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on Energy Economics |
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Issue of 2011‒08‒09
twenty-one papers chosen by Roger Fouquet Basque Climate Change Centre, Bilbao, Spain |
| By: | Harrison, Richard (Bank of England); Thomas, Ryland (Bank of England); de Weymarn, Iain (Bank of England) |
| Abstract: | This paper outlines the properties of one of the models used at the Bank of England for analysing the impact of energy prices on the UK economy. We build a dynamic general equilibrium model that includes a variety of channels through which energy prices affect demand and supply. On the demand side we model household consumption of final energy goods (petrol and utilities) separately from other goods and services. On the supply side, we model the production of final energy goods and the way that they enter the production process of other goods and services. We calibrate the model using UK data and examine how the various channels in the model contribute to the responses to permanent energy price shocks of a similar magnitude to those observed in the recent data. We show the effects of such shocks have important implications for monetary policy. |
| Keywords: | Energy; prices. |
| JEL: | E27 E37 |
| Date: | 2011–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0433&r=ene |
| By: | Millard, Stephen (Bank of England) |
| Abstract: | In this paper, I estimate a dynamic stochastic general equilibrium (DSGE) model of the United Kingdom. The basic building blocks of the model are standard in the literature. The main complication is that there are three consumption goods: non-energy output, petrol and utilities; given relative prices and their overall wealth, consumers choose how much of each of these goods to consume in order to maximise their utility. Each of the consumption goods is produced according to a sector-specific production function and sticky prices in each sector imply sector-specific New Keynesian Phillips Curves. I show how this model, once estimated, could form a useful additional input within a policymaker’s ‘suite of models’ by considering its implications for the responses of various macroeconomic variables to different economic shocks and by decomposing recent movements of energy and non-energy output and inflation into the proportions caused by each of the shocks. |
| Keywords: | Dynamic stochastic general equilibrium model; Energy prices and inflation |
| JEL: | E13 E31 |
| Date: | 2011–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0432&r=ene |
| By: | Mayer, Klaus; Schmid, Thomas; Weber, Florian |
| Abstract: | Starting with the liberalization of electricity trading, this market grew rapidly over the last decade. However, while spot and future markets are rather liquid nowadays, option trading is still limited. One of the potential reasons for this is that the spot price process of electricity is still puzzling researchers and practitioners. In this paper, we propose an approach to model spot prices that combines mean-reversion, spikes and stochastic volatility. Thereby we use different mean-reversion rates for 'normal' and 'extreme' (spike) periods. Another feature of the model is its ability to capture correlation structures of electricity price spikes. Furthermore, all model parameters can easily be estimated with help of historical data. Consequently, we argue that this model does not only extend academic literature on electricity spot price modeling, but is also suitable for practical purposes, e.g. as underlying price model for option pricing. -- |
| Keywords: | Electricity,Energy markets,Lévy processes,Mean-reversion,Spikes,Stochastic volatility,GARCH |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cefswp:201102&r=ene |
| By: | Moy, Caroline; Roberts, Leigh |
| Abstract: | A direct approach is taken to modelling New Zealand electricity prices, in which extreme value theory is used to augment a basic time series model. Despite its simplicity, the resulting model is suitable for answering fundamental questions of interest to risk managers, who might not find it worthwhile to apply a more sophisticated and complex approach to statistical modelling. |
| Keywords: | electricity prices, extreme value theory, New Zealand, statistical modelling, |
| Date: | 2011–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwecf:1666&r=ene |
| By: | Schleich, Joachim; Klobasa, Marian; Brunner, Marc; Gölz, Sebastian; Götz, Konrad |
| Abstract: | In this paper, we present the results from a field study on smart metering in Germany and Austria, focusing on the effects of providing feedback information on average electricity consumption. Econometric analyses are applied using a cross section of observations for more than 2000 households served by nine utilities. More than half of these households received feedback on their electric-ity consumption together with information about electricity saving measures (pi-lot group). The remaining households served as a control group. To evaluate the impact of feedback information, we econometrically estimated household electricity consumption. Explanatory variables include a wide range of socio-economic factors (income, education, age, household size, age composition, etc.) as well as the household appliance stock (large appliances, boiler, com-puters, TV, etc. ...). The results suggest that the feedback provided under the smart metering programme results in electricity savings of around 3.7%. -- |
| Keywords: | Smart metering,feedback,household electricity consumption |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisisi:s62011&r=ene |
| By: | André Betzer (University of Wuppertal); Markus Doumet (University of Mannheim); Ulf Rinne (IZA) |
| Abstract: | This paper analyzes how policy changes affect shareholder wealth in the context of environmental regulation. We exploit the unique and unexpected German reaction to the Fukushima Daiichi nuclear disaster, which involved the immediate shutdown of almost half of Germany’s nuclear reactors while safety checks were carried out, and a three-month moratorium on extending the lives of others. Using the event study methodology, our findings indicate a wealth transfer from nuclear energy companies to renewable energies companies in Germany. We moreover find that the joint market capitalization of these firms has decreased, but the amount of this combined decrease is small. Substantial heterogeneity in the shareholder wealth effects across European countries can be linked to different nuclear energy policies. The shareholder wealth of nuclear and conventional energy companies in the United States has been unaffected. |
| Keywords: | Electric Power, Nuclear Power, Green Economy, Earthquake, Tsunami, Event Study, Environment |
| JEL: | Q48 Q54 G38 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp11011&r=ene |
| By: | Lehmann, Paul; Gawel, Erik |
| Abstract: | In virtually all EU Member States, the EU Emissions Trading Scheme (EU ETS) is complemented by support schemes for electricity generation from renewable energy sources (RES-E). This policy mix has been subject to strong criticism. It is mainly argued that RES-E schemes contribute nothing to emissions reduction and undermine the cost-effectiveness of the EU ETS. Consequently, many scholars suggest the abolition of RES-E schemes. However, this conclusion rests on quite narrow and unrealistic assumptions about the design and performance of markets and policies. This article provides a systematic and comprehensive review and discussion of possible rationales for combining the EU ETS with RES-E support schemes. The first and most important reason may be restrictions to technology development and adoption. These may be attributed to the failure of markets as well as policies, and more generally to the path dependency in socio-technical systems. Under these conditions, RES-E schemes are required to reach sufficient levels of technology development. In addition, it is highlighted that in contrast to the EU ETS RES-E support schemes may provide benefits beyond mitigating climate change. -- |
| Keywords: | EU Emissions Trading System,market failure,path dependency,policy failure,policy mix,renewable energies,subsidies |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ufzdps:52011&r=ene |
| By: | Dallinger, David; Wietschel, Martin |
| Abstract: | Plug-in electric vehicles (PEVs) are expected to balance the fluctuation of re-newable energy sources (RES). To investigate the contribution of PEVs, the availability of mobile battery storage and the control mechanism for load man-agement are crucial. This study therefore combined the following: a stochastic model to determine mobility behavior, an optimization model to minimize vehicle charging costs and an agent-based electricity market equilibrium model to esti-mate variable electricity prices. The variable electricity prices are calculated based on marginal generation costs. Hence, because of the merit order effect, the electricity prices provide incentives to consume electricity when the supply of renewable generation is high. Depending on the price signals and mobility behavior, PEVs calculate a cost minimizing charging schedule and therefore balance the fluctuation of RES. The analysis shows that it is possible to limit the peak load using the applied control mechanism. The contribution of PEVs to improving the integration of intermittent renewable power generation into the grid depends on the characteristic of the RES generation profile. For the Ger-man 2030 scenario used here, the negative residual load was reduced by 15 to 22 percent and the additional consumption of negative residual load was be-tween 34 and 52 percent. -- |
| Keywords: | Plug-in electric vehicles,demand-side management,variable prices,intermittent generation |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisisi:s72011&r=ene |
| By: | Erdogdu, Erkan |
| Abstract: | The last two decades have witnessed widespread power market reforms in both developed and developing countries that have cost billions of dollars. Among the key aims (and assumptions) of these reforms, there has always been realization of improvements in power sector efficiency. This paper questions the validity of this hypothesis. Using panel data from 92 countries covering the period 1982–2008, empirical models are developed and analyzed. The research findings suggest that the impact of the reforms on electricity industry performance is statistically significant but also limited. The results imply that, after controlling for country-specific variables, application of liberal market models in electricity industries slightly increases efficiency in power sector. Besides, we detect a positive relationship between reform process and the percentage share of network (transmission and distribution) losses in total electricity supplied; meaning that as countries take more reform steps the network losses as a fraction of power generated tend to increase. Moreover, the study puts forward that income level and other country specific features are more important determinants of industry efficiency than the reform process. Overall, contrary to expectations of substantial increases in sector efficiency, the paper concludes that introducing a decentralized market model with competition in the electricity sector has a limited increasing effect on power industry performance. |
| Keywords: | Models with panel data (C33); model construction and estimation (C51); electric utilities (L94); power market reform; electricity industry efficiency |
| JEL: | C51 L11 O13 L94 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32483&r=ene |
| By: | Adam Copeland; James Kahn |
| Abstract: | Stabilization policies frequently aim to boost spending as a means to increase GDP. Spending does not necessarily translate into production, however, especially when inventories are involved. We look at the “cash-for-clunkers” program that helped finance the purchase of nearly 700,000 vehicles in 2009. An analysis of auto sales and production movements reveals that the program did prompt a large spike in sales. But the program had only a modest and fleeting impact on production, as inventories buffered the movements in sales. These findings suggest caution in judging the efficacy of such policies by their impact on spending alone. |
| Keywords: | Economic policy ; Inventories ; Automobile industry and trade ; Industrial productivity ; Consumption (Economics) |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:503&r=ene |
| By: | Ross, Michael; Kaiser, Kai; Mazaheri, Nimah |
| Abstract: | The recent political upheavals in the Middle East and North Africa region have exposed growing concerns about conflict risk, political stability, and reform prospects across its societies. Given the prevalence of oil and gas resource endowments in the region, which a voluminous literature suggests can be associated with adverse development consequences, this paper examines the interplay between their associated rents and political economy trajectories. The contribution of the paper is threefold: first, to examine the quantitative evidence of violent conflict in the region since 1960; second, to provide a nuanced review of the regional case study literature on the relationship between resource endowments, political stability, and conflict risk; and third, to assess how prospective political transitions have implications for the World Bank Group's work in the region on public sector management and private sector development. The authors find that resources and regimes have intersected to provide stability and limited violent conflict in the region, but that these development patterns have yielded a set of policy choices and development patterns that are proving increasingly brittle and unsustainable. A major institutional challenge for reforms will be to consolidate a requisite degree of inter-temporal credibility and stability in these regimes, while expanding inclusiveness in state-society relations. |
| Keywords: | Environmental Economics&Policies,Post Conflict Reconstruction,Economic Theory&Research,Labor Policies,Emerging Markets |
| Date: | 2011–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5742&r=ene |
| By: | Abdou Kâ Diongue (UFR SAT - Université Gaston Berger de Saint-Louis Sénégal - Université Gaston Berger de Saint-Louis); Gaël Giraud (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, ESCP-Europe - Campus de Paris); Cécile Renouard (ESSEC - ESSEC Business School) |
| Abstract: | Extractive industries face two main challenges in terms of CSR and poverty reduction : 1) recognize that societal activity is part of their core business ; 2) take part in socio-economic projects that contribute to their stakeholders' empowerment and not only to their living conditions. Based on surveys achieved in Nigeria in 2008, the paper presents two societal performance indices meant to be complementary : the Poverty Exit Index (PEI) and the Relational Capability Index (RCI). We show that, while they have fostered the PEI of the local communities, the development projects of the oil companies had a rather negative impact on their RCI. We then identify key variables that can influence positively the RCI and on which a sensible development policy should focus. |
| Keywords: | Development indices, capability approach, relational capability, development, poverty, impact assessment. |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00611942&r=ene |
| By: | Juan Ricardo PERILLA JIMÉNEZ |
| Abstract: | Este artículo forma parte de una investigación sobre el efecto del precio del petróleo sobre el crecimiento económico en Colombia a nivel agregado y sectorial. La estimación del impacto se realiza a ambos niveles aplicando técnicas de series de tiempo. La evidencia sugiere que éste impacto existe y es asimétrico a nivel agregado. En el período de análisis la dinámica de los precios habría tenido efectos cambiarios que favorecieron la importación de bienes intermedios y de capital pero al mismo tiempo habrían tenido consecuencias negativas para las exportaciones sectoriales. La combinación de estos dos principales efectos sobre el comportamiento de la producción sectorial no es concluyente ni homogénea entre sectores. This paper makes part of a research effort regarding the impact of oil prices over Colombian economic growth. Time series estimates for sector and aggregate activity are set which allow thinking of an asymmetrical relationship between price shocks and overall economic growth. Price dynamics would have impacted real exchange rate thus favoring imports of intermediates and capital goods, but also had jeopardizing effects for sector exports. Nevertheless, these main effects do not allow drawing conclusion for production at the sector level nor are identical between different sectors. |
| Date: | 2010–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:col:000118:008849&r=ene |
| By: | Kostka, Genia; Shin, Kyoung |
| Abstract: | China's energy-service companies (ESCOs) have developed only modestly despite favorable political and market conditions. We argue that with sophisticated market institutions still evolving in China, trust-based relations between ESCOs and energy customers are essential for successful implementation of energy efficiency projects. Chinese ESCOs, who are predominantly small and private enterprises, perform poorly in terms of trust-building because they are disembedded from local business, social, and political networks. We conclude that in the current institutional setting, the ESCO model based on market relations has serious limitations and is unlikely to lead to large-scale implementation of energy efficiency projects in China. -- |
| Keywords: | energy policies,energy service companies (ESCO),social networks,trust,China |
| JEL: | Q40 Q48 O53 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fsfmwp:168&r=ene |
| By: | Clemens Haftendorn; Claudia Kemfert; Franziska Holz |
| Abstract: | Because of economic growth and a strong increase in global energy demand the demand for fossil fuels and therefore also greenhouse gas emissions are increasing, although climate policy should lead to the opposite effect. The coal market is of special relevance as coal is available in many countries and often their first choice to meet energy demand. In this paper we assess possible interactions between climate policies and the global steam coal market. Possible market adjustments between demand centers through market effects are investigated with a numerical model of the global steam coal market until 2030: the "COALMOD-World" model. The COALMOD-World model is an equilibrium model that computes future trade flows, infrastructure investments and prices until 2030. We investigate three specific designs of climate policy: a unilateral European climate policy, an Indonesian export-limiting policy and a carbon capture and storage (CCS) fast-roll out policy in the broader context of climate policy and market constraints. We find that market adjustment effects in the coal market can have significant positive and negative impacts on the effectiveness of climate policies. |
| Keywords: | climate policy, future coal production, energy, numerical modeling, international trade |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1146&r=ene |
| By: | Bruce Chapman (Crawford School of Economics & Government, Australian National University, Canberra, ACT, Australia); Kiatanantha Lounkaew (Crawford School of Economics & Government, Australian National University, Canberra, ACT, Australia) |
| Abstract: | It is commonplace in Australian policy debate for groups presumed to be adversely affected by proposed policies to provide estimates of the undesirable consequences of change. A fashionable form relates to predictions of job losses for the group affected, usually accompanied by counter-claims made by the government of the day or other groups in favour of the policy. A highly public example of the above is the claim by the Minerals Council of Australia (MCA), based on work done in 2009 by Concept Economics (2009) that the then-planned Emissions Trading Scheme (ETS) would result in 23,510 fewer jobs in Australian mining than would otherwise be the case. Our research reports on findings using three different data series and methods to put into context the supposed jobs loss figure. Our results should not be taken to mean that economic policy reform is costless to all employees who might be affected by sectoral changes in the labour market, and there remain clear roles for government to minimise the personal costs for those so disadvantaged. As well, the details of this research cannot be translated into precise analyses of the employment effects of the carbon price policy being developed by the current government. But the essential points concerning the size and meaning of mining sector employment effects should not be in dispute; the alleged Òjobs lossesÓ aspect of the climate change policy debate is not in any sense important to the overall discourse. |
| JEL: | E24 E27 E60 J20 J23 J60 Q48 Q54 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1106&r=ene |
| By: | Madrazo Madrazo, Santos (Departamento de Historia Moderna (Universidad Autónoma de Madrid)); Hernando Ortego, Javier (Departamento de Análisis Económico: Teoría e Historia Económica (Universidad Autónoma de Madrid)); Madrazo García de Lomana, Gonzalo (Departamento de Análisis Geográfico Regional y Geografía Física (Universidad Complutense de Madrid)) |
| Abstract: | The aim of this paper is to evaluate the impact of Madrid’s fuel demand on the near surrounding territory in the early modern period, both from an economic and an ecological viewpoint. Fuel supply (charcoal and timber) to Madrid required the raising of resources from a vast territory of inland Spain, and caused a process of specialization of forests in fuel extraction and commercialization. The economic structures of the villages of Castile adapted to the rising needs, and rural populations could take an active part in transportation of fuel and charcoal production. This paper also aims to define the area affected by the city’s charcoal production in order to analyze the ecological footprint in an organic economy. |
| Keywords: | energy history, ecological footprint, forest history, urban supply, preindustrial transport. |
| JEL: | N53 N73 Q41 R41 L73 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpapeh:201103&r=ene |
| By: | Attavanich, Witsanu; McCarl, Bruce A.; Fuller, Stephen W.; Vedenov, Dmitry V.; Ahmedov, Zafarbek |
| Abstract: | This study was funded by the the University Transportation Center for Mobility, Texas Transportation Institute |
| Keywords: | Grain Transportation, Climate change and agriculture, Climate change and transportation, Land use change, Supply of grain, Demand for grain, Crop production patterns, Inland waterways, Mississippi River Basin, Climate change adaptation, Welfare distribution, Corn transportation, Soybeans transportation, Crop Production/Industries, Demand and Price Analysis, Environmental Economics and Policy, International Relations/Trade, Land Economics/Use, C61, L91, L92, Q15, Q17, Q54, R14, R41, R13, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea11:109241&r=ene |
| By: | Edgar Moreno Castillo |
| Abstract: | El presente artículo tuvo como objetivo comparar metodologías de análisis desde los sistemas complejos que involucraran elementos sociales y naturales en interacción entre sí y a diferentes escalas, para ser aplicadas en el estudio de proyectos forestales de captura de carbono. Este tipo de proyectos se denominan mecanismos de mitigación al cambio climático, clasificados dentro del Mecanismo de Desarrollo Limpio (MDL) y los Mercados Voluntarios de Carbono (MVC), y despiertan especial interés por estudiar los beneficios que dejan a los “países en desarrollo”. Se realizó una revisión de trabajos que identificaran los posibles beneficios en proyectos MDL forestales y se analizaron a través de tres metodologías: Análisis y Desarrollo Institucional (IAD), Sistemas Socio Ecológicos (SSE) y Sistemas Co-evolutivos (SCE). El uso conjunto de estas metodologías contribuyó a entender mejor el tipo de interacciones y procesos emergentes que tienen los proyectos forestales, a su vez se identificaron características comunes entre metodologías y elementos de las interacciones en los proyectos relevantes para conseguir beneficios locales. Se concluyó que la implementación de proyectos forestales de captura de carbono requiere elementos institucionales, biofísicos y sociales para satisfacer múltiples intereses y su análisis requiere de metodologías que los reconozcan. Además, las metodologías estudiadas tienen suficientes elementos en común como para trabajarse de forma conjunta para representar los procesos de los proyectos forestales. Se identifica la necesidad de más investigación, ya sea metodológica o en la aplicación de modelos, particularmente la modelación basada en agentes. |
| Date: | 2011–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:col:000178:008846&r=ene |
| By: | Thomas Cleff (Pforzheim University); Klaus Rennings (Mannheim Centre for European Economic Research (ZEW)) |
| Abstract: | In environmental policy first mover advantages for environmental technologies are often taken for granted. It is a popular view to see the state as a political entrepreneur who introduces a certain environmental policy instrument, e.g. feedin tariffs for renewable energies, and thus becomes the world market leader or the lead market for the respective technology. Against this background, this paper wants to find out if the idea of first mover advantages can be justified by theories and empirical evidence from industrial organization and business management studies. After a review of theoretical and empirical papers we see that first mover advantages are not confirmed by empirical evidence. Thereby the successful innovator is not necessarily the first but very often one of the early movers within the competition of different innovation designs. We show that the success of a timing strategy depends on country-specific lead market potentials, on market and technology characteristics and on the regime of the country-specific regulation. On this basis we derive options for environmental innovation strategies for firms under different circumstances of markets, technologies and regulations. We will see different implications for practical innovation management and innovation policy. |
| Keywords: | Lead markets, environmental innovation, first mover advantages,innovation strategies |
| JEL: | Q55 L60 O33 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp11-01&r=ene |
| By: | Yallwe, Hagos Alem; Buscemi, Antonino |
| Abstract: | The paper summarized some theories and facts related to Environment, Energy and Economics. This work paper provides some highlights about the theoretical issues and facts regarding to environmental pollutions and its effect on economy and the importance of relying on other source energy to fulfil the increasing demand of power or electricity. Moreover, the paper also discussed by making comparison between industrialized and developing countries about their effect on environment and their capacity in producing nuclear energy and production level and also the link between environmental science and economics. This paper concluded that the industrialized countries are not fulfilling their commitments. About 7 Billion Metric Tons of carbon equivalent harmful greenhouse gases are omitted by industrialized countries every year and the share of U.S.A is 24% followed by Japan & Developed European Nations which accounts 26%. Whereas developing nations contributes 13% other than china. Currently only eight countries are known to have a nuclear weapons capability and sixty further nuclear power reactors are under construction, equivalent to 17% of existing capacity, while over 150 are firmly planned, equivalent to 46% of present capacity. Sixteen countries depend on nuclear power for at least a quarter of their electricity. From developed countries, France is the first country that gets around three quarters of its power from nuclear energy. Whereas most developing countries under design and some of them have small share as compared to industrialized countries. After the disaster in Japan, many countries have changed policies on the implementation of nuclear power plants. In addition, the Italian Parliament was suspended for one year, the work of approving projects on the production of energy through nuclear power plants. |
| Keywords: | Environment; Economics; Energy; |
| JEL: | A12 N5 N7 |
| Date: | 2011–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32216&r=ene |