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on Energy Economics |
| By: | Allcott, Hunt (NYU); Rogers, Todd (Harvard University) |
| Abstract: | Behavioral decision research has profoundly changed our understanding of decision-making. Recent research has begun to explore how behavioral insights can influence behavior in the world, at scale. This work often involves field experiments studying outcomes over short time windows. We study a descriptive social norms intervention's impact on household energy usage continuously over 39 to 49 months. Our two field experiments (N=155,000 households) each have three conditions: untreated control, continued treatment, and treatment that is subsequently discontinued. We find that continued treatment reduces energy usage over the entire period ("durability"). Further, after treatment is discontinued, a sizable energy use reduction persists ("persistence"). Finally, continued treatment generates a greater impact over time than discontinued treatment, showing that continued treatment exerts incremental influence on behavior over and above persistence. We discuss implications, describe how long-term persistence can occur, and argue that future behavioral decision research should address long-term effects of interventions. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp12-045&r=ene |
| By: | Anna Créti (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense); Léonide Michael Sinsin (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X) |
| Abstract: | Many reviews were published these last years about the photovoltaic development. It also reflects the importance of green energy and business at the heart of today's preoccupations. According to the Global Market Outlook of May 2012, the global cumulative installed capacity switched from 40 GW to 70GW between 2010 and 2011. By the past, the PV growth was geographically concentred in a small fraction of countries: more than 70% in Germany, Spain, Italy and Bulgary for Eeurope, United States and Japan for the Rest of the World. Without deploying in their country, China firms have enacted an overwhelming competition to the former majors. In 2011, more than six international firms have bankrupted such as Q-Cells, the German leader producer. The main purpose of this paper is to make up an econometric model close to the market evolution. This paper differs from those earlier studies in that we identify a number of issues to explain the worldwide pricing. We use a panel estimation approach to identify variables which drive the photovoltaic production and installation. This analysis represents an opportunity to developp PV in developing countries (India and Africa fot examples) where there is a real lack of electricity. |
| Date: | 2012–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00749385&r=ene |
| By: | Grimaud, André (TSE,IDEI,LERNA); Rougé, Luc (TBS) |
| Abstract: | The possibility of capturing and sequestering some fraction of the CO2 emissions arising from fossil fuel combustion, often labeled as carbon capture and storage (CCS), is drawing an increasing amount of attention in the business and academic communities. We present here a model of endogenous growth in which the use of a non-renewable resource in production yields flows of pollution whose accumulated stock negatively a¤ects welfare. A CCS technology allows, via some effort, for the partial reduction of CO2 emissions in the atmosphere. We characterize the social optimum and how the availability of the CCS technology affects it, and we study the decentralized economy's trajectories. We then analyze economic policies. We first characterize the first-best policy. We derive the expression of the Pigovian carbon tax, and we give a full interpretation of its level, which is unique. We then study the impacts of three different second-best policies: a carbon tax, a subsidy to sequestered carbon, and a subsidy to labor in CCS. The first two tools foster CCS activity; so does the third, but only if it is coupled with one of the other two. While the tax postpones resource extraction, the two subsidies accelerate it's possibly yielding a rise in short-term CO2 emissions. The effects on growth are more complex. If the weight of the CCS sector in the economy is high, the tax will generally be detrimental to output growth, while the subsidies can foster it in the long-term. Finally, the carbon tax has a negative impact on the output level in the short-term, contrary to the subsidies. |
| Keywords: | carbon capture and storage (CCS), endogenous growth, polluting non-resources, carbon tax, subsidy to CCS. |
| JEL: | O3 Q3 |
| Date: | 2012–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:26507&r=ene |
| By: | Lionel Nesta (Ofce sciences-po); Francesco Vona (Observatoire Francais des Conjonctures Economiques Author-Workplace-Postal :69, quai d'Orsay, Paris 75007, France); Francesco Nicolli (University of Ferrara) |
| Abstract: | We investigate the effectiveness of policies in favor of innovation in renew- able energy under dierent levels of competition. Using information regarding renewable energy policies, product market regulation and high-quality green patents for OECD countries since the late 1970s, we develop a pre-sample mean count-data econometric specification that also accounts for the endogeneity of policies. We nd that renewable energy policies are significantly more effective in fostering green innovation in countries with deregulated energy markets. We also nd that public support for renewable energy is crucial only in the genera- tion of high-quality green patents, whereas competition enhances the generation of green patents irrespective of their quality. |
| Keywords: | renwable energy technology, patents,environmental policies, product market regulation,policy complementarity |
| JEL: | Q55 Q58 Q42 Q48 O34 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1225&r=ene |
| By: | Kristina, Ek (Luleå University of Technology, Department of business administration, technology and social sciences); Persson, Lars (Department of Economics, Umeå School of Business and Economics) |
| Abstract: | This paper aims at measuring preferences for attributes related to the establishment of wind power farms among the general public in Sweden. The method applied is a choice experiment where people are asked to choose between two hypothetical wind farms, each characterized by different attributes. Five attributes are included in the experiment: (i) type of landscape, (ii) ownership, (iii) the extent to which the local public is invited to participate in the planning process, (iv) the choice to transfer revenue to the society in a pre-specified way, and (v) a monetary cost in terms of an additional electricity certificate fee. The results are based on the survey responses from 1500 individuals and show that all attributes have a significant impact on the choice of the preferred wind farm. The results indicate that the electricity consumers in Sweden are more likely to accept the higher costs (through the renewable electricity certificate fee) if; (a) wind power farms in areas used for recreational purposes are substantially avoided, (b) if the establishment is anchored by whole or partly ownership in the local community and, (c) if the local population is involved in the planning and implementation process. Our policy simulation exercise shows that respondents are willing to pay a higher electricity fee corresponding to about four öre to avoid wind farms located in the mountainous area and to avoid private ownership. People consider extended consultation processes and earmarked transfers for nature conservation to the local community as changes for the better, while the opposition towards wind energy in the mountainous areas and privately owned wind farms dominates the positive effects from consultation and transfers. |
| Keywords: | wind power farm establishment; preferences; choice experiment; public opinion |
| JEL: | O13 Q20 Q42 |
| Date: | 2012–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0854&r=ene |
| By: | Andreas Schröder; Maximilian Bracke |
| Abstract: | This article presents an integrated electricity dispatch and load flow model with endogenous electricity generation capacity expansion. The target is to quantify generation capacity requirements for 2030 and where within Central Europe it shall be ideally placed when taking into account the projected grid structure. We explicitly model the interdependence between grid operation and power plant placing as we investigate the contribution of centralized power plant placement on reducing the need for grid expansion. The application focuses on Germany and its neighbors and reference is made to recently published plans on grid expansion (TSO 2012). We adopt the perspective of a welfare maximizing system planner and thus determine capacity expansion levels as first-best benchmark. Results show that optimal capacity expansion levels are much lower than previous studies indicate (e.g. dena (2008); EC (2011); EWI et al. (2010); Maurer et al. (2012)). We also show that the need for grid expansion can be reduced by the appropriate placing of just a few Combined Cycle Gas Turbine (CCGT) power plants as well as the use of storage and Demand-Side-Management. The presence of intra-national HVDC lines as proposed in the Grid Development Plan of 2012 (TSO 2012) is found to significantly reduce overall congestion and the need for back-up power plants. However, the contribution of the proposed HVDC lines varies greatly from project to project, calling for a prioritization of plans. |
| Keywords: | electricity, network planning, renewable energies, electricity markets, capacity investment |
| JEL: | D61 D85 C61 Q42 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1250&r=ene |
| By: | Sebastian Just; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen) |
| Abstract: | This paper investigates the incentives market participants have in the German electricity balancing mechanism. Strategic over- and undersupply positions are the result of existing stochastic arbitrage opportunities between the spot market and the balancing mechanism. This strategic behavior can be clearly identified in aggregate market data. These structural imbalances increase the need for reserve capacity, raise system security concerns, and thus burden significant cost on the customers. More effective market designs include changes in the balancing mechanism, the reserve capacity and the intraday spot markets. |
| Keywords: | Electricity market design, balancing mechanism, reserve capacity, strategic behavior |
| JEL: | L94 Q41 Q47 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:1204&r=ene |
| By: | Jakub Nowotarski; Jakub Tomczyk; Rafal Weron |
| Abstract: | When building stochastic models for electricity spot prices the problem of uttermost importance is the estimation and consequent forecasting of a component to deal with trends and seasonality in the data. While the short-term seasonal components (daily, weekly) are more regular and less important for valuation of typical power derivatives, the long-term seasonal components (LTSC; seasonal, annual) are much more difficult to tackle. Surprisingly, in many academic papers dealing with electricity spot price modeling the importance of the seasonal decomposition is neglected and the problem of forecasting it is not considered. With this paper we want to fill the gap and present a thorough study on estimation and forecasting of the LTSC of electricity spot prices. We consider a battery of models based on Fourier or wavelet decomposition combined with linear or exponential decay. We find that all considered wavelet-based models are significantly better in terms of forecasting spot prices up to a year ahead than all considered sine-based models. This result questions the validity and usefulness of stochastic models of spot electricity prices built on sinusoidal long-term seasonal components. |
| Keywords: | Electricity spot price; Long-term seasonal component; Robust modeling; Forecasting; Wavelets; |
| JEL: | C45 C53 C80 Q47 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:wuu:wpaper:hsc1206&r=ene |
| By: | Koichiro Ito |
| Abstract: | Nonlinear pricing and taxation complicate economic decisions by creating multiple marginal prices for the same good. This paper provides a framework to uncover consumers’ perceived price of nonlinear price schedules. I exploit price variation at spatial discontinuities in electricity service areas, where households in the same city experience substantially different nonlinear pricing. Using household-level panel data from administrative records, I find strong evidence that consumers respond to average price rather than marginal or expected marginal price. This sub-optimizing behavior makes nonlinear pricing unsuccessful in achieving its policy goal of energy conservation and critically changes the welfare implications of nonlinear pricing. |
| JEL: | L11 L51 L94 L98 Q41 Q48 Q58 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18533&r=ene |
| By: | Yuri Lee; Juan Roberto Paredes; Soo Hyun Lee |
| Abstract: | The Energy Division of the Infrastructure and Environment Sector (INE/ENE) of the Inter-American Development Bank has launched a technical cooperation project called "Smart Grid and Its Application in Sustainable Cities" to aid countries in the Latin American and Caribbean (LAC) region. This technical note describes smart grid system elements, indicates their costs and benefits, discusses the smart grid initiative in Korea, and includes the case study of the Korean Jeju Island test bed. The publication assesses the possibilities to transfer and implement these strategies in Latin American and Caribbean (LAC) cities and discusses ongoing experiences in the region. |
| Keywords: | Energy & Mining :: Renewable Energy |
| JEL: | Q2 Q3 Q4 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:76358&r=ene |
| By: | Yuri Lee; Juan Roberto Paredes; Soo Hyun Lee |
| Abstract: | La División de Energía del Departamento de Infraestructura y Medio Ambiente (INE/ENE) del Banco Interamericano de Desarrollo (BID) ha puesto en marcha un proyecto de cooperación técnica (CT) denominado "Las redes inteligentes de energía y su implementación en ciudades sostenibles" (TC #RG-T2058) ) para ayudar a los países de la región de América Latina y el Caribe (ALC). Esta nota técnica describe algunos elementos del sistema de redes inteligentes, indica sus costos y beneficios, analiza la iniciativa de redes inteligentes en Corea e incluye el estudio de caso del banco de pruebas de redes eléctricas inteligentes de la Isla de Jeju en Corea. Esta publicación sopesa las posibilidades de transferir e implementar estas estrategias en las ciudades de América Latina y el Caribe y examina las experiencias en curso en la región. |
| Keywords: | Energía y minería :: Energía renovable, Red Inteligente, Recursos renovables, Energía |
| JEL: | Q2 Q30 Q40 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:77418&r=ene |
| By: | Thomas Jobert (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Fatih Karanfil (EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense); Anna Tykhonenko (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)) |
| Abstract: | Much of the existing literature on the relationship between nuclear energy consumption and gross domestic product (GDP) deals only with the causal links between these two variables. However, very little attention has been paid to the structure and form of this relationship. This paper first uses panel cointegration techniques to illustrate the form of an inverted U-shaped curve that arise from pooled data, then, applies the iterative empirical Bayesian procedure to in order to account for the heterogeneity in the coefficients of the long-term relationship. The empirical results from a multivariate framework involving carbon dioxide (CO2) emissions reveal that for only 3 of the 21 nuclear countries studied a linear form of the relationship can be justified and that nuclear energy goes from being a normal good to being an inferior good for the majority of the sample countries. |
| Keywords: | Nuclear energy; Panel cointegration; Shrinkage estimators |
| Date: | 2012–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00749757&r=ene |
| By: | Maria Lykidi (ADIS - Analyse des Dynamiques Industrielles et Sociales - Département d'Economie - Université Paris XI - Paris Sud); Jean-Michel Glachant (ADIS - Analyse des Dynamiques Industrielles et Sociales - Département d'Economie - Université Paris XI - Paris Sud, EUI - European University Institute - Robert Schuman Center); Pascal Gourdel (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | In many countries, the electricity systems are quitting the vertically integrated monopoly organization for an operation framed by competitive markets. It therefore questions how nuclear plants should be operated in an open market framework. We address the medium-term horizon of management to take into account the fluctuations of demand according to the seasons of year. A flexible nuclear set (like the French) could be operated to follow a part of the demand variations. Since nuclear plants have to stop periodically to reload their fuel (every 12 or 18 months), we can analyze the nuclear fuel as a stock behaving like a reservoir. The flexible operation of the reservoir permits to get different nuclear fuel allocations according to the different levels of the seasonal demand. We then analyze it within a general deterministic dynamic framework with two types of generation : nuclear and thermal non-nuclear. We study the optimal management of the production in a perfectly competitive market. In this paper, we focus on the optimal short-term (monthly) production behaviour before moving to a yearly or multi-annual optimization. This constitutes a prudent research strategy of a flexible nuclear set leaving the monopoly organization and exploring how to reach a market equilibrium in a competitive market. Then, we set up a simple numerical model (based on data from the French market) given that the nuclear production set is managed in a flexible manner in order to follow the variations in demand (like the French nuclear set actually does). The marginal cost of nuclear production being (significantly) lower than the one of non-nuclear induces a discontinuity of producer's short-term profit. The problem of discontinuity makes the resolution of the optimal short-term production problem extremely complicated and even leads to a lack of solutions. That is why it is necessary to study an approximate problem (continuous problem) that constitutes a "regularization" of our economical problem (discontinuous problem). The simulations show why future demand has to be anticipated to manage the current use of the nuclear fuel reservoir. Moreover, to ensure the equilibrium between supply and demand, the management of the nuclear set has to take into account the thermal non-nuclear generation capacity. |
| Keywords: | Electricity market; nuclear generation; competition with reservoir; short-term optimal reservoir operation; electricity fuel mix; price discontinuity. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00747386&r=ene |
| By: | Le Coq, Chloe (Stockholm Institute of Transition Economics); Paltseva, Elena (New Economic School, Moscow) |
| Abstract: | Current debate on the energy security in the EU often stresses the EU dependency on gas imports from Russia. However, Russia is no less dependent on the EU – more than half of its gas exports goes to Europe. The purpose of this paper is to characterize this mutual dependency through an index-based approach, and to discuss how the development of gas markets may affect such dependency. We suggest a unified framework to assess the security of gas supply for the EU and the security of gas demand for Russia, and construct dependency indexes for both parties. Our approach accounts not only for the traditional import/export dependency measures but also for the balance of power between Russia and the EU. The proposed methodology is then used to address the evolution of the EU-Russia gas relationship in the view of gas market’s developments. New gas pipelines projects (e.g., South Stream, Nabucco) and increasing use of liquefied natural gas are all likely to impact both the demand side and the supply side of the EU-Russia gas trade, and affect mutual gas dependency between the EU and Russia. |
| Keywords: | Energy Security; European Union; Gas transit risks; Index; Russia. |
| JEL: | C81 Q40 Q48 |
| Date: | 2012–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hasite:0018&r=ene |
| By: | David P. Byrne |
| Abstract: | I never owned a car as a student. If I had to go somewhere, I walked or took public transport. I paid little attention to petrol prices because they did not affect my weekly budget. However, if you talk to someone who owns a car or drives to work, you will likely find they pay attention to prices at the pump.They may tell you which are the cheap petrol stations in their market, what the cheap day of the week for buying petrol is, or express concern that petrol prices rise around weekends and holidays.Consumers’ interest in petrol prices is likely driven by three facts: (1) petrol prices are displayed on large signs, making them highly visible; (2) in the short-run, consumers are unable to substitute from petrol to other fuels or modes of transportation when petrol prices rise; and (3) consumers spend a large share of their income on petrol. In 2009, the average Australian spent $51.02 per week on petrol, or 4.1% of their total weekly expenditures (ACCC 2011). Moreover, petrol is a relatively homogeneous good, which leaves consumers questioning why its price varies so much over time and across stations. Given the impact petrol costs have on consumers’ budgets, the Australian Competition and Consumer Commission (ACCC) monitors competition in Australian petrol markets. In fact, the ACCC has an entire branch solely dedicated to petrol markets! A striking finding the ACCC has documented for at least the past five years is that petrol price cycles exist in Australian cities. Figure 1, taken from an ACCC (2010) monitoring report, illustrates petrol price cycles for Adelaide, Brisbane, Melbourne, Perth, and Sydney. In these cities, the average daily petrol price drastically increases once a week (“price restorations”), followed by a sequence of daily price decreases (the “undercutting phase”), until the next price restoration occurs.1 To the extent that drivers purchase petrol from different stations at different parts of the cycle, petrol price cycles may explain why consumers form opinions about cheaper stations, cheap days for buying petrol, and petrol price hikes around weekends and holidays. This article provides an overview of the burgeoning academic literature on petrol price dynamics and cycles. I first discuss the empirical literature on price cycles in petrol markets. In light of the empirics, I then present theories of competition and consumer demand in petrol markets that help us understand the many facets of petrol price cycles. Developing such an understanding is important for antitrust policy. Policymakers require benchmark economic models that predict how prices should behave if stations set prices competitively, given market and supply conditions. With such a model in hand, authorities can effectively monitor the conduct of petrol stations, identify collusive behaviour, and design policies that help to ensure consumers pay fair prices. It is my hope that this article sheds light on the economics behind petrol price cycles, informs the development of such benchmark models, and piques readers’ interest in petrol industry research. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mlb:wpaper:1159&r=ene |
| By: | Daniel Albalate (Faculty of Economics, University of Barcelona); Jordi Perdiguero (Departament d'Economia Aplicada. Universitat Autònoma de Barcelona) |
| Abstract: | Regulatory and funding asymmetries in the Spanish motorway network produce huge differences in the structure of gasoline markets by motorway type: free or toll. While competition is encouraged among gas stations on free motorways, the regulations for toll motorways allow private concessionaires to auction all gas stations to the same provider, thereby limiting competition and consolidating market power. This paper reports how this regulatory asymmetry results in higher prices and fewer gas stations. Specifically, we show that competition is constrained on toll motorways by the granting of geographical monopolies, resulting in a small number of rivals operating in close proximity to each other, and allowing gas stations to operate as local monopolies. The lack of competition would seem to account for the price differential between toll and free motorways. According to available evidence, deregulation measures affecting toll motorway concessions could help to mitigate price inefficiencies and increase consumer welfare. |
| Keywords: | Geographical competition, Regional Monopolies, Gasoline prices, Motorways JEL classification: L11, L12, L43 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201218&r=ene |
| By: | Marc Remer (Economic Analysis Group, Antitrust Division, U.S. Department of Justice) |
| Abstract: | This article empirically investigates the cause of asymmetric pricing: retail prices responding faster to cost increases than decreases. Using daily price data for over 11,000 retail gasoline stations, I nd that prices fall more slowly than they rise as a consequence of rms extracting informational rents from consumers with positive search costs. Premium gasoline prices are shown to fall more slowly than regular fuel prices but rise at the same pace, and this pricing pattern supports theories based upon competition with consumer search. Further testing also rejects focal price collusion as an important determinant of asymmetric pricing. |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:doj:eagpap:201210&r=ene |
| By: | Guillermo Perry; Sebastián Bustos |
| Abstract: | This paper shows, first, that non-commodity revenues are more volatile in oil- and mineral-rich countries and that quality of institutions is associated with lower volatility. We investigate the channels through which oil and mineral revenue volatility lead to non-commodity revenues volatility, and find that when oil and fiscal revenues increase (decrease), non-commodity revenues are reduced (increased) discretionally, and that this substitution effect is larger and faster than an indirect positive income effect through increased public expenditures and GDP. Latin American oil- and mineral-rich countries appear, though, to behave differently. In particular, most of them show increased non-commodity revenues pari passu with increased oil and mineral revenues during the last decade. These findings have consequences for the overall volatility of public expenditures and the effectiveness of automatic tax stabilizers in oil- and mineral-rich countries. |
| Keywords: | Economics :: Monetary Policy, Science & Technology :: Research & Development, Energy & Mining :: Renewable Energy, Economics :: Economic Development & Growth, Natural resources, Windfall public revenues, Natural resource curse, Optimal fiscal policy |
| JEL: | E61 F43 H21 H25 H50 H63 O11 Q30 Q33 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:76318&r=ene |
| By: | Hertel, Thomas |
| Abstract: | This paper introduces a general framework for analyzing the impacts of regional and global technological change on long run agricultural output, prices, land rents, land use, and associated GHG emissions. In so doing, it facilitates a reconciliation of the apparently conflicting views of the impacts of agricultural productivity growth on global GHG emissions and environmental quality. As has been previously recognized, in the case of a global change in farm productivity, the critical condition for an innovation to lead to diminished land use is that the farm level demand for agricultural products is inelastic. However, in the more common case where the innovation is regional in nature, the necessary condition for a reduction in global land use and associated GHG emissions is more complex and depends on the relative yields, emissions efficiencies and supply conditions in the affected and unaffected regions. While innovations in agricultural are most common land-sparing at global scale, innovations in regions commanding a small share of global production, with relatively low yields, high land supply elasticities and low emissions efficiencies can lead to an increase in global land use change emissions. A numerical example illustrates these points and suggests that these conditions may hold for productivity shocks in Latin America and Sub-Saharan Africa. These insights are also relevant for the emerging literature on the effect of adverse climate change on global agriculture and associated emissions from land use change. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:gta:workpp:4020&r=ene |
| By: | Ben Jebli, Mehdi; Ben Youssef, Slim |
| Abstract: | We consider a symmetric model composed of two countries and a firm in each country. Firms produce the same good by means of a polluting technology that uses fossil energy. However, these firms can adopt a clean technology that uses a renewable energy and that has a lower unit cost. Surprisingly, opening markets to international competition increases the per-unit emission-tax and decreases the per-unit production subsidy. Interestingly, the socially-optimal adoption date under a common market better internalizes transboundary pollution than that under autarky, and than the optimal adoption date of regulated firms. However, the optimal adoption date of non-regulated firms completely don't internalize transboundary pollution. In autarky (resp. a common market), regulated firms adopt earlier (resp. later) than what is socially-optimal, whereas non-regulated firms adopt later than the socially-optimal adoption date and than the optimal adoption date of regulated firms. Therefore, in autarky (resp. a common market) regulators can induce firms to adopt at the socially-optimal adoption date by giving them postpone ( resp. speed up) adoption subsidies. Opening markets to international trade, speeds up the socially-optimal adoption date and delays optimal adoption dates of regulated and non-regulated firms. |
| Keywords: | Regulation; Adoption date; Renewable energy; Transboundary pollution; Common market |
| JEL: | O38 L51 D62 Q55 O13 O32 H23 F18 Q27 C72 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42467&r=ene |
| By: | Nævdal, Erik (The Frisch Centre for EConomic Research); Vislie, Jon (Dept. of Economics, University of Oslo) |
| Abstract: | An intertemporal optimal strategy for accumulation of reversible capital and management of an exhaustible resource is analyzed for a global economy when resource depletion generates discharges that add to a stock pollutant that affects the likelihood for hitting a tipping point or threshold of unknown location, causing a random“disembodied technical regress”. We characterize the optimal strategy by imposing the notion “precautionary tax” on current extraction. Such a tax will internalize future expected damages or expected welfare loss should a threshold be hit. With reversible capital the presence of a stochastic threshold should speed up accumulation as long as no threshold is hit so as to build up a buffer or stock for future consumption should a threshold be hit. |
| Keywords: | Catastrophic risk and stochastic thresholds; capital accumulation; precautionary taxation; stock pollution; resource extraction |
| JEL: | C61 Q51 Q54 |
| Date: | 2012–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2012_024&r=ene |
| By: | Mads Greaker and Tom-Reiel Heggedal (Statistics Norway) |
| Abstract: | The major claim in Acemoglu, Aghion, Bursztyn & Hemous (2012) (AABH) is that subsidies for research and development of clean technologies are more important than carbon taxes when dealing with climate change. However, they – unconventionally – assume that a patent only lasts for one period. In this note we introduce long-lived patents into the AABH model. This makes the role of a research subsidy for clean technologies in AABH far less crucial and reestablishes the role of the carbon tax. This is good news as it is far easier to tax emissions than to pick the right technologies to subsidize. |
| Keywords: | Environment; directed technological change; innovation policy |
| JEL: | O30 O31 O33 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:713&r=ene |
| By: | Milena Breisinger |
| Abstract: | This document provides the methodology prepared and used by IDB to assess the impact of its direct investments loans on greenhouse gas (GHG) emissions since 2009. The document provides the methodology behind a series of tools developed to assess GHG emissions for IDB operations in key sectors. |
| Keywords: | Environment & Natural Resources :: Climate Change, GHG Emissions Assessment |
| JEL: | Q54 C13 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:76299&r=ene |
| By: | Grimaud, André (TSE,IDEI,LERNA); Rougé, Luc (TBS) |
| Abstract: | The possibility of capturing and sequestering some fraction of the CO2 emissions arising from fossil fuel combustion, often labeled as carbon capture and storage (CCS), is drawing an increasing amount of attention in the business and academic communities. We present here a model of endogenous growth in which the use of a non-renewable resource in production yields flows of pollution whose accumulated stock negatively a¤ects welfare. A CCS technology allows, via some effort, for the partial reduction of CO2 emissions in the atmosphere. We characterize the social optimum and how the availability of the CCS technology affects it, and we study the decentralized economy's trajectories. We then analyze economic policies. We first characterize the first-best policy. We derive the expression of the Pigovian carbon tax, and we give a full interpretation of its level, which is unique. We then study the impacts of three different second-best policies: a carbon tax, a subsidy to sequestered carbon, and a subsidy to labor in CCS. The first two tools foster CCS activity; so does the third, but only if it is coupled with one of the other two. While the tax postpones resource extraction, the two subsidies accelerate it's possibly yielding a rise in short-term CO2 emissions. The effects on growth are more complex. If the weight of the CCS sector in the economy is high, the tax will generally be detrimental to output growth, while the subsidies can foster it in the long-term. Finally, the carbon tax has a negative impact on the output level in the short-term, contrary to the subsidies. |
| Keywords: | carbon capture and storage (CCS), endogenous growth, polluting non-resources, carbon tax, subsidy to CCS. |
| JEL: | O3 Q3 |
| Date: | 2012–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:26505&r=ene |
| By: | Mireille Chiroleu-Assouline; Mouez Fodha |
| Abstract: | European countries have increased their use of environmental tax instruments by designing new tax bases. But, many countries have to face the opposition of the public opinion, for fear of the distributive consequences of these environmental tax reforms. This paper sheds light on the distrib-utive consequences of environmental tax policies when households are heterogeneous. The objective is to assess whether an environmental tax reform could be Pareto improving, when the revenue of the pollution tax is recycled by a change in the labor tax properties. We show that, whatever the degree of regressivity of the environmental tax alone, it is possible to design a recycling mechanism that renders the tax reform Pareto improving, by simultaneously decreasing the average rate of the wage tax and increasing its progressivity. |
| Keywords: | Environmental tax reform,heterogeneity, welfare analysis, tax progressivity. |
| JEL: | D60 D62 E62 H23 |
| Date: | 2012–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:eus:ce3swp:0312&r=ene |
| By: | Giuseppe De Feo (Department of Economics and Management, University of Pavia and University of Strathclyde); Joana Resende (University of Porto and Cef.up); Maria Eugenia Sanin (University of Montpellier) |
| Abstract: | In this paper we analyze environmental regulation based on tradable emission permits in the presence of strategic interaction in an output market with differentiated products. We characterize firms' equilibrium behavior in the permits and in the output market and we show that both firms adopt "rival's cost-rising strategies". Then, we study the problem of the regulator that aims to maximize social welfare, proposing an efficient criterion to allocate permits between firms. We find that the optimal allocation criterion requires a perfect balance between the difference on firms' price-cost margins in the permits and the difference on firms' mark ups in the output market. In light of the previous result, we use a simulation to obtain the optimal allocation of permits between firms as a function of output market characteristics, in particular as a function of goods substitutability. |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:013&r=ene |
| By: | Richard G. Newell; William A. Pizer; Daniel Raimi |
| Abstract: | Carbon markets are substantial and they are expanding. There are many lessons from experiences over the past eight years: fewer free allowances, better management of market-sensitive information, and a recognition that trading systems require adjustments that have consequences for market participants and market confidence. Moreover, the emerging international architecture features separate emissions trading systems serving distinct jurisdictions. These programs are complemented by a variety of other types of policies alongside the carbon markets. This sits in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol and raises a suite of new questions. In this new architecture, jurisdictions with emissions trading have to decide how, whether, and when to link with one another, and policymakers overseeing carbon markets must confront how to measure the comparability of efforts among markets as well as relative to a variety of other policy approaches. |
| JEL: | Q48 Q54 Q58 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18504&r=ene |