nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒02‒11
47 papers chosen by
Roger Fouquet
London School of Economics

  1. Green energy By Olteanu, Victor
  2. The Impact of the Shale Oil Revolution on U.S. Oil and Gasoline Prices By Kilian, Lutz
  3. The Effect of Wind on Electricity CO2 Emissions: The Case of Ireland By Malaguzzi-Valeri, Laura; di Cosmo, Valeria
  4. Carbon Price and Wind Power Support in Denmark By Claire Gavard
  5. Individual Choice in a residential building and heating model - An application case for Germany By Klaas Bauermann; Christoph Weber
  6. Information v. Energy Efficiency Incentives: Evidence from Residential Electricity Consumption in Maryland By Massimo Anna Alberini; Charles Towe
  7. On the Relative Roles of Fossil Fuel Prices, Energy Efficiency, and Carbon Taxation in Reducing Carbon Dioxide Emissions: The Case of Portugal By Alfredo Marvão Pereira; Rui M. Pereira
  8. Technological Uncertainty in Meeting Europe’s Decarbonisation Goals By Rob Aalbers; Johannes Bollen; Kees Folmer; Geoffrey J. Blanford
  9. Carbon Pricing: Transaction Costs of Emissions Trading vs. Carbon Taxes By Coria, Jessica; Jaraite, Jurate
  10. Regulatory Options for Local Reserve Energy Markets: Implications for Prosumers, Utilities, and other Stakeholders By Rosen, Christiane; Madlener, Reinhard
  11. Temperature Effects on Firms’ Electricity Demand: An Analysis of Sectorial Differences in Spain By Moral Carcedo, Julián; Pérez García, Julián
  12. Canada – Renewable Energy: Implications for WTO Law on Green and Not-so-Green Subsidies By Steve Charnovitz; Carolyn Fischer
  13. How Does Stock Market Volatility React to Oil Shocks? By Andrea Bastianin; Matteo Manera
  14. Quo Vadis? Energy Consumption and Technological Innovation in China's Economic Growth By Wei Jin; ZhongXiang Zhang
  15. The effects and side-effects of the EU emissions trading scheme By Timothy Laing; Misato Sato; Michael Grubb; Claudia Comberti
  16. Estimating the Marginal Abatement Cost Curve of CO2 Emissions in China: Provincial Panel Data Analysis By Limin DU; Aoife Hanley; Chu WEI
  17. Renewable Energy, Subsidies, and the WTO: Where Has the ‘Green’ Gone? By Patrice Bougette; Christophe Charlier
  18. Time Series Properties of the Renewable Energy Diffusion Process: Implications for Energy Policy Design and Assessment By Masini, Andrea; Aflaki, Sam
  19. Access to Modern Energy: a Review of Impact Evaluations By Jacopo Bonan; Stefano Pareglio; Massimo Tavoni
  20. Rockets and Feathers Meet Joseph: Reinvestigating the Oil-gasoline Asymmetry on the International Markets By Ladislav Kristoufek; Petra Lunackova
  21. The Effects of Oil Price Shocks in a New-Keynesian Framework with Capital Accumulation. By Verónica Acurio Vasconez; Gaël Giraud; Florent Mc Isaac; Ngoc Sang Pham
  22. Why is Pollution from U.S. Manufacturing Declining? The Roles of Trade, Regulation, Productivity, and Preferences By Joseph S. Shapiro; Reed Walker
  23. Assessing the Energy-Efficiency Gap By Todd D. Gerarden; Richard G. Newell; Robert N. Stavins
  24. From Energy-intensive to Innovation-led Growth: On the Transition Dynamics of China’s Economy By Wei Jin; ZhongXiang Zhang
  25. Optimal monetary policy response to endogenous oil price fluctuations By Arnoud Stevens
  26. The impact of ‘clean innovation’ on economic growth: evidence from the transport and energy industries By Ralf Martin; Romesh Vaitilingam
  27. Inside the crystal ball: New approaches to predicting the gasoline price at the pump By Baumeister, Christiane; Kilian, Lutz; Lee, Thomas K.
  28. Capital-embodied Technologies in CGE Models By James Lennox; Ramiro Parrado
  29. Sector-level tests of the feasibility of green growth: Carbon intensity versus economic and productivity growth indicators By Ardjan Gazheli; Miklós Antal; Jeroen van den Bergh
  30. Tipping Points and Business-as-Usual in a Global Carbon Commons By Rodrigo Harrison; Roger Lagunoff
  31. Environmental Policy Performance and its Determinants: Application of a Three-level Random Intercept Model By Marzio Galeotti; Yana Rubashkina; Silvia Salini; Elena Verdolini
  32. Policy packages for modal shift and CO2 reduction in Lille, France By Hakim Hammadou; Claire Papaix
  33. Catastrophic Risk, Precautionary Abatement, and Adaptation Transfers By Francesco Bosello; Enrica De Cian; Licia Ferranna
  34. Steering urban growth: governance, policy and finance By Graham Floater; Philipp Rode; Bruno Friedel; Alexis Robert
  35. Incentives for Price Manipulation in Emission Permit Markets with Stackelberg Competition By Francisco J. André; Luis M. de Castro
  36. On The Strategic Effect of International Permits Trading on Local Pollution: The Case of Multiple Pollutants By Antoniou, Fabio; Kyriakopoulou, Efthymia
  37. The Persistence of Moral Suasion and Economic Incentives: Field Experimental Evidence from Energy Demand By Koichiro Ito; Takanori Ida; Makoto Tanaka
  38. Urban Green Growth in Dynamic Asia: A Conceptual Framework By Tadashi Matsumoto; Loïc Daudey
  39. Environmental Engel Curves By Arik Levinson; James O'Brien
  40. Consumer valuation of fuel costs and the effectiveness of tax policy: Evidence from the European car market By Grigolon, Laura; Reynaert, Mathias; Verboven, Frank
  41. The effect of Environmental Quality Misperception on Investments and Regulation By Luca Lambertini; Giuseppe Pignataro; Alessandro Tampieri
  42. Coherence, efficiency, and independence of the EU environmental policy system: results of complementary statistical and econometric analyses By F. Zagonari
  43. Budgetary Interests and the Degree of Unbundling in Electricity Markets - An Empirical Analysis for OECD Countries By Lindemann, Henrik
  44. Supporting BLUE Growth: Eliciting Stakeholders' preferences for Multiple-Use Offshore Platforms By Osiel Gonzalez Davila; Phoebe Koundouri; Ioannis Souliotis; Erasmia Kotroni; Wenting Chen; Claire Haggett; Shiau-Yun Lu; David Rudolph
  45. Price dispersion and station heterogeneity on German retail gasoline markets By Haucap, Justus; Heimeshoff, Ulrich; Siekmann, Manuel
  46. Clean Energy - Bridging to Commercialization: The Key Potential Role of Large Strategic Industry Partners By Lawrence M. Murphy; Ron Ondechek Jr.; Ricardo Bracho; John McKenna
  47. Adaptation to climate change and economic growth in developing countries By Antony Millner; Simon Dietz

  1. By: Olteanu, Victor
    Abstract: Strategic plans in the energy sector have the overall objective of the use of renewable energy, especially wind power, hydroelectricity, biomass intending a considerable increase in the share it has in total energy production. Thus, chase is moving towards an economy based on low carbon consumption and improve performance standards for the production, distribution and use of energy, helping to reduce greenhouse gas emissions, increase the use of renewable resources for energy production, to lower consumtion. The aim of the study is to describe a few of production and technologies to reduce the consumption of energy in classical sources other than wind power and photovoltaic's.
    Keywords: renewable energy, pollution, ecological technologies
    JEL: Q16 Q20 Q42 Q49 Q50
    Date: 2014–11–20
  2. By: Kilian, Lutz
    Abstract: This article examines how the shale oil revolution has shaped the evolution of U.S. crude oil and gasoline prices. It puts the evolution of shale oil production into historical perspective, highlights uncertainties about future shale oil production, and cautions against the view that the U.S. may become the next Saudi Arabia. It then reviews the role of the ban on U.S. crude oil exports, of capacity constraints in refining and transporting crude oil, of differences in the quality of conventional and unconventional crude oil, and of the recent regional fragmentation of the global market for crude oil for the determination of U.S. oil and gasoline prices. It discusses the reasons for the persistent wedge between U.S. crude oil prices and global crude oil prices in recent years and for the fact that domestic oil prices below global levels need not translate to lower U.S. gasoline prices. It explains why the shale oil revolution unlike the shale gas revolution is unlikely to stimulate a boom in oil-intensive manufacturing industries. It also explores the implications of shale oil production for the transmission of oil price shocks to the U.S. economy.
    Keywords: Capacity constraints; Export ban; Infrastructure; Oil independence; Oil sands; Oil trade; Refining; Shale oil; Tight oil; Unconventional oil
    JEL: Q33 Q43
    Date: 2014–12
  3. By: Malaguzzi-Valeri, Laura; di Cosmo, Valeria
    Date: 2014–10
  4. By: Claire Gavard (Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC), Italy)
    Abstract: This paper aims at characterizing the conditions of wind power deployment in order to infer a carbon price level that would provide wind power with comparable advantage over fossil fuel technologies as effective wind support policies. The analysis is conducted on Danish data from 2000 to 2010, i.e. after market liberalization took place in 2000. Probit technique is used to analyze the connection of new turbines to the grid each month and tobit analysis is employed on the additional capacity installed monthly. I find that the level and type of the support policy are the dominant drivers of deployment. Electricity price impact is not visible. The investment cost impact is not significant either, but the effect of the interest rate, although not visible in the probit analysis, is significant in the tobit analysis. The number of turbines already installed, that is taken as a proxy for the sites availability, does not have any significant effect either. A feed-in tariff significantly brings more wind power in than a premium policy. The fact that the support policy is a feed-in tariff rather than a premium increases the additional capacity installed monthly by up to several tens MW. The additional capacity installed monthly increases by up to thousand kW for each additional e/MWh of support. If the policy is a premium, I find that 24 e/MWh of support in addition to electricity price is needed to observe the connection of new turbines to the grid with a 0.5 probability. I convert this support level into a carbon price of 28 e/ton if wind power competes with coal, and 50 e/t if it competes with gas.
    Keywords: Wind Power, Renewable Energy, Subsidy, Carbon Price, Feed-in Tariff, Emissions Trading, Climate Policy
    JEL: Q4 Q42 Q48 Q5 Q54 Q58
    Date: 2015–01
  5. By: Klaas Bauermann; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen)
    Abstract: In Germany and other Central and Northern European countries, energy demand for space heating dominates the energy demand of households. In line with European and national energy efficiency and emission reduction objectives, policy makers have identified the residential building sector potentials for the achieving of reduction targets. This paper presents an extended logit model approach for the residential heating market with special regard to the development of the built environment and the heating system choice. A policy as usual scenario for Germany is calculated as an application example to evaluate the likeliness of target achievement for the heating market, its energy demand and associated emissions.
    Keywords: Intraday market, electricity, liquidity, fundamental model, trading model
    JEL: Q42 Q48
    Date: 2015–02
  6. By: Massimo Anna Alberini (University of Maryland,USA); Charles Towe (Department of Agricultural and Resource Economics - University of Connecticut.)
    Abstract: We focus on two utility programs intended to reduce energy usage and the associated CO2 emissions—a home energy audit and rebates on the purchase of high-efficiency air-source heat pumps. We use a unique panel dataset from participating and non-participating households to estimate the average treatment effect of participating in either program on electricity usage. We fit models with household-by-season, season-by-year, and household-by-year fixed effects to account for all possible confounders that might be influence energy usage. Since the programs are voluntary, we seek to restore near-exogeneity of the program “treatment” by matching participating households with control households. We deploy coarsened exact matching (CEM; Iacus et al., 2011) as our main matching method. We ask whether it is sufficient to match households based on past electricity usage, or if we gain by adding structural characteristics of the home, including heating system type. We find that the two programs reduce electricity usage by 5% on average. The effects are strong in both winter and summer for the energy audit group but appear to be stronger in the winter for the heat pump rebate group. Adding house characteristics to the matching variables does seem to affect results, suggesting that using past usage alone may not be sufficient to identify the effects of program participation.
    Keywords: Energy Efficiency; Household Behavior; Energy Efficiency Incentives; Electricity Usage; Home Energy Audit.
    JEL: Q41 D12 H3
    Date: 2015–01
  7. By: Alfredo Marvão Pereira (Department of Economics, The College of William and Mary); Rui M. Pereira (Department of Economics, The College of William and Mary)
    Abstract: We assess the relative role of fossil fuel prices, energy efficiency and carbon taxation in achieving climate policy goals using a dynamic general equilibrium model of the Portuguese economy with endogenous growth and a detailed modeling of public sector activities. We show that to achieve ambitious domestic reductions in emissions, given the expected evolution of international fossil fuel prices, the roles of promoting energy efficiency and of a new significant carbon tax are fundamental. More importantly, promoting energy efficiency improvements and the new carbon tax have significantly different economic and budgetary effects. Energy efficiency improvements achieve reductions in emissions while promoting economic performance at the risk of increasing public and foreign debt. The new carbon tax in turn achieves reductions in emissions at the risk of jeopardizing economic performance while the effects on public and foreign debt are more favorable. This being the case, the relevance of pursuing both strategies in tandem is clear. Finally, domestic efforts toward promoting energy efficiency and the introduction of a new carbon tax need to be calibrated in function of the expected evolution of international fossil fuel prices. This evolution has significant effects on emissions and thereby on the measure of the additional effects required from the domestic authorities. It also has negative effects on economic performance while it may have more positive effects on the evolution foreign and public debts, which provide important leeway for the implementation of the domestic policies without generating a negative impact on the levels of indebtedness assuming that the public sector curtails spending appropriately in response to the increasing opportunity cost of public funds.
    Keywords: Fossil Fuel Prices, Energy Efficiency, Carbon Taxation, Endogenous Growth, Budgetary Consolidation, Portugal.
    JEL: D58 H63 O44
    Date: 2015–02–05
  8. By: Rob Aalbers; Johannes Bollen; Kees Folmer; Geoffrey J. Blanford
    Abstract: In response to the challenge of managing the risks of a changing climate, there is no single optimal transition path for energy technology due to uncertainty in several dimensions. In this paper, we use the MERGE model, a long-term optimization model of the global energy and climate systems with regional and technological detail, enhanced in this paper with  a more detailed representation of investment and dispatch detail in Europe’s electric sector, to explore a wide range of possible technology futures under alternative emissions reduction goals.  We find that, based on the revised modeling approach, wind energy is attractive for Europe in all scenarios, but to a varying extent ranging from under 15% to over 75%. One of its key disadvantages is to impose lower capacity factors on other technologies, an effect that can be partially mitigated with flexible operations such as joint production of hydrogen and electricity via gasification with CCS.  Solar PV is almost never attractive for Europe as a whole, unless CCS and other technologies are significantly limited.
    JEL: Q54 Q42 D58 H21
    Date: 2015–01
  9. By: Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University); Jaraite, Jurate (Centre for Environmental and Resource Economics, School of Business and Economics, Umeå University, Umeå, Sweden)
    Abstract: In this paper we empirically compare the transaction costs from monitoring, reporting and verification (MRV) of two environmental regulations directed to cost-efficiently reduce greenhouse gas emissions: a carbon dioxide (CO2) tax and a tradable emissions system. We do this in the case of Sweden, where a set of firms are covered by both types of regulations, i.e., the Swedish CO2 tax and the European Union’s Emissions Trading System (EU ETS). This provides us with an excellent case study as it allows us to disentangle the costs of each regulation from other firm-specific variables that might affect the overall cost of MRV procedures. Our results indicate that the MRV costs of CO2 taxation do not depend on firms’ emissions, while they do in the case of the EU ETS. For firms of equivalent emissions’ size, the MRV costs are lower for CO2 taxation than for the EU ETS, which confirms the general view that regulating emissions upstream by means of a CO2 tax yields lower transaction costs vis-á-vis downstream regulation by means of emission trading.
    Keywords: Carbon dioxide emissions; Carbon tax; Emissions Trading; EU ETS; Firm-level data; Sweden
    JEL: D23 H23 Q52 Q58
    Date: 2015–01
  10. By: Rosen, Christiane (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: While the share of fluctuating renewable energy resources is constantly increasing, the centralized, hierarchical organization of the current energy system cannot adequately accommodate such decentralized electricity generation. New ideas have been developed for improved integration, especially in the lead market Germany. One of these concepts is the microgrid, a grid within the grid. This paper presents a local reserve energy market, which can facilitate the operation and allow trading within the microgrid. Emphasis is put on the regulatory options and current market framework, mainly from a European and German perspective, which serve as a basis for implementing the local market.
    Keywords: local reserve energy market; balance group; prosumer
    JEL: C91 D03 D44 D83
    Date: 2014–10
  11. By: Moral Carcedo, Julián (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Pérez García, Julián (Departamento de Economía Aplicada. Universidad Autónoma de Madrid)
    Abstract: TGlobal warming, intermittent production, and efficient use of energy require adequate demand response policies. The price inelasticity of electricity demand represents the main obstacle for developing adequate measures. A potential source of demand inelasticity is the temperature effect ‐the reaction of electricity demand to variations in temperature. Studies using aggregate data show that temperature‐driven electricity demand is growing in most countries. Using disaggregated data by sectors, we analyze the sectorial breakdown of temperature effects on firms’ electricity demand. In‐depth knowledge of sectorial demand responses to temperature changes is fundamental for improved energy planning. If electricity consumption in a sector heavily reacts to temperature, “flattening” electricity demand will eventually become infeasible. Our findings indicate that in Spain firms’ aggregate electricity demand is rather insensitive to temperature. However, there are marked differences among sectors, with the highest sensitivity found for firms in the service sector.
    Keywords: sectorial electricity demand; temperature effect; “cooling” and “heating”; electricity demand.
    JEL: L5 L94 Q4
    Date: 2015–01
  12. By: Steve Charnovitz (George Washington University Law School); Carolyn Fischer (Resources for the Future (RFF) and Fondazione Eni Enrico Mattei (FEEM))
    Abstract: In the first dispute on renewable energy to come to WTO dispute settlement, the domestic content requirement of Ontario’s feed-in tariff was challenged as a discriminatory investment-related measure and as a prohibited import substitution subsidy. The panel and Appellate Body agreed that Canada was violating the GATT and the TRIMS Agreement. But the SCM Article 3 claim by Japan and the European Union remains unadjudicated, because neither tribunal made a finding that the price guaranteed for electricity from renewable sources constitutes a ‘benefit’ pursuant to the SCM Agreement. Although the Appellate Body provides useful guidance to future panels on how the existence of a benefit could be calculated, the most noteworthy aspect of the new jurisprudence is the Appellate Body’s reasoning that delineating the proper market for ‘benefit’ analysis entails respect for the policy choices made by a government. Thus, in this dispute, the proper market is electricity produced only from wind and solar energy.
    Keywords: Feed-in-Tariff, Renewable Energy, Subsidies, International Trade, WTO, Green Growth, Local Content Requirement
    JEL: K33 Q48 Q56 Q58
    Date: 2014–11
  13. By: Andrea Bastianin (University of Milan and FEEM); Matteo Manera (University of Milan-Bicocca and FEEM)
    Abstract: We study the impact of oil price shocks on U.S. stock market volatility. We derive three different structural oil shock variables (i.e. aggregate demand, oil-supply, and oil-demand shocks) and relate them to stock market volatility, using bivariate structural VAR models, one for each oil price shock. Identification is achieved by assuming that the price of crude oil reacts to stock market volatility only with delay. This implies that innovations to the price of crude oil are not strictly exogenous, but predetermined with respect to the stock market. We show that volatility responds significantly to oil price shocks caused by sudden changes in aggregate and oil-specific demand, while the impact of supply-side shocks is negligible.
    Keywords: Volatility, Oil Shocks, Oil Price, Stock Prices, Structural VAR
    JEL: C32 C58 E44 Q41 Q43
    Date: 2015–01
  14. By: Wei Jin (School of Public Policy, Zhejiang University); ZhongXiang Zhang (School of Economics, Fudan University)
    Abstract: There is a growing body of literature mentioning the slow pace of energy technological progress as compared to other technologies like information technology (IT), but the reasons why energy sector is perplexed by slow innovation remain unexplained. Based on a variety-expanding endogenous technological change model, this paper provides a rigorous economic exposition of the mechanism that underlies the slow progress of energy technological innovation. We show that in decentralized market equilibrium the growth rate of energy technology variety is lower than that of IT variety. This stems from both market fundamentals where the homogeneity of end-use energy goods is less likely to harness the pecuniary externality embedded in the householdÕs love-for-variety preference, and technology fundamentals where the capital-intensiveness of energy technology inhibits the non-pecuniary technological externality due to knowledge spillovers. We further show that a social planner solution can promote energy technological progress, yet still cannot achieve an outcome in which energy technology variety grows faster than IT variety. By targeting subsidies on energy technology R&D and the use of intermediate primary energy inputs by secondary energy producers, the decentralized market equilibrium can achieve an outcome in which energy technology grows faster than IT.
    Keywords: energy technological innovation; product homogeneity; knowledge spillovers; love-for-variety effect
    JEL: Q55 Q58 Q41 Q43 Q48 O31
    Date: 2015–01
  15. By: Timothy Laing; Misato Sato; Michael Grubb; Claudia Comberti
    Abstract: As many countries, regions, cities, and states implement emissions trading policies to limit CO2 emissions, they turn to the European Union's experience with its emissions trading scheme since 2005. As a prominent example of a regional carbon pricing policy, it has attracted significant attention from scholars interested in evaluating the effectiveness and impacts of emissions trading. Among the key difficulties faced by researchers is isolating the effect of the EU ETS on industry operation, investment, and pricing decisions from other dominant factors such as the financial crisis, and establishing credible counterfactual scenarios against this backdrop. This article reviews the evidence, focusing on two intended effects (emissions abatement and investment in low-carbon technologies) as well as two side-effects (profits and price impacts). We find that the EU ETS cut CO2 emissions by 40–80 million t/year on average, or 2–4% of the total capped, while the evidence on innovation and investment impacts is inconclusive. There is strong empirical support for cost-pass through in electricity (20–100%), in diesel and gasoline (>50%), and some preliminary evidence of pricing power in other industrial sectors. Windfall profits have amounted to billions of Euros, and concentrated in a few large companies.
    JEL: D24 H23 Q54 Q58
    Date: 2014–07
  16. By: Limin DU; Aoife Hanley; Chu WEI
    Abstract: This paper estimates the Marginal Abatement Cost Curve (MACC) of CO2 emissions in China based on a provincial panel for the period of 2001-2010. The provincial marginal abatement cost (MAC) of CO2 emissions is estimated using a parameterized directional output distance function. Four types of model specifications are applied to fit the MAC-carbon intensity pairs. The optimal specification controlling for various covariates is identified econometrically. A scenario simulation of China’s 40-45 percent carbon intensity reduction based on our MACC is illustrated. Our simulation results show that China would incur a 559-623 Yuan/ton (roughly 51-57 percent) increase in marginal abatement cost to achieve a corresponding 40-45 percent reduction in carbon intensity compared to its 2005 level
    Keywords: CO2 Emissions; Marginal Abatement Cost Curve; Model Selection; China
    JEL: Q52 Q54 Q58
    Date: 2015–01
  17. By: Patrice Bougette (Université Nice Sophia Antipolis and GREDEG/CNRS); Christophe Charlier (Université Nice Sophia Antipolis and GREDEG/CNRS)
    Abstract: Faced with the energy transition imperative, governments have to decide about public policy to promote renewable electrical energy production and to protect domestic power generation equipment industries. For example, the Canada – Renewable energy dispute is over Feed-in tariff (FIT) programs in Ontario that have a local content requirement (LCR). The EU and Japan claimed that FIT programs constitutesubsidies that go against the SCM Agreement, and that the LCR is incompatible with the non-discrimination principle of the World Trade Organization (WTO). This paper investigates this issue using an international quality differentiated duopoly model in which power generation equipment producers compete on price. FIT programs including those with a LCR are compared for their impacts on trade, profits, amount of renewable electricity produced, and welfare. When ‘quantities’ are taken into account, the results confirm discrimination. However, introducing a difference in the quality of the power generation equipment produced on both sides of the border provides more mitigated results. Finally, the results enable discussion of the question of whether environmental protection can be put forward as a reason for subsidizing renewable energy producers in light of the SCM Agreement.
    Keywords: Feed-in Tariffs, Subsidies, Local Content Requirement, Industrial Policy, Canada – Renewable Energy Dispute, Trade Policy
    JEL: F18 L52 Q42 Q48 Q56
    Date: 2014–10
  18. By: Masini, Andrea; Aflaki, Sam
    Abstract: Confronted by increasingly tight budgets and a broad range of alternative options, policy makers need empirical methods to evaluate the effectiveness of policies aimed at supporting the diffusion of renewable energy sources (RES). Rigorous empirical studies of renewable energy policy effectiveness have typically relied on panel data models to identify the most effective mechanisms. A common characteristic of some of these studies, which has important econometric implications, is that they assume that the contribution of RES to total electricity generation will be stationary around a mean. This paper reviews such assumptions and rigorously tests the time series properties of the contribution of RES in the energy mix for the presence of a unit root. To that end, we use both individual and panel unit root tests to determine whether the series exhibit non-stationary behavior at the country level as well as for the panel as a whole. The analysis, applied to a panel of 19 OECD countries over the period 1990-2012, provides strong evidence that the time series of the renewable share of electricity output are not stationary in 17 of the 19 countries examined. This finding has important implications for energy policy assessment and energy policy making, which are discussed in the paper.
    Keywords: Unit root; cross-sectional dependence; renewable energy diffusions; renewable energy policies
    JEL: C22 C23 Q28
    Date: 2014–09–01
  19. By: Jacopo Bonan (Università Cattolica del Sacro Cuore and Laboratorio Expo); Stefano Pareglio (Università Cattolica del Sacro Cuore and Laboratorio Expo); Massimo Tavoni (Fondazione Eni Enrico Mattei (FEEM), Centro Euro-Mediterraneo sui Cambiamenti Climatici and Politecnico di Milano)
    Abstract: Universal access to modern energy services, in terms of access to electricity and to modern cooking facilities, has been recognized as fundamental challenge for development and is likely to be included in the post-2015 Sustainable Development Goals. Despite a strong praise for action and several programs at both national and international level, very few impact evaluation studies try to shed light on the causal relationship between access to energy and development, by also allowing decision makers to rigorously assess cost-effectiveness and efficiency of policies and programs. This work attempts to review the literature on existing impact evaluation of access to electricity and modern cooking facilities. For access to electricity we consider as outcomes labour markets, time allocation, household welfare (consumption, income, schooling and health) and business. For access to improved cookstoves, we assess impacts on household welfare. The reviewed literature highlights a significant causal impact of electricity access on important metrics of wellbeing, but more mixed evidence regarding clean cookstove. Finally, we also review the barriers and drivers of access to modern energy services identified by most recent impact evaluation studies.
    Keywords: Impact Evaluation, Energy Poverty, Energy Access, Rural Electrification, Modern Cookstoves, Literature Review
    JEL: O1 O13 Q4 Q48
    Date: 2014–11
  20. By: Ladislav Kristoufek (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic; Institute of Information Theory and Automation, Academy of Sciences of the Czech Republic, Pod Vodarenskou Vezi 4, 182 00, Prague, Czech Republic); Petra Lunackova (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic)
    Abstract: We reinvestigate the "rockets and feathers" effect between retail gasoline and crude oil prices in a new framework of fractional integration, long-term memory and borderline (non)stationarity. The most frequently used error-correction model is examined in detail and we find that the prices return to their equilibrium value much more slowly than would be typical for the error-correction model. Such dynamics is usually referred to as "the Joseph effect". The standard procedure is shown to be troublesome and we introduce two new tests to investigate possible asymmetry in the price adjustment to equilibrium under these complicated time series characteristics. On the dataset of seven national gasoline prices, we find no statistically significant asymmetry. The proposed methodology is not limited to the gasoline and crude oil case but it can be utilized for any asymmetric adjustment analysis.
    Keywords: rockets and feathers, asymmetry, gasoline, crude oil, cointegration
    JEL: Q40 Q43 Q48
    Date: 2015–02
  21. By: Verónica Acurio Vasconez (Centre d'Economie de la Sorbonne); Gaël Giraud (Centre d'Economie de la Sorbonne - Paris School of Economics); Florent Mc Isaac (Centre d'Economie de la Sorbonne); Ngoc Sang Pham (Centre d'Economie de la Sorbonne)
    Abstract: The economic implications of oil price shocks have been extensively studied since the 1970s'. Despite this huge literature, no dynamic stochastic general equilibrium model was available that captures two well-known stylized facts: 1) the stagflationary impact of an oil price shock, together with 2) the influence of the energy productivity of capital on the depth and length of this impact. We build, estimate and simulate a New-Keynesian model with capital accumulation, which takes the case of an economy where oil is imported from abroad, and where these stylized facts can be accounted for. Moreover, the Bayesian estimation of the model on the US economy (1984-2007) suggests that the output elasticity of oil might have been above 10%, stressing the role of oil use in US growth at this time. Finally, our simulations confirm that an increase in energy efficiency significantly attenuates the effects of an oil shock —a possible explanation of why the third oil shock (1999-2008) did not have the same macro-economic impact as the first two ones.
    Keywords: New-Keynesian model, DSGE, oil, capital accumulation, stagflation, energy productivity.
    JEL: C68 E12 E23 Q43
    Date: 2014–12
  22. By: Joseph S. Shapiro (Cowles Foundation, Yale University); Reed Walker (University of California, Berkeley, IZA, & NBER)
    Abstract: Between 1990 and 2008, emissions of the most common air pollutants from U.S. manufacturing fell by 60 percent, even as real U.S. manufacturing output grew substantially. This paper develops a quantitative model to explain how changes in trade, environmental regulation, productivity, and consumer preferences have contributed to these reductions in pollution emissions. We estimate the model's key parameters using administrative data on plant-level production and pollution decisions. We then combine these estimates with detailed historical data to provide a model-driven decomposition of the causes of the observed pollution changes. Finally, we compare the model-driven decomposition to a statistical decomposition. The model and data suggest three findings. First, the fall in pollution emissions is due to decreasing pollution per unit output within narrowly defined products, rather than to changes in the types of products produced or changes to the total quantity of manufacturing output. Second, the implicit pollution tax that rationalizes firm production and abatement behavior more than doubled between 1990 and 2008. Third, environmental regulation explains 75 percent or more of the observed reduction in pollution emissions from manufacturing.
    JEL: F18 H23 Q56
    Date: 2015–01
  23. By: Todd D. Gerarden; Richard G. Newell; Robert N. Stavins
    Abstract: Energy-efficient technologies offer considerable promise for reducing the financial costs and environmental damages associated with energy use, but these technologies appear not to be adopted by consumers and businesses to the degree that would apparently be justified, even on a purely financial basis. We present two complementary frameworks for understanding this so-called “energy paradox” or “energy-efficiency gap.” First, we build on the previous literature by dividing potential explanations for the energy-efficiency gap into three categories: market failures, behavioral anomalies, and model and measurement errors. Second, we posit that it is useful to think in terms of the fundamental elements of cost-minimizing energy-efficiency decisions. This provides a decomposition that organizes thinking around four questions. First, are product offerings and pricing economically efficient? Second, are energy operating costs inefficiently priced and/or understood? Third, are product choices cost-minimizing in present value terms? Fourth, do other costs inhibit more energy-efficient decisions? We review empirical evidence on these questions, with an emphasis on recent advances, and offer suggestions for future research.
    JEL: L00 Q4 Q48 Q5
    Date: 2015–01
  24. By: Wei Jin (School of Public Policy, Zhejiang University, Hangzhou, China); ZhongXiang Zhang (School of Economics, Fudan University, Shanghai, China)
    Abstract: Whether China continues its current energy-intensive growth path or adopts a sustainable development prospect has significant implication for energy and climate governance. Building on a Ramsey-Cass-Koopmans growth model incorporating the mechanism of endogenous technological change and its interaction with fossil energy use and economic growth, this paper contributes to an economic exposition of China’s potential transition from an energy-intensive to an innovation-led growth path. We find that in China’s initial growth period the small amount of capital stock creates higher dynamic benefits of capital investment and incentives of capital stock accumulation rather than R&D-related innovation. Accumulation of energy-consuming capital stock along this non-innovation-led growth path thus leads to an intensive use of fossil energy - an energy-intensive growth pattern. To avoid this undesirable outcome, China’s social planner should consider locating a transition point to an innovation-led balanced growth path (BGP). When the growth dynamics reaches that transition point, China’s economy would embark on investment in physical capital and R&D simultaneously, and make a transition into the innovation-led BGP along which consumption, capital investment, and R&D have a balanced share. Also in this innovation-led BGP, consumption, physical capital stock, and knowledge stock all grow, fossil energy uses decline.
    Keywords: Technological Innovation, Energy Consumption, Economic Growth Model
    JEL: Q55 Q58 Q43 Q48 O13 O31 O33 O44 F18
    Date: 2014–12
  25. By: Arnoud Stevens (Research Department, NBB)
    Abstract: Should the central bank seek to identify the underlying causes of oil price hikes in determining appropriate policy responses to them? Most likely not. Within a calibrated new-Keynesian model of Oil-Importing and Oil-Producing Countries, I derive the Ramsey policy and analyze optimal monetary policy responses to different sources of oil price fluctuations. I find that oil-specific demand and supply shocks call for similar policy responses, given the low substitutability of oil in production and the incompleteness of international asset markets.
    Keywords: Oil Prices, Optimal Monetary Policy, Ramsey Approach,Welfare Analysis
    JEL: E52 E61 Q43
    Date: 2015–01
  26. By: Ralf Martin; Romesh Vaitilingam
    Abstract: Policies on climate change that encourage 'clean innovation' while displacing 'dirty innovation' could have a positive impact on short-term economic growth while avoiding the potentially disastrous reduction in GDP that could result from climate change over the longer term.
    Keywords: Innovation spill-overs; Climate Change; Growth; Patents; Clean technology; Optimal climate policy
    JEL: H23 O30 O38 Q54 Q55 Q58
    Date: 2014–11
  27. By: Baumeister, Christiane; Kilian, Lutz; Lee, Thomas K.
    Abstract: Although there is much interest in the future retail price of gasoline among consumers, industry analysts, and policymakers, it is widely believed that changes in the price of gasoline are essentially unforecastable given publicly available information. We explore a range of new forecasting approaches for the retail price of gasoline and compare their accuracy with the no-change forecast. Our key finding is that substantial reductions in the mean-squared prediction error (MSPE) of gasoline price forecasts are feasible in real time at horizons up to two years, as are substantial increases in directional accuracy. The most accurate individual model is a VAR(1) model for real retail gasoline and Brent crude oil prices. Even greater reductions in MSPEs are possible by constructing a pooled forecast that assigns equal weight to five of the most successful forecasting models. Pooled forecasts have lower MSPE than the EIA gasoline price forecasts and the gasoline price expectations in the Michigan Survey of Consumers. We also show that as much as 39% of the decline in gas prices between June and December 2014 was predictable.
    Keywords: retail gasoline price,oil market,real-time data,WTI,Brent,survey expectations,expert forecasts,forecast combination
    JEL: Q43 C53
    Date: 2015
  28. By: James Lennox (Fondazione Eni Enrico Mattei); Ramiro Parrado (Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo sui Cambiamenti Climatici)
    Abstract: Computable general equilibrium (CGE) models are widely used to analyse macroeconomic and sectoral effects of climate policies. Developing new and improving existing carbon-free energy technologies will be crucial to limit the long-term economic costs of mitigation policies. Such technologies are largely embodied in capital goods; yet conventionally structured CGE models cannot capture capital-embodiment of sector-specific technologies. In this paper, we clarify the conceptual nature of the capital embodiment problem in multisector CGE models. Aggregating productive sectors and investment goods eliminates channels whereby specific technological changes are embodied in specific capital stocks. Nevertheless, capital-embodiment of sector-specific Hicks-neutral technical changes can be directly represented as investment-specific technical change (ISTC)
    Keywords: Climate Change Mitigation, Capital-Embodiment, Technological Change, CGE Models
    JEL: O33 O44 Q54 Q55 Q58
    Date: 2015–01
  29. By: Ardjan Gazheli; Miklós Antal; Jeroen van den Bergh
    Abstract: In this paper we present a sector-based approach to investigate whether green growth – combining economic growth with environmental sustainability – is feasible. Our approach considers the relation between on the one hand carbon dioxide emissions per dollar of output (what we will call carbon intensity) and on the other growth in economic output and labor productivity, at the level of production sectors. Carbon intensity (CI) is calculated in two ways: as direct CO2 emissions from each sector, which can be seen to immediately result from the processes in the respective sector; and as total, direct plus indirect, emissions, by using environmentally-extended input-output tables. The analysis covers Denmark, Germany and Spain for the period 1995-2007. We calculate correlations over time between sectoral CIs and a range of economic indicators: sectoral total and relative output, final demand, value added, and so-called output and valued-added productivity indicators, and their change. The findings are similar for the two types of CI indicators. The bad news for green growth is that relatively clean sectors do not seem to be more productive than dirtier ones, and neither show higher productivity growth. Sectors associated with high carbon intensity grew more in absolute terms than those with low carbon intensity. The share of these sectors increased suggesting that green growth requires a very rapid pace of decarbonization, or the economy as a whole to shrink. Longer-term sectoral growth on the other hand, as expressed by a change in value added, does not seem to be positively correlated with carbon intensity.
    Keywords: CO2 emissions, Climate change, Green growth, Labor productivity, Production sectors, World Input-output Database
    Date: 2015–01
  30. By: Rodrigo Harrison (Instituto de Economia. Pontificia Universidad Catolica de Chile.); Roger Lagunoff (Department of Economics, Georgetown University)
    Abstract: This paper formulates a dynamic model of global carbon consumption in the absence of an effective international agreement. Each period, countries extract carbon from the global ecosystem. A country's output depends both on its carbon usage and on the ecosystem ("stored carbon"). The desired mix of extracted versus stored carbon by each country is determined by its stochastically evolving factor elasticities. We characterize Business-as-usual (BAU) equilibria as smooth, Markov Perfect equilibrium profiles of carbon usage across countries. A BAU equilibrium is shown to generate lower aggregate output and higher carbon use each period than the socially efficient path, although some countries might actually use less carbon under BAU. We characterize properties of {\em tipping points}, threshold levels of stored carbon stocks below which the global commons collapses, spiraling downward toward a steady state of marginal sustainability. We show that if the profile of carbon factor elasticities reaches a high enough threshold, a tipping point will be breached. Even in this case, there remains a time span (a "negotiation window") in which a collapse may be averted if the countries agree to implement the efficient profile of carbon usage.
    Keywords: carbon consumption, global carbon commons, climate change, tipping points, international carbon agreements.
    JEL: C73 D82 F53 Q54 Q58
    Date: 2015–01–02
  31. By: Marzio Galeotti (University of Milan and IEFE-Bocconi); Yana Rubashkina (Catholic University of Milan); Silvia Salini (University of Milan); Elena Verdolini (Fondazione Eni Enrico Mattei and CMCC)
    Abstract: We propose the use of a three-level random intercept model to measure the degree of environmental policy performance of different countries and to study its determinants. Inspired by the literature on multilevel latent models and Item Response Theory (IRT), this framework treats policy commitment as a latent variable which is estimated conditional on the difficulty of the policy portfolio implemented by each country. We contribute to the study and scoring of environmental and energy policies in three main ways. First, the model results in a ranking of countries which is conditional on the complexity of their chosen policy portfolio. Second, we provide a unified framework in which to construct a policy indicator and to study its determinants through a latent regression approach. The resulting country ranking can thus be cleaned from the eect of economic and institutional observables which aect policy design and implementation. Third, the model estimates parameters which can be used to describe and compare policy portfolios across countries. We apply this methodology to the case of energy eciency policies in the industrial sectors of 29 EU countries between 2004 and 2011. We conclude by highlighting the future possible applications of this approach, which are not confined to the realm of environmental and energy policy.
    Keywords: Energy Policy, Environmental Policy, Ranking, Policy Portfolios
    JEL: Q58 O57 C33
    Date: 2014–10
  32. By: Hakim Hammadou; Claire Papaix
    Abstract: This paper proposes a second-best approach to cutting CO2 emissions caused by the urban mobility of passengers. We develop policy scenarios that compare the first-best tool of carbon tax, to a combination of second-best tools, not originally aimed at reducing CO2 (i.e. congestion charging, parking charges, and public transport services). We study their efficiency in attaining a CO2 target, through a change in the modal split. In our model, modal choices depend on individual characteristics, journey features (including the effects of policy tools), and land use at origin and destination zones. Personal “CO2 emissions budgets” resulting from the journeys observed in the metropolitan area of Lille (France) in 2006 are calculated and compared to the situation related to the different policy scenarios. We find that an increase of 50% in parking charges combined with a cordon toll of €1.20 and a 10% travel time decrease in public transport services (made after recycling toll-revenues) is the winning scenario. The combined effects of all the policy scenarios are superior to their separate effects.
    Keywords: CO2 emissions, urban mobility, second-best instruments, cost-efficiency, mode choice model.
    Date: 2015
  33. By: Francesco Bosello (University of Milan, Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC)); Enrica De Cian (Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC)); Licia Ferranna (Cà Foscari University of Venice and Fondazione Eni Enrico Mattei (FEEM))
    Abstract: This paper contributes to the normative literature on mitigation and adaptation by framing the question of their optimal policy balance in the context of catastrophic climate risk. The analysis uses the WITCH integrated assessment model with a module that models the endogenous risk of experiencing an economic catastrophe if temperature increases above a certain threshold. We find that the risk of a catastrophic outcome would encourage countries to reduce emissions even in the absence of a coordinated global agreement on climate change and to realign the policy balance from adaptation toward more mitigation. Our analysis also shows that adaptation transfers from and strategic unilateral commitments to adaptation in developed countries appear to provide weak incentives for reducing emissions in developing countries. Thus our first conclusion is that precautionary considerations, rather than the ability to reduce smooth damage increases, justify mitigation as a fundamental policy option. Accordingly, adaptation is needed to cope with the non-catastrophic damages that countries would fail to address with mitigation Our second conclusion is that supporting adaptation in developing countries should be considered primarily as a mean for ensuring equity or improving development, and very marginally as a mitigation incentive.
    Keywords: Climate Change, Mitigation, Adaptation, Climate Risk, Integrated Assessment
    JEL: C61 D58 Q5
    Date: 2015–01
  34. By: Graham Floater; Philipp Rode; Bruno Friedel; Alexis Robert
    Abstract: We live in an urban age. Over half the world’s population now lives in urban areas, while the urban population is expected to reach 60% by 2030. At the same time, the importance of cities for national economic growth and climate change continues to increase. Three groups of cities will be particularly important for the global economy and climate: Emerging Cities, Global Megacities and Mature Cities. When combined, these 468 cities are projected to contribute over 60% of global GDP growth and over half of global energy-related emissions growth between 2012 and 2030 under business as usual. However, not all countries and cities will benefit from the potential economic gains of urban growth under business as usual. The winners and losers of urban expansion will depend on the policy decisions that national and sub-national governments make over the next few years. Evidence suggests that urban growth that is poorly managed by governments can lead to a range of economic, social and environmental costs, such as traffic congestion, inefficient public transport, air pollution with associated health impacts, and inadequate infrastructure for basic services such as energy, water and waste.
    JEL: R14 J01 E6
    Date: 2014–11
  35. By: Francisco J. André (Universidad Complutense de Madrid, Spain); Luis M. de Castro (Universidad Complutense de Madrid, Spain)
    Abstract: It has been shown in prior research that cost effectiveness in the competitive emissions permit market could be affected by tacit collusion or price manipulation when the corresponding polluting product market is oligopolistic. We analyze these cross market links using a Stackelberg model to show that under reasonable assumptions, there are no incentives to collude for lobbying prices up. However, incentives for manipulating the price of permits up appear if there is an initial free allocation of permits, which is a policy argument against grandfathering and in favor of auctioning. This effect is increasing with the amount of permits allocated to the leader. Moreover, the changes for price manipulation increase with those changes that tend to undermine the leader's advantage in output production or to reduce the leader’s abatement cost.
    Keywords: Emissions Permits, Collusion, Market Power, Duopoly, Stackelberg Model
    JEL: D43 L13 Q58
    Date: 2015–02
  36. By: Antoniou, Fabio (Institut für Wirtschaftstheorie I, Humboldt-Univeristät zu Berlin); Kyriakopoulou, Efthymia (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We introduce a model of strategic environmental policy where two firms compete à la Cournot in a third market under the presence of multiple pollutants. Two types of pollutants are introduced, a local and a transboundary one. The regulator can only control local pollution as transboundary pollution is regulated internationally. The strategic effect present in the original literature is also replicated in this setup. However, we illustrate that when transboundary pollution is regulated through the use of tradable emission permits instead of non-tradable ones then a new strategic effect appears which had not been identified thus far. In this case, local pollution increases further and welfare is lowered. We also provide evidence from the implementation of EU ETS over the pollution of PM10 and PM2.5.<p>
    Keywords: Environmental regulation; multiple pollutants; (non) tradable permits; strategic interactions
    JEL: F12 F18 Q58
    Date: 2015–02
  37. By: Koichiro Ito; Takanori Ida; Makoto Tanaka
    Abstract: Firms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for various economic activities. To investigate the persistence of such interventions, we randomly assigned households to moral suasion and dynamic pricing that stimulate energy conservation during peak demand hours. Using household-level consumption data for 30-minute intervals, we find significant short-run effects of moral suasion, but the effects diminished quickly after repeated interventions. Economic incentives produced larger and persistent effects, which induced habit formation after the final interventions. While each policy produces substantial welfare gains, economic incentives provide particularly large gains when we consider persistence.
    JEL: D12 L11 L94 L98 Q4 Q41 Q5 Q58
    Date: 2015–01
  38. By: Tadashi Matsumoto; Loïc Daudey
    Abstract: The development of Asian cities is characterised by rapid and continuous urbanisation on an unprecedented scale, with rapid economic growth led in most places by the manufacturing industry, and rapidly increasing motorisation. The result has been escalating greenhouse gas emissions, sprawling urban development and local environmental impacts, as well as disparities in income, education levels and job opportunities in the urban population. These trends differ sharply from those in most of the OECD area and call for a green growth model that differs from those identified in previous OECD studies and that addresses the specific circumstances of Asian cities.<P> This paper proposes an analytical framework for assessing policies for green growth in rapidly growing cities in the emerging world. It builds on Cities and Green Growth: A Conceptual Framework (Hammer et al., 2011) and is adapted to the urban policy context of dynamic Asia. Its three main elements are: i) identification of the key policy strategies for urban green growth in fast-growing Asian cities, highlighting similarities to and differences from OECD cities; ii) opportunities for green growth; and iii) enabling strategies for implementing urban green growth.
    Keywords: Asia, transport, water, government policy, climate change, cities, green growth, solid waste management, land use, energy
    JEL: O18 O19 Q53 Q54 R11 R58
    Date: 2014–12–22
  39. By: Arik Levinson; James O'Brien
    Abstract: Environmental Engel curves (EECs) plot the relationship between households’ incomes and the pollution embodied in the goods and services they consume. They provide a basis for estimating the degree to which observed environmental improvements, which come in part from changing consumption patterns, can be attributed to income growth. We calculate a set of annual EECs for the United States from 1984 to 2002, revealing three clear results. First, EECs are upward sloping: richer households are indirectly responsible for more pollution. Second, EECs are convex, with income elasticities of less than one. Third, EECs have been shifting down over time: at every level of income households are responsible for decreasing amounts of pollution. We show that even without changes to production techniques, the pollution necessary to produce the goods and services American households consume would have declined 5 to 8 percent, despite a 13 percent increase in real household incomes. Most of this improvement is attributable to households consuming a less pollution-intensive mix of goods, driven about equally by two factors: household income growth represented by movement along convex EECs; and economy-wide changes represented by downward shifts in EECs.
    JEL: Q56
    Date: 2015–01
  40. By: Grigolon, Laura; Reynaert, Mathias; Verboven, Frank
    Abstract: To what extent do car buyers undervalue future fuel costs, and what does this imply for the effectiveness of alternative tax policies? To address both questions, we show it is crucial to account for consumer heterogeneity in mileage and other dimensions. We use detailed product-level data for a long panel of European countries, and exploit variation in fuel prices by engine type. We find there is only modest undervaluation of fuel costs. As a consequence, fuel taxes are unambiguously more effective in reducing fuel usage than product taxes based on fuel economy, because fuel taxes better target high mileage consumers.
    Keywords: effectiveness of tax policy; European car market; fuel cost valuation
    JEL: H23 L62
    Date: 2014–12
  41. By: Luca Lambertini (Department of Economics, University of Bologna); Giuseppe Pignataro (La Trobe University, Victoria Australia); Alessandro Tampieri (CREA, Université de Luxembourg)
    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 mis- perception of quality, while the investment in green quality decreases the more the goods are substitutes. We further consider the introduction of either an emis- sion tax or an environmental standard. Both interventions rise the investment in quality, but their effect is differently influenced by the level of environmental misperception. We show that an optimal environmental standard may be effective against greenwashing when the marginal damage of emissions is low.
    Keywords: Green Quality, Misperception; Pigouvian taxation; Environmental Standard
    JEL: L13 L51 Q50
    Date: 2015
  42. By: F. Zagonari
    Abstract: This paper presents the first empirical test of coherence (i.e., consistency of policies within a framework), efficiency (i.e., ability of policies to meet their objectives), and independence (i.e., logical priority of objectives over policies) of the overall EU environmental policy system. To do so, I applied statistical (cross-sectional and time series) and econometric (dynamic tri-probit) analyses to an original panel dataset, based on addressed issues rather than on implemented policies. In contrast with previous studies of single EU environmental policies, characteristics of the EU environmental policy, or EU environmental objectives, I found that the overall EU environmental policy system is coherent, efficient, and independent. Moreover, the evidence suggests that many issues are correlated: trans-boundary issues became more relevant in 2012, pollution production was more significant than resource use, and flow issues were more important than stock issues from 1995 to 2010. Finally, I show that few objectives overlapped: a “safe environment” objective (1987 to 1997) was preferred to a “greenhouse gas (GHG) reduction” objective (2003 to 2012, but pursued with a 2-year lag), although the latter has recently become preferred to the former. In addition, a “GHG reduction” objective was preferred to “a sustainable development” objective (1998 to 2002).
    JEL: Q28 Q38 Q48 Q58
    Date: 2015–02
  43. By: Lindemann, Henrik
    Abstract: The degree of liberalization in OECD electricity markets varies considerably across countries. Commonly explained by diverging economic performances, corruption levels or government ideologies, this paper suggest another potential reason for cross-national differences in market reforms: given the high financial dependence of regulatory actors on public funding both in the past and nowadays, we expect regulators to increasingly refrain from [foster] the implementation of liberalization steps, the more such measures reduce [raise] the revenues of a tax; this prevents [aims at realizing] substantial decreases [increases] in public revenues (being a major source of regulatory funds) and thus most likely also in the regulators' budgets. Estimation results substantiate these considerations for both the corporate income tax and (in cases of a high price elasticity of power demand) the VAT on electricity.
    Keywords: Electricity Market Reform,Vertical Separation,Regulatory Authorities
    JEL: L50 L94 L98
    Date: 2015–01
  44. By: Osiel Gonzalez Davila; Phoebe Koundouri; Ioannis Souliotis; Erasmia Kotroni; Wenting Chen; Claire Haggett; Shiau-Yun Lu; David Rudolph
    Abstract: The objective of this paper is to elicit stakeholder preferences in relation to different Multiple Use Offshore Platforms (MUOP) designs produced by the TROPOS project ( for the Liuqiu Island, Taiwan using the Choice Experiment (CE) method. To authors/ acknowledge, this is the first non-market valuation of multiple use offshore platforms and definitely the first using CE in this context. The MUOP concept is defined as a floating platform moored in Taiwan shallow waters located offshore and concerned as a sustainable and ecologic location, which supports the development of the local economy and serves as an example of sustainable development in offshore environments. The CE was conducted on tourists and residents of the area. A ranking preference technique with visual aids was used, in order to obtain a more complete characterization of the respondents� preference structure. The attributes used were the environmental impacts of the modules (using an ecosystem services approach), the level of mitigation, the existence of renewable energy production and leisure facilities. The results show that residents would be less likely to support the development of such a project, compared to tourists that would be willing to pay a daily tax for the leisure and renewable energy facilities.
    Keywords: Choice Experiment, Multiple Use Offshore Platform, Ranking Preference technique
    Date: 2015–02–05
  45. By: Haucap, Justus; Heimeshoff, Ulrich; Siekmann, Manuel
    Abstract: Price levels and movements on gasoline and diesel markets are heavily debated among consumers, policy-makers, and competition authorities alike. In this paper, we empirically investigate how and why price levels differ across gasoline stations in Germany, using eight months of data from a novel panel data set including price quotes from virtually all German stations. Our analysis specifically explores the role of station heterogeneity in explaining price differences across gasoline stations. Key determinants of price levels across fuel types are found to be ex-refinery prices as key input costs, a station's location on roads or highway service areas, and brand recognition. A lower number of station-specific services implies lower fuel price levels, so does a more heterogeneous local competitive environment.
    Keywords: Gasoline Pricing,Price Dispersion,Fuel Prices,Gasoline Stations
    JEL: L11 L71
    Date: 2015
  46. By: Lawrence M. Murphy (NREL); Ron Ondechek Jr. (Kidron Corporate Advisors); Ricardo Bracho (NREL); John McKenna (Hamilton Clark)
    Abstract: This white paper explores a range of potentially attractive partnerships, including those between established US industry members, the entrepreneurial CE (clean energy) community, and the financial industry. These partnerships, include those that can leverage a wide range of entrepreneurial and industry resources that are needed to promote the development and commercialization of innovative new technologies - partnerships that in turn can lead to accelerated, global utilization of CE, as well as US global leadership for the CE industry. The need for these partnerships is discussed within the context of the growing interest in CE, driven in large part by the anticipated strong, global growth in energy demand, as well as by the need for a spectrum of other long term (e.g. environmental) benefits from CE. The impacts of the rapidly changing investment and the market environment for innovative CE technologies, are also explored. The strong need for multifaceted enabling partnerships and resources are found to go well beyond those corresponding to financing, and includes for example, expertise on markets and market creation, and product development. In addition, deep resource levels are often especially needed in the pursuit of high potential, next generation CE innovative supply technologies that require costly technology development. Such is the case for example, where sophisticated manufacturing approaches are needed to exploit promising, and high performance, material combinations along with novel and complex technology based hardware. Further, access to adequate resources for the needed, high cost, technology development is increasingly less likely to be available from traditional partners such as VCs and their limited partners. Of the key potential partners explored, Strategic Industry Partners (SIPs) are found to be particularly intriguing - they have the most robust range of appropriate resources to potentially benefit from these partnerships while also helping to fill the void in the commercialization food chain for technology development, where VC funding is not available. SIPs also play a broad enabling role for the growth of the entrepreneurial US based, CE industry. Moreover, SIPs also have the required stature and influence to impact global markets as well as to promote global US leadership in CE, while also contributing to the dialogue around public-private partnerships. While SIPs have stringent requirements for partnering, as well as intense competition for their resource investments, successfully pursuing mutually attractive partnerships with SIPs should be well worth the required effort.
    Keywords: Clean Energy, Strategic Industry Partners, High Cost Technology Development, Commercialization
    JEL: Q42 Q49 G24
    Date: 2014–11
  47. By: Antony Millner; Simon Dietz
    Abstract: Developing countries are vulnerable to the adverse effects of climate change, yet there is disagreement about what they should do to protect themselves from antic- ipated damages. In particular, it is unclear what the optimal balance is between investments in traditional productive capital (which increases output but is vulner- able to climate change), and investments in adaptive capital (which is unproductive in the absence of climate change, but ‘climate-proofs’ vulnerable capital). We show that, while it is unlikely that the optimal strategy involves no investment in adapta- tion, the scale and composition of optimal investments depends on empirical context. Our application to sub-Saharan Africa suggests, however, that in most contingencies it will be optimal to grow the adaptive sector more rapidly than the vulnerable sector over the coming decades, although it never exceeds 1% of the economy. Our sensi- tivity analysis goes well beyond the existing literature in evaluating the robustness of this finding.
    Keywords: economic growth; climate change; adaptation; development
    JEL: D61 O11 O40 Q54
    Date: 2014

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