Feasibility study for the design of a mixed carbon pricing instrument in Peru (carbon tax, emissions trading system)

The Inter-American Development Bank (IDB), in coordination with the Ministry of Economy and Finance (MEF) and the Ministry of Environment (MINAM) of Peru, invites consulting firms to submit proposals to conduct a feasibility study to evaluate the design of a carbon pricing instrument (carbon tax, regulated emissions trading system or a combined scheme).

The objective is to provide empirical evidence on cost-effectiveness, macroeconomic, fiscal and distributional impacts, and institutional conditions to support decision-making in compliance with the Nationally Determined Contributions (NDCs), deepening the foundations of the E4 Roadmap.

1. Technical scope and central objectives

Benchmarking instruments: Analyze the trade-offs between a carbon tax and an emissions trading system (ETS), determining the level of welfare and economic impact of each option or mixed scheme. Marginal abatement cost curve (MACC): Formulate the abatement curve for the GHG inventory sectors (energy, transport, industry, LULUCF and waste) to estimate the limit price per ton of CO_2 and identify credit-demanding sectors. Characterization of price-demand elasticity: Model scenarios for setting emission caps (Caps) and tax rates to calculate the response of demand to price changes in credits and taxed goods.

2. Key Activities and Economic Modeling

Macroeconomic and fiscal modeling: Quantify the impact of climate scenarios on GDP, employment, household income, inflation and tax collection, proposing social or industrial compensation measures.

International meta-analysis: Systematize global experiences of carbon pricing, identifying implementation barriers, regulatory solutions, and environmental outcomes.

Gathering information and consulting stakeholders: Review national and international statistics (ECLAC studies, State and Trends of Carbon Pricing report) and conduct structured interviews and focus groups with key stakeholders.

3. Expected deliverables

Output 1 — Work plan and methodological design: Research roadmap, strategic documentary review and focus group plan. Output 2 — Estimation of the MACC curve: Sectoral emission abatement curves and estimation of the carbon price cap.

Output 3 — Price-demand elasticity study: Evaluation of supply/demand behavior in the face of different Caps and tax rates.

Output 4 — Macroeconomic Impact Model: Integrated Impact Assessment on Socioeconomic Variables and Selection of the Optimal Alternative for NDC.

Output 5 — Meta-analysis of international experiences: Global lessons learned, operational barriers overcome and compensation schemes.

Note: Interested companies should review the requirements on the BEO Bidder Portal. TheInter-AmericanDevelopmentBank(IDB),incoordinationwiththeMinistryofEconomyandFinance(MEF)andtheMinistryofEnvironment(MINAM)ofPeru,invitesconsultingfirmstosubmitproposalstoconductafeasibilitystudytoevaluatethedesignofacarbonpricinginstrument(carbontax,regulatedemissionstradingsystemoracombinedscheme).Theobjectiveistoprovideempiricalevidenceoncost-effectiveness,macroeconomic,fiscalanddistributionalimpacts,andinstitutionalconditionstosupportdecision-makingincompliancewiththeNationallyDeterminedContributions(NDCs),deepeningthefoundationsoftheE4Roadmap.1.TechnicalscopeandcentralobjectivesBenchmarkinginstruments:Analyzethetrade-offsbetweenacarbontaxandanemissionstradingsystem(ETS),determiningthelevelofwelfareandeconomicimpactofeachoptionormixedscheme.Marginalabatementcostcurve(MACC):FormulatetheabatementcurvefortheGHGinventorysectors(energy,transport,industry,LULUCFandwaste)toestimatethelimitpricepertonofCO_2andidentifycredit-demandingsectors.Characterizationofprice-demandelasticity:Modelscenariosforsettingemissioncaps(Caps)andtaxratestocalculatetheresponseofdemandtopricechangesincreditsandtaxedgoods.2.KeyActivitiesandEconomicModelingMacroeconomicandfiscalmodeling:QuantifytheimpactofclimatescenariosonGDP,employment,householdincome,inflationandtaxcollection,proposingsocialorindustrialcompensationmeasures.Internationalmeta-analysis:Systematizeglobalexperiencesofcarbonpricing,identifyingimplementationbarriers,regulatorysolutions,andenvironmentaloutcomes.Gatheringinformationandconsultingstakeholders:Reviewnationalandinternationalstatistics(ECLACstudies,StateandTrendsofCarbonPricingreport)andconductstructuredinterviewsandfocusgroupswithkeystakeholders.3.ExpecteddeliverablesOutput1—Workplanandmethodologicaldesign:Researchroadmap,strategicdocumentaryreviewandfocusgroupplan.Output2—EstimationoftheMACCcurve:Sectoralemissionabatementcurvesandestimationofthecarbonpricecap.Output3—Price-demandelasticitystudy:Evaluationofsupply/demandbehaviorinthefaceofdifferentCapsandtaxrates.Output4—MacroeconomicImpactModel:IntegratedImpactAssessmentonSocioeconomicVariablesandSelectionoftheOptimalAlternativeforNDC.Output5—Meta-analysisofinternationalexperiences:Globallessonslearned,operationalbarriersovercomeandcompensationschemes.Note:InterestedcompaniesshouldreviewtherequirementsontheBEOBidderPortal.

Executing unit: Inter-American Development Bank (IDB)

IDB project: PE-T1531

Contact: [contact details removed]

Financed by the Inter-American Development Bank (IDB).