HENRIET Fanny

Not all barrels of oil are created equal: their extraction varies in both private cost and carbon intensity. Using a rich micro-dataset on World oil fields and estimates of their carbon intensities and private extraction costs, this paper quantifies the additional emissions and costs from having extracted the 'wrong' deposits. We do so by comparing historic deposit-level supplies to counterfactuals that factor in pollution costs, while keeping annual global consumption unchanged. Between 1992 and 2018, carbon misallocation amounted to at least 10.02 GtCO₂ with an environmental cost evaluated at 2 trillion US dollars (2018 US dollars). This translates into a significant supply-side ecological debt for major producers of dirty oil. Looking towards the future, we estimate the gains from making deposit-level extraction socially-optimal, and document the very unequal distribution of the subsequent stranded oil reserves across countries.

Because climate change affects the economy at different scales, quantifying its impacts is particularly difficult. However, understanding these impacts is essential to develop an appropriate response in terms of mitigation and adaptation. It allows us to set regional and global targets in light of the costs of inaction, and to prepare for adaptation by identifying future vulnerabilities. This thesis focuses on how the dynamics and distribution of climate change impacts affect the assessment of mitigation trajectories. First, I show that the dynamics of the climate system play an important role in understanding the resulting economic damages, which can increase the social value of carbon. In a second step, taking into account the heterogeneity of impacts across countries, I study the distributional effects of different emission trajectories. Finally, I show how spillover effects and structural change can modify the distribution of climate change costs, through the example of impacts on labor productivity.

From the back cover: "Achieving our energy transition to a zero-net-zero emissions world will be difficult and costly, but we have no choice. If we want the planet to be livable for our children, we must shift energy production from fossil fuels to decarbonized sources and transform the economy. The climate clock is ticking fast: such a transition cannot wait. Technological progress, changes in individual preferences and social norms, fiscal and regulatory policies, green finance - The levers to reduce carbon emissions are numerous. Some are more effective, others easier to implement, but none of them, used alone, can be sufficient. We need to mobilize all of them, within a set of measures structured around a carbon price that reflects the decrease in the related budget".

We examine an open economy’s strategy to reduce its carbon emissions by replacing its consumption of coal—very carbon intensive—with gas—less so. Unlike the standard theoretical approach to carbon leakage, we show that unilateral CO2 reduction policies generate a higher leakage rate in the presence of more than one carbon energy source and may turn counterproductive, ultimately increasing world emissions. We establish testable conditions as to whether a unilateral tax on domestic CO2 emissions increases the domestic exploitation of gas and whether such a strategy increases global emissions. We also characterize this strategy’s implications for climate policy in the rest of the world. Finally, we present an illustrative application of our results to the United States.

Achieving our energy transition to a net zero emissions (NZE) world will be difficult and costly, but we have no choice. If we want the planet to be livable for our children, we must shift energy production from fossil fuels to decarbonized sources and transform the economy. The climate clock is ticking fast: such a transition cannot wait. Technological progress, changes in individual preferences and social norms, fiscal and regulatory policies, green finance - The levers to reduce carbon emissions are numerous. Some are more effective, others easier to implement, but none of them, used alone, can be sufficient. We need to mobilize all of them, as part of a package of measures structured around a carbon price that reflects the decrease in the carbon budget.

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The need to fight global warming appears consensual in our country in light of polls according to which 85% of French people are concerned about global warming (IFOP, October 2018). The urgency and the need for a global approach framing all CO2 emissions are recalled by the IPCC. On the other hand, as demonstrated by the Yellow Vests protest movement that started with the increase in the carbon tax, environmental policies remain widely debated. Environmental taxation has been seen as an additional tax motivated more by budgetary considerations than by climate policy. It has also been seen as unfair, especially for the least well-off households and those who have few alternatives, for example, in their means of transport. But without a carbon tax, we will not achieve our objectives of reducing CO2 emissions by 2030. The challenge is therefore to propose profound changes in order to build an efficient and fair system. Efficiency requires that the price signal be safeguarded and justice requires that the costs of environmental measures be shared fairly.

This paper considers the distributional impact of optimal carbon taxation on fossil-fuel owners. A carbon-emitting exhaustible resource competes with a dirtier abundant resource and a clean backstop. A time-dependent carbon tax is set to optimally use these resources under a cap constraint over atmospheric concentration. As the cap is tightened, the dirtier resource becomes less competitive compared to the exhaustible resource (the “competition effect”), but the timing and duration of extraction of the exhaustible resource is modified (the “timing effect”). We provide analytical expressions of these effects, and determine conditions over CO2 size of reserves, pollution contents, extraction costs and demand elasticity such that the exhaustible-resource owners’ profits increase as the ceiling is tightened. Calibrations for the transport and power sectors suggest that the profits of conventional-oil and natural-gas owners increase compared to a baseline without regulation for plausible carbon-ceiling values.

We study the optimal design of consumption taxes when both global and local externalities matter. Local externalities make the social impact of the consumption of externality-generating commodities varying across consumers. A typical example involves the greater damage caused by pollution from urban fuel consumers. We provide a condition for the validity of the targeting principle according to which externality concerns should only fall on the taxes on externality-generating commodities. When this condition is satisfied, one can decompose the tax on an externality-generating commodity into equity/efficiency and Pigovian contributions. The Pigovian contribution should exceed the average social damage if the fuel consumption of the greatest polluters is more responsive to fuel price. In an empirical illustration we find that the fuel tax in France is mostly explained by Pigovian considerations.

We study optimal linear commodity taxes in the presence of non-linear income taxes when agents differ in skills and tastes for consumption. We show that optimal commodity taxes are partly determined by a many-person Ramsey rule when there is taste heterogeneity within income classes. The usual role of commodity taxes in relaxing incentive constraints explains the remaining part of these taxes when there is taste heterogeneity between income classes. We quantify these two parts using French consumption microdata and find that commodities taxes are only shaped by many-person Ramsey considerations.

Launched in 2010, the Programme d'investissements d'avenir (PIA) aims to stimulate research, development and innovation activities in targeted growth-generating sectors as diverse and varied as higher education and research, the digital economy, health and sustainable development. Nearly €50 billion in funding was committed for the first two parts of the AIPs, which were renewed for the third time in June 2016 with an additional €10 billion. The PIA has thus become a major instrument in France's innovation support policy, alongside the research tax credit (CIR).As with any public aid policy in favor of companies, the question arises as to the impact of this aid on the behavior of companies as well as on their performance. Indeed, in order to judge the relevance and effectiveness of such a policy of support for companies, it is crucial to determine i) whether this aid adds to the R&D expenditure of companies while encouraging them to invest more, or whether on the contrary it replaces it; and ii) whether this aid improves the performance of beneficiary companies and to what extent it affects the performance of non-beneficiary companies. By focusing on the AIP managed by the French Environment and Energy Management Agency (ADEME), which specializes in environmental issues such as energy transition and "green" growth, the objective of this study is to evaluate ex post the effects of the grants awarded by ADEME on beneficiary companies.

We study optimal commodity taxes in the presence of non-linear income taxes when agents differ in skills and tastes for consumption. We show that commodity taxes are partly determined by a many-person Ramsey rule when there is taste heterogeneity within income classes. The usual role of consumption taxes in relaxing incentive constraints explains the remaining part of these taxes when there is taste heterogeneity between income classes. We quantify the importance of these two components on Canadian microdata using a new method to identify empirically the binding incentive constraints. Incentives matter but tax exemptions are mostly justified by Ramsey considerations.

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We provide a necessary condition for optimal commodity taxes when agents differ according to labor skill and consumption tastes and when the government can also use a general nonlinear tax on labor income. The discouragement index of commodities in shown to be the sum of (1) the distributive factors over the different income classes and (2) the excess demand of mimickers. The first component arises whenever there is taste heterogeneity within income classes. The second one arises whenever there is taste heterogeneity between income classes. In an empirical application from Canadian microdata we delineate groups of households with homogeneous tastes based on nonviolation of revealed preferences. Assuming that indirect taxes are set optimally, we identify the relevant incentive constraints and provide estimates for social values of the different groups. Redistribution from indirect taxes favors households living in rural Quebec.

In the context of the deep contrast between the shale gas boom in the United States and the recent ban by France of shale gas exploration, this paper explores whether climate policy justifies developing more shale gas, taking into account environmental damages, both local and global, and addresses the question of a potential arbitrage between shale gas development and the transition to clean energy. We construct a Hotelling-like model where electricity may be produced by three perfectly substitutable sources: an abundant dirty resource (coal), a non-renewable less polluting resource (shale gas), and an abundant clean resource (solar). The resources differ by their carbon contents and their unit costs. Fixed costs must be paid for shale gas exploration, and before solar production begins. Climate policy takes the form of a ceiling on atmospheric carbon concentration. We show that at the optimum tightening climate policy always leads to bringing forward the transition to clean energy. We determine conditions under which the quantity of shale gas extracted should increase or decrease as the ceiling is tightened. To address the question of the arbitrage between shale gas development and the transition to clean energy, we assume that the social planner has to comply to the climate constraint without increasing energy expenditures. We show that when the price elasticity of electricity demand is low, a binding financial constraint leads to an overinvestment in shale gas and postpones the switch to the clean backstop. We calibrate the model for Europe and determine whether shale gas should be extracted, depending on the magnitude of the local damage, as well as the potential extra amount of shale gas developed because of a financial constraint, and the cost of a moratorium on extraction.

This paper studies how oil owners can benefit from carbon taxation. We build a Hotelling-like model with three energy resources: oil (exhaustible, polluting), coal (non exhaustible, very polluting) and solar energy (non exhaustible, non polluting). The CO2 concentration must be kept under a carbon ceiling. The optimal extraction path is decentralized by a tax on emissions, and tax revenues are not redistributed. We characterize the different extraction paths. We focus on the case where both oil and coal are extracted and oil gets exhausted. When oil is cheaper to extract than coal, if oil is sufficiently scarce, or if the extraction cost of oil is close enough to the extraction cost of coal or if its pollution content is low enough, or if the demand elasticity is low enough, the profits of oil owners will increase when the carbon regulation is tightened. When oil is more expensive to extract than coal, and both resources are used and oil exhausted, tightening the carbon regulation increases the oil profits.

We build, calibrate and simulate a stylized energy-economy model designed to evaluate the magnitude of carbon tax that would allow the French economy to reduce by a factor of four its CO2 emissions at a forty-year horizon. We estimate the substitution possibilities between fossil energy and other factors for households and firms. We build two versions of the model, the first with exogenous technical progress, and the second with an endogenization of the direction of technical progress. We show that if the energy-saving technical progress rate remains at its recent historical value, the magnitude of the carbon tax is quite unrealistic. When the direction of technical progress responds endogenously to economic incentives, CO2 emissions can be reduced by more than that allowed by the substitution possibilities, but not by a factor of four. To achieve this, an additional instrument is needed, namely a subsidy to fossil energy-saving research. The redirection of technical progress, which is a driver of energy transition, comes at a small cost in terms of the overall growth rate of the economy. [ABSTRACT FROM AUTHOR].

We build, calibrate and simulate a stylized energy-economy model designed to evaluate the magnitude of carbon tax that would allow the French economy to reduce by a factor of four its CO2 emissions at a forty-year horizon. We estimate the substitution possibilities between fossil energy and other factors for households and firms. We build two versions of the model, the first with exogenous technical progress, and the second with an endogenization of the direction of technical progress. We show that if the energy-saving technical progress rate remains at its recent historical value, the magnitude of the carbon tax is quite unrealistic. When the direction of technical progress responds endogenously to economic incentives, CO2 emissions can be reduced by more than that allowed by the substitution possibilities, but not by a factor of four. To achieve this, an additional instrument is needed, namely a subsidy to fossil energy-saving research. The redirection of technical progress, which is a driver of energy transition, comes at a small cost in terms of the overall growth rate of the economy.

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This thesis addresses several diverse issues related to climate policy. The first chapter examines the optimal extraction of a polluting non-renewable resource in the presence of environmental regulation and when a clean technology can be developed through research and development activities. The second chapter studies the introduction of carbon capture and storage technology. Where technical constraints do not allow all emissions to be captured, this technology should be used before environmental damage occurs. The third chapter studies the changes in the optimal tax system when an externality is discovered, in a Mirlees-like framework with heterogeneous agents. If productivity and the cost of access to a substitute good are negatively correlated, then no good should be taxed in the absence of an externality. With externality, it is optimal to tax the dirty good at a rate lower than the piggyback rate and to tax the clean good. In the fourth chapter, we build, calibrate and simulate a stylized model designed to evaluate the magnitude of the carbon tax that would allow the French economy to divide its CO2 emissions by four over a forty year horizon. The magnitude of the required carbon tax is completely unrealistic. The fifth chapter discusses the ecological discount rate that should be used to evaluate projects to improve the environment. We study the properties of the standard discount rate, as well as the ecological discount rate. We also discuss a form of the precautionary principle.