nep-ene New Economics Papers
on Energy Economics
Issue of 2010‒04‒24
seventeen papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Exploring the Determinants of ‘Best Practice’ in Network Regulation: The Case of the Electricity Sector By Brophy Haney, A.; Pollitt, M.G.
  2. A Nuclear Future? UK Government Policy and the Role of the Market? By Newbery, D.
  3. Electricity Production with Intermittent Sources of Energy By Stefan Ambec; Claude Crampes
  4. Innovation in Concentrating Solar Power Technologies: A Study Drawing on Patent Data By Frauke G. Braun; Liz Hooper; Robert Wand; Petra Zloczysti
  5. Innovative Activity in Wind and Solar Technology: Emprical Evidence on Knowledge Spillovers Using Patent Data By Frauke G. Braun; Jens Schmidt-Ehmcke; Petra Zloczysti
  6. Energy-Efficiency Program Evaluations: Opportunities for Learning and Inputs to Incentive Mechanisms By Kaufman, Noah; Palmer, Karen
  7. Options for Energy Efficiency in India and Barriers to Their Adoption: A Scoping Study By Bhattacharya, Soma; Cropper, Maureen L.
  8. Challenging the popular wisdom. New estimates of the unobserved economy. By Luisanna Onnis; Patrizio Tirelli
  9. Welfare Implications of Leadership in a Resource Market Under Bilateral Monopoly By Kenji Fujiwara; Ngo Van Long
  10. Oil shocks and optimal monetary policy By Carlos Montoro
  11. The Effects of Uncertainty about Oil Prices in G-7 By Don Bredin; John Elder; Stilianos Fountas
  12. CO2 emissions from international shipping: Brown owners versus brown flags By Pierre Cariou; François-Charles Wolff
  13. Getting Cars Off the Road: The Cost-Effectiveness of an Episodic Pollution Control Program By Maureen L. Cropper; Yi Jiang; Anna Alberini; Patrick Baur
  14. Testing the Martingale Difference Hypothesis in the EU ETS Markets for the CO2 Emission Allowances: Evidence from Phase I and Phase II By Amélie Charles; Olivier Darné; Jessica Fouilloux
  15. Modeling the Effects of Pasture Expansion and Yield Increase on Emissions from Land-Use Change By Jerome Dumortier; Dermot J. Hayes; Miguel Carriquiry; Fengxia Dong; Xiaodong Du; Amani Elobeid; Jacinto F. Fabiosa; Kranti Mulik
  16. Climate Change Impacts on Global Agriculture By Alvaro Calzadilla; Katrin Rehdanz; Richard Betts; Pete Falloon; Andy Wiltshire; Richard S.J. Tol
  17. A Semiparametric Panel Model for Unbalanced Data with Application to Climate Change in the United Kingdom By Atak, Alev; Linton, Oliver B.; Xiao, Zhijie

  1. By: Brophy Haney, A.; Pollitt, M.G.
    Abstract: In this paper we use a best practice index constructed from the survey responses of regulators in 40 countries to explore the determinants of outcomes in electricity network regulation. We construct a model of explained behaviour where we are particularly interested in understanding the impact of industry setting, political, and economic environments on the degree of best practice regulation. Our results suggest that political and economic institutions as well as the behaviour of regulators in neighbouring countries/states may be important determinants of outcomes; this also leads us to question whether one “best practice” model is in fact applicable to countries with very different political and economic contexts.
    Keywords: Network regulation; Electricity; Efficiency analysis; Institutions
    Date: 2010–03–30
  2. By: Newbery, D.
    Abstract: UK energy policy has evolved since the 2002 Energy Review (PIU, 2002) in which Tony Blair introduced the report and noted that “securing cheap, reliable, and sustainable sources of energy has long been a major concern for governments”. The new Department of Energy and Climate Change, DECC, has rephrased its objectives3 to “ensure our energy is secure, affordable and efficient” and “bring about a transition to a low-carbon Britain”. The shift from “cheap” to “affordable” is significant, as meeting the low-carbon (low-C) targets will not be cheap, but should be affordable. We forget that in the interwar period electricity prices were three to four times more expensive than now in real terms. Since then dramatic improvements in efficiency have allowed costs and prices to fall. If one considers that real wages have improved by a factor of four over this period, electricity prices relative to earning power are now less than one tenth of their interwar level.
    Date: 2010–03–25
  3. By: Stefan Ambec; Claude Crampes
    Date: 2010–04
  4. By: Frauke G. Braun; Liz Hooper; Robert Wand; Petra Zloczysti
    Abstract: Better understanding the innovative process of renewable energy technologies is important for tackling climate change. Though concentrating solar power is receiving growing interest, innovation studies so far have explored innovative activity in solar technologies in general, ignoring the major differences between solar photovoltaic and solar thermal technologies. This study relies on patent data to examine international innovative activity in concentrating solar power technologies. Our unique contribution, based on engineering expertise and detailed datawork, is a classification system matching solar thermal technologies to the International Patent Classification (IPC) system. To this end we suggest a narrowly defined set of IPC classes and a broader one of technologies relevant to CSP, but not exclusively so. We moreover exploit information from three international patent offices, the European, the United States and the Japanese patent office. Innovative activity in narrowly defined CSP technologies has experienced an early boom before 1980 and only recently showed some signs of more activity - a pattern closely resembling the R&D support path. R&D and innovation are concentrated in few high-tech countries - such as the U.S. or Germany. Large CSP potential is not a sufficient condition for innovation, only developed countries such as Australia with both CSP potential and adequate economic and scientific capabilities are found to be among the group of relevant innovators.
    Keywords: Innovation, patent data, solar technologies, climate change
    JEL: O31 Q42 Q54 Q55
    Date: 2010
  5. By: Frauke G. Braun; Jens Schmidt-Ehmcke; Petra Zloczysti
    Abstract: This paper studies technological change in renewable energies, providing empirical evidence on the determinants of innovative activity with a special emphasis on the role of knowledge spillovers. We investigate two major renewable energy technologies - wind and solar - across a panel of 21 OECD countries over the period 1978 to 2004. Spillovers may occur at the national level, either within the same technology field or economic sector (intra-sectoral spillovers) or in related technologies or sectors (inter-sectoral spillovers), or at the international level. We find that innovation is strongly driven by knowledge spillovers, especially those occurring at the national level. Wind and solar technologies exhibit distinct innovation characteristics: both are stimulated by intra-sectoral spillovers, but respond differently to inter-sectoral spillovers, which are only influential in the case of wind technology. We also find evidence that public R&D stimulates innovation, particularly in solar technologies.
    Keywords: Technological change, renewable energy, patents, knowledge spillover, climate change, innovation
    JEL: O31 Q42 Q55
    Date: 2010
  6. By: Kaufman, Noah; Palmer, Karen (Resources for the Future)
    Abstract: We analyze the evaluations of California energy-efficiency programs to assess the effectiveness of these evaluations in: 1) improving our understanding of their performance and 2) providing a check on utility incentives to overstate energy savings. We find that third-party evaluations are useful tools to achieve both ends because the programs largely did not meet their energy-savings projections, and the utility-reported savings estimates are systematically higher than the evaluated savings estimates. We also find evidence that the choice of the third-party evaluator was influential in determining the estimate of evaluated savings.
    Keywords: energy efficiency, third-party evaluation, energy-savings measurement
    JEL: L94 L95 L51
    Date: 2010–04–14
  7. By: Bhattacharya, Soma; Cropper, Maureen L. (Resources for the Future)
    Abstract: We review the economics literature on energy efficiency in India, as a guide for further research in the area. The empirical literature has focused on four questions: How does energy efficiency in India compare with energy efficiency in other countries? What would be the energy savings (and cost savings) from adopting certain energy-efficient technologies? Why are these technologies being -- or not being -- adopted? What policies should be implemented to encourage their adoption? Most of the literature focuses on answers to the first two questions. Studies are needed that quantify factors affecting the rate of diffusion of energy-efficient technologies and rigorously evaluate reforms implemented by the Government of India, beginning in the 1990s, that could affect energy efficiency.
    Keywords: energy efficiency, energy use, India
    JEL: O33 Q4
    Date: 2010–04–15
  8. By: Luisanna Onnis; Patrizio Tirelli
    Abstract: We estimate the unrecorded economy in 49 economies from 1981 to 2005. Our study is based on electricity consumption series which are fil- tered to account for technological change and for the changing weight of the energy-intensive industrial sector. In contrast with studies based on the MIMIC method, we obtain a reduction in the weight of the unobserved economy. Unlike La Porta and Shleifer (2008), we identify measures of institutional quality which are significantly related to the shadow econ- omy even after controlling for per-capita GDP. Thus the shadow economy should not be dismissed as the unpleasant side e¤ect of underdevelopment. Instead it is related to some specific institutional aspects that may well survive even when the economy reaches higher development stages. We identify strong substitution effects between official and unofficial sectors both in the long run and over the business cycle. This has important impli- cations for income convergence and for the relationship between volatility and growth.
    Date: 2010–04
  9. By: Kenji Fujiwara; Ngo Van Long
    Abstract: Does a country strictly gain if it acts as a leader in a resource market under bilateral monopoly? Using differential games, we show that the answer is "yes" when leadership can be exercised globally (global Stackelberg leadership), but possibly "no" when it is exercised only at each stage (stagewise Stackelberg leadership). On the other hand, world welfare under Nash equilibrium is strictly higher than under global Stackelberg equilibrium. Regardless of which country is the leader, world welfare under stagewise Stackelberg leadership is higher than under global Stackelberg leadership. <P>Quand un pays est un leader dans un marché d’une ressource non-renouvelable, est-ce que son niveau de bien-être devient plus élevé? On montre que la réponse est affirmative quand il s’agit d’un leadership global, mais elle peut être négative dans le cas d’un leadership par étapes. Par contre, le niveau de bien-être mondial sous l’équilibre de Nash est supérieur à celui qui est le résultat de l’équilibre global de Stackelberg. Du point de vue du bien-être mondial, l’équilibre de Stackelberg par étapes est meilleur que l’équilibre global de Stackelberg.
    Keywords: dynamic game, exhaustible resource, Stackelberg leadership. , jeu dynamique, ressources non-renouvelables, leadership de Stackelberg.
    JEL: C73 Q34 F18
    Date: 2010–04–01
  10. By: Carlos Montoro
    Abstract: In practice, central banks have been confronted with a trade-off between stabilising inflation and output when dealing with rising oil prices. This contrasts with the result in the standard New Keynesian model that ensuring complete price stability is the optimal thing to do, even when an oil shock leads to large output drops. To reconcile this apparent contradiction, this paper investigates how monetary policy should react to oil shocks in a microfounded model with staggered price-setting and with oil as an input in a CES production function. In particular, we extend Benigno and Woodford (2005) to obtain a second order approximation to the expected utility of the representative household when the steady state is distorted and the economy is hit by oil price shocks. The main result is that oil price shocks generate an endogenous trade-off between inflation and output stabilisation when oil has low substitutability in production. Therefore, it becomes optimal for the monetary authority to stabilise partially the effects of oil shocks on inflation and some inflation is desirable. We also find, in contrast to Benigno and Woodford (2005), that this trade-off is reduced, but not eliminated, when we get rid of the effects of monopolistic distortions in the steady state. Moreover, the size of the endogenous "cost-push" shock generated by fluctuations in the oil price increases when oil is more difficult to substitute by other factors.
    Keywords: optimal monetary policy, welfare, second order solution, oil price shocks, endogenous trade-off
    Date: 2010–04
  11. By: Don Bredin (University College Dublin); John Elder (North Dakota State University); Stilianos Fountas (University of Macedonia)
    Abstract: The failure of decreases in oil prices to produce expansions that mirror the contractions associated with higher oil prices has been a topic of considerable interest. We investigate for the G-7 one explanation for this feature - the role of uncertainty about oil prices. In particular, we examine the link between oil price uncertainty and industrial production utilizing a very general and °exible empirical methodology that is based on a structural VAR modi¯ed to accommodate multivariate GARCH in mean. Our primary result is that oil price uncertainty has had a negative and signi¯cant e®ect on industrial production in four of the G-7 countries - Canada, France, UK and US. Impulse-response analysis suggests that, in the short-run, both positive and negative oil shocks may be contractionary. Our result helps explain why the sudden collapse in oil prices in the mid-1980's failed to produce rapid expansion in the G-7, and why the steady increases in oil prices from 2003-2007 did not induce recessions.
    Keywords: Oil, Volatility, Vector autoregression, Multivariate GARCH-in-Mean VAR.
    JEL: E32 C32
    Date: 2010–04–13
  12. By: Pierre Cariou (World Maritime University - Malmø University, Euromed Management - Euromed Management - Marseille); François-Charles Wolff (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: This paper estimates the annual CO2 emissions by international shipping over the 2007-2009 period. Once controlling for the recent changes in activity levels in international trade, we evidence a slow-down of the total volume emitted in 2009. Using an exhaustive dataset of the world fleet, we provide international rankings in CO2 emissions both by country of ownership and by flag of registry of vessels. We finally study how, through flagging-out, most ship-owners from developed countries are implicitly exporting a share of their CO2 emissions under foreign flags. This suggests that a system based on taxes or quotas to be applied by vessel type rather than by the country of ownership or flag of registry may be more efficient to reduce CO2 emissions in shipping.
    Date: 2010–04–12
  13. By: Maureen L. Cropper; Yi Jiang; Anna Alberini; Patrick Baur
    Abstract: Ground-level ozone remains a serious problem in the United States. Because ozone non-attainment is a summer problem, episodic rather than continuous controls of ozone precursors are possible. We evaluate the costs and effectiveness of an episodic scheme that requires people to buy permits to drive on high-ozone days. We estimate the demand function for permits based on a survey of 1,300 households in the Washington, DC, metropolitan area. Assuming that all vehicle owners comply with the scheme, the permit program would reduce volatile organic compounds (VOCs) by 50 tons and nitrogen oxides (NOx) by 42 tons per Code Red day at a permit price of $75. Allowing for non-compliance by 15 percent of respondents reduces the effectiveness of the scheme to 39 tons of VOCs and 33 tons of NOx per day. The cost per ozone season of achieving these reductions is approximately $9 million (2008 USD). This compares favorably with permanent methods of reducing VOCs that cost $645 per ton per year.
    JEL: Q52 Q53 Q58
    Date: 2010–04
  14. By: Amélie Charles (Audencia Nantes, School of Management - Audencia, School of Management); Olivier Darné (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Jessica Fouilloux (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen)
    Abstract: This study examines the martingale difference hypothesis (MDH) for the market of carbon emission allowances within the European Union Emission Trading Scheme (EU ETS) during the Phase I and the Phase II, using both daily and weekly data over the period 2005--2009. The weak-form efficient market hypothesis for spot prices negotiated on BlueNext, European Energy Exchange and NordPool is tested with new variance ratio tests developed by Kim (2009). For the Phase I, the results show that these three markets of the European Union allowances seems to be efficiency, except after the European Commission announcements of stricter Phase II allocation in October 2006. Finally, we find that the CO2 spot prices seem to be weak-form efficiency during the Phase II since the MDH is failed to reject from both daily and weekly data.
    Date: 2010
  15. By: Jerome Dumortier (Center for Agricultural and Rural Development (CARD)); Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Miguel Carriquiry (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Fengxia Dong (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Xiaodong Du (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Amani Elobeid (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Jacinto F. Fabiosa (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Kranti Mulik
    Abstract: This paper evaluates the land-use and greenhouse gas emission impact of higher yields in the European Union and a livestock tax in the United States using a global agricultural outlook model and a greenhouse gas model that includes land-use change from cropland and pasture. Both policies are intended to reduce greenhouse gas emissions by decreasing carbon release from indirect land-use change and lowering livestock emissions. A yield increase in the European Union leads to savings whereas the tax scenario leads to ambiguous results depending on the assumption about extensification and intensification of livestock production.
    Keywords: crop yield, greenhouse gas emissions, land-use change, pasture extensification.
    Date: 2010–02
  16. By: Alvaro Calzadilla; Katrin Rehdanz; Richard Betts; Pete Falloon; Andy Wiltshire; Richard S.J. Tol (Economic and Social Research Institute)
    Abstract: Based on predicted changes in the magnitude and distribution of global precipitation, temperature and river flow under the IPCC SRES A1B and A2 scenarios, this study assesses the potential impacts of climate change and CO2 fertilization on global agriculture. The analysis uses the new version of the GTAP-W model, which distinguishes between rainfed and irrigated agriculture and implements water as an explicit factor of production for irrigated agriculture. Future climate change is likely to modify regional water endowments and soil moisture. As a consequence, the distribution of harvested land would change, modifying production and international trade patterns. The results suggest that a partial analysis of the main factors through which climate change will affect agricultural productivity lead to different outcomes. Our results show that global food production, welfare and GDP fall in the two time periods and SRES scenarios. Higher food prices are expected. Independently of the SRES scenario, expected losses in welfare are marked in the long term. They are larger under the SRES A2 scenario for the 2020s and under the SRES A1B scenario for the 2050s. The results show that countries are not only influenced by regional climate change, but also by climate-induced changes in competitiveness.
    Keywords: Computable General Equilibrium, Climate Change, Agriculture, Water Resources, River Flow
    JEL: D58 Q17 Q25 Q54
    Date: 2010–04
  17. By: Atak, Alev; Linton, Oliver B.; Xiao, Zhijie
    Abstract: This paper is concerned with developing a semiparametric panel model to explain the trend in UK temperatures and other weather outcomes over the last century. We work with the monthly averaged maximum and minimum temperatures observed at the twenty six Meteorological Office stations. The data is an unbalanced panel. We allow the trend to evolve in a nonparametric way so that we obtain a fuller picture of the evolution of common temperature in the medium timescale. Profile likelihood estimators (PLE) are proposed and their statistical properties are studied. The proposed PLE has improved asymptotic property comparing the the sequential two-step estimators. Finally, forecasting based on the proposed model is studied.
    Keywords: Global warming; Kernel estimation; Semiparametric; Trend analysis
    JEL: C13 C14 C21
    Date: 2010–03–15

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