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on Energy Economics |
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Issue of 2012‒02‒27
fifteen papers chosen by Roger Fouquet Basque Climate Change Centre, Bilbao, Spain |
| By: | Linn, Joshua (Resources for the Future); Mastrangelo, Erin; Burtraw, Dallas (Resources for the Future) |
| Abstract: | The Clean Air Act has assumed the central role in U.S. climate policy, directing the Environmental Protection Agency to develop regulations governing the emissions of greenhouse gases from existing coal-fired power plants. The cost and environmental effectiveness of policy options depend on abatement costs, the magnitude of emissions reduction opportunities, and the sensitivity of plant utilization. This paper examines the operation of electricity-generating units over 25 years to estimate the marginal costs and potential magnitude of emissions reductions that could result from improvements in their operating efficiency. We find that a 10 percent increase in coal prices causes a 0.3 to 0.9 percent heat rate reduction, broadly consistent with engineering assessments of abatement costs and opportunities. We also find that coal prices have a significant effect on utilization, but that will vary depending on the policy design. The results are used to compare cost-effectiveness of alternative policies. |
| Keywords: | efficiency, regulation, greenhouse gas, carbon dioxide, coal, performance standards |
| JEL: | L94 Q54 |
| Date: | 2012–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-11-43-rev&r=ene |
| By: | Thilo Grau |
| Abstract: | This paper reviews the adjustments of the feed-in tariff for new solar photovoltaics (PV) installations in Germany. As PV system prices declined rapidly over the last years, the German government implemented automatic mechanisms to adjust the support level for new installations in response to deployment volumes. This paper develops an analytic model to simulate weekly installations of PV systems ?30 kW (35% market share in 2010) based on project profitability and duration. The model accurately replicates observed market developments, showing the need for (i) more frequent tariff reductions (ii) and an appropriate choice of adjustment response parameters. The model can be used to test for appropriate parameter choices, and to compare different policy designs. To illustrate this, the competing proposals that had been discussed in 2011 are simulated. A robust choice must perform well against multiple scenarios for future PV system prices. The analysis shows that adjustment schemes with more frequent tariff reductions would have reached deployment targets in 2011 more effectively. |
| Keywords: | feed-in tariff, photovoltaic, renewable deployment |
| JEL: | O30 O31 Q42 Q48 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1189&r=ene |
| By: | Jairo Núñez; Andrés Bateman; Carlos Castañeda; Sandra Cortés |
| Abstract: | "El presente estudio se propone realizar un análisis de la población en condición de morosidad en la ciudad de Medellín, tratando de establecer las diferencias y similitudes que existen entre esta población y la población que presenta pagos oportunos. Después de caracterizar la población que se encuentra en condición de morosidad, se procede a construir la Cadena de Causalidad que determina esta condición y la cual brinda una base conceptual sólida con la cual se podrán evaluar las alternativas que EPM pone a disposición de los usuarios y que busca mitigar la situación de morosidad en los hogares. Este análisis permitirá establecer los beneficios y las fallas de las alternativas de EPM con el fin de establecer nuevos esquemas que busquen mejorar el acceso a los servicios públicos en un contexto político, social y económico sostenible y retributivo para todos los actores, identificando cuáles de estas propuestas pueden ser implementadas por las EPM como prestador del servicio y cuáles corresponden a políticas públicas que deben ser establecidas por el Gobierno Nacional, Departamental, Municipal, los reguladores, o los prestadores de los servicios públicos, etc. Para lograr los objetivos propuestos, este estudio consta de cuatro capítulos además de esta introducción. En el primer capítulo se realiza un diagnóstico de la situación de morosidad en la ciudad de Medellín con el fin de identificar las variables o comportamientos más relevantes de esta problemática. A partir de la identificación de las variables relevantes, en el segundo capítulo se construye la Cadena de Causalidad del problema de la morosidad la cual constituye el marco de referencia central para el análisis propuesto en este estudio. Una vez construida la Cadena de Causalidad, el tercer capítulo se ocupa del análisis de las alternativas implementadas por EPM buscando identificar los eslabones de la Cadena que ataca cada alternativa, pero también aquellos que está dejando de atender. Por último, en el capítulo cuatro se retoman todos los elementos anteriores con el fin de proponer una estrategia general contra la morosidad". |
| Date: | 2011–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:009320&r=ene |
| By: | Kenji Fujiwara (School of Economics, Kwansei Gakuin University); Ngo Van Long (Department of Economics, McGill University) |
| Abstract: | Constructing a dynamic game model of trade of an exhaustible resource, this paper compares feedback Nash and Stackelberg equilibria. We consider two dierent leadership scenarios: leadership by the importing country, and leadership by the exporting country. We numerically show that as compared to the Nash equilibrium, both countries are better o if the importing country is a leader, but that the follower becomes worse o if the exporting country is a leader. Consequently, the world welfare is highest under the importing country's leadership and lowest under the exporting country's leadership. |
| Keywords: | dynamic game, feedback Nash equilibrium, feedback Stackelberg equilibrium |
| JEL: | C73 L72 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:82&r=ene |
| By: | Dmytro Boyarchuk |
| Abstract: | Azerbaijan’s current fiscal stance is quite strong; however, this stability is completely based on oil-related revenues. In the meantime, the situation with alternative sources of fiscal revenues is uncertain. A large part of fiscal management is built on opacity and an assessment of budget spending efficiency has never been done. It is likely that Azerbaijan will only be able to maintain its fiscal stability through the next ten years or so, i.e. until the end of the active oil-extraction period. In the more distant future, a substantial fiscal correction will be necessary. |
| Keywords: | Institutional reforms, Eastern Europe, Caucasus and Central Asia, Azerbaijan |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:sec:ebrief:1202&r=ene |
| By: | Ercio Muñoz; Miguel Ricaurte; Mariel Siravegna |
| Abstract: | This paper conducts an exhaustive out-of-sample forecasting evaluation exercise for the monthly price of crude oil between 1992 and 2011. The idea is to identify the forecasting strategy that results in the “best” forecasts in terms of mean forecasting error. To this end, a wide variety of econometric models as well as future prices are tested for different forecasting horizons in an individual manner, as well as combined. We find that for short horizons (1 and 3 months), an ARIMA specification results in smaller forecasting errors, but for longer horizons (6-24 months), future prices outperform other models. All models are found to underestimate the true price of oil, on average. The combination of these individual models only yields smaller forecasting errors when compared to the “best” individual strategy in a restricted sample ending in 2005. Nevertheless, when we tabulate the number of times one strategy yields the largest forecasting error compared to other alternatives, combinations of forecasts never yields the highest absolute error except one month ahead. These results are robust to the sample selection. |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:660&r=ene |
| By: | Chan, Gabriel (Harvard University); Stavins, Robert (Harvard University); Stowe, Robert (Harvard University); Sweeney, Richard (Harvard University) |
| Abstract: | The introduction of the U.S. SO2 allowance-trading program to address the threat of acid rain as part of the Clean Air Act Amendments of 1990 is a landmark event in the history of environmental regulation. The program was a great success by almost all measures. This paper, which draws upon a research workshop and a policy roundtable held at Harvard in May 2011, investigates critically the design, enactment, implementation, performance, and implications of this path-breaking application of economic thinking to environmental regulation. Ironically, cap and trade seems especially well suited to addressing the problem of climate change, in that emitted greenhouse gases are evenly distributed throughout the world's atmosphere. Recent hostility toward cap and trade in debates about U.S. climate legislation may reflect the broader political environment of the climate debate more than the substantive merits of market-based regulation. |
| JEL: | Q52 Q55 Q58 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp12-003&r=ene |
| By: | Ibrahim Ahamada (Centre d'Economie de la Sorbonne - Paris School of Economics); Djamel Kirat (Centre d'Economie de la Sorbonne - Paris School of Economics) |
| Abstract: | This paper addresses the economic impact of the European Union Emission Trading Scheme (EU ETS) for carbon on wholesale electricity prices in France and Germany during the Kyoto commitment period (2008-2012). Specifically, we use first identify a structural break occurred on the carbon spot price series on October 2008, which is mainly resulting from the financial and economic crisis. Then, we model the prices of day-ahead electricity contracts. We look at the volatilities around their fundamentals and simultaneously evaluate the correlation between electricity prices in both countries. We find that the price of carbon does not matter for electricity prices in either countries before October 2008. After October 2008, electricity producers in both countries were constrained to include the carbon price in their cost functions. During that period, French electricity producers were more constrained than their German counterparts. Comparing the results with those reported in Kirat and Ahamada (2011) reveals improvements in the response of electricity generation sector to carbon constraints. The impact of carbon constraint increased significantly by 300% and 150% in France and Germany, respectively, between the pilot phase and the second phase of the EU ETS. This is a consequence of the possibility of "banking" for subsequent periods and the reduction of allowance caps introduced in the second phase. We also find evidence of a trade off between gas and coal in electricity generation in Germany. Furthermore, the conditional correlation of electricity prices in both countries is highly significant and greater than during the pilot phase of the EU ETS. |
| Keywords: | Carbon emission trading, multivariate GARCH models, structural breaks, energy prices. |
| JEL: | C32 C51 Q49 Q58 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:12007&r=ene |
| By: | Hervé-Mignucci, Morgan |
| Abstract: | Cette thèse porte sur l’impact du système communautaire d’échange de quotas d’émission (SCEQE) sur les décisions d’investissement dans le secteur électrique européen. Après une description du SCEQE et autres développements majeurs, nous discutons des principaux moyens qu’ont les acteurs de conformité pour faire face à la contrainte du SCEQE : réductions d’émissions, acquisition d’actifs carbone et autres types de réactions. Nous présentons les résultats d’une revue empirique des investissements par les producteurs d’électricité européens les plus contraints par le SCEQE. Les décisions d’investissement ont été davantage motivées par des considérations stratégiques et économiques que par l’introduction d’un prix du CO2. Nous discutons des impacts de ces investissements sur la conformité carbone des producteurs d’électricité européens : tonnes de CO2 potentiellement fixées par les investissements, changements de périmètres de conformité, mais également les fuites de carbone et recours aux mécanismes de projets. Enfin, nous explorons l’impact de scénarios de prix pour les quotas sur les portefeuilles d’investissement en capacité de production électrique. Nous montrons que : le SCEQE a un rôle modeste mais central dans la réallocation des portefeuilles d’investissement ; toute indication sur la tendance de prix de long terme du carbone est très utile ; certains éléments du SCEQE n’ont qu’un effet faible sur les investissements ; les anticipations de prix du carbone influencent les décisions liées aux portefeuilles d’investissement ; si le SCEQE joue un rôle central, c’est la combinaison de politiques de réduction des émissions et autres politiques qui compte le plus. |
| Abstract: | This PhD thesis focuses on the impact of the European Union Emissions Trading Scheme (EU ETS) on investment decisions in the European power sector. We provide the policy background on the EU ETS and contemporary policy and economic developments. We discuss the main types of compliance buyers’ responses to the EU ETS constraint: emissions reductions, acquisitions of additional compliance assets, and other responses. We present the results of an empirical survey of the most carbon constrained European utilities. We show that strategic and economic considerations prevailed over the introduction of the carbon price. We discuss the impact of those investments on European utilities’ EU ETS profile by looking at the potentially locked-in emissions, changes in the compliance perimeter and some specific developments relative to carbon leakage and Kyoto offsets. We offer a review of the investment decision-making approaches. Exploring the impact of carbon price scenarios on generation investment portfolios, we are able to identify that: the EU ETS has a moderate but central reallocation role in power generation investment portfolios; insights into the long-term carbon price trend are particularly helpful to unlock investment; some much discussed policy provisions only have a relatively small impact on investment portfolios; carbon price expectations impact decisions relative to power generation investment portfolios; while the EU ETS has a central role, the climate and non-climate policy mix matters most. |
| Keywords: | carbon price; investment portfolios; power sector; European Union Emissions Trading Scheme; conformité carbone; portefeuilles d’investissement; industries électriques; système communautaire d’échange de quotas d’émission; |
| JEL: | Q53 G11 L94 Q48 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:ner:dauphi:urn:hdl:123456789/8200&r=ene |
| By: | Shirai, Daichi; Takeda, Shiro; Ochiai, Katsuaki |
| Abstract: | Although many CGE models have already been developed for analyzing the climate policy in Japan, most of them only investigate national level impacts. However, impacts of emissions regulations are likely to vary considerably by region because there are large regional differences in household expenditure pattern and industry structure. To investigate regional impacts of greenhouse gas (GHG) emissions regulations in Japan, we construct a new multi-regional CGE model with 9 regions in Japan and estimate regional GHG emissions. We analyze impacts of 10% reduction of GHG on regional GDP, welfare and production. Our simulation shows that regions with the higher share of energy-intensive industries and thermal power generation incur the larger loss in GDP. |
| Keywords: | 応用一般均衡分析 地域間産業連関表 日本の温暖化対策 地域経済 |
| JEL: | R13 D58 Q54 |
| Date: | 2011–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:35273&r=ene |
| By: | Teichmann, Dorothee |
| Abstract: | L’investissement dans des infrastructures locales sobres en carbone est considéré comme une composante importante de la lutte contre le changement climatique. Les mécanismes de règlementation climatique (comme la compensation carbone) font supporter aux développeurs de projet les risques liés à la réduction des émissions de gaz à effet de serre (GES): les risques opérationnels, technologiques ou liés au monitoring environnemental et aux mécanismes régulateurs. Nous montrons que l’efficacité environnementale et économique des projets dépend en grande partie des modalités de partage de ces risques entre les différents acteurs impliqués dans le projet. Sur un échantillon de projets de torchage des gaz d’enfouissement financés par le Mécanisme pour un Développement Propre, il est montré que la délégation de la fourniture de la technologie crée des risques supplémentaires. La délégation de l’élaboration de la documentation du projet selon les règles formelles de l’UNFCCC et la séparation de l’opération de la décharge et du projet MDP semblent être maîtrisables par la mise en place de mesures de partage de risques. |
| Abstract: | Investment in low carbon infrastructure is considered an important component of the fight against climate change. The mechanisms of climate regulation (such as carbon offsets) transfer to project developers the risks associated with reducing emissions of greenhouse gas (GHG) emissions, i.e. operational and technological risk, or risks associated with the environmental monitoring and the regulatory mechanism itself. The success of projects depends importantly on the risk sharing arrangements between the private and public partners. It is shown that the delegation of tasks between the partners can create risks that affect the environmental effectiveness and economic efficiency of the project. For a sample of landfill gas flaring projects financed under the Clean Development Mechanism, it is shown that the outsourcing of the provision of technology creates additional risks. The outsourcing of the development of the official project documentation required by the UNFCCC and the separation of the operation of the landfill and the CDM project development appear to be manageable by risk sharing arrangements. |
| Keywords: | partenariats privé-public; infrastructure locale; gestion des déchets; Mécanisme pour un Développement Propre; changement climatique; théorie des contrats; Public-private partnerships; local infrastructure; waste management; Clean Development Mechanism; climate change; contract theory; |
| JEL: | L24 L33 Q54 Q53 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:ner:dauphi:urn:hdl:123456789/8201&r=ene |
| By: | Qin Bao (Academy of Sciences, Beijing, China); Ling Tang (Institute of Policy and Management, Chinese Academy of Sciences, Beijing, China); Zhongxiang Zhang (East-West Center, Honolulu, Hawaii, USA); Han Qiao (College of Economics, Qingdao University, Qingdao, China); Shouyang Wang (Institute of Systems Science, Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing, China) |
| Abstract: | Carbon-based border tax adjustments (BTAs) have recently been proposed by some OECD countries to level the carbon playing field and target major emerging economies. This paper applies a multi-sector dynamic computable general equilibrium (CGE) model to estimate the impacts of the BTAs implemented by US and EU on ChinaÕs sectoral carbon emissions. The results indicate that BTAs will cut down export prices and transmit the effects to the whole economy, reducing sectoral output-demands from both supply side and demand side. On the supply side, sectors might substitute away from exporting toward domestic market, increasing sectoral supply; while on the demand side, the domestic income may be strikingly cut down due to the decrease in export price, decreasing sectoral demand. Furthermore, such shrinkage of demand may similarly reduce energy prices, which leads to energy substitution effect and somewhat stimulates carbon emissions. Depending on the relative strength of the output-demand effect and energy substitution effect, sectoral carbon emissions and energy demands will vary across sectors, with increasing, decreasing or moving in a different direction. These results suggest that an incentive mechanism to encourage the widespread use of environment-friendly fuels and technologies will be more effective. |
| JEL: | D58 F18 Q43 Q48 Q52 Q54 Q5 Q58 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1202&r=ene |
| By: | Jaraite, Jurate (CERE, Centre for Environmental and Resource Economics); Kažukauskas, Andrius (CERE, Centre for Environmental and Resource Economics); Lundgren, Tommy (CERE, Centre for Environmental and Resource Economics) |
| Abstract: | This paper provides new evidence on the determinants of environmental expenditure and investment. Also, by employing the Heckman selection models, we study how environmental expenditure and investment by Swedish industrial firms responded to the national and international policies directed to mitigate air pollution during the period 1999 through 2008. We find that firms that use carbon intensive fuels such as oil and gas are more likely to spend to and invest in the environment. Larger, more profitable and more energy intensive firms are more likely to incur environmental expenditure/investment. Overall, an important finding of our econometric analysis is that environmental regulation both on the national and international levels are highly relevant motivations for environmental expenditure and investment. |
| Keywords: | environmental expenditure and investment; environmental policy; EU ETS; panel data |
| JEL: | C23 Q52 Q58 |
| Date: | 2012–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2012_007&r=ene |
| By: | Linus Mattauch (Department of Economics of Climate Change, TU Berlin); Felix Creutzig; Ottmar Edenhofer |
| Abstract: | A major obstacle for the transformation to a low-carbon economy is the risk of a carbon lock-in: fossil fuel-based ('dirty') technologies dominate the market although their carbon-free ('clean') alternatives are dynamically more efficient. We study the interaction of learning-by-doing spillovers and the substitution elasticity between the clean and the dirty sector in an intertemporal general equilibrium model. We find that the substitution possibilities between the two sectors have an ambivalent effect: although a high substitution elasticity requires less aggressive mitigation policies than a low one, it creates a greater lock-in in the absence of regulation. The optimal policy response consists of a permanent carbon tax as well as a learning subsidy for clean technologies. A single policy instrument can also avoid high welfare losses, but a more stringent mitigation target can only be achieved at painful costs. We demonstrate that the policy implication of [Acemoglu et al. 2012] is limited in scope. Our numerical results also highlight that infrastructure provision is crucial to facilitate the low-carbon transformation. |
| Keywords: | structural change, low-carbon economy, carbon lock-in, mitigation policies, learning-by-doing |
| JEL: | O30 O38 Q54 Q55 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecc:wpaper:3&r=ene |
| By: | Stéphane Hallegatte; Geoffrey Heal; Marianne Fay; David Treguer |
| Abstract: | Green growth is about making growth resource-efficient, cleaner and more resilient without slowing it. This paper aims at clarifying this in an analytical framework and proposing foundations for green growth. This framework identifies channels through which green policies can potentially contribute to economic growth. Finally, the paper discusses the policies that can be implemented to capture co-benefits and environmental benefits. Since green growth policies pursue a variety of goals, they are best served by a combination of instruments: price-based policies are important but are only one component in a policy tool-box that can also include norms and regulation, public production and direct investment, information creation and dissemination, education and moral suasion, or industrial and innovation policies. |
| JEL: | D90 Q01 Q32 Q4 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17841&r=ene |