Jing Wu (p)

Timothy Wojan

China has taken great strides over the last 15 years to constrain the rise of CO2 emissions from its energy sector. Energy intensity has declined, the installed capacity for wind and solar energy has soared, and the share of fossil fuels is falling. This success has been achieved through deploying administrative policy instruments backed by generous state finance. As this approach is yielding diminishing returns, the government has launched a number of initiatives to increase the role of market forces across the energy sector: in the oil, gas and electricity industries, and through the development of carbon markets. However, the wider political and economic context is undermining these moves. Central and local government agencies regularly intervene to disrupt the operation of these markets. At the same time, most resources and assets remain in the hands of enterprises owned by the state at central or local levels, giving them too the ability to undermine these markets. In other words, existing energy policies remain well short of achieving a rapid transformation to a low carbon system of energy supply. One of the principal reasons has been political resistance from incumbent fossil fuel industries. While numerous studies have demonstrated the influence of business actors across multiple policy domains, less work has examined the behaviour of business actors in individual energy-centric industries, namely the oil, gas, coal, utility and renewable industries. Accordingly, this paper examines the role of business actors in China’s energy sector and asks what should policymakers do? Drawing on new empirical data, primarily semi-structured interviewers with business actors across the China’s energy sector, this paper aims to identify what specific strategies policymakers can employ to help overcome the resistance from incumbent fossil fuel industries.

Alexandre Porsse (p)

Jing Wu

Energy prices have experienced a significant boost since the COVID-19 pandemic and the economic disturbances caused by the Russian-Ukraine war. In Brazil, oil prices rose by 75.9% in 2021-22 compared to the pre-pandemic period, affecting the entire economic system due to the price transmission mechanisms on energy goods. To mitigate the impact on economic growth, the Federal government claimed the need to reduce taxation on energy goods. However, this created a federative conflict because most of the tax burden on energy goods is a competence of the state governments. The Federal Senate moderated this debate and approved the Complementary Law 194/2022, establishing the reduction of the state tax rate on energy goods. This study uses a multi-regional recursive dynamic CGE model to evaluate the economic impact of a shock increasing oil prices by 75.9% in 2021-22, and to assess the extent to which the reduction of state taxes on energy goods could contribute to economic recovery. We carried out two simulations, where the first allows the oil price shock alone, and the second adds the tax policy. Our findings show the isolated oil price shock causes a cumulative deviation of national GDP of -1.70% in 2022, with a slight recovery until 2027 (-1.26%). The transmission effects on the regions are very heterogenous, mainly affecting the growth of the states more specialized in oil production: Rio de Janeiro (-5.40%), Espirito Santo (-4.22%), Sergipe (-3.14%), and Rio Grande do Norte (-3.07%). Regarding the tax policy response, our simulations reveal a marginal effect on the economic recovery. With the cut of state tax rates on energy goods, the cumulative deviation of national GDP is -1.53% in 2022 and -1.06% in 2027.

Timothy Wojan (p)

Alexandre Porsse

Despite the urgent imperative to decarbonize the economy as quickly as possible to avoid the catastrophic consequences of a more than 2 degree Celsius increase in global temperatures, national statistical offices have been slow to produce data on decarbonization. This presentation will outline the decarbonization and environmental innovation questions included in the 2023 Annual Business Survey (ABS) that will be in the field June through December. The real value added of these questions is the ability to link these data to highly detailed information on energy use and expenditures in the Manufacturing Energy Consumption Survey and the Economic Census, collected in the same calendar year. Different theoretical constructs for examining the spatial dimensions of decarbonization such as the implications of the different energy densities of fossil and renewable sources will be discussed along with a summary of the types of research questions that can be investigated with these data. What differentiates this Fifth Industrial Revolution from all those that came before is that we only have one chance to get this one right. The objective of the presentation is to stimulate blue sky thinking on urgent data needs, using the decarbonization module in the 2023 ABS as a point of departure.