Peace not Pollution: How Going Green Can Tackle Climate Change and Toxic Politics

EditedbyChristianGollierandDominicRohner PeacenotPollution HowGoingGreenCanTackleBothClimateChangeandToxicPolitics PeacenotPollution HowGoingGreenCanTackleBothClimateChangeandToxicPolitics WITHSUPPORTOFCEPRPARISFOUNDINGPARTNERS CEPRPRESS CentreforEconomicPolicyResearch187boulevardSaint-Germain 75007,Paris,France 33GreatSuttonStreetLondon,EC1V0DX,UK Tel:+44(0)2071838801 Email:cepr@cepr.orgWeb:www.cepr.org ISBN:978-1-912179-74-9 Copyright©CEPRPress,2023 PeacenotPollution HowGoingGreenCanTackleBothClimateChangeandToxicPolitics EditedbyChristianGollierandDominicRohner CENTREFORECONOMICPOLICYRESEARCH(CEPR) TheCentreforEconomicPolicyResearch(CEPR)isanetworkofover1,700researcheconomistsbasedmostlyinEuropeanuniversities.TheCentre’sgoalistwofold:topromoteworld-classresearch,andtogetthepolicy-relevantresultsintothehandsofkeydecision-makers.CEPR’sguidingprincipleis‘Researchexcellencewithpolicyrelevance’.ItwasfoundedintheUKin1983,whereitisaCharity,andinNovember2019CEPRinitiatedthecreationofanAssociationunderFrenchlaw,inordertoprovideavehicleforanexpansioninFrance.ThemembersoftheConseild’AdministrationoftheAssociationareidenticaltotheUKBoardofTrustees. CEPRisindependentofallpublicandprivateinterestgroups.IttakesnoinstitutionalstandoneconomicpolicymattersanditscorefundingcomesfromitsInstitutionalMembers,projectsthatitrunsandsalesofpublications.Becauseitdrawsonsuchalargenetworkofresearchers,itsoutputreflectsabroadspectrumofindividualviewpointsaswellasperspectivesdrawnfromcivilsociety.CEPRresearchmayincludeviewsonpolicy,buttheTrustees/membersoftheConseild’AdministrationoftheAssociationdonotgivepriorreviewtoitspublications.TheopinionsexpressedinthisreportarethoseoftheauthorsandnotthoseofCEPR. ChairoftheBoardSirCharlieBeanFounderandHonoraryPresidentRichardPortes PresidentBeatriceWederdiMauro VicePresidentsMaristellaBotticiniPhilippeMartinUgoPanizza MarReguantHélèneRey ChiefExecutiveOfficerTessaOgden Contents Forewordvii 1Championingthegreenenergytransitionwithoutplayingintothehandsofpopulists1 ChristianGollierandDominicRohner PartI:Curbingenergydemand 2Taxingcarbon15 ThomasSterner,JensEwaldandErikSterner 3Thefasttracktoglobalcarbontaxation23 LaurenceKotlikoff,AndreyPolbinandSimonScheidegger 4Carbonpricingandsocialacceptability:UsingEUETSauctionrevenuesforsocialexpendituresinachangingworld41 SimoneBorghesiandAlbertFerrari 5Phase-outpolicies49 EstelleCantillon 6Sobriety57 KathelineSchubert 7Managingenergydemandwithinformation-basedpoliciesintimesofcrises69 SébastienHoude PartII:Boostinggreenenergysupplybydecarbonisingelectricity 8Promotingsolarenergy:Accountingforbarrierstothetransition79 AudePommeret 9DecarbonisationandregulationoftheelectricitysectorinEurope89 DominiqueBureau 10Challengesforretailelectricity97 ClaudeCrampes 11Assessingthescientificimpactofsustainabledevelopment,climatechange andbiodiversityprojectsintheHorizon2020programme107 PhoebeKoundouri,HarisPapageorgiouandConradLandis PartIII:Themacroeconomicsofthegreentransition 12Isgreengrowthachievable?121 Pierre-LouisGirardandAgnèsBénassy-Quéré 13Equitableclimatemitigationstrategiesinaworldofhighenergyprices127 IanParry 14Thegreenenergytransition,part1:Backgroundandhurdles135 FrancescoPaoloMongelli 15Thegreenenergytransition,part2:Drivers,effectsofcarbonpricing,newexternalitiesandpolicychallenges149 FrancescoPaoloMongelli 16Thegreenenergytransition,part3:Climatefinanceopportunities, perspectivesandstrains165 FrancescoPaoloMongelli PartIV:Politicaleconomicsofgreenenergy 17Thegreentransition,energysecurityandenergyindependence185 TatyanaDeryugina 18Unextractablemineralsandmetalsfortheenergytransition191 JérémyLaurent-LucchettiandEvelinaTrutnevyte 19Onthenewgeopoliticsofcriticalmaterialsandthegreentransition199 RabahArezkiandRickvanderPloeg 20Mineralextractionandconflictintheeraofgreentechnologies: Implicationsandconsequences213 MathieuCouttenier 21Cleanenergy,cleanpolitics:Thekeyimportanceofdecentralisation,transparencyandlocalempowermentforthegreentransition221 DominicRohner Foreword Despitewidespreadconcernoverclimatechangeandrecognitionoftheneedforagreenenergytransition,resistanceoftenariseswhenfacedwithspecificpolicymeasures.Whilethisdisconnectmaybeinfluencedbyfactorsincludingthe‘notinmybackyard’attitude,unrealisticexpectationsofasacrifice-freetransitionandfree-riderincentives,thechallengealsoliesineffectivelycommunicatinggreenpolicieswhileconsideringpotentialadversedistributionalconsequences.Failuretodosorunstheriskthatmisconceptionsconcerningalackoffairnesscouldbeexploitedbypopulistpoliticians.TheinvasionofUkrainehasexposedtherisksinherentinfossilfueldependencyandtheintricateconnectionbetweenenergyandconflict,reinforcingimpetustoact. ThiseBookfeaturescontributionsfromleadingeconomistsandpractitionerswhoprovideacomprehensiveoverviewofthechallenges,initiativesandfar-reachingimpactsof‘goinggreen’.Chaptersdiscussstrategiestocurbharmfulenergyconsumptionandproductionusinggreentaxes,carbonpricing,andreducingfossilfuelsubsidies.Theauthorsstressthatsuchpoliciesmust