GONAND Frederic

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The development of decentralized sources of power out of renewable sources of energies has been triggering far-reaching consequences for Distribution System Operators over the past decade in Europe. Our paper benchmarks across 23 European countries the impact of the development of renewables on the physical characteristics of power distribution networks and on their investments. It builds on a large spectrum of databases of quantitative indicators about the dynamics of installed capacity of renewable energy resources and the power generation out of them, electricity independence, quality of electricity distribution, smart grids investments, Network System Operators capital expenditures, length of the distribution networks, overall costs of power networks paid by private agents, and electricity losses, all in relation with the development of decentralized generation. The heterogeneity of these indicators across Europe appears to be wide notably because of physical constraints, historic legacies, or policy and regulatory choices. A cluster analysis allows for deriving six groups of countries that display statistically homogenous characteristics. Our results may provide decision makers and regulators with a tool helping them to concentrate on the main issues specific to their countries as compared to the European median, and to look for possible solutions in the experience of other clusters which are shown to perform better for some indicators.

Social planners in most western countries will be facing two long-lasting challenges in the next years: energy transition and fiscal consolidation. One problem is that governments might consider that implementing an energy transition could get in the way of achieving a fiscal consolidation. If so, interrupting the energy transition in a time of fiscal consolidation would involve significant aggregate impacts on activity and intergenerational redistributive effects. This article tries to assess them empirically. It relies on an overlapping-generations framework in a general equilibrium setting, with a detailed energy module. The model is parameterized on data provided by OECD/IEA for France. Different results emerge. Renouncing to the energy transition would slightly foster the level of GDP during the next 10 to 15 years - depending on the dynamics of the prices of fossil fuels on world markets - but weigh on it more significantly afterwards (up to -1% in 2050). If the prices of fossil fuels keep increasing in the future, implementing an energy transition could have broadly the same favourable effects on the GDP level in the long run as those of a fiscal consolidation diminishing significantly public spending instead of raising taxes. In the long-run, the GDP would be maximized by implementing an energy transition and simultaneously lessening the public deficit by lowering some public expenditure, a policy that would entail an overall gain of around 1,6% of GDP in 2050. Stopping the energy transition would also bring about intergenerational issues. It would be detrimental to the intertemporal wellbeing of almost all cohorts alive in 2010. A fiscal policy with lower public expenditures and frozen tax rates may be still more favourable to young and future generations than implementing an energy transition. However, renouncing to an energy transition would annihilate most of these proyouth effects.

On January 22, the Commission published its proposals for the future "Energy-Climate Package 2030" which will be submitted to the European Council on March 20 and 21. They mention the creation of a "stability reserve" for the European CO2 market.

A rising share of renewables in the energy mix push es up the average price of energy - and so does a carbon tax. However the former bolsters the accumulation of capital whereas the latter, if fully recycled, does not. Thus, in general equilibrium, the effects on growth and intertemporal welfare of these two environmental po licies differ. The present article assesses and compares these effects. It relies on a computable general equilibrium model with overlapping generations, an energy module and a pub lic finance module. The main result is that an increasing share of renewables in the energy mix and a fully recycled carbon tax have opposite (though limited) impacts on activity and i ndividuals’ intertemporal welfare in the long run. The recycling of a carbon tax fosters consumption and labour supply, and thus growth and welfare, whereas an increasing share of renewables does not. Results also suggest that a higher share of renewables and a recycled carbon tax trigger intergenerational redistributive effects, with the former being relat ively detrimental for young generations and the latter being pro-youth. The policy implication is that a social planner seeking to modify the structure of the energy mix while achieving some ne utrality as concerns the GDP and triggering some proyouth intergenerational equity, could usefully contemplate the joint implementation of higher quantitative targets for the future development of renewables and a carbon tax fully recycled through lower proportional taxes.

Ageing increases the income of a carbon tax ceteris paribus since energy consumption rises with age, as macro and micro data show. Ageing also increases some public expenditures, notably those of pay-as-you-go (PAYG) pension systems. Accordingly, there may be a case for recycling a carbon tax in an ageing context so as to finance ageing-related public expenditures. This article studies the interacting effects on intergenerational equity and growth of such a recycling. It relies on a general equilibrium model with overlapping generations parameterised with empirical data. Several results emerge. Implementing a carbon tax fully recycled through higher lump-sum pensions weighs relatively more on the intertemporal welfare of young and future generations. A carbon tax fully recycled through lower social contributions financing the PAYG bolsters the wellbeing of young and future generations but weighs on the welfare of baby-boomers and older cohorts. The redistributive effects of recycling a carbon tax can depend significantly on the way used to balance the PAYG regime.

Ageing increases the income of a carbon tax ceteris paribus since energy consumption rises with age, as macro and micro data show. Ageing also increases some public expenditures, notably those of pay-as-you-go (PAYG) pension systems. Accordingly, there may be a case for recycling a carbon tax in an ageing context so as to finance ageing-related public expenditures. This article studies the interacting effects on intergenerational equity and growth of such a recycling. It relies on a general equilibrium model with overlapping generations parameterised with empirical data. Several results emerge. Implementing a carbon tax fully recycled through higher lump-sum pensions weighs relatively more on the intertemporal welfare of young and future generations. A carbon tax fully recycled through lower social contributions financing the PAYG bolsters the wellbeing of young and future generations but weighs on the welfare of baby-boomers and older cohorts. The redistributive effects of recycling a carbon tax can depend significantly on the way used to balance the PAYG regime.

The demographic structure of a country influences economic activity. The “second dividend” modifies growth. Accordingly, in general equilibrium, the second dividend and the demographic structure are interrelated. This paper aims at assessing empirically the “second dividend” in a dynamic, empirical and intertemporal setting that allows for measuring its impact on growth, its intergenerational redistributive effects, and its interaction with the demographic structure. The paper uses a general equilibrium model with overlapping generations, an energy module and a public finance module that distinguishes between non-ageing-related public spending and a pension regime. Policy scenarios compare the consequences of different scenarios of recycling a carbon tax through lower proportional income taxes rather than higher public lump-sum expenditures. They are computed for two countries with different demographics (France and Germany). Results suggest that the magnitude of the “second dividend” is significantly related with the demographic structure. The more concentrated the demographic structure on cohorts with higher income and saving rate, the stronger the effect on capital supply of the second dividend. The second dividend weighs on the welfare of relatively aged working cohorts. It fosters the wellbeing of young working cohorts and of future generations. The more concentrated the demographic structure on aged working cohorts, the higher the intergenerational redistributive effects of the second dividend.

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This thesis empirically analyzes the macroeconomic effects of different PAYG pension reforms and their redistributive consequences. In a general equilibrium model with overlapping generations, the criterion of the effect on growth makes it possible to rule out the choice of an increase in social contributions as the exclusive lever of the reform. However, it does not allow us to distinguish, particularly in France, between scenarios as different as an increase in the effective retirement age linked to life expectancy or a decrease in the replacement rate with an unchanged retirement age, each of which would make it possible to support the future average annual growth rate of GDP per capita by about 0.2% compared to the scenario of an increase in compulsory contributions. Taking into account the redistributive consequences becomes decisive for the choice of reform. A freeze in the retirement age fuels an intergenerational conflict between working people, whereas an increase in the retirement age distributes the welfare cost of the reform more evenly among working people. A utilitarian planner with a moderate aversion to intergenerational inequality thus favors the effective retirement age as the main lever of a reform. Reforms with an increase in the retirement age also moderate the redistribution effects according to income level compared to reforms with an unchanged retirement age. Finally, taking into account the effects of reforms on the welfare of low-income earners (incomplete careers, eligibility for the minimum old-age pension) may influence the choice of adjustment parameter (social security contribution rate or replacement rate) accompanying an increase in the retirement age. Overall, this thesis suggests that France should increase the retirement age by a little more than one year per decade, with a contained decline in the average replacement rate of 0.5 percentage point per year over the next twenty years.