|
on Energy Economics |
| By: | Daniel Nachtigall; Dirk Rübbelke |
| Abstract: | We investigate the effect of climate policies on fossil fuel use in the presence of a clean alternative technology that exhibits learning-by-doing. In a two-period framework, the costs of clean and regenerative energy in the second period are decreasing with the amount of this energy produced in the first one. While a carbon tax on present fossil fuels always reduces the use of the conventional energy source, the effect of a subsidy for regenerative energy is ambiguous and depends on the size of the learning effect. For small learning effects, a subsidy reduces the present use of fossil fuels since their substitute becomes comparatively cheap. However, for larger learning effects, a subsidy leads to the green paradox as the cost reduction in the clean energy sector reduces the future demand for conventional energy and brings forward extraction. We conclude that the best way to reduce present CO2 emissions is the implementation of a carbon tax. If the learning effect is small, the carbon-tax revenues should additionally finance the subsidy for the renewable energy.<br /> |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:2013-09&r=ene |
| By: | Severin Borenstein |
| Abstract: | Improving the efficiency with which we use energy is often said to be the most cost-effective way to reduce energy use and greenhouse gas emissions. Yet, such improvements usually lower the cost of using energy-intensive goods and may create wealth from the energy savings, both of which lead to increased energy use, a "rebound'' effect. Disagreements about the magnitude of energy efficiency rebound are immense and play a central role in debates over the role energy efficiency can play in combating climate change. But these differing views seem to stem as much from the lack of a common framework for the analysis as from different estimates of key parameters. I present a theoretical framework that parses rebound into economic income and substitution effects. The framework captures the wide range of rebound effects that have been termed direct, indirect, re-spending, and transformational rebound, among others. It does not capture economy-wide impacts, such as the potential for a macroeconomic multiplier or the impact on energy prices, which I discuss separately. I then explore the implications of this framework for measurement of rebound, examining rebound from improved auto fuel economy and lighting efficiency. The illustrative calculations I carry out suggest that rebound that more than offsets the savings from energy efficiency investments (known as "backfire") is unlikely, but rebound is likely to significantly reduce the net savings from at least these energy efficiency improvements. |
| JEL: | Q4 Q41 Q48 Q54 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19044&r=ene |
| By: | Espinosa Alejos, María Paz |
| Abstract: | Regulators and market participants have become increasingly concerned about the Spanish electricity tariff deficit due to its size and the difficulties to control its growth. The deficit can be traced to inefficiencies in market organization and solutions should be designed to mitigate those inefficiencies. Tariff deficits have allowed for the transfer of part of the present costs of electricity services to future consumers, but this situation has reached a limit and a deep revision of regulation in this market cannot be postponed. In general, solutions that interfere with market prices and signals are not appropriate. |
| Keywords: | regulated activities, energy policy, electricity market, renewable energy |
| JEL: | L51 Q4 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:dfaeii:10012&r=ene |
| By: | Höök, Mikael; Fantazzini, Dean; Angelantoni, André; Snowden, Simon |
| Abstract: | Current world capacity of hydrocarbon liquefaction is around 400,000 barrels per day (kb/d), providing a marginal share of the global liquid fuel supply. This study performs a broad review of technical, economic, environmental, and supply chains issues related to coal-to-liquids (CTL) and gas-to-liquids (GTL). We find three issues predominate. First, significant amounts of coal and gas would be required to obtain anything more than a marginal production of liquids. Second, the economics of CTL plants are clearly prohibitive, but are better for GTL. Nevertheless, large scale GTL plants still require very high upfront costs, and for three real world GTL plants out of four, the final cost has been so far approximately three times that initially budgeted. Small scale GTL holds potential for associated gas. Third, CTL and GTL both incur significant environmental impacts, ranging from increased greenhouse gas emissions (in the case of CTL) to water contamination. Environmental concerns may significantly affect growth of these projects until adequate solutions are found. |
| Keywords: | hydrocarbon liquefaction, gas-to-liquids, CTL, GTL, coal-to-liquids, peak oil |
| JEL: | Q32 Q38 Q42 Q48 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46957&r=ene |
| By: | Billette de Villemeur, Etienne; Leroux, Justin |
| Abstract: | We propose a new climate policy that is efficient, robust, and asks for payments proportional to realized climate damage. In each period, countries are made liable for their share of the responsibility in the current damage. Efficiency follows from countries' anticipations of climate change, hence of future payments. Robustness is achieved thanks to the introduction of a market for carbon liabilities. Rather than being based on the expected discounted sum of future marginal damage (as with a carbon tax or tradable emission permits) our proposal relies only on observed realized damage and on the well-documented emission history of countries. |
| Keywords: | Climate Change; Ex-ante vs ex-post approach; Carbon Liability |
| JEL: | H23 K13 Q54 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46953&r=ene |
| By: | Godby, Robert; Torell, Greg; Coupal, Roger |
| Abstract: | The expansion of wind-generation in the United States poses significant challenges to policy-makers, particularly because wind’s intermittency and unpredictability can exacerbate problems of congestion on a transmission constrained grid. Understanding these issues is necessary if optimal development of wind energy and transmission is to occur. This paper applies a model that integrates the special concerns of electricity generation to empirically consider the challenges of developing wind resources in the Rocky Mountain region of the United States. Given the lack the high frequency data needed to address the special problems of intermittency and congestion, our solution is to create a dispatch model of the region and to use simulations to generate the necessary data, then use this data to understand the development patterns that have occurred as wind resources have been developed. Our results indicate that the price effects caused by changes in power output at intermittent sources are strongly dependent on supply conditions and the presence of market distortions caused by transmission constraints. Peculiarities inherent in electric grid operation can cause system responses that are not always intuitive. The distribution of the rents accruing to wind generation, particularly in unexpectedly windy periods are strongly dependent on the allocation of transmission rights when congestion occurs, which impacts potential returns to developing wind resources. Incidents of congestion depend on the pace of development of wind and transmission capacity. Not accounting for such distortions may cause new development to worsen market outcomes if mistaken estimates of benefits or costs lead to sub-optimal development of wind and transmission facilities. |
| Keywords: | transmission, wind integration, wind energy, renewable energy, electricity grid, transmission value, dispatch model |
| JEL: | Q4 Q42 Q49 |
| Date: | 2013–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47026&r=ene |
| By: | Ýstemi Berk (Cologne Graduate School (CGS), Institute of Energy Economics (EWI), University of Cologne); Ý. Hakan Yetkiner (Department of Economics, Izmir University of Economics) |
| Abstract: | In this paper, we attempt to derive and test the role of energy prices on economic growth. We first developed a two-sector endogenous growth model, based on Rebelo (1991). We modified the model such that consumption goods sector uses energy as an input along with capital. The model allows us to show that the growth rate of energy price has a negative effect on the growth rates of energy use and real GDP, consistent with the finding of van Zon and Yetkiner (2003), who studied a similar model by placing energy as an input in the intermediate goods sector. Following this, derived theoretical relationships between energy prices and economic growth and energy consumption were tested empirically using error-correction based panel cointegration tests and panel Autoregressive Distributed Lag (ARDL) approach. We applied this methodology on annual data of composite energy prices, GDP per capita and energy consumption per capita for fifteen countries for the period between 1978 and 2011. We found significant cointegration between energy prices and real GDP per capita as well as between energy prices and energy consumption per capita. Moreover, long-run elasticity estimates reveal a negative and significant impact of composite energy prices on both GDP per capita and energy consumption per capita. |
| Keywords: | Two-sector model, energy price, endogenous growth, panel cointegration, panel ARDL |
| JEL: | O4 Q3 C3 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:izm:wpaper:1303&r=ene |
| By: | Ping-Yu Chen (National Chung Hsing University, Taiwan); Chia-Lin Chang (National Chung Hsing University, Taiwan); Chi-Chung Chen (National Chung Hsing University, Taiwan); Michael McAleer (Erasmus University Rotterdam, Kyoto University, Japan, and Complutense University of Madrid, Spain) |
| Abstract: | The main purpose of this paper is to evaluate the effect of crude oil price on global fertilizer prices in both the mean and volatility. The endogenous structural breakpoint unit root test, ARDL model, and alternative volatility models, including GARCH, EGARCH, and GJR models, are used to investigate the relationship between crude oil price and six global fertilizer prices. The empirical results from ARDL show that most fertilizer prices are significantly affected by the crude oil price while the volatility of global fertilizer prices and crude oil price from March to December 2008 are higher than in other periods. |
| Keywords: | Fertilizer Price, Oil Price, Volatility |
| JEL: | Q14 C22 C58 |
| Date: | 2013–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2013024&r=ene |
| By: | Lan-Fen Chu (National Science and Technology Center for Disaster, Taiwan); Michael McAleer (Erasmus University Rotterdam, Kyoto University, Complutense University of Madrid); Chi-Chung Chen (National Chung Hsing University, Taiwan) |
| Abstract: | This paper analyzes two indexes in order to capture the volatility inherent in El Niños Southern Oscillations (ENSO), develops the relationship between the strength of ENSO and greenhouse gas emissions, which increase as the economy grows, with carbon dioxide being the major greenhouse gas, and examines how these gases affect the frequency and strength of El Niño on the global economy. The empirical results show that both the ARMA(1,1)-GARCH(1,1) and ARMA(3,2)-GJR(1,1) models are suitable for modelling ENSO volatility accurately, and that 1998 is a turning point, which indicates that the ENSO strength has increased since 1998. Moreover, the increasing ENSO strength is due to the increase in greenhouse gas emissions. The ENSO strengths for Sea Surface Temperature (SST) are predicted for the year 2030 to increase from 29.62% to 81.5% if global CO2 emissions increase by 40% to 110%, respectively. This indicates that we will be faced with even stronger El Nino or La Nina effects in the future if global greenhouse gas emissions continue to increase unabated. |
| Keywords: | El Niños Southern Oscillations (ENSO), Greenhouse Gas Emissions, Global Economy, Southern Oscillation Index (SOI), Sea Surface Temperature (SST), Volatility. |
| JEL: | Q51 Q52 Q53 Q54 |
| Date: | 2013–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2013007&r=ene |
| By: | Peter Mulder (VU University Amsterdam); Henri L.F. de Groot (VU University Amsterdam) |
| Abstract: | This paper makes use of a new dataset to investigate energy intensity developments in the Netherlands over the period 1987-2005. The dataset allows for a comparison with 18 other OECD countries. A key feature of our analysis is that we combine a cross-country perspective with a high level of sectoral detail, covering 49 sectors. Particularly innovative is our evaluation of energy intensity developments in a wide range of Service sectors. We find that across sectors energy intensity levels in the Netherlands on average decreased only marginally, and increased in Services. This performance is in general worse than the OECD average, especially between 1987 and 1995. Changes in the sectoral composition of the economy play an important role in explaining aggregate trends. In the Manufacturing sector about half of the efficiency improvements were undone by a shift towards a more energy-intensive industry structure, while in the Service sector about one-third of the decrease in efficiency was undone by a shift towards a less energy-intensive sector structure. |
| Keywords: | Energy Intensity, Decomposition, Sectoral Analysis |
| JEL: | O13 O47 O5 Q43 |
| Date: | 2012–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012049&r=ene |
| By: | Yoshifumi Konishi (Faculty of Liberal Arts, Sophia University); Nori Tarui (Department of Economics, University of Hawaii at Manoa) |
| Abstract: | We investigate the long-run impact of environmental regulations on the intra-industry distribution of firm-level productivity and the resulting aggregate variables. In a general-equilibrium model that accounts for endogenous entry/exit of heterogeneous firms, neither the average productivity of firms nor the mass of firms is independent of the choice of policy instruments (i.e. emissions tax vs. emissions trading) or permit allocation rules. The equilibrium price of permits under emissions trading is lower than the emissions tax rate that would support the same aggregate emissions. An incomplete emissions market results in a net increase in combined aggregate emissions. |
| Keywords: | Emissions Tax; Emissions Trading; Heterogeneous Firms; Endogenous Entry/Exit; Melitz Model; Incomplete Regulation; Emissions Leakage |
| JEL: | Q50 Q52 Q58 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201307&r=ene |
| By: | Avelino, Andre F. T.; Hewings, Geoffrey J. D.; Guilhoto, Joaquim José Martins |
| Abstract: | This study proposes a social-environmental economic model, based on Regional Sequential Interindustry Model (SIM) integrated with geoprocessing data, in order to identify economic, pollution and public health impacts in state and municipality levels for energy planning analysis. Integrating I-O framework with electrical and dispersion models, dose-response functions and GIS data, this model aims to expand policy makers’ scope of analysis and provide an auxiliary tool to assess energy planning scenarios in Brazil both dynamically and spatially. Moreover, a case study for wind power plants in Brazil is performed to illustrate its usage. |
| Keywords: | Energy Planning, Input-Output, Sequential Interindustry Model, Energy Economics |
| JEL: | Q4 Q5 R15 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46955&r=ene |
| By: | Peter Mulder (VU University Amsterdam); Henri L.F. de Groot (VU University Amsterdam) |
| Abstract: | This paper uses a new dataset derived from a consistent framework of national accounts to compute and evaluate energy intensity developments across 18 OECD countries and 50 sectors over the period 1970-2005. We find that across countries energy intensity levels tend to increase in a fairly wide range of Services subsectors, but decrease in most Manufacturing sectors. A decomposition analysis reveals that changes in the sectoral composition of the economy explain a considerable and increasing part of aggregate energy intensity dynamics. A convergence analysis reveals that only after 1995 cross-country variation in aggregate energy intensity levels clearly tends to decrease, driven by a strong and robust trend break in Manufacturing and enhanced convergence in Services. Moreover, we find evidence for the hypothesis that across sectors lagging countries are catching-up with leading countries, with rates of convergence on average being higher in Services than in Manufacturing. Aggregate convergence patterns are almost exclusively caused by convergence of within-sector energy intensity levels, and not by convergence of the sectoral composition of economies. |
| Keywords: | Energy Intensity, Convergence, Decomposition, Sectoral Analysis |
| JEL: | O13 O47 O5 Q43 |
| Date: | 2012–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012027&r=ene |
| By: | Bruno de Borger (University of Antwerp); Jan Rouwendal (VU University Amsterdam) |
| Abstract: | We study the impact of fuel taxes and kilometer taxes on households' choices of vehicle quality, on their demand for kilometers driven, and on fuel consumption. Moreover, embedding this information in a model of the car market, we analyze the implications of these taxes for the opportunity costs of owning cars of different quality. Higher quality raises the fixed cost of car ownership, but it may raise (engine size, acceleration speed, etc.) or reduce (fuel technology, etc.) the variable user cost. Our results show that kilometer charges and fuel taxes have very different implications. For example, a higher fuel tax raises household demand for more fuel efficient cars, provided that the demand for car use is inelastic; it reduces the demand for characteristics that raise variable user costs. Surprisingly, however, a kilometer tax unambiguously reduces the demand for more fuel efficient cars. Incorporating price adjustments at the market level, we find th at fuel taxes raise the <I>marginal</I> fixed opportunity cost of better fuel efficiency at all quality levels. <I>Total</I> annual opportunity costs of owning highly fuel efficient cars increase, while they decline for cars of low fuel efficiency. We further find that both a fuel tax and a kilometer charge reduce the <I>total</I> annual fixed ownership cost for car attributes that raise the variable cost of driving (engine power, acceleration speed, etc.). There is thus in general a trade-off between fixed and variable car costs: if the latter increase - due to higher fuel prices or a kilometer charge - total demand for cars decreases and a return to equilibrium is only possible by a decrease in fixed costs. All theoretical results are illustrated using a numerical version of the model. The analysis shows that modeling the effect of tax changes on household behavior alone can produce highly misleading results. |
| Keywords: | car market, car quality, fuel tax, kilometer charge, market equilibrium |
| JEL: | H22 L62 |
| Date: | 2012–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012122&r=ene |
| By: | Deepti Goel (Department of Economics, Delhi School of Economics, Delhi, India); Smriti Sharma (Food and Resource Economics Department, University of Florida, P.O. Box 110240 IFAS Gainesville, FL32611, U.S.A.) |
| Abstract: | In this paper we investigate the effect of the Delhi Metro, an intra-city mass rail transit system, on air pollution within Delhi. To identify effects on pollution, we exploit the discontinuous jumps in metro ridership, each time the network is extended. Our identifying assumption is that in the absence of the extension there would be a smooth transition in pollution levels. We find strong evidence to show that the Delhi Metro has resulted in reductions of two important vehicular emissions, namely, nitrogen dioxide and carbon monoxide. We estimate a cumulative impact of a 35 percent reduction in CO levels for the region around ITO (a major traffic intersection in Delhi). This is suggestive of a traffic diversion effect, where people are switching from private modes of travel to the Delhi Metro. Given, documented evidence on the adverse health effects of air pollution, our findings suggest that these indirect benefits must be considered in any cost-benefit analysis of a rapid mass transport system. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:229&r=ene |
| By: | Hooi Hooi Lean; Russell Smyth |
| Abstract: | The objective of this paper is to examine whether energy consumption in Malaysia, disaggregated by sector and type, is stationary or contains a unit root. To realize our objective we apply the Lagrange multiplier (LM) family of unit root tests with up to two structural breaks. Depending on the decision rule for selecting between results in the no-break, one break and two-break cases, we find that energy consumption is stationary for between 50 per cent and 70 per cent of the disaggregated energy series and between 25 per cent and 50 per cent of sectors. Implications for the Malaysian government's attempts to reduce fossil fuel consumption are discussed. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2013-07&r=ene |
| By: | Sonia Akter; Jeff Bennett; Michael B. Ward |
| Abstract: | Public scepticism surrounding climate change is an obstacle for implementing climate change mitigation measures in many countries. However, very little is known about: (1) the nature and sources of climate change scepticism; and (2) its influence on preferences for climate change mitigation policies. In this paper, we investigate these two issues using evidence and analysis from an Australian public survey and choice experiment. The study has three key findings. First, the intensity of scepticism varies depending on its type; we observed little scepticism over the cause, trend and impact of climate change and widespread scepticism over the effectiveness of mitigation measures and global co-operation. Second, cause and mitigation scepticism play significant roles in determining public support for climate change abatement. Respondents who believed in human-induced climate change were significantly more supportive of mitigation. Likewise, respondents who believed that mitigation would be successful in slowing down climate change were significantly more likely to be supportive. Third, the general public tend to give the benefit of the doubt to supporting mitigation. Those who expressed higher uncertainty about climate outcomes were more supportive of mitigation than others with similar expectations but lower uncertainty. |
| Keywords: | Climate change; Emissions trading scheme; Scepticism; Mitigation; Public opinion; Choice experiment; Australia |
| JEL: | Q54 Q51 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:archive-47&r=ene |
| By: | Bagayev, Igor; Najman, Boris |
| Abstract: | The paper describes the main determinants of electricity intensity in twenty-nine transition economies. We provide an original analysis on the way the local power sector unreliability may affect the firm-level electricity intensity. The paper explains the different firm’s behaviour, within EU and outside EU, in front of outages and/or local supply power quality. For this purpose, we use the Business Environment and Enterprise Performance Survey (BEEPS) done in 2008-2009 over 2400 enterprises. Moreover, we built an innovative measure of the electricity supply quality at the local-level inspired by the previous work of Guiso et al. (2004). Our results indicate that in non-EU (or insufficiently reformed) countries power sector unreliability increases firm’s electricity intensity. We estimated a potential reduction of one-fifth of firm’s electricity intensity associated with an improvement from the 75th percentile to the 25th percentile of the distribution of the local power sector unreliability. Our results suggest that bad quality of the local power sector seems to dampen the firms’ ability to decreases their electricity consumption, if the country’s institutional framework is poor. |
| Keywords: | Electricity Intensity, Local Power Sector, Electric Power Reforms, Transition Economies |
| JEL: | P28 Q4 R34 |
| Date: | 2013–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46943&r=ene |
| By: | Elisa Sainz de Murieta; Aline Chiabai |
| Abstract: | The case study presented in this section aims to estimate the economic value of the water services used for hydropower in tropical forests in Costa Rica, and to assess the expected economic impact due to climate change. The model developed allows estimating the economic impacts of climate change on the hydroelectric sector, using the association between bio-physical data, technical data related to the plants and economic inputs. A production function is used for this purpose which relates the quantity of water available (runoff) with the energy generated by the selected plants, based on a sample of 40 plants. <br /> Results show a significant reduction in the hydropower production in all future scenarios, estimated between 41 and 43% for Costa Rica. This translates in a considerable reduction in the expected revenues of the hydroelectric sector in Costa Rica under all climate change scenarios considered, but with lower reductions in the B1 scenario, which incorporates sustainability criteria. Taking into account future technological changes, the model shows that it would be necessary to double the installed capacity of all plants to get an increase in annual revenue that ranges from 3-18%. With an increase in the installed capacity of about 50%, economic losses would be reduced by 12% in all the scenarios. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:2013-10&r=ene |
| By: | Ladislav Kristoufek; Karel Janda; David Zilberman |
| Abstract: | For the biofuel markets and related commodities, we study their price transmission, which is in fact equivalent to studying price cross-elasticities. Importantly, we focus on the price dependence of the price transmission mechanism. Several methodological caveats are discussed. Specifically, we combine the memory robust feasible generalized least squares estimation with two-stage least squares to control for endogeneity bias and inconsistency. We find that both ethanol and biodiesel prices are responsive to their production factors (ethanol to corn, and biodiesel to German diesel). The strength of transmission between both significant pairs increased remarkably during the food crisis of 2007/2008. Causality tests further show that price changes in production factors lead the changes in biofuels even after controlling for price effects. |
| Keywords: | biofuels; price transmission; price cross-elasticity; causality; |
| JEL: | C22 Q16 Q42 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp481&r=ene |
| By: | Markus Pasche (School of Economics and Business Administration, Friedrich-Schiller-University Jena) |
| Abstract: | Behavioural economics attracted attention from environmental economists: it should help to understand why people do not respond to environmental policy measures, based on neoclassical assumptions, as predicted by theory. Moreover, understanding motives and driving forces behind pro-social, pro-environmental and cooperative behaviour should help to improve environmental policy design. The aim of this paper is a critical discussion of the way how this branch of research is interpreting the explanatory power and the normative (policy) implications of behavioural economics. |
| Keywords: | Behavioural economics, environmental economics, policy design, methodology |
| JEL: | B41 D0 D70 Q57 Q58 |
| Date: | 2013–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2013-020&r=ene |