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on Energy Economics |
| By: | Johan Eyckmans and Cathrine Hagem (Statistics Norway) |
| Abstract: | The literature suggests that Russia and Ukraine may become large sellers of greenhouse gas emissions permits under the Kyoto Protocol and might exploit their market power to maximize trading profits. The EU countries taken together will probably be net buyers of permits. For any given global target for emission, participation by developing countries with low-cost abatement options would benefit the net buyers of permits because the market price for carbon permits would go down. We explore how the EU could benefit from a broader participation through specific bilateral agreements with developing countries in the post-Kyoto period. The bilateral agreement involves a minimum permit sales requirement which is compensated by a financial transfer from EU to the developing country. Such bilateral agreement enables the EU to act strategically in the permit market on behalf of its member states, although firms in each member state are assumed to be price takers in the permit market. In a numerical simulation we show that an appropriately designed bilateral agreement between the EU and China can cut EU’s total compliance cost by one third. |
| Keywords: | emissions permits; post-Kyoto climate agreement; strategic permit trading |
| JEL: | D43 Q54 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:530&r=ene |
| By: | Uwe A. Schneider; Michael Obersteiner; Erwin Schmid; Bruce A. McCarl (Research unit Sustainability and Global Change, Hamburg) |
| Abstract: | This study uses a partial equilibrium model of the US agricultural sector to examine how technical progress and carbon price levels affect land management adaptation. We find that the climate policy range, over which a more extensive agriculture is preferred, decreases as crop yields increase. Second, technical progress with traditional crops offers less mitigation benefits than progress with mitigation options themselves. Third, while agricultural producers benefit from technical progress on energy crops, they fare worse if technical progress improves traditional crops and low carbon prices. |
| Keywords: | Technical Change, Producer Adaptation, Agricultural Sector Model, Carbon Sequestration, Mathematical Programming, Climate Policy Simulation |
| JEL: | Q11 Q55 Q58 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:133&r=ene |
| By: | Siddiqui, Afzal; Fleten, Stein-Erik |
| Abstract: | The advantage of thorium-fuelled nuclear power is that it limits the potential for spreading weapons-grade material and produces less long-lived nuclear waste than existing uranium-fuelled plants. However, there are a number of technical challenges that need to be overcome, and the current costs of initiating a thorium fuel cycle would be very high. We analyse how a government may proceed with a staged development of meeting electricity demand as fossil fuel sources are being phased out. The thorium technology is one possibility, where one would start a major research and development program as an intermediate step. Alternatively, the government could choose to deploy an existing renewable energy technology, and using the real options framework, we compare the two projects to provide policy implications on how one might proceed. |
| Keywords: | Real options; Renewable electricity technologies; Electricity markets; Stochastic price; R&D |
| JEL: | Q42 Q2 G13 |
| Date: | 2008–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:7355&r=ene |
| By: | Catherine Norman (Johns Hopkins University); STEPHEN DECANIO (University of California, Santa Barbara); Lin Fan (Johns Hopkins University) |
| Abstract: | This paper considers the success of the Montreal Protocol on Substances that deplete the Ozone Layer in addressing an incompletely understood global environmental hazard under risk and uncertainty, and its implications for and interactions with other global environmental protection regimes, particularly the Kyoto Protocol. We illustrate a method for assessing joint impacts of projects and policies designed to reduce environmental damage in the absence of a coordinated legal and regulatory framework. Further, we note areas for improvements in coordination and efficiency across the treaties. |
| Keywords: | Global environmental protection, emissions trading markets, Montreal Protocol, Kyoto Protocol, abatement costs, ozone, climate, |
| Date: | 2007–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsbec:12-07&r=ene |
| By: | Feng, Hongli; Rubin, Ofir; Babcock, Bruce A. |
| Abstract: | Life cycle analysis (LCA) is the standard approach used to evaluate the greenhouse gas (GHG) benefits of biofuels. However, it is increasingly recognized that LCA results do not account for some impacts—including land use changes—that have important implications on GHGs. Thus, an alternative accounting system that goes beyond LCA is needed. In this paper, we contribute to the literature by laying out the basics of a system-wide accounting (SWA) method that takes into account all potential changes in GHGs resulting from biofuel expansion. We applied both LCA and SWA to assess the GHG impacts of ethanol based on Iowa corn. Growing corn in rotation with soybeans generated 35% less GHG emissions than growing corn after corn. Based on average corn production, ethanol’s GHG benefits were lower in 2007 than in 2006 because of an increase in continuous corn in 2007. When only additional corn was considered, ethanol emitted about 22% less GHGs than gasoline. Results from SWA varied with the choice of baseline and the definition of geographical boundaries. Using 2006 as a baseline and 2007 as a scenario, corn ethanol’s benefits were about 20% of the emissions of gasoline. If we expand geographical limits beyond Iowa, but assume the same emission rates for soybean production and land use changes as those in Iowa, then corn ethanol generated more GHG emissions than gasoline. These results highlight the importance of boundary definition for both LCA and SWA. |
| Keywords: | biofuels, corn ethanol, greenhouse gas, life cycle analysis, system-wide accounting. |
| Date: | 2008–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12871&r=ene |
| By: | Mindy L. Baker; Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC)) |
| Abstract: | A myriad of policy issues and questions revolve around understanding the bioeconomy. To gain insight, we develop a stochastic and dynamic general equilibrium model and capture the uncertain nature of key variables such as crude oil prices and commodity yields. We also incorporate acreage limitations on key feedstocks such as corn, soybeans, and switchgrass. We make standard assumptions that investors are rational and engage in biofuel production only if returns exceed what they can expect to earn from alternative investments. The Energy Independence and Security Act of 2007 mandates the use of 36 billion gallons of biofuels by 2022, with significant requirements for cellulosic biofuel and biodiesel production. We calculate the level of tax credits required to stimulate this level of production. Subsidies of nearly $2.50 per gallon to biodiesel and $1.86 per gallon to cellulosic biofuel were required, and long-run equilibrium commodity prices were high, with corn at $4.76 per bushel and soybeans at $13.01 per bushel. High commodity prices are due to intense competition for planted acres among the commodities. |
| Keywords: | biodiesel, biofuels, cellulosic, dynamic, ethanol, general equilibrium Monte Carlo, market. |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:08-wp460&r=ene |
| By: | Jon Strand |
| Abstract: | We derive non-cooperative Nash equilibrium (NE) importer and exporter petroleum excise taxes given full within-group tax coordination, but no coordination between groups, assuming that importers do not produce and exporters do not consume petroleum, and petroleum consumption causes a global externality. The aggregate NE tax is found to consist of an externality component and an optimal tariff component, and exceeds the standard Pigou tax. The environmental component in isolation is however less than the Pigou tax. With Stackelberg tax setting, the leader's tax is higher than in the Ne, and the follower's tax lower, and the overall tax higher. We show that importers prefer to set a tax instead of an import quota, since exporters' optimal response to a quota is a higher tax. An optimal cap-and-trade scheme will thus fare worse than an optimal tax scheme for importers, and will imply greater petroleum consumption and carbon emissions. When exporters behave as a cartel satisfying demand at a fixed export price, exporters' optimal tax is higher, while importers tax rule is Pigouvian. Exporters then gain at the expense of importers. |
| Keywords: | Oil , Taxation , Oil consumption , Oil production , |
| Date: | 2008–02–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:08/35&r=ene |
| By: | Daniel Leigh; Etibar Jafarov |
| Abstract: | This paper considers long-term fiscal policy options in Norway, the world's fifth largest oil exporter, in light of the substantial expected increase in pension outlays. It compares the current fiscal rule, which targets a (central government structural) non-oil deficit equal to 4 percent of Government Pension Fund assets, with three alternatives that save a larger share of oil revenue and accumulate more assets to pay for aging costs. It also analyzes the macroeconomic consequences of accumulating more assets, finding that the additional income generated from more assets allows lower tax rates, with positive effects on long-term output. |
| Keywords: | Working Paper , Fiscal policy , Norway , Oil revenues , Pensions , |
| Date: | 2007–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/241&r=ene |
| By: | Robalo, Pedro Brito; Salvado, João Cotter |
| Abstract: | This paper assesses empirically the effect of oil price shocks on Portuguese aggregate economic activity, industrial production and price level. We take the usual multivariate VAR methodology to investigate the magnitude and stability of this relationship. In doing so, we follow the approach presented in the recent literature and adopt different oil price specifications. We conclude that, as for most industrialized countries, the nature of this relationship changed in the mid-1980s. Furthermore, we show that the main Portuguese macroeconomic variables have become progressively less respon |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unl:unlfep:wp529&r=ene |
| By: | Abdou Kâ Diongue (UFR SAT - Université Gaston Berger - Université Gaston Berger de Saint-Louis, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, School of Economics and Finance - Queensland University of Technology); Dominique Guegan (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Ecole d'économie de Paris - Paris School of Economics - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | Electricity spot prices exhibit a number of typical features that are not found in most financial time series, such as complex seasonality patterns, persistence (hyperbolic decay of the autocorrelation function), mean reversion, spikes, asymmetric behavior and leptokurtosis. Efforts have been made worldwide to model the behaviour of the electricity's market price. In this paper, we propose a new approach dealing with the stationary k-factor Gegenbauer process with asymmetric Power GARCH noise under conditional Student-t distribution, which can take into account the previous features. We derive the stationary and invertible conditions as well as the δth-order moment of this model that we called GGk-APARCH model. Then we focus on the estimation parameters and provide the analytical from of the likelihood which permits to obtain consitent estimates. In order to characterize the properties of these estimates we perform a Monte Carlo experiment. Finally the previous approach is used to the model electricity spot prices coming from the Leipzig Power Exchange (LPX) in Germany, Powernext in France, Operadora del Mercado Espagñol de Electricidad (OMEL) in Spain and the Pennsylvania-New Jersey-Maryland (PJM) interconnection in United States. In terms of forecasting criteria we obtain very good results comparing with models using hederoscedastic asymmetric errors. |
| Keywords: | Asymmetric distribution function, electricity spot prices, Leptokurtosis, persistence, seasonality, GARMA, A-PARCH. |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00259225_v1&r=ene |
| By: | Brett R. Gelso; John C. Whitehead |
| Abstract: | The purpose of this study is to determine the effects of Minerals Management Service policy on Outer Continental Shelf leasing between 1983 and 2006. We apply a discrete choice model to a large, recently-developed spatial data set and focus on the effect of increased royalties on offshore production. We focus on offshore policies subsequent to 1983 with a flexible Random Parameters Logit model. Oil prices, net income, distance, geographical proxies and weather variables influence bidding in expected ways. We include the second moment of parameter distributions to avoid erroneous conclusions about the effects of government policy on bidding. Key Words: Random Parameter Logit, Oil Policy, Outer Continental Shelf |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:08-03&r=ene |
| By: | Paulo Flavio Nacif Drummond |
| Abstract: | This paper argues that as part of their fiscal optimization strategies CEMAC countries should be given the opportunity to invest into longer-term assets that generate market-based returns. The BEAC has created a framework of longer-term savings funds but due to low remuneration and other factors usage has remained limited. The paper also argues that regional savings in the form of reserve accumulation must be sufficient to ensure the stability of the common currency. While the current level of common foreign reserves may now be appropriate, maintaining an adequate level calls for a link between country-specific savings decisions and the setting of a regional reserve target. Strengthening and diversifying reserve management will also be desirable, a process the BEAC has embarked upon. |
| Keywords: | Working Paper , Central African Economic and Monetary Community , Oil revenues , Fiscal policy , Reserves adequacy , Reserves accumulation , Savings , Central bank policy , |
| Date: | 2007–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/243&r=ene |
| By: | HOSOE Nobuhiro; AKIYAMA Shu-ichi |
| Abstract: | In the assessment and review of regulatory reforms in the electric power market, price elasticity is one of the most important parameters that characterize the market. However, price elasticity has seldom been estimated in Japan; instead, it has been merely assumed to be as small as 0.1 or 0 without examining the empirical validity of such a priori assumptions. We estimated the regional power demand functions for nine regions in order to quantify the elasticity, and found the short-run price elasticity to be 0.100-0.300 and the long-run price elasticity to be 0.126-0.552. Inter-regional comparison of our estimation results suggests that price elasticity in rural regions is larger than that in urban regions. Popular assumptions of small elasticity such as 0.1 could be suitable for examining Japanfs aggregate power demand but not the power demand functions that focus on the respective regions. Furthermore, assumptions with smaller elasticity values such as 0.01 and 0 could not be supported statistically. |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:08005&r=ene |