Altana Davydova participated in the conference of Central Bank of Brazil
Expert of Laboratory on Climate Change Economics Altana Davydova participated in the conference of Central Bank of Brazil. She presented the report "Comparison of carbon regulation scenarios for the BRICS and EAEU countries using the GTAP-E computable general equilibrium model"
Altana Davydova presented the results of a study on comparing the economic effects of national carbon regulation and the international quota trading system in the BRICS and EAEU countries in the medium term.
As countries gradually introduce national carbon regulations and discuss the risks of "carbon leakage"*, it is important to develop a carbon policy that is mutually recognized between close trading partners.
The group of countries under consideration also includes Uzbekistan, which has observer status at the EAEU, and Turkmenistan, a trade and economic partner of the EAEU countries. Emission reduction targets are formulated on the basis of the countries' interim goals, according to documents and analytical reports under the Paris Agreement.
The simulation results show that in terms of real GDP, participation in the quota trading system is more preferable for countries such as Belarus, Russia, Kyrgyzstan, Kazakhstan, Armenia, Brazil and India. And for China, South Africa, Uzbekistan and Turkmenistan, participation in the ETS leads to a greater decrease in GDP than with independent carbon taxation. However, the model used does not include foreign direct investment in renewable energy sources. While the current trends of China and other countries' international projects in solar and wind energy, Russia and a number of countries in nuclear energy may mitigate the decline in GDP predicted by the model.
The study also identified industries whose output is growing after the introduction of carbon regulation. For a number of BRICS and EAEU countries, growth is observed in the chemical industry, non-ferrous and ferrous metallurgy. These industries are energy-intensive, but countries are reducing emissions through the production of energy sectors. For the long-term perspective, cooperation between the BRICS and the EAEU countries in the development of low-carbon technologies in these industries is necessary.
* "carbon leakage" - the transfer of carbon-intensive industries from countries with strict climate policies to states with more relaxed regulation of greenhouse gas emissions or an increase in imports of carbon-intensive products from them. To prevent "carbon leakage", countries are discussing the introduction of protectionist measures, such as EU Carbon Border Regulation.