nep-ene New Economics Papers
on Energy Economics
Issue of 2013‒03‒16
fifty papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao

  1. The Economics of Renewable Electricity Policy in Ontario By Donald N. Dewees
  2. Long-term Transport Energy Demand and Climate Policy: Alternative Visions on Transport Decarbonization in Energy Economy Models By Robert Pietzcker; Thomas Longden; Wenying Chen; Sha Fu; Elmar Kriegler; Page Kyle; Gunnar Luderer
  3. Evaluation of Two Alternative Carbon Capture and Storage Technologies: A Stochastic Model By Luis M. Abadie; Ibon Galarraga; Dirk Rübbelke
  4. Will technological progress be sufficient to effectively lead the air transport to a sustainable development in the mid-term (2025)?. By Chèze, Benoit; Chevallier, Julien; Gastineau, Pascal
  5. Trade of Woody Biomass for Electricity Generation under Climate Mitigation Policy By Alice Favero; Emanuele Massetti
  6. Carbon Efficiency, Technology, and the Role of Innovation Patterns: Evidence from German Plant-Level Microdata By Sebastian Petrick
  7. The Role of Hedging in Carbon Markets By Anne Schopp; Karsten Neuhoff
  8. Designing an Optimal 'Tech Fix' Path to Global Climate Stability: R&D in a Multi-Phase Climate Policy Framework By Paul A. David; Adriaan van Zon
  9. Delivering a competitive Australian power system Part 2: The challenges, the scenarios By John Foster; Craig Froome; Ove Hoegh-Guldberg; Paul Meredith; Lynette Molyneaux; Tapan Saha; Liam Wagner; Barry Ball
  10. Integration and Convergence in European Electricity Markets By Bollino, Carlo Andrea; Ciferri, Davide; Polinori, Paolo
  11. Fiscal limits on first-best climate policy: A CGE analysis for Europe By Richard Tol; Stefano F Verde
  12. Impact evaluation of free-of-charge CFL bulb distribution in Ethiopia By Costolanski, Peter; Elahi, Raihan; Iimi, Atsushi; Kitchlu, Rahul
  13. Should Green Jobs Be Outsourced? By Peter Philips
  14. Technology Agreements with Heterogeneous Countries By Michael Hoel; Aart de Zeeuw
  15. Towards a New Eastern Mediterranean Energy Corridor? Natural Gas Developments Between Market Opportunities and Geopolitical Risks By Simone Tagliapietra
  16. The Welfare Impact of Indirect Pigouvian Taxation: Evidence from Transportation By Christopher R. Knittel; Ryan Sandler
  17. How solar subsidies can distort the power market: the case of Italy By Stagnaro, Carlo
  18. Electricity infrastructure: More border crossings or a borderless Europe? By Georg Zachmann
  19. Is Energy Storage an Economic Opportunity for the Eco-Neighborhood? By Hélène Le Cadre; David Mercier
  20. Incentivizing China’s Urban Mayors to Mitigate Pollution Externalities: The Role of the Central Government and Public Environmentalism By Siqi Zheng; Matthew E. Kahn; Weizeng Sun; Danglun Luo
  21. Dynamic relationship between energy consumption and income in Tunisia: A SVECM approach By Boufateh, Talel; Ajmi, Ahdi Noomen; El Montasser, Ghassen; Issaoui, Fakhri
  22. Unobserved heterogeneous effects in the cost efficiency analysis of electricity distribution systems By Per J. Agrell; Mehdi Farsi; Massimo Filippini; Martin Koller
  23. A Hybrid Approach for Forecasting of Oil Prices Volatility By Komijani, Akbar; Naderi, Esmaeil; Gandali Alikhani, Nadiya
  24. The Dynamics of Electric Cookstove Adoption: Panel data evidence from Ethiopia By Alem, Yonas; Hassen, Sied; Köhlin, Gunnar
  25. A Market Screening Model for Price Inconstancies: Empirical Evidence from German Electricity Markets By Korbinian von Blanckenburg; Marc Hanfeld; Konstantin A. Kholodilin
  26. A review of optimization methods for evaluation of placement of distributed generation into distribution networks (Przegląd metod optymalizacji przyłączenia rozproszonych źródeł energii do sieci elektroenergetycznej) By Anna Kowalska-Pyzalska
  27. Population, Resources, and Energy in the Global Economy: A Vindication of Herman Daly's Vision By Jonathan M. Harris
  28. Evaluating CO2 reduction policy portfolios in the automotive sector By van der Vooren; Eric Brouillat
  29. On the short- and long-run efficiency of energy and precious metal markets By Mohamed El Hedi Arouri; Shawkat Hammoudeh; Duc Khuong Nguyen; Amine Lahiani
  30. How Full Is the tank? – Insights on Short-run Fuel Price Reactions from German Travel Diary Data By Nolan Ritter; Christoph M. Schmidt; Colin Vance
  31. On the relationship between world oil prices and GCC stock markets By Mohamed El Hedi Arouri; Jamel Jouini; Duc Khuong Nguyen
  32. Can Climate Policy Enhance Sustainability? By Lorenza Campagnolo; Carlo Carraro; Marinella Davide; Fabio Eboli; Elisa Lanzi; Ramiro Parrado
  33. Environmental Catastrophes Under Time-inconsistent Preferences By Michielsen, T.O.
  34. Green Keynesianism: Beyond Standard Growth Paradigms By Jonathan M. Harris
  35. Methodology for Integrated Socio-Economic Assessment of Offshore Platforms: Towards Facilitation of the Implementation of the Marine Strategy Framework Directive By Ioannis Anastasiou; Anastasios Xepapadeas; Vassilios Babalos; Marva Stithou; Osiel Davila; Phoebe Koundouri; Antonios Antypas; Nikolaos Kourogenis; Aris Mousoulides; Marianna Mousoulidou; Nick Ahrensberg; Barbara Zanuttigh; Fabio Zagonari; Manfred A. Lange; Carlos Jimenez; Elena Charalambous; Lars Rosen; Andreas Lindhe; Jenny Norrman; Tommy Norberg; Tore Soderqvist; Aksel Pedersen; Dimitris Troianos; Athanasios Frentzos; Yukiko Krontira; Inigo Losada; Pedro Diaz-Simal; Raul Guanche; Mark de Bel; Wei He; Sedat Kabdasli; Nilay Elginoz; Elif Oguz; Taylan Bagci; Bilge Bas; Matteo Cantu�; Matteo Masotti; Roberto Suffredini; Marian Stuiver
  36. Climate Change: Risk, Reputation, and Mechanism Design By Prasenjit Banerjee; Jason F. Shogren
  37. Optimal pollution control under emission constraitns: switching between regimes. By Enrico Saltari; Giuseppe Travaglini
  38. Measurement of Environmentally Sensitive Productivity Growth in Korean Industries By Chung, Yeimin; Heshmati, Almas
  39. Biofuels, Binding Constraints and Agricultural Commodity Price Volatility By Philip Abbott
  40. Nonuse values of climate policy: An empirical study in Xinjiang and Beijing By Ahlheim, Michael; Frör, Oliver; Tong, Jiang; Jing, Luo; Pelz, Sonna
  41. Measuring Productivity Gains from Deregulation of the Japanese Urban Gas Industry By Tanaka, Kenta; Managi, Shunsuke
  42. Simulation Modeling and Optimization of Competitive Electricity Markets and Stochastic Fluid Systems. By Ozdemir, O.
  43. Decomposing changes in competition in the Dutch electricity market through the Residual Supply Index By Schoonbeek, Lambert; Mulder, Machiel
  44. The Impact of Environmental Taxes on Firms' Technology and Entry Decisions. By Boying Liu; Ana Espinola-Arredondo
  45. Oscillatory Versus Quadratic Trends in Natural Resource Commodity Prices By Antonios Antypas; Phoebe Koundouri; Nikolaos Kourogenis
  46. Econophysics of adaptive power markets: When a market does not dampen fluctuations but amplifies them By Sebastian M. Krause; Stefan Boerries; Stefan Bornholdt
  47. Discounting and Relative Consumption By Johansson-Stenman, Olof; Sterner, Thomas
  48. Dynamics and Spatial Distribution of Global Nighttime Lights By Nicola Pestalozzi; Peter Cauwels; Didier Sornette
  49. Biofuels and Food Prices: Searching for the Causal Link By Andrea Bastianin; Marzio Galeotti; Matteo Manera
  50. Le risque d'accident nucléaire majeur : calcul et perception des probabilités By François Lévêque

  1. By: Donald N. Dewees
    Abstract: Economic evaluation of green or renewable power should compare the cost of renewable power with the cost savings from displaced fossil generation plus the avoided harm from reduced emissions of air pollution and greenhouse gases. We use existing estimates of the values of the harm and we calculate cost savings from renewable power based on wholesale spot prices of power in Ontario and steady-state estimates of the cost of new gas generation to estimate the value or affordability of various forms of renewable power in Ontario. We find that timing matters in evaluating intermittent renewable sources. Considering air pollution and greenhouse gases we find that coal generation is dominated by natural gas, supporting Ontario's policy of ending coal generation by 2014. Renewable power thus displaces gas. Dispatchable renewable generation sources, such as many biogas, biomass and some hydroelectric sites cause savings and reduced harm that can justify some of the Ontario Feed-in-Tariff prices up to $130/MWh; other FIT prices are too high. Wind and solar power are variable, so the value of their power depends on system marginal costs when they generate. Wind's displacement of gas capacity is low because it cannot be depended upon when demand is high and generation is needed, so it justifies prices of only $60 to $95/MWh, less than the FIT price of $115. Solar power justifies higher prices than wind, up to $152/MWh because solar generates in the daytime when prices are higher and when solar can fairly reliably displace gas capacity. Still, solar power falls far short of justifying the 2012 Ontario FIT prices of $347 to $549/MWh. Ontario's Feed-in-Tariff program costs more than necessary to achieve its environmental goals.
    Keywords: renewable energy, green energy, wind power, solar power, air pollution harm, greenhouse gases, feed-in-tariff, electricity generation externalities
    JEL: L94 Q42 Q51 Q52 Q53 Q54 Q58
    Date: 2013–03–05
  2. By: Robert Pietzcker (Potsdam Institute for Climate Impact Research Thomas Longden, Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change); Thomas Longden (Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change); Wenying Chen (3E (Energy, Environment and Economy) Research Institute, Tsinghua University); Sha Fu (National Center for Climate Change Strategy and International Cooperation (NCSC)); Elmar Kriegler (Potsdam Institute for Climate Impact Research); Page Kyle (Joint Global Change Research Institute, Paci?c Northwest National Laboratory); Gunnar Luderer (Potsdam Institute for Climate Impact Research)
    Abstract: Transportation accounts for a substantial share of CO2 emissions, and decarbonizing transport will be necessary to limit global warming to below 2°C. Due to persistent reliance on fossil fuels, it is posited that transport is more difficult to decarbonize than other sectors. We test this hypothesis by comparing long-term transport energy demand and emission projections for China, USA and the World from five large-scale energy-economy models with respect to three climate policies. We systematically analyze mitigation levers along the chain of causality from mobility to emissions, and discuss structural differences between mitigation in transport and non-transport sectors. We can confirm the hypothesis that transport is difficult to decarbonize with purely monetary signals when looking at the period before 2070. In the long run, however, the three global models achieve deep transport emission reductions by >90% through the use of advanced vehicle technologies and carbon-free primary energy; especially biomass with CCS plays a crucial role. Compared to the global models, the two partial-equilibrium models are relatively inflexible in their reaction to climate policies. Across all models, transportation mitigation lags behind non-transport mitigation by 10-30 years. The extent to which earlier mitigation is possible strongly depends on implemented technologies and model structure.
    Keywords: Transportation Scenarios, Carbon Emission Mitigation, Integrated Assessment, Energy-Economy Modeling, Advanced Light Duty Vehicles, Demand Reduction
    JEL: Q54 R41 R48
    Date: 2013–01
  3. By: Luis M. Abadie; Ibon Galarraga; Dirk Rübbelke
    Abstract: In this paper we evaluate two alternative CCS technologies of a coal-fired power plant from an investor’s point of view. The first technology uses CO2 for enhanced oil recovery (EOR) paired with storage in deep saline formations (DSP) and the second one just stores CO2 in DSF. For projects of this type there are many sources of risk, and three sources of uncertainty stand out: the price of electricity, the price of oil and the price of carbon allowances. In this paper we develop a general stochastic model that can be adapted to other projects such as enhanced gas recovery (EGR) or industrial plants that use CO2 for either EOR or EGR with CCS. The model is calibrated with UK data and applied to help understand the conditions that generate the incentives needed for early investments in these technologies. Additionally, we analyse the risks of these investments.
    Keywords: carbon capture and storage; enhanced oil recovery; power plants; stochastic model; futures markets; real options.
    Date: 2013–03
  4. By: Chèze, Benoit; Chevallier, Julien; Gastineau, Pascal
    Abstract: The aim of this article is to investigate whether anticipated technological progress can be expected to be strong enough to offset carbon dioxide (CO2)emissions resulting from the rapid growth of air transport. Aviation CO2 emissions projections are provided at the worldwide level and for eight geographical zones until 2025. Total air traffic flows are first forecast using a dynamic panel-data econometric model and then converted into corresponding quantities of air traffic CO2 emissions, through jet fuel demand forecasts, using specific hypothesis and energy factors. None of our nine scenarios appears compatible with the objective of 450 ppm CO2-eq. (a.k.a. “scenario of type I”) recommended by the Intergovernmental Panel on Climate Change (IPCC). None is either compatible with the IPCC scenario of type III, which aims at limiting global warming to 3.2◦C. Thus, aviation CO2 emissions are unlikely to diminish over the next decade unless there is a radical shift in technology and/or travel demand is restricted.
    Keywords: Air transport; CO2 emissions; Forecasting; Climate change;
    JEL: C53 L93 Q47 Q54
    Date: 2013–01
  5. By: Alice Favero (Yale University, FEEM and CMCC); Emanuele Massetti (Yale University, FEEM and CMCC)
    Abstract: Bio-energy has the potential to be a key mitigation option if combined with carbon capture and sequestration (BECCS) because it generates electricity and absorbs emissions at the same time. However, biomass is not distributed evenly across the globe, and regions with a potentially high demand might be constrained by limited domestic supply. Therefore, climate mitigation policies might create the incentive to trade biomass internationally. This paper uses scenarios generated by the integrated assessment model WITCH to study trade of woody biomass from multiple perspectives: the volume of biomass traded, its value, the impact on other power generation technologies and on marginal abatement costs. The policy scenarios consist of three representative carbon tax policies (4.8 W/m2, 3.8 W/m2 and 3.2 W/m2 radiative forcing in 2100) and a cap-and-trade scheme (3.8 W/m2 in 2100). Results show that the incentive to trade biomass is high: at least 50% of biomass consumed globally is from the international market. Regions trade 13-69 EJ/yr of woody biomass in 2050 and 55-81 EJ/yr in 2100. In 2100 the value of biomass traded is equal to US$ 0.7-7.2 Trillion. Trade of woody biomass sensibly reduces marginal abatement costs. In the tax scenarios, abatement increases by 120-323 Gt CO2 over the century. In the cap-and-trade scenario biomass trade reduces the price of emission allowances by 34% in 2100 and cumulative discounted policy costs by 14%.
    Keywords: BECCS, Woody Biomass Trade, IAM, Negative Emissions, Carbon Market
    JEL: Q23 Q56 F18
    Date: 2013–02
  6. By: Sebastian Petrick
    Abstract: We describe the determinants of energy intensity, carbon intensity, and CO2 emissions in the German manufacturing sector between 1995 and 2007, applying the LMDI index decomposition technique not to aggregate but to micro data. We trace back changes in total CO2 emissions from manufacturing to changes in activity level, structural change between sectors, structural change within sectors, energy intensity at the firm level, fuel mix, and emission factors. We use a firm data set on energy use from the AFiD-Panel on German manufacturing plants that allows us to analyze energy use at the firm level with unprecedented accuracy. Our results show that heterogeneity among firms within one sector is a driver of energy intensity, carbon intensity, and CO2 emissions. By stressing the importance of competition between firms for energy efficiency improvements, we highlight a factor that has so far been widely ignored. Firm heterogeneity has so far rarely included in index decomposition analyses. Contrary to wide-spread beliefs, energy intensity improvements at the firm level do not play a significant role in reducing emissions. Based on findings from the decomposition analysis, we use sector-level results on the relative importance of improvements in firm-level energy intensity and intra-sectoral structural change to distinguish two different innovation channels: innovation by technology and by entrants. We show that incumbent firms in a number of sectors, including some of the most energy intensive ones, do not significantly improve their energy efficiency. Innovation takes place via new entrants instead, rendering standard policies targeted at firm-level energy efficiency ineffective
    Keywords: Index decomposition, industrial energy, energy intensity, carbon intensity, structural change
    JEL: Q40 Q41
    Date: 2013–02
  7. By: Anne Schopp; Karsten Neuhoff
    Abstract: In the European Emissions Trading System, power generators hold CO2 allowances to hedge for future power sales. First, we model their aggregate hedging demand in response to changes in expectations of future fuel, carbon and power prices from forward prices. This partial equilibrium analysis is then integrated into a two period model of the supply and demand of CO2 allowances considering also emissions impact and banking of allowances by speculative investors. We find that hedging flexibility can balance a CO2 allowance surplus in the range of 1.1 - 1.6 billion t CO2 at discount rates of future carbon allowances between 0 - 10%. If the surplus exceeds this level, then the rate at which today's carbon prices discount expected future prices increases. This points to the value of reducing the surplus estimated to be 2.6 billion t CO2 allowances in 2015 by about 1.3 billion t CO2, thus ensuring that hedging makes a significant contribution to stabilise carbon prices.
    Keywords: Emissions trading schemes, banking, power hedging, discount rates
    JEL: D84 G18 Q48
    Date: 2013
  8. By: Paul A. David (Stanford Economics Department); Adriaan van Zon (SBE Maastricht University & UNU-MERIT (Maastricht, NL))
    Abstract: The research reported here gives priority to understanding the inter-temporal resource allocation requirements of a program of technological changes that could halt global warming by completing the transition to a “green” (zero net CO2- emission) production regime within the possibly brief finite interval that remains before Earth’s climate is driven beyond a catastrophic tipping point. This paper formulates a multi-phase, just-in-time transition model incorporating carbon-based and carbon-free technical options requiring physical embodiment in durable production facilities, and having performance attributes that are amenable to enhancement by directed R&D expenditures. Transition paths that indicate the best ordering and durations of the phases in which intangible and tangible capital formation is taking place, and capital stocks of different types are being utilized in production, or scrapped when replaced types embodying socially more efficient technologies, are obtained from optimizing solutions for each of a trio of related models that couple the global macro-economy’s dynamics with the dynamics of the climate system. They describe the flows of consumption, CO2 emissions and the changing atmospheric concentration of green-house gas (which drives global warming), along with the investment dynamics required for the timely transformation of the production regime. These paths are found as the welfare-optimizing solutions of three different “stacked Hamiltonians”, each corresponding to one of our trio of integrated endogenous growth models that have been calibrated comparably to emulate the basic global setting for the “transition planning” framework of dynamic integrated requirements analysis modeling (DIRAM). As the paper’s introductory section explains, this framework is proposed in preference to the (IAM) approach that environmental and energy economists have made familiar in integrated assessment models of climate policies that would rely on fiscal and regulatory instruments -- but eschew any analysis of the essential technological transformations that would be required for those policies to have the intended effect. Simulation exercises with our models explore the optimized transition paths’ sensitivity to parameter variations, including alternative exogenous specifications of the location of a pair of successive climate “tipping points”: the first of these initiates higher expected rates of damage to productive capacity by extreme weather events driven by the rising temperature of the Earth’s surface; whereas the second, far more serious “climate catastrophe” tipping point occurs at a still higher temperature (corresponding to a higher atmospheric concentration of CO2). In effect, that sets the point before which the transition to a carbon-free global production regime must have been completed in order to secure the possibility of future sustainable development and continued global economic growth.
    Keywords: global warming, tipping point, catastrophic climate instability, extreme weatherrelated damages, R&D based technical change, embodied technical change, optimal sequencing, multi-phase optimal control, sustainable endogenous growth
    JEL: Q54 Q55 O31 O32 O33 O41 O44
    Date: 2013–03
  9. By: John Foster (Department of Economics, University of Queensland); Craig Froome; Ove Hoegh-Guldberg (Global Change Institute, University of Queensland); Paul Meredith (Department of Physics, University of Queensland); Lynette Molyneaux (Department of Economics, University of Queensland); Tapan Saha (School of Information Technology and Electrical Engineering); Liam Wagner (Department of Economics, University of Queensland); Barry Ball (Global Change Institute, University of Queensland)
    Abstract: Australia’s abundant supply of coal has underpinned its power system. Competing countries have used a variety of energy resources, which sees many of them now equipped with resilient power systems to provide future electrical power. This paper considers the implication of possible scenarios for the Australian power system in 2035.
    Keywords: Distributed Generation, Energy Economics, Electricity Markets, Renewable Energy
    JEL: Q40
    Date: 2013–01
  10. By: Bollino, Carlo Andrea; Ciferri, Davide; Polinori, Paolo
    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: 2013–01–07
  11. By: Richard Tol (Department of Economics, University of Sussex; Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands; Department of Spatial Economics, Vrije Universiteit, Amsterdam, The Netherlands); Stefano F Verde (Climate Policy Research Unit, European University Institute, Florence, Italy)
    Abstract: We use a standard computable general equilibrium model to explore the fiscal implications of stringent carbon dioxide emission reduction in Europe. Both the immediate targets (20-30% by 2020) and the medium-term targets (80-90% by 2050) for abatement can be met with a carbon tax that is modest to sizeable. Imposing budget neutrality, a carbon tax that would allow all other taxes to fall by 5% (20%) would cut emissions by about 40% (80%). For 80% emission reduction, the carbon tax would only be the third largest tax in terms of revenue. A 40% emission reduction would cost about 1.5% of GDP. Costs are roughly exponential in abatement. The economic impact of emission reduction is minimized if the carbon tax revenue is preferentially used to reduce taxes on intermediates and import tariffs; such taxes, however, bring in little revenue at present. Emission reduction in Europe affects trade patterns across the world. It hampers the economies of West Asia and Africa, but has stimulating effect elsewhere. Economies everywhere outside Europe become more carbon-intensive. About one in four of emissions avoided in Europe are emitted elsewhere.
    Keywords: carbon tax, tax reform, greenhouse gas emission reduction
    JEL: H23 Q54
    Date: 2013–02
  12. By: Costolanski, Peter; Elahi, Raihan; Iimi, Atsushi; Kitchlu, Rahul
    Abstract: Electricity infrastructure is one of the most important development challenges in Africa. While more resources are clearly needed to invest in new capacities, it is also important to promote energy efficiency and manage the increasing demand for power. This paper evaluates one of the recent energy-efficiency programs in Ethiopia, which distributed 350,000 compact fluorescent lamp bulbs free of charge. The impact related to this first phase is estimated at about 45 to 50 kilowatt hours per customer per month, or about 13.3 megawatts of energy savings in total. The overall impact of the compact fluorescent lamp bulb programs, thanks to which more than 5 million bulbs were distributed, could be significantly larger. The paper also finds that the majority of the program beneficiaries were low-volume customers -- mostly from among the poor -- although the program was not targeted. In addition, the analysis determines the distributional effect of the program: the energy savings relative to the underlying energy consumption were larger for the poor. The evidence also supports a rebound effect. About 20 percent of the initial energy savings disappeared within 18 months of the program's completion.
    Keywords: Energy Production and Transportation,Climate Change Economics,Climate Change Mitigation and Green House Gases,Energy and Environment,Environment and Energy Efficiency
    Date: 2013–03–01
  13. By: Peter Philips
    Abstract: The proposed Sempra 1250 megawatt (MW) tieline connecting the California grid to envisioned new wind-farms in Mexico is not just about electricity. It is also about foregone opportunities, lost human capital investment, lost worklives, lost tax revenues, and diminished economic development prospects; and also, it is about which regulatory authority, California or Mexico, should oversee the environmental impacts of building green generation capacity for the California grid. Finally, it is about undoing some of the economic benefits and jobs stimulated by the first set of federally subsidized, utilityscale, solar projects fast-tracked by the Interior Department.
    Keywords: renewable energy, construction, Imperial Valley, California, local economic development, photovoltaic solar energy generation, worker training, apprenticeship, local economic development JEL Classification: Q4, Q42, O1, O18
    Date: 2013
  14. By: Michael Hoel (University of Oslo); Aart de Zeeuw (Tilburg University)
    Abstract: For sufficiently low abatement costs many countries might undertake significant emission reductions even without any international agreement on emission reductions. We consider a situation where a coalition of countries does not cooperate on emission reductions but cooperates on the development of new, climate friendly technologies that reduce the costs of abatement. The equilibrium size of such a coalition, as well as equilibrium emissions, depends on the distribution across countries of their willingness to pay for emission reductions. Increased willingness to pay for emissions reductions for any group of countries will reduce (or leave unchanged) the equilibrium coalition size. However, the effect of such an increase in aggregate willingness to pay on equilibrium emissions is ambiguous.
    Keywords: Technology Agreement, Coalition Stability, Climate, International Agreement
    JEL: F42 O32 Q2 C72
    Date: 2013–01
  15. By: Simone Tagliapietra (Fondazione Eni Enrico Mattei)
    Abstract: The Eastern Mediterranean region is rapidly changing. The turbolent political transition in Egypt after the Arab Spring, the civil war in Syria, the emergence of Turkey as leading regional power, the tensions between Israel and Gaza and the never-ending dispute between Turkey and the Republic of Cyprus are -all together- reshuffling the regional geopolitical equilibrium. At the same time natural gas findings are flourishing in the offshore of Egypt, Israel, and Cyprus, reshaping the regional energy map and rapidly making the Eastern Mediterranean a world-class natural gas province. These geopolitical and energy pressures are rapidly converging, generating a number of new challenges and opportunities for each player in the region. The aim of this paper is to provide a comprehensive overview on these new regional developments and to propose a critical discussion of the market opportunities and geopolitical risks related to the potential emergence of a new Eastern Mediterranean Energy Corridor.
    Keywords: Eastern Mediterranean, Natural Gas, Energy Geopolitics, Turkey, Israel, Egypt, Cyprus, Lebanon, European Union, Security of Gas Supply, Energy security
    JEL: Q40 Q42 Q48
    Date: 2013–02
  16. By: Christopher R. Knittel; Ryan Sandler
    Abstract: A basic tenet of economics posits that when consumers or firms don't face the true social cost of their actions, market outcomes are inefficient. In the case of negative externalities, Pigouvian taxes are one way to correct this market failure, where the optimal tax leads agents to internalize the true cost of their actions. A practical complication, however, is that the level of externality nearly always varies across economic agents and directly taxing the externality may be infeasible. In such cases, policy often taxes a product correlated with the externality. For example, instead of taxing vehicle emissions directly, policy makers may tax gasoline even though per-gallon emissions vary across vehicles. This paper estimates the implications of this approach within the personal transportation market. We have three general empirical results. First, we show that vehicle emissions are positively correlated with vehicle elasticities for miles traveled with respect to fuel prices (in absolute value)—i.e. dirtier vehicles respond more to fuel prices. This correlation substantially increases the optimal second-best uniform gasoline tax. Second, and perhaps more importantly, we show that a uniform tax performs very poorly in eliminating deadweight loss associated with vehicle emissions; in many years in our sample over 75 percent of the deadweight loss remains under the optimal second-best gasoline tax. Substantial improvements to market efficiency require differentiating based on vehicle type, for example vintage. Finally, there is a more positive result: because of the positive correlation between emissions and elasticities, the health benefits from a given gasoline tax increase by roughly 90 percent, compared to what one would expect if emissions and elasticities were uncorrelated.
    JEL: H21 H23 L91 Q48 Q51 Q52 Q53 Q54 Q58
    Date: 2013–02
  17. By: Stagnaro, Carlo
    Abstract: Italian policies to stimulate power production have been a success in the sense that solar power capacity has exploded, but they have also led to formidable costs. What is more, argues Carlo Stagnaro of the Italian think tank Istituto Bruno Leoni, support for green power has profoundly distorted the functioning of the Italian energy market. As solar power is subsidized and given unlimited priority access to the grid, the size of the "contestable market", where power producers compete with each other, has shrunk dramatically. Stagnaro warns that the measures now being discussed to remedy the problems will put further pressure on the market model in Italy and lead to more control from above.
    Keywords: subsidies, renewable energies, solar power, electricity, competition, regulation, italy
    JEL: H23 K23
    Date: 2012–07–05
  18. By: Georg Zachmann
    Abstract: Being able to transport electricity seamlessly across borders is essential for achieving three major European Union energy policy goals: (1) enabling competition between national energy companies, (2) cost-effective roll-out of renewables,and (3) security of supply. However, neither the market design nor the framework for infrastructure investment proposed by the European Commission is adequate for enabling free flows of electricity within the EU. We propose that first, vertical unbundling needs to be completed. Second, to ensure the reliable operation of the meshed European electricity system a European control centre should be established. Third, a truly European and binding network infrastructure planning process should be established. It should be transparent and open in order to ensure the synchronisation of investment.The outcome should be democratically legitimised. Finally, networks should be joint-funded by all benefiting parties, not just consumers that happen to live in the member state where a particular line is being built. Without a bold step the single energy market project risks falling short in theface of increased penetration of intermittent renewable sources
    Date: 2013–02
  19. By: Hélène Le Cadre (CMA - Centre de Mathématiques Appliquées - MINES ParisTech - École nationale supérieure des mines de Paris); David Mercier (CEA, LIST - CEA)
    Abstract: In this article, we consider houses belonging to an eco-neighborhood in which inhabitants have the capacity to optimize dynamically the energy demand and the energy storage level so as to maximize their utility. The inhabitants' preferences are characterized by their sensitivity toward comfort versus price, the optimal expected temperature in the house, thermal loss and heating efficiency of their house. At his level, the eco-neighborhood manager shares the resource produced by the eco-neighborhood according to two schemes: an equal allocation between the houses and a priority based one. The problem is modeled as a stochastic game and solved using stochastic dynamic programming. We simulate the energy consumption of the eco-neighborhood under various pricing mechanisms: flat rate, peak and off-peak hour, blue/white/red day, peak day clearing and a dynamic update of the price based on the consumption of the eco-neighborhood. We observe that economic incentives for houses to store energy depend deeply on the implemented pricing mechanism and on the homogeneity in the houses' characteristics. Furthermore, when prices are based on the consumption of the eco-neighborhood, storage appears as a compensation for the errors made by the service provider in the prediction of the consumption of the eco-neighborhood.
    Keywords: Eco-Neighborhood; Planning; Stochastic game theory; Energy storage; Pricing
    Date: 2013–05–20
  20. By: Siqi Zheng; Matthew E. Kahn; Weizeng Sun; Danglun Luo
    Abstract: China’s extremely high levels of urban air, water and greenhouse gas emissions levels pose local and global environmental challenges. China’s urban leaders have substantial influence and discretion over the evolution of economic activity that generates such externalities. This paper examines the political economy of urban leaders’ incentives to tackle pollution issues. Based on a principal-agent framework, we present evidence consistent with the hypothesis that both the central government and the public are placing pressure on China’s urban leaders to mitigate externalities. Such “pro-green” incentives suggest that many of China’s cities could enjoy significant environmental progress in the near future.
    JEL: H23 H41 Q48 Q53 R5
    Date: 2013–03
  21. By: Boufateh, Talel; Ajmi, Ahdi Noomen; El Montasser, Ghassen; Issaoui, Fakhri
    Abstract: This study examines the short-run and long-run dynamics binding energy consumption to GDP using a structural vector error correction (SVECM) model during the period 1971-2009. In addition, a comparative study between Tunisia,the USA and Sweden is conducted. Results spread over two axes. First,the cyclical component of the model indicates that the instantaneous impact of a short run shock on energy is generally positive. However, the impact of this shock on output is positive in the USA and Sweden and negative in Tunisia. Therefore, it seems that unlike a small country like Tunisia where the productive system is directly penalized, developed countries are better able to cope with a transitory shock and find alternatives to productivity gains. Secondly concerning the trend component of the model, we conclude that the effect of a long run shock on energy consumption is positive in Tunisia while it is negative in the USA and Sweden. The effect of a long run shock on production for both the developed countries is positive and increasing. This findings seems interesting insofar as it reflects the willingness of developed countries substitute current energy sources by renewable and cleaner sources. It also reflects Tunisian dependence to current sources of electricity.
    Keywords: Energy consumption, GDP, SVEC model, Tunisia
    JEL: C32 Q43
    Date: 2013–02–15
  22. By: Per J. Agrell; Mehdi Farsi; Massimo Filippini; Martin Koller
    Abstract: The purpose of this study is to analyze the cost efficiency of electricity distribution systems in order to enable regulatory authorities to establish price- or revenue cap regulation regimes. The increasing use of efficiency analysis in the last decades has raised serious concerns among regulators and companies regarding the reliability of efficiency estimates. One important dimension affecting the reliability is the presence of unobserved factors. Since these factors are treated differently in various models, the resulting estimates can vary across methods. Therefore, we decompose the benchmarking process into two steps. In the first step, we identify classes of similar companies with comparable network and structural characteristics using a latent class cost model. We obtain cost best practice within each class in the second step, based on deterministic and stochastic cost frontier models. The results of this analysis show that the decomposition of the benchmarking process into two steps has reduced unobserved heterogeneity within classes and, hence, reduced the unexplained variance previously claimed as inefficiency.
    Keywords: Efficiency analysis, cost function, electricity sector, incentive regulation
    JEL: L92 L50 L25
    Date: 2013–01
  23. By: Komijani, Akbar; Naderi, Esmaeil; Gandali Alikhani, Nadiya
    Abstract: This study aims to introduce an ideal model for forecasting crude oil price volatility. For this purpose, the ‘predictability’ hypothesis was tested using the variance ratio test, BDS test and the chaos analysis. Structural analyses were also carried out to identify possible nonlinear patterns in this series. On this basis, Lyapunov exponents confirmed that the return series of crude oil price is chaotic. Moreover, according to the findings, the rate of return series has the long memory property rejecting the efficient market hypothesis and affirming the fractal markets hypothesis. The results of GPH test verified that both the rate of return and volatility series of crude oil price have the long memory property. Besides, according to both MSE and RMSE criteria, wavelet-decomposed data improve the performance of the model significantly. Therefore, a hybrid model was introduced based on the long memory property which uses wavelet decomposed data as the most relevant model.
    Keywords: Forecasting, Oil Price, Chaos, Wavelet Decomposition, Long Memory
    JEL: C53 C58 G17
    Date: 2013–01–04
  24. By: Alem, Yonas (School of Business, Economics and Law); Hassen, Sied (School of Business, Economics and Law); Köhlin, Gunnar (School of Business, Economics and Law)
    Abstract: Previous studies on improved cookstove adoption in developing countries use cross-sectional data, which makes it difficult to control for unobserved heterogeneity and investigate what happens to adoption over time. We use robust non-linear panel data and hazard models on three rounds of panel data from urban Ethiopia to investigate the determinants and dynamics of electric cookstove adoption. We find the price of electricity and firewood, and access to credit as major determinants of adoption and transition. Our findings have important implications for policies aiming at promotion of energy transition and reduction of the pressure on forest resources in developing countries.<p>
    Keywords: Cookstoves; Electric Mitad; Firewood; Panel data; Random-Effects Probit
    JEL: Q40 Q41 Q42 Q48
    Date: 2013–02–28
  25. By: Korbinian von Blanckenburg; Marc Hanfeld; Konstantin A. Kholodilin
    Abstract: In this paper, we develop a market screening model to detect inconstancies in price changes. Although there is a long history of industrial organization research of collusion, price setting behavior, and conduct - a robust model to detect structural changes in market structure was missing so far. Our non-parametric approach closes this gap and can be used as a tentative warning system for emerging collusions. Based on the theoretical and empirical results from previous research, we describe requirements of screenings, develop a model, and illustrate our approach with a short market simulation. Finally, we apply the model to the German electricity market. According to our results, between 2001 and 2011 energy suppliers appear to be successful in controlling the market price for several phases.
    Keywords: Market screening, collusion, competition policy, energy markets
    JEL: L10 L60
    Date: 2013
  26. By: Anna Kowalska-Pyzalska
    Abstract: In last decades the rapid development of distributed generation can be observed. It is caused, among others, by legal circumstances, liberalization of the energy market and increasing demand of electrical energy. The presence of many various distributed generators in the power system is a big challenge for the transmission and distribution system operators. Optimization methods, which state-of-the-art is the subject and aim of this paper, can be very helpful in planning and decision making about the reinforcement of the networks. In the paper the most common optimization methods, objective functions and constraints will be described. The current trends in optimization of distributed generation will be presented.
    Keywords: Distributed generation; Distribution system operator; Optimization
    JEL: C61 L94 P28 Q42
    Date: 2013
  27. By: Jonathan M. Harris
    Abstract: Herman Daly pioneered the concept of environmental macroeconomics. He famously argued that we have moved from an “empty world” of resource abundance to a “full world” of energy and resource limits. His insights, however, have generally been rejected or ignored by most mainstream economic analysts, who argue that resource shortages are remediable through market flexibility and substitution, posing no threat to long-term exponential economic growth. In the absence of immediate crisis, standard economics has been able to maintain this “optimistic” stance, dismissing population, resource, and energy limits. But developments during the first decade of the twenty-first century indicate that it will be Daly’s view, rather than that of the mainstream, that will be most important in shaping economic development in the coming century. As Daly foresaw, an energy economy based on high efficiency and renewable fuels cannot pursue the exponential growth path characteristic of the fossil-fuel dependent economy of the twentieth century. The issues involved go well beyond the energy sector of the economy. Population growth and food supply also become critical. There are many interactions between the agricultural and energy systems; in addition to energy intensification in agriculture, demands for biofuels put pressure on the limited supply of agricultural land. Recent price spikes in food, fuels, and minerals indicate the tremendous stresses placed on the global ecosystem by the combination of population and economic growth in China, India, and elsewhere. They also raise major issues of equity, as high prices for energy and food impact the poor disproportionately. Similar problems affect ecological systems such as forests and fisheries on a global scale. It will not be possible to adjust to such stresses simply through market flexibility. It is already evident that large-scale government intervention will be needed to respond to climate change. In this context, an activist environmental macroeconomics will be required to balance the requirements of equity and ecosystem sustainability. Either through planned adjustment or through crisis, it will be necessary to shift away from a macroeconomics of indefinite growth towards stabilization of population and reduction of resource throughput, as Daly has long advocated.
    Date: 2013–02
  28. By: van der Vooren; Eric Brouillat
    Abstract: This paper presents an agent-based model that simulates the market for passenger cars in which firm strategies, market structure, consumer choices and policy instruments co-evolve. The main contribution of the paper is to show that this type of simulation model can be used to explore interactions and additional effects when different policy measures are combined to reduce CO2 emissions. We show the impact of policy portfolios on economic and technological decisions of firms, on consumer choice and on global CO2 emissions. In particular, we show how the dynamics of the system can lead to a technological lock-in into internal combustion technologies and demonstrate the ways in which policy instruments can help to break this lock-in. We show that policy portfolios can be relevant to achieve the best of different stand-alone policy measures, but not necessarily. Ex ante evaluation is therefore recommended.
    Keywords: agent-based simulation, CO2 emissions, low emission vehicle technologies, policy portfolio, technological change, transition
    Date: 2013–02
  29. By: Mohamed El Hedi Arouri (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans); Shawkat Hammoudeh (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II); Duc Khuong Nguyen (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II); Amine Lahiani (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans)
    Abstract: This article contributes to the related literature by empirically investigating the efficiency of nine energy and precious metal markets over the last decades, employing several pronounced models. We test for both the short- and the long-run efficiency using, in addition to linear cointegration models, nonlinear cointegration and error-correction models (ECM) which allow the efficiency intensity to change per regime. Our findings can be summarized as follows: i) futures prices are found to be cointegrated with spot prices, but they do not constitute unbiased predictors of future spot prices; ii) the hypothesis of risk neutrality is rejected and there is some evidence of time-varying risk premia; iii) the short-run efficiency hypothesis is rejected, suggesting that using past futures price returns improves the modeling and forecasting of future spot prices; and iv) the nonlinear modeling suggests the presence of two distinct regimes where in the first regime the efficiency hypothesis is supported, whereas in the second it is rejected. The empirical findings have important implications for producers, hedgers, speculators and policymakers.
    Date: 2013–03–07
  30. By: Nolan Ritter; Christoph M. Schmidt; Colin Vance
    Abstract: We provide evidence that motorists respond to short-run fluctuations in fuel prices at the gas pump and not on the road. Employing variants of censored panel regression to control for unobserved heterogeneity and censoring of the dependent variable, we find that the fuel price has a large and negative impact on the quantity of fuel purchased, but no significant impact on the subsequent distance driven per day until the next refill. Over the short-run, drivers thus appear to cope with high fuel prices by adjusting fuel purchases with each visit to the filling station, but without altering their daily mileage
    Keywords: Panel data; households; driving behavior; tanking behavior, fuel price
    JEL: C33 Q41 R41
    Date: 2013–02
  31. By: Mohamed El Hedi Arouri (EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense); Jamel Jouini (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Duc Khuong Nguyen (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II)
    Abstract: We provide comprehensive evidence on the relationship between oil prices and stock mar-kets for six GCC countries. Unlike previous contributions, a wide range of modern econo-metric techniques are applied in order to: i) capture both short- and long-term interactions between considered markets; ii) deal with the potential asymmetry in such interactions and iii) control for the effects of relevant global financial variables. Empirical results show strong causal linkages in the short-run with the impact direction running usually from oil to stocks, but no long-run links. Stock returns seem also to be more sensitive to negative than to positive oil shocks.
    Date: 2013–03–07
  32. By: Lorenza Campagnolo (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and Advanced School of Economics); Carlo Carraro (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and Ca’ Foscari University of Venice); Marinella Davide (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change); Fabio Eboli (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change); Elisa Lanzi (Fondazione Eni Enrico Mattei and Advanced School of Economics); Ramiro Parrado (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change)
    Abstract: Implementing an effective climate policy is one of the main challenges for our future. Even though ambitious mitigation targets are necessarily costly, curbing GHG emissions can prevent future irreversible impacts of climate change on human kind and the environment. Climate policy is therefore crucial for present and future generations. Nonetheless, one may wonder whether the economic and social dimensions of future global development could be harmed by climate policy. This paper addresses this question by examining some recent developments in international climate policy and considering different levels of cooperation that may arise in light of the outcomes of the Conference of the Parties recently held in Doha. Then it explores whether the implementation of various climate policy scenarios would help enhancing sustainability or rather whether there is a trade-off between climate policy and economic development and/or social cohesion. This is done by using a new comprehensive indicator, the FEEM Sustainability Index (FEEM SI), which aggregates several economic, social, and environmental indicators. The FEEM SI index is built into a recursive-dynamic Computable General Equilibrium (CGE) model of the world economy, thus offering the possibility of projecting all indicators into the future, and therefore delivering a perspective assessment of sustainability under different future climate policy scenarios. We find that the environmental component of sustainability improves at the regional and world level thanks to the GHG emission reductions achieved through climate policy. However, the economic and social components are affected negatively yet marginally. Hence, overall sustainability increases in all scenarios. If the USA, Canada, Japan and Russia would not contribute to mitigating future GHG emissions, as envisioned in one of our scenarios, sustainability in these countries would decrease and the overall effectiveness of climate policy in enhancing global sustainability would be offset.
    Keywords: Climate policy, Computable General Equilibrium (CGE) Models, Sustainability, Indicators
    JEL: Q54 Q56 C68
    Date: 2013–01
  33. By: Michielsen, T.O. (Tilburg University, Center for Economic Research)
    Abstract: Abstract I analyze optimal natural resource use in an intergenerational model with the risk of a catastrophe. Each generation maximizes a weighted sum of discounted utility (positive) and the probability that a catastrophe will occur at any point in the future (negative). The model generates time-inconsistency as generations disagree on the relative weights on utility and catastrophe prevention. As a consequence, future generations emit too much from the current generation’s perspective and a dynamic game ensues. I consider a sequence of models. When the environmental problem is related to a scarce exhaustible resource, early generations have an incentive to reduce emissions in Markov equilibrium in order to enhance the ecosystem’s resilience to future emissions. When the pollutant is expected to become obsolete in the near future, early generations may however increase their emissions if this reduces future emissions. When polluting inputs are abundant and expected to remain essential, the catastrophe becomes a self-fulfilling prophecy and the degree of concern for catastro- phe prevention has limited or even no effect on equilibrium behaviour.
    Keywords: catastrophic events;decision theory;uncertainty;time consistency
    JEL: C73 D83 Q54
    Date: 2013
  34. By: Jonathan M. Harris
    Abstract: In the wake of the global financial crisis, Keynesianism has had something of a revival. In practice, governments have turned to Keynesian policy measures to avert economic collapse. In the theoretical area, mainstream economists have started to give grudging attention to Keynesian perspectives previously dismissed in favor of New Classical theories. This theoretical and practical shift is taking place at the same time that environmental issues, in particular global climate change, are compelling attention to alternative development paths. Significant potential now exists for “Green Keynesianism” -- combining Keynesian fiscal policies with environmental goals. But there are also tensions between the two perspectives of Keynesianism and ecological economics. Traditional Keynesianism is growth-oriented, while ecological economics stresses limits to growth. Expansionary policies needed to deal with recession may be in conflict with goals of reducing resource and energy use and carbon emissions. In addition, long-term deficit and debt problems pose a threat to implementation of expansionary fiscal policies. This paper explores the possibilities for Green Keynesianism in theory and practice, and suggests that these apparent contradictions can be resolved, and that Green Keynesian policies offer a solution to both economic stagnation and global environmental threats.
    Date: 2013–02
  35. By: Ioannis Anastasiou; Anastasios Xepapadeas; Vassilios Babalos; Marva Stithou (University of Stirling, UK); Osiel Davila (AUEB-RC); Phoebe Koundouri; Antonios Antypas (Department of Banking and Financial Management, University of Piraeus); Nikolaos Kourogenis (Department of Banking and Financial Management, University of Piraeus.); Aris Mousoulides; Marianna Mousoulidou; Nick Ahrensberg; Barbara Zanuttigh; Fabio Zagonari; Manfred A. Lange; Carlos Jimenez; Elena Charalambous; Lars Rosen; Andreas Lindhe; Jenny Norrman; Tommy Norberg; Tore Soderqvist; Aksel Pedersen; Dimitris Troianos; Athanasios Frentzos; Yukiko Krontira; Inigo Losada; Pedro Diaz-Simal; Raul Guanche; Mark de Bel; Wei He; Sedat Kabdasli; Nilay Elginoz; Elif Oguz; Taylan Bagci; Bilge Bas; Matteo Cantu�; Matteo Masotti; Roberto Suffredini; Marian Stuiver
    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
    JEL: Q25 Q42
    Date: 2013–02–19
  36. By: Prasenjit Banerjee; Jason F. Shogren
    Date: 2013
  37. By: Enrico Saltari (Department of Economics and Law, Università "La Sapienza" Roma); Giuseppe Travaglini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: In this paper we develop a model of pollution control which maximizes the present value of net social benefits. We show that the presence of an upper constraint on emissions affects the pollution control even when emissions are far below the level where the constraint binds. We get three main results. First, we find that for a society it is optimal to take into account the impact of the latent constraint at the outset and to modify the flow of emissions even when the constraint is still slack. Second, we analyze how the restriction works effectively in the intermediate phases before the constraint binds, comparing the unconstrained and constrained scenarios. Finally, we state the boundary conditions to compute the optimal trajectory of emissions switching between regimes. This trajectory cannot be obtained by simply pasting together the unconstrained and the constrained parts of the trajectories.
    Keywords: Pollution control, inequality constraints, net social benefits
    JEL: E22 L51 H23 Q28
    Date: 2013
  38. By: Chung, Yeimin (Korea University); Heshmati, Almas (Sogang University)
    Abstract: This study measures productivity growth using the Metafrontier Malmquist-Luenberger productivity growth index (MML index) method and decomposes the index. The results are compared with those obtained from the conventional Malmquist-Luenberger (ML) productivity growth index. MML has two advantages compared with the ML index. The former is able to consider undesirable output as a by-product of production which accounts for producer group heterogeneities. As a result, it enables separation and estimation of changes in the technological gap between regional and global frontier technologies. The proposed index is employed to measure productivity growth and decompose its components in 14 Korean industrial sectors during the period between 1981 and 2007. For the purpose of detailed analysis of policy effects, the study period was divided into three decades. The results show that technology innovation can be regarded as a more important factor of productivity growth, rather than efficiency change. The chemical and Petrochemical, Machinery and Transport equipment industries are treated as global innovators in the whole period. However, the result differs according to decades. It is found that the groups with higher energy efficient technology and profitability obtain a higher productivity growth rate in comparison with their low energy efficient technology industry counterparts. Policy implications of the empirical results are discussed.
    Keywords: CO2 emission, undesirable output, DEA, Malmquist-Luenberger productivity (ML) index, Metafrontier Malmquist-Luenberger productivity (MML) index, productivity change
    JEL: D24 C61 O31 O44
    Date: 2013–02
  39. By: Philip Abbott
    Abstract: The share of U.S. corn production used to produce ethanol increased from 12.4% in the 2004/05 crop year to over 38.5% in the 2010/11 crop year, and remained at that high level in 2011/12. Even after accounting for return of by-products to the feed market, this is a large and persistent new demand for corn that surely has changed price dynamics. Nevertheless, the role of biofuels in determining recent high corn and other agricultural commodity prices, as well as their volatility, remains controversial. Policy measures to encourage biofuels production, including the Renewable Fuels Standard (RFS) mandates, subsidies to ethanol blenders, regulations on gasoline chemistry and import tariffs, helped to create this new, persistent demand for corn and contributed to incentives to create the capacity to produce ethanol and to use corn for fuel rather than food. Various aspects of implementing that policy and the economics of ethanol plant operation suggest very inelastic industrial demand for corn, contributing to both higher prices and greater price volatility. But turbulence in recent economic events have caused the mechanisms through which biofuels demands influence corn and other agricultural commodity prices to vary over time in ways that are observable in data. Price volatility and “subsidy incidence” also depend on which regime is in place. Simple theory along with data on supply, use and pricing are used to identify when each regime matters as policy influenced constraints bound to varying degrees. Capacity constraints appear to have dominated in the short run, allowing rents to absorb differences in variations of corn prices versus energy prices. Apparent price volatility seems due to mechanism switching and to changing trends more so than to random short run shocks under inelastic demand.
    JEL: Q02 Q16
    Date: 2013–03
  40. By: Ahlheim, Michael; Frör, Oliver; Tong, Jiang; Jing, Luo; Pelz, Sonna
    Abstract: Climate policy measures can be roughly subdivided into mitigation measures and adaptation measures. Mitigation policy aims at a reduction of greenhouse gas emissions with the overall goal of slowing down climate change and global warming. Since greenhouse gases like CO2, Methane etc. are global pollutants which have the same effect on world climate irrespective of where they are emitted mitigation policy creates benefits for people all over the world. Adaptation policy on the other hand does not seek to influence the world climate but, instead, is meant to reduce the negative consequences of climate change for a specific region. The benefits created by adaptation policy are, therefore, only of local importance while mitigation policy yields global benefits. This difference has, of course, consequences for the welfare economic appraisal of mitigation policy measures as compared to adaptation policy measures. Since the wellbeing of many more people worldwide is affected by mitigation measures than by adaptation measures the former will always appear more attractive in a cost-benefit analysis than the latter, at least from a global perspective. In this paper we want to show that adaption policy measures are often undervalued in cost-benefit analyses because only their so-called use values are considered, while the nonuse values they create are neglected. The use value of a commodity accrues from a direct utilization of that commodity. In an environmental context the use value of e.g. a beautiful landscape is felt by those people who visit this landscape. Beyond this use value the landscape might also have a value for people who never visit it but still enjoy the knowledge that in their country such a beautiful landscape exists and that endangered animals and plants are preserved there. This value that originates from the mere existence of a (market or environmental) good is often called its nonuse value because it is independent of a direct (and empirically observable) utilization of this good. If it can be shown that some adaptation policy measures in the context of climate policy create also nonuse values in addition to the use values this might lead to a new assessment of such measures and it might increase their chances of being approved in the political decision process. It is obvious that the systematic undervaluation of adaptation policy measures resulting from the neglect of the nonuse values they create might have the consequence that they are declined because they do not pass the cost-benefit test, though they create high nonuse values which are not considered in this test. Of course, the existence of nonuse values depends on the cultural background of the people affected by these measures and of the society they live in. Especially in an emerging country like China many people might still underestimate the importance of climate adaptation measures in comparison with economic policy measures triggering the economic growth of the country, especially if the adaptation measures are conducted in faraway regions of the country. In this study we test empirically the hypothesis that also in a growth-oriented economy like China non-materialistic values like the nonuse values of climate policy are perceived and respected by the population. This should especially hold for the better educated people living in big cities like Beijing. Therefore, we conduct a survey in Beijing where we ask people to assess a climate change adaptation project to be implemented in a faraway region, in this case in the Tarim basin in Xinjiang. In this survey we find that also Beijing citizens feel responsible for the environmental conditions in Xinjiang, especially under the impression of climate change. We find that they are even willing to contribute personally to financing a public project for the improvement of the living conditions in this remote (as viewed from Beijing) region. The rest of the paper is organized as follows: the next chapter focuses on the importance of nonuse values in environmental cost-benefit analyses; information concerning the impact of climate change on the Tarim area is provided in chapter three; the survey method and sampling procedure are introduced in chapter four; in chapter five results of the survey in Beijing are presented and analyzed, followed by some concluding remarks. --
    Date: 2013
  41. By: Tanaka, Kenta; Managi, Shunsuke
    Abstract: The Japanese government initiated a series of regulatory reforms in the mid-1990s. The Japanese urban gas industry consists of various sized private and non-private firms. Numerous previous studies find that deregulation leads to productivity improvements. We extend the literature by analyzing deregulation, privatization, and other aspects of a regulated industry using unique firm level data. This study measures productivity to evaluate the effect of the deregulation reform. Using data from 205 firms from 1993 to 2004, we find that the deregulation effect differs depending on firm size. Competitive pressure contributes to advanced productivity. The deregulation of gas sales to commercial customers is the most important factor for advancing productivity.
    Keywords: Productivity analysis, Deregulation reform, Gas industry, Proportional distance function, Natural gas
    JEL: C51 L51 L95
    Date: 2013–02
  42. By: Ozdemir, O. (Tilburg University)
    Abstract: The second part of the thesis focuses on a different stochastic problem of finding the optimal hedging points in a manufacturing flow control system. Our simulation-based method allows solving large scale systems that are considered very difficult to solve by current standards in the literature.
    Date: 2013
  43. By: Schoonbeek, Lambert; Mulder, Machiel (Groningen University)
    Abstract: We propose to assess the influence of a number of events on the degree of competition in the Dutch electricity wholesale market over the period 2006-2011 through a decomposition method based on the Residual Supply Index. We distinguish regulatory market-integration events, firm-level events and changes in the level of residual demand. We conclude that market-integration measures to improve competition have been effective, but that the changes in residual demand appear to have been equally important. Firm-level events have only had a minor impact on the intensity of competition.
    Date: 2013
  44. By: Boying Liu; Ana Espinola-Arredondo (School of Economic Sciences, Washington State University)
    Abstract: This paper investigates under which conditions a regulator can strate- gically set an emission fee as a tool to induce a domestic firm to adopt a non-polluting technology and deter entry. We consider a market in which a monopolistic incumbent faces the threat of entry from firms that can choose between a dirty and a green technology. Our results show that, despite the fact of facing a polluting incumbent, an entrant might find it profitable to acquire a clean technology if the environmental tax is strin- gent enough. In addition, we demonstrate that an incumbent that adopts a clean technology is more likely to deter entry than an incumbent that keeps its dirty technology. Finally, we also show that a non-polluting duopoly market, in which all firms acquire clean technology, is socially preferred to a non-polluting monopoly market if the green technology cost is sufficiently low. However, if the clean technology becomes more expensive it may be socially optimal to have a polluting duopoly market in which only one firm adopts the green technology.
    Keywords: Technology Adoption; Market Structure; Emission Tax
    JEL: H23 L12 Q58
    Date: 2013–01
  45. By: Antonios Antypas (Department of Banking and Financial Management, University of Piraeus); Phoebe Koundouri; Nikolaos Kourogenis (Department of Banking and Financial Management, University of Piraeus.)
    Abstract: In this paper we introduce a model for the description of natural resources�� price paths, which in contrast to the existing literature, captures non-linear trends by means of a simple trigonometric function. We then use a set of model selection criteria to compare our trigonometric trend model with Slade��s (1982) quadratic trend model, as well as a more general one, that nests both of these models. We estimate the models using price series of the main fuel and metal resources prices, analyzed by the relevant literature, and ��nd that in most cases the trigonometric trend model is selected as the one better ��tting the data. Our results have implications for the long-run projection of natural resources prices and, consequently, for the relevance of the Hotelling rule.
    Keywords: Oscillatory trend, quadratic trend, Hotelling rule, natural resources�prices, model selection.
    JEL: E3 C22
    Date: 2013–02–19
  46. By: Sebastian M. Krause; Stefan Boerries; Stefan Bornholdt
    Abstract: The average economic agent is often used to model the dynamics of simple markets, based on the assumption that the dynamics of many agents can be averaged over in time and space. A popular idea that is based on this seemingly intuitive notion is to dampen electric power fluctuations from fluctuating sources (as e.g. wind or solar) via a market mechanism, namely by variable power prices that adapt demand to supply. The standard model of an average economic agent predicts that fluctuations are reduced by such an adaptive pricing mechanism. However, the underlying assumption that the actions of all agents average out on the time axis is not always true in a market of many agents. We numerically study an econophysics agent model of an adaptive power market that does not assume averaging a priori. We find that when agents are exposed to source noise via correlated price fluctuations (as adaptive pricing schemes suggest), the market may amplify those fluctuations. In particular, small price changes may translate to large load fluctuations through catastrophic consumer synchronization. As a result, an adaptive power market may cause the opposite effect than intended: Power fluctuations are not dampened but amplified instead.
    Date: 2013–03
  47. By: Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Sterner, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We analyze optimal social discount rates when people derive utility from relative consumption. We compare the social, private, and conventional Ramsey rates. Assuming a positive growth rate, we find that 1) the social discount rate exceeds the private discount rate if the importance of relative consumption increases with consumption and that 2) the social discount rate is smaller than the Ramsey rate given quasi-concavity in own and others’ consumption and risk aversion with respect to others’ consumption. Numerical calculations demonstrate that the latter difference may be substantial and have important implications for long run environmental issues such as global warming.
    Keywords: Environmental discounting; global warming; relative consumption; Ramsey rule; positionality.
    JEL: D63 D90 H43
    Date: 2013–03–08
  48. By: Nicola Pestalozzi; Peter Cauwels; Didier Sornette
    Abstract: Using open source data, we observe the fascinating dynamics of nighttime light. Following a global economic regime shift, the planetary center of light can be seen moving eastwards at a pace of about 60 km per year. Introducing spatial light Gini coefficients, we find a universal pattern of human settlements across different countries and see a global centralization of light. Observing 160 different countries we document the expansion of developing countries, the growth of new agglomerations, the regression in countries suffering from demographic decline and the success of light pollution abatement programs in western countries.
    Date: 2013–03
  49. By: Andrea Bastianin; Marzio Galeotti; Matteo Manera
    Abstract: We analyze the relationship between the prices of ethanol, agricultural commodities and livestock in Nebraska, the U.S. second largest ethanol producer. The paper focuses on long-run relations and Granger causality linkages between ethanol and the other commodities. The analysis takes possible structural breaks into account and uses a set of techniques that allow to draw inferences about the existence of long-run relations and of short-run in-sample Granger causality and out-ofsample predictive ability. Even after taking breaks into account, evidence that the price of ethanol drives the price dynamics of the other commodities is extremely weak. It is concluded that, on the basis of a formal, comprehensive and rigorous causality analysis we do not find evidence in favour of the Food versus Fuel debate.
    Keywords: Ethanol, Field Crops, Granger Causality, Forecasting, Structural Breaks
    JEL: C22 C53 Q13 Q42 Q47
    Date: 2013–03
  50. By: François Lévêque (CERNA - Centre d'économie industrielle - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: Avant la fusion de coeur des réacteurs 1, 2 et 3 de Fukushima Daiichi, huit accidents majeurs affectant des centrales nucléaires s'étaient déjà produits dans le monde. Ce chiffre est élevé par rapport à celui escompté par les experts. Les observations ne semblent pas coller avec les résultats des modèles probabilistes d'accidents nucléaires élaborés depuis les années 1970. Paradoxalement, le nombre d'accidents majeurs est plus proche du risque perçu par les citoyens. Chacun d'entre nous a en effet tendance à surévaluer le risque lorsqu'il concerne des événements rares et effroyables. Comment comprendre les écarts et réconcilier le monde de l'observation, la probabilité objective des accidents et l'évaluation subjective des risques ? Les experts ont-ils pêché par optimisme ? L'opinion publique est-elle irrationnelle sur le sujet du danger nucléaire ? Comment mesurer le risque et sa perception ?
    Date: 2013–02

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