nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒02‒16
fifty papers chosen by
Roger Fouquet
London School of Economics

  1. The Energy-Growth Nexus in Thailand: Does Trade Openness Boost up Energy Consumption? By Kyophilavong, Phouphet; Shahbaz, Muhammad; Anwar, Sabeen; Masood, Sameen
  2. An optimal incentive contract to avert firm relocation By Pollrich, Martin; Schmidt, Robert
  3. On the effects of unilateral environmental policy on offshoring in multi-stage production processes By Schenker, Oliver; Koesler, Simon; Löschel, Andreas
  4. Self-enforcing international environmental agreements and trade: taxes versus caps By Pethig, Rüdiger; Eichner, Thomas
  5. Network Expansion to Mitigate Market Power: How Increased Integration Fosters Welfare By Zerrahn, Alexander; Huppmann, Daniel
  6. Climate Change, Green Growth and Aid Allocation to Poor Countries By Stefan Dercon
  7. The impact of the solar energy collecting systems on an individual agricultural household By Turek Rahoveanu, Petruta
  8. Unconventional Gas and the European Union: Prospects and Challenges for Competitiveness By Herman R.J. Vollebergh; Eric Drissen
  9. An Assessment of the Energy-Efficiency Gap and its Implications for Climate-Change Policy By Todd D. Gerarden; Richard G. Newell; Robert N. Stavins; Robert C. Stowe
  10. Energy Technology Expert Elicitations for Policy: Workshops, Modeling, and Meta-analysis By Laura Diaz Anadon; Valentina Bosetti; Gabe Chan; Gregory Nemet; Elena Verdolini
  11. Environmental Co-benefits and Stacking in Environmental Markets By Jussi Lankoski; Markku Ollikainen; Elizabeth Marshall; Marcel Aillery
  12. Should We Ban Unconventional Oil Extraction to Reduce Global Warming? By Samuel Carrara; Emanuele Massetti
  13. Energiewende, Butterberge und das Kiwi-in-Grönland-Problem By Weichenrieder, Alfons J.
  14. City Silhouette, World Climate By Dascher, Kristof
  15. Pipeline Power: A Case Study of Strategic Network Investments By Cobanli, Onur; Hubert, Franz
  16. How Effective Are Energy-Efficiency Incentive Programs? Evidence from Italian Homeowners By Anna Alberini; Andrea Bigano
  17. Testing innovation, employment and distributional impacts of climate policy packages in a macro-evolutionary systems setting By Bernhard Rengs; Manuel Scholz-Wäckerle; Ardjan Gazheli; Miklós Antal; Jeroen van den Bergh
  18. The Environmental and Economic Effects of a New Carbon Tax in Portugal:A Dynamic General Equilibrium Model Assessment By Alfredo Marvão Pereira; Rui M. Pereira
  19. The Economic and Budgetary Effects of Producing Oil and Natural Gas From Shale By Congressional Budget Office
  20. The Rebound Effect and Energy Efficiency Policy By Kenneth Gillingham; David Rapson; Gernot Wagner
  21. The Long-Run Macroeconomic Impacts of Fuel Subsidies By Michael Plante
  22. The Relation Between Overreaction in Forecasts and Uncertainty: A Nonlinear Approach By Leppin, Julian Sebstian
  23. The Growth Drag of Pollution By Schäfer, Andreas
  24. Towards a European Energy Union. The Need to Focus on Security of Energy Supply By Simone Tagliapietra
  25. Environmental Art, Prior Knowledge about Climate Change, and Carbon Offsets By Blasch, Julia; Turner, Robert
  26. Investments in a Combined Energy Network Model: Substitution between Natural Gas And Electricity? By Weigt, Hannes; Abrell, Jan
  27. Scarcity Rents and Incentives for Price Manipulation in Emissions Permit Markets with Stackelberg Competition By André, Francisco J.; de Castro, Luis Miguel
  28. Integration of Power Generation Capacity Expansion in an Applied General Equilibrium Model By Gauthier de Maere d'Aertrycke; Olivier Durand-Lasserve; Marco Schudel
  29. The Effect of Demand Response on Electricity Consumption in Japan By Fumitoshi Mizutani; Takuro Tanaka; Eri Nakamura
  30. Real-world fuel economy and CO2 emissions of plug-in hybrid electric vehicles By Plötz, Patrick; Funke, Simon; Jochem, Patrick
  31. Optimal Dynamic Carbon Taxation in a Life-Cycle Model with Distortionary Fiscal Policy By Rausch, Sebastian; Abrell, Jan
  32. Fiscal policy and CO2 emissions of new passenger cars in the EU By Thomas Michielsen; Reyer Gerlagh; Inge van den Bijgaart; Hans Nijland
  33. Does Economic Growth Matter? Technology-Push, Demand-Pull and Endogenous Drivers of Innovation in the Renewable Energy Industry By Aflaki, Sam; Masini , Andrea
  34. Tradable Renewable Quota vs. Feed-In Tariff vs. Feed-In Premium under Uncertainty By Robert Marschinski; Philippe Quirion
  35. Cooperation and Competition in Climate Change Policies: Mitigation and Climate Engineering when Countries are Asymmetric By Vassiliki Manoussi; Anastasios Xepapadeas
  36. Will skyscrapers save the planet? By Borck, Rainald
  37. The Influence of Environmental Factors on Human Health: Economic Estimations for Ukraine By Kubatko Oleksandr; Kubatko Oleksandra
  38. R&D, Patenting and Market Regulation: Evidence from EU Electricity industry By Carlo Cambini; Federico Caviggioli; Giuseppe Scellato
  39. Natural resourcs and the spread of HIV/AIDS: curse or blessing? By Olivier Sterck
  40. Understanding the decline in the price of oil since June 2014 By Baumeister, Christiane; Kilian, Lutz
  41. The Effects of Expert Selection, Elicitation Design, and R&D Assumptions on Experts’ Estimates of the Future Costs of Photovoltaics By Elena Verdolini; Laura Diaz Anadon; Jiaqi Lu; Gregory F. Nemet
  42. Oil Volatility Risk and Expected Stock Returns By Peter Christoffersen; Xuhui (Nick) Pan
  43. The Silver Lining of Price Spikes: How Electricity Price Spikes Can Help Overcome the Energy Efficiency Gap By Mauritzen, Johannes
  44. Corporate Governance in der Energiewirtschaft – zwischen Unternehmenswert und Public Value By Ahrend, Klaus-Michael
  45. Relações do Brasil Com a América do Sul Após a Guerra Fria: Política Externa, Integração, Segurança e Energia By Walter Antonio Desiderá Neto; Marcelo Passini Mariano; Raphael Padula; Michelle Carvalho Metanias Hallack; Pedro Silva Barros
  46. Flexibility in the Market for International Carbon Credits and Price. Dynamics Difference with European Allowances By Claire Gavard; Djamel Kirat
  47. Sister models for load forecast combination By Bidong Liu; Jiali Liu; Tao Hong
  48. Discovering the signs of Dutch disease in Russia By Mironov, V.V.; Petronevich , A.V.
  49. Sharing the Burden for Climate Change Mitigation in the Canadian Federation By Christoph Böhringer, Nicholas Rivers, Thomas F. Rutherford, Randall Wigle
  50. Implications of Weak Near-term Climate Policies on Long-term Mitigation Pathways By Gunnar Luderer; Christoph Bertram; Katherine Calvin; Enrica De Cian; Elmar Kriegler

  1. By: Kyophilavong, Phouphet; Shahbaz, Muhammad; Anwar, Sabeen; Masood, Sameen
    Abstract: The nexus between trade openness and energy demand is hot topic of discussion among academicians and researchers, and numerous studies are available in existing literature while investigating the nexus between trade openness and energy demand. This paper explores the relationship between energy consumption, trade openness and economic growth in case of Thailand. In doing so, we have applied Bayer and Hanck cointegration approach to test whether the long run relationship exists between the variables. Our results confirm the presence of cointegration between the variables. Energy consumption stimulates economic growth. Trade openness adds in economic growth. The causality analysis reveals that energy consumption Granger causes economic growth and in resulting, economic growth Granger causes energy consumption. Trade openness and energy consumption are interdependent i.e. trade openness Granger causes energy consumption and in return, energy consumption Granger causes trade openness. This paper openness up new directions for policy making authorities in Thailand to design a comprehensive energy and trade policies to sustain economic growth for long run.
    Keywords: Energy, Trade, Growth, Thailand
    JEL: C1 C5
    Date: 2015–02–01
  2. By: Pollrich, Martin; Schmidt, Robert
    Abstract: In a globalized economy, firms move production to other countries without turning a hair. A local policy maker who seeks to avert relocation faces a dynamic problem - incentivizing the firm to remain in its home country today does not guarantee that the firm also stays in the future. We investigate situations where contracts between a local regulator and the firm can be written on some contractible productive activity, e.g. labor, output, or the firm's emissions. The firm undertakes a location-specific investment that is not contractible. When long-term contracts are feasible, the regulator averts relocation by postponing a sufficient amount of transfer to the second period. With limited commitment, i.e. when only short-term contracts are feasible, contracts with positive transfers in the second period cannot be implemented if the firm's investment is unobservable to the regulator. The regulator can avoid this problem by a tighter regulation in the first period. This induces the firm to invest more, which creates a `lock-in effect' that prevents relocation without transfers in period 2. An important application of our model is in the area of climate policy, where firm relocation can be triggered via a unilateral introduction of an emissions price by a country.
    JEL: D82 D86 L51
    Date: 2014
  3. By: Schenker, Oliver; Koesler, Simon; Löschel, Andreas
    Abstract: In the last decades supply chains emerged that stretch across many countries. This has been explained with decreasing trade and communication costs. We extend the literature by analyzing if and how unilateral environmental regulation induces offshoring to unregulated jurisdictions. We first apply an analytical partial-equilibrium model of a two-stage production process that can be distributed between two countries and investigate unilateral emission pricing and its supplementation with border carbon taxes. To get a more comprehensive picture, we subsequently apply a computable general equilibrium model that includes a better representation of international supply chains. We find heterogeneous, but mostly positive effects of a unilateral carbon emission reduction by the European Union on the degree of vertical specialisation of European industries and explain these differences by heterogeneity in the emission-intensity and pre-policy vertical specialisation of sectors. Border taxes are successful in protecting upstream industries, but with negative side effects for downstream industries.
    Keywords: Unilateral Climate Policy,Border Carbon Taxes,Vertical Specialisation,Offshoring,Outsourcing,Computable General Equilibrium
    JEL: C68 F12 F18 Q58
    Date: 2014
  4. By: Pethig, Rüdiger; Eichner, Thomas
    Abstract: This paper studies within a multi-country model with international trade the stability of international environmental agreements (IEAs) when countries regulate carbon emissions either by taxes or caps. Regardless of whether coalitions play Nash or are Stackelberg leaders the principal message is that the choice of caps or taxes matters. International trade and tax regulation turn out to be necessary conditions for the existence of the encompassing self-enforcing IEA, and that the latter is attained the more likely, the less severe the climate damage. Hence, cap regulation is inferior to tax regulation insofar as in case of the former there exist no large and effective self-enforcing IEAs, in particular not the encompassing self-enforcing IEA. Further results are that for the formation of encompassing self-enforcing IEAs it does not matter (much) whether climate coalitions play Nash or are Stackelberg leaders or whether fossil fuel is modeled as a consumer good or an intermediate good.
    JEL: C72 F18 Q54
    Date: 2014
  5. By: Zerrahn, Alexander; Huppmann, Daniel
    Abstract: Lack of transmission capacity hampers the efficient integration of the European electricity market, and thereby precludes reaping the full benefits of competition. We investigate to what extent the expansion of the transmission grid promotes competition, efficiency, and welfare. This work proposes a three-stage model for grid investment: a benevolent planner decides on network upgrades; she considers the welfare benefits of investment through a reduction of market power exertion by strategic generators. These firms anticipate their impact on the Independent System Operator and are able to exert market power, in particular when lines are congested. We illustrate the model on a simple three-node network. Results indicate that network expansion indeed provides a suitable way of enhancing welfare due to a reduction of market power potential.
    JEL: L13 L51 C61
    Date: 2014
  6. By: Stefan Dercon
    Abstract: With serious impacts of climate change looming in a few decades, but currrent poverty still high in the developing word, we ask how to spend development aid earmarked for the poor.  Poverty reduction tends to be strongly linked to economic growth, but growth impacts the environment and increases CO2 emissions.  So can greener growth that is more climate-resilient and less environmentally damaging deliver large scale poverty reduction?  Can aid be used for effective poverty reduction now without affecting carbon emissions substantially?  We argue that there are bound to be trade-offs between emissions reductions and a greener growth on the  one hand, and growth that is most effective in poverty reduction.  We argue that development aid, earmarked for the poorest countries, should only selectively pay attention to climate change, and remain focused on fighting current poverty reduction, including via economic growth, not least as future resilience of these countries and their population will depend on their ability to create wealth and build up human capital now.  The only use for development aid within the poorest countries or explicit climate-related investment ought to be when the investments also contribute to poverty reduction now, including for increasing resilience to current impacts of environmental shocks, or when the investments done now have serious intertemporal 'lock-in' problems so that they have implications also for when climate change bites by 2050.  In our conclusions, we offer a series of concrete principles to judge development spending.
    Keywords: Green growth, poverty, environmental externalities
    Date: 2014–06–07
  7. By: Turek Rahoveanu, Petruta
    Abstract: Using solar energy through photovoltaic systems implementation in an agricultural household leads to the increasing of it’s efficiency, to optimizing energy balance thus implying the decreasing of the primary energy costs. The solar energy refers to a renewable energy source that is produced directly by light and solar radiation. It can be used to generate electricity through solar cells (photovoltaic); to generate electricity through thermal power plants; to generate electricity through solar towers,etc. The introduction and development of new technologies and processes through the use of energy from renewable sources leads to production costs reduction and implicitly to the increase of economic profitability of the agricultural holding.
    Keywords: renewable energy, solar energy, photovoltaic panels
    JEL: Q16 Q29 Q40 Q42
    Date: 2014–11–20
  8. By: Herman R.J. Vollebergh (CentER and Tilburg Sustainability Centre, Tilburg University, PBL Netherlands Environmental Assessment Agency and CESifo); Eric Drissen (PBL Netherlands Environmental Assessment Agency)
    Abstract: This article studies the likely impact of unconventional gas developments in the U.S. on EU competitiveness. We find, first of all, little evidence for a prosperous unconventional gas development in Europe. Second, the U.S. boom has already a strong impact on both world and European energy markets. In particular, lower U.S. gas and coal prices have changed relative energy prices both at home and abroad. Finally, competitiveness impacts in some (sub)sectors will be considerable. These impacts are not only related to production based on gas use as a feedstock but also on the ‘byproducts’ from unconventional gas production, such as ethylene, propane and butane. However, several indirect impacts, such as lower coal import prices, may soften the adverse competitiveness impact in the EU.
    Keywords: Shale Gas, Hydrocarbon Resources, Energy Demand and Supply, Non-renewable Resources, Competitiveness Impacts, European Union
    JEL: L71 O52 Q41 Q43
    Date: 2015–01
  9. By: Todd D. Gerarden; Richard G. Newell; Robert N. Stavins; Robert C. Stowe
    Abstract: Improving end-use energy efficiency—that is, the energy-efficiency of individuals, households, and firms as they consume energy—is often cited as an important element in efforts to reduce greenhouse-gas (GHG) emissions. Arguments for improving energy efficiency usually rely on the idea that energy-efficient technologies will save end users money over time and thereby provide low-cost or no-cost options for reducing GHG emissions. However, some research suggests that energy-efficient technologies appear not to be adopted by consumers and businesses to the degree that would seem justified, even on a purely financial basis. We review in this paper the evidence for a range of explanations for this apparent “energy-efficiency gap.” We find most explanations are grounded in sound economic theory, but the strength of empirical support for these explanations varies widely. Retrospective program evaluations suggest the cost of GHG abatement varies considerably across different energy-efficiency investments and can diverge substantially from the predictions of prospective models. Findings from research on the energy-efficiency gap could help policy makers generate social and private benefits from accelerating the diffusion of energy-efficient technologies—including reduction of GHG emissions.
    JEL: Q4 Q48
    Date: 2015–01
  10. By: Laura Diaz Anadon (Belfer Center for Science and International Affairs, Harvard Kennedy School, Harvard University); Valentina Bosetti (Department of Economics, Bocconi University, Milan, Italy, Fondazione Eni Enrico Mattei, Milan, Italy and CMCC, Lecce, Italy); Gabe Chan (Belfer Center for Science and International Affairs, Harvard Kennedy School, Harvard University); Gregory Nemet (LaFollette School of Public Affairs, University of Madison-Wisconsin); Elena Verdolini (Fondazione Eni Enrico Mattei and CMCC)
    Abstract: Characterizing the future performance of energy technologies can improve the development of energy policies that have net benefits under a broad set of future conditions. In particular, decisions about public investments in research, development, and demonstration (RD&D) that promote technological change can benefit from (1) an explicit consideration of the uncertainty inherent in the innovation process and (2) a systematic evaluation of the tradeoffs in investment allocations across different technologies. To shed light on these questions, over the past five years several groups in the United States and Europe have conducted expert elicitations and modeled the resulting societal benefits. In this paper, we discuss the lessons learned from the design and implementation of these initiatives in four respects. First, we discuss lessons from the development of ten energy-technology expert elicitation protocols, highlighting the challenge of matching elicitation design with a particular modeling tool. Second, we report insights from the use of expert elicitations to optimize RD&D investment portfolios. These include a discussion of the rate of decreasing marginal returns to research, the optimal level of overall investments, and the sensitivity of results to policy scenarios and selected metrics for evaluation. Third, we discuss the effect of combining online elicitation tools with in-person group discussions on the usefulness of the results. Fourth, we summarize the results of a meta-analysis of elicited data across research groups to identify the association between expert characteristics and elicitation results.
    Keywords: Expert Elicitations, Energy Technology Innovation, Public R&D, Meta-analysis, Optimization
    JEL: O32 Q40
    Date: 2014–10
  11. By: Jussi Lankoski; Markku Ollikainen; Elizabeth Marshall; Marcel Aillery
    Abstract: This paper investigates farmers’ incentives to participate voluntarily in carbon offset markets when environmental credit stacking is allowed, that is, farmers can stack water quality credits with carbon credits. The implications of stacking on additionality of environmental services in interlinked markets, market participation rates, and market equilibrium prices are analysed by developing a conceptual framework of environmental credit stacking, which is applied with data estimates for the US Corn Belt. Analysis shows that credit stacking increases farmers’ participation in carbon offset markets, and that such increased participation provides additionality in environmental service provision. It is further shown that ecosystem markets are interlinked so that credit price changes in one market will shift credit supply in another market, thus affecting equilibrium prices. Empirical application of the framework shows that provision of CO2-eq offsets through reductions of nitrogen application or through the establishment of green set-asides is not profitable without water quality credits. A conversion from conventional tillage and reduced tillage to no-till is profitable in some cases, although current low carbon offset prices and transaction costs have a significant negative impact on the number of participating parcels. When farmers are allowed to stack water quality credits the profitability of carbon sequestration practices increases. Reduced nitrogen application levels becomes a profitable option and 21% of field parcels - representing 4.6 million acres- participate in the market with water quality credit prices at base levels of USD 3/lb for N and USD 4/lb for P. The establishment of green set-aside and streamside buffer strips becomes profitable in the lower productivity and highly erodible lands with base prices of nutrient credits. If water quality trading markets are small then high participation rates among farmers may result in an oversupply of nutrient credits and as a consequence equilibrium credit prices and farmers’ credit revenue would decrease.
    Keywords: transaction costs, interlinked environmental markets, additionality, carbon offset, nutrient credit
    JEL: Q53 Q54 Q57 Q58
    Date: 2015–02–06
  12. By: Samuel Carrara (FEEM and CMCC); Emanuele Massetti (Georgia Institute of Technology, CESIfo and FEEM)
    Abstract: The extraction and processing of unconventional oil is more energy intensive and has larger negative environmental impacts than the extraction of conventional oil. The European Union (EU) estimates that oil sands lead to 22% more emissions than conventional oil. The EU is very concerned by the potential climate and environmental impacts and has considered introducing a tax on imported unconventional oil in order to discourage its production. This study shows that a global ban on the use of unconventional oil substantially reduces global carbon dioxide emissions, but the policy is not efficient. A unilateral ban of the EU on unconventional oil has no climate benefits and it is expensive for Europe.
    Keywords: Unconventional Oil, Climate Mitigation, Energy Policy, European Union
    JEL: Q37 Q42 Q48 Q56
    Date: 2014–12
  13. By: Weichenrieder, Alfons J.
    Abstract: Das ursprüngliche Ziel des Erneuerbare-Energien-Gesetz war die Verringerung der Emissionen. Eigentlich hat die Politik bereits ein Instrument an der Hand, das dieses Ziel fokussiert und kostensparend erreichen kann: den Handel mit CO2-Zertifikaten. Der Autor argumentiert, dass das Nebeneinander von CO2-Handel und EEG höchst unproduktiv ist und schleunigst beendet werden sollte. Ein plausibleres Argument für den politischen Erfolg des EEG und das derzeitige Herumdoktern im Detail ist, dass die Politik mit dem EEG Industriepolitik betreiben und die Kosten auf zukünftige Parlamente und Generationen überwälzen kann.
    Keywords: Erneuerbare-Energien-Gesetz,Energiewende,Steuergelder
    Date: 2014
  14. By: Dascher, Kristof
    Abstract: A country's urban silhouettes prophesy its future climate policy, or so this paper argues. The more its city silhouettes are skewed to the periphery, the more likely a country is to implement the carbon tax. This is why the effect of a country's urban form on greenhouse gas emissions -- a bone of contention in the recent literature -- cannot be separated from that country's choice of carbon tax. From this paper's perspective, a country with greater city silhouette skews may emit less greenhouse gases not so much because its cities are more compact but because it places a higher price on carbon consumption.
    JEL: R12 Q54 H41
    Date: 2014
  15. By: Cobanli, Onur; Hubert, Franz
    Abstract: We use the Shapley value and the nucleolus to analyze the impact of three controversial pipeline projects on the power structure in the Eurasian trade of natural gas. Two pipelines, `Nord Stream' and `South Stream', allow Russian gas to bypass transit countries, Ukraine and Belarus. The third project, `Nabucco', aims at diversifying Europe's gas imports by accessing producers in Middle East and Central Asia. For the Shapley Value we obtain a clear ranking of the projects which corresponds to the observed investment patterns. Nord Stream's strategic value is huge, easily justifying the high investment cost for Germany and Russia. The additional leverage obtained through South Stream is much smaller and Nabucco is not viable. For the nucleolus in contrast, none of the pipelines has any strategic relevance at all, which appears to be at odds with the empirical evidence.
    JEL: C71 L50 L95
    Date: 2014
  16. By: Anna Alberini (AREC, University of Maryland, Fondazione Eni Enrico Mattei (FEEM), Center for Economic Research, ETH Zurich, and Queen’s University Belfast); Andrea Bigano (Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Centre on Climate Change (CMCC))
    Abstract: We evaluate incentives for residential energy upgrades in Italy using data from an original survey of Italian homeowners. In this paper, attention is restricted to heating system replacements, and to the effect of monetary and non-monetary incentives on the propensity to replace the heating equipment with a more efficient one. To get around adverse selection and free riding issues, we ask stated preference questions to those who weren’t planning energy efficiency upgrades any time soon. We argue that these persons are not affected by these behaviors. We use their responses to fit an energy-efficiency renovations curve that predicts the share of the population that will undertake these improvements for any given incentive level. This curve is used to estimate the CO2 emissions saved and their cost-effectiveness. Respondents are more likely to agree to a replacement when the savings on the energy bills are larger and experienced over a longer horizon, and when rebates are offered to them. Reminding about CO2 (our non-monetary incentive) had little effect. Even under optimistic assumptions, the cost-effectiveness of incentives of size comparable to that in the Italian tax credit program is generally not favorable.
    Keywords: Energy-efficiency Incentives, Free Riding, Adverse Selection, Stated Preferences, CO2 Emissions Reductions; CO2 emissions Reductions Supply Curves, Residential Energy Consumption
    JEL: Q41 Q48 Q54 Q51
    Date: 2014–11
  17. By: Bernhard Rengs; Manuel Scholz-Wäckerle; Ardjan Gazheli; Miklós Antal; Jeroen van den Bergh
    Abstract: Climate policy has been mainly studied with economic models that assume representative, rational agents. However, it aims at changing behavior associated with carbon-intensive goods that are often subject to bounded rationality and social preferences, such as status and imitation. Here we use a macroeconomic multi-agent model with such features to test the effect of various policies on both environmental and economic performance. The model is particularly suitable to address distributional impacts of climate policies, not only because populations of many agents are included, but also as these are composed of different classes of households driven by specific motivations. We simulate various policy scenarios, combining in different ways a carbon tax, a reduction of labor taxes, subsidies for green innovation, a price subsidy to consumers for less carbon-intensive products, and green government procurement. The results show pronounced differences with those obtained by rational-agent model studies. It turns out that demand-oriented subsidies lead to lower unemployment and higher output, but perform less well in terms of carbon emissions. The supply-oriented subsidy for green innovation results in a significant reduction of carbon emissions with a slight reduction of unemployment.
    Keywords: Agent based modelling; climate change; bounded rationality; carbon productivity; environmental innovation; double dividend; other-regarding preferences
    JEL: B52 C63 H3 Q55
    Date: 2015–02
  18. 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 consider the environmental, economic, and budgetary effects of a new carbon tax indexed to the carbon price in the EU-ETS market in the context of a dynamic general equilibrium model of the Portuguese economy. We show that the careful recycling of the carbon tax revenues to finance reductions in the personal income tax, in the social security taxes and increases in investment tax credits, in particular when these changes are connected to energy efficiency promoting activities, allows for the carbon tax reform to yield three dividends – reduction in emissions, improvement in economic conditions, and improvements in the budgetary position. By doing so we show that it is possible to design a carbon tax reform that is politically feasible as it satisfies the main constraints of the domestic economy – the quest for growth and for fiscal consolidation – and can accommodate the legitimate interests and needs of different social players–the focus on environmental goals by environmental groups, the concerns with households distributional issues by consumer advocacy groups, and with international competitiveness by business groups.
    Keywords: Carbon Taxation, Economic Performance, Budgetary Consolidation, Three Dividends, Portugal.
    JEL: D58 H63 O44
    Date: 2015–02–05
  19. By: Congressional Budget Office
    Abstract: CBO estimates that the development of shale resources will increase GDP by about two-thirds of 1 percent in 2020 and about 1 percent in 2040, and that the increases in GDP will lead to slightly larger percentage increases in federal revenues. The effect of shale development on domestic energy prices will continue to be larger for natural gas than for oil.
    JEL: L70 L71 O49 Q40 Q58
    Date: 2014–12–09
  20. By: Kenneth Gillingham (Yale University); David Rapson (University of California, Davis); Gernot Wagner (Environmental Defense Fund)
    Abstract: What do we know about the size of the rebound effect? Should we believe claims that energy efficiency improvements lead to an increase in energy use? This paper clarifies what the rebound effect is, and provides a guide for economists and policymakers interested in its magnitude. We describe how some papers in the literature consider the rebound effect from a costless exogenous increase in energy efficiency, while others examine the effects of a particular energy efficiency policy—a distinction that leads to very different welfare and policy implications. We present the most reliable evidence available quantifying the energy efficiency rebound, and discuss areas where estimation is extraordinarily difficult. Along these lines, we offer a new way of thinking about the macroeconomic rebound effect. Overall, the existing research provides little support for the so-called “backfire” hypothesis. Still, much remains to be understood, particularly relating to induced innovation and productivity growth.
    Keywords: Energy Efficiency, Rebound Effect, Take-back Effect, Backfire, Jevons Paradox
    JEL: H23 Q38 Q41
    Date: 2015–01
  21. By: Michael Plante (FederalReserveBankofDallas)
    Keywords: oil; fuel-price subsidies; developing countries; fiscal policy
    JEL: Q43 E62 H30
    Date: 2013–03
  22. By: Leppin, Julian Sebstian
    Abstract: This paper examines if overreaction of oil price forecasters is affected by uncertainty. Furthermore, it takes into account joint effects of uncertainty and oil price returns on forecast changes. The panel smooth transition regression model from Gonz alez et al. (2005) is applied with univariate and multivariate 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 forecasters overreact for low levels of uncertainty and underreact for increasing uncertainty. Furthermore, returns are found to be more relevant for forecast changes in short time horizons while uncertainty dominates for longer ones.
    JEL: G14 G29 C33
    Date: 2014
  23. By: Schäfer, Andreas
    Abstract: Higher child mortality reduces the willingness of parents to invest in children's education and increases their desired level of fertility. In this context, economic inequality is not only decisive for human capital investments and the emergence of differential fertility, but also for agents' exposure to environmental pollution because wealthier households live in cleaner areas. This is the key mechanism through which environmental conditions may impose a growth drag on the economy. In addition, preferred levels of tax-financed abatement measures differ between population groups with different exposures to pollutants, in the sense that the least affected population group prefers the lowest tax rate. Thus, the adverse effect of inequality and pollution on economic growth is amplified, if the population group that is least affected decides about the level of tax-financed abatement measures.
    JEL: O10 Q50 I10
    Date: 2014
  24. By: Simone Tagliapietra (Fondazione Eni Enrico Mattei (FEEM))
    Abstract: Energy has been at the core of the EU integration since its inception. However, following the path of a shooting star, the key role of energy gradually declined over time, to the level of being basically left out from the Treaties, at least up to Lisbon. The EU has struggled to circumnavigate this “energy-gap” of the Treaties by legislating on energy-related issues by making use of its shared competences in the areas of internal market and environment. However, this effort has resulted in a very fragmented EU energy policy, also characterized by the absence of a major element: security of energy supply. After the 2014 Ukraine crisis a new momentum has emerged in the EU about the urgent need of creating a truly European energy policy, with both the new President of the EU Council and the new EU Commission calling for the creation of a EU Energy Union. This paper argues that the EU should seize this historical opportunity to fill the main long-lasting gap of its energy policy: security of energy supply. To this end, the paper proposes a set of new actions that might be undertaken in this field, also outlying that the most feasible option to the development of a new EU Energy Union seems to be the formation -through a scheme of differentiated integration- of a smaller coalition of Member States committed to quickly advance the integration of their energy policies under the principle that only by acting together the EU will be able to meet the growing energy challenges of the future.
    Keywords: EU Energy Policy, EU Energy Security, EU Energy Union
    JEL: Q40 Q42 Q48
    Date: 2014–11
  25. By: Blasch, Julia (Department of Economics, Colgate University); Turner, Robert (Department of Economics, Colgate University)
    Abstract: Using a contingent choice survey of US citizens, we investigate the influence of environmental art on individual willingness to purchase voluntary carbon offsets. In a split-sample experiment, we compare the stated preferences of survey respondents in two different treatment groups to the preferences of a control group. One treatment group is shown photographs that illustrate the impacts of climate change; the other is shown animated images that illustrate wind speeds and patterns for extreme weather events. While individuals seeing the photographs show a higher willingness to purchase voluntary offset than the control group, respondents seeing the animated images seem less willing to buy offsets. This result remains stable when accounting for preference heterogeneity related to prior knowledge about climate change issues. We hypothesize that the differential impacts of the two kinds of artistic images are due to a combination of factors influencing individual choices: emotional affect, cognitive interest, and preferences for the prevention of specific climate change impacts as well as, more generally, internalized and social norms for the mitigation of climate change.
    Keywords: environmental art, climate change, carbon offsetting, knowledge, norms, discrete choice experiment
    JEL: Q5 Z1
    Date: 2015–01–01
  26. By: Weigt, Hannes; Abrell, Jan
    Abstract: Natural gas plays an important role in the future development of electricity markets as it is the least emission intensive fossil generation option while additionally providing the needed flexibility in plant operation to deal with intermittent renewable generation. As both the electricity and the natural gas market rely on networks, congestion on one market may lead to changes on another. In addition, investments in one market have an impact in the other and may even become substitutes for one another. The objective of this paper is to develop a dynamic model representation of coupled natural gas and electricity network markets to test the potential interaction with respect to investments. The model is tested under simplified conditions as well as for a stylized European network setting. The results indicate that there is a potential for investment-substitution and significant market interactions that warrants the application of coupled models especially with regard to simulations of long term system developments.
    JEL: L94 L95 D92
    Date: 2014
  27. By: André, Francisco J.; de Castro, Luis Miguel
    Abstract: Prior research has shown, on the one hand, that firms subject to a cap-and-trade system can enjoy scarcity rents and, on the other hand, that cost effectiveness in a competitive emission permit market could be affected by tacit collusion and price manipulation when the corresponding polluting product market is oligopolistic. It has also been argued that this type of collusive behavior might be responsible for the high prices of permits observed during the first phase of the EU ETS. We analyze these cross market links using a Stackelberg model to show that, under reasonable assumptions, there are no incentives to collude in order to manipulate prices up. However, incentives for manipulating the price of permits upward 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. The likelihood of observing price manipulation increases 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: 2015–02–01
  28. By: Gauthier de Maere d'Aertrycke (GDF-SUEZ, Center of Expertise in Economic Modelling and Studies, Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC)); Olivier Durand-Lasserve (GDF-SUEZ, Center of Expertise in Economic Modelling and Studies); Marco Schudel (GDF-SUEZ, Center of Expertise in Economic Modelling and Studies)
    Abstract: This paper presents a version of a hybrid (top-down bottom-up), multi-region multi-period forward looking applied general equilibrium model, MERGE, that includes a capacity expansion submodel of the electricity sector with demand represented by various time segments. This model is solved numerically using the decomposition method proposed by Bohringer and Rutherford (2006). In the decomposition, the bottom-up (energy) submodel of MERGE is embedded in a quadratically constrained program (QCP) that maximizes a welfare function calibrated on a linear approximation, around a benchmark point, of aggregated energy and capital demand . This latter is provided by constraining energy supply in a nonlinear programming problem (NLP) that essentially contains the MERGE top-down (macro) submodel. The method is illustrated with a simulation that provides projections of load duration curves and hours of activity of various electricity technologies.
    Keywords: Power Generation, Equilibrium Model
    Date: 2014–08
  29. By: Fumitoshi Mizutani (Graduate School of Business Administration, Kobe University); Takuro Tanaka (Graduate School of Economics, Kobe University); Eri Nakamura (Graduate School of Business Administration, Kobe University)
    Abstract: The main purpose of this study is to investigate, by using regressions analysis, the DR effect on households' electricity consumption. We employ three kinds of estimation models: a pooled OLS model, a random effect model, and a fixed effect model. Major results are as follows. First, the DR scheme clearly reduces electricity consumption. As the peak-time price of electricity increases by 20 yen/kWh in the form of TOU and CPP, electricity consumption decreases by about 8.1% at sample mean. However, consumption after DR tends to increase, most likely due to the rebound effect. Second, the reduction effects of the DR scheme can be strengthened as households' income becomes higher. In contrast, as more people stay at home during the daytime and the temperature rises, the reduction effects of the DR scheme may become weaker. Third, electricity price, household characteristics, and external conditions are significant factors affecting electricity consumption. Fourth, the effects of some DR schemes such as requests to save electricity, TOU, and CPP, can differ largely according to household characteristics and external conditions.
    Keywords: Demand Response, Electricity Consumption, Time of Use, Critical Peak Pricing
    JEL: L4 L5 L9
    Date: 2015–02
  30. By: Plötz, Patrick; Funke, Simon; Jochem, Patrick
    Abstract: Plug-in hybrid electric vehicles (PHEV) combine electric propulsion with an internal combustion engine. Their potential to reduce transport related green-house gas emissions highly depends on their actual usage and electricity provision. Various studies underline their environmental and economic advantages, but are based on standardised driving cycles, simulations or small PHEV fleets. Here, we analyse real-world fuel economy of PHEV and the factors influencing it based on about 2,000 actual PHEV that have been observed over more than a year in the U.S. and Germany. We find that real-world fuel economy of PHEV differ widely among users. The main factors explaining this variation are the annual mileage, the regularity of daily driving, and the likelihood of long-distance trips. Current test cycle fuel economy ratings neglect these factors. Despite the broad range of PHEV fuel economies, the test cycle fuel economy ratings can be close to empiric PHEV fleet averages if the average annual mileage is about 17,000 km. For the largest group of PHEV in our data, the Chevrolet Volt, we find the average fuel economy to be 1.45 litres/100 km at an average electric driving share of 78%. The resulting real-world tank-to-wheel CO2 emissions of these PHEV are 42 gCO2/km and the annual CO2 savings in the U.S. amount to about 50 Mt. In conclusion, the variance of empirical PHEV fuel economy is considerably higher than of conventional vehicles. This should be taken into account by future test cycles and high electric driving shares should be incentivised.
    Keywords: electric vehicles,plug-in hybrid electric vehicles,real-world fuel economy,utility factor
    Date: 2015
  31. By: Rausch, Sebastian; Abrell, Jan
    Abstract: We quantitatively characterize optimal carbon, capital, and labor income taxes in an economy-climate integrated assessment model that features overlapping generations and distortionary fiscal policy. First, we show that the optimal carbon tax significantly differs from the Pigouvian carbon levy in a first-best setting with overlapping generations in which fully rational households optimize over finite lifetimes. The key driving force behind this result is the life-cycle structure of the our model, in conjunction with endogenously chosen labor supply. We also show that the assumed labor supply elasticity is important for the size of deviation of the optimal carbon tax from the Pigouvian tax, but not the existence of the deviation from Pigouvian pricing. Second, interacting life-cycle household behavior with distortionary fiscal policy is shown to further drive a wedge between the second-best optimal carbon tax and a Pigouvian carbon levy.
    JEL: E13 H21 H24
    Date: 2014
  32. By: Thomas Michielsen; Reyer Gerlagh; Inge van den Bijgaart; Hans Nijland
    Abstract: To what extent have national fiscal policies contributed to the decarbonisation of newly sold passenger cars? We construct a simple model that generates predictions regarding the effect of fiscal policies on average CO<sub>2</sub> emissions of new cars, and then test the model empirically. Our empirical strategy combines a diverse series of data. First, we use a large database of vehicleâ€specific taxes in 15 EU countries over 2001â€2010 to construct a measure for the vehicle registration and annual road tax levels, and separately, for the CO<sub>2</sub> sensitivity of these taxes. We find that for many countries the fiscal policies have become more sensitive to CO<sub>2</sub> emissions of new cars. We then use these constructed measures to estimate the effect of fiscal policies on the CO<sub>2</sub> emissions of the new car fleet. The increased CO<sub>2</sub>â€sensitivity of registration taxes have reduced the CO2 emission intensity of the average new car by 1,3 percent, partly through an induced increase of the share of dieselâ€fuelled cars by 6,5 percentage points. Higher fuel taxes lead to the purchase of more fuel efficient cars, but higher annual road taxes have no or an adverse effect. Key Words: vehicle registration taxes, fuel taxes, CO<sub>2</sub> emissions
    JEL: H30 L62 Q48 Q54 Q58 R48
    Date: 2015–02
  33. By: Aflaki, Sam; Masini , Andrea
    Abstract: The paper aims to contribute to the longstanding technology-push vs. demand-pull debate and to the literature on renewable energy diffusion and renewable energy policy assessment. The authors argue that in addition to the traditional push-pull dichotomy, the drivers of technological change must be differentiated by whether they are exogenous or endogenous to the economic system. They maintain that a specific type of endogenous demand-pull mechanism (i.e. economic growth) is a major catalyst of environmental innovation. We apply this perspective to study the diffusion of renewable energy (RE) technologies in 15 European Union countries from 1990 to 2012. Applying different panel data estimators, the authors find that public R&D investments, policies supporting RE and per capita income all have a positive impact on RE diffusion, whereas the variability of policy support has a negative impact. However, they also find that economic growth is a stronger driver than either public R&D investments or policies supporting RE, and that models that do not take it explicitly into account tend to overestimate the importance of exogenous drivers. Most importantly, they note that the effect of economic growth on RE diffusion exhibits a nonlinear, U-shaped pattern that resonates with the well-known Environmental Kuznets Curve hypothesis. RE penetration remains negligible at low levels of growth whereas it increases sharply only after income per capita has reached a given threshold and the demand for environmental quality rises. Their findings have implications for policy making. They suggest that for RE diffusion to increase, government action should be directed not only at shielding renewables from competition with fossil fuel technologies but also at stimulating aggregated demand and economic growth.
    Keywords: Deployment policy; Technological innovation; Renewable Energy; Environmental Kuznets Curve; Nonstationary Panel
    JEL: C23 O31 O33 O38 O44
    Date: 2014–12–01
  34. By: Robert Marschinski (MCC, PIK, TU-Berlin); Philippe Quirion (CNRS, CIRED, MCC)
    Abstract: We study the performance under uncertainty of three renewable energy policy instruments: Tradable Renewable Quota (TRQ), Feed-In-Tariff (FIT), and Feed-In-Premium (FIP). We develop a stylized model of the electricity market, where renewables are characterized by a positive learning externality, which the regulator aims to internalize. Assuming shocks on the fossil-based electricity supply, renewables supply, or on total electricity demand, we analytically derive the conditions determining the instruments’ relative welfare ranking. Although we generally confirm the key role of the slopes of marginal benefits and costs associated with the policy, the specific ranking depends on which type of uncertainty is considered, and whether shocks are permanent or transitory. However, a high learning rate generally favours the FIT, while TRQ is mostly dominated by the other two instruments. These results are confirmed in a numerical application to the US electricity market, in which the FIP emerges as the most and TRQ as the least robust overall choice.
    Keywords: Feed-in Premium, Feed-in Tariff, Renewable Energy Policy, Renewable Portfolio Standard, Tradable Renewable Quota, Uncertainty
    JEL: Q4 Q48
    Date: 2014–11
  35. By: Vassiliki Manoussi (Athens University of Economics and Business, Department of International and European Economic Studies); Anastasios Xepapadeas (Athens University of Economics and Business, Department of International and European Economic Studies)
    Abstract: We study a dynamic game of climate policy design in terms of emissions and solar radiation management (SRM) involving two heterogeneous regions or countries. Countries emit greenhouse gasses (GHGs), and can block incoming radiation by unilateral SRM activities, thus reducing global temperature. Heterogeneity is modelled in terms of the social cost of SRM, the environmental damages due to global warming, the productivity of emissions in terms of generating private benefits, the rate of impatience, and the private cost of geoengineering. We determine the impact of asymmetry on mitigation and SRM activities, concentration of GHGs, and global temperature, and we examine whether a trade-off actually emerges between mitigation and SRM. Our results could provide some insights into a currently emerging debate regarding mitigation and SRM methods to control climate change, especially since asymmetries seem to play an important role in affecting incentives for cooperation or unilateral actions.
    Keywords: Climate Change, Mitigation, Solar Radiation Management, Cooperation, Differential Game, Asymmetry, Feedback Nash Equilibrium
    JEL: Q53 Q54
    Date: 2014–12
  36. By: Borck, Rainald
    Abstract: This paper studies the effectiveness of building height limits as a policy to limit greenhouse gas (GHG) emissions. It shows that building height limits lead to urban sprawl and higher emissions from commuting. On the other hand, aggregate housing consumption may decrease which reduces emissions from residential energy use. The paper uses numerical simulation to show that total GHG emissions may be lower under building height restrictions. It also studies the effect of endogenous transport technology and the urban heat island effect.
    JEL: Q54 R14 R21
    Date: 2014
  37. By: Kubatko Oleksandr; Kubatko Oleksandra
    Abstract: This paper estimates the influence of pollution on population health outcomes throughmeasuring direct and indirect pollution health effects. It is found that air pollution increase thenumber of population morbidities, and responsible on average for 10.3% of all incidents ofcardiovascular morbidity; 11% of digestion morbidity cases, 16% of respiratory morbidity cases,30% and 10.5% of man lung cancer and women lung cancer respectively. Also air pollution isresponsible on average for 3.6% of all mortality cases in Ukraine. Total economic costs attributed toair pollution and selected morbidity indicators in 2011 were in a range 0.7%-1.3% of GDP.
    JEL: I Q
    Date: 2015–02–02
  38. By: Carlo Cambini; Federico Caviggioli; Giuseppe Scellato
    Abstract: In this paper we study the effects of the changes in the level of product market regulation on the industry-level innovation intensity in the Electricity sector across 16 European countries during years 1990-2009. We matched data on R&D budgets and EPO patent applications from IEA and Eurostat Databases and indexes of market regulation conditions from OECD, in order to test the impact of deregulatory policies on the propensity to innovate in new energy technologies. Our findings indicate an increase in the aggregated Electricity R&D and in patenting activities following market deregulation. Our measure of market regulation intensity is based on the aggregation of three factors that capture respectively entry barriers, public ownership and vertical integration. Econometric results suggest that policies aimed at a reduction in vertical integration have a positive impact on both industry-level R&D and patenting. The reduction of public ownership of incumbent operators and entry barriers are mostly associated to a significant increase in R&D expenditures. In the paper we discuss the implication of this evidence in light of the current trend in investment in the electricity sector in Europe.
    Keywords: Innovation, Patents, Regulation, Electricity.
    JEL: L94
    Date: 2015
  39. By: Olivier Sterck
    Abstract: This paper answers two questions: "What impact have natural resources had on the spread of the HIV/AIDS epidemic so far?" and "What role can natural resource rents play in order to finance the long-run response to HIV/AIDS?"  Using a panel dataset, de Soysa and Gizelis (2013) provided evidence that oil-rich countries are more deeply affected by the HIV epidemic.  They concluded that government of resource-rich countries failed to implement effective public policies for dealing with the HIV/AIDS epidemic.  In this paper, I show that their results are not robust and are spurious because the dependent variables and explanatory variables considered in their analysis are non-stationary.  After correcting for these issuse, I find no specific relationship between resource rents and the spread of HIV/AIDS.  I conclude by discussing the potential of resources rents for financing the long-term liability brought about by the HIV/AIDS epidemic in sub-Saharan Africa.
    Keywords: HIV/AIDS, natural resources, resource curse, epidemics, spurious regression, non-stationarity
    JEL: I1 I18 E6 Q32
    Date: 2014–03–01
  40. By: Baumeister, Christiane; Kilian, Lutz
    Abstract: Some observers have conjectured that oil supply shocks in the United States and in other countries are behind the plunge in the price of oil since June 2014. Others have suggested that a major shock to oil price expectations occurred when in late November 2014 OPEC announced that it would maintain current production levels despite the steady increase in non-OPEC oil production. Both conjectures are perfectly reasonable ex ante, yet we provide quantitative evidence that neither explanation appears supported by the data. We show that more than half of the decline in the price of oil was predictable in real time as of June 2014 and therefore must have reflected the cumulative effects of earlier oil demand and supply shocks. Among the shocks that occurred after June 2014, the most influential shock resembles a negative shock to the demand for oil associated with a weakening economy in December 2014. In contrast, there is no evidence of any large positive oil supply shocks between June and December. We conclude that the difference in the evolution of the price of oil, which declined by 44% over this period, compared with other commodity prices, which on average only declined by about 5%-15%, reflects oil-market specific developments that took place prior to June 2014.
    Keywords: oil price declines,OPEC,oil supply,oil demand,shale oil
    JEL: Q43 C53
    Date: 2015
  41. By: Elena Verdolini (Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo sui Cambiamenti Climatici); Laura Diaz Anadon (John F. Kennedy School of Government, Harvard University); Jiaqi Lu (La Follette School of Public Affairs, University of Wisconsin-Madison, USA); Gregory F. Nemet (La Follette School of Public Affairs and Nelson Institute Center for Sustainability and the Global Environment (SAGE), University of Wisconsin-Madison, USA)
    Abstract: Expert elicitations of future energy technology costs can improve energy policy design by explicitly characterizing uncertainty. However, the recent proliferation of expert elicitation studies raises questions about the reliability and comparability of the results. In this paper, we standardize disparate expert elicitation data from five EU and US studies, involving 65 experts, of the future costs of photovoltaics (PV) and evaluate the impact of expert and study characteristics on the elicited metrics. The results for PV suggest that in-person elicitations are associated with more optimistic 2030 PV cost estimates and in some models with a larger range of uncertainty than online elicitations. Unlike in previous results on nuclear power, expert affiliation type and nationality do not affect central estimates. Some specifications suggest that EU experts are more optimistic about breakthroughs, but they are also less confident in that they provide larger ranges of estimates than do US experts. Higher R&D investment is associated with lower future costs. Rather than increasing confidence, high R&D increases uncertainty about future costs, mainly because it improves the base case (low cost) outcomes more than it improves the worst case (high cost) outcomes.
    Keywords: Photovoltaic Costs, Energy R&D, Expert Elicitation, Survey Design, Heuristics
    JEL: O32 Q40 Q55
    Date: 2015–01
  42. By: Peter Christoffersen (University of Toronto, Rotman School of Management and CREATES); Xuhui (Nick) Pan (Tulane University, A.B. Freeman School of Business)
    Abstract: After the financialization of commodity futures markets in 2004-05 oil volatility has become a strong predictor of returns and volatility of the overall stock market. Furthermore, stocks' exposure to oil volatility risk now drives the cross-section of expected returns. The difference in average return between the quintile of stocks with low exposure and high exposure to oil volatility is significant at 0.66% per month, and oil volatility risk carries a significant risk premium of -0.60% per month. In the post-financialization period, oil volatility risk is strongly related with various measures of funding liquidity constraints suggesting an economic channel for the effect.
    Keywords: option-implied volatility, oil prices, volatility risk, cross-section, factor-mimicking portfolios, financial intermediaries
    JEL: G12 G13 E44 Q02
    Date: 2014–12–02
  43. By: Mauritzen, Johannes (Norwegian School of Economics)
    Abstract: Studies have shown that many consumers and businesses fail to invest in energy efficiency improvements despite seemingly ample financial incentives to do so – the so called energy efficiency gap or paradox. Attempts to explain this gap often focus on searching costs, information frictions and behavioral factors. Using data on Norwegian electricity prices and Google searches for heat pumps, I suggest that the inherently spikey nature of many electricity markets has a strong and significant positive effect on searching for information on energy efficiency goods. Because consumers pay for electricity based on at least monthly averages of the wholesale price, I can identify the informational and behavioral effect by decomposing prices into smoothed and deviation components using a novel method of measuring spikiness, comparing the actual price series with a range of deviations from Loess smoothed series.
    Keywords: Energy efficiency; Deregulated electricity markets; Price spikes; Informational frictions
    JEL: D12 D83 Q41
    Date: 2014–11–28
  44. By: Ahrend, Klaus-Michael
    Abstract: Eine verantwortungsvolle Corporate Governance soll dazu beitragen, dass einerseits das Energieunternehmen und andererseits der wesentliche Gesellschafter, die Kommune, bei der Erfüllung ihrer Ziele unterstützt werden. Wie jeder private Anteilseigner strebt die politische Führung einer Kommune einen angemessenen Einfluss auf Entscheidungen bei den Beteiligungen der kommunalen Stadtwirtschaft an. Neben dem Vertrauen in eine geeignete Geschäftsleitung und einer effektiven Unternehmensaufsicht ist besonders die Ausgestaltung des Zielsystems erfolgskritisch. Für das Zielsystem von kommunalen Energieunternehmen präsentiert der Artikel die beiden Konzepte Wertorientierte Unternehmensführung und Public Value Management. Auch wenn die Kapitalgeber bei der wertorientierten Steuerung im Vordergrund stehen, sind auch zufriedene Stakeholder die Voraussetzung für eine Erhöhung des Unternehmenswerts. Ein Wert für die Kapitalgeber wird nur geschaffen, wenn die Kunden einen hohen Nutzen wahrnehmen, die Lieferanten für ihre Produkte und Dienstleistungen wertschöpfende Erträge erwirtschaften und die Beschäftigten angemessen vergütet werden. Entsprechend ist dabei auch der Public Value zu berücksichtigen. Public Values sind Werte für die Gesellschaft, für die Bürgerinnen und Bürger einer Gebietskörperschaft oder Region. Eine Orientierung des Energieunternehmens hin zum Public Value führt zu einem ganzheitlichen Verständnis des Unternehmens als Mitglied, als aktiver und kooperierender Teil des Netzwerks Kommune. Folgende Public Values werden vorgestellt: Einbezug der Öffentlichkeit, Gesellschaftliches Engagement, Ökologische Nachhaltigkeit, Querverbund, Förderung der Gründungsregion und das regionalökonomische Netzwerk. Für diese Public Values werden jeweils anwendbare Kennzahlen zur Steuerung und Messung präsentiert. Durch die authentische Berücksichtigung des Public Value im Rahmen der Corporate Governance können sich kommunale Energieunternehmen gegenüber dem Wettbewerb, insbesondere auch den privaten Wettbewerbern differenzieren. Eine bessere Kundenbindung kann die Folge sein. Abschließend werden Ansatzpunkte für die Verbesserung der Corporate Governance im Zuge der Einführung des Public Value Ansatzes und darüber hinaus präsentiert.
    Abstract: An effective corporate governance intends to support the municipal energy company and the major shareholder, the community, in meeting their goals. Like any private shareholder the political leadership of a community seeks for a reasonable influence on decisions of municipal subsidiaries. In addition to the trust in an appropriate management team and an effective supervisory board particularly the design of the target system is critical for success. For the target system of municipal energy companies the article presents the concepts Value-oriented Management and Public value Management. Even if the owners are in the focus of value-based management, satisfied stakeholders are the prerequisite for an increase in corporate value. A value for the investor is only created when customers perceive high benefits, suppliers generate sufficient income for their products and services and employees receive a reasonable remuneration. In addition, the value for the public has to be considered. Public Values are values for society, for citizens of a municipality or a region. An orientation of the energy company towards public value leads to a holistic understanding of the company as a member, as an active and cooperating part of the network community. The following public values are described: citizen participation, social commitment, environmental sustainability, corporate synergies, encourage an entrepreneurial region and the regional economic network. For those public values usable key performance indicators for management and measurement are presented. Through the authentic consideration of public value in companies’ corporate governance, municipal energy companies are able to differentiate themselves from competition, especially from private competitors. A better client relationship can be achieved. Finally, aspects for the improvement of corporate governance in the context of the introduction of the public value approach and beyond are presented.
    Keywords: Energiewirtschaft,Public Value,Gemeinwohl,Ertragswert,Wertorientierte Führung,Zielsysteme,Unternehmensstrategien,Unternehmenssteuerung,Corporate Governance,Public Corporate Governance,Unternehmensaufsicht,Integrierte Berichterstattung
    JEL: G32 G34 G38 H23 H31 H70 H83 I31 L14 L21 L25 L26 L32 L94 L95 M1 M4 Q4 R1
    Date: 2014–10–20
  45. By: Walter Antonio Desiderá Neto; Marcelo Passini Mariano; Raphael Padula; Michelle Carvalho Metanias Hallack; Pedro Silva Barros
    Abstract: Desde o final da Guerra Fria, mas especialmente a partir dos anos 2000, com o aumento da importância das potências regionais na política internacional, para se obter uma melhor compreensão acerca das transformações globais, tornou-se fundamental o exame de como têm se dado as relações políticas entre essas potências e seu entorno imediato, como complemento da análise de seu comportamento em âmbito global. Dessa forma, este trabalho tem como objetivo caracterizar e analisar as relações do Brasil com seus vizinhos (os demais países sul-americanos), no período entre 1985 e 2010, no que concerne ao desenho da política externa brasileira para a região, à arquitetura das instituições regionais e ao tratamento de questões de segurança regional e de integração energética. O texto está organizado da seguinte forma: após uma breve seção introdutória, o texto conta com mais três seções. A segunda examina a maneira pela qual a política externa brasileira para a vizinhança sul-americana foi desenhada tanto de acordo com as mudanças no cenário internacional como com as transições de governo. Além disso, procura esclarecer o papel desempenhado pelo Brasil na construção e na caracterização das instituições de integração regional das quais tem participado no continente. A terceira seção traz duas análises sobre a integração regional sul-americana em segurança e em energia. Estes temas foram selecionados uma vez que, em ambos os casos, fica clara a forma como o comportamento brasileiro é determinante para que as iniciativas prosperem ou não. Por fim, a quarta seção busca sintetizar os argumentos apresentados, de maneira a concluir o texto. Since the end of the Cold War, and especially since the 2000s, due to the increasing significance of regional powers in world politics, in order to understand global transformations, it has become crucial to examine how regional powers have been relating to their neighborhoods, complementing their global behavior analysis. Therefore, this work aims to characterize and analyze Brazilian relations with its neighbors (the other American countries), during 1985-2010, concerning Brazilian foreign policy towards the region, the architecture of regional institutions and the management of regional security and energy integration issues. The text is organized in four sections. After a brief introductory part, in the second section is examined how Brazilian foreign policy towards the neighborhood was designed in accordance with administrations and with shifts in the international scene. The third section brings two exams about South American regional integration: security and energy. These two themes were selected since in both cases it becomes clear how Brazilian behavior determines the prosperity (or not) of regional initiatives. In the end, the fourth section aims to synthesize the arguments, concluding the paper.
    Date: 2015–01
  46. By: Claire Gavard (Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC), Italy); Djamel Kirat (Laboratoire d’Economie d’Orléans (LEO), Université d’Orléans, France)
    Abstract: We analyze the price dynamics of European allowances and international carbon credits in the second phase of the European carbon market. We develop and use a model combining fundamental drivers associated with the demand for quotas by installations and risk-return considerations related to the financial nature of carbon permits. We estimate it with autoregressive conditional heteroskedasticity models. Although carbon permits present some characteristics of financial assets, we find that an increased volatility is not associated with an increased return. The price of allowances and credits are explained by similar factors. However, whereas the corresponding returns present comparable dynamics, the long-term relationships between the price of these two types of permits and their drivers differ significantly. While the price of allowances is demand-driven, we suggest the existence of a supply-side effect for credits, and explain it by the flexibility in the related market. The impact of the European economic activity is less visible on credits than on allowances. The price elasticity of allowances with regards to the coal and gas prices is negative in time periods of low economic activity while it is positive in the rest of the time. We suggest an explanation for this dynamics difference.
    Keywords: European Allowances International Credits, Emissions Trading, Power Sector, Time Series Analysis
    JEL: C32 C58 Q48 Q54 Q58
    Date: 2015–01
  47. By: Bidong Liu; Jiali Liu; Tao Hong
    Abstract: This paper introduces the concept of sister models, and proposes a sister model based load forecast combination method to enhance the point forecasting accuracy. Using the data from the Global Energy Forecasting Competition 2014, we create a case study with 4 sister forecasts from 4 sister models. The result shows that the simple average of the 4 sister forecasts yields lower error than each individual forecast by 2% to 10%.
    Keywords: Electric load forecasting; Forecast combination; Sister forecast
    JEL: C22 C32 C53 Q47
    Date: 2015–02–05
  48. By: Mironov, V.V. (BOFIT); Petronevich , A.V. (BOFIT)
    Abstract: This paper examines the problem of Dutch disease in Russia during the oil boom of the 2000s, from both the theoretical and empirical points of view. Our analysis is based on the classical model of Dutch disease by Corden and Neary (1982). We examine the relationship between changes in the real effective exchange rate of the ruble and the evolution of the Russian economic structure during the period 2002 – 2013. We empirically test the main effects of Dutch disease, controlling for specific features of the Russian economy, namely the large role of state-owned organizations. We estimate the resource movement and spending effects as determined by the theoretical model and find the presence of several signs of Dutch disease: the negative impact of the real effective exchange rate on growth in the manufacturing sector, the growth of total income of workers, and the positive link between the real effective exchange rate and returns on capital in all three sectors. Although also predicted by the model and clearly observable, the shift of labor from manufacturing to services cannot be explained by ruble appreciation alone.
    Keywords: Dutch disease; resource curse; real effective exchange rate; cointegration model; economic policy; Russia
    JEL: C32 F41 F43
    Date: 2015–01–19
  49. By: Christoph Böhringer, Nicholas Rivers, Thomas F. Rutherford, Randall Wigle (Wilfrid Laurier University)
    Abstract: Dividing the burden for greenhouse gas abatement amongst the provinces has proven challenging in Canada, and is a major factor contributing to Canada’s poor historic performance on greenhouse gas abatement. As the country aims to achieve substantial cuts to emissions over the next decade and by mid-century, such burden sharing considerations are likely to be elevated in importance. This paper uses a detailed Canadian computable general equilibrium model to compare a number of archetypal rules for sharing the burden of a joint commitment amongst members for the case of greenhouse gas reductions in Canada. Because of the substantial heterogeneity amongst Canadian provinces, these different burden sharing rules imply significantly different relative abatement effort amongst provinces, and also significantly different welfare implications. We compare these archetypal burden sharing rules to existing provincial emission reduction commitments, and find that none of the standard burden sharing rules comes close to existing commitments. We argue that future efforts to share the burden of greenhouse gas abatement in Canada would be more successful if they were informed by a formal analysis such as the one presented here.
    Keywords: climate change, burden sharing, policy, computable general equilibrium model
    JEL: C68 Q50
    Date: 2015–01–01
  50. By: Gunnar Luderer (Potsdam Institute for Climate Impact Research, Potsdam, Germany); Christoph Bertram (Potsdam Institute for Climate Impact Research, Potsdam, Germany); Katherine Calvin (PNNL, USA); Enrica De Cian (Fondazione Eni Enrico Mattei (FEEM), Italy); Elmar Kriegler (Potsdam Institute for Climate Impact Research, Potsdam, Germany)
    Abstract: While the international community has agreed on the long-term target of limiting global warming to no more than 2°C above pre-industrial levels, only a few concrete climate policies and measures to reduce greenhouse gas (GHG) emissions have been implemented. We use a set of three global integrated assessment models to analyze the implications of current climate policies on long-term mitigation targets. We define a weak-policy baseline scenario, which extrapolates the current policy environment by assuming that the global climate regime remains fragmented and that emission reduction efforts remain unambitious in most of the world’s regions. These scenarios clearly fall short of limiting warming to 2°C. We investigate the cost and achievability of the stabilization of atmospheric GHG concentrations at 450 ppm CO2e by 2100, when countries follow the weak policy pathway until 2020 or 2030 before pursuing the long-term mitigation target with global cooperative action. We find that after a deferral of ambitious action the 450 ppm CO2e is only achievable with a radical up-scaling of efforts after target adoption. This has severe effects on trans-formation pathways and exacerbates the challenges of climate stabilization, in particular for a delay of cooperative action until 2030. Specifically, reaching the target with weak near-term action implies (a) faster and more aggressive transformations of energy systems in the medium term, (b) more stranded investments in fossil-based capacities, (c) higher long-term mitigation costs and carbon prices and (d) stronger transitional economic impacts, rendering the political feasibility of such pathways questionable.
    Keywords: Climate Change, Mitigation
    JEL: Q5 Q58
    Date: 2015–01

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