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

Gissela Landa Rivera, Frédéric Reynès (), Ivan Islas Cortes, François-Xavier Bellocq and Fabio Grazi

Energy Policy, 2016, vol. 96, issue C, 314-327

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 would reduce 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: the policy appears beneficial both in terms of GDP and CO2 emissions reduction.

Keywords: Climate policy; Energy-economy modeling; Energy system; Carbon tax; Double dividend (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:96:y:2016:i:c:p:314-327

DOI: 10.1016/j.enpol.2016.06.012

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