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on Energy Economics |
| By: | Paul L. Joskow |
| Abstract: | The industry structure and regulatory framework that characterizes the electric power sector in the U.S. is in a state of disarray. Some regions have adopted a fully liberalized electricity sector model, others have retained the traditional model of regulated vertically integrated monopolies, while still other regions are "stuck" with combinations of both. This situation will undermine the ability of the U.S. electric power sector (a) to provide an abundant and reliable supply of electricity efficiently, (b) to confront retail consumers with the appropriate prices to encourage efficient utilization of electricity, (c) to meet greenhouse gas mitigation goals efficiently, and (d) to support efforts to increase energy security and reliability. A federal reform program for dealing with the underlying structural and regulatory problems is suggested. |
| Keywords: | electricity, regulation, deregulation, energy |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2009/01&r=ene |
| By: | David Newbery |
| Abstract: | The traditional measure of market power is the HHI, which gives implausible results given the low elasticity of demand in electricity spot markets, unless it is adapted to take account of contracting. In its place the Residual Supply Index has been proposed as a more suitable index to measure potential market power in electricity markets, notably in California and more recently in the EU Sector Inquiry. The paper investigates its value in identifying the ability of firms to raise prices in an electricity market with contracts and capacity constraints and find that it is most useful for the case of a single dominant supplier, or with a natural extension, for the case of a symmetric oligoply. Estimates from the Sector Inquiry seem to fit this case better than might be expected, but suggests an alternative defintion of the RSI defined over flexible output that should give a more reliable relationship. |
| Keywords: | Residual Supply Index, Cournot equilibrium, Lerner Index, electricity markets, market power |
| JEL: | D43 K21 L94 |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2009/03&r=ene |
| By: | Nils-Henrik M. Von Der Fehr; Petter Vegard Hansen |
| Abstract: | We analyse retailer and household behaviour on the Norwegian electricity market, based on detailed information on prices and other market characteristics. We find that there exists a competitive market segment where a number of retailers compete fiercely for customers, with small margins on all products. However, we also find evidence of monopolistic behaviour, whereby retailers exploit the passivity of some of their customers. We discuss explanations for these results, as well as means to improve market performance. |
| Keywords: | electricity markets, retailing, supply, competition |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2009/04&r=ene |
| By: | Jean-Michel Glachant |
| Abstract: | The regulation of network industries has undergone profound transformation in the past twenty years. The regulated industry is no longer the same, being exposed to new competitive dynamics having revolutionized their industrial framework, technology and interactions with users. There also have been fundamental changes in what regulation is feasible. In an “information society” a model devised in the 19th century to set prices for monopoly infrastructures such as bridges, roads and railways no longer captures the essential: the interactive dynamics created by technologies, uses, and markets. |
| Keywords: | Regulatory economics, network industries, utilities regulation, information society |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2009/05&r=ene |
| By: | Jean-Michel Glachant; Adrien de Hauteclocque |
| Abstract: | Long-term supply contracts often have ambiguous effects on the competitive structure, investment and consumer welfare in the long term. In a context of market building, these effects are likely to be worsened and thus even harder to assess. Since liberalization and especially since the release of the Energy Sector Enquiry in early 2007, the portfolio of long-term supply contracts of the former incumbents have become a priority for review by the European Commission and the national competition authorities. It is widely believed that European Competition authorities take a dogmatic view on these contracts and systemically emphasize the risk of foreclosure over their positive effects on investment and operation. This paper depicts the methodology that has emerged in the recent line of cases and argues that this interpretation is largely misguided. It shows that a multiple-step approach is used to reduce regulation costs and balance anti-competitive effects with potential efficiency gains. However, if an economic approach is now clearly implemented, competition policy is constrained by the procedural aspect of the legal process and the remedies imposed remain open for discussion. |
| Keywords: | Long-term supply contracts, Competition Policy, European Union |
| JEL: | K21 L42 L44 |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2009/06&r=ene |
| By: | Stern, David I. |
| Abstract: | As is the case with capital-energy substitution, interfuel substitutability has been of longstanding interest to the energy economics and policy community. However, no quantitative meta-analysis has yet been carried out of this literature. This paper fills this gap by analyzing a broad sample of studies of interfuel substitution in the industrial sector, manufacturing industry or subindustries, or macro-economy of a variety of developed and developing economies. Publication bias is controlled for by including the primary study sample size and the influence factor of the journal in the meta-regression. Results for the shadow elasticity of substitution between coal, oil, gas, and electricity for forty-five primary studies show that there are easy substitution possibilities between all the fuel pairs with the exception of gas and electricity. Model and data specification issues very significantly affect the estimates derived by each individual study. While publication bias does not seem to be present there is a relationship between sample size and the value of the elasticities with larger sample studies finding greater values of the elasticities. |
| Keywords: | Meta-analysis; energy; substitution; elasticity; interfuel |
| JEL: | Q40 D24 |
| Date: | 2009–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13734&r=ene |
| By: | Catherine Locatelli (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II) |
| Abstract: | L’année 2008 marque la première année de baisse de la production pétrolière russe, suite à une longue phase de croissance soutenue suivie d’une courte période de stagnation. Au centre du débat sur le devenir de long terme de cette industrie se trouve être le « modèle pétrolier » mis en œuvre. Ce dernier peut se définir comme un modèle organisationnel articulé à des modalités d’accès aux ressources en hydrocarbures. Il apparaît aujourd’hui centré sur les compagnies d’Etat et un accès aux ressources en hydrocarbures mieux maîtrisé par la puissance publique. Une des questions essentielles de l’industrie pétrolière russe est ainsi de savoir si les caractéristiques de ce nouveau modèle sont susceptibles d’impulser de nouveaux comportements d’investissement plus en accord avec une gestion de long terme dès lors qu’il vise à chercher une plus grande cohérence avec l’environnement institutionnel de ce pays. |
| Keywords: | RUSSIE ; INDUSTRIE PETROLIERE ; ETAT |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00365374_v1&r=ene |
| By: | Simone Valente (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland) |
| Abstract: | We study a two-phase endogenous growth model in which the adoption of a backstop technology (e.g. solar) yields a sustained supply of essential energy inputs previously obtained from exhaustible resources (e.g. oil). Growth is knowledge-driven and the optimal timing of technology switching is determined by welfare maximization. The optimal path exhibits discrete jumps in endogenous variables: technology switching implies sudden reductions in consumption and output, an increase in the growth rate, and instantaneous adjustments in saving rates. Due to the positive growth e¤ect, it is optimal to implement the new technology when its current consumption bene.ts are substantially lower than those generated by old technologies. |
| Keywords: | Backstop technology, Discrete jumps, Endogenous growth, Exhaustible resources, Optimal Control |
| JEL: | O33 Q32 Q43 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:09-104&r=ene |
| By: | Michelle Alexopoulos; Jon Cohen |
| Abstract: | We present new indicators of U.S. technological change for the period 1909-49 based on information in the Library of Congress’ catalogue. We use these indicators to estimate the connections between technological change and economic activity, and to investigate the relationship between fluctuations in innovative activity and the Great Depression. Although we do find links between technological change, output and productivity, our results suggest that the slowdown in technological progress in the early 1930s did not contribute significantly to the Great Depression. On the other hand, the remarkable acceleration in innovations after 1934 did play a role in the recovery. |
| Keywords: | Technical Change, Productivity, the Great Depression |
| JEL: | E3 O3 O4 N1 |
| Date: | 2009–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-349&r=ene |
| By: | Denny Ellerman |
| Abstract: | The European Union's Emission Trading Scheme (EU ETS) is the world's first multinational cap-and-trade system for greenhouse gases. As an agreement between sovereign nations with diverse historical, institutional, and economic circumstances, it can be seen as a prototype for an eventual global climate regime. Interestingly, the problems that are often seen as dooming a global trading system - international financial flows and institutional readiness - haven't appeared in the EU ETS, at least not yet. The more serious problems that emerge from the brief experience of the EU ETS are those of (1) developing a central coordinating organization, (2) devising side benefits to encourage participation, and (3) dealing with the interrelated issues of harmonization, differentiation, and stringency. The pre-existing organizational structure and membership benefits of the European Union provided convenient and almost accidental solutions to the need for a central institution and side benefits, but these solutions will not work on a global scale and there are no obvious substitutes. Furthermore, the EU ETS is only beginning to test the practicality of harmonizing allocations within the trading system, differentiating responsibilities among participants, and increasing the stringency of emissions caps. The trial period of the EU ETS punted on these problems, as was appropriate for a trial period, but they are now being addressed seriously. From a global perspective, the answers that are being worked out in Europe will say a great deal about what will be feasible on a broader, global scale. |
| Keywords: | European Union, emissions trading, climate change policy, global climate architecture, cap-and-trade |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2009/02&r=ene |
| By: | Douglas, Niall Edward |
| Abstract: | A thorough review is made of Climate Change Science, going into much greater detail than is typical of papers in Economics and specifically emphasising the hard thermodynamic limits of biological and physical processes. This theme is then continued in a historical review of theory relevant to Climate Change taken from Economics, Physics, Biology and Mathematics, clarified by extensive real-life historical time series plus calculations of fundamental thermodynamic limits – which results in a series of pointed, uncomfortable truths that our culture & society prefers to overlook. Two types of “costs of climate change” models are then placed under the microscope: (i) The Stern Report (2007) and (ii) The Limits to Growth (2004) – both chosen as the two most widely known by the greater public. Both models are evaluated according to the scientific realities outlined in the previous two chapters, including going into some detail of the specifics of the models themselves through analysis of their source code implementations. Finally, the author’s subjective opinion is given as to the quality of the models given the results of the prior chapter. I conclude that the models are primitive, but not much better than the state-of-the-art currently employed by the Intergovernmental Panel on Climate Change. The hard reality is that we do not sufficiently understand the nature nor causes of climate change, only that it is happening – and thus building a realistic model is currently outside our capability. This is changing very quickly however – the paper has tried, where possible, to include the very latest research on climate change and to show by just how much the ground is currently moving. |
| Keywords: | environmental economics; ecological economics; climate change; stern report; limits to growth; IPCC; thermoeconomics; modelling; |
| JEL: | Q5 Q51 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13650&r=ene |
| By: | Kousky, Carolyn (Resources for the Future); Cooke, Roger M. (Resources for the Future) |
| Abstract: | Adapting to climate change will not only require responding to the physical effects of global warming, but will also require adapting the way we conceptualize, measure, and manage risks. Climate change is creating new risks, altering the risks we already face, and also, importantly, impacting the interdependencies between these risks. In this paper we focus on three particular phenomena of climate related risks that will require a change in our thinking about risk management: global micro-correlations, fat tails, and tail dependence. Consideration of these phenomena will be particularly important for natural disaster insurance, as they call into question traditional methods of securitization and diversification. |
| Keywords: | tail dependence, micro-correlations, fat tails, damage distributions, climate change |
| JEL: | Q54 G22 C02 |
| Date: | 2009–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-09-03&r=ene |
| By: | Andreas Ziegler (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland); Timo Busch (Nachhaltigkeit und Technologie, ETH Zurich, Switzerland); Volker H. Hoffmann (Nachhaltigkeit und Technologie, ETH Zurich, Switzerland) |
| Abstract: | This paper examines the relationship between corporate activities to address climate change and stock performance. By separately analyzing the US and European stock markets for different sub-periods, we highlight the impact of the underlying climate policy regime. Methodologically, we compare risk-adjusted returns of stock portfolios comprising corporations that differ in their responses to climate change. In this respect, we apply the flexible Carhart fourfactor model besides the restricted one-factor model based on the Capital Asset Pricing Model (CAPM). While our portfolio analysis shows negative relationships over the entire observation period from 2001 to 2006, we find that a trading strategy, which bought stocks of corporations with a higher level of responses to climate change and sold stocks of corporations with a lower level, led to negative abnormal returns in regions and periods with less ambitious climate policy, but to positive abnormal returns in regions and periods with stringent climate policy. |
| Keywords: | Climate change, Climate policy, Corporate environmental performance, Financial performance, Portfolio analysis, Asset pricing models |
| JEL: | Q54 Q48 M14 G11 G12 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:09-105&r=ene |
| By: | Wang, Chegnuang; Larson, James A.; English, Burton C.; Jensen, Kim |
| Abstract: | Switchgrass for bioenergy production will require substantial storage. This study evaluated costs of alternative baling and on-farm storage systems. Rectangular bales minimize cost if switchgrass is processed immediately after harvest. However, round bales minimize cost if switchgrass is stored under cover for 200 days before transporting to the biorefinery |
| Keywords: | switchgrass, baling, storage, transport, costs, farm, biorefinery, Agricultural Finance, Farm Management, Production Economics, Resource /Energy Economics and Policy, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saeana:47169&r=ene |
| By: | GRIMAUD, André; ROUGÉ, Luc |
| JEL: | O32 O41 Q20 Q32 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:10624&r=ene |
| By: | Füssel, Hans-Martin |
| Abstract: | This paper applies G-Econ+, an updated version of the G-Econ database by Nordhaus, to analyze the influence of climatic and geographic factors on the geographic distribution of population and economic activity. I discuss options for improved treatment of several statistical problems associated with G-Econ, which are not addressed adequately in the original G-Econ analysis. Reanalysis of key results from the original G-Econ analysis corrects some surprising results therein. Extensive sensitivity analysis determines the robustness of the relationship between climatic factors and economic activity across alternative central estimators. Further analysis assesses revealed climatic preferences of population, the effects of climate parameters on different quantiles of economic variables, and synergies between temperature and precipitation. I find that population density has a much stronger influence on output density than output per capita. Furthermore, least developed countries are located in a climatic zone where all indicators of economic activity decline with increasing temperature. |
| Keywords: | Climate; macroeconomics; population; cross-sectional analysis; G-Econ |
| JEL: | C82 Q54 C21 |
| Date: | 2009–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13788&r=ene |