Conference Agenda

Food production and consumption account for more than a third of global greenhouse gas emissions. Policies such as carbon taxation and carbon labelling can help consumers to internalize their pollution externality by substituting carbon intensive products with less polluting ones. In order to investigate the welfare impacts of these policies, we use the data from a survey introducing in a randomized controlled experiment these policies in a simulated online supermarket, on a representative sample of the UK population. We employ the Exact Affine Stone Index model to estimate demand elasticities, while accounting for censoring in the consumption choices. We then calculate the welfare effects for a range of policy scenarios. We find that the application of carbon labels leads to a 6.15% decrease in the carbon content of the food basket of the median household. A £60 per CO2e ton tax on the most carbon intensive products would yield a 10.22% reduction in the carbon footprint, which is equivalent to a loss in welfare of £193.01 per household per year with respect to the baseline scenario. However, combining carbon taxation and carbon labelling would allow to reach the same decrease in CO2e content with a tax rate of £27.33 per CO2e ton, corresponding to a £77.21 welfare loss. These results imply that carbon taxation and carbon labelling can be complementary policies to abate GHG emissions while limiting the negative impact on welfare.

This study aims at identifying the strengths and weaknesses of GHG Quota Trading as an alternative to allowance trading and carbon taxes. Information was gathered from the websites and publications of the responsible authorities and relevant legal texts. Moreover, literature on comparable environmental policy instruments was analyzed based on predefined criteria. Assumptions were made to create models in order to assess cost effectiveness, Pareto-efficiency, and dynamic incentive effects. The results show that the GHG Quota Trading only partially meets the basic criteria of environmental effectiveness, cost effectiveness, and Pareto-efficiency, and has further weaknesses regarding legitimacy and practical feasibility. In order to reduce GHG emissions from fossil fuels as efficiently as possible, a key policy priority should therefore be to adapt the GHG Quota Trading and to combine it systematically with other environmental economics policies such as a carbon tax.

Reaching net zero emissions requires deep transformations in the production system, necessarily affecting productivity. However, very little is known about the aggregate productivity effects of technological and structural changes implied by net-zero scenarios. We build a parsimonious and transparent framework to assess these impacts. Our approach makes an assumption that allows us to derive independent industry-level productivity changes from price and output growth available in net zero scenario, and aggregate these industry-level productivity shocks using a general input-output framework. We apply this method to the UK net zero transition scenarios. Preliminary results indicate a limited net impact of the net zero transition on national productivity growth, between +5.7bp per year under optimistic assumptions on technology costs and -0.7bp per year in a more pessimistic scenario. How an industry reaches net zero has a significant impact on productivity growth estimates. Especially, the switch of the energy sector towards wind and solar electricity generation is key in the transition and brings most of the productivity gains.