M2 Choice – Environmental and Natural Resources Economics (ERNA)

Current Student – Charlotte Chemarin

Which aspects of your chosen program were the most challenging? 

I think one of the most challenging aspects is that we have a lot of oral presentations to do – at least one per course. It is something I am not comfortable with. Nevertheless, I know it is important to develop oral skills, so it is useful. We also read a lot of academic papers and have many group projects – but still less work than in M1, no worries.

Which was your favourite course(s) and why? 

I prefer courses that are more applied and that teach us practical skills. I also like Mr Amigues’s classes where we can challenge our beliefs and see things differently, regarding, for example, economic growth and the environment, management of biodiversity, pollution, etc.

The truth is that I am really interested in environmental topics and it is motivating to finally focus on it in every course. Hence, I enjoy this year more than the previous ones.

What do you plan to do next?

It is always tricky to answer this kind of question. To be honest, I do not know yet – and hopefully I am not the only one. I want to work in environment-related topics for sure, perhaps more precisely on agriculture and resilience. This is why I am doing my M2 internship at the INRAE. I hope it will help me figure out what I want to do.

M2E_E_Current StudentCurrent Student – Jérémy Ferrante (Economics and Ecology Path)

Which aspects of your chosen program were the most challenging?

Considering the double approach of our master program, it is quite normal for students from an ecology background to struggle with some principles of economics, and vice-versa. I had already completed a master’s degree in socio-environmental management prior to my arrival here at TSE, and this previous formation included very little mathematics, let alone economics! So, quite naturally, the most requiring parts of this whole Ecology and Economics program were to be found, in my opinion, in some mathematical aspects of economic theories. Though it has been manageable so far.

 Which was your favourite course(s)and why?

I would say that the classes we followed in the CNRS research center in Moulis (Ariège) were both the most exciting and most original classes I had this year. They were about many topics, such as environmental modelling, economic valuation, or even philosophy of sciences. Moreover, some of them were conducted following the problem-based learning approach, which favors autonomy and “cross-learning” between students.  However, for me, the most enriching courses were probably the more “conventional” ones in pure economics, as I was almost ignorant of everything in this field. For instance, Non-Market Valuation with Mr. Henrik Andersson, or, in the second semester, Ecosystem Management and Policies with Mr. François Salanié.

What do you plan to do next?

Here comes the big question! Well, my usual answer is that I have always proceeded one step at a time. And I plan to do just that in the upcoming years. For now, I found an internship at EDF, on the economic opportunities related to the sediment sludges, a by-product of hydropower generation. As for what’s coming next, who knows? One step at a time.

 

M2ERNA_AlumniAlumni – Valérie Furio, Climate Policy Initiative

What are you up to now?

I am currently in London working for Climate Policy Initiative (CPI) as an Analyst in the Climate Finance program, where I was hired after a summer internship that I completed for my M2 ERNA. The CPI is a non-profit international research organisation, with the climate finance program focused on advising policymakers and financial actors on how to achieve a Paris Agreement-aligned economic growth and development through finance. This ultimate goal is approached from several angles: tracking of climate finance flows, advising governments and development finance institutions on their climate finance portfolio, and the development of innovative financial instruments.

Despite having joined the organisation less than a year ago, I have been involved in many different projects. For example, I have worked on tracking finance flows (essentially collecting and consolidating data, then providing an analysis of it) for energy access – looking at technologies enabling access to electrification, as well as clean cooking technologies and fuels, which is a topic with interesting development implications. Another project I worked on was to help an institution develop an air pollution bond, which is an innovative financial instrument issued by a municipality, with proceeds going to financing air pollution reduction projects in the city. These are just examples of projects, but the work is varied and fascinating and can go from looking into blockchain insurance for smallholder farmers to the role of subnational governments in climate finance, or from the financial barriers women face in accessing energy to how data can be leveraged to track private finance. We are also encouraged to think of ways to improve methodologies and come up with new research proposals, which is an exciting part of working for CPI as we feel involved in the organisation’s development.

Which skills, acquired from studying at the TSE, have you found useful? 

The ERNA M2 is a great preparation for many different types of work in this space – whether that be with a focus on energy, climate change, development, or public policy evaluation, the master has at least one class focused on these topics that will help explore these interests. The class on green policies is a staple for understanding the wider context, as well as the energy economics and climate policy class. However, my work at CPI is quite wide in scope and I found that all my classes in ERNA provided useful insight. As always, familiarity with econometric methods and program evaluation are useful when doing a quality literature review, and the knowledge of programming languages such as R and Python are useful to our work and increasingly employed, as well as SQL.

Last but definitely not least, writing and communications skills are highly valued in organisations like  CPI, and thus participating in the TSEconomist was an excellent way of honing those skills in a school like TSE – I would highly recommend it!

Taxe carbone et redistribution

Taxe carbone et redistribution

Alors que Greta Thumberg s’indigne au sommet de l’ONU pour le climat, les émissions de gaz à effet de serre ne cessent de s’élever. Pour respecter la barre des deux degrés choisie par la COP 21, la concentration de CO2 devrait se stabiliser puis diminuer. Or elle augmente, à hauteur de 2 ppm (partie par million) par an. Il y a quelques mois , le gouvernement français annonça une augmentation de la taxe carbone. Une vague de contestation déferla sur le territoire français, les Gilets Jaunes, et une partie de la population s’indigna de l’égocentrisme des manifestants : c’est pourtant l’avenir des générations futures qui est en jeu ! Mais n’aurait-on pas oublié l’aspect inégalitaire de la taxe carbone ?

 

Quésaco « taxe carbone » ?

La taxe carbone ou CCE (Contribution Climat Énergie) existe depuis 2014. Elle s’ajoute à d’autres taxes qui sont la TICPE (Taxe Intérieur sur la Consommation de Produit Énergétique) et la TVA. En 2018, 61,4 % du prix du SP 95 correspond à des taxes. La TICPE représente à elle seule 73 % du montant des taxes, ce qui en fait la quatrième source de revenu de l’état. La CCE, quant à elle, est relative aux quantités de CO2 émises par la source d’énergie utilisée (essence, gazole, fioul…). Elle a vu sa valeur augmenter progressivement, passant de 7 euros à 55 euros par tonne de CO2 émise entre 2014 et 2019. L’ambition de la Loi finance de 2018 était d’atteindre 86,4 euros/t CO2 en 2022.

Contrairement aux autres taxes sur les carburants, la taxe carbone a pour mission d’intérioriser les externalités dues à l’émission de CO2. Cette taxe pigouvienne vise à atteindre un signal prix en accord avec le bien commun. Pour les économistes, calculer le coût de la tonne peut se révéler complexe. En effet, le cycle de vie du CO2 s’étale sur environ 80 ans, ce qui force à anticiper l’ensemble des dommages résultant de cette consommation tout au long de cette période. Payer une taxe carbone c’est donc transférer des fonds du présent vers les générations suivantes.

Une tonne de CO2 émise entraînerait 1200 euros de dommage sur la période. Avec un taux d’actualisation de 4% (voir Christian Gollier, « Le climat après la fin du mois »), cela conduit à payer 50 euros aujourd’hui. Une évaluation en accord avec le rapport de Stern et Stiglitz de 2017, évaluait la tonne de CO2 entre 40 et 80 euros. On estime qu’en moyenne, un être humain émet 5,5 tonnes de CO2 par an. Le gouvernement toucherait alors une recette carbone par tête d’environ 275 euros.

Payer une taxe carbone, c’est donc payer le vrai prix de sa consommation. Alors pourquoi des milliers de personne ont-elles occupé des ronds-points un peu partout en France ?

 

Opposition à la taxe carbone

Après les Bonnets Rouges en 2015, le mouvement populaire d’octobre 2018 fait à nouveau remonter des oppositions à la mise en place de la taxe.

Entre 2016 et 2018, la taxe carbone passe de 22 euros à 44,6 euros/t/CO2. En parallèle, le prix annuel moyen du baril de Brent augmente d’environ 60 %. L’augmentation des prix des carburants qui a mis le feu aux poudres est donc le résultat d’une augmentation de la taxe carbone mais surtout d’une augmentation des cours du pétrole. Les deux cumulés ont bien évidemment rendu le coup encore plus rude, mais surtout pour qui ?

Il est important de se souvenir que la taxe carbone constitue un instrument fiscal régressif : les taxes sur les carburants prennent une part relative dans les revenus des plus démunis supérieure à celle des plus aisés. Il faut aussi prendre en compte le facteur géographique : les zones péri-urbaines voire rurales abritent beaucoup de personnes à bas revenus. L’éloignement des services, et l’absence ou le manque de transport en commun conduisent inévitablement à une très forte dépendance aux carburants. Le manque de produits de substitution piège ces personnes, et les condamne à subir de plein fouet la hausse des prix.

« Jaune de rage » pouvait-on voir écrit sur les pancartes, trois mots qui illustrent le sentiment d’injustice ressenti par les manifestants. Un sentiment compréhensible quand on sait que 45 % des émissions de CO2 en Europe proviennent d’entreprises soumises à une taxe carbone deux fois moins importante que pour le reste des agents (dont les ménages).

Cette différence provient de l’European Trading Scheme (ETS), marché des quotas d’émission mis en place à partir de 2005. À la suite de la mise en place du système, une augmentation de 10% des investissements verts des entreprises a conduit à une diminution de leurs émissions. Arrivent les crises des subprimes et de la dette souveraine qui entraînent une diminution de la production et donc de la demande de quotas d’émissions. Actuellement le prix de la t/CO2 pour ces entreprises s’élève à 25 euros, son plus haut niveau depuis 2008. Un écart de prix aberrant, et ce même sur le plan de l’efficacité économique : le signal prix doit être le même pour tous.

Enfin, se pose le problème de l’utilisation des recettes de la taxe carbone. En 2016 par exemple, sur les 3,8 milliards de recettes, 3 milliards sont affectés au Crédit d’Impôt pour la Compétitivité et l’Emploi (CICE). Le montant des fonds affectés à la transition écologique est donc minoritaire. L’utilisation des recettes est floue pour la population. Dans un contexte de suppression de l’ISF, augmenter la taxe carbone dont une partie des recettes est allouée au budget général constitue au minimum un mauvais message politique. Ces messages sont déterminants, car en fin de compte, c’est à la génération actuelle d’accepter la transition.

Pour autant, l’impact du CO2 sur le réchauffement climatique nous force à agir.  Malgré son aspect inégalitaire et un système global encore imparfait (ETS, manque de coordination internationale, etc), une taxe carbone doit voir le jour. La question est : comment la rendre acceptable ?

 

Solutions et redistribution

« La goutte d’eau qui fait déborder le vase » est l’expression parfois employée pour dénoncer l’importance de la hausse des prix des carburants dans le mouvement des Gilets Jaunes. Comme on a pu le voir, c’est l’augmentation simultanée des cours du pétrole et de la CCE qui en est à l’origine. Dans un contexte de hausse des prix d’un produit peu substituable, est-il avisé de la part du gouvernement d’augmenter la pression fiscale ?

Entre 2000 et 2002, la TIPP flottante variait en sens inverse des cours du pétrole. Une hausse des cours du Brent était donc amortie par une diminution de la taxe. Un tel mécanisme en 2018 aurait évité en théorie une hausse trop brusque. Or, ce n’est pas l’objectif d’une taxe carbone. Cette dernière doit mesurer l’impact des émissions de CO2 dont la valeur ne dépend absolument pas des cours du pétrole. De plus, si chaque pays adoptait cette pratique, les exportateurs de pétrole n’auraient qu’à augmenter leurs prix jusqu’à réduire la part de la taxe à zéro.

Tout réside en réalité dans l’allocation des recettes.

La commission Rocard donne une première piste : utiliser une partie des recettes pour financer des projets bas carbones, et l’autre pour réduire les charges sociales. En moyenne annuelle, la charge sociale s’élève à 28 055 euros / ind. En reprenant les chiffres cités plus haut, on comprend que, même en utilisant toutes les recettes carbone (soit 275 euros / ind), l’effet serait marginal, et le serait de plus en plus puisque tout l’intérêt de la taxe réside dans la diminution des émissions, donc des recettes.

En revanche, Helmuth Cremer et Norbert Ladoux montrent que rendre une partie des recettes de la taxe pigouvienne à ceux pour qui elle est la plus lourde à supporter, permet de donner un aspect redistributif à la politique environnementale. Une idée dans la lignée de la tribune du 17 Janvier 2019 du Wall Street journal, signée par 27 lauréats du prix Nobel d’économie. Ces derniers défendent unanimement une taxe carbone dont l’ensemble des recettes serait redistribué uniformément à la population. Christian Gollier soutient l’idée de Cremer et Ladoux, considérant que la redistribution doit être orientée seulement vers les personnes les plus démunies, mais tout en conservant une part des recettes pour d’autres utilisations.

 

En quelques mots…

Le processus de lutte contre les émissions de CO2 sera décisif pour la préservation d’un milieu viable pour l’Homme, ainsi que dans la sauvegarde de nos équilibres démocratiques. Les mouvements populaires nous montrent que la transition écologique doit être équitable, au risque d’entraîner la création de faux adversaires. Dans ce sens, lutter contre les émissions de CO2 en conservant nos valeurs démocratiques nécessitera des processus de redistribution aussi réfléchis, voire plus, que la taxe carbone.

 

Par Maël Jammes

 

 

The growth of world air traffic and its impact on climate change

23_NoEco Picture Plane

Driven by economic growth in East Asia, world air traffic has increased at a very rapid pace in the last decades. As more and more people join the middle class in emerging countries, the market for domestic flights is expanding rapidly, which, in turn, boosts demand for commercial flights in different parts of the world. This has contributed a lot to the continuous growth of air traffic, which has quadrupled in 30 years. This is good news for cities like Toulouse, as aircraft production should continue to increase steadily. However, because the environmental impact of the transportation sector is quite high, growth in this sector raises the question of how this trend will affect climate change. While it may seem like we are moving toward an environmental catastrophe, progress in terms of technology and fuel consumption may lessen the ecological footprint of the aeronautical industry.

Air Traffic Around the World

According to the International Civil Aviation Organization – ICAO, a UN specialised agency responsible for international civil aviation standards, 4.3 billion passengers embarked on regular – commercial – flights in 2018, which represents a 6.4% increase compared to the previous year. In perspective, this rate is about twice the growth rate of the world’s real GDP. Nonetheless, this impressive increase is not new: air traffic growth has been very stable in the past decades, doubling every 15 years, and has been resilient to external shocks – such as recessions or the 9/11 terrorist attacks.

Picture_Sébastien Montpetit

Paul Chiambaretto, a Professor of Marketing and Strategy at Montpellier Business School, argues in The Conversation in 2008 that the rapid expansion of air traffic is a result of both demand-side and supply-side factors. On the demand side, he stresses the tight link between the development level of a country and the consumption level of air transport. The International Air Transport Association’s estimate of income elasticity of the demand for airplane tickets is between 1.5 and 2, meaning that a 1% increase in national income implies people buy 1.5 to 2% more tickets. A prime example of this relationship between economic growth and air transport demand is Asia. Passenger traffic in Asia, expressed in revenue passenger-kilometres (RPK) – i.e. the number of passengers multiplied by the distance travelled, a standard measure of air traffic in the industry – grew by 9.5% in the region, which currently accounts for 34.8% of world traffic. Furthermore, planes are now used more than ever for freight transport, which pushes the demand for commercial flights even further.

On the supply side, the emergence of low-cost companies, especially in Europe, has forced other airline companies to lower their prices. For prices to fall, economic theory suggests that the increase in supply must be greater than the increase in demand, which says a lot about the weight that companies such as Ryanair and Easyjet have on the market.

Airplanes and Global Warming

The growth of air transport seems a priori incompatible with the international community’s objective of limiting global warming. Transoceanic flights require tens of thousands of litres of jet fuel for an ever increasing number of departures. In 2017, the transport sector was responsible for 25% of the European Union’s greenhouse gas emissions. Even if air transport generates a small share of these transport emissions, the level of emissions remains very high.

However, new technologies have been implemented by airplane manufacturers to reduce fuel consumption, and consequently mitigate the environmental footprint of aviation. According to the ICAO, aircraft operations are now 70% more efficient than they were in the 1970s. The organisation claims that reducing aircraft noise and emissions is one of its main priorities. Airline companies and manufacturers are committed to deploying new systems that limit greenhouse gas emissions. They mainly focus on three fields: improving airport infrastructures, adapting aircraft technology and increasing the use of sustainable fuels.

In particular, the CORSIA program, adopted in October 2016 in Montreal, Canada, is one of the first binding international environmental agreements in history. This ambitious program aims at maintaining the level of carbon emissions of international aviation at the 2020 threshold. Under the agreement, for the first six years, 65 countries representing 87% of world air traffic, committed to halting the increase in air transport emissions from 2020 to 2026. From 2027, all 191 member countries – with some exceptions for less-developed countries and isolated countries – will be bound by the constraining agreement. As a result of the agreement, a carbon market will be created to force companies that pollute more to buy credits from less polluting companies in order to compensate for their emissions.

At a time when progress concerning the reduction in carbon emissions is scarce, the progress made by the transport industry proves that there is hope. Not only has this sector succeeded in slowing the increase in greenhouse gas emissions despite a high growth in demand, but it has set also ambitious targets for the following decade. Hopefully, many other international initiatives will follow to curb worldwide greenhouse emissions. That being said, it was nice to see Greta Thunberg in Montreal with about half a million people for the Global Climate Strike on 27 September 2019. Greta, may you inspire all of us to fight climate change together!

by Sébastien Montpetit

 

References:

  1. International Civil Aviation Organization. The World of Air Transport in 2018. 2019. https://www.icao.int/annual-report-2018/Pages/the-world-of-air-transport-in-2018.aspx
  2. Schulz, E. (2018). Global Networks, Global Citizens: Global Market Forecast 2018-2037. Airbus GMF 2018.
  3. Chaimbaretto, Paul. Trafic aérien mondial, une croissance pas prête de s’arrêter. The Conversation. 19-05-08. https://theconversation.com/trafic-aerien-mondial-une-croissance-fulgurante-pas-prete-de-sarreter-116107
  4. International Air Transport Association. (2008). Air Travel Demand. IATA Economics Briefing No 9.
  5. Eurostat. Greenhouse gas emission statistics–emission inventories. 2019. https://ec.europa.eu/eurostat/web/environment/air-emissions
  6. Représentation permanente de la France auprès de l’Organisation de l’Aviation Civile Internationale. L’Assemblée de l’OACI adopte une résolution historique relative à un mécanisme mondial pour la compensation des émissions de CO2 de l’aviation internationale. 2019. https://oaci.delegfrance.org/L-Assemblee-de-l-OACI-adopte-une-resolution-historique-relative-a-un-mecanisme

Internship Report : Valérie Furio, Efficacity

  1. Where did you do your internship and what was your role?

I did my M1 internship at Efficacity, a research institute for energy efficiency in urban systems. The institute is located just east of Paris in the Descartes campus, which has been developed with the clear intention of becoming a hub for research on urbanism and sustainability. This means that you have engineering and architecture schools, and all sorts of research institutes – Efficacity, but also the CSTB, or IFFSTAR – operating from the cluster.

The uniting theme being energy efficiency in cities, the institute seeks to bring together expertise from various fields: my colleagues were mostly engineers but also architects, urban designers, economists, geographers, sociologists, and applied mathematicians. I joined the economics team as an intern in the socioeconomic valuation research pole. My main role was to identify best practice methodologies for ex-ante and ex-post valuation of these energy efficiency measures, and to determine whether it was socially desirable, for instance, for a municipality to adopt a specific policy.

  1. How did your studies at TSE help you during the internship?

In general, the strength one gains from studying at TSE is a solid grounding in economic theory. The M1 courses in public economics and environmental economics both offered me at least an introduction to the principles of cost-benefit analysis, and to its strengths and limitations. The course in environmental economics, in particular, was helpful in getting accustomed to the various methods used to value non-monetary impacts, which was useful when I was asked to quantify, in monetary terms, the health impact resulting from an improvement in trains’ braking system.

In addition to these courses, the Econometrics and Program Evaluation classes were both useful in reading and interpreting all the literature on environmental economics, which was an important first step in any of the analysis we conducted.

  1. How did you get your internship? What would be your advice for students looking for a similar internship?

I found my internship at TSE’s Business Networking Day: I knew I had an interest in environmental and energy economics, and went to chat with EDF to understand why they had come and what they were looking for. One of them worked with Efficacity (as EDF is a partner of the institute), and passed my CV on to them. After some time, I interviewed with him and two other members of Efficacity, and got the internship.

I would advise other students to focus on their studies but to not forget that it is important to get out there: go to the BND, use your network, and talk to those whose career inspires you. More often than not, people are happy to help!

M2 Report – IRSN, Felipe Ramírez

  1. Where did you do your internship and what was your role?

I did a six months internship at the IRSN (Institut de Radioprotection et de Sûreté Nucléaire) – the French nuclear protection institute. It employs around 1800 people, at the moment, in activities related to nuclear safety, regulation, research and risk management, and analysis. I worked in the Health pole, in the Nuclear Crisis Service’s Economics Lab. The internship project focused on improving the probabilistic safety analysis (PSA) code used by the IRSN to include the health risk costs caused by hypothetical nuclear accidents. The PSA code serves to estimate the distribution of nuclear accidents’ costs on different civil nuclear power plants located in France. The code uses data from nuclear reactors and an atmospheric distribution model. The model simulates the transfers of radioactive elements in the environment and computes the level of exposure for different populations. The economics analysis lab takes this exposure data and uses epidemiological models to compute the impacts of radiation on individual health. My work was to use non-market valuation methods and health economics models to come up with a monetary value (in Euros) for all the expected health effects in the exposed population. This is important for the estimation of the damage function of nuclear power production to allocate the optimum level of nuclear safety investment.

  1. How did your studies at TSE help you during the internship?

My experience at TSE helped me in various ways but I will focus on the two most important things.

First, academic knowledge acquired in TSE was essential because my internship focused on topics like environmental valuation, uncertainty, and cost-benefit analysis, which are important subjects in the ERNA program. Also, very basic microeconomics was necessary to understand certain more complicated mechanisms in the models reviewed for my project. That was very surprising because most people think that bachelor level economics models don’t do well in capturing real-life phenomena. However, at IRSN, I had the chance to see that certain behaviours are still better explained with basic micro models in practice.

Second, during the internship, I had to cooperate with people working on very different topics than economics for example meteorologists, nuclear engineers, epidemiologists etc. Moreover, we were encouraged to be proactive when organising meetings and discussing with experts. I feel that my participation in different TSE associations really helped me to develop my leadership skills and perform better during the internship.

  1. How did you get your internship? What would be your advice for students looking for a similar internship?

The internship offer was posted on the TSE alumni website. I did a phone interview and had to pass a background check before they accepted my candidacy.

I would recommend, first, that students use the extra time available in M2 compared to M1 to do research about their interests, know what topics really interest them and try to talk to their teachers and whoever contact they have about the different options in the job market. Most TSE professors have worked outside of the academic world, so they usually have very cool experiences in different sub-fields and organisations. In my opinion, it is also very important to have interesting previous internships, for example in M1. In my case, there were lots of questions about my previous work experiences during the interview, and my past experiences helped greatly. For people who have not done many internships before, it can help to talk about their work in different academic projects, like Applied Econometrics, and make a connection between their projects and what they will be asked to do during the internship they are applying to.