nep-ene New Economics Papers
on Energy Economics
Issue of 2005‒12‒01
seven papers chosen by
Roger Fouquet
Imperial College, UK

  1. Policy Processes for Low Carbon Innovation in the UK: Successes, failures and lessons By Tim J. Foxon; Peter J. Pearson
  2. Strategic Behavior in Day-Ahead and Real-Time Markets for Electricity: Offer Cost or Payment Cost Minimization? By Nicholas Shunda
  3. Regulatory reforms in selected EU network industries By Reiner Martin; Moreno Roma; Isabel Vansteenkiste
  4. Hydropower Economics By Førsund, Finn R.
  5. China and the Geopolitics of Oil in the Asian Pacific Region By Pablo Bustelo
  6. USO DE COMBUSTÍVEIS E EMISSÕES DE CO2 NO BRASIL: UM MODELO INTER-REGIONAL DE INSUMO-PRODUTO By Emerson Martins Hilgemberg; Joaquim J. M. Guilhoto; Cleise M. A. T. Hilgemberg

  1. By: Tim J. Foxon (4CMR – Cambridge Centre for Climate Change Mitigation Research, Department of Land Economy, University of Cambridge.); Peter J. Pearson (Centre for Environmental Policy, Imperial College London, SW7 2AZ, UK.)
    Abstract: This paper analyses recent, current and potential future relations between policy processes and substantive outcomes in UK low carbon innovation policy. It examines the development of policy processes relating to the adoption and implementation of the Renewables Obligation and how these may affect the current and likely future success of the Obligation in promoting low carbon innovation. It looks at the new policy and institutional processes put in place in the 2003 Energy White Paper and argues that these are unlikely to provide the strategic long-term framework needed to realize the ambitious goals for UK energy policy set out in the White Paper. Finally, it outlines some suggestions for further development of policy processes to facilitate improved delivery of these goals, based on guiding principles for sustainable innovation policy processes, developed by the authors and colleagues.
    Keywords: Low carbon innovation policy, Renewables Obligation, guiding principles, sustainable innovation policy processes.
    Date: 2005–02
  2. By: Nicholas Shunda (University of Connecticut)
    Abstract: This study compares the procurement cost-minimizing and productive efficiency performance of the auction mechanism used by independent system operators (ISOs) in wholesale electricity auction markets in the U.S. with that of a proposed alternative. The current practice allocates energy contracts as if the auction featured a discriminatory final payment method when, in fact, the markets are uniform price auctions. The proposed alternative explicitly accounts for the market clearing price during the allocation phase. We find that the proposed alternative largely outperforms the current practice on the basis of procurement costs in the context of simple auction markets featuring both day-ahead and real-time auctions and that the procurement cost advantage of the alternative is complete when we simulate the effects of increased competition. We also find that a trade-off between the objectives of procurement cost minimization and productive efficiency emerges in our simple auction markets and persists in the face of increased competition.
    Keywords: strategic behavior, multi-unit auction, wholesale electricity, Bertrand competition
    JEL: C72 D44 L10 L94
    Date: 2005–10
  3. By: Reiner Martin (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Moreno Roma (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Isabel Vansteenkiste (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: In the course of the 1990s, the EU has embarked on an ambitious regulatory reform programme for a number of European network industries, such as telecommunications, energy and transport. This paper analyses the potential benefits of successful reforms in these sectors with a focus on the price effects of regulatory reforms. Following a review of the existing empirical literature in this field, the paper discusses the evolution of the current regulatory framework for network industries in the EU. An empirical analysis of the main determinants of recent price developments in these industries provides evidence that regulatory reform measures had a substantial downward impact on prices in the four sectors under review.
    Keywords: Network Industries, Panel Data, Price effects, Regulatory Reforms.
    JEL: E30 L33 L51 L93 L94 L95 L96
    Date: 2005–04
  4. By: Førsund, Finn R. (Dept. of Economics, University of Oslo)
    Abstract: The key question in hydropower production is the time pattern of the use of the water in the reservoir. The water used to produce electricity today can alternatively be used tomorrow. The analysis of the operation of hydropower is therefore essentially a dynamic one. The paper introduces some basic models for social allocation of stored water over discrete time periods using non-linear programming assuming capacities of generation and transmission as given. Implications of constraints such as limited storage capacity and limited connector capacity for (international) trade are studied. Results are derived for water allocation and development of the electricity price over time. Graphical illustrations are provided in the two- period case and successive pairs of periods in a multi-period setting by means of the bathtub diagram. Thermal capacity is added to hydro and the optimal mix is studied. The walls of the hydro bathtub are extended endogenously by thermal capacities. Finally, the case of monopoly is studied.Different from standard monopoly behaviour of contracting output, if total available water is to be used, the strategy of a monopolist is to redistribute the use of water for electricity production over periods compared with the social optimal distribution.
    Keywords: Hydropower; electricity; reservoir; water value; monopoly
    JEL: D42 L95
    Date: 2005–11–21
  5. By: Pablo Bustelo (Elcano Royal Institute for International & Strategic Studies & Complutense University of Madrid)
    Abstract: China’s growing demand for oil is significantly changing the international geopolitics of energy, especially in the Asian Pacific region. The recent growth in oil consumption, combined with forecasts of increased oil imports (especially from the Middle East), have led to deep concern among Chinese leaders regarding their country’s energy security. They are responding in a number of different ways. In particular, they are determined to increase the security and reliability of oil imports by searching for new sources of supply, and to control purchases and transport lanes, while boosting national production at any cost. This is already causing tension and could lead to further disputes with the US and other big oil consumers, such as Japan and India, as well as with other Asian Pacific countries. However, enhanced cooperation among the big East Asian economies (China, Japan and South Korea) is also a possibility. This document first of all presents an overview of China’s energy sector, emphasising the strong growth in its energy demand to date and its potential for future growth. Secondly, we look at the oil sector, highlighting China’s growing dependence on imports. The third part deals with the Chinese perception of energy security in the oil sector. Finally, the fourth part focuses on the geopolitical implications for the Asian Pacific region of China’s search for oil.
    Keywords: China, energy consumption, energy production, oil consumption, oil production, oil imports, East Asia
    JEL: O13 Q41 Q43
    Date: 2005–11–20
  6. By: Emerson Martins Hilgemberg; Joaquim J. M. Guilhoto; Cleise M. A. T. Hilgemberg
    Abstract: This work quantifies the CO2 emissions from energy use of natural gas, alcohol and oil derived products at a regional level and evaluates the impacts of eventual policies for emissions control. The results pointed the connection between the activity level and the emissions of CO2 for each energy input considered for the six regions detailing the portion of the total emissions caused by final demand, interindustry consumption and household consumption. The model was also used to make simulations in order to evaluate the economic effects of a hypothetic control on emissions.
    JEL: Q52
    Date: 2005
  7. By: Alexandre Rivas; James F. Casey; James R. Kahn
    Abstract: This paper looks at the question of whether subsistence level/indigenous people place a value on the preservation of ecosystems independent of direct impacts of environmental change, such as impacts on their health or production activities. A survey was conducting of rainforest communities who live on the banks of the Amazon River, in the vicinity of proposed oil and gas pipelines. The data was analyzed using conjoint analysis, revealing a very strong willingness to pay to avoid damage to ecosystems, even if the people were completely compensated for direct damages such as loss of access to productive resources. This results shows that environmental quality is not necessarily a luxury good, and rejects the hypothesis that people with low cash incomes have low demand for environmental quality.
    JEL: Q51 Q56 Q57
    Date: 2005

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