nep-ene New Economics Papers
on Energy Economics
Issue of 2011‒06‒25
29 papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. The Impact of Rate-of-Return Regulation on Electricity Generation from Renewable Energy By Adrienne M. Ohler
  2. Interactions of Policies for Renewable Energy and Climate By Cédric Philibert
  3. Optimization of hydroelectric power generation, case study of Roseires Dam in Sudan By Mohamed, Issam A.W.
  4. Survey of Photovoltaic Industry and Policy in Germany and China By Thilo Grau; Molin Huo; Karsten Neuhoff
  5. Innovation and diffusion of clean/green technology: Can patent commons help? By Hall, Bronwyn H.; Helmers, Christian
  6. Energy-Efficiency Policy Opportunities for Electric Motor-Driven Systems By Paul Waide; Conrad U. Brunner
  7. Walking the Torque: Proposed Work Plan for Energy-Efficiency Policy Opportunities for Electric Motor-Driven Systems By Hugh Falkner; Shane Holt
  8. Electric Vehicles: A Tentative Economic and Environmental Evaluation By Rémy Prud'homme
  9. Electricity Saving in Households after the Eastern Japan Earthquake By Kenichi Mizobuchi; Kenji Takeuchi
  10. Is electrification welfare improving?: non-experimental evidence from rural Bhutan. By Kumar, Santosh; Rauniyar, Ganesh
  11. Technology Development Prospects for the Indian Power Sector By Uwe Remme; Nathalie Trudeau; Dagmar Graczyk; Peter Taylor
  12. Saudi Aramco and the oil market By Anton Nakov; Galo Nuño
  13. Overseas Investments by Chinese National Oil Companies: Assessing the Drivers and Impacts By Julie Jiang; Jonathan Sinton
  14. Hypothesis of Currency Basket Pricing of Crude Oil: An Iranian Perspective By Melhem Sadek; Diallo Abdul Salam; Terraza Michel
  15. Risk Spillovers in Oil-Related CDS, Stock and Credit Markets By Shawkat Hammoudeh; Tengdong Liu; Chia-Lin Chang; Michael McAleer
  16. The role of oil prices in the euro area economy since the 1970s By Elke Hahn; Ricardo Mestre
  17. Can Oil Prices Forecast Exchange Rates? By Domenico Ferraro; Ken Rogoff; Barbara Rossi
  18. Assessing gas transit risks: Russia vs. the EU By Le Coq, Chloé; Paltseva, Elena
  19. Monitor groothandelsmarkten gas en elektriciteit 2010 By Marcel Vermeulen
  20. Rethinking industrial policy By Philippe Aghion; Julian Boulanger; Elie Cohen
  21. Could environmental policies be enforced without affecting economic growth By Mariam Camarero; Yurena Mendoza; Javier Ordoñez
  22. Environmental Kuznets curve in Indonesia, the role of energy consumption and foreign trade By Saboori, Behnaz; Soleymani, Abdorreza
  23. Unmasking the Porter hypothesis: Environmental innovations and firm-profitability By Rexhäuser, Sascha; Rammer, Christian
  24. Sectoral and Regional Expansion of Emissions Trading By Christoph Bšhringer; Bouwe Dijsktra; Knut Einar Rosendahl
  25. The Impact of a Carbon Tax on Sectors Competitiveness By Nicolas Gonne
  26. A shapley value approach to pricing climate risks By Cooke, Roger M.
  27. Cost and Performance of Carbon Dioxide Capture from Power Generation By Matthias Finkenrath
  28. The US government's social cost of carbon estimates after their first year: Pathways for improvement By Kopp, Robert E.; Mignone, Bryan K.
  29. Economic Costs of Ocean Acidification: A Look into the Impacts on Shellfish Production By Daiju Narita; Katrin Rehdanz; Richard S.J. Tol

  1. By: Adrienne M. Ohler (Department of Economics, Illinois State University)
    Abstract: Traditional electric utility companies face a trade-off between building generation facilities that utilize renewable energy (RE) and non-renewable energy (non-RE). The firm’s input decision to build capacity for either source depends on several constraining factors, including input prices, policies that promote or discourage RE use, and the type of regulation faced by the firm. This paper models the utility company’s decision between RE and non-RE capital types. From the model, two main results are derived. First, rate-of-return (ROR) regulation decreases the investment in RE capital relative to the unregulated firm. These findings suggest restructuring electricity generation markets, which removes the ROR on generating assets, can increase the relative use of RE. Second, the renewable portfolio standard (RPS) increases the investment in capital and labor that requires RE as a source of electricity, as expected. The model shows that the impact of an RPS depends on the amount of ROR regulation.
    Keywords: renewable portfolio standard, renewable energy, rate-of-return regulation
    JEL: L2 L51 L94 Q2 Q3
    Date: 2011–05
  2. By: Cédric Philibert
    Abstract: This paper explores the relationships between climate policy and renewable energy policy instruments. It shows that, even where CO2 emissions are duly priced, specific incentives for supporting the early deployment of renewable energy technologies are justified by the steep learning curves of nascent technologies. This early investment reduces costs in the longer term and makes renewable energy affordable when it needs to be deployed on a very large scale to fully contribute to climate change mitigation and energy security. The paper also reveals other noteworthy interaction effects of climate policy and renewable policy instruments on the wholesale electricity prices in deregulated markets, which open new areas for future research.
    Date: 2011–03
  3. By: Mohamed, Issam A.W.
    Abstract: Water reservoirs are large pools of water created stream or river catchment's areas and torrential rains and for storing water for use in many ways, and perhaps electric power generation is one of the most important uses of these reservoirs and for agriculture. That is extremely beneficial considering a rare and limited economic resources. Applied stochastic processes model has been applied in the work of Roseires dam, in order to develop a system to generate the highest possible power in the resources available. The current paper aims to apply another model, which is a dynamic programming model to verify the possibility of developing the same system and thus generate the highest possible electricity from the reservoir. Data collected from the Ministry of Irrigation and the National Electricity Cooperation and international information network during the years 2006-2007.
    Keywords: Englsih
    JEL: C00 C0 C40 A10 C01 C80
    Date: 2011
  4. By: Thilo Grau; Molin Huo; Karsten Neuhoff
    Abstract: As building-integrated photovoltaic (PV) solutions can meet around one-third of electricity demand in Germany and China, both countries are interested in exploring this potential. PV technologies have demonstrated significant price reductions, but large-scale global application of PV requires further technology improvements and cost reductions along the value chain. We analyze policies in Germany and China, including deployment support, investment support for manufacturing plants and R&D support measures, and we survey the industrial actors they can encourage to pursue innovation. While deployment support has been successful, investment support for manufacturing in these nations has not been sufficiently tied to innovation incentives, and R&D support has been comparatively weak. The paper concludes with a discussion of the opportunities for global policy coordination.
    Keywords: Photovoltaics, Technology Policy, Innovation, Investment Support
    JEL: O31 Q42 Q48
    Date: 2011
  5. By: Hall, Bronwyn H. (UNU-MERIT, Maastricht University, UC Berkeley, NBER, and IFS); Helmers, Christian (Universidad Carlos III de Madrid, LSE)
    Abstract: This paper explores the characteristics of 238 patents on 94 “inventions” contributed by major multinational innovators to the “Eco-Patent Commons”, which provides royalty-free access to third parties to patented climate change related innovations. By comparing the pledged patents to other patents in the same technologies or held by the same multinationals, we investigate the motives of the contributing firms as well as the potential for such commons to encourage innovation and diffusion of climate change related technologies. This study, therefore, indirectly provides evidence on the role of patents in the development and diffusion of green technologies. More generally, the paper sheds light on the performance of hybrid forms of knowledge management that combine open innovation and patenting.
    Keywords: patent commons, green technology, eco-aptents, diffusion, climate change
    JEL: H23 H42 K11 O33 O34
    Date: 2011
  6. By: Paul Waide; Conrad U. Brunner
    Abstract: This paper is the first global analysis of the potential energy savings which could be found in electric motor- driven system (EMDS). EMDS currently accounts for more than 40% of global electricity consumption. Huge untapped energy efficiency potential was found in EMDS; around 25 % of EMDS electricity use could be saved cost-effectively, which would reduce total global electricity demand by about 10%. To date, energy efficiency opportunities with EMDS have been relatively neglected in comparison with other sustainable energy opportunities. It is crucial to scale up operations and resources committed to realizing the vast potential energy savings and this paper proposes a comprehensive package of policy recommendations to help governments achieve these significant energy savings in EMDS.
    Date: 2011–05
  7. By: Hugh Falkner; Shane Holt
    Abstract: Electric motor-driven system (EMDS) accounts for more than 40% of global electricity consumption. This paper sets out an ambitious but achievable target with the global work plan to improve the energy efficiency of EMDS by 10% to 15% based on findings from the working paper ‘Energy Efficiency Policy Opportunities for Electric Motor-Driven System (Waide et al., 2011)’. If governments commit to the proposed work plan immediately, and maintain resourcing levels, the target could be achieved by 2030 and would be equivalent to reducing total global electricity use by around 5%. The proposed work plan of this paper is to align regulatory settings within a globally applicable scheme. The IEA believes its target can only be achieved through global co-operation leading to aligned national policy settings.
    Date: 2011–03
  8. By: Rémy Prud'homme
    Abstract: Electric vehicles are often presented as a green solution to the transport problem. They offer, it is argued, the benefits of the private car without its costs. They make it possible for individuals and families to move around easily, rapidly, comfortably, at any moment in time, which makes them more consumer friendly than public modes of transportation. Yet, unlike classical cars, they do not consume scarce and dwindling fossil fuel resources and do not reject greenhouse gases, nor local pollutants....
    Date: 2010–11
  9. By: Kenichi Mizobuchi (Faculty of Economics, Matsuyama University); Kenji Takeuchi (Graduate School of Economics, Kobe University)
    Date: 2011–05
  10. By: Kumar, Santosh; Rauniyar, Ganesh
    Abstract: This paper investigates the income and educational impacts of a large village-based electrification program in rural Bhutan. We designed and administered a household and village-level socio-economic survey in the electrified and non-electrified villages and collected data on wide range of developmental outcomes. Using Propensity Score Matching (PSM) and propensity-based weighted regression, we find that access to electricity improved economic and educational outcomes. While access to electricity increased non-farm income by 60-70%, and it had no significant effect on farm-income. Since non- farm income consists of a small percentage of total household income, the impact should be considered modest and not large. We also nd that children in electrified households have 0.75 additional years of schooling, an increase of about 24%. Additionally, amount of evening study time at home is 10 minutes more for the children in the treated households compared to untreated households. We employed different matching algorithms and our results are consistent and robust to all matching estimator. Our study contributes to the few studies on infrastructure literature which has often been focused on transport, telecom, and water projects. Given the limited use of electricity for income-generating activities in Bhutan, investments in other complementary infrastructure, such as, markets, roads, information technology, credit may help the households to realize the full benefits of electrification.
    Keywords: Rural Electrification; Development Effectiveness; Asian Development Bank; Impct Evaluation; South-east Asia; Bhutan.
    JEL: O18 O20 N75
    Date: 2011–02–20
  11. By: Uwe Remme; Nathalie Trudeau; Dagmar Graczyk; Peter Taylor
    Abstract: The Indian power sector will face numerous challenges over the next four decades. More than one third of India's population currently do not have access to electricity. Urgent action is needed to overcome this problem of energy poverty. At the same time rapid economic growth is projected to increase electricity demand by fivefold to sixfold between now and 2050. Massive investments will be needed to meet this increased demand, but this will also create unique opportunities to transform the power sector towards a low-carbon future.<p>This Information Paper presents in more detail the analysis for India published in Energy Technology Perspectives 2010. The paper investigates the best way of achieving deep CO2 emission cuts in the Indian power system while allowing the Indian economy to continue growing and meeting the challenge of alleviating energy poverty. It does so from a techno-economic perspective - building on detailed resource and technology data for India - and identifies the key power sector technologies needed for India to realise such a transition.
    Date: 2011–02
  12. By: Anton Nakov (European Central Bank, DG Research, Neue Mainzer Strasse 66, D-60311 Frankfurt am Main, Germany.); Galo Nuño (Banco de España, Economía and Asuntos Internacionales, Alcalá 48, 28014 Madrid, Spain.)
    Abstract: We present a general equilibrium model of the global oil market, in which the oil price, oil production, and consumption, are jointly determined as outcomes of the optimizing decisions of oil importers and oil exporters. On the supply side the oil market is modelled as a dominant firm – Saudi Aramco – with competitive fringe. We establish that a dominant firm may exist as long as it enjoys a cost advantage over the fringe. We provide an expression for the optimal markup and compute the spare capacity maintained by such a firm. The model produces plausible dynamics in response to oil supply and oil demand shocks. In particular, it reproduces successfully the jump in oil output of Saudi Aramco following the output collapse of Iraq and Kuwait during the first Gulf War, explaining it as the profit-maximizing response of the dominant firm. Oil taxes and subsidies affect the oil price and welfare through their effect on the trade-off between oil production efficiency and oil market competition. JEL Classification: E32, Q43.
    Keywords: oil price, oil production, dominant firm, Saudi Aramco, oil tax.
    Date: 2011–06
  13. By: Julie Jiang; Jonathan Sinton
    Abstract: This report examines inaccuracies in some commonly held views of China's National Oil Companies (NOCs). Until now, there has been little analysis to test the widely held presumption that these companies act under the instructions and in close co-ordination with the Chinese government. Nor have critics been challenged on the validity of their concerns about investments made by these NOCs, and how they could be blocking supplies of oil for other importing countries.<p>The IEA analysis, however, finds that contrary to these views, the NOCs actually operate with a high degree of independence from the Chinese government, and their investments have in fact largely boosted global supplies of oil and gas, which other importers rely on.
    Date: 2011–02
  14. By: Melhem Sadek; Diallo Abdul Salam; Terraza Michel
    Abstract: The decline in the value of US dollar and the emergence of other currencies has opened the debate within OPEC, of whether it is possible to resort to the pricing of crude oil in alternative currencies. The debate was limited because of the inadequate liquidity of most other currencies. In this paper, we focus on the implications of the shift in the pricing of Iran’s crude oil to other currencies than the US dollar. The results demonstrated that the pricing for Iranian oil in US dollar had high reaction potential and responded moderately to the change in the exchange rate, when compared to the pricing in Euro and in Yen. Consequently, it appeared that stability on the financial market led to partial stability in the oil market.
    Keywords: Crude Oil Pricing, Currency Basket, OPEC, Exchange Rate of Dollar, Euros, Yen.
    Date: 2011–06
  15. By: Shawkat Hammoudeh (Lebow College of Business, Drexel University, USA); Tengdong Liu (Lebow College of Business, Drexel University, USA); Chia-Lin Chang (Department of Applied Economics, Department of Finance, National Chung Hsing University, Taichung, Taiwan); Michael McAleer (Econometrisch Instituut (Econometric Institute), Faculteit der Economische Wetenschappen (Erasmus School of Economics) Erasmus Universiteit, Tinbergen Instituut (Tinbergen Institute).)
    Abstract: This paper examines risk transmission and migration among six US measures of credit and market risk during the full period 2004-2011 period and the 2009-2011 recovery subperiod, with a focus on four sectors related to the highly volatile oil price. There are more long-run equilibrium risk relationships and short-run causal relationships among the four oil-related Credit Default Swaps (CDS) indexes, the (expected equity volatility) VIX index and the (swaption expected volatility) SMOVE index for the full period than for the recovery subperiod. The auto sector CDS spread is the most error-correcting in the long run and also leads in the risk discovery process in the short run. On the other hand, the CDS spread of the highly regulated, natural monopoly utility sector does not error correct. The four oil-related CDS spread indexes are responsive to VIX in the short- and long-run, while no index is sensitive to SMOVE which, in turn, unilaterally assembles risk migration from VIX. The 2007-2008 Great Recession seems to have led to “localization” and less migration of credit and market risk in the oil-related sectors.
    Keywords: Risk, Sectoral CDS, VIX, SMOVE, MOVE, Adjustments.
    JEL: C13 C22 G1 G12 Q40
    Date: 2011
  16. By: Elke Hahn (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Ricardo Mestre (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.)
    Abstract: This paper explores the role of oil prices in the euro area economy since the 1970s by applying a VAR framework with time varying parameters and stochastic volatility in which oil supply and global demand shocks are identified. Our results show that both types of shock contributed substantially to the oil price surges during historical oil crises and likewise to those over the past decade. Counterfactual histories of the price and activity variables, moreover, reveal much larger adverse contributions of both shocks to HICP inflation and GDP in the first half of the sample than in the second, which suggests that changes related to these shocks have contributed to the Great Moderation. Impulse responses, moreover, show that a decline in the pass through of the two shocks has added to the moderating contribution over time, while variance decompositions indicate no change in the relative importance of the two shocks over time. JEL Classification: E3.
    Keywords: Oil prices, Great Moderation, time varying parameter VAR model, stochastic volatility, euro area.
    Date: 2011–06
  17. By: Domenico Ferraro; Ken Rogoff; Barbara Rossi
    Abstract: This paper investigates whether oil price shocks have a reliable and stable out-of-sample relationship with the Canadian/U.S Dollar nominal exchange rate. Despite state-of-the-art methodologies and clean data, we …find paradoxically little systematic relation between oil prices and the exchange rate, especially if one takes the monthly and quarterly frequencies into account. In contrast, the very short term relationship between oil prices and exchange rates at the daily frequency is rather robust, and holds no matter whether we use contemporaneous (realized) or lagged oil price shocks in our regression. However, the short-term out-of-sample predictive ability is ephemeral, and it mostly appears after time variation in the forecasting ability of the models has been appropriately taken into account. We show that a similar results hold for other currencies and commodity price shocks.
    JEL: F31 F37 C22 C53
    Date: 2011
  18. By: Le Coq, Chloé (Stockholm Institute of Transition Economics); Paltseva, Elena (Department of Economics, University of Copenhagen)
    Abstract: This paper proposes a Transit Risk Index (TRI) designed to assess the riskiness of pipeline gas imports and to study the effect of introducing new gas routes. TRI controls for gas dependency, transit route diversification, political risks of transit, pipeline rupture probability, and the balance of power between supplying and consuming countries along the transit route. Evaluating TRI for the EU-Russia gas trade, we show that the introduction of the Nord Stream pipeline would further widen already large disparities in gas risk exposure across the EU Member States. The gas risk exposure of the Member States served by Nord Stream would decline. In contrast, EU countries not connected to Nord Stream, but sharing other Russian gas transit routes with the Nord Stream countries, would face greater gas risk exposure. We discuss the implications of our analysis for the design of the common energy policy in the EU.
    Keywords: Gas transit risk; Index; Security of supply; Nord Stream; Common Energy Policy
    JEL: C80 Q40 Q48
    Date: 2011–06–03
  19. By: Marcel Vermeulen
    Abstract: Marktwerking op de Nederlandse groothandelsmarkt voor gas is tot op heden beperkt van de grond gekomen. Handelsvolumes op de TTF nemen jaar op jaar toe maar het aandeel in de totale gasstromen blijft beperkt. Het jaar 2011 belooft echter een kentering te brengen. GTS voert per 1 april een nieuw marktmodel en nieuw balanceringsregime in en op 1 april komt Gasterra met nieuwe producten en diensten op de markt.
    Keywords: Monitoring, electricity, gas, competition, infrastructure
    JEL: L1 Q4
    Date: 2011–02–01
  20. By: Philippe Aghion; Julian Boulanger; Elie Cohen
    Abstract: Industrial policy has a bad name: â??picking winnersâ?? and thus distorting competition, while exposing government to capture by vested interests. But there are reasons for a rethink. First, climate change: without government intervention to jump-start massive private investment in clean technologies, governments, by default, encourage investment in dirtier technologies. Second, a new post-crisis realism: laissez-faire complacency by many governments has led to mis-investment in the non-tradable sector at the expense of growth-rich tradables. Third, China â?? and some other emerging economies â?? are big deployers of growth-enhancing sectoral policies. The challenge for Europe is how it can design and govern sectoral policies that are competition-friendly and thus growth-enhancing.
    Date: 2011–06
  21. By: Mariam Camarero (Departamento de Economía. Universidad Jaume I); Yurena Mendoza (Departamento de Economía Aplicada II. Universidad de Valencia); Javier Ordoñez (Departamento de Economía. Universidad Jaume I)
    Abstract: The aim of this paper is to determine whether constraining the release of CO2 emissions is neutral on economic growth in 59 countries for the period 1950–2007. We test for cointegration in the CO2-GDP relationship using a non-linear methodology, rather than the linear methodology commonly applied in the empirical literature. While there is scarce evidence of cointegration when using the linear approach when a smooth transition autoregressive (STAR) is applied, the results are quite favourable to the existence of a long-run relationship linking the variables.
    Keywords: CO2 emissions, GDP, nonlinear cointegration
    Date: 2011–06
  22. By: Saboori, Behnaz; Soleymani, Abdorreza
    Abstract: This study examines the dynamic relationship among carbon dioxide (CO2) emissions, economic growth, energy consumption and foreign trade based on the environmental Kuznets curve (EKC) hypothesis for Indonesia during the period 1971–2007. The Auto regressive distributed lag (ARDL) methodology is used as an estimation technique. The results do not support the EKC hypothesis, which assumes an inverted U-shaped relationship between income and environmental degradation. The long-run results indicate that foreign trade is the most significant variable in explaining CO2 emissions in Indonesia followed by Energy consumption and economic growth. The stability of the variables in estimated models is also examined. The result suggests that the estimated models are stable over the sample period.
    Keywords: Environmental Kuznets curve; CO2 emissions; energy consumption
    JEL: Q53 Q51 Q43
    Date: 2011–06–14
  23. By: Rexhäuser, Sascha; Rammer, Christian
    Abstract: We examine impacts of different types of environmental innovations on firm profits. Following Porter's (1991) hypothesis that environmental regulation can improve firms' competitiveness we distinguish regulation induced and voluntary environmental innovations. We find that innovations which reduce environmental externalities reduce firms' profits, as long as they are induced by regulations. However, innovation that increases a firm's material or energy efficiency in terms of material or energy consumption has a positive impact on profitability. This positive result holds both for regulation induced and voluntary innovations, although the effect is significantly larger for regulation-driven innovation.We conclude that the Porter hypothesis does not hold in general for its 'strong' version but has to be qualified by the type of environmental innovation. Our finding rest on firm level data from the German part of the Community Innovation Survey in 2009. --
    Keywords: Environmental innovation,environmental regulation,Porter hypothesis,competitiveness
    JEL: Q55 Q58
    Date: 2011
  24. By: Christoph Bšhringer (Department of Economics, University of Oldenburg); Bouwe Dijsktra (University of Nottingham); Knut Einar Rosendahl (Research Department, Statistics Norway)
    Abstract: We consider an international emissions trading scheme with partial sectoral and regional coverage. Sectoral and regional expansion of the trading scheme is beneficial in aggregate, but not necessarily for individual countries. We simulate international CO2 emission quota markets using marginal abatement cost functions and the Copenhagen 2020 climate policy targets for selected countries that strategically allocate emissions in a bid to manipulate the quota price. Quota exporters and importers generally have conflicting interests about admitting more countries to the trading coalition, and our results indicate that some countries may lose substantially when the coalition expands in terms of new countries. For a given coalition, expanding sectoral coverage makes most countries better off, but some countries (notably the USA and Russia) may lose out due to loss of strategic advantages. In general, exporters tend to have stronger strategic power than importers.
    Keywords: Emissions Trading; Allocation of Quotas; Strategic Behavior
    JEL: C61 C72 Q25
    Date: 2011–06
  25. By: Nicolas Gonne
    Abstract: Asymmetric climate policies are expected to distort the level-playing field regarding international trade, singularly to the detriment of small open economies. The paper develops a flexible method that provides essential input regarding the design of offsetting measures at the sectoral level. It builds on input-output analysis and standard input-output data to provide proxies for both the carbon-intensity and the trade-intensity of production. These are used to reckon the impact that such policies as carbon taxation have on the price-competitiveness of sectors. The method is then applied to the case of Belgium.
    Keywords: Asymmetric climate policies; Carbon taxes; Input-output analysis; Sectors price-competitiveness
    JEL: C67 D57 H23 Q56 Q58
    Date: 2010–10
  26. By: Cooke, Roger M.
    Abstract: This paper prices the risk of climate change by calculating a lower bound for the price of a virtual insurance policy against climate risks associated with the business as usual (BAU) emissions path. In analogy with ordinary insurance pricing, this price depends on the current risk to which society is exposed on the BAU emissions path and on a second emissions path reflecting risks that society is willing to take. The difference in expected damages on these two paths is the price which a risk neutral insurer would charge for the risk swap excluding transaction costs and profits, and it is also a lower bound on society's willingness to pay for this swap. The price is computed by (1) identifying a probabilistic risk constraint that society accepts, (2) computing an optimal emissions path satisfying that constraint using an abatement cost function, (3) computing the extra expected damages from the business as usual path, above those of the risk constrained path, and (4) apportioning those excess damages over the emissions per ton in the various time periods. The calculations follow the 2010 US government social cost of carbon analysis, and are done with DICE2009. --
    Keywords: Climate change,insurance premium,Shapley value,DICE
    JEL: C71 Q54
    Date: 2011
  27. By: Matthias Finkenrath
    Abstract: This working paper evaluates cost and performance trends related to carbon dioxide (CO2) capture from power generation, based on extensive analysis of data from major engineering studies published between 2006 and 2010. Since individual studies use different methodologies and boundary conditions, study estimates for over 50 CO2 capture installations are re-evaluated on a consistent basis and updated to current cost levels. <p>The paper discusses the need for further standardisation of evaluation methodologies and additional data for specific CO2 capture routes. Further analysis for non-OECD countries is considered crucial for global energy scenario models, and for improving the skills and knowledge developing countries need to evaluate the role of CCS in their national energy contexts.
    Date: 2011–03
  28. By: Kopp, Robert E.; Mignone, Bryan K.
    Abstract: In 2010, the U.S. government adopted its first consistent estimates of the social cost of carbon (SCC) for government-wide use in regulatory cost-benefit analysis. Here, we examine a number of the limitations of the estimates identified in the U.S. government report and elsewhere and review recent advances that could pave the way for improvements. We consider in turn socioeconomic scenarios, treatment of physical climate response, damage estimates, ways of incorporating risk aversion, and consistency between SCC estimates and broader climate policy. --
    Keywords: Climate change,social cost of carbon
    JEL: Q54 Q58
    Date: 2011
  29. By: Daiju Narita; Katrin Rehdanz; Richard S.J. Tol
    Abstract: Ocean acidification is increasingly recognized as a major global problem. Yet economic assessments of its effects are currently almost absent. Unlike most other marine organisms, mollusks, which have significant commercial value worldwide, have relatively solid scientific evidence of biological impact of acidification and allow us to make such an economic evaluation. By performing a partial-equilibrium analysis, we estimate global and regional economic costs of production loss of mollusks due to ocean acidification. Our results show that the costs for the world as a whole could be over 100 billion USD with an assumption of increasing demand of mollusks with expected income growths. The major determinants of cost levels are the impacts on the Chinese production, which is dominant in the world, and the expected demand increase of mollusks in today’s low-income countries, which include China, in accordance with their future income rise
    Keywords: Climate Change, Economic Impact, Mollusks, Ocean Acidification
    JEL: Q51 Q54 Q57
    Date: 2011–06

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