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on Energy Economics |
| By: | Vicki Knoblauch (University of Connecticut) |
| Abstract: | This study of the wholesale electricity market compares the cost-minimizing performance of the auction mechanism currently in place in U.S. markets with the performance of a proposed replacement. The current mechanism chooses an allocation of contracts that minimizes a fictional cost calculated using pay-as-offer pricing. Then suppliers are paid the market clearing price. The proposed mechanism uses the market clearing price in the allocation phase as well as in the payment phase. In concentrated markets, the proposed mechanism outperforms the current mechanism even when strategic behavior by suppliers is taken into account. The advantage of the proposed mechanism increases with increased price competition. |
| Keywords: | strategic behavior, multi-unit auction, electricity, Bertrand competition |
| JEL: | C72 D44 L10 L94 |
| Date: | 2004–04 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2004-41&r=ene |
| By: | C. Robert Clark; Andrew Leach |
| Abstract: | <P>Ce rapport aborde la question de la réglementation des marchés de l’énergie en général en mettant l’accent sur les marchés de l’électricité et du gaz naturel. On réglemente des marchés si l’on juge qu’ils représentent des situations de monopole naturel ou si l’on a des raisons de croire que les firmes non réglementées ne tiendraient pas compte des externalités qu’elles pourraient créer. L’argument habituellement invoqué pour justifier la réglementation des marchés de l’énergie est que celle-ci représente la meilleure solution de rechange lorsque le marché est défaillant. En d’autres termes, le résultat obtenu avec la réglementation peut s’avérer meilleur que celui que l’on obtiendrait si le marché n’était pas réglementé. Dans ce cas, l’intervention du gouvernement peut être requise pour protéger les intérêts des consommateurs. <P> Les marchés de l’énergie ont généralement été perçus comme des situations de monopole naturel, dans une large mesure en raison des énormes coûts fixes associés à la production et à la distribution de l’énergie. De plus, l’électricité et le gaz naturel sont généralement considérés comme des biens essentiels, ou plus précisément, comme des biens pouvant générer des bénéfices externes considérables lorsque fournis de manière fiable. Un approvisionnement fiable est nécessaire au bon fonctionnement de toute économie moderne et un marché privé pourrait ne pas fournir de manière égale le service aux consommateurs de différentes régions. <P> Au cours des dernières années, des segments de certains marchés de l’énergie ont été libéralisés n’étant plus perçus comme constituant des situations (actuelles ou potentielles) de monopole naturel ou parce que le marché permettait de s’assurer que les firmes prennent en considération les externalités qu’elles génèrent. Nous présentons ici les expériences de certaines juridictions en matière de libéralisation des marchés de l’énergie et montrons que la réglementation est possible et qu’elle est même susceptible d’apporter une amélioration par rapport au statu quo, dans la mesure où elle limite la position dominante d’une firme sur le marché. <P> Nous considérons ensuite le potentiel de restructuration des marchés de l’énergie au Québec, lesquels sont présentement réglementés principalement par la Régie de l’énergie du Québec. Le marché québécois de l’électricité ne constitue pas un cas typique pour la restructuration du secteur de la production puisqu’une grande majorité de la capacité génératrice provient de centrales hydroélectriques. En effet, plus de 90 % de la capacité électrique installée au Québec provient de sites hydrauliques, ce qui place la province au second rang des marchés hydroélectriques au monde, après la Norvège. Qui plus est, cette capacité est hautement concentrée sur trois réseaux hydrographiques. Le modèle usuel de cession forcée par réseau fluvial est susceptible d’introduire un pouvoir de marché au sein du marché restructuré et risque de créer de plus grandes inefficacités que celles prévalant sous le régime réglementé. Pour que la restructuration s’avère un succès, au moins une des deux approches suivantes doit être retenue. D’une part, un système avec droits de débit échangeables pourrait être mis en place parallèlement à un marché d’énergie concurrentiel, de façon à permettre la cession d’installations individuelles à l’intérieur d’un réseau fluvial ou, d’autre part, les marchés du Québec pourraient être ouverts à la concurrence étrangère. <P> Le segment de la vente au détail des marchés québécois de l’électricité et du gaz naturel pourrait potentiellement bénéficier de la libéralisation. La seule différence évidente entre les marchés de l’énergie du Québec et ceux d’autres juridictions provient de la politique de tarification uniforme. De plus bas prix pourraient prévaloir si le marché était ouvert à la concurrence, mais pas pour tous les consommateurs. La détermination du Québec à maintenir une tarification uniforme pour toute la province signifie que certains consommateurs paient actuellement leur énergie en deçà du prix du marché. Le prix pour ces consommateurs pourrait être appelé à augmenter si la restructuration du marché devait avoir lieu. |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirbur:2005rb-04&r=ene |
| By: | Frédéric Marty (IDEFI - Institut de droit et d'économie de la firme et de l'industrie - [CNRS : FRE2814] - [Université de Nice Sophia-Antipolis]) |
| Abstract: | L'un des principaux enjeux qui se posent en matière de viabilité et d'acceptabilité sociale des marchés de l'électricité libéralisés tient dans la capacité de ces derniers à satisfaire la demande dans des conditions de prix raisonnables . Deux dimensions sont alors présentes. La première tient à des dimensions de court terme. Elles sont liées au pilotage du réseau électrique, à son efficacité propre et à l'éventualité de manipulation des cours par les acteurs du marché. La seconde correspond à des dimensions de long terme. Elle tient à l'adéquation du parc productif avec la demande. Il s'agit alors de la question de l'optimalité des signaux de prix fournis par les marchés de l'électricité en matière d'incitations à l'investissement .<br /><br />Si les marchés de l'électricité étaient parfaitement efficients, les investisseurs seraient en mesure de former des anticipations parfaites sur les cash-flows attendus de leurs investissements. Ils devraient être en mesure de sécuriser ces derniers au travers de contrats à termes dont les échéances seraient calées sur les délais d'amortissement financier des nouvelles infrastructures. De la même façon, l'éventuel exercice de pouvoirs de marchés n'aurait qu'un impact limité du fait du caractère subsidiaire du marché spot vis-à-vis des contrats bilatéraux à long terme .<br /><br />Cependant, les marchés de l'électricité présentent de nombreuses particularités accroissant la volatilité des cours et susceptibles de décourager les investissements. La première d'entre elles tient à l'inélasticité de la demande aux prix. Une facturation en temps réel étant encore techniquement problématique et apparaissant comme socialement peu acceptable , il est difficile sinon impossible de responsabiliser la demande au moment de la pointe . Ce faisant, les cours sont susceptibles de connaître des variations extrêmes. La seconde particularité tient aux risques associés aux investissements dans des capacités de pointe. Ces dernières ne seront potentiellement appelées que durant quelques heures dans l'année. La rentabilité de l'investissement dépend des seules espérances de cash-flows liés à ces épisodes de tension extrême sur les capacités productives. Comme il n'existe pas encore de contrats à terme permettant suffisamment de sécuriser les débouchés de ces unités sur l'ensemble de leur durée d'exploitation, les investisseurs peuvent reculer devant le risque. Non seulement la volatilité peut-elle accroître le risque des nouveaux investissements, mais elle peut aussi brouiller les signaux de prix. En effet, les investisseurs peuvent difficilement faire la part des choses entre les deux origines possible d'une valorisation extrême des prix de l'électricité, à savoir l'existence de rentes de raretés et l'exercice de pouvoir de marché . Non seulement l'investisseur risque de ce méprendre sur la réalité des rentes de raretés (annonciatrices de cash-flows futurs), mais il anticipe que les valorisations des prix risquent de susciter des accusations de manipulations des cours Ces dernières peuvent être à l'origine d'interventions brutales du régulateurs, notamment sous forme de plafonnement des cours. Celles-ci peuvent être des plus préjudiciables pour l'amortissement des investissements, dans la mesure où elles contribuent à annihiler les rentes en question, indispensables à l'amortissement des capacités de pointe.<br /><br />Nous nous proposerons donc d'analyser dans une première partie les principales causes d'instabilité des marchés de l'électricité, avant de nous attacher dans une seconde partie aux mécanismes institutionnels permettant de sécuriser l'approvisionnement électrique via la garantie d'une rémunération des capacités de production de réserve. Enfin, dans une troisième partie conclusive, nous nous interrogerons sur la capacité des seuls mécanismes de marché à relever les défis posés par la continuité de l'approvisionnement. |
| Keywords: | Electricité, signaux de prix, sécurité de l'approvisionnement |
| Date: | 2006–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00010364_v1&r=ene |
| By: | Alejandro Diaz-Bautista (COLEF) |
| Abstract: | México requiere realizar cambios estructurales sustanciales en el sector eléctrico durante el presente sexenio. Dicha modificación, debe ser resultado de una intensa discusión económica, técnica y política, considerando seriamente las propuestas ejecutivas y legislativas y que permita analizar otras opciones capaces de evitar los riesgos de una reforma apresurada en el sector, sin poner en peligro el poder satisfacer la creciente demanda en los próximos años. La reforma del sector eléctrico debe considerar la opción de un sistema mixto entre el público y el privado. Una desregulación económica encaminada a un sistema mixto puede evitar las ineficiencias en la producción económica, al igual que significaría la mayor autonomía financiera de las empresas eléctricas, lo que mejoraría la calidad del servicio eléctrico, reduciendo los pasivos de las empresas y disminuyendo el precio para los usuarios. El cambio estructural del sector eléctrico hacia un sistema mixto presenta beneficios para México. Un sector eléctrico con una regulación clara, no discrecional, que combine la libertad de mercado con una redistribución no burocrática del ingreso, será la regla para fomentar el crecimiento económico del sector y del país en la primera década del nuevo milenio. This paper discusses the experiences, needs, ideas and actions taken in developing the energy policy and regulatory power frameworks, during the process of power sector reform in Mexico. |
| Keywords: | ENERGY , POWER, REGULATION , MEXICO |
| JEL: | L |
| Date: | 2005–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpio:0504011&r=ene |
| By: | Rudiger Ahrend; William Tompson |
| Abstract: | This paper provides an overview of the political economy of oil in the CIS. It briefly situates the region?s oil sector potential in the global context, before analysing the structural features of the oil sectors by country. It examines the ways in which CIS oil industries have been organised and governed since 1991, as well as questions of transport infrastructure and export routes, which are especially critical for Central Asia?s landlocked producers. The paper finally considers the causes and likely consequences of the recent shift towards greater state ownership and control in Russia and Kazakhstan, the region?s most important oil producers. The paper?s central argument is that these changes have increased the risk that the full hydrocarbon potential of the CIS may not be developed in a timely and economically efficient way. <P>Réaliser le potentiel pétrolier des pays de la CEI Cette étude présente un panorama de l?économie politique du secteur pétrolier dans les pays de la CEI. Après une brève description du potentiel de la région, vu dans un contexte global, une analyse des caractéristiques structurelles des secteurs pétroliers pays par pays est présentée. L?étude propose également un examen des modes d?organisation et de gestion des industries pétrolières depuis 1991, ainsi que des questions d?infrastructure de transport et des routes de transit pour l?exportation, qui sont particulièrement cruciales pour les producteurs enclavés d?Asie Centrale. Enfin, les causes et les conséquences probables du mouvement récent vers un contrôle croissant du secteur par l?état en Russie et au Kazakhstan, les deux plus importants producteurs de la région, sont analysées. La conclusion principale de l?étude est que ces changements ont accru le risque que le plein potentiel des pays de la CEI ne soit pas développé de manière opportune et économiquement efficiente. |
| Keywords: | growth, corruption, croissance, privatisation, privatisation, energy, énergie, Russia, pipelines, state ownership, Russie, entreprise d'État, oil, property rights, pétrole, droit de propriété, corruption, political economy, économie politique, CIS, Kazakhstan, Uzbekistan, Turkmenistan, Caspian, CEI, Kazakhstan, Azerbaïdjan, Ouzbékistan, Turkménistan, Caspienne, oléoducs, Azerbaijan |
| JEL: | L71 O57 P28 Q41 |
| Date: | 2006–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:484-en&r=ene |
| By: | Pandey Ajay; Morris Sebastian |
| Abstract: | The budget contained an announcement that the central government would actively explore the option of using an appropriate form of the ‘food stamps’ or an alternative scheme to improve the efficacy and reduce the cost of the current system of administration of food subsidies. The announcement provides an opportunity to discuss the issues of subsidy on account of LPG and device a system of subsidisation based on ‘LPG Stamps’ or some other scheme to improve the efficacy of subsidisation and remove the large distortions created by the current system. LPG subsidy has grown historically and has become quite high because of aggressive growth in connections and increase in per connection consumption in addition to rising input costs. Given that there is evidence that LPG subsidy has been ineffective in increasing penetration in rural and poorer households, there is a case for capping and targeting LPG subsidy. Otherwise it can explode over time unless new connection growth is curbed, which is indefensible. The best option to curtail LPG subsidy would be to eliminate it straight away. However, there are at least two factors which are likely to make it difficult. Firstly, the input costs are high (from a historical point of view). Secondly, the high input prices coupled with lack of preparatory ground work may result in political mobilization against the move. The next best option which sharply focuses on the deserving segment is direct subsidy to below poverty line families. These households may be given up to 8 coupons every year. Each coupon can be used for subsidy for a cylinder. A separation of the identification and issuance of coupon is critical to the success of this scheme. As clarified elsewhere in the study, by coupon we mean any technology which allows the target group to get a well-defined and secured entitlement. It could be paper coupons with security features or smart cards, using IT for identification and entitlements. Direct subsidy to BPL family through coupon would allow them to pay cash equal to retail price less the subsidy per coupon. This amount and a coupon would entitle them to get a cylinder. The coupon surrendered to the dealer would be in turn be surrendered by him to the Oil companies, who would pay equivalent cash to the dealer. In fact, dealer may get an additional compensation for the cost of accounting and administration. The BPL coupon holders may be allowed to trade the coupons as this would convert the LPG subsidy to income subsidy. Even if the transfer or trade is not allowed, it is bound to take place and the net effect of that would be sharing of subsidy between intended beneficiary and some intermediary. Targeting LPG subsidy to BPL consumers may encounter problems in improper identification about which Oil companies need to work closely with district/ local administration so as to proactively eliminate inappropriately classified consumers. Targeting BPL consumers for LPG subsidy also leaves open the possibility of non-BPL consumers taking connections in the name of BPL consumer and that of BPL consumers opting for multiple connections. Both problems are to some extent self limiting (due to conflict and due to connection charges) but warrant closer examination of new connections under BPL category. Coupon based direct subsidies require efficient administrative support associated with coupon distribution, appropriate documentation, coupon accounting, collection and cash reconciliation. Coupons have to be difficult to copy and print to prevent frauds etc. This can be ensured by printing of coupons at a security press, or by suitable IT enabled mechanisms. Irrespective of any method of LPG subsidy reduction, there is a need to examine the taxes built in currently estimated gross subsidy. The net subsidy to the consumers should be the basis of elimination otherwise the target is self-defeating (by being higher) and not justifiable (elimination of gross subsidy means moving from net subsidy to net tax regime). Even if the state governments continue to collect sales tax, the central government which also collects taxes and simultaneously bears subsidy should neutralize the subsidy estimate from central taxes. The state governments need to be persuaded to retain the current amount of sales tax (but at a lower rate) otherwise states get higher revenue and the price target goes up. In case the state governments were to pay truant on this issue, there is a need to explore whether differential issue prices can be used as a deterrent. Another issue which warrants closer examination is the impact of volatility of input costs on retail prices. Had the industry been competitive, this would not have been a major issue. Clearly, some oversight or regulation is required so that prices are changed at appropriate intervals and are still neither excessive nor too low. It would be appropriate to set up a regulator to review periodically review the input costs and allow changes. He may allow prices on the basis of average cost with a lag or may prescribe a band linked to input costs and may monitor the prices to prevent any abuse. The rationalisation of prices and of tax reform in this sector is long overdue. These need to be simultaneously pursued. It is possible for the entire sector to move towards a revenue neutral cenvat based tax regime. That in itself and the direct subsidization of kerosene and LPG through coupons is necessary to remove all the distortions. The ill effects of the distortions that result in misuse, diversion, revenue loss, and added environmental and governance problems can only be feasibility addressed by the movement away from price based subsidies to direct subsidies. Similarly kerosene subsidises if correctly targeted and administered can have large spillovers in the management of subsidies in LPG. |
| Date: | 2006–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:2006-04-07&r=ene |
| By: | Linda Bui |
| Abstract: | I investigate whether, as is commonly believed -- and if so how -- firm disclosure of so-called "toxic" releases, required since 1987 by the federal "Toxics Release Inventory ("TRI"), has brought about the reductions in toxic releases that have occurred since that time. Existing literature, consisting principally of event studies of stock market returns, suggest that dirty firms experience abnormal negative returns. Using a micro-level data set that links TRI releases to plant level Census data for petroleum refineries, I study plant-level behavior, exploiting state variation in toxics regulations, and exploring the relationship between TRI releases and concomitant regulation of non-toxic pollutants. I find that, although TRI induced public disclosure may have contributed to the decline in reported toxic releases, that alone has not been the cause of those reductions: the evidence is strong that changes in toxic emission intensity are a byproduct of more traditional command and control regulation of emissions of non-toxic pollutants. I find that (1) since 1987, refineries have become substantially cleaner in terms of over-all toxic releases; (2) the clean-up has not occurred through substitution away from TRI listed substances as inputs or alteration in the mix of outputs; and (3) refineries in states with more stringent supplemental regulation of toxics (e.g. with specific state-wide goals for toxic reductions) have significantly lower toxic emission intensity levels than refineries in other states. I find also that (4) TRI air releases are highly correlated with levels of criteria air pollution; (5) both toxic pollution levels and intensity fall with increases in pollution abatement (operating and maintenance) expenditures for non-toxic air pollution; and (6) TRI air releases are affected by being in more stringent regulatory regions for the criteria air pollutants. Finally, I link my data-set with CRSP data to re-evaluate the effect of TRI reporting on company stock market valuation, correcting for a methodological shortcoming (stemming from the fact that all reporting firms face a common event window) of prior event studies of the impact of the TRI. Correcting for that shortcoming, I find that (7) the evidence of negative abnormal returns around TRI reporting dates for petroleum companies is not significant. My findings suggest that the most probable mechanism through which TRI reporting may induce firms to clean up is local and state governmental use of TRI disclosures. They suggest also not only that the perceived effectiveness of TRI regulation has been overstated, but perhaps more importantly that the benefits of command and control regulation of non-toxic pollutants have been underestimated. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-13&r=ene |
| By: | Adriana Ignaciuk |
| Abstract: | Biomass as a source of energy has several advantages over fossil fuels. It delivers energy at low net CO2 emission levels and it contributes to sustaining future energy supplies. However, an often-heard concern is that large-scale biomass plantations might increase pressure on the productive land and might cause a substantial increase of food prices. Johansson and Azar (2004) predict that due to rigid CO2 policy the price of agricultural goods increase substantially. McCarl and Schneider (2001) analyses the impact of carbon price on food and biomass production and they conclude that with a carbon price of 500$/MTCE, US crop prices almost triple. If we can exploit the multi functionality properties of biomass plantation, such as bioremediation, they can contribute to environmental policy by reducing the competition between biomass and agricultural production. In this paper we deal with the trade-off between agricultural and biomass production when such synergies are explicitly taken into account. To assess the impact of environmental policies on greenhouse gas emissions, land use allocation, sectoral production and consumption levels and prices of land, food, electricity and other commodities we present an applied general equilibrium (AGE) model with special attention to biomass and multi-product crops. The model describes the entire economy, with explicit detail in the representation of production of traditional agricultural and biomass crops. The model is an extended version of the model described in Ignaciuk et al. (2004). The model distinguishes 35 sectors, including 6 agricultural and biomass sectors. Moreover, the bioelectricity sector is explicitly described. We include three primary production factors: labor, capital and land. Three land classes are identified to capture differences in productivity from different land types. A representative consumer maximizes utility under the condition that expenditures on consumption goods do not exceed income. Utility is represented by a nested constant elasticity of substitution (CES) function, in order to allow for substitution possibilities between different consumption goods, such as between conventional electricity and bioelectricity. Producers maximize profits subject to the available production technologies. Production technologies are represented by six-level nested CES functions, where also emissions (emission permits) from production processes are incooperated. The emissions of major greenhouse gases are calculated; namely CO2, N2O and CH4. A government sector collects taxes, distributes subsidies and consumes public goods; environmental policy is implemented by reducing the number of emission permits the government auctions. This way of modeling environmental policy ensures that a cost-effective allocation is achieved. The interactions between the various production sectors are relevant, as the agricultural and energy sectors have strong links with the rest of the economy. An economy-wide model, such as the AGE-framework provides, allows us to take these interlinkages fully into account. Moreover, the indirect impacts of environmental policies, that are often ignored but can be highly relevant (cf. Dellink 2005) are incorporated in this way, ensuring a consistent assessment of the economic costs of environmental policy. We calibrate the AGE model using data for Poland for 1997. Poland provides a relevant case as it has a high potential for biomass production, and has a large agricultural sector (Ignaciuk et al.2005). In the empirical application, we focus on bioremediation characteristics of willow plantations and on biodiversity support of forestry. Data are taken from Statistics Poland (GUS 2002) and the GTAP database (Rutherford & Paltsev 2000). The preliminary results show that bioremediation characteristics of willow can substantially increase the potential for bioenergy, thanks to its potential of growing on marginal land. Thus, the costs of climate policy can be substantially reduced and the policy goals set for bioenergy use can be achieved with less effort. However, at current prices, willow and forestry are not economically interesting, and hence stringent environmental policies are needed to ensure that these opportunities are reaped. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa05p600&r=ene |
| By: | Ghalwash, Tarek (Department of Economics, Umeå University) |
| Abstract: | This thesis consists of four papers: two of them deal with the relationship between consumption, energy taxation, and emissions on macro level, and two of them focus on the effects of changes in consumption and income on the environmental quality on a micro level. <p> The main objective of paper [I] is to examine how exogenous technological progress, in terms of an increase in energy efficiency, affects consumption choice by Swedish households and thereby emissions of carbon dioxide (CO2), sulphur dioxide (SO2) and nitrogen oxide (NOx). The aim of the paper is closely related to the discussion of what is known as the “rebound effect”. To neutralize the rebound effect, we estimate the necessary change in CO2 tax, i.e. the CO2 tax that keeps CO2 emissions at their initial level. In addition, we estimate how this will affect emissions of sulphur dioxide and nitrogen oxides. The results indicate that an increase in energy efficiency of 20 percent will increase emissions of CO2 by approximately 5 percent. To reduce the CO2 emissions to their initial level, CO2 tax must be raised by 130 percent. This tax increase will reduce the emissions of sulphur dioxide to below their initial level, but will leave the emissions of nitrogen oxides at a higher level than initially. <p> One of the premises implied in paper [II] is that the changes in consumer prices, as a result of changes in environmental taxes, may send a different signal to the consumer compared with other changes in consumer prices, such as changes in producer price. In addition, this assumed difference in the signaling effect of the changes in environmental taxes, compared to changes in the producer price, may also differ between different commodities. To achieve the objectives a system of demand functions for Swedish households is estimated. To test for the signaling effect of environmental taxes the consumer price for energy goods is partitioned into a producer price part and a tax part. <p> In Paper [III], we estimate the income elasticity of demand for recreational services and other traditional groups of goods in Sweden and we test for potential changes in such estimates over the twentieth century. The paper uses Swedish household surveys for the years 1913, 1984, 1988, and 1996. Because of the difficulty of directly observing the demand for recreational services, we employ an indirect methodology by using the demand for some outdoor goods as proxies for the recreational services demand. <p> In paper [IV], we investigate the relationship between pollution and income at the household level. Here we want to investigate, and hence contribute to the existing literature, under what conditions concerning individual preferences and the link between consumption and pollution a linear relationship is to be expected, but also to empirically assess the relationship. To achieve our objective we formulate a model determining different type of households’ choice of consumption for goods. Furthermore we link the demand model to emission functions for the various goods. The results from the empirical analysis show that, at least in a close neighborhood of observed income/pollution, we can reject linearity for all three types of pollutions, CO2, SO2, and NOx. According to our results the pollution/income relationships are all strictly concave. Thus the implication is that the income distribution seems to matter in the sense that equalization of income will lead to higher emissions. Furthermore it is shown that the slope as well as the curvature differ between different types of households, which means that preferences differ across households. <p> Keywords: Household consumption, energy demand, emissions, rebound effect, energy taxation, tax elasticities, environmental services, income elasticities, Engel Curves, income distribution. |
| Keywords: | Household consumption; energy demand; emissions; rebound effect; energy taxation; tax elasticities; environmental services; income elasticities; Engel Curves; income distribution |
| JEL: | D12 H31 H41 Q26 Q41 Q53 Q56 |
| Date: | 2006–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0678&r=ene |
| By: | Ronald Shadbegian; Wayne Gray |
| Abstract: | This study examines the determinants of environmental and economic performance for plants in three traditional smoke-stack industries: pulp and paper, oil, and steel. We combine data from Census Bureau and EPA databases and Compustat on the economic performance, regulatory activity and environmental performance on air and water pollution emissions and toxic releases. We find that plants with higher labor productivity tend to have lower emissions. Regulatory enforcement actions (but not inspections) are associated with lower emissions, and state-level political support for environmental issues is associated with lower water pollution and toxic releases. There is little evidence that plants owned by larger firms perform better, nor do older plants perform worse. |
| Keywords: | Environmental Performance, Labor Productivity, Emissions, Enforcement Activity, Technology |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:05-03&r=ene |
| By: | Burtraw, Dallas (Resources for the Future); Palmer, Karen (Resources for the Future); Kahn, Daniel (Resources for the Future) |
| Abstract: | Cap-and-trade programs for air emissions have become the widely accepted, preferred approach to cost-effective pollution reduction. One of the important design questions in a trading program is how to initially distribute the emissions allowances. Under the Acid Rain program created by Title IV of the Clean Air Act, most emissions allowances were distributed to current emitters on the basis of a historic measure of electricity generation in an approach known as grandfathering. Recent proposals have suggested two alternative approaches: allocation according to a formula that is updated over time according to some performance metric in a recent year (the share of electricity generation or something else) and auctioning allowances to the highest bidders. Prior research has shown that the manner in which allowances for carbon dioxide (CO2) are initially distributed can have substantial effects on the social cost of the policy as well as on who wins and who loses as a result of the policy. Another concern with a regional cap-and-trade program like the Regional Greenhouse Gas Initiative (RGGI) is the effect that different approaches to allocating emissions allowances will have on the level of CO2 emissions outside the region, commonly called emissions leakage. In this research we model historic, auction, and updating approaches to allowance allocation that we call bookends, then model various variations on these approaches. We consider changes in measures such as electricity price, the mix of generation technologies, and the emissions of conventional pollutants inside and outside the RGGI region. We examine the social cost of the program, measured as the change in economic surplus, which is the type of measure used in benefit–cost analysis. We also examine the effects of different approaches to distributing allowances on the net present value of generation assets inside and outside the RGGI region. We find that how allowances are allocated has an effect on electricity price, consumption, and the mix of technologies used to generate electricity. Electricity price increases the most with a historic or auction approach. Coal-fired generation in the RGGI region decreases under all approaches but decreases the most under updating. Gas-fired generation decreases under historic and auction approaches but increases substantially under updating. Renewable generation increases under historic and auction approaches but decreases slightly under updating as a consequence of the expanded generation from gas. Consistent with the changes in the composition of generation, the decline in emissions of conventional pollutants including sulfur dioxide (SO2), nitrogen oxides (NOx), and mercury that was expected as a result of the Clean Air Interstate Rule is accelerated substantially as a result of the RGGI policy, particularly under updating. The cost of complying with SO2, NOx, and mercury rules declines similarly. We find that the social costs of the bookend auction and historic approaches are comparable and that the social cost of updating is roughly three times that of the other approaches. At the same time, updating yields greater emissions reductions on a national basis (because it produces less emissions leakage) and greater cumulative reductions in emissions at the national level than historic allocation. Varying the design of the updating approach can reduce its social costs but generally would increase leakage at the same time. An updating approach with allocation to all generators, including all nuclear and renewables has the lowest social cost within the RGGI region of any policy analyzed, although this result comes at the expense of costs imposed outside the region. When the approaches to allocation are mixed, we find the changes in electricity price, generation, and emissions are roughly a combination of the performance of each individual approach. In particular, social costs typically are lower under the scenarios that combine an auction with updating than when updating is the exclusive approach to distributing allowances. Who wins and who loses from the policy varies with the approach to allocation. Under a historic approach, producers in the RGGI region gain substantially and generally are better off than without the program; such is not true under an auction or updating. Producers also gain overall from the policy when a historic allocation is combined with an auction, but the gains are substantially less than in the 100% historic case. Producers outside the region tend to benefit considerably from the higher electricity price in the RGGI region but benefit the least under updating because the effect on electricity price is lowest. Consumers both inside and outside the RGGI region are adversely affected under all allocation approaches but much less so under updating because the change in electricity price is lowest. One exception is when eligibility for allowances under an updating allocation is limited to nonemitters only, in which case the electricity price increases substantially. Different types of generators fare differently under the various allocation approaches. Asset values for all types of generators are highest under a historic approach, although the difference between historic and auction approaches is small for nuclear generators. Compared with the baseline, both nuclear and existing gas-fired generators in the RGGI region gain under an auction. Only gas-fired generators gain under the bookend approach to updating, although nuclear generators benefit as well under updating designs that include them among those eligible for allowances. Coal-fired generators lose the most under updating. Moving from 100% updating to auctioning an increasingly larger share of allowances generally has a positive effect on asset values for all fuel types including coal. The one exception is that moving from 50% auction and 50% updating to 100% auction has a negative effect on the asset values for coal. Finally, we conduct sensitivity analyses with higher natural gas prices and constraints on electricity transmission capability. The social cost of the RGGI program does not appear to be sensitive to these constraints. Higher gas prices or transmission constraints alone impose significant costs that are larger than the effect of adding the RGGI policy. For example, their substantial effect on electricity price is greater than the added effect imposed by the RGGI program. The constraints that are modeled do not appear to have a strong impact on RGGI implementation. We also conduct a sensitivity analysis with renewables portfolio standard policies in place throughout the region. The resulting prices of electricity and CO2 emissions allowances are slightly lower than without the renewables policy. |
| Keywords: | emissions trading, allowance allocations, electricity, air pollution, auction, grandfathering, generation performance standard, output-based allocation, cost-effectiveness, greenhouse gases, climate change, global warming, carbon dioxide, sulfur dioxide, nitrogen oxides, mercury |
| JEL: | Q2 Q25 Q4 L94 |
| Date: | 2005–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-05-25&r=ene |
| By: | Karsten Neuhoff; Kim Keats; Misato Sato |
| Abstract: | The allowance allocation under the European Emission trading schemes differs fundamentally from earlier cap and trade programs, like SO2 and NOx in the USA. Because of the iterative nature of negotiations of the overall budget, the allocation also has to follow an iterative process. If power generators anticipate that their current behaviour will affect future allowance allocation, then this can distort today’s decisions. Furthermore, the National Allocation Plans (NAPs) contain multiple provisions dealing with existing installations, what happens to allocation when they close, and allocations to new entrants. We provide a framework to assess the economic incentives and distortions that provisions in NAPs can have on market prices, operation and investment decisions. To this end, we use both analytic models to illustrate the incentives effects and results from numerical simulation runs that estimate the magnitude of impacts from different allocation rules. |
| Keywords: | Allowance allocation, Emission trading, Power sector, Economic incentives |
| JEL: | D24 D92 Q28 L10 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0642&r=ene |
| By: | Nick Vanston |
| Abstract: | This document forms a record of a workshop held on 16 January 2006, aimed at examining the mechanisms underlying cross-country convergence of per capita GDP, to what extent they operate in practice, and the implications for policies, including those requiring plausible long-term projections of economic growth by country or region. The workshop included presentations by leading academics and OECD staff from the Economics Department, the Directorates of the Environment, Science and Technology, and Statistics and the Development Centre. A list of the main participants, and links to their presentations, are given in an Annex. At the end of the workshop, a panel of senior policy advisers discussed the policy implications for OECD countries. |
| Keywords: | growth, croissance, institutions, institutions, convergence, convergence, structural policies, politique structurelle, technology, factor flows, climate change, mouvements de facteurs de production, technologie, changement climatique |
| JEL: | O1 O3 O4 Q54 |
| Date: | 2006–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:483-en&r=ene |
| By: | Joakim Johansson (Inregia AB); Sirje Pädam (Departament of Public Economy at Tallinn University of Technology, and Inregia AB) |
| Abstract: | From the perspective of economic efficiency there are obvious advantages of regional differentiation of regulatory measures instead of relying on nationally uniform regulation, which is due to the fact that adverse health impacts, as well as other negative externalities, such as environmental damage and congestion, vary between locations. One conclusion of the analysis is that ranking of economic instruments depends on whether regulation is imposed nationally or regionally. Another implication is that if road pricing is not possible to implement locally, then command and control need to be considered. |
| Keywords: | air quality standards, road pricing, vehicle taxes, scrapping subsidy, economic efficiency |
| JEL: | D62 R48 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ttu:wpaper:121&r=ene |
| By: | Martin Gassebner; Michael Lamla; Jan-Egbert Sturm |
| Abstract: | Recent literature proposes many variables as significant determinants of pollution. This paper gives an overview of this literature and asks which of these factors have an empirically robust impact on water and air pollution, i.e. do not depend upon the conditioning information set. For this, we apply Extreme Bound Analysis (EBA) on a panel of 208 countries covering the period 1960–2001. We find supportive evidence on the existence of the environmental Kuznets curve. Furthermore, mainly demographic variables and variables capturing the economic structure of a country contribute in explaining air and water pollution. |
| Keywords: | pollution, environment, sensitivity analysis, environmental Kuznets curve |
| JEL: | C52 F18 L60 O13 Q53 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1699&r=ene |