Showing posts with label Energy & Climate Change.   Show all posts

Coping with Natural Disaster Risks in Sri Lanka

From the IMF’s latest report on Sri Lanka:

“Sri Lanka has been prone to weather-related natural disasters, possibly reflecting climate change. While the government has started to build up resiliency against disasters by introducing disaster insurance schemes and increasing mitigation spending, it can further improve disaster preparedness by undertaking policy measures in the near term. First, a contingency budget for emergency cash support and infrastructure rehabilitation can be introduced within the budget. Second, the planned introduction of an automatic pricing mechanism for electricity, combined with well-targeted safety nets, can contain fiscal risks from droughts. Third, the risk management of disaster insurance schemes can be improved to maximize its effectiveness for post-disaster reconstruction while minimizing costs. Beyond the near term, there is a need to develop a comprehensive disaster risk financing strategy that is consistent with Sri Lanka’s debt sustainability, and build up capacity for innovative risk transfer approaches such as parametric insurance.”

 

From the IMF’s latest report on Sri Lanka:

“Sri Lanka has been prone to weather-related natural disasters, possibly reflecting climate change. While the government has started to build up resiliency against disasters by introducing disaster insurance schemes and increasing mitigation spending, it can further improve disaster preparedness by undertaking policy measures in the near term. First, a contingency budget for emergency cash support and infrastructure rehabilitation can be introduced within the budget.

Read the full article…

Posted by at 1:53 PM

Labels: Energy & Climate Change

5 Things You Need to Know About the IMF and Climate Change

From an IMFBlog post by Ian Parry (IMF):

“The world is getting hotter, resulting in rising sea levels, more extreme weather like hurricanes, droughts, and floods, as well as other risks to the global climate like the irreversible collapsing of ice sheets. 

Here are five ways the IMF helps countries move forward with their strategies as part of their commitment to the 2015 Paris Agreement on Climate Change.

  1. Mitigate emissions. Carbon taxes, or similar charges for the carbon content of coal, petroleum products, and natural gas, are potentially the most effective instruments to reduce carbon dioxide emissions, the major source of heat-trapping gases. These taxes are straightforward to administer, for example, building off existing fuel excises, and can raise significant revenue for government that they might use to cut other burdensome taxes on the economy, or fund growth-enhancing investments.The IMF provides practical guidance on the design of fiscal policy to mitigate climate change. We are developing spreadsheet tools to help countries gauge the emissions, and broader fiscal and economic impacts of carbon pricing, and the trade-offs across alternative mitigation instruments like taxes on individual fuels, emissions trading, and incentives for energy efficiency.For example, our annual economic review for China showed that a carbon tax, or just a tax on coal use, would be significantly more effective at reducing carbon and local air pollution emissions than emissions trading systems which do not cover emissions from vehicles and buildings, and would also raise substantial revenue.And according to our forthcoming working paper, a $70 price per ton on carbon dioxide emissions in 2030, which would increase gasoline prices by about 60 cents per gallon, and more than triple coal prices, would be more than sufficient to meet mitigation pledges in some advanced and emerging market economies like China, India, Indonesia, and South Africa. That price would be nearly sufficient in some other countries like Turkey and the United States, but well short of what Australia, Canada, and some European countries need.These differences in the ability of the $70 price to meet mitigation pledges reflect both differences in the stringency of commitments, and in the responsiveness of fuels and emissions to pricing. For example, emissions tend to be more responsive to pricing in countries that use a lot of coal, like China, India, and South Africa. 

  2. Energy subsidy reform. Pricing carbon should be part of a broader strategy to reflect the full range of social costs in energy pricing. This includes deaths from air pollution and other local environmental side effects from fuel use. A spreadsheet tool provides, for all member countries, estimates of the energy prices needed to reflect supply, and all environmental costs, as well as the implicit subsidies from underpricing fossil fuels.According to IMF estimates, efficient energy pricing would have reduced global carbon emissions in 2013 by over 20 percent, and fossil fuel air pollution deaths by over 50 percent, while raising revenues of 4 percent of GDP.

    IMF case studies of numerous countries’ reforms distill the ingredients for successful reform. One especially important ingredient is compensation for low-income households, which generally requires only a small fraction of the revenues generated from reform. We discuss energy price reforms as part of our annual review of a country’s economy, as well as in our technical assistance work with countries like Saudi Arabia , Jordan, United Arab Emirates, and in our courses and workshops.”

Continue reading here.

From an IMFBlog post by Ian Parry (IMF):

“The world is getting hotter, resulting in rising sea levels, more extreme weather like hurricanes, droughts, and floods, as well as other risks to the global climate like the irreversible collapsing of ice sheets. 

Here are five ways the IMF helps countries move forward with their strategies as part of their commitment to the 2015 Paris Agreement on Climate Change.

Read the full article…

Posted by at 7:07 AM

Labels: Energy & Climate Change

Options for Carbon Mitigation and Transportation Policy in the Netherlands

From the IMF’s latest report on the Netherlands:

“The new Dutch government fully embraced the Paris Climate Agreement and committed to an ambitious climate change policy. The European Union (EU) has pledged to reduce CO2 and other greenhouse gases (GHGs) by 40 percent relative to 1990 levels by 2030. The Netherlands is planning to go further, increasing its own GHG reduction target for 2030 to 49 percent below 1990 levels. Existing policies designed to meet the EU pledge include: (i) the EU Emissions Trading System (ETS) reducing power generation and large industrial emissions 43 percent below 2005 levels by 2030; (ii) national-level targets for non-ETS emissions—for the Netherlands a 36 percent reduction below 2005 levels by 2030;2 (iii) EU goals for energy efficiency (a 30 percent improvement by 2030) and renewables;3 and (iv) EU standards for vehicle CO2 emission rates. The new government agreement contains substantial policy measures to cost-effectively reduce emissions including: introducing a minimum price for CO2 emissions from power generation on top of the ETS; shifting taxes off electricity and onto gas generation; phasing out coal plants and natural gas for new buildings by 2030; subsidizing carbon capture and storage (CCS); and expanding offshore wind power.

The Dutch authorities are also considering major reforms to transportation policy to complement emission reduction efforts and to address other environmental costs. These reforms include full penetration of electric vehicles into the new car fleet by 2030; adoption of km-based (i.e., distance-based) taxation for HGVs; stiffer penalties to deter dangerous driving; and infrastructure upgrades to alleviate traffic congestion. The first policy will progressively erode traditional revenue sources from LDVs—fuel taxes and CO2-related vehicle taxes—posing the question of what revenue-raising instruments could replace them.”

 

 

From the IMF’s latest report on the Netherlands:

“The new Dutch government fully embraced the Paris Climate Agreement and committed to an ambitious climate change policy. The European Union (EU) has pledged to reduce CO2 and other greenhouse gases (GHGs) by 40 percent relative to 1990 levels by 2030. The Netherlands is planning to go further, increasing its own GHG reduction target for 2030 to 49 percent below 1990 levels. Existing policies designed to meet the EU pledge include: (i) the EU Emissions Trading System (ETS) reducing power generation and large industrial emissions 43 percent below 2005 levels by 2030;

Read the full article…

Posted by at 5:48 PM

Labels: Energy & Climate Change

Chart of the Week: Greenery and Prosperity

Economic growth has traditionally moved in tandem with pollution. But can countries break this link and manage to grow while lowering pollution?

Our research, based on joint work with Gail Cohen and Ricardo Marto, shows that yes, progress is being made. Our evidence is clear: advanced economies are starting to show signs of decoupling—increasing growth while reducing pollution—but emerging market economies not yet.

The chart summarizes our evidence on the link between the trend (long-run relationship) in greenhouse gas (GHG) emissions and the trend in incomes. Our analysis covers the world’s top twenty largest GHG emitters from 1990 to the present. Over this time, incomes have grown—the trend is positive—despite dips due to occasional recessions and financial crises. But what has happened to trend emissions?

 

The bars in the chart show the percent increase in trend emissions for every 1 percent increase in trend incomes—economists refer to such estimates as elasticities. Look first at the three cases on the far right of the chart—Germany, the United Kingdom, and France. For this group the elasticity estimates are negative: emissions have fallen despite the increase in incomes. These countries have achieved decoupling of emissions and output. Our results show that this is due both to active policies by these countries aimed at decarbonizing their economies as well as the structural transformation of their economies towards a greater role for services.

Continue reading here.

Economic growth has traditionally moved in tandem with pollution. But can countries break this link and manage to grow while lowering pollution?

Our research, based on joint work with Gail Cohen and Ricardo Marto, shows that yes, progress is being made. Our evidence is clear: advanced economies are starting to show signs of decoupling—increasing growth while reducing pollution—but emerging market economies not yet.

The chart summarizes our evidence on the link between the trend (long-run relationship) in greenhouse gas (GHG) emissions and the trend in incomes.

Read the full article…

Posted by at 10:51 AM

Labels: Energy & Climate Change

Rethinking the macroeconomics of resource-rich countries: A new eBook

From VoxEU:

After years of high commodity prices, a new era of lower ones, especially for oil, seems likely to persist. This will be challenging for resource-rich countries, which must cope with the decline in income that accompanies the lower prices and the potential widening of internal and external imbalances. This column presents a new VOXEU eBook in which leading economists from academia and the public and private sector examine the shifting landscape in commodity markets and look at the exchange rate, monetary, and fiscal options policymakers have, as well as the role of finance, including sovereign wealth funds, and diversification.

 

The sudden slide in prices in 2014 forced resource-rich developing countries into a rapid adjustment – less painful for those that had built buffers, more for those that had not. Whether the adjustment was more or less painful, resource-rich countries now face a second phase of adjustment: making structural changes to reduce resource dependence. The challenges over the medium run are enormous, especially considering how difficult it has been historically for these countries to diversify their economies (Venables 2016).  What is more, new risks have emerged such as stranded assets—fossil fuel assets that will no longer earn an economic return because of declining demand caused mainly by global environmental concerns (McGlade and Ekins 2015).

A new VoxEU eBook based on the proceedings of a conference held in Algiers, Algeria, in May 2016 aims to synthesise some key insights that have emerged from the latest economic research on resource-rich countries, making them user-friendly for both policymakers and scholars (Arezki et al. 2018). The common denominator of the research is that the countries must build and maintain a robust macroeconomic framework in the wake of the collapse in commodity prices. The scholars also cite the need to think differently about the role of finance and diversification in the transformation of these economies.

Shifting landscape

Most studies have emphasised excess supply as the dominant factor in the 2014 oil price collapse. Although historically supply changes have been exogenous to the economy, in this case the increase in supply was caused by powerful shifts in technology triggered by high prices.

These price-spawned technological innovations, led to the adoption of new recovery techniques, which in turn spawned the development of ‘unconventional oil’, such as that produced from shale. Provided they are effective and widely adopted, improvements in recovery techniques increase the size of recoverable oil reserves, which, in turn, changes expectations about future oil production – with potentially large and immediate implications for oil prices. But innovations in recovery techniques are not exogenous. Instead they are of the market, typically following periods of prolonged high prices or changes in regulations that render them more economical. Innovative drilling techniques such as 3D imaging and hydraulic fracturing – or fracking, in which water is injected to free up petroleum trapped in layers of rock – gave rise to the substantial increase in production of shale oil in the 2000s.

 

Continue reading here.

From VoxEU:

After years of high commodity prices, a new era of lower ones, especially for oil, seems likely to persist. This will be challenging for resource-rich countries, which must cope with the decline in income that accompanies the lower prices and the potential widening of internal and external imbalances. This column presents a new VOXEU eBook in which leading economists from academia and the public and private sector examine the shifting landscape in commodity markets and look at the exchange rate,

Read the full article…

Posted by at 10:00 AM

Labels: Energy & Climate Change

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