nep-ene New Economics Papers
on Energy Economics
Issue of 2014‒03‒30
thirty-one papers chosen by
Roger Fouquet
London School of Economics

  1. Instrument Choice and Cost Uncertainty in the Electricity Market By Elisabette Cornago; Renaud Foucart
  2. The role of renewable energy in climate stabilization: results from the EMF27 scenarios By Gunnar Luderer; Volker Krey; Katherine Calvin; James Merrick; Silvana Mima; Robert Pietzcker; Jasper Van Vliet; Kenichi Wada
  3. Energy prices and CO2 emission allowance prices: A quantile regression approach By Shawkat Hammoudeh; Duc Khuong Nguyen; Ricardo M. Sousa
  4. Optimal Renewable-Energy Subsidies By Mark Andor; Achim Voss
  5. A Note on Oil and Gas Production from Shale and Long-Run U.S. Economic Growth By Arora, Vipin
  6. Energy efficiency determinants: an empirical analysis of Spanish innovative firms By María Teresa Costa; José García-Quevedo; Agustí Segarra
  7. Substitutability and the Cost of Climate Mitigation Policy By Yingying Lu; David I. Stern
  8. Dynamic spillovers among major energy and cereal commodity prices By Walid Mensi; Shawkat Hammoudeh; Duc Khuong Nguyen; Seong-Min Yoon
  9. Nuclear energy, renewable energy, and economic growth in developed and developing countries : A modelling analysis from simultaneous-equation models By Anis Omri; Anissa Chaibi
  10. Explaining the Slow Pace of Energy Technological Innovation: Why Market Conditions Matter? By Wei Jin; ZhongXiang Zhang
  11. Switching from Fossil Fuel to Renewables in Residential Heating Systems: An Empirical Study of Homeowners’ Decisions in Germany By Michelsen , Carl Christian; Madlener, Reinhard
  12. Empirical linkage between oil price and stock market returns and volatility: Evidence from international developed markets By Dhaoui, Abderrazak; Khraief, Naceur
  13. A note on using the Hodrick-Prescott filter in electricity markets By Rafal Weron; Michal Zator
  14. Carbon price analysis using empirical mode decomposition By Bangzhu Zhu; Ping Wang; Julien Chevallier; Yiming Wei
  15. The 2014 Power Trading Agent Competition By Ketter, W.; Collins, J.; Reddy, P.; Weerdt, M.M.
  16. Forecasting the Oil-gasoline Price Relationship: Should We Care about the Rockets and the Feathers? By Andrea Bastianin; Marzio Galeotti; Matteo Manera
  17. Designing an emissions trading scheme for China: An up-to-date climate policy assessment By Hübler, Michael; Löschel, Andreas; Voigt, Sebastian
  18. Electricity Sector Data for Policy-Relevant Modeling: Data Documentation and Applications to the German and European Electricity Markets By Jonas Egerer; Clemens Gerbaulet; Richard Ihlenburg; Friedrich Kunz; Benjamin Reinhard; Christian von Hirschhausen; Alexander Weber; Jens Weibezahn
  19. Network Regulation and Regulatory Institutional Reform: Revisiting the Case of Australia By Rabindra Nepal; Flavio Menezes; Tooraj Jamasb
  20. Exploring the transition potential of renewable energy communities By Gabriella Doci; Eleftheria Vasileiadou; Arthur Petersen
  21. Opening the upstream oil industry to private companies By Sylvain Rossiaud
  22. Sailing into a dilemma: An economic and legal analysis of an EU trading scheme for maritime emissions By Hermeling, Claudia; Klement, Jan Henrik; Koesler, Simon; Köhler, Jonathan; Klement, Dorothee
  23. The role of short-termism and uncertainty in organizational inaction on climate change: multilevel framework By Natalie Slawinski; Jonatan Pinkse; Timo Busch; Subhabrata Bobby Banerjeed
  24. Threshold Effects in Self-Enforcing International Environmental Agreements By Renaud Foucart; Grégoire Garsous
  25. Production and consumption-based approaches for the Environmental Kuznets Curve in Latin America using Ecological Footprint By Marie-Sophie Hervieux; Olivier Darné
  26. Modeling the dynamics of European carbon futures price: a Zipf analysis By Bangzhu Zhu; Shujiao Ma; Julien Chevallier; Yiming Wei
  27. The influence of biofuels, economic and financial factors on daily returns of commodity futures prices By Algieri, Bernardina
  28. Oil windfalls and tax inefficiency: evidence from Brazil By Fernando Antonio Slaibe Postali
  29. A recursive method for solving a climate-economy model: value function iterations with logarithmic approximations By Hwang, In Chang
  30. Rural Electrification in Rwanda : A Measure of Willingness to Contribute Time and Money By Thierry Kalisa
  31. Erhöhung der EEG-Kosten als Investitionshemmnis für stromintensive Unternehmen By Bardt, Hubertus

  1. By: Elisabette Cornago; Renaud Foucart
    Keywords: prices vs. quantities; renewable energy sources; electricity
    JEL: D62 H23 Q42 Q48
    Date: 2014–02
  2. By: Gunnar Luderer (PIK - Potsdam Institute for Climate Impact Research - Potsdam Institute for Climate Impact Research); Volker Krey (IIASA - International Institute for Applied Systems Analysis - International Institute for Applied Systems Analysis); Katherine Calvin (Joint Global Change Research Institute - Joint Global Change Research Institute); James Merrick (EPRI - Electric Power Research Institute, - Electric Power Research Institute); Silvana Mima (PACTE - Politiques publiques, ACtion politique, TErritoires - Institut d'Études Politiques [IEP] - Grenoble - CNRS : UMR5194 - Université Pierre-Mendès-France - Grenoble II - Université Joseph Fourier - Grenoble I); Robert Pietzcker (PIK - Potsdam Institute for Climate Impact Research - Potsdam Institute for Climate Impact Research); Jasper Van Vliet (PBL Netherlands Environmental Assessment Agency - PBL Netherlands Environmental Assessment Agency); Kenichi Wada (Research Institute of Innovative Technology for the Earth - Research Institute of Innovative Technology for the Earth)
    Abstract: This paper uses the EMF27 scenarios to explore the role of renewable energy (RE) in climate change mitigation. Currently RE supplies almost 20 % of global electricity demand. Almost all EMF27 mitigation scenarios show a strong increase in renewable power production, with a substantial ramp-up of wind and solar power deployment. In many scenarios, renewables are the most important long-term mitigation option for power supply. Wind energy is competitive even without climate policy, whereas the prospects of solar photovoltaics (PV) are highly contingent on the ambitiousness of climate policy. Bioenergy is an important and versatile energy carrier; however--with the exception of low temperature heat--there is less scope for renewables other than biomass for non-electric energy supply. Despite the important role of wind and solar power in climate change mitigation scenarios with full technology availability, limiting their deployment has a relatively small effect on mitigation costs, if nuclear and carbon capture and storage (CCS)--which can serve as substitutes in low-carbon power supply--are available. Limited bioenergy availability in combination with limited wind and solar power by contrast, results in a more substantial increase in mitigation costs. While a number of robust insights emerge, the results on renewable energy deployment levels vary considerably across the models. An in-depth analysis of a subset of EMF27 reveals substantial differences in modeling approaches and parameter assumptions. To a certain degree, differences in model results can be attributed to different assumptions about technology costs, resource potentials and systems integration.
    Keywords: renewable energy ; climate change ; scenario
    Date: 2013–10
  3. By: Shawkat Hammoudeh; Duc Khuong Nguyen; Ricardo M. Sousa
    Abstract: We use a quantile regression framework to investigate the impact of changes in crude oil pric- es, natural gas prices, coal prices, and electricity prices on the distribution of the CO2 emis- sion allowance prices in the United States. We find that: (i) an increase in the crude oil price generates a substantial drop in the carbon prices when the latter is very high; (ii) changes in the natural gas prices have a negative effect on the carbon prices when they are very low but have a positive effect when they are quite high; (iii) the impact of the changes in the electrici- ty prices on the carbon prices can be positive in the right tail of the distribution; and (iv) the coal prices exert a negative effect on the carbon prices.
    Keywords: CO2 allowance price, energy prices, quantile regression
    JEL: Q47
    Date: 2014–02–25
  4. By: Mark Andor; Achim Voss
    Abstract: We derive optimal subsidization of renewable energies in electricity markets. The analysis takes into account that capacity investment must be chosen under uncertainty about demand conditions and capacity availability, and that capacity as well as electricity generation may be sources of externalities. The main result is that generation subsidies should correspond to externalities of electricity generation (e.g., greenhouse gas reductions), and investment subsidies should correspond to externalities of capacity (e.g., learning spillovers). If only capacity externalities exist, then electricity generation should not be subsidized at all. Our results suggest that some of the most popular promotion instruments are likely to cause welfare losses.
    Keywords: Peak-load pricing; capacity investment; demand and supply uncertainty; renewable energy sources; energy policy; optimal subsidies; feed-in tariffs
    JEL: Q41 Q48 H23
    Date: 2014–02
  5. By: Arora, Vipin
    Abstract: The short-term economic benefits of oil and gas production from shale for the U.S. economy have been widely discussed, but the long-term effects remain unclear. These long-run impacts likely depend upon the degree to which such oil and gas production can impact growth in capital per worker or technological progress throughout the economy. Oil or gas production from shale can lead to economic growth through economy-wide increases in capital per worker directly through investment in the oil and gas extraction sector and along the supply chain. Alternatively, the availability of low cost natural gas in large quantities may lead to replacement or additions to capital stock outside of oil and gas extraction and related industries. Oil and gas production can lead to economy-wide technology gains directly through the application of technologies used in extraction and related activities in other sectors. There is much greater upside and uncertainty, however, surrounding if such production can lead to technological growth in other sectors indirectly. Are there currently important and productive technologies not being used or applied that become plausible because of lower-cost natural gas? Will there be transformative technologies developed for use with lower-cost natural gas that currently do not exist? And might each of these individually lead to other technologies that currently do not exist?
    Keywords: Productivity; shale; economic growth; oil and gas
    JEL: E00 O40 Q33 Q43
    Date: 2014–03–24
  6. By: María Teresa Costa (Universitat de Barcelona & IEB); José García-Quevedo (Universitat de Barcelona & IEB); Agustí Segarra (GRIT, CREIP, Rovira i Virgili University)
    Abstract: This paper examines the extent to which innovative Spanish firms pursue improvements in energy efficiency (EE) within their innovation objectives. The increase in energy consumption and its impact on greenhouse gas emissions justifies the greater attention being paid to energy efficiency and especially to industrial EE. The ability of manufacturing companies to innovate and improve their EE has a substantial influence on reaching the objectives regarding climate change mitigation. Despite the effort to design more efficient energy policies, the EE determinants in manufacturing firms have been little studied in the empirical literature. From an exhaustive sample of Spanish manufacturing firms and using a probit model, we examine the energy efficiency determinants to those firms that have innovated. To carry out the econometric analysis, we use a panel data coming from CIS (Community Innovation Survey) for the period 2008-2011 that includes 4,458 manufacturing firms. Among firm characteristics, the empirical results underline the importance of size in facilitating the adoption of technology that improves energy efficiency; while among the factors related to companies’ behavior, the favorable influence of organizational innovations and innovations related with the reduction of environmental impacts stand out as the main factors in carrying out innovations with the objective of increasing energy efficiency.
    Keywords: Energy efficiency, corporate targets, innovation, Community Innovation Survey
    JEL: Q40 Q55 O31
    Date: 2014
  7. By: Yingying Lu; David I. Stern
    Abstract: We explore how and by how much the values of elasticities of substitution affect estimates of the cost of emissions reduction policies in computable general equilibrium (CGE) models. We use G-Cubed, an intertemporal CGE model, to carry out a sensitivity and factor decomposition analysis. Average abatement cost rises non-linearly as elasticities are reduced. Changes in the substitution elasticities between capital, labor, energy, and materials have a greater impact on mitigation costs than do inter-fuel elasticities of substitution. The former has more effect on business as usual emissions and the latter on average abatement costs. As elasticities are reduced, business as usual emissions and GDP growth also decrease so that there is not much variation in the total costs of reaching a given target across the parameter space. Our results confirm that the cost of climate mitigation policy is at most a few percent of global GDP.
    Keywords: Elasticity of substitution, Mitigation policy, CGE models, G-Cubed, Sensitivity analysis, Decomposition analysis
    JEL: Q54 Q58 C68
    Date: 2014–03
  8. By: Walid Mensi; Shawkat Hammoudeh; Duc Khuong Nguyen; Seong-Min Yoon
    Abstract: Over the past decade, the sharp increases in the prices of oil and agricultural commodities have raised serious concerns about the heightened volatility of these markets and the possible negative interactions between them. This article deals with the dynamic return and volatility spillovers across internationally traded energy and cereal commodity markets. It also examines the impacts of three types of OPEC news announcements on the volatility spillovers and persistence in these markets. For this purpose, we make use of the VAR-BEKK-GARCH and VAR-DCC-GARCH models for the daily prices of eight major commodities including WTI oil, Europe Brent oil, gasoline, heating oil #2, barley, corn, sorghum, and wheat. Our results provide evidence of significant linkages between the energy and cereal markets. Moreover, the OPEC news announcements are found to exert influence on the oil markets as well as on the oil-cereal relationships. Finally, we show that the persistence of volatility decreases (increases) for the crude oil and heating (gasoline) returns after accounting for the OPEC announcements in these multivariate GARCH models. However, the results are more mixed for the cereal markets. Overall, our results can be used to improve the risk-adjusted performance by having more diversified portfolios and also serve to hedge the oil risk more effectively.
    Keywords: Cereal, Energy, OPEC meetings, Volatility spillovers, Multivariate GARCH
    JEL: G14 G15
    Date: 2014–02–25
  9. By: Anis Omri; Anissa Chaibi
    Abstract: This paper investigates the causal relationship among two types of energy consumption (nuclear energy and renewable energy) and economic growth using dynamic simultaneous-equation panel data models for 17 developed and developing countries. Our results indicate that there is a unidirectional causality running from nuclear consumption to economic growth in Belgium and Spain, while a unidirectional causality running from economic growth to nuclear consumption is supported in Bulgaria, Canada, Netherlands, and Sweden. A bidirectional relationship appears in Argentina, Brazil, France, Pakistan, and the USA, while no causality exists in Finland, Hungary, India Japan, Switzerland, and the U.K. Second, the results for the second nexus among renewable energy and economic growth show that there is a unidirectional causality running from renewable consumption to economic growth in Hungary, India, Japan, Netherlands, and Sweden, while there exist a unidirectional running from economic growth to renewable consumption in Argentina, Spain, and Switzerland. A bidirectional relationship is supported in Belgium, Bulgaria, Canada, France, Pakistan, and the USA, while no causality exists in Brazil, Finland, and Switzerland . Third, we find the existence of a bidirectional causality between nuclear consumption and economic; and a unidirectional causality running from economic growth to renewable energy consumption for the global panel.
    Keywords: Nuclear energy, Renewable energy, Economic growth, Dynamic simultaneous-equation models.
    Date: 2014–02–25
  10. By: Wei Jin (Research School of Public Economics and Policy College of Public Policy and Administration, Zhejiang University, China); ZhongXiang Zhang (Department of Public Economics, School of Economics, Fudan University, China)
    Abstract: As a useful complement to numerous innovation policy studies from a normative perspective, this paper provides a positive framework to analyze the basic economic mechanism of energy technological innovation and explains its slow pace of technological progress. We find that the capital-intensiveness of energy technology is an inhibiting factor to catalyze market size effect and slows innovations and diffusions of energy technology in the market. We also show that the substantial homogeneity of energy products leads to both a monopolistic market structure on the supply side and a weak level of positive pecuniary externality on the demand side, both dampening the incentive of innovation. On the basis of our economic analysis, we recommend that a package of policy responses to accelerating energy innovation should include 1) downsizing “heavy” assets of energy technologies; 2) deregulating monopolistic energy-supplying markets; and 3) differentiating the homogenous energy products.
    Keywords: The Economics of Technological Innovation, Market Size Effect, Love-for-variety effect, Energy Technology, IT Technology
    JEL: Q55 Q58 Q43 Q48 O31
    Date: 2014–02
  11. By: Michelsen , Carl Christian (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This paper investigates key drivers and barriers behind homeowners’ decisions to switch from a fossil fuel (i.e. oil or gas boiler) to a renewable residential heating system (RHS). For this purpose, we draw on data from a 2010 questionnaire survey among owners of existing 1-family or 2-family homes in Germany that had received a financial grant for installing an (at least partly) renewable RHS (i.e. heat pump or wood pellet boiler). We analyze the data by means of logistic regression techniques. First, our results show that the motivation to deal with external threats (i.e. environmental protection and reduction of dependence on fossil fuels) and a higher degree of RHS-related knowledge are key drivers for switching to a renewable RHS. Second, we identify the different barriers that prevent homeowners from adopting a specific RHS. In particular, for the adoption of fossil fuel RHS, the perceived strong reliance on pricey oil or natural gas is found to be a major hurdle. For the heat pump, we find that the perceived difficulty of getting used to the system and a misunderstanding of its principal functioning are important obstacles. Finally, for the wood pellet boiler, our results imply that non-adopters perceive the low usability, the labor-intensive operation, and the systems’ high fault liability to be important barriers. We conclude that homeowners often fear major changes to their current status quo (e.g. replacement of the existing heating system infrastructure) and, thus, tend to opt for minor and thus quick adjustments to their RHS (e.g. replacing only the boiler). Likewise, a higher replacement rate of fossil fuel by renewable RHS requires the homeowners’ willingness to relinquish old habits and perceptions of how an RHS works and operates.
    Keywords: Residential heating systems; Private households; Technology replacement; Adoption barriers; Consumer choice
    JEL: C25 D12 O33 Q41
    Date: 2013–10
  12. By: Dhaoui, Abderrazak; Khraief, Naceur
    Abstract: This paper examines empirically whether oil price shocks impact stock market returns. Using monthly data for eight developed countries from January 1991 to September 2013, strong negative connections between oil price and stock market returns are found in seven of the selected countries. Oil price changes are without significant effect on the stock market of Singapore. On the volatility of returns, the changes in oil prices are significant for six markets and they have not much effect on the others. --
    Keywords: oil price shocks,stock market return,EGARCH
    JEL: G12 Q43
    Date: 2014
  13. By: Rafal Weron; Michal Zator
    Abstract: Recently, Nowotarski et al. (2013) have found that wavelet-based models for the long-term seasonal component (LTSC) are not only better in extracting the LTSC from a series of spot electricity prices but also significantly more accurate in terms of forecasting these prices up to a year ahead than the commonly used monthly dummies and sine-based models. However, a clear disadvantage of the wavelet-based approach is the increased complexity of the technique as compared to the other two classes of LTSC models, which may render it too complicated for practitioners. To facilitate this problem, we propose here a much simpler, yet equally powerful method for identifying the LTSC in electricity spot price series. It makes use of the Hodrick-Prescott (HP) filter, a widely-recognized tool in macroeconomics.
    Keywords: Hodrick-Prescott filter; Electricity spot price; Long-term seasonal component; Robust modeling;
    JEL: C14 C51 C53 Q47
    Date: 2014–03–20
  14. By: Bangzhu Zhu; Ping Wang; Julien Chevallier; Yiming Wei
    Abstract: Mastering the underlying characteristics of carbon price changes can help governments formulate correct policies to keep efficient operation of carbon markets, and investors take effective measures to evade their investment risks. Empirical mode decomposition (EMD), a self-adaption data analysis approach for nonlinear and non-stationary time series, can accurately explain the formation mechanism of carbon price by decomposing it into several intrinsic mode functions (IMFs) and one residue from different scales. In this study, we apply EMD to the European Union Emissions Trading Scheme (EU ETS) carbon price analysis. First, the carbon price is decomposed into eight IMFs and one residue. Moreover, these IMFs and residue are reconstructed into a high frequency component, a low frequency component and a trend component using hierarchical clustering method. The economic meanings of these three components are identified as short term market fluctuations, effects of significant trend breaks, and a long-term trend, respectively. Finally, some strategies are proposed for carbon price forecasting.
    Keywords: Carbon Price; Empirical Mode Decomposition; Multiscale Analysis; Forecasting; EU ETS
    Date: 2014–02–25
  15. By: Ketter, W.; Collins, J.; Reddy, P.; Weerdt, M.M.
    Abstract: This is the specification for the Power Trading Agent Competition for 2014 (Power TAC 2014). Power TAC is a competitive simulation that models a “liberalized” retail electrical energy market, where competing business entities or “brokers” offer energy services to customers through tariff contracts, and must then serve those customers by trading in a wholesale market. Brokers are challenged to maximize their profits by buying and selling energy in the wholesale and retail markets, subject to fixed costs and constraints. Costs include fees for publication and withdrawal of tariffs, and distribution fees for transporting energy to their contracted customers. Costs are also incurred whenever there is an imbalance between a broker’s total contracted energy supply and demand within a given time slot. The simulation environment models a wholesale market, a regulated distribution utility, and a population of energy customers, situated in a real location on Earth during a specific period for which weather data is available. The wholesale market is a relatively simple call market, similar to many existing wholesale electric power markets, such as Nord Pool in Scandinavia or FERC markets in North America, but unlike the FERC markets we are modeling a single region, and therefore we model locational-marginal pricing through a simple manipulation of the wholesale supply curve. Customer models include households, electric vehicles, and a variety of commercial and industrial entities, many of which have production capacity such as solar panels or wind turbines. All have “real-time” metering to support allocation of their hourly supply and demand to their subscribed brokers, and all are approximate utility maximizers with respect to tariff selection, although the factors making up their utility functions may include aversion to change and complexity that can retard uptake of marginally better tariff offers. The distribution utility models the regulated natural monopoly that owns the regional distribution network, and is responsible for maintenance of its infrastructure. Real-time balancing of supply and demand is managed by a market-based mechanism that uses economic incentives to encourage brokers to achieve balance within their portfolios of tariff subscribers and wholesale market positions, in the face of stochastic customer behaviors and weather-dependent renewable energy sources. The broker with the highest bank balance at the end of the simulation wins.
    Keywords: autonomous agents, electronic commerce, energy, preferences, portfolio management, power, policy guidance, sustainability, trading agent competition
    Date: 2014–03–19
  16. By: Andrea Bastianin (University of Milan and FEEM); Marzio Galeotti (University of Milan and IEFE-Bocconi); Matteo Manera (University of Milan-Bicocca and FEEM)
    Abstract: According to the Rockets and Feathers hypothesis (RFH), the transmission mechanism of positive and negative changes in the price of crude oil to the price of gasoline is asymmetric. Although there have been many contributions documenting that downstream prices are more reactive to increases than to decreases in upstream prices, little is known about the forecasting performance of econometric models incorporating asymmetric price transmission from crude oil to gasoline. In this paper we fill this gap by comparing point, sign and probability forecasts from a variety of Asymmetric-ECM (A-ECM) and Threshold Autoregressive ECM (TAR-ECM) specifications against a standard ECM. Forecasts from A-ECM and TAR-ECM subsume the RFH, while the ECM implies symmetric price transmission from crude oil to gasoline. We quantify the forecast accuracy gains due to incorporating the RFH in predictive models for the prices of gasoline and diesel. We show that the RFH is useless for point forecasting, while it can be exploited to produce more accurate sign and probability forecasts. Finally, we highlight that the forecasting performance of the estimated models is time-varying.
    Keywords: Asymmetries, Forecast Evaluation, Gasoline, Crude Oil, Rockets and Feathers
    JEL: C22 C32 C53 Q40 Q47
    Date: 2014–03
  17. By: Hübler, Michael; Löschel, Andreas; Voigt, Sebastian
    Abstract: We assess recent Chinese climate policy proposals in a multi-region, multi-sector computable general equilibrium model with a Chinese carbon emissions trading scheme (ETS). When the emissions intensity per GDP in 2020 is required to be 45% lower than in 2005, the model simulations indicate that the climate policy- induced welfare loss in 2020, measured as the level of GDP and welfare in 2020 under climate policy relative to their level under business-as-usual (BAU) in the same year, is about 1%. The Chinese welfare loss in 2020 slightly increases in the Chinese rate of economic growth in 2020. When keeping the emissions target fixed at the 2020 level after 2020 in absolute terms, the welfare loss will reach about 2% in 2030. If China's annual economic growth rate is 0.5 percentage points higher (lower), the climate policy-induced welfare loss in 2030 will rise (decline) by about 0.5 percentage points. Full auctioning of carbon allowances results in very similar macroeconomic effects as free allocation, but full auctioning leads to higher reductions in output than free allocation for ETS sectors. Linking the Chinese to the European ETS and restricting the transfer volume to one third of the EU's reduction effort creates at best a small benefit for China, yet with smaller sectoral output reductions than auctioning. These results highlight the importance of designing the Chinese ETS wisely. --
    Keywords: China,climate policy,ETS,linking,CGE
    JEL: C68 Q54 Q56
    Date: 2014
  18. By: Jonas Egerer; Clemens Gerbaulet; Richard Ihlenburg; Friedrich Kunz; Benjamin Reinhard; Christian von Hirschhausen; Alexander Weber; Jens Weibezahn
    Date: 2014
  19. By: Rabindra Nepal (School of Economics, The University of Queensland); Flavio Menezes (School of Economics, The University of Queensland); Tooraj Jamasb (Durham University Business School, Durham)
    Abstract: It is well-understood that the success of liberalizing the electricity supply industry depends crucially on the quality and design of the regulatory and institutional framework. This paper analyses the regulatory arrangements that underpin the work of the Australian Energy Regulator (AER). These arrangements are contrasted with the regulatory structure of electricity provision in Norway. A key difference between the reform processes in the two countries relates to the lack of privatization in Norway and the coexistence of private and publicly owned generators and distributors in Australia. This comparative analysis allows us to make several recommendations to improve regulatory arrangements in Australia. These include greater independence for the AER, better coordination among regulatory institutions, greater use of benchmarking analysis, greater customer involvement, and improving market transparency and privatization of government-owned corporations. However, the success of privatization will hinge upon the effectiveness of the regulatory environment.
    Date: 2014–03–24
  20. By: Gabriella Doci; Eleftheria Vasileiadou; Arthur Petersen
    Abstract: Although in the last decades a transition toward a sustainable energy system with renewables has been advocated by many, it is still uncertain where the support and required investments for renewables can come from. In this article we introduce and analyze a special type of investor group: renewable energy communities, which are grassroots initiatives that invest in 'clean energy' in order to meet consumption needs and environmental goals and thereby – even unwittingly – conduce to the spread of renewables. The aim of the present study is to explore the potential of renewable energy communities, as social niches, to contribute to transitions in the energy system. To do so, we propose three indicators for measuring the transition potential of social niches, based on proxies for technological innovations derived from the literature. In addition, we reinterpret the notion of niches and the way transition occurs by arguing that niches are complex systems in which both technological and social innovations develop simultaneously and that during transition entire niches link up with the regime. Furthermore, we make a distinction between internally and externally oriented niches based on their orientation and application focus. Our results show that renewable energy communities in the Netherlands are internally oriented social niches that have the potential for upscaling and contribute to sustainability transitions. We use a comparative case study analysis complemented by a systematic literature and documentary review to show that these communities are already changing the Dutch energy system, by connecting to regime actors. Their further advancement depends on strengthening their links to established actors, but also on providing a favorable regulatory framework.
    Keywords: crowd science, funding
    Date: 2014–03
  21. By: Sylvain Rossiaud (PACTE - Politiques publiques, ACtion politique, TErritoires - Institut d'Études Politiques [IEP] - Grenoble - CNRS : UMR5194 - Université Pierre-Mendès-France - Grenoble II - Université Joseph Fourier - Grenoble I)
    Abstract: Oil nationalism cycle reflects the difficulties encountered by oil states, international oil companies (IOCs) and national oil companies (NOCs) in establishing order over and above the conflicts in upstream oil transaction. By drawing on transaction cost theory, this article identifies the coordination problems and contractual hazards resulting from transaction and contributes to a better understanding of the different roles of an NOC in the governance of transaction. An NOC can complement or replace coordination through contractual arrangements. We therefore propose and discuss the hypothesis that the functional effectiveness of an oil governance structure depends on the consistency between the role of the NOC in this structure and the state's capacity to ensure effective regulation through contracts.
    Keywords: Transaction Costs ; Regulation ; Oil Governance Structure ; National Oil Companies
    Date: 2014–01
  22. By: Hermeling, Claudia; Klement, Jan Henrik; Koesler, Simon; Köhler, Jonathan; Klement, Dorothee
    Abstract: On the basis of a joint economic and legal analysis, we evaluate the effects of a 'regional' (European) emission trading scheme aiming at reducing emissions of international shipping. The focus lies on the question which share of emissions from maritime transport activities to and from the EU can and should be included in such a system. Our findings suggest that the attempt to implement an EU maritime ETS runs into a dilemma. It is not possible to design a system that achieves emission reductions in a cost efficient manner and is compatible with international law. --
    Keywords: emission trading,international shipping,maritime emissions,regional emission trading,international jurisdiction for emission trading schemes
    JEL: L91 Q58 R48
    Date: 2014
  23. By: Natalie Slawinski (Memorial University of Newfoundland - Memorial University of Newfoundland); Jonatan Pinkse (MTS - Management Technologique et Strategique - Grenoble École de Management (GEM)); Timo Busch (University of Hamburg - University of Hamburg); Subhabrata Bobby Banerjeed (Cass Business School - Cass Business School)
    Abstract: Despite increasing pressure to deal with climate change, firms have been slow to respond with effective action. This paper derives a multi-level framework for a better understanding of why many firms are failing to reduce their absolute greenhouse gas emissions that contribute to climate change. To explain the phenomenon of organizational inaction on climate change, we draw on the related concepts of short-termism and uncertainty avoidance from research in psychology, sociology and organization theory. We argue that antecedents related to short-termism and uncertainty avoidance reinforce each other at three levels - individual, organizational and institutional - and result in organizational inaction on climate change. We discuss the implications of our framework for research on corporate sustainability.
    Keywords: Climate change; corporate sustainability; short-termism; uncertainty avoidance; multi-level theory.
    Date: 2014
  24. By: Renaud Foucart; Grégoire Garsous
    Keywords: climate change; self-enforcing international agreements; threshold effects
    JEL: Q54 C72
    Date: 2013–10
  25. By: Marie-Sophie Hervieux (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Olivier Darné (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: In this paper we examine the Environmental Kuznets Curve (EKC) hypothesis using the Ecological Footprint (EF), a more comprehensive indicator of environmental degradation, for ve Latin American countries covering the 1971-2007 period. We test the EKC hypothesis using a traditional quadratic function from both the supply and consumption-side, adding several explicative variables: urbanization, petrol price and industrialization for supply-side; biocapacity, life expectancy and energy use for consumption-side. We perform an ARDL modeling in order to study both short and long-run periods. We nd that there is no stable relationship between environment and economic development in the long-run. For the short-run analysis, the EKC hypothesis is supported for no one, we rather nd an increasing relationship between growth and environment. Results for explicative variables are mixed: For production-side approach, industrialization appears to have a positive impact on EF for Chile. For consumption-side approach, we nd that energy use seems to have a positive impact on EF for Argentina and Colombia whereas biocapacity and life expectancy have a positive and negative impact, respectively, on EF for Paraguay.
    Keywords: Environmental Kuznets Curve; Ecological Footprint; ARDL model.
    Date: 2014–03–13
  26. By: Bangzhu Zhu; Shujiao Ma; Julien Chevallier; Yiming Wei
    Abstract: This article investigates the European carbon futures price dynamics by applying the Zipf analysis. The results show that: first, carbon price behaviour is asymmetric, and the long-term bearish probability is greater than the long-term bullish probability. Second, time-scales of investment and speculators’ expectations of returns have dual effects on carbon price behaviour. The longer time-scales of investment, the higher the bearish probability. The lower expectations of returns, the smaller the distortion of carbon price behaviour. Third, the differences in carbon market cognitions from non-greedy speculators with different expectations of returns mainly lie in the amplitudes and occasions of carbon price fluctuations, rather than carbon price fluctuations themselves. Fourth, speculators’ expectations of returns have critical points. Once the critical points are reached, they will no longer be able to distort carbon price behaviour. Finally, we discuss some investment advice for supports of the decision-makers. For non-greedy-type speculators, they will choose to hold negatively in the short term and buy and hold in the long term, while for greedy-type speculators they will sell their European Union Allowances (EUAs) in the short term, and buy and hold in the long term. The results are helpful to hedge against unwanted carbon price movements, and to understand the transactions between different types of agents.
    Keywords: EU ETS; carbon futures price; Zipf analysis; expectation of return; time-scale of investment
    Date: 2014–02–25
  27. By: Algieri, Bernardina
    Abstract: Biofuels production has experienced rapid growth worldwide as one of several strategies to promote green energy economies. Indeed, climate change mitigation and energy security have been frequent rationales behind biofuel policies, but biofuels production could generate negative impacts, such as additional demand for feedstocks, and therefore for land on which to grow them, with a consequent increase in food commodity price. In this context, this paper examines the effect of biofuels and other economic and financial factors on daily returns of a group of commodity futures prices using Generalized Autoregressive Conditional Heteroskedasticity (GARCH) family models in univariate and multivariate settings. The results show that a complex of drivers are relevant in explaining commodity futures returns; more precisely, the Standard and Poor’s (S&P) 500 positively affects commodity markets, while the US/Euro exchange rate brings about a decline in commodity returns. It turns out, in addition, that energy market returns are significant in explaining commodity returns on a daily basis, while monetary liquidity does not. Finally, the GARCH model has shown that current variance is influenced more by its past values than by the previous day’s shocks, and there is high persistence, meaning that variance slowly decays and prompts a sluggish “revert to the mean.” The multivariate BEKK framework confirms the results of the univariate setting.
    Keywords: futures returns, biofuels, univariate and multivariate GARCH, Environmental Economics and Policy, Financial Economics, Resource /Energy Economics and Policy, C58, G15, Q14, Q43,
    Date: 2014–02
  28. By: Fernando Antonio Slaibe Postali
    Abstract: This paper investigates whether Brazilian municipalities are losing efficiency when collecting local taxes in response to oil windfalls. A two-stage procedure was adopted. First, we calculate the efficiency scores for tax collection using the Data Envelopment Analysis (DEA) method. In the second stage, the efficiency scores are used as the dependent variable in a quantile regression model to assess whether oil rents affect this indicator. The results reveal that the municipalities benefitting from oil revenues (royalties) reduce their efficiency in collecting taxes in response to such grants, which signals that they generate some type of X-inefficiency in municipal public management. Using a Cost-Minimization DEA, it is possible to avoid the problem of mixing technical efficiency with unobservable preferences on public goods. It is also possible to decompose efficiency within three components: technical, allocative and economic.
    Keywords: Data envelopment analysis; quantile regression; oil royalties; public sector
    JEL: H21 H71 Q33
    Date: 2014–03–18
  29. By: Hwang, In Chang
    Abstract: A recursive method for solving an integrated assessment model of climate and the economy is developed in this paper. The method approximates value function with a logarithmic basis function and searches for solutions on a set satisfying optimality conditions. These features make the method suitable for a highly nonlinear model with many state variables and various constraints, as usual in a climate-economy model.
    Keywords: Dynamic programming; recursive method; value function iteration; integrated assessment
    JEL: C61 C63 Q54
    Date: 2014–03–25
  30. By: Thierry Kalisa (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I)
    Abstract: This paper's motivation is to contribute to the growing literature on contingent valuation in developing countries. In a new survey in Rwanda valuing people's contribution for electrification, an innovative design is proposed, giving the choice to respondents between two scenarios : one in which they would contribute their time and another in which they would contribute their money. Results show that people prefer to contribute in time rather than in money. A great majority of people who have electricity would accept to contribute for the electrification of others. The potential contributors are willing to contribute 37,250 Frw ($ 55) and 66 days on average per year for five years.
    Keywords: Contingent valuation; electrification; contribution; time
    Date: 2013
  31. By: Bardt, Hubertus
    Abstract: Im Rahmen der aktuellen deutschen und europäischen Diskussionen um die Reform der Förderung erneuerbarer Energien wird vor allem auch die Besondere Ausgleichsregelung infrage gestellt, mit der bisher stark stromintensive Unternehmen weitgehend von der EEG-Umlage entlastet werden. Dies wird in der deutschen Politik diskutiert, aber auch von der Europäischen Kommission im Rahmen eines Beihilfeverfahrens sowie im Rahmen des Entwurfs für neue Beihilferegeln bedroht. Eine Abschaffung oder weitgehende Einschränkung der Besonderen Ausgleichsregelung oder vergleichbare Mehrbelastungen würde die Investitionsbereitschaft stromintensiver Unternehmen in Deutschland erheblich einschränken. Schon heute sind eine Desinvestition energieintensiver Unternehmen in Deutschland und ein Ausbau der Investitionen im Ausland zu beobachten. Die aktuelle Energiepolitik führt zu Investitionsattentismus und droht weiter Verlagerungen nach sich zu ziehen. Dies hätte negative Folgen für ganze Wertschöpfungsketten und die Innovationsfähigkeit nachgelagerter Branchen. --
    Keywords: Erneuerbare Energien,Industrie,Strommarkt
    JEL: E29 Q48 Q52
    Date: 2013

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