nep-ene New Economics Papers
on Energy Economics
Issue of 2014‒06‒28
29 papers chosen by
Roger Fouquet
London School of Economics

  1. The role of oil price shocks in causing U.S. recessions By Kilian, Lutz; Vigfusson, Robert J.
  2. Conditional Correlations and Volatility Spillovers between Crude Oil and Oil- exporting and importing countries By Khaled Guesmi; Ilyes Abid; Olfa Kaabia
  3. A fear index to predict oil futures returns By Julien Chevallier; Benoit Sevi
  4. The Distributional Impacts of an Energy Boom in Western Canada By Marchand, Joseph
  5. Demand for carbon-neutral food – evidence from a Discrete Choice Experiment for milk and apple juice By Breustedt, Gunnar
  6. Assessing energy price induced improvements in efficiency of capital in OECD manufacturing industries By Steinbuks, Jevgenijs; Neuhoff, Karsten
  7. Elasticity of substitution in capital-energy relationships: how central is a sector-based panel estimation approach? By Valeria Costantini; Elena Paglialunga
  8. Causality between trade openness and energy consumption: What causes what in high, middle and low income countries By Muhammad M. Shahbaz; Samia S. Nasreen; Chong Hui C.H. Ling; Rashid Sbia
  9. L’intégration de l’Economie Circulaire via les entreprises du secteur de l’énergie By Gaël -Miguel JUILLARD; Dominique BONET FERNANDEZ
  10. Electricity consumption and economic growth: exploring panel-specific differences By Fatih Karanfil; Yuanjing Li
  11. Hierarchical structure of the countries based on electricity consumption and economic growth By Ersin Kantar; Alper Aslan; Bayram Deviren; Mustafa Keskin
  12. Changing patterns of electricity use in European manufacturing: A decomposition analysis By Wenzel, Lars; Wolf, André
  13. Coping with area price risk in electricity markets: Forecasting Contracts for Difference in the Nordic power market By Egil Ferkingstad; Anders L{\o}land
  14. Economics of transiting to renewable energy in Morocco : a general equilibrium analysis By Timilsina, Govinda R.; Landis, Florian
  15. Turn on the Lights: Macroeconomic Factors Affecting Renewable in Pakistan By Malik, Ihtisham Abdul; Siyal, Ghamz-e-Ali; Abdullah, Alias Bin; Alam, Arif; Zaman, Khalid; Kyophilavong, Phouphet; Shahbaz, Muhammad; Baloch, Siraj Ullah; Shams, Tauqeer
  16. Modelling the Impact of Market Imperfections on Farm Household Investment in Stand-Alone Solar PV. By Abdul-Salam, Yakubu; Phimister, Euan
  17. The value chain of heat production from woody biomass under market competition and different intervention systems: An agent-based real options model By Wolbert-Haverkamp, Matthias; Feil, Jan-Henning; Mußhoff, Oliver
  18. Confronting the food-energy-environment trilemma : global land use in the long run By Steinbuks, Jevgenijs; Hertel, Thomas W.
  19. Water use implications of bioenergy cropping systems in Eastern England By Glithero, N. J.; Wilson, P.; Ramsden, S. J.
  20. Carbon price efficiency : lock-in and path dependence in urban forms and transport infrastructure By Avner, Paolo; Rentschler, Jun; Hallegatte, Stephane
  21. A dynamic CGE modelling approach for analyzing trade-offs in climate change policy options: the case of Green Climate Fund. By Antimiani Alessandro; Valeria Costantini; Anil Markandya; Chiara Martini; Alessandro Palma; Maria Cristina Tommasino
  22. The Economics of Climate Change Policy: Critical review and future policy directions By Halkos, George
  23. Is green knowledge improving environmental productivity? Sectoral Evidence from Italian Regions. By Claudia Ghisetti; Francesco Quatraro
  24. Intertemporal links in cap-and-trade schemes By Aurelie Slechten
  25. GHG abatement welfare cost curves for Norwegian agriculture By Blandford, David; Gaasland, Ivar; Vårdal, Erling
  26. Assessing uncertainty in the cost-effectiveness of agricultural greenhouse gas mitigation By Eory, Vera; Topp, Cairistiona F. E.; Moran, Dominic; Butler, Adam
  27. Determinants of Eco-innovation from a European-wide Perspective - an Analysis based on the Community Innovation Survey (CIS). By Jens Horbach
  28. Adoption of greenhouse gas mitigation in agriculture: an analysis of dairy farmers’ preferences and adoption behaviour By Glenka, Klaus; Eorya, Vera; Colombo, Sergio; Barnes, Andrew

  1. By: Kilian, Lutz; Vigfusson, Robert J.
    Abstract: Although oil price shocks have long been viewed as one of the leading candidates for explaining U.S. recessions, surprisingly little is known about the extent to which oil price shocks explain recessions. We provide the first formal analysis of this question with special attention to the possible role of net oil price increases in amplifying the transmission of oil price shocks. We quantify the conditional recessionary effect of oil price shocks in the net oil price increase model for all episodes of net oil price increases since the mid-1970s. Compared to the linear model, the cumulative effect of oil price shocks over course of the next two years is much larger in the net oil price increase model. For example, oil price shocks explain a 3% cumulative reduction in U.S. real GDP in the late 1970s and early 1980s and a 5% cumulative reduction during the financial crisis. An obvious concern is that some of these estimates are an artifact of net oil price increases being correlated with other variables that explain recessions. We show that the explanatory power of oil price shocks largely persists even after augmenting the nonlinear model with a measure of credit supply conditions, of the monetary policy stance and of consumer confidence. There is evidence, however, that the conditional fit of the net oil price increase model is worse on average than the fit of the corresponding linear model, suggesting much smaller cumulative effects of oil price shocks for these episodes of at most 1%. --
    Keywords: real GDP,nonlinearity,asymmetry,time variation,conditional response,prediction
    JEL: E32 E37 E51 Q43
    Date: 2014
  2. By: Khaled Guesmi; Ilyes Abid; Olfa Kaabia
    Abstract: The paper analyses the time-varying conditional correlations between stock markets and oil
    Keywords: Oil Prices, stock markets, conditional correlations, DCC-GJR-GARCH model.
    JEL: Q43 E44 G15 C1
    Date: 2014–06–16
  3. By: Julien Chevallier; Benoit Sevi
    Abstract: This paper evaluates the predictability of WTI light sweet crude oil futures by us- ing the variance risk premium, i.e. the difference between model-free measures of implied and realized volatilities. Additional regressors known for their ability to ex- plain crude oil futures prices are also considered, capturing macroeconomic, finan- cial and oil-specific influences. The results indicate that the explanatory power of the (negative) variance risk premium on oil excess returns is particularly strong (up to 25% for the adjusted R-squared across our regressions). It complements other fi- nancial (e.g. default spread) and oil-specific (e.g. US oil stocks) factors highlighted in previous literature.
    Keywords: Oil Futures, Variance Risk Premium, Forecasting
    JEL: C32 G17 Q47
    Date: 2014–06–16
  4. By: Marchand, Joseph
    Abstract: In the energy-rich region of Western Canada, inequality rose over the past two decades, while poverty declined, begging the question of whether the recent energy boom was a contributing factor. This study uses measures of inequality and poverty across local labor markets that vary in energy extraction intensity to identify these distributional impacts. The evidence shows that, overall, the boom increased inequality and decreased poverty. There are, however, a few notable cases where these relationships are reversed. The significance and relative magnitude of growth across and between distributional segments were consistent with these findings.
    Keywords: distribution, energy boom, inequality, local labor markets, poverty
    JEL: J31 Q33 R23
    Date: 2014–06–16
  5. By: Breustedt, Gunnar
    Abstract: To internalize climate-related external costs from agricultural production and food consumption Pigou taxes and carbon credits increase private costs for food. Voluntary consumer choices for carbon-neutral food can be advantageous over such policy measures since they avoid higher food prices for the poor. We empirically analyze consumers’ willingness-to-pay for hypothetical carbon-reduced as well as carbon-neutral milk and apple juice. Data are collected in Discrete Choice Experiments in a German supermarket. Estimates reveal a substantial price premium for the carbon-neutral products which is probably sufficient to cover the products’ extra costs, including the purchase of carbon credits. The premiums are around 0.20 € per liter milk and 0.30 € per liter apple juice. Although the external validity of stated-preference methods is limited the willingness-to-pay measures for organic milk and juice as well as for different real-world labels in our experiment are similar to real-world price premiums.
    Keywords: climate change, carbon-neutral food, discrete-choice-experiment, Consumer/Household Economics, Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods, Q54, Q130, Q180,
    Date: 2014–04
  6. By: Steinbuks, Jevgenijs; Neuhoff, Karsten
    Abstract: To assess how capital stocks adapt to energy price changes, it is necessary to account for the impacts on different vintages of capital and to account separately for price-induced and autonomous improvements in the energy efficiency of capital stock. The results of econometric analysis for five manufacturing industries in 19 OECD countries between 1990 and 2005 indicate that higher energy prices resulted in smaller energy use due to both improved energy efficiency of capital stock and reduced demand for the energy input. The investment response to energy prices varied considerably across manufacturing industries, being more significant in energy-intensive sectors. The results of policy simulations indicate that a carbon tax can deliver significant reductions in energy consumption in the medium run with modest declines in energy-using capital stock.
    Keywords: Energy Production and Transportation,Political Economy,Climate Change Economics,Economic Theory&Research,Markets and Market Access
    Date: 2014–06–01
  7. By: Valeria Costantini (Dipartimento di Economia, Roma Tre University, Roma, CERIS-CNR, Milano.); Elena Paglialunga (Dipartimento di Economia, Roma Tre University, Roma.)
    Abstract: The challenging climate change reduction policies envisaged by current international negotiations have fuelled the debate on abatement cost assessment. One specific issue under investigation is the role of behavioural parameters in influencing cost assessment results. This paper specifically addresses the computation of energy-output and capital-energy substitution elasticity values in ten manufacturing sectors for OECD countries. The paper contains five novelties with regard to the existing literature: i) energy-output elasticities are computed for disaggregated manufacturing sectors for a long time span (1970-2008) for a panel of 21 OECD countries; ii) capital-energy substitution elasticity is estimated at aggregate level for the whole manufacturing sector for the same longitudinal dataset; iii) capital-energy substitution elasticities are also accurately estimated for 10 distinguished manufacturing sectors ; iv) average substitution values at sector level are computed by comparing several alternative econometric estimation methods; v) average substitution values at sector level are also computed for separate sub-periods in order to trace the dynamics over time of these behavioural parameters. These results should constitute the basis for sensitivity analysis for several forecasting economic models by computing abatement costs derived from climate change policies.
    Keywords: capital-energy substitution elasticity, Allen elasticity of substitution, translog function, manufacturing sectors.
    JEL: D24 L60 Q43 Q47
    Date: 2014–05
  8. By: Muhammad M. Shahbaz; Samia S. Nasreen; Chong Hui C.H. Ling; Rashid Sbia
    Abstract: This paper explores the relationship between trade openness and energy consumption using data of 91 high, middle and low income countries. The study covers the period of 1980-2010. We have applied panel cointegration to examine long run relationship between the variables. The direction of causal relationship between trade openness is investigated by applying Homogenous non-causality, Homogenous causality and Heterogeneous causality tests.Our variables are integrated at I(1) confirmed by time series and panel unit root tests and cointegration is found between trade openness and energy consumption. The relationship between trade openness and energy consumption is inverted U-shaped in high income countries but U-shaped in middle and low income countries. The homogenous and non-homogenous causality analysis reveals the bidirectional causality between trade openness and energy consumption. This paper opens up new insights for policy makers to design a comprehensive economic, trade and policies for sustainable economic growth in long run following heterogeneous causality findings. 2014 Elsevier Ltd.
    Keywords: Causality; Energy; Trade
    Date: 2014
  9. By: Gaël -Miguel JUILLARD; Dominique BONET FERNANDEZ
    Abstract: Circular economy is a hot topic and an innovative attempt to address practical and effective way to economic, political, environmental and social challenges. In this context, research on energy business strategies is rare. The aim of our doctoral research is to identify facilitators and barriers to integration practices of circular economy in large French industrial companies. We present the context of research, the theoretical framework and the proposed methodology.
    Keywords: circular economy, energetic strategies, France
    Date: 2014–06–16
  10. By: Fatih Karanfil; Yuanjing Li
    Abstract: In this paper, we examine the long-­- and short-­-run dynamics between
    Keywords: Electricity consumption; economic growth; electricity dependence; urbanization.
    JEL: C23 O57 Q43
    Date: 2014–06–16
  11. By: Ersin Kantar; Alper Aslan; Bayram Deviren; Mustafa Keskin
    Abstract: We investigate the hierarchical structures of countries based on electricity consumption and economic growth by using the real amounts of their consumption over a certain time period. We use of electricity consumption data to detect the topological properties of 60 countries from 1971 to 2008. These countries are divided into three subgroups: low income group, middle income group and high income group countries. Firstly, a relationship between electricity consumption and economic growth is investigated by using the concept of hierarchical structure methods (minimal spanning tree (MST) and hierarchical tree (HT)). Secondly, we perform bootstrap techniques to investigate a value of the statistical reliability to the links of the MST. Finally, we use a clustering linkage procedure in order to observe the cluster structure more clearly. The results of the structural topologies of these trees are as follows: i) we identified different clusters of countries according to their geographical location and economic growth, ii) we found a strong relation between energy consumption and economic growth for all the income groups considered in this study and iii) the results are in good agreement with the causal relationship between electricity consumption and economic growth.
    Date: 2014–06
  12. By: Wenzel, Lars; Wolf, André
    Abstract: This paper sets out to investigate the changing patterns of electricity intensity in European manufacturing for the time span 2000-2011. While GVA in Manufacturing has grown and electricity use has declined, it is not clear that this decrease in intensity is directly associated with improvements in technology. Decomposition of the effect suggests that a switch towards less energy intensive sectors accounted for roughly 10% of the total change in electricity intensity. A further level of disaggregation was added in order to account for the factor mix in the form of potential substitution between labor and electricity. The factor mix effect was largely positive, implying that substitution from labor to electricity has been the norm. The average decrease in labor intensity has been more pronounced than the corresponding decrease in electricity intensity. Accordingly, aggregate changes cannot purely be attributed to less electricity-dependent modes of production, but are rather due to general improvements in productivity. Interestingly, this does not appear to be driven by factor prices, as electricity prices grew significantly more than wage compensations within the period at hand. -- Diese Arbeit untersucht zeitliche Veränderungen der Stromintensität in der europäischen Industrie in der Zeitspanne 2000 bis 2011. Parallel zur steigenden industriellen Produktion ist der Stromverbrauch der Industrie im Mittel gesunken, dies ist jedoch nicht zwangsläufig das Ergebnis von technologischem Fortschritt. Eine Zerlegung in Struktur- und Intensitätskomponente ergibt, dass etwa 10 % der gesunkenen Stromintensität auf sektorale Effekte zurückzuführen sind. Um zusätzlich Änderungen im Substitutionsverhältnis von Arbeit und Energie zu berücksichtigen, wurde in einem weiteren Zerlegungsschritt ein Faktormixeffekt bestimmt. Dabei wurde im allgemeinen ein systematischer Anstieg des Arbeitseinsatzes in Relation zum Stromverbrauch festgestellt. Änderungen in der Intensität können damit nicht allgemein auf einen Wechsel zu weniger stromabhängigen Produktionsmethoden zurückgeführt werden. Interessanterweise schien dies nicht durch Änderungen in den Faktorpreisen verursacht worden zu sein, da die Strompreise deutlich stärker gewachsen sind als die Löhne.
    Keywords: decomposition analysis,electricity intensity,European manufacturing,Logarithmic Mean Divisia Index (LMDI)
    Date: 2014
  13. By: Egil Ferkingstad; Anders L{\o}land
    Abstract: Contracts for Difference (CfDs) are forwards on the spread between an area price and the system price. Together with the system price forwards, these products are used to hedge the area price risk in the Nordic electricity market. The CfDs are typically available for the next two months, three quarters and three years. This is fine, except that CfDs are not traded at NASDAQ OMX Commodities for every Nord Pool Spot price area. We therefore ask the hypothetical question: What would the CfD market price have been, say in the price area NO2, if it had been traded? We build regression models for each observable price area, and use Bayesian elicitation techniques to obtain prior information on how similar the different price areas are to forecast the price in an area where CfDs are not traded.
    Date: 2014–06
  14. By: Timilsina, Govinda R.; Landis, Florian
    Abstract: Morocco has set an ambitious target of supplying 42 percent of electricity through renewable sources, 14 percent each through hydro, wind, and solar, by 2020. To analyze the economic and environmental implications of implementing this target, this study uses a dynamic computable general equilibrium model with foresight that includes explicit representation of various electricity generation technologies. Two types of policy instruments, a production subsidy financed through fossil fuel taxation and a renewable energy mandate financed through increased electricity prices, have been considered to attract investment in renewable energy. The study shows that meeting the renewable target would achieve up to 15 percent reduction of national greenhouse gas emissions in 2020 compared with a situation in the absence of the target, or the baseline. However, meeting the target would decrease household consumption of goods and services, thereby worsening household welfare. The study also shows that the renewable production subsidy financed through fossil fuel taxation is superior to the mandate policy to meet the renewable energy target in Morocco, as the former would cause a lower loss in economic welfare and a larger reduction of greenhouse gas emissions than the latter.
    Keywords: Energy Production and Transportation,Climate Change Mitigation and Green House Gases,Energy Demand,Environment and Energy Efficiency,Energy and Environment
    Date: 2014–06–01
  15. By: Malik, Ihtisham Abdul; Siyal, Ghamz-e-Ali; Abdullah, Alias Bin; Alam, Arif; Zaman, Khalid; Kyophilavong, Phouphet; Shahbaz, Muhammad; Baloch, Siraj Ullah; Shams, Tauqeer
    Abstract: The objective of the study is to examine the relationship between macroeconomic factors (i.e., population growth; urbanization, industrialization, exchange rate, price level, food production index and live stock production index) and renewable energy in Pakistan over a period of 1975-2012. In addition, this study uses oil rent as an intervening variable to overcome the biasness of the single equation model. The results indicate that macroeconomic factors positively contributed to renewable energy consumption in Pakistan. The causality test indicate that there is a unidirectional causality running towards macroeconomic factors to renewable energy in Pakistan, however, renewable energy Granger cause oil rent but not via other route. In addition, there is bidirectional causality between exchange rate and live stock production in Pakistan. Variance decomposition analysis shows that economic growth has a major contribution to increase renewable energy in Pakistan.
    Keywords: Renewable energy; oil rent; exchange rate; consumer price index; Pakistan
    JEL: C1 C5 C54
    Date: 2014–06–14
  16. By: Abdul-Salam, Yakubu; Phimister, Euan
    Abstract: In many Sub Saharan Africa countries, access to electricity to electricity is very low in rural areas. For example in Ghana only 27% of rural households have access. However, extending the grid in these countries faces significant technical and financial constraints and many see decentralised systems particularly those using renewable energy as being enormously important. This presupposes the adoption of standalone technologies by a large number of poor farm households who are currently off-grid is likely. However, such households in LDCs typically face a range of market imperfections in credit, product and other markets. This paper explores the potential value of access to electricity for poor agricultural households and the extent to which credit and output market imperfections may inhibit the uptake of stand-alone solar panels using a life cycle farm household simulation model which allows for credit constraints and yield risk.
    Keywords: Agribusiness, Consumer/Household Economics, Research Methods/ Statistical Methods,
    Date: 2014–04
  17. By: Wolbert-Haverkamp, Matthias; Feil, Jan-Henning; Mußhoff, Oliver
    Abstract: Woody biomass in terms of short rotation coppice (SRC) could be a promising alternative for producing biomass to generate renewable energy. Even through, from a single farms point of view, SRC seems to be an interesting land use alternative, farmers do not cultivate SRC. Some studies found out that the real options approach (ROA) could at least partially explain farmers' inertia of cultivating SRC. Nevertheless, those studies do not take into account market competition between farmers and farmers' fear of not having an outlet market in order to dispose the harvested wood chips. This inertia can also cause an investment reluctance concerning building biomass heating stations. In the present study therefore, we focuses on the whole value chain from producing wood chips over generating energy and selling the energy to the end-consumers. We develop an agent-based model which is able to consider market competition and can picture the whole value chain. In order to further motivate farmers to cultivate SRC different types of incentives offered by the biomass heating station are investigated. Our results show that if no incentive system is offered, farmers cultivate SRC reluctantly which leads to a loss of profit of the biomass heating station. With regard to an investment subsidy, it needs to be equal to approximately 300% of the capital costs of investment to strongly motivate farmers to produce enough wood chips that largely decrease the loss of profit of the biomass heating station. If a price floor is offered, farmers' additional amount of wood chips produced is very small. Therefore, the loss of profit does not significantly decrease if the price floor amounts to 95%. --
    Keywords: real options,value chain,competition,incentive systems,biomass,short rotation coppice
    Date: 2014
  18. By: Steinbuks, Jevgenijs; Hertel, Thomas W.
    Abstract: Economic, agronomic, and biophysical drivers affect global land use, so all three influences need to be considered in evaluating economically optimal allocations of the world's land resources. A dynamic, forward-looking optimization framework applied over the course of the coming century shows that although some deforestation is optimal in the near term, in the absence of climate change regulation, the desirability of further deforestation is eliminated by mid-century. Although adverse productivity shocks from climate change have a modest effect on global land use, such shocks combined with rapid growth in energy prices lead to significant deforestation and higher greenhouse gas emissions than in the baseline. Imposition of a global greenhouse gas emissions constraint further heightens the competition for land, as fertilizer use declines and land-based mitigation strategies expand. However, anticipation of the constraint largely dilutes its environmental effectiveness, as deforestation accelerates prior to imposition of the target.
    Keywords: Climate Change Mitigation and Green House Gases,Environmental Economics&Policies,Climate Change Economics,Environment and Energy Efficiency,Energy and Environment
    Date: 2014–06–01
  19. By: Glithero, N. J.; Wilson, P.; Ramsden, S. J.
    Abstract: Food and fuel security in the face of population growth and climate change represent key societal challenges. Extending an arable farm-level bio-economic optimisation model ‘MEETA’ to include dedicated energy crops (DECs) and water metrics, we quantify water use implications and trade-offs between greenhouse gas emissions, net energy and farm profitability. Drawing upon the limited available water use data for arable and energy crops applicable for East Anglia in the UK, six different farm scenarios were investigated. Profit maximisation produces a conventional crop mix, while maximising net energy and minimising greenhouse gas emissions result in crop mixes which impose financial penalties and lower water use in comparison to conventional cropping; average financial impacts of the associated reduced water use under these respective scenarios range from £0.12 to £0.28 per m3 of water. Confidence in these results and work on water use and management more generally would be improved through better data on inter-annual crop-water needs, temporal water availability relationships and water response functions. Water availability for UK crop production is largely perceived to be a non-limiting resource; however climate change predictions demonstrate that availability of water for UK crop production is of increasing concern for both farmers and society as a whole.
    Keywords: Food, Bioenergy, Water Use, Modelling, Greenhouse Gas Emissions, Environmental Economics and Policy, International Relations/Trade, Resource /Energy Economics and Policy, Q41,
    Date: 2014–04
  20. By: Avner, Paolo; Rentschler, Jun; Hallegatte, Stephane
    Abstract: This paper investigates the effect of carbon or gasoline taxes on commuting-related CO2 emissions in an urban context. To assess the impact of public transport on the efficiency of the tax, the paper investigates two exogenous scenarios using a dynamic urban model (NEDUM-2D) calibrated for the urban area of Paris: (i) a scenario with the current dense public transport infrastructure, and (ii) a scenario without. It is shown that the price elasticity of CO2 emissions is twice as high in the short run if public transport options exist. Reducing commuting-related emissions thus requires lower (and more acceptable) tax levels in the presence of dense public transportation. If the goal of a carbon or gasoline tax is to change behaviors and reduce energy consumption and CO2 emissions (not to raise revenues), then there is an incentive to increase the price elasticity through complementary policies such as public transport development. The emission elasticity also depends on the baseline scenario and is larger when population growth and income growth are high. In the longer run, elasticities are higher and similar in the scenarios with and without public transport, because of larger urban reconfiguration in the latter scenario. These results are policy relevant, especially for fast-growing cities in developing countries. Even for cities where emission reductions are not a priority today, there is an option value attached to a dense public transport network, since it makes it possible to reduce emissions at a lower cost in the future.
    Keywords: Transport Economics Policy&Planning,Climate Change Mitigation and Green House Gases,Climate Change Economics,Transport in Urban Areas,Transport and Environment
    Date: 2014–06–01
  21. By: Antimiani Alessandro (Istituto Nazionale di Economia Agraria (INEA), Roma (Italy).); Valeria Costantini (Department of Economics, Roma Tre University, Roma (Italy).); Anil Markandya (Basque Centre for Climate Change (BC3), Spain.); Chiara Martini (Agenzia nazionale per le nuove tecnologie, l’energia e lo sviluppo economico sostenibile (ENEA), Italy.); Alessandro Palma (Department of Economics, Roma Tre University, Roma (Italy).); Maria Cristina Tommasino (Agenzia nazionale per le nuove tecnologie, l’energia e lo sviluppo economico sostenibile (ENEA), Italy.)
    Abstract: We investigate the trade-offs between economic growth and low carbon targets for developing and developed countries in the period up to 2035. Policy options are evaluated with an original version of the dynamic CGE model GDynE. Abatement costs appear to be strongly detrimental to conomic growth for developing countries. We investigate options for reducing these costs that are consistent with a green growth strategy. We show that Green Climate Fund financed through a levy on carbon taxation can benefit all parties, and larger benefits are associated with investment of the Green Climate Fund to foster energy efficiency in developing countries.
    Keywords: Climate Change Policies, Green Growth, Developing Countries, Dynamic CGE Energy Model, Green Climate Fund.
    JEL: C68 H23 O44 Q54
    Date: 2014–06
  22. By: Halkos, George
    Abstract: This paper presents the dimensions of the climate change problem and its economic effects as well as the evolution of the international meetings to cope with it. In these lines it discusses the use of Integrated Assessment Models (IAMs), the damage cost estimates and various other issues related to global warming and concerning the significance of uncertainty and risk aversion, the importance of discounting and the impact of financial crisis on emissions predictions. The methods of constructing abatement cost curves together with adaptation policies are presented. It also refers to the basic policy approaches for reducing greenhouse gases paying attention to emissions trading schemes.
    Keywords: Climate change; Integrated Assessment Models; Abatement costs.
    JEL: Q50 Q52 Q54 Q58
    Date: 2014–06
  23. By: Claudia Ghisetti (Dipartimento di Economia e Management, Università  di Ferrara and SEEDS - Sustainability Environmental Economics and Dynamic Studies.); Francesco Quatraro (GREDEG-CNRS University of Nice-Sophia Antipolis (France) and BRICK, Collegio Carlo Alberto (Torino).)
    Abstract: This paper provides empirical investigation of the effects of environmental innovations (EIs) on environmental performances, as proxied by the environmental productivity (EP) measure. We focused on sectoral environmental productivity of Italian Regions by exploiting the Regional Accounting Matrix including Environmental Accounts(Regional NAMEA). Patent applications have been extracted by the Patstat Database and assigned to the environmental domain by adopting three international classifications of green technologies: the WIPO IPC green inventory, the European Patent Office climate change mitigation technologies classification (Y02) and the OECD ENV-Tech indicators. Econometric results outline that regions-sectors characterized by higher levels of green technologies (GTs) are actually those facing better environmental performance. These positive effects directly stem from the introduction of GT in the same sector, as well as from the introduction of GT in vertically related sectors.
    Keywords: environmental performance, regional NAMEA, environmental innovation, green technologies, vertical relatedness.
    JEL: O33 Q53 Q55 Q56 R11
    Date: 2014–05
  24. By: Aurelie Slechten
    Abstract: In a two-period general equilibrium model, I study the effects of intertemporal emission permit trading in a cap-and-trade scheme when firms' investments in abatement have long-term effects. To meet their caps, firms optimally choose levels of trading and investment in each period by equalizing the marginal benefit of abatement to the marginal cost of abatement in each period. The fact that investments have long-term effects introduces new effects: investments in period 1 have both an additional benefit (the reduction of emissions in period 2) and an additional cost (the decrease in abatement opportunities in period 2). This changes the standard condition of equalization of marginal costs across periods for cost-effectiveness. Without intertemporal trading, some investments in period 1 are entirely driven by second-period abatement needs. In that case, allowing intertemporal trading may reduce investment in period 1 as some long-term investments are substituted by intertemporal permit trading. Descriptive evidence from the EU Emissions Trading System (ETS) illustrates this potential effect. © 2013 Elsevier Inc.
    Keywords: Abatements; Banking; Borrowing; Cap-and-trade schemes; Emission trading; Investment
    Date: 2013–09
  25. By: Blandford, David; Gaasland, Ivar; Vårdal, Erling
    Abstract: Agriculture makes a significant contribution to Norway’s emissions of greenhouse gases (GHG). Although the sector accounts for only 0.3 per cent of GDP, it accounts for roughly 9 per cent of total GHG emissions. Norwegian agriculture is dominated by livestock production; ruminants (cattle and sheep) are particularly important. There are opportunities for GHG mitigation under existing technology through changes in agricultural practices. Analytically we derive abatement cost curves for Norway in terms of the change in economic welfare, and on a theoretical basis we examine the impact of various policy objectives on the abatement cost curve. In particular we consider the policy objective of keeping the production of calories at the current level. We use a detailed economic model to assess the impact and welfare implication of a reduction in GHG emissions.
    Keywords: greenhouse gas mitigation, economic model, abatement costs, Environmental Economics and Policy, International Relations/Trade, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods, C61, Q18, Q54,
    Date: 2014–04
  26. By: Eory, Vera; Topp, Cairistiona F. E.; Moran, Dominic; Butler, Adam
    Abstract: Information on the uncertainty of quantitative results feeding into public decision making is essential for designing robust policies. However, this information is often not available in relation to the economics of greenhouse gas (GHG) mitigation in agriculture. This paper analyses the uncertainty of the mitigation estimates provided by a Marginal Abatement Cost Curve (MACC). The case study is based on the GHG MACC developed for Scottish agricultural soils. The qualitative assessment disentangled the different sources and types of uncertainty in the cost-effectiveness analysis of GHG mitigation options. The quantitative assessment estimated the statistical uncertainty of the results by propagating uncertainty through the model, using three uncertainty scenarios. The results show that the uncertainty in the economically optimal abatement in Scottish agricultural soils is high with the medium and high uncertainty scenarios, with the ratio of the 95% CI to the mean being 0.57-1.01 and 0.98-1.4, respectively, while the low uncertainty scenario resulting in a ratio of the 95% CI to the mean of 0.24-0.68. However, the ranking of the measures are relatively robust with all three uncertainty scenarios, especially in terms of which options have cost-effectiveness below the carbon price threshold.
    Keywords: marginal abatement costs curves, uncertainty, greenhouse gases, agriculture, GHG mitigation, Environmental Economics and Policy, Risk and Uncertainty, Q54,
    Date: 2014–04
  27. By: Jens Horbach (University of Applied Sciences, Augsburg.)
    Abstract: Eco-innovations lead to less environmental impacts or to a reduction of energy use and are therefore crucial for climate protection. Recently, the determinants of eco-innovation activities have been widely explored for single countries but there is still a lack of country comparisons mainly because of data restrictions. In 2009, a special module on eco-innovation has been included in the Community Innovation Survey (CIS) allowing a comparison of the determinants of eco-innovation in 19 different European countries. Our analysis especially focuses on Eastern European transformation countries because the determinants of eco- innovation in these countries have not yet been systematically analyzed. Concerning the introduction of eco-innovation, the econometric analysis shows that regulation activities seem to be more important for Eastern European countries. This is especially the case for 'traditional fields'such as air, noise, soil, water, recycling or dangerous substances. Except energy saving measures, environmentally related subsidies seem to be quantitatively more important for the Eastern European countries pointing to the lower financial performance of the respective firms. Furthermore, Eastern European countries are more relying on competitors and external R&D as information sources indicating a technology transfer from West to East.
    Keywords: eco-innovation, probit models, country analysis.
    JEL: Q55 O33 C25
    Date: 2014–04
  28. By: Glenka, Klaus; Eorya, Vera; Colombo, Sergio; Barnes, Andrew
    Abstract: Greenhouse gas mitigation in agriculture implies changes in farm management practices. Knowledge on farmers’ current adoption of management practices aimed at reducing emissions, and their preferences regarding these, is important to inform the development of robust climate change mitigation policies in the agricultural sector. In the context of Scottish dairy farms, this study combines information on current adoption of mitigation practices with preference information based on Best-Worst-Scaling to facilitate the choice of mitigation practices to support via policy mechanisms that encourage and incentivise change. We find that current adoption plays an important role in understanding preference rankings of mitigation practices, and identify promising mitigation practices based on their potential for additional emission reduction, their perceived contribution to the farm’s financial and environmental performance and information on their cost-effectiveness.
    Keywords: Climate change, Mitigation, Best-Worst-Scaling, Stated preferences, Technology adoption, Dairy farming, Agribusiness, Environmental Economics and Policy, Livestock Production/Industries, Research and Development/Tech Change/Emerging Technologies, Q19, Q54, D03,
    Date: 2014–04
  29. By: CEMBALO, Luigi; PASCUCCI, Stefano; TAGLIAFIERRO, Carolina; CARACCIOLO, Francesco
    Abstract: The topic of integration and development of sustainable chains has lately gained much attention in the academia debates. In particular, how to manage integration in the bio-energy chains is discussed. Integration is a process of progressive dependence among different actors willing to coordinate processes of innovation. This dynamic is generated by the interaction of individuals willing to start up collective action. The effectiveness of a collective action depends on the number of formal norms developed by collective contracts. This paper tackles these issues considering the specific case study of a collective action in a bio-energy chain. It focuses on the decision-making process of farmers on whether to join or not a collective action, analysing their trade-offs over the attributes of collective contracts. The empirical study was conducted in an area in Southern Italy, most affected by soil erosion problems. A stated preference model was implemented where respondents were asked to choose between alternative collective contracts with varying attribute levels to start biomass cultivation. Two hundreds face-to-face questionnaires were administered to farmers in September-October 2013. First results show that participation is mainly influenced by minimum price guaranteed, contract length, and re-negotiation before the end of a contract.
    Keywords: Agro-biomass, Choice Modelling, Contract farming, Soil erosion mitigation, Valuing contract attributes, Agribusiness, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy, D71, D86, O13,
    Date: 2014–04

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