nep-ene New Economics Papers
on Energy Economics
Issue of 2013‒10‒25
thirty-six papers chosen by
Roger Fouquet
London School of Economics

  1. White Knights: Will wind and solar come to the rescue of a looming capacity gap from nuclear phase-out or slow CCS start-up? By Bradford Griffin; Pierre Buisson; Patrick Criqui; Silvana Mima
  2. Assessing and ordering investments in polluting fossil-fueled and zero-carbon capital By Oskar Lecuyer; Adrien Vogt-Schilb
  3. Economic benefits of decarbonising the global electricity sector By J. F. Mercure; P. Salas; A. Foley; U. Chewpreecha; H. Pollitt; P. B. Holden; N. R. Edwards
  4. Hydrogen Storage for Wind Parks - A Real Options Evaluation for an Optimal Investment in More Flexibility By Kroniger, Daniel; Madlener, Reinhard
  5. Firm competitiveness and the European union emissions trading scheme By Chan, Hei Sing; Li, Shanjun; Zhang, Fan
  6. Heterogeneous beliefs, regret, and uncertainty: The role of speculation in energy price dynamics By Marc Joëts
  7. Greenhouse Gas Emissions from Small Industries By Mohajan, Haradhan
  8. What Drives Natural Gas Consumption in Europe? Analysis and Projections By Özge Dilaver; Zafer Dilaver; Lester C. Hunt
  9. Energy prices and the real exchange rate of commodity-exporting countries By Magali Dauvin
  10. Are Per Capita CO2 Emissions Increasing Among OECD Countries? A Test of Trends and Breaks By Yamazaki, Satoshi; Tian, Jing; Tchatoka, Firmin Doko
  11. The Effect of Public Policies on Consumers' Preferences: Lessons from the French Automobile Market By D'Haultfoeuille, Xavier; Durrmeyer, Isis; Février, Philippe
  12. A theory of investment and energy use By Antonia Díaz; Luis A. Puch
  13. Climate and Carbon: Aligning Prices and Policies By OECD
  14. Low climate stabilisation under diverse growth and convergence scenarios By Patrick Criqui; Mikel Gonzalez-Eguino; Anil Markandaya; Silvana Mima
  15. The European Union Emissions Trading System : should we throw the flagship out with the bathwater ? By Frédéric Branger; Oskar Lecuyer; Philippe Quirion
  16. Optimal growth under a climate constraint By Amigues, Jean-Pierre; Moreaux, Michel
  17. Residential end-use electricity demand : Development over time By Hanne Marit Dalen; Bodil M. Larsen
  18. Les véhicules électrifiés réduisent-ils les émissions de carbone ? Un raisonnement prospectif By Adrien Vogt-Schilb; Céline Guivarch; Jean-Charles Hourcade
  19. Rational Inattention and Energy Efficiency By James M. Sallee
  20. Would Border Carbon Adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies By Frédéric Branger; Philippe Quirion
  21. Should marginal abatement costs differ across sectors? The effect of low-carbon capital accumulation By Adrien Vogt-Schilb; Guy Meunier; Stéphane Hallegatte
  22. The likely impact of Basel III on a bank's appetite for renewable energy financing By Narbel, Patrick A.
  23. Addressing Competitiveness and Carbon Leakage Impacts Arising from Multiple Carbon Markets: A Modelling Assessment By Elisa Lanzi; Damian Mullaly; Jean Chateau; Rob Dellink
  24. The Political Economy of British Columbia's Carbon Tax By Kathryn Harrison
  25. Energy price transmissions during extreme movements By Marc Joëts
  26. Transitions énergétiques en France: Enseignements d'exercices de prospective By Ruben Bibas; Jean-Charles Hourcade
  27. Analysis of Climate Policies with GDyn-E By Golub, Alla
  28. L'effet net sur l'emploi de la transition énergétique en France : Une analyse input-output du scénario négaWatt By Philippe Quirion
  29. Ireland's Carbon Tax and the Fiscal Crisis: Issues in Fiscal Adjustment, Environmental Effectiveness, Competitiveness, Leakage and Equity Implications By Frank J. Convery; Louise Dunne; Deirdre Joyce
  30. Carbon Leakage and Capacity-Based Allocations. Is the EU right? By Guy Meunier; Jean-Pierre Ponssard; Philippe Quirion
  31. The Cost of Solar-Centric Renewable Portfolio Standards By Timothy J. Considine; Edward J. M. Manderson
  32. Exports and Participation in Clean Development Mechanism [CDM] in Technology Intensive Industries in India By Sahu, Santosh Kumar; Narayanan, K.
  33. Fred Schweppe meets Marcel Boiteux and Antoine-Augustin Cournot: transmission constraints and strategic underinvestment in electric power generation By Léautier, Thomas-Olivier
  34. The Consequences of Urban Air Pollution for Child Health: What does Self Reporting Data in the Jakarta Metropolitan Area Reveal? By Mia Amalia; Budy P. Resosudarmo; Jeff Bennett
  35. Planning reform, rescaling, and the construction of the post-political: the case of The Planning Act 2008 and nuclear power consultation in the UK By Philip Johnstone
  36. Waste of Effort? International Environmental Agreements By Derek Kellenberg; Arik Levinson

  1. By: Bradford Griffin (Enerdata S.A. - Enerdata); Pierre Buisson (Enerdata S.A. - Enerdata); Patrick Criqui (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); Silvana Mima (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)
    Abstract: In the wake of the Fukushima nuclear accident, countries like Germany and Japan have planned a phase-out of nuclear generation. Carbon capture and storage (CCS) technology has yet to become a commercially viable technology with little prospect of doing so without strong climate policy to spur development. The possibility of using renewable power generation from wind and solar as a non-emitting alternative to replace a nuclear phase-out or failure to deploy CCS technology is investigated using scenarios from EMF27 and the POLES model. A strong carbon price appears necessary to have significant penetration of renewables regardless of alternative generation technologies available, but especially if nuclear or CCS are absent from the energy supply system. The feasibility of replacing nuclear generation appears possible at realistic costs (evaluated as total abatement costs and final user prices to households); however for ambitious climate policies, such as a 450 ppm target, CCS could represent a critical technology that renewables will not be able to fully replace without unbearable economic costs.
    Keywords: nuclear energy ; CCS ; phase-out ; renewable energy ; climate policy
    Date: 2013–10
  2. By: Oskar Lecuyer (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Adrien Vogt-Schilb (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech)
    Abstract: Climate change mitigation requires to replace preexisting carbon-intensive capital with different types of cleaner capital. Coal power and inefficient thermal engines may be phased out by gas power and efficient thermal engines or by renewable power and electric vehicles. We derive the optimal timing and costs of investment in a low- and a zero-carbon technology, under an exogenous ceiling constraint on atmospheric pollution. Producing output from the low-carbon technology requires to extract an exhaustible resource. A general finding is that investment in the expensive zero-carbon technology should always be higher than, and can optimally start before, investment in the cheaper low-carbon technology. We then provide illustrative simulations calibrated with data from the European electricity sector. The optimal investment schedule involves building some gas capacity that will be left unused before it naturally depreciates, a process known as \textit{mothballing} or \textit{early scrapping}. Finally, the levelized cost of electricity (LCOE) is a misleading metric to assess investment in new capacities. Optimal LCOEs vary dramatically across technologies. Ranking technologies according to their LCOE would bring too little investment in renewable power, and too much in the intermediate gas power.
    Date: 2013–08–07
  3. By: J. F. Mercure; P. Salas; A. Foley; U. Chewpreecha; H. Pollitt; P. B. Holden; N. R. Edwards
    Abstract: Conventional economic analyses of stringent climate change mitigation have generally concluded that economic austerity would result from carbon austerity. These analyses however rely critically on the assumption of an economic equilibrium, which dismisses established notions on behavioural heterogeneity, path dependence and technology transitions. Here we show that on the contrary, the decarbonisation of the electricity sector globally can lead to improvements in economic performance. By modelling the process of innovation-diffusion and non-equilibrium dynamics, we establish how climate policy instruments for emissions reductions alter economic activity through energy prices, government spending, enhanced investment and tax revenues. While higher electricity prices reduce income and output, this is over-compensated by enhanced employment generated by investments in new technology. We stress that the current dialogue on the impacts of climate policies must be revisited to reflect the real complex dynamics involved in the global economy, not captured by conventional models.
    Date: 2013–10
  4. By: Kroniger, Daniel (RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: In this paper, we investigate the economic viability of hydrogen storage for excess electricity produced in wind power plants. To this end, we define two scenarios and use both Monte Carlo simulation and real options analysis. The use of hydrogen as a storage medium helps to increase capacity utilization of the wind parks; in the case of disconnection of the wind park (grid overload, grid stability considerations), the investor can also offer system-relevant services by producing reserve energy. It also allows temporal arbitrage, i.e. the purchasing of electrical energy at low spot market prices in order to generate hydrogen, and the selling of electricity that is generated from hydrogen at high spot market prices. Finally, system services can be offered in the form of minute reserve.
    Keywords: Wind power; hydrogen storage; real options analysis; optimal investment decision-making
    Date: 2013–02
  5. By: Chan, Hei Sing; Li, Shanjun; Zhang, Fan
    Abstract: The European Union Emissions Trading Scheme is the first international cap-and-trade program for carbon dioxide and the largest carbon pricing regime in the world. A significant concern over the Emissions Trading Scheme has been the potential impact on the competitiveness of industry. Using data on 5,873 firms in ten European countries during 2001-2009, this paper assesses the impact on three variables through which the effects on firm competitiveness may manifest -- unit material costs, employment and revenue. The analysis focuses on the three most heavily-emitting industries under the program -- power, cement, and iron and steel. Empirical results indicate that the Emissions Trading Scheme has had different impacts across these three sectors. Although no impacts are found on any of the three variables in the cement and iron and steel industries, a positive effect is found on both material costs and revenue in the power sector. The effect on material costs likely reflects fuel-switching to reduce carbon dioxide emissions, while that on revenue may be partly due to cost pass-through to consumers in a market that is less exposed to competition outside the Europen Union. Overall the findings do not substantiate concerns over carbon leakage, job loss or industry competitiveness during the study period.
    Keywords: Climate Change Mitigation and Green House Gases,Climate Change Economics,Energy Production and Transportation,E-Business,Environment and Energy Efficiency
    Date: 2013–10–01
  6. By: Marc Joëts
    Abstract: This paper proposes to investigate the impact of …nancialization on energy markets (oil, gas, coal, and electricity European forward prices) during both normal times and periods of extreme ‡uctuation through an original behavioral and emotional approach. With this aim, we propose a new theoretical and empirical framework based on a hetero- geneous agents model in which fundamentalists and chartists co-exist and are subject to regret and uncertainty. We …nd signi…cant evidence that energy markets are composed of heterogeneous traders who be- have di¤erently, depending on the intensity of the price ‡uctuations and the uncertainty context. In particular, energy prices are mainly governed by fundamental and chartist neutral agents during normal times, whereas they face irrational chartist averse investors during pe- riods of extreme ‡uctuations. In this context, the recent surge in energy prices can be viewed as the consequence of irrational exhuberance. Our new theoretical model outperforms the random walk in out-of-sample predictive ability.
    Keywords: Energy forward prices, Â…nancialization, heterogeneous agents,uncertainty aversion, regret.
    JEL: Q43 G15 G02 D81
    Date: 2013–10–15
  7. By: Mohajan, Haradhan
    Abstract: This paper discusses mathematical calculations of the greenhouse gas emissions from small industries which cause the global warming in the atmosphere. Due to global warming the ocean levels are increasing, it is estimated that most of the coastal areas of the world will be submerged by 2050, and some insects and animals will be extinct. Very simple calculations are presented here to estimate three greenhouse gases, carbon dioxide, methane, and nitrous oxide emissions from small industry. The emissions from fossil fuels in a small mill are given with mathematical calculations. Emissions from combined heat and power plants are allocated in this paper by using ‘The World Resources Institute and World Business Council for Sustainable Development Efficiency’ method.
    Keywords: Greenhouse gas emissions, Biomass, Fossil fuels, Kyoto Protocol 1997.
    JEL: Q5
    Date: 2013–02–22
  8. By: Özge Dilaver (Centre for Research in Social Simulation (CRESS), Department of Sociology, University of Surrey, and British Institute at Ankara, Turkey); Zafer Dilaver (The Republic of Turkey Prime Ministry, Ankara, Turkey, and Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.); Lester C. Hunt (Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.)
    Abstract: Natural gas is an important fuel source for Europe and it is expected to remain so in the near future. The market power of suppliers is an important structural element of the European natural gas market and long-term investment and contracts necessitate reliable projections of natural gas demand. This research attempts to address this need. It investigates the impact of income, real natural gas prices and the underlying energy demand trend (UEDT) on OECD-Europe natural gas consumption by applying the structural time series technique to annual data over the period 1978 to 2011. The results suggest that, in order of importance, income, the UEDT and natural gas prices all play a role in driving OECD-Europe natural gas consumption with the estimated UEDT having both increasing (gas using) and decreasing (gas saving) periods over the estimation period and the estimated long run income and price elasticities being 1.19 and -0.16 respectively. Furthermore, based upon the estimated relationship, OECD-Europe natural gas consumption is predicted to be somewhere between 572 and 646 bcm (about 472 and 533 mtoe) by 2020.
    Keywords: OECD-Europe Gas Demand; Structural Time Series Model (STSM); Gas Demand Modelling and Future Scenarios.
    JEL: C22 Q41 Q47 Q48
    Date: 2013–10
  9. By: Magali Dauvin
    Abstract: This paper investigates the relationship between energy prices and the real effective exchange rate of commodity-exporting countries. We consider two sets of countries: 10 energy-exporting and 23 non-fuel commodity-exporting countries over the period 1980-2011. Estimating a panel cointegrating relationship between the real exchange rate and its fundamentals, we provide evidence for the existence of "energy currencies". Relying on the estimation of panel smooth transition regression (PSTR) models, we show that there exists a certain threshold beyond which the real effective exchange rate of both energy and commodity exporters reacts to oil prices, through the terms-of-trade. More specifically, when oil price variations are low, the real effective exchange rates are not determined by terms-of-trade but by other usual fundamentals. Nevertheless, when the oil market is highly volatile, currencies follow an "oil currency" regime, terms-of-trade becoming an important driver of the real exchange rate.
    Keywords: energy prices, terms-of-trade, exchange rate, commodity-exporting countries, panel cointegration, nonlinear model, PSTR
    JEL: C33 F31 Q43
    Date: 2013
  10. By: Yamazaki, Satoshi; Tian, Jing; Tchatoka, Firmin Doko (School of Economics and Finance, University of Tasmania)
    Abstract: We empirically analyze the trend characteristics of per capita CO2 emissions in OECD countries from 1971 to 2009. We use a statistically robust procedure, which is valid regardless of whether per capita CO2 emissions are trend stationary or contain a stochastic trend, to test for the presence of a deterministic trend and a structural break in the trend. Our results suggest that the trend in per capita CO2 emissions shifts downward or is reversed for a number of OECD countries either after the 1970s oil shocks or during the early to mid-2000s.
    Keywords: carbon dioxide, trend, structural break, robust test
    JEL: C12 Q53
  11. By: D'Haultfoeuille, Xavier; Durrmeyer, Isis; Février, Philippe
    Abstract: In this paper, we investigate whether French consumers have modified their preferences towards environmentally-friendly vehicles between 2003 and 2008. We estimate a model of demand for automobiles incorporating both consumers' heterogeneity and CO2 emissions of the vehicles. Our results show that there has been a shift in preferences towards low-emitting cars, with an average increase of 367 euros of the willingness to pay for a reduction of 10 grams of carbon dioxide per kilometer. We also stress a large heterogeneity in the evolution of preferences between consumers. Rich and young people are more sensitive to environmental issues, and our results are in line with votes for the green party at the presidential elections. We relate these changes with two environmental policies that were introduced at these times, namely the obligation of indicating energy labels by the end of 2005 and a feebate based on CO2 emissions of new vehicles in 2008. Our results suggest that such policies have been efficient tools to shift consumers utility towards environmentally-friendly goods, the shift in preferences accounting for 20% of the overall decrease in average CO2 emissions of new cars on the period.
    Keywords: environmental policy; consumers' preferences; CO2 emissions; automobiles
    JEL: D12 H23 L62 Q51
    Date: 2013–10–10
  12. By: Antonia Díaz; Luis A. Puch
    Abstract: In this paper we propose a theory of investment and energy use to study the response of macroeconomic aggregates to energy price shocks. In our theory this response depends on the interaction between the energy efficiency built in capital goods (which is irreversible throughout their lifetime) and the growth rate of Investment Specific Technological Change (ISTC hereafter). We show that ISTC is a sort of energysaving technical change and, therefore, a substitute of energy efficiency: it rises the productivity of capital without rising energy use, which increases effective energy efficiency (i.e., the amount of energy use required per unit of quality-adjusted capital). Hence, our theory can account for the fall of energy use per unit of output observed during the 1990s, a period in which energy prices fell below trend. By increasing investment in the years of high ISTC growth, the economy was increasing the average efficiency of the economy (the capital-energy ratio), shielding the economy against the impact of the 2003-08 price shock.
    Keywords: Energy use, Vintage capital, Energy price shocks, Investment-specific technology shocks
    JEL: E22 E23
    Date: 2013–09
  13. By: OECD
    Abstract: The international community has agreed to limit the average global temperature increase to no more than 2ºC above pre-industrial levels. This will require a gradual phase-out of fossil fuel emissions by the second half of this century. This report brings together lessons learned from OECD analysis on carbon pricing and climate policies. It recommends that governments ensure coherent policies surrounding the gradual phase-out of fossil fuel emissions and consistent signals to consumers, producers and investors alike. A key component of this approach is putting an explicit price on every tonne of CO2 emitted. Explicit pricing instruments, however, may not cover all sources of emissions and will often need to be complemented by other policies that effectively put an implicit price on emissions. But the policies must be mutually supportive and as cost-effective as possible, both on their own and as a package. In addition, tax exemptions and fossil-fuel subsidies that undermine the transition towards zero carbon solutions must be reformed. Finally, the report highlights the issues of competitiveness, distributional impacts and communication as key elements in implementing climate policy reform. Climat et carbone : rapprochement de la politique et des prix La communauté internationale s’est accordée sur la nécessité de maintenir l'augmentation de la température moyenne de la planète en deçà de 2º C par rapport au niveau de l'ère préindustrielle. Cela nécessitera une élimination progressive des émissions liées aux combustibles fossiles durant la seconde moitié de ce siècle. Ce rapport rassemble les enseignements tirés de l’analyse de l’OCDE sur la tarification du carbone et les politiques en matière de changement climatique. Il recommande aux gouvernements de s’assurer de la cohérence à la fois des politiques visant à la suppression progressive des émissions liées aux combustibles fossiles, et des signaux envoyés aux consommateurs, producteurs et investisseurs. Un élément clé de cette approche consiste à établir de façon explicite un prix pour chaque tonne de CO2 émise. Toutes les sources d’émissions ne peuvent cependant pas se prêter à une telle approche et il sera nécessaire de faire appel à d’autres mesures établissant un prix du carbone de manière implicite. Les politiques mises en place doivent se soutenir mutuellement et offrir un bon rapport coût/efficacité, à la fois individuellement et collectivement. De plus, il est nécessaire de réformer les exemptions fiscales et les subventions aux combustibles fossiles qui compromettent la transition vers des solutions décarbonées. Enfin, le rapport souligne le rôle clé des questions de compétitivité, des effets redistributifs, ainsi que l’importance de la communication pour mettre en oeuvre la réforme des politiques en matière de changement climatique.
    Date: 2013–10–09
  14. By: Patrick Criqui (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); Mikel Gonzalez-Eguino (BC3 - Basque Centre for Climate Change - Basque Centre for Climate change); Anil Markandaya (BC3 - Basque Centre for Climate Change - Basque Centre for Climate change); Silvana Mima (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : FRE3389 - Université Pierre-Mendès-France - Grenoble II)
    Abstract: Few papers have analysed the consequences of low climate stabilisation. Most models and scenarios assume that future trends in global GDP will be similar to the growth experienced in the past century, which would imply multiplying current output nineteen-fold in this century. However, natural resource and environmental constraints suggest that future global economic growth may not be so high. Furthermore, the environmental implications of such growth depend on how it is distributed across countries. This paper studies the implications on GHG abatement policies of different assumptions on global GDP growth and convergence levels. A partial equilibrium model (POLES) of the world's energy system is used to provide detailed projections up to 2050 for the different regions of the world. The results suggest that while low stabilisation is technically feasible and economically viable for the world in all the scenarios considered, it is more likely to occur with more modest global growth. Convergence in living standards on the other hand places greater pressures in terms of the required reduction in emissions. In general we find that there are major differences between regions in terms of the size and the timing of abatement costs and economic impact.
    Keywords: Climate policy ; Economic growth ; Convergence ; Energy forecasting ; Abatement cost ; Partial Equilibrium models ; Energy systems
    Date: 2013
  15. By: Frédéric Branger (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Oskar Lecuyer (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Philippe Quirion (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech)
    Abstract: The European Union Emissions Trading System (EU-ETS), presented as the ''flagship'' of European climate policy, is subject to many criticisms from different stakeholders. Criticisms include the insufficient carbon emissions reduction, the competitiveness losses and the induced carbon leakages, the unfair distributional effects, the frauds and the existence of several other overlapping climate policy instruments. We review these criticisms and find the EU-ETS brought small but real abatements. The competitiveness losses and carbon leakages do not seem to have occurred. The distributional effects have indeed been unfair and fraud has been important. Finally, the scheme does not justify abandoning other climate policies. Some of these problems could have been avoided and can still be corrected by rethinking flexibility mechanisms and by adding some control over the carbon price.
    Keywords: EU-ETS; climate policy; carbon price; flexibility mechanisms; carbon leakage; competitiveness; frauds; distributional effects
    Date: 2013–07
  16. By: Amigues, Jean-Pierre; Moreaux, Michel
    Abstract: Inside a standard growth model with exhaustible resources, we study the optimal growth policy of an economy submitted to a climate constraint, taking the form of a ceiling over admissible atmospheric carbon concentrations. The optimal scenario is a three phases path: a rise of carbon concentrations until the carbon cap is attained followed by a time phase constrained by the ceiling on possible emissions and a last unconstrained phase of resource depletion. Depending upon the primitives of the model we show that the optimal path may be of two main kinds: paths characterized by a positive growth of the economy and paths corresponding to a complex structural adjustment process involving negative growth during some time interval.
    Keywords: Carbon pollution; economic growth; exhaustible resources
    JEL: Q00 Q32 Q43 Q54
    Date: 2013–01
  17. By: Hanne Marit Dalen; Bodil M. Larsen (Statistics Norway)
    Abstract: It is costly and difficult to meter electricity consumption for different end uses, e.g. space heating, lighting and household appliances. We deduce a model for using cross-sectional data for total annual electricity consumption for a sample of households, together with information from energy surveys, to estimate the end uses within an econometric demand model conditional on appliance ownership. By applying a consistent method to Norwegian data for 1990, 2001 and 2006, we compare results over time and detect possible trends. We find that electricity consumption for many end use necessities such as washing, water heating and refrigeration varies somewhat from year to year, but they show no trend. The only clear trend is a steady increase in electricity used for more untraditional end uses and newer types of appliances. Total energy consumption for heating purposes is quite stable over the time period.
    Keywords: Energy end-use consumption over time; Econometric conditional demand model
    JEL: C51 D12 Q40
    Date: 2013–04
  18. By: Adrien Vogt-Schilb (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Céline Guivarch (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Jean-Charles Hourcade (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech)
    Abstract: La pertinence des véhicules électrifiés (VE) pour diminuer les émissions de gaz à effet de serre (GES) est sujette à débat. De nombreuses études fondent le calcul des émissions kilométriques des VE sur le contenu carbone de l'électricité contemporaine. Nous proposons une évaluation qui mobilise une vision cohérente de l'évolution du système énergétique dans lequel les VE doivent s'insérer. Nous utilisons un modèle de simulation prospective pour produire des scénarios contrastés de l'évolution du contenu carbone de l'électricité européenne. Cet exercice suggère que si l'Europe choisit de mettre en place des politiques climatiques destinées à réduire drastiquement ses émissions de GES, le contenu carbone de l'électricité va diminuer rapidement, prolongeant sur le long terme l'avantage actuel des VE sur les véhicules classiques en termes d'émissions par kilomètre.
    Keywords: véhicules électrique; gaz à effet de serre; bilan carbone; prospective; politiques climatiques
    Date: 2013–01
  19. By: James M. Sallee
    Abstract: If time and effort are required to accurately ascertain the lifetime value of energy efficiency for a durable good, consumers might rationally ignore energy efficiency. This paper argues that such inattention may be rational in the market for automobiles and home appliances. To do so, it develops a heuristic model of a consumer's decision problem when purchasing an energy consuming durable good in which uncertainty about each good's energy efficiency can be resolved via costly effort. The model indicates under what conditions the consumer will be less likely to undertake this effort. The empirical portion of the paper argues that energy efficiency is often not pivotal to choice. This, along with a simulation of the automobile market, suggests that returns to paying attention to energy may be modest, and analysis of the information readily available to consumers suggests that the costs of being fully informed may be substantial. The paper discusses the implications of rational inattention for public policy and for empirical research on the energy paradox.
    JEL: D03 H23 Q48
    Date: 2013–10
  20. By: Frédéric Branger (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Philippe Quirion (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech)
    Abstract: The efficiency of unilateral climate policies may be hampered by carbon leakage and competitiveness losses. A widely discussed policy option to reduce leakage and protect competitiveness of heavy industries is to impose Border Carbon Adjustments (BCA) to non regulated countries, which remains contentious for juridical and political reasons. The estimation of carbon leakage as well as the assessment of different policy options led to a substantial body of litterature in energy-economic modeling. In order to give a quantitative overview on the most recent research on the topic, we conduct a meta-analysis on 25 studies, altogether providing 310 estimates of carbon leakage ratios according to different assumptions and models. The typical range of carbon leakage ratio estimates are from 5% to 25% (mean 14%) without policy and from -5% to 15% (mean 6%) with BCA. The output change of Energy Intensive Trade Exposed (EITE) sectors varies from -0.1% to -16% without BCA and from +2.2% to -15.5% with BCA. A meta-regression analysis is performed to further investigate the impact of different assumptions on the leakage ratio estimates. The decrease of the leakage ratio with the size of the coalition and its increase with the binding target is confirmed and quantified. Providing flexibility reduces leakage ratio, especially the extension of coverage to all GHG sources. High values of Armington elasticities lead to higher leakage ratio and among the BCA options, the extension of BCA to all sectors is in the meta-regression model the most efficient feature to reduce the leakage ratio. Our most robust statistical finding is that, all other parameters being constant, BCA reduces leakage ratio by 6 percentage points.
    Keywords: Carbon leakage; Competitiveness; Border Carbon Adjustments; Meta-analysis; Meta-regression analysis; Computable General Equilibrium (CGE) models
    Date: 2013–09
  21. By: Adrien Vogt-Schilb (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Guy Meunier (ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303); Stéphane Hallegatte (SDN - Sustainable Developpment Network - The World Bank)
    Abstract: Climate mitigation is largely done through investments in low-carbon capital that will have long-lasting effects on emissions. In a model that represents explicitly low-carbon capital accumulation, optimal marginal investment costs differ across sectors. They are equal to the value of avoided carbon emissions over time, minus the value of the forgone option to invest later. It is therefore misleading to assess the cost-efficiency of investments in low-carbon capital by comparing levelized abatement costs, measured as the ratio of investment costs to discounted abatement. The equimarginal principle applies to an accounting value: the Marginal Implicit Rental Cost of the Capital (MIRCC) used to abate. Two apparently opposite views are reconciled. On the one hand, higher efforts are justified in sectors that will take longer to decarbonize, such as transport and urban planning; on the other hand, the MIRCC should be equal to the carbon price at each point in time and in all sectors. Equalizing the MIRCC in each sector to the social cost of carbon is a necessary condition to reach the optimal pathway, but it is not a sufficient condition. Decentralized optimal investment decisions at the sector level require not only the information contained in the carbon price signal, but also knowledge of the date when the sector reaches its full abatement potential.
    Date: 2013–08–07
  22. By: Narbel, Patrick A. (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: The new Basel III regulations are likely to make long-term financing more expensive, which will affect the financing of capital-intensive renewable energy technologies, because they typically rely on long-term financing. In addition, the capital and liquidity requirements of Basel III are likely to limit the amount of capital available for renewable energy financing from banks in the future. Together, these are threats to renewable energy deployment because limited financing may prevent the financing of some projects and because more expensive loans are likely to make a number of projects uninteresting financially. A potential solution is proposed here, which requires financing capital-intensive energy projects, pooling these investments into a portfolio and selling down the portfolio in tranches to various types of investors. The benefit of this solution for banks is that it will allow them to maintain the financing of capital intensive renewable energy projects, while complying more easily with Basel III.
    Keywords: Renewable energy financing; Basel III; capital-intensive energy projects
    JEL: Q00 Q20 Q40
    Date: 2013–10–17
  23. By: Elisa Lanzi; Damian Mullaly; Jean Chateau; Rob Dellink
    Abstract: Competitiveness and carbon leakage issues have been some of the main concerns in the implementation and discussions of climate policies. These concerns are particularly important in the presence of multiple carbon markets since differences in climate change policy approaches may have impacts on the relative competitiveness of domestic sectors in countries with more stringent policies, and on the environmental effectiveness through carbon leakage. This paper examines the macroeconomic and sectoral competitiveness and carbon leakage impacts associated with a range of stylised mitigation policy scenarios. The scenarios reflect different depictions of carbon markets in terms of their level of linkages, their coverage (i.e. number of countries participating, types of gases and sectors) and the stringency of the carbon pricing policy across countries. The paper also investigates some policies to address competitiveness and carbon leakage issues. The analysis considers border carbon adjustments (BCAs) as well as direct and indirect (offset-based) linking of carbon markets. The results show that in presence of multiple carbon markets, competitiveness can decrease in countries that undertake climate policies, also leading to carbon leakage. The negative sectoral competitiveness and leakage effects can be reduced when more countries act, more emission sources are covered, and when the climate mitigation policy is harmonised across countries. The results also show that response policies, such as BCAs and linking of carbon markets, can address some, but not all, of the competitiveness and carbon leakage issues. While BCAs are more effective in addressing domestic competitiveness concerns than linking instruments, the latter are better in preserving the welfare of countries that are not undertaking a climate policy.
    Keywords: competitiveness, climate change, mitigation, border tax adjustment, computable general equilibrium model
    JEL: D58 H25 Q54
    Date: 2013–09–11
  24. By: Kathryn Harrison
    Abstract: In July 2008, the Canadian province of British Columbia (BC) launched North America’s first revenue-neutral carbon tax reform. The tax, which applied to all combustion sources of all fossil fuels, was introduced at a rate of CAD 10 per tonne of CO2, with a schedule for annual increases of CAD 5 per tonne of CO2 until the tax reached CAD 30 per tonne of CO2 in 2012. Tax revenues were fully recycled via a combination of corporate and income tax cuts, phased in over time. This paper reviews the political economy of the BC tax in three distinct periods – its origins, its survival in the face of political backlash, and its longer-term prospects... En juillet 2008, la province canadienne de Colombie-Britannique a été la première collectivité d’Amérique du Nord à procéder à une réforme fiscale sans incidence sur les recettes impliquant la mise en place d’une taxe carbone. Le montant de cette taxe frappant l’ensemble des sources de combustion et des énergies fossiles a été fixé dans un premier temps à 10 CAD par tonne de CO2, mais il était prévu dès le départ qu’il augmenterait chaque année de 5 CAD pour atteindre 30 CAD par tonne de CO2 en 2012. Le produit de la taxe carbone a été intégralement recyclé sous forme de baisses progressives de l’impôt sur les sociétés et de l’impôt sur le revenu. Le présent document examine l’économie politique de la taxe instaurée par la Colombie-Britannique en distinguant trois phases : les origines de la taxe, son maintien sur fond de réactions politiques négatives et ses perspectives à plus long terme...
    Keywords: political economy, carbon tax, policy lessons, économie politique, taxe carbone
    JEL: F18 H23 P48 Q38 Q48 Q5 Q58
    Date: 2013–10–08
  25. By: Marc Joëts
    Abstract: This paper investigates price transmissions across European energy forward markets at distinct maturities during both normal times and extreme ‡uctuation periods. To this end, we rely on the traditional Granger causality test (in mean) and its multivariate extension in tail distribution developped by Candelon, Joëts, and Tokpavi (2013). Con- sidering forward energy prices at 1, 10, 20, and 30 months, it turns out that no signi…cant causality exists between markets at regular times whereas comovements are at play during extreme periods especially in bear markets. More precisely, energy prices comovements appear to be stronger at short horizons than at long horizons, testifying an eventual Samuelson mechanism in the maturity prices curve. Diversi…cation strategies tend to be more e¢ cient as maturity increases.
    Keywords: Value-at-Risk (VaR); CAViaR approach; risk spillover; Granger causality.
    JEL: C32 Q40
    Date: 2013–10–15
  26. By: Ruben Bibas (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Jean-Charles Hourcade (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech)
    Abstract: Le modèle d'équilibre général Imaclim-R France est utilisé pour examiner différentes stratégies de transition énergétique menant à une trajectoire 'Facteur 4'. Le bilan macroéconomique d'un jeu d'hypothèses sur les conditions techniques de l'offre et la demande d'énergie varie fortement selon qu'il est inséré ou non dans un ensemble de mesures qui ne ressortissent pas du seul domaine des politiques énergétiques : politiques fiscales pour éviter la propagation des surcoûts de l'énergie dans l'appareil de production, négociation sociale et salariale pour gérer le recyclage du produit d'une taxe carbone, réforme des structures de financement, politiques industrielles et de formation aux nouveaux métiers, politiques d'infrastructures et changement comportementaux. Nous montrons ensuite comment une politique de financement baissant le coefficient risque des investissements 'bas carbone' permettrait, en améliorant la crédibilité des politiques publiques, de réduire les craintes qui expliquent la frilosité des acteurs économiques et de déclencher une réorientation des investissements plus rapide vers des équipements sobres en énergie. Le bilan macroéconomique change selon les modalités de la transition mais est positif à moyen et long terme en matière de croissance et d'emploi, ceci en raison de la synergie entre trois mécanismes : baisse des importations d'énergie, économies d'énergie libérant le pouvoir d'achat des ménages en biens et services non énergétiques, baisse du coût du travail permis par une taxe carbone. L'accompagnement économique de la transition est décisif pour passer d'un bilan légèrement négatif à court terme à un bilan positif, ce afin de donner le 'grain à moudre' nécessaire pour réduire ces tensions. L'enjeu est un 'effet crédibilité' venant de la conduite cohérente de politiques de prix et de financement guidant les anticipations des acteurs dans un contexte défavorable. Quant au dossier nucléaire, nous faisons apparaître une grande différence entre un nucléaire contraint par des exigences accrues 'de précaution' et une sortie volontariste à l'horizon 2050 avec interdiction de construction de nouvelles centrales. Cette dernière hypothèse suppose, pour respecter le F4, un développement important et précoce du CCS et conduit à un retard de croissance de 4,5 ans sur 40 ans compte non tenu des coûts de reconversion, et, en sens inverse, de changements profonds des comportements et des structures économiques. Des scénarios 'nucléaire de précaution' limitent sa place autour de 40% du mix énergétique à 2050 et permettent de reculer une décision de sortie ou de nouveau déploiement qui pourra être prise plus tard " en meilleure connaissance de cause ". L'enjeu, aujourd'hui est de se mettre en position de la prendre avec un fort consensus national autour non seulement du choix technologique ultime, quel qu'il soit, mais aussi des politiques économiques et sociales cohérentes avec ce choix.
    Keywords: transition énergétique, émissions de gaz à effets de serre, équilibre général, prospective, taxe carbone, anticipations
    Date: 2013–07
  27. By: Golub, Alla
    Abstract: This paper documents GDyn-E CGE model developed for analysis of climate policies in dynamic GTAP framework. Description of the modeling framework is followed by a presentation of a simple application focused on emission leakage associated with a unilateral GHG abatement policy, analysis and decomposition of the emission leakage, and sensitivity analysis.
    Date: 2013
  28. By: Philippe Quirion (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech)
    Abstract: Nous étudions l'impact sur l'emploi en France de la mise en œuvre du scénario de transition énergétique construit par l'Association négaWatt (2011), qui prévoit un développement massif des économies d'énergie (par le biais de mesures de sobriété et d'efficacité énergétiques) et des énergies renouvelables entre 2012 et 2050. Par rapport à 2010, ce scénario aboutit à une division par deux des émissions de CO2 d'origine énergétique en France en 2030 et à une division par 16 en 2050, sans capture-stockage du CO2, sans mise en œuvre de nouvelle centrale nucléaire et en fermant les centrales existantes au bout de 40 ans d'exploitation au maximum. Nous calculons l'effet sur l'emploi de la mise en œuvre de ce scénario en comparaison avec un scénario tendanciel qui prolonge les évolutions récentes et prend en compte les politiques déjà décidées. La méthode retenue pour calculer l'effet sur l'emploi de chaque scénario consiste à calculer le coût des principales options techniques et organisationnelles retenues, à ventiler ces coûts entre les 118 branches de l'économie française et à multiplier ces coûts par le contenu en emploi de chaque branche. Ce dernier élément est estimé par une analyse input-output, ce qui permet de comptabiliser les emplois générés par la production de l'ensemble des consommations intermédiaires. L'un des deux scénarios étant plus coûteux que l'autre, il faut prendre en compte l'effet négatif sur l'emploi du financement de ce surcoût. Pour cela, on fait l'hypothèse que ce surcoût est supporté par les ménages et que ces derniers diminuent en conséquence leur consommation du même montant et de manière homothétique. Ainsi, on évite de biaiser les résultats en faveur du scénario le plus coûteux. La mise en œuvre du scénario négaWatt aboutit à un effet positif sur l'emploi, de l'ordre de +240 000 emplois équivalent temps-plein en 2020 et 630 000 en 2030. Nous étudions la sensibilité des résultats aux hypothèses sur les prix de l'énergie importée, l'évolution de la productivité du travail, la répartition du coût entre ménages et administrations publiques, et enfin l'arbitrage consommation-épargne. L'effet sur l'emploi reste largement positif dans tous les cas.
    Keywords: emploi ; politique climatique ; transition énergétique ; input-output ; tableau entrées-sorties
    Date: 2013–04
  29. By: Frank J. Convery; Louise Dunne; Deirdre Joyce
    Abstract: Beginning in late 2008, Ireland experienced a fiscal crisis. This resulted in November 2010 in agreement between the Irish government and the European Central Bank, the European Commission and the International Monetary Fund (IMF) – known collectively as ‘the Troika’ – whereby the latter provided substantial financial support, on condition that a number of revenue raising and expenditure reduction targets were met. Also in 2010, a carbon tax at a rate of EUR 15 per tonne of CO2 was introduced, covering most CO2 emissions from the non-traded sectors (mainly transport, heat in buildings and heat and process emissions by small enterprises). This paper describes the features of the tax, recounts the story of its interplay between fiscal adjustment and helping meet the obligations to raise taxes, and implications for competitiveness and carbon leakage, environmental effectiveness and equity issues, and draws some conclusions regarding why it happened, and provides some tentative insights for other countries in a similar situation. The circumstances that resulted in a carbon tax being proposed and subsequently introduced in Ireland include: Leadership by the Green Party; limited public opposition; Government need for the income; supports the Green Economy; support from the academic and wider policy population; exemptions for large emitters (many in EU ETS) and agriculture; effective engagement and good planning... L’Irlande a connu fin 2008 une crise budgétaire qui a conduit son gouvernement à conclure, en novembre 2010, un accord avec la Banque centrale européenne, la Commission européenne et le Fonds monétaire international (FMI) – collectivement dénommés la « Troïka » – dans lequel ce dernier s’engage à lui apporter une aide financière conséquente, sous réserve qu’elle remplisse un certain nombre d’objectifs en matière de prélèvements fiscaux et de réduction des dépenses. En 2010 a été également mise en place une taxe carbone de 15 EUR par tonne de CO2, couvrant la plupart des émissions de CO2 des secteurs hors SCEQE (transport, chauffage des bâtiments et chauffage et procédés des petites entreprises, principalement). Ce rapport décrit les caractéristiques de cette taxe, relate ses interactions avec le rééquilibrage budgétaire et les obligations de prélèvements fiscaux, examine ses conséquences pour la compétitivité et le transfert d’émissions de carbone, son efficacité environnementale et les questions d’équité, et tire certaines conclusions sur les raisons qui ont poussé l’Irlande à faire ce choix, en proposant plusieurs enseignements qui pourraient se révéler utiles aux pays confrontés à une situation analogue. La taxe carbone a été proposée puis mise en oeuvre en Irlande dans un contexte bien particulier caractérisé par : le rôle moteur du Green Party ; la faible opposition du public ; un État en quête de recettes ; la promotion de l’Économie verte ; le soutien des milieux universitaires et des responsables publics en général ; l’exonération des grands émetteurs (inclus pour beaucoup dans le SCEQE) et de l’agriculture ; un réel engagement et une bonne planification...
    Keywords: carbon tax, policy lessons, fiscal adjustment, taxe carbone, enseignements pour l’action, ajustement budgétaire
    JEL: P48 Q38 Q48 Q58
    Date: 2013–10–03
  30. By: Guy Meunier (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303); Jean-Pierre Ponssard (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X); Philippe Quirion (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech)
    Abstract: Two main approaches have been implemented in regional CO2 markets to address competitiveness and carbon leakage: output based allocation (Australia, California, New Zealand) and capacity based allocation (EU). This paper characterizes the best policy, given that auctioning with border adjustment is excluded. A simple model is used in which the regional demand is subject to business cycles, and the import pressure depends on the demand level and capacity constraints. A combination of output and capacity based allocation is proved to be the optimal second best policy. The EU scheme for 2013-2020 is discussed, using cement as a case study.
    Date: 2012–02–22
  31. By: Timothy J. Considine; Edward J. M. Manderson
    Date: 2013
  32. By: Sahu, Santosh Kumar; Narayanan, K.
    Abstract: This study attempts to find out the relationship between exports and Participation in Clean Development Mechanism [CDM] in the technology intensive industries in India. Data are used from the PROWESS, CMIE and the VCU (Verified Carbon Units) database from 2007 to 2012. Results of this study indicate that firm size, age of the firms, profitability and R&D intensity are the major determinants of export intensity. In addition, technology imports and multinational affiliation also help firms in exporting more. The CDM participation in terms of higher VCU, and energy related technological advancements at firm level are also found to be major determinants of export intensity. India, unlike other established European carbon markets is not a platform for trading but the country is known for its creation of VCU and selling them. Government should focus more on smaller and less profitable firms and create a wider platform for them to be an active participant. Technology spillovers created by bigger and profitable firms which attract more benefits from Verified carbon offsetting should pool the entire interested ready-to-participate firms and attain a common goal, i.e. economically viable and environmentally sustainable and the leaders in the international export market.
    Keywords: Exports, CDM, Technology Intensive Indian Manufacturing Industries
    JEL: L15 L52 Q37 Q48
    Date: 2013–10–16
  33. By: Léautier, Thomas-Olivier
    Abstract: This article examines imperfectly competitive investment in electric power generation in the presence of congestion on the transmission grid. Under simple yet realistic assumptions, it precisely derives the technology mix as a function of the capacity of the transmission interconnection. In particular, it …nds that, if the interconnection is congested in one direction only, the cumulative capacity is not a¤ected by the congestion, while the baseload capacity is simply the uncongested baseload capacity, weighted by the size of its domestic market, plus the interconnection capacity. If the interconnection is successively congested in both directions, the peaking capacity is the cumulative uncongested capacity, weighted by the size its domestic market, plus the capacity of the interconnection, while the baseload capacity is the solution of a simple …rst-order condition. The marginal value of interconnection capacity is shown to generalize the expression obtained under perfect competition. It includes both a short-term component, that captures the reduction in marginal cost from substituting cheaper for more expensive power, but also a long-term component, that captures the change in installed capacity. Finally, increasing interconnection is shown to have an ambiguous impact on producerspro…ts. For example, if the interconnection is congested in one direction only, increasing capacity increases a monopolist pro…t. On the other hand, if the line is almost not congested, it reduces oligopolistspro…ts.
    JEL: D61 L11 L94
    Date: 2013–09–19
  34. By: Mia Amalia; Budy P. Resosudarmo; Jeff Bennett
    Abstract: Since the early 1990s, the air pollution level in the Jakarta Metropolitan Area (JMA) has arguably been one of the highest among mega cities in developing countries. This paper utilises the self-reporting data on illnesses available in the 2004 National Socio-Economic Household Survey (Survei Sosial Ekonomi Nasional, or SUSENAS) to test the hypothesis that air pollution impacts human health, particularly among children, in JMA. Test results confirm that air pollution, represented by the PM10 level in a sub-district, does significantly correlate with the level of human health problems, represented by the number of restricted activity days (RAD) in the previous month. The results also show that a given level of PM10 concentration is more hazardous for children.
    Keywords: Air pollution, environmental economics, health economics and exposure response model
    JEL: Q53 Q51 I18
    Date: 2013
  35. By: Philip Johnstone (SPRU, University of Sussex, UK)
    Date: 2013–10–16
  36. By: Derek Kellenberg; Arik Levinson
    Abstract: Many of the world's environmental problems cross international borders, and to address those problems approximately 1,000 different International Environmental Agreements (IEAs) are in operation today. Most evidence, however suggests that those IEAs are ineffectual, merely ratifying business-as-usual outcomes and doing little to improve the environment. But much of that empirical analysis faces two obstacles: (1) limited data from before the IEAs were enacted and thus an inability to make before-and-after comparisons; and (2) difficulty estimating the counterfactual outcomes – what would have happened absent the agreements. In this paper we test the effectiveness of one particular IEA – the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal. In this special case we have data on international waste shipments from both before and after countries ratify the agreement, along with a unique approach to identifying the treaty's effect using annual bilateral waste shipments among countries before and after one of the trading partners signs the agreement. Despite the strengths of this approach, we find almost no evidence that the Convention has resulted in less waste being shipped among countries.
    JEL: F13 F18 Q53 Q56
    Date: 2013–10

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