nep-ene New Economics Papers
on Energy Economics
Issue of 2013‒11‒29
thirty papers chosen by
Roger Fouquet
London School of Economics

  1. A Policy Analysis of HawaiiÕs Solar Tax Credit Incentive By Makena Coffman; Sherilyn Wee; Carl Bonham; Germaine Salim
  2. Smart grid agent: Plug-in electric vehicle By Dallinger, David; Link, Jochen; Büttner, Markus
  3. Delivering a competitive Australian power system Part 3: A Better Way to Competitive Power in 2035 By John Foster; Craig Froome; Chris Greig; Ove Hoegh-Guldberg; Paul Meredith; Lynette Molyneaux; Tapan Saha; Liam Wagner; Barry Ball
  4. The Law NOME: Some Implications for the French Electricity Markets By Pouyet, Jérôme; Sanin, Maria Eugenia; Creti, Anna
  5. Risk aversion and technology mix in an electricity market By Guy Meunier
  6. Switching off or switching source: energy consumption and household response to higher energy prices in the Kyrgyz Republic By Gassmann, Franziska; Tsukada, Raquel
  7. Do high-frequency financial data help forecast oil prices? The MIDAS touch at work By Baumeister, Christiane; Guérin, Pierre; Kilian, Lutz
  8. Driving Down Diesel Emissions By Harley, Robert
  9. L'évolution des réserves disponibles en hydrocarbures : historique et tendances. By Olivier Appert
  10. Oil Price and Exchange Rate Volatility in Nigeria By Ogundipe, Adeyemi; Ogundipe, Oluwatomisin
  11. Scarcity vs. Pollution in Public Policy toward Fossil Fuels By Nikita Lyssenko; Leslie Shiell
  12. Natural resource curse: a non linear approach in a panel of oil exporting countries By Seghir, Majda; Damette, Olivier
  13. Braucht Deutschland einen Kapazitätsmarkt für eine sichere Stromversorgung? By Haucap, Justus
  14. Cyclical Fiscal Rules for Oil-Exporting Countries By Stephen Snudden
  15. The contribution of vehicle-to-grid to balance fluctuating generation: Comparing different battery ageing approaches By Dallinger, David
  16. The Economics of Global Climate Change: A Historical Literature Review By David I. Stern; Frank Jotzo; Leo Dobes
  17. The Environmental Kuznets Curve: The Role of Renewable and Non-Renewable Energy Consumption and Trade Openness By Ben Jebli, Mehdi; Ben Youssef, Slim; Ozturk, Ilhan
  18. Offshoring, trade and environmental policies: Effects of transboundary pollution By Keisuke Kawata; Yasunori Ouchida
  19. Pollution effects on labor supply and growth By Stefano Bosi; David Desmarchelier; Lionel Ragot
  20. From Fuel Taxes to Mileage Fees By Sorensen, Paul
  21. Green taxation in Italy: an assessment of a carbon tax on transport By Federico Cingano; Ivan Faiella
  22. Politiques de R&D, Taxe Carbone et Paradoxe Vert By Grimaud, André; Neubauer, Mauricio; Rougé, Luc
  23. Analyse temps-fréquence de la relation entre les prix du quota et du crédit carbone By Ange Nsouadi; Jules Sadefo Kamdem; Michel Terraza
  24. Costs of meeting international climate targets without nuclear power By Duscha, Vicki; Schumacher, Katja; Schleich, Joachim; Buisson, Pierre
  25. Designing an optimal 'tech fix' path to global climate stability: R&D in a multi-phase climate policy framework By Zon, Adriaan van; David, Paul
  26. Border Carbon Ajustment in Europe and Trade Retaliation: What would be the Cost for European Union? By Jean Fouré; Houssein Guimbard; Stéphanie Monjon
  27. Non-binding Defaults and Voluntary Contributions to a Public Good - Clean Evidence from a Natural Field Experiment By Felix Ebeling
  28. Splitting the difference in global climate finance: are fragmentation and legitimacy mutually exclusive? By Jonathan Pickering; Frank Jotzo; Peter J. Wood
  29. Inter-Generational Games with Dynamic Externalities and Climate Change Experiments By Ekaterina Sherstyuk; Nori Tarui; Majah-Leah V. Ravago; Tatsuyoshi Saijo
  30. CLIMATE POLICY AND CATASTROPHIC CHANGE: Be Prepared and Avert Risk By Frederick van der Ploeg; Aart de Zeeuw

  1. By: Makena Coffman (University of Hawaii at Manoa, Department of Urban and Regional Planning & University of Hawaii Economic Research Organization); Sherilyn Wee (University of Hawaii Economic Research Organization); Carl Bonham (University of Hawaii Economic Research Organization); Germaine Salim (University of Hawaii at Manoa, Department of Urban and Regional Planning)
    Abstract: This study uses Hawaii as an illustrative case study in state level tax credits for PV. We examine the role of HawaiiÕs tax credit policy in PV deployment, including distributional and tax payer impacts. Hawaii is interesting because its electricity rates are nearly four times the national average as well as has a 35% tax credit for PV, capped at $5,000 per system. We find that PV is an excellent investment for HawaiiÕs homeowners, even without the state tax credit. For the typical household, the internal rate of return with the state tax credit is about 14% and, without it, 10%. Moreover, the vast majority of installations are demanded by households with the median income and higher. We estimate that single-family homeownerÕs in Hawaii may demand as much as 1,100 MW of PV. There are, however, significant grid constraints. Policy currently limits PV generation to no more than 15% of peak load for any given circuit, or approximately 3% of aggregate electricity demand. Tax credits are therefore not likely to increase the overall deployment of PV, but rather spread the cost of installation from homeowners to taxpayers and accelerate the rate at which Hawaii reaches grid restrictions.
    Date: 2013–11
  2. By: Dallinger, David; Link, Jochen; Büttner, Markus
    Abstract: This study describes a method for programming a plug-in electric vehicle agent that can be used in power system models and in embedded systems implemented in real plug-in electric vehicles. Implementing the software in real-life applications and in simulation tools enables research with a high degree of detail and practical relevance. Agent-based programming, therefore, is an important tool for investigating the future power system. To demonstrate the plug-in electric vehicle agent behavior, an optimization algorithm is presented and two battery aging methods as well as their effect on V2G operation are analyzed. Aging costs based on the depth of discharge result in shallow cycles and a strong dependency on driving behavior, because the state-of-charge affects the discharging process. In contrast, aging costs based on energy throughput calculations results in deeper cycles and V2G operation which is less depend-ent on driving behavior. --
    Date: 2013
  3. By: John Foster (School of Economics, University of Queensland); Craig Froome (Global Change Institute, University of Queensland); Chris Greig (University of Queensland); Ove Hoegh-Guldberg (Global Change Institute, University of Queensland); Paul Meredith (Department of Physics, University of Queensland); Lynette Molyneaux (School of Economics, University of Queensland); Tapan Saha (School of Information Technology and Electrical Engineering); Liam Wagner (School of Economics, University of Queensland); Barry Ball (Global Change Institute, University of Queensland)
    Abstract: This paper, the final in a three part series examining the competitiveness of Australia’s power system, seeks to identify a pragmatic strategy to transition Australia to a resilient power economy at reasonable cost and in an age of uncertainty. The resilience of a country’s power economy refers to its ability to meet power requirements while withstanding supply shocks and environmental constraints. For a country’spower economy to be competitive, it must be both affordable and resilient.This series examines the competitiveness of Australia’s power economy and evaluates possible strategies for securing the nation’s power economy into the future. In Part 1, (published December 2011), we demonstrated that Australia’s power system was not resilient, with higher electricity prices than most competing countries. Various scenarios for Australia’s power future were the focus in Part 2 (published February 2013). Our analysis found that shifting to gas from coal power generation did not address this vulnerability but could instead lead to large price increases. Rather, a portfolio approach to investing in electricity generation will ensure Australia starts to build a power system that is more robust, and thus more competitive, in the years to come. While market structures are well-suited to factoring risk into investment decisions, electricity generation in Australia faces multiple layers of uncertainty and external costs which can deflect the market from efficient outcomes. For this reason, it is important for Australia to pursue a strategy of diversity in power generation technologies and energy sources to keep options open for the future and initiate climate change mitigation measures. The best way to achieve both resilience and cost competitiveness in Australia’s power system is to develop a strategy that pursues the middle ground. In this paper, Part 3 of the series, we use the Power System Resilience Index developed in Part 1 to compare German, Chinese and Californian energy policies with Australia. We ask how effective they are in achieving greater diversity and, in this way, resilience in electricity.
    Keywords: Energy Economics, Electricity Markets, Energy Policy, Resources Policy, Renewable Energy
    JEL: Q48 Q41 Q43
    Date: 2013–11
  4. By: Pouyet, Jérôme; Sanin, Maria Eugenia; Creti, Anna
    Abstract: The French law `Nouvelle Organisation du March e de l'Electricit e' makes available, at a regulated price, withdrawal rights to source low-cost electricity production from nuclear plants owned by the incumbent. Downstream market retailers bene t from such a measure, up to a given amount xed by the law, to compete on a level playing eld with the historical supplier. Our analysis assesses whether this production release pro- gramme is likely to result in a lower retail price. We show that whether pro-competitive e ects arise depends not only on the amount of the preassigned capacity but also on the rules used to allocate it to retailers.
    Keywords: Nome law; Retail competition; Electricity markets; France;
    JEL: L50 D43 L94
    Date: 2013–04
  5. By: Guy Meunier (ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: This article analyzes the eff ect of risk and risk aversion on the long-term equilibrium technology mix in an electricity market. It develops a model where fi rms can invest in baseload plants with a fi xed variable cost and peak plants with a random variable cost, and demand for electricity varies over time but is perfectly predictable. At equilibrium the electricity price is partly determined by the random variable cost and the returns from the two kinds of plants are negatively correlated. When the variable cost of the peak technology is high the return of peak plants is low but the return to baseload plants is high. Risk-averse fi rms reduce the capacity of the riskiest technology and develop the capacity of the other, compared to risk-neutral fi rms. In the particular case where a risk-neutral fi rm invests heavily in baseload technology and only sparely in peak capacity, a risk-averse fi rm would invest less in baseload, increase peak capacity, and increase total installed capacity.
    Keywords: Electricity market; Technology mix; Risk aversion
    Date: 2013–11–20
  6. By: Gassmann, Franziska (UNU-MERIT / MGSoG); Tsukada, Raquel (UNU-MERIT / MGSoG)
    Abstract: Access to energy is fundamental to improving quality of life and is a key imperative for economic development" (Energy Poverty Action). This is particularly true in Central Asia where winters are harsh and long. Changes in energy prices affect the purchasing power of households, hitting the poor in particular. The impact very much depends on a household's energy basket and the available strategies for switching to alternative energy sources. Using data from the Kyrgyz Integrated Household Survey (KIHS) 2011, this paper analyzes the profile of household energy consumption and the impact of electricity tariff increases on the probability that households would switch to alternative energy sources. Results suggest that households would respond to an electricity price increase by increasing consumption of fuels: households would tend to move away from electricity-only heating source towards the use of stove-only.
    Keywords: energy, household consumption, Central Asia, Kyrgyz Republic
    JEL: H23 I38 P22
    Date: 2013
  7. By: Baumeister, Christiane; Guérin, Pierre; Kilian, Lutz
    Abstract: The substantial variation in the real price of oil since 2003 has renewed interest in the question of how to forecast monthly and quarterly oil prices. There also has been increased interest in the link between financial markets and oil markets, including the question of whether financial market information helps forecast the real price of oil in physical markets. An obvious advantage of financial data in forecasting oil prices is their availability in real time on a daily or weekly basis. We investigate whether mixed-frequency models may be used to take advantage of these rich data sets. We show that, among a range of alternative high-frequency predictors, especially changes in U.S. crude oil inventories produce substantial and statistically significant real-time improvements in forecast accuracy. The preferred MIDAS model reduces the MSPE by as much as 16 percent compared with the no-change forecast and has statistically significant directional accuracy as high as 82 percent. This MIDAS forecast also is more accurate than a mixed-frequency realtime VAR forecast, but not systematically more accurate than the corresponding forecast based on monthly inventories. We conclude that typically not much is lost by ignoring high-frequency financial data in forecasting the monthly real price of oil. --
    Keywords: Mixed frequency,Real-time data,Oil price,Forecasts
    JEL: C53 G14 Q43
    Date: 2013
  8. By: Harley, Robert
    Keywords: Architecture, Education, Engineering, Law, Social and Behavioral Sciences
    Date: 2013–10–01
  9. By: Olivier Appert (IFPEN - IFP Energies Nouvelles - IFP Energies Nouvelles)
    Abstract: Les hydrocarbures, pétrole et gaz naturel, tiennent une place importante dans le bilan énergétique mondial. Ils représentent en 2011 près de 58 % de la consommation totale d'énergie primaire, une proportion qui a peu évolué sur les 20 dernières années, alors que parallèlement la consommation d'énergie des habitants de la planète, tirée principalement sur la dernière décennie par les pays émergents, augmentait de plus de 50 %. Les deux dernières décennies ont été régulièrement ponctuées par les questionnements sur la raréfaction des ressources fossiles et l'annonce récurrente d'un très prochain plafonnement de la production pétrolière. En 2013, qu'en est-il des réserves de pétrole et de gaz naturel ? Quelles évolutions ont marqué les deux dernières décennies ? Qu'attendre dans un futur proche ? ...
    Date: 2013
  10. By: Ogundipe, Adeyemi; Ogundipe, Oluwatomisin
    Abstract: Nigeria being a mono-product economy, where the main export commodity is crude oil, changes in oil prices has implications for the Nigerian economy and, in particular, exchange rate movements. The latter is mostly important due to the double dilemma of being an oil exporting and oil-importing country, a situation that emerged in the last decade. The study examined the effects of oil price, external reserves and interest rate on exchange rate volatility in Nigeria using annual data covering the period 1970 to 2011. The theoretical framework of this study is based on Generalized Autoregressive Conditional Heteroskedasity modeled by Tim Bolerslev (1986) and Exponential General Autoregressive Conditional heteroskedastic modeled by Daniel Nelson (1991). These models were used to estimate the relationship between oil price changes and exchange rate. Relevant descriptive and econometric analyses were employed. The econometric tests adopted include the unit root tests, Johansen co-integration technique and the Vector Error Correction Model (VECM); the time series property examined shows that all the variables were stationary at first difference. The long run relationship among the variables was determined using the Johansen Co-integration technique while the vector correction mechanism was used to examine the speed of adjustment of the variables from the short run dynamics to the long run. It was observed that a proportionate change in oil price leads to a more than proportionate change in exchange rate volatility in Nigeria; which implies that exchange rate is susceptible to changes in oil price. The study therefore recommend that the Nigeria government should diversify from the Oil sector to other sectors of the economy so that Crude oil will no longer be the mainstay of the economy and frequent changes in crude oil price will not influence exchange rate volatility significantly in Nigeria.
    Keywords: Oil Price, Exchange rate, Volatility, Johansen Co-integration
    JEL: F31 G12 G15
    Date: 2013–11–22
  11. By: Nikita Lyssenko; Leslie Shiell
    Abstract: Most policy exercises that model the optimal control of greenhouse gas emissions have focused almost exclusively on the pollution problem in isolation from the fossil fuels scarcity problem. We argue that this approach misses important interactions between the two issues and, contrary to what is claimed, will lead to sub-optimal policies, at least within the framework of the models employed. To demonstrate, we employ an intertemporally optimizing model of economy and climate, with carbon resource scarcity and a backstop technology. Using plausible parameter values, we conclude that the initial resource shadow price is approximately twice the value of the pollution shadow price. Therefore, the optimal carbon tax is approximately three times what would be recommended if we focused solely on the pollution problem. This result is robust to changes in the values of key parameters, including the social discount rate and the backstop price.
    Keywords: pollution, scarcity, carbon tax, climate policy
    JEL: Q3 Q4
    Date: 2013–10–01
  12. By: Seghir, Majda; Damette, Olivier
    Abstract: This paper explores the idea of regime switching as a new methodological approach to bring new insights into the natural resource curse hypothesis in the case of oil exporting countries. The basic idea is that when a threshold of oil dependence is passed, the relationship between economic growth and its determinants could move smoothly from a regime to another. Relying upon the estimation of a PSTR model, our findings offer strong evidence that oil revenues non-linearly impacts economic growth and that resource curse only exists under the condition of high oil dependence. More precisely, below the level of 51% of oil dependence, oil revenues have a positive impact on economic growth, whereas above this level, it have serious drawbacks on economic growth through inefficiencies into the quality and the quantity of government expenditures.
    Keywords: Natural resource curse, Panel Smooth Transition Regression, Oil exporting countries,
    JEL: O11 O43 Q32 Q43
    Date: 2013
  13. By: Haucap, Justus
    Abstract: Dieser Beitrag spricht sich gegen eine hastige Einführung von Kapazitätsmechanismen in Deutschland aus .Ein systematisches, dauerhaftes Marktversagen auf dem Großhandelsmarkt für Strom, das eine solche Maßnahme rechtfertigen könnte, ist aktuell nicht zu erkennen. Weder die geringe Nachfrageelastizität, vorgebliche Eigenschaften öffentlicher Güter oder die ggf. mangelnde politische Akzeptanz von Preisspitzen belegen bei näherer Analyse ein Marktversagen des Energy‐Only Marktes. Belastbare Anzeichen für einen systemweiten Versorgungsengpass in den nächsten Jahren sind ebenfalls nicht ersichtlich. Vielmehr ist der deutsche Markt für Stromerzeugung nach wie vor durch deutliche Überkapazitäten gekennzeichnet. Die Erfahrung absolut aller Kapazitätsmechanismen auf der gesamten Welt lehrt zudem vor allem eines: Das Marktdesign ist nicht stabil, sondern wird in unterschiedlich kurzen Intervallen immer wieder verändert und angepasst. Die Vorstellung, heute ein langfristig stabiles Marktdesign zu entwerfen und zu implementieren, erscheint vor dem Hintergrund internationaler Erfahrungen doch etwas optimistisch. Möglich sind jedoch einige leicht zu implementierende Maßnahmen, um sich gegen erzeugungsseitig bedingte Stromausfälle abzusichern. So könnten begrenzte strategische Kaltreserven gehalten werden. Zudem sollte sich das Bundeskartellamt schnell von seiner Interpretation lösen, dass marktbeherrschende Unternehmen stets zu kurzfristigen Grenzkostenpreisen in den Markt bieten müssen. Diese Vorgabe wirkt marktverschließend und somit investitionshemmend und würde in anderen Fällen als wettbewerbswidrige Strategie ausgelegt werden. -- This paper argues against the rapid implementation of capacity mechanisms in Germany. There is no systematic, non-temporary market failure in the German wholesale electricity market which could justify such a Government intervention. Neither the low elasticity of demand nor debatable public good characteristics nor the potentially missing acceptance of price spikes can support the idea of that the energy only market may fail to guarantee reliability of supply. In addition, there are currently no resilient signs of any shortage of supply. In contrast, the German wholesale electricity market is still characterized by over-capacities. The worldwide experience with capacity mechanisms also demonstrates most of all that no capacity market design is ever stable, but subject to change in often quite short intervals. Potential low-cost options to safeguard security of supply include a strategic reserve against generation failures. In addition, the Federal Cartel Office should correct its position that dominant firms must not offer electricity at a price above the shortrun marginal cost. Such a prescription forecloses the market and chokes off investment and would in most other cases be regarded as an anticompetitive foreclosure strategy of a dominant firm.
    Date: 2013
  14. By: Stephen Snudden
    Abstract: Structural budget-balance rules with countercyclical elements appear well suited to stabilize the macroeconomic volatility of oil-exporting countries and have been used successfully by other commodity exporters. Using a global DSGE model, the efficient design of such rules is found to depend on the source of oil price fluctuations and the oil exporters’ structural characteristics. The output-inflation tradeoff is of particular concern for oil exporters relative to non-oil exporters due to the pass through of oil prices into headline inflation. Fiscal rules are best when coordinated with inflation targeting monetary policy, but are still desirable for fixed exchange rate regimes.
    Keywords: Fiscal policy;Oil exporting countries;Oil prices;Business cycles;External shocks;Demand;Monetary policy;Economic models;Fiscal policy rules; automatic stabilizers; countercyclical fiscal policy; macroeconomic policy; oil price.
    Date: 2013–11–06
  15. By: Dallinger, David
    Abstract: This paper analyzes how energy throughput and depth of discharge-based battery ageing affects vehicle-to-grid operation of plug-in electric vehicles. Plug-in electric vehicles are discussed as a grid resource to balance the fluctuating electricity generation of renewable energy sources, but their contri-bution to balance fluctuating generation strongly depends on battery ageing and costs to feed back electricity. Therefore, an electricity system scenario with a very high share of wind and solar generation for Germany 2030 is analyzed focusing on different battery cost scenarios and ageing assumptions for plug- in vehicle batteries. The agent-based approach used renders price-based control with vehicle specific dispatch decision possible. Hence, in dependence of the individual state of charge depth of discharge-based battery discharging costs and expected smart charging revenues can be calculated. The results indicate that depth of discharge-based battery ageing results in a more restrictive vehicle-to-grid operation that is substantially affected by the driving behavior. Overall, vehicle-to-grid allows for increasing the contribution to balance fluctuating generation compared to load shifting only but encounters challenges in terms of costs and battery ageing. --
    Date: 2013
  16. By: David I. Stern; Frank Jotzo; Leo Dobes
    Abstract: We review the historical literature on the economics of climate change with a focus on the evolution of the literature from some of the early classic papers to the latest contributions. We divide the paper into three main sections: trends in greenhouse gas emissions, mitigation, and adaptation.
    Keywords: Economics, climate change, emissions trends, mitigation, adaptation
    JEL: Q54
    Date: 2013–11
  17. By: Ben Jebli, Mehdi; Ben Youssef, Slim; Ozturk, Ilhan
    Abstract: We use panel cointegration techniques to investigate the causal relationship between CO2 emissions, renewable and non-renewable energy consumption, and trade openness in three different models for a panel of twenty five OECD countries over the period 1980-2009. Also the validity of the Environmental Kuznets Curve (EKC) hypothesis has been tested for these countries. Short-run Granger causality tests show the existence of a unidirectional causality running from the square of per capita output to per capita CO2 emissions and per capita non-renewable energy consumption and a unidirectional causality running from per capita real exports to per capita CO2 emissions. There is an indirect short-run causality running from per capita output to per capita non-renewable energy consumption. In the long-run, the FMOLS and DOLS estimates suggest that per capita GDP and per capita non-renewable energy consumption have a positive impact on per capita CO2 emissions. The long-run estimates suggest that the square of per capita GDP, per capita renewable energy consumption, and per capita real exports and imports have a negative impact on per capita CO2 emissions. Therefore, more trade openness and more use of renewable energy are efficient strategies to combat global warming.
    Keywords: Environmental Kuznets curve; Renewable energy; Non-renewable energy; Trade openness; CO2 emissions; Panel cointegration techniques.
    JEL: C33 F18 Q42 Q43
    Date: 2013–11
  18. By: Keisuke Kawata (Graduate School for International Development and Cooperation, Hiroshima University); Yasunori Ouchida (Graduate School of Social Science, Hiroshima University)
    Abstract: This study develops a two-country model, Home and Foreign, with offshoring and environmental spillover. A final good producer in Home can produce (homogeneous) final goods using customized inputs produced by its partner-supplier in Foreign. The intermediate input price is determined by Nash bargaining, presenting a hold-up problem. Additionally, input production causes transboundary pollution. Home and Foreign governments can set trade taxes. Moreover, the Foreign government can set the environmental standard. This model demonstrates that, under no international policy agreement, both the environmental standard and the quantity of the intermediate input are lower than the first-best levels. This ineffciency persists even if both governments conclude an agreement.
    Keywords: Offshoring; Intermediate input trade; Emission spillover; Environmental standard; Incomplete contract
    JEL: F21 F13 F18 L24 Q56
    Date: 2013–11
  19. By: Stefano Bosi; David Desmarchelier; Lionel Ragot
    Abstract: Some recent empirical contributions have pointed out a significant negative impact of pollution on labor supply. These impacts have been largely ignored in the theoretical literature, which, instead, focused on the case of pollution effects on consumption demand. In this paper, we study the short and long-run effects of pollution in a Ramsey model where pollution and labor supply are nonseparable arguments in households’ preferences. We determine sufficient conditions for existence and uniqueness of a longterm equilibrium and we show how large (negative) effects of pollution on labor supply may promotes macroeconomic volatility (deterministic cycles near the steady state) through a flip bifurcation.
    Keywords: pollution, endogenous labor supply, Ramsey model.
    JEL: E32 O44
    Date: 2013–11–02
  20. By: Sorensen, Paul
    Keywords: Architecture, Education, Engineering, Law, Social and Behavioral Sciences
    Date: 2013–10–01
  21. By: Federico Cingano (OECD); Ivan Faiella (Bank of Italy)
    Abstract: The Europe 2020 strategy commits Italy to reduce emissions by about 16 per cent by 2020, compared with 2005. In the case of transport, the sector that has contributed most to the growth of total emissions between 1990 and 2008, the 2020 target could be achieved by introducing a Carbon Tax (CT). A CT would significantly reduce householdsÂ’ demand for private transportation, lowering their emissions. CT proceedings could pay for the reduction of more distortive levies (e.g. labour taxation) or recycled to finance the deploying of renewable energy, replacing the existing charges on electricity consumption, thus alleviating the cost burden of less-affluent households. The CT would also be consistent with the polluter-pays principle, since the largest reduction in emissions would be financed to a proportionally larger extent by those with higher emissions.
    Keywords: environmental taxation, climate change, transports
    JEL: D62 Q52 Q54 Q58
    Date: 2013–10
  22. By: Grimaud, André; Neubauer, Mauricio; Rougé, Luc
    Abstract: We study an economy in which a final good is produced by two sectors. One uses a non-renewable and polluting resource, the other a renewable and clean resource. A specific type of research is associated to each sector. The public authorities levy a carbon tax and simultaneously subsidize both research sectors. We study the impact of such a policy scheme on the rate of resource extraction and emissions. The subsidy to research in the clean sector goes in the opposite direction of the effects of the carbon tax. If the tax creates a green paradox, the subsidy moderates it; if the tax slows down resource extraction, then the subsidy generates a green paradox
    Keywords: carbon tax, directed technical change, green paradox, R&D policy
    JEL: O32 O41 Q20 Q32
    Date: 2013–11
  23. By: Ange Nsouadi; Jules Sadefo Kamdem; Michel Terraza
    Abstract: La relation entre le Système Communautaire d’Echange de Quotas d’Emission (SCEQE) et le Mecanisme de Développement Propre (MDP) intéresse aujourd’hui de nombreux pays du monde. Le MDP est considéré comme l’un des principaux outils qui permet aux pays d’augmenter leur rentabilité et de s’acquiter de leurs obligations de conformité issues du protocole de kyoto. Il est considéré, de plus, comme un moyen rentable pour répondre au changement climatique. L’existence d’une relation entre le SCEQE et le MDP peut conduire à une baisse du prix du quota carbone européen et également à une réduction des coûts de conformités. Pour mésurer la nature de cette relation, nous analysons les différentes intéractions qui peuvent exister entre le marché Européen de quota carbone (EUA : European Union Allowance) et celui du crédit carbone (CER: Certified Emission Reduction). [...]
    Date: 2013–11
  24. By: Duscha, Vicki; Schumacher, Katja; Schleich, Joachim; Buisson, Pierre
    Abstract: This paper assesses the impact of a global phase-out of nuclear energy on the costs of meeting international climate policy targets for 2020. The analyses are based on simulations with a global energy systems model. The phase-out of nuclear power increases greenhouse gas emissions by 2% globally, and 7% for Annex I countries. The price of certificates increases by 24% and total compli-ance costs of Annex I countries rise by 28%. Compliance costs increase the most for Japan (+58%) and the USA (+28%). China, India and Russia benefit from a global nuclear phase-out because revenues from higher trading volumes of certificates outweigh the costs of losing nuclear power as a mitigation option. Even for countries that face a relatively large increase in compliance costs, such as Japan, the nuclear phase-out implies a relatively small overall economic burden. When trading of certificates is available only to countries that committed to a second Kyoto period, the nuclear phase-out results in a larger increase in the compliance costs for the group of Annex I countries (but not for the EU and Australia). Results from sensitivity analyses suggest that our findings are fairly robust to alternative burden-sharing schemes and emission target levels. --
    Keywords: nuclear power,phase out,climate policy,Post-Kyoto,Copenhagen pledges
    Date: 2013
  25. By: Zon, Adriaan van (UNU-MERIT/MGSoG, and Maastricht University); David, Paul (SIEPR, and Economics Department, Standford University, and UNU-MERIT/MGSoG)
    Abstract: The research reported here gives priority to understanding the inter-temporal resource allocation requirements of a program of technological changes that could halt global warming by completing the transition to a "green" (zero net CO2- emission) production regime within the possibly brief finite interval that remains before Earth's climate is driven beyond a catastrophic tipping point. This paper formulates a multi-phase, just-in-time transition model incorporating carbon-based and carbon-free technical options requiring physical embodiment in durable production facilities, and having performance attributes that are amenable to enhancement by directed R&D expenditures. Transition paths that indicate the best ordering and durations of the phases in which intangible and tangible capital formation is taking place, and capital stocks of different types are being utilized in production, or scrapped when replaced types embodying socially more efficient technologies, are obtained from optimizing solutions for each of a trio of related models that couple the global macro-economy's dynamics with the dynamics of the climate system. They describe the flows of consumption, CO2 emissions and the changing atmospheric concentration of green-house gas (which drives global warming), along with the investment dynamics required for the timely transformation of the production regime. These paths are found as the welfare-optimizing solutions of three different "stacked Hamiltonians", each corresponding to one of our trio of integrated endogenous growth models that have been calibrated comparably to emulate the basic global setting for the "transition planning" framework of dynamic integrated requirements analysis modelling (DIRAM). As the paper's introductory section explains, this framework is proposed in preference to the (IAM) approach that environmental and energy economists have made familiar in integrated assessment models of climate policies that would rely on fiscal and regulatory instruments -- but eschew any analysis of the essential technological transformations that would be required for those policies to have the intended effect. Simulation exercises with our models explore the optimized transition paths' sensitivity to parameter variations, including alternative exogenous specifications of the location of a pair of successive climate "tipping points": the first of these initiates higher expected rates of damage to productive capacity by extreme weather events driven by the rising temperature of the Earth's surface; whereas the second, far more serious "climate catastrophe" tipping point occurs at a still higher temperature (corresponding to a higher atmospheric concentration of CO2). In effect, that sets the point before which the transition to a carbon-free global production regime must have been completed in order to secure the possibility of future sustainable development and continued global economic growth.
    Keywords: global warming, tipping point, catastrophic climate instability, extreme weather-related damages, R&D based technical change, embodied technical change, optimal sequencing, multi-phase optimal control, sustainable endogenous growth
    JEL: Q54 Q55 O31 O32 O33 O41 O44
    Date: 2013
  26. By: Jean Fouré; Houssein Guimbard; Stéphanie Monjon
    Abstract: Unilateral climate policy, such as carbon pricing, represents an additional cost to the economy, especially to energyintensive industrial sectors, as well as those exposed to international competition. A border carbon adjustment (BCA) is often presented as an attractive policy option for countries that want to go ahead without waiting for a global climate agreement. We used the computable general equilibrium model MIRAGE-e to simulate the impact of the introduction of a BCA on imports of energy intensive products in EU and EFTA countries and to evaluate the export losses their main trade partners would suffer. Given that a BCA is a trade measure, it would certainly lead to disputes at the World Trade Organization (WTO). If the BCA is considered illegal, the losses suffered by some partners may justify retaliation, as authorized by a WTO dispute settlement. The overall aggregated impacts of these measures would be negative but marginal, meaning that neither the BCA nor trade retaliation would have a marked impact on consumers’ real income or GDP, while prohibitive retaliatory tariffs are more likely to target sensitive products in the EU. A BCA would ultimately be a signal of the EU’s willingness to maintain an ambitious climate policy.
    Keywords: emission trading scheme;border carbon adjustment;trade retaliation
    JEL: D58 F18 Q56
    Date: 2013–11
  27. By: Felix Ebeling
    Abstract: We conducted a large scale field experiment to test whether framing a voluntary contribution decision with different non-binding defaults affect people's behavior. On an electricity provider's website, we manipulated non-binding green energy defaults in electricity contract offers. The default was either green or non-green. Buying green is costly and protects the environment. Hence, it is a voluntary contribution to a public good. Our core results are: First, defaults have a strong effect on contributions. 69% of new customer buy green, when the default was green, but only 7% when the default was nongreen. Second, the fraction of website visitors signing an electricity contract is similar across treatments. Third, regional election results affect green energy choice of customers.
    Keywords: Framing, Defaults, Public Goods, Randomized Field Experiments
    JEL: D03 D12 Q4
    Date: 2013–11–20
  28. By: Jonathan Pickering; Frank Jotzo; Peter J. Wood
    Abstract: International funding for climate change action in developing countries may enhance the legitimacy of global climate governance. However, by allowing for a fragmented approach to mobilizing funds, current multilateral commitments raise further legitimacy challenges. We analyze the potential for unilateral and coordinated approaches to advance “output” and “input” legitimacy respectively by raising adequate funds and representing interests in contributing and recipient countries that are affected by funding decisions. Achieving legitimacy will require coordinated approaches to goal-setting, oversight and effort-sharing. Vesting contributing countries with substantial discretion over funding sources may enhance taxpayers’ support and boost funding more rapidly. However, multilateral coordination will be necessary to maximize opportunities for raising revenue from carbon pricing and to minimize adverse impacts of funding choices on developing countries. Our analysis provides a principled justification for the degree of fragmentation compatible with achieving legitimacy. These insights may inform future evaluation of legitimacy requirements in other spheres of environmental governance.
    Keywords: Climate policy, climate finance, legitimacy, fragmentation, climate change mitigation, climate change adaptation, development assistance
    Date: 2013–11
  29. By: Ekaterina Sherstyuk (Department of Economics, University of Hawaii at Manoa); Nori Tarui (Department of Economics, University of Hawaii at Manoa); Majah-Leah V. Ravago (School of Economics, University of the Philippines Diliman); Tatsuyoshi Saijo (Kochi University of Technology)
    Abstract: Dynamic externalities are at the core of many long-term environmental problems, from species preservation to climate change mitigation. We use laboratory experiments to compare welfare outcomes and underlying behavior in games with dynamic externalities under two distinct settings: traditionally-studied games with infinitely-lived decision makers, and more realistic inter-generational games. We show that if decision makers change across generations, resolving dynamic externalities becomes more challenging for two distinct reasons. First, decision makers’ actions may be short-sighted due to their limited incentives to care about the future generations’ welfare. Second, even when the incentives are perfectly aligned across generations, strategic uncertainty about the follower actions may lead to an increased inconsistency of own actions and beliefs about the others, making own actions more myopic. Inter-generational learning through history and advice from previous generations may improve dynamic efficiency, but may also lead to persistent myopia.
    Keywords: economic experiments; dynamic externalities; inter-generational games; climate change
    JEL: C92 D62 D90 Q54
    Date: 2013–11
  30. By: Frederick van der Ploeg; Aart de Zeeuw
    Abstract: The optimal reaction to a pending climate catastrophe is to accumulate capital to be better prepared for the disaster and levy a carbon tax to reduce the risk of the hazard by curbing global warming. The optimal carbon tax consists of the present value of marginal damages, the non-marginal expected change in welfare caused by a marginal higher risk of catastrophe, and the expected loss in after-catastrophe welfare. The last two terms offset precautionary capital accumulation. A linear hazard function calibrated to an expected time of 15 years for a 32% drop in global GDP if temperature stays at 6 degrees Celsius implies with a discount rate of 1.4% a precautionary return of 1.6% and a carbon tax of 136 US $/tC. More intertemporal substitution lowers precautionary capital accumulation and lessens the need for a high carbon tax, but implies less intergenerational inequality aversion which pushes up the carbon tax.
    Keywords: non-marginal climate policy, tipping points, risk avoidance, economic growth, social cost of carbon, precaution, adaptation capital
    JEL: D81 H20 O40 Q31 Q38
    Date: 2013–10–01

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