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on Energy Economics |
| By: | Mireille Bossy; Nadia Maizi; Odile Pourtallier |
| Abstract: | In this paper, we analyze Nash equilibria between electricity producers selling their production on an electricity market and buying CO2 emission allowances on an auction carbon market. The producers' strategies integrate the coupling of the two markets via the cost functions of the electricity production. We set out a clear Nash equilibrium on the power market that can be used to compute equilibrium prices on both markets as well as the related electricity produced and CO2 emissions released. |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1408.6122&r=ene |
| By: | Melanie Houllier; Lilian M. De Menezes; Michael Tamvakis |
| Abstract: | For a long time fuels such as gas, coal or oil have been the most important cost items for power generation accounting for 70% of the variable costs (Crampes and Fabra, 2005), since they were usually marginal generation technologies that set wholesale prices (Bosco et al., 2010). Intuitively, long run dynamics of electricity prices should therefore reflect fuel price developments, at least in markets with a significant share in their energy mix. However, with the EU Directive 2009/28/EC, EU Member States have established national action plans, which set the share of energy from renewable sources for 2020 (20-20-20 targets) (EC, 2009). The EU Renewable Energy Target decreed that 15% of all energy (or 30-35% of electricity) is to be generated by RES-E by 2020 in the UK. This change in energy mix may have altered traditional associations between fuel inputs and price behaviour, at least in the short run. We therefore identify changes in wholesale price dynamics, using weekdaily APX spot prices from February 2003 to October 2013, and investigate their association with gas and coal prices as well as wind penetration levels. Localized autocorrelation (Cardinali and Nason, 2013) are used to identify changes of long run dynamics in the time series. Cointegration analysis (Engle and Granger 1987) and fractional co-integration analysis are then employed to investigare common long run dynamics in the UK energy sector for stationary and non-stationary periods respectively. UK electricity spot prices are found to be locally non-stationary processes (see Figure 1), which means that there are periods when prices are stable around a level and others when the time series describe a trend that is associated with the dominant fossil fuel being used. During these non-stationary periods, UK electricity spot prices are shown to have common long run dynamics with fossil fuels. During stationary periods, shocks can take a while to dilute, as it is observed that the price series shows long-memory behaviour. In such periods, wind penetration levels are significantly associated with spot price dynamics. In all, the results illustrate how different inputs influence wholesale prices and how a changing energy mix may affect the long run dynamics in the UK electricity market. |
| Keywords: | UK, Macroeconometric modeling, Energy and environmental policy |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6970&r=ene |
| By: | Sandrine Selosse; Nadia Maizi |
| Abstract: | Global warming is in essence an economic and political problem. Greenhouse gas (GHG) emissions contributing to global warming have the same damaging effect regardless of the country in which they originate. All regions of the world are affected regardless of whether and to what extent they contribute to the problem. Protecting the atmosphere and therefore preventing global warming implies a drastic reduction in total greenhouse gas emissions. However, in the absence of an international agreement on emissions control, countries adopt free-riding behaviours. Each country counts on others to reduce emissions and to incur the resulting abatement cost. The Kyoto Protocol was the first international agreement in which some countries (Annex I to the protocol) committed to emission reduction targets over the period 2008-2012. The protocol’s impact has however been limited, because of a lack of commitments from rapidly growing emerging countries such as China, India and Brazil, and non-ratification by the United States. The challenge of the Copenhagen summit in 2009 was to determine the rules for the post-Kyoto period. It was therefore essential to ensure the ratification of a global agreement on emission reduction targets and to include all major industrialized and emerging countries. Although negotiations during the summit failed to reach a global agreement, in late January 2010 some countries including major emerging nations pledged their commitment to the United Nations Framework Convention on Climate Change (UNFCCC) as part of the Copenhagen Agreement. Emissions control commitments now cover 80% of 2005 global GHG emissions. These pledges occur until 2020 and constitute period 2 of the Kyoto Protocol (2013-2020). The challenge now is to get countries to converge towards a global and multilateral agreement to keep in line with ambitious targets to limit GHG emissions. This is the ultimate aim of the Conference of Parties due to take place in Paris in 2015. While the deadline for the implementation of this agreement is imminent, we propose to discuss the key points to reach these ambitious objectives by 2015. The aim of this study is to analyze different paths of GHG emission mitigation targets and to discuss the future climate regime with the modeling tool TIAM-FR. More precisely, we investigate different coordination schemes for regions pledging to reach GHG mitigation targets in line with 1) commitments occurring according to the Copenhagen Agreement by 2020, 2) an ambitious ultimate and global target by 2050-2100 in line with the IPCC recommendations (AR4 and AR5), and 3) regional assumptions by 2050 according to the group of countries (industrialized, fast developing or developing). Drawing from regional scenarios of carbon constraints, we discuss possible futures for the next climate regime according to the rule of “What might happen if…?” e.g.: Can we reach the 2°C target if developing countries do not contribute to reducing GHG emissions in the future? What could happen if developed countries do not contribute enough to reducing GHG emissions in the future? What are the induced regional energy system costs of these climate scenarios if fast developing countries do not contribute early to reducing GHG emissions in the future? and so on. Our analysis mainly focuses on the effects of these environmental constraints on several indicators such as global and regional GHG emissions, the cost of the climate policy, carbon marginal costs, the evolution of primary energy consumption and the energy mix. This paper compares global efforts of GHG mitigation with the cost of carbon for a variety of climate policies and finally discusses the impact of the development of technologies in the energy mix in 2050. We analyze the environmental and economic impacts of the climate commitments by introducing climate pledges in the bottom-up optimization model TIAM-FR. This linear programming model minimizes the total discounted cost of the world energy system over a long time period under a number of environmental, technological and demand constraints. TIAM-FR, as TIMES family models, depicts the energy system with a detailed description of different energy forms, resources, processing technologies and end-uses, on a Reference Energy System (RES). TIAM-FR is geographically integrated and offers a representation of the global energy system in 15 regions covering the entire world. In each region, TIAM-FR describes the entire energy system with the same level of technological disaggregation. To discuss the climate context of the future climate regime, we considered the Post-Copenhagen pledges for 2020 and made assumptions on the 2050 targets based on each country’s announced political ambitions, expected ambitions or required contributions. We then compared these pledges to a business-as-usual scenario and a global scenario compatible with the UNFCCC ultimate objective of limiting temperature change to 2°C, where all countries are constrained or not to contribute to this global mitigation target. Emission reduction is achieved through technology and fuel substitutions. The optimization results are notably the structure of the energy system, i.e. type and capacity of the energy technologies, energy consumption by fuel, development of emissions, energy trade flows between the regions as well as the required transport capacities and the detailed energy system costs, plus information on the marginal costs of environmental measures such as GHG reduction targets. The various scenarios we investigated include environmental targets for different world regions over the period 2000-2050. We analyze a combination of these scenarios in order to provide a framework for understanding the climate context of the future regime which is expected to be decided in 2015: (1) BASE: World reference scenario without any explicit policy measures on GHG mitigation (2) 2°C scenario: World climate scenario in line with limiting temperature change to 2°C in 2100 (i.e. 50% reduction of GHG emissions by 2050) a. DEVin: With the contribution of developing countries b. DEVout: Without the contribution of developing countries (3) Regional Post-Copenhagen pledges scenario: a. COP+: with an optimistic GHG emission reduction commitment to 2020 for countries that pledged commitments in the Copenhagen Accord b. COP-: with a pessimistic GHG emission reduction commitment to 2020 for countries that pledged commitments in the Copenhagen Accord c. NoDEV: without a GHG emission reduction commitment for developing countries d. DEV30: with a GHG emission reduction commitment of 30% to 2020 compared to a business as usual scenario for developing countries e. DEV15: with a GHG emission reduction commitment of 15% to 2020 compared to a business as usual scenario for developing countries (4) Regional long-term objectives scenario by 2050: according to international convergence and expressed ambitions a. Ind80: with a pessimistic GHG emission reduction commitment to 2050 for industrialized countries b. Ind95: with an optimistic GHG emission reduction commitment to 2050 for industrialized countries (5) 4°C scenario: World climate scenario in line with a temperature change to 4°C in 2100 as feared in the last IPCC Report (AR5, 2013). According to the results from the next IPCC report (expected in 2014), new scenarios will be implemented to bring new elements into the climate context assessment. The previously cited scenarios are analyzed to explore the effects of a possible international coordination on the main environmental and economic indicators. The impacts of different commitment levels under post-Copenhagen and/or global policies can thereby be discussed and provide some understanding on the stakes and issues. The main focus will be, in a first part, on the ambition of the various climate policies regarding GHG emissions at global and regional level. In a second part, we discuss the total cost of these policies, the regional costs of avoided GHG (carbon marginal cost) associated with the different GHG mitigation targets, and finally, the level of ambition of the GHG reduction targets. Indeed, we studied the cost implications of these climate policies. How could this cost be distributed between the different committed regions? Is climate policy through associated targets weighed in the same manner for all regions? In a third part, we extend the analysis on the impact of international climate change strategies to the energy system. Discussions investigate long-term solutions, such as the development of CCS technologies or renewables, in response to a constraint that influences the energy mix. The aim is to assess the plausibility of its fulfillment and to highlight the challenges. As shown for example in figure 1, a strong climate policy in line with the 2°C objective (representing the UNFCCC consensus) requires a global contribution, whether countries are industrialized or developing, or especially fast developing or emerging. After many years of discussion, ambitious targets require commitment to meet the recommended 2°C limitation in temperature increases. However, it is primarily up to industrialized countries to keep their promise of helping countries develop a record of adapting to the impacts of climate change, and nothing is certain as regards the possible level of GHG emission reduction that developing countries will be able to attain or, even, accept to reduce. In terms of cost, a larger contribution from developing countries is less expensive than strong emission mitigation in industrialized countries, as expressed by the decision to allow flexible mechanisms under the Kyoto Protocol (i.e. develop GHG emissions mitigation projects where the carbon abatement cost can be lower). But this is not sufficient. Could we reach an ambitious, and necessary, climate target without the participation of developing countries? However, do developing countries have the capacity to implement policies to reduce emissions given that their priority is development and energy supply? What are the technological possibilities considering the state of development of their energy systems and the evolution of their needs? A key feature of the Copenhagen agreement is the participation of the United States of America and non-Annex I countries, especially China, as they represent a large share of global CO2 emissions. China and the USA are the largest global emitters of CO2 and, without their participation in a climate agreement; the latter cannot really ensure achieving stabilized CO2 concentration and global temperatures. Industrialized countries must provide tools and resources to meet the challenges. If they do not, developing countries, which are the most affected by climate change and the most vulnerable, will not be able to commit to reducing their own GHG emissions. However, it is imperative that these countries promptly consider such mitigation policies, especially China, India and Brazil, because in the near future they will represent the biggest share of global emissions. For example, in 2008 China surpassed Germany in terms of economic wealth, and the United States in terms of emissions of carbon dioxide (CO2). So what will happen if some industrialized countries do not commit to targets? Can they do so? At what cost? Indeed the impact of these countries’ CO2 mitigation targets on global CO2 emissions is essentially long term. Moreover, the relatively high CO2 marginal cost that China has to bear to ensure its 2050 pledge shows that is important for each region to evaluate the costs of its CO2 emission targets and indicates the extent to which they must make a concrete commitment to combating climate change. We studied the cost implications of these climate policies. How could this cost be distributed between the different committed regions? Is climate policy through associated targets weighed in the same manner for all regions? No country can mitigate climate change on its own. International cooperation is needed to tackle the energy-climate problem. However, not only must countries act, but technological progress must also find an adequate response to countries’ ambitions to expand the pool of available (or not) technologies and their mitigation potential. This not only concerns CCS technologies, but also non-fossil energies, like wind, solar, biomass, etc. Thus the question of technological plausibility is also a critical factor for the future international climate regime. Indeed, the carbon constraint response in these scenario analyses is often investments in CCS technologies in order to reach targets of different levels. However, the feasibility of avoiding the required Gt of CO2 emissions by investing in CCS technologies is questionable. Could the potential use of these technologies be enough to satisfy this need? This question of plausibility also concerns renewables. In the total primary energy supply, the shares of renewables, biomass, and alcohols can appear high. Their size might increase significantly with a more stringent target, but this depends on the cost and efficiency of renewable technologies, and their comparability with fossil fuels. Their future technological development is still an uncertain variable that should be taken into account. |
| Keywords: | We study the world energy system under a disaggregation in 15 regions : Africa (AFR), Australia-New Zealand (AUS), Canada (CAN), China (includes Hong Kong, excludes Chinese Taipei; CHI), Central and South America (CSA), Eastern Europe (EEU), Former Soviet Union (includes the Baltic states, FSU), India (IND), Japan (JPN), Mexico (MEX), Middle-East (includes Turkey; MEA), Other Developing Asia (includes Chinese Taipei and Pacific Islands; ODA), South Korea (SKO), United States of America (USA) and Western Europe (EU-15, Iceland, Malta, Norway and Switzerland; WEU). Some results are discussed considering 3 groups of countries: Industrialized, Fast developing countries and developing countries. , Impact and scenario analysis, Energy and environmental policy |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:7089&r=ene |
| By: | Zheng Wang; GU Gaoxiang |
| Abstract: | the process-technology progress which is caused by the improvement of the productive technologies can reduce the demands of the intermediate inputs in the productive process, and then reduce the energy demands and the carbon emissions. Thus, to improve the level of process technologies is an important way for the global carbon emission abatement. In this paper, based on Jin (2012)’s model, a general equilibrium model of multi-country-section economy was built. Coupled with the climate system of RICE model, a climate-economy integrated assessment model was built with the interactions between the economic system and the climate system.Coupled with the climate system of RICE model, a climate-economy integrated assessment model was built with the interactions between the economic system and the climate system.Based on this model, the carbon emissions and the energy demands of different countries and sections were studied. The simulated outcomes show that the process-technology progress can bring on early peaks of energy demands and carbon emissions. Under the three different scenarios, China will reach its carbon emission peak at year 2034, 2030, and 2022 respectively. In the more bold scenario 3, the accumulated carbon emission of China can reduce to 93GtC, accomplishing the abatement target of 100GtC. Besides, along with the progress of the process technologies, the developing countries like China and India have larger abatement potentials, which in the sections, the energy section and the service sections have larger abatement potentials. |
| Keywords: | China, US, EU, Japan, India and Russia, Energy and environmental policy, General equilibrium modeling |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6910&r=ene |
| By: | Robert Beestermöller; Ulrich Fahl |
| Abstract: | The aim of this paper is to assess the impacts of German energy policies on the competitiveness of national energy intensive industries. The basic idea behind our analysis is that energy policies in Germany create a certain electricity market structure resulting in a certain electricity price, which is a major determinant for the competitiveness of energy intensive industries (e.g. chemicals, paper, aluminum, iron and steel) as energy and electricity constitute a large share in manufacturing costs. The electricity price is the outcome of supply and demand decisions of producers and consumers, with a major supply determinant being the electricity generation technology portfolio. Suboptimal investments within this portfolio are supposed to raise the electricity price and deteriorate the competitiveness of German energy intensive industries. As competitiveness is a relative concept and all world regions are connected via trade, especially in manufacturing, competitiveness occurrences in Germany have direct implications for the competitiveness of energy intensive industries in other European countries, China or the U.S. Our analysis has been motivated by the current discussion about future investment needs of large gas power plants in Germany. Currently, they are crowded out of the electricity market by extensive renewable energy promotion under the German renewable energy law (EEG). This phenomenon is known as the merit-order-effect (Sensfuß et al., 2008). Though, this kind of substitution between electricity generation technologies is in part a desired outcome of that energy and climate policy. But this instant potentially affects the security-of-supply-goal of German and European energy policy, particularly in periods with a low feed-in of renewable energies (high residual load). Gas power plants, like gas turbine or combined cycle gas turbine (CCGT) plants, are essentially employed in periods with a high residual load, because they are the most flexible in terms of adjusting power level (load-following), which is a valuable feature in times of fluctuating wind and solar power. However, gas power plants typically exhibit the highest marginal costs of non-renewable power plants. This poses the question whether the current energy-only market works correctly or not, i.e. whether the electricity price reflects scarcity of peak-load or load-following capacities sufficiently. If it does, investments in gas power plants are redundant, even in periods with a high residual load. If not, the marginal cost based price would be too low to cover the high investment costs (“missing money” problem). Scarcity could lead to temporary price spikes or even blackouts, if grid restrictions rule out electricity imports from other areas. In that case other mechanisms, such as capacity markets, would be needed to also remunerate capacity provision for peak-load or load-following capacities (cf. Finon & Pignon, 2008). In addition, more and more electricity generation takes place in a decentralized manner. Combined heat and power (CHP) plants and self-supply of industry could reduce the need for large gas power plants. It is not clear what this trend means for the average electricity price. In general, large centralized power plants exhibit lower unit costs of electricity generation compared to distributed generation, owing to economies of scale and higher efficiencies. Nevertheless, we are not following the discussion on this kind of issues here. Rather, we take them as a starting point for our analysis and hypothesize that there is underinvestment of large gas power plants. We ask how this specific energy policy situation in Germany affects the average electricity price and how this consequently impacts on the competitiveness of the energy intensive industries in Germany. This is a central question, because manufacturing has become an important determinant for Germany’s recent macroeconomic resilience. Consequently, there is a discussion whether energy intensive industries should be exempted from certain policies in order not to harm their competitiveness. Besides, energy intensive industries also manufacture substantial components for renewable energy technologies (e.g. steel for wind turbines). Evidence on the significance of energy costs for the placement of manufacturing facilities is also given by recent shale gas and oil discoveries in the U.S. and subsequent energy price falls, which have attracted U.S. companies to move their international manufacturing operations back to the U.S. (The Economist, 2013). In a globalized economy, changes of national competitiveness will affect other countries’ competitiveness. We therefore ask who benefits most from the occurring competitiveness shifts and which of the energy intensive sectors is especially affected. For our global economic analysis, a worldwide macroeconomic model is needed, which represents a closed circular flow of income. Therefore we use the NEWAGE model from IER Stuttgart, which is a global multi-sector computable general equilibrium (CGE) model with a detailed representation of the energy sector and disaggregated electricity generation technologies. Due to the total analytical framework of the general equilibrium approach, the interaction of actors on markets of the economy is described in a closed circular flow of income. This allows capturing both direct effects in individual sectors (e.g. electricity) as well as indirect effects (feedback effects) across the economy that are caused by price-induced supply and demand shifts in response to any political intervention. The basic assumption of the general equilibrium approach is perfect competition on all factor and goods markets. Firms buy production factors and sell goods following cost minimization. Consumers buy these goods using their income from selling the production factors following utility maximization. The government imposes taxes and grants subsidies following guidance and fiscal objectives. The equilibrium system is solved for the variables prices, production levels and income. The NEWAGE model is based on the GTAP database and maps the global economy into 10 countries/regions and 16 sectors. The production of goods in the 16 sectors is modeled with CES (constant elasticity of substitution) production functions, where output is produced as a combination of the input factors capital, labor, energy and materials. The degree to which inputs can be substituted for each other is determined by the respective elasticities of substitution, which are based on technical assumptions or taken from the literature. CO2 allowances are an additional input if fossil fuels are used. The assumption of perfect competition may be waived in special markets, as is done for the labor market in NEWAGE to reflect imbalances existing on real labor markets. Therefore, the model considers unemployment, wage rigidities and different grades of labor qualifications (skilled, unskilled). The dynamic approach is recursive-dynamic applying 5-year milestones from 2010 to 2030. Competitiveness can be measured by different indicators, such as trade balance or trade volume per sector and country, or more complex concepts, such as the Relative World Trade Share (RWS) or the Revealed Comparative Advantage (RCA) (see Klepper & Peterson, 2008). The RWTS relates the share of national exports and world exports of a sector to the share of total national and total world exports. The RCA relates the national terms-of-trade of one sector to the total national terms-of-trade. The changes in these indicators reflect the production shifts as a result of changes in the input cost structure of the energy intensive industries, i.e. their competitiveness. For analyzing the impacts of possible underinvestment of large gas power plants on the electricity price in Germany and the competitiveness of national energy intensive industries we conduct scenario analysis in a two-stage approach: 1) Effects of underinvestment in large gas power plants on the electricity price (average price) 2) Effects of electricity price changes on sectoral and national competitiveness of energy intensive industries The first step is to fix the production from new gas power plants to the value of 2010, meaning that there are no further investments than already in place. Then we assess the implications of this constraint for the German electricity price and, as a second step, assess the implications of the electricity price change for the competitiveness of the energy intensive industries in Germany and worldwide. We evaluate these experiments against a reference scenario from 2010 to 2030 where moderate gas power investments still occur, even though there is renewable energy promotion via feed-in tariffs. We calculate impacts for all of the above mentioned competitiveness indicators to check for robustness. The effects are measured in a relative manner, which enables us to control for the arbitrary assumptions of the reference scenario and isolate competitiveness effects. This means that we conduct our analysis producing relative, not absolute results regarding physical or monetary units. Within the general equilibrium approach we are able to capture global adjustment processes responding to the impulse of single sectoral or national policy interventions. Our results indicate which countries in the world profit from these energy constraints in Germany, and which of the energy intensive sectors is particularly affected. |
| Keywords: | Germany, Energy and environmental policy, General equilibrium modeling |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5653&r=ene |
| By: | World Bank |
| Keywords: | Environment - Climate Change Mitigation and Green House Gases Macroeconomics and Economic Growth - Climate Change Economics Energy - Energy Production and Transportation Environment - Environment and Energy Efficiency Energy - Energy and Environment |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:19319&r=ene |
| By: | Virginie Doumax-Tagliavini; Jean-Marc Philip; Cristina Sarasa |
| Abstract: | The 2009 Renewable Energies Directive (RED) has set up ambitious targets concerning biofuel consumption in the European Union by 2020. Nevertheless, budgetary constraints and growing concerns about the environmental integrity of first-generation biofuels have imposed a phasing out of the fiscal instruments to promote them. Focusing on France, this paper combines an exogenous increase in oil prices and tax policies on fossil fuels. The objective is to determine the efficiency of an alternative incentive scheme for biodiesel consumption based on a higher price of the fossil fuel substitute. Policy simulations are implemented through a dynamic computable general equilibrium (CGE) model calibrated on 2009 French data. The results show that the 10% biodiesel mandate set by the RED would not be achieved even if the fixed taxes on diesel reach the same level as those on gasoline. Although integrating the rise in oil prices into the fiscal framework improves the biodiesel penetration rate, it remains slightly below the target. Moreover, we find that the effects of biofuel consumption are limited to the biofuel chain sectors. In other agricutural sectors, the substitution effect of biodiesel with diesel is partially offset by the pricing effect induced by higher energy production costs. see above See above |
| Keywords: | France, Energy and environmental policy, Energy and environmental policy |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:6245&r=ene |
| By: | Olivia Ricci; Sandrine Selosse; Sabine Garabedian; Nadia Maizi |
| Abstract: | Declared in 2010 as a UNESCO world heritage site, the overseas French Region of La Reunion – Reunion Island – has adopted a strategy for sustainable development which aims to attain energy autonomy by 2030. With currently half of the island’s power generated by coal-fired power plants, this unique European territory in the Indian Ocean has large potential for renewable energy generation (solar, marine, wind and biomass) and so largely bases the achieving of this goal on the development of these renewable energy sources. Since 2007, La Réunion has implemented the GERRI project, Green Energy Revolution, where all low carbon innovations are promoted in order to be integrated into the society by 2030; this includes transport, energy production, storage and use, town planning and construction. This also includes tourism, La Reunion aiming to develop an ecological tourism sector with the objective of welcoming 600,000 tourists by 2020. The Reunion’s plan for making its electricity system 100% renewable involves a multi-fold process. The French Minister of Ecology already mandated in April 2009 that all new constructions in overseas departments to install solar hot water heating on all new construction. Additionally, biomass will increasingly substitute coal, which will entail the development of more fibrous sources of sugarcane, supported by an increase in cane farms that also produce solar power. Increased hydropower and geothermal energy will also enter the mix, along with experimenting with tidal power. These measures will also help the island achieve its goal to meeting all heating and cooling needs with renewable resources. The aim of this study is to discuss the large integration of renewable energy in the Reunion power system through the bottom-up energy model TIMES-Reunion (Drouineau, 2011; Bouckaert, 2013). This research is developed with TIMES-Reunion, a bottom-up model describing the small and isolated energy system in great detail of current and future technologies (Drouineau, 2011). This technological model is drived by an exogeneous energy demand and aims at minimize the global discounted cost of the energy system. The time horizon range from 2008 to 2030. We investigate different scenarios binding the target of 100% renewables sources in power generation by 2030 and specifying potentials for renewable energy sources. Moreover we implement sensitivity analysis especialy based on solar, ocean energy, geothermal and sugarcane. We analyse the changes of the current production patterns to move toward a system capable of meeting the energy challenge. In the business as usual, the Reunion electricity production doubles from 2008 to 2030, in particular based on the development of coal. The oil becomes missing in 2015, coal being more profitable, and the share of renewables stabilizes around 35% by 2030. Despite tremendous potential of renewable present on the island, a transition to a 100% renewable energy needs being supported by incitations or constraints. We analyse the impact on the electricity mix of changes in the level of renewables potentials. Particularly, we discuss the level of development of solar and wave/ocean energies. We also explore the impact on the system of strong political choices on 1) the development of geothermal through the authorization to exploit geothermal energy in a protected natural area and 2) the exploitation of 100% energy-sugarcane. Then, in respect with the large development of renewables as solar and wind, we investigate scenarios dealing with the management of intermittent energy including exploitation rule in line with the decision of the network operator (rule of 30% of intermittent energy). |
| Keywords: | Reunion Island, Energy and environmental policy, Impact and scenario analysis |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:7069&r=ene |
| By: | World Bank |
| Keywords: | Environment - Environment and Energy Efficiency Energy - Electric Power Private Sector Development - E-Business Energy - Energy Production and Transportation Macroeconomics and Economic Growth - Markets and Market Access |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:19329&r=ene |
| By: | Kirsten Svenja Wiebe; Ulrike Lehr; Christian Lutz |
| Abstract: | Renewable energy deployment is growing rapidly on a global scale. China, Germany, Japan and the US are among the countries with highest capacity of renewables installed. In Germany, for example, the large growth in renewable power generation (RPG) capacities in the past has been mainly due to demand supporting policy measures (demand pull). Globally, increasing deployment also is accelerated by strongly decreasing costs of these technologies. Deployment, on the other hand leads to cost decreases via scale effects and this interdependence can be captured in learning curves, which is a concept used to model technological change. Using this concept it is possible to – at least partly – endogenize technological change in economic models. Introducing endogenous technological change is necessary to adequately analyze not only the direct effects of technological change, but also the indirect effects on important macro-economic indicators such as growth, employment, welfare and trade as well as their feedback to the electricity sector. In this paper a renewable power generation module for the INFORUM type econometric input-output models (see Eurostat, 2008, for more details) such as GINFORS (Lutz & Wiebe, 2012) and PANTA RHEI (Lehr et al., 2012) is developed. The energy sector modeling is based on the energy balances of the IEA. Renewables have only been a small aggregated part in the model previously, but are now included in more detail. In addition, this will be a first step to endogenize technological change in the model. Wind (on and offshore), PV, and concentrating solar power (CSP) generation technologies have been selected for further analysis. Their representation in the model is based on learning curves, which may, among other factors, depend on capacity installed, investment, R&D. We test both one factor and two factor learning curves (Wiesenthal et al., 2012) with learning rates estimated from the data and compared to existing studies. The electricity production is then calculated from capacity installed using the respective load hours of the year 2010, partly adapted if more information is available. This RPG extension of the econometric input-output model will contribute to a better understanding of the interaction between the deployment of renewable energy technologies and macro-economic indicators such as employment, GDP and sectoral production. The learning curves reflect both learning-by-doing and learning-by-searching. All of these factors develop endogenously in the model, but may also be influenced by policy measures. This approach will be a first step to endogenously determine the national investments in RPG technologies, electricity generation costs and global feedback loops of national policy measures (incl. export of policy measures) on RE investment and electricity production costs. Important results are exports and imports of RPG goods and services using assumptions regarding world market shares and trade shares, as well as the share of renewables in total electricity production and carbon emissions associated with electricity production. References Eurostat (2008): Eurostat Manual of Supply, Use and Input-Output Tables, Luxembourg. Lehr, U., Lutz, C. & Edler, D. (2012): Green jobs? Economic impacts of renewable energy in Germany. Energy Policy 40, DOI 10.1016/j.enpol.2012.04.076 Lutz, C. & Wiebe, K.S. (2012): Economic impacts of different Post-Kyoto regimes. International Journal of Energy Science 2(4), 163-168. Wiesenthal et al. (2012b). Technology Learning Curves for Energy Policy Support. EUR - Scientific and Technical Research Reports. JRC73231, doi:10.2790/59345. |
| Keywords: | Germany, Denmark, Spain, France, Italy, Portugal, United Kingdom, Japan, US, MENA, Rest of the World, Energy and environmental policy, Forecasting and projection methods |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5117&r=ene |
| By: | Zhu Qianting; Wujing; Wangzheng |
| Abstract: | Using agent-based modeling, this study creates a global carbon trading simulation system, and simulates the global carbon trading market under different scenarioes. To evaluate the effect of quota-based carbon emission permits trading mechanism globally, this article constructs a carbon trading model by using ABS modeling technology, and then develops a global carbon trading system, finally examining the capital flows of carbon trading and its impact on global climate protection. Simulation results shows that :( 1) the results of carbon trading depend on quota allocation. To offset the numerous historic carbon emissions, developed countries such as US would face huge quota deficits in the former scenario. (2) With a decrease in global carbon emission quotas and an increase demand for carbon emissions, the global carbon price will rise in the future.(3) The implementation of carbon trading is helpful for transferring capital mainly from developed countries to developing countries. (4)Under the carbon emission trading process, developed countries will purchase a large number of emissions quotas from developing countries, therefore, the cumulative carbon emissions per capita in developed countries will be still much higher than that in developing countries. (5) In both scenarios, carbon emission trading always increases the global Ramsey utility. |
| Keywords: | China (CN), the US (US), the EU (EU), Japan (JP), the former Soviet Union (FSU), and rest of the world (ROW)., Agent-based modeling, Impact and scenario analysis |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6876&r=ene |
| By: | Asian Development Bank (ADB); (Southeast Asia Department, ADB); ; |
| Abstract: | This report was produced under the Technical Assistance Grant: Determining the Potential for Carbon Capture and Storage (CCS) in Southeast Asia (TA 7575-REG), and is focused on an assessment of the CCS potential in Thailand, Viet Nam, and specific regions of Indonesia (South Sumatra) and the Philippines (CALABARZON). It contains inventories of carbon dioxide emission sources, estimates of overall storage potential, likely source-sink match options for potential CCS projects, and an analysis of existing policy, legal, and regulatory frameworks with a view toward supporting future CCS operations. The report also presents a comparative financial analysis of candidate CCS projects, highlights possible incentive schemes for financing CCS, and provides an actionable road map for pilot, demonstration, and commercial CCS projects. |
| Keywords: | energy and environment, climate change mitigation, Southeast Asia, carbon market, greenhouse gases, GHG emission, carbon dioxide emission, carbon capture and storage, Clean Development Mechanism, fossil fuels, indonesia, philippines, thailand, vietnam |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:asd:wpaper:rpt135683-2&r=ene |
| By: | World Bank Group |
| Keywords: | Environment - Climate Change Mitigation and Green House Gases Macroeconomics and Economic Growth - Climate Change Economics Transport Economics Policy and Planning Energy - Energy Production and Transportation Energy - Energy and Environment Transport |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:19308&r=ene |
| By: | Grossi, Luigi; Heim, Sven; Waterson, Michael |
| Abstract: | The German response to the Fukushima nuclear power plant incident was possibly the most significant change of policy towards nuclear power outside Japan, leading to a sudden and very significant shift in the underlying power generation structure in Germany. This provides a very useful natural experiment on the impact of increasing proportions of renewable compared to conventional fuel inputs into power production, helping us to see how changed proportions in future as a result of policy moves in favour of renewables are likely to impact. We find through quasi-experimental exploration of a modified demand-supply framework that despite the swift, unpredicted change, the main impact was a significant increase in prices, partly caused by more frequent situations with unilateral market power. The price impact was also most significant in off-peak hours, leading to changed investment incentives. There were no appreciable quantity effects on the market, such as power outages, contrary to some views that the impacts would be significant. Furthermore, we find the sudden and unilateral phase-out decision by the German government has significantly affected electricity prices and thus competitiveness in neighbouring countries. -- |
| Keywords: | electricity markets,Atomausstieg,German power market,nuclear outages,renewables |
| JEL: | L51 L94 Q41 Q48 Q54 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14051&r=ene |
| By: | HARUO IMAI; Jiro Akita; Hidenori NIizawa |
| Abstract: | After five years of Kyoto Protocol, now it is the time to review its impact and possible improvement, although KP itself in a sense suffers from a decline in the number of countries accepting emission quota. One notable feature of KP was the introduction of baseline-credit mechanism called the Clean Development Mechanism (CDM) to assist nations to reduce emissions within the assigned amount. There was several mistakes pointed out in the design of this mechanism, and among them is the dominance of non-energy related projects in the supply of the credits. Now, the reform of CDM is proposed by the CDM-EB (executive board) and still the scheme developed by the UN for CDM is considered a valuable infrastructure which can be shared by many alternative mechanisms as well as regional agreement which make use of offset schemes. However, among the proposed reform is the standardization of baselines which seems to contain several potential problems. In this paper, we shall examine several problems in this proposal taking the instances of projects which improves the emissions from a coal-fired power plant as discussed in Hayashi and Michelowa (2012). Among others, the proposal attempt to bind together several project options from energy efficiency project like the use of supercritical technology, to fuel switch project like a switch to LNG, and ultimately to the renewable energy. Mixing these together, the proposal sets the baseline and additionality criterion at a certain percentage point of the cumulative distribution. We shall point our several issues spotted in this proposal and try to fine a better option. Based on these observations, we examine the method to strike a balance between transaction costs and environmental integrity. See above See above |
| Keywords: | NA, Energy and environmental policy, Energy and environmental policy |
| Date: | 2013–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:005741:5999&r=ene |
| By: | Djoni Hartono; Nurkholis; Aldi Hutagalung |
| Abstract: | To be completed To be completed To be completed |
| Keywords: | Indonesia, Energy and environmental policy, Energy and environmental policy |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:7346&r=ene |
| By: | Reyno Seymore; R. Inglesi-Lotz1; J. Blignaut1 |
| Abstract: | A comparative analysis among the various greenhouse gas (GHG) emission inventories of South Africa is conducted, and in the process new inventories for 2007 and 2008 are constructed. The need for such a comparative analysis exists due to the number of inventories that have been published by, among others, the South African Department of Energy (DoE), the South African Department of Environmental Affairs and Tourism (DEAT), the International Energy Agency (IEA), Scholes and van der Merwe (1996), Howells and Solomon (2000), and Blignaut et al. (2005). Not only are these emission inventories relatively dated and requiring an update, but they also make use of different methodologies and report on the emissions using different industrial classifications. This paper proposes a consistent and theoretical rigorous approach to construct a reliable and timeous GHG emissions inventory. To accomplish this task, this paper develops GHG emissions databases for 2007 and 2008 in terms of industrial sectors, using the energy balances of South Africa. The South African Department of Energy (DoE), the South African Department of Environmental Affairs and Tourism (DEAT), as well as the International Energy Agency (IEA) published emissions data for South Africa. However, there seems to be inconsistencies between the different emission datasets. • The IEA database, while providing useful information for the comparison analysis with other countries, neither provides disaggregated emissions per sector nor includes other (non-CO2) greenhouse gas emissions. • The DoE has recent data and on a desired level of disaggregation; however, due to data gaps it probably underestimates emissions. • The DEAT inventory, while it includes a high level of disaggregation with an all-inclusive approach, is relatively dated providing an inventory only until 2000. Based on the consistent similarity between the Blignaut et al. (2005) and the 2006 IPCC Emissions Guidelines inventories, as well as the methodological rigor of both approaches, compared to the ambiguous treatment of several sectors in the DoE inventory, the suggested inventory to use is either the inventory constructed using the same emission factors as Blignaut et al. (2005) or the one using the 2006 IPCC Emissions Guidelines. |
| Keywords: | South Africa, Energy and environmental policy, Developing countries |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5071&r=ene |
| By: | Balke, Nathan S. (Southern Methodist University); Plante, Michael D. (Federal Reserve Bank of Dallas); Yucel, Mine K. (Federal Reserve Bank of Dallas) |
| Abstract: | This paper studies the e ffects of oil producing countries' fuel subsidies on the oil market and the world economy. We identify 24 oil producing countries with fuel subsidies where retail fuel prices are about 34 percent of the world price. We construct a two-country model where one country represents the oil-exporting subsidizers and the second the oil-importing bloc, and calibrate the model to match recent data. We find that the removal of subsidies would reduce the world price of oil by six percent. The removal of subsidies is unambiguously welfare enhancing for the oil-importing countries. Welfare can also improve in the oil-exporting countries, depending upon the extent to which they are net exporters of oil and on oil supply and demand elasticities. |
| Keywords: | oil prices; fuel subsidies; fiscal policy; open economy macro |
| JEL: | E62 F41 Q43 |
| Date: | 2014–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:1407&r=ene |
| By: | Isabel Teichmann |
| Abstract: | Biochar is a carbon-rich solid obtained from the heating of biomass in the (near) absence of oxygen in a process called pyrolysis. Its deployment in soils is increasingly discussed as a promising means to sequester carbon in soils and, thus, to help mitigate climate change. For a wide range of feedstocks and scenarios and against the baseline of conventional feedstock management, we calculate the technical greenhouse-gas mitigation potentials of slow-pyrolysis biochar in 2015, 2030 and 2050 when the biochar is incorporated into agricultural soils in Germany and when the by-products from biochar production - pyrolysis oils and gases - are used as renewable sources of energy. Covering the greenhouse gases carbon dioxide, methane and nitrous oxide, our analysis reveals that biochar allows for an annual technical greenhouse-gas mitigation potential in Germany in the range of 2.8-10.2 million tonnes of carbon-dioxide equivalents by 2030 and 2.9-10.6 million tonnes of carbon-dioxide equivalents by 2050. This corresponds to approximately 0.4-1.5% and 0.3-1.1% of the respective German greenhouse-gas reduction targets in 2030 and 2050. |
| Keywords: | Biochar, agriculture, Germany, climate change, soil carbon sequestration |
| JEL: | Q15 Q24 Q54 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1406&r=ene |
| By: | Karl Steininger; Birgit Bednar-Friedl; Wolf Grossmann; Thomas Schinko |
| Abstract: | Climate policy arrangements of partial regional coverage, as they seem to emerge from the UNFCCC process, might lead to carbon leakage and hence a broad literature has developed to quantify global leakage rates. While most of these analyses, are confined to consider combustion emissions only, Bednar-Friedl et al. (2012b) have pointed out the particular relevance of process emissions for both leakage rates and effectiveness of border carbon adjustment. We use this expanded framework in considering both combustion and process emissions in a multi-sectoral multi-regional Computable General Equilibrium model and analyze the implications of carbon free processinnovations. As a medium-term alternative to border carbon adjustment, we find that such a technological switch, for example in the European steel industry towards low-carbon electrowinning, can effectively reduce global carbon leakage. For border carbon adjustment considerations this implies their setting including a phase-out, such that incentivesfor carbon free innovations are preserved. Note from admin: See full paper Note from admin: See full paper |
| Keywords: | Note from admin: See full paper, Energy and environmental policy, General equilibrium modeling |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5482&r=ene |
| By: | Asian Development Bank (ADB); (East Asia Department, ADB); ; |
| Abstract: | This regional study includes the People’s Republic of China, Japan, the Republic of Korea, and Mongolia and examines how strategies for adapting to climate change up to 2050 can be combined with measures to reduce greenhouse gas emissions in East Asia. Besides discussing climate model results for costs of adaptation in infrastructure, coastal protection, and agriculture, the study estimates costs for sector-specific mitigation options and the total abatement potential for 2020 and 2030. Long-term strategies for addressing the impacts of climate change in East Asia are explored with a focus on the linkages between adaptation and mitigation taking account uncertainty about key climate variables. Finally, it discusses opportunities for enhancing the effectiveness of some critical climate change policies such as regional carbon markets. |
| Keywords: | economics, climate change, east asia, china, japan, korea, mongolia, carbon markets, CO2 emissions, climate change adaptation, climate change mitigation, climate policy |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:asd:wpaper:rpt125169-2&r=ene |
| By: | Lilian de Menezes; Melanie A. Houllier |
| Abstract: | The German Energiekonzept (Energy Concept) was proposed in 2010 with the goal of making the country one of the world’s most energy efficient and environmentally friendly economies (Bundesregierung, 2011). One year later, as a reaction to the multiple reactor meltdowns in Fukushima, this strategy was reinforced with a broad consensus within the German government to implement its Atomaustiegsgestz (Nuclear Phase-Out Act), by closing immediately eight nuclear power plants and then the remaining nine until 2022 (Bundesregierung, 2011). Subsequently, the Renewable Energy Source Act 2012 (RESA, 2012) aims to increase electricity generated from renewable sources to at least 35% by 2020 and to at least 80% by the year 2050. The RESA 2012 reaffirmed the basic principles of the feed-in tariff policy, which prioritizes renewable energy sources, the pledge to connect all renewable producers to the grid and the guarantee of a favourable unit price. This paper examines the potential impact of wind generated electricity produced in Germany on other European electricity markets, by employing MGARCH (multivariate generalized autoregressive conditional heteroscedasticity) models with constant and time-varying correlations for daily data. The interrelationship of electricity spot prices of APX-ENDEX (UK and Netherlands), Belpex (Belgium), EPEX (Germany and Switzerland), OMEL (Spain and Portugal), Nord Pool (Finland, Denmark and Norway) and Powernext (France) with wind penetration induced by the German system is studied from November 2009 to October 2012, thus covering the period before and after the closures of eight nuclear power plants. Literature Studies, such as Gross et al. (2006), Holttinen at al. (2009) and Smith et al. (2007) have highlighted the challenges associated with increased penetration levels of renewable energy sources as planned by the German government. There is, for example, a significant risk that a system with high wind power capacity will suffer electricity shortages and even blackouts. Other studies have shown that electricity spot market prices decrease to varying extents with the in-feed of wind generated electricity (see for example: Bode and Groscurt, 2006; Gil et al., 2012; Jacobsen and Zvingilaite, 2010; Neubarth et al. ,2006; Saenz de Miera et al., 2008; Sensfuß et al ,2008). The reduction of electricity spot prices is attributed to the cheaper wind generated electricity displacing offers from generators whose technologies have higher marginal costs (Sensfuß et al., 2008; Woo et al., 2011). Nevertheless, this positive effect may come at the cost of an overall increase in spot price volatility, due to the combined effect of non-storability of electricity and the high volatility of wind power (Woo et al., 2011; Milstein and Tishler, 2011; Green and Vasilakos, 2010). Despite integrated electricity markets being a promising instrument when managing intermittent sources of energy, the few studies that assess the volatility interrelationships among electricity markets have largely neglected the potential impact of renewables. Indeed, Bosco et al. (2007) remark that ‘[...] post-reform European price series have generally been studied in isolation and the issue of the interdependency in the price dynamics of neighbouring markets has largely been ignored.’ (p. 2). To date, a small body of literature applied a multivariate framework to electricity price volatilities (Worthington et al. (2005), Higgs (2009), Le Pen and Sévi (2010), Veka et al. (2012)). In this context, the present study aims to assess the potential effects of Germany´s energy transition on level and volatility of electricity spot prices in Germany and in other European countries. Germany serves as a statuary example, because of its increasing reliance on and investments in wind generated electricity as well as the size and importance of the German electricity market in Europe. Constant Conditional Correlation Bollerslev (1990) proposed a Constant Conditional Correlation MGARCH model (CCC), which has been preferred in empirical research over the BEKK specification because of its computational simplicity. This model is based on the decomposition of the conditional covariance matrix into conditional standard deviations and correlations. The conditional correlation matrix is time invariant and the conditional covariance matrix can be written for each time, t, as follows: H_t=D_t ΓD_t=ρ_ij (h_iit h_jjt )^(1/2) (1) Where 1≤i≤j≤K,t=1,…,N; K is the number of variables in the model and N is the number of observations in the estimation period; D_t=diag(h_11t^(1/2)…h_KKt^(1/2)), (2) Γ=ρ_ij (3) h_iit is the conditional variance of a univariate GARCH model and Γ is the symmetric positive definite constant conditional correlation matrix, with ρ_ii=1 ,∀i. Dynamic Conditional Correlation Although the CCC model overcomes the shortcomings of the BEKK and VEC models, the assumption of constant correlations may be too restrictive (Minović, 2009). Tse and Tsui (2002) and Engle (2002) therefore extended the CCC models to dynamic conditional correlation models (DCC), by including a time dependent conditional correlation matrix (Γ_t) and thus the conditional covariance matrix becomes: H_t=D_t Γ_t D_t (4) Where D_(t ) and h_iit are as defined in equation (2). Following, Tse and Tsui (2002) the conditional correlation matrix is given by: Γ_t=(1-θ_1-θ_2 )Γ+θ_2 Γ_(t-1)+θ_1 Ψ_(t-1) , (5) where 1≤i≤j≤K and θ_1 and θ_2 are non-negative constants such thatθ_1+θ_2<1 and. Γ, is the KxK symmetric positive definite constant parameter matrix with ρ_ii=1 for all i. Ψ_(t-1) is a function of the lagged standardized residuals ξ_it, and its ijth element can be denoted as: Ψ_(t-1,ji)=(∑_(m=1)^M▒ξ_(i,t-m) ξ_(j,t-m))/√((∑_(m=1)^M▒ξ_(i,t-m)^2 )(∑_(m=1)^M▒〖ξ_(j,t-m)^2)〗) where ξ_it=e_it/h_iit^(1/2) ` (6) Engle (2002) proposed the following alternative formulation: Γ_t=diag (q_11t^(-1/2)…q_KKt^(-1/2) )((1-θ_1-θ_2 ) Q ̅+θ_1 ξ_(t-1) ξ_(t-1)^'+θ_2 Q_(t-1) )diag(q_11t^(-1/2)…q_KKt^(-1/2) ), (7) where Q ̅ is the KxK unconditional correlation matrix of ξ_t, and θ_1 and θ_2 are non-negative parameters satisfying θ_1+θ_2<1 (Higgs 2009). The results of the MGARCH models indicate positive cross-market and lagged spillovers, as well as significant reduction in electricity spot prices with increasing wind penetration. Positive time-varying correlations between spot market volatilities are found for markets with substantial shared interconnector capacity, and wind penetration volatility is negatively associated with electricity spot price fluctuations. All in all, this study provides evidence that decisions made by one state in the European Union regarding its electricity sector can impact on neighbouring electricity markets. |
| Keywords: | Germany, Energy and environmental policy, Sectoral issues |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5395&r=ene |
| By: | Davide Antonioli (University of Ferrara, Italy.); Simone Borghesi (University of Siena, Italy.); Alessio D'Amato (Università di Roma Tor Vergata, Italy.); Marianna Gilli (University of Ferrara, Italy.); Massimiliano Mazzanti (University of Ferrara, Italy.); Francesco Nicolli (CERIS-CNR Milano, Italy.) |
| Abstract: | The paper investigates the effectiveness and efficiency of energy-environmental policy interactions in Italy, adopting a broad optimality perspective that includes policy feasibility and dynamic efficiency. The analysis highlights that though some complementarity among different policies exists, climate policies have been often undermined by energy and renewables policy. Nevertheless, some complementarities between policy landscapes are found, as in the case of the Kyoto Fund (climate policy) and of the incentives and funding towards thermal energy, both acting as a complementary tool to cover non EU-ETS sectors. Overall, renewables oriented policies bring about efficacy but this often occurs at the expenses of their efficiency, thus generating a trade-off between these two components of optimality. Finally, incentives remuneration of renewables and also Energy efficiency investments give a mixed signal to improve innovation and to stimulate the green sector. In conclusion, notwithstanding efficacy is present in some case, cost effectiveness and efficiency are far from being optimal, and It would be better to provide a clear and durable price signal using carbon taxation tools. |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:2514&r=ene |
| By: | Covi, Giovanni |
| Abstract: | The paper aims at understanding if the First Oil Shock has produced long-term effects to the economic system and its fundamentals, if it is still indirectly affecting the energy market and the growth rates of the Western Economies and Less Developed Countries. An historical perspective here will be used as an interpretative tool in order to discern the causes of the 1973’s events and its long-term consequences on the world economy during the two decades following the First Oil Shock. The circumstances and the causes by which the shock has developed, the happenings during the conflict, and the changes in the structure of the energy market play a key role for the analysis and therefore will be deeply investigated. |
| Keywords: | First Oil Shock; Sustainable Development; Long Waves; Oil; |
| JEL: | O11 Q32 Q43 |
| Date: | 2014–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:58130&r=ene |
| By: | Elena Stolyarova |
| Abstract: | This paper provides an empirical analysis of CO2 emissions and economic growth, based on a panel dataset covering 93 countries over the period 1960-2008, and examines the challenge of country selection for homogeneous and appropriates groups. We have proposed a no parametric hierarchic clustering approach, based on 17 categorical variables, used the Multiple Correspondence Analysis (MCA) and the Hierarchical Clustering on Principal Components (HCPC). We have began ecnometric modeling by some model specification tests: parameters’ homogeneity, the unit root (IPS procedure) and Pedroni's cointegration tests. Finally Dynamic Panel Data and WITHIN models were estimated to explain the growth rate of per capita CO2 emissions. The results of the clustering indicate the optimal partition of 93 countries into 7 groups, each with its own characteristics. The unit root and cointegration tests show that the long-run relationship does not exist for any clusters and the nature of stationary is different between and into the groups. It’s found that the growth rate of per capita CO2 emissions depends positively on the growth rate of per capita GDP (short-run elasticity is between 0.3 and 0.79) and negatively on the growth rate of energy mix (between -0.025 and -0.13). |
| Keywords: | 93 countries (largest CO2 emitters), Energy and environmental policy, Macroeconometric modeling |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5433&r=ene |
| By: | Fabio Indeo |
| Abstract: | The presence in its territory of huge oil and gas reserves and its geographic-territorial location as a kind of “energy bridge” between Caspian energy and Turks and European markets represent relevant geopolitical factors which have enhanced the strategic relevance of Azerbaijan in the regional and international scenario. Thanks to these conditions, several energy projects (pipelines, LNG terminals) have been proposed with the aim to cross Azeri republic or to use Azeri oil and gas reserves: the most famous is Nabucco and the Southern Corridor but there are others like AGRI, TANAP, ITGI, TAP which stress the rising importance of this Caucasian republic. The aim of this paper is to evaluate if Azerbaijan could play both roles as energy supplier and energy hub in the East-West corridor in the next years and which geopolitical, strategic and economic gains could obtain considering following issues: Azerbaijan is a strategic key partner for the EU in order to satisfy its growing demand of energy and to achieve its energy security strategy focus on the diversification of export route and on the reduction of export dependency from Russia; Azerbaijan could be a geopolitical player in the Russian energy strategy aimed to preserve the EU dependency from Russian gas hindering the realization of the Southern Corridor; Azerbaijan could become a strategic energy partner for Turkey, not only following the implementation of the planned TANAP pipeline but because most of planned energy routes projects involving Azerbaijan must necessarily cross Turkish territory; Azerbaijan is the obliged route for Central Asian states (mainly Kazakhstan and Turkmenistan) which aimed to channel their oil and gas exports towards Western and European markets. We can observe that the precondition for a full implementation of the Southern Corridor is the Turkmen-Azeri appeasementTo develop my research, I use a comparative method through which I analyse how Azeri strategic key drivers (strategic geographic position, huge oil and gas reserves, Azerbaijan's diversification strategy of energy exports) have attracted interests of geopolitical actors in order to achieve their strategic energy goals.The convergence of strategic interests between Azerbaijan and EU focused on the energy diversification concept has enhanced the Caucasian republic in the role of key partner for EU, in order to achieve its energy security through the implementation of the Southern Gas Corridor (SGC). The future implementation of the Trans Anatolia Gas Pipeline (TANAP) will represent a concrete and feasible opportunity for Azerbaijan to play both role of transit and supplier country within the SGC also benefiting of several economic, political and strategic gains. However, the achievement of this result will hinder Russian geopolitical plans in the region (to set back EU energy diversification projects and to obtain additional volumes of gas to fuel South Stream project). The concrete achievement of the Azeri geopolitical ambition to become a strategic energy supplier and transit country depends on the solution of regional hindrances, such as the obliged Georgian export route, the unsolved Caspian legal status, relations with Turkmenistan to realize the Trans Caspian energy corridor.. |
| Keywords: | Azerbaijan, Energy, Infrastructure |
| Date: | 2013–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:005741:6037&r=ene |
| By: | Roger Coupal; Robert Godby; Greg Torell |
| Abstract: | The expansion of wind generation in the United States poses significant challenges to policymakers. Of primary concern is how to optimally incorporate wind in the existing electricity-grid while maintaining power supply at low cost and high reliability. On the supply side, adding generation with the unique characteristics of wind power to the grid presents significant reliability and cost challenges. Wind's intermittency and unpredictability makes scheduling electricity sources in a reliable but efficient way challenging since electricity cannot be stored. To ensure reliability, backstop sources can be added to the grid for use when wind availability is low, but these large fixed capital investments are costly and using them primarily as a backstop ensures lower capital return and higher system costs than when the same technologies are used as primary generators. Transmission capacity and network congestion also limit wind development efforts. Location of wind resources often require new transmission capacity to deliver power to market. Without such capacity wind resources are restricted in their export potential, reducing the return to investment and welfare benefits of such renewable generation facilities. Wind's intermittency can also exacerbate problems of congestion on a transmission constrained grid. On the demand side, electricity demand is unresponsive to cost change, lacking both the information to react to cost conditions and the short-run flexibility with respect to power-use to meaningfully change an inelastic demand. Optimal policy-making with respect to development of wind energy and transmission resources requires some estimate of their costs and benefits, recognizing the stochastic nature of wind resources and transmission constraints on the dynamics of grid electricity cost. This requires a modeling framework that mimics the special nature of electricity markets. This paper attempts to inform such policy concerns by using a recursive optimization simulation model to estimate levels of generation across the two-state region and spanning seasonal variations. A dispatch model incorporates the stochastic aspects of wind generation on a grid with line loss and transmission constraints to estimate the value of additional transmission facilities and expanded wind resources in the Rocky Mountain region of the United States. The simulation model is used to estimate the value of newly built wind resources and planned transmission facilities in the Rocky Mountain Power Area (which includes the state of Colorado, along with most of Wyoming and portions of South Dakota and Nebraska). Price and welfare changes are estimated in these areas as new transmission and wind generation capacity is added to the system. The dispatch model is imbedded in a computable general equilibrium (CGE) model to estimate broader sectoral impacts and regional welfare changes. to estimate economy-wide production, employment, income, and welfare effects. Initial results indicate that the price effects caused by changes in power output at intermittent sources are strongly dependent on the demand conditions and the presence of market distortions caused by the transmission constraints. The peculiarity inherent in electric grid operation can generate responses to policies and congestion that are not always intuitive at the outset. The distribution of the rents accruing to wind generation, particularly in unexpectedly windy periods are strongly dependent on the allocation of transmission rights especially when congestion occurs, which impacts potential returns to developing wind resources. Incidents of congestion depend on the pace of development of transmission capacity. Not accounting for such distortions unique to the electricity grid may cause new development to worsen market outcomes in one region relative to another if mistaken estimates of benefits or costs lead to sub-optimal future development of wind and transmission facilities. Note from admin: see above Note from admin: see above |
| Keywords: | Rocky Mountain region, Energy and environmental policy, General equilibrium modeling |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5488&r=ene |
| By: | Virginie Doumax-Tagliavini; Cristina Sarasa, University of Zaragoza |
| Abstract: | In September 2013, the EU Parliament has called for a 6% limitation of crop-based biofuels (instead of 10% initially) and proposed a 2.5% binding incorporation target for cellulosic biofuels by 2020. In spite of this stated objective, the horizon of a large-scale adoption for advanced biofuels remains largely uncertain. Indeed, biofuels competitiveness is tightly linked to crude oil prices that also follow an uncertain evolution. In this context, including both uncertainties into the same analysis framework could be challenging. Focusing on France, this work proposes to address this issue. The main objective is to assess the economic and environmental impacts of first and second-generation biofuels. We also determine the conditions under which advanced biofuels could become available earlier regarding to the evolution of oil prices and public subsidies. We develop an original approach to incorporate uncertainty within a dynamic computable general equilibrium (CGE) model calibrated on 2009 French data. In line with the existing literature, cellulosic biofuels are modeled as latent technology (Reilly and Paltsev, 2007; Melillo et al., 2009) and biofuels by-products are included into the analysis (Taheripour et al., 2010). Using stochastic programming, we consider different scenarios depending on the oil price volatility and the changes in the fiscal incentives. This methodology allows us to compare the effects of first and second-generation biofuels as regards mainly agricultural land, food production and greenhouse gas (GHG) emissions. Results confirm the larger performance of advanced biofuels in terms of GHG emissions. They also show in which measure the technology improvement may reduce the pressure on food and land resources. Therefore, simulations provide guidelines for public deciders to design alternative fiscal policies to support advanced biofuels hand in hand with economic, social and environmental impacts. |
| Keywords: | France, General equilibrium modeling, Energy and environmental policy |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6941&r=ene |
| By: | Nigar Muradkhanli |
| Abstract: | Researching new solutions of meeting the European increasing energy demand. Estimating Caspian potential and other solutions of this problem like shale gas. The case study is mainly based on qualitative research, with using quantitative and comparative methodologies as well. Showing the role of Caspian countries in energy supply security of Europe. |
| Keywords: | Caspian region and the EU countries, Energy, Socio-economic development |
| Date: | 2013–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:005741:5991&r=ene |
| By: | Michael Hübler; Sebastian Voigt; Andreas Löschel |
| 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). We conduct a quantitative assessment of the Chinese emissions trading scheme (ETS) with the help of PACE (Policy Analysis based on Computable Equilibrium). PACE is a multi-sector, multi-region computable general equilibrium (CGE) model of global production, consumption, trade and energy use which is calibrated for the year 2005 proceeding in five-year time steps until the year 2030. The model is recursive dynamic, this means, it is solved for a sequence of global market equilibria. The equilibria are connected via investments and other exogenous drivers of economic growth. The benchmark data for the year 2004/2005 are taken from the GTAP 7 data base (Global Trade Analysis Project; Badri and Walmsley, 2008). Data for the dynamic business-as-usual (BAU) calibration until 2030 are taken from IEO (2008/2010). IEO (2008/2010) provides detailed regional data on fuel-specific primary energy consumption and carbon emissions. Pricing of carbon emissions with the help of an ETS results in macroeconomic effects (welfare, GDP, net exports etc.) and sectoral effects (output reductions). 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. When imposing a laxer 40% intensity target, the losses will decline to 1.7% in 2030. Full auctioning of carbon allowances results in very similar macroeconomic effects as free allocation, but the results differ significantly at the sector level. 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: | People's Republic of China, General equilibrium modeling, Impact and scenario analysis |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6775&r=ene |
| By: | Yingying Lu; David Stern |
| Abstract: | The degree of substitutability assumed between inputs in production and commodities in consumption is one of the key factors that might affect the range of predicted climate mitigation costs. We explore how and by how much assumptions about 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 analysis and apply factor decomposition analysis to the outcomes from the model.The results suggest that the average abatement cost rises non-linearly as elasticities are reduced. Substitution elasticities between capital, labor, energy, and materials in production have a larger impact on mitigation costs than inter-fuel substitution does. There are notable differences in the effect of the elasticities on costs at the regional level due to interactions in international trade and capital flows in such a global model. As elasticities are reduced, growth in GDP and emissions also decrease under the business as usual scenario and so the emissions that must be cut to reach a given absolute mitigation target are also reduced. Therefore, there is not much variation in the total costs of reaching a given target across the parameter space. |
| Keywords: | Global, General equilibrium modeling, Energy and environmental policy |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6692&r=ene |
| By: | Roula Inglesi-Lotz; Jessika Bohlmann |
| Abstract: | One of the most severe problems of the modern world is the climate change and its important negative consequences to the environment. Human activity, particularly the consumption of energy, has been considered being one of the main factors contributing to the changing of climate in the last decades (IPCC, 2007). To tackle the future changes of the environment, among other measures, a change in the current ways of generating energy is imperative. Traditional generation techniques such as coal-burning have detrimental effects to the environment and hence, internationally, countries have turned towards more environmentally-friendly generation techniques from renewable sources such as solar and wind that are also in synergy with many aspects of sustainable development (Stiglitz, 2002). Developed countries promote renewable energies (RE) with ultimate purpose to strengthen the energy security and control their greenhouse gas (GHG) emissions (Moselle, 2011); while the developing economies see solutions in the use of RE to the challenges of rural electrification and lack of access to electricity (Munasinghe 1990, Pereira et al. 2010). The Environmental Kuznets Curve (EKC) illustrates the hypothesis that a country is performing environmentally worse at the early stages of economic growth and development but subsequently, as the economic growth rises, the environmental quality improves. Although in theory, the hypothesis can be justified, the results of the empirical studies remain inconclusive. Possible reasons to explain this phenomenon can be: (a) the transition of the economies from clean agricultural economies, to high polluting secondary sector-based economies and finally to clean service-based economies and (b) at higher income levels, people do not worry about their surviving needs and tend to improve their preference for environmental quality. Examining the existence of EKC for the South African case and the rest of Africa will be particularly interesting and relevant for South Africa and other African economies that are already in a certain path of growth and development but in parallel they are also committed internationally to reduce emissions and promote clean and renewable energies. This paper will be able to answer the following research questions: • What has the recent international literature concluded on the EKC hypothesis? • Theoretically, where does the hypothesis stand on? • Does the choice of the indicator for environmental performance have an impact on the findings? • Which is the most appropriate methodology to be used in an empirical analysis of EKC for South Africa and the African countries? • Using this methodology, is the EKC hypothesis confirmed or rejected for South Africa? What are the reasons behind the findings? • Are there interventions that can promote a “tunnel-through” for South Africa? What can the country learn from international best practice? • What are the policy implications of the findings and how should the policy makers use them? References IPCC (2007). Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Geneva, Switzerland Moselle, B. (2011). Why support renewables?. EPRG spring research seminar. University of Cambridge. UK. Munasinghe, M. (1990). Rural electrification in the Third World. Power Engineering journal: 189-202. Pereira, M.G.,Freitas, M.A.V. and Silva, N.F. (2010). Rural electrification and energy poverty: empirical evidences from Brazil. Renewable and Sustainable Energy Reviews: 14:1229-1240. Stiglitz, J. (2002). Globalization and its discontents. Penguin Books Ltd. London, UK. Numerous studies have estimated EKCs for certain air and water pollutants as well as other indicators proxying environmental performance. As noted Arrow et al. (1995) and Stern et al. (1996), these estimated regressions are reduced-form relationships which mean that they reflect correlation rather than a causal relationship. Nevertheless, these studies provide evidence that, for at least those pollutants involving local short-term health hazards, market and institutional mechanisms have eventually brought about a reduction in environmental damage during the course of economic growth (Cole et al. 1997). Cole et al (1997) extended past empirical studies by including more environmental indicators such as carbon dioxide, methane, and others. “The employment of a reasonably comprehensive data set permits the examination of a number of hypotheses relating to the association between economic growth and the environment. First, that pollutants with a local short-term impact (e.g., suspended particulate matter) will have estimated turning points at lower per capita income levels than those environmental indicators whose impact is more global in nature (e.g., carbon dioxide)” (Cole et al. 1997). In our analysis, we will follow Cole et al. (1997) with the idea of using different indicators for South Africa and compare the results. The basic model is: Et= f( Yt, Xt) where Et denotes the environmental indicator in per capita form in the country at year t, Yt denotes per capita income in the country at year t, and Xt represents exogenous factors, such as trade intensity and the level of technology in the country at year t. Two alternative functional forms are employed for estimating equation (1) from a cross-country/regional panel set: quadratic in levels and quadratic in logarithms. These are written as: Et= (α + μ F) + β Yt+ γ Yt2+ Xt +et (1) and ln Et= (λ +κ F) + η lnYt + θ(lnYt)2+Xt+ εt (2) A cubic function can also be considered, even though that Cole et al. (1997) pointed that the fact that every cubic relationship necessarily extends to plus or minus infinity was deemed to be unrealistic. An environmental quality path exists if there is a statistically significant relationship between an environmental indicator and income. A path displays a turning point if β> 0 and γ<0 in equation (1) and η>0 and θ<0 in equation (2). Income at the turning point, denoted by Y* is Y*=(-β/2γ) in equation (1) and Y*=exp(-η/2θ) in equation (2). A priori, the quadratic logs function would seem to provide a more realistic income–environmental quality path than the quadratic levels function because of the symmetrical nature of the latter. If, for example, pollution is considered, this symmetry implies, first, that pollution levels will fall at the same rate as they increased and, second, that these pollution levels will become negative, probably in a short space of time. This is in contrast to the quadratic logs function which falls away only gradually, once it passes the turning point, as the curve asymptotically approaches zero. I will critically evaluate various econometric methodologies that would seem appropriate to quantify the above discussed theoretical framework. Among them, we will consider cointegration techniques such as ones using time series data (cointegration as the ones proposed by Granger, Johannsen or the ARDL), Vector AutoRegression (VAR) and Vector Error Correction Models (VECM), or panel data techniques such as the Generalised Method of Moments (GMM) or Seemingly Unrelated regressions (SUR). References Arrow, K., B. Bolin, R. Costanza, P. Dasgupta, C. Folke, C.S. Holling, B.-O. Jansson, S. Levin, K.-G. Maler, C. Perrings and D. Pimentel (1995), ‘Economic growth, carrying capacity and the environment’, Ecological Economics 15(2): 91–95. Cole, M.A., Rayner, A.J. and Bates, J.M. (1997). The environmental Kuznets curve: and empirical analysis. Environment and Development Economics, 2: 401-406. Stern, D.I., M.S. Common and E.B. Barbier (1996), ‘Economic growth and environmental degradation: The environmental Kuznets curve and sustainable development’, World Development 24(7): 1151–1160. The results of this paper will confirm or not the EKC hypothesis and also, make some useful suggestions with regards to the proxies to be used in such papers in the future as well as the appropriate methodologies. |
| Keywords: | South Africa, Energy and environmental policy, Developing countries |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6378&r=ene |
| By: | Yadulla Hasanli |
| Abstract: | The purpose of the research is to unveil conditions for sustainable development by studying relationship between natural (I) and non-natural (II) wealth based on Carl Marx’ re-production scheme. General Equilibrium Model extented to Marx's Production Schema Realization results of the model showed that the growth of the oil industry's tend to be higher than non-oil sector . The process continues in this manner creates the move toward an increase in the income share of the oil sector . This leads to the one-sided development of the economy ( in the oil sector ) that is regarded as a sign of "Dutch disease". Note that natural resources ( natural capital ) by its nature can be divided into renewable and nonrenewable resources . Renewable natural resources ( natural capital ) , for example , is water. For nonrenewable resources can be show as oil, gas and ferrous metals. The volume of production of oil and gas resources are falling sharply after the exhaustion of these resources. Thus, physical capital and labor resources gathered in the oil and gas sector ( human capital ) is ineffective , therefore, the capital , as well as low levels of the workforce is employed. The main reasons for the growth of the income in oil sector compared to th other sectors is that natural resouces not fully paid for their contribution in total income. This factor reduces the demand in oil sector for the of non-oil sector, and in turn the growth rate of non-oil sector comes down. From our scheme it becomes clear that repayment of money to the the restoration of natural capital from share of income in the oil sector could be the main condition for the balanced development of the economy . |
| Keywords: | Azerbaijan, General equilibrium modeling, Impact and scenario analysis |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:7083&r=ene |
| By: | Faisal Jamil; Ahmad, Eatzaz |
| Abstract: | The paper empirically investigates the effects of various economic, legal, meteorological and technical factors in explaining the theft from electric utilities in Pakistan. We obtained elasticity of electricity theft with respect to different variables mentioned. Panel data from nine utilities Fixed effects and Random effects modeling approach estimated through GMM and LSDV approachOur results indicate that per capita income has significant negative and electricity price positive effect on electricity theft with sufficiently high coefficient values. However, the probability of detection does not perform consistently in combating electricity theft in all the models showing poor deterrence. The impact of penalty i.e. fine on conviction however, depresses electricity theft. |
| Keywords: | India, Pakistan, Srilanka, Bhutan, Nepal, Bangladesh, Afghanistan, Energy, Socio-economic development |
| Date: | 2013–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:005741:6031&r=ene |
| By: | Jing Wu; Zheng Wang; Qianting Zhu; Lijuan Wang; Yi Gong; Huaqun Li |
| Abstract: | Integrated assessment models(IAMs) are the primary methodology for climate change policy modeling, since it connect the economic activities with the natural system which is influenced by economic system. In this paper,we present a IAM model and develop policy assessment for mitigation strategies.The IAM model named MRICES in our paper is based on dynamic system mechanism. Many global emission reduction strategies have been proposed, but few have been assessed quantitively from the view of equality, efficiency and effectiveness. Integrated assessment models (IAM) is one of the effective ways to make climate policy modeling. So in this paper we developed the MRICES (Multi-regional integrated model of climate and economy with GDP spillovers) model, which is an IAM but extends to include GDP spillover mechanism, to make assessment on several strategies for global emissions reduction, including the egalitarianism strategy, the UNDP strategy and the Copenhagen Accord. Using 1990 as a baseline for historical emissions levels, the egalitarian strategy argues that developed nations should implement urgent emissions reductions, whereas developing nations are allowed relatively higher future emissions quotas. The UNDP strategy addresses the issue of substantial changes in global temperature but acknowledges that developing countries are not able to afford more costs for mitigation measures, which is inequitable from the perspective of a country’s right to develop. We also simulated the Copenhagen Accord to determine the consequences by the year 2100 if each country continues their current emissions mitigation actions, and results indicated that the increase in global temperature will be 2.8°C by 2100; consequently, much stronger emissions reduction efforts must be implemented after 2020. Based on analysis on mitigation strategies, it is recognized that the common but differentiated responsibility principle must be insisted when making global mitigation strategy. To comply with this principle, the emission reduction baseline of developed and developing countries should be discriminated, so 1990 and 2005 can be taken as the base year for developed and developing countries respectively. |
| Keywords: | Global, Impact and scenario analysis, Energy and environmental policy |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6567&r=ene |
| By: | Lucas Bretschger (ETH Zurich, Switzerland); Alexandra Vinogradova (ETH Zurich, Switzerland) |
| Abstract: | Climate physics predicts that the intensity of natural disasters will increase in the future due to climate change. One of the biggest challenges for economic modeling is the inherent uncertainty of climate events, which crucially affects consumption, investment, and abatement decisions. We present a stochastic model of a growing economy where natural disasters are multiple and random, with damages driven by the economy's polluting activity. We provide a closed-form solution and show that the optimal path is characterized by a constant growth rate of consumption and the capital stock until a shock arrives, triggering a downward jump in both variables. Optimum mitigation policy consists of spending a constant fraction of output on emissions abatement. This fraction is an increasing function of the arrival rate, polluting intensity of output, and the damage intensity of emissions. A sharp response of the optimum growth rate and the abatement share to changes in the arrival rate and the damage intensity justifies more stringent climate policies as compared to the expectation-based scenario. We subsequently extend the baseline model by adding climate-induced fluctuations around the growth trend and stock-pollution effects, demonstrating robustness of our results. In a quantitative assessment of our model we show that the optimal abatement expenditure at the global level may represent 0.9% of output, which is equivalent to a tax of $71 per ton carbon. |
| Keywords: | Climate policy; uncertainty; natural disasters; endogenous growth. |
| JEL: | O10 Q52 Q54 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:14-202&r=ene |
| By: | Dina Azhgaliyeva |
| Abstract: | Recently it has become popular among oil-producing countries to establish oil revenue funds, which are believed to stabilize the economy. However their effectiveness is still under debates. The objectives of this paper to determine what makes funds effective in oil-producing countries. The effect of different types of funds on correlation between exchange rates and oil export was tested using data of Azerbaijan, Kazakhstan and other 26 oil-producing countries. An effective fund must be able to de-link exchange rates from oil export. The empirical model is based on the findings theoretical model. The data was tested using panel and country-by-country unit roots and cointegration tests. The effectiveness of funds was tested using country-by-country estimation and panel data estimation. The results show that funds can stabilize exchange rates, however just the existence of funds does not guarantee their effectiveness. The results of panel data estimation provide a list of rules (such as accumulation rule, investment, reference oil price and percentage which accumulates funds) which make funds effective. The results show that the oil revenue fund of Azerbaijan is effective in stabilizing exchange rate, but this result is statistically not significant. The results show that the oil revenue fund of Kazakhstan is not effective in stabilizing exchange rate, this result is statistically not significant. |
| Keywords: | Azerbaijan, Kazakhstan and other oil -producing countryies, Energy, Tax and public finance |
| Date: | 2013–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:005741:6023&r=ene |
| By: | Virginie Doumax; Jean-Marc Philip; Cristina Sarasa |
| Abstract: | The 2009 Directive on Renewable Energies (called RED) has set up ambitious targets concerning biofuels consumption in the European Union. This paper addresses this issue in the case of France, focusing on alternative tax policies designed to stimulate biofuels consumption. Our main objective is to determine under what circumstances tax policies could help the French government to achieve the 2020 biofuels consumption mandate. A common response is to increase taxes on fossil fuels in order to enhance the price competitiveness of their renewable substitutes on the fuel market. However, recent studies (Timilsina et al., 2011a; Barker et al., 2008; Weber et al., 2005) have shown that the way the government uses the tax revenue is a key determinant. Indeed, recycling the tax revenue to households through a lump-sum rebate is not an efficient strategy since the impact on biofuels consumption is limited, even with higher tax rates. Hovewer, when the tax revenue is used to finance a biofuel subsidy, the market penetration of biofuels increases significantly. On the other hand, some studies underline the role of oil prices in the expansion of biofuels worldwide. Timilsina et al. (2011b) show that if oil prices rise 150% from their 2009 levels by 2020, the resulting penetration of biofuels would be 9%. But they don’t take into account the context of rising oil prices into a tax policy analysis. With these questions in mind, we propose to go further and to combine both features, tax policies and rising oil prices, into a same model. The aim is to determine the minimal level of additional taxes on fossil fuels needed to achieve the 2020 biofuels target when oil prices increase. On the other hand, we take into account the budgetary constraints of the government by eliminating the differential tax rate between fossil fuels and renewable fuels. To do it, we increase the level of the excise-tax on biofuels by 35% in order to observe if the 2020 biofuels target could be also reached under this assumption. For this purpose, we develop a multi-sector, recursive dynamic computable general equilibrium (CGE) model calibrated on 2009 French data. Standard CGE models take into account the various inter-linkages between economic sectors and are particularly useful for the evaluation of tax policies. Our first scenario consists in designing different tax schemes on fossil fuels. We compare the level of additional taxes required to reach the 2020 consumption target when the tax rate increases progressively and when the rise is less graduated. Then, in a second scenario, we wonder which would be the level of taxes on fossil fuels to reach the 2020 consumption target when the excise-tax rate on biofuels is increased. In a third scenario, we combine the precedent simulation with an exogenous increase of oil prices with the assumption that future evolution of oil prices will follow the trend observed on the past period. This paper also investigates the economy-wide effects of these alternative scenarios, notably on the agricultural sector. Indeed, the impacts of a larger expansion of biofuels may increase the agricultural outputs, while an exogenous increase of oil prices may lead to an output drop. Finally, we introduce explicitly biofuels by-products in the analysis, notably oilseed meals, in order to check if their presence reduces the price impacts of the biofuel production. Indeed, recent studies (for e.g. Taheripour et al., 2010) have shown that the presence of by-products could mitigate the price impacts of biofuel production. Results of scenarios 1 and 2 suggest that the target could be achieved with acceptable levels of taxation. Nevertheless, scenario 2 implies higher tax rates on fossil fuels and larger but limited welfare losses. The needed level of additional taxes is lower when it is analyzed in a context of rising oil prices, as it was expected. Besides, we find that the development of biofuel consumption only partially offsets the depressive effect of oil prices on the agricultural output. The introduction in the model of biofuels by-prducts reveals smaller changes in agricultural prices, particularly in the livestock sector, confirming that models that omit by-products may overstate the economic impacts of biofuels mandates. |
| Keywords: | The model concerns the French national economy., Energy and environmental policy, Agricultural issues |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5417&r=ene |
| By: | Djoni Hartono; Tony Irawan; Ahmad Komarulzaman |
| Abstract: | To be completed To be completed To be completed |
| Keywords: | Indonesia, Energy and environmental policy, General equilibrium modeling |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:7344&r=ene |
| By: | Massimiliano Mazzanti (Dept. of Economics and Management. University of Ferrara, Italy. CERIS CNR Milan. SEEDS – Sustainability Environmental Economics Dynamics Studies.); Antonio Musolesi (INRA, UMR; Université de Grenoble Alpes, France.) |
| Abstract: | We study long run carbon dioxide emissions-economic development relationships for advanced countries grouped in policy relevant groups: North America and Oceania, South Europe, North Europe. By relying on recent advances on Generalized Additive Mixed Models (GAMMs) and adopting interaction models, we handle simultaneously three main econometric issues, named here as functional form bias, heterogeneity bias and omitted time related factors bias, which have been proved to be relevant but have been addressed separately in previous papers. The model incorporates nonlinear effects, eventually heterogeneous across countries, for both income and time. We also handle serial correlation by using autoregressive moving average (ARMA) processes. We find that country-specific time related factors weight more than income in driving the northern EU Environmental Kuznets. Overall, the countries differ more on their carbon-time relation than on the carbon-income relation which is in almost all cases monotonic positive. Once serial correlation and (heterogeneous) time effects have been accounted for, only three Scandinavian countries — Denmark, Finland and Sweden — present some threshold effect on the CO2-development relation. |
| Keywords: | Environmental Kuznets curve, semiparametric models, generalized additive mixed models, interaction models. |
| JEL: | C14 C23 Q53 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:2214&r=ene |
| By: | Aliakbar Kiani |
| Abstract: | studieng some aspects of globalization and energy issues as a field for cooperation instead of conflictFunctional theory based on neoliberal instutionalismGlobal Peace and Integration |
| Keywords: | World wide, Energy, Regional integration |
| Date: | 2013–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:005741:5880&r=ene |
| By: | Walsh, Darragh; Malaguzzi Valeri, Laura |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp488&r=ene |
| By: | Crowley, Sara; FitzGerald, John; Malaguzzi Valeri, Laura |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp486&r=ene |
| By: | Khalid Siddig; Harald Grethe |
| Abstract: | 1 Introduction In 2009, major offshore natural gas deposits were discovered in Israel after historically being an energy-poor state relying on imported fossil fuels to meet its energy needs, and an energy island that is disconnected from energy infrastructure in the region, with the exception of gas supplies from Egypt (Shaffer, 2011). Since 2008, Egypt is supplying Israel with 40% of its domestically consumed natural gas. The gas is delivered through a pipeline that connects the Arab (Egypt, Jordan, Lebanon, and Syria) Gas Pipeline with Israel, which branches off from the same pipeline in Egypt. Natural gas entered Israel’s energy mix for the first time in 2004, with a domestic field (Yam Tethys) supplying its production to the market. The consumption of natural gas expanded in 2008, when the Eastern Mediterranean Gas and Oil (EMG) Company began importing natural gas from Egypt to Israel. The EMG supplied 2.5 Billion Cubic Meters (BCM) of natural gas to consumers in Israel in 2010, which was nearly 50% of the 5.3 BCM consumed in Israel in 2010, while the rest was supplied by domestic fields (Shaffer, 2011). There is no detailed information available on the level of the preferential price paid by Israel and its difference from the world price of natural gas. However, according to Khadduri (2011), the initially agreed upon price was 3 to 3.5 dollars per million British thermal units (Btu). Khadduri (2011) also reports that in August 2009, the Israel Electric Corporation (the primary consumer of gas exports from Egypt) approved an adjusted price of 4 to 4.5 dollars per million Btu. Approximately 425 BCM of natural gas was discovered in 2009 and 2010 close to Israel’s Mediterranean coastline in different fields namely, Tamar, Dalit, and Leviathan. According to IsraelStrategist (2011), the Tamar field was the largest natural gas discovery in the world that year and is expected to meet Israel’s gas needs for up to the next three decades. The Leviathan field was discovered in December 2010 representing the largest natural gas discovery in the world in the past decade, and is predicted to satisfy Israel’s domestic gas needs indefinitely and will potentially be used for export. The start of production of the two fields is expected in 2013 and 2016, respectively (Ratner, 2011). With the newly discovered fields of Natural gas, Israel could get into a situation where it displaces its gas imports from Egypt, which would according to Ratner (2011) bring benefits for both countries. First, there is public discontent in Egypt against the sales of gas to Israel particularly after the January revolution as Israel pays below market prices for the natural gas it imports from Egypt (Ratner, 2011). As a consequence, the gas pipelines used for transporting the Egyptian gas to Israel have been attacked more than ten times since the Egyptian revolution in January 2011, causing Israel’s gas supply to be temporarily cut off (Afify and Fahim, 2011; Elyan, 2011). Therefore, ending exports to Israel would have political advantages, while sustaining natural gas exports to Israel seems doubtful in post-revolution Egypt. In addition, there might be the option of changing the agreement between the two countries in a way that increases the price paid by Israel for the Egyptian gas, which could improve Egypt’s trade balance (Ratner, 2011). As a second option, Israel may decide to continue importing the cheaper Egyptian gas and using the additional production for exports to destinations such as Europe or even countries in the middle east such as Jordan. This is expected to improve Israel’s energy security and generate economic benefits. 2 Objectives/ Research questions This paper uses a global applied general equilibrium model that links the Israeli economy with the rest of the world including Egypt to investigate the economic implications of different gas scenarios on the Israeli economy: • What are the macroeconomic implications of increasing the price of Egyptian gas exports to Israel and equalize it to the price of gas paid by countries in the region such as Jordan? • The recent discoveries of the three major fields of gas in Israel (Tamar, Dalit and Leviathan) are expected to begin production in 2012-2013, 2013-2013, and 2016-2018, respectively (Ratner, 2011). What are the implications this may have on the Israeli economy at large, and on the livelihoods of different household groups? • At which level of domestic gas output would Israel (1) reach the self-sufficiency in gas, (2) start exporting domestic gas to other regions, and (2) eliminate its gas imports from Egypt? • How would the impact on the Israeli economy of the three scenarios mentioned above differ, should some rigidity be introduced in the model according to which Israel’s ability to re-source its imports of gas to regions other than Egypt would be limited? 3 Methodology We use an applied general equilibrium model that links the Israeli economy with the rest of the world including Egypt. The newly developed MyGTAP Model (Minor and Walmsley, 2012) is an extension to the GTAP model (Hertel, 1997) that modifies the original single regional household to allow for multiple households. The new specification improves the treatment of government income and expenditures, which helps to better track the effects of the gas-related simulations on the government accounts. In order to be able to use the MyGTAP model, the GTAP Data Base will be modified to break out the one regional household into multiple households following the work of Minor and Walmsley (2012). We do this using the newly developed Israeli Social Accounting Matrix, which has information, on 10 different household groups classified according to ethnicity to Jewish and non-Jewish and according to income level to five quintiles for each ethnic group (Nwafor et al. 2010). The structure of MyGTAP also draws the important linkages among household groups and production factors by assigning the income of the different factors of production to the designated household group through the ownership of factors by household groups. This advantage is particularly useful in the Israeli context because of the very detailed nature of the production factor’s account in the Israel SAM (Siddig et al., 2011). The SAM breaks down the factor account to 38 subaccounts including land, capital and 36 different labor categories. The latter classifies labor according to skills, ethnicity, and gender, besides being legally or illegally employed . Despite the fact that MyGTAP provides many country-specific features, it also lacks some of the major feature of the standard model (Hertel, 1997) because it is still in the development process. The welfare decomposition module of the standard GTAP model is not yet incorporated in MyGTAP as it relies completely on the regional household concept, which is broken down to private households and government accounts in MyGTAP. Therefore, it was found essential to incorporate the standard model as well, so as to report major parts of the results of this study. One other important feature of this study that needs the standard model is that it runs a couple of pre-simulation scenarios to update the database so as to better reflect the structure of the gas sectors in Egypt and Israel and afterwards, it uses the updated database as a new base. Such a feature is still to be incorporated in MyGTAP model. 4 Data adjustments This study uses an adjusted GTAP database prepared by Siddig and Grethe (2012) for an impact assessment of gas scenarios on the Egyptian economy. Siddig and Grethe (2012) aggregated the standard GTAP regions and commodities to 45 and 40, respectively. Afterwards, they adjusted the structures of the gas sector in the database for Egypt and Israel and made it reflecting its state in 2010 based on different sources of data including BP (2011), ICBS (2011), and CAPMAS (2011) among others. For the purpose of this study, the regions and sectors of Siddig and Grethe (2012) are further aggregated to 24 and 16, respectively. The mapping between the 24x16 and 45x40 aggregations for sector and regions is shown in Appendix (1) and Appendix (2), respectively. The most relevant sectors besides gas such as crude and refined oil, gas manufacturing and distribution, and electricity are represented separately in the sectoral aggregation. Agriculture is represented by three major aggregates, namely, ‘agricultural crops’, ‘meat and livestock’, and ‘forestry and fishing’. Another three major aggregates reserved for services, four major aggregates for industries, and the rest of mining is aggregated in one sector. As shown in Appendix (2), regional aggregation separates regions for Israel, Egypt, and the rest of MENA together. In addition there are regions for each of the major players in gas trade such as the USA and Russia, while separating the major importers of the Egyptian gas each in a region such as Italy and Belgium. After the setup of the final aggregation of the database, a pre-simulation is applied to generate a new database following the “Altertax” approach of Malcolm (1998) . Atertax is applied to introduce the difference between the average world price of gas and the preferential price that Israel pays for its imports of gas from Egypt in 2008 . the updated database afterwards represents the base for our simulations, to which any changes are compared. 5 Simulation scenarios Four simulation scenarios are simulated in this study in connection to the research questions raised in section 2 of the paper. Each of the four scenarios is run twice, once in the standard GTAP model and in addition in the MyGTAP model. This makes the findings of the study more comprehensive as it benefits from the advantages of both models and considers them complements to each other. The specific scenarios of the paper are the following: Scenario1: increasing the price paid by Israel for its imports of gas from Egypt and equalizes it to that paid by other importers such as Jordan; this is done by removing the designated subsidy that was introduced in the Altertax pre-simulation. Scenario2: increasing the production of domestic gas in Israel by 100%, which is a conservative projection for the production in the next 2 years based on Ratner (2011) and Nobel Energy (2010). This simulation is introduced by augmenting the technology parameter of the production factors in the gas sector, based on the fact that the reserves are natural resources and would be exploited by contracts with foreign companies including but maybe not limited to Nobel Energy (Ratner, 2011). Scenario3 and Scenario4 replicates Scenario1 and Scenario2, respectively using a version of the models that introduces the Israeli geopolitical situation in a form of rigidity in the trade parameters, i.e. Armington elasticity of imports of gas from different regions. 6 Preliminary findings Preliminary findings of the price scenarios, namely Scenario1 and Scenario3 are found to generate negative welfare impact on the Israeli people despite the improvement that they bring to the Israeli trade balance with the latter being due to the decreasing imports of gas from Egypt. Introducing the rigidity to the gas trade was found to have a significant impact particularly on the welfare figures produced by the models. While Scenario1 generates a welfare loss of US$ million 157, Scenario3 would make it US$ million 362. The positive change in the trade balance would be US$ million 102 and US$ million 239 for the two simulations respectively. Nonetheless, the impact of the two simulations on the Israeli GDP is quite small as they lead to a slight decline in GDP value index by 0.10% and 0.22% due to Scenario1 and Scenario3, respectively. Results of the domestic production scenarios (i.e. Scenario2 and Scenario4) on the other hand tell a slightly different story at least on the most aggregate level represented by overall welfare, overall trade balance and GDP. Welfare gains of US$ million 548 and US$ million 544 are generated due to the two scenarios respectively, while negative changes of US$ million 96 and US$ million 127 are shown for the trade balance. The difference between the model parameter being flexible or rigid is the context of the production simulations is found to be less influential compared to the price simulations due to direct connection to the trading sector in the latter case. The impact of the two simulations on GDP is also low: the percentage increase of the GDP value index is 0.45% and 0.44% under Scenario2 and Scenario4, respectively. Keywords: Natural gas, discoveries, Israel, Egypt. 7 References Afify, Heba and Fahim, Kareem (2011): Gunmen Attack Sinai Gas Pipeline. The New York Times. Published: July 30, 2011. Accessed on January11, 2012.http://www.nytimes.com/2011/07/31/world/middleeast/31egypt.html?_r=2. BP (2011): British Petroleum Statistical Review of World Energy. June 2011. bp.com/statisticalreview. Accessed on January 2, 2012. BMI (2009). Business Monitor International. Egypt Oil and Gas Report 2010. Part of BMI’s Industry Survey & Forecasts Series. ISSN 1748-3948. Published by Business Monitor International Ltd. CAPMAS (2011): Central Agency for Mobilization and Statistics, Egypt in Figures. http://www.capmas.gov.eg/pdf/egypt10/indst10/51.pdf. Accessed in January 2, 2012. Elyan, Tamim (2011): Blast hits Egypt's gas pipeline to Jordan and Israel. Reuters Reporter (CAIRO | Sun Dec 18, 2011 5:13am EST). Accessed on January 11, 2012.http://www.reuters.com/article/2011/12/18/us-egypt-explosion-idUSTRE7BH07N20111218. Hertel, Thomas; Hummels, David; Ivanic, Maros and Keeney, Roman (2007): How confident can we be of CGE-based assessments of Free Trade Agreements? Economic Modelling 24 (2007) 611–635. Hertel, Thomas (1997): Global Trade Analysis: Modeling and Applications. (editor), Cambridge University Press. ICBS, 2011. The Israeli Central Bureau of Statistics. Energy Balance of Israel. http://www1.cbs.gov.il/energy/new_energy/new_enr_nach_eng_new_huz.html. Accessed on December 29, 2011. IMF (2005): Arab Republic of Egypt: Selected Issues. International Monitory Fund (IMF) Country Report No. 05/179, June 2005. Khadduri, Walid (2011): Egyptian gas exports to Israel. Al-Arabiya online, Monday, 21 February 2011. http://www.alarabiya.net/views/2011/02/21/138539.html. Accessed April 16, 2012. Malcolm, G., 1998. Adjusting Tax Rates in the GTAP Data Base. GTAP Technical Paper No. 12. http://docs.lib.purdue.edu/gtaptp/15. Accessed on April 16, 2012. Nobel Energy (2010): Nobel Energy announces significant discovery at Leviathan offshores Israel, Nobel Energy Press Release, December 29, 2010. http://investors.nobleenergyinc.com/releasedetail.cfm?releaseid=539152. Accessed on December 3, 2012. Shaffer, Brenda (2011): Israel: new natural gas producer in the Mediterranean. Energy Policy, 39 (2011) 5379–5387. Siddig, Khalid, Flaig, Dorothee, Luckman, Jonas and Grethe, Halrald (2011b). GTAP 8 Data Base Documentation - Chapter 7. R: Israel, in Narayanan, G., Badri, Angel Aguiar and Robert McDougall, Eds. 2012. Global Trade, Assistance, and Production: The GTAP 8 Data Base, Center for Global Trade Analysis, Purdue University. Ratner, Michael (2011): Israel’s Offshore Natural Gas Discoveries Enhance Its Economic and Energy Outlook. Congressional Research Service. 7-5700, R41618. http://www.fas.org/sgp/crs/mideast/R41618.pdf. Accessed on January 2, 2012. |
| Keywords: | Egypt, Israel, General equilibrium modeling, Trade issues |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5446&r=ene |
| By: | Ayele Gelan |
| Abstract: | Electricity users in Kuwait pay a nominal tariff of 2 fills (about USD 0.007) per KWh. Almost all cost of generation, distribution and supply are covered by a very generous government subsidy. The 2 fills/KWh was introduced in 1966 and has been retained at that level since then. On the other hand, the cost of generating electricity has sharping risen particularly in recent years. For instance, cost per KWh escalated from about 20 fills in 2000 to about 40 fills in 2010, indicating that cost of production nearly doubled during that decade. The extremely generous subsidy or almost free availability of electricity has given rise to a pattern unsustainable behaviour in electricity use. Krane (2012) expressed the situation as a ‘dichotomy between energy value and price’ to say that excessively low energy pricing induced ‘wanton consumption’ whereby ‘low pricing encourages consumption at rates above those warranted by the opportunity cost of these fuels on global energy markets. Low prices also distort energy allocation preferences while undercutting upstream investment and efficiency incentives’ . These are reflected in a number of key aggregate indicators. For instance, in terms of economic electricity use efficiency, measured in terms of GDP generated per unit of KWh used, Kuwait does not only stand among the lowest but also the situation has gotten worse over the years. In 1990 GDP/KWh was USD 1.4 but it fell to USD1.2 in 2005. This contrasts with experiences of most other countries in the world; for instance, USA which was doing already much better in 1990 (about USD 2.2/KWh) but also electricity use efficiency improved and reached about USD2.7 in 2005. In terms of electricity consumption per capita Kuwait is the second highest in 2005 (after Norway). This figure doubled between 1985 and 2005, rising from about 8 thousands KWh to 17 thousand KWh. It should be noted that while Kuwait’s electricity is generated entirely by using fossil fuels but other countries like Norway have shifted to renewables such as hydro sources. The objective of this study is to quantify economy-wide impacts of public utility reform that may target to start by reducing electricity subsidy. The study is timely and highly relevant to current policy developments in the country. It will inform the ongoing debate regarding far reaching economic reform programmes, mainly aiming at diversification of Kuwait’s economy away from heavy reliance on the oil sector and reducing the dominance of the public sector by promoting private sector developments. Approaches and Methods The study was conducted using a computable general equilibrium (CGE) modelling approach. This was based on a social accounting matrix constructed for Kuwait based base year data of 2010. The 2010 Kuwait input-output table and related system of national accounts provided by the Central Statistical Bureau (CSB) provided core data required to construct a SAM with 17 production sectors. This was supplemented with other satellite accounts such as employment, demographic and capital stock which are separately estimated in line with flow variables in the SAM. The CGE model used for this study is the comparative static version of the standard IFPRI CGE model (Lofgren, et al, 2001), which was substantially revised to customize it to the purpose of this study . While designing the simulation experiments, the focus of this study was on labour market conditions to capture the highly segmented nature of the labour market in Kuwait. Expatriates constitute the bulk of the work force in Kuwait, about 83%. Kuwaiti’s account for the remaining proportion. Critically, the national labour force are highly concentrated in the public sector, including the electricity sector. The average wage level for Kuwaiti’s is substantially higher than expatriate salaries and wages. These conditions are highly relevant in the context of this study. Economic reform in Kuwait is bound to be implemented in conditions of inflexible wages and limited sectoral mobility among the Kuwaitis. However, labour market conditions for the expatriates is likely to be flexible wages and free mobility between sectors. Simulation experiments were conducted by taking these conditions into account. Preliminary Simulation Results Two scenarios of simulation experiments were conducted. These are separately discussed below. Scenario 1: 25% reduction of subsidy on the electricity sector To begin with the intra-sectoral impacts, gross value-added in the electricity sector falls by 34% while electricity tariff rises 260%, which means a rise from 2 fills/KWh to 5.2 fills/KWh. The policy shock reveals interesting macroeconomic and sectoral impacts. The inter-sectoral effects are more or less in line with an inverse proportion with sectoral electricity use intensity – more intensive users experiencing a degree of contraction while less intensive electricity users experiencing some expansions. The mixed impacts at sectoral levels have led to negligible macroeconomic effects. Aggregate GDP (value-added measure) declining by a less than 1% while gross domestic expenditure marginally increased, by about 1%. As we expect government surplus increases by about 3%. Household welfare, measured in terms of equivalent variation, declined but only by 0.5%. In this modelling framework, the net impacts of this policy shock are negligible but distributional impacts are likely to be much higher. We have shown this in terms of distributional effects across sectors but distributional effects across the households is beyond the scope of this research, since this study is based on a highly aggregate SAM which does not distinguish between households by income or expenditure sizes. This are left for future research. Scenario 2: 25% reduction of subsidy on the electricity sector accompanied by household compensation for welfare loss This scenario was conducted aiming at compensating households for the welfare loss they experienced due to the policy shock. It should be noted that the reduction in welfare reported above is negligible. However, if the subsidy reduction was much larger, say 50% or more, then we would expect that the welfare loss to households will be much larger. We have noted that the policy shock will also further increase Kuwaiti government budget surplus. However, unlike other countries with large budget deficits, current economic reforms in Kuwait are motivated more by the need to adjust the structure of the economy and improve efficient resource allocation rather than budgetary considerations. In that context, if the economic reform can help with achieving the main objective of effecting efficient resource allocation, then compensating households for welfare loss may be necessary particularly to reduce public resistance to expected rationalizations of public utilities including the electricity sector. It was with these policy context in mind that the scenario 2 policy experiment was conducted. The additional simulation shock was effected by compensating households by full amount of budget surplus gained by the government as a result of the policy change. In other words, government transfer to households was scaled up by the full amount of the difference between government budget surplus with the policy shock in scenario 1 and the corresponding figure in the base year. This yielded a much higher expansionary effect. In scenario 2, the only sector that experience contraction in terms of gross value added is the electricity sector, the sector that received the shock, but it contracts by about 32%, which is smaller than the contraction it experienced in scenario 1. The rates of positive stimulus to the other sectors ranged from 0.41% in government services to 6% in the construction sector. Aggregate GDP increased by 2.2% and the compensation caused household welfare to improve by 3.4% compared to the pre-reform level. |
| Keywords: | Kuwait, Energy and environmental policy, General equilibrium modeling |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:7106&r=ene |
| By: | Şevket KALANLAR; Dr. A. Ahmet YÜCER; Dr. Muhammet DEMIRTAŞ; Dr. Şevket KALANLAR |
| Abstract: | Due to the increasing oil prices in Turkey, the fuel released with legal regulations, as the supply of fuel and diesel oil from 2013 to domestic agricultural products produced in the gradually bio-fuel blending mandates. Accordingly; the supply of gasoline as fuel types on the market; 2% in 2013, 2014 at least 3% extra for bio-ethanol produced domestic agricultural products is required. Diesel oil; at least 1% in 2014, at least 2% in 2015 and at least 3% in 2016 is produced by domestic agricultural products extra mandates to bio-diesel. The results of the analysis conducted in this context study, costs of policy, import requirement, minimum space requirements adhering to the criteria. Study on bio-fuel raw materials as wheat, corn, sugar beets; sunflower, rapeseed, safflower and soybean is taken into account. 34,5% of the fat in sunflower, soybean 18.2%, 44% of the Canola. Contains of ethanol ratio; 40% in corn, 34% wheat, Sugar beets 11% was accepted.The analysis of bio-energy in Turkey; the need to meet the demand for diesel fuel in 2014 0.169 million tons, 0.351 million tons in 2015, 0,546 million tons in 2016, 0.565 million tons in 2017, 0.583 million tons in 2018, 0.600 million tons in 2019, 2,071 million tons in 2020, have been identified. In Turkey; to meet the demand for fuels product needs 0.144 million tons in 2014, 0.139 million tons in 2015, 0.133 million tons in 2016, 0.127 million tons in 2017, 0.121 million tons in 2018, 0.115 million tons in 2019, 0.363 million tons in 2020 have been identified. The current oilseeds pattern in Turkey and production capacity, the targeted rate of bio-diesel fuel-mixture is quite inadequate to meet the quantity demanded. This demand breaks the food security. Because current agricultural structure and costs within the framework of a single product to meet this demand the impossible. According to the results of the analysis of bio-ethanol; the current crop pattern in Turkey and production capacity from 2013 the rate of bio-ethanol fuel-mixture of targeted demanded quantity is sufficient on its own to meet the bio-energy. In this context the areas of cultivation of agricultural products needed to meet these quantities are determined. Current agricultural policy tools and threads in the current situation are discussed in the context of the future in bio-fuels in Turkey. |
| Keywords: | Turkey, Energy, Agriculture |
| Date: | 2013–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:005741:6093&r=ene |
| By: | Ramón E. Key-Hernández; Claudina Villarroel |
| Abstract: | Venezuela is one of the countries with high levels of subsidies to the domestic energy consumption. Studies reveal that these subsidies amounted to 15 billion dollars in 2010 and threaten the strength of the energy sector (Villarroel (2012)). Energy prices have indeed been frozen since the 90s (more specifically since 1996 in the case of fossil fuels, and since 1999 in the case of electricity). One of the main reasons why there is resistance in the government and in the society to adjustments in the energy prices in general (and fossil fuels in particular) is the collective memory of the social upheaval during 1989 known as the "Caracazo" attributed to the increase in the prices of fossil fuels by 100%. However, the reality was more complex. The social explosion was not a simple consequence of the increase in the energy prices. In fact the 1989 comprehensive macroeconomic adjustment program played a significant role in the social unrest. The 1989 macroeconomic adjustment program consisted of a series of measures that included not only the adjustment of fuel prices, but also a devaluation of the exchange rate by 100%, an increase of more than 100 % in the interest rates for loans as a result of the liberalization of the financial markets, also accompanied by trade liberalization which resulted in a reduction of tariffs and the elimination of import restrictions. In order to shed some light on the probable implications of energy price adjustments in the future, it is important to untangle what happened in 1989 and understand the impacts of the various policy measures taken within the structural adjustment program. This might help to demystify the issue about the relationship between the adjustment in fuel prices and social unrest. In this exploratory research we develop a real-financial SAM for 1988, one year prior to the implementation of the adjustment program in 1989. Additionally the paper presents a real-financial CGE model of the Venezuelan economy to assess the macroeconomic impacts of the 1989 adjustment program (increase in gasoline prices, devaluation of the exchange rate, increase in loan interest rates and tariff reduction). The paper highlights the recessionary bias of the measures taken and their social cost. Moreover, comparing the impact of adjustments to the fuel prices with the impact of the rest of the measures taken we conclude that the burden of the adjustment to fuel prices in the social revolt of 1989 is less than which is usually assumed in the political debate. Despite these results, it should be noted that the model tends to underestimate the inflationary impact of all the measures. |
| Keywords: | Venezuela, General equilibrium modeling, Developing countries |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:5149&r=ene |
| By: | Curtis, John; Devitt, Niamh; Whelan, Adele |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp489&r=ene |
| By: | Asian Development Bank (ADB); (South Asia Department, ADB); ; |
| Abstract: | The cities of South Asia are growing at an unprecedented rate, and there is potential to steer this development onto a sustainable and green path. Carbon financing serves as a valuable revenue source to help cities earn additional income to support low-carbon development. With the end of the first commitment period of the Kyoto Protocol on 31 December 2012, a fragmented international carbon market now exists with various approaches to reducing greenhouse gas emissions outside the national borders of Annex I (industrialized) countries. Considering the potential for low-carbon development in South Asia, there is a need to help countries understand and navigate this new international carbon market. This guidance note (i) provides an overview of the carbon financing market in the post-2012 context, (ii) guides readers on how to access carbon finance, and (iii) highlights good practices in low-carbon urban development. It is aimed at government officials and project developers throughout South Asia, and is structured in a question-and-answer format for quick and easy reference. |
| Keywords: | climate change, urban development, carbon finance, green cities, sustainability, solid waste management, economic development, environment, livable city, sustainable city, urbanization, sustainable development |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:asd:wpaper:rpt136012-2&r=ene |
| By: | Olivia Ricci; Legendre Bérangère |
| Abstract: | Little empirical research has been undertaken on fuel poverty in France. Fuel poverty can be measured in a number of ways; therefore we analyze the impact of three different measurement approaches on the extent of fuel poverty and the composition of the fuel poor households in France. Then, we study another aspect of fuel poverty that has been covered less frequently in literature. That is, identifying households that are at risk of falling below the poverty line specifically because of high fuel costs. These households can be classified as vulnerable in the sense that they are a priori non-poor before the fuel bills but a marginal increase in energy prices is enough to make them slip below the threshold . Such an approach allows us to identify the impact of high fuel costs on the margins of poverty. We conduct descriptive statistics in order to quantify and identify fuel poor households under the three approaches. Then we estimate a log-log regression model to characterize vulnerable households that are pushed into poverty because of fuel costs. Using a log log model allows us to verify whether the patterns commonly seen across fuel poverty are actually associated with single characteristics or a combination of several characteristics The three measurement approaches selected led to contrasting results in terms of the extent of fuel poverty and the composition of the fuel poor. Moreover, the three approaches identify distinct types of fuel poor households. The econometric study suggests that living alone is associated with a high probability of falling into fuel poverty. Moreover, retired people living alone are significantly exposed to fuel poverty. Being a homeowner and highly educated is associated with lower exposure to fuel poverty. The heating system equipment and the type of energy used for cooking are key elements that influence the probability of falling into fuel poverty. Using an individual boiler and cooking with butane/propane are associated with a high probability of being fuel poor, while collective boilers, district heating systems and cooking with city gas (natural gas) seem to protect against fuel poverty. Moreover, a home’s low energy performance is a significant fuel poverty factor. Only housing built after 1974 (after the first thermal regulation in France) decreases the exposure to fuel poverty. |
| Keywords: | France, Energy and environmental policy, Macroeconometric modeling |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6923&r=ene |
| By: | Bulat Mukhamediyev; Mukhamediyev Bulat |
| Abstract: | For oil producing countries it is important to share rationally oil revenues between current expenditure and savings. The purpose of this paper is to study what impact will have change of the oil revenues accumulation on the dynamics of macroeconomic indicators.Modeling of dynamic stochastic general equilibrium with oil producing sector of economy.Forecasted responses of model variables to internal and external shocks of the economy of Kazakhstan. The influences of changes in the share of oil revenues accumulation in the National Fund on forecasted responses of macroeconomic indicators were found. |
| Keywords: | Kazakhstan, General equilibrium modeling, Developing countries |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6890&r=ene |
| By: | William A. Pizer; Andrew J. Yates |
| Abstract: | Compliance links between CO2 emission trading programs--where firms regulated under one region's tradable permit program can comply using permits from another region, and vice-versa--are beginning to arise as a vehicle to lower costs, increase liquidity, and strengthen institutions while achieving the same environmental outcome. These links are not immutable, however, as highlighted by New Jersey's decision to exit the multi-state Regional Greenhouse Gas Initiative at the end of 2011. This raises the question of how to manage a delink and, in particular, what to do with existing permits that are banked for future use--choices that can have important consequences for market behavior in advance of, or upon speculation about, a delinking event. To examine this question, we consider two delinking policies. One differentiates banked permits by origin, where banked permits originating in one region are only valid for compliance in that region after the delink occurs. The other treats all banked permits the same, with each banked permit being similarly split into two pieces, with one piece valid in one region and the other piece valid in the other region. Using a two-region, two-period model, we describe the price behavior and relative cost-effectiveness of each policy. Treating permits differently generally leads to higher costs, and may lead regional prices to diverge, even when there is only speculation about delinking. We illustrate these results with a numerical example of the EU-Australian link contemplated in 2013. |
| JEL: | Q54 Q58 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20393&r=ene |
| By: | Guntur Sugiyarto; Erwin Corong; Angelo Taningco |
| Abstract: | The global economy must face crucial challenge on how to cope with soaring oil prices, which have been on a precipitous increase in the last years. The high rise has alarmed countries around the world, especially the net oil importers, since continuing oil price hikes tend to lower economic growth and reduce productivity by increasing production costs and overall domestic prices. It is also likely to increase poverty by reducing income level of the poor and increasing their consumption costs. A computable general equilibrium model calibrated to the Indonesian economy and linked to household survey data was developed in this study to shed light on the issue. The results indicate that higher oil prices generate adverse effects to the economy and poverty, working through their impacts on sectoral outputs, household incomes, and consumer prices. Moreover, the welfare effects across different household groups vary considerably, calling for careful policy responses. The government cash transfer program introduced subsequently to mitigate the adverse effects on the poor shows a sensible but modest result. More comprehensive policies are therefore needed to really help the poor to cope with adverse effects and to improve their conditions. This includes incorporating better and progressive targeting and positive conditionalities to maximize the programs benefits and to make the poor taking actions closer to the social optimum that will benefit the economy in the long term. See above See above |
| Keywords: | See above, Impact and scenario analysis, General equilibrium modeling |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6995&r=ene |
| By: | Ramón E. Key-Hernández; Claudina Villarroel |
| Abstract: | OPEC claims that the aim of this organization is to coordinate and unify the petroleum policies among its member countries to ensure a secure and stable income provision to its member countries; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital invested in the oil industry (OPEC, 2010, "Long-term Strategy). One way to achieve their goals is through agreement on each country´s production allocation. In this century, the oil market has witnessed the active role of OPEC to stabilize the market when prices show downward trend. From 2011 oil prices have remained relatively stable, around $ 95/ barrel for WTI and $ 105 / barrel for the OPEC basket. However, no situations are discarded in the near future that require actions by OPEC as have been seen in the recent past. In this sense there is evidence that the production of non-OPEC countries has been increasing, while risk situations remain to global financial stability that threaten the future growth of the residual demand for OPEC crude. This paper analyzes the effects of production cuts on Nigeria and Venezuela, founding members of OPEC countries. These two countries together account for 15% of current OPEC production (6% Nigeria, Venezuela 9%) and 28% of proven oil reserves (3% and 25% respectively). The cases of Nigeria and Venezuela are of particular interest because their economies show greater diversification from the rest of OPEC. According to World Bank statistics for 2006, the combined weight of the agricultural and manufacturing sectors in these countries reached proportions that are superior to most other OPEC countries (Nigeria 35% and Venezuela 19%), with the notable exceptions of Iran (21%) and Indonesia (41%). However, Indonesia the largest diversified country in OPEC ceased to belong to this organization in September 2008. A computable general equilibrium is developed to measure the impact of production cuts in Nigeria and Venezuela. The model considers 14 production activities for each country (comparable to each other). Production cuts are simulated as export restrictions by introducing quota exports in the model as a complementary condition). Additionally alternative scenarios are considered regarding capital mobility between sectors and closures alternatives.Preliminary results from a version of the proposed model for Venezuela with 4 sectors (petroleum, manufacturing, services, and other sectors.) reveal that a 10% reduction in oil exports could generate an overall decline in economic activity (GDP) of 0.1 % , mainly affecting the oil producer sector and the "all others sectors" which mainly includes the construction sector. It is noteworthy that the production of the manufacturing sector expands slightly to 0.3%. In this case suggesting that weight status of manufacturing sector in the structure of a country like Venezuela is not a decisive factor in the recessive character may have, in the short term, the production cuts. |
| Keywords: | Nigeria, Venezuela, General equilibrium modeling, Developing countries |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:7007&r=ene |
| By: | Joseph E. Aldy |
| Abstract: | In 2010, the Gulf Coast experienced the largest oil spill, the greatest mobilization of spill response resources, and the first Gulf-wide deepwater drilling moratorium in U.S. history. Taking advantage of the unexpected nature of the spill and drilling moratorium, I estimate the net effects of these events on Gulf Coast employment and wages. Despite predictions of major job losses in Louisiana — resulting from the spill and the drilling moratorium — I find that Louisiana coastal parishes, and oil-intensive parishes in particular, experienced a net increase in employment and wages. In contrast, Gulf Coast Florida counties, especially those south of the Panhandle, experienced a decline in employment. Analysis of accommodation industry employment and wage, business establishment count, sales tax, and commercial air arrival data likewise show positive economic activity impacts in the oil-intensive coastal parishes of Louisiana and reduced economic activity along the Non-Panhandle Florida Gulf Coast. |
| JEL: | J30 J64 Q40 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20409&r=ene |
| By: | Arik Levinson |
| Abstract: | From 1990 to 2008, the real value of US manufacturing output grew by one-third while the pollution emitted from US factories fell by two-thirds. What accounts for this cleanup? Prior studies have documented that a relatively small share can be explained by changes in the composition of US manufacturing – a shift towards producing relatively more goods whose production processes involve less pollution. Those studies attribute the unexplained majority to “technique”, a mix of input substitution, process changes, and end-of-pipe controls. But because that technique effect is a residual left over after other explanations, any errors or interactions in the original calculation could inflate the estimated technique. In this paper I provide the first direct estimate of the technique effect. I combine the National Emissions Inventories with the NBER-CES Manufacturing Industry Database for each of over 400 manufacturing industries. I aggregate across industries using analogs to the Laspeyres and Paasche price indexes for each of six major air pollutants. The calculations using this direct estimation of the technique effect support the research findings using indirect measures. From 1990 to 2008, production technique changes account for more than 90 percent of the overall cleanup of US manufacturing. |
| JEL: | Q55 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20399&r=ene |
| By: | Roberto Roson; Franz Hubert |
| Abstract: | The realization of international energy distribution networks requires cooperation and the sharing of costs and benefits. Economic incentives, at a country level, to join an international network depend on how net surplus would be distributed, which in turn depends on a variety of factors: position of each country on a specific network, geo-political stability, existence of market distortions and avaiability of alternative energy sources (including renewables). This study is aimed at presenting a game theory methodology that can be applied to real world cases, thereby shedding light on several political economy issues.A methodology will be presented and illustrated with application to a fictious network structure. The method is based on a two-stage process: first, a network optimization model is used to generate payoff values under different coalitions and network structures; a second model is subsequently employed to identify cooperative game solutions, like the Shapley value or the nucleolus. Country level surplus and infrastructure costs can therefore be compared, to assess the economic viability of each project.A numerical model will be realized and discussed. The model output will be sensitive to assumptions on link capacity, supply and demand curves, possible existence of market distortions, alternative energy sources, geo-political stability. |
| Keywords: | None specifically, although a similar approach has been tested for Eastern Europe., Energy, Infrastructure |
| Date: | 2013–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:005741:5877&r=ene |
| By: | L. Lambertini; G. Pignataro; A. Tampieri |
| Abstract: | In this paper we analyse a setup where consumers are heterogeneous in the perception of environmental quality. The equilibrium is verified in a setting with horizontal and vertical (green) differentiation. Profits are increasing in the misperception of quality, while, the investment in green quality decreases the more the goods are substitutes. We further consider the introduction of either an emission tax or an environmental standard. The former rises the investment in environmental quality due to the higher cost of production, whereas in equilibrium quality always improves after the introduction of the latter. We show that an optimal environmental standard is an effective regulatory instrument against greenwashing and that the efficacy of the interventions is conditioned to the damage distribution and the aggregate level of emission. |
| JEL: | L13 L51 Q50 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp958&r=ene |
| By: | Schneider, M.; Stenger, A.; Goeke, D. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:62382&r=ene |