nep-ene New Economics Papers
on Energy Economics
Issue of 2013‒12‒15
sixty papers chosen by
Roger Fouquet
London School of Economics

  1. The Economics of Energy Security By Gilbert E. Metcalf
  2. The Economic Cost of Global Fuel Subsidies By Lucas W. Davis
  3. Embodied energy consumption in Chinese industries By Zhu Liu; Yong Geng; Soeren Linder; Hongyan Zhao; T Fujita; Dabo Guan
  4. The Pathway to ASEAN Energy Market Integration By Navarro, Adoracion M.; Sambodo, Maxensius Tri
  5. The Political Economy of Fuel Subsidies in Colombia By Helena Garcia Romero; Laura Calderon Etter
  6. Energy Market Integration and Energy Poverty in ASEAN By Navarro, Adoracion M.; Sambodo, Maxensius Tri; Todoc, Jessie L.
  7. The Lightbulb Paradox: Evidence from Two Randomized Experiments By Hunt Allcott; Dmitry Taubinsky
  8. The EU Internal Electricity Market: Done Forever? By Jean-Michel Glachant; Sophia Ruester
  9. How to engage consumers in demand response: a contract perspective By Xian He; Nico Keyaerts; Isabel Azevedo, Leonardo Meeus, Leigh Hancher, Jean-Michel Glachant
  10. Power Generation and the Business Cycle: The Impact of Delaying Investment By Renato Agurto; Fernando Fuentes; Carlos Garcia; Esteban Skoknic
  11. Financial Constraints and Investment: A Quasi-Experiment in the Electricity Sector By Evangelina Dardati; Julio Riutort
  12. The Economic Costs of Unsupplied Electricity: Evidence from Backup Generation among African Firms By Musiliu O. Oseni; Michael G. Pollitt
  13. Biofuel mandate versus favourable taxation of electric cars : The case of Norway By Geir H. Bjertnæs
  14. Are tax exemptions for electric cars an efficient climate policy measure? By Geir H. Bjertnæs
  15. Does the Quality of Electricity Matter? Evidence from Rural India By Ujjayant Chakravorty; Martino Pelli; Beyza Ural Marchand
  16. Liberalization of electricity retailing in Europe: coming back or going forth? By Silvia Concettini; Anna Créti
  17. What blows in with the wind? By De Silva, Dakshina G.; McComb, Robert P.; Schiller, Anita R.
  18. Improving the Effectiveness of Green Local Development: The Role and Impact of Public Sector-Led Initiatives in Renewable Energy By Cristina Martinez-Fernandez; Samantha Sharpe; Merritt Hughes; Carmen Avellaner de Santos
  19. E(co)nergy Green energy and sustainable energy consumption. By Cappuyns, Valérie; Bellemans, Yoeri; Michielsen, Melissa; De Pauw, Jan
  20. Organising a market: Photovoltaics in Germany By Fuchs, Gerhard; Wassermann, Sandra
  21. 2013 EPRG Public Opinion Survey: Smart Energy Survey — Attitudes and Behaviours By Musiliu O. Oseni; Michael G. Pollitt; David M. Reiner; Laura-Lucia Richter; Kong Chyong
  22. The Importance of Azerbaijan's Energy Revenues in its Exports Volume and the Effects on the National Economy By Suleymanov, Elchin; Nuri Aras, Osman; Huseynov, Ruslan
  23. Boom or gloom? Examining the Dutch disease in a two-speed economy By Hilde C. Bjørnland; Leif Anders Thorsrud
  24. The Distributional Impacts of an Energy Boom in Western Canada By Marchand, Joseph
  25. Online Appendix to "Structural Transformation and the Oil Price" By Radoslaw Stefanski
  26. Optimal Monetary Responses to Oil Discoveries By Samuel Wills
  27. “One more lie: the ‘Monday effect’ in Spain’s retail petrol market” By Juan Luis Jiménez; Jordi Perdiguero
  28. Property Rights, Oil and Income Levels: Over a Century of Evidence By Christa N. Brunnschweiler; Simone Valente
  29. Pétrole : la poudrière syrienne By Céline Antonin
  30. On the Impact of Oil Price Volatility on the Real Exchange Rate - Terms of Trade Nexus : Revisiting Commodity Currencies By Virginie Coudert; Cécile Couharde; Valérie Mignon
  31. The Relationship between Population Dynamics and Investments for Energy and Telecommunication Infrastructures in the Philippines By Busilac, Aileen Jean; Deluna, Roperto Jr
  32. Optimal macroeconomic stabilization policy of food, metal, and energy price cycles in small open economies By Carlos Garcia; Jesisbé Mejía
  33. L'impact du coût de l'énergie sur la compétitivité de l'industrie manufacturière By Mathieu Bordigoni
  34. Gas Network and Market: à la carte? By Miguel Vazquez; Michelle Hallack; Jean-Michel Glachant
  35. The Gas Target Model for the Vysehrad 4 Region. Conceptual Analysis By Sergio Ascari
  36. MIRAGE-e: A General Equilibrium Long-term Path of the World Economy By Lionel Fontagné; Jean Fouré; Maria Priscila Ramos
  37. The environmental Kuznets curve, economic growth, renewable and non-renewable energy, and trade in Tunisia By Ben Jebli, Mehdi; Ben Youssef, Slim
  38. Urban Density and Climate Change: A STIRPAT Analysis using City-level Data By Liddle, Brantley
  39. Features, trajectories and driving forces for energy-related GHG emissions from Chinese mega cites By Zhu Liu; Sai Liang; Yong Geng; Bing Xue; Fengming Xi; Ying Pan; Tianzhu Zhang; Tsuyoshi Fujita
  40. International Equity on Greenhouse Gas Emissions and World Levels: an integrated analysis through distributive welfare indices By Duro Moreno, Juan Antonio; Teixidó Figueras, Jordi
  41. Population, Affluence, and Environmental Impact Across Development: Evidence from Panel Cointegration Modeling By Liddle, Brantley
  42. Uncovering China’s greenhouse gas emission from regional and sectoral perspectives By Zhu Liu; Yong Geng; Dabo Guan; Soeren Linder
  43. Untapped Fossil Fuel and the Green Paradox: A classroom calibration of the optimal carbon tax By Rick Van der Ploeg
  44. Estimating the Marginal Abatement Costs of Carbon Dioxide Emissions in China: A Parametric Analysis By Limin DU; Aoife Hanley; Chu WEI
  45. Marginal abatement cost curves and the optimal timing of mitigation measures By Adrien Vogt-Schilb; Stéphane Hallegatte
  46. Assessing and ordering investments in polluting fossil-fueled and zero-carbon capital By Oskar Lecuyer; Adrien Vogt-Schilb
  47. Global Warming, Technology Transfer and Trade in Carbon Energy: Challenge or Threat? By Georg Müller-Fürstenberger; Gunter Stephan
  48. Banking and backloading emission permits By Corinne Chaton; Anna Créti; Benoit Peluchon
  49. Pollution Permit Systems and Firm Dynamics: Does the Allocation Scheme Matter? By Evangelina Dardati
  50. The Market Microstructure of the European Climate Exchange By Yoichi Otsubo; Bruce Mizrach
  51. Can non-market regulations spur innovations in environmental technologies? : A study on firm level patenting By Marit E. Klemetsen; Brita Bye; Arvid Raknerud
  52. SRI Cultivation in Andhra Pradesh : Achievements, Problems and Implications for GHGs and Work By Duvvuru, Narasimha Reddy; Motkuri, Venkatanarayana
  53. How can LDCs benefit from the CDM?: A panel data analysis of determinants of CDM project hosting By Kasai, Katsuya
  54. Accounting for Different Uncertainties: Implications for Climate Investments? By Svenja Hector()
  55. Trade tariffs and self-enforcing environmental agreements By Thomas Eichner; Rüdiger Pethig
  56. Efficiency and Acceptability of Climate Policies: Race Against the Lock-ins By Julie Rozenberg; Adrien Vogt-Schilb; Hallegatte Stéphane
  57. Self-enforcing environmental agreements and capital mobility By Thomas Eichner; Rüdiger Pethig
  58. Two Decades of European Climate Policy: A Critical Appraisal By Christoph Böhringer
  59. Climate Policy and Catastrophic Change: Be Prepared and Avert Risk By Rick Van der Ploeg; Aart de Zeeuw
  60. Optimal Expectations and the Welfare Cost of Climate Variability By Alem, Yonas; Colmer, Jonathan

  1. By: Gilbert E. Metcalf
    Abstract: Energy security is the ability of households, businesses, and government to accommodate disruptions in supply in energy markets. This survey considers the economic dimensions of energy security, political and other non-economic security concerns and discusses policy approaches that could enhance U.S. energy security. A number of points emerge. First, energy security is enhanced by reducing consumption, not imports. A policy to eliminate oil imports, for example, will not enhance U.S. energy security whereas policies to reduce energy consumption can improve energy security. Second, energy security is distinct from considerations of energy externalities. Energy security taxes are appealing on political grounds but more difficult to justify on economic grounds. Finally, the contrasting concerns over energy security between policy makers and economists is striking. The survey notes some possible reasons for these differing views and suggests possible research opportunities in this area.
    JEL: Q4
    Date: 2013–12
  2. By: Lucas W. Davis
    Abstract: By 2015, global oil consumption will reach 90 million barrels per day. In part, this high level of consumption reflects the fact that many countries provide subsidies for gasoline and diesel. This paper examines global fuel subsidies using the latest available data from the World Bank, finding that road-sector subsidies for gasoline and diesel totaled $110 billion in 2012. Pricing fuels below cost is inefficient because it leads to overconsumption. Under baseline assumptions about supply and demand elasticities, the total annual deadweight loss worldwide is $44 billion. Incorporating external costs increases the economic costs substantially.
    JEL: H23 Q41 Q48 Q51
    Date: 2013–12
  3. By: Zhu Liu; Yong Geng; Soeren Linder; Hongyan Zhao; T Fujita; Dabo Guan
  4. By: Navarro, Adoracion M.; Sambodo, Maxensius Tri
    Abstract: Global experience in regional energy market integration presents broad elements of integration, i.e., binding agreements, physical infrastructure, standardized or harmonized rules of operation, and governing or coordinating institutions. The pathway to ASEAN Energy Market Integration (AEMI) will also involve creating these elements; however, this activity must be preceded by trust-building activities among ASEAN members. Trust should be built by candidly disclosing mutual gains from, and shared costs and externalities in energy resource development, trading energy products, market adjustments, and regulatory reforms. Shared databases and assessments could allow ASEAN members to formulate the building blocks of an AEMI regional accord. ASEAN leaders could then forge a regional accord for AEMI through 2030 with actionable targets and timetables. The targets could include establishing or strengthening institutions for facilitating integration efforts, removing border and behind-the-border barriers to energy trade and investments, harmonizing rules and standards, and building the physical infrastructure for regional energy trading. Since energy market integration takes place not only at the government level but also at the private sector level, ASEAN members must base their preparedness to join AEMI on the business case for integration rather than merely on the availability of energy resources. Moreover, at the minimum, ASEAN members should have independent energy regulators and pursue harmonization of rules and standards.
    Keywords: ASEAN, cross-border infrastructure, energy market integration, energy regulatory reforms, energy trading
    Date: 2013
  5. By: Helena Garcia Romero; Laura Calderon Etter
    Abstract: Colombia has made progress towards eliminating fuel and diesel subsidies and reducing discretionary spaces allowing for artificially low fuel prices, but challenges remain. Colombia has provided explicit and implicit subsidies to gasoline and diesel since 1983, costing the government up to 1.6% of GDP. This paper discusses the political economy of fuel subsidies in the country to understand why reform has been so slow. It focuses on the groups benefitting from the subsidies and their political participation, as well as other economic impacts that have limited the political will to eliminate them. The Colombian case serves as an example of the difficulty of fully eliminating fuel subsidies once they are already established. La Colombie a fait des progrès pour éliminer les subventions accordées aux carburants et au gazole et réduire les possibilités de faire baisser artificiellement les prix des carburants, mais certaines difficultés demeurent. La Colombie applique depuis 1983 des subventions explicites et implicites à l’essence et au gazole, représentant jusqu’à 1.6 % de son PIB. On trouvera dans le présent rapport une analyse de l’économie politique des subventions aux carburants qui permettra de mieux comprendre la lenteur de la réforme dans ce pays. Le rapport s’intéresse aux groupes qui bénéficient de ces subventions et à leur participation politique, ainsi qu’aux autres impacts économiques qui ont entamé la volonté politique de les supprimer. L’exemple de la Colombie illustre la difficulté d’éliminer complètement les subventions aux carburants une fois établies.
    Keywords: political economy, Colombia, fossil-fuel subsidies, Colombie, économie politique
    JEL: H23 O13 Q48
    Date: 2013–12–10
  6. By: Navarro, Adoracion M.; Sambodo, Maxensius Tri; Todoc, Jessie L.
    Abstract: Based on available statistics, between 127 and 130 million people in Southeast Asia lack access to electricity. At least 228 million still rely on traditional biomass for cooking and lack access to clean and modern cooking facilities, with dire consequences for their quality of life and human development. Discussions for an integrated Association of Southeast Asian Nations (ASEAN) energy market cannot overlook this energy poverty situation in the region. In fact, the overall goal of ASEAN Energy Market Integration (AEMI) to achieve balanced and equitable economic growth and development for all countries in the region cannot be realized while people continue to suffer from energy poverty. This study maps the energy poverty situation in the region, and reviews the links between energy access and economic and human development. It also draws a connection between AEMI and the eradication of energy poverty, or attaining universal energy access, in terms of benefits and strategies, particularly with regard to mapping investment requirements and taking inventory of financing options. The study concludes with some recommendations for near-term actions.
    Keywords: ASEAN, energy market integration, energy poverty, electrification, universal access
    Date: 2013
  7. By: Hunt Allcott; Dmitry Taubinsky
    Abstract: It is often suggested that consumers are imperfectly informed about or inattentive to energy costs of durable goods such as cars, air conditioners, and lightbulbs. We study two randomized control experiments that provide information on energy costs and product lifetimes for energy efficient compact fluorescent lightbulbs (CFLs) vs. traditional incandescent bulbs. We then propose a general model of consumer bias in choices between energy-using durables, derive sufficient statistics for quantifying the welfare implications of such bias, and evaluate energy efficiency subsidies and standards as second best corrective policies if powerful information disclosure is infeasible. In the context of our theoretical model, the empirical results suggest that moderate CFL subsidies may be optimal, but imperfect information and inattention do not appear to justify a ban on traditional incandescent lightbulbs in the absence of other inefficiencies.
    JEL: D03 D12 H21 H31 L94 Q41 Q48
    Date: 2013–12
  8. By: Jean-Michel Glachant; Sophia Ruester
    Abstract: Taking a quarter-century to build a European internal market for electricity may seem an incredibly long journey. The aim of achieving a European-wide market might be reached, but we have gone through – and should continue to go through – a process subject to many adverse dynamics. The EU internal market may derail greatly in the coming years from the effects of a massive push for renewables, as well as a growing decentralization of the production-consumption loop. Moreover, a serious concern is the risk of a definitive fragmentation of the European electricity market due to uncoordinated national moves with respect to renewable support and capacity mechanisms.
    Keywords: EU internal market, Power sector reform, Renewable integration
    Date: 2013–10
  9. By: Xian He; Nico Keyaerts; Isabel Azevedo, Leonardo Meeus, Leigh Hancher, Jean-Michel Glachant
    Abstract: Nowadays, the European electricity systems are evolving towards a generation mix that is more decentralised, less predictable and less flexible to operate. In this context, additional flexibility is expected to be provided by the demand side. Thus, how to engage consumers to participate in demand response is becoming a pressing issue. In this paper, we provide an analytical framework to assess consumers’ potential and willingness to participate in active demand response from a contract perspective. On that basis, we present policy recommendations to empower and protect consumers in their shift to active demand response participants.
    Keywords: Electricity system, demand response, contract, energy policy
    Date: 2013–10
  10. By: Renato Agurto; Fernando Fuentes (Facultad de Economía y Negocios, Universidad Alberto Hurtado); Carlos Garcia (Facultad de Economía y Negocios, Universidad Alberto Hurtado); Esteban Skoknic
    Abstract: This article presents the hypothesis that exogenous shocks in the electricity market can affect the business cycle of the Chilean economy in the short and medium terms. The shocks are identified as the delays in power-generation investment that have characterized the sector in recent years. The delays are due to political decisions and the process of attaining environmental approvals by state agencies. A comparison of different scenarios reveals that after eight years, the country would lose the equivalent of one year of GDP growth, with a consequent reduction in private investment, domestic consumption, and job creation. This result highlights the importance of environmental and energy policy in reducing business cycle fluctuations.
    Keywords: Business Cycle, Electric Energy, Bayesian Econometrics, DSGE models
    JEL: E17 E27 E37 L94
    Date: 2013–07
  11. By: Evangelina Dardati (Facultad de Economía y Negocios, Universidad Alberto Hurtado); Julio Riutort (Escuela de Universidad, Pontificia Universidad Católica de Chile)
    Abstract: We study the impact of financial constraints on the investments behavior of electricity generating utilities. The pollution permit allocation rule of the US SO2 regulation introduced variation in internally available funds, in a industry where firms are otherwise very similar. We use this exogenous variation to identify the relationship between cash flow an investment. Consistent with a financial constraints explanation, this relationship is on average positive but decreases with firm size.
    Date: 2013–02
  12. By: Musiliu O. Oseni; Michael G. Pollitt
    Abstract: Public electricity provision in Africa has been marred by under investment and frequent power outages. One of the strategies often adopted by firms to cope with this poor public supply is investment in backup generation. This strategy is not without cost however. Extant literatures on outage cost estimation have shown that firms possessing certain characteristics have a higher tendency to invest in backup generation. What is less known, however, is whether those firms suffer lesser or higher unmitigated outage losses (costs). Using cross-sectional data from 6854 firms currently operating in 12 African countries, this study investigated the extent to which firms’ characteristics might create incentives for auto-generation and whether these incentives lead to lesser unmitigated outage costs. We used three different methods including marginal cost, incomplete backup and subjective evaluation techniques. The results reveal that large firms, firms engaging in exports, and those using the Internet for their operation still suffer higher unmitigated outage costs despite having a higher propensity of investing in backup generation. The results further reveal that unmitigated costs still account for the larger proportion of the total outage costs despite high prevalence of backup ownership among the firms. This reflects the inefficiency in backup generation due to small backup capacity held by firms. Our estimates also indicate that ignoring firms’ characteristics such as size and the nature of operation (e.g. export promotion, internet usage, etc.) may result in underestimation of outage losses. The analysis further suggests that firms can still benefit significantly even when the current subsidised tariffs are replaced by cost-reflective rates that ensure stable electricity supply. The net outage cost (having adjusted for a cost-reflective tariff) incurred by firms are large enough to expand their scope of operation and hire more workers, suggesting the macroeconomic effect could be significant.
    Keywords: Africa, Backup, Electricity, Firms, Outage costs, Two-Limit Tobit
    JEL: L6 L81 L94 N77 Q4
    Date: 2013–04–12
  13. By: Geir H. Bjertnæs (Statistics Norway)
    Abstract: This study investigates whether biofuel policies or favourable taxation of electric cars should be employed to satisfy a green house gas emission target connected to private transport within the Norwegian economy. The study shows that implementation of biofuel generates a welfare gain in the presence of the current favourable taxation of electric cars in Norway. Implementation of biofuels, however, generates a welfare loss when the tax rate on purchase of electric cars is increased to the average tax rate on purchase of diesel powered cars.
    Keywords: Biofuel; Mandates; Electric cars; Greeen house gas emissions
    JEL: Q54 R48 H23
    Date: 2013–06
  14. By: Geir H. Bjertnæs (Statistics Norway)
    Abstract: This study finds that the welfare gain, excluding environmental effects, generated by increasing the Norwegian tax rate on purchase of electric cars from 8 to 37 percent amounts to approximately 5500- 6500 NOK (or 680-820 euro) per ton increase in GHG emissions in the long run. Substantial tax exemptions implies that reallocation from electric cars towards petrol and diesel powered cars generates a tax revenue gain of more than 40 billion NOK, which amounts to almost 10 percent of government consumption in 2007.
    Keywords: Taxation; Electric cars; CO2 emissions
    JEL: Q54 R48 H23
    Date: 2013–05
  15. By: Ujjayant Chakravorty (Department of Economics, Tufts University); Martino Pelli (Département d'économique, Université de Sherbrooke); Beyza Ural Marchand (Department of Economics, University of Alberta)
    Abstract: This paper estimates the returns to household income due to improved access to electricity in rural India. We examine the effect of connecting a household to the grid and the quality of electricity, defined as hours of daily supply. The analysis is based on two rounds of a representative panel of more than 10,000 households. We use the district-level density of transmission cables as instrument for the electrification status of the household. We find that a grid connection increases non-agricultural incomes of rural households by about 9 percent during the study period (1994- 2005). However, a grid connection and a higher quality of electricity (in terms of fewer outages and more hours per day) increases non-agricultural incomes by about 28.6 percent in the same period.
    Keywords: Electricity Supply, Quality, India, Energy and Development, Infrastructure
    JEL: O12 O18 Q48
    Date: 2013–10
  16. By: Silvia Concettini (Universita degli Studi di Milano - [-], Université Paris Ouest Nanterre La Défense - [-]); Anna Créti (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, Université Paris Dauphine - [-])
    Abstract: The aim of this article is to provide a mid-term evaluation of liberalization of electricity retailing in Europe taking into account some relevant analytic con- straints: di erent and often conflicting theoretical points of view, shortage of routinely collected data, problems in isolating the impact of single reforms in power sector and pervasive regulatory interventions. Theoretical approaches and empirical studies are discussed with the goal of testing the consistency of theory and practice. Our analysis suggests that direct bene ts of retail competition have been often overstated, particularly for small and residential customers. Final market has proven to be less dynamic than forecast and new entry in supply more di cult to sustain in the medium-long run. Regulatory requirements are demonstrated to be more signi cant than suggested in previous papers, due to non-negligible market imperfections. Our main conclusion is that it seems unlikely that \light-handed regulation" may fully substitute for \hard regulation" in this sector, especially for small and residential customers. Moreover, direct regulatory interventions remain essential for arranging and managing Default and Last Resort services and avoiding the risk of excluding \vulnerable customers" from trade. In the light of this limitations, further actions appear to be required to give a thorough organization to this business able to let expected outcomes of other related reforms (e.g. liberalization of generation) a stronger impact on nal customers' welfare.
    Date: 2013–12–09
  17. By: De Silva, Dakshina G.; McComb, Robert P.; Schiller, Anita R.
    Abstract: The shift toward renewable forms of energy for electricity generation in the electricity generation industry has clear implications for the spatial distribution of generating plant. Traditional forms of generation are typically located close to the load or population centers, while wind and solar-powered generation must be located where the energy source is found. In the case of wind, this has meant significant new investment in wind plant in primarily rural areas that have been in secular economic decline. This paper investigates the localized economic impacts of the rapid increase in wind power capacity at the county level in Texas. Unlike Input-Output impact analysis that relies primarily on levels of inputs to estimate gross impacts, we use traditional econometric methods to estimate net localized impacts in terms of employment, personal income, and property tax base. While we find evidence that both direct and indirect employment impacts are modest, significant increases in per capita income accompany wind power development. County and school property tax rolls also realize important benefits from the local siting of utility scale wind power.
    Keywords: Wind energy, industry growth, per capita income, tax base.
    JEL: H2 H23 H7 H72 Q4 Q42 Q48 R1 R11
    Date: 2013–12–02
  18. By: Cristina Martinez-Fernandez; Samantha Sharpe; Merritt Hughes; Carmen Avellaner de Santos
    Abstract: This report presents a snapshot of the global renewable energy industry and investigates what this global industry can mean for local development. This industry is rapidly growing in response to countries’ activities to reduce their carbon emissions. The deployment of renewable energy is seen as a key development opportunity for rural regions and a way for governments to give substance to “green growth” claims. The paper suggests that local governments and other institutions will be central agents in the success of the transition of regional areas to low-carbon economies.
    Date: 2013–11–26
  19. By: Cappuyns, Valérie; Bellemans, Yoeri; Michielsen, Melissa; De Pauw, Jan
    Abstract: In 2008, the Brussels-Capital Region created “Research in Brussels” to promote scientific and technological research in Brussels and to encourage scientific study amongst young people in order to renew the pool of researchers in the future. Within this framework, a call for projects: 'Later, I'll be... Einstein!' is launched every year to financially support science awareness initiatives for young people in Brussels. In 2012, financial support was obtained for the E[co]nergy project, that aims to sensitize secondary school pupils (between 16 and 18 years old) with respect to sustainable energy production and consumption. As an introduction, pupils fill out a questionnaire with regard to their own ecological footprint and energy consumption patterns. The topic of sustainable energy production is then instructed and analyzed in more detail during the educational game Ecoduel, in which strategic choices have to be made with regard to different types of energy supply. In the following discussion, students reflect about sustainable energy production and consumption. Besides the more technical aspects such as energy efficiency and secondary environmental impacts of ‘grey’ and ‘green’ energy production, political and ethical consequence of the choices made during the game are addressed. To conclude, a visit to a solar panel installation, a windmill and biomass installation is organized in collaboration with Ecopower, a cooperative investing in projects with regards to renewable energy. The project has also been implemented in the curriculum of bachelor students of the Environmental Health and Safety Management program. The students (second bachelor year) followed a workshop in which they were trained to accompany the educational game Ecoduel with pupils of the 3rd grade of secondary school and to facilitate the discussion afterwards, encouraging pupils to consider the complexities of ‘sustainable’ energy production and consumption. By doing so, the students also practice important program-specific and behavioral competences such as team work, explaining scientific topics in a clear, comprehensive and attractive way, and leading a discussion with regard to a specific scientific subject.
    Keywords: sustainability; education;
    Date: 2013–09
  20. By: Fuchs, Gerhard; Wassermann, Sandra
    Abstract: The article analyses the case of a successful innovation in the energy sector: the development of a market for Photovoltaics. It argues that - given the special characteristics of the energy sector - successful innovation depends on strong political support and an advocacy coalition. The method chosen to realize a successful innovation constituted the creation of a quickly expanding niche market especially with the help of regulatory instruments. -- Die Märkte für Energie waren lange Zeit sowohl durch ihre politische Konstitution wie durch ihre Stabilität gekennzeichnet. Unsicherheit wurde in nahezu allen Staaten reduziert durch mehr oder weniger strikte Vorgaben des Staates oder regulatorischer Einrichtungen. Die Energiemärkte befinden sich jedoch seit einigen Jahren weltweit in Bewegung. Die in Europa insbesondere von der Europäischen Kommission vorangetriebene Liberalisierung der Energiemärkte, die noch voll im Gange ist, verbunden mit den Bemühungen Klimapolitik zu betreiben und neue Diskussionen um die Sicherheit der Energieversorgung haben die Frage nach der Konstitution der Märkte und dem Umgang mit Unsicherheiten virulent werden lassen. In diesem Zusammenhang stehen verschiedene Versuche, die Bedingungen wirtschaftlichen Handelns auf den Energiemärkten auf lokaler, regionaler, nationaler wie internationaler Ebene neu zu bestimmen. Gegenstand des vorliegenden Papiers ist die Entwicklung auf einem Marktsegment des Energiebereichs, dem Markt für netzgekoppelte Photovoltaik.
    Date: 2012
  21. By: Musiliu O. Oseni; Michael G. Pollitt; David M. Reiner; Laura-Lucia Richter; Kong Chyong
    Abstract: We present results of the 2013 Energy Policy Research Group (EPRG) public opinion survey on smart metering and consumption behaviour. Our survey examines the energy consumption awareness and attitudes of the British public, the effect of peers on consumption behaviour, the potential for consumer engagement and consumer acceptance of various energy saving measures. Wherever possible, comparisons were made to EPRG public opinion surveys from 2006, 2008 and 2010. The share of individuals that would not want their consumption data recorded at all has gone down from 2010 levels from 30% to 22% although numerous concerns remain. Smart devices do lead to behavioural response but the challenge is the sustainability of this behaviour change over time. The share of electricity monitor householders that read the monitor at least once in a week is 26%, compared to less than 5% of non-monitor households that reported checking their meters at least once a week. However, the reading habit declines over time. Peer influence is not found to have strong impacts on behaviour change. Affordable and user friendly applications on smart phones that inform people of their consumption are seen as promising tools to raise awareness and induce behaviour change. There is scope for shifting load off-peak through smart technologies that minimise impact on availability and functionality, and guarantee consumer privacy.
    Keywords: Public opinion survey, Consumption awareness, Electricity policy, Energy consumption behaviour, electricity monitor, Smart appliances, Supplier switching
    JEL: Q40 Q48 Q42 L94
    Date: 2013–04–12
  22. By: Suleymanov, Elchin; Nuri Aras, Osman; Huseynov, Ruslan
    Abstract: Large energy reserves have been a major contributor to the Azerbaijan economy, and affected the country's exports volume, and have become a main determinant of the country's economic structure. Azerbaijan is a country that has major oil and gas based economy with the completion of the Baku-Tbilisi-Ceyhan Oil Pipeline in 2005 and Baku-Tbilisi-Erzurum Gas Pipeline in 2007. First export oil was pumped into Baku-Tbilisi-Ceyhan in May 2005, and the oil reached Ceyhan in May 2006. On the other hand, first export gas was pumped into Baku-Tbilisi-Erzurum in March 2007. The importance of country energy source revenues on Azerbaijan's export volume and the effects on national economy has increased with the completion of these pipelines year after year. Azeri export’s reliance on energy source revenues keeps dominant position in Azerbaijan’s exports despite efforts to diversify Azerbaijan’s economy away from oil. Finally, crude oil made 86 percent and oil products made 6 percent, so oil and oil products made 92 percent of Azerbaijan’s export in 2011. Non-oil products made up only 8 percent of the country’s export last year. Thus, non-oil sector contribution to Azerbaijani export was lower than Georgian export in 2011. This means that increasing of total export volume of Azerbaijan is not sustainable.
    Keywords: Energy Resources, Oil, Export, Azerbaijan Economy, National Budget, Inflation.
    JEL: D1 D10 D2 O5
    Date: 2013–06–19
  23. By: Hilde C. Bjørnland; Leif Anders Thorsrud
    Abstract: Traditional studies of the Dutch disease do not typically account for productivity spillovers between the booming energy sector and non-oil sectors. This study identifies and quantifies these spillovers using a Bayesian Dynamic Factor Model (BDFM). The model allows for resource movements and spending effects through a large panel of variables at the sectoral level, while also identifying disturbances to the real oil price, global demand and non-oil activity. Using Norway as a representative case study, we find that a booming energy sector has substantial spillover effects on the non-oil sectors. Furthermore, windfall gains due to changes in the real oil price also stimulate the economy, but primarily if the oil price increase is caused by global demand. Oil price increases due to, say, supply disruptions, while stimulating activity in the technologically intense service sectors and boosting government spending, have small spillover effects on the rest of the economy, primarily because of reduced cost competitiveness. Yet, there is no evidence of Dutch disease. Instead, we find evidence of a two-speed economy, with non-tradables growing at a much faster pace than tradables. Our results suggest that traditional Dutch disease models with a fixed capital stock and exogenous labor supply do not provide a convincing explanation for how petroleum wealth a effects a resource rich economy when there are productivity spillovers between sectors.
    Keywords: Resource boom, oil prices, Dutch disease, learning by doing, two-speed economy, Bayesian Dynamic Factor Model(BDFM)
    JEL: C32 E32 F41 Q33
    Date: 2013–12
  24. By: Marchand, Joseph (University of Alberta, Department of Economics)
    Abstract: In the energy-rich region of Western Canada, inequality has risen over the past two decades, while poverty has declined, begging the question of whether the recent energy boom was a contributing factor in these changes. This study uses local labor market variation in energy extraction to identify the distributional impacts of this boom. The evidence shows that the gains from an energy boom are widely distributed across the distribution. Overall inequality rises due to the boom, driven by movement in the top half of the distribution. At the industry level, energy extraction had large direct increases in inequality, while construction and retail trade had moderate indirect increases, and inequality slightly declined in all services. The energy boom was also associated with a large decrease in absolute poverty and a small increase in relative poverty. Earnings generated in the lower distribution of the energy extraction sector had the largest spillovers into average earnings of the other local sectors and was the lone contributor to the reduction in absolute poverty.
    Keywords: distribution; energy boom; inequality; local labor markets; poverty
    JEL: D31 I32 J31 Q33 R23
    Date: 2013–11–29
  25. By: Radoslaw Stefanski (University Laval)
    Abstract: Online appendix for the Review of Economic Dynamics article
    Date: 2013
  26. By: Samuel Wills
    Abstract: Monetary policy can play an important role in managing oil discoveries. Ideally governments will use fiscal policy to smooth consumption of oil income. In practice this often does not happen, as governments delay spending until oil revenues are received. This induces changes in the economy, both at discovery and when spending begins. In this paper we consider how monetary policy should respond. The paper makes three contributions. The first is to show that an oil discovery causes the real exchange rate to appreciate twice: when forward-looking households and then the government increase their consumption. This can cause a recession under standard monetary regimes, as firms anticipate the second appreciation. The second contribution is to micro-found the objective of monetary policy. The central bank should stabilise inflation, the output gap and the fiscal gap. It will also try to appreciate the non-oil terms of trade, to exploit the asymmetry from owning oil wealth. The third is to derive a closed form for optimal monetary policy, which will respond in advance to expected changes in government demand. This will delay the second real appreciation until the government can take up the slack left by private demand. Optimal policy significantly improves welfare relative to standard monetary regimes, and is well approximated by a simple Taylor rule that responds to expected changes in the natural level of output.
    Keywords: Natural resources, oil, optimal monetary policy, small open economy, anticipated windfall
    JEL: E52 E62 F41 O13 Q30 Q33
    Date: 2013–08–30
  27. By: Juan Luis Jiménez (Universidad de Las Palmas de Gran Canaria); Jordi Perdiguero (Universitat Autònoma de Barcelona)
    Abstract: Empirical evidence drawn from the economic literature points to a low level of competition in the retail petrol market. Similar evidence can be found for the Spanish market. In fact, both Spain’s antitrust authority (Comisión Nacional de la Competencia) and its energy regulator (Comisión Nacional de la Energía) have recently initiated disciplinary proceedings against the majors on the grounds of suspected price manipulation in the retail petrol market. They are accused of cutting retail prices on Mondays so as to distort the rank position of Spain in European Union statistics in a practice that has received the name of the ‘Monday effect’. Here, we analyze this effect by constructing a database that includes daily retail prices for all petrol stations in Spain in the period 2009-2012, and a more detailed database for the city of Barcelona in 2013. Our estimations confirm that: i) in 2011 and 2012 prices fell on Mondays at retailers branded by majors; ii) prices were unchanged at stations in our two control groups; iii) prices were also seen to fall when a more detailed analysis was conducted, and this price cut was also found in 2013. In short, one more indicator of collusion in this sector and … one more lie.
    Keywords: Petrol; Antitrust; Monday effect. JEL classification: L13, L59, L71.
    Date: 2013–12
  28. By: Christa N. Brunnschweiler (Department of Economics, Norwegian University of Science and Technology); Simone Valente (Department of Economics, Norwegian University of Science and Technology)
    Abstract: We investigate the e¤ects of di¤erent regimes of control rights over oil exploitation on ag- gregate domestic income. We construct a new panel dataset on petroleum ownership struc- tures for up to 68 countries between 1867-2008, distinguishing among regimes of Domestic Control, Foreign Control, and international Partnerships. Results show that Partnerships tend to generate higher domestic income than Foreign and Domestic Control. This result is robust to controlling for political regimes (i.e. democracy, anocracy, autocracy), time e¤ects, and other factors. Existing theories of incomplete contracts capture several aspects, but not the general mechanism underlying the relationships between aggregate domestic income and control regimes in primary sectors.
    Date: 2013–12–13
  29. By: Céline Antonin (OFCE)
    Abstract: Les craintes du début de l’année de voir les cours du Brent dépasser durablement la barre des 120 dollars ne se sont pas matérialisées et le premier semestre 2013 a été marqué par une baisse des cours du baril de Brent de 116 à 103 dollars entre janvier et juin 2013. Ce fléchissement s’explique par plusieurs facteurs : la faiblesse de la demande en provenance des pays industriels, la montée en puissance de nouveaux gisements non conventionnels en Amérique du Nord, et la présence de capacités de production inutilisées au sein des pays de l’OPEP.
    Date: 2013–10
  30. By: Virginie Coudert; Cécile Couharde; Valérie Mignon
    Abstract: The aim of this paper is to study the relationship between terms of trade and real exchange rates of commodityproducing Commodity currencies,countries on both the short and the long run. We pay particular attention to the dominant role played by oil among commodities by investigating the potential non-linear effect exerted by the situation on the oil market on the real exchange rate - terms of trade nexus. To this end, we rely on the panel smooth transition regression methodology to estimate the adjustment process of the real effective exchange rate to its equilibrium value depending on the volatility on the oil market. Considering a panel of 52 commodity exporters and 17 oil exporters over the 1980-2012 period, our findings show that while exchange rates are mainly driven by fundamentals in the low-volatility regime, they are mostly sensitive to changes in terms of trade when oil price variations exceed a certain threshold. The commodity-currency property is thus at play in the short run only for important variations in the oil price.
    Keywords: Commodity currencies;Oil price;Non-linearity
    JEL: C23 F31 Q43
    Date: 2013–12
  31. By: Busilac, Aileen Jean; Deluna, Roperto Jr
    Abstract: The study examined the relationship between population dynamics and investments for energy and telecommunication infrastructures in the Philippines from 1990-2011. Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS-IV) were explored to estimates the coefficients of the models. However, Hausman Specification test rejected the hypothesis of simultaneity problem in the models. Therefore, results of the OLS estimation is preferred than the results of 2SLS-IV. Results revealed that investment for energy and telecommunication is negatively affected by total population but positively affected by the level of population below 15 years old and above 65 years old. Urban agglomeration has significantly increased investments for telecommunication. In general, level of population and its dynamics significantly affects the aggregate infrastructure investments.
    Keywords: Population Dynamics, 2SLS-IV, Investment
    JEL: C36 H54 J11
    Date: 2013–04–01
  32. By: Carlos Garcia (Facultad de Economía y Negocios, Universidad Alberto Hurtado); Jesisbé Mejía
    Abstract: This paper proposes an optimal strategy for stabilizing macroeconomic policy to address jointly the effects of changes in the prices of food, minerals and energy (oil). Our approach differs from the general literature, which analyzes the effects of a commodity boom and therefore the solutions in terms of economic policy separately, that is, by type of commodity. The stabilization strategy that we propose considers a key fact affecting many small open economies, namely, that they not only are affected by increases in commodity prices, but also benefit from them. Consequently, we use a DSGE model for a small open economy with restricted households to show that welfare could be improved with a fiscal rule incorporating transfers to stabilize household consumption. This strategy noticeably dominates an aggressive monetary policy focused only on stabilizing inflation and a fiscal policy that has an excessive bias toward saving income from exports.
    Keywords: commodity price boom, optimal fiscal and monetary policy, DSGE models
    JEL: E31 E32 E52 E62 E63 F1 F41
    Date: 2012–10
  33. By: Mathieu Bordigoni (CERNA - Centre d'économie industrielle - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: Trois faits majeurs peuvent être observés aujourd'hui. D'abord la fragilité de l'industrie manufacturière en France et dans d'autres pays occidentaux. Ensuite, des débats nourris sur la transition énergétique, notamment en France, qui laissent envisager des scénarios susceptibles d'augmenter le coût de l'énergie. Enfin, le développement rapide de l'exploitation d'huiles et de gaz de schistes aux Etats-Unis, à l'origine d'une baisse importante du prix du gaz sur ce continent. Dans ce contexte, il est normal de s'interroger sur l'impact des prix de l'énergie et de ses variations sur la compétitivité de l'industrie française. Certaines données importantes pour aborder cette question sont parfois méconnues. Valorisant les résultats d'une thèse de doctorat sur ce sujet , ce document de travail vise à présenter sous une forme accessible les principaux résultats de la littérature économique et leurs conséquences. L'objectif est ici de donner quelques clés de compréhension des débats en cours et de proposer des informations susceptibles de stimuler la discussion sur ces sujets difficiles, sans prétendre répondre aux nombreuses questions soulevées dans ces débats.
    Date: 2013–11–18
  34. By: Miguel Vazquez; Michelle Hallack; Jean-Michel Glachant
    Abstract: The institutional setting of open gas networks and markets is revealing considerably diverse and diverging roads taken by the US, the EU or Australia. We will show that this is explained by key choices made in the liberalization process. This liberalization is based on a redefinition of the property rights associated with transmission grid usage. That leads to different systems for the transmission services, as well as for the gas commodity trade, which in turn depends on the network services to get any market deal actually implemented. Not only do those choices depend on the physical architecture of the network, but also the perceived difficulties and costs to coordinate the actual transmission services through certain market arrangements.
    Keywords: network regulation, gas market, property rights, carriage systems
    Date: 2013–10
  35. By: Sergio Ascari
    Abstract: The Gas Target Model is a challenge, notably for the less than large European markets that are fostered to merge in order to boost liquidity. Th challenge is even tougher for the Vysehrad countries (Czech Republic, Hungary, Poland and Slovakia), which have long been dependent on Russian supplies and are therefore characterised by less open markets than their Western neighbours. This paper analyses the reality of the V4 countries vis -à-vis the European Gas Target Model, starting from their current and expected infrastructural endowment, and suggests ways to develop and implement it in the most efficient way for them and for the EU as a whole.
    Keywords: Gas Target Model, Vysehrad 4, Security of Supply, Gas Hubs
    Date: 2013–10
  36. By: Lionel Fontagné; Jean Fouré; Maria Priscila Ramos
    Abstract: Thinking of how the relative sizes of countries and how the geography of world production and trade will be affected in the long run must be based on sound economic reasoning about the determinants of long term growth. It must also be embedded in a general equilibrium framework that takes account of the interactions among markets and sectors, as well as between countries. This paper takes stock of a three phase research project. The first step consists of deriving and estimating a three-factor (labour, capital, energy) macroeconomic growth model for a large set of individual countries, which fits two forms of technological progress (standard TFP and energy efficiency). The second step consists of recovering the sectoral detail with an energy-oriented Computable General Equilibrium model of the world economy calibrated to fit these projections. In a third step we confront the assumptions for our baseline to alternative scenarios.
    Keywords: CGE model;Dynamic Baseline;Growth model;Energy
    JEL: C53 C68 O44 O47 Q56
    Date: 2013–12
  37. By: Ben Jebli, Mehdi; Ben Youssef, Slim
    Abstract: We use the autoregressive distributed lag (ARDL) bounds approach to cointegration in order to investigate the short and long-run relationship between per capita CO2 emission, GDP, renewable and non-renewable energy consumption and trade openness for Tunisia during the period 1980-2009. The Fisher-statistic for cointegration is established when CO2 emission is defined as a dependent variable. The stability of coefficients in the long and short-run is examined. Short-run Granger causality suggests that there is a one way causality relationship from economic growth and trade openness (exports and imports) to emissions, whereas there is no causality running from renewable and non-renewable energy consumption to emissions. The results from the long-run relationship suggest that non-renewable energy consumption contributes positively in explaining CO2 emission (for both models), whereas renewable energy affects CO2 emission negatively (for the model with exports). The contribution of trade openness is positive and statistically significant in the long-run. The Environmental Kuznets Curve (EKC) that assumes an inverted U-shaped relationship between per capita CO2 emissions and output is not supported in the long-run. This means that Tunisia has not yet reached the required level of per capita GDP to get an inverted U-shaped EKC.
    Keywords: Environmental Kuznets Curve; Renewable and non-renewable energy; Trade openness; Autoregressive distributed lag; Tunisia.
    JEL: C22 F14 Q42 Q43 Q54
    Date: 2013–12–10
  38. By: Liddle, Brantley
    Abstract: Two important, increasing trends for those concerned about climate change to consider are urbanization/the importance of cities and energy used in transport—particularly energy used to achieve personal mobility. While national urbanization levels are not a good indicator of urban transport demand, there is an established negative relationship between urban density and such demand. This paper uses a consistent, well-known population-based framework (the STIRPAT model) and three separate, but highly related, datasets of cities from developed and developing countries (with observations from 1990, 1995, and 2001) to examine the relationship among private transport energy consumption, population, income, urban density, and several variables (e.g., network size and prices) that describe the nature of the public and private transport systems of those cities. The paper confirms the now well-established result that urban density is negatively correlated with urban private transport energy consumption. In terms of policies, improving private vehicle fuel efficiency, in particular, and increasing fuel price as well as other ownership/operating costs for private transport could have a substantial impact on lowering transport energy consumption. On the other hand, there is no evidence that further lowering the cost to riders of public transport would lower private transport energy consumption. For cities in developing countries, demographic variables (population size and urban density) are particularly important in determining private transport energy consumption. Also, private transport energy consumption is considerably less price sensitive in those developing country cities compared to cities in the most developed countries.
    Keywords: urban density; STIRPAT; transport energy demand; city-based data
    JEL: O18 Q50 Q54 R14 R40
    Date: 2013
  39. By: Zhu Liu; Sai Liang; Yong Geng; Bing Xue; Fengming Xi; Ying Pan; Tianzhu Zhang; Tsuyoshi Fujita
  40. By: Duro Moreno, Juan Antonio; Teixidó Figueras, Jordi
    Abstract: Up until now, analyses of the international distribution of pollutant emissions have not paid sufficient attention to the implications that, in terms of social welfare, the combined evolution of the global world average entails. In this context, this paper proposes the use of environmental welfare indices, taken and adapted from the literature on social welfare and inequality, in order to make a comprehensive examination of the international equity factor and the mean factor in this field. The proposed methodology is implemented empirically in order to explore the evolution in distributive-based environmental welfare on a global level for the three main pollutants with greenhouse gas effects: CO2, CH4 and NO, both globally and for selected years during the period of 1990- 2005. The main results found are as follows: firstly, typically, the environmental welfare associated with the overall greenhouse gases decreased significantly over the period, due primarily to the role of CO2; secondly, in contrast, the global welfare associated with CH4 and NO improved; and thirdly, typically, the evolutions can be attributed to a greater extent to the mean component than to the distributive component, although there are exceptions. These results would seem to be relevant in policy terms. JEL codes: D39; Q43; Q56. Keywords: environmental welfare: greenhouse gases; environmental equity.
    Keywords: Gasos d'efecte hivernacle -- Aspectes econòmics, Energia -- Aspectes econòmics, Distribució de rendes, 33 - Economia,
    Date: 2013
  41. By: Liddle, Brantley
    Abstract: This paper analyzes urban population’s and affluence’s (GDP per capita’s) influence on environmental impact in developed and developing countries by taking as its starting point the STIRPAT framework. In addition to considering environmental impacts particularly influenced by population and affluence (carbon emissions from transport and residential electricity consumption), the paper determines whether and, if so, how those environmental impact relationships vary across development levels by analyzing panels consisting of poor, middle, and rich countries. The development-based panels approach is an improvement on the GDP per capita polynomial model used in the Environmental Kuznets Curve and other literatures for several reasons: (i) it allows one to determine whether the elasticity of all variables considered varies according to development; (ii) it is arguably a more accurate description of the development process; (iii) it avoids potentially spurious regressions involving nonlinear transformations of nonstationary variables (GDP per capita squared); and (iv) unlike the polynomial model, it allows for the possibility that elasticities are significantly different across development levels but still positive—precisely the relationship expected for the environmental impacts considered here. Whether or not the elasticity for affluence was greater than that for population was a function of both the choice of dependent variable and the makeup of the panel (all countries, poor, middle, or rich). Furthermore, the estimated elasticities varied, in a nonlinear fashion, according to the development process: U-shaped, inverted U-shaped, and monotonic patterns were revealed, again, depending on the dependent variable.
    Keywords: STIRPAT; population and environment; FMOLS panel cointegration; environment and development; IPAT; GHG emissions; Environmental/Carbon Kuznets Curve
    JEL: Q56
    Date: 2013
  42. By: Zhu Liu; Yong Geng; Dabo Guan; Soeren Linder
  43. By: Rick Van der Ploeg
    Abstract: A classroom model of global warming, fossil fuel depletion and the optimal carbon tax is formulated and calibrated. It features iso-elastic fossil fuel demand, stock-dependent fossil fuel extraction costs, an exogenous interest rate and no decay of the atmospheric stock of carbon. The optimal carbon tax reduces emissions from burning fossil fuel, both in the short and medium run. Furthermore, it brings forward the date that renewables take over from fossil fuel and encourages the market to keep more fossil fuel locked up. A renewables subsidy induces faster fossil fuel extraction and thus accelerates global warming during the fossil fuel phase, but brings forward the carbon-free era, locks up more fossil fuel reserves and thus ultimately curbs cumulative carbon emissions and global warming. For relatively large subsidies social welfare is more likely to fall as the economic costs rises more than proportionally with the size of the subsidy. Our calibration suggests that such subsidies are not a good second-best climate policy.
    Keywords: global warming, social cost of carbon, optimal cabon tax, renewables
    JEL: D81 H20 Q31 Q38
    Date: 2013–07–25
  44. By: Limin DU; Aoife Hanley; Chu WEI
    Abstract: This paper investigates the technical inefficiency, shadow price and substitution elasticity of CO2 emissions of China based on a provincial panel for 2001-2010. Using linear programming to calculate a quadratic parameterized directional output distance function, we show that China’s technical inefficiency increases over the period implying further scope for CO2 emissions reduction in the medium and longer term at best by 4.5% and 4.9% respectively. Our results (notwithstanding regional differences) highlight increases in the shadow price of CO2 abatement (1000 Yuan/ton in 2001 to 2100 Yuan/ton in 2010). Additionally, increasingly steep substitution elasticity highlights the difficult reality of reducing China’s CO2 emissions
    Keywords: CO2 emissions; Shadow Price; Parametric Estimation; China
    JEL: Q52 Q54 Q58
    Date: 2013–11
  45. 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); Stéphane Hallegatte (SDN - Sustainable Development Network - The World Bank)
    Abstract: Decision makers facing abatement targets need to decide which abatement measures to implement, and in which order. Measure-explicit marginal abatement cost curves depict the cost and abating potential of available mitigation options. Using a simple intertemporal optimization model, we demonstrate why this information is not sufficient to design emission reduction strategies. Because the measures required to achieve ambitious emission reductions cannot be implemented overnight, the optimal strategy to reach a short-term target depends on longer-term targets. For instance, the best strategy to achieve European's -20% by 2020 target may be to implement some expensive, high-potential, and long-to-implement options required to meet the -75% by 2050 target. Using just the cheapest abatement options to reach the 2020 target can create a carbon-intensive lock-in and make the 2050 target too expensive to reach. Designing mitigation policies requires information on the speed at which various measures to curb greenhouse gas emissions can be implemented, in addition to the information on the costs and potential of such measures provided by marginal abatement cost curves.
    Keywords: climate change mitigation; dynamic efficiency; sectoral policies
    Date: 2013–12–10
  46. 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
  47. By: Georg Müller-Fürstenberger; Gunter Stephan
    Abstract: Is it possible to combat global climate change through North-to-South technology transfer even without a global climate treaty? Or do carbon leakage and the rebound effect imply that it is possible to take advantage of technological improvements under the umbrella of a global arrangement only? For answering these questions a world with full international cooperation is compared with a world, where countries act non-cooperatively. More precisely, in case of non-cooperation two cases are discussed. The first one is called Kyoto-plus and the second one labeled Kyoto-reversed. Kyoto-plus means that the North decides: (1) to unilaterally reduce its domestic greenhouse gas emissions and (2), to transfer technological knowledge to the South. If Kyoto-reversed is considered, the North decides on transferring technology while the South commits itself to reduce emissions. Rebound and leakage effects hinder a sustainable and welfare improving solution of the climate problem.
    Date: 2012
  48. By: Corinne Chaton (EDF R&D - EDF, CABREE - Centre for Applied Business Research in Energy and the Environment); Anna Créti (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X); Benoit Peluchon (EDF R&D - EDF)
    Abstract: In this article we focus on carbon price dynamics, more speci…cally the impact of a policy envisaged by the European Commission to increase the CO2 price. This policy consists of removing a share of the allowances allocated for a period in order to reallocate some or all of them during the following period. To analyze the impact of this backloading we determine the CO2 market equilibrium with and without the policy, considering not only the market for permits but also the output market of regulated sectors. We propose a two-period model without uncertainty, where the market for permits is perfectly competitive, and the output market can be either com- petitive or oligopolistic. First, we de…ne the condition for which banking from one period to another is optimal. This condition, that is the absence of arbitrage opportunities (AOA), depends on not only from the per period initial allocation but also on production market fundamentals. When this condition is satisfi…ed, the market for emission is shown intertemporally efficient. Second, we show that the back-loadingpolicy may be such that theAOA is no longer veri…ed and thus create inefficiencies or being ineffective.
    Keywords: CO2 prices, banking, backloading, ETS reform.
    Date: 2013–12–09
  49. By: Evangelina Dardati (Facultad de Economía y Negocios, Universidad Alberto Hurtado)
    Abstract: Most cap-and-trade systems allocate permits for free. However, they differ dependent on whether closing plants and new entrants get free permits. I use a dynamic model with heterogeneous firms and equilibrium conditions in the output and emission market to quantify the effect on exit/entry, investment and welfare of different allocation rules. I calibrate the model with data from the power plants participating in the US SO2 program and quantify the effects of two allocation schemes: The US SO2 case, in which closing plants keep their permits and new entrants do not get any of them; The EU-ETS case, in which plants lose permits upon exit and new entrants get allowances. If the US switched to the EU-ETS allocation scheme, the price of output would be 1:5% lower, the price of permits 7.6% higher, and there would be a distribution of dirtier and less productive plants. Consumers are better off if the US switched to the EU-ETS system (lower price), while producers are better off with the US SO2 system (higher profits).
    Date: 2013–03
  50. By: Yoichi Otsubo; Bruce Mizrach (LSF)
    Abstract: This paper analyzes the market microstructure of the European Climate Exchange, the largest EU ETS trading venue. The ECX captures 2/3 of the screen traded market in EUA and more than 90% in CER. 2009 Trading volumes total ?22 billion and are growing, with EUA transactions doubling, and CER volume up 61%. Spreads range from ?0:02 to ?0:06 for EUA and from ?0:07 to ?0:18 for CER. Market impact estimates imply that an average trade will move the EUA market by 1.08 euro centimes and the CER market 4.29. Both Granger-Gonzalo and Hasbrouck information shares imply that approximately 90% of price discovery is taking place in the ECX futures market. We find imbalances in the order book help predict returns for up to three days. A simple trading strategy that enters the market long or short when the order imbalance is strong is profitable even after accounting for spreads and market impact.
    Keywords: "Keywords: carbon; market microstructure; bid-ask spread; information share; order imbalance"
    JEL: G13 G32 E44
    Date: 2012
  51. By: Marit E. Klemetsen; Brita Bye; Arvid Raknerud (Statistics Norway)
    Abstract: This paper provides new evidence on the role of non-market based (“command-and-control”) regulations in relation to innovations in environmental technologies. While pricing is generally considered the first-best policy instrument, non-market regulations, such as technology standards and non-tradable emission quotas, are common when a regulator faces multiple emission types and targets, heterogeneous recipients, or uncertainty with regard to marginal damages. Knowing whether these regulations spur or hinder innovation is of great importance to environmental policy. Using a unique Norwegian panel data set that includes information about the type and number of patent applications, technology standards, non-tradable emission quotas, and a large number of control variables for almost all large and medium-sized Norwegian incorporated firms, we are able to conduct a comprehensive study of the effect of non-market based regulations on environmental patenting. Unlike previous studies that are typically conducted at the industry level, we are able to take firm heterogeneiry into account, and thereby reduce the common problem of omitted variable bias in our analysis. We empirically identify strong and significant effects on innovations from implicit regulatory costs associated with the threat that a firm will be sanctioned for violating an emission permit.
    Keywords: Command-and-control regulations; Technology standards; Non-tradable emission quotas; Patents; Innovation; Environmental technologies; Random effects ordered probit model.
    JEL: C23 O34 Q52 Q53 Q55 Q58
    Date: 2013–09
  52. By: Duvvuru, Narasimha Reddy; Motkuri, Venkatanarayana
    Abstract: Strategies and solutions to meet the challenges of GHGs call for new methods and technologies. Potential options for the rice industry sector to contribute to the mitigation of, and adaptation to, climate change by increasing rice production in a physically sustainable manner are attracting growing research interest. One such area of interest is the new method of rice cultivation: the System of Rice Intensification (SRI). SRI is an innovative approach to rice cultivation but not a technology as such. The present papers examines advantages of SRI and its diffusion in India in general Andhra Pradesh in particular.
    Keywords: SRI, Rice Cultivation, Rice, Paddy, New Systems of Cultivation, Andhra Pradesh, Climate Change, Green House GAs, GHG Emission
    JEL: Q01 Q10 Q15 Q16 Q18 Q25 Q54 Q58
    Date: 2013–09
  53. By: Kasai, Katsuya
    Abstract: The CDM plays an important role in the international GHG reduction activities. However, the distribution of CDM projects has been quite biased. Hence, considering the current distributional imbalance, this study was conducted aiming to identify the determinants of CDM project hosting in order to suggest potential measures for LDCs based on empirical evidence. By running random effects panel Tobit models, this paper sheds light on the fact that the four significant factors, GHG reduction potentials, governance levels, science and technology levels, and economic ties between host and Annex I countries in the private sector, have positive impacts on hosting CDM projects. This paper, therefore, denotes that the effective way to promote CDM activities in LDCs is to approach both sides: one is that LDCs accomplish the improvement of the significant factors by themselves; and the other is to facilitate the programmatic CDM activities by enlisting cooperation from international organisations or firms capable of investing in CDM activities in LDCs and/or providing capacity building programs. It is hoped that both Annex I and Non-Annex I countries tackle the climate change issue with stimulating the effective use of this innovative mechanism, CDM, not only in advanced developing countries but also in LDCs.
    Keywords: CDM; Kyoto Protocol; LDCs; ODA; Tobit model
    JEL: Q48 Q54 Q56
    Date: 2012–08
  54. By: Svenja Hector()
    Abstract: The paper clarifies the link between changes in risk aversion and the effect on the consumption discount rate. In a general framework that can cope with various forms of uncertainty, it is shown that the response of the consumption discount rate to a change in risk aversion depends on some fundamental properties of the considered uncertainties. The application of this general result to specific forms of uncertainty extends existing results to more general forms of risk and yields a new result on preference uncertainty.
    Keywords: discount rate, risk aversion, Kreps-Porteus-Selden, Risk-Sensitive preferences, uncertain preferences, climate change
  55. By: Thomas Eichner; Rüdiger Pethig
    Abstract: In the basic model of international environmental agreements (IEAs) (Barrett 1994, Rubio and Ulph 2006) extended by international trade, self- enforcing - or stable - IEAs may comprise up to 60% of all countries (Eichner and Pethig 2013). But these IEAs reduce total emissions only slightly compared to non-cooperation. Here we analyze the capacity of sign-unconstrained tariffs to enhance the size and performance of self-enforcing IEAs. We show that the size of stable IEAs shrinks when climate coalitions are Stackelberg leaders and set tariffs in addition to their cap-and-trade schemes. Surprisingly, these smaller IEAs reduce total emissions more effectively than the larger stable IEAs without tariffs. In the model with tariffs the signatory countries import fossil fuel and their tariff takes the form of a subsidy of fuel consumption and a tax on the production of the consumption good.
    Keywords: tariff, trade, self-enforcing environmental agreements, Stackelberg equilibrium
    JEL: C72 F18 Q50 Q58
    Date: 2013
  56. By: Julie Rozenberg (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); Hallegatte Stéphane (SDN - Sustainable Development Network - The World Bank)
    Abstract: Policymakers have good reasons to prefer capital-based policies - such as CAFE standards or feebates programs - over a carbon price. A carbon price minimizes the discounted cost of a climate policy, but may result in existing capital being under-utilized or scrapped before its scheduled lifetime, hurt the workers that depend on it, and inflict an immediate income drop. Capital-based policies avoid these obstacles, but can reach a given climate target only if implemented early enough. Delaying mitigation policies may thus create a political-economy lock-in (easier-to-implement policies become unavailable) in addition to the economic lock-in (the target becomes more expensive).
    Keywords: intergenerational equity, sectoral policies, mothballing
    Date: 2013
  57. By: Thomas Eichner; Rüdiger Pethig
    Abstract: In a multi-country model with mobile capital and global pollution this paper analyzes the stability of self-enforcing environmental agreements (IEAs) when the coalition formed by the signatory countries plays Nash. In accordance with previous environmental literature we show that there exists a unique self-enforcing IEA consisting of two or three signatory countries if emissions tax rates are strategic substitutes. However, emissions tax rates are strategic complements if the pollution is not too detrimental. In that case we find very small self-enforcing IEAs, as before, but now the socially optimal agreement among all countries may be selfenforcing as well. Special emphasis is placed on the investigation and interpretation of the conditions which render stable the grand coalition.
    Keywords: capital mobility, self-enforcing environmental agreements, emissions tax, Nash behavior
    JEL: H23 H77 Q58
    Date: 2013
  58. By: Christoph Böhringer (Carl von Ossietzky Universität Oldenburg, Institut für Volkswirtschaftslehre & ZenTra)
    Abstract: Climate change ranks high on the policy agenda of the European Union (EU) which considers itself as a leading force in the battle against anthropogenic climate change. The EU is committed to the objective of limiting the rise in global average temperature to no more than 2°C above pre-industrial levels to prevent dangerous anthropogenic interference with the climate system. This article provides a critical appraisal of two decades of EU climate policy. Based on the global nature of climate change, we pre-sent three criteria for sound unilateral action and evaluate current EU climate policy against these criteria. We find that the actual implementation of EU climate policies is likely to make emission abatement much more costly than necessary.
    Keywords: EU climate policy, emission regulation, cost-effectiveness
    JEL: H21 H23 Q58
    Date: 2013–11
  59. By: Rick 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: 2013–07–24
  60. By: Alem, Yonas (Department of Economics, School of Business, Economics and Law, Göteborg University); Colmer, Jonathan (the Grantham Research Institute and Dept of Geography and Environment, London School of Economics, UK)
    Abstract: Uncertainty about the future is an important determinant of well-being,especially in developing countries where financial markets and other market failures result in ineffective insurance mechanisms. However, separating the effects of future uncertainty from realised events, and then measuring its impact on utility presents a number of empirical challenges. This paper addresses these issues and shows that increased climate variability (a proxy for future income uncertainty) reduces farmers’ subjective well-being, consistent with the theory of optimal expectations (Brunnermeier & Parker, 2005), using panel data from rural Ethiopia and a new data set containing daily atmospheric parameters. The magnitude of our result indicates that a one standard deviation (7%) increase in climate variability has an equivalent effect on life satisfaction to a two standard deviation (1-2%) decrease in consumption. This effect is one of the largest determinants of life satisfaction in rural Ethiopia.
    Keywords: climate variability; uncertainty; subjective well-being; fixed effects
    JEL: C25 D60 I31
    Date: 2013–12–10

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