nep-ene New Economics Papers
on Energy Economics
Issue of 2008‒10‒13
five papers chosen by
Roger Fouquet
Imperial College, UK

  1. Border tax adjustments and the EU-ETS By Ton Manders; Paul Veenendaal
  2. International Environmental Agreement: a Dynamic Model of Emissions Reduction By Marta Biancardi; Andrea Di Liddo
  3. Modern Management: Good for the Environment or just Hot Air? By Nicholas Bloom; Christos Genakos; Ralf Martin; Raffaella Sadun
  4. The Canadian Dollar and Commodity Prices: Has the Relationship Changed over Time? By Philipp Maier; Brian DePratto
  5. Relative Consumption and Resource Extraction By Francisco Alvarez-Cuadrado; Ngo Van Long

  1. By: Ton Manders; Paul Veenendaal
    Abstract: If the EU stands alone in adopting climate policy and imposes a strict emissions ceiling, competitiveness of EU energy-intensive sectors will be affected negatively. Relocation of EU energy-intensive firms to countries with a lax regime also leads to carbon leakage. However, when use is made of the opportunities of the Clean Development Mechanism these impacts are very modest. Border tax adjustments (BTAs) to ‘level the playing field’ between domestic and foreign producers may be considered to address the concerns about both competitiveness and carbon leakage. It is far from clear whether these measures are WTO-proof. Simulations show that both an import levy and an export refund restore competitiveness to a certain extent. BTAs may lower the costs for energy-intensive sectors, but induce higher costs for other sectors. This paper uses a general equilibrium model to quantify and assess the implications of a number of policy scenarios.
    Keywords: climate policy; border tax; revenue recycling; Clean Development Mechanism
    JEL: Q53
    Date: 2008–10
  2. By: Marta Biancardi; Andrea Di Liddo
    Abstract: We model an International Environmental Agreement as a two stages game: during the first stage each country decides whether or not to join the agreement while, in the second stage, the quantity of emissions reduction is choosen. Players determine their abatement levels in a dynamic setting, given the dynamics of pollution stock and the strategies of other countries. Players may act cooperatively, building coalitions and acting according to the interest of the coalition, or they make their choices taking care of their individual interest only. Countries can behave myopically or in a farsighted way. As a consequence, the size of stable coalition can completely change. A continuous time framework is choosen in the present paper and consequently the problem is studied by a differential game.
    Keywords: IEA, Differential games, Coalition stability.
    Date: 2008–09
  3. By: Nicholas Bloom; Christos Genakos; Ralf Martin; Raffaella Sadun
    Abstract: We use an innovative methodology to measure management practices in over 300 manufacturing firms in the UK. We then match this management data to production and energy usage information for establishments owned by these firms. We find that establishments in better managed firms are significantly less energy intensive. They use less energy per unit of output, and also in relation to other factor inputs. This is quantitatively substantial: going from the 25th to the 75th percentile of management practices is associated with a 17.4% reduction in energy intensity. This negative relationship is robust to a variety of controls for industry, location, technology and other factor inputs. Better managed firms are also significantly more productive. One interpretation of these results is that well managed firms are adopting modern lean manufacturing practices, which allows them to increase productivity by using energy more efficiently. This suggests that improving the management practices of manufacturing firms may help to reduce greenhouse gas emissions.
    JEL: L26 L6 M11 M12 Q40 Q41
    Date: 2008–10
  4. By: Philipp Maier; Brian DePratto
    Abstract: The authors examine the impact of the recent run-up in energy and non-energy commodity prices on the Canadian dollar. Using the Bank of Canada's exchange rate equation, they find that the differences between the actual value of the Canadian exchange rate and the simulated values observed in 2007 are not historically large. Still, given that there is some evidence that the sensitivity of the standard exchange rate equation to changes in energy and non-energy commodities may have changed over time, the authors explore different ways of modelling the impact of energy and non-energy commodity prices. Their results indicate that specifications that explicitly consider the importance of energy and non-energy commodities in Canada's export or production basket may yield more stable coefficient estimates, particularly over recent periods. Future research should investigate the robustness of these findings, particularly if, at some point, price increases for energy and non-energy commodities were to moderate.
    Keywords: Exchange rates
    JEL: F31
    Date: 2008
  5. By: Francisco Alvarez-Cuadrado; Ngo Van Long
    Abstract: This paper presents a simple model of resource extraction where preferences are household's preferences depend on relative consumption levels. We identify two dimensions along which consumption externalities distort the efficient extraction of resources: (i) the static trade-off between consumption and effort, and (ii) the dynamic trade-off between current and future consumption. In general, households over-exploit the natural resource stocks, resulting in steady state stocks lower than the efficient stocks of resources that would be chosen by a benevolent central planner. We propose a tax mechanism to induce the first best outcome. <P>On présente un modèle d’exploitation d’une ressource naturelle dans lequel les ménages accordent une importance à la consommation relative, soit la différence entre leur consommation et celle de leur groupe de référence. On identifie deux dimensions de distorsion. Premièrement, il y a la distorsion dans le choix du niveau d’effort. Deuxièmement, il y a la distorsion dans le choix entre la consommation présente et la consommation dans le futur. En général, les ménages ont tendance à exploiter les ressources naturelles de facon excessive. Par conséquent, les stocks de ressources à l’état stationnaire sont plus petits que ceux qu’aurait choisis un planificateur central. On propose une règle de taxation qui assure les résultats optimaux.
    Keywords: relative consumption, relative income hypothesis, permanent income hypothesis, consommation relative, revenue relative, l’hypothèse de la revenue permanente.
    JEL: D62 Q20 Q50
    Date: 2008–10–01

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