nep-ene New Economics Papers
on Energy Economics
Issue of 2010‒03‒28
28 papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Interfuel Substitution in the United States By Apostolos Serletis; Govinda Timilsina; Olexandr Vasetsky
  2. What is an oil shock? Panel data evidence By Dong Heon Kim
  3. Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle By Pablo Lopez Murphy; Mauricio Villafuerte
  4. The Predictive Content of Commodity Futures By Menzie D. Chinn; Olivier Coibion
  5. Evaluation of the Oil Fiscal Regime in Russia and Proposals for Reform By Daria Zakharova; Brenton Goldsworthy
  6. Angolaâs Macroeconomy and Agricultural Growth By Kyle, Steven
  7. Inclusive Institutions and the Onset of Internal Conflict in Resource-rich Countries By Tim Wegenast
  8. Profit Sharing under the Threat of Nationalization By Di Corato, Luca
  9. The Cyclicality of Fiscal Policy in the Middle East and Central Asia:Is the Current Crisis Different? By Yasser Abdih; Pablo Lopez-Murphy; Agustin Roitman; Ratna Sahay
  10. The effect of biofuel on the international oil market By Hochman, Gal; Rajagopal, Deepak; Zilberman, David
  11. The Impact of Feedstock Supply and Petroleum Price Variability on Domestic Biofuel and Feedstock Markets â The Case of the United States By Yano, Yuki; Blandford, David; Surry, Yves
  12. Natural Gas Export Revenue, Fiscal Balance and Inflation in Myanmar By Kubo, Koji
  13. Design and operations of gas transmission networks By BABONNEAU, FrŽdŽric; NESTEROV, Yurii; VIAL, Jean-Philippe
  14. The valuation of power futures based on optimal dispatch By DE MAERE DÕAERTRYCKE, Gauthier; SMEERS, Yves
  15. Environmental Federalism in the European Union and the United States By David J. Vogel; Michael W. Toffel; Diahanna Post; Nazli Z. Uludere Aragon
  16. The overall economic and environmental effectiveness of a combined carbon footprinting and feedback system - Climate Bonus project report (WP6) By Adriaan Perrels; Anna Sahari; Ari Nissinen
  17. Promoting clean technologies under imperfect competition By AZOMAHOU, ThŽophile; BOUCEKKINE, Raouf; NGUYEN-VAN, Phu
  18. ÒMitigation, adaptation, sufferingÓ : In search of the right mix in the face of climate change By TULKENS, Henri; VAN STEENBERGHE, Vincent
  19. Modelling the convenience yield in carbon prices using daily and realized measures By Julien Chevallier
  20. Understanding volatility dynamics in the EU-ETS market: lessons from the future By SANIN, Maria Eugenia; VIOLANTE, Francesco
  21. Clean technology adoption and its influence on tradeable emission permit prices. By SANIN, Maria Eugenia; ZANAJ, Skerdilajda
  22. Will the clean development mechanism mobilize anticipated levels of mitigation ? By Rahman, Shaikh M.; Dinar, Ariel; Larson, Donald F.
  23. Carbon Capture and Storage (CCS) Technologies and Economic Investment Opportunities in the UK By Julien Chevallier
  24. The Bioeconomics of Conservation Agriculture and Soil Carbon Sequestration in Developing Countries By Akpalu, Wisdom; Anders, Ekbom
  25. Agricultural Land Tenure and Carbon Offsets By Claassen, Roger; Morehart, Mitch
  26. Regional Power Shifts and Climate Knowledge Systems: South Africa as a Climate Power? By Babette Never
  27. CLEAR Economics: State-Level Impacts of the Carbon Limits and Energy for America’s Renewal Act on Family Incomes and Jobs By James Boyce; Matthew Riddle
  28. Climate Policies with Pollution Externalities and Learning Spillovers By Lehmann, Paul

  1. By: Apostolos Serletis; Govinda Timilsina; Olexandr Vasetsky
    Abstract: In this paper, we use the locally fexible translog functional form to investigate the demand for energy and interfuel substitution in the United States and to provide a comparison of our results with most of the existing empirical energy demand literature. Motivated by the widespread practice of ignoring theoretical regularity, we follow Barnett's (2002) sugges- tions and estimate the model subject to theoretical regularity, using methods developed by Diewert and Wales (1987) and Ryan and Wales (2000), in an attempt to produce inference consistent with neoclassical microeconomic theory. Moreover, we use the most recent data, published by the U.S. Energy Information Administration (EIA), and in addition to investigating interfuel substitution possibilities in total U.S. energy demand, we follow Serletis et al. (2009) and also examine interfuel substitution possibilities in energy demand by sector. Moreover, we test for weak separability, with the objective of discovering the structure of the functional form in total energy demand as well as energy demand by sector.
    JEL: C2 D4
    Date: 2010–01–01
  2. By: Dong Heon Kim (Department of Economics, Korea University)
    Abstract: This paper characterizes the nonlinear relation between oil price change and GDP growth, focusing on the panel data of various industrialized countries. Toward this end, the paper extends a flexible nonlinear inference to the panel data analysis where the random error components are incorporated into the flexible approach. The paper reports clear evidence of nonlinearity in the panel and confirms earlier claims in the literature - oil price increases are much more important than decreases and previous upheaval in oil prices causes the marginal effect of any given oil price change to be reduced. Our result suggests that the nonlinear oil-macroeconomy relation is generally observable over different industrialized countries and it is desirable for one to use the nonlinear function of oil price change for GDP forecast.
    Keywords: Oil shock; Nonlinear flexible inference; Panel data; Error components model, Economic fluctuation
    JEL: E32 C33
    Date: 2010
  3. By: Pablo Lopez Murphy; Mauricio Villafuerte
    Abstract: This paper presents a detailed analysis of the average fiscal policy responses of oil producing countries (OPCs) to the recent oil price cycle. We find that OPCs worsened their non-oil primary balances substantially during 2003-2008 driven by an increase in primary spending. However, this trend was partially reversed when oil prices went down in 2009. We also find evidence that fiscal policy has been procyclical and has hence exacerbated the fluctuations in economic activity. In addition, we estimate that a small reduction in oil prices could lead to very large financing needs in the near future. Finally, we show that long-term fiscal sustainability positions in OPCs have worsened.
    Keywords: Business cycles , Commodity price fluctuations , Cross country analysis , Fiscal policy , Fiscal sustainability , Nonoil sector , Oil prices , Oil producing countries , Oil production , Oil revenues ,
    Date: 2010–02–02
  4. By: Menzie D. Chinn (Department of Economics, University of Wisconsin); Olivier Coibion (Department of Economics, College of William and Mary)
    Abstract: This paper examines the relationship between spot and futures prices for a broad range of commodities, including energy, precious and base metals, and agricultural commodities. In particular, we examine whether futures prices are (1) an unbiased and/or (2) accurate predictor of subsequent spot prices. While energy futures prices are generally unbiased predictors of future spot prices, there is much stronger evidence against the null for other commodity markets. This difference appears to be driven in part by the depth of each market. We find that over the last five years, it is much harder to reject the null of futures prices being unbiased predictors of future spot prices than in earlier periods for almost all commodities. In addition, futures prices do approximately as well as a random walk in forecasting future spot prices, and vastly outperform a reduced form empirical model.
    Keywords: futures, energy, petroleum, natural gas, heating oil, gasoline, precious metals, base metals, agricultural commodities, forecasting, efficient markets hypothesis.
    JEL: G13 Q43
    Date: 2010–03–15
  5. By: Daria Zakharova; Brenton Goldsworthy
    Abstract: Oil revenue plays a central role in Russia's economic development. Thus, the recent decline in oil production and investment, and the possible contribution of the current fiscal regime to these developments, have prompted a reassessment of the oil tax system in Russia. Some important changes have already been made, while others are underway. This paper uses a simulation model to evaluate Russia's current oil fiscal regime. Based on these simulations, the paper proposes ways to make the fiscal regime more supportive of investment, while ensuring an appropriate share of oil sector profits for the government.
    Keywords: Cross country analysis , Economic models , Fiscal policy , Natural gas sector , Oil production , Oil revenues , Oil sector , Reserves , Resource mobilization , Russian Federation , Tax policy , Tax systems ,
    Date: 2010–02–16
  6. By: Kyle, Steven
    Abstract: This paper discusses the effects of Angolaâs mineral wealth on the process of agricultural development. Though Angola has a rich agricultural resource base its history of civil war and extreme real exchange rate distortions has resulted in agricultural stagnation through many parts of the country. Though the security situation is now much improved, current high oil prices along with oil output increases mean that pressures on the real exchange rate will remain a fact of life for the foreseeable future.
    Keywords: Financial Economics, Resource /Energy Economics and Policy,
    Date: 2010–02–01
  7. By: Tim Wegenast (GIGA German Institute of Global and Area Studies)
    Abstract: The literature on institutional determinants of intra-state violence commonly asserts that the presence of multiple political parties reduces the conflict potential within countries; by co-opting oppositional groups into an institutionalized political arena, dissidents would prefer parliamentarian means over violent rebellion in order to pursue their goals. The present paper shows that this proposition does not necessarily hold for fuel-abundant states. In the presence of natural resources such as oil or gas, countries exhibiting numerous non-competitive parties are actually more susceptible to internal conflict. Fortified by the establishment of legal political parties, regime opponents succumb more easily to the prospects of securing resource revenues, adopting rapacious behaviour. Fuel-related internal grievances as well as the opposition’s disaffection over the lack of effective political leverage and government use of political violence provide a seemingly legitimate motive for armed rebellion. Moreover, financial means for insurgency are raised by extortion or the possibility of selling future exploitation rights to natural resources. Logit models using different estimation techniques and alternative operationalizations corroborate the proposed claim. The argumentation is further illustrated by a depiction of the Colombian case.
    Keywords: intra-state conflict, natural resources, political parties, democracy, Colombia
    Date: 2010–03
  8. By: Di Corato, Luca
    Abstract: A multinational corporation engages in foreign direct investment for the extraction of a natural resource in a developing country. The corporation bears the initial investment and earns as a return a share of the profits. The host country provides access and guarantees conditions of operation. Since the investment is totally sunk, the corporation must account in its plan not only for uncertainty in market conditions but also for the threat of nationalization. In a real options framework, where the government holds an American call option on nationalization, we show under which conditions a Nash bargaining leads to a profit distribution maximizing the joint venture surplus. We find that the threat of nationalization does not affect the investment threshold but only the Nash bargaining solution set. Finally, we show that the optimal sharing rule results from the way the two parties may differently trade of rents with option values.
    Keywords: Real Options, Nash Bargaining, Expropriation, Natural Resources, Foreign Direct Investment, International Relations/Trade, Resource /Energy Economics and Policy, C7, D8, K3, F2, O1,
    Date: 2010
  9. By: Yasser Abdih; Pablo Lopez-Murphy; Agustin Roitman; Ratna Sahay
    Abstract: The countries of the Middle East and North Africa, and the Caucasus and Central Asia have the highest output volatility in the world. Fiscal policy is a powerful tool that can help dampen the business cycles. This paper analyzes the cyclical properties of fiscal policy in the region during the past four decades and explores whether the response during the current global economic crisis is different in 2009. Across a sample of 28 countries, we find that fiscal policy has typically amplified the business cycles and that it has been more procyclical in good times than in bad times. However, the response to the current crisis has differed from the past in that about half of the countries responded countercyclically in 2009. Going forward, the fiscal space during downturns varies widely across countries, depending on the level of debt, access to capital markets, and natural resource wealth. Not surprisingly, the oil exporters have more fiscal room than oil importers, although there are some oil importers that still have room to respond countercyclically in bad times.
    Date: 2010–03–18
  10. By: Hochman, Gal (University of California, Berkeley. Dept of agricultural and resource economics); Rajagopal, Deepak (University of California, Berkeley); Zilberman, David (University of California, Berkeley. Dept of agricultural and resource economics)
    Keywords: energy, opec, biofuels, fuel, carbon savings, optimal export tax model, cheap oil
    Date: 2010
  11. By: Yano, Yuki; Blandford, David; Surry, Yves
    Abstract: The promotion of biofuel use in preference to traditional petroleum-based transportation fuel has linked agricultural commodity markets and energy markets more closely together. Biofuel policies can involve multiple policy instruments, but studies examining their effects on biofuel feedstock and energy markets are scarce. In addition, the impact of alternative policy approaches in the context of variability in petroleum prices and the supply of biofuel feedstock has received limited attention. Focusing on the current situation in the United States, in which prohibitively high duties prevent imports of ethanol, this paper examines how variability in the price of petroleum and corn supply affects domestic market variability under three types of domestic policies, inclusive of their combinations, for promoting the use of ethanol: 1) the provision of a fixed subsidy (tax credit) for blending ethanol with gasoline; 2) the use of a blending mandate; and 3) the use of a consumption mandate. Varying relative variability in petroleum price and corn supply, we analyze numerically the implications of changes in domestic biofuel policy for variability (measured by the coefficient of variation) in ethanol use and corn prices. We also provide some brief insights into the design of market stabilization policies. Results obtained from Monte Carlo simulations show that in the absence of mandates the quantity of ethanol used under a subsidy policy is highly susceptible to fluctuations in oil prices and corn supply, providing that there are no constraints to adjustment in ethanol demand. The impact of oil price fluctuations on the price of corn is large, but corn supply fluctuations have no or a small impact on the equilibrium corn price, depending on the flexibility of the use of corn in ethanol refining. This is because variations in ethanol volume absorb shocks caused by corn supply fluctuations. Consequently, high fluctuations in the price of petroleum are expected to result in high variability in the corn price in the absence of mandates. With a mandate (with or without a subsidy), as the likelihood that the mandate becomes binding increases, variability in ethanol use declines, the impact of variations in petroleum price on corn prices is reduced, and the impact of variations in corn supply on prices is accentuated. Therefore, if the mandate is likely to be binding, high fluctuations in corn supply are expected to result in high variability in the corn price. If the likelihood that ethanol use exceeds the mandated level is high, the effects are similar to those in the absence of a mandate. The effects of changes in biofuel policy, such as a reduction in the level of tax credit under a mandate and an increase in its level, on the price of corn depend on the relative magnitudes of world oil price and domestic corn supply fluctuations.
    Keywords: biofuels, subsidies, mandates, variability, Agricultural and Food Policy, International Relations/Trade, Resource /Energy Economics and Policy,
    Date: 2010–02
  12. By: Kubo, Koji
    Keywords: Myanmar, Disinflation, Natural Resource Exports, Dual Exchange Rates, Natural Gas, Exports, Inflation
    JEL: E31 F31 O53 Q33
    Date: 2010–03
  13. By: BABONNEAU, FrŽdŽric (Ordecsys, CH-1224 Chne-Bougeries, Switzerland); NESTEROV, Yurii (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); VIAL, Jean-Philippe (Ordecsys, CH-1224 Chne-Bougeries, Switzerland)
    Keywords: gas transmission networks, reinforcement, convex optimization
    Date: 2009–08–01
  14. By: DE MAERE DÕAERTRYCKE, Gauthier (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); SMEERS, Yves (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Keywords: power contingent claims, PDE valuation of financial derivatives, unit commitment, market price of risk, EEX
    JEL: C61 G13
    Date: 2009–03–01
  15. By: David J. Vogel (Haas School of Business); Michael W. Toffel (Harvard Business School, Technology and Operations Management Unit); Diahanna Post; Nazli Z. Uludere Aragon
    Abstract: The United States (US) and the European Union (EU) are federal systems in which the responsibility for environmental policy-making is divided or shared between the central government and the (member) states. The attribution of decision-making power has important policy implications. This chapter compares the role of central and local authorities in the US and the EU in formulating environmental regulations in three areas: automotive emissions for health related (criteria) pollutants, packaging waste, and global climate change. Automotive emissions are relatively centralised in both political systems. In the cases of packaging waste and global climate change, regulatory policy-making is shared in the EU, but is primarily the responsibility of local governments in the US. Thus, in some important areas, regulatory policy-making is more centralised in the EU. The most important role local governments play in the regulatory process is to help diffuse stringent local standards through more centralised regulations, a dynamic which has become recently become more important in the EU than in the US.
    Date: 2010–03
  16. By: Adriaan Perrels; Anna Sahari; Ari Nissinen
    Abstract: This report is the fifth in a series of reports produced by the Climate Bonus study. In this project is surveyed what are the possibilities and effectiveness of the combined use of (1) verified carbon footprints (possibly visualised through labels), (2) personalised monitoring and feedback services to households regarding the greenhouse gas intensities of their purchases, (3) a reward system (bonuses) for consumers who manage to reduce the embodied emissions, and (4) a secondary reward system for retailers that successfully reduce the emission intensity of their sales. The present report starts with a review of how the large scale introduction of the envisaged carbon footprinting and feedback system would interact with existing policy instruments and measures. Subsequently, it discusses the options and obstacles regarding economically sensible deployment of the system, and tentative cost ranges. Finally, it introduced preliminary estimates of the emission reduction potential the envisaged system may be able to tap into and of the value the emission reduction potential could represent. As regards realisation of the potential some suggestions are done as regards improving the fit with existing instruments.
    Keywords: Bonus systems, carbon compensation, carbon footprints, carbon offset, embodied emissions, feedback, policy instruments, interaction effects, LCA, lifecycle analysis, voluntary emission trade
    JEL: Q01 Q56 Q54 D01 D80
    Date: 2009–12–31
  17. By: AZOMAHOU, ThŽophile; BOUCEKKINE, Raouf (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); NGUYEN-VAN, Phu
    Keywords: energy-saving technological progress, vintage capital, market imperfections, natural monopoly, investment subsidies
    JEL: O40 E22 Q40
    Date: 2009–03–01
  18. By: TULKENS, Henri (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); VAN STEENBERGHE, Vincent (Belgian Federal Ministry for the Environment, Brussels)
    Keywords: cost of climate change, adaptation, mitigation, residual cost, envelope cost function, cost benefit analysis
    JEL: Q54 Q58
    Date: 2009–09–01
  19. By: Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: This article investigates the modelling of the convenience yield in the European carbon market by using daily and intradaily measures of volatility. The convenience yield stems from differences in spot and futures prices, and can explain why firms hold inventories. The main findings are that (i) a simple AR(4) process best describes the 2008 convenience yield, and (ii) there exists a non linear relation between spot and futures prices. The approach developed in this article captures 74% of the explanatory power for the 2008 convenience yield variable in an autoregressive framework, with carbon spot price levels, moving averages and carbon futures realized volatility measures as exogenous regressors. These results are of interest for energy utilities, risk-managers, and traders exposed to the variation of carbon prices.
    Keywords: Convenience Yield; Carbon Price; EU ETS; High frequency Data; Realized Volatility
    Date: 2010–03–15
  20. By: SANIN, Maria Eugenia; VIOLANTE, Francesco
    Keywords: EUA market, EU-ETS, carbon emission trading, Garch model, normal mixture
    JEL: C16 C32 C51 C53 Q52 Q53
    Date: 2009–04–01
  21. By: SANIN, Maria Eugenia; ZANAJ, Skerdilajda (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Keywords: environmental innovation, tradable emission permits, Cournot interaction
    JEL: D43 L13 Q55
    Date: 2009–04–01
  22. By: Rahman, Shaikh M.; Dinar, Ariel; Larson, Donald F.
    Abstract: Under the Kyoto Protocol, developed countries can only tap mitigation opportunities in developing countries by investing in projects under the Clean Development Mechanism. Yet Clean Development Mechanism investments have so far failed to reach many of the high-potential sectors identified by the Intergovernmental Panel on Climate Change. This raises doubts about whether the Clean Development Mechanism can generate an adequate supply of credits from the limited areas where it has proved successful. This paper examines the current trajectory of mitigation projects entering the Clean Development Mechanism pipeline and projects it forward under the assumption that the diffusion of the Clean Development Mechanism will follow a path similar to other innovations. Projections are then compared with pre-Clean Development Mechanism predictions of the mechanism’s potential market size to discern whether limits on the types of projects entering the pipeline have limited the expected supply of certified emission reductions. Parameter tests suggest that this is not the case and that currently identified Clean Development Mechanism investments will generate offsets in excess of early model predictions. In particular, under favorable circumstances, the mechanism is on track to deliver an average annual flow of roughly 700 million certified emission reductions by the close of 2012 and nearly to 1,100 million certified emission reductions by 2020.
    Keywords: Climate Change Mitigation and Green House Gases,Climate Change Economics,ICT Policy and Strategies,Energy Production and Transportation,Carbon Policy and Trading
    Date: 2010–03–01
  23. By: Julien Chevallier (Université Paris Dauphine - Université Paris Dauphine - Paris IX)
    Abstract: This article reviews the role played by carbon and capture (CCS) technologies in order to facilitate the transition to low-carbon emitting technologies in the medium term. More precisely, we address the following central questions: how will the development of CCS technologies impact energy policies in order to yield to sustainable energy solutions? At what costs will pollution reductions be achieved? And most importantly, which CCS technologies will turn out to offer the most effective and efficient solution to handle the challenge of the increased demand for energy within the context of the climate change? We critically assess the technology readiness levels of various CCS technologies – post-combustion capture, pre-combustion capture, amine scrubbing, oxyfuel, integrated gasification combined cycle, calcium looping and chemical looping – based on the best available evidence to date.
    Keywords: Carbon Capture and Storage; Technology Readiness; Climate Policy
    Date: 2010
  24. By: Akpalu, Wisdom; Anders, Ekbom
    Abstract: Improving soil carbon through conservation agriculture in developing countries may generate some private benefits to farmers, as well as sequester carbon emissions, which is a positive externality to society. Leaving crop residue on the farm has become an important option in conservation agriculture practice. However, in developing countries, using crop residue for conservation agriculture has the opportunity cost of feed for livestock. In this paper, we model and develop an expression for an optimum economic incentive that is necessary to internalize the positive externality. A crude value of the tax is calculated using data from Kenya. We also empirically investigated the determinants of the crop residue left on the farm and found that it depends on the cation exchange capacity (CEC) of the soil, the prices of maize, whether extension officers visit the plot or not, household size, the level of education of the household head, and alternative cost of soil conservation.
    Keywords: conservation agriculture, soil carbon, climate change, bioeconomics, Kenya
    JEL: C61 Q18 Q24 Q54 Q56
    Date: 2010–03–08
  25. By: Claassen, Roger; Morehart, Mitch
    Abstract: Agricultural Land Tenure and Carbon Offsets examines the potential role that land ownership might play in determining the agricultural sectorâs involvement in carbon sequestration programs. By estimating the carbon sequestration potential of agricultural producers who own most of the land they operate, this report finds that land ownership should not be a constraining factor in agricultureâs ability to provide carbon offsets.
    Keywords: Keywords: Climate change, carbon sequestration, carbon offsets, cap and trade programs, farmland ownership, tenure, farming practices, conservation practices, Conservation Reserve Program, crops, livestock, environmental services, ERS, USDA, Environmental Economics and Policy, Land Economics/Use,
    Date: 2009–09
  26. By: Babette Never (GIGA German Institute of Global and Area Studies)
    Abstract: In the international system, there has been a power shift towards regional powers, which can be illustrated by recent developments in climate governance. I argue that some of these regional powers are also climate powers, which benefit from an issue-specific power shift. The behavior and strategies of those climate powers are central for global climate governance. To analyze their strategies, a multi-level approach is required that captures the link between domestic climate governance and climate foreign policy. I develop such a concept of climate knowledge systems. It is based on Emanuel Adler’s theory of cognitive evolution and communities of practice. A pragmatist philosophy such as this that allows for mixed methods research is most suitable for analyzing the proposed connection between knowledge, practices and change. It also presents the key to an extended regional powers framework, leaving the somewhat artificial boundaries of international relations in climate governance behind. The concept of climate knowledge systems is empirically applied to South Africa with some early tentative results of an online expert survey, as well as the analysis of data of the Carbon Disclosure Project.
    Keywords: South Africa, regional powers, climate governance, communities of practice, knowledge systems, mixed methods
    Date: 2010–03
  27. By: James Boyce; Matthew Riddle
    Abstract: <p class="text" style="text-align: left;" align="left"><span>Congress is expected to take up the Carbon Limits and Energy for America’s Renewal (CLEAR) Act in the coming months. In preparation for that debate, James K. Boyce and Matthew Riddle have updated earlier anlysis that examines the household-level impacts of this cap-and-dividend plan, and how they differ between states. In this paper, the authors not only <span> </span>consider the specific parameters of the CLEAR Act, but also add an assessment of the state-by-state job creation from the bill.</span></p> <p class="text" style="text-align: left;" align="left"><span>Boyce & Riddle find that interstate differences in the bill’s impact on household incomes are small: much smaller than differences across the income spectrum, and vastly smaller than the differences in other federal programs, such as defense spending. As a result, the CLEAR Act delivers positive net benefits to the majority of households </span><span style="font-size: 4pt;"><span> </span></span><span>in every state. Where there are interstate differences, Boyce & Riddle suggest </span>ways in which the CLEAR Act could be modified to eliminate them altogether.</p>
    Keywords: Climate change; climate policy; climate protection; global warming; cap-and-dividend; energy policy; green jobs
    JEL: H22 H23 Q48 Q52 Q54 Q58
    Date: 2010
  28. By: Lehmann, Paul
    Abstract: Economic theory suggests that with a pollution externality and learning spillovers related to renewable energy technologies, the optimal climate policy mix includes an emissions policy and an output subsidy to the learning industry. Instead of output subsidies, feed-in tariffs are often implemented in addition to emissions policies. This paper reveals that this policy mix may theoretically provide for a first-best outcome as well. However, its efficient design may be cumbersome for regulators. An emissions tax must be below the Pigovian level and differentiate between fossil fuels. Moreover, both tax and feed-in tariff must be adapted continuously.
    Keywords: emissions tax; feed-in tariffs; policy mix; spillovers; learning by doing
    JEL: D62 Q48 Q54 Q58
    Date: 2009–10

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