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on Energy Economics |
| By: | Khanna, Shefali (Resources for the Future); Linn, Joshua (Resources for the Future) |
| Abstract: | By decreasing gasoline consumption, greater fuel economy could significantly reduce environmental and energy security concerns. In this paper, we show that since the year 2000, technology and market shares have contributed roughly equally to rising new vehicle fuel economy in the United States. We discuss the implications of these patterns for the safety and welfare effects of fuel economy standards. |
| Keywords: | corporate average fuel economy standards, passenger vehicles, fuel savings, vehicle safety, greenhouse gas emissions rate standards |
| JEL: | Q4 L62 |
| Date: | 2013–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-29&r=ene |
| By: | MORITA Tamaki; MANAGI Shunsuke |
| Abstract: | The Great East Japan Earthquake on March 11, 2011 severely damaged the Fukushima Daiichi Nuclear Power Plant, and has reminded people of the potential risk of electricity supply shortage. Japanese consumers have since also began rethinking about the source of electricity production. This paper presents the results of both discrete choice experiments and choice probabilities experiments to determine the citizens' willingness to pay (WTP) for residential electricity produced by natural gas, solar, wind, and nuclear, to evaluate the three energy mix scenarios presented by the government. The authors also measured the effects of the positive or negative information on nuclear energy. The results show that Japanese consumers on average have negative WTP for electricity produced by nuclear power regardless of the information they read, and that their WTP for energy mix changes is far less than price increases already planned by electric companies without any prospects on actual changes in their energy mix. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:13066&r=ene |
| By: | Fraas, Arthur G. (Resources for the Future); Harrington, Winston (Resources for the Future); Morgenstern, Richard D. (Resources for the Future) |
| Abstract: | The shale gas revolution in the United States has dropped the price of natural gas (NG) significantly. Combined with new fuel and vehicle technologies, an opportunity exists to expand the use of NG throughout the economy, including in the light-duty fleet of cars and trucks. This expansion could involve the direct combustion of the gas in the form of compressed natural gas or liquid petroleum gas or, alternatively, the use of natural-gas-based liquid fuels such as ethanol or methanol. This paper examines the potential economic, environmental, and national security gains from replacing a portion of the domestic gasoline use in the light-duty fleet with these various NG-based fuels. Also examined are the regulatory barriers to the expanded use of the fuels. We find that these NG-based fuels could yield significant fuel cost savings relative to conventional gasoline in the light-duty fleet, along with gains to national security and, possibly, some environmental benefits. |
| Keywords: | energy, natural gas, alternative fuels |
| JEL: | Q42 Q48 Q53 Q55 |
| Date: | 2013–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-28&r=ene |
| By: | Ibrahim Abada; Pierre-André Jouvet |
| Abstract: | This article presents a stochastic dynamic Generalized Nash-Cournot model to describe the evolution of the natural gas markets. The major gas chain players are depicted including: producers, consumers, storage, and pipeline operators, as well as intermediate local traders. Our economic structure description takes into account market power and the demand representation captures the possible fuel substitution that can be made between oil, coal, and natural gas in the overall fossil energy consumption. The demand is made random because of the oil price fluctuations and we take into account long-term contracts in an endogenous way. The model is applied to represent the European natural gas market and to forecast, until 2035, after a calibration process, patterns of consumption, prices, production, and long-term contract prices and volumes. In terms of policy implications, we show how the perception of the oil price’s uncertainty modifies the gas long-term contract volumes in Europe between the producers and the midstreamers. Finally, we define the value, gain and loss of the stochastic solution adapted to our model and calculate them for each market actor. |
| Keywords: | Energy markets modeling, Game theory, Generalized Nash-Cournot equilibria, Quasi-Variational Inequality, Equilibrium problems, Stochastic programming |
| JEL: | C61 C73 D24 D43 L13 Q41 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:1308&r=ene |
| By: | Ben Jebli, Mehdi; Ben Youssef, Slim |
| Abstract: | The authors consider a symmetric model composed of two countries and a firm in each country. Firms produce the same good by means of a polluting technology which uses fossil energy. However, these firms can adopt a clean technology which uses a renewable energy having a lower unit cost. Surprisingly, opening markets to international competition increases the per-unit emission-tax and decreases the per-unit production subsidy. Interestingly, the socially optimal adoption date under a common market better internalizes transboundary pollution than that under autarky. It also better internalizes transboundary pollution compared with the optimal adoption dates for firms. In autarky (resp. a common market), firms adopt the clean technology earlier (resp. later) than what is socially optimal and, therefore, regulators can induce clean technology adoption at the socially optimal adoption date by giving firms postpone (resp. speed up) adoption subsidies. Opening markets to international trade, speeds up socially optimal adoption dates and delays optimal adoption dates for firms. Consequently, with market opening, speed up adoption subsidies are needed to reduce the global flow of pollution. -- |
| Keywords: | regulation,adoption date,renewable energy,transboundary pollution,common |
| JEL: | D62 F18 H57 Q42 Q55 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201350&r=ene |
| By: | Koichiro Ito |
| Abstract: | Many countries use substantial public funds to subsidize reductions in negative externalities. However, such subsidies create asymmetric incentives because increases in externalities remain unpriced. This paper examines implications of such asymmetric subsidy incentives by using a regression discontinuity design in California's electricity rebate program that provided a financial reward for energy conservation. Using household-level panel data from administrative records, I find precisely-estimated zero causal effects in coastal areas. In contrast, the incentive produced a 5% consumption reduction in inland areas. Income and climate conditions significantly drive the heterogeneity. Asymmetric subsidy structures weaken incentives because consumers far from the rebate target show little response. The overall program cost is 17.5 cents per kWh reduction and $390 per ton of carbon dioxide reduction, which is unlikely to be cost-effective for a reasonable range of the social marginal cost of electricity. |
| JEL: | L11 L51 L94 L98 Q41 Q48 Q58 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19485&r=ene |
| By: | Carlson , Annelie (VTI); Mellin , Anna (VTI) |
| Abstract: | In the debate of climate change and mitigation of greenhouse gases, the issue of energy use is closely related. Several political aims concern the need to reduce the overall energy demand in the society, where transportation is an important contributor. In the transport sector, major efforts have been concentrated on developing more fuel efficient engines and vehicles. However, the road infrastructure, its operation and maintenance also use energy and do have an effect on traffic fuel consumption and emissions. It is therefore important to also take the infrastructure into consideration when addressing the energy issue for traffic and use a broader perspective. The objective of this study is to estimate the total energy use in a life cycle perspective of a road infrastructure investment and the impact of different phases of the roads life time. How the results are related to the transport objectives is also addressed. A life cycle assessment method is used to evaluate an infrastructure investment, including construction, operation, maintenance and traffic during 60 years. A small community is used as a case study where a bypass has been built and the result show that this investment will increase the total energy use by approximately 60%, or 1 550 TJ compared to not building it. A major part of the increase is due to traffic, and since mostly fossil fuel is used there will also be an increase in greenhouse gas emissions. The result stipulates that the aspects of energy efficiency and reduction of greenhouse gases has not been accounted for in the planning or it has been considered as less important than other aspects, e.g. traffic safety and accessibility. |
| Keywords: | Life cycle assessment; Energy use; Road infrastructure and traffic |
| JEL: | R40 |
| Date: | 2013–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2013_023&r=ene |
| By: | Astrid Kander; David I. Stern |
| Abstract: | We examine the role of substitution from traditional to modern energy carriers and of differential rates of innovation in the use of each of these in Sweden from 1850 to 1950. We use a simple growth model with a nested CES production function and exogenous factor augmenting technological change and carry out a growth accounting decomposition based on the econometric results. Energy and energy augmenting technological change contributed more than a third of the economic growth in this period. Even though the rate of technical change was much larger for modern energy, innovation in the use of traditional energy carriers contributed more to growth between 1850 and 1890, since the cost share of traditional energy was so much larger than that of modern energy in that period. However, after 1890 we find that modern energy contributed much more to economic growth than traditional energy, but increasingly labor augmenting technological change and capital accumulation became the most important drivers of growth in the final decades of the period. |
| JEL: | O13 O41 Q43 N13 N14 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2013-65&r=ene |
| By: | Dirk Rübbelke; Stefan Vögele |
| Abstract: | In Europe the ambitions of individual countries to deploy carbon capture and storage (CCS) technologies are diverse. Reasons for this are, amongst other things, the heterogeneity of national electricity generation systems and storage capacities and the differences in the public perception of these technologies. In this analysis we investigate the consequences of partial deployment of CCS, i.e. we consider a situation where some European countries (the “pioneersâ€) actively deploy CCS technologies, while others (the “laggardsâ€) do not use CCS. Our study focuses on the question whether it pays throughout to be a pioneer and whether laggards will generally be disadvantaged. In our assessment, we take into account impacts on consumers affected from rising electricity prices, electricity suppliers whose profits are influenced by changes in both electricity prices and sales, and international trade-flow changes (modifications in European electricity import/export patterns). |
| Keywords: | Carbon capture and storage (CCS); electricity generation; environmental technology; load dispatch approach. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:2013-13&r=ene |
| By: | Farrell, Niall; Devine, Mel; Lee, William; Gleeson, James; Lyons, Seán |
| Abstract: | This paper derives efficient pricing formulae for renewable energy Feed-in Tariff (FiT) designs that incorporate exposure to uncertain market prices by using option pricing theory. Such FiT designs are presented as a means to delineate market price risk amongst investors and policymakers when designing renewable energy support schemes. Sequential game theory provides the theoretical framework through which we model the strategic interaction of policymakers and investors during policy formulation. This model is solved using option pricing theory when a FiT is comprised of market prices combined with a guaranteed element. This solution also allows for an analytical formulation of the policy cost of subsidisation. Partial derivatives characterise sensitivity of policy cost and investor remuneration to deviations in market conditions beyond those expected. Analytical derivations provide a set of tools which may guide more efficient FiT policy and investment decisions. Numerical simulations demonstrate application for a stylised Irish case study, with a scenario analysis providing further insight into the relative sensitivity of policy cost and investor remuneration under different market conditions. |
| Keywords: | Renewable Energy, Feed-in Tariff, Option Pricing, Renewable Energy Support Schemes � |
| JEL: | G13 L94 Q4 Q48 Q5 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49777&r=ene |
| By: | Haikel Khalfallah (PACTE - Politiques publiques, ACtion politique, TErritoires - Institut d'Études Politiques [IEP] - Grenoble - CNRS : UMR5194 - Université Pierre-Mendès-France - Grenoble II - Université Joseph Fourier - Grenoble I); Vincent Rious (Microeconomix - Microeconomix) |
| Abstract: | In this paper we study the economic consequences of two real-time electricity market designs (with or without penalties) taking into account the opportunistic behaviors of market players. We implement a two-stage dynamic model to consider the interaction between the forward market and the real-time market where market players compete in a Nash manner and rely on supply/demand function oligopoly competition. Dynamic programming is used to deal with the stochastic environment of the market and the mixed complementarity problem is employed to find a solution to the game. Numerical examples are presented to illustrate how the optimal competitor's strategies could change according to the adoption or no adoption of a balancing mechanism and to the level of the penalty imposed on imbalances, regarding a variety of producers' cost structures. The main finding of this study is that implementing balancing mechanisms would increase forward contracts while raising electricity prices. Moreover, possible use of market power would not be reduced when imbalances are penalized. |
| Keywords: | Electricity markets ; balancing mechanisms ; supply function equilibrium ; mixed complementarity problem |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00816355&r=ene |
| By: | Elofsson, Katarina (Department of Economics, Swedish University of Agricultural Sciences); Gren, Ing-Marie (Department of Economics, Swedish University of Agricultural Sciences) |
| Abstract: | This study investigates the contribution of forest carbon sequestration to a cost-efficient EU climate policy from 2010 to 2050 under conditions of uncertainty. We note that there is a trade-off between sequestration and alternative uses of forests such as bioenergy and timber production. A dynamic and probabilistic cost-minimization model is developed, which includes fossil fuel use within the EU Emissions Trading System and forest management in the EU-27 countries. The results suggest that if policy makers wish to meet emissions targets with 80% certainty, this goal will be eight times more expensive than when they were unconcerned with uncertainty. Policy makers’ risk attitudes affect forest management strategy primarily through the inclusion of wood products, where potential carbon emissions reductions are high but also highly uncertain. Excluding wood products from a climate strategy can be expensive if policy maker are insensitive to uncertainty. |
| Keywords: | uncertainty; carbon sequestration; bioenergy; wood products; climate policy; cost-efficiency; EU. |
| JEL: | Q23 Q28 Q48 Q54 |
| Date: | 2013–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slueko:2013_008&r=ene |
| By: | Ferede, Tadele; Gebreegziabher, Zenebe; Mekonnen, Alemu; Guta, Fantu; Levin, Jörgen; Köhlin, Gunnar |
| Abstract: | In this study, we assess the economy-wide effects of biofuel investment in Ethiopia, with a focus on the external sector. The Government of Ethiopia has been revising its energy policy to switch from imported fossil oil to domestically produced biofuels, partly in response to climate change and partly in response to rising world oil prices, which leave oil-importing countries such as Ethiopia vulnerable to external oil price shocks. In Ethiopia, the value of oil imports relative to export earnings has increased over time, which has negatively impacted its balance of payments. Specifically, this paper assesses the implications of biofuels investment for growth and the external sector in Ethiopia using a dynamic recursive computable general equilibrium (CGE) model. The study is based on primary data collected from biofuel firms in Ethiopia and assumes that the amount of land is fixed in a given period. The results indicate that the macroeconomic and sectoral effects of biofuel investment in the context of Ethiopia are mixed. Biofuel expansion can help to improve economic growth if such expansion generates spillover effects, with jatropha and castor bean found to have the strongest positive impact on the economy. Without spillovers, the effect of biofuel investment on economic growth is negligible, indicating the importance of technology transfers. The impact on the external sector, especially on exports and imports, is negative, as biofuels expansion affects both the real exchange rate and production of export commodities. This negative effect might be mitigated by policies encouraging biofuels investment to move in a direction that does not compete with the use of land for traditional export crops. |
| Keywords: | biofuels, CGE model, economic growth, external sector, Ethiopia |
| JEL: | O11 O2 O47 O55 Q42 |
| Date: | 2013–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-08-efd&r=ene |
| By: | EDAMURA Kazuma; OKADA Yosuke |
| Abstract: | Based upon the standard model of Grilliches (1981), this paper examines the relationship between the intangible asset of energy-saving technologies and stock market value. We furthermore construct the spillover variable of energy-saving technologies for each firm using the definition of technological proximity by Jaffe (1986), and consider their distinctive impact on stock market value. Non-linear estimation using firm-level data of listed Japanese manufacturing firms reveals that intangible assets as a whole are positively associated with market value, although the intangible asset of energy-saving technologies is negatively correlated with market value. In addition, we find that the spillover of energy-saving technologies raises stock market value significantly. These results suggest that developing energy-saving technologies is difficult to appropriate its potential private rate of return, and the research and development (R&D) for energy-saving technologies is underinvested and socially insufficient. Policy implications are also discussed. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:13062&r=ene |
| By: | Christian de Perthuis; Raphael Trotignon |
| Abstract: | The European emissions trading scheme (EU ETS) is the centrepiece of Europe’s climate policy. The system has been undermined variously by the weakness of its regulation, an undesirable overlap with other public policies and the far-reaching economic and financial crisis that caused the market price of allowances to plunge. This article attempts to identify the conditions for making the coming years of the EU ETS a success. It draws historical lessons from the eight years the scheme has been in operation, and then analyzes, using the ZEPHYR-Flex model, the various interventions by the public authorities currently under discussion in order to revive the market. These simulations reveal the risk of carrying forward problems to the future, with further clouding of the visibility needed by ETS actors in the long term. Finally, the article proposes to draw lessons from monetary policy by outlining what might be the mandate of an Independent Carbon Market Authority, with responsibility for the dynamic management of the supply of allowances, and whose main mission would be to ensure the optimal linkage between the different temporal horizons of the climate strategy. |
| Keywords: | Emission trading, EU ETS, governance |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:1307&r=ene |
| By: | TAKARADA Yasuhiro |
| Abstract: | We develop a two-country, two-good general equilibrium model of international trade that takes international transport sectors into explicit consideration to examine the effects of environmental policy on international transport. International transportation services are traded between two countries. First, we find that international emission permit trading between the international transport sectors of two countries benefits the country that imports transportation services, regardless of the trading price of emission permits. However, a country that exports transportation services may lose from emissions trading even if it receives all of the direct gains from permit trade by buying (or selling) permits at the current market price of the other country. Our results suggest that the trade pattern in transportation services is crucial to the welfare effects of permit trade in international transport sectors. Second, we demonstrate that a country may gain from unilateral reduction in the emission permit of its transport sector despite the fact that the stricter regulation shrinks its transport sector. Both countries can benefit from the voluntary regulation if environmental regulations on international transport are initially weak. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:13061&r=ene |
| By: | Satti, Saqlain Latif; Hassan, Muhammad shahid; Mahmood, Haider; Shahbaz, Muhammad |
| Abstract: | This study is an attempt to revisit the causal relationship between coal consumption and economic growth in case of Pakistan. The present study covers the period of 1974-2010. The direction of causality between the variable is investigated by applying the VECM Granger causality approach. Our findings have exposed that there exists bidirectional Granger causality between economic growth and coal consumption. The Cumulative Sum (CUSUM) and Cumulative Sum of Square (CUSUMSQ) diagrams have not found any structural instability over the period of 1974-2010. |
| Keywords: | Pakistan; Economic Growth, Coal Consumption |
| JEL: | C5 |
| Date: | 2013–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50147&r=ene |
| By: | Brennan, Timothy J. (Resources for the Future) |
| Abstract: | Storm-related service outages in electricity and telecommunications have created public controversies regarding the adequacy of ex ante efforts to prevent outages and ex post efforts to restore power. Product liability rules, used to promote quality of service throughout the economy, might seem to offer a solution to this problem in the utility context. Strict liability rules avoid the need for determining whether utilities were appropriately careful but increase ratepayer costs because of moral hazard and, in effect, force ratepayers to buy outage insurance from the utility. By leaving customers exposed to damage, negligence rules can avoid these shortcomings but force upon regulators and courts the need to make difficult decisions regarding efficient care levels. Profit regulation, risk aversion, regulatory commitment failures, and distributional considerations add further complications. Still, the consideration of liability rules may provide worthwhile reminders that increased reliability is neither free nor guaranteed by public provision of service. |
| Keywords: | electricity, distribution, reliability, outage, blackouts, liability, negligence |
| JEL: | L51 K13 L94 |
| Date: | 2013–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-16&r=ene |
| By: | KAINOU Kazunari |
| Abstract: | The Fukushima No. 1 Nuclear Power Reactor Accident in March 2011 caused radioactive pollution problems of various agricultural, forestry and fishery products in nearby Prefectures and government of Japan took production and shipment stoppage order for these products immediately. More than two years have already elapsed and most of the stoppage order has been cancelled due to the confirmation of the safety or establishment of pollution checking and control systems, and most of their prices and shipment quantities are recovered before the accident level. But some commodities especially produced in Fukushima prefectures are still suffering low prices and refusal of purchasing due to the consumer's concern of pollution although they are not actually polluted at all; let us call this phenomena as "rumor-based economical damages". The Tokyo Electric Power Company is liable for the damage and paying compensation for the damage including the "rumor-based economical damages" in accordance with the guideline of Government of Japan, but they are not sure whether the "rumor-based economical damages" are still existing, due to the simplification and speed up of the procedures of compensation payment; although that may cause some problems that the compensation may be used out of the original purposes. The author developed two quantitative judgment criteria to test the existence of the "rumor-based economical damage" using statistical methodologies such as average treatment effect, and applied them to the 34 major commodities in agricultural, forestry and fishery area of their trading price and quantity recorded by Tokyo Central Wholesale Market, and then analyzed and evaluated the results. The author found that the "rumor-based economical damage" still exists in various commodities in Fukushima Prefecture, same as only limited commodities such as vegetables and fruits in Ibaragi Prefecture, but the author could not find the phenomena in most of the area in Ibaragi Prefecture and almost none in Tochigi Prefecture. Then the author recommends that simplified compensation payment procedures should be applied only for Fukushima Prefecture and certain areas in Ibaragi Prefectures because of the continuation of the "rumor-based economical damage," but further checking systems should be introduced in other areas and other Prefectures where no such phenomena is found. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:13060&r=ene |
| By: | Satti, Saqlain Latif; Farooq, Abdul; Shahbaz, Muhammad |
| Abstract: | This present study investigates the relationship between natural resource abundance and economic growth in Venezuelan economy. We have applied the ARDL bounds testing approach to cointegration developed by Pesaran et al. (2001) to examine long run relationship between the variables. The VECM Granger causality is applied to test the direction of causality between the variables. The present study covers the period of 1971-2011. Our empirical evidence indicated that variables are found to be cointegrated. The results confirm that natural resource abundance impedes economic growth. Financial development, capital stock and trade openness enhance economic growth. The feedback hypothesis is also found between natural resource abundance and economic growth. |
| Keywords: | natural resource abundance, economic growth, cointegration |
| JEL: | C3 |
| Date: | 2013–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50150&r=ene |
| By: | Aurelio Volpe (CSIL Centre for Industrial Studies); Mauro Spinelli (CSIL Centre for Industrial Studies) |
| Abstract: | This research aims to provide figures and trends for the European market for lighting controls, analyzing the sector performance, the competitive system, market drivers and major market players. The study has been produced on the basis of around 50 direct interviews and overall documentation relating to the lighting industry available both online and offline + CSIL's database of roughly 1,000 worldwide manufacturers operating in the lighting industry. In this research product segmentation included: residential, commercial, industrial and outdoor lighting controls applications. Subcategories of any of the mentioned segment have also been investigated (offices, hotels, private homes, industrial plants, etc..). The following technologies have been investigated: user interfaces (including sliders, dimmers, touch panels, remote controls, timers and standard control panels); sensors (including presence, occupancy,movement and light sensors); control modules (including relay panels, group controllers, scene controllers and DMX controllers); fixture mounted (including all devices mounted on the fixture or luminaries); wall mounted (including ceiling mounted); integrated building automation system (BAS); further protocols used (DALI, DMX, etc.). Ballasts are excluded; The countries covered are: European Union (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, United Kingdom) + Norway and Switzerland. |
| JEL: | L11 L22 L68 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:mst:csilre:eu26&r=ene |