I need to understand if there is a posibility that the envisaged transition to a low carbon or net-zero carbon economy, can result in or insight shodow economy tendencies. If so at what stage of the transition process and how to mitigate?
As economies transition toward a lower carbon footprint, a wide array of possibilities exist including expansion the shadow economy (e.g., underground economy).
With this in mind, let's consider a few of the many possible outcomes.
Let's say the authorities move toward a lower carbon footprint for an economy; moreover, let's say many (or most) of the economic agents (e.g., firms, NGO's, consumers, and others) are not willing to change their actions and behaviors to be consistent with reducing their carbon footprint, let alone moving toward a net-zero carbon economy. Then, it seems likely many may move at least some of their actions to the shadow economy.
Let's change the situation where economic agents favor moving toward reducing their carbon footprint (e.g., perhaps this could occur if they think it is the "right thing to do" or maybe it becomes popular to live in a more sustainable fashion). There seems to be a disincentive to move "underground" in either of these situations, especially the latter.
Obviously, the official position and the influence of the authorities could make a difference. Let's skip the situation where the authorities and other economic agents both want to reduce their carbon footprint because this situation is too easy.
Realistically, few authorities would advocate for expanding an economy's carbon footprint, except possibly to cater to special interests or groups that want to go in a different direction than the science might indicate. More realistically, the authorities may favor economic expansion over almost all else and effectively suggest it is more "about priorities" and say something like the economy will suffer. The key question here is will this situation push economic activity that reduces the carbon footprint underground toward a shadow economy.
I can envision different outcomes depending on the situation. Generally, economic agents have the incentive to hide economic activity that has adverse consequences for them or if the activity is unpopular.
Conversely, if it becomes popular to exhibit carbon-reducing behaviors in the case at hand, then the people as economic agents may move from the shadows to highly visible behaviors. This could occur if they want to " do the right thing," express solidarity with a movement, openly challenge the authorities (or their legitimacy), or other reasons, of course.
So many possibilities exist and this covers only a few! It seems like understanding things like information, power, and incentives are a few things to consider. Together we can make a difference.
Low carbon economy means less production and therefore to meet the ever bulging demand for goods and services by human beings, informal trades will thrive just at the onset.
