nep-ene New Economics Papers
on Energy Economics
Issue of 2009‒05‒30
twenty-one papers chosen by
Roger Fouquet
Imperial College, UK

  1. Causes and Consequences of the Oil Shock of 2007-08 By James D. Hamilton
  2. US Industry-Level Returns and Oil Prices By Fan, Qinbin; Jahan-Parvar, Mohammad R.
  3. On the short-term influence of oil price changes on stock markets in GCC countries: linear and nonlinear analyses By Mohamed El Hedi Arouri; Julien Fouquau
  4. (No)competition in the Spanish retailing gasoline market: a variance filter approach By Juan Luís Jiménez; Jordi Perdiguero
  5. Hydrogen Transport and the Spatial Requirements of Renewable Energy By Ashraf-Ball, Hezlin; Oswald, Andrew J.; Oswald, James I.
  6. Economic impacts of the RES Obligations in Austria – an Application of the Macro-Econometric Model By Dr. Ulrike Lehr; Dr. Marc Ingo Wolter
  7. On the Relation Between the Endogenous Growth Rate of the Economy and the Dynamics of Renewable Resources By José Belbute; Paulo Brito
  8. Energy Demand in Pakistan: A Disaggregate Analysis By Khan, Muhammad Arshad; Ahmed, Usman
  9. Assessing Policy Choices For Managing SO2 Emisions From Indian Power Sector By Deepa Menon Choudhary
  10. Tax policy to reduce carbon emissions in south Africa By Devarajan, Shantayanan; Go, Delfin S.; Robinson, Sherman; Thierfelder, Karen
  11. Ressourcenproduktivität und Klimaverträglichkeit - Instrumentenwahl und ihre Wechselwirkungen By Prof. Dr. Bernd Meyer
  12. On the realized volatility of the ECX CO2 emissions 2008 futures contract: distribution, dynamics and forecasting By Julien Chevallier; Benoît Sévi
  13. Banking and Borrowing in the EU ETS: An Econometric Appraisal of the 2005-2007 Intertemporal Market By Julien Chevallier; Emilie Alberola
  14. Intertemporal Emissions Trading and Market Power: A Dominant Firm with Competitive Fringe Model By Julien Chevallier
  15. Simple model frameworks for explaining inefficiency of the clean development mechanism By Rosendahl, Knut Einar; Strand, Jon
  16. EU Climate Change Policy 2013-2020: Using the Clean Development Mechanism More Effectively By Paul K. Gorecki; Seán Lyons; Richard S. J. Tol
  17. Cognitive and behavioral challenges in responding to climate change By Norgaard, Kari Marie
  18. Social and governance dimensions of climate change : implications for policy By Foa, Roberto
  19. Re-examining the concept of sustainable development in light of climate change By Julien Chevallier
  20. Climate change governance By Meadowcroft, James
  21. Beyond mitigation : potential options for counter-balancing the climatic and environmental consequences of the rising concentrations of greenhouse gases By MacCracken, Mike

  1. By: James D. Hamilton
    Abstract: This paper explores similarities and differences between the run-up of oil prices in 2007-08 and earlier oil price shocks, looking at what caused the price increase and what effects it had on the economy. Whereas historical oil price shocks were primarily caused by physical disruptions of supply, the price run-up of 2007-08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects on overall consumption spending and purchases of domestic automobiles in particular. In the absence of those declines, it is unlikely that we would have characterized the period 2007:Q4 to 2008:Q3 as one of economic recession for the U.S. The experience of 2007-08 should thus be added to the list of recessions to which oil prices appear to have made a material contribution.
    JEL: E32 Q43
    Date: 2009–05
  2. By: Fan, Qinbin; Jahan-Parvar, Mohammad R.
    Abstract: This paper takes a closer look at the puzzle uncovered by Driesprong et al. (2008) and nds empirical support for the "oil eect" in equity returns. Using forty nine US industry-level returns series and changes in oil spot and futures prices, we address whether industry-level returns are predictable. We nd that using changes in oil spot prices, the answer is yes; but for just under a fth of industries in our sample. We nd weak support for the predictability of industry-level returns based on changes in oil futures prices. Our ndings are consistent with the delayed reaction to new information, a variant of Hong and Stein (1996)'s "underreaction" hypothesis.
    Keywords: Industry-level returns; Oil prices; Return predictability; Underreaction
    JEL: G14 G11 G12
    Date: 2009–05
  3. By: Mohamed El Hedi Arouri (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans); Julien Fouquau (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans)
    Abstract: This paper examines the short-run relationships between oil prices and GCC stock markets. Since GCC countries are major world energy market players, their stock markets may be susceptible to oil price shocks. To account for the fact that stock markets may respond nonlinearly to oil price shocks, we have examined both linear and nonlinear relationships. Our findings show that there are significant links between the two variables in Qatar, Oman, and UAE. Thus, stock markets in these countries react positively to oil price increases. For Bahrain, Kuwait, and Saudi Arabia we found that oil price changes do not affect stock market returns.
    Keywords: GCC stock markets, oil prices, linear and nonlinear analyses
    Date: 2009
  4. By: Juan Luís Jiménez (Departamento de Análisis Económico Aplicado. Grupo de Economía de las Infraestructuras y el Transporte. Universidad de Las Palmas de Gran Canaria); Jordi Perdiguero (PPRE-IREA, Universitat de Barcelona)
    Abstract: Various methodologies in economic literature have been used to analyse the international hydrocarbon retail sector. Nevertheless at a Spanish level these studies are much more recent and most conclude that generally there is no effective competition present in this market, regardless of the approach used. In this paper, in order to analyse the price levels in the Spanish petrol market, our starting hypothesis is that in uncompetitive markets the prices are higher and the standard deviation is lower. We use weekly retail petrol price data from the ten biggest Spanish cities, and apply Markov chains to fill the missing values for petrol 95 and diesel, and we also employ a variance filter. We conclude that this market demonstrates reduced price dispersion, regardless of brand or city.
    Keywords: Competition, Petrol, Variance filter analysis, Gibbs sampling, Markov chain Monte Carlo.
    JEL: L13 L59 L71
    Date: 2009–05
  5. By: Ashraf-Ball, Hezlin; Oswald, Andrew J. (Department of Economics, Warwick University); Oswald, James I.
    Abstract: Unlike oil and coal, which are compressed forms of energy, renewable energy requires unusually large land areas. This article calculates the consequences of a switch to hydrogen-cell vehicles powered by electricity from wind turbines. It then re-does the calculation for three other green energy sources : wave power ; biofuels ; solar energy. We argue that policy-makers and social scientists need to understand the significant spatial demands of a move to a carbon-free society.
    Keywords: Renewable energy ; wind power ; land use ; energy efficiency ; wind turbines ; transport ; environmental ; solar ; biomass ; wave
    JEL: Q42 R12 R40
    Date: 2009
  6. By: Dr. Ulrike Lehr (GWS - Institute of Economic Structures Research); Dr. Marc Ingo Wolter (GWS - Institute of Economic Structures Research)
    Abstract: The year 2008 started in January (Jan 23, 2008) with ambitious European initiatives on climate change when the European Commission suggested a climate packages with new targets for energy from renewable sources (RES), for the design of the third phase of the emission trading system, for a directive on carbon capture and storage systems (CCS), for the fuel directive, and a directive on CO2 limit for new vehicles. Several of these proposed directives have been an issue of fierce discussion during the year, especially as the extent of the financial crisis gradually came to the fore and the fears of a worldwide economic crisis grew. At the end of 2008, however, the package passed the European parliament (Dec. 17, 2008) though several concessions had to be made concerning the emission trading system or the vehicle directive. However, seemingly unaffected by current fears and therefore largely unaltered the directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources in Europe passed with a rather high amount of “yes” votes of the whole package, indicating that the support for energy from renewable sources still seems strong. The Directive “establishes a common framework for the promotion of energy from renewable sources. It sets mandatory national targets for the overall share of energy from renewable sources in gross final consumption of energy and for the share of energy from renewable sources in transport.” (COM(2008)0019 – C6-0046/2008 – 2008/0016(COD) The national overall targets are set individually for each country and the required increases compared to 2005 are as low as 22% (Sweden, Latvia) or as high as more than 1000% in the case of the UK (c.f. full table in the Appendix). Each country will have to develop a strategy for a sustainable pathway to reach the target. Though the strategic decisions will be on the national levels for each country, the knowledge of the targets for the European Community provides useful information to back the decision. Domestic support of RES technologies can induce a lead market and create international export opportunities. Observing the strategies of the other EC member states will affect the choice of the national efficient and effective policy mix. Austria is an interesting case study insofar as it already uses renewable energy to a large extent (23.3% in 2005) and still has to increase it by almost 50% to 34% by 2020. This increase will come with large necessary investments and will require a combined energyefficiency strategy. To answer the question how and at what overall economic costs in terms of GDP and employment effects the targets can be reached a scenario has to be developed and tested with the help of a model that reflects the economic and environmental interdependences. Therefore, to analyze the overall effects a highly interdependent resource economic modeling approach is needed. The macro-econometric model has been developed to answer such questions. The article is organized as following. Section 2 describes the model Section 3 suggests an energy-efficiency scenario that meets the EC’s targets. Section 4 presents modeling results and section 5 concludes.
    Keywords: Austria, Macro-Econometric Model,, Economic impacts, RES Obligations
    JEL: C51 C52 C53 E17
    Date: 2009
  7. By: José Belbute (Department of Economics, University of Évora; CEFAGE-UE); Paulo Brito (Department of Economics, Technical University of Lisbon; UECE)
    Abstract: In this paper we study a simple endogenous growth model in which the two engines of growth are the exogenous technical progress in dematerialization and the accumulation of a renewable natural resource. The model is also labeled as been "endogenous" as the rate of growth of natural capital is endogenously determined and should lie between zero and the rate of technical progress. In this context, it is possible to combine permanent economic growth with permanent growth of the environmental asset. the endogenous rate of growth of the stock of natural resources is a positive function of the physical rate of regeneration (which will occur if consumption would be zero) and of the rate of technical progress. However, in order to assure sustainability, the former growth rate should be larger than zero but smaller than the later. Second, the output growth rate (which in our model is equal to the rate of consumption) should lie between the rate of technical progress and the sum of the rate of technical progress and the natural rate of regeneration. Therefore, even in the case in which the physical rate of renewal is mall, this will allow for unbounded growth. Third, in our simple model, there is no transitional dynamics.
    Keywords: Endogenous growth, environmental preservation, habit-formation
    JEL: C61 Q56 O39 O40
    Date: 2009
  8. By: Khan, Muhammad Arshad; Ahmed, Usman
    Abstract: This study examines the demand for energy at disaggregate level (gas, electricity and coal) for Pakistan over the period 1972-2007. Over main results suggest that electricity and coal consumption responds positively to changes in real income per capita and negatively to changes in domestic price level. The gas consumption responds negatively to real income and price changes in the shortrun, however, in the long-run real income exerts positive effect on gas consumption, while domestic price remains insignificant. Furthermore, in the short-run the average elasticities of price and real income for gas consumption (in absolute terms) are greater than that of electricity and coal consumption. The differences in elasticities of each component of energy have significant policy implications for income and revenue generation.
    Keywords: Energy Demand; Cointegration; Pakistan
    JEL: Q41 Q43
    Date: 2009
  9. By: Deepa Menon Choudhary
    Abstract: The production, transportation and consumption of energy resources, especially of fossil fuels such as coal, oil and natural gas, generate negative environmental externalities including air pollution. The use of energy resources are the largest anthropogenic source of air pollution and the impacts are felt both at the global and local level. At the global level, emissions include greenhouse gases (GHGs) like carbon-dioxide (CO2), methane (CH4) and nitrous oxide (N2O) and the local pollutants include sulphur-dioxide (SO2), nitrogen-dioxide (NO2), suspended particulate matter (SPM) and carbon monoxide (CO). The GHG emissions cause global warming, which impacts agriculture and food security, natural ecosystems, human health, energy and industrial infrastructures, and coastal areas. In the case of local pollutants, their concentration in the ambient air reflects the air quality in an area. These concentrations, if exceeded, result in direct and immediate damaging impacts on human health and ecosystems, besides having other local and regional impacts such as acid rains.[CSH OP NO 12]
    Keywords: Energy; environment; policymaking; deteriorating; air quality; market-based instruments; power generation; coal; steel; cement; chemical; fertilizer; externalities; GHG emissions; SO2; air quality management; Mashelkar Committee; Public Interest Litigations; power sector; United Nations Framework Convention on Climate Change; cost savings; Power; Planning Commission, 2002b; Industrial Policy Resolution; Electricity Supply Act, 1948; National Thermal Power Corporation
    Date: 2009
  10. By: Devarajan, Shantayanan; Go, Delfin S.; Robinson, Sherman; Thierfelder, Karen
    Abstract: Noting that South Africa may be one of the few African countries that could contribute to mitigating climate change, the authors explore the impact of a carbon tax relative to alternative energy taxes on economic welfare. Using a disaggregate general-equilibrium model of the South African economy, they capture the structural characteristics of the energy sector, linking a supply mix that is heavily skewed toward coal to energy use by different sectors and hence their carbon content. The authors consider a"pure"carbon tax as well as various proxy taxes such as those on energy or energy-intensive sectors like transport and basic metals, all of which achieve the same level of carbon reduction. In general, the more targeted the tax to carbon emissions, the better the welfare results. If a carbon tax is feasible, it will have the least marginal cost of abatement by a substantial amount when compared to alternative tax instruments. If a carbon tax is not feasible, a sales tax on energy inputs is the next best option. Moreover, labor market distortions such as labor market segmentation or unemployment will likely dominate the welfare and equity implications of a carbon tax for South Africa. This being the case, if South Africa were able to remove some of the distortions in the labor market, the cost of carbon taxation would be negligible. In short, the discussion of carbon taxation in South Africa can focus on considerations other than the economic welfare costs, which are likely to be quite low.
    Keywords: Environmental Economics&Policies,Transport Economics Policy&Planning,Taxation&Subsidies,Energy Production and Transportation,Environment and Energy Efficiency
    Date: 2009–05–01
  11. By: Prof. Dr. Bernd Meyer (GWS - Institute of Economic Structures Research)
    Abstract: Die Umweltpolitik kann auf bemerkenswerte Erfolge zurückblicken. Es ist ihr gelungen, zumindest in Europa im Bewusstsein der Menschen die Emissionen von Klimagasen als größte Gefahr für das Wohlergehen künftiger Generationen zu verankern. Die Wahrnehmung anderer Gefahren der fortschreitenden Umweltschädigung hat in der Öffentlichkeit und der Politik allerdings abgenommen, Klimaschutz steht bei vielen synonym für Umweltschutz. Ferner hat es die Umweltpolitik geschafft, in der Politik in Europa die Akzeptanz ökonomischer Instrumente und hier insbesondere der handelbaren Emissionsrechte so weit durchzusetzen, dass die Grundstoffindustrien in Bezug auf die CO2-Emissionen im Rahmen des ETS einem solchen System unterliegen, und dass dieses System voraussichtlich auf weitere Bereiche der Wirtschaft ausgebaut werden wird. Das Klimaproblem erscheint als lösbar, indem man mit dem „Global Deal“ (Edenhofer 2008) ein weltweites System Handelbarer Emissionsrechte einführt. Allerdings ist man weder auf der Konferenz von Bali 2007 noch auf der von Posen 2008 diesem Ziel bislang näher gekommen. Auf der anderen Seite stellen wir fest, dass die Suche nach Strategien zur Vermeidung von CO2-Emissionen Verhaltensweisen generiert, die neue Probleme schaffen und alte Probleme als weniger dringlich erscheinen lassen. Zum letzteren gehört die wieder erstarkende Akzeptanz der Nutzung der Kernenergie, zum ersten Punkt die Gewinnung von Kraftstoffen aus Pflanzen. Biodiesel aus Raps und Ethanol für Ottomotoren werden zunehmend als erneuerbare Energieträger eingesetzt. Damit gehen aber der Landwirtschaft Flächen zur Erzeugung von Nahrungsmitteln verloren und die Preise für Nahrungsmittel stehen im Verbund mit den Preisen der Kraftstoffe aus fossilen Energieträgern, was gerade für die ärmsten Menschen in den Entwicklungsländern schwere Konsequenzen hat. Ein anderes Beispiel sind die Hybridfahrzeuge, die durch die Zuschaltung oder den zeitweisen Betrieb eines Elektromotors zum Verbrennungsmotor wohl die mit der Transportleistung der Fahrzeuge verbundenen CO2-Emissionen mindern. Diese Hybridfahrzeuge weisen aber dennoch eine verheerende Ökobilanz auf, weil zusätzlich der Elektromotor und die Batterie erzeugt und später entsorgt werden müssen. Im Zentrum der Logik der CO2-Emissionsvermeidungsstrategie liegt auch die Entwicklung der so genannten CCSTechnologie (Carbon Capture and Storage): Bei der Stromerzeugung durch Kohleverbrennung wird durch zusätzlichen Energieeinsatz das CO2 abgeschieden und in unterirdische natürliche Lagerstätten verbracht, wo es dann hoffentlich auch verbleibt. Letzteres ist noch nicht sicher. Kommt dieses Verfahren etwa ab 2020 zum Einsatz, dann können zwar die CO2-Emissionen bei der Stromerzeugung gemindert werden, aber der Rohstoffverbrauch wird weiter beschleunigt. Die Liste der Beispiele ist lang, die zeigen, dass die Umweltpolitik gegenwärtig erhebliche Probleme hat, die immer wieder den gesamten Ansatz in Frage stellen. Wenn eine Therapie so heftige Nebenwirkungen hat, dann ist die Frage erlaubt, ob der theoretische Ansatz, der dieser Politik zu Grunde liegt, noch trägt. Die heute herrschende neoklassische Umweltökonomik hat die Reduktion der Emission von Rest- und Schadstoffen zum Ziel. Ihr Forschungsansatz ist dabei der der mikroökonomischen Partialanalyse. Wir werden im Abschnitt 2 darlegen, dass der totalanalytische Ansatz derv on Ayres und Knees (1969), Daly (1968) und anderen vor vierzig Jahren begründeten Ecological Economics dem überlegen ist. Hier geht es um die Reduktion des Rohstoffverbrauchs. Der vorliegende Beitrag fragt dann im Abschnitt 3 nach einem globalen Konzept für die Umweltpolitik, die eine Minderung des Rohstoffverbrauchs und gleichzeitig eine Erreichung des Klimazieles anstrebt. Im Abschnitt 4 sollen die Potenziale einer solchen Politik abgeschätzt werden. Einige Schlussfolgerungen im Abschnitt 5 schließen den Beitrag ab.
    Keywords: Ressourcenproduktivität, Klimaverträglichkeit, Umwelt
    JEL: Q54 Q28
    Date: 2009
  12. By: Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre); Benoît Sévi (GRANEM LEMNA - Université d'Angers - Université de Nantes)
    Abstract: The recent implementation of the EU Emissions Trading Scheme (EU ETS) in January 2005 created new financial risks for emitting firms. To deal with these risks, options are traded since October 2006. Because the EU ETS is a new market, the relevant underlying model for option pricing is still a controversial issue. This article improves our understanding of this issue by characterizing the conditional and unconditional distributions of the realized volatility for the 2008 futures contract in the European Climate Exchange (ECX), which is valid during Phase II (2008-2012) of the EU ETS. The realized volatility measures from naive, kernel-based and subsampling estimators are used to obtain inferences about the distributional and dynamic properties of the ECX emissions futures volatility. The distribution of the daily realized volatility in logarithmic form is shown to be close to normal. The mixture-of-distributions hypothesis is strongly rejected, as the returns standardized using daily measures of volatility clearly departs from normality. A simplified HAR-RV model (Corsi, 2009) with only a weekly component, which reproduces long memory properties of the series, is then used to model the volatility dynamics. Finally, the predictive accuracy of the HAR-RV model is tested against GARCH specifications using one-step-ahead forecasts, which confirms the HAR-RV superior ability. Our conclusions indicate that (i) the standard Brownian motion is not an adequate tool for option pricing in the EU ETS, and (ii) a jump component should be included in the stochastic process to price options, thus providing more efficient tools for risk-management activities.
    Keywords: CO2 Price; Realized Volatility; HAR-RV; GARCH; Futures Trading; Emissions Markets; EU ETS; Intraday data; Forecasting
    Date: 2009–05–25
  13. By: Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre); Emilie Alberola (Mission Climat Caisse des Dépôts - Université Panthéon-Sorbonne - Paris I)
    Abstract: This article critically examines the EU ETS intertemporal market during its Phase I (2005-2007). We test the Hotelling rule as a key element of a competitive equilibrium to validate whether allowance prices rise at the same rate as the interest rate. Including readily observable characteristics of the EU ETS such as the presence of one endogenous structural break and the influence of other energy markets shocks, we argue the inter-period ban on banking undermines the ability of the EU ETS to provide efficient price signalling. We also find a significant relationship between allowance price changes and the expected scarcity of allowances approximated by the Ellerman-Parsons ratio. Finally, our results show evidence of institutional learning by market participants.
    Keywords: Emissions trading; Banking; EU ETS; Hotelling rule; Ellerman-Parsons Ratio
    Date: 2009–05–26
  14. By: Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: In international emissions trading schemes such as the Kyoto Protocol and the European Union Emissions Trading Scheme, the suboptimal negotiation of the cap with respect to total pollution minimization leads us to critically examine the proposition that generous allocation of grandfathered permits by the regulator based on recent emissions might pave the way for dominant positions. Stemming from this politically given market imperfection, this chapter develops a differential Stackelberg game with two types of non cooperative agents: a large potentially dominant agent, and a competitive fringe whose size are exogenously determined. The strategic interactions are modeled on an intra-industry permits markets where agents can freely bank and borrow permits. This chapter contributes to the debate on initial permits allocation and market power by focusing on the effects of allowing banking and borrowing. A documented appraisal on whether or not such provisions should be included is frequently overlooked by the debate to introduce the permits market itself among other environmental regulation tools. Numerical simulations provide a quantitative illustration of the results obtained.
    Keywords: Emissions Trading; Banking; Borrowing; Market Power.
    Date: 2009–05–26
  15. By: Rosendahl, Knut Einar; Strand, Jon
    Abstract: The Clean Development Mechanism (CDM) is an offset mechanism designed to reduce the overall cost of implementing a given global target for greenhouse gas (GHG) emissions in industrialized"Annex B"countries of the Kyoto Protocol. This paper discusses various ways in which CDM projects do not imply full offset of emissions, thus leading to an overall increase in global GHG emissions when considering the Annex-B emissions increase allowed by the offsets. The authors focus on two ways in which this may occur: baseline manipulation; and leakage. Baseline manipulation may result when agents that carry out CDM projects have incentives to increase their initial (or baseline) emissions in order to optimize the value of CDM credits. Leakage occurs because reductions in emissions under a CDM project may affect market equilibrium in local and/or global energy and product markets, and thereby increase emissions elsewhere. Remedies against these problems are discussed. Such remedies are more obvious for the baseline problem (where one is simply to choose an exogenous baseline independent of the project) than for the leakage problem (which is difficult to prevent, and where a prediction of the effect must rely on information about overall market equilibrium effects).
    Keywords: Energy Production and Transportation,Environmental Economics&Policies,Environment and Energy Efficiency,Energy and Environment,Transport Economics Policy&Planning
    Date: 2009–05–01
  16. By: Paul K. Gorecki (ESRI); Seán Lyons (ESRI); Richard S. J. Tol (ESRI)
    Abstract: Under European Union proposals for CO2 emission reduction between 2013 and 2020, a Member State can transfer to another Member State the right to use its unused Clean Development Mechanism (?CDMs?) credits. The paper addresses three issues in relation to these CDM Warrants (?CDMW?). First, how should the Member State treat the CDMW in making decisions concerning emission reduction? The price of the property right is an important signal for a Member State in deciding the level of domestic abatement compared to trading in CDMWs. In other words, a shadow price for CDMWs should be used in formulating the emission strategy in order to determine whether or not a member State is a buyer or seller of CDMWs. Second, what mechanism should be used to facilitate the exchange of CDMWs? The preferred mechanism depends on the market size, over which there appears to be some ambiguity: market intermediaries such as Over-the-Counter trades and exchanges are preferred if market size is small; auctions if the market size is large. Third, who should realise the value of CDMWs ? the State, existing polluters etc? The value of CDMWs should accrue to the State.
    Date: 2009–05
  17. By: Norgaard, Kari Marie
    Abstract: Climate scientists have identified global warming as the most important environmental issue of our time, but it has taken over 20 years for the problem to penetrate the public discourse in even the most superficial manner. While some nations have done better than others, no nation has adequately reduced emissions and no nation has a base of public citizens that are sufficiently socially and politically engaged in response to climate change. This paper summarizes international and national differences in levels of knowledge and concern regarding climate change, and the existing explanations for the worldwide failure of public response to climate change, drawing from psychology, social psychology and sociology. On the whole, the widely presumed links between public access to information on climate change and levels of concern and action are not supported. The paper's key findings emphasize the presence of negative emotions in conjunction with global warming (fear, guilt, and helplessness), and the process of emotion management and cultural norms in the construction of a social reality in which climate change is held at arms length. Barriers in responding to climate change are placed into three broad categories: 1) psychological/conceptual, 2) social and cultural, and 3) structural (political economy). The author provides policy considerations and summarizes the policy implications of both psychological and conceptual barriers, and social and cultural barriers. An annotated bibliography is included.
    Keywords: Environmental Economics&Policies,Climate Change,Transport and Environment,Global Environment Facility,Environmental Governance
    Date: 2009–05–01
  18. By: Foa, Roberto
    Abstract: This paper addresses two vital concerns in the debate on adaptation to climate change. First, how can countries prepare to manage the impact of climate-change induced natural disasters? Second, how can countries ensure that they have the governmental institutions required to manage the phenomenal challenge of adaptation to climate change? A range of economic and institutional measures are tested for their potential effects on natural disaster resilience and the quality of environmental governance. The findings suggest an important role is played by social and political institutions in determining the ability of countries to adapt to climate change and respond to natural disasters, in particular in the degree to which countries have succeeded in gender empowerment and the development of a robust civil society and nonprofit sector. As the climate change challenge moves from that of"proving the facts"to that of"implementing change,"the authors suggest that international policymakers, donors, and activists must increasingly focus on building domestic policy environments that are conducive to the delivery of more effective environmental legislation, for example through implementation of gender quotas and provision of support to civil society groups.
    Keywords: Environmental Economics&Policies,Population Policies,Natural Disasters,Governance Indicators,Hazard Risk Management
    Date: 2009–05–01
  19. By: Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: This article provides a critical appraisal of the concept of sustainable development in light of climate change. As the latest climate change science indicates strong effects of anthropogenic activity on global warming, we review the pros and the cons of prioritizing development over environmental protection. The methodology used consists in critically discussing the arguments of scientists and academic researchers in the environmental economics field to put a greater emphasis on the preservation of the environment vs. urging development issues. We show that the debate over prioritization does not make sense insomuch as the wider consequences of climate change are envisioned, i.e. it does not appear conceptually appropriate to think about environment and development issues in separate spheres. Our main contribution consists in embracing a holistic approach to discuss sustainable development issues within the new international framework of climate change policy and anthropogenic global warming concerns.
    Keywords: climate change policy, sustainable development, prioritization, development, environmental protection, global warming
    Date: 2009–05–26
  20. By: Meadowcroft, James
    Abstract: Climate change governance poses difficult challenges for contemporary political/administrative systems. These systems evolved to handle other sorts of problems and must now be adapted to handle emerging issues of climate change mitigation and adaptation. This paper examines long-term climate governance, particularly in relation to overcoming"institutional inertia"that hampers the development of an effective and timely response. It argues that when the influence of groups that fear adverse consequences of mitigation policies is combined with scientific uncertainty, the complexity of reaching global agreements, and long time frames, the natural tendency is for governments to delay action, to seek to avoid antagonizing influential groups, and to adopt less ambitious climate programs. Conflicts of power and interest are inevitable in relation to climate change policy. To address climate change means altering the way things are being done today - especially in terms of production and consumption practices in key sectors such as energy, agriculture, and transportation. But some of the most powerful groups in society have done well from existing arrangements, and they are cautious about disturbing the status quo. Climate change governance requires governments to take an active role in bringing about shifts in interest perceptions so that stable societal majorities in favor of deploying an active mitigation and adaptation policy regime can be maintained. Measures to help effect such change include: building coalitions for change, buying off opponents, establishing new centers of economic power, creating new institutional actors, adjusting legal rights and responsibilities, and changing ideas and accepted norms and expectations.
    Keywords: Environmental Economics&Policies,Climate Change,Environment and Energy Efficiency,Transport and Environment,Energy and Environment
    Date: 2009–05–01
  21. By: MacCracken, Mike
    Abstract: Global climate change is occurring at an accelerating pace, and the global greenhouse gas (GHG) emissions that are forcing climate change continue to increase. Given the present pace of international actions, it seems unlikely that atmospheric composition can be stabilized at a level that will avoid"dangerous anthropogenic interference"with the climate system, as called for in the UN Framework Convention on Climate Change. Complicating the situation, as GHG emissions are reduced, reductions in the offsetting cooling influence of sulfate aerosols will create an additional warming influence, making an early transition to climate stabilization difficult. With significant reductions in emissions (mitigation) likely to take decades, and with the impacts of projected climate change-even with proactive adaptation-likely to be quite severe over the coming decades, additional actions to offset global warming and other impacts have been proposed as important complementary measures. Although a number of possible geoengineering approaches have been proposed, each has costs and side effects that must be balanced against the expected benefits of reduced climate impacts. However, substantial new research is needed before comparison of the relative benefits and risks of intervening is possible. A first step in determining whether geoengineering is likely to be a useful option is the initiation of research on four interventions to limit the increasing serious impacts: limiting ocean acidification by increasing the removal of carbon dioxide from the atmosphere and upper ocean; limiting the increasing intensity of tropical cyclones; limiting the warming of the Arctic and associated sea level rise; and sustaining or enhancing the existing sulfate cooling influence. In addition, in depth consideration is needed regarding the governance structure for an international geoengineering decision-making framework in the event that geoengineering becomes essential.
    Keywords: Montreal Protocol,Climate Change,Energy Production and Transportation,Energy and Environment,Environment and Energy Efficiency
    Date: 2009–05–01

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