nep-ene New Economics Papers
on Energy Economics
Issue of 2007‒12‒01
fourteen papers chosen by
Roger Fouquet
Imperial College, UK

  1. Mitigation of CO2 emissions in 2020 : impacts of the " 20/20/20 " European policy By Loreta Stankeviciute
  2. The determinants of allowance prices in the European Emissions Trading Scheme - Can we expect an efficient allowance market 2008? By Wilfried Rickels; Vicki Duscha; Andreas Keller; Sonja Peterson
  3. Oil Crisis, Energy-Saving Technological Change and the Stock Market Crash of 1973-74 By Alpanda, Sami; Peralta-Alva, Adrian
  4. Europäischer Handel mit Treibhausgasemissionszertifikaten und seine Umsetzung in das deutsche Umweltrecht By Fritz Rahmeyer
  5. Crude Oil Price Determinants By Jochen Moebert
  6. Oil and the Great Moderation By Anton Nakov; Andrea Pescatori
  7. Forecasting electricity spot market prices with a k-factor GIGARCH process By Abdou Kâ Diongue; Dominique Guégan; Bertrand Vignal
  8. Energy-Using Appliances and Energy-Saving Features: Determinants of Ownership in Ireland By Joe O'Doherty; Sean Lyons; Richard S. J. Tol
  9. Modern energy consumption and economic modernisation in Latin America and the Caribbean between 1890 and 1925 By M. del Mar Rubio Varas; César Yáñez; Mauricio Folchi; Albert Carreras
  10. Consumerism and environment: does consumption behaviour a_ect environmental quality? By ORECCHIA CARLO; ZOPPOLI PIETRO
  11. Optimal Monitoring to Implement Clean Technologies when Pollution is Random By Ines Macho-Stadler; David Perez-Castrillo
  12. Lutte contre le changement climatique : les instruments économiques By Patrick Criqui
  13. Conflict and Production: An Application to Natural Resources By Wick, Katharina
  14. Resource Rents and their Impact on Institutional and Economic Development By Ian Keay

  1. By: Loreta Stankeviciute (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: The study aims to quantify the interactions between the three European objectives in the horizon of 2020: (1) the reduction of 20% of greenhouse gas emissions (GHG) (2) the saving of 20% of the energy consumption and (3) the share of 20% of renewables energies in the overall energy consumption. Particular focus is, however, placed on the influence of the environmental policies on the<br />CO2 emission reduction and the carbon price in 2020.<br />The national objectives for the energy savings and renewables energies in our study are realized with the quota systems in every country: white and green certificate systems, while the CO2 emission reduction is carried out at the European level within the ETS in the<br />context of international carbon market. In order to exploit the interactions among the different<br />environmental policies, a number of scenarios are tested within a combination of two powerful<br />modeling tools: POLES world energy model and ASPEN, dedicated for the analysis of quota systems.<br />The paper shows, in particular, that the order of environmental policies does not affect significantly the reduction of emissions and the carbon price. On the other hand, the presence of these policies diminishes highly the marginal European reduction cost and, consequently, the compliance costs for ETS participants.
    Keywords: CO2 emissions ; carbon price ; white certificate price ; green certificate price ; European objectives in 2020
    Date: 2007–11
  2. By: Wilfried Rickels; Vicki Duscha; Andreas Keller; Sonja Peterson
    Abstract: The European emissions trading scheme (EU-ETS) for CO2 is the largest existing emissions trading scheme in the world. The main reason for the implementation of this scheme is to reach the European Kyoto targets at minimal cost and to establish a price for emissions. The right to emit CO2 therefore becomes a scarce production input. In this paper we want to analyze the determinants of the price for allowances in the EU-ETS and study whether it reacts to fundamental influence factors such as energy prices. The results show, that as long as the market viewed the allowances as a scarce input factor, the price reacts to changes in energy prices and weather variations.
    Keywords: European Emissions Trading Scheme, allowance prices, energy prices, weather variation
    JEL: C22 Q56 Q58 Q54
    Date: 2007–11
  3. By: Alpanda, Sami; Peralta-Alva, Adrian
    Abstract: The market value of U.S. corporations was nearly halved following the oil crisis of October 1973. Real energy prices more than doubled by the end of the decade, increasing energy costs and spurring innovation in energy-saving technologies by corporations. This paper uses a neo-classical growth model to quantify the impact of the increase in energy prices on the market value of U.S. corporations. In the model, corporations adopt energy-saving technologies as a response to the energy price shock and the price of installed capital falls due to investment irreversibility. The model calibrated to match the subsequent decline in energy consumption in the U.S. generates a 24% decline in market valuation - accounting for nearly half of what is observed in the data.
    Keywords: oil crisis; stock market crash; technological change
    JEL: C68 G12 O31 Q43
    Date: 2007–08
  4. By: Fritz Rahmeyer (University of Augsburg, Department of Economics)
    Abstract: With coming into force of the Directive 2003/87/EU of the European Parliament and of the Council greenhouse gas emission allowance trading within the community (EU ETS) has begun in 2005. Emission trading is a flexible instrument to abate emissions within the framework of the Kyoto-Protocol. Up to this time command-and-control regulations and national emission or energy taxes were predominant within environmental policy. The German Pollution Protection Law (Bundesimmissionsschutzgesetz) and emission trading were incompatible. As a result the EU-Directive released approved industrial installations, which take part in emission allowance trading, from fulfilling their duty to keep marginal emission values. It is the purpose of this paper to present and elucidate the sectoral system of emission allowance trading according to the EU-Directive and its legal consequences. To start with integral parts of the science and the economics of climate change are subjects under debate. In particular the discounting of future damage costs is looked at. After that the political architecture of climate-change policy and its instruments is dealt with in detail. In the following the broadening of the established German Pollution Protection Law with regard to the EU-Directive is in the fore, besides that the national rules of allocation of EU emission allowances to entitled enterprises.
    Keywords: climate policy, emission trading, environmental law, national allocation plan
    JEL: Q54 Q58
    Date: 2007–11
  5. By: Jochen Moebert (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology))
    Abstract: Based on monthly observations, I specify an econometric model capturing the driving forces behind the crude oil price series in recent years. A large set of covariates, such as supply and demand variables as well as futures market variables, is used to test the impact on the crude oil price. Current price movements are a result of scarce refining capacity and speculators betting on higher prices. The results also question OPEC’s market power.
    Keywords: Crude oil market, Econometric modelling
    JEL: C51 Q41
    Date: 2007–08
  6. By: Anton Nakov; Andrea Pescatori
    Abstract: We assess the extent to which the period of great U.S. macroeconomic stability since the mid-1980s can be accounted for by changes in oil shocks and the oil share in GDP. To do this we estimate a DSGE model with an oil-producing sector before and after 1984 and perform counterfactual simulations. We nest two popular explanations for the Great Moderation: (1) smaller (non-oil) real shocks;and (2) better monetary policy. We find that the reduced oil share accounted for as much as one-third of the inflation moderation and 13% of the growth moderation, while smaller oil shocks accounted for 11% of the inflation moderation and 7% of the growth moderation. This notwithstanding, better monetary policy explains the bulk of the inflation moderation, while most of the growth moderation is explained by smaller TFP shocks.
    Keywords: Monetary policy ; Petroleum products - Prices ; Business cycles
    Date: 2007
  7. By: Abdou Kâ Diongue (UFR SAT - Université Gaston Berger - Université Gaston Berger de Saint-Louis); Dominique Guégan (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Bertrand Vignal (EDF - EDF - Recherche et Développement)
    Abstract: In this article, we investigate conditional mean and variance forecasts using a dynamic model following a k-factor GIGARCH process. We are particularly interested in calculating the conditional variance of the prediction error. We apply this method to electricity prices and test spot prices forecasts until one month ahead forecast. We conclude that the k-factor GIGARCH process is a suitable tool to forecast spot prices, using the classical RMSE criteria.
    Keywords: Conditional mean, conditional variance, forecast, electricity prices, GIGARCH process.
    Date: 2007–11
  8. By: Joe O'Doherty (Economic and Social Research Institute (ESRI)); Sean Lyons (Economic and Social Research Institute (ESRI)); Richard S. J. Tol (Economic and Social Research Institute (ESRI))
    Abstract: Energy usage and energy efficiency are of increasing concern in Ireland. Regression analyses on a large household micro-dataset reveal that those homes that have more energy-saving features are also likely to have a high ‘potential energy use’. Statistically significant dwelling features include location, value and dwelling type, while household features such as income, age, period of residency, social status and tenure type are also important.
    Keywords: Energy use, Ireland, appliance ownership, energy efficiency
    Date: 2007–11
  9. By: M. del Mar Rubio Varas; César Yáñez; Mauricio Folchi; Albert Carreras
    Abstract: In the absence of comparable macroeconomic indicators for most of the Latin American economies before the 1930s, the apparent consumption of energy is used in this paper as a proxy of the degree of modernisation of Latin America and the Caribbean. This paper presents an estimate of the apparent consumption per head of modern energies (coal, petroleum and hydroelectricity) for 30 countries of Latin American and the Caribbean for 1890 to 1925, multiplying the number of countries for which energy consumption estimates were previously available. As a result, the paper provides the basis for a quantitative comparative analysis of modernisation performance beyond the few countries for which historical national accounts are available in Latin America.
    Keywords: Energy consumption, economic modernisation, Latin America
    JEL: N16 N76 Q43 O13
    Date: 2007–11
    Abstract: The literature has typically expressed environmental quality as a function of per capita income ignoring the role consumption choices can play as a potential mediating factor between environmental degradation and economic growth. Consumption can affect the environment in many ways: higher levels of consumption (and therefore higher levels of production) require larger inputs of energy and material and generate larger quantities of waste byproducts. Increased extraction and exploitation of natural resources, accumulation of waste and concentration of pollutants can damage the environment and, on the long run, limit economic activity. Rebus sic stantibus, consumerism, a term used by sociologists to describe the effects of equating personal happiness with purchasing material possessions, can even do worse as long as it determines an increase in the amount of purchased goods. The object of this article is to analyse the relationship between consumerism and environment. We critically review the empirical findings of the Environmental Kuznets Curve literature, according to which an inverted U-relationship between environmental degradation and economic growth is observed. In particular, we focused our attention on consumption-based approaches to the income-environment relation in order to better identify the impact of consumerism on the environment. We finally suggest a possible specification and estimation of a reduced form equation relating several impact indicator to consumption per capita.
    Date: 2007–11
  11. By: Ines Macho-Stadler (Universitat Autonoma de Barcelona); David Perez-Castrillo (Universitat Autonoma de Barcelona)
    Abstract: We analyze environments where firms chose a production technology which, together with random events, determines the final emission level. We consider the coexistence of two alternative technologies. The cost of the adoption of the clean technology and the actual emissions are firms' private information. The environmental regulation is based on taxes over reported emissions, and on monitoring and penalties over unreported emissions. We show that the optimal monitoring is a cut-off policy, where all reports below a threshold are inspected with the same probability, while reports above the threshold are not monitored. We show that if the adoption of the technology is firms' private information, too few firms will adopt the clean technology under the optimal monitoring policy. However, when the EA can check the technology adopted by the firms, the optimal policy may induce overswitching or underswitching to the clean technology.
    Keywords: Production technology, random emissions, environmental taxes, optimal monitoring policy.
    JEL: K32 K42 D82
    Date: 2007–11
  12. By: Patrick Criqui (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: Pour lutter contre le changement climatique, les pouvoirs publics devront programmer une hausse progressive du prix des énergies fossiles, émettrices de gaz à effet de serre.
    Date: 2007–07
  13. By: Wick, Katharina
    Abstract: We present a Stackelberg model of conflict, in which contestants have limited endowments to be put in two separate sectors, thus incorporating salient features of many conflicts. The model is applied to the case of conflict over natural resources. Consistent with amounting empirical evidence regarding a so-called "resource curse", we find that the relation between conflict intensity and resource rents is non-monotonous, and that the economy's income growth rate may be negatively affected by resource abundance.
    Keywords: Resource curse, exhaustible resources, civil war, economic performance and resources
    JEL: D74 O13 Q32
    Date: 2007
  14. By: Ian Keay (Queen's University, Department of Economics)
    Abstract: Over the twentieth century, Canada's energy, forestry, and mining industries played a substantial and increasing role in the growth and development of the aggregate economy. Despite the improving fundamentals that were underlying their increased contributions to the size, capital intensity, and productivity of the aggregate economy, the relative profitability and equity market performance of the resource industries deteriorated over the twentieth century. Without having to invoke entrepreneurial failure among the resource industries or equity market inefficiency, I am able to illustrate that falling relative output prices played the key role in a reconciliation of what, at first glance, appears to be a surprising relationship between the resource industries' fundamentals, resource rents, and equity market performance.
    JEL: N22 N52 Q20 Q32
    Date: 2007–08

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