nep-ene New Economics Papers
on Energy Economics
Issue of 2012‒06‒13
sixteen papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. China's Energy Reform and Climate Policy: The Ideas Motivating Change By Olivia Boyd
  2. US Residential Energy Demand and Energy Efficiency: A Stochastic Demand Frontier Approach By Massimo Filippini; Lester Hunt
  3. Can Declining Energy Intensity Mitigate Climate Change? Decomposition and Meta-Regression Results By Stephan B. Bruns; Christian Gross
  4. Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves By Hanna, Rema; Duflo, Esther; Greenstone, Michael
  5. Cash by Any Other Name? Evidence on Labelling from the UK Winter Fuel Payment By Timothy K.M. Beatty; Laura Blow; Thomas Crossley; Cormac O’Dea
  6. The sclerosis of regional electricity intensities in Italy: an aggregate and sectoral analysis By Andrea Vaona
  7. Identifying spikes and seasonal components in electricity spot price data: A guide to robust modeling By Janczura, Joanna; Trueck, Stefan; Weron, Rafal; Wolff, Rodney
  8. Who is Selling You Chiquilitros of Gasoline? Evidence From a Public Disclosure Policy By Santiago Guerrero
  9. Carburant cher : un mal nécessaire?. By Antonin, Céline
  10. Oil and US GDP: A Real-Time out-of Sample Examination By Francesco Ravazzolo; Philip Rothman
  11. Frac Sand Mining and Community Economic Development By Deller, Steven C.; Schreiber, Andrew
  12. Разработка модели системной динамики для энергетического сектора в Латвии By Skribans, Valerijs
  13. Post-Durban Climate Policy Architecture Based on Linkage of Cap-and-Trade Systems By Ranson, Matthew; Stavins, Robert N.
  14. Rolling over EUAs and CERs By Oscar Carchano; Vicente Medina Martínez; Ángel Pardo Tornero
  15. Essay on Four Issues in Public Policy Evaluation. By Givord, Pauline
  16. Designing a Bretton Woods Institution to Address Climate Change By Aldy, Joseph E.

  1. By: Olivia Boyd
    Abstract: China has embarked on an ambitious and unprecedented programme of energy reform and climate change mitigation. Yet the motivations for this important shift remain unclear. This paper surveys key central government documents and articles by China's leading energy academics to investigate the ideas influencing China's new energy and climate policies. Three key ideas in particular are supportive of greater climate mitigation than in the past. First, domestic energy security concerns have risen on the central government agenda as a result of electricity shortages and rapidly rising energy consumption. Such concerns have deeply influenced China's ambitious and largely successful energy efficiency policies. Second, growing awareness of the environmental constraints on economic growth in general, and the potential damages of dangerous climate change in particular, has prompted stronger official rhetoric in favour of green development. The appearance of targets and policies that specifically target carbon emissions reductions in the 12th FYP for the first time suggests that climate change mitigation is becoming a motivation for policy action in its own right, rather than simply a co-benefit of policies enacted for other purposes. Third, a conviction that the world is moving towards low-carbon energy forms has given rise to the belief that China must become a technological and economic leader in this transition. Large levels of public financing to support the development of China's wind power and solar PV sectors suggests that the Chinese government has strong vested interests in seeing China successfully compete and lead in global low-carbon energy markets. In order to understand the shift in China's approach to climate change since the 11th FYP, it is important to understand how new ideas such as these have reframed and reshaped the Chinese government's interests and objectives.
    Keywords: China, climate change, mitigation, energy policy, environment, renewable energy, energy efficiency, carbon market, pollution, reform
    JEL: Q54 Q48 Q58 P28
    Date: 2012–05
  2. By: Massimo Filippini (Centre for Energy Policy and Economics (CEPE), Department of Management, Technology and Economics, ETH Zurich and Department of Economics, University of Lugano, Switzerland); Lester Hunt (Department of Economics, University of Surrey, UK)
    Abstract: This paper estimates a US frontier residential aggregate energy demand function using panel data for 48 ‘states’ over the period 1995 to 2007 using stochastic frontier analysis (SFA). Utilizing an econometric energy demand model, the (in)efficiency of each state is modelled and it is argued that this represents a measure of the inefficient use of residential energy in each state (i.e. ‘waste energy’). This underlying efficiency for the US is therefore observed for each state as well as the relative efficiency across the states. Moreover, the analysis suggests that energy intensity is not necessarily a good indicator of energy efficiency, whereas by controlling for a range of economic and other factors, the measure of energy efficiency obtained via this approach is. This is a novel approach to model residential energy demand and efficiency and it is arguably particularly relevant given current US energy policy discussions related to energy efficiency.
    Keywords: US residential energy demand, efficiency and frontier analysis, state energy efficiency
    JEL: D2 Q4
    Date: 2012–04
  3. By: Stephan B. Bruns; Christian Gross
    Abstract: Drawing on the Kaya identity, we assess the role of the main driver of the decline in carbon intensity, namely the (economic) energy intensity. Using meta-signi?ficance testing for a sample of 44 studies, dealing with the causality between energy and GDP, we ?find that both variables are strongly coupled. Hence, after having exhausted energy savings from nonrecurring structural changes, the economic energy intensity may soon converge than being arbitrarily reducible. We suggest, therefore, not to rely on further reductions of economic energy intensity but rather to invest in the reduction of the carbon intensity of energy to mitigate climate change.
    Keywords: Climate change mitigation, Kaya identity, Energy intensity, Meta-significance testing
    JEL: C83 Q43 Q51
    Date: 2012–05–31
  4. By: Hanna, Rema (Harvard University); Duflo, Esther (MIT and BREAD, Duke University); Greenstone, Michael (MIT and American Bar Foundation)
    Abstract: It is conventional wisdom that it is possible to reduce exposure to indoor air pollution, improve health outcomes, and decrease greenhouse gas emissions in the rural areas of developing countries through the adoption of improved cooking stoves. This belief is largely supported by observational field studies and engineering or laboratory experiments. However, we provide new evidence, from a randomized control trial conducted in rural Orissa, India (one of the poorest places in India), on the benefits of a commonly used improved stove that laboratory tests showed to reduce indoor air pollution and require less fuel. We track households for up to four years after they received the stove. While we find a meaningful reduction in smoke inhalation in the first year, there is no effect over longer time horizons. We find no evidence of improvements in lung functioning or health and there is no change in fuel consumption (and presumably greenhouse gas emissions). The difference between the laboratory and field findings appear to result from households' revealed low valuation of the stoves. Households failed to use the stoves regularly or appropriately, did not make the necessary investments to maintain them properly, and usage rates ultimately declined further over time. More broadly, this study underscores the need to test environmental and health technologies in real-world settings where behavior may temper impacts, and to test them over a long enough horizon to understand how this behavioral effect evolves over time.
    Date: 2012–05
  5. By: Timothy K.M. Beatty (University of Minnesota); Laura Blow (Institute for Fiscal Studies); Thomas Crossley (Institute for Fiscal Studies, University of Cambridge, and Koç University); Cormac O’Dea (Institute for Fiscal Studies)
    Abstract: Standard economic theory implies that the labelling of cash transfers or cash-equivalents (e.g. child benefits, food stamps) should have no effect on spending patterns. The empirical literature to date does not contradict this proposition. We study the UK Winter Fuel Payment (WFP), a cash transfer to older households. Exploiting sharp eligibility criteria in a regression discontinuity design, we find robust evidence of a behavioural effect of the labelling. On average households spend 41% of the WFP on fuel. If the payment was treated as cash, we would expect households to spend approximately 3% of the payment on fuel.
    Keywords: labelling, benefits, expenditure.
    JEL: D12 H24
    Date: 2012–06
  6. By: Andrea Vaona (Department of Economics (University of Verona))
    Abstract: The convergence of regional electricity intensities in Italy is studied over the period from 1997 to 2007. We stress the importance of the statistical significance of the results, which point to an impressive sclerosis of the geographic distribution of the variable under scrutiny. A shift-share analysis points to the importance of region specific effects. Policy implications are discussed.
    Keywords: Sigma- and gamma-convergence Shift-share analysis Italian regions
    JEL: Q4 R1
    Date: 2012–05
  7. By: Janczura, Joanna; Trueck, Stefan; Weron, Rafal; Wolff, Rodney
    Abstract: An important issue in fitting stochastic models to electricity spot prices is the estimation of a component to deal with trends and seasonality in the data. Unfortunately, estimation routines for the long-term and short-term seasonal pattern are usually quite sensitive to extreme observations, known as electricity price spikes. Improved robustness of the model can be achieved by (a) filtering the data with some reasonable procedure for outlier detection, and then (b) using estimation and testing procedures on the filtered data. In this paper we examine the effects of different treatment of extreme observations on model estimation and on determining the number of spikes (outliers). In particular we compare results for the estimation of the seasonal and stochastic components of electricity spot prices using either the original or filtered data. We find significant evidence for a superior estimation of both the seasonal short-term and long-term components when the data have been treated carefully for outliers. Overall, our findings point out the substantial impact the treatment of extreme observations may have on these issues and, therefore, also on the pricing of electricity derivatives like futures and option contracts. An added value of our study is the ranking of different filtering techniques used in the energy economics literature, suggesting which methods could be and which should not be used for spike identification.
    Keywords: Electricity spot price; Outlier treatment; Price spike; Robust modeling; Seasonality
    JEL: C51 C52 Q47 C80
    Date: 2012–06–06
  8. By: Santiago Guerrero
    Abstract: This paper estimates the impacts of disclosing information online and through the newspapers of gas stations that violate fuel supplying standards in Mexico. Using data from inspection histories, it finds that disclosing information online decreases the probability that any gas station would be found in violation in subsequent periods. Gas stations exposed in the newspapers are estimated to decrease their sales at the month of the newspaper publication. This effect fades with time and is not significant for subsequent months. The paper shows that public disclosure mechanisms can complement enforcement effort in contexts where institutions are weak.
    Keywords: Public disclosure, Corruption, Enforcement, Inspections, Violations.
    JEL: K42 K32 L51
    Date: 2012–05
  9. By: Antonin, Céline (OFCE)
    Abstract: Début 2011, les prix de l'essence affichent des records, dépassant même leur précédent pic de 2008. Cette situation s'explique essentiellement par la dépréciation de l'euro par rapport au dollar et par la hausse des cours du pétrole, sur fond d'instabilité au Moyen Orient. Selon les experts, les prix du pétrole sont structurellement orientés à la hausse: les prix du carburant devraient donc rester durablement élevés. Après avoir décomposé les prix du carburant, et étudié l'évolution de ses composantes, il est nécessaire de s'interroger sur les conséquences d'une hausse pérenne des prix sur les ménages. Il apparaît qu'une baisse généralisée des prix du carburant via une baisse des taxes est coûteuse économiquement et écologiquement et que la nécessité de concilier équité, efficacité et impératif écologique plaide plutôt pour des mesures transitoires comme la mise en place de "chèques transport", spécifiquement ciblées vers les ménages périurbains et ruraux.
    Date: 2011–07
  10. By: Francesco Ravazzolo; Philip Rothman
    Abstract: We study the real-time predictive content of crude oil prices for US real GDP growth through a pseudo out-of-sample (OOS) forecasting exercise. Comparing our benchmark model “withoutoil†against alternatives “with oil,†we strongly reject the null hypothesis of no OOS population-level predictability from oil prices to GDP at the longer forecast horizon we consider. These results may be due to our oil price measures serving as proxies for a recently developed measure of global real economic activity omitted from the alternatives to the benchmark forecasting models. This examination of the global OOS relative performance of the models we consider is robust to use of ex-post revised data. But when we focus on the forecasting models’ local relative performance, we observe strong differences across use of real-time and ex-post revised data.
    JEL: C22 C53 E32 E37
    Date: 2011–11
  11. By: Deller, Steven C. (University of WI); Schreiber, Andrew (University of WI)
    Abstract: As the national economy struggles to recover from the "Great Recession" of 2008-2009 the high price of oil, and to a lesser extent natural gas, has created economic opportunities for many rural communities. The process of hydraulic fracturing, or "fracking", to remove oil and gas from rock formations has created "mining booms" in large parts of the western Appalachian Mountains (the Marcellus fields in the Appalachian Basin) and western North Dakota and eastern Montana (the Bakken fields in the Williston Basin) to name a few. While there is limited possibility for the extraction of shale deposited oil and gas for Wisconsin, the engineering of the extraction process requires sand with specific characteristics that is in abundant supply in many parts of Wisconsin. The surge in demand for this "frac sand" has created what appear to be significant economic opportunities for the western and central parts of Wisconsin.
    Date: 2012–05
  12. By: Skribans, Valerijs
    Abstract: One of the most pressing problems in the Latvian economy is related to the energy sector. The most characteristic feature is coupled with the low efficiency of thermal energy consumption of households as a result of poor insulation of existing buildings in Latvia. Solving energy sector problems requires a comprehensive decision, both in energy production and consumption. It is therefore necessary to develop energy sector model to be able to evaluate not only the energy consumption growth and the factors affecting it directly, but also the feedback caused by the increase of the efficiency growth. The model shown in the article has been developed using system dynamic method. Latvian energy sector model consists of resources, production and consumption blocks. A separate place is taken by electricity generation hydroelectric power plants (HPP), net imports of electricity and so on. Resource blocks consist of primary energy resource blocks: petroleum products, solid fuel, wood and gas blocks. Primary energy resources are used for production of other energy forms, i.e. heat or electricity production, they are shown in the production blocks. Both the primary energy and produced energy (and electricity generated by HPP) are passed on to final consumers, who make consumer unit blocks. It consists of: transport, agriculture, households and other (industrial and services sectors) blocks. The model key role is to forecast energy consumption by separate groups, both consumers and energy resources groups; to estimate energy sector impact on environment. The model has been developed to estimate the impact of buildings thermo insulation program on Latvian economy.
    Keywords: energy efficiency; consumption; system dynamic; modelling and simulation; building warming and renovation; the CO2 emissions and quotas
    JEL: Q00 C68 Q41 C00 Q47 Q01 C60 Q30 C53 Q52 C50 Q40 C30 Q20
    Date: 2011
  13. By: Ranson, Matthew (Harvard University); Stavins, Robert N. (Harvard University)
    Abstract: The outcome of the December 2011 United Nations climate negotiations in Durban, South Africa, provides an important new opportunity to move toward an international climate policy architecture that is capable of delivering broad international participation and significant global CO2 emissions reductions at reasonable cost. We evaluate one important component of potential climate policy architecture for the post-Durban era: links among independent tradable permit systems for greenhouse gases. Because linkage reduces the cost of achieving given targets, there is tremendous pressure to link existing and planned cap-and-trade systems, and in fact, a number of links already or will soon exist. We draw on recent political and economic experience with linkage to evaluate potential roles that linkage may play in post-Durban international climate policy, both in a near-term, de facto architecture of indirect links between regional, national, and sub-national cap-and-trade systems, and in longer-term, more comprehensive bottom-up architecture of direct links. Although linkage will certainly help to reduce long-term abatement costs, it may also serve as an effective mechanism for building institutional and political structure to support a future climate agreement.
    JEL: Q40 Q48 Q54 Q58
    Date: 2012–05
  14. By: Oscar Carchano (Dpto. Economía Financiera y Actuarial); Vicente Medina Martínez (Facultad de Economía); Ángel Pardo Tornero (Dpto. Economía Financiera y Actuarial)
    Abstract: Whatever derivative contract has a finite life limited by their maturity. The construction of long series, however, is of interest for academic, hedging and investments purposes. In this study, we analyze the relevance of the choice of the rollover date on European Union Allowances (EUAs) and Certified Emissions Reduction (CERs) futures contracts. We have used five different methodologies to construct long series and the results show that, regardless of the criterion applied, there are not significant differences between the resultant return distribution series. Therefore, the least complex method, which is to roll on the last trading day, can be used in order to reach the same conclusions. Additional liquidity analysis confirms this method as the optimum method to link EUAs and CERs series, indicating that simplicity when linking EUAs and CERs series is not at odds with liquidity.
    Keywords: Rollover date, futures contracts, European Union Allowances, Certified Emission Reductions
    Date: 2012–05
  15. By: Givord, Pauline
    Abstract: This dissertation proposes four independent evaluations of French public policies, using recent micro-econometrics methods. Following a first chapter that presents a French summary of the dissertation, the second chapter studies the impact of the French "ecological bonus/malus" (feebate) policy on total CO2 emissions. The evaluation of the impact of this policy on final emissions requires to model not only the choice for new vehicles (and their sensitiveness to prices), but also the mileage done by vehicles. As the policy was implemented in a very span of time, it provides a credible source of identification for the sensitivity of consumers to financial incentives. The estimates suggest that the policy has a counterintuitive impact, as it increases total CO2 emissions. The third chapter examines the capacity of fiscal policies to foster employment and economic activities in targeted areas, through the French ZFU (enterprises zones). With precise local data we could evaluate the impact of tax exemptions provided to firms implemented in the second wave of enterprise zones. Enterprise zones have a significant but small impact on business creation and employment by comparison with other similar disadvantaged areas. The fourth chapter considers consequences of temporary contracts on professional trajectories. A dynamic fixed-effect model is used to deal with unobserved heterogeneity. According to these estimates, fixed-term contracts significantly increase the transition intensity to permanent contract relatively to unemployment. By contrast, temporary agency work does not significantly improve transition to regular jobs. The fifth chapter deals with the impact of minimum wages increases on earnings inequalities. The "Fillon law" decided an harmonization of these levels in 2002, that took place over a three-year period. This exogenous increase is used to measure the potential spread-up impact of the minimum wage over the whole earnings distributions. Estimates are based on an unconditional quantile regression method. They suggest small impact up-to the seventh decile of the distribution of earnings for male workers, but none significant impact for earnings of female workers.
    Abstract: Cette thèse présente quatre tentatives indépendantes d'évaluations de politiques publiques, mettant en application les méthodes microéconométriques récentes. Précédé d'un premier chapitre présentant un grand résumé en français, le deuxième chapitre s'intéresse à l'impact de la réforme dite du bonus/malus écologique sur les émissions de CO2. Évaluer l'impact de cette mesure sur les émissions finales de CO2 demande de modéliser non seulement les choix d'achat de véhicule, mais également l'usage de ces véhicules. La rapidité de mise en oeuvre de la mesure offre une source d'identification crédible de la sensibilité des choix des consommateurs aux incitations financières. Les estimations suggèrent cependant un bilan très décevant de la mesure : du fait de forts effets volumes, le bonus/malus s'est traduit par une augmentation substancielle des émissions de CO2. Le troisième chapitre évalue la capacité de dispositifs fiscaux à redynamiser l'emploi et l'activité économique locale des zones ciblées, à travers le dispositif des Zones Franches Urbaines. L'accès à des données locales précises permet d'évaluer l'impact des exonérations fiscales accordées aux entreprises s'installant dans les ZFU de deuxième génération. Celles-ci auraient un impact positif mais faible sur la création d'entreprise et l'emploi en comparaison avec les autres zones défavorisées similaires. Le quatrième chapitre s'intéresse aux conséquences des contrats temporaires sur les trajectoires professionnelles. En contrôlant des biais d'hétérogénéité individuelle par un modèle à effets fixes, on montre que les CDD augmentent significativement les transitions vers l'emploi stable par rapport au chômage. En revanche, le travail intérimaire n'améliore que marginalement ces transitions. Le cinquième chapitre traite des effets des augmentations du salaire minimum créées par loi Fillon sur les inégalités salariales. Alors que la mise en place progressive des accords de réduction de temps de travail avaient créés plusieurs niveaux de rémunération minimale, leur convergence sur trois ans fournit une source d'identification. Les estimations utilisent une méthode de régression de quantiles inconditionnelles. Les augmentations de salaire minimum auraient un effet (faible) jusqu'au septième décile des distributions de salaire des hommes, mais négligeable pour ceux des femmes.
    Keywords: Evaluation, salaire minimun, ZFU, emploi temporaire, Emmissions de CO2;
    Date: 2011–06
  16. By: Aldy, Joseph E. (Harvard University and Resources for the Future, Washington, DC)
    Abstract: The information structure of the climate change policy collaboration problem necessitates the design of institutions to enhance public knowledge about nations' commitments, policies, and outcomes. The international community has addressed this kind of problem in a wide array of other contexts from which lessons can be drawn and applied to international climate policy. Based on these experiences and the characteristics of a successful international climate policy architecture, this paper proposes the design of a "Bretton Woods Climate Institution" (BWCI). This BWCI should implement a serious system of national and global policy surveillance. This surveillance would include an evaluation by independent experts of the various policy commitments nations make in international negotiations to assess whether nations delivered on their commitments and to examine the impacts of these actions on various climate change risk reduction margins, such as emission abatement and adaptation. Such a surveillance scheme should be consultative in nature, to allow give and take among experts and among nations engaged in the international climate policy effort. Based on this surveillance, the institution should promote best policy practices. In addition, the BWCI should provide a means to channel some financing for investments in climate change risk mitigation activities in developing countries. By making funds conditional on agreeing to policy surveillance, such an approach would create an incentive for transparent evaluations of policies and actions. Moreover, access to market-based climate policy schemes, such as the Clean Development Mechanism and emission trading, could be predicated on countries agreeing to participate in policy surveillance.
    Date: 2012–05

This nep-ene issue is ©2012 by Roger Fouquet. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.