nep-ene New Economics Papers
on Energy Economics
Issue of 2013‒09‒06
twelve papers chosen by
Roger Fouquet
London School of Economics

  1. Tracking global fuel supply, CO2 emissions and sustainable development By Liam Wagner; Ian Ross; John Foster; Ben Hankamer
  2. Electricity Supply Preferences in Europe: Evidence from Subjective Well-Being Data By Heinz Welsch; Philipp Biermann
  3. The Silver Lining of Price Spikes: How electricity price spikes can help overcome the energy efficiency gap By Mauritzen, Johannes
  4. EU Biofuel Policies In Practise - A Carbon Map for Kalimantan and Sumatra By Mareike Lange
  5. Distant Event, Local Effects? Fukushima and the German Housing Market By Thomas K. Bauer; Sebastian Braun; Michael Kvasnicka
  6. Energy Tariffs, Production, and Income in a Small Open Economy By Henry Thompson
  7. Economic challenges in the Anthropocene By Ignazio Musu
  8. Is there a Homogeneous Causality Pattern between Oil Prices and Currencies of Oil Importers and Exporters? By Joscha Beckmann; Robert Czudaj
  9. Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program and Ozone Reductions By Deschenes, Olivier; Greenstone, Michael; Shapiro, Joseph S.
  10. Understanding Unemployment Hysteresis: A system-based econometric approach to changing equilibria and slow adjustment By Niels Framroze Møller
  11. Bioeconomic factors of natural resource transitions: The US sperm whale fishery of the 19th century By Brooks A. Kaiser
  12. Os Desafios do Desenvolvimento e da Inclusão Social: O Caso do Arranjo Político-Institucional do Programa Nacional de Produção e uso do Biodiesel By Paula Maciel Pedroti

  1. By: Liam Wagner (Department of Economics, University of Queensland); Ian Ross (IMB, University of Queensland); John Foster (Department of Economics, University of Queensland); Ben Hankamer (IMB, University of Queensland)
    Abstract: Reducing CO2 emissions is imperative to stay within the 2oC global warming ‘safe limit’ of the Intergovernmental Panel on Climate Change. However to ensure social and political stability, these reductions must be aligned with fuel security and economic growth. Here an advanced multifactorial model is used to forecast global energy demand, based on global population, current energy use and economic growth rates allowing a critical analysis of global energy use patterns. A severe upward pressure on global energy demand results from the combined interplay of increasing population and continuing economic growth. The predictive output highlights (i) the potential for an exponential increase of fuel consumption (ii) serious fossil fuel limitations from 2033 onward, (iii) implications for CO2 emission reduction in a ‘pro-growth’ global economy and (iv) poverty alleviation. These findings place economists and environmentalists on the same side and establish a reference to guide sustainable development.
    Keywords: Energy Demand; Fossil Fuels; Economic Growth; Climate Change; Equilibrium correction Model; Time Series;
    JEL: Q41 Q32 Q43 C53 O13 O44
    Date: 2013–08
  2. By: Heinz Welsch (University of Oldenburg, Department of Economics); Philipp Biermann (University of Oldenburg, Department of Economics)
    Abstract: We use survey data for 139,517 individuals in 26 European Countries, 2002-2011, to estimate the relationship between subjective well-being (SWB) and production shares of various types of electricity generation. The estimated relationships are taken to represent preference relationships over attributes of electricity supply systems (costs, safety, environmental friendliness etc.). Controlling for a variety of individual and macro-level factors, we find that individuals’ SWB varies systematically and significantly with differences in the electricity mix across countries and across time. Among other results, we find that a greater share of solar and wind power relative to nuclear power is associated with greater SWB and that the implied preference for solar and wind power over nuclear power has risen drastically after the Fukushima nuclear accident. In general, our results suggest that environmental and safety concerns are of major importance in European citizens’ preference function over electricity supply structures.
    Keywords: : energy mix; preference; subjective well-being; energy transition; Fukushima
    JEL: Q42 Q48 I31
    Date: 2013–08
  3. By: Mauritzen, Johannes (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: Studies have shown that many consumers and businesses fail to invest in energy efficiency improvements despite seemingly ample financial incentives to do so – the so-called energy efficiency gap. Attempts to explain this gap often focus on searching costs, information frictions and behavioral factors. Using data on Norwegian electricity prices and Google searches for heat pumps, I suggest that the inherently spikey nature of many deregulated electricity markets – often seen as a sign of inefficiency – has a strong and significant positive effect on searching for information on energy efficiency goods. I attempt to identify the informational/behavioral effect by using a novel method of measuring spikiness: decomposing the price series into a range of Loess smoothed series and deviations from these curves.
    Keywords: Price spikes; energy efficiency gap; deregulated electricity markets
    JEL: L00 L10 L50 Q00 Q40
    Date: 2013–08–29
  4. By: Mareike Lange
    Abstract: It is still difficult for biofuel producers to proof the contribution of their biofuels to reducing carbon emissions because the production of biofuel feedstocks can cause land use change (LUC), which in turn causes carbon emissions. A carbon map can serve as a basis to proof such contribution. I show how to calculate a carbon map according to the sustainability requirements for biofuel production adopted by the European Commission (EU-RED) for Kalimantan and Sumatra in Indonesia. Based on the carbon map and the carbon balance of the production process I derive maps showing the possible emission savings that would be generated by biofuels based on palm if an area were to be converted to produce feedstock for this biodiesel options. I evaluate these maps according to the criterion contained in the EU-RED of 35% minimum emission savings for each biofuel option compared to its fossil alternative. In addition, to avoid indirect LUC effects of the EU-RED that might offset any contribution of biofuels to reducing carbon emissions, I argue that all agricultural production should be subject to sustainability assessments and that for an effective forest protection policies need to address the manifold drivers of deforestation in the country. In this effort, my resulting carbon maps can be the basis for a sustainable land use planning with a strategy to reactivate degraded areas that is binding for all agricultural production in the country
    Keywords: biofuels, carbon emissions, Renewable Energy directive, carbon map, land use change, Indonesia
    JEL: Q42 Q58 Q56 Q16
    Date: 2013–08
  5. By: Thomas K. Bauer; Sebastian Braun; Michael Kvasnicka
    Abstract: The Fukushima Daiichi accident in Japan in March 2011 caused a fundamental change in Germany’s energy policy which led to the immediate shut down of nearly half of its nuclear power plants. This paper uses data from Germany’s largest internet platform for real estate to investigate the effect of Fukushima on the German housing market. Using a difference-in-differences approach, we find that Fukushima reduced house prices near nuclear power plants that were in operation before Fukushima by almost 6%. House prices near sites that were shut down right after the accident even fell by 10.8%. Our results suggest that economic reasons are of prime importance for the observed fall in house prices near nuclear power plants.orex interventions. Our results indicate that only coordinated interventions seem to stabilize the Dollar-Yen exchange rate in a long-run perspective. This is a novel contribution to the literature.
    Keywords: Fukushima; nuclear power plants; housing prices; Germany
    JEL: R31 Q48 Q58
    Date: 2013–08
  6. By: Henry Thompson
    Abstract: A tariff on imported energy in a small open economy alters production, redistributes income, and generates tariff revenue. The present paper includes tariff revenue in a general equilibrium economy producing two traded goods with imported energy and domestic capital and labor. An energy tariff reduces energy intensive output and domestic factor income but payment to one domestic factor may rise as might the other output. Tariff revenue, not included in the related theoretical literature, is shown to be concave in the tariff. A simulation illustrates these general equilibrium properties including the revenue maximizing tariff.
    Keywords: Energy Tariffs; Tariff Revenue; General Equilibrium
    JEL: F11
    Date: 2013–08
  7. By: Ignazio Musu (Department of Economics, University of Venice Cà Foscari)
    Abstract: The evolution during the Anthropocene is analyzed through the interaction between economic and technological development, characterized by the role of fossil fuels and by the progressive dominance of those with a higher energy and density power. The challenge is how to make the rising demand for economic growth, mainly coming from developing and emerging countries, compatible with the sustainability of the processes concerning the Earth system. Mainly by focusing on the energy-environment challenge, it is claimed that the required technological breakthrough will not be possible without an appropriate combination of environmental and innovation policies. The big size of the needed investments in a context of limited financial resources asks for a strong support and definition of precise priorities by the governments. A strong help will come from a cultural change able to determine a more sustainable demand for goods and services and a new system of social norms.
    Keywords: Economic development, Technical Change, Sustainability, Environment, Energy
    JEL: O1 O3 Q4 Q5
    Date: 2013
  8. By: Joscha Beckmann; Robert Czudaj
    Abstract: Although the link between oil prices and dollar exchange rates has been frequently analyzed, a clear distinction between prices and nominal exchange rate dynamics and a clarifi cation of the issue of causality has not been provided. In addition, previous studies have mostly neglected nonlinearities which for example may stem from exogenous oil price shocks. Using monthly data for various oil-exporting and oil-importing countries, this study contributes to the clarification of those issues. We discriminate between long-run and time-varying short-run dynamics, using a Markov-Switching vector error correction model. In terms of causality, the results differ between the economies under observation but suggest that the most important causality runs from exchange rates to oil prices, with a depreciation of the dollar triggering an increase in oil prices. On the other hand, changes in nominal oil prices are responsible for ambiguous real exchange rate effects mostly through the price differential and partly also through a direct influence on the nominal exchange rate. Overall, the fact that the adjustment pattern frequently differs between regimes underlines the fact that the relationships are subject to changes over time, suggesting that nonlinearities are an important issue when analyzing oil prices and exchange rates.orex interventions. Our results indicate that only coordinated interventions seem to stabilize the Dollar-Yen exchange rate in a long-run perspective. This is a novel contribution to the literature.
    Keywords: Bayesian econometrics; cointegration; exchange rates; Markov-switching model; oil prices; oil-importing and oil-exporting countries
    JEL: C32 E31 F31 G15
    Date: 2013–08
  9. By: Deschenes, Olivier (University of California, Santa Barbara); Greenstone, Michael (MIT); Shapiro, Joseph S. (Yale University)
    Abstract: Demand for air quality depends on health impacts and defensive investments that improve health, but little research assesses the empirical importance of defenses. We study an important cap-and-trade market, which dramatically reduced NOx emissions, a key ingredient in ozone formation. A rich quasi-experiment reveals that it decreased summertime ozone, pharmaceutical expenditures, and mortality rates. Reductions in pharmaceutical purchases and mortality are each valued at $900 million annually, suggesting that defensive investments are a substantial portion of willingness-to-pay. We cautiously conclude that ozone reductions are the primary channel for these effects, implying that ozone's costs are larger than previously understood.
    Keywords: pharmaceuticals, ozone, cap and trade, willingness to pay for air quality, mortality, compensatory behavior, human health
    JEL: H4 I1 Q4 Q5 D1
    Date: 2013–08
  10. By: Niels Framroze Møller (DTU Management Engineering, Energy Systems Analysis, Technical University of Denmark)
    Abstract: What explains the persistence of unemployment? The literature on hysteresis, which is based on unit root testing in autoregressive models, consists of a vast number of univariate studies, i.e. that analyze unemployment series in isolation, but few multivariate analyses that focus on the sources of hysteresis. As a result, this question remains largely unanswered. This paper presents a multivariate econometric framework for analyzing hysteresis, which allows one to test different hypotheses about non-stationarity of unemployment against one another. For example, whether this is due to a persistently changing equilibrium, slow adjustment towards the equilibrium (persistent ?uctuations), or perhaps even a combination of the two. Different hypotheses of slow adjustment, as implied by theories of hysteresis, nominal rigidities or labor hoarding can also be compared. A small illustrative application to UK quarterly data on prices, wages, output, unemployment and crude oil prices, suggests that, for the period 1988 up to the onset of the financial crisis, the non-stationarity of UK unemployment cannot be explained as a result of slow adjustment, including sluggish wage formation as emphasized by the hysteresis theories. Instead, it is the equilibrium that has evolved persistently as a consequence of exogenous oil prices shifting the price setting relation (in the unemployment-real wage space) in a non-stationary manner.
    Keywords: Hysteresis, Unemployment Hysteresis, Persistence, Cointegration, Structural VAR, Equilibrium unemployment, Multivariate Time series analysis, Price- and Wage Setting, Wage formation, Crude oil prices, UK unemployment
    JEL: C1 C32 E00 E24
    Date: 2013–08–28
  11. By: Brooks A. Kaiser (Department of Environmental and Business Economics, University of Southern Denmark)
    Abstract: This paper uses bio-economic modeling and simulation to investigate the de-mise of the sperm whale industry in the mid-19th century. Petroleum is widely credited both contemporaneously and today with ‘saving the whales.’ We in-vestigate the transition in illumination technologies from whale oil to petroleum as a stochastic dynamic process in which there is uncertainty over the parameters of the fishery and the timing of available substitutes for sperm oil in order to determine the effect on the whale population. Using new biological analysis of the sperm whale fishery (Whitehead, 2002) and insights from natural resource economics we show that under most economic conditions the dynamics, even without a substitute, would have prevented extinction; this result is notably different, for economic and biological reasons, than that usually determined for the better studied baleen whales. This research builds on a long history of understanding the whale fisheries, particularly Davis et al. (1988) and related work, integrating new scientific and economic evidence.
    Date: 2013–04
  12. By: Paula Maciel Pedroti
    Abstract: Este artigo analisa o Programa Nacional de Produção e Uso do Biodiesel (PNPB), uma política pública agroenergética com forte caráter social, a partir do exame das capacidades políticas e técnico-administrativas de seu arranjo político-institucional. Com base no referencial analítico-conceitual proposto por Pires e Gomide (2012a), pretende-se verificar se seu arranjo é capaz de conjugar os requisitos de participação, controle e transparência – próprios de um contexto democrático – com os elementos do aparato técnico-administrativo necessários para conduzir com eficiência esta política pública. Pretende-se, ainda, examinar de que maneira o seu arranjo contribui para o alcance de dois objetivos: formação do mercado do biodiesel e inclusão da agricultura familiar na cadeia de produção. The article analyses the Programa Nacional de Produção e Uso do Biodiesel (PNPB), an agro-energy policy with social aims, through the study of the political and technical capabilities of its institutional arrangement. The article verifies if the arrangement is able to combine the demands of democratic context (such as transparency, control and social participation) with the technical elements needed to conduct this policy efficiently. It also analyses the contribution of the PNPB’s arrangement in the accomplishment of two goals: the creation of the biodiesel market and the social inclusion in the productive chain of the sector.
    Date: 2013–08

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