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Economic Implications of Reducing Carbon Emissions from Energy Use and Industrial Processes in Brazil

Joint Bank-Fund Brown-Bag Research Seminars on Environment and Energy:


Henry Chen and Govinda Timilsina
Development Resarch Group, Environment and Energy Team (DECEE), the World Bank

 
 
Wednesday, December 7, 2011, 12.30-2 pm
Venue: MC6-598

Economic Implications of Reducing Carbon Emissions from Energy Use and Industrial Processes in Brazil

Presented by Govinda Timilsina


Abstract:
We study, with the help of a recursive dynamic general equilibrium model, impacts on the Brazilian economy, and on overall Brazilian carbon emissions, of reducing CO2 emissions from energy use and industrial processes. The policy instrument considered is a hypothetical carbon tax.  We project that, in 2040 under the business-as-usual scenario, CO2 emissions from energy use and industrial processes will be almost three times as high as that in 2010 and would account for more than half of the total national CO2 emissions in that year.  The study shows that if the National Plan on Climate Policy, which aims at reducing deforestation by 70% by 2017, is implemented as planned, there would be no need to reduce CO2 emissions from energy use and industrial processes to meet the country’s voluntary GHG reduction targets by 2020.  The burden of reducing emissions from energy-use and industrial processes would not be significant even until 2040 provided that the deforestation mitigation target is met.  Our evidence also supports the double dividend hypothesis: using carbon tax revenue to finance the cut in labor tax can reduce the loss in real GDP.  The study also shows that using carbon tax revenue to subsidize wind power can effectively increase wind power output, especially when expansion of wind power is less dependent on the capacity of other dispatchable generations.

Bio, Henry Chen:
Henry Chen is an Economist in DECEE at the World Bank.  He holds a Ph D degree in economics from the University of Colorado, and has previously worked as a postdoctoral fellow at MIT. He has publications in the fields of International Economics, Applied Econometrics, Industrial Organization, and Energy Economics.  Recently, he has built a recursive-dynamic general equilibrium model for DECEE.  The model has been applied on assessing carbon mitigation effects of various countries.


Bio, Govinda Timilsina:
Govinda Timilsina is a Senior Research Economist in DECEE. He holds masters and doctoral degrees in energy economics from the Asian Institute of Technology, Bangkok. He has more than 15 years experience from work on energy and climate change economics. His key expertise includes general equilibrium and input-output modeling; project based mechanisms under the Kyoto Protocol; climate change science, impacts and mitigation; GHG markets; energy sector modeling, and electricity economics & planning. Prior to joining the World Bank, he was a Senior Research Director at the Canadian Energy Research Institute, Calgary, Canada, where he was engaged mainly on climate change policy analysis, economic impacts assessment, and electricity issues.

For further information on the presentation, contact Jon Strand at: jstrand1@worldbank.org,
202-458-5122

The Joint Bank-Fund Brown-Bag Research Seminars on Environment and Energy is a joint initiative between the Development Research Group, Environment and Energy Team (DECEE), World Bank, and the Fiscal Affairs Department, IMF. Organizers of the series are Jon Strand (DECEE), and Ruud de Mooij and Ian Parry (FAD/IMF). The seminars are held at lunch time, normally once every two weeks, alternately in the Bank and Fund. Aims of the seminars are to raise attention to, and interest in, environment, energy and natural resources issues in both institutions; to promote the interaction between the two institutions in these fields; and to improve the institutions' common work on policy.
 


 




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