nep-ene New Economics Papers
on Energy Economics
Issue of 2012‒12‒22
28 papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao

  1. Lifestyle Choices and Societal Behavior Changes as Local Climate Strategy By Mohanty, Brahmanand; Scherfler, Martin; Devatha, Vikram
  2. Testing the Effect of Defaults on the Thermostat Settings of OECD Employees By Zack Brown; Nick Johnstone; Ivan Haščič; Laura Vong; Francis Barascud
  3. Behavioural Economics and Environmental Incentives By Jason Shogren
  4. A Guide to the Political Economy of Reforming Energy Subsidies By Commander, Simon
  5. Effects of feedback on residential electricity demand: Findings from a field trial in Austria By Schleich, Joachim; Klobasa, Marian; Götz, Sebastian; Brunner, Marc
  6. Productivity in Electricity, Gas and Water: Measurement and Interpretation By Topp, Vernon; Kulys, Tony
  7. On the optimal timing of switching from non-renewable to renewable resources: dirty vs clean energy sources and the relative efficiency of generators By E. Agliardi; L. Sereno
  8. The Fossile Episode By Hassler, John; Sinn, Hans-Werner
  9. Price Dispersion, Search Costs and Spatial Competition: Evidence from the Austrian Retail Gasoline Market By Bernd Jost
  10. Who is Exposed to Gas Prices? How Gasoline Prices Affect Automobile Manufacturers and Dealerships By Meghan R. Busse; Christopher R. Knittel; Florian Zettelmeyer
  11. Liquidity and crude oil prices: China’s influence over 1996-2011 By Ratti, Ronald; Vespignani, Joaquin
  12. Oil price density forecasts: Exploring the linkages with stock markets By Francesco Ravazzolo; Marco J. Lombardi
  13. Do Fewer People Mean Fewer Cars? – Population Decline and Car Ownership in Germany By Nolan Ritter; Colin Vance
  14. Does a renewable fuel standard for biofuels reduce climate costs? By Mads Greaker, Michael Hoel and Knut Einar Rosendahl
  15. Environmental Innovation in Germany By Ivan Haščič
  16. Environmental Kuznets curve for carbon dioxide emissions: lack of robustness to heterogeneity? By Jobert, Thomas; Karanfil, Fatih; Tykhonenko, Anna
  17. Expert Elicitation of the Value per Statistical Life in an Air Pollution Context By Hammitt, James; Roman, Henry; Stieb, David; Walsh, Tyra
  18. CO2 Emission and Firm Heterogeneity: A Study of Metals & Metal based Industries in India By K., Narayanan; Sahu, Santosh Kumar
  19. The Potential Contribution of the Shipping Sector to an Efficient Reduction of Global Carbon Dioxide Emissions By Nadine Heitmann; Sonja Peterson
  20. Reducing Greenhouse Gas Emissions in a Cost Effective Way in Switzerland By Anita Wölfl; Patrizio Sicari
  21. Emissions trading with offset markets and free quota allocations By Knut Einar Rosendahl and Jon Strand
  22. Optimal Timing of Carbon Capture Policies Under Alternative CCS Cost Functions By Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
  23. Optimal timing of CCS policies with heterogeneous energy consumption sectors By Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
  24. Numerische Simulation geomechanischer Prozesse bei der Verpressung von CO2 By Görke, Uwe-Jens; Kolditz, Olaf; Park, Chan-Hee; Taron, Joshua; Wang, Wenqing; Watanabe, Norihiro; Zehner, Björn
  25. Political motives in climate and energy policy By Annegrete Bruvoll, Hanne Marit Dalen and Bodil M.Larsen
  26. Potential Irreversible Catastrophic Shifts of the Assimilative Capacity of the Environment By Amigues, Jean-Pierre; Moreaux, Michel
  27. Optimal Multi-Phase Transition Paths toward A Stabilized Global Climate: Integrated Dynamic Requirements Analysis for the ‘Tech Fix’ By Paul A. David; Adriaan van Zon
  28. The Effect of Learning on Climate Policy under Fat-tailed Uncertainty By Richard S. J. Tol; In Chang Hwanga; Frédéric Reynèsa

  1. By: Mohanty, Brahmanand (Asian Development Bank Institute); Scherfler, Martin (Asian Development Bank Institute); Devatha, Vikram (Asian Development Bank Institute)
    Abstract: The Asia-Pacific region is witnessing rapid economic growth. Along with rising incomes, the lifestyles of the large middle class are moving quickly towards a buy-and-discard consumer model that involves carbon-intensive products and services. This paper attempts to identify lifestyle changes at the individual level, and behavioral changes at the community level that could offer high carbon abatement potential. It also provides some good practices of public policies and policy recommendations that can be pivotal in making a business case of low-carbon and eco-efficient lifestyles, strengthening collective awareness, and influencing public decision-making in developing countries in Asia.
    Keywords: local climate strategy; renewable resources; conservation; environmental management; environmental modeling
    JEL: F18 H23 Q20 Q21 Q28
    Date: 2012–12–04
  2. By: Zack Brown; Nick Johnstone; Ivan Haščič; Laura Vong; Francis Barascud
    Abstract: Default options have been shown to affect behaviour in a variety of economic choice tasks, including health care and retirement savings. Less research has tested whether defaults affect behaviour in the domain of energy efficiency. This study uses data from a randomized controlled experiment in which the default settings on office thermostats in an OECD office building were manipulated during the winter heating season, and employees’ chosen thermostat setting observed over a 6 week period. Using difference-in-differences, panel, and censored regression models (to control for maximum allowable thermostat settings), we find that a 1°C decrease in the default caused a reduction in the chosen setting by 0.38°C on average. Sixty-five percent of this effect could be attributed to office occupant behaviour (p-value=0.044). The difference-in-differences model shows that small decreases in the default (1°) led to a greater reduction in chosen settings than large decreases (2°). We also find that office occupants who are more apt to adjust their thermostats prior to the intervention were less susceptible to the default. We find no evidence that offices with multiple occupants displayed different patterns in thermostat choices than single-occupant offices. We conclude that this kind of intervention can increase building-level energy efficiency, and discuss potential explanations and broader policy implications of our findings.<BR>Il a été démontré que les options par défaut influaient sur le comportement dans diverses situations de choix économique, portant par exemple sur le système de santé ou le régime de retraite. Cependant, l’incidence des options par défaut sur le comportement dans le domaine de l’efficacité énergétique a fait l’objet de travaux de recherche moins nombreux. Pour cette étude, des données ont été recueillies dans le cadre d’une expérience aléatoire contrôlée ayant consisté à manipuler le réglage par défaut des thermostats installés dans les bureaux d’un bâtiment de l'OCDE pendant la période de chauffage hivernale, et à observer le réglage choisi par les salariés sur une période de 6 semaines. Des modèles fondés sur la méthode des « différences de différences », des données de panel et une analyse de régression censurée (prenant en compte les réglages thermostatiques maximum admissibles) permettent de constater qu’une baisse de la température par défaut de 1°C se traduit par une réduction de 0.38°C en moyenne de la température choisie. Soixante-cinq pour cent de cet effet pourrait être attribué au comportement de l’occupant du bureau (valeur-p=0.044). Le modèle de « différences de différences » montre qu’une légère baisse de la température par défaut (1°) entraîne une plus forte réduction de la température choisie qu’une baisse importante (2°). Nous constatons aussi que les occupants des bureaux les plus enclins à ajuster leur thermostat avant l’intervention ont été moins sensibles au réglage par défaut. Nous ne trouvons pas de différence quant aux choix de température entre les bureaux occupés par plusieurs personnes et les bureaux individuels. Nous concluons que ce type d’intervention peut accroître l’efficacité énergétique au niveau des bâtiments, et examinons les explications possibles et les enseignements plus généraux qui peuvent être tirés de nos résultats pour l’élaboration des politiques publiques.
    Keywords: energy efficiency, behavioural economics, field experiments
    JEL: B5 C1 C9 H3 Q4
    Date: 2012–12–05
  3. By: Jason Shogren
    Abstract: This review aims to improve our understanding of the implications of the insights from behavioural economics for environmental policy design. The review focuses on the question of incentive design in two broad areas — risk, conflict and cooperation; and mechanism design. A number of lessons for policy design emerge from the literature and are highlighted in the paper.<BR>Cet examen vise à améliorer notre compréhension des implications des perspectives de l'économie comportementale pour la conception de la politique environnementale. L'examen porte sur la question de la conception d'incitation dans deux grandes zones: (A) le risque, les conflits et la coopération et (B) la conception du mécanisme. Des leçons émergent de la littérature pour la conception des politiques et sont mis en évidence dans le document.
    Keywords: institutions, environmental policy, behavioural economics, mechanism design, institutions, politique environnementale, économie comportementale, conception du mécanisme
    JEL: D70 H30 H41 Q28 Q58
    Date: 2012–11–07
  4. By: Commander, Simon (EBRD, London)
    Abstract: Energy subsidies are used widely. Although adverse from an efficiency perspective, subsidies confer private benefits on particular groups and, once introduced, tend to be persistent. This paper examines the reasons why and possible ways of overcoming the barriers to reform. The starting point is to look at the motives lying behind the adoption of energy subsidies. Distributional motives were found to figure prominently while the role of interested parties or lobbies is also common. The paper then looks at the characteristics of countries that use energy subsidies. Countries with weak institutions – often non-democracies – tend to be associated with higher subsidies. The paper then looks at how country level conditions and constraints can be identified. An analytical-cum-policy framework allowing identification of the key constraints is proposed before turning to the types of policies – contingent on institutional capacity – that can address those constraints, such as compensating transfers. The paper also indicates how a better understanding of citizens’ policy preferences and the trade-offs that are likely to be accepted is essential for designing reform.
    Keywords: political economy, energy, subsidies, transfers
    JEL: H20 H23 J65 J68
    Date: 2012–12
  5. By: Schleich, Joachim; Klobasa, Marian; Götz, Sebastian; Brunner, Marc
    Abstract: This paper analyzes the effects of providing feedback on electricity consumption in a field trial involving more than 1,500 households in Linz, Austria. About half of these households received feedback together with information about electricity-saving measures (pilot group), while the remaining households served as a control group. Participation in the pilot group was random, but households were able to choose between two types of feedback: access to a web portal or written feedback by post. Results from cross section OLS regression suggest that feedback provided to the pilot group corresponds with electricity savings of around 4.5 % for the average household. Our results from quantile regressions imply that for house-holds in the 30th to the 70th percentile, feedback on electricity consumption is statistically significant and effects are highest in absolute terms and as a share of electricity consumption. For percentiles below or above this range, feedback ap-pears to have no effect. Finally, controlling for a potential endogeneity bias induced by non random participation in the feedback type groups, we find no difference in the effects of feedback provided via the web portal and by post. --
    Keywords: smart metering,feedback,household electricity consumption
    Date: 2012
  6. By: Topp, Vernon (Productivity Commission); Kulys, Tony (Productivity Commission)
    Abstract: This staff working paper examines productivity trends in the Australian utilities industry and highlights some significant issues relating to the measurement and interpretation of changes in measured productivity over time. Multifactor productivity (MFP) growth in Australia's market sector has been considerably below average since 2003-04. Utilities (Electricity, Gas, Water and Waste services), have played a significant role in this, with MFP growth being strongly negative between 1997-98 and 2009-10 (MFP falling, on average, by 3.2 per cent per year). To better understand why, this study examined MFP at the subdivision level, with a particular focus on the two largest subdivisions - Electricity supply (ES), and Water supply, sewerage and drainage services (WSSD). MFP growth between 1997-98 and 2009-10 was negative for both ES (on average, -2.7 per cent per year) and WSSD (-4.3 per cent per year). This study highlights some of the challenges involved in measuring and interpreting estimates of MFP growth in utilities. A particular concern is the influence of changes in capacity utilisation arising from either cyclical investment patterns, or changes in the structure of electricity demand. Also, government policies, regulatory settings and external shocks (especially the weather) can impact on the quantity or quality of measured output, and on the choice of production technology, thereby influencing estimates of MFP. The views expressed in this paper are those of the authors and are not necessarily those of the Productivity Commission, or of the organisations or people who provided assistance.
    Keywords: productivity trends; measured productivity; utilities industry; electricity; gas; water; multifactor productivity (MFP)
    JEL: Q40 Q50
    Date: 2012
  7. By: E. Agliardi; L. Sereno
    Abstract: We develop a model on the optimal timing of switching from non-renewable to renewable energy sources with endogenous extraction choices under emission taxes and abatement costs. We assume that non-renewable resources are "dirty" inputs and create environmental degradation, while renewable resources are more environmentally friendly, although they may be more or less productive than the exhaustible resources. The value of the switching option from non-renewable to renewable resources is characterized. Numerical applications show that an increase in emission taxes, abatement costs or demand elasticity slows down the adoption of substitutable renewable resources, while an increase in the natural rate of resource regeneration, the stock of renewable resources or the relative productivity parameter speeds up the investment in the green technology.
    JEL: D81 H23 Q28 Q38 Q40 Q50
    Date: 2012–11
  8. By: Hassler, John; Sinn, Hans-Werner
    Abstract: We build a two-sector dynamic general equilibrium model with one-sided substitutability between fossil carbon and biocarbon. One shock only, the discovery of the technology to use fossil fuels, leads to a transition from an inital pre-industrial phase to three following phases: a pure fossil carbon phase, a mixed fossil and biocarbon phase and an absorbing biocarbon phase. The increased competition for biocarbon during phase 3 and 4 leads to increasing food prices. We provide closed form expressions for this price increase. Our calibration leads to a price increase of 40% if capital and labor are allowed to move to the biocarbon sector. Otherwise, the price increase is much higher. We also use the model to analyze the consequences of restrictions on using biocarbon as fuel. We show that such restrictions can lead to a substantially slower global warming due to an endogenous slowdown of fossil fuel extraction.
    Keywords: biocarbon; climate change; fossil fuel
    JEL: O41 Q32 Q54
    Date: 2012–12
  9. By: Bernd Jost
    Date: 2012–09–26
  10. By: Meghan R. Busse; Christopher R. Knittel; Florian Zettelmeyer
    Abstract: Many consumers are keenly aware of gasoline prices, and consumer responses to gasoline prices have been well studied. In this paper, by contrast, we investigate how gasoline prices affect the automobile industry: manufacturers and dealerships. We estimate how changes in gasoline prices affect equilibrium prices and sales of both new and used vehicles of different fuel economies. We investigate the implications of these effects for individual auto manufacturers, taking into account differences in manufacturers' vehicle portfolios. We also investigate effects on manufacturers' affiliated dealership networks, including effects implied by the changes in used vehicle market outcomes.
    JEL: L1 L2 L9 Q4
    Date: 2012–12
  11. By: Ratti, Ronald (University of Western Sydney, School of Business); Vespignani, Joaquin (School of Economics and Finance, University of Tasmania)
    Abstract: Movement in China’s money supply drives the movement in world money supply over the last twenty years. Within the framework advanced by Kilian (2009) that identifies the supply and demand side factors driving oil price changes we introduce the influence of liquidity in China and other countries on oil price changes. Structural shocks are large for both G3 (U.S., Eurozone and Japan) real M2 and China’s real M2. However, the cumulative impact of real G3 M2 shocks on real oil prices is small in contrast to a large cumulative effect of China’s real M2 on the real price of crude oil. It is shown that increased liquidity in China relative to that in the U.S., Eurozone and Japan significantly raises real oil prices over 1996:1-2011:12. Following a sharp fall in real oil price in the last half of 2008, the cumulative impact of China’s real M2 on the real price of crude oil is particularly substantial in the recovery of oil price during 2009 from a low of $41.68 for January 2009. The analysis sheds light on the causes of movement in oil prices over the last twenty five years and in assessing the relative importance of China in the upsurge of the real price of crude oil.
    Keywords: Oil Price, China’s Global Influence, Oil Price and Liquidity
    JEL: E31 E32 Q43
    Date: 2012–09–20
  12. By: Francesco Ravazzolo; Marco J. Lombardi
    Abstract: In the recent years several commentators hinted at an increase of the correlation between equity and commodity prices, and blamed investment in commodity-related products for this. First, this paper investigates such claims by looking at various measures of correlation. Next, we assess to what extent correlations between oil and equity prices can be exploited for asset allocation. We develop a time-varying Bayesian Dynamic Conditional Correlation model for volatilities and correlations and find that joint modelling of oil and equity prices produces more accurate point and density forecasts for oil which lead to substantial benefits in portfolio wealth.
    Keywords: Oil price, stock price, density forecasting, correlation, Bayesian DCC
    JEL: C11 C15 C53 E17 G17
    Date: 2012–12
  13. By: Nolan Ritter; Colin Vance
    Abstract: Drawing on household data from Germany, this study econometrically analyzes the determinants of automobile ownership, focusing specifically on the extent to which decreases in family size translate into fewer cars at the national level. Beyond identifying several variables over which policy makers have direct leverage, including the price for fuel, the supply of public transit, and land use features, the analysis uses the estimated coefficients from a multinomial logit model to simulate car ownership rates under alternative scenarios pertaining to demographic change and other socioeconomic variables. Our baseline scenario predicts continued increases in the number of cars despite decreases in population, a trend that could be partially offset by substantial increases in fuel prices.
    Keywords: Car ownership; demographic change; Germany; multinomial logit; simulation
    JEL: C25 D10 R41
    Date: 2012–11
  14. By: Mads Greaker, Michael Hoel and Knut Einar Rosendahl (Statistics Norway)
    Abstract: Recent contributions have questioned whether biofuels policies actually lead to emissions reductions, and thus lower climate costs. In this paper we make two contributions to the literature. First, we study the market effects of a renewable fuel standard. Opposed to most previous studies we model the supply of fossil fuels taking into account that fossil fuels is a non-renewable resource. Second, we model emissions from land use change explicitly when we evaluate the climate effects of the renewable fuel standard. We find that extraction of fossil fuels most likely will decline initially as a consequence of the standard. Thus, if emissions from biofuels are sufficiently low, the standard will have beneficial climate effects. Furthermore, we find that the standard tends to reduce total fuel (i.e., oil plus biofuels) consumption initially. Hence, even if emissions from biofuels are substantial, climate costs may be reduced. Finally, if only a subset of countries introduce a renewable fuel standard, there will be carbon leakage to the rest of the world. However, climate costs may decline as global extraction of fossil fuels is postponed.
    Keywords: Biofuels; Non-renewable resources; Land-use changes; Climate costs
    JEL: H23 Q30 Q42 Q54
    Date: 2012–12
  15. By: Ivan Haščič
    Abstract: This paper reviews the recent experience of Germany in encouraging innovation to reduce negative environmental impacts of economic activity. The essence of the German approach to policy-induced environmental innovation is discussed in the context of changing policy objectives, and illustrated with selected examples from waste management, renewable energy and transportation. The paper covers environmental and general innovation policies and the cross-cutting issue of policy co-ordination. Particular attention is paid to analysis of policies to promote renewable energy, including feed-in tariffs, and policies to promote advanced transportation.<BR>Ce document analyse le bilan de l’action menée dans un passé récent en Allemagne pour encourager une innovation tournée vers la réduction des effets négatifs de l’activité économique sur l’environnement. La nature profonde de l’approche de l’Allemagne, qui mise sur le développement d’innovations environnementales sous l’impulsion des politiques publiques, est examinée dans le contexte de l’évolution des objectifs de l’action publique, et illustrée par plusieurs exemples portant sur la gestion des déchets, les énergies renouvelables et les transports. Ce document aborde les politiques en faveur de l’innovation environnementale et de l’innovation en général, de même que la question transversale de la coordination des politiques. Une attention particulière est portée à l’analyse des mesures visant à promouvoir les énergies renouvelables – dont les tarifs de rachat – et des mesures visant à promouvoir les technologies avancées de transport.
    Keywords: environmental policy, innovation, technology, eco-innovation, policy coordination, politique environnementale, innovation, technologie, éco-innovation, coordination des politiques
    JEL: H23 O31 O33 O38 O52 Q42 Q48 Q53 Q54 Q55 Q58 R48
    Date: 2012–12–12
  16. By: Jobert, Thomas (Groupe de REcherche en Droit, Économie, Gestion); Karanfil, Fatih (Galatasaray University Economic Research Center); Tykhonenko, Anna (Groupe de REcherche en Droit, Économie, Gestion)
    Abstract: This paper focuses solely on the energy consumption, carbon dioxide (CO2) emissions and economic growth nexus applying the iterative Bayesian shrinkage procedure. The environmental Kuznets curve (EKC) hypothesis is tested using this method for the first time in this literature and the results obtained suggest that: first, the EKC hypothesis is rejected for 49 out of the 51 countries considered when heterogeneity in countries' energy efficiencies and cross-country differences in the CO2 emissions trajectories are accounted for; second, a classification of the results with respect to countries’ development levels reveals that an overall inverted U-shape curve is due to the fact that increase in gross domestic product (GDP) in the high-income countries decreases emissions, while in the low-income countries it increases emissions.
    Keywords: Environmental Kuznets curve; Bayesian shrinkage estimator; Heterogeneity
    JEL: O13 O44 Q56
    Date: 2012–12–12
  17. By: Hammitt, James; Roman, Henry; Stieb, David; Walsh, Tyra
    Abstract: The monetized value of avoided premature mortality typically dominates the calculated benefits of air pollution regulations; therefore, characterization of the uncertainty surrounding these estimates is key to good policymaking. Formal expert judgment elicitation methods are one means of characterizing this uncertainty. They have been applied to characterize uncertainty in the mortality concentration-response function, but have yet to be used to characterize uncertainty in the economic values placed on avoided mortality. We report the findings of a pilot expert judgment study for Health Canada designed to elicit quantitative probabilistic judgments of uncertainties in Value-per-Statistical-Life (VSL) estimates for use in an air pollution context. The two-stage elicitation addressed uncertainties in both a base case VSL for a reduction in mortality risk from traumatic accidents and in benefits transferrelated adjustments to the base case for an air quality application (e.g., adjustments for age, income, and health status). Results for each expert were integrated to develop example quantitative probabilistic uncertainty distributions for VSL that could be incorporated into air quality models.
    Date: 2012–01
  18. By: K., Narayanan; Sahu, Santosh Kumar
    Abstract: Industrial energy efficiency has emerged as one of the key issues in India. The increasing demand for energy that leads to growing challenge of climate change has resulted major issues. It is obvious that high-energy intensity leads to high carbon intensity of the economy. This paper is an attempt to estimate the firm level CO2 emissions for the metals and metal based industries in Indian manufacturing. Calculation of firm level emissions is carried out following IPCC reference approach methodology of Carbon Dioxide emission from fuel combustion. We tried to find out the inter-firm differences of CO2 emission in the metals and metal based industries. In finding out the determinants of CO2 emission at firm level we have examined whether the firm heterogeneity matters for the differences in emission at firm level. Data for this study is collated from the CMIE PROWESS online database from 2000-2008, IEA energy statistics and IPCC conversion factors for each of the fuel types.
    Keywords: CO2 emission; Firm heterogeneity; Panel data econometrics; Metals and Metal based industries
    JEL: B23 Q4
    Date: 2012–02–22
  19. By: Nadine Heitmann; Sonja Peterson
    Abstract: In this paper, we analyze how much the shipping sector could contribute to global CO2 emission reductions from an efficiency point of view. To do this, a marginal abatement cost curve (MACC) for the shipping sector is generated that can be combined with a MACC for conventional CO2 abatement in the production and consumption sectors around the world. These two MACCs are used to assess the following as regards the various global reduction targets: (a) what the maximum global cost savings would be that could be achieved by abating emissions in the shipping sector, (b) how much the shipping sector could contribute to abating emissions cost efficiently, and (c) what the potential additional costs of implementing a separate solution for the shipping sector would be. The focus is on the year 2020. We find that the shipping sector could always contribute to efficient global emission reductions and thus could always achieve global cost savings, but also that the size of the contribution and the size of cost savings depend heavily on the MACC case assumed, i.e., on how the existence of negative abatement costs is treated in a MACC, and on the reduction potentials and costs of measures assumed
    Keywords: climate change, shipping sector, CO2 emissions, marginal abatement cost curve
    JEL: Q52 Q54 Q58
    Date: 2012–12
  20. By: Anita Wölfl; Patrizio Sicari
    Abstract: Switzerland has low greenhouse gas emissions per capita as compared to other countries, which reflects the strong reliance on energy sources emitting few greenhouse gas emissions, especially in electricity generation, and little heavy industry. Greenhouse gas emissions have remained almost the same since 1990, as emission reductions in the residential and industrial sector were offset by increases from the transport sector. It is estimated that, in aggregate, marginal abatement costs are relatively high in Switzerland and meeting the 2020 target of a 20% emission reduction below the 1990 level will necessitate more cost effective policies. In particular, more needs to be done in the road transport sector, the domestic sector with the largest potential for emission reductions at relatively low cost. The incentive for energy saving renovations in rented dwellings could be raised by a better design of existing policies. And the policies in the industrial sector could be made more effective with the transition towards linking the Swiss and the EU emission trading systems.<P>Réduire les émissions de gaz à effet de serre pour un coût raisonnable en Suisse<BR>Comparée à d’autres pays, la Suisse émet peu de gaz à effet de serre par habitant, car elle recourt en grande partie à des sources d’énergie qui n’en produisent pas beaucoup, notamment dans le secteur de l’électricité, et son industrie lourde est modeste. Ces émissions sont à peu près stables depuis 1990, leur diminution dans les secteurs résidentiel et industriel ayant été compensée par une hausse dans celui des transports. D’après les estimations, les coûts marginaux de la réduction des émissions sont dans l’ensemble relativement élevés en Suisse et des mesures plus efficaces par rapport à leur coût seront nécessaires pour atteindre l’objectif fixé d’ici 2020, à savoir un retour à 20 % en dessous du niveau de 1990. Il faut en particulier accentuer l’effort dans le secteur des transports routiers, lequel présente le potentiel le plus élevé de réduction des émissions à un coût relativement bas. L’incitation en faveur des travaux d’économie d’énergie dans les logements en location pourrait être renforcée moyennant une meilleure conception des mesures existantes. L’action menée dans le secteur industriel pourrait gagner en efficacité moyennant le couplage progressif des systèmes suisse et communautaire d’échanges de crédits d’émission.
    Keywords: Switzerland, agriculture, industry, carbon tax, greenhouse gas emissions, emissions trading system, congestion, CO2, residential sector, Suisse, agriculture, industrie, émissions de gaz à effet de serre, congestion, secteur résidentiel, CO2, système d'échanges de crédits d'émission
    JEL: H23 Q18 Q54 Q56 Q58 R41 R48
    Date: 2012–12–04
  21. By: Knut Einar Rosendahl and Jon Strand (Statistics Norway)
    Abstract: We study interactions between a “policy bloc’s” emissions quota market and an offset market where emissions offsets can be purchased from a non-policy “fringe” of countries (such as for the CDM under the Kyoto Protocol). Policy-bloc firms are assumed to benefit from free quota allocations that are updated according to either past emissions or past outputs. We show that both overall abatement, and the allocation of given abatement between the policy bloc and the fringe, tend to be inefficient. When the policy-bloc quota market and offset markets are fully integrated (and firms buy offsets directly from the fringe), and all quotas and offsets must be traded at a single price, it is optimal for the policy bloc to either not constrain the offset market whatsoever, or to ban offsets completely. The former (latter) case occurs when free allocation of quotas is not too generous (very generous), and the offset market can profitably deliver large (only a small) quota amounts. Governments of policy countries would however instead prefer to buy offsets directly from the fringe at a price below the policy-bloc quota price. The offset price will then be below the marginal damage cost of emissions, and the quota price in the policy bloc above marginal damage cost. This solution is also inefficient as the policy bloc (acting as a monopsonist) purchases too few offsets from the fringe.
    Keywords: Emissions quotas; Offset market; Quota allocation
    JEL: H23 Q54 Q58
    Date: 2012–12
  22. By: Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
    Abstract: We determine the optimal exploitation time-paths of three types of perfect substitute energy resources: The first one is depletable and carbon-emitting (dirty coal), the second one is also depletable but carbon-free thanks to a carbon capture and storage (CCS) process (clean coal) and the last one is renewable and clean (solar energy). We assume that the atmospheric carbon stock cannot exceed some given ceiling. These optimal paths are considered along with alternative structures of the CCS cost function depending on whether the marginal sequestration cost depends on the flow of clean coal consumption or on its cumulated stock. In the later case, the marginal cost function can be either increasing in the stock thus revealing a scarcity effect on the storage capacity of carbon emissions, or decreasing in order to take into account some learning process. We show among others the following results: Under a stockdependent CCS cost function, the clean coal exploitation must begin at the earliest when the carbon cap is reached while it must begin before under a flow-dependent cost function. Under stock-dependent cost function with a dominant learning effect, the energy price path can evolve non-monotonically over time. When the solar cost is low enough, this last case can give rise to an unusual sequence of energy consumption along which the solar energy consumption is interrupted for some time and replaced by the clean coal exploitation. Last, the scarcity effect implies a carbon tax trajectory which is also unusual in this kind of ceiling models, its increasing part been extended for some time during the period at the ceiling.
    Keywords: Carbon capture and storage; Energy substitution; Learning effect; Scarcity effect; Carbon stabilization cap.
    JEL: Q32 Q42 Q54 Q55 Q58
    Date: 2012–04
  23. By: Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
    Date: 2012–07–23
  24. By: Görke, Uwe-Jens; Kolditz, Olaf; Park, Chan-Hee; Taron, Joshua; Wang, Wenqing; Watanabe, Norihiro; Zehner, Björn
    Abstract: Neben anderen Konzepten zählt das Verfahren des Abscheidens, Transports und der geologischen Speicherung von CO2 (Carbon dioxide Capture and Storage - CCS) zu den weltweit diskutierten Optionen, im Sinne einer Übergangstechnologie zur Verringerung des Eintrags schädlicher Treibhausgase in die Atmosphäre beizutragen. Das Verfahren ist nicht nur für die Energiewirtschaft mit ihrem hohen Anteil fossiler Energieträger von Interesse, sondern auch für andere CO2-intensive Wirtschaftszweige, wie beispielsweise der Zementindustrie. Im Jahr 2005 veröffentlichte der Zwischenstaatliche Klimawandelausschuss (Intergovernmental Panel on Climate Change - IPCC) einen Sonderbericht, in dem Stand, Perspektiven und Wissenslücken von Verfahren der geologischen Langzeitspeicherung von CO2 aufgezeigt werden (IPCC, 2005). Der Modellierung und Simulation von Injektion und Ausbreitung des CO2 im geologischen Untergrund kommt dabei eine entscheidende Bedeutung für das Verständnis der dabei auf unterschiedlichen Zeit- und Längenskalen ablaufenden physikalischen und chemischen Prozesse sowie für die Beurteilung von Effizienz und Sicherheit der ausgewählten Speicher zu. Von den potenziell möglichen geologischen Speicherformationen stehen in Deutschland tiefe, saline Grundwassersysteme sowie (nahezu) ausgebeutete Erdgaslagerstätten mit zweckmäßig nutzbaren Kapazitäten zur Verfügung. Die Arbeiten des hier präsentierten Berichts wurden im Teilprojekt M1b 'Numerische Simulation geomechanischer Prozesse bei der Verpressung von CO2' des Forschungs- und Entwicklungsvorhabens (F&E-Vorhaben) CO2-MoPa ausgeführt. Sie wurden unter dem Förderkennzeichen 03G0686D vom Bundesministerium für Bildung und Forschung (BMBF) im Zeitraum vom 01.04.2008 bis 31.12.2011 gefördert und vom Helmholtz-Zentrum für Umweltforschung - UFZ, Department Umweltinformatik realisiert. Integrierende Hauptaufgabe des F&E-Vorhabens CO2-MoPa war die Analyse, Bewertung und Quantifizierung von Speichermechanismen bei der Verpressung von CO2 in tiefe, saline Grundwasserformationen (Aquifere). Am Beispiel virtueller Standorte sollten Prozeduren für Dimensionierungs- und Risikoanalysen entwickelt werden, die wesentlich auf experimentell untersetzten Modellierungsansätzen beruhen und Hinweise auf die optimale Gestaltung von Erkundungs-, Nutzungs- und Monitoringstrategien für potenzielle CO2-Reservoire beinhalten. --
    Date: 2012
  25. By: Annegrete Bruvoll, Hanne Marit Dalen and Bodil M.Larsen (Statistics Norway)
    Abstract: Standard economic theory provides clear guidance on the design of cost-efficient policy in the presence of imperfect markets and externalities. However, observed policies reveal extensive discrepancies between principles and practise. Based on interviews with core politicians from the Norwegian parliament, we investigate causes for the lack of cost efficiency in climate and energy policy. We find that politicians agree with the notion of cost efficiency in principle, but rather than ascribing efficient instruments directed at specific policy goals, they include concerns for industrial and regional development, income distribution and employment in the environmental policy design. Lacking insight in the functioning of economic instruments and perceptions of a non-binding budget constraint also violate the requirements for efficient policy decisions. The findings point to the role of economists and social scientists to communicate the functioning of complex instruments. Improved compensation procedures could help reduce the politicians’ incentives to undermine efficiency in order to avoid unwanted distributional effects.
    Keywords: policy instruments; policy formulation; political processes; climate policy frameworks; energy policy
    JEL: Q48 Q54 Q58
    Date: 2012–12
  26. By: Amigues, Jean-Pierre; Moreaux, Michel
    Date: 2012–02
  27. By: Paul A. David (Stanford University); Adriaan van Zon (Maastricht University)
    Abstract: This paper analyzes the requirements for a social welfare-optimized transition path toward a carbon-free economy, focusing particularly on the role of R&D and other technological measures to achieve timely supply-side transformations in the global production regime that will avert catastrophic climate instability. We construct a heuristic integrated model of macroeconomic growth constrained by geophysical system with climate feedbacks, including extreme weather damages from global warming driven by greenhouse gas emissions, and ‘tipping point’ for catastrophic runaway warming. A variety of options for technology development and implementation, and the dynamic relationships among them will be examined: interactions among the, each having a distinctive primary functionality CO2 emissions control. The specifications recognize (i) the endogeneity and embodiment of technical innovations, and (ii) the irreversibility and long gestation periods of required intangible (R&D) and tangible capital formation. Efficient exercise of these options is shown to involve sequencing different investment and production activities in separate temporal “phases” that together form a transition path to a carbon free economy. To study the requirements of a timely (catastropheaverting) transition, we formulate a sequence of optimal control sub-problems linked together by transversality conditions, the solution of which determines the optimum allocation of resources and sequencing of the several phases implied by the options under consideration. Ours is “planning-model” approach, which departs from conventional IAM exercises by eschewing assumptions about the behaviors of economic and political actors in response to market incentives and specific public policy measures. Solutions for each of several multi-phase models yields the optimal phase durations and rates of investment and production that characterize the transition path. Sensitivity experiments with parameters of economic and geophysical sub-systems provide insights into the robustness of the requirements analysis under variations in the technical and geophysical system parameters.
    Keywords: global warming, tipping points, catastrophic climate instability, technology fix options, R&D investments, capital-embodied innovations, optimal sequencing, IAM and DIRAM policy design approaches, multi-phase optimal control, sustainable endogenous growth
    JEL: Q54 Q55 O31 O32 O33
    Date: 2012–12
  28. By: Richard S. J. Tol (Department of Economics, University of Sussex, Brighton, United Kingdom; Institute for Environmental Studies, Vrije Universiteit, Amsterdam, Netherlands; Department of Spatial Economics, Vrije Universiteit, Amsterdam, Netherlands); In Chang Hwanga (Institute for Environmental Studies, Vrije Universiteit, Amsterdam, Netherlands); Frédéric Reynèsa (OFCE Sciences Po’s Economic Research Centre, Paris, France; Institute for Environmental Studies, Vrije Universiteit, Amsterdam, Netherlands; TNO - Netherlands Organisation for Applied Scientific Research, Delft, The Netherlands)
    Abstract: The effect of learning on climate policy is not straightforward when climate policy is concerned. It depends not only on the ways that climate feedbacks, preferences, and economic impacts are considered, but also on the ways that uncertainty and learning are introduced. Deep (or fat-tailed) uncertainty does matter for the optimal climate policy in that it requires more stringent efforts to reduce carbon emissions. However, learning may reveal thin-tailed uncertainty, weakening the case for emission abatement: learning reduces the stringency of the optimal abatement efforts relative to the no learning case even when we account for deep uncertainty. In order to investigate this hypothesis, we construct an endogenous (Bayesian) learning model with fat-tailed uncertainty on climate change and solve the model with stochastic dynamic programming. In our model a decision maker updates her belief on the total feedback factors through temperature observations each period and takes a course of action (carbon reductions) based on her belief. With various scenarios, we find that the uncertainty is partially resolved over time, although the rate of learning is relatively slow, and this materially affects the optimal decision: the decision maker with a possibility of learning lowers the effort to reduce carbon emissions relative to the no learning case. This is because the decision maker fully utilizes the information revealed to reduce uncertainty, and thus she can make a decision contingent on the updated information. In addition, with incorrect belief scenarios, we find 2 that learning enables the economic agent to have less regrets (in economic terms, sunk benefits or sunk costs) for her past decisions after the true value of the uncertain variable is revealed to be different from the initial belief.
    Keywords: Climate policy; deep uncertainty; fat-tails; Bayesian learning; integrated assessment; stochastic modeling; dynamic programming
    JEL: Q54
    Date: 2012–12

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