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on Energy Economics |
| By: | Nick, Sebastian (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Thoenes, Stefan (Energiewirtschaftliches Institut an der Universitaet zu Koeln) |
| Abstract: | In this study, we develop a structural vector autoregressive model (VAR) for the German natural gas market. Our setup allows us to analyze the determinants of the natural gas price in a comprehensive framework. In particular, we illustrate the usefulness of our approach by disentangling the effects of different fundamental influences on gas prices during three recent supply interruptions: The Russian-Ukrainian gas dispute of January 2009, the Libyan civil war in 2011 and the withheld Russian exports in February 2012. Our results show that the natural gas price is affected by temperature, storage and supply shortfalls in the short term, while the long-term development is closely tied to both crude oil and coal prices, capturing the economic climate and the energy specific demand. |
| Keywords: | natural gas; structural vector autoregression; SVAR; supply interruption; security of supply |
| JEL: | Q41 |
| Date: | 2013–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2013_002&r=ene |
| By: | Carlo Andrea Bollino; Davide Ciferri; Paolo Polinori |
| Abstract: | In this paper we investigate wholesale electricity prices integration process in the main European markets. After reforms introduced in the last decades in Europe, wholesale electricity prices are now determined in regulated markets. However, while market institutional frameworks show several similarities, there are still differences in fuel mix, generation units technologies, market structure. Using multivariate cointegration techniques we test integration dynamics within four European markets (Austria, Germany, France and Italy) for which we have collected a novel dataset of spot prices from 2004 to 2010. We provide evidence that German market constitutes a common stochastic trend driving the long-run behavior of other markets. Our results are robust to causality test, to Granger causality test, to oil price relevance test and provide additional evidence to assess the efficient market hypothesis in European electricity markets. |
| Keywords: | European electricity markets, electricity spot prices, cointegration, structural MA representation |
| JEL: | C32 L16 Q41 |
| Date: | 2013–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:114/2013&r=ene |
| By: | Nagl, Stephan (Energiewirtschaftliches Institut an der Universitaet zu Koeln) |
| Abstract: | This paper outlines the effects of weather uncertainty on investment and operation decisions of electricity producers under a feed-in tariff and renewable quota obligation. Furthermore, this paper tries to quantify the sectoral welfare and investments risks under the different policies. For this purpose, a spatial stochastic equilibrium model is introduced for the European electricity market. The numerical analysis suggests that including the electricity market price in renewable policies (wholesale price + x) reduces the loss of sectoral welfare due to a renewable policy by 11-20 %. Moreover, investors face an only slightly higher risk than under fixed price compensations. However, electricity producers face a substantially larger investment risk when introducing a renewable quota obligation without the option of banking and borrowing of green certi cates. Given the scenario results, an integration of the hourly market price in renewable support mechanisms is mandatory to keep the financial burden to electricity consumers at a minimum. Additionally, following the discussion of a European renewable quota after 2020, the analysis indicates the importance of an appropriate banking and borrowing mechanism in light of stochastic wind and solar generation. |
| Keywords: | RES-E policy; price and quantity controls; mixed complementarity problem |
| JEL: | C61 L50 Q40 |
| Date: | 2013–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2013_004&r=ene |
| By: | Zhang, Fan |
| Abstract: | Feed-in tariffs have become the most widely used policy instrument to promote renewable energy deployment around the world. This paper examines the relation between tariff setting and policy outcome based on wind capacity expansion in 35 European countries over the 1991-2010 period. Using a dynamic panel data model, it estimates the long-run elasticity of wind deployment with respect to the level of feed-in support. The analysis finds that higher subsidies do not necessarily yield greater levels of wind installation. Non-economic barriers and rent-seeking may have contributed to the weak correlation. On the other hand, the length of feed-in contract and guaranteed grid access are important determinants of policy effectiveness. A one-year extension of an original 5-year agreement on average increases wind investment by 6 percent annually, while providing an interconnection guarantee almost doubles wind investment in one year. |
| Keywords: | Energy Production and Transportation,Climate Change Mitigation and Green House Gases,Carbon Policy and Trading,Climate Change Economics,Markets and Market Access |
| Date: | 2013–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6376&r=ene |
| By: | Eriksson, Mathilda (CERE, Centre for Environmental and Resource Economics) |
| Abstract: | This paper develops a model to evaluate then potential role of the global forest as an option to reduce climate change. The approach is to assess the forest as both a source of renewable energy and a potential storage of carbon together with non-carbon energy. The analysis shows that the global forest plays a signicant part in the carbon cycle and should be used together with non-carbon energy strategies. The tropical forest carbon storage proves to be especially important and the emphasis is to enlarge the growing stock, rather than increase the use of forest bioenergy. The positive dynamic eects of increasing bioenergy harvest is too weak to overpower the instant and future benets of increasing the growing forest biomass. Reducing tropical deforestation in the near future proves to be important for reducing climate change. |
| Keywords: | Integrated Assessment Models; Forest |
| JEL: | Q23 Q54 |
| Date: | 2013–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2013_001&r=ene |
| By: | Lindenberger, Dietmar (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Kümmel, Reiner (Universität Würzburg, Theoretische Physik I) |
| Abstract: | Energy conversion in the production of goods and services, and the resulting emissions associated with entropy production, have not yet been taken into account by the mainstream theory of economic growth. Novel econometric analyses, however, have revealed energy as a production factor whose output elasticity, which measures its productive power, is much higher than its share in total factor cost. This, although being at variance with the notion of orthodox economics, is supported by the standard maximization of profit or time-integrated utility, if one takes technological constraints on capital, labor, and energy into account. The present paper offers an explanation of these findings in the picture of a sledge, which represents the economy, on the slope of a niveous mountain, which represents cost. Historical economic trajectories indicate that the representative entrepreneur at the controls of the sledge steers his vehicle with due regard of the barriers from the technological constraints, observing “soft” constraints, like the legal framework of the market, in addition. We believe that this perspective contributes to resolving the paradox that energy hardly matters in mainstream growth theory, whereas it is an issue of growing importance in international policy. |
| Keywords: | energy; economic growth; oil price; profit maximization; technological constraints; output elasticities |
| JEL: | O11 Q43 |
| Date: | 2013–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2013_003&r=ene |
| By: | Ling Tang; Qin Bao; ZhongXiang Zhang; Shouyang Wang |
| Abstract: | With large shares in global trade and carbon emissions, China’s international trade is supposed to be significantly affected by the proposed carbon-based border tax adjustments (BTAs). This paper examines the impacts of BTAs imposed by USA and EU on China’s international trade, based on a multi-sector dynamic computable general equilibrium (CGE) model. The simulation results suggest that BTAs would have a negative impact on China’s international trade in terms of large losses in both exports and imports. As an additional border tariff, BTAs will directly affect China’s exports by cutting down exports price level, whereas Chinese exporting enterprises will accordingly modify their strategies, significantly shifting from exports to domestic markets and from regions with BTAs policies towards other regions without them. Moreover, BTAs will affect China’s total imports and sectoral import through influencing the whole economy in an indirect but more intricate way. Furthermore, the simulation results for coping policies indicate that enhancing China’s power in world price determination and improving energy technology efficiency will effectively help mitigate the damages caused by BTAs. |
| Keywords: | Border carbon tax adjustments; International trade; Dynamic computable general equilibrium model; Price determination power; Technological change |
| JEL: | D58 F18 Q43 Q48 Q52 Q54 Q56 Q58 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1301&r=ene |
| By: | Adele C. Morris; Warwick J. McKibbin; Peter J. Wilcoxen |
| Abstract: | The Doha climate talks in December 2012, wrapped up lines of negotiation that were begun years before in Bali. Negotiators resolved contentious questions about the future of the Kyoto Protocol and finally put the constraints of the Bali agenda behind them. Now they need turn to developing by 2015 a new agreement under the United Nations Framework Convention on Climate Change (UNFCCC) to cover the post-2020 period. In order to make concrete progress on climate policy there is a need to establish a Carbon Pricing Consultation (CPC) process, which would be a detailed, pragmatic, and ongoing discussion of the implementation details of domestic cap-and-trade and GHG taxes. Though carbon pricing generally been considered to be a national-level policy?to be adopted at the discretion of individual governments?the paper argues that a CPC process would provide an opportunity for negotiators, as well as the administrators of national pricing policies, to discuss how to induce, practically and efficiently, the broad economic shifts required to de-couple emissions and economic activity. This paper makes the argument for focusing on carbon pricing in the international negotiations and offers a way forward in that process. |
| Keywords: | Carbon Pricing, Carbon Tax, UNFCCC, Climate Change, Negotiations |
| JEL: | F51 F53 Q54 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2013-08&r=ene |
| By: | Lazarczyk, Ewa (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper studies the impact of market specific news on the short-time forward premia on the Scandinavian electricity market. I show that the short time premia between the day-ahead and intra-day electricity prices on the Scandinavian market can be explained by the arrival of news specific to the power market. By exploring the types of news I indicate that production failures shape the premia. Production disruptions in coal-powered units are most frequent and have the greatest effect on the differences between the day-ahead and intra-day prices. |
| Keywords: | Intra-day electricity market; Forward premia; Market specific news; Supply shocks |
| JEL: | D40 G14 L94 Q40 |
| Date: | 2013–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0953&r=ene |
| By: | Richter, Jan (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Viehmann, Johannes (Energiewirtschaftliches Institut an der Universitaet zu Koeln) |
| Abstract: | We study two electricity markets connected by a fixed amount of crossborder capacity. The total amount of capacity is known to all electricity traders and allocated via an auction. The capacity allocated to each bidder in the auction remains private information. We assume that traders are faced with a demand function reflecting the relationship between electricity transmitted between the markets and the spot price difference. Therefore, traders act like Bayesian-Cournot oligopolists in exercising their transmission rights when presented with incomplete information about the competitors’ capacities. Our analysis breaks down the welfare effect into three different components: Cournot behavior, capacity constraints, and incomplete information. We find that social welfare increases with the level of information with which traders are endowed. |
| Keywords: | Cournot Oligopoly; incomplete information; capacity constraints; electricity markets; interconnector; cross-border trade |
| JEL: | C72 D43 L13 L94 |
| Date: | 2013–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2013_005&r=ene |
| By: | Fischer, Carolyn (Resources for the Future); Heutel, Garth (University of North Carolina at Greensboro, Department of Economics) |
| Abstract: | Environmental economics has traditionally fallen in the domain of microeconomics, but recently approaches from macroeconomics have been applied to studying environmental policy. We focus on two macroeconomic tools and their application to environmental economics. First, real business cycle models can incorporate pollution and pollution policy and be used to answer several questions. How can environmental policy adjust to business cycles? How do different types of policies fare in a context with business cycles? Second, endogenous technological growth is an important component of environmental policy. Several studies ask how policy can be designed to both tackle emissions directly and influence the adoption of clean technologies. We focus on these two aspects of environmental macroeconomics but emphasize that there are many other potential applications. |
| Keywords: | Real business cycles; Endogenous technological change; Pollution |
| JEL: | E32 O44 Q50 Q55 |
| Date: | 2013–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:uncgec:2013_002&r=ene |
| By: | Zahabi, Seyed Amir H.; Miranda-Moreno, Luis; Patterson, Zachary; Barla, Philippe |
| Abstract: | This work examines the temporal-spatial variations of daily automobile distance traveled and greenhouse gas emissions (GHGs) and their association with built environment attributes and household socio-demographics. A GHGs household inventory is determined using link-level average speeds for a large and representative sample of households in three origin-destination surveys (1998, 2003 and 2008) in Montreal, Canada. For the emission inventories, different sources of data are combined including link-level average speeds in the network, vehicle occupancy levels and fuel consumption characteristics of the vehicle fleet. Built environment indicators over time such as population density, land use mix and transit accessibility are generated for each household in each of the three waves. A latent class (LC) regression modeling framework is then implemented to investigate the association of built environment and socio-demographics with GHGs and automobile distance traveled. Among other results, it is found that population density, transit accessibility and land-use mix have small but statistically significant negative impact on GHGs and car usage. Despite that this is in accordance with past studies, the estimated elasticities are greater than those reported in the literature for North American cities. Moreover, different household subpopulations are identified in which the effect of built environment varies significantly. Also, a reduction of the average GHGs at the household level is observed over time. According to our estimates, households produced 15% and 10% more GHGs in 1998 and 2003 respectively, compared to 2008. This reduction is associated to the improvement of the fuel economy of vehicle fleet and the decrease of motor-vehicle usage. A strong link is also observed between socio-demographics and the two travel outcomes. While number of workers is positively associated with car distance and GHGs, low and medium income households pollute less than high-income households. |
| Keywords: | Greenhouse gas emissions, spatio-temporal variations, built environment, latent class regression, household clusters, Environmental Economics and Policy, R42, R48, Q54, Q58, |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ulavwp:144271&r=ene |
| By: | Belén Martín-Barragán; Sofía B. Ramos; Helena Veiga |
| Abstract: | In a global economy, shocks occurring in one market can spill over to other markets. This paper investigates the impact of oil shocks and stock markets crashes on correlations between stock and oil markets. We test changes in correlations at different scales with non-overlapping confidence intervals based on estimated wavelet correlations. Contrary to other approaches, this method does not need adjustment for heteroskedasticity biases on the correlation coefficients. Our results show that oil shocks affect the correlation between both markets. The evidence on the change of correlation between stock markets after an oil shock is weaker; except in some specific cases during the Kuwait war and the OPEC cutback period. Conversely, we only find weak evidence that stock market crashes change the correlation between oil and stock markets. Overall, the evidence gives support to including oil as an asset class in asset allocation strategies. |
| Keywords: | Correlations, Financial shocks, International Financial Markets, Oil shocks, Stock Market Returns, Wavelets |
| JEL: | C40 E32 G15 F30 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wsrepe:ws130504&r=ene |
| By: | David Hendry; Felix Pretis |
| Abstract: | We demonstrate major flaws in the statistical analysis of Beenstock, Reingewertz and Paldor (2012), discrediting their initial claims as to the different degrees integrability of CO2 and temperature. |
| Keywords: | Econometric modelling, location shifts, data measurements, climate change |
| JEL: | C1 Q5 |
| Date: | 2013–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:643&r=ene |
| By: | Yasunori Ouchida (Faculty of Economics, Hiroshima University); Daisaku Goto (Graduate School for International Development and Cooperation, Hiroshima University) |
| Abstract: | In a recent publication in Journal of Economic Behavior and Organization, Poyago-Theotoky (2007) developed a three-stage game model, and also derived theoretical findings and important policy implications for environmental R&D under a time-consistent emission tax. Among the conclusions presented in that paper, it was stated that with inefficient environmental R&D technology and small environmental damage, cooperative environmental R&D engenders larger environmental R&D efforts and greater social welfare than noncooperative environmental R&D does. This note describes that the results of Professor Poyago-Theotoky's (2007, 2010) works are still robust in a relaxed wider parameter range of the environmental damage coefficient. Furthermore, we provide the generalized sufficient condition of damage coefficient to guarantee an interior solution for R&D in an extended framework. |
| Keywords: | Time-consistent emission tax, Environmental R&D, environmental damage, Cournot duopoly |
| JEL: | O32 L13 Q55 Q58 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:hir:idecdp:1-6&r=ene |
| By: | Leeuwen, George van (Centraal Bureau voor Statistiek); Mohnen, Pierre (UNU-MERIT/MGSoG) |
| Abstract: | Almost all empirical research that has attempted to assess the validity of the Porter hypothesis has started from reduced-form models, e.g. by using single-equation models for estimating the contribution of environmental regulation (ER) to productivity. This paper addresses the Porter Hypothesis within a structural approach that allows us to test what is known in the literature as the "weak" and the "strong" version of the Porter hypothesis. Our "Green Innovation" model includes three types of eco investments and non-eco R&D to explain differences in the incidence of innovation. Besides product and process innovations we recognize eco-innovation as a separate type of innovation output. We explicitly model the potential synergies of introducing the three types of innovations simultaneously and their synergy in affecting total factor productivity (TFP) performance. Using a comprehensive panel of firm-level data built from four surveys we aim to estimate the relative importance of energy price incentives as a market based type of ER and the direct effect of environmental regulation on eco investment and firms' decisions regarding the introduction of several types of innovations. The results of our analysis show a strong corroboration of the weak version of the Porter hypothesis but not of the strong version of the PH, in this case on TFP performance. |
| Keywords: | Porter Hypothesis, green innovation, environmental regulation, innovation complementarities, productivity |
| JEL: | H23 L5 O32 O38 Q55 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2013002&r=ene |
| By: | Andrés González; Martha Rosalba López Piñeros; Norberto Rodríguez Niño; Santiago Téllez |
| Abstract: | In this paper we develop a dynamic stochastic general equilibrium fiscal model for the Colombian economy. The model has three main components: the existence of non-Ricardian households, price and wage rigidities, and a fiscal authority that finances government spending partly with public debt. The model is calibrated to capture the empirical evidence on the macroeconomic effects of government spending and it is used to study the effect of an oil price shock under different fiscal policy rules. Our results show that fiscal multipliers in Colombia are positive in a way consistent with the evidence. Our analysis also shows that a structural fiscal rule delivers a better outcome in terms of macroeconomic volatility relative to a balanced budget rule or a countercyclical fiscal rule. |
| Keywords: | Fiscal multipliers, fiscal policy rules, non-Ricardian households, DSGE model. Classification JEL: D91, E21, E62 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:759&r=ene |
| By: | Islam, Asif M.; Lopez, Ramon E. |
| Abstract: | This study examines the effect of the composition of federal and state government spending on various important air pollutants in the US using a newly assembled data set of government spending. The results indicate that a reallocation of spending from private goods (RME) to social and public goods (PME) by state and local governments reduces sulfur dioxide concentrations while the composition of federal spending has no effect. A 10% percent increase in the share of state and local social and public goods government spending reduces air pollution concentrations by 3 to 5% for Sulfur Dioxide, 2 to 3% for particulate matter 2.5 and 1 to 2 % for ozone. The results are robust to various sensitivity checks. |
| Keywords: | air pollution, government spending, public goods, market imperfections, Environmental Economics and Policy, Public Economics, H50, H40, O13, O44, Q53, |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:umdrwp:144406&r=ene |
| By: | Hanley, Nicholas; Hynes, Stephen; Jobstvogt, Niels; Kenter, Jasper; Witte, Ursula |
| Abstract: | The deep-sea includes over 90% of the world oceans and is thought to be one of the most diverse ecosystems in the World. It supplies society with valuable ecosystem services, including the provision of food, the regeneration of nutrients and the sequestration of carbon. Technological advancements in the second half of the 20th century made large-scale exploitation of mineral-, hydrocarbon- and fish resources possible. These economic activities, combined with climate change impacts, constitute a considerable threat to deep-sea biodiversity. Many governments, including that of the UK, have therefore decided to implement additional protected areas in their waters of national jurisdiction. To support the decision process and to improve our understanding for the acceptance of marine conservation plans across the general public, a choice experiment survey asked Scottish households for their willingness-to-pay for additional marine protected areas in the Scottish deep-sea. This study is one of the first to use valuation methodologies to investigate public preferences for the protection of deep-sea ecosystems. The experiment focused on the elicitation of economic values for two aspects of biodiversity: (i) the existence value for deep-sea species and (ii) the option-use value of deep-sea organisms as a source for future medicinal products. |
| Keywords: | existence value; option-use value; choice experiment; Deep-sea biodive rsity |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2013-04&r=ene |