nep-ene New Economics Papers
on Energy Economics
Issue of 2005‒10‒15
nine papers chosen by
Roger Fouquet
Imperial College, UK

  1. The Anatomy of Electricity Demand: A CGE Decomposition for Norway By Erling Holmøy
  2. Deregulation of electricity markets—The Norwegian experience By Torstein Bye and Einar Hope
  3. Climate change- lower electricity prices and increasing demand. An application to the Nordic Countries By Karina Gabrielsen, Torstein Bye and Finn Roar Aune
  4. Enhancing Brazil's Regulatory Framework for Network Industries: The Case of Electricity, Oil and Gas, and Water and Sanitation By Edmar Almeida; Nanno Mulder
  5. Product Market Competition and Economic Performance in the United Kingdom By OECD
  6. Avoiding Adverse Employment Effects from Energy Taxation: What does it cost? By Geir H. Bjertnæs
  7. Distributional Effects of Environmental Taxes on Transportation. Evidence from Engel Curves in the United States By Erling Røed Larsen
  8. Is Individual Environmental Consciousness One of the Determinants in Transport Mode Choice? By Junyi Shen; Yusuke Sakata; Yoshizo Hashimoto
  9. Regime shifts, environmental signals, uncertainty, and policy choice By Brock,W.A.; Carpenter,S.R.; Scheffer,M.

  1. By: Erling Holmøy (Statistics Norway)
    Abstract: The paper derives a general equilibrium demand function for electricity by imposing a specific closure rule on a large CGE-model of the Norwegian economy. By a decomposition technique it quantifies the contribution from various mechanisms to the price sensitivity of aggregate electricity demand. Specifically, it identifies the contributions from substitution at the micro level, as well as changes in the industry structure to the substitution at the aggregate level. It also separates the substitution effects of equilibrium adjustments of other prices than the electricity price, and macroeconomic income effects on total demand. The direct price elasticity of aggregate electricity demand is estimated to -0.31. Within industry factor substitution contributes most to this response.
    Keywords: Electricity demand; Computable general equilibrium model
    JEL: Q41 Q43
    Date: 2005–06
  2. By: Torstein Bye and Einar Hope (Statistics Norway)
    Abstract: In this paper, we describe the approach to, and experience of, the deregulation and liberalisation of the Norwegian electricity sector from 1991. The Norwegian electricity market was subsequently integrated with the Swedish, Finnish and Danish markets to become the Nordic electricity market: the first common, integrated, intercountry electric power market in the world. We discuss the background to electricity market reform, the analytical and legal foundations for reform, and the chosen market and regulatory design. We find that the market has performed well in terms of economic efficiency and market functionality, even when exposed to severe supply shocks because of water shortages for a power system that relies heavily on hydropower. However, we also identify issues and challenges that must be addressed to improve the performance of the Nordic electricity market and its regulatory system.
    Keywords: Deregulation; Market design; Electricity markets
    JEL: D21 D41 D42 Q4
    Date: 2005–09
  3. By: Karina Gabrielsen, Torstein Bye and Finn Roar Aune (Statistics Norway)
    Abstract: Concentration of greenhouse gases in the atmosphere influences the climate, which then alters the amount of primary energy for countries or regions where hydropower and wind power constitute important parts of the energy supply. Besides, the demand effect of temperature increases may be large in economies where heating and air-conditioning demand a large share of total energy. In this article, we apply climate change calculations from natural science and detailed inflow data from the authorities to estimate the change in primary energy supply of the hydropower-dominated Nordic electricity market. The estimated inflow model shows an increase in primary inflow in the next 40 years of 6–15% in the Nordic countries. An estimated temperature model shows a 2–4% initial drop in demand in the same time period, because of increasing temperature. Within the context of a perfect-competition electricity market model, we simulate the total market outcome. As primary supply increases, the production cost decreases, prices drop and the total demand increases as the price effect dominates the temperature effect. Since the hydropower plants are located away from large consumer groups, the stress on the transmission networks is dramatic for some regions, which in the next phase may trigger new investments in transmission network capacities.
    Keywords: Climate change; electricity market
    JEL: Q11 Q21 Q42
    Date: 2005–08
  4. By: Edmar Almeida; Nanno Mulder
    Abstract: This paper assesses Brazil’s regulatory framework and agencies for several network industries (electricity, oil and gas, and water and sanitation). Private investment can be encouraged by tackling regulatory uncertainty in many areas. To this end, recent initiatives include a new regulatory model for the electricity sector, and new draft legislation on the role and structure of the regulatory agencies (currently in Congress). The overall approach to regulatory reform in network industries, particularly in electricity, is well thought out but the risk of regulatory failure should not be underestimated. Implementation will be the ultimate test of reform in this area. In natural gas, the dominance of Petrobras, the national oil company, throughout the industry has often been perceived as an obstacle to its development. Private investment in water and sanitation is constrained by a lack of clarity over the assignment of regulatory powers across different levels of government. These reforms are consistent with the government’s agenda for growth, focusing on meeting the challenge of improving the business environment. This Working Paper relates to the 2005 OECD Economic Survey of Brazil ( <P>Améliorer le cadre réglementaire des industries de réseau au Brésil Ce papier évalue le cadre réglementaire ainsi que les agences régulatrices pour plusieurs industries de réseau (électricité, pétrole et gaz, eau et assainissement). L’investissement privé pourrait être encouragé en réduisant l’incertitude réglementaire dans plusieurs domaines. A ce propos, des initiatives récentes incluent un nouveau modèle réglementaire pour le secteur de l’électricité et un projet de loi sur le rôle et la structure des agences régulatrices (actuellement au Congrès). L’approche générale retenue en ce qui concerne la réforme de la réglementation dans les industries de réseau, notamment dans le secteur de l’électricité, est judicieuse, mais le risque de défaillance de la réglementation ne doit pas être sous-estimé. C’est au stade de sa mise en œuvre que la réforme dans ce domaine sera mise à l’épreuve. Pour ce qui est du gaz naturel, la position dominante de la société pétrolière nationale Petrobras dans l’ensemble du secteur a souvent été perçue comme un obstacle au développement de celui-ci. L’investissement privé dans les secteurs de l’eau et de l’assainissement se heurte à un manque de clarté dans la répartition des pouvoirs de réglementation entre les différents niveaux d’administration. Ces réformes se situent dans la lignée du programme de croissance du gouvernement, en mettant l’accent sur l’amélioration de l’environnement des entreprises. Ce Document de travail se rapporte à l`Étude économique de l'OCDE du Brésil, 2005 (
    Keywords: economics of regulation, government policy (energy), réglementation, regulations, Brazil, Brésil, electricity, gas, électricité, gaz, pipelines, oil, pétrole, regulatory agencies, sanitation, water utilities, politique publique (énergie), agence régulatrice, assainissement, eau
    JEL: K23 L51 L94 L95 O54 Q48
    Date: 2005–04–08
  5. By: OECD
    Abstract: This paper assesses what role product market competition and regulatory reforms may have played in the performance of the British economy over the past decade. Competitive pressures appear to be relatively strong in the United Kingdom, with regulations inhibiting competition and barriers to trade amongst the lowest in the OECD. Nevertheless, there is scope for improvement and the recent overhaul of competition legislation should help to further promote competition. Much progress has been made in the professional services sector. Self-regulatory bodies are no longer exempt from competition legislation and professional bodies have undertaken a number of actions towards removing or easing restrictions that inhibit competition. In the retail sector, market power remains a problem and the competition authorities will need to remain vigilant. The government’s recent approach to planning has made new large scale entry very difficult, impeding competition and inhibiting entry. Industry regulators also need to remain vigilant in the electricity, gas and telecommunications sectors. Reforms in these sectors have led to increased productivity, though international comparisons suggest that there is scope for prices to fall. While recent steps by the government overcome the most serious weaknesses of the privatised rail system, continuing problems regarding incentives and responsibilities remain to be resolved. <P>Concurrence sur les marchés de produits et performance économique au Royaume-Uni L'objet du présent document est d'évaluer le rôle que la concurrence sur les marchés de produits et les réformes de la réglementation ont pu jouer dans les performances de l'économie britannique au cours des dix dernières années. Les pressions concurrentielles semblent relativement fortes au Royaume-Uni, où les réglementations entravant la concurrence et les obstacles aux échanges figurent parmi les plus modestes de la zone OCDE. Il existe néanmoins des marges de progression, et la récente refonte du droit de la concurrence devrait contribuer à promouvoir davantage celle-ci. Des avancées considérables ont été accomplies dans le secteur des services professionnels. Les organismes d'autoréglementation ne sont plus exclus du champ d'application du droit de la concurrence, et des organismes professionnels ont pris un certain nombre de mesures en vue de lever ou d'assouplir les restrictions à la concurrence. Dans le secteur de la distribution, la question du pouvoir de marché reste problématique et les autorités de la concurrence devront rester sur le qui-vive. L'approche adoptée récemment par le gouvernement en matière d'urbanisme a rendu très difficile l'installation de nouvelles grandes surfaces, ce qui entrave la concurrence et l'entrée de nouveaux acteurs sur le marché. Les autorités de régulation compétentes doivent également demeurer vigilantes dans les secteurs de l'électricité, du gaz et des télécommunications. Les réformes menées dans ces branches d'activité ont débouché sur des gains de productivité, mais des comparaisons internationales laissent à penser que les prix peuvent encore baisser. Si les récentes initiatives des pouvoirs publics ont permis de remédier aux défaillances les plus graves du système privatisé de transport ferroviaire, les problèmes persistants relatifs aux incitations et au partage des compétences doivent encore être résolus.
    Keywords: market structure, structure de marché, network industries, industrie de réseau, competition, United Kingdom, Royaume-Uni, concurrence, productivity and growth, droit de la concurrence, productivité et croissance, antitrust law, regulatory policies, politique de réglementation
    JEL: K21 K23 L11 L16 L40 L43 O51
    Date: 2005–07–09
  6. By: Geir H. Bjertnæs (Statistics Norway)
    Abstract: Welfare analysis of energy taxes typically shows that systems with uniform rates perform better than differentiated systems. However, most western countries include some exemptions for their energy-intensive export industry, and hence, avoid this potential welfare gain. Böhringer and Rutherford (1997) find that compared to a differentiated system, uniform taxation in combination with a wage subsidy preserve jobs in these industries at a fraction of the potential welfare gain in the German economy. This result holds in this Norwegian study where a more broad based subsidy scheme, represented by production dependent subsidies, is used to protect jobs in the Norwegian energy-intensive industry. However, the welfare cost per job preserved by this subsidy scheme amounts to about 60 percent of the wage cost per job, suggesting that these jobs are expensive to preserve.
    Keywords: Energy taxes; Political feasibility; Competitiveness; CGE models
    JEL: F41 H21 Q43 Q48
    Date: 2005–09
  7. By: Erling Røed Larsen (Statistics Norway)
    Abstract: Indirect taxes on transportation activities that pollute can correct externalities and close the gaps between private and social costs. However, policy makers often find such Pigou taxes difficult to implement because of political resistance due to possibly adverse affects on equity. For this reason it is important to assess the distributional aspects of environmental levies. This article estimates properties of the demand for transportation in parametric and non-parametric analyses of Consumer Expenditure Surveys for the United States, 2000, and finds patterns in the resulting set of Engel curves. Private transportation using air flights and new automobiles have Engel elasticities above unity while public transportation via mass transit has Engel elasticity below unity. The findings can be interpreted in an important way since they show that a differentiated scheme of environmental taxes on transportation may function progressively. A Pigou scheme with larger taxes on modes of transportation that pollute more appears to coincide with larger levies on luxury modes preferred by richer households.
    Keywords: consumption patterns; double dividend; Engel curves; environmental levies; equity; externality; indirect taxation; Pigou correction; redistribution; transportation; travel
    JEL: D12 D31 H23 R41
    Date: 2005–06
  8. By: Junyi Shen (Osaka School of Interna ional Public Policy, Osaka University); Yusuke Sakata (School of Economics, Kinki University); Yoshizo Hashimoto (Osaka School of Interna ional Public Policy, Osaka University)
    Abstract: This paper models a transport negative impact on environment as one of attributes of the transport mode. By this modeling, we are able to examine whether individual environmental consciousness has a significant effect on his/her choice of transport mode. A survey data from Saito and Onohara Area in Northern Osaka of Japan is used to estimate the model specified by Heteroscedastic Extreme Value (HEV). Both of the estimated and simulated results imply that individual environmental consciousness does influence his/her decision on transport mode choice. Furthermore, the likelihood ratio tests suggest that both the utility and scale parameters are not equal across sub-samples of university commuters, research-facility commuters, and residents. The details of the comparison across sub-samples suggest that we may learn more from subdividing a whole sample into several sub-samples if we could select them based on their characteristics.
    Keywords: Environmental consciousness; Transport mode choice; Stated choice experiment; Heteroscedastic Extreme Value (HEV) model; Value of time saving (VOTS)
    JEL: C35 D12 Q51 R41
    Date: 2005–10
  9. By: Brock,W.A.; Carpenter,S.R.; Scheffer,M. (University of Wisconsin-Madison, Social Systems Research Institute)
    Date: 2005

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