nep-ene New Economics Papers
on Energy Economics
Issue of 2007‒03‒10
eight papers chosen by
Roger Fouquet
Imperial College, UK

  1. Comment: Legal Liability as Climate Change Policy By Hilary Sigman
  2. On the Importance of Equity in International Climate Policy: An Empirical Analysis By Lange, Andreas; Vogt, Carsten; Ziegler, Andreas
  3. GTAP-E: An Energy-Environmental Version of the GTAP Model with Emission Trading By Truong P. Truong; Claudia Kemfert; Jean-Marc Burniaux
  4. Incentives and quota prices in an emission trading scheme with updating By Knut Einar Rosendahl
  5. "China's Energy Security: National Security, Ecological Balance and Regional Co-operation" By Haider A. Khan; Mariko Frame
  6. Testing the Natural Resource Curse Hypothesis in Indonesia: Evidence at the Regional Level By Ahmad Komarulzaman; Armida Alisjahbana
  7. Efectos de los choques petroleros sobre las economías de Centroamérica y la República Dominicana By Guerrero, Carlos; Urzúa, Carlos M.
  8. The First World War and coal trade geography in Latin America and the Caribbean (1890-1930) By Anna Carreras Marin; Marc Badia Miro

  1. By: Hilary Sigman (Rutgers University)
    Abstract: Several U.S. states have attempted to use of legal liability imposed on greenhouse gas emitters as a public policy instrument for climate change. This brief comment considers the desirability of this approach, focusing on three possible roles for climate change liability: as a source of compensation, as a direct influence on greenhouse gas concentrations, and as a means to facilitate the adoption of ex ante public policies to control greenhouse gases. The strongest argument for liability may be that the threat of liability improves the chances that climate change policies will use more efficient, revenue-raising instruments.
    Keywords: Environmental policy, Law and economics, Revenue recycling
    JEL: K32 Q54
    Date: 2007–02–21
  2. By: Lange, Andreas; Vogt, Carsten; Ziegler, Andreas
    Abstract: Based on unique data from a world-wide survey of agents involved in international climate policy, this paper empirically analyzes the importance of equity in this field. We find that equity issues are considered highly important in international climate negotiations and that the polluter-pays rule and the accompanying poor losers rule are the most widely accepted equity principles. Our econometric analysis shows a strong influence of the economic or emission performance of the agents’ country on the importance of equity issues and principles: (i) Equity issues are seen as more important by individuals from G77/China countries or from countries with less current per capita GDP and less future per capita CO2 emissions. (ii) Agents from richer countries are less in favor of incorporating the polluter-pays and the ability-to-pay principle in future international climate agreements. (iii) The poor losers rule is more strongly supported by individuals from G77/China countries or by individuals from countries with less current per capita GDP. While these results are consistent with pure economic self-interest, the support for the egalitarian principle runs contrary to economic intuition: In the long-run, agents from richer countries are more in favor of incorporating the egalitarian principle. Furthermore, the effect of the economic performance variables on the desired degree of incorporating the polluter-pays principle interestingly becomes less significant in the long-run. This indicates that future international climate agreements could possibly be based on a combination of the polluter-pays, the egalitarian, and the poor losers rule.
    Keywords: International Climate Policy, International Environmental Negotiations, Equity Issues, Probit Models
    JEL: D63 H41 Q48 Q54
    Date: 2006
  3. By: Truong P. Truong; Claudia Kemfert; Jean-Marc Burniaux
    Abstract: Energy is an important commodity in many economic activities. Its usage affects the environment via CO2 emissions and the Greenhouse Effect. Modeling the energy-economy-environment-trade linkages is an important objective in applied economic policy analysis. Previously, however, the modeling of these linkages in GTAP has been incomplete. This is because energy substitution, a key factor in this chain of linkages, is absent from the standard model specification. This technical paper remedies this deficiency by incorporating energy substitution into the standard GTAP model. It begins by first reviewing some of the existing approaches to this problem in contemporary CGE models. It then suggests an approach for GTAP which incorporates some of these desirable features of energy substitution. The approach is implemented as an extended version of the GTAP model called GTAP-E. In addition, GTAP-E incorporates carbon emissions from the combustion of fossil fuels and this revised version of GTAP-E provides for a mechanism to trade these emissions internationally as well as domestically. The policy relevance of GTAP-E in the context of the existing debate about climate change is illustrated by some illustrative simulations of the implementation the European emissions trading scheme in 2005. It is hoped that the proposed model will be used by individuals in the GTAP network who may not be themselves energy modelers, but who require a better representation of the energy-economy-environmental linkages than is currently offered in the standard GTAP model.
    Date: 2007
  4. By: Knut Einar Rosendahl (Statistics Norway)
    Abstract: Emission trading schemes where allocations are based on updated baseline emissions give firms less incentives to reduce emissions. Nevertheless, according to Böhringer and Lange (2005a), such allocation schemes are cost-effective if the system is closed and allocation rules are equal across firms. In this paper we show that the cost-effective solution may be infeasible if the marginal abatement costs grow too fast. Moreover, if a price cap or banking/borrowing are introduced, the abatement profile is no longer the same as in the case with lump sum allocation. In addition, we show that with allocation based on updated emissions, the quota price will always exceed the marginal abatement costs. Numerical simulations indicate that the quota price most likely will be several times higher than the marginal abatement costs, unless a significant share of allowances are either auctioned or lump sum distributed.
    Keywords: Emission trading; Allocation of quotas; Quota prices.
    JEL: H21 Q28
    Date: 2007–02
  5. By: Haider A. Khan (GSIS, University of Denver); Mariko Frame (GSIS, University of Denver)
    Abstract: This paper analyzes both global and regional approaches to solving problems of energy security and ecological imbalance by addressing specifically the problems of China's energy security. PRC's growing energy dependence has become a major concern for both economic and national security policymakers in that country. The ambitious goal of modernization of the economy along the lines of the other newly industrialized economies(NIEs) of Asia has succeeded only too well, and it is difficult to reorient economic priorities. If examined rigorously, such an economic strategic assumption can be seen to entail the goal of creating further technological capabilities. In particular, China seems to be firmly committed to the creation of a largely self-sustaining innovation system as part of a knowledge-based economy of the future . Such innovation systems, called positive feedback loop innovation systems or POLIS have been created by advanced countries, and NIEs such as South Korea and Taiwan are proceeding to create these as well. But this will add to its energy burden and further dependence on the US as the power which controls the key sea lanes. Only a strategic reorientation to building a self-sustaining POLIS and appropriate regional cooperation institutions can lead to the way out of the current dilemma for China.
    Date: 2007–03
  6. By: Ahmad Komarulzaman (Department of Economics, Padjadjaran University); Armida Alisjahbana (Department of Economics, Padjadjaran University)
    Abstract: Resource curse literatures explain that countries abundant with natural resources tend to grow slower. This hypothesis is relevant for Indonesia as it is a country rich in natural resources. This paper tries to investigate empirically the relationship between resources abundance and its impact on economic development at the regional level using cross section regression approach. The regional financial data from ministry of finance are combined with regional specific data from BPS to seek the pattern. The paper will shed light on whether resources rich regions in Indonesia are trapped in this curse.
    Keywords: Natural resource rent, resource curse hypothesis, Indonesia
    JEL: Q01 Q56 R11
    Date: 2006–08
  7. By: Guerrero, Carlos (Tecnológico de Monterrey, Campus Ciudad de México); Urzúa, Carlos M. (Tecnológico de Monterrey, Campus Ciudad de México)
    Abstract: This document analyzes the effects of recent oil shocks on the economies of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. The general results are as follows. First, oil demand responded elastically to economic activity, and was almost perfectly inelastic to its relative price. Second, statistical analysis suggests that in most cases oil shocks affected economic activity negatively, and pushed prices up. And third, after the increases in the oil price, the corresponding monetary policies tended to be restrictive.
    Keywords: Guatemala, Salvador, Honduras, Nicaragua, Costa Rica, Dominicana, choques petroleros, inflación, petróleo, consumo, hidrocarburos, oil shocks, oil demand, inflation, VAR models
    JEL: O54 Q31 Q38
    Date: 2007–01
  8. By: Anna Carreras Marin; Marc Badia Miro (Universitat de Barcelona)
    Abstract: This paper aims to illustrate the dynamics of coal trade between Latin America and its main trade partners, i.e. the USA, Great Britain and Germany, before and after the enormous disruption caused by the First World War. The coal trade was used as an indicator of modernization for Latin American countries, given that oil was at that time of secondary importance. Energy imports have determined the possibilities of each Latin American country in its process of development. Here we address this question and place special emphasis on supply channels, concluding that the trade link with main suppliers was of key significance. Although this was very clear by the end of the period, the process had started well before the First World War, at least for the majority of LA&C countries. These points are developed through a gravity model applied to the bilateral coal trade. The importance of the market supplier share is addressed through cluster methodologies.
    Keywords: coal trade, latin american and caribbean trade, economic geography, economic trade dependency
    JEL: N76 F19 N16
    Date: 2007

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