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

31 Pages Posted: 31 May 2018

See all articles by Y.-H. Henry Chen

Y.-H. Henry Chen

Massachusetts Institute of Technology (MIT) - Joint Program on the Science and Policy of Global Change; MIT Energy Initiative

Govinda R. Timilsina

World Bank - Development Research Group (DECRG)

Florian Landis

ZEW – Leibniz Centre for European Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: October 19, 2013

Abstract

This study assesses the economy-wide impacts of cutting CO2 emissions on the Brazilian economy. It finds that in 2040, the business-as-usual CO2 emissions from energy use and industrial processes would be almost three times as high as those in 2010 and would account for more than half of total national CO2 emissions. The current policy aims to reduce deforestation by 70 percent by 2017 and lower emissions intensity of the overall economy by 36–39 percent by 2020. If the policy were implemented as planned and continued to 2040, there would be no need to cut CO2 emissions from energy use and industrial processes until 2035, as emissions reduction through controlling deforestation would be enough to meet the voluntary carbon mitigation target of Brazil. The study also finds that using the carbon tax revenue to subsidize wind power can effectively increase the country's wind power output if that is the policy priority. Further, it finds evidence supporting the double dividend hypothesis, i.e., using revenue from a hypothetical carbon tax to finance a cut in labor income tax can significantly lower the GDP impacts of the carbon tax.

Keywords: Low-Carbon Growth, Brazil, Computable General Equilibrium Model

JEL Classification: D58, Q43

Suggested Citation

Chen, Y.-H. Henry and Timilsina, Govinda R. and Landis, Florian, Economic Implications of Reducing Carbon Emissions from Energy Use and Industrial Processes in Brazil (October 19, 2013). Journal of Environmental Management, Vol. 130, 2013. Available at SSRN: https://ssrn.com/abstract=3181717

Y.-H. Henry Chen (Contact Author)

Massachusetts Institute of Technology (MIT) - Joint Program on the Science and Policy of Global Change ( email )

E19-429
77 Massachusetts Ave
Cambridge, MA 02139
United States

MIT Energy Initiative ( email )

Cambridge, MA 02139
United States

Govinda R. Timilsina

World Bank - Development Research Group (DECRG) ( email )

1818 H Street NW
MSN3-311
Washington, DC 20433
United States

Florian Landis

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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