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A stylized applied energy-economy model for France

Author

Listed:
  • Henriet, F.
  • Maggiar, N.
  • Schubert, K.
Abstract
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 endogeneisation 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.

Suggested Citation

  • Henriet, F. & Maggiar, N. & Schubert, K., 2014. "A stylized applied energy-economy model for France," Working papers 478, Banque de France.
    • Handle: RePEc:bfr:banfra:478
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    Cited by:

    1. Corbier, Darius & Gonand, Frédéric, 2024. "A hybrid electricity-economy model to assess the aggregate impacts of low-carbon transition: An application to France," Ecological Economics, Elsevier, vol. 216(C).
    2. Verónica Acurio Vásconez, 2015. "What if oil is less substitutable? A New-Keynesian Model with Oil, Price and Wage Stickiness including Capital Accumulation," Post-Print halshs-01167027, HAL.
    3. Pascal da Costa, 2014. "Semi-Endogenous Growth and Pollution: No Double Dividend in the Long Term," Working Papers hal-00994904, HAL.
    4. Fanny Henriet & Nicolas Maggiar & Katheline Schubert, 2016. "La France peut-elle atteindre l’objectif du Facteur 4 ? Une évaluation à l’aide d’un modèle stylisé énergie-économie," Economie & Prévision, La Documentation Française, vol. 0(1), pages 1-21.
    5. Pascal da Costa & Wenhui Tian, 2015. "A Sectoral Prospective Analysis of CO2 Emissions in China, USA and France, 2010-2050," Working Papers hal-01026302, HAL.
    6. Veronica ACURIO VASCONEZ, 2020. "What if Oil was Less Substitutable?," Working Papers of BETA 2020-08, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    7. Antoine Devulder & Noëmie Lisack, 2020. "Carbon Tax in a Production Network: Propagation and Sectoral Incidence," Working papers 760, Banque de France.

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    More about this item

    Keywords

    CGE model; Energy; Environment; Carbon Tax.;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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