nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒04‒11
34 papers chosen by
Roger Fouquet
London School of Economics

  1. Reforming Electricity Subsidies in Pakistan : Measures to Protect the Poor By Thomas Walker; Sebnem Sahin; Mohammad Saqib; Kristy Mayer
  2. Fuel poverty as a major determinant of perceived health: the case of France By Chaton, Corinne; Lacroix, Elie
  3. Dynamic Properties of Energy Affordability Measures By Peter Heindl; Rudolf Schüssler
  4. Assessment and Action Plan to Improve Payment for Electricity Services in the Palestinian Territories By World Bank Group
  5. Public policy influence on renewable energy investments-A panel data study across OECD countries By Friedemann F. Polzin; Michael M. Migendt; Paschen P. von Flotow; Florian Taübe
  6. The Wind Power Volatility and the Impact on Failure Rates in the Nordic Electricity Market By Fogelberg, Sara; Lazarczyk, Ewa
  7. Bringing Variable Renewable Energy Up to Scale : Options for Grid Integration Using Natural Gas and Energy Storage By Silvia Martinez Romero; Wendy Hughes
  8. Energy transition under irreversibility: a two-sector approach By Prudence Dato
  9. Incorporating Energy from Renewable Resources into Power System Planning By Marcellino Madrigal; Rhonda Lenai Jordan
  10. Impacts of solar lanterns in geographically challenged locations : experimental evidence from Bangladesh By Kudo, Yuya; Shonchoy, Abu S.; Takahashi, Kazushi
  11. Estimating informal economy share in Russian regions By Vorobyev Pavel
  12. Private and Public Information on the Nordic Intra-Day Electricity Market By Lazarczyk, Ewa
  13. Do Politicians Change Public Attitudes? By Magnus Carlsson; Gordon B. Dahl; Dan-Olof Rooth
  14. Global sensitivity analysis of an energy-economy model of the residential building sector By Frédéric Branger; Louis-Gaëtan Giraudet; Céline Guivarch; Philippe Quirion
  15. The Market Stability Reserve: Is Europe Serious about the Energy Union? By William Acworth; Nils May; Karsten Neuhoff
  16. Endogenizing long-term contracts in gas market models By ABADA, Ibrahim; EHRENMANN, Andreas; SMEERS, Yves
  17. Uncertainty and crude oil returns By Riadh Aloui; Rangan Gupta; Stephen M. Miller
  18. Are benefits from oil-stocks diversification gone? New evidence from a dynamic copula and high frequency data By Avdulaj, Krenar; Barunik, Jozef
  19. Specification, estimation and evaluation of vector smooth transition autoregressive models with applications By Terasvirta, Timo; Yang, Yukai
  20. Oil Price Forecastability and Economic Uncertainty By Stelios Bekiros; Rangan Gupta; Alessia Paccagnini
  21. Co-movements of Ethanol Related Prices: Evidence from Brazil and the USA By Ladislav Kristoufek; Karel Janda; David Zilberman
  22. Estimating the size of external effects of energy subsidies in transport and agriculture By Commander,Simon John; Nikoloski,Zlatko Slobodan; Vagliasindi,Maria
  23. Thirsty Energy : Understanding the Linkages between Energy and Water By Anna Delgado; Diego J. Rodriguez; Antonia A. Sohns
  24. Spillovers between Food and Energy Prices and Structural Breaks By Alanoud Al-Maadid; Guglielma Maria Caporale; Fabio Spagnolo; Nicola Spagnolo
  25. Trade Liberalisation, Transboundary Pollution and Market Size By Rikard FORSLID; OKUBO Toshihiro; Mark SANCTUARY
  26. Drivers of Industrial and Non-Industrial Greenhouse Gas Emissions By Luis F. Sanchez; David I. Stern
  27. Targeted carbon tariffs - Carbon leakage and welfare effects By Christoph Böhringer; Brita Brita Bye; Taran Fæhn; Knut Einar Rosendahl
  28. Targeted carbon tariffs. Carbon leakage and welfare effects By Böhringer, Christoph; Bye, Brita; Fæhn, Taran; Rosendahl, Knut Einar
  29. An analysis of the sensitivity of a dynamic climate-economy CGE model (GDynE) to empirically estimated energy-related elasticity parameters By Alessandro Antimiani; Valeria Costantini; Elena Paglialunga
  30. Trade and the Environmental Kuznets Curve: A Panel Data Approach By Olga Podkorytova; Yulia Raskina
  31. CO2-emissions from Norwegian oil and gas extraction By Gavenas, Ekaterina; Rosendahl, Knut Einar; Skjerpen, Terje
  32. Resource Market Power and Levels of Knowledge in General Equilibrium By Marz, Waldemar; Pfeiffer, Johannes
  33. Environmental policy and invention crowding out. Unlocking the automotive industry from fossil fuel path dependence By Nicolò Barbieri
  34. Carbon Emissions Trading in China: The Evolution from Pilots to a Nationwide Scheme By ZhongXiang Zhang

  1. By: Thomas Walker; Sebnem Sahin; Mohammad Saqib; Kristy Mayer
    Keywords: Energy - Energy Production and Transportation Energy - Electric Power Economic Theory and Research Finance and Financial Sector Development - Debt Markets Private Sector Development - E-Business Macroeconomics and Economic Growth Energy - Energy and Poverty Alleviation Poverty Reduction - Poverty Reduction Strategies Social Protections and Labor - Safety Nets and Transfers
    Date: 2014–06
  2. By: Chaton, Corinne; Lacroix, Elie
    Abstract: The numbers of households in fuel poverty is increasing. Indeed, more and more people are struggling to heat their homes and therefore more and more people are exposed to low temperatures which can affect their health. In this paper, we use the French database of the Healthcare and Insurance survey to study the link between a subjective measure of fuel poverty (coldness) and self-reported health. We also analyze the impact of other individual and environmental special features on self-reported health. The estimation of a dichotomous Probit model allows us to infer a negative impact of fuel poverty on self-reported health. Thus, a person in fuel poverty is 2.36 percentage points more likely to report poor or fair health status than a person who is not in fuel poverty. Accordingly, it may be appropriate to implement support for the most vulnerable categories of the health impacts of fuel poverty and cold homes, eg for chronic patients who have difficulty heating their homes.
    Keywords: Fuel poverty; health status;
    JEL: I1 I32 Q4
    Date: 2015–03
  3. By: Peter Heindl; Rudolf Schüssler
    Abstract: Measures of affordability are applied in practice, e.g., to assess the affordability of energy services, water or housing. They can be interpreted as measures of deprivation in a specific domain of consumption. The large body of literature on affordability measure has little overlap with the existing literature on poverty measurement. A comprehensive assessment of the response of affordability measures as a result of changes in the distribution of income or expenditure is missing. This paper aims to fill this gap by providing a conceptual discussion on the ‘dynamics’ of energy affordability measures. Several types of measures are examined in a microsimulation framework to assess their dynamic properties. Our results indicate that some measures exhibit odd dynamic behavior. This includes measures used in practice, such as the low income/high cost measure and the double median of expenditure share indicator. Odd dynamic behavior is attributed to definitions made with respect to higher moments of the expenditure distribution. Definitions that rely on a percentage share of expenditure relative to income or an absolute or relative income poverty line fare well from a dynamic perspective.
    Keywords: affordability measure; energy poverty; fuel poverty
    JEL: I32 D63 Q48
    Date: 2015
  4. By: World Bank Group
    Keywords: Finance and Financial Sector Development - Access to Finance Energy - Energy Production and Transportation Private Sector Development - E-Business Energy - Electric Power Banks and Banking Reform
    Date: 2014–11
  5. By: Friedemann F. Polzin; Michael M. Migendt; Paschen P. von Flotow; Florian Taübe
    Abstract: This paper examines the impact of public policy measures on renewable energy (RE) investments in electricity-generating capacity made by institutional investors. Using a novel combination of datasets and a longitudinal research design, we investigate the influence of different policy measures in a sample of OECD countries to suggest an effective policy mix which could tackle failures in the market for clean energy. The results call for technology-specific policies which take into account actual market conditions and technology maturity. To improve the conditions for institutional investments, advisable policy instruments include economic and fiscal incentives such as feed-in tariffs (FIT), especially for less mature technologies. Additionally, market-based instruments such as greenhouse gas (GHG) emission trading systems for mature technologies should be included. These policy measures directly impact the risk and return structure of RE projects. Supplementing these with regulatory measures such as codes and standards (e.g. RPS) and long-term strategic planning could further strengthen the context for RE investments.
    Keywords: Institutional investors; Longitudinal analysis; Public policy mix; Renewable energy
    Date: 2015–05
  6. By: Fogelberg, Sara (Research Institute of Industrial Economics (IFN)); Lazarczyk, Ewa (Research Institute of Industrial Economics (IFN))
    Abstract: Wind power generation of electricity has gained popular support because of its low environmental impact and because of its low costs relative to other renewable energy sources. However, concerns have been raised in the power sector that wind power generation will come with the price of increased damage to other power generators. Wind power generation is naturally volatile which requires other power sources to start up and shut down in accordance with weather conditions, which for instance coal or gas generators are not built to do. The previous literature has used simulations to show that the damage done and the associated costs can be substantial. We use a dataset containing all reported failures in the Scandinavian electricity market Nord Pool and data for Danish wind power generation. The analysis shows at for Denmark the short term costs associated with the volatility of wind power generation are non-significant. Effects are slightly more pronounced for Nord Pool, indicating that the other countries in Nord Pool bear some of the costs for Denmark’s high share of wind power use.
    Keywords: Intermittent electricity production; Cycling costs; Nord Pool; UMMs; Failures
    JEL: L94 Q40
    Date: 2015–03–27
  7. By: Silvia Martinez Romero; Wendy Hughes
    Keywords: Energy - Energy Resources Development Energy Technology and Transmission Energy Policies and Economics Energy - Energy and Natural Resources Energy - Energy Markets Energy - Energy Production and Transportation
    Date: 2015–02
  8. By: Prudence Dato (IREGE, University Savoie Mont Blanc.)
    Abstract: In this paper, we analyze the optimal energy transition of a two-sector economy (energy and final goods) with exhaustible oil reserves, a renewable source of energy and a pollution threat. The latter corresponds to a pollution threshold above which a part of the capital is lost (following flooding for instance). Part of the energy is used as energy services by a representative consumer through a CRRA utility function and the other part is used as input in a Leontief production function to produce final goods. Moreover, we assume that both energy sources are complementary. We use the optimality conditions as in Boucekkine et al. (2013) to show that the optimal energy transition path may correspond to a corner regime in which the economy starts using both resources, then crosses the pollution threshold and therefore loses a part of its capital. At the end, the economy never adopts only renewable energy. This result is in line with the asymptotic energy transition arguments stating that the transition to "clean" energy may happen only in the long run. We extend the present model to allow for additional investment in energy saving technologies. Our main results show that this additional investment favours the energy transition in the sense that it increases the time within which the economy may experience the catastrophe and the welfare of the society. For policy implications, economic instruments such as taxes on "dirty" energy, subsidies on "clean" energy or incentives for energy saving technologies need to be implemented in order to promote the energy transition. But those economic instruments should be carefully designed in line with the asymptotic energy transition result.
    Keywords: Energy, pollution, irreversibility, switch
    JEL: Q30 Q53 C61
    Date: 2015–02
  9. By: Marcellino Madrigal; Rhonda Lenai Jordan
    Keywords: Environment - Climate Change Mitigation and Green House Gases Macroeconomics and Economic Growth - Climate Change Economics Infrastructure Economics and Finance - Infrastructure Economics Geographical Information Systems Energy - Energy Production and Transportation
    Date: 2014–12
  10. By: Kudo, Yuya; Shonchoy, Abu S.; Takahashi, Kazushi
    Abstract: Despite continuous efforts to improve the coverage, the access to electricity remains insufficient in many developing countries, particularly in geographically challenged locations, due mostly to the high cost of grid extension. To rigorously investigate the effectiveness of solar products as an alternative in remote areas, we conducted a randomized controlled trial in river islands of northern Bangladesh where no grid-based electricity is available. We found that solar lanterns significantly increased home study hours among schooled children, especially in the night and before exams. School attendance rate also initially increases due to the provision of solar lamps, although such effects fade away over time. The increased study time and initial school attendance rate, however, did not improve children's exam results. We also found marginal improvements on health-related indicators, such as eye redness and irritation, but negligible impacts on respiratory indicators. Households that received solar lanterns substituted the traditional lighting sources with modern technology, leading to a significant decrease in annual biomass fuel consumptions, particularly kerosene. Finally, treated households showed a greater self-reported willingness to purchase solar products compared with the control group.
    Keywords: Bangladesh, Solar energy, Electric power, Household, Children, Education, Poverty
    JEL: O13 O18 Q41
    Date: 2015–03
  11. By: Vorobyev Pavel
    Abstract: TInformal economy in Russian regions is measured using two approaches: 1) cross-section regression model for electricity consumption in Russian regions; 2) augmented electricity dynamics approach. 1) Regression model is applied for electricity consumption in production of goods and services (total electricity consumption less losses, less households’ consumption). Model was estimated on the basis of regional data in 2011. It allowed estimating informal economy share in 67 Russian regions in 2011. The average informal economy share is estimated at 40% with standard deviation 18 percentage points. These results show high positive correlation with usual proxies for informal economy such as corruption, unemployment, and especially dependency of regional budget from Federal transfers. 2) Augmented electricity dynamics approach is developed to estimate dynamics of informal economy share in regions over 2004-2011. Comparing to traditional method in the literature, it takes into account changes in regional industrial structure and electricity intensity of GRP. It leads to more accurate estimates. It has been shown that the share of informal economy in Russia diminished from 55% in 2004 to 40% in 2011 due to the growth of formal sector. Only 16 from 65 regions witnessed an increase in informal economy share over the period.
    JEL: R11
    Date: 2015–03–27
  12. By: Lazarczyk, Ewa (Research Institute of Industrial Economics (IFN))
    Abstract: This paper is an empirical investigation of how traders react to public news in a market where there are lots of non-scheduled announcements, often arriving simultaneously. Using detailed trade information from the Nordic intra-day electricity market and GARCH models, this paper examines market participants’ reaction to news about sudden production and transmission failures on the electricity grid. I divide the time of news announcement into three phases: the preannouncement period – the interval up to one hour before the hour of the public announcement of a message, the contemporaneous period – the same hour as the announcement of a message, and the post-announcement period – one hour after the hour of the announcement of a message. I find effect of news on prices in the preannouncement period, indicating that private information exists and is being used for trading on the intra-day market.
    Keywords: Private information; Public information; Non-scheduled announcements; Intra-day electricity market; Nord Pool; UMMs
    JEL: G14 L94
    Date: 2015–03–27
  13. By: Magnus Carlsson; Gordon B. Dahl; Dan-Olof Rooth
    Abstract: A large theoretical and empirical literature explores whether politicians and political parties change their policy positions in response to voters' preferences. This paper asks the opposite question: do political parties affect public attitudes on important policy issues? Problems of reverse causality and omitted variable bias make this a difficult question to answer empirically. We study attitudes towards nuclear energy and immigration in Sweden using panel data from 290 municipal election areas. To identify causal effects, we take advantage of large nonlinearities in the function which assigns council seats, comparing otherwise similar elections where one party either barely wins or loses an additional seat. We estimate that a one seat increase for the anti-nuclear party reduces support for nuclear energy in that municipality by 18%. In contrast, when an anti-immigration politician gets elected, negative attitudes towards immigration decrease by 7%, which is opposite the party's policy position. Consistent with the estimated changes in attitudes, the anti-nuclear party receives more votes in the next election after gaining a seat, while the anti-immigrant party experiences no such incumbency advantage. The rise of the anti-immigration party is recent enough to permit an exploration of possible mechanisms using several ancillary data sources. We find causal evidence that gaining an extra seat draws in lower quality politicians, reduces negotiated refugee quotas, and increases negative newspaper coverage of the anti-immigrant party at the local level. Our finding that politicians can shape public attitudes has important implications for the theory and estimation of how voter preferences enter into electoral and political economy models.
    JEL: D72 D8 L82
    Date: 2015–04
  14. By: Frédéric Branger (AgroParisTech ENGREF et CIRED); Louis-Gaëtan Giraudet (CIRED); Céline Guivarch (CIRED); Philippe Quirion (CNRS et CIRED)
    Abstract: In this paper, we discuss the results of a sensitivity analysis of Res-IRF, an energy-economy model of the demand for space heating in French dwellings. Res-IRF has been developed for the purpose of increasing behavioral detail in the modeling of energy demand. The different drivers of energy demand, namely the extensive margin of energy efficiency investment, the intensive one and building occupants’ behavior are disaggregated and determined endogenously. The model also represents the established barriers to the diffusion of energy efficiency: heterogeneity of consumer preferences, landlord-tenant split incentives and slow diffusion of information. The relevance of these modeling assumptions is assessed through the Morris method of sensitivity analysis, which allows for the exploration of uncertainty over the whole input space. We find that the Res-IRF model is most sensitive to energy prices. It is also found to be quite sensitive to the factors parameterizing the di fferent drivers of energy demand. In contrast, inputs mimicking barriers to energy efficiency have been found to have little influence. These conclusions build confidence in the accuracy of the model and highlight occupants’ behavior as a priority area for future empirical research.
    Keywords: Sensitivity analysis, Monte Carlo, Morris method, Energy efficiency, Building sector
    JEL: C63 Q47
    Date: 2015–06
  15. By: William Acworth; Nils May; Karsten Neuhoff
    Abstract: The European Union Emission Trading Scheme (EU ETS) has been implemented to provide a common climate policy instrument across European Union countries, to contribute to a credible investment perspective for low-carbon investors and support further European integration of energy markets. Thus the EU ETS is a key element of the European Energy Union.However, given the accumulation of a large surplus in the EU ETS, there is now a consensus between the EuropeanCommission, the European Council and the European Union Parliament (ENVI vote) that a Market Stability Reserve (MSR) needs to be implemented. The Latvian Presidency announced on March 26th a mandate to start trilogue negotiations onthe implementation of an MSR. Yet there remains discrepancy on the design parameters which will determine how quickly the MSR can respond to the surplus and restore consistency, price credibility, and robustness for investors of EU ETS.If Europe misses the opportunity to secure a timely restoration of EU ETS, then individual member states are likely to implement national measures to deliver energy and climate objectives. For example Germany has started to debate a Carbon Price add on for very carbon intensive power production to secure modernization and efficient power production should the EU ETS price not recover by the end of the decade. In this Roundup, we explore five design elements of the MSR that will determine the speed at which the most prominent European energy and climate policy instrument, the EU ETS, can deliver consistency, price credibility, and robustness for investors. The discussion of these design elements in the trilogue process that begins today will show how serious EU member states are not only about Climate Policy but equally about the Energy Union as a common policy framework to enhance investment and energy security across Europe.
    Date: 2015
  16. By: ABADA, Ibrahim (GDF Suez); EHRENMANN, Andreas (GDF Suez); SMEERS, Yves (Universitécatholique de Louvain, CORE, Belgium)
    Abstract: Up to now, the European natural gas trade was dominated by bilateral long-term upstream agreements between producers and midstreamers that fixed a minimum volume to be exchanged (Take Or Pay) and a price formula that was usually indexed on oil products prices. These arrangements were believed to allow: i) market risk sharing between the producer (who takes the price risk) and the midstreamer (who takes the volume risk) as well as ii) risk hedging since oil is considered as a trusted commodity by investors. The fall of the European demand combined with the increase of the oil price favored the emergence of a gas volume bubble that caused net losses for most of the European midstreamers who were bound by long-term agreements. As a result, some energy economists brought forward the idea of indexing contracts on gas spot prices. In this paper, we present an equilibrium model that endogenously captures the contracting behavior of both the producer and the midstreamer who strive to hedge their profit-related risk. The players choose between gas forward and oil-indexed contracts. Using the model we show that i) contracting can reduce the trade risk of both the producer and midstreamer, ii) oil-indexed contracts should be signed only when oil and gas spot prices are well correlated, otherwise, these contracts hold less interest for risk mitigation, iii) contracts are more needed when the upstream cost structure is CAPEX driven and iv) a too risk-averse behavior of the midstreamer might deprive upstream investments and the downstream consumer surplus.
    Date: 2014–11–05
  17. By: Riadh Aloui (University of Sousse); Rangan Gupta (University of Pretoria); Stephen M. Miller (University of Nevada, Las Vegas and University of Connecticut)
    Abstract: We use a copula approach to investigate the effect of uncertainty on crude- oil returns. Using copulas to construct multivariate distributions of time- series data permit the calculation of the dependence structure between the series independently of the marginal distributions. Further, we implement the copula estimation using a rolling window method to allow for a time- varying effect of equity and economic policy uncertainty on oil returns. The results show that higher uncertainty, as measured by equity and economic policy uncertainty indices, significantly increase crude-oil returns only during certain periods of time. That is, we find a positive dependence prior to and into the financial crisis and Great Recession, Interestingly, estimation of the copula over the entire sample period leads to a negative dependence between the equity and economic policy indices and the crude-oil return.
    Keywords: Uncertainty, oil shocks, copulas
    Date: 2015–04
  18. By: Avdulaj, Krenar; Barunik, Jozef
    Abstract: Oil is perceived as a good diversification tool for stock markets. To fully understand this potential, we propose a new empirical methodology that combines generalized autoregressive score copula functions with high frequency data and allows us to capture and forecast the conditional time-varying joint distribution of the oil-stocks pair accurately. Our realized GARCH with time-varying copula yields statistically better forecasts of the dependence and quantiles of the distribution relative to competing models. Employing a recently proposed conditional diversification benefits measure that considers higher-order moments and nonlinear dependence from tail events, we document decreasing benefits from diversification over the past ten years. The diversification benefits implied by our empirical model are, moreover, strongly varied over time. These findings have important implications for asset allocation, as the benefits of including oil in stock portfolios may not be as large as perceived.
    Keywords: portfolio diversification,dynamic correlations,high frequency data time-varying copulas,commodities
    JEL: C14 C32 C51 F37 G11
    Date: 2015
  19. By: Terasvirta, Timo (Aarhus University); Yang, Yukai (Université catholique de Louvain, CORE, Belgium)
    Abstract: We consider a nonlinear vector model called the logistic vector smooth transition autoregressive model. The bivariate single-transition vector smooth transition regression model of Camacho (2004) is generalised to a multivariate and multitransition one. A modelling strategy consisting of specification, including testing linearity, estimation and evaluation of these models is constructed. Nonlinear least squares estimation of the parameters of the model is discussed. Evaluation by misspecification tests is carried out using tests derived in a companion paper. The use of the modelling strategy is illustrated by two applications. In the first one, the dynamic relationship between the US gasoline price and consumption is studied and possible asymmetries in it considered. The second application consists of modelling two well known Icelandic riverflow series, previously considered by many hydrologists and time series analysts.
    Keywords: Vector STAR models, modelling nonlinearity, vector autoregression, generalized impulse response, asymmetry, oil price, river flow
    JEL: C32 C51 C52
    Date: 2014–11–30
  20. By: Stelios Bekiros; Rangan Gupta; Alessia Paccagnini
    Abstract: Information on economic policy uncertainty (EPU) does matter in predicting oil returns especially when accounting for omitted nonlinearities in the relationship between these two variables via a time-varying coe¢ cient approach. In this work, we compare the forecastability of standard, Bayesian and TVP-VAR models against the random-walk and benchmark AR models. Our results indicate that over the period 1900:1-2014:2 the time-varying VAR model with stochastic volatility outranks all alternative models.
    Keywords: Oil prices, Economic policy uncertainty, Forecasting
    JEL: C22 C32 C53 E60 Q41
    Date: 2015–04
  21. By: Ladislav Kristoufek; Karel Janda; David Zilberman
    Abstract: We use the wavelet coherence methodology to investigate relations between prices of ethanol and its feedstocks. Our continuous wavelet framework allows for discovering price connections and their evolution in both time and frequency domain in the most important ethanol markets – Brazil and the USA. For both of these markets we show that the long-run relationship between prices of ethanol and corn (in USA) or sugar (in Brazil) is positive, strong and stable in time. Importantly, we show that the prices of feedstock lead the prices of ethanol and not the other way around. The price lead of feedstock is documented for both short and long run horizons. Our qualitative results hold true even when the influence of crude oil prices is accounted for by utilizing partial wavelet coherence approach.
    Keywords: ethanol, corn, sugar, oil, wavelet coherence
    JEL: C22 Q16 Q42
    Date: 2015–04
  22. By: Commander,Simon John; Nikoloski,Zlatko Slobodan; Vagliasindi,Maria
    Abstract: It is widely accepted that the costs of underpricing energy are large, whether in advanced or developing countries. This paper explores how large these costs can be by focussing on the size of the external effects that energy subsidies in particular generate in two important sectors?transport and agriculture?in two countries in the Middle East and North Africa, the Arab Republic of Egypt (transport) and the Republic of Yemen (agriculture). The focus is mainly on the costs associated with congestion and pollution, as well as the impact of underpriced energy for depletion of scarce water resources, including through crop selection. Quantifying the size of external effects in developing countries has received relatively little analytical attention, although there is a significant body of literature for developed countries. By building on earlier research, as well as employing the United Nations ForFITS model, the paper provides indicative estimates of the external costs of energy subsidies, as manifested in congestion and pollution. The estimates using simulations indicate that these costs could be materially reduced by elimination or reduction of energy subsidies. The paper also describes the impact of energy subsidies on water consumption in a region where water resources are particularly limited. The findings provide further evidence of the adverse and significant consequences of subsidizing energy.
    Keywords: Transport and Environment,Energy Production and Transportation,Transport Economics Policy&Planning,Climate Change Economics,Climate Change Mitigation and Green House Gases
    Date: 2015–04–01
  23. By: Anna Delgado; Diego J. Rodriguez; Antonia A. Sohns
    Keywords: Environment - Climate Change Mitigation and Green House Gases Energy - Energy and Environment Science and Technology Development - Engineering Energy - Energy Production and Transportation Environment - Environment and Energy Efficiency
    Date: 2015–01
  24. By: Alanoud Al-Maadid; Guglielma Maria Caporale; Fabio Spagnolo; Nicola Spagnolo
    Abstract: This paper estimates a bivariate VAR-GARCH(1,1) model to examine linkages between food and energy prices. The adopted framework is suitable to analyse both mean and volatility spillovers, and also allows for possible parameter shifts resulting from four recent events, namely: 1) the 2006 food crisis, 2) the Brent oil bubble, 3) the introduction of the Renewable Fuel Standard (RFS) policy, and 4) the 2008 global financial crisis. The empirical findings suggest that there are significant linkages between food and both oil and ethanol prices. Further, the four events considered had mixed effects, the 2006 food crisis and 2008 financial crisis leading to the most significant shifts in the (volatility) spillovers between the price series considered.
    Keywords: Energy and food prices, VAR-GARCH BEKK model, Mean and volatility spillovers
    JEL: C32 F36 G15
    Date: 2015
  25. By: Rikard FORSLID; OKUBO Toshihiro; Mark SANCTUARY
    Abstract: This paper uses a monopolistic competitive framework with many sectors to study the impact of trade liberalization on local and global emissions. We focus on the interplay of the pollution haven effect and the home market effect and show how a large-market advantage can counterbalance a high emission tax, implying that trade liberalization leads to lower global emissions. Generally, our results suggest that relative market size, the level of trade costs, the ease of abatement, and the degree of product differentiation are relevant variables for empirical studies on trade and pollution.
    Date: 2015–04
  26. By: Luis F. Sanchez (Crawford School of Public Policy, The Australian National University); David I. Stern (Crawford School of Public Policy, The Australian National University)
    Abstract: There has been extensive analysis of the drivers of carbon dioxide emissions from fossil fuel combustion and cement production, which constituted only 55% of global greenhouse gas (GHG) emissions in 1970 and 65% in 2010. But there has been much less analysis of the drivers of greenhouse gases in general and especially of emissions of greenhouse gases from agriculture, forestry, and other land uses, which we call non-industrial emissions in this paper, that constituted 24% of total emissions in 2010. We statistically analyse the relationship between both industrial and non-industrial greenhouse gas emissions and economic growth and other potential drivers for 129 countries over the period from 1971 to 2010. Our analysis combines the three main approaches in the literature to investigating the evolution of emissions and income. We find that economic growth is a driver of both industrial and non-industrial emissions, though growth has twice the effect on industrial emissions. Both sources of emissions decline over time though this effect is larger for non-industrial emissions. There is also convergence in emissions intensity for both types of emissions but given these other effects there is no evidence for an environmental Kuznets curve.
    Keywords: energy technological innovation; product homogeneity; knowledge spillovers; love-for-variety effect
    JEL: Q54 Q56
    Date: 2015–03
  27. By: Christoph Böhringer (University of Oldenburg, Department of Economics); Brita Brita Bye (Statistics Norway, Research Department); Taran Fæhn (Statistics Norway, Research Department); Knut Einar Rosendahl (Norwegian University of Life Sciences, School of Economics and Business)
    Abstract: Climate effects of unilateral carbon policies are undermined by carbon leakage. To counteract leakage and increase global cost-effectiveness carbon tariffs can be imposed on the emissions embodied in imports from non-regulating regions. We present a theoretical analysis on the economic incentives for emission abatement of producers subjected to carbon tariffs. We quantify the impacts of different carbon tariff designs by an empirically based multi-sector, multi-region CGE model of the global economy. We find that firm-targeted tariffs can deliver much stronger leakage reduction and higher efficiency gains than tariff designs operated at the industry level. In particular, because the exporters are able to reduce their carbon tariffs by adjusting emissions, their competitiveness and the overall welfare of their economies will be less randomly and less adversely affected than in previously studied carbon tariff regimes. This beneficial distributional impact could facilitate a higher degree of legitimacy and legality of carbon tariffs
    Keywords: carbon leakage, border carbon adjustment, carbon tariffs, computable general equilibrium (CGE)
    JEL: Q43 Q54 H2 D61
    Date: 2015–03
  28. By: Böhringer, Christoph (Department of Economics, University of Oldenburg, Germany); Bye, Brita (Statistics Norway, Research Department); Fæhn, Taran (Statistics Norway, Research Department); Rosendahl, Knut Einar (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: Climate effects of unilateral carbon policies are undermined by carbon leakage. To counteract leakage and increase global cost-effectiveness carbon tariffs can be imposed on the emissions embodied in imports from non-regulating regions. We present a theoretical analysis on the economic incentives for emission abatement of producers subjected to carbon tariffs. We quantify the impacts of different carbon tariff designs by an empirically based multi-sector, multi-region CGE model of the global economy. We find that firm-targeted tariffs can deliver much stronger leakage reduction and higher efficiency gains than tariff designs operated at the industry level. In particular, because the exporters are able to reduce their carbon tariffs by adjusting emissions, their competitiveness and the overall welfare of their economies will be less randomly and less adversely affected than in previously studied carbon tariff regimes. This beneficial distributional impact could facilitate a higher degree of legitimacy and legality of carbon tariffs.
    Keywords: carbon leakage; border carbon adjustment; carbon tariffs; computable general equilibrium (CGE)
    JEL: D61 H20 Q43 Q54
    Date: 2015–03–30
  29. By: Alessandro Antimiani (National Institute of Agricultural Economics (INEA), Italy); Valeria Costantini (Department of Economics, Roma Tre University, Italy); Elena Paglialunga (Department of Economics, Roma Tre University, Italy)
    Abstract: A dynamic energy-economic CGE model is used to analyse how sensitive simulation results are to alternative values assumed by several types of elasticity of substitution. Substitutability in the energy mix is analysed by taking into account the nest structure of the CGE model in the energy module. Input substitutability in the production function is tested for the relationship between capital and energy in different manufacturing sectors. The simulation exercise reveals that the model produces highly differentiated results when different sets of elasticity parameters are adopted. A reduction in the flexibility of energy substitution possibilities makes abatement efforts more expensive at the general level. Moreover, this restriction generates changes in the distribution of costs associated with abatement efforts across regions. The direct implication derived from this work is that in order to use CGE forecasting models to predict the costs and feasibility of climate policies, they must be integrated with empirically estimated behavioural parameters at the highest possible disaggregation level.
    Keywords: sensitivity analysis; CGE model; elasticity of substitution; climate policy
    JEL: C68 D58 L60 Q47 Q54
    Date: 2015–03
  30. By: Olga Podkorytova; Yulia Raskina
    Abstract: Environmental Kuznets curve (EKC) describes the relationship between the economic growth and the environmental degradation. Some researchers assume that this nexus may be influenced by international trade. In this paper we estimated EKC for carbon dioxide emissions using panel data for 15 countries of the former Soviet Union spanning the period 1990-2011. We revealed positive dependence of the carbon dioxide emissions on export. We also found that foreign direct investment does not affect air pollution.
    Keywords: environmental Kuznets curve, former USSR, carbon emissions, panel data, trade turnover
    Date: 2014–12–31
  31. By: Gavenas, Ekaterina (School of Economics and Business, Norwegian University of Life Sciences); Rosendahl, Knut Einar (School of Economics and Business, Norwegian University of Life Sciences); Skjerpen, Terje (Research Department, Statistics Norway, Oslo, Norway)
    Abstract: Emissions from oil and gas extraction matter for the lifecycle emissions of fossil fuels, and account for significant shares of domestic emissions in many fossil fuel exporting countries. In this study we investigate empirically the driving forces behind CO2-emission intensities of Norwegian oil and gas extraction, using detailed field-specific data that cover all Norwegian oil and gas activity. We find that emissions per unit extraction increase significantly as a field’s extraction declines. Moreover, emission intensities increase significantly with a field’s share of oil in total oil and gas reserves. We also find some indication that oil and CO2-prices may have influenced emission intensities on the Norwegian continental shelf.
    Keywords: CO2-emissions; Oil and gas extraction; Panel data estimation
    JEL: C23 L71 Q54
    Date: 2015–03–30
  32. By: Marz, Waldemar; Pfeiffer, Johannes
    Abstract: We analyze monopoly power in a market for a complementary fossil resource like oil in a two country/two period model with international trade in general equilibrium. Focusing on the complex interplay of capital and resource market, we elaborate how these effects feed back into the resource monopolist's extraction decision. His level of knowledge about the economic structure thereby plays a key role. The accumulation of own capital assets over time, together with a recognized influence of extraction on the interest rate, can lead the monopolist to accelerate or postpone extraction. Considering the interaction of resource market and global capital accumulation poses an incentive for the monopolist to accelerate extraction and to exploit the importers' increased resource addiction in the future. The conservationist bias of resource market power can be increased, dampened or reversed through the general equilibrium effects.
    Keywords: Monopoly, fossil energy resources, Hotelling rule, general equilibrium, capital market, sovereign wealth
    JEL: D42 D58 D9 Q3
    Date: 2015–03–23
  33. By: Nicolò Barbieri (Deptartment of Economics. University of Bologna, Italy.)
    Abstract: This paper aims to shed light on the drivers that encourage a shift from incumbent internal combustion engine technologies towards low-emission vehicle technologies. We emphasise the role of fuel prices, one of the main drivers of environmental innovation, and other features of the technology space (such as technological proximity), in impacting technological dynamics and fossil fuel technological lock-ins. Specifically, we investigate whether green technological efforts come at the expense of other environmental or non-environmental inventive activities. In doing so, we employ Self-Organised Maps (SOMs) to detect the main technological domains exploited by the automotive industry during the period 1982-2008, using triadic patent families as a proxy for technological efforts pursued in each technological field. On the one hand, we test whether these drivers foster the substitution of non-green patents with green ones. On the other, we analyse if they favour substitution between technological efforts related to alternative vehicles, de facto influencing low-emitting vehicle competition. Our findings suggest that higher tax-inclusive fuel prices (used as a proxy for carbon tax) are effective in redirecting patenting activities from non-green to green technological fields. In addition, we observe a similar impact when we focus on green technological fields. Although this result may involve the risk of potential lock-in into sub-optimal substituting technologies, there are insights that the competition within the environmental technological domain mainly regards technological efforts spent on greening conventional cars and developing low-emission vehicles.
    Keywords: Environmental technologies, Self-Organising Maps, Crowding out, Fuel prices, Patent data
    JEL: O32 Q55 L62
    Date: 2015–03
  34. By: ZhongXiang Zhang (School of Economics, Fudan University)
    Abstract: The Chinese central government has approved the seven pilot carbon trading schemes. These seven pilot regions are deliberately selected to be at varying stages of development and are given considerable leeway to design their own schemes. These pilot trading schemes have features in common, but vary considerably in their approach to issues such as the coverage of sectors, allocation of allowances, price uncertainty and market stabilization, potential market power of dominated players, use of offsets, and enforcement and compliance. This article explains why China opts for emissions trading, rather than carbon or environmental taxes at least initially, discusses the key common and varying features of these carbon trading pilots and their first-year performance, draws the lessons learned, discusses the potential pathways for evolution of regional pilot carbon trading schemes into a nationwide carbon trading scheme, and raises fundamental issues that must be addressed in order to make such an emissions trading scheme to work reliably and effectively and with an increasingly expanded coverage and scope Keywords: Pilot carbon trading schemes; environmental taxes; compliance; carbon offsets; energy prices; China
    JEL: H23 O13 P28 Q43 Q48 Q52 Q54 Q58
    Date: 2015–04

This nep-ene issue is ©2015 by Roger Fouquet. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.