|
on Energy Economics |
|
Issue of 2011‒11‒21
twenty papers chosen by Roger Fouquet Basque Climate Change Centre, Bilbao, Spain |
| By: | George R. Parsons (Department of Environmental and Natural Resource Economics, University of Delaware); Michael K. Hidrue (Department of Economics, University of Delaware); Willett Kempton (Department of Electrical & Computer Engineering, University of Delaware); Meryl P. Gardner (Department of Business Administration, University of Delaware) |
| Abstract: | Vehicle-to-grid (V2G) electric vehicles can return power stored in their batteries back to the power grid and be programmed to do so at times when power prices are high. Since providing this service can lead to payments to owners of vehicles, it effectively reduces the cost of electric vehicles. Using data from a national stated preference survey (n = 3029), this paper presents the first study of the potential consumer demand for V2G electric vehicles. In our choice experiment, 3029 respondents compared their preferred gasoline vehicle with two V2G electric vehicles. The V2G vehicles were described by a set of electric vehicle attributes and V2G contract requirements such as “required plug-in time” and “guaranteed minimum driving range”. The contract requirements specify a contract between drivers and a power aggregator for providing reserve power to the grid. Our findings suggest the V2G concept is mostly likely to help EVs on the market if power aggregators operate on pay-as-you-go-basis or provide consumers with advanced cash payment (upfront discounts on the price of EVs) in exchange for V2G restrictions. |
| Keywords: | electric vehicles, vehicle-to-grid, stated preference, latent-class model |
| JEL: | Q42 Q51 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dlw:wpaper:11-21.&r=ene |
| By: | Dietrich, Antje-Mareike; Sieg, Gernot |
| Abstract: | This article shows that in the presence of environmental externalities, it may be welfare enhancing to overcome a technological lock-in by a deadend technology through governmental intervention. It is socially desirable to subsidize a dead-end technology if its environmental externality is small relative to the one of the established technology, if the installed base and/or the strength of the network effect is small and if future generations matter. Applying our results to the private transport sector, governments promoting alternatives to gasoline-driven vehicles have to be aware of these opposing welfare effects. -- |
| Keywords: | environmental externalities,network effects,private transport,technological change |
| JEL: | O33 L92 Q55 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tbswps:12&r=ene |
| By: | Roger Fouquet |
| Abstract: | The purpose of this paper is to understand the long run demand for energy-related environmental quality, its influence on legislation and on transitions to low polluting energy sources. It starts by presenting a simple framework of the relationship between the demand for and supply of environmental quality, environmental legislation and energy. This forms the structure for presenting a series of episodes in British history where a demand for improvements in energy-related environmental quality existed. This analysis proposes that markets can drive transitions to low polluting energy sources, in specific economic conditions. However, most probably, governments will need to push them, and this cannot be expected without strong and sustained demand for environmental improvements. Yet, while demand is a prerequisite, it is not enough. It must also be spearheaded by strong, creative and sustained pressure groups (i.e., powerful lobbying and the weakening of the counter-lobby) to introduce legislation, to enforce it and to avoid it being over-turned by future governments. |
| Keywords: | Energy Transitions, Historical, Environmental Quality, Air Pollution. |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:2011-11&r=ene |
| By: | Kisswani, Khalid/ M. |
| Abstract: | In 1973-1974, the U.S. faced the so-called “Energy Crisis” due to the Arab oil embargo and a quadrupling of world crude oil prices by OPEC. This led the U.S. to use a” Price Control” policy in the domestic energy market. The effects of such policy are explored and well documented. However, the responses of OPEC producers to such a policy need further attention. This paper examines the effects of these price controls on OPEC‟s extraction path. It also examines the relation between the harm function and the change in OPEC production. The results show some evidence that OPEC did respond differently to price controls applied by the U.S. For some periods it cut production, while in other periods production levels increased. The results also show some evidence regarding Wirl (2008) that OPEC includes political support as part of its objective function when it comes to oil extraction. |
| Keywords: | OPEC; Price Controls; Energy Economics; Oil |
| JEL: | C00 C20 Q40 Q30 |
| Date: | 2011–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34624&r=ene |
| By: | Ron Alquist; Olivier Gervais |
| Abstract: | Over the past 10 years, financial firms have increased the size of their positions in the oil futures market. At the same time, oil prices have increased dramatically. The conjunction of these developments has led some observers to argue that financial speculation caused the run-up in oil prices. Yet several arguments cast doubt on the validity of this claim. First, although the stock of open futures contracts is many times larger than the flow of oil consumption in the United States, comparing these two statistics is misleading. Stocks are not measured with respect to a specific unit of time but flows are, so the two are not directly comparable. Second, empirical analysis shows that changes in financial firms’ positions do not predict oil-price changes, but that oil-price changes predict changes in positions. Third, the evidence indicates that financial firms’ positions did not cause the market to expect persistent price increases during 2007/08. Other explanations for the increase in oil prices include macroeconomic fundamentals, such as interest rates and increased demand from emerging Asia. Of these two explanations, the one that seems most consistent with the facts explains oil-price fluctuations in terms of large and persistent demand shocks related to growth in global real activity in the presence of supply constraints. |
| Keywords: | International topics |
| JEL: | Q41 G12 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:11-6&r=ene |
| By: | Jussila Hammes, Johanna (VTI) |
| Abstract: | We study the effect of uncertainty about the greenhouse gas emissions arising from the production of biofuels on trade policy, in the presence of lobby groups and two policy instruments, trade policy and biofuels mandates. We show that in the presence of biofuels mandates it would be optimal from a societal point of view to lower the trade tariff on biofuels when the emissions from their production are shown to be ‘high’ as compared to when they are believed to be ‘low’. If the government is susceptible to lobbying, the tariff may be raised instead. We further show that at subsequent time periods, the biofuels sector’s marginal lobbying effort will not fall compared to previous periods, and that consequently, its political contribution also does not fall. Finally we show how policy may be path dependent, i.e., that earlier tariff rates in part determine future tariff rates if the government is susceptible to lobbying and given that the domestic price of biofuels does not fall. The model can, e.g., shed light on why the EU does not lower the tariffs on Brazilian ethanol in the face of new information. |
| Keywords: | Path dependence; trade policy; biofuels mandate; political economics |
| JEL: | D72 F18 H23 H25 P16 Q42 |
| Date: | 2011–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2011_001&r=ene |
| By: | Kimitaka Nishitani (Graduate School for International Development and Cooperation, Hiroshima University); Shinji Kaneko (Graduate School for International Development and Cooperation, Hiroshima University); Satoru Komatsu (Graduate School for International Development and Cooperation, Hiroshima University); Hidemichi Fujii (Graduate School of Environmental Studies, Tohoku University) |
| Abstract: | This paper analyzes how a firmfs reduction of its greenhouse gas (GHG) emissions affects its economic performance. The theoretical model used is derived from the Cobb-Douglas production function and the inverse demand function, and predicts that in reducing its GHG emissions, a firm will increase its value added because it promotes an increase in demand for its output and improves its productivity. The estimation results, using data on Japanese manufacturing firms, suggest that the reduction of GHG emissions increases a firmfs economic performance only through an increase in demand. Thus, firms can improve their overall economic performance because increased demand accompanies their reduction of GHG emissions, even if they cannot achieve this through an improvement in productivity, as estimates here support the traditional view that reducing GHG emissions imposes additional costs on firms. |
| Keywords: | Reduction of greenhouse gas emissions, Economic performance, Increase in demand, Improvement in productivity, Instrumental variables model |
| JEL: | C21 M20 Q56 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:hir:idecdp:1-1&r=ene |
| By: | Kågeson, Per (KTH) |
| Abstract: | The report discusses options for reconciling the principle of Common but Differentiated Responsibility (CBDR) with IMO’s principle of equal treatment of ships when creating a markedbased measure for curbing CO2 emissions from international shipping. Global application with revenues used for compensating the developing countries (no net incidence) is the most obvious option. Another possibility is to provide a grace period for emissions from ships on route to non-Annex I countries by restricting the application of a market-based measure to emissions caused by ships on journey to ports in the rich countries. The geographical coverage of such a scheme could gradually widen as non-Annex I countries become more economically advanced. Among the issues that need to be clarified are the exact grounds for compensation. The basic choice is between distinct categories (Annex I or non-Annex I) and parametric values such as CO2/capita and GDP/capita. Another main issue is the duration of the compensation rules. Some non-Annex I countries have already passed the least developed Annex I countries in terms of GDP per capita and/or emissions per capita. It may be a good idea to establish an expert group, as proposed by China and India, to look into the details of how to apply CBDR to the reduction of emissions from international shipping, including the longer term implications. |
| Keywords: | CBDR; shipping; IMO; climate change |
| JEL: | Q53 R48 |
| Date: | 2011–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2011_005&r=ene |
| By: | Kågeson, Per (KTH) |
| Abstract: | This paper was prepared as a contribution to the Working Group on Ships of the European Union's European Climate Change Programme (ECCP) and presented on 22–23 June 2011 at the second meeting of the group. It discusses various options that may be considered by the EU when contemplating, in the absence of any progress in the International Maritime Organzation (IMO), to act unilaterally on market-based measures for curbing CO2 emissions from international shipping. Focus is, in particular, on the pros and cons of introducing a hybrid scheme where emissions from domestic shipping and other small vessels (below a certain size threshold) are addressed by up-stream allocation of liability, i.e. with the fuel suppliers, while a down-stream allocation of responsibility would apply to large ships and to journeys departing from ports outside of the EU. For the latter, the ship owner would be directly responsible for submission on emission allowances or, alternatively, for paying a CO2 charge or levy. |
| Keywords: | Shipping emissions; IMO; climate change; ECCP |
| JEL: | Q53 R48 |
| Date: | 2011–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2011_009&r=ene |
| By: | Rajat Acharyya (CUHK - City University Hong Kong) |
| Abstract: | This paper examines the optimality of environmental standards that are often observed to be imposed by the importing North on exporting South. In the context of goods differentiated in terms of environmental quality and the degree of consumption pollution they generate, consumers' willingness-to-pay varying with such quality and being different across income groups, we show that: (1) competitive environmental qualities are sub-optimal; (2) environmental-quality dependent consumption tax is the first best policy; and (3) when South has a cost advantage in dirty varities, the second-best policy for North is to lower minimum environmental standard from the autarchic level of minimum standard. |
| Keywords: | Environmental quality choice, consumption pollution, environmental standard |
| JEL: | O13 P28 Q34 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:21749&r=ene |
| By: | Aldy, Joseph E. (Harvard University); Stavins, Robert N. (Harvard University) |
| Abstract: | Because of the global commons nature of climate change, international cooperation among nations will likely be necessary for meaningful action at the global level. At the same time, it will inevitably be up to the actions of sovereign nations to put in place policies that bring about meaningful reductions in the emissions of greenhouse gases. Due to the ubiquity and diversity of emissions of greenhouse gases in most economies, as well as the variation in abatement costs among individual sources, conventional environmental policy approaches, such as uniform technology and performance standards, are unlikely to be sufficient to the task. Therefore, attention has increasingly turned to market-based instruments in the form of carbon-pricing mechanisms. We examine the opportunities and challenges associated with the major options for carbon pricing: carbon taxes, cap-and-trade, emission reduction credits, clean energy standards, and fossil fuel subsidy reductions. |
| JEL: | Q40 Q48 Q54 Q58 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp11-041&r=ene |
| By: | Aldy, Joseph E. (Harvard University); Stavins, Robert N. (Harvard University) |
| Abstract: | Emissions of greenhouse gases linked with global climate change are affected by diverse aspects of economic activity, including individual consumption, business investment, and government spending. An effective climate policy will have to modify the decision calculus for these activities in the direction of more efficient generation and use of energy, lower carbon intensity of energy, and--more broadly--a more carbon-lean economy. The only approach to doing this on a meaningful scale that would be technically feasible and cost-effective is carbon pricing, that is, market-based climate policies that place a shadow-price on carbon dioxide emissions. We examine alternative designs of three such instruments--carbon taxes, cap-and-trade, and clean energy standards. We note that the U.S. political response to possible market-based approaches to climate policy has been and will continue to be largely a function of issues and structural factors that transcend the scope of environmental and climate policy. |
| JEL: | Q40 Q48 Q54 Q58 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp11-038&r=ene |
| By: | Kågeson, Per (KTH) |
| Abstract: | This paper reviews the financial capabilities of a Levy on carbon dioxide emissions from international shipping as proposed in the International Maritime Organization (IMO) by Cyprus, Denmark, the Marshall Islands and Nigeria. The conclusion is that a relatively high levy would be required to create the resources needed for satisfying all four objectives brought forward by the proponents and in addition provide compensation to developing countries based on the principle of no net incidence. Choosing a low and stable rate would force the decision maker to forsake the task of offsetting any shipping emissions above a proposed (declining) cap, which would make the scheme less environmentally effective. |
| Keywords: | Shipping; climate change; IMO; market-based measures |
| JEL: | Q53 R48 |
| Date: | 2011–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2011_012&r=ene |
| By: | Tol, Richard S. J. |
| Abstract: | We use a demo-economic model to examine the question of whether climate change could widen or deepen poverty traps. The model includes two crucial mechanisms. Parents are risk averse when deciding how many children to have; fertility is high when infant survival is low. High fertility spreads scarce household resources thin, resulting in children being poorly educated. At the macro level, technological progress is slow because of decreasing returns to scale in agriculture. With high population growth and slow technological progress, the economy stagnates. If, on the other hand, infant survival is high, then fertility is low, education is high, and the economy grows exponentially. Diarrhea and malaria are among the leading causes of infant mortality; both are sensitive to weather and climate. There may thus be a climate-related poverty trap where climate change increases disease burdens that reinforce poverty. We estimate finite-mixture models of per capita income, fertility, and mortality at the national scale. As predicted by the model, the observations are bi-modal. Temperature has statistically significant effects: hotter countries are more likely to be classified as poor; hotter countries are more likely to be classified as high mortality; and the number of children per woman in high fertility societies increases with temperature. We then use the model to simulate a number of different futures, focusing on the question whether climate change may widen and deepen the health/fertility poverty trap. The results suggest that this is unlikely for reasonable parameter choices. Climate change may have a substantial effect on specific causes of infant mortality, but the effect on total infant mortality is more muted. More importantly, the model is driven by infant survival, and climate change has a much smaller proportional effect on survival than on mortality. Furthermore, climate change will be relatively small over the next few decades. In the medium term, the impact of climate change is therefore dwarfed by other factors (health and education in this model). In the long term, climate change is more important, but the long term is primarily shaped by the medium term. |
| Keywords: | children/Climate change/education/fertility/growth/infant mortality/population/poverty/poverty traps/risk |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp413&r=ene |
| By: | McDermott, Thomas K. J.; Barry, Frank; Tol, Richard S. J. |
| Abstract: | We demonstrate, using a simple two-period equilibrium model of the economy, the potential effects of extreme event occurrences - such as natural or humanitarian disasters - on economic growth over the medium- to long-term. In particular, we focus on the effect of such shocks on investment. We examine two polar cases; an economy in which agents have unconstrained access to capital markets, versus a credit-constrained version, where the economy is assumed to operate in financial autarky. Considering these extreme cases allows us to highlight the interaction of disasters and economic underdevelopment, manifested through poorly developed financial markets. The theoretical analysis shows that the shock of a disaster occurrence could have lasting effects on economic growth only if agents face borrowing constraints. The predictions of our theoretical model are then tested using a panel of data on natural disaster events at the country-year level, covering the period 1979-2007. We find that for countries with low levels of financial sector development, natural disaster events exert a significant negative impact on economic growth. In particular, where access to credit is problematic, the negative effects of disasters on growth are persistent over the medium-term. These results are robust to various checks. Our findings suggest that natural disasters do represent significant threats to economic development in poor countries. |
| Keywords: | natural disasters,financial development,credit constraints,economic growth/growth/investment/US/data |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp411&r=ene |
| By: | Benchekroun, H.; Marrouch, W.; Ray Chaudhuri, A. (Tilburg University, Center for Economic Research) |
| Abstract: | While an international agreement over the reduction of greenhouse gases (GHGs) emissions proves to be elusive, there is a large and growing support for investment in developing more effective technologies to adapt to climate change. We show that an increase in effectiveness of adaptation will diminish the incentive of individual countries to free-ride on a global agreement over emissions. Moreover, we show that this positive effect of an increase in adaptation's effectiveness can also be accompanied by an increase in the gains from global cooperation over GHGs emissions. |
| Keywords: | adaptation;climate change;international environmental agreements;transboundary pollution. |
| JEL: | Q54 Q59 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011120&r=ene |
| By: | Tsur, Yacov; Withagen, Cees |
| Abstract: | We study optimal adaptation to climate change when the harmful consequences of global warming are associated with stochastic occur- rence of abrupt changes. The adaptation policy entails the accumula- tion of a particular sort of capital that will eliminate or reduce the catas- trophic damage of an abrupt climate change when (and if) it occurs. The occurrence date is uncertain. The policy problem involves balancing the tradeos between the (certain) investment cost prior to occurrence and the benet (in reduced damage) that will be realized after the (uncer- tain) occurrence date. For stationary economies the optimal adaptation capital converges to a steady state. For growing economies the optimal adaptation capital stock approaches the maximal economic level above which further accumulation is ineective. |
| Keywords: | climate change, adaptation, hazard, Environmental Economics and Policy, O13, Q54, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:huaedp:117652&r=ene |
| By: | Adolfo Albo; Juan Luis Ordaz Diaz |
| Abstract: | En este articulo se aborda el analisis del vinculo entre migracion y clima, para lo cual revisamos algunas de las posibles consecuencias del cambio climatico sobre la migracion y nos enfocamos en el caso particular de Mexico. Revisamos algunos trabajos sobresalientes que describen las tendencias climaticas mundiales y como ellas podrian afectar los desplazamientos de personas; ademas exponemos algunas estadisticas que intentan dar cierta luz sobre el posible vinculo entre migracion y cambio climatico en el caso mexicano y señalamos, a partir de diversos estudios, en que regiones del pais podrian presentarse movimientos migratorios como respuesta al cambio climatico. |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:1127&r=ene |
| By: | Colin Hunt (School of Economics, The University of Queensland) |
| Abstract: | The carbon emissions of Australia’s future energy consumption are compared with the emissions targets implied by the cuts in carbon emissions committed to by the Australian government for 2020 and 2050. Analysis shows that even the seemingly modest cut of 5% of carbon emissions by 2020 cannot be met without substantial contributions by low carbon sources that are in addition to the contribution of 20% of electricity supply mandated by the government. The choices in renewable energy are constrained by the need for base-load power to constitute a large proportion of energy supply but the short lead time to 2020 precludes sources that require more development or lengthy planning processes. The official forecasts of energy generation assume a large proportion of Australia’s emissions will be offset through international emission trading. However the prospects for the development of international carbon market are presently poor. The conclusion is that, even with a domestic price on carbon, the Australian government’s 2020 targets for carbon emission reductions are unlikely to be met and should be revised downwards. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:440&r=ene |
| By: | Kratzsch, Uwe; Sieg, Gernot; Stegemann, Ulrike |
| Abstract: | This paper analyzes greenhouse gas emissions that build up an atmospheric stock which depreciates over time. Weakly renegotiation- proof and subgame perfect equilibria in a game of international emission reduction exist if countries put a sufficiently high weight on future payoffs, even though there is a discontinuity in the required discount factor due to the integrity of the number of punishing countries. Treaties are easier to reach if the gas depreciates slowly. -- |
| Keywords: | global warming,international agreement,weak renegotiation-proofness |
| JEL: | Q54 F53 H41 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tbswps:11&r=ene |