Toward a low carbon growth in Mexico: is a double dividend possible ? A dynamic general equilibrium assessment

Gissela Landa (), Frédéric Reynés (), Ivan Islas, François-Xavier Bellock and Fabio Grazi
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Ivan Islas: INECC - Instituto Nacional de Ecología y Cambio Climático
François-Xavier Bellock: AFD - Agence française de développement
Fabio Grazi: AFD - Agence française de développement

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Abstract: This paper simulates the medium- and long-term impact of proposed and expected energy policy on the environment and on the Mexican economy. The analysis has been conducted with a Multi-sector Macroeconomic Model for the Evaluation of Environmental and Energy policy (Three-ME). This model is well suited for policy assessment purposes in the context of developing economies as it indicates the transitional effects of policy intervention. Three-ME estimates the carbon tax required to meet emissions reduction targets within the Mexican "Climate Change Law", and assesses alternative policy scenarios, each reflecting a different strategy for the recycling of tax revenues. With no compensation, the taxation policy if successful will succeed in in reducing CO2 emissions by more than 75% by 2050 with respect to Business as Usual (BAU), but at high economic costs. Under full redistribution of carbon tax revenues, a double dividend arises and the policy is beneficial both in terms of GDP and CO2 emissions reduction.

Keywords: Climate policy; Energy economy modelling; Energy system; Double dividend (search for similar items in EconPapers)
Date: 2015-10-01
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