It is increasingly recognized that banks might not be pricing adequately climate risks in the value of their loans contracts. This represents a barrier to scale up the green investments needed to align the economy to sustainability and to preserve financial stability. To overcome this barrier, climate-aligned policies, such as a revision of the microprudential banking framework (for example a Green Supporting Factor (GSF )), and the introduction of stable green fiscal policies (for example a Carbon Tax (CT )), have been advocated. However, understanding the conditions under which a GSF or a CT could represent an opportunity for scaling up green investments, while preventing trade-offs on risk for financial stability, is still insufficient. We contribute to fill this knowledge gap threefold. First, we analyse the risk transmission channels from climate-aligned policies, a GSF and a CT, to the credit market and the real economy via loans contracts. Second, we assess the reinforcing feedbacks leading to cascading macro-financial shocks. Third, we consider how banks could react to the policies, i.e., their climate sentiments. In this regard, we embed for the first- time banks climate sentiments, modelled as a non-linear adaptive forecasting function into a Stock-Flow Consistent model that represents agents and sectors of the real economy and the credit market as a network of interconnected balance sheets. Our results suggest that the GSF is not sufficient to effectively scale up green investments via a change in lending conditions to green firms. In contrast, the CT could shift the bank's loans and the green/brown firms' investments towards the green sector. Nevertheless, it could imply short-term negative transition effects on GDP growth and financial stability, according to how the policy is implemented. Finally, our results show that bank's anticipation of a climate-aligned policy, through stronger climate sentiments, could smooth the risk for financial stability and foster green investments. Thus, our results contribute to understand the conditions for the onset and the mitigation of climate-related financial risks and opportunities. / Series: Ecological Economic Papers

以經濟計量迴歸模式討論二氧化碳減量與經濟之間關係時，若就單一影響變數加以探討，容易忽略了其他經濟變數的影響，可能造成所檢定或估計之長期關係有所偏誤。在解釋現實或政策分析上，這種偏誤的估計往往導致混淆與誤導。本文的目的即是根據經濟理論，使用 Johansen 方法建立向量自我迴歸模型，再利用最大概似函數檢定 CO2 排放、所得、能源及其他要素價格變數之間的共整合關係，並得出具有經濟意義的彈性係數，最後並利用此長期關係模擬碳稅之效果。主要結論如下： (1)所得為 CO2 排放成長最主要之因素，且 CO2 排放成長率將大於 GDP 的成長率。 (2)能源價格係數值偏低，顯示能源價格變動對 CO2 排放的影響不大。 (3)模型限制愈嚴格，因忽略某些長期訊息，故檢定出之長期彈性愈不敏感。 (4)基本模型的假設限制最少，較具說服力，但檢定結果較不明確；三變數模型其結果較為明確易於作判斷，同時所犧牲之長期資訊將不至於太大。雙變數模型假設限制最大，具有最大之檢定偏誤，故應用在解釋上將有所限制。 (5)二氧化碳排放將隨經濟成長之下降而隨之減緩，但因預估我國經濟成長仍在 5%以上， CO2排放成長減緩之幅度不大，因此政府必須採用政策工具來干預。 (6)由課征碳稅之模擬結果發現：欲明顯發揮碳稅之效果，其稅率將非常高。但高稅率在執行上將產生困難。 因此本文建議：除了碳稅有其效率性仍應在可能範圍內加以課徵之外，應同時採取其他減量工具配合，就短期而言，直接管制、低利貸款、加速折舊以及獎勵廠商研究減少 CO2 排放之技術是可行之做法；長期而言，制定出一套規劃完整之排放權交易制度，可說是政府未來努力之目標。

Air pollution—both indoor and outdoor—results in more deaths and diseases in India than in any other country in the world. The first chapter in this dissertation explores why despite profoundly negative health consequences of indoor air pollution, most rural Indian households cook using traditional biomass fuel. Among many factors that contribute to households’ continued use of solid fuels, we focus on one: women’s intra-household status. We exploit Indian son preference: having a girl first child lowers women’s status relative to having a boy first child, and is therefore associated with lower likelihood of using clean fuel. This effect is found throughout the wealth distribution, and is not concentrated among households in states with a high child sex ratio or households where women have some education. The second chapter focuses on outdoor air pollution in India. We use a general equilibrium model of Indian economy to quantify the spillovers from a carbon tax on fossil fuels to local air quality and the health outcomes in urban India. We estimate that a $10/ton of Carbon tax on all fossil fuels will reduce CO2 emission by 10.7% from business-as-usual and save nearly 0.3 million urban lives from pollution related deaths while adding 0.2 percent to the GDP over the three decades from 2003 to 2030. We get this double dividend from carbon tax if the tax revenue is used to reduce existing distortionary taxes. Carbon tax is more progressive if the revenue is repatriated to households, but the GDP is slightly smaller than the base case under this regime. In the third chapter, we present the first VSL estimates from India using hedonic wage method with worker and job characteristics data from Employment and Unemployment Survey of India (EUS)—a large nationally representative survey that has not been used in this literature before. We estimate VSL of an average low-skilled urban Indian worker to be about $85,000 in 2004-05 (about 65 times the annual wage) at 2010 constant prices. Our estimates of VSL and VSL-to-income ratio are much lower than all previous estimates from India. Comparisons with estimates from other developing countries like China and Taiwan, however, suggest that our estimates are more reasonable. Our VSL estimate, if reliable, sets a lower threshold for investment in environment and public safety projects that can be justified using cost-benefit criteria.

People respond to incentives—people make decisions by comparing the costs and benefits of a particular action. When either the costs or benefits change, behavior also changes. My dissertation focuses on estimating the impact of two different behaviour-altering taxes on household consumption. In the first section, I conduct an empirical examination of a hypothetical "fat tax" on household food consumption in Canada. The simulation results suggest that when fat tax revenues are recycled as lump-sum transfers to households, this policy would be the most efficient and progressive scenario from both economic and health perspectives. In the second section, I examine the impact of British Columbia's (BC) recently implemented carbon tax on household energy use from an aggregate perspective. I find no significant impact of the BC carbon tax on residential natural gas consumption. The third section is a further investigation of the BC carbon tax on household natural gas consumption varied by their environmental ideology. The results suggest that the impact of the carbon tax is more effective for non-environmentally conscious households than for other households.

This dissertation addresses the crucial problem of how environmental policy uncertainty influences investments in energy technological change. The rising level of carbon emissions due to increasing global energy consumption calls for policy shift. In order to stem the negative consequences on the climate, policymakers are concerned with carving an optimal regulation that will encourage technology investments. However, decision makers are facing uncertainties surrounding future environmental policy. The first part considers the treatment of technological change in theoretical models. This part has two purposes: (1) to show-through illustrative examples-that technological change can lead to quite different, and surprising, impacts on the marginal costs of pollution abatement. We demonstrate an intriguing and uncommon result that technological change can increase the marginal costs of pollution abatement over some range of abatement; (2) to show the impact, on policy, of this uncommon observation. We find that under the assumption of technical change that can increase the marginal cost of pollution abatement over some range, the ranking of policy instruments is affected. The second part builds on the first by considering the impact of uncertainty in the carbon tax on investments in a portfolio of technologies. We determine the response of energy R&D investments as the carbon tax increases both in terms of overall and technology-specific investments. We determine the impact of risk in the carbon tax on the portfolio. We find that the response of the optimal investment in a portfolio of technologies to an increasing carbon tax depends on the relative costs of the programs and the elasticity of substitution between fossil and non-fossil energy inputs. In the third part, we zoom-in on the portfolio model above to consider how uncertainty in the magnitude and timing of a carbon tax influences investments. Under a two-stage continuous-time optimal control model, we consider the impact of these uncertainties on R&D spending that aims to lower the cost of non-fossil energy technology. We find that our results tally with the classical results because it discourages near-term investment. However, timing uncertainty increases near-term investment.

Chapter 1. This chapter aims to find the effects of financial point of sales incentives on the sales of electric vehicles across the Canadian provinces from September 2012 to December 2016. The findings of my study indicate that purchase incentives cause the sales of new electric vehicles to increase by 8 percent on average due to a $1000 increase in incentives. I find that 47% of electric vehicle sales across the rebating provinces (Ontario, Quebec, and British Columbia) are attributed to the purchase incentives. Results of my counter-factual simulations imply that the cost of eliminating one tonne of carbon emissions across the provinces that offer incentives over the years of my study is, on average, $216/tonne CO2. Chapter 2. In light of the rapid increase in Canadian gasoline prices from 2000 to 2010, this chapter focuses on the relationship between gasoline price and demand for vehicle fuel efficiency across the Canadian forward sortation areas (FSA) over this period. I find that consumers respond to variations in gasoline price when deciding the fuel efficiency of their new vehicle; increases in gasoline price result in shifts in demand for more fuel-efficient vehicles and therefore improve the average fuel efficiency of the new vehicle fleet. I find that the elasticity of fuel economy with respect to gasoline price for new vehicles sold across the Canadian forward sortation areas (FSA) from 2000 to 2010 is -0.06 to -0.16. Results of further analyses imply that consumer are more responsive to rising and constant gasoline prices than falling prices and that urban residents are slightly more responsive to variations in gasoline price compared to residents of suburb regions. Chapter 3. This chapter investigates the effect of the carbon tax policy implemented by the Canadian Province of British Columbia on households’ new vehicle purchase decisions. I dis-aggregate the effects of gasoline price into two effects: the carbon tax and carbon tax-exclusive gasoline price. These effects are both measured along the extensive margin of replacing a fuel inefficient vehicle with a fuel-efficient vehicle. The results indicate that there is a significant negative relationship between both effects and fuel efficiency substitutions. However, vehicle fuel economy is more sensitive to changes in the carbon tax than to equivalent changes in the carbon tax-exclusive gasoline price. I find that the elasticity of fleet fuel economy with respect to the carbon tax ranges from -0.22 to -0.26 whereas this elasticity changes between -0.1 and -0.15 with respect to gasoline price (net of the carbon tax). I obtain consistent results when estimating the effect of both factors on fleet fuel economy conditional on fleet composition, indicating that almost all vehicle segments respond more strongly to changes in the carbon tax component of gasoline price than other components. Results also imply that, among all segments, the fuel consumption of compact sport utility vehicles (SUVs), minivans, and luxury high-end cars respond the most to the carbon tax.

Smart Prosperity (SP) brings together multi-sectoral business leaders, policy experts, unions and progressive NGO change makers to align Canada’s civil society messaging on climate change action and policy. SP has recently found national relevance thanks to considerable policy uptake by Justin Trudeau’s ruling federal Liberal party. Rooted in a neoclassical economic model of demand-management, SP positions themselves as the architects of an energy transition regime of consumer price signals. This study examines 118 of SP’s academic and policy reports from 2008 to 2018 using an institutional ethnographic approach to textual analysis to consider the ideological and ontological consequences of SP’s policy program for the tender geographies of communities in Canada. SP is found to contrive a terrain of energy possibilities that rests on administrative abstraction, economism and market fetishism, and which places the economic administrator at the heart of Canada’s social and natural relations. / Graduate

Thesis (MBA.) --University of Limpopo, 2019. / The study is carried out in order to evaluate the readiness of new car dealerships in Polokwane for the possible levying of carbon taxes. The study is set out to determine the level of understanding and knowledge of carbon taxes by the new car dealerships. With the continuous changing climate, the weather patterns have worsened and the resultant impacts seen through storms, hurricanes, droughts and floods, to name a few, around the globe. This has been as a result of the carbon emissions that has damaged the ozone layer. The ideology of the carbon instruments is that the emitters of carbon will divert to more environmentally friendly methods of running their operations. South Africa is one of the countries that has adopted to implement carbon taxes and the implementation began in 2010 within the motor vehicle industry. However, the motor vehicle industry does not seem to have prepared for the possible implementation of carbon taxes. With Polokwane being a developing city, the researcher aims to determine whether new car dealerships in the city of Polokwane were prepared for the implementation of the carbon taxes. The study was mainly qualitative and borrowed from quantitative methodology for data analysis. The total population amounted to 20 new car dealerships and a sample of 10 was selected for the purpose of the research. The evaluation of readiness was carried out by sampling of ten new car dealerships within Polokwane where a questionnaire was prepared and the participants requested to complete the questionnaire truthfully. The literature review considered prior research in relation to carbon emissions and carbon instruments. Some of the findings include identifying that there is still a gap in terms of knowledge and understanding of how carbon instruments work. However; if carbon instruments are correctly applied and implemented, provides for a good stimulation of economic growth. The laws and regulations around carbon tax still need to be refined to ensure that the desired outcomes are obtained.

The radical rise of global temperatures has put high pressure on the environment, leading to societal pressure towards politicians to reverse the trend. In light of this environmental crisis, economists all over the world agree that carbon taxes are the most cost-effective instrument for reducing carbon emissions. This study uses difference-in-differences analysis to examine the treatment effect of a carbon tax implementation in Denmark, Finland, Norway, and Sweden. Panel data from 24 OECD countries, between 1978 and 2004, is used throughout this study. This study has not found support that different levels of democracy and GDP per capita affect tax efficiency. Moreover, higher levels of urbanisation are seen to undermine the efficiency of a carbon tax, however, the result may be affected by confounding bias. Lastly, tax rate and tax coverage are both factors that seem to affect carbon tax efficiency.

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