nep-res New Economics Papers
on Resource Economics
Issue of 2021‒12‒06
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Carbon Leakage in a Small Open Economy: The Importance of International Climate Policies By Ulrik R. Beck; Peter K. Kruse-Andersen; Louis B. Stewart
  2. Climate mitigation co-benefits from sustainable nutrient management in agriculture: Incentives and opportunities By Mikael Skou Andersen; Gérard Bonnis
  3. Critical raw materials for the energy transition By Aude Pommeret; Francesco Ricci; Katheline Schubert

  1. By: Ulrik R. Beck (Danish Research institute for Economic Analysis and Modelling (DREAM)); Peter K. Kruse-Andersen (Department of Economics, University of Copenhagen); Louis B. Stewart (The Secretariat of the Danish Council on Climate Change)
    Abstract: A substantial literature investigates carbon leakage effects for large countries and climate coalitions. However, little is known about leakage effects for a small open economy within a climate coalition. To fill this gap in the literature, we incorporate international climate policies relevant for a small open EU economy into the general equilibrium model GTAP-E. We focus our analysis on Denmark, but we show that our framework can be applied to any EU economy. We find substantial leakage associated with an economy-wide CO2e tax. This result is strongly affected by EU climate policies. We also present sector-specific leakage rates and find large sectoral differences.
    Keywords: Carbon leakage, Trade and the environment, Climate policy, Computable general equilibrium
    JEL: F18 H23 Q54
    Date: 2021–11–28
  2. By: Mikael Skou Andersen (Aarhus University); Gérard Bonnis (OECD)
    Abstract: Nitrogen management policies introduced in the past decades by some OECD countries have succeeded in reducing excess nitrogen use by farmers, but half of global mineral fertiliser use is still lost for crops. While about half of OECD countries have nutrient surpluses of between 25-50 kg N per hectare, a smaller number of countries are still having surpluses of more than 100 kg N per hectare. Since the production and use of mineral fertilisers have a large greenhouse gas footprint and to achieve the deep reductions in emissions as the Paris Agreement aims for, nitrogen management policies could be reinforced and pursued more systematically. The paper identifies significant reduction potential by eliminating the excess use of nitrogen fertilisers and improving efficiency in the use of manure-nitrogen, which could be obtained with a redesign of nitrogen management policies and schemes for public financial support. To underpin such measures a tax on the nitrogen surplus at farm level could play a vital role. Based on the available estimates of environmental externalities of nitrogen, the paper identifies an average rate of EUR 1-2 as a suitable starting point for a tax or penalty on the surplus application of nitrogen. The paper also explores the opportunities for sustainable nutrient management in agriculture with climate mitigation benefits relating to nitrous oxides in particular.
    Keywords: agricultural fertilisers, climate change mitigation, environmental taxation, manure, nitrogen pollution
    JEL: D62 H23 H87 O13 P52 Q15 Q24 Q51 Q55 Q58
    Date: 2021–12–02
  3. By: Aude Pommeret (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Francesco Ricci (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UMR 5211 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Katheline Schubert (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Renewable energy generation and storage requires specialized capital goods, embedding critical raw materials (CRM). The scarcity of CRM therefore affects the transition from a fossil based energy system to one based on renewables, necessary to cope with climate change. We consider the issue in a theoretical model, where we allow for a very costly potential substitute, reflecting a backstop technology, and for partial and costly recycling of materials in capital goods. We characterize the main features of the efficient energy transition, and their dependence on the relative abundance of CRM and on the recycling technology. Recycling reduces the cost of the transition. It also calls for having a large stock of recyclable CRM embedded in specialized capital at the time of adoption of the backstop technology. Moreover, we consider constraints on policy tools and myopic regulation, and show how abstracting from the scarcity of CRM, or tightly linking subsidies for renewables to the carbon tax revenue, is misleading in designing climate policy.
    Keywords: material scarcity,recycling,energy transition,policy acceptability,myopia
    Date: 2021–11–15

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