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on Energy Economics |
| By: | Anne Neumann; Sophia Rüster; Christian von Hirschhausen |
| Abstract: | Long-term contracts are an important element of all economic activity and, thus, critical for understanding modern economic structures. The natural gas industry provides particular insights into the functioning and dynamics of long-term contracts and industry structures, in a sector that is globally important. This Data Documentation provides a survey of the literature on long-term contracts in the natural gas sector, as seen from an institutional and industrial economics perspective; we also add suggestions for further research. The core of the documentation is a detailed database of 426 long-term contracts struck between sellers and buyers between 1965 and 2014. Though not comprehensive, the database covers a large share of contracts, both for pipeline gas and liquefied natural gas (LNG). |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwddc:dd77&r=ene |
| By: | Antoine Dechezleprêtre; Misato Sato |
| Abstract: | This paper measures the response of bilateral trade flows to differences in industrial energy prices across countries. Using a panel for the period 1996-2011 including 42 countries, 62 sectors and covering 60% of global merchandise trade, we estimate the short-run effects of sector-level energy price asymmetry on trade. We find that changes in relative energy prices have a statistically significant but very small impact on imports. On average, a 10% increase in the energy price difference between two country-sectors increases imports by 0.2%. The impact is larger for energy-intensive sectors. Even in these sectors however, the magnitude of the effect is such that changes in energy price differences across time explain less than 0.01% of the variation in trade flows. Simulations based on our model predict that a †40-65/tCO2 price of carbon in the EU ETS would increase Europe's imports from the rest of the world by less than 0.05% and decrease exports by 0.2%. |
| Keywords: | Energy prices, international trade, carbon taxes |
| JEL: | F18 F14 Q56 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1337&r=ene |
| By: | Lundgren, Tommy (CERE); Marklund, Per-Olov (CERE); Zhang, Shanshan (CERE) |
| Abstract: | This paper estimates firm level energy efficiency and its determinants in 14 sectors of Swedish manufacturing by using stochastic frontier analysis (SFA). We derive energy demand frontiers both from cost minimizing and profit maximizing perspectives. To account for firms’ heterogeneity, Greene’s true random effects model is adopted. Results show that, from both firm behavior perspectives, there is room to improve energy efficiency in all sectors of Swedish manufacturing. The EU ETS seem to have had a moderate or no effect on Swedish firms’ efficient use of energy. Moreover, we found that energy intensity or energy productivity (energy use over production value) is not an appropriate proxy for energy efficiency. |
| Keywords: | energy demand; energy efficiency; manufacturing; stochastic frontier analysis; true random effects |
| JEL: | D22 D24 L60 Q41 |
| Date: | 2014–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2014_009&r=ene |
| By: | Lundgren, Tommy (CERE); Zhang, Shanshan (CERE); Zhou, Wenchao (Centre for Regional Science) |
| Abstract: | This paper assesses energy efficiency in Swedish industry. Using unique firm-level panel data covering the years 2001-2008, the efficiency estimates are obtained for firms in 14 industrial sectors by using data envelopment analysis (DEA). The analysis accounts for multi-output technologies where undesirable outputs are produced alongside with the desirable output. The results show that there was potential to improve energy efficiency in all the sectors and relatively large energy inefficiencies existed in small energy-use industries in the sample period. Also, we assess how the EU ETS, the carbon dioxide (CO2) tax and the energy tax affect energy efficiency by conducting a second-stage regression analysis. To obtain consistent estimates for the regression model, we apply a modified, input-oriented version of the double bootstrap procedure of Simar and Wilson (Journal of Econometrics 136(1):31-64, 2007). The results of the regression analysis reveal that the EU ETS and the CO2 tax did not have significant influences on energy efficiency in the sample period. However, the energy tax had a positive relation with the energy efficiency. |
| Keywords: | energy efficiency; EU ETS; data envelopment analysis; double bootstrap |
| JEL: | D22 D24 L60 Q41 |
| Date: | 2015–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2015_003&r=ene |
| By: | Mahieu, Pierre-Alexandre (LEMNA); Donfouet, Hermann Pythagore Pierre (CREM); Kriström, Bengt (CERE) |
| Abstract: | Many countries are facing a dilemma over whether to extend the lives of their old reactors or make costly capital investments on Renewable Energy (RE). This paper explores the determinants of Willingness-To-Pay (WTP) for RE in France by means of a contingent valuation question that was included in a large web survey organized by the OECD. The main contribution of our paper is to test whether people living close to a reactor are sensitive to the age of the reactor. We find that the age of the reactor has a positive effect on WTP for RE. |
| Keywords: | Contingent valuation; nuclear power plant; renewable energy |
| JEL: | C82 I10 Q21 |
| Date: | 2014–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2014_014&r=ene |
| By: | Daniel Nachtigall (Freie Universitaet Berlin); Dirk Ruebbelke (Technische Universitaet Bergakademie Freiberg, Lehrstuhl fuer Allgemeine Volkswirtschaftslehre, insbesondere Rohstoffokonomik) |
| Abstract: | The green paradox conveys the idea that climate policies may have unintended side effects when taking into account the reaction of fossil fuel suppliers. In particular, carbon taxes that will be implemented in the future induce resource owners to extract more rapidly which increases present carbon dioxide emissions and accelerates global warming. Our results suggest that future carbon taxes may even decrease present emissions if resource owners face increasing marginal extraction costs and if there is a clean energy source that is a perfect substitute and exhibits learning-by-doing (LBD). If the marginal extraction cost curve is sufficiently flat, resource owners respond to a future carbon tax with lowering total extraction and only slightly increase present extraction. Moreover, taxation leads to higher energy prices which induces the renewable energy firms to increase output not only in the future, but also in the present because of the anticipated benefits from LBD. This crowds out energy from the combustion of fossil fuels and may outweigh the initial increase in present extraction, leading to less emissions in the present. Creation Date: 2014 |
| Keywords: | climate change, exhaustible resources, learning-by-doing, green paradox |
| JEL: | Q38 Q54 Q28 H23 |
| URL: | http://d.repec.org/n?u=RePEc:bdp:wpaper:2014002&r=ene |
| By: | Vladimir Udalov (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)) |
| Abstract: | This paper investigates an intergenerational conflict arising from renewable energy support (RES). Using a simple polito-economic overlapping generations (OLG) model, it can be shown that old individuals unambiguously lose from renewable energy support and therefore vote for its minimum level. In contrast, young individuals benefit from positive environmental and consumption effects and, therefore, vote for a higher level of renewable energy support. The voting outcome is determined through a political process, whereby political parties converge to platforms that maximize the aggregate welfare of the electorate. Depending on the size of the exogenous parameters, the level of RES varies between the voting preferences of younger and older individuals. As a result, this model offers a good starting point for possible medium to long-term policy recommendations in order to increase the accepted level of RES. |
| Keywords: | overlapping generations, generational conflict, environmental policy, renewable energy, voting |
| JEL: | Q54 Q29 D60 D90 H23 D72 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:eiiwdp:disbei202&r=ene |
| By: | Ma, Chunbo; Polyakov, Maksym; Pandit, Ram |
| Abstract: | Using a large sample of property sales data and high-resolution aerial maps, this study provides the first empirical estimate of the price premium of properties with photovoltaic (PV) panels in Australia. We use three model specifications to control for spatial heterogeneity and correlation as well as price dynamics over time. Results from hedonic models, repeated sales models and hybrid models have all shown strong evidence that PV panels contribute a 2.34 to 4.12 percent premium to properties prices. This suggests that PV investments are, on average, over-capitalized into property prices during our sample period, which we argue is largely a reflection of changing policy parameters regarding feed-in tariffs. Greater premium is found in localities with a larger share of votes for the Green Party and Australian Labor Party in 2008 State Election and votes for no daylight saving in 2009 State Referendum, registered Prius hybrid vehicles and college graduates and postgraduates. The results have significant implications for property owners, builders, financial institutions, PV retailers, and policy makers. |
| Keywords: | Hedonic, Repeated Sales, Solar Panels, Photovoltaic, Environmental Economics and Policy, Resource /Energy Economics and Policy, O18, Q42, R21, |
| Date: | 2015–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uwauwp:199230&r=ene |
| By: | Karsten Neuhoff; Sophia Ruester; Sebastian Schwenen |
| Abstract: | We revisit key elements of European power market design with respect to both short term operation and longer-term investment and re-investment choices. For short term markets, the European policy debate focuses on the definition of common interfaces, like for example gate closure time. We argue that that this is insufficient if the market design is to accommodate for the different needs of renewable and conventional generation assets and different flexibility options. The market design needs to ensure resources are pooled over larger geographic areas, the full flexibility of different assets can be realized with complex bids and scarce network resources are efficiently used. For investment and re-investment choices we argue that different technology groups like wind and solar versus fossil fuel based generation may warrant different treatment – reflecting different level of publicly accessible information, requirements for grid infrastructure, types of strategic choices relevant for the sector and share of capital cost in overall generation costs. We discuss opportunities for such a differentiated treatment and implications for electricity consumers. |
| Keywords: | Power market design, regulation, investment framework |
| JEL: | L11 L94 G32 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1456&r=ene |
| By: | Vesterberg, Mattias (CERE); B. Krishnamurthy, Chandra Kiran (CERE); Bayrak, Oben (CERE) |
| Abstract: | Using a unique and highly detailed data set of energy consumption at the appliance-level for 390 Swedish households, seemingly unrelated regression (SUR)-based end-use specific load curves are estimated. The estimated load curves are then used to explore possible restrictions on load shifting (e.g. the office hours schedule) as well as the cost implications of different load shift patterns. The cost implications of shifting load from “expensive” to “cheap” hours, using aggregate spot price data, is computed to be very small; roughly 2-5% daily cost reduction from shifting load up to seven hours ahead, indicating small incentives for households (and suppliers) to adopt dynamic pricing of electricity. In addition, end-use-specific income elasticites are also estimated, for the first time for Sweden, using again a SUR framework. The estimated income elasticties are large and significant, varying from a high of 0.8-1.25 for heating to a low of 0.2-0.5 for lighting. Aggregate income elasticity is also high, varying from 0.5 to 0.81. Our results have important implications for Swedish energy policy, in particular for the Swedish government’s stated goal of realtime pricing. |
| Keywords: | Direct Metering; Residential Electricity Demand; Real time electricity pricing |
| JEL: | C30 D12 Q41 Q48 |
| Date: | 2014–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2014_016&r=ene |
| By: | A.E Clements; A.S Hurn |
| Keywords: | Short-term load forecasting, seasonality, intra-day correlation, recursive equation system. |
| JEL: | C32 Q41 Q47 |
| Date: | 2014–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:qut:auncer:wp103&r=ene |
| By: | Scheurlen, Elena |
| Abstract: | This paper presents evidence on rural Ethiopian households’ time allocation to different activities, especially fuel collection work, and examines the effect of changes in the availability of firewood resources on households’ time allocation to fuel collection and on- and off-farm income generation. Based on firsthand insights from focus group discussions conducted with farmers in three rural villages of Ethiopia and data from an IFPRI-CIMMYT (International Food Policy Research Institute/International Maize and Wheat Improvement Center) household survey implemented by the Association of Ethiopian Microfinance Institutions, the results show that women are involved in more time-consuming and simultaneous work activities than men and hold the primary responsibility for fuel collection |
| Keywords: | Gender, Women, Energy, rural areas, Poverty, Agricultural production, productivity, households, Household behavior, firewood collection, firewood availability, |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1419&r=ene |
| By: | Henriques, Sofia Teives (University of Southern Denmark); Sharp, Paul (University of Southern Denmark) |
| Abstract: | We examine the case of Denmark - a country which historically had next to no domestic energy resources - for which we present new historical energy accounts for the years 1800-1913. We demonstrate that Denmark’s take off at the end of the nineteenth century was relatively energy dependent. We relate this to her well-known agricultural transformation and development through the dairy industry, and thus complement the literature which argues that expensive energy hindered industrialization, by arguing that similar obstacles would have precluded other countries from a more agriculture-based growth. The Danish cooperative creameries, which spread throughout the country over the last two decades of the nineteenth century, were dependent on coal. Although Denmark had next to no domestic coal deposits, we demonstrate that her geography allowed cheap availability throughout the country through imports. On top of this we emphasize that another important source of energy was imported feed for the cows. |
| Keywords: | Coal, Denmark, energy transition, agriculture |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:217&r=ene |
| By: | Shahbaz, Muhammad; Sbia, Rashid; Nanthakumar, Loganathan; Afza, Talat |
| Abstract: | This paper investigates the impact of urbanization on energy consumption by applying the Stochastic Impacts by Regression on Population, Affluence and Technology (STIRPAT) in case of Malaysia. The study covers the time period of 1970Q1-2011Q4. The unit root test and the ARDL bounds testing approach have been applied to examine integrating properties and long run relationship in the presence of structural breaks. Our results validated the existence of cointegration and exposed that urbanization is a major contributor in energy consumption. Affluence raises energy demand. Capital stock boosts energy consumption. Trade openness leads affluence and hence increases energy consumption. The causality analysis finds that urbanization Granger causes energy consumption. The feedback effect is found between energy consumption and affluence and, energy consumption and capital. The bidirectional causality exists between trade openness and energy consumption. |
| Keywords: | Urbanization, Energy, Malaysia |
| JEL: | C1 |
| Date: | 2015–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:62743&r=ene |
| By: | Franz Hamann (Banco de la República de Colombia); Jesús Bejarano (Banco de la República de Colombia); Diego Rodríguez (Banco de la República de Colombia) |
| Abstract: | The sudden collapse of oil prices poses a challenge to inflation targeting central banks in oil exporting economies. This paper illustrates that challenge and conducts a quantitative assessment of the impact of permanent changes in oil prices in a small and open economy, in which oil represents an important fraction of its exports. We calibrate and estimate a variety of real and monetary dynamic stochastic general equilibrium models using Colombian historical data. We find that, in these artificial economies the macroeconomic effects can be large but vary depending on the structure of the economy. The main channels through which the shock passes to the economy come from the increased country risk premium, the real exchange rate depreciation, the sectoral reallocation of resources from nontradables to tradables and the sluggish adjustment of prices. Contrary to the conventional findings in the literature of the financial accelerator mechanism for single-good closed economies, in multiple-goods small open economies the financial accelerator does not play a significant role in magnifying macroeconomic fluctuations. The sectoral reallocation from nontradable to tradables diminishes the financial amplification mechanism. Classification JEL: C61, E31, E37, E52, F41 |
| Keywords: | oil prices, precautionary savings, monetary policy, credit, leverage, financial accelerator, Colombia |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:871&r=ene |
| By: | Mina, Wasseem; Jaeck, Louis |
| Abstract: | In this paper we empirically examine the impact of labor market flexibility on FDI flows to oil-rich GCC and compare it to middle income countries in 2006-2011. We account for potential endogeneity and nonstationarity and adopt system GMM and IV estimation methodologies. Our findings show that in middle income countries overall flexibility increases FDI flows under both system GMM and IV methodologies. In GCC countries overall LMF decreases FDI flows under system GMM methodology. Results also show a positive “GCC region” influence outweighing the negative flexibility influence. Growth potential and infrastructure development matter for both GCC and middle income countries. |
| Keywords: | Labor markets; FDI; GCC; Middle income countries; UAE |
| JEL: | F2 F21 J3 J32 J38 J5 J53 J58 J6 J65 J68 |
| Date: | 2015–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:62652&r=ene |
| By: | IWAISAKO Tokuo; NAKATA Hayato |
| Abstract: | By using the framework of a structural vector autoregression (VAR) model, in this paper, we provide a quantitative assessment of the relative importance of exogenous shocks to Japanese output, as measured by aggregate sales, industry sales, and the sales of different firm-size groups. We analyze four structural shocks: (i) oil supply shock; (ii) oil price fluctuations not related to supply and demand; (iii) world economic activity (an aggregate demand shock); and (iv) exchange rate fluctuations not related to other structural shocks. We find that exogenous variation in oil production has little effect, whereas global economic conditions have a clear positive effect on output. The impact of the exchange rate depends on industry and firm size. Although appreciation of the yen has a negative impact on the Japanese economy as a whole, it has a clear positive effect on small and medium-sized enterprises in the nonmanufacturing sector. Our results suggest that recognizing the difference between fluctuations in the exchange rate and an exchange rate "shock" is important for macroeconomic policy management. In particular, much of the yen's appreciation following the Lehman Brothers collapse can be explained by the sudden slowdown in global real economic activity and the sharp decline in crude oil prices. Ignoring these factors greatly exaggerates the negative impact of the yen's appreciation on the Japanese economy. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15028&r=ene |
| By: | Lindmark, Magnus (CERE); Acar, Sevil (Istanbul Kemerburgaz University Department of Economics) |
| Abstract: | This paper examines convergence of carbon dioxide (CO2) emissions caused by oil combustion for a panel of 86 countries considering the importance of analyzing several sub-periods separately. Also, the investigation points at the necessity of choosing a restricted global sample, which takes into account that, for instance, eastern bloc countries reacted differently to increasing world market crude prices than the Western economies. The analysis builds on examining the beta-convergence hypothesis in a neoclassical growth model setting with additional control variables such as combustion of solid fuels. The results reveal evidence in support of beta-convergence of CO2 emissions intensity due to oil combustion for the sub-periods 1973-1979 and 1979-1991, while no evidence for convergence was found for the post-1991 period. This is true both for the restricted global sample and the sub-samples comprised of western OECD economies. One possible interpretation of the results is that international carbon taxes or permit trading schemes may first be introduced for oil only. |
| Keywords: | Carbon dioxide; Oil; Convergence; Carbon convergence; Energy history |
| JEL: | N50 |
| Date: | 2015–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2015_001&r=ene |
| By: | Franz Hamann; Jesús Bejarano; Diego Rodríguez |
| Abstract: | The sudden collapse of oil prices poses a challenge to inflation targeting central banks in oil exporting economies. This paper illustrates that challenge and conducts a quantitative assessment of the impact of permanent changes in oil prices in a small and open economy, in which oil represents an important fraction of its exports. We calibrate and estimate a variety of real and monetary dynamic stochastic general equilibrium models using Colombian historical data. We find that, in these artificial economies the macroeconomic effects can be large but vary depending on the structure of the economy. The main channels through which the shock passes to the economy come from the increased country risk premium, the real exchange rate depreciation, the sectoral reallocation of resources from nontradables to tradables and the sluggish adjustment of prices. Contrary to the conventional findings in the literature of the financial accelerator mechanism for single-good closed economies, in multiple-goods small open economies the financial accelerator does not play a significant role in magnifying macroeconomic fluctuations. The sectoral reallocation from nontradable to tradables diminishes the financial amplification mechanism. |
| Keywords: | oil prices, precautionary savings, monetary policy, credit, leverage, financial accelerator, Colombia |
| JEL: | C61 E31 E37 E52 F41 |
| Date: | 2015–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:col:000094:012615&r=ene |
| By: | Declerck , Francis (ESSEC Business School); Indjehagopian , Jean-Pierre (ESSEC Business School); Bellocq , Flavien (ESSEC Business School) |
| Abstract: | La recherche explique comment le cours des actions des compagnies pétrolières dépend du prix à terme du pétrole. La modélisation est appliquée aux principales compagnies pétrolières Shell: Exxon Mobil, BP, Total et Chevron. La recherche est originale car elle porte sur les relations à court et long terme à partir de modèles à correction d'erreur vectorielle (VECM) avec changements de régime. La modélisation structurelle, entre le cours des actions des compagnies pétrolières et le prix à terme du pétrole, est menée à partir de modèles de d’autorégression vectorielle (VAR) en lien avec la cointégration. La recherche est conduite en utilisant des données mensuelles de novembre 1989 à juin 2011. La stationnarité des séries temporelles est testée avec les tests de DickeyFuller, PhilipsPerron et KPSS. Les approches d’EngleGranger et Johansen ne permettent pas de trouver une relation de long terme sur toute la période. Cependant, l’approche de Bai et Perron permet d’identifier 5 changements de régime et de modéliser des relations de cointégration différentes sur ces souspériodes. Afin d'identifier les relations de cointégration à changements de régime, la méthode Gregory et Hansen est utilisée et les résultats montrent une cointégration avec des changements de régime. Les VECM associés à la cointégration avec changements de régime sont estimés. Le VECM permet de comprendre la dynamique sur le court terme. Puis l'analyse économique et financière est faite. L’analyse de choc est mise en oeuvre avec la fonction de réponse impulsionnelle. De plus, le test ARCHLM montre l'existence d'un modèle ARCH vectoriel. La recherche indique comment les dernières techniques de cointégration sont utiles notamment en incluant des ruptures structurelles endogènes menant à des évolutions de régimes. D'autres recherches seront effectuées pour estimer si l'on peut couvrir les risques de fluctuations des prix des matières premières en utilisant les cours boursiers des entreprises cotées dans des marchés beaucoup plus liquides. Cette modélisation sera complétée par la construction de modèles de court terme incorporant des changements de régime avec l’approche markovienne MSVAR et MSVECM. |
| Keywords: | marchés à terme; changements structurels multiples; VAR; cointégration; pétrole; prix à terme du pétrole; cours boursier des compagnies pétrolières; modèle à changement de régime markovien |
| JEL: | C32 C58 Q41 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:essewp:dr-15004&r=ene |
| By: | Severin Borenstein; James Bushnell; Frank A. Wolak; Matthew Zaragoza-Watkins |
| Abstract: | We analyze the demand for emissions allowances and the supply of allowances and abatement opportunities in California's 2013-2020 cap and trade market for greenhouse gases (GHG). We estimate a cointegrated vector autoregression for the main drivers of greenhouse gas emissions using annual data from 1990 to 2011. We use these estimates to forecast businss-as-usual (BAU) emissions during California's program and the impact of the state's other GHG reduction programs. We then consider additional price-responsive and price-inelastic activities that will affect the supply/demand balance in the allowance market. We show that there is significant uncertainty in the BAU emissions levels due to uncertainty in economic growth and other factors. Our analysis also suggests that most of the planned abatement will not be very sensitive to the price of allowances, creating a steep abatement supply curve. The combination of BAU emissions uncertainty and inelastic abatement supply implies a high probability that the price of allowances in California will either be at the price floor, or high enough to trigger a safety valve mechanism called the Allowance Price Containment Reserve (APCR). We estimate a low probability that the price would end up in an intermediate range between the price floor and the APCR. The analysis suggests that cap-and-trade markets, as they have been established in California, the EU and elsewhere may be more likely to experience price volatility and extreme low or high prices than is generally recognized. |
| JEL: | Q5 Q52 Q54 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20999&r=ene |
| By: | Christopher Hansman; Jonas Hjort; Gianmarco León |
| Abstract: | Regulations that constrain firms' externalities in one dimension can distort incentives and worsen externalities in other dimensions. In Peru's industrial fishing sector, the world's largest, fishing boats catch anchovy that plants along the coast convert into fishmeal. Matching administrative, daily data on plant production, ground-level air quality data, hospital admissions records, and survey data on individual health outcomes, we first show that fishmeal production negatively affects adult and child health through air pollution emitted by plants. We then analyze the industry's response to a 2009 reform that split the Total Allowable Catch (TAC) into boat-specific, transferable quotas (ITQs) to preserve fish stocks and reduce overcapacity. As predicted by a two-sector model with heterogeneous plants, on average across locations, fishmeal production was spread out in time, for two reasons: (i) boats' incentive to "race" for fish was removed, and (ii) production fell in inefficient plants (and locations) and increased, in the time dimension, in efficient plants (and locations). The reform greatly exacerbated the industry's impact on health, causing a loss of about 1.4 million disability-adjusted life years. We show that the reason is that longer periods of moderate air pollution are worse for health than shorter periods of higher intensity exposure. Our findings demonstrate the risks of piecemeal regulatory design, and that the common policy trade-off between duration and intensity of pollution exposure can be critical for industry's impact on health. |
| Keywords: | Industrial regulations, firms, externalities, air pollution, health, fishing, Peru, ITQs |
| JEL: | D2 L5 L7 O1 I1 Q5 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1469&r=ene |
| By: | Brännlund, Runar (CERE); Karimu, Amin (CERE); Söderholm, Patrik (Department of Business Administration, Technology and Social Sciences Luleå University of technology) |
| Abstract: | This paper examines convergence of per capita carbon dioxide (CO2) emission for a panel of 124 countries taking into account the impact of the quality of government institutions. The analysis builds on both parametric and nonparametric panel data techniques, and we examine the beta-convergence hypothesis in a neoclassical growth model setting with institutional quality as one of the independent variables. The results reveal evidence in support of beta-convergence of per capita CO2 emissions for the global sample, and for the sub-samples comprising OECD and non-OECD countries, respectively. The results indicate heterogeneity in beta-convergence, which tends to vary with the level of the initial per capita CO2 emissions. We also find evidence of a negative direct effect of institutional quality on growth in per capita CO2 emissions. However, institutional quality also promotes economic growth, thus generating a positive indirect effect on emissions growth. Overall our empirical results suggest a positive total effect of institutions on growth in per capita CO2 emission based on the global sample. Finally, we find some evidence of bias in the parametric approach, in particular in the case of the estimates for the convergence parameter at either end of the distribution. |
| Keywords: | Carbon dioxide; Convergence; Institutions; Nonparametric approach |
| JEL: | O43 Q54 Q56 |
| Date: | 2014–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2014_012&r=ene |
| By: | Coria, Jessica (Department of Economics. School of Business, Economics and Law. University of Gothenburg); Jaraite, Jurate (CERE) |
| 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: | 2015–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2015_002&r=ene |
| By: | Edward S. Barbier (Department of Economics & Finance, University of Wyoming); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Nick Hanley (University of St Andrews, School of Geography and Sustainable Development) |
| Abstract: | This paper explores both theoretically and empirically whether or not the willingness to pay (WTP) for pollution control varies with income. Our model indicates that the income elasticity of the marginal WTP for pollution reduction is only constant under very restrictive conditions, which are not necessary for an environmental Kuznets curve relationship between pollution and income. Our empirical analysis tests the null hypothesis that the elasticity of the WTP for pollution control with respect to income is constant, employing a multi-country contingent valuation study of eutrophication reduction in the Baltic Sea. Our findings reject this hypothesis, and estimate an income elasticity of the WTP for eutrophication control of 0.1 - 0.2 for low-income respondents and 0.6 - 0.7 for high-income respondents. Thus, our empirical results suggest that the elasticity is not constant and always less than one. |
| Keywords: | Baltic Sea, benefit transfer, environmental Kuznets curve, eutrophication, income elasticity of willingness to pay, non-market valuation |
| JEL: | Q51 Q53 Q56 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2015-07&r=ene |
| By: | Cheung, Jimmy; Kragt, Marit; Burton, Michael |
| Abstract: | Several airlines in Australia have initiated voluntary carbon offset (VCO) programs, called 'Fly Carbon Neutral', to encourage their customers to offset the carbon emissions of their flight. A VCO scheme aims to 'neutralise' emissions from a particular activity, by compensating with carbon reduction projects in another sector. As well as carbon sequestration, these activities often bring secondary benefits such as wildlife protection. There are currently few studies about the awareness and willingness to pay to offset carbon emission from flying. This paper conducted a choice experiment study to address this knowledge gap, by estimating Australian air travellers' willingness to pay for different attributes of carbon offset projects. Analyses reveal that values for carbon offset projects depend on respondent's perceptions of the importance of the aviation industry's contribution to the global carbon emissions, membership of environmental organisation, education level, income and their age. Results show that the majority of respondents preferred to not buy an offset. Of those respondents willing to buy an offset, most preferred renewable energy projects located in their own state over reforestation or forest protection projects in other states or overseas. The results will provide a better understanding of air travellers' preference, thus to improve future carbon offset policies making. |
| Keywords: | Carbon offsets, Aviation industry, Willingness to pay, Choice experiments, Choice modelling, Australia, Environmental Economics and Policy, Q51, Q57, |
| Date: | 2015–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uwauwp:199231&r=ene |
| By: | Vasiliy Rud’ (Saint-Petersburg Polytechnical University); Serguey Trukhachev (Department of Economics, Lomonosov Moscow State University) |
| Abstract: | Research, the results of which will be discussed in the present report were obtained in the framework of the Commission under the President of the Russian Federation for Modernization and Technological Development of Russia's Economy. Key issues affecting the management of the flow of all types of waste in Russia are: A huge number of unsorted household waste and unprocessed Extremely high yield landfill business and its criminal Lack of waste treatment business Possibility of selling the energy received from the recycling can not be considered as an incentive for the development of business Building regulations do not provide for the installation of systems for separate collection of household waste Public services and private investors are not able to effectively solve the problem of eliminating the effects of pollution of waste production and consumption with the formation of an efficient, cost-effective and environmentally sound waste management industry. It is necessary to pay more attention to not direct support projects on waste recycling, and introduce restrictive measures for the development of businesses not harmless to the garbage. We need to develop a "roadmap" of joint actions of government and business to create a national market for emissions trading of greenhouse gas emissions on the basis of voluntary commitments by companies to reduce them. As a result of the work done has been formulated for a number of assignments signed by the President of the Russian Federation . |
| Keywords: | municipal solid management, public-private partnership, institutionalism, project management. |
| JEL: | D00 D02 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:upa:wpaper:0017&r=ene |
| By: | Brännlund, Runar (CERE); Lundgren, Tommy (CERE); Söderholm, Patrik (Economics Unit, Luleå University of Technology) |
| Abstract: | The overall objective of the paper is to analyze convergence of CO2 emission intensity across manufacturing sectors in Sweden. Our approach differs from previous work on carbon convergence in that it employs a theoretical framework to construct a CO2 performance index, which explicitly takes into account that industrial firms produce good as well as bad outputs. This index is then used as the dependent variable in a growth-type regression equation. We employ a data set covering 14 industrial sectors over the time period 1990-2008. The results suggest the presence of conditional beta-convergence in CO2 performance among the industrial sectors in Sweden. Moreover, the speed of convergence varies significantly in the sense that the higher the capital intensity is, the lower is the convergence rate to the different steady states. This reflects the importance of – and in part the costs associated with – capital turnover to achieve a transition towards lower CO2 emission paths. |
| Keywords: | convergence; carbon dioxide emission intensity; industry; Sweden |
| JEL: | Q30 |
| Date: | 2014–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2014_010&r=ene |
| By: | Ahmet Sensoy; Erk Hacihasanoglu; Duc Khuong Nguyen |
| Abstract: | We analyze the dynamic comovement of commodity futures returns within each category (energy, precious metals, industrial metals, and agriculture) from 1997 to 2013 under the eects of the nancialization of commodity markets. Our findings from the dynamic equicorrelation GARCH model of ? show evidence of convergence for precious and industrial metal commodity futures since mid-2000s. On the other hand, there is no sign of convergence across the agricultural commodity futures, with most of them moving in a unrelated manner. Finally, a relatively high level of convergence is found for energy commodity futures, except for natural gas futures which expectedly behave significantly different from the other energy commodity futures. As a whole, our results suggest some potential for diversification benefits within commodity-specific categories, but at the same time the predominance of physical supply/demand balance as the main driving force of the commodity futures price dynamics rather than global financi l conditions. |
| Keywords: | commodity futures, dynamic convergence, dynamic equicorrelation |
| JEL: | C58 G11 L61 Q02 Q14 Q40 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:bor:wpaper:1525&r=ene |
| By: | Heyen, Daniel |
| Abstract: | Technological innovation is a key strategy for tackling environmental problems. The required R&D expenditures however are substantial and fall on self-interested countries. Thus, the prospects of successful innovation critically depend on innovation incentives. This paper focuses on a specific mechanism for strategic distortions in this R&D game. In this mechanism, the outlook of future conflicts surrounding technology deployment directly impacts on the willingness to undertake R&D. Apart from free-riding, a different deployment conflict with distortive effects on innovation may occur: Low deployment costs and heterogeneous preferences might give rise to 'free-driving'. In this recently considered possibility (Weitzman 2012), the country with the highest preference for technology deployment, the free-driver, may dominate the deployment outcome to the detriment of others. The present paper develops a simple two stage model for analyzing how technology deployment conflicts, free-riding and free-driving, shape R&D incentives of two asymmetric countries. The framework gives rise to rich findings, underpinning the narrative that future deployment conflicts pull forward to the R&D stage. While the outlook of free-riding unambiguously weakens innovation incentives, the findings for free-driving are more complex, including the possibility of super-optimal R&D and incentives for counter-R&D. |
| Date: | 2015–03–02 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0584&r=ene |
| By: | Heindl, Peter; Löschel, Andreas |
| Abstract: | This paper reviews the literature on distributional effects of energy and carbon taxation with focus on microsimulation models. Most studies find that direct energy and carbon taxation tends to be regressive. Regressive effects occur mostly with respect to taxation of electricity or space heating. Taxation of transportation fuels show less regressive, neutral, or even progressive effects. Adequate revenue recycling often allows for neutralisation or full elimination of regressive effects so that energy and carbon tax reforms can be progressive. Some studies find evidence for the existence of a double dividend. There seems to be an efficiency-equity trade-off in revenue recycling, i.e. whether to foster growth or to assist low-income households. While a large number of studies on advanced economies are available, there clearly is a gap with regard to evidence for developing countries. Another gap relates to the lack of documentation on the challenges of incorporating macroeconomic models and long-term modelling perspectives in microsimulation. Both aspects can be of great importance with respect to the design of green growth policies. Thoughtful incorporation of social considerations, including aspects of poverty in modelling approaches could enhance the existing instruments of exante policy assessments since poverty is a tangible concept which is well-known, understandable, and openly observable for citizens and policy makers. |
| Keywords: | Distributional Effects,Environmental Tax Reform,Green Growth,Energy Poverty,Microsimulation |
| JEL: | H23 H31 Q54 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cawmdp:81&r=ene |
| By: | Brännlund, Runar (CERE); Karimu, Amin (CERE) |
| Abstract: | A large body of literature explores convergence in environmental performance (EP) using a simple measure of the percentage change of per capita CO2 as dependent variable and the level of per capita CO2 and GDP as explanatory variables. As such it conforms to the standard convergence literature in the economic growth literature. This study differs from these studies by constructing a measure based on production theory, where production processes explicitly results in the production of two outputs; a good output (GDP) and a bad output (CO2). Based on this we derive an EP index that can be expressed as the ratio of the inverse of the change of the emission intensity. We use the derived EP index to test the beta-convergence hypothesis for a panel of 94 countries. The results reveal strong evidence in support of beta-convergence in environmental, or carbon, performance. Moreover we find evidence of heterogeneity between groups of countries in line with the concept of “club” convergence and also heterogeneity between countries within country groups, especially for the high-income group. Additionally, we find evidence of a negative relation between environmental performance and fossil fuel share both at the global level as well as within sub-samples, which tend to vary with capital intensity. As such the results conform to the results from studies of the dynamics of per capita emissions. These results are therefore very informative and can help in both regional and international negotiations regarding burden sharing of global CO2 emissions. The results also suggest a balanced policy mix between efficiency and conservation policies in order to promote good environmental performance. |
| Keywords: | Convergence; Environmental Performance; Fossil fuel; Kyoto Protocol; Spillovers |
| JEL: | Q20 Q28 Q38 |
| Date: | 2015–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2014_015&r=ene |
| By: | William Brock; Anastasios Xepapadeas |
| Abstract: | Human economies and ecosystems form a coupled system coevolving in time and space, since human economies use ecosystems services and at the same time affect ecosystems through their production and consumption activities. The study of the interactions between human economies and ecosystems is fundamental for the efficient use of natural resources and the protection of the environment. This necessitates the development and use of models capa- ble of tracing the main interactions, links and feedbacks. In developing this chapter, our objective was to focus on a segment of rapidly developing lit- erature on coupled ecological/economic models with an emphasis on climate change. The advantage of this approach is that it introduces the reader to a very important current research topic, but it also allows, by using climate as the reference ecosystem, the exploration of new modeling approaches which are relevant and useful for the modeling of other types of coupled ecologi- cal/economic systems. These include modeling of deep structural uncertainty by using robust control methods, exploring modeling through cumulative car- bon budgeting, studying spatial transport phenomena and spatial aspects in economic/ecological modelling. |
| Keywords: | Coupled ecological/economic models, climate change, deep uncertainty, robust control,cumulative carbon budgeting, energy balance climate models, spatial aspects in ecological/economic modeling. |
| JEL: | Q20 Q40 Q54 Q57 |
| Date: | 2015–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:aue:wpaper:1508&r=ene |
| By: | Christopher Hansman; Jonas Hjort; Gianmarco León |
| Abstract: | Regulations that constrain firms' externalities in one dimension can distort incentives and worsen externalities in other dimensions. In Peru's industrial fishing sector, the world's largest, fishing boats catch anchovy that plants along the coast convert into fishmeal. Matching administrative, daily data on plant production, ground-level air quality data, hospital admissions records, and survey data on individual health outcomes, we first show that fishmeal production negatively affects adult and child health through air pollution emitted by plants. We then analyze the industry's response to a 2009 reform that split the Total Allowable Catch (TAC) into boat-specific, transferable quotas (ITQs) to preserve fish stocks and reduce overcapacity. As predicted by a two-sector model with heterogeneous plants, on average across locations, fishmeal production was spread out in time, for two reasons: (i) boats' incentive to \race" for fish was removed, and (ii) production fell in inefficient plants (and locations) and increased, in the time dimension, in efficient plants (and locations). The reform greatly exacerbated the industry's impact on health, causing a loss of about 1.4 million disability-adjusted life years. We show that the reason is that longer periods of moderate air pollution are worse for health than shorter periods of higher intensity exposure. Our findings demonstrate the risks of piecemeal regulatory design, and that the common policy trade-off between duration and intensity of pollution exposure can be critical for industry's impact on health. |
| Keywords: | industrial regulations, firms, externalities, air pollution, health, fishing, Peru, ITQs |
| JEL: | D2 L5 L7 O1 I1 Q5 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:809&r=ene |