nep-ene New Economics Papers
on Energy Economics
Issue of 2010‒02‒13
eleven papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Natural Gas Situation and LNG Supply/Demand Trends in Asia-Pacific and Atlantic Markets By Yoshikazu Kobayashi
  2. Testing the Neocon Agenda: Democracy in Resource-Rich Societies.. By Collier, Paul; Hoeffler, Anke
  3. Oil and the Eruption of the Algerian Civil War: A Context-sensitive Analysis of the Ambivalent Impact of Resource Abundance By Miriam Shabafrouz
  4. Nigeria: A Prime Example of the Resource Curse? Revisiting the Oil-Violence Link in the Niger Delta By Annegret Maehler
  5. Ethanol Production, Food and Forests By Saraly Andrade de Sa; Charles Palmer; Stefanie Engel
  6. Exploration of Certain Aspects of CARB's Approach to Modeling Indirect Land Use from Expanded Biodiesel Production, An By Bruce A. Babcock; Miguel Carriquiry
  7. Transport consumption inequalities and redistributive effects of taxes: A comparison of France, Denmark and Cyprus By Akli Berri; Stéphanie Vincent Lyk-Jensen; Ismir Mulalic; Theodoros Zachariadis
  8. Environmental Aspects of Inter-City Passenger Transport By Per Kageson
  9. The Economics of CO2 Emissions Trading for Aviation By Peter Morrell
  10. Is Economic Volatility Detrimental to Global Sustainability? By Yongfu Huang
  11. Climate Policy, Technology Choice, and Multiple Equilibria in A Developing Economy By Daiju Narita

  1. By: Yoshikazu Kobayashi (The Institute of Energy Economics, Japan)
    Abstract: Since the autumn of 2008, the global LNG supply/demand balance has eased substantially. Demand-side factors including the impact of the financial crisis on global natural gas consumption, and supply-side factors such as launchings of new projects and progress in unconventional natural gas development in North America are behind the LNG supply/demand balance change. For the immediate future, the LNG supply/demand balance is likely to remain easy. While the LNG situation is changing dramatically, key points to which we should pay attention over a short term with regard to a future LNG supply/demand outlook include LNG demand trends in the United States and China and destinations for exports from new LNG facilities launching operations by 2011. Factors that are expected to have great influences on future LNG supply and demand over a edium to long term may include the impact of the financial market credit crunch on investment in new medium to long-term gas development projects, gas shortages in the Middle East, and industrial nations’ ongoing efforts toward a low-carbon society.
    Keywords: liquid natural gas, LNG, energy supply, energy demand,
    JEL: Q40 Q41 Q43
    Date: 2010
  2. By: Collier, Paul; Hoeffler, Anke
    Abstract: Resource-rich countries have tended to be autocratic and also have tended to use their resource wealth badly. The neoconservative agenda of promoting democratization in resource-rich countries thus offers the hopeful prospect of a better use of their economic opportunities. This paper examines whether the effect of democracy on economic performance is distinctive in resource-rich societies. We show that a priori the sign of the effect is ambiguous: Resource rents could either enhance or undermine the economic consequences of democracy. We therefore investigate the issue empirically. We first build a new dataset on country-specific resource rents, annually for the period 1970–2001. Using a global panel dataset, we find that in developing countries the combination of high natural resource rents and open democratic systems has been growth-reducing. Checks and balances offset this adverse effect. Thus, resource-rich economies need a distinctive form of democracy with particularly strong checks and balances. Unfortunately, this is rare: Checks and balances are public goods and so are liable to be undersupplied in new democracies. Over time they are eroded by resource rents.
    JEL: Q38 O11 O40
    Date: 2009–04
  3. By: Miriam Shabafrouz (GIGA Institute of Global and Area Studies)
    Abstract: Algeria’s intrastate war in the 1990s, during which militant Islamists and the state fought fiercely against each other, still raises questions concerning the decisive factors leading to its onset and escalation. This paper uses the resource curse approach and the rentier state theory to understand the impact resource wealth could have had on the outbreak of this violent conflict, then goes one step further, adopting a context-sensitive approach. This approach attempts to juxtapose those conditions directly linked to the resource sector with the general conflict-fueling conditions diagnosed in Algeria. It takes into account conditions both within the country and in the international context. The application of a context matrix allows us to examine the interplay of resource-related factors and other conflictdriving forces, such as socioeconomic, demographic and ideological changes. Such an approach not only broadens the general understanding of the resource-violence link but also enhances our understanding of the eruption of violence in Algeria.
    Keywords: Algeria, oil, civil war, resource curse, rentier state theory, context approach
    Date: 2010–01
  4. By: Annegret Maehler (GIGA Institute of Global and Area Studies)
    Abstract: This paper studies the oil-violence link in the Niger Delta, systematically taking into consideration domestic and international contextual factors. The case study, which focuses on explaining the increase in violence since the second half of the 1990s, confirms the differentiated interplay of resource-specific and non-resource-specific causal factors. With regard to the key contextual conditions responsible for violence, the results underline the basic relevance of cultural cleavages and political-institutional and socioeconomic weakness that existed even before the beginning of the “oil era.” Oil has indirectly boosted the risk of violent conflicts through a further distortion of the national economy. Moreover, the transition to democratic rule in 1999 decisively increased the opportunities for violent struggle, in a twofold manner: firstly, through the easing of political repression and, secondly, through the spread of armed youth groups, which have been fostered by corrupt politicians. These incidents imply that violence in the Niger Delta is increasingly driven by the autonomous dynamics of an economy of violence: the involvement of security forces, politicians and (international) businessmen in illegal oil theft helps to explain the perpetuation of the violent conflicts at a low level of intensity.
    Keywords: Nigeria, natural resources, oil, political economy, violence, context sensitivity
    Date: 2010–01
  5. By: Saraly Andrade de Sa; Charles Palmer; Stefanie Engel
    Abstract: This paper investigates the direct and indirect impacts of ethanol production on land use, deforestation and food production. A partial equilibrium model of a national economy with two sectors and two regions, one of which includes a residual forest, is developed. It analyses how an exogenous increase in the ethanol price affcts input allocation (land and labor) between sectors (energy crop and food). Three potential effects are identified. First, the standard and well-documented effect of direct land competition between rival uses increases deforestation and decreases food production. Second, an indirect displacement of food production across regions, provoked by a shift in the price of food, increases deforestation and reduces the total output of the food sector. Finally, labor mobility between sectors and regions tends to decrease food production but also deforestation. The overall impact of ethanol production on forest conversion is ambiguous, providing a number of interesting pointers to further, empirical research.
    Keywords: Ethanol, Food Production; Land Use; Deforestation; Direct and Indirect Effects; Migration.
    JEL: Q11 Q24 Q42
    Date: 2010
  6. By: Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC)); Miguel Carriquiry (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: This report provides insight into four aspects of modeling indirect land use caused by expanded biofuels production. The report was motivated by the National Biodiesel Board's interest in better understanding how the California Air Resources Board (CARB) estimated an indirect land-use factor for soybean-based biodiesel of 66 gCO2e/MJ, which is more than three times greater than the direct emissions from the fuel. Four aspects of CARB's modeling approach were examined: (1) why CARB estimates that more U.S. forest than pasture will be converted to cropland; (2) whether CARB's predicted land-use changes are consistent with observed U.S. land-use changes in the past decade; (3) how CARB could account for double cropping; and (4) whether CARB's assumption that land brought into production has lower yields than land that was already in production. Results indicate that (1) much of the predicted U.S. forestland conversion is likely due to restrictions on cross-price elasticities imposed by use of the Constant Elasticity of Transformation supply function; (2) a stock of idled cropland could have accommodated the increase in U.S. cropland in 2007 and 2008; (3) the soybean yield elasticity with respect to price can be adjusted to account for double-cropped acres; and (4) there is no empirical support for the assumption that yields in Brazil on new land are lower than yields on old land. The analysis shows how much work needs to be done in this area if the models used to estimate indirect land use are to become widely accepted.
    Keywords: CET supply function, double cropping, idle cropland, indirect land use.
    Date: 2010–02
  7. By: Akli Berri (INRETS, Department of Transport Economics and Sociology (DEST)); Stéphanie Vincent Lyk-Jensen (SFI - The Danish National Centre for Social Research); Ismir Mulalic (University of Copenhagen and Technical University of Denmark); Theodoros Zachariadis (University of Cyprus)
    Abstract: We evaluate household transport consumption inequalities in France, Denmark and Cyprus, investigate their temporal dynamics and estimate the redistributive effects of taxes on different commodity categories. A comparative analysis is carried out in light of the differences between these countries, most notably in terms of car taxation systems and car ownership levels. A decomposition by expenditure component of the Gini index is applied, using household-level data from repeated cross-sections of expenditure surveys spanning long time periods. The results highlight the effect of car social diffusion. The relative contribution of vehicle use items to total expenditure inequality decreases over time, thus reflecting the more and more widespread use of the car. Moreover, fuel taxes become regressive (i.e. they affect the poor more than the rich), while the progressive character of taxes on the remaining car use commodities weakens with time. Taxes on transport goods and services as a whole are progressive (i.e. they affect the rich more than the poor). However, this is principally due to the progressivity of taxes on automobile purchases. The progressivity of taxes on car purchases is by far much stronger in Denmark. In this country, these taxes are so high that car purchase costs can be afforded only by high incomes. These findings underline the fact that equity issues should not be overlooked when designing policies to attenuate the environmental impact of cars. Increasing car use costs, notably fuel prices, through an increase of uniform taxes would be particularly inequitable.
    Keywords: Inequality; transport consumption; household expenditure surveys; Gini index; decomposition by component; redistributive effects of taxes
    JEL: D12 H23 H24 R41
    Date: 2010
  8. By: Per Kageson
    Abstract: Many governments in different parts of the world are investing in high speed rail. Some of them do so thinking that it will be an important part of climate change mitigation. Intercity traffic over medium distances is particularly interesting in the environmental context as it constitutes the only transport segment where aircraft, trains, coaches and cars naturally compete for market shares. This report calculates the effect on emissions from building a new high speed link that connects two major cities located 500 km apart. It assumes that emissions from new vehicles and aircraft in 2025 can be used as a proxy for the emissions during a 50 year investment depreciation period. The emissions from the marginal production of electricity, used by rail and electric vehicles, are estimated to amount on average to 530 gram per kWh for the entire period. Fuels used by road vehicles are assumed to be on average 80 percent fossil and 20 per cent renewable (with a 65% carbon efficiency in the latter case).
    Date: 2009–12
  9. By: Peter Morrell
    Abstract: There has been a growing interest in the environmental impact of aviation, both in terms of noise and aircraft engine emissions. Discussions have included both mitigation measures and methods of internalisation of these environmental costs also described as the principle of polluter pays. This paper focuses on CO2 emissions from aircraft engines, which have both local and climate change implications, and where the emphasis of most recent discussions has centred. These have taken place at an international, regional and local level.
    Date: 2009–12
  10. By: Yongfu Huang
    Abstract: This paper examines the effects of economic volatility on global sustainability in a dynamic panel data model allowing for error cross section dependence. It finds that output volatility and financial market volatility exert strong negative impacts on sustainable development, with the impacts exacerbated in some subsamples such as higher energy intensity countries and lower trade share countries. The paper also identifies a financial development channel through which output volatility impedes global sustainability, highlighting the interaction between global financial markets and the wider economy as a key factor influencing the low carbon development path. The finding is significant for the conduct of macroeconomic and environmental policies in an integrated global green economy.
    Keywords: Output Volatility; Financial Market Volatility; Global Sustainability; Genuine Savings; Cross Section Dependence
    JEL: E32 O11 O16
    Date: 2010
  11. By: Daiju Narita
    Abstract: Control of carbon dioxide emissions in developing countries is becoming a key issue in the international climate policy. A critical element for achieving substantial emission reduction in those countries is the installment of new energy technologies. Drawing on the framework of poverty-trap models in development economics, we discuss how climate policy affects the transition of energy technologies in a developing economy. We show that while a moderate carbon policy could promote transition to low-emission energy technology, too stringent policy in a relatively poor economy may rather hinder the process by reducing the economy’s financing capacity as to building new energy infrastructure – there, the barrier is not the long-run costs of the new technology but the availability of financial resources for initial investment, which could be constrained not only by the domestic saving but also by the imperfection of credit market. The possibility of such a trapping may provide a justification for financial support towards the deployment of alternative energy technologies in low-income economies
    Keywords: Climate policy, technology choice, credit market imperfection, climate funds
    JEL: O16 O33 Q54 Q56
    Date: 2010–01

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