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Green fiscal reform for a just energy transition in Latin America

Author

Listed:
  • Jakob, Michael
  • Soria, Rafael
  • Trinidad, Carlos
  • Edenhofer, Ottmar
  • Bak, Céline
  • Bouille, Daniel
  • Buira, Daniel
  • Carlino, Hernan
  • Gutman, Veronica
  • Hübner, Christian
  • Knopf, Brigitte
  • Lucena, André
  • Santos, Luan
  • Scott, Andrew
  • Steckel, Jan Christoph
  • Tanaka, Kanako
  • Vogt-Schilb, Adrien
  • Yamada, Koichi

Abstract

Green fiscal reforms would contribute to climate change mitigation, increase the economic efficiency of national tax systems and provide additional public revenues. Some countries in Latin America have already taken first steps towards green fiscal reforms. This paper provides an overview of the major challenges for the successful implementation of such reforms and discusses how they could be overcome. The authors first discuss the role of country-specific economic and political enabling conditions that need to be in place for successful implementation for green successful reforms. Second, they emphasize the importance of comprehensive reform plans that include all relevant ministries and agencies and are well-aligned with other policy objectives, such as energy security and industrial development. Third, they highlight how appropriate sequencing and gradualism could lower implementation costs and hence increase the political feasibility of green fiscal reforms. Finally, the authors analyze the potential impacts of green fiscal reforms on the distribution of income and discuss transfer schemes that could avoid adverse outcomes for the poorest parts of the population. They use these four dimensions to illustrate why recent reform efforts in selected Latin American countries have been successful or have failed, respectively.

Suggested Citation

  • Jakob, Michael & Soria, Rafael & Trinidad, Carlos & Edenhofer, Ottmar & Bak, Céline & Bouille, Daniel & Buira, Daniel & Carlino, Hernan & Gutman, Veronica & Hübner, Christian & Knopf, Brigitte & Lucen, 2018. "Green fiscal reform for a just energy transition in Latin America," Economics Discussion Papers 2018-86, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:201886
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    References listed on IDEAS

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    1. Jessica Jewell & David Mccollum & Johannes Emmerling & Christoph Bertram & David Gernaat & Volker Krey & Leonidas Paroussos & Loïc Berger & Kostas Fragkiadakis & Ilkka Keppo & Nawfal Saadi & Massimo T, 2018. "Limited emission reductions from fuel subsidy removal except in energy-exporting regions," Post-Print hal-01744617, HAL.
    2. Jun Rentschler & Morgan Bazilian, 2017. "Policy Monitor—Principles for Designing Effective Fossil Fuel Subsidy Reforms," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 138-155.
    3. Steckel, Jan Christoph & Jakob, Michael, 2018. "The role of financing cost and de-risking strategies for clean energy investment," International Economics, Elsevier, vol. 155(C), pages 19-28.
    4. Kanako, Tanaka, 2011. "Review of policies and measures for energy efficiency in industry sector," Energy Policy, Elsevier, vol. 39(10), pages 6532-6550, October.
    5. Gabriel Di Bella & Lawrence Norton & Joseph Ntamatungiro & Sumiko Ogawa & Issouf Samaké & Marika Santoro, 2015. "Energy Subsidies in Latin America and the Caribbean; Stocktaking and Policy Challenges," IMF Working Papers 15/30, International Monetary Fund.
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    Cited by:

    1. Luis Rivera-González & David Bolonio & Luis F. Mazadiego & Sebastián Naranjo-Silva & Kenny Escobar-Segovia, 2020. "Long-Term Forecast of Energy and Fuels Demand Towards a Sustainable Road Transport Sector in Ecuador (2016–2035): A LEAP Model Application," Sustainability, MDPI, Open Access Journal, vol. 12(2), pages 1-26, January.

    More about this item

    Keywords

    green fiscal reform; energy subsidies; Latin America; multi-objective climate policy; sequencing; distribution;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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