nep-ene New Economics Papers
on Energy Economics
Issue of 2014‒12‒24
forty-nine papers chosen by
Roger Fouquet
London School of Economics

  1. Does a Renewable Fuel Standard for Biofuels Reduce Climate Costs? By Greaker, Mads; Hoel, Michael; Rosendahl, Knut Einar
  2. The Perverse Impact of Calling for Energy Conservation By J. Scott Holladay; Michael K. Price; Marianne Wanamaker
  3. Do Economic and Financial Development Increase Carbon Emission in Pakistan: Empirical Analysis through ARDL Cointegration and VECM Causality By Shahzad, Syed Jawad Hussain; Rehman, Mobeen Ur; Hurr, Maryam; Zakaria, Muhammad
  4. How Does Fuel Taxation Impact New Car Purchases?: An Evaluation Using French Consumer-Level Data By Pauline Givord; Céline Grislain-Letrémy; Helene Naegele
  5. Economic and Environmental Impacts of Electric Vehicle Society in Toyohashi City in Japan - A CGE Modeling Approach - By Yuzuru Miyata; Hiroyuki Shibusawa; Tomoaki Fujii
  6. Assessing temporal trends and industry contributions to air and water pollution using stochastic dominance By E. Agliardi; M. Pinar; T. Stengos
  7. The diffusion of patented oil and gas technology with environmental uses: a forward patent citation analysis By Maria Teresa Costa; Nestor Duch-Brown
  8. Carbon Policy in a High Growth Economy: The case of China By Lucas Bretschger; Lin Zhang
  9. Reaching a climate agreement - do we have to compensate for energy market effects of climate policy? By Sonja Peterson; Matthias Weitzel
  10. Energy Use Patterns and Firm Performance: Evidence from Indian Industries By Santosh Kumar Sahu
  11. Gasoline Prices and Road Fatalities: International Evidence By Paul J. Burke; Shuhei Nishitateno
  12. The Global Environment Facility in MENA By Dominique Isabelle Kayser; Song Li; Suiko Yoshijima
  14. Should We Resurrect TIPP Flottante if Oil Price Booms Again? Specific Taxes as Fuel Consumer Price Stabilizers By Marina Di Giacomo; Massimiliano Piacenza; Francesco Scervini; Gilberto Turati
  15. On Distributive Effects of Optimal Regulation for Power Grid Expansion By Juan Rosellon; Luis Herrera
  16. The stabilizing effect of hydro reservoir levels on intraday power prices under wind forecast errors By Mehtap Kilic; Elisa Trujillo-Baute
  17. Designing an Optimal 'Tech Fix' Path to Global Climate Stability: Integrated Dynamic Requirements Analysis for the 'Tech Fix' By Paul David; Adriaan van Zon
  18. Residential End use electricity demand and the implications for real time pricing in Sweden By Vesterberg, Mattias; Kiran B. Krishnamurthy, Chandra; Bayrak, Oben
  19. Electricity Tariff Deficit: Temporary or Permanent problem in the EU? By Asa Johannesson Linden; Fotios Kalantzis; Emmanuelle Maincent; Jerzy Pienkowski
  20. Economic Evaluation of Small Hydroelectric Generation Project which aims to both Global Warming Adaptation and Regional Economic Revitalization By Eiji Ohno; Ryuta Mori; Masafumi Morisugi; Hiroshi Sao
  21. Compressed air energy storage with waste heat export: An Alberta case study By Safaei, Hossein; Keith, David
  22. Prospects for grid-connected solar photovoltaic in Kenya: A systems approach By Rose, Amy; Stoner, Robert J.; Perez-Arriaga, Ignacio
  23. Emissions and abatement costs for the passenger cars sector in Greece By Halkos, George; Kevork, Ilias; Tziourtzioumis, Chris
  24. Policy implications of resource constraints on the European economy By Kurt Kratena; Mark Sommer
  25. The Role of Oil Price Shocks in Causing U.S. Recessions By Kilian, Lutz; Vigfusson, Robert J.
  26. To raise or not to raise: Impact assessment of Russia's gas price reform By Christophe Heyndrickx; Victoria Alexeeva-Taleebi; Natalia Tourdyeva
  27. Are there Environmental Kuznets Curves for US State-Level CO2 Emissions? By Nicholas Apergis; Christina Christou; Rangan Gupta
  28. A General Approach to Recovering Market Expectations from Futures Prices With an Application to Crude Oil By Baumeister, Christiane; Kilian, Lutz
  29. The relation between overreaction in forecasts and uncertainty: A nonlinear approachvon By Leppin, Julian Sebastian
  30. The impact of startup costs and the grid operator on the power price equilibrium By Miha Troha; Raphael Hauser
  31. How Relevant Has Been the Learning-by-Doing for Brazilian Sugarcane Ethanol Production? By Héctor M. Núñez
  32. Vertical Disintegration in the European Electricity Sector: Empirical Evidence on Lost Synergies By Klaus Gugler; Mario Liebensteiner; Stephan Schmitt
  33. Cost Efficiency Analysis based on The DEA and StoNED Models: Case of Norwegian Electricity Distribution Companies By Cheng, Xiaomei; Bjørndal, Endre; Bjørndal, Mette
  34. Vertical fiscal externalities and the environment By Christoph Böhringer; Nicholas Rivers; Hidemichi Yonezawa
  35. The impacts of alternative policy instruments on environmental performance. A firm level study of temporary and persistent effects By Brita Bye; Marit E. Klemetsen
  36. Impact Assessment of European Clean Air policies in a CGE framework By Zoi Vrontisi; Jan Abrell; Frederik Neuwahl; Bert Saveyn; Fabian Wagner
  37. Measuring Environmental Policy Stringency in OECD Countries: A Composite Index Approach By Enrico Botta; Tomasz Koźluk
  38. The Long-run Relationship among World Oil Price, Exchange Rate and Inflation in the Philippines By Deluna, Roperto Jr
  39. Pro-environmental Behaviors, Energy Efficiency and Sustainable Development in Russia By Svetlana Ratner
  40. A Solvable Two-Dimensional Degenerate Singular Stochastic Control Problem with Non Convex Costs By Tiziano De Angelis; Giorgio Ferrari; John Moriarty
  41. The impact of an EU-US Transatlantic Trade and Investment Partnership Agreement on Biofuel and Feedstock Markets By Beghin, John C.; Bureau, Jean-Christophe; Gohin, Alexandre
  42. The impact of an EU-US Transatlantic Trade and Investment Partnership Agreement on Biofuel and Feedstock Markets By John C. Beghin; Jean-Christophe Bureau; Alexandre Gohin
  43. Analyzing the Effect of Real Exchange Rate on Petrochemicals Exporting By Delavari, Majid; Baranpour, Naghmeh; Abdeshahi, Abbas
  44. Essays in environmental and political economics By Sen, S.
  45. Are there Multiple Bubbles in the Ethanol-Gasoline Price Ratio of Brazil? By Ghassen El Montasser; Rangan Gupta; Andre Luis Martins; Peter Wanke
  46. Natural resources, demand for external finance and financial development By Hattendorff, Christian
  47. Economic development in Sarawak, Malaysia: An overview By Furuoka, Fumitaka
  48. Multidimensional poverty in Nigeria: First order dominance approach By Ajakaiye, Olu; Jerome, Afeikhena T.; Olaniyan, Olanrewaju; Mahrt, Kristi; Alaba, Olufunke A.
  49. Economic Valuation of the Damage to Tourism Benefits by Eastern Japan Great Earthquake Disaster By Katsuhito Nohara

  1. By: Greaker, Mads (Statstics Norway); Hoel, Michael (Dept. of Economics, University of Oslo); Rosendahl, Knut Einar (Norwegian Univeristy of Life Sciences)
    Abstract: Recent literature on biofuels has questioned whether biofuels policies are likely to reduce the negative effects of climate change. Our analysis explicitly takes into account that oil is a non-renewable natural resource. A blending mandate has no effect on total cumulative oil extraction. However, extraction of oil is postponed as a consequence of the renewable fuel standard. Thus, if emissions from biofuels are negligible, the standard will have beneficial climate effects. The standard also reduces total fuel (i.e., oil plus biofuels) consumption initially. Hence, even if emissions from biofuels are non-negligible, a renewable fuel standard may still reduce climate costs. In fact our simulations show that even for biofuels that are almost as emissions-intensive as oil, a renewable fuel standard has beneficial climate effects.
    Keywords: Renewable fuel standard; Blending mandate; Biofuels; Climate costs; Petroleum extraction profi…le
    JEL: Q30 Q40 Q50
    Date: 2014–04–23
  2. By: J. Scott Holladay; Michael K. Price; Marianne Wanamaker
    Abstract: In periods of high energy demand, utilities frequently issue "emergency" appeals for conservation over peak hours to reduce brownout risk. We estimate the impact of such appeals using high-frequency data on actual and forecasted electricity generation, pollutant emission measures, and real-time prices. Our results suggest a perverse impact; while there is no significant reduction in grid stress over superpeak hours, such calls lead to increased off-peak generation, CO2 emissions, and price volatility. We postulate that consumer attempts at load shifting lead to this result.
    JEL: D04 Q4 Q5
    Date: 2014–11
  3. By: Shahzad, Syed Jawad Hussain; Rehman, Mobeen Ur; Hurr, Maryam; Zakaria, Muhammad
    Abstract: This empirical study is an effort to establish cointegration and causality between carbon emissions, economic growth, energy consumption, financial development and trade openness in Pakistan. Lack of environmental protection laws, energy crises and resulting lower economic growth make Pakistan a unique setting to study the country specific reactions among the variables. The annual data after the separation of Bangladesh from 1973 to 2011 is used for the empirical work. The stationarity of the variables with structural breaks is analyzed. The Auto-regressive Bound Testing (ARDL) approach to cointegration is used to determine the cointegration relation. Fully Modified Ordinary Least Square (FMOLS) and Dynamic OLS (DLOS) cointegration equations are applied to estimate long run co-efficients. Short run relationship is determined through Vector Error Correction (VEC) based Granger causality, Variance Decomposition Analysis (VDA) and Impulse Response Function (IRF). After confirmation of cointegration between the variables, long term estimations confirm that economic growth and energy consumption increase the carbon emissions. Economic growth, energy consumption and trade openness Granger cause carbon emission in short run. There is unidirectional causality running from financial development and energy consumption to economic growth. Financial development is caused by carbon emissions and trade openness. Trade openness also Granger causes energy consumption. There is a bi-directional causality between financial development and energy consumption in Pakistan. Hence, the efforts to overcome energy crises and foster the economic growth require considerable attention to the carbon emissions; the best policy is to improve the situation through alternate energy resources i.e. Coal, Liquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG). There is a need to introduce conservation policies so that wastage and spillovers of energy resources can be minimize. Efficient use of scarce energy resources will not only reduce the environment degradation but will also help to foster the economic growth. The environmental protection laws require proper enforcement.
    Keywords: Carbon emission, economic growth, financial development, Pakistan
    JEL: Q43 Q53 Q58
    Date: 2014–11–30
  4. By: Pauline Givord; Céline Grislain-Letrémy; Helene Naegele
    Abstract: This study evaluates the impact of fuel prices on new car purchases, using exhaustive individual-level data of monthly registration of new private cars in France from 2003 to 2007. Detailed information on the car holder enables us to account for heterogeneous preferences across purchasers. We identify demand parameters through the large oil price fluctuations of this period. We find that the sensitivity of short-term demand with respect to fuel prices is generally low. Using these estimates, we assess the impact of a policy equalizing diesel and gasoline taxes. Such a policy would reduce the share of diesel in new cars purchases from 69% to 66% in the short-run, without substantially changing the average fuel consumption or CO2 emission levels of new cars. Alternatively, a carbon tax would slightly decrease the CO2 emission levels of new cars in the short-run (by 0.1%) without any significant impact on the share of diesel cars purchased.
    Keywords: Fuel prices, automobiles, carbon dioxide emissions, environmental tax
    JEL: C25 D12 H23 L62 Q53
    Date: 2014
  5. By: Yuzuru Miyata; Hiroyuki Shibusawa; Tomoaki Fujii
    Abstract: In this paper we explore economic and environmental impacts of promotion and realization of an electric vehicle society (EVS). More concretely, this paper emphasizes a CGE-modelling approach to evaluate the following issues: entire economic impacts of subsidies for promotion of an EVS, the possibility of carbon dioxide (CO2) emissions and prices reduction, a change of industrial structure towards an EVS, and a modal shift towards an EVS. Our simulation results demonstrate that after applying 20% subsidies to five industries including electric vehicles (EVs) manufacturing, EV transport, solar power generation, cogeneration and other transport, the total industrial output and municipal GDP increase. A large growth rates are found in industries where subsidies are introduced except non-ferrous metal industry. However, it is motivating that decreasing proportions are found in oil, coal product, mining, heat supply and gasoline vehicles (GVs) transport industries. Moreover all the commodity prices decrease since subsidies are given to some industries. Hence Toyohashi CityÂfs economy shows a direction where the demand for conventional vehicles and energy use are decreased, conversely, the demand for EVs and renewable energy are increased that displays different lifestyles from the current one. For all these reasons, it is our conclusion that EVS can really represent a realistic and alternative society both in terms of economic development and CO2 emissions reduction. In this study therefore it is clear that modal shift will occur to EVS, and thus we suggest for promotion of a new industrial structure to introduce an EVS in Toyohashi City in Japan. The proposed model can even be applied to the other cities in Japan and other countries in the world which are similar to this area.
    Keywords: electric vehicle; CGE; Toyohashi; R13; O18
    Date: 2014–11
  6. By: E. Agliardi; M. Pinar; T. Stengos
    Abstract: We employ a stochastic dominance (SD) approach to analyze the components that contribute to environmental degradation over time. The variables that are considered include countries’ greenhouse gas (GHG) emissions and water pollution. Our approach is based on pair-wise SD tests. First, we study the dynamic progress of each separate variable over time, from 1990 to 2005, within 5-year horizons. Then, pair-wise SD tests are used to study the major industry contributors to the overall GHG emissions and water pollution at any given time, to uncover the industry which contributes the most to total emissions and water pollution. We find that CO2 emissions not only contribute the most to the GHG emissions over time, but also increased within 15 year in the first-order SD sense. On the other hand, water pollution increased in a second-order SD sense. Pair-wise industry comparisons suggest that the major industry contributors to the CO2 emissions have always been the electricity and heat production sectors, while the transport sector has been the second contributor between 1990 and 2005. Finally, the food industry gradually became the major contributing industry for water pollution over time.
    JEL: C4 C5 C14 Q01 Q5 Q51
    Date: 2014–12
  7. By: Maria Teresa Costa (Universitat de Barcelona & IEB); Nestor Duch-Brown (Universitat de Barcelona & IEB)
    Abstract: Relevant advances in the mitigation of environmental impact could be obtained by the appropriate diffusion of existing environmental technologies. In this paper, we look at the diffusion of knowledge related to environmental technologies developed within the oil and gas industry. To assess knowledge spillovers from oil and gas inventions as a measure of technology diffusion, we rely on forward patent citations methodology. Results show that there is a strong likelihood that the citing patent will be eventually linked to environmental technologies if the original oil and gas invention has already environmental uses. Moreover, both intra and intersectoral spillovers produce a "turnabout" effect, meaning that citing patents show the opposite quality level of the cited patent. Our results support the idea that more sector-specific environmental policies, with an emphasis on diffusion, would significantly improve the use of environmental technologies developed within the oil and gas industry.
    Keywords: Forward patent citations, petroleum industry, environmental and technology policies
    JEL: Q4 Q55 O31
    Date: 2014
  8. By: Lucas Bretschger; Lin Zhang
    Abstract: There is widespread concern that an international agreement on stringent climate policies will not be reached because it would imply too high costs for fast growing economies like China. To quantify these costs we develop a general equilibrium model with fully endogenous growth. The framework includes disaggregated industrial and energy sectors, endogenous innovation, and sector-specic investments. We nd that the implementation of Chinese government carbon policies until 2020 causes a welfare reduction of 0.3 percent. For the long run up to 2050 we show that welfare costs of internationally coordinated emission reduction targets lie between 3 and 8 percent. Assuming faster energy technology development, stronger induced innovation, and rising energy prices in the reference case reduces welfare losses signicantly. We argue that increased urbanization raises the costs of carbon policies due to altered consumption patterns.
    Keywords: Carbon policy, China, Endogenoous growth, Induced innovation, Urbanization
    JEL: Q54 O41 O53 C68
    Date: 2014
  9. By: Sonja Peterson; Matthias Weitzel
    Abstract: Because of large economic and environmental asymmetries among world regions and the incentive to free ride, an international climate Regime with broad participation is hard to reach. Most of the so far proposed Regimes base on an allocation of emission rights that is to be perceived as fair. Yet, there are also some arguments to focus more on the actual welfare implications of different Regimes and to aim for a "fair" Distribution of resulting costs. Using the Cpmputable General Equilibrium model DART, we analyze the driving Forces of welfare implications in different Scenarios where a global Emission target derived from the 2 degree target is reached. These include two Regimes that are often presumed to be "fair", namely a harmonized international carbon tax and a cap and trade System based on the convergence of per capita Emission rights, and additionally an "equal loss" Scenario where welfare losses relative to a Business as usual Scenario are equal for all Major world regions. We show that "eqaual losses" would mean in particular to compensate for the effects of climate policy on energy markets and e.g. to compensate for the loss of oil revenues as the Organization of Petroleum Exporting Countries (OPEC) argues for
    Keywords: International climate Regime, Emission Targets, Emission trading, taxes, Distribution
    JEL: H22 H23 H87 D58 Q48 Q52
    Date: 2014–10
  10. By: Santosh Kumar Sahu (Madras School of Economics)
    Abstract: This paper is an attempt to understand the relationship between firm performances based on energy use patterns of Indian manufacturing industries. Determinates of firm performances are estimated for the full sample and for the sample of firms using similar energy sources. Econometric analysis of the data collected from the CMIE PROWESS at firm level from 2005-2013 reveals that the determinants of profitability vary across groups. Energy intensity is positively related to profitability for three models except for the firms using natural gas as primary source of energy. R and D intensity is positively related to profitability for the full sample and for the firms using petroleum. For the firms using coal as primary source of energy, less R and D intensive firms are found to be profitable. For all the cases, firm size is found to be nonlinearly related to profitability. In the policy front, shifting primary energy source from coal and petroleum to natural gas; firms can become energy efficient and profitable.
    Keywords: Energy Use, Firm Performance, Indian Manufacturing, Energy Intensity, Profitability
    JEL: Q4 B23
    Date: 2014–09
  11. By: Paul J. Burke; Shuhei Nishitateno
    Abstract: This study utilizes data for 144 countries from 1991-2010 to present the first international estimates of the gasoline price elasticity of road fatalities. We instrument each country's gasoline price with that country's oil reserves and the yearly international crude oil price to address potential endogeneity concerns. Our findings suggest that the average reduction in road fatalities resulting from a 10% increase in the gasoline pump price is in the order of 3-6%. Around 35,000 road deaths per year could be avoided by the removal of global fuel subsidies.
    Keywords: road deaths, road safety, gasoline price, subsidy, taxation
    JEL: R41 H23 O18 Q43
    Date: 2014
  12. By: Dominique Isabelle Kayser; Song Li; Suiko Yoshijima
    Keywords: Environment - Climate Change Mitigation and Green House Gases Water Resources - Wetlands Environment - Environment and Energy Efficiency Energy - Energy and Environment Environmental Economics and Policies
    Date: 2013–11
  13. By: Selien De Schryder; Gert Peersman (-)
    Abstract: Using recent advances in panel data estimation techniques, we .find that an appreciation of the US dollar exchange rate leads to a significant decline in oil demand for a sample of 65 oil-importing countries. The estimated effect turns out to be considerably larger than the impact of a shift in the global crude oil price expressed in US dollar. This .finding appears to be the consequence of a stronger pass-through of changes in the US dollar exchange rate to domestic end-user oil products prices relative to changes in the global crude oil price. Furthermore, we demonstrate the relevance of US dollar fluctuations for global oil price dynamics.
    Keywords: Oil demand, US dollar exchange rate, oil price pass-through, panel data
    JEL: C33 F31 Q41
    Date: 2014–11
  14. By: Marina Di Giacomo (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Massimiliano Piacenza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Francesco Scervini (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Gilberto Turati (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: As an answer to soaring oil prices, stabilization mechanisms based on specific taxes, such as the French Tipp flottante, have been discussed and introduced in some countries in early 2000s, but then soon abandoned. Our contribution aims at analysing the excise pass-through and the cost shifting in a comprehensive European context to understand whether such a mechanism could actually reach its target. Our results show that, on average, fuel tax reductions are effective in stabilize consumer price, but the measure is particularly costly for public budgets.
    Keywords: Fuel Markets, Tax Incidence, Excise Pass-through, Price Stabilization, Oil Price.
    JEL: H22 Q41 Q48 D24
    Date: 2014–11
  15. By: Juan Rosellon (Division of Economics, CIDE); Luis Herrera
    Abstract: To date, the distributive implications of incentive regulation on electricity transmission networks have not been explicitly studied in the literature. More specifically, the parameters that a regulator might use to achieve distributive efficiency under price-cap regulation have not yet been identified. To discern these parameters is the motivation for the research presented in this paper. We study how different weight parameters affect the distributive characteristics of optimal price-cap incentive regulation for electricity transmission. We find that a regulator’s use of ideal (Laspeyres) weights tends to be more beneficial for the Transco (consumers) than for consumers (the Transco).
    Keywords: Electricity transmission, incentive regulation, distributive efficiency
    JEL: L50 L51 L94 Q40 Q42
    Date: 2013–11
  16. By: Mehtap Kilic (Erasmus School of Economics); Elisa Trujillo-Baute (Universitat de Barcelona & IEB)
    Abstract: The power system has to deal with three main sources of uncertainty: demand uncertainty and load prediction errors, failure of power plants and uncertainty of wind. The growing share of wind and other intermittent generation sources in the European supply increases the uncertainty about power production in day-ahead and longer-term predictions. As EU member states increase the deployment of wind power and other intermittent renewable energy sources, the intraday and balancing market will gain more interest, as additional demand for reserve and response operations is needed. Hence, it becomes relevant to analyse the effect of wind power forecasting errors on intraday power prices. A higher forecast error will increase the need of intraday markets to balance out the oversupply or deficit of wind power on an hourly basis. This oversupply or deficit can be corrected though flexible hydropower plants; however the power price is highly influenced by the fluctuations in the reservoir level (Huisman et. al [2013]). In this paper, we question to what extent hydropower a stabilizing effect has on the impact of wind forecast errors on NordPool intraday prices. To do so, we examine the peak and off peak imbalance power prices for the Scandinavian market (ELBAS) from 2011 until 2013 with a Markov regime-switching model in periods with low and high hydro reservoir levels. Results indicate that under wind forecast error, the use of hydropower capacity in intraday markets is proven to be an effective volatility control mechanism. However, the price stabilizing effect of hydropower capacity does not take place at all times.
    Keywords: Electricity, intraday prices, wind forecast error, Markov-switching models
    JEL: L11 Q41 C24
    Date: 2014
  17. By: Paul David (Stanford University); Adriaan van Zon (United Nations University)
    Abstract: This paper analyzes the requirements for a social welfare-optimized transition path toward a carbon-free economy, focusing particularly on the deployment of low-carbon technologies, and the roles of engineering upgrading of extant facilities, and directed R&D to enhancing their productivity. The goal in each case is to achieve timely supply-side transformations in the global production regime that will avert catastrophic climate instability, and do so in a manner that minimizes the social welfare costs of stabilizing the level of the atmospheric concentration of greenhouse gases (GHG). This “planning-model” approach departs from conventional IAM exercises by dispensing with the need to make (generally dubious) assumptions about the macro-level consequences of behaviors of economic and political actors in response to market incentives and specific public policy instruments, such as a carbon tax. It shifts attention instead to the need for empirical research on critical technical parameters, and problems of inter-temporal coordination of investment and capacity utilization that will be required to achieve a timely, welfare-optimizing transition. A suite of heuristic integrated models is described, in which global macroeconomic growth is constrained by geophysical system with climate feedbacks, including extreme weather damages from global warming driven by greenhouse gas emissions, and the threshold level GHG concentration beyond which the climate system will be “tipped into” catastrophic runaway warming. A variety of technological options are identified, each comprising an array of specific techniques that share a distinctive instrumental role in controlling the concentration level of atmospheric CO2. The development of low-carbon technologies through investment in R&D, and their deployment embodied in new physical capital formation, is explicitly modeled; as is the implementation of known engineering techniques to “upgrade” existing fossil-fueled production facilities. The social-welfare efficient exercise of the available technological options is shown to involve sequencing different investment and production activities in separate temporal “phases” that together form a transition path to a sustainable low-carbon economy— one in which gross CO2-emissions do not exceed the Earth’s “natural” abatement capacity. Parametric variations of the “tipping point” constraint in these models will permit exploration of the corresponding modification in the required sequencing and durations of investment and production in the phases that form the optimal transition path. The preliminary solutions (using mufti-phase optimal control methods) expose important dynamic complementarities among technological options that are often presented as substitutes by current climate policy discussions.
    Keywords: global warming, tipping points, catastrophic climate instability, technology fix options, R&D investments, capital-embodied innovations, optimal sequencing, IAM and DIRAM policy design approaches, multi-phase optimal control, sustainable endogenous growth
    JEL: Q54 Q55 O31 O32 O33
    Date: 2014–08
  18. By: Vesterberg, Mattias (Department of Economics, Umeå School of Business and Economics); Kiran B. Krishnamurthy, Chandra (Department of Economics, Umeå School of Business and Economics); Bayrak, Oben (CERE and Department of Forest Economics)
    Abstract: Using a unique and highly detailed data set of energy consumption at the appliance-level for 390 Swedish households, seemingly unrelated regression (SUR)-based end-use specific load curves are estimated. The estimated load curves are then used to explore possible restrictions on load shifting (e.g. the office hours schedule) as well as the cost implications of different load shift patterns. The cost implications of shifting load from “expensive” to “cheap” hours, using aggregate spot price data, is computed to be very small; roughly 2-5% daily cost reduction from shifting load up to seven hours ahead, indicating small incentives for households (and suppliers) to adopt dynamic pricing of electricity. In addition, end-use-specific income elasticites are also estimated, for the first time for Sweden, using again a SUR framework. The estimated income elasticties are large and significant, varying from a high of 0.8-1.25 for heating to a low of 0.20.5 for lighting. Aggregate income elasticity is also high, varying from 0.5 to 0.81. Our results have important implications for Swedish energy policy, in particular for the Swedish government’s stated goal of realtime pricing.
    Keywords: Direct Metering; Residential Electricity Demand; Real time electricity pricing
    JEL: C30 D12 Q41 Q48
    Date: 2014–12–09
  19. By: Asa Johannesson Linden; Fotios Kalantzis; Emmanuelle Maincent; Jerzy Pienkowski
    Abstract: In the recent years electricity tariff deficits emerged in Spain, Portugal, Greece and in some other Member States. Tariff deficits are shortfalls of revenues in the electricity system, which arise when the tariffs for the regulated components of the retail electricity price are set below the corresponding costs borne by the energy companies. The objective of this paper is to define and identify the different cases of electricity tariff deficits in Member States. The analysis starts with a description of the functioning of the electricity market in Europe, including price formation and different forms of government intervention, such as support to renewable energy and retail price regulation. Then the paper determines the existence of tariff deficits in the various Member States on the basis of common criteria and describes their common features, as well as particular characteristics of tariff deficits in the countries concerned. An econometric analysis is carried out to identify the drivers of the emergence of a tariff deficit. The final section discusses the impact on the individual firms and on public finances and provides the conclusions.
    JEL: D21 D22
    Date: 2014–10
  20. By: Eiji Ohno; Ryuta Mori; Masafumi Morisugi; Hiroshi Sao
    Abstract: Based on the international agreements after the Kyoto Protocol, some projects to reduce the greenhouse gas emission have been promoted even in Japan. Therefore, policies such as various regulations and introduction of the environmental tax have been discussed, so people will be asked for big burden. However, in many local cities, problems such as falling birth rate, aging, and stagnation of regional economy are important subjects, so it is hard to give the priority to the global warming prevention policy. In addition, in spite of abundance of natural resources such as forest, wind, water, and sunlight, the local city has a problem that the fund for the global warming prevention policy which utilizes these resources cannot be procured by financial difficulties. On the other hand, the renewable energy business with citizen participation will give the local community some effects. On the environment aspect, the carbon dioxide emission will be reduced by introducing the renewable energy. On the economy aspect, the local employment will be stimulated if the local contractor will construct the renewable energy system and maintain it. Therefore, there should be the renewable energy business which would achieve both the global warming prevention and the regional economic revitalization. Furthermore, through such business with citizen participation, the environmental activity of the local residents will be activated, and we can expect that the semi-public service will be improved and the satisfaction of the local residents will rise. In this paper, we propose a small hydroelectric generation project with citizen participation which includes not only donation to the project but also cooperation in the activity such as cleaning and patrols. And the project is evaluated economically based on the willingness to work (WTW) by using the contingent valuation method and the general equilibrium analysis. As a result, the WTW for the project has been estimated as a function of its various attributes; the revenue, the profit to the local community, and the reward to contributors. On the other hand, the revenue should vary with the number of contributors; where the number means the WTW. As for the profit to the local community and the reward to contributors, these are positioned as the policy variables. Therefore, by using our evaluation model, we will be able to evaluate various policies for the renewable energy business; for example, policies which make the revenue maximize, policies which make the social utility maximize, and so on.
    Keywords: small hydro-electric generation; global warming prevention; regional economic revitalization; contingent valuation method; general equilibrium analysis;
    JEL: Q42 Q51 R13
    Date: 2014–11
  21. By: Safaei, Hossein; Keith, David
    Abstract: Interest in compressed air energy storage (CAES) technology has been renewed driven by the need to manage variability form rapidly growing wind and solar capacity. Distributed CAES (D-CAES) design aims to improve the efficiency of conventional CAES through locating the compressor near concentrated heating loads so capturing additional revenue through sales of compression waste heat. A pipeline transports compressed air to the storage facility and expander, co-located at some distance from the compressor. The economics of CAES are strongly dependant on electricity and gas markets in which they are embedded. As a case study, we evaluated the economics of two hypothetical merchant CAES and D-CAES facilities performing energy arbitrage in Alberta, Canada using market data from 2002 to 2011. The annual profit of the D-CAES plant was $1.3 million more on average at a distance of 50 km between the heat load and air storage sites. Superior economic and environmental performance of D-CAES led to a negative abatement cost of −$40/tCO2e. We performed a suite of sensitivity analyses to evaluate the impact of size of heat load, size of air storage, ratio of expander to compressor size, and length of pipeline on the economic feasibility of D-CAES.
    Date: 2014
  22. By: Rose, Amy; Stoner, Robert J.; Perez-Arriaga, Ignacio
    Abstract: Capacity planners in developing countries frequently use screening curves and other system-independent metrics such as levelized cost of energy to guide investment decisions. This can lead to spurious conclusions when evaluating intermittent power sources
    Keywords: solar photovoltaic (PV), renewable integration, developing countries
    Date: 2014
  23. By: Halkos, George; Kevork, Ilias; Tziourtzioumis, Chris
    Abstract: In this paper we present for Greece a methodology for predicting emissions and estimating the abatement costs of the transport sector, focusing our analysis on passenger cars. In the first section we estimate for the period 2000-2030 the annual emissions of the most important pollutants using the Tier 2 method. For the application of this method, we forecast the number of passenger cars and the annual average distance driven per car technology, fuel type and displacement category. In particular, the forecasts for the number of cars are obtained by fitting trend and double exponential smoothing models to the available data from 2000 to 2013. Necessary adjustments to the number of cars of the latest technologies are made for each year such that the sum of predictions equals to the estimated total number of cars obtained through an econometric model that relates the changes in the number of cars and the changes in GDP (at current prices). In the second part of the study we estimate the total pollution cost at 2013 prices for four alternative scenarios, where for each scenario we assume changes for the period 2013-2030 to the composition of the fleet of passenger cars for the benefit of either gasoline or diesel or hybrids or LPG cars. The costs analyzed are capital, operation and maintenance and fuel.
    Keywords: Transport sector; passenger cars; tier 2 method; abatement costs; emissions.
    JEL: C53 M21 Q50 Q53 Q54 Q58 R40
    Date: 2014–11–25
  24. By: Kurt Kratena; Mark Sommer
    Abstract: It is expected that binding biophysical constraints have the potential to slow growth and impede the improvement of other key macroeconomic variables. Using a DYNK (Dynamic New Keynesian) model of the EU27, we study two different environmental policy options and evaluate their impact on environmental as well as socio-economic targets (equity and employment). Macroeconomic simulation models are very useful to discuss alternatives to the status quo in economic theory and policy in the face of increasing resource scarcities and impacts. Scenarios of possible economic futures until 2050 generated on the basis of these models can provide very useful insights. Any feasible scenario that allows for achieving policy targets for resource use without completely failing on economic and social targets requires absolute decoupling of resource use from income or GDP. Therefore, a modelling approach that takes into account the full feedback between the physical flows that are to be reduced and the flows in the economic system needs to be applied. For Europe the reduction of resource use is linked to different policy goals. First of all, the European consumer is embedded into global value chains and thereby directly and indirectly contributes to global resource use. GHG emissions of Europe are still an important part of global emissions and emissions per capita are far beyond a sustainable global level. Security of supply and the risks attached to that are a further issue for a European resource policy. The political targets, formulated in roadmaps for GHG emission reduction and resource efficiency therefore describe significant reductions in resource use linked to domestic production (GHG emissions), as well as to domestic consumption (domestic material consumption, DMC). The main instrument discussed in this context is the introduction of prices/taxes for GHG emissions and for resources like construction minerals and metal ores. At the same time, the problem of 'leakage' is identified in a scenario of an isolated European policy. Higher costs for European producers due to these taxes may lead to relocation of energy and material intensive production. This in turn can hurt labour in Europe and on a global scale lead to the same or even higher resource use and GHG emissions. In the end, the genuine source of leakage is the consumers' demand in Europe. Given this demand, producers outside Europe increase their resource use, if the European producer of energy and material intensive products is not competitive. The socio-economic impact of two alternative policies ('classical green tax' reform, 'environmental fiscal devaluation') is analysed and compared.
    Keywords: Beyond GDP, Biophysical constraints, CGE models, Ecological innovation, Macroeconomic disequilibrium, Socio-ecological transition, Sustainable growth, Wealth
    JEL: H J68 O38 O44 Q48 Q54 Q58
    Date: 2014–11
  25. By: Kilian, Lutz; Vigfusson, Robert J.
    Abstract: Although oil price shocks have long been viewed as one of the leading candidates for explaining U.S. recessions, surprisingly little is known about the extent to which oil price shocks explain recessions. We provide the first formal analysis of this question with special attention to the possible role of net oil price increases in amplifying the transmission of oil price shocks. We quantify the conditional recessionary effect of oil price shocks in the net oil price increase model for all episodes of net oil price increases since the mid-1970s. Compared to the linear model, the cumulative effect of oil price shocks over course of the next two years is much larger in the net oil price increase model. For example, oil price shocks explain a 3% cumulative reduction in U.S. real GDP in the late 1970s and early 1980s and a 5% cumulative reduction during the financial crisis. An obvious concern is that some of these estimates are an artifact of net oil price increases being correlated with other variables that explain recessions. We show that the explanatory power of oil price shocks largely persists even after augmenting the nonlinear model with a measure of credit supply conditions, of the monetary policy stance and of consumer confidence. There is evidence, however, that the conditional fit of the net oil price increase model is worse on average than the fit of the corresponding linear model, suggesting much smaller cumulative effects of oil price shocks for these episodes of at most 1%.
    Keywords: asymmetry; conditional response; nonlinearity; oil price; real GDP; recession; time variation
    JEL: E32 E37 E51 Q43
    Date: 2014–06
  26. By: Christophe Heyndrickx; Victoria Alexeeva-Taleebi; Natalia Tourdyeva
    Abstract: One of grand challenges which are faced by Russia today is to deregulate its gas market while favouring longer-term growth of economy. Since the 1990s, several proposals for structural reforms of Russian gas industry have been intensively debated, including the split-up of Gazprom. From the mid-2000s onwards, the key component of the reforms has become the introduction of a new pricing scheme for natural gas supply at the domestic markets. This is claimed to fit in a policy promoting energy efficiency, increasing investments in natural gas production and bringing the natural gas price on the domestic market closer to long term cost recovery. Underpricing of natural gas at the domestic markets was an explicit feature of the Soviet era, aimed at stimulating industrial growth. In the post-Soviet period, domestic gas prices were kept at relatively low levels to back up economic recovery, though this strategy had become increasingly untenable by 2006 in the light of Gazprom's investment needs into new extraction fields. A number of studies supported an upward price correction as a prerequisite for any structural reforms of Russian gas industry. Price increases on domestic market have been considered as a remedy to overcome the risk of a shortage in Russian gas sector. Since then domestic gas prices have been following a steady upward trend. The average regulated gas prices for both industrial consumers and private households have more than doubled from 2006 to 2011 . Nonetheless, today Russian consumers pay one third of the gas price charged abroad.. The growing momentum for gas price liberalization in Russia is increasingly constrained by fears of potentially strong adverse impact that market-based price setting principle will have on the economy. Based on a novel multi-regional, multi-sector and multi-household computable general equilibrium (CGE) model of the Russian Federation, this paper presents a simple yet a flexible framework for evaluating gas price reform. We found that the reform is feasible at low economic cost, without greater disparities in terms of increased inequity within and between country's federal districts. Large redistributive impacts can arise from specific mechanisms to recycle revenues. In terms of global environmental credentials, gas price liberalization can bring Russia on a substantially more sustainable path. The potential to foster adoption of energy efficiency measures by exploiting the revenue-recycling effect is, however, limited.
    Keywords: Regional general equilibrium model; sustainable development; natural gas pricing; Russia
    JEL: D58 H21 H22 Q48
    Date: 2014–11
  27. By: Nicholas Apergis (Department of Economics and Property, Curtin University, Australia and Department of Banking and Financial Management, University of Piraeus, Greece); Christina Christou (Department of Banking and Financial Management, University of Piraeus, Greece); Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: The paper assesses the existence of the Environmental Kuznets Curve (EKC) hypothesis, across 48 contiguous states of the US, using recent advances in panel data techniques, given the existence of cross-sectional dependence, which in turn, makes reliance on time-series evidence biased. The Common Correlated Effects (CCE) estimation procedure of Pesaran,(2006), allows us to obtain state-level results, while staying in a panel set-up to accommodate for cross-sectional dependence, in the presence of cointegration in the relationship between emissions and a measure of output, and its squared value – a function that captures the inverted u-shaped relationship postulated by the EKC. Our results show that, the EKC hypothesis holds for only 10 of the 48 states, and hence implies that, the remaining 38 states should reform a number of their environmental regulatory policies to prevent environmental degradation, since otherwise, lower levels of emissions would only be possible at the expense of production.
    Keywords: ECO2 Emissions; Environmental Kuznets Curve; US States
    JEL: C33 Q53 Q56
    Date: 2014–11
  28. By: Baumeister, Christiane; Kilian, Lutz
    Abstract: Futures markets are a potentially valuable source of information about market expectations. Exploiting this information has proved difficult in practice, because the presence of a timevarying risk premium often renders the futures price a poor measure of the market expectation of the price of the underlying asset. Even though the expectation in principle may be recovered by adjusting the futures price by the estimated risk premium, a common problem in applied work is that there are as many measures of market expectations as there are estimates of the risk premium. We propose a general solution to this problem that allows us to uniquely pin down the best possible estimate of the market expectation for any set of risk premium estimates. We illustrate this approach by solving the long-standing problem of how to recover the market expectation of the price of crude oil. We provide a new measure of oil price expectations that is considerably more accurate than the alternatives and more economically plausible. We discuss implications of our analysis for the estimation of economic models of energy-intensive durables, for the debate on speculation in oil markets, and for oil price forecasting.
    Keywords: Forecast; Futures; Market expectation; Model uncertainty; Oil price; Risk premium
    JEL: C53 D84 G14 Q43
    Date: 2014–09
  29. By: Leppin, Julian Sebastian
    Abstract: This paper examines if overreaction of oil price forecasters is related to uncertainty. Furthermore, it takes into account impacts from oil price return and oil price volatility on forecast changes. The panel smooth transition regression model from González et al. (2005) is applied with different specifications of the transition functions to account for nonlinear relations. Data on oil price expectations for different time horizons are taken from the European Central Bank Survey of Professional Forecasters. The results show that forecast changes are governed by overreaction. However, overreaction is markedly reduced when high levels of uncertainty prevail. On the other hand, noisy signals and positive oil price returns tend to cause higher overreaction.
    Keywords: Overreaction,Uncertainty,Panel Smooth Transition Regression
    JEL: G14 C33 E37
    Date: 2014
  30. By: Miha Troha; Raphael Hauser
    Abstract: In this paper we propose a quadratic programming model that can be used for calculating the term structure of electricity prices while explicitly modeling startup costs of power plants. In contrast to other approaches presented in the literature, we incorporate the startup costs in a mathematically rigorous manner without relying on ad hoc heuristics. Moreover, we propose a tractable approach for estimating the startup costs of power plants based on their historical production. Through numerical simulations applied to the entire UK power grid, we demonstrate that the inclusion of startup costs is necessary for the modeling of electricity prices in realistic power systems. Numerical results show that startup costs make electricity prices very spiky. In the second part of the paper, we extend the initial model by including the grid operator who is responsible for managing the grid. Numerical simulations demonstrate that robust decision making of the grid operator can significantly decrease the number and severity of spikes in the electricity price and improve the reliability of the power grid.
    Date: 2014–11
  31. By: Héctor M. Núñez (Division of Economics, CIDE)
    Abstract: This paper examines the role of several factors in reducing the production costs of Brazilian sugarcane ethanol, including learning-by-doing (LBD), economies of scale, rising factor prices, market competitiveness, and exogenous technological changes. Using the aggregate industry-level data over the period 1975- 2010, we find that the reduction in production costs of sugarcane ethanol was primarily driven by autonomous technological changes and unrelated to LBD. The increase in energy prices raised production costs of sugarcane ethanol, while the effects of other input prices on reducing production costs of sugarcane ethanol are found to be insignificant. By increasing the costs of procuring key inputs for ethanol production, market competitiveness had a negative effect on reducing production costs of sugarcane ethanol. The role of economies of scale in affecting sugarcane ethanol production costs is inconclusive depending on model specifications.
    Keywords: Sugarcane ethanol, Production cost reductions, Learning-by-doing; Technological changes
    JEL: O33 Q20 Q42
    Date: 2013–06
  32. By: Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Mario Liebensteiner (Research Institute for Regulatory Economics, Vienna University of Economics and Business); Stephan Schmitt (WIK Consult and Research Institute for Regulatory Economics, Vienna University of Economics and Business)
    Abstract: The EU has been promoting unbundling of the transmission grid from other stages of the electricity supply chain with the aim of fostering competition in the upstream stage of electricity generation. At presence, ownership unbundling is the predominant form of unbundling in Europe. However, the benefits of increased competition from ownership unbundling of the transmission grid may come at the cost of lost vertical synergies between the formerly integrated stages of electricity supply. The policy debate generally neglects such potential costs of unbundling, yet concentrates on its benefits. Therefore European cross-country evidence may shed some light on this issue. This study helps fill this void by empirically estimating the magnitude of economies of vertical integration (EVI) between electricity generation and transmission based on a quadratic cost function. For this purpose we employ novel firm-level panel data of major European electricity utilities. Our results confirm the presence of substantial EVI, which put the policy measure of transmission ownership unbundling into question.
    Keywords: Cost function, Economies of Scope, Ownership Unbundling, Vertical Integration
    JEL: L22 L25 L51 Q48
    Date: 2014–11
  33. By: Cheng, Xiaomei (Dept. of Business and Management Science, Norwegian School of Economics); Bjørndal, Endre (Dept. of Business and Management Science, Norwegian School of Economics); Bjørndal, Mette (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: Our paper applies data envelopment analysis (DEA) and stochastic non-parametric envelopment of data (StoNED) to measure cost efficiency of electricity distribution companies. The data cover 123 Norwegian electricity distribution companies during 2004-2010, and the performance of these companies is compared across the two models with and without environmental variables, i.e., variables that account for local conditions that affect the companies’ costs. The results indicate that the cost efficiency estimates with the StoNED approach are much higher than with the DEA method when we do not consider environmental variables. It shows that the choice of estimation methods is important with respect to the estimated impact of environmental variables on the performance. In addition, the inclusion of the environmental variables has considerable effect on the classification of companies with respect to local returns to scale.
    Keywords: Cost efficiency; DEA; Environmental variables; Regulation; StoNED
    JEL: Q00
    Date: 2014–06–26
  34. By: Christoph Böhringer (Carl von Ossietzky Universität Oldenburg, Institut für Volkswirtschaftslehre & ZenTra); Nicholas Rivers (Graduate School of Public and International Affairs and Institute of the Environment, University of Ottawa); Hidemichi Yonezawa (University of Ottawa, Institute of the Environment)
    Abstract: We show that imposition of a state-level environmental tax in a federation crowds out preexisting federal taxes. We explain how this vertical fiscal externality can lead unilateral statelevel environmental policy to generate a welfare gain in the implementing state, at the expense of other states. Using a computable general equilibrium model of the Canadian federation, we show that vertical fiscal externalities can be the major determinant of the welfare change following environmental policy implementation by a state government. Our numerical simulations indicate that - as a consequence of vertical fiscal externalities - state governments can reduce greenhouse gas emissions by over 20 percent without any net cost to themselves.Length: 47 pages
    Keywords: fiscal externality, climate policy, federalism, computable general equilibrium
    Date: 2014–11
  35. By: Brita Bye; Marit E. Klemetsen (Statistics Norway)
    Abstract: We study the effects of various environmental regulations on environmental performance measured as emission intensity. Moreover, we aim to test whether any such effects are persistent or only temporary. Conventional theory predicts that indirect regulations as opposed to direct regulations provide continuous dynamic incentives for emission reductions. Our unique Norwegian firm level panel data set allow us to identify effects from different types of regulations such as environmental taxes, non-tradable emission quotas and technology standards. The data includes information of different environmental regulations, all kinds of polluting emissions, and a large number of control variables for all polluting incorporated firms. Empirically we identify positive and significant effects from both direct and indirect policy instruments. We also investigate whether the regulations provide continuous dynamic incentives that lead to persistent effects. In contrast to what the literature suggests, we find evidence that direct regulations promote persistent effects. Indirect regulations will, on the other hand, only have potential persistent effects if environmental taxes are increasing over time.
    Keywords: environmental performance; emission intensity; environmental regulations; command-and-control; environmental taxes; long-run effects
    JEL: C01 C23 D04 D22 H23 L51 Q51 Q58
    Date: 2014–10
  36. By: Zoi Vrontisi (JRC IPTS , European Commission); Jan Abrell (ETH Zurich); Frederik Neuwahl (DG ENV, European Commission); Bert Saveyn (JRC IPTS, European Commission; JRC IPTS , European Commission); Fabian Wagner (IIASA)
    Abstract: In March 2014 the UN World Health Organization (World Health Organization, 2014), released a study reporting that in 2012 one in eight of global deaths were a result of air pollution exposure. As part of a long-term effort, in late 2013, the European Commission (EC) adopted the "The Clean Air Policy Package", where it proposes new air pollution reduction objectives for the period up to 2030, as well as instruments to deliver those objectives. This paper explains in detail the modelling conducted with a Computable General Equilibrium model, GEM-E3, for the EC Impact Assessment of this recent EU policy proposal along with an additional analysis of the benefits deriving from the proposed policies. We show that the expenditure on pollution abatement represents a cost for the abating sectors but also that the expenditure in abatement technologies is an economic opportunity for the sectors that produce these technologies.  Moreover, we find that the inclusion of benefits in our analysis, especially those related to health, can offset the resource costs and yield overall marginally positive macro-economic impacts on the European economy.
    Keywords: The Clean Air Policy Package, environmental policy, health, general equilibrium
    JEL: Q53 Q58 C68 H51
    Date: 2014–12
  37. By: Enrico Botta; Tomasz Koźluk
    Abstract: Cross-country analysis of the economic effects of environmental policies is limited by the lack of reliable, comparable measures of the stringency of environmental policies. This paper attempts to fill this gap, by constructing new quantitative indexes of environmental policy stringency (EPS). Selected environmental policy instruments, primarily related to climate and air pollution, are scored and aggregated into composite EPS indexes. Two EPS indexes are proposed – one for the energy sector, and an extended one to proxy for the broader economy (“economy-wide”). They cover most OECD countries over 1990s-2012. While a simplification of the multidimensional reality of environmental policies, the EPS indicators are a first tangible effort to measure environmental policy stringency internationally over a relatively long time horizon. They show relatively high and significant correlations with alternative proxies of EPS used in the literature, such as measures of perceived stringency based on surveys, measures based on environmental outcomes and a composite policy-based measure with no time series. The paper describes some additional features of the EPS indicators and sketches out possible future extensions.<P>Mesurer la sévérité des politiques environnementales dans les pays de l'OCDE : Approche fondée sur des indices composites<BR>L’analyse des effets économiques des politiques environnementales dans une optique internationale est entravée par le manque de mesures fiables et comparables de la sévérité de ces politiques. Ce document vise à combler cette lacune en construisant de nouveaux indices quantitatifs de la sévérité des politiques environnementales (SPE). En l’occurrence, une note est attribuée à certains instruments de la politique de l’environnement – liés principalement au climat et à la pollution atmosphérique – et les notes sont agrégées sous forme d’indices composites de la SPE. Deux indices de SPE sont proposés : un pour le secteur de l’énergie et un, élargi, destiné à couvrir l’économie dans son ensemble (« macro-économique »). Ces indices couvrent la plupart des pays de l’OCDE pour la période allant des années 90 à 2012. Même s’ils dressent un tableau simplifié de la réalité protéiforme des politiques environnementales, les indicateurs de SPE sont l’aboutissement d’un premier effort tangible visant à mesurer la sévérité de ces politiques dans une optique internationale sur une période relativement longue. Ils laissent apparaître des corrélations relativement fortes et significatives avec d’autres mesures indirectes de la SPE employées dans les travaux publiés, comme celles issues d’enquêtes sur la sévérité perçue, celles reposant sur les résultats environnementaux et une mesure composite fondée sur les politiques pour laquelle il n’existe pas de série temporelle. Le document décrit plusieurs autres caractéristiques des indicateurs de SPE et esquisse de possibles prolongements à venir.
    Keywords: composite indicators, environmental regulations, environmental policies, environmental policy stringency, sévérité des politiques environnementales, politiques environnementales, réglementation environnementale, indicateurs composites
    JEL: Q48 Q50 Q58
    Date: 2014–12–04
  38. By: Deluna, Roperto Jr
    Abstract: This study was conducted to determine the long-run relationship among world oil price (WOP), Philippine inflation rate (IR) and exchange rate (ER). Results of the Augmented Dickey Fuller (ADF) tests of the variables revealed that all three series are not stationary in the process and were subjected to first differencing. ADF further revealed that the three series are integrated of order 1 or I(1). Therefore, vector error correction model (VECM) was used to examine the relationship of the three variables. VECM revealed a positive long-run relationship between IR and WOP, and IR and ER. A unit increase of the world oil price will increase Philippine inflation by 0.31%. While, a unit increase in exchange rate (PhP: USD) will increase inflation rate by 0.42%. In terms of ER, results revealed that an increase in the past values of WOP will increase ER. However, ER is not affected by the past values of IR. Result of the granger causality shows that all of the other variables jointly granger cause and individually granger cause inflation rate. Changes in ER cannot be predicted by joint and individual changes in the previous periods of WOP and IR.
    Keywords: VECM, inflation, world oil price, exchange rate
    JEL: C3 C32 E1 E10 E31
    Date: 2014–08–01
  39. By: Svetlana Ratner
    Abstract: The studies of environmental awareness or the so-called people's pro-environmental behaviors (PEBs) became a popular topic in Europe, North America and Asia, but not yet in Russia. Many studies investigated PEBs revealed that monetary saving and health concern are considered to be the most common influential factors for many PEBs. Because of the lowest electric power and heat tariffs in the world as well as abundant natural resources it can be assumed that the level of environmental awareness in Russia is low comparing to EU. Nowadays this problem can became a barrier for innovative development and diffusion of new energy efficient technologies. In this paper we present the results of empirical research aiming evaluation of environmental awareness in one of the southern region of Russia ? Krasnodar region. In research we also evaluate the informational transparency in the field of ecology in Russia and distinguish the most popular sources of information. The method of research is medium-scale face-to-face inquiry. The survey involved 112 respondents from one big city (Krasnodar), it's suburbs, several small cities and rural areas. Data analysis was performed using StatSoft STATISTICA 10.0. The non-parametric Mann-Whitney tests and Kruskal?Wallis one-way analysis of variance were used to reveal the optimal quantification that describes the relationships between the categorical scores of each variable as well as the relationships between the variables themselves. In order to identify relationships between variables, measured in nominal scales, contingency tables (cross tabulation) were used. In some cases (where it was appropriate) correlation analysis and one-way ANOVA were used.
    Keywords: environmental awareness; pro-environmental behaviors; informational transparency; sustainable development; regional economy; nonparametric analysis; multiple correspondence analysis
    JEL: O13 Q21 Q42 Q51
    Date: 2014–11
  40. By: Tiziano De Angelis (School of Mathematics, University of Manchester); Giorgio Ferrari (Center for Mathematical Economics, Bielefeld University); John Moriarty (School of Mathematics, University of Manchester)
    Abstract: In this paper we provide a complete theoretical analysis of a two-dimensional degenerate non convex singular stochastic control problem. The optimisation is motivated by a storage-consumption model in an electricity market, and features a stochastic real-valued spot price modelled by Brownian motion. We find analytical expressions for the value function, the optimal control and the boundaries of the action and inaction regions. The optimal policy is characterised in terms of two monotone and discontinuous repelling free boundaries, although part of one boundary is constant and and the smooth fit condition holds there.
    Keywords: finite-fuel singular stochastic control, optimal stopping, free boundary, Hamilton-Jacobi-Bellmann equation, irreversible investment, electricity market
    Date: 2014–11
  41. By: Beghin, John C.; Bureau, Jean-Christophe; Gohin, Alexandre
    Abstract: We assess the impact of a potential TTIP bilateral free trade agreement on the EU and US bio-economies (feedstock, biofuels, by-products, and related competing crops) and major trade partners in these markets. The analysis develops a multi-market model that incorporates bilateral trade flows (US to EU, EU to US, and similarly with third countries) and is calibrated to OECD-FAO baseline for 2013–2022 to account for recent policy decisions. The major policy reforms from a TTIP involve tariff and TRQ liberalization and their direct contractionary impact on US sugar supply, EU biofuel production, and indirect negative effect on US HFCS production. EU sugar and isoglucose productions expand along with US ethanol and biodiesel and oilseed crushing. EU sugar would flow to the US, US biofuels and vegetable oil to the EU. We further quantify nontariff measures (NTM) affecting these trade flows between the EU and the US. EU oilseed production contracts, and EU crushing expands with improving crushing margins following reduced NTM frictions. Our analysis reveals limited net welfare gains with most net benefits reaped by Brazil and not the two trading partners of the TTIP.
    Keywords: biofuel; ethanol; biodiesel; sugar; TTIP; bilateral trade agreement; nontariff measure
    JEL: F13 Q17 Q42 Q48
    Date: 2014–11–19
  42. By: John C. Beghin (Center for Agricultural and Rural Development (CARD)); Jean-Christophe Bureau; Alexandre Gohin
    Abstract: We assess the impact of a potential TTIP bilateral free trade agreement on the EU and US bio-economies (feedstock, biofuels, by-products, and related competing crops) and major trade partners in these markets. The analysis develops a multi-market model that incorporates bilateral trade flows (US to EU, EU to US, and similarly with third countries) and is calibrated to OECD-FAO baseline for 2013–2022 to account for recent policy decisions. The major policy reforms from a TTIP involve tariff and TRQ liberalization and their direct contractionary impact on US sugar supply, EU biofuel production, and indirect negative effect on US HFCS production. EU sugar and isoglucose productions expand along with US ethanol and biodiesel and oilseed crushing. EU sugar would flow to the US, US biofuels and vegetable oil to the EU. We further quantify nontariff measures (NTM) affecting these trade flows between the EU and the US. EU oilseed production contracts, and EU crushing expands with improving crushing margins following reduced NTM frictions. Our analysis reveals limited net welfare gains with most net benefits reaped by Brazil and not the two trading partners of the TTIP.
    Keywords: TTIP, bilateral trade agreement, biofuel, ethanol, biodiesel, sugar, nontariff measure JEL Codes: F13, Q17, Q42, Q48
    Date: 2014–11
  43. By: Delavari, Majid; Baranpour, Naghmeh; Abdeshahi, Abbas
    Abstract: The export of petrochemical products -as a type of non-oil export- plays a key role in the economic development of our country. This is of special importance in light of the structure of Iran's economy that is oil-based. Identifying the factors affecting the export of petrochemical products can improve their export. Using Johansen-Juselius co-integration method and the error correction model, the present study purports to investigate the effects of the real foreign exchange rate and the total value of petrochemical products on the export of these products in Iran. This research used data from 1989 to 2012. It was found that the real foreign exchange rate and the real value of total petrochemical products positively affect their export in the long run, and the effect of the former is greater than that of the latter. However, in the short run the effect of the foreign exchange rate on the export of petrochemical products is more significant.
    Keywords: Real Exchange Rate, Non-Oil Exporting, Petrochemicals, Johansen-Juselius Method, ECM Model.
    JEL: C22 C65 Q42 Q43
    Date: 2014–11–30
  44. By: Sen, S. (Tilburg University, School of Economics and Management)
    Abstract: Environmental pollution is among the main problems threatening a global sustainable future, and strongly intertwined with the unprecedented rise in economic prosperity since the industrial revolution. The first three chapters deal with two questions: The first question is: Does economic growth, without any intervention, eventually lead to lower levels of pollution? The second question is: If not, what are the strategies that should be followed? The last chapter focuses on another issue which is democratic transitions.
    Date: 2014
  45. By: Ghassen El Montasser (Ecole supérieure de commerce de Tunis, University of Manouba, Tunisia); Rangan Gupta (Department of Economics, University of Pretoria); Andre Luis Martins (COPPEAD Graduate Business School, Federal University of Rio de Janeiro, Rua Paschoal Lemme, 355. 21949-900 Rio de Janeiro); Peter Wanke (COPPEAD Graduate Business School, Federal University of Rio de Janeiro, Rua Paschoal Lemme, 355. 21949-900 Rio de Janeiro)
    Abstract: This paper presents an analysis of ethanol-gasoline price ratio in Brazil from 2000 to 2012. Since 2008 Brazilian Government has artificially frozen gasoline prices while prices of ethanol to the consumer were still liberated. Considering that annual inflation in Brazil is around 5% per year and increase in costs is transferred to ethanol prices this explain why ethanol consumption decays while gasoline consumption boosts. In Brazil, consumers are often told that ethanol is more advantageous for refueling cars when such price ration is below 0.70. In this paper, we use right-tailed ADF tests, developed recently by Phillips et al., (2013), to check for bubbles in this ratio. The results obtained suggest the existence of two bubbles: one has already collapsed and the other is still on course since 2010. Policy implications are also derived.
    Keywords: Brazil, Bubbles, Ethanol-Gasoline Price-ratio, Right-tailed ADF tests
    JEL: C15 C22 Q16 Q21
    Date: 2014–12
  46. By: Hattendorff, Christian
    Abstract: The paper contributes to the ongoing debate on the natural resource curse, which postulates a negative link between natural resource abundance and economic growth. It shows empirically that resource-rich countries appear to have a less developed financial system and investigates a potential mechanism behind this connection by applying insights from the finance and trade literature. It tests whether the resource sectors' lower demand for short-term external credit negatively affects financial development. This is done with cross-sectional and panel analysis, using an instrument for credit demand based on exogenous geographic determinants. The results, however, suggest that poor economic diversity rather than firms' credit demand drives the detrimental effect of resources on finance.
    Keywords: financial development,external dependence,natural resource curse,international trade,gravity model
    JEL: F10 G10 O13 O16
    Date: 2014
  47. By: Furuoka, Fumitaka
    Abstract: The state of Sarawak is situated on Borneo Island in East Malaysia. It is the largest state in Malaysia covering an area of approximately 124 thousand square kilometres. Sarawak’s population is approximately 2.07 million people, which makes it the fourth most populous state in the country. There are several distinguished characteristics of the economic development process in Sarawak which highlight the contrast in economic development in Sarawak and the rest of Malaysia. On the whole, the Malaysian economy transformed itself from a primary commodity-based economy to a manufacturing and industry-based one. Until the 1970s, Malaysia was predominantly an exporter of rubber and tin. However, the country overcame the colonial heritage that shaped its economic structure based on primary commodity dependency and became an exporter of manufactured goods. Sarawak, on the other hand, did not follow suit and its economy remains being driven by export of primary commodities, such as liquefied natural gas (LNG) and crude petroleum.
    Keywords: Economic development, Sarawak, Malaysia
    JEL: O53 R11
    Date: 2014
  48. By: Ajakaiye, Olu; Jerome, Afeikhena T.; Olaniyan, Olanrewaju; Mahrt, Kristi; Alaba, Olufunke A.
    Abstract: This study appraises non-monetary multidimensional poverty in Nigeria using the novel first order dominance approach developed by Arndt et al. (2012). It examines five dimensions of deprivation: education, water, sanitation, shelter, and energy-using comp
    Keywords: development, multidimensional poverty, ordinal dominance, welfare, well-being, Nigeria
    Date: 2014
  49. By: Katsuhito Nohara
    Abstract: Main purpose of this study is to evaluate the lost benefits of tourism by harmful rumors or misinformation proceeded from Higashi Nihon Daishinsai, literally Eastern Japan Great Earthquake Disaster on 11 March 2011. Its great earthquake disaster has done a lot of damages to many people, buildings, key infrastructures, and regional economy. Most regions have recovered from a devastating earthquake, but tourism industry of Tohoku region which include Aomori, Akita Iwate, Yamagata, Miyagi and Fukushima prefecture is still stagnant. There is little famous sight-seeing area at Pacific coast of Tohoku region where was hit by a gigantic earthquake and subsequently by a giant tsunami. Despite most famous tourist spots of Tohoku region, for example Hiraizumi where was registered as a World Heritage Site in 2001, Naruko spring, Aizu and so on, are located an inland area of the northeastern part of Japan, total tourists who visited Tohoku region decreased little by little after that disaster. This main reason is harmful rumors or misinformation brought about serious accidents at the Fukushima Nuclear Power Plants No.1 of Tokyo Electric Power Company. Although more than three years have already passed and the number of tourist who visit to Tohoku region recovered the previous level in some area, there still remains significant damage in some area due to the tourist's concern of radioactive pollution despite of the area are not actually polluted at all. This is so called the economical damages caused by harmful rumors or misinformation. In Fukushima, the slump in travel demand is in a terrible state because of harmful rumors or misinformation. Tourism industry is very important for Fukushima because the annual amount of tourism consumption (287,663,000,000yen) exceeds the annual amount of gross agricultural output (233,000,000,000yen) and the shipment value of food (278,200,000,000yen) in 2010. Therefore, this study applies to Travel Cost Method- Contingent Behavior (TCM-CB) which is capable of evaluating impact for benefits by changing environmental quality. Specifically, this study estimates the hypothetical travel demand function if the accident of Fukushima Nuclear Power Plants No.1 is not occurred and calculates lost tourism benefits due to harmful rumors or misinformation by comparing that derived hypothetical demand function with actual travel demand function. Then the author suggests that simplified monetary compensation system which makes up for lost tourism benefits should be introduced to certain areas in Fukushima.
    JEL: Q51 Q54
    Date: 2014–11

This nep-ene issue is ©2014 by Roger Fouquet. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.