nep-ene New Economics Papers
on Energy Economics
Issue of 2005‒06‒05
six papers chosen by
Roger Fouquet
Imperial College, UK

  1. Reversal in the Trend of Global Anthropogenic Sulfur Emissions By David I. Stern
  2. Carbon leakage revisited: unilateral climate policy with directed technical change By Maria,Corrado di; Werf,Edwin van der
  3. World Trade as the Adjustment Mechanism of Agriculture to Climate Change By Roxana Julia; Faye Duchin
  4. Insurance and Financial Hedging of Oil Pollution Risks. By André SCHMITT; Sandrine SPAETER
  5. Energy development under regional autonomy: Distributions, poverty alleviation, subsidies and corporate social responsibilities By Hadi Soesastro
  6. Identification of Options and Policy Instruments for the Internalisation of External Costs of Electricity Generation. Dissemination of External Costs of Electricity Supply Making Electricity External Costs Known to Policy-Makers MAXIMA By Anil Markandya; Alberto Longo

  1. By: David I. Stern (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA)
    Abstract: Global anthropogenic sulfur emissions increased until the late 1980s. Existing estimates for 1995 and 2000 show a moderate decline from 1990 to 1995 or relative stability throughout the decade. This paper combines previously published data and new econometric estimates to show a 25% decline over the decade to a level not seen since the early 1960s. The decline is evident in North America, Western and Eastern Europe and in the last few years in East and South Asia. If this new trend is maintained local air pollution problems will be ameliorated but global warming may be somewhat exacerbated.
    JEL: Q53 Q54 Q56
    Date: 2005–05
  2. By: Maria,Corrado di; Werf,Edwin van der (Tilburg University, Center for Economic Research)
    Abstract: The increase in carbondioxide emissions by some countries in reaction to an emission reduction by countries with climate policy (carbon leakage) is seen as a serious threat to unilateral climate policy. Using a two-country model where only one of the countries enforces an exogenous cap on emissions, this paper analyzes the effect of technical change that can be directed towards the clean or dirty input, on carbon leakage. We show that, as long as technical change cannot be directed, there will always be carbon leakage through the standard terms-of-trade effect. However, once we allow for directed technical change, a counterbalancing induced technology effect arises and carbon leakage will generally be lower. Moreover, we show that when the relative demand for energy is sufficiently elastic, carbon leakage may be negative: the technology effect induces the unconstrained region to voluntarily reduce its own emissions.
    JEL: F18 O33 Q54 Q55
    Date: 2005
  3. By: Roxana Julia (Department of Economics, Rensselaer Polytechnic Institute,1403 Park Boulevard, Troy, NY, 12180,USA); Faye Duchin (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA)
    Abstract: This paper evaluates the role of trade as mechanism of economic adjustment to the impacts of climate change on agriculture. The study uses a model of the world economy able to reflect changes in comparative advantage; the model is used to test the hypotheses that trade can assure that, first, satisfying global agricultural demand will not be jeopardized, and, second, general access to food will not decrease. The hypotheses are tested for three alternative scenarios of climate change; under each scenario, regions adjust to the climatic assumptions by changing the land areas devoted to agriculture and the mix of agricultural goods produced, two of the major mechanisms of agricultural adaptation. We find that trade makes it possible to satisfy the world demand for agricultural goods under the changed physical conditions. However, access to food decreases in some regions of the world. Other patterns also emerge that indicate areas of concern in relying on trade as a mechanism for the adjustment of agriculture to likely future changes in climate.
    JEL: Q54 Q17 C61
    Date: 2005–05
  4. By: André SCHMITT; Sandrine SPAETER
    Abstract: The current international regime that regulates maritime oil transport calls for financial contributions by oil firms once an oil spill has occurred. Their percentage contribution to the International Oil Pollution Compensation Fund depends only on their level of activity. In this paper, we show that this compensation regime would be more efficient if contributing oil companies adopted financial strategies to hedge against oil pollution risks. The optimal coverage contract is such that standard insurance is useful to manage small and medium oil spills, while investments on financial markets help to cover large oil spills, less frequent but much more catastrophic for society. We also show that the prevention of oil spills increases when insurance is combined with a financial hedging strategy. This positive effect on prevention is further enhanced if firms have the opportunity to send signals about their risk-reducing activities to potential investors.
    Keywords: oil spill, legislation, insurance, capital markets, prevention, catastrophe.
    JEL: D80 G22 Q25
    Date: 2004
  5. By: Hadi Soesastro (Centre for Strategic and International Studies, Jakarta, Indonesia)
    Abstract: This paper examines problems and policies in regard to energy development under regional autonomy, distributions - in the sense of distributional or equity issues, poverty alleviation, subsidies, and corporate social responsibilities. The paper examines the problem from a simplified perspective, namely that of a centralized system versus decentralized system of energy development.
    Keywords: Indonesia, energy policy, fuel subsidies
    Date: 2004–11
  6. By: Anil Markandya (The World Bank); Alberto Longo (University of Bath)
    Abstract: In the present paper, after reviewing the results of the ExternE project and its follow-up stages in the estimation of the external costs of electricity production, we look at the policy instruments for the internalisation of such costs. Emphasis is given to subsidies, such as feed-in tariffs, competitive bidding processes and tradable green certificates to stimulate the use of renewables in the production of electricity. When policy-makers are asked to choose the instrument(s) to internalise the externalities in the electricity production, they have to find a solution that gives the best outcome in terms of efficiency, cost minimisation, impact on the job market, security of energy supply, equity of the instrument, technological innovation, certainty of the level of the internalisation, and feasibility. The choice of the instrument will require some trade-offs among these criteria. Conjoint choice analysis can help in investigating how stakeholders and policy makers trade off the criteria when choosing a policy for the internalisation of the externalities. In this paper we present the first results of a questionnaire that employs conjoint choice questions to find out how policy makers and stakeholders of the electricity market trade off some socio-economic aspects in the selection of the policy instruments for the internalisation of the externalities. The results of this first set of interviews will be useful for further research.
    Keywords: Policy instruments, ExternE, External costs, Electricity, Conjoint choice analysis
    JEL: Q42 Q48 Q51
    Date: 2005–05

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