nep-ene New Economics Papers
on Energy Economics
Issue of 2013‒02‒08
sixteen papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao

  1. Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry By Philippe Aghion; Antoine Dechezleprêtre; David Hemous; Ralf Martin; John Van Reenen
  2. An Econometric Analysis of the Effectiveness of Development Finance for the Energy Sector By Giorgio Gualberti; Luis Filipe Martins; Morgan Bazilian
  3. One Hundred Years of Oil Income and the Iranian Economy: A curse or a Blessing? By Mohaddes, K.; Pesaran, M.H.
  4. Precio del Petróleo: Tensiones Geopolíticas y Eventos de Oferta By Eduardo López; Ercio Muñoz
  5. Modelling the Effects of Oil Prices on Global Fertilizer Prices and Volatility By Ping-Yu Chen; Chia-Lin Chang; Chi-Chung Chen; Michael McAleer
  6. Cross-border infrastructure constraints, regulatory measures and economic integration of the Dutch - German gas market By Mulder, Machiel; Kuper, Gerard
  7. Renewable energy consumption and economic efficiency: Evidence from European countries By Halkos, George; Tzeremes, Nickolaos
  8. Methodology for Integrated Socio-Economic Assessment of Offshore Platforms: Towards Facilitation of the Implementation of the Marine Strategy Framework Directive By Phoebe Koundouri; Osiel González Dávila; Mavra Stithou
  9. Innovation Benefits from Nuclear Phase-out: Can they Compensate the Costs? By Enrica De Cian; Samuel Carrara; Massimo Tavoni
  10. Les coûts du nucléaire : repères et incertitudes By François Lévêque
  11. Economic Efficiency, Environmental Effectiveness and Political Feasibility of Energy Efficiency Rebates: The Case of the Spanish Energy Efficiency “Renove†Plan By Ibon Galarraga; Luis M. Abadie; Alberto Ansuategi
  12. Unobserved heterogeneous effects in the cost efficiency analysis of electricity distribution systems By Antoine Bommier; François Le Grand
  13. Co-intégration et causalité entre PIB, emploi et consommation d’énergie: évidence empirique sur les pays de l’UEMOA By Boukary OUEDRAOGO; Mamoudou HASSANE
  14. A spatial competitive analysis: the carbon leakage effect on the cement industry under the European Emissions Trading Scheme By Elisabetta Allevi; Giorgia Oggioni; Rossana Riccardi; Marco Rocco
  15. The Intergenerational Transfer of Solar Radiation Management Capabilities and Atmospheric Carbon Stocks By Goeschl, Timo; Heyen, Daniel; Moreno-Cruz, Juan
  16. The Value of Climate Amenities: Evidence from US Migration Decisions By Paramita Sinha; Maureen L. Cropper

  1. By: Philippe Aghion (Harvard University); Antoine Dechezleprêtre (Grantham Research Institute on Climate Change and the Environment and Centre for Economic Performance, London School of Economics); David Hemous (INSEAD); Ralf Martin (Imperial College Business School and Centre for Economic Performance, London School of Economics); John Van Reenen (Centre for Economic Performance, London School of Economics and NBER)
    Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between “dirty” (internal combustion engine) and “clean” (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies.
    Keywords: Climate Change, Innovation, Directed Technical Change, Automobiles
    Date: 2012–12
  2. By: Giorgio Gualberti (Instituto Superior Técnico, Technical University of Lisbon); Luis Filipe Martins (ISCTE Business School, Lisbon); Morgan Bazilian (International Institute for Applied Systems Analysis, Laxenburg)
    Abstract: Reaching the objective of universal access to modern energy services will require large investments in infrastructure in developing countries. An important part of funding will be provided in the form of development finance and its effectiveness in producing positive impacts is crucial for this achievement. This paper presents a panel analysis of the relationship between the installed capacity of electricity generation, the development finance committed for the energy sector, and the gross fixed capital formation. We tested four models with a large dataset and found development finance to have, in most cases, a positive influence on installed base.
    Keywords: International Aid, Energy Access, Aid Effectiveness
    JEL: O19 O21 Q40
    Date: 2012–12
  3. By: Mohaddes, K.; Pesaran, M.H.
    Abstract: This paper examines the impact of oil revenues on the Iranian economy over the past hundred years, spanning the period 1908-2010. It is shown that although oil has been produced in Iran over a very long period, its importance in the Iranian economy was relatively small up until the early 1960s. It is argued that oil income has been both a blessing and a curse. Oil revenues when managed appropriately are a blessing, but their volatility (which in Iran is much higher than oil price volatility) can have adverse effects on real output, through excessively high and persistent levels of inflation. Lack of appropriate institutions and policy mechanisms which act as shock absorbers in the face of high levels of oil revenue volatility have also become a drag on real output. In order to promote growth, policies should be devised to control in?ation; to serve as shock absorbers negating the adverse effects of oil revenue volatility; to reduce rent seeking activities; and to prevent excessive dependence of government finances on oil income.
    Keywords: Oil price volatility, oil income, rent seeking, inflation, macroeconomic policy.
    JEL: E02 N15 Q32
    Date: 2013–01–29
  4. By: Eduardo López; Ercio Muñoz
    Abstract: The impact on oil prices of geopolitical tensions and oil supply-side events is examined. Using a GARCH model on daily oil price data, we find that, when these events actually occur -10% frequency- the geopolitical events explain around 3/4 of daily oil returns forecasted by the model, and oil supply-side events explain 2/3. When there is no occurrence of these events, financial factors (i.e. dollar fluctuations and market risk perception changes) explain around 4/5 of the daily return of oil price forecasted in average. Variance of oil return is highly persistent and these events explain no more than 10% of the daily conditional variance on the day the events actually occur.
    Date: 2012–11
  5. By: Ping-Yu Chen (National Chung Hsing University, Taiwan); Chia-Lin Chang (National Chung Hsing University, Taiwan); Chi-Chung Chen (National Chung Hsing University, Taiwan); Michael McAleer (Erasmus University Rotterdam, Kyoto University, Japan, and Complutense University of Madrid, Spain)
    Abstract: The main purpose of this paper is to evaluate the effect of crude oil price on global fertilizer prices in both the mean and volatility. The endogenous structural breakpoint unit root test, ARDL model, and alternative volatility models, including GARCH, EGARCH, and GJR models, are used to investigate the relationship between crude oil price and six global fertilizer prices. The empirical results from ARDL show that most fertilizer prices are significantly affected by the crude oil price while the volatility of global fertilizer prices and crude oil price from March to December 2008 are higher than in other periods.
    Keywords: Fertilizer Price; Oil Price; Volatility
    JEL: Q14 C22 C58
    Date: 2013–01–25
  6. By: Mulder, Machiel; Kuper, Gerard (Groningen University)
    Abstract: We estimate to which extent regulatory measures in the Dutch market have reduced the vulnerability of this market to constraints in the cross-border infrastructure with Germany, which is the largest Dutch neighbouring market. We measure this vulnerability by the degree the markets are integrated, i.e. to which extent the gas prices differ between the Dutch market (Title Transfer Facility or TTF) and the German market (NetConnectGermany or NCG). The constraints are measured through the utilisation of the cross-border infrastructure. We find evidence that the introduction of a market-based balancing regime together with the obligation to deliver all gas on the TTF on 1 April 2011 reduced the impact of the utilisation the Dutch-German cross-border infrastructure on the differences in prices between these countries.
    Date: 2013
  7. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper examines the relationship between renewable energy consumption and economic efficiency. For this reason conditional Data Envelopment Analysis (DEA) estimators alongside with nonparametric regressions are applied in a sample of 25 European countries for the year 2010. Our results reveal that renewable energy consumption has a positive effect on countries’ economic efficiency for lower consumption levels while for higher levels the analysis reveals mixed effects, which are also subject to regional disparities. Finally, it appears that the effect of renewable energy consumption on countries’ economic efficiency depends also on countries’ specific regional characteristics as well as on the environmental policies adopted.
    Keywords: Renewable energy consumption; economic efficiency; data envelopment analysis; nonparametric regression
    JEL: C14 Q40 Q01 Q20 C60 O44
    Date: 2013–02–02
  8. By: Phoebe Koundouri; Osiel González Dávila (AUEB-RC); Mavra Stithou
    Abstract: In this paper a Methodology for Integrated Socio-Economic Assessment (MISEA) of the viability and sustainability of different designs of Multi-Use Offshore Platforms (MUOPs) is presented. MUOPs are designed for multi-use of ocean space for energy extraction (wind power production and wave energy), aquaculture and transport maritime services. The developed methodology allows identification, valuation and assessment of: the potential range of impacts of a number of feasible designs of MUOP investments, and the likely responses of those impacted by the investment project. This methodology provides decision-makers with a valuable decision tool to assess whether a MUOP project increases the overall social welfare and hence should be undertaken, under alternative specifications regarding its design, the discount rate and the stream of net benefits, if a Cost-Benefit Analysis (CBA) is to be followed or sensitivity analysis of selected criteria in a Multi-Criteria Decision Analysis (MCDA) framework. Such a methodology is also crucial for facilitating of the implementation of the Marine Strategy Framework Directive (MSFD adopted in June 2008) that aims to achieve good environmental status of the EU's marine waters by 2020 and to protect the resource base upon which marine-related economic and social activities depend. According to the MSFD each member state must draw up a program of cost-effective measures, while prior to any new measure an impact assessment which contains a detailed cost-benefit analysis of the proposed measures is required.
    Keywords: Multi-Use Offshore Platforms, Integrated Socio-Economic Assessment, Marine Strategy Framework Directive, Program of Measures, Cost-Benefit Analysis.
    Date: 2013–01–27
  9. By: Enrica De Cian (Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC)); Samuel Carrara (Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC)); Massimo Tavoni (Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC))
    Abstract: This paper investigates whether an inefficient allocation of abatement, due to constraints on the use of currently available low carbon mitigation options, can promote innovation in new technologies and eventually generate welfare gains. We focus on the case of nuclear power phase out, when accounting for endogenous technical change in energy efficiency and in low carbon technologies. The analysis uses the Integrated Assessment Model WITCH, which features multiple externalities due to both climate and innovation market failures. Our results show that phasing out nuclear power stimulates additional R&D investments and deployment of infant technologies with large learning potential. The innovation benefits which this would generate and that would not otherwise be captured due to intertemporal and international externalities almost completely offset the economic costs of phasing out nuclear power. The technological change benefit depends on the stringency of the climate policy and is distributed unevenly across countries.
    Keywords: Technological change, Climate policy, Nuclear phase-out
    JEL: H40 O33 Q40 Q55
    Date: 2012–12
  10. By: François Lévêque (CERNA - Centre d'économie industrielle - École Nationale Supérieure des Mines - Paris (ParisTech))
    Abstract: En France, le coût de revient du MWh produit par les centrales nucléaires existantes est-il de 32 euros ou de 42 euros ? L'investissement dans un réacteur de nouvelle génération de type EPR est-il proche de 2000 euros/kW ou plutôt du double ? La controverse sur le coût de revient supporté par EDF a surgi à l'occasion d'une nouvelle loi sur l'électricité adoptée en 2010 , qui oblige l'opérateur historique à céder une partie de la production du parc nucléaire à ses concurrents situés en aval. Selon cette loi le prix de cession est fixé par la puissance publique et doit refléter les coûts de production du parc nucléaire actuel. GDF Suez, principal concurrent d'EDF, les estime à environ 32 euros le MWh, tandis que l'exploitant du parc nucléaire les évalue à dix euros de plus. Comment un tel écart peut-il être expliqué ? S'agit-il uniquement de chiffres jetés en l'air par un vendeur et un acheteur, soucieux chacun d'influencer le gouvernement pour obtenir le prix leur étant le plus favorable ? Ou bien une des deux valeurs est-elle la bonne, l'un ayant raison et l'autre tort ?
    Date: 2013–01–29
  11. By: Ibon Galarraga; Luis M. Abadie; Alberto Ansuategi
    Abstract: Energy labels are used to promote the purchase of efficient appliances. Many countries in Europe use subsidies (namely energy efficiency rebates) to support these purchases as it is the case of Spain. A figure ranging from 50 to 105€ subsidy has been granted in the past for the acquisition of the most efficient appliances. This paper first analyses the impact of a 80€ subsidy on the dishwasher market and compares the results with a 40 € tax for non-labelled ones. The results take into account the effects that the policies generate in the market segment that is a close substitute, that is, cross effects. The paper shows that the subsidy is expensive for the Government, generates some welfare losses and it also generates a rebound effect as a consequence of the increase in the total number of appliances sold. The 40 € tax does not cost money to the Government, it generates a lower welfare loss and reduces the energy bill. However, the analysis is extended to go beyond the two extreme scenarios: subsidies without taxes and taxes without subsidies. Different combinations of both instruments are suggested and they are assessed based on their performance regarding economic efficiency, environmental effectiveness and political feasibility.
    Keywords: Energy efficiency rebates, deadweight losses, rebound effect
    Date: 2013–02
  12. By: Antoine Bommier (ETH Zurich, Switzerland); François Le Grand (EMLyon Business School)
    Abstract: We investigate whether the set of Kreps and Porteus (1978) preferences include classes of preferences that are stationary, monotonic and well-ordered in terms of risk aversion. We prove that the class of preferences introduced by Hansen and Sargent (1995) in their robustness analysis is the only one that fulfills these properties. The paper therefore suggests a shift from the traditional approach to studying the role of risk aversion in recursive problems. We also provide applications, in which we discuss the impact of risk aversion on asset pricing and risk sharing.
    Keywords: risk aversion; recursive utility; robustness; ordinal dominance; risk free rate; equity premium; risk sharing
    JEL: E2 E43 E44
    Date: 2013–01
  13. By: Boukary OUEDRAOGO; Mamoudou HASSANE
    Abstract: Cet article utilise, les données de la zone UEMAO de la période 1979-2010 pour examiner les relations de causalité entre le PIB par employé et la Consommation d’énergie d’une part, et celles entre l’Emploi et la consommation d’énergie d’autre part. Les tests de Phillips Perron, permettant de déterminer le niveau d’intégration des variables, ont conduit à la conclusion que les séries sont stationnaires à l’exception du PIB par emploi qui est intégré d’ordre 1. Les tests de la version Hsiao de la méthode de causalité de Granger révèlent l’existence d’une relation à sens unique entre d’une part le PIB par employé et la consommation d’énergie et l’emploi et la consommation d’énergie d’autre part. Ce qui permet une bonne définition de la politique énergétique en zone UEMOA.
    Keywords: Energie, PIB, Emploi, UEMAO
    JEL: C50 Q41
    Date: 2013
  14. By: Elisabetta Allevi (University of Brescia); Giorgia Oggioni (University of Brescia); Rossana Riccardi (University of Brescia); Marco Rocco (Bank of Italy)
    Abstract: The European Emissions Trading Scheme (ETS) is a cap and trade system to curb CO2 emissions. It has caused both direct costs (CO2 allowances) and indirect costs (higher electricity prices) to energy-intensive industries. Moreover, as there is no global CO2 agreement, the ETS could distort the European economy, prompting energy-intensive industries to relocate production to unregulated countries: the “carbon leakage” effect. This paper investigates the impact of ETS on the cement industry, focusing on Italy, the second European producer, analyzing a Cournot oligopolistic partial equilibrium model with a detailed technological representation of the market. Simulation results show that the European and Italian cement markets are subject to carbon leakage, especially where carbon regulation is more stringent and where plants are located near the seacoast. Further, transportation costs - particularly high in the cement sector - significantly affect the rate of carbon leakage.
    Keywords: carbon leakage, cement sector, ETS, generalized Nash game
    JEL: C60 D43 D58 C61 Q50
    Date: 2013–01
  15. By: Goeschl, Timo; Heyen, Daniel; Moreno-Cruz, Juan
    Abstract: Solar radiation management (SRM) technologies are considered one of the likeliest forms of geoengineering. If developed, a future generation could deploy them to limit the damages caused by the atmospheric carbon stock inherited from the current generation, despite their negative side effects. Should the current generation develop these geoengi-neering capabilities for a future generation? And how would a decision to develop SRM impact on the current generation's abatement efforts? Natural scientists, ethicists, and other scholars argue that future generations could be more sanguine about the side effects of SRM deployment than the current generation. In this paper, we add economic rigor to this important debate on the intergenerational transfer of technological capabilities and pollution stocks. We identify three conjectures that constitute potentially rational courses of action for current society, including a ban on the development of SRM. How-ever, the same premises that underpin these conjectures also allow for a novel possibility: If the development of SRM capabilities is sufficiently cheap, the current generation may for reasons of intergenerational strategy decide not just to develop SRM technologies, but also to abate more than in the absence of SRM.
    Keywords: Geoengineering; Climate Change; Intergenerational Issues; Strategic Behavior.
    Date: 2013–01–24
  16. By: Paramita Sinha; Maureen L. Cropper
    Abstract: We value climate amenities by estimating a discrete location choice model for households that changed metropolitan statistical areas (MSAs) between 1995 and 2000. The utility of each MSA depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household’s 1995 location. We use the estimated trade-off between wages and climate amenities to value changes in mean winter and summer temperatures. At median temperatures for 1970 to 2000, a 1°F increase in winter temperature is worth less than a 1° decrease in summer temperature; however, the reverse is true at winter temperatures below 25°F. These results imply an average welfare loss of 2.7 percent of household income in 2020 to 2050 under the B1 (climate-friendly) scenario from the special report on emissions scenarios (Intergovernmental Panel on Climate Change 2000), although some cities in the Northeast and Midwest benefit. Under the A2 (more extreme) scenario, households in 25 of 26 cities suffer an average welfare loss equal to 5 percent of income.
    JEL: Q5 Q51
    Date: 2013–02

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