nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒06‒20
fifty-four papers chosen by
Roger Fouquet
London School of Economics

  1. The impact of lower oil prices on energy expenditure and economic activity By Ivan Faiella; Alessandro Mistretta
  2. CO2-emissions form Norwegian oil and gas extraction By Ekaterina Gavenas; Knut Einar Rosendahl; Terje Skjerpen
  3. Should we extract the European shale gas? The effect of climate and financial constraints By Fanny Henriet; Katheline Schubert
  4. Peak Power Problems: How Ontario’s Industrial Electricity Pricing System Impacts Consumers By Anindya Sen
  5. The Relationships between Carbon Dioxide (CO2) Emissions, Energy Consumption and GDP for Saudi Arabia By Jinhoa Lee
  6. A Primer on Comprehensive Policy Options for States to Comply with the Clean Power Plan By Palmer, Karen; Paul, Anthony
  8. Coal and Gas - From Cradle to Grave with Carbon Capture and Storage By Steinkraus, Arne
  9. Rising energy prices and advances in renewable energy technologies By Emam, Sherief; Grebel, Thomas
  10. Can Benchmarking and Disclosure Laws Provide Incentives for Energy Efficiency Improvements in Buildings? By Palmer, Karen; Walls, Margaret
  11. Examining the energy-related CO2 emissions using Decomposition Approach in EU-15 before and after the Kyoto Protocol By Victor Moutinho; José Manuel Xavier; Pedro Miguel Silva
  12. An Economy-Wide Evaluation of New Power Generation in South Africa: The Case of Kusile and Medupi By Jessica A. Bohlmann; Heinrich R. Bohlmann; Roula Inglesi-Lotz
  13. Growth-Globalisation-Emissions Nexus: The Role of Population in Australia By Muhammad Shahbaz; Mita Bhattacharya; Khalid Ahmed
  14. Energy Benchmarking and Disclosure: Summary of a Workshop on City Experiences, Market Impacts, and Program Evaluation By O'Keeffe, Lucy; Palmer, Karen; Walls, Margaret; Hayes, Kristin
  15. Does Information Provision Shrink the Energy Efficiency Gap? A Cross-City Comparison of Commercial Building Benchmarking and Disclosure Laws By Palmer, Karen; Walls, Margaret
  16. Dynamics of Natural Gas Consumption, Output and Trade: Empirical Evidence from the Emerging Economies By Md. Samsul Alam; Sudharshan Reddy Paramati; Muhammad Shahbaz; Mita Bhattacharya
  17. Competitiveness Impacts of the German Electricity Tax By Florens Flues; Benjamin Johannes Lutz
  18. Putting a Carbon Charge on Federal Coal: Legal and Economic Issues By Krupnick, Alan; Darmstadter, Joel; Richardson, Nathan; McLaughlin, Katrina
  19. Measuring and evaluating energy security and sustainability: A Case study of India By B.Sudhakara Reddy
  20. Strategic Policy Choice in State-Level Regulation: The EPA's Clean Power Plan By James B. Bushnell; Stephen P. Holland; Jonathan E. Hughes; Christopher R. Knittel
  21. A Microsimulation Model of the Distributional Impacts of Climate Policies By Gordon, Hal; Burtraw, Dallas; Williams, Roberton
  22. International and sectoral variation in energy prices 1995-2011: how does it relate to emissions policy stringency? By Misato Sato; Gregor Singer; Damien Dussaux; Stefania Lovo
  23. Working Paper - 218 - Household Energy Demand and the Impact of Energy Prices: Evidence from Senegal By AfDB AfDB
  24. Renewable Energy Policy, Economic Growth and Employment in EU Countries: Gain without Pain? By Jaraite, Jurate; Karimu, Amin; Kažukauskas, Andrius; Kažukauskas, Paulius
  25. Measurement of Energy Efficiency Based on Economic Foundations By Massimo Filippini; Lester Hunt
  26. Is our everyday comfort for sale? Preferences for demand management on the electricity market By Broberg, Thomas; Persson, Lars
  27. The economic viability of jatropha biodiesel in Nepal By Timilsina,Govinda R.; Tiwari,Ujjal
  28. The Effect of Energy Consumption and Human Capital on Economic Growth: An Exploration of Oil Exporting and Developed Countries By Fatema Alaali; Jennifer Roberts; Karl Taylor
  29. The climate beta By Simon Dietz; Christian Gollier; Louise Kessler
  30. The Dynamics of Pollution Permits By Hasegawa, Makoto; Salant, Stephen
  31. A multicomponent DEA approach to measure the economic and energy efficiencies of OECD countries By Abbas Valadkhani; Israfil Roshdi; Russell Smyth
  32. Country-Specific Oil Supply Shocks and the Global Economy: A Counterfactual Analysis By Kamiar Mohaddes and M. Hashem Pesaran
  33. The improved biomass stove saves wood, but how often do people use it ? evidence from a randomized treatment trial in Ethiopia By Beyene,Abebe D.; Bluffstone,Randall; Gebreegziabher,Zenebe; Martinsson,Peter; Mekonnen,Alemu; Vieider,Ferdinand
  34. An Economic Analysis of Policies for Promoting Economically Efficient Water Heater Systems Operating Under Seasonal Climatic Conditions By Arif Yurtsev; Glenn P. Jenkins
  35. Impact of electricity prices on foreign direct investment: Evidence from the European Union By Bartekova E.; Ziesemer T.H.W.
  36. Does final energy consumption in Portugal exhibit long memory? By José Manuel Belbute
  37. Can Energy Efficiency Standards Reduce Prices and Improve Quality? Evidence from the US Clothes Washer Market By Arlan Brucal; Michael Roberts
  38. Sustainable energy security for India: An assessment of energy demand sub-system By Kapil Narula; B. Sudhakara Reddy; Shonali Pachauri
  39. International Trade and the Environment: New Evidence on CO2 Emissions By Vinicius A. Vale; Fernando S. Perobelli, Ariaster B. Chimeli
  40. Energy efficiency subsidies with price-quality discrimination By Marie-Laure Nauleau; Louis-Gaëtan Giraudet; Philippe Quirion
  41. Characterizing the policy mix and its impact on eco-innovation in energy-efficient technologies. By Valeria Costantini; Francesco Crespi; Alessandro Palma
  42. An Integrated Approach to Climate Change, Income Distribution, Employment, and Economic Growth* By Lance Taylor; Armon Rezai; Duncan K. Foley
  43. Mandate a Man to Fish?: Technological Advance in Cooling Systems at U.S. Thermal Electric Plants By Victor M. Peredo-Alvarez; Allen S. Bellas; Ian Lange
  44. Probabilistic time series forecasting with boosted additive models: an application to smart meter data By Souhaib Ben Taieb; Raphael Huser; Rob J. Hyndman; Marc G. Genton
  45. Egregiousness and Boycott Intensity: Evidence from the BP Deepwater Horizon Oil Spill By Wang, Zhongmin; Lee, Alvin; Polonsky, Michael
  46. Green Economy Implications on National Energy Governance: The case of Laos and Cambodia. PhD Research proposal By Faith Euphrasia Mavengere
  47. Assessment of the environmental performance of European countries over time: Addressing the role of carbon leakage and nuclear waste By Grebel, Thomas; Stützer, Michael
  48. Modeling and Computation of Mean Field Equilibria in Producers' Game with Emission Permits Trading By Shuhua Chang; Xinyu Wang; Alexander Shananin
  49. A Contingent Valuation Approach to Estimating Regulatory Costs: Mexico’s Day Without Driving Program By Blackman, Allen; Alpizar, Francisco; Carlsson, Fredrik; Rivera Planter, Marisol
  50. Refunding Emissions Payments By Hagem, Cathrine; Hoel, Michael; Holtsmark, Bjart; Sterner, Thomas
  51. The Elasticity of Air Quality: Evidence from Millions of Households Across the United States By Christos Makridis
  52. Cournot Competition and "Green" Innovation: An Inverted-U Relationship By L. Lambertini; J. Poyago-Theotoky; A. Tampieri
  53. Can GRI Light Up the Future of Mankind? By Marcello Tonelli; Nicolò Cristoni
  54. Conditional Convergence in US Disaggregated Petroleum Consumption at the Sector Level By Hooi Hooi Lean; Russell Smyth

  1. By: Ivan Faiella (Bank of Italy); Alessandro Mistretta (Bank of Italy)
    Abstract: The recent drop in oil prices will lower Italy’s energy bill. Due to the progressive marginalization of oil, both as an energy source and as a benchmark for energy prices, households and firms will reap the benefits of this reduction largely through the lower cost of petroleum products; for electricity and gas, the effects will be negligible. Using simulation techniques and survey microdata it can be estimated that the effects will differ for households and firms, with the former expected to benefit from liquid fuel savings amounting to €2.1 billion per year (€80 per family), €1.8 billion of which will be used to increase consumer spending. These additional resources will not reach the one third of households that do not purchase gasoline or diesel. Using some recent estimates of manufacturing firms’ energy costs we also estimate that the decline in the prices of oil products will increase turnover by €650 million and investment expenditure by about €27 million.
    Keywords: microsimulation, oil prices, energy costs
    JEL: C15 Q41 Q43
    Date: 2015–06
  2. By: Ekaterina Gavenas; Knut Einar Rosendahl; Terje Skjerpen (Statistics 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: 2015–04
  3. By: Fanny Henriet (Paris School of Economics - Centre d'Economie de la Sorbonne); Katheline Schubert (Paris School of Economics - Centre d'Economie de la Sorbonne)
    Abstract: In the context of the deep contrast between the shale gas boom in the United States and the recent ban by France of shale gas exploration, this paper explores whether climate policy justifies developing more shale gas, taking into account environmental damages, both local and global, and addresses the question of a potential arbitrage between shale gas development and the transition to clean energy. We construct a Hotelling-like model where electricity may be produced by three perfectly substitutable sources: an abundant dirty resource (coal), a non-renewable less polluting resource (shale gas), and an abundant clean resource (solar). The resources differ by their carbon contents and their unit costs. Fixed costs must be paid for shale gas exploration, and before solar production begins. Climate policy takes the form of a ceiling on atmospheric carbon concentration. We show that at the optimum tightening climate policy always leads to bringing forward the transition to clean energy. We determine conditions under which the quantity of shale gas extracted should increase or decrease as the ceiling is tightened. To address the question of the arbitrage between shale gas development and the transition to clean energy, we assume that the social planner has to comply to the climate constraint without increasing energy expenditures. We show that when the price elasticity of electricity demand is low, a binding financial constraint leads to an overinvestment in shale gas and postpones the switch to the clean backstop. We calibrate the model for Europe and determine whether shale gas should be extracted, depending on the magnitude of the local damage, as well as the potential extra amount of shale gas developed because of a financial constraint, and the cost of a moratorium on extraction
    Keywords: Shale Gas; Global Warming; Non-renewable Resources; Energy transition
    JEL: H50 Q31 Q41 Q42 Q54
    Date: 2015–06
  4. By: Anindya Sen
    Keywords: Energy and Natural Resources, Electricity Pricing
    JEL: L94
    Date: 2015–06
  5. By: Jinhoa Lee (Hankuk University of Foreign Studies)
    Abstract: The relationships between environmental quality, energy use and economic output have created growing attention over the past decades among researchers and policy makers. Focusing on the empirical aspects of the role of carbon dioxide (CO2) emissions and energy use in affecting the economic output, this paper is an effort to fulfill the gap in a comprehensive case study at a country level using modern econometric techniques. To achieve the goal, this country-specific study examines the short-run and long-run relationships among energy consumption (using disaggregated energy sources: petroleum products and the direct combustion of crude oil, natural gas, and electricity), CO2 emissions and gross domestic product (GDP) for Saudi Arabia using time series analysis from the year 1980-2010. To investigate the relationships between the variables, this paper employs the Augmented Dickey-Fuller (ADF) and the Phillips–Perron (PP) unit root tests for stationarity, Johansen maximum likelihood method for cointegration and a Vector Error Correction Model (VECM) for both short- and long-run causality among the research variables for the sample. All the independent variables in this study show very strong significant effects on the GDP in the country for the long term. The long-run equilibrium in the VECM suggests negative long-run causalities from the CO2 emissions and the consumption of petroleum products and the direct combustion of crude oil to the GDP. Conversely, positive impacts of the natural gas use and the electricity consumption on the GDP found to be significant in Iraq during the period. In the short run, there also exists a negative unidirectional causality running from the GDP to the electricity consumption. The results partly support and also partly deny the conventional arguments that there is a short-run positive effect from environmental quality and energy use on economic output but they eventually reduce economic output in the long run. Overall, this study found that the associations could to be differed by the sources of energy in the case of Saudi Arabia over of period 1980-2010.
    Keywords: CO2 emissions, energy consumption, GDP, Saudi Arabia, time series analysis
  6. By: Palmer, Karen (Resources for the Future); Paul, Anthony (Resources for the Future)
    Abstract: The US Environmental Protection Agency (EPA) has proposed regulations to reduce emissions of carbon dioxide (CO2)from existing fossil electricity generators in its proposed Clean Power Plan rule under section 111(d) of the Clean Air Act. The proposal is based on the best system of emissions reductions (BSER) and calls for states to develop plans to achieve reductions that are demonstrated to be equivalent to those attained by the application of BSER to each state. Policy options from which states may choose are not restricted - the BSER and state plans are distinct from one another. This primer describes the different types of incentive-based comprehensive policies that states could adopt and how policy design features can address particular objectives including overall cost-effectiveness, distributional consequences for electricity consumers and producers, administrative costs, and emissions of other pollutants. We also elucidate some trade-offs that state policymakers will face as they develop their plans for Clean Power Plan compliance.
    Keywords: tradable performance standard, climate policy, clean energy standard, cap and trade, allowance allocation
    JEL: Q42 Q48 Q54 Q58
    Date: 2015–04–24
    Abstract: Most because of the rapidly increasing world population, the world energy demand has also increased year by year. Unfortunately, that energy demand has satisfied with an energy sources such as oil, natural gas and coal that can’t be sustainable. In this regard the extensive and rapidly increasing use of fossil fuels is concieved as a main reason both of the climate change and global warming. On the other hand the relationship between economic growth and environmental pollution is frequently investigated by researchers in the economic literature. The main theoretical proposition of this relationship named as Environmental Kuznets Curve (EKC) hypothesis by researchers. According to this hypothesis, at the early stages of economic development, governments and citizens are rarely aware of the environmental problems and environmental friendly energy sources such as renewable energy that is not so profitable to use because of its high investment costs. Afterwards, along with per capita income increase, environmental pollution increases to the beyond of the ecological threshold level. In that point, environmental quality improves with higher income per capita. However governments may still prefer to consume mainly fossil fuel energy sources in their energy policies because of the high investment costs of the renewable energy sources. This study is aimed to investigate the relationship between renewable energy consumption per capita and income per capita in G-20 countries during 1992 and 2010 by using panel data analysis techniques. According to the analysis results, income per capita has a statistically significant (1 percent significancy) and positive impact (0.61%) on renewable energy consumption per capita in the long run. However it has found that increase in carbon dioxide emission (CO2) per capita any statistically significant impact on renewable energy consumption per capita. Concordantly coherent with the EKC hypothesis, it has found in that study that G-20 countries are prefer to consume renewable energy sources depending upon the increase in income per capita.
    Keywords: Environmental Kuznets Curve, Renewable Energy, Panel Data Analysis, Income, G-20 countries.
    JEL: Q50
  8. By: Steinkraus, Arne
    Abstract: Existing studies on Carbon Capture and Storage (CCS) only focus on costs and carbon dioxide (CO2 ) reduction that arise at the power plant and geological storage. These studies do not consider additional expenses and emissions at the input and output pathways. Consequently, we use a simulation model containing input data from different studies to estimate the cradle-to-grave costs of avoided carbon dioxide. We show that the true costs vary between 70 and 90 US-Dollars per ton of CO2 . Additional sensitivity analyses support the results because they are robust against different parameter adjustments. Because it is not evident whether CCS is an efficient mitigation option, it is compared to a variety of renewable energy sources. Thus, it is cheaper to avoid one ton of CO2 by means of wind energy, but costs arising from the use of solar energy are much higher.
    Keywords: CCS,Cradle-to-Grave,climate change,coal,gas,efficiency analysis
    JEL: Q40 Q50
    Date: 2015
  9. By: Emam, Sherief; Grebel, Thomas
    Abstract: In this paper we investigate the impact of rising energy prices on technological progress in the market for renewable energies. We use patent data of OECD countries from 1970 to 2010 and test the impact of oil prices on the innovative success of countries; R&D, investment activities, electricity consumption, etc. are used as control variables. We compare several models such as Pooled Mean Group (PMG), Mean Group (MG), Count data (CD) and Dynamic fixed effects (DFE) models to distinguish short and long-term effects. The preliminary results show that increasing energy prices seem to encourage innovation in renewable energy technologies.
    Keywords: Renewable Energy,Heterogeneous Dynamic Panel Data,Technological Progress
    JEL: Q55 C23
    Date: 2014
  10. By: Palmer, Karen (Resources for the Future); Walls, Margaret (Resources for the Future)
    Abstract: Building energy use accounted for 38 percent of total US carbon dioxide (CO2) emissions in 2012, and roughly half of those emissions were attributable to the commercial building sector. A new policy that has been adopted in 10 US cities and one US county is a requirement that commercial and sometimes also multifamily residential building owners disclose their annual energy use and benchmark it relative to other buildings. We discuss these nascent policies, preliminary analyses of the data that have been collected so far, and how to evaluate whether they are having an effect on energy use and CO2 emissions. Missing or imperfect information is a contributor to the energy efficiency gap, the finding that many low-cost options for improving energy efficiency fail to be adopted. These new laws may be an important step in closing the gap in the commercial and multifamily building sectors, but careful evaluation of the programs will be essential.
    Keywords: energy efficiency, commercial buildings, disclosure, benchmarking, energy use intensity, Energy Star, LEED
    JEL: Q40 Q48
    Date: 2015–03–13
  11. By: Victor Moutinho (CEFAGE-UE and Department of Economics, Management and Industrial Engineering, University of Aveiro); José Manuel Xavier (ISCIA); Pedro Miguel Silva (Department of Economics, Management and Industrial Engineering, University of Aveiro)
    Abstract: This study breaks down carbon emissions into six effects within the European group - EU-15 countries – and analyses their evolution before and after the Kyoto Protocol in order to determine which of them has more impact in the intensity of emissions in those countries. The 'complete decomposition' technique was used to examine the CO2 emissions and its components: carbon intensity,(CI effect), the changes in fossil fuels consumption towards total energy consumption,(EM effect), the change in energy intensity effect,(EG effect), the average renewable capacity productivity (GC effect), the change in capacity of renewable energy per capita (CP effect), and the change in population, (P effect). It is shown that in both periods (before and after Kyoto protocol) for Germany, Denmark and Sweden reductions in CO2 emissions; in particular, with higher levels of differentiation in Germany and Sweden, before Kyoto commitment, it was explained by the predominance of negative effects on the negative variations of three effects decomposed. In the post Kyoto period there is even a greater differential in the negative changes in CO2 emissions, which were caused by the negative contribution of the intensity variations of the effects EM, GC, CP and P that exceeded the positive changes occurred in CI and EG effects. It seems also important to stress the fluctuations in CO2 variations before and after Kyoto, turning positive changes to negative changes, especially in France, Italy and Spain.
    Keywords: Decomposition analysis; Emissions intensity; European Countries; Renewables capacity.
    JEL: C29 Q47 Q52 Q57
    Date: 2014
  12. By: Jessica A. Bohlmann (Department of Economics, University of Pretoria); Heinrich R. Bohlmann (Department of Economics, University of Pretoria); Roula Inglesi-Lotz (Department of Economics, University of Pretoria)
    Abstract: The South African economy has suffered over the past decade due to a lack of adequate electricity supply. With two new coal-fired power stations, Kusile and Medupi scheduled to come online over a six year period (2014-2019), their additional generation capacity is expected to restore electricity reserve margins and facilitate increased growth and investment in the local economy. In this paper, we use a dynamic CGE model for South Africa to evaluate the economy-wide impact that the additional power generation from these two stations will have across a broad range of macroeconomic and industry variables. In terms of the new power generation capacity, our findings suggest that the macroeconomic impact of Kusile and Medupi will be a definite positive. Results show that, in the medium term, investment expenditur is particularly sensitive to the building of these new power plants. Additional costly blackouts are also likely to be avoided, further promoting economic growth and investment. Once Kusile and Medupi are fully operational and able to provide its projected 9600MW of base load electricity supply, old coal-fired power plants may be decommissioned and replaced by cleaner and more efficient generation sources as outlined in the Department of Energy's Integrated Resource Plan. Our analysis also suggests that this outcome provides a good balance between utilising modern clean coal technologies that are cost-effective while laying the foundation to improving our generation-mix and carbon emissions profile.
    Keywords: Computable general equilibrium, UPGEM, electricity supply, Kusile, Medupi
    JEL: C68 Q41 Q43
    Date: 2015–06
  13. By: Muhammad Shahbaz; Mita Bhattacharya; Khalid Ahmed
    Abstract: Australia has sustained a relatively high economic growth rate since the 1980s compared to other developed countries. Per capita CO2 emissions tend to be highest amongst OECD countries, creating new challenges to cut back emissions toward international standards. This study explores the dynamics of economic growth, CO2 emissions (including energy consumption), population growth and globalisation (an index of openness). Our contributions toward the literature in an Australian context are the following. First, we employ a newly developed cointegration test by Bayer-Hanck (2013) to establish the long-term dynamics between CO2 emissions and growth in the presence of population growth and trade openness. Second, we find economic growth is not emissions intensive, while energy consumption is emissions intensive. Third, in an environment of increasing population, Australia needs to be energy efficient at the household level, creating appropriate infrastructure for sustainable population growth. Finally, open trade environments have been conducive to combating emissions. Our findings advocate for continued investment in alternative energy sources, particularly renewables and green technologies, as well as the development of proper infrastructure to reduce per capita energy consumption.
    Keywords: growth, energy, population growth, globalisation, emissions
    JEL: O13 Q30 Q32 C12 C23
    Date: 2015–02
  14. By: O'Keeffe, Lucy (Resources for the Future); Palmer, Karen (Resources for the Future); Walls, Margaret (Resources for the Future); Hayes, Kristin (Resources for the Future)
    Abstract: Energy benchmarking and disclosure laws have been passed in 10 US cities and one county and are under consideration in many more. The laws require owners of commercial and, in some cities, multifamily residential buildings to annually disclose their energy use and benchmark it relative to similar buildings. This discussion paper summarizes the presentations, discussion, and findings from a December 2014 workshop hosted by Resources for the Future on benchmarking and disclosure. Participants included representatives from the cities where laws have been passed and are being considered, electric utilities, the real estate sector, energy service companies, energy data analytics companies, nongovernmental organizations, the federal government, and academia. A major focus of the workshop was on evaluation of the programs and how to go about assessing their ability to reduce energy use and greenhouse gas emissions.
    Keywords: energy efficiency, commercial buildings, disclosure, benchmarking, energy use intensity, Energy Star, LEED, program evaluation
    Date: 2015–03–10
  15. By: Palmer, Karen (Resources for the Future); Walls, Margaret (Resources for the Future)
    Abstract: Information failures may help explain the so-called “energy efficiency gap” in commercial buildings, which account for approximately 20 percent of annual US energy consumption and CO2 emissions. Building owners may not fully comprehend what influences energy use in their buildings and may have difficulty credibly communicating building energy performance to prospective tenants and buyers. Ten US cities and one county have addressed this problem by passing energy benchmarking and disclosure laws. The laws require commercial buildings to report their annual energy use to the government. We evaluate whether the laws have had an effect on utility expenditures in office buildings covered by the laws in four of the early adopting cities—Austin, New York, San Francisco, and Seattle—and find that they have reduced utility expenditures by about 3 percent. Our view is that these estimated effects in the early days of the programs are largely attributable to increased attentiveness to energy use.
    Keywords: energy efficiency, information, commercial buildings, differences-in-differences regression
    JEL: L94 L95 Q40 Q48
    Date: 2015–04–09
  16. By: Md. Samsul Alam; Sudharshan Reddy Paramati; Muhammad Shahbaz; Mita Bhattacharya
    Abstract: This study examines the dynamic relationship between natural gas consumption, output, and trade in a sample of fifteen emerging economies using quarterly data for the period of 1990-2012. We employ the robust panel cointegration techniques and a heterogeneous panel causality test. Our findings confirm the presence of long-run association between natural gas consumption, output and trade. The short-run heterogeneous panel causality test suggests that natural gas consumption has feedback effect between economic growth and international trade. These findings have important implications for energy and environmental policies. The conservation policies that are designed to reduce natural gas consumption have an adverse effect on both economic growth and trade. We suggest future energy policies should focus on improving energy supply, and formulate appropriate channels to attract investments into renewable energy production with greater involvement of public-private partnership initiatives.
    Keywords: Natural gas consumption, economic growth, trade, emerging economies
    JEL: F14 O47 P28 Q43
    Date: 2015–03
  17. By: Florens Flues; Benjamin Johannes Lutz
    Abstract: Proposals to increase environmentally related taxes are often challenged on competitiveness grounds. The concern is that value creation in certain sectors might decline domestically if a country introduces environmentally related taxes unilaterally. Furthermore, environmental goals might not be reached if pollution shifts abroad. A competing view argues that properly implemented environmentally related taxes foster innovation, thereby boosting productivity and competitiveness. Empirical research is needed to gain insight into the strength of these various effects. This paper provides evidence on the short-term competitiveness impacts of the German electricity tax introduced unilaterally in 1999. Germany’s manufacturing sector uses significant amounts of electricity, and to counteract potential negative effects on competitiveness, relief was provided: firms using more electricity than specified thresholds benefitted from reduced electricity tax rates. The tax reduction amounted up to EUR 14.6 per megawatt hour, about 80% of the full tax rate. When measured as an effective rate on the carbon content in the average unit of electricity, the electricity tax translates into EUR 44.4 per tonne of carbon dioxide, indicating the magnitude of the tax. The econometric analysis – a regression discontinuity design – shows no robust effects in either direction of the reduced electricity tax rates on firms’ competitiveness. Firms subject to the full tax rates, but otherwise similar to firms facing reduced rates, did not perform worse in terms of turnover, exports, value added, investment and employment. The analysis questions the relevance of the tax reduction for competitiveness reasons and suggests that it could be gradually removed. The energy use threshold, above which a reduced tax rate applies, could be raised over time and competitiveness impacts monitored.
    Keywords: tax expenditure, environmental taxation, competitiveness impacts
    JEL: D22 H21 H23 Q41 Q48
    Date: 2015–05–12
  18. By: Krupnick, Alan (Resources for the Future); Darmstadter, Joel (Resources for the Future); Richardson, Nathan (Resources for the Future); McLaughlin, Katrina (Resources for the Future)
    Abstract: US policy to limit greenhouse gas emissions is currently driven, in part, by the US Environmental Protection Agency’s proposed Clean Power Plan, which seeks a drop in carbon dioxide (CO2) emissions from fossil-fueled power plants—a “downstream” approach to regulation. Here, we consider an alternative, or possibly complementary, regulatory perspective - What is the legal and economic feasibility of imposing an “upstream” CO2 charge on coal production at its extraction site? Specifically, our focus is on leased coal from federal lands managed by the Bureau of Land Management (BLM). Such a carbon charge is designed, in principle, to embody the cumulative “lifecycle” externalities from coal mining to combustion (or other “downstream” utilization). Our legal analysis concludes that BLM has the statutory and regulatory authority to impose such a charge and that it would be best to add it to the royalty rate. But a large fee that would dramatically reduce revenues could invite judicial concern. The economic case is weaker than the legal case because production on state, private, and tribal lands (60 percent of total production) would not be subject to the charge and so could ramp up in response to the economic disadvantage the charge would cause for coal on federal lands, among other reasons. Best would be a comprehensive set of charges on royalties for all fossil fuels, irrespective of ownership.
    Keywords: carbon taxes, coal, climate change, pollution strategies, emissions reductions
    JEL: Q30 Q52 Q54
    Date: 2015–03–30
  19. By: B.Sudhakara Reddy (Indira Gandhi Institute of Development Research)
    Abstract: The imperative for energy security is paramount for global, national and internal stability and development. Using an indicator based approach, the present study develops a framework for sustainable energy security of India. First, it presents the energy supply and demand situation in the country under different scenarios. Then it conceptualizes the notion of energy security and quantifies it for India with the help of different indicators for energy security available in the literature. Both the supply and demand side views and both micro and macro dimensions are considered in assessing how secured India as a country is with respect to our energy future. The dimensions that include energy security are: economic, environmental, social and institutional. This will help planners and policy makers to understand India's energy scene better and design policies to develop sustainable technologies and practices to ensure energy resources last long.
    Keywords: energy, development, indicator, security, sustainability
    JEL: P28 Q41 Q42 Q48
    Date: 2015–04
  20. By: James B. Bushnell; Stephen P. Holland; Jonathan E. Hughes; Christopher R. Knittel
    Abstract: Flexibility in environmental regulations can lead to reduced costs if it allows additional abatement from lower cost sources or if policy tailoring and experimentation across states increases regulatory efficiency. The EPA's 2014 Clean Power Plan, which implements greenhouse gas regulation of power plants under the Clean Air Act, allows substantial regulatory flexibility. The Clean Power Plan sets state-level 2030 goals for emissions rates (in lbs CO2 per MWh) with substantial variation in the goals across states. The Clean Power Plan allows states considerable flexibility in attaining these goals. In particular, states can choose whether to implement the rate standards goals or equivalent mass-based goals (i.e., emissions cap and trade, CAT). Moreover, states can choose whether or not to join with other states in implementing their goals. We analyze incentives to adopt inefficient rate standards versus efficient CAT standards using both analytical and simulation models. We have five main results. First, we theoretically show that industry supply can be efficient under both CAT regulation and rate-based regulation. However, under rate-based standards the carbon price must equal the social cost of carbon and the rate standard must be equal across all the states. Second, we illustrate important differences in the incentives of a unified coalition of states and the incentives of a single state. Third, our simulation results show that when states fail to coordinate on a policy, the merit order can be ``scrambled'' quite dramatically leading to significant inefficiencies. Fourth, the Nash equilibrium of a game between coastal and inland western states is an inefficient policy for consumers and an uncoordinated policy for generators. Finally, we show that how new plants are treated under the Clean Power Plan has large effects on the scale and location of entry.
    JEL: L5 L9 Q48 Q54
    Date: 2015–06
  21. By: Gordon, Hal (Resources for the Future); Burtraw, Dallas (Resources for the Future); Williams, Roberton (Resources for the Future)
    Abstract: Carbon policies introduce potentially uneven cost burdens. Anticipating these outcomes is important for policymakers seeking to achieve an equitable outcome and can be politically important as well. This paper describes the details of a microsimulation model that utilizes the price and quantity changes predicted by economic models of carbon policies to make an estimation of economic incidence by income quintile or state, and potentially across other dimensions. After taking as inputs the aggregate output from partial or general equilibrium economic modeling, the microsimulation model uses data from the Consumer Expenditure Survey (CE), the State Energy Data System (SEDS), the National Income and Product Accounts (NIPA), estimations from the Congressional Budget Office (CBO), and the Haiku electricity model. These data sources are used to estimate the share of consumer and producer surplus changes that accrue to households in each income quintile and state. The model is unique among existing incidence models in its ability to drill down to the level of state incidence and to plug into a wide range of economic models.
    Keywords: carbon price, carbon tax, emissions tax, cap and trade, distributional effects, equity, efficiency, incidence
    JEL: H22 H23 Q52 Q54
    Date: 2015–02–26
  22. By: Misato Sato; Gregor Singer; Damien Dussaux; Stefania Lovo
    Abstract: The lack of information on the cost of energy for industry poses a major barrier in assessing the effects of energy prices and taxes on the economic performance and international competitiveness of regulated firms. This paper documents the construction of an energy price index for 12 industrial sectors, covering 48 countries for the period 1995 to 2011. Two distinct indices are constructed: the Variable-Weight Energy Price Level (VEPL) which is useful for cross sectional analysis or descriptive statistics and; the Fixed-Weight Energy Price Index (FEPI) which is designed for use in times series and panel data analysis. We present a descriptive analysis of the major trends in energy prices and taxes, and provide guidelines for the use of our energy price data which is made publicly available for download. The indices reveal, among other things, that industrial energy prices have been on an increasing trend in real terms since 2000 for most countries, and that the gap between the highest and the lowest energy prices internationally has widened with the average price in the 10% highest countries being 2.4 times larger than the 10% lowest in 2010. The bulk of variation in industrial energy prices across countries is attributable not to the wholesale price differences but the tax component. We then evaluate to what extent energy prices are a good proxy for emissions policy stringency, and it shows that it has many attractive qualities and avoid problems common to other proxies which have been used in the literature.
    Date: 2015–03
  23. By: AfDB AfDB
    Date: 2015–01–21
  24. By: Jaraite, Jurate (CERE); Karimu, Amin (CERE); Kažukauskas, Andrius (CERE); Kažukauskas, Paulius (HIS)
    Abstract: Given the intensifying debates whether governments should use industrial policies to promote particular renewable energy technologies, the main objective of this study is to investigate the long-run effects of renewable energy support policies on economic growth and employment in 15 European Union (EU) member states for the 1990-2012 time period by using panel-data time-series econometric techniques. The first hypothesis is that the EU’s renewable energy support policies lead to technological advancement, followed by economy growth, in the long-run. The second hypothesis states that these policies at least generate an increase in output and employment in the short-run. In summary, our results provide some evidence in support of the second hypothesis, but, in contrary to the similar studies, our findings do not support the first hypothesis that these policies promote growth in the long-run.
    Keywords: economic growth; EU; Granger causality; panel cointegration; policy; renewable energy
    JEL: O44 Q43 Q48
    Date: 2015–06–08
  25. By: Massimo Filippini (ETH Zurich, Switzerland); Lester Hunt (Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey, UK)
    Abstract: Energy efficiency policy is seen as a very important activity by almost all policy makers. In practical energy policy analysis, the typical indicator used as a proxy for energy efficiency is energy intensity. However, this simple indicator is not necessarily an accurate measure given changes in energy intensity are a function of changes in several factors as well as ‘true’ energy efficiency; hence, it is difficult to make conclusions for energy policy based upon simple energy intensity measures. Related to this, some published academic papers over the last few years have attempted to use empirical methods to measure the efficient use of energy based on the economic theory of production. However, these studies do not generally provide a systematic discussion of the theoretical basis nor the possible parametric empirical approaches that are available for estimating the level of energy efficiency. The objective of this paper, therefore, is to sketch out and explain from an economic perspective the theoretical framework as well as the empirical methods for measuring the level of energy efficiency. Additionally, in the second part of the paper, some of the empirical studies that have attempted to measure the energy efficiency using such an economics approach are summarised and discussed.
    Keywords: economic foundations of energy efficiency; energy demand; stochastic frontier analysis
    JEL: D D2 Q Q4 Q5
    Date: 2015–06
  26. By: Broberg, Thomas (CERE); Persson, Lars (CERE)
    Abstract: In a European perspective, the electricity markets have been experiencing major changes via deregulation, new technologies and changes in the production mix. Together with the daily and seasonal peak hours on the demand side, the changing markets put pressure on increased flexibility to handle and sustain balance in the grid systems. This paper focuses on the demand side and analyzes preferences related to demand management of Swedish households energy use. Preferences are analyzed within the framework of choice experiments and people are faced with hypothetical electricity contracts. The respondents reveal their preferences for attributes related to external control of heating, household electricity and information dissemination (integrity). The results show that people put a substantial value on not being controlled, illustrated by compensations up to thousands of SEK for accepting a contract characterized by external control of energy use in various dimensions. In addition, the results show that household composition, age, gender and income play a role for the perceived discomfort from the external control and information dissemination.
    Keywords: choice experiment; demand side management; electricity market; energy policy; demand flexibility; smart grids
    JEL: Q40 Q41
    Date: 2015–06–08
  27. By: Timilsina,Govinda R.; Tiwari,Ujjal
    Abstract: Nepal depends entirely on imports for meeting its demand for petroleum products, which account for the largest share in total import volume. Diesel is the main petroleum product consumed in the country and accounts for 38 percent of the total national CO2 emissions from fuel consumption. There is a general perception that the country would economically benefit if part of imported diesel is substituted with domestically produced jatropha-based biodiesel. This study finds that the economics of jatropha-based biodiesel depend on several factors, such as diesel price, yield of jatropha seeds per hectare, and availability of markets for production byproducts, such as glycerol and jatropha cake. Under the scenarios considered, jatropha biodiesel is unlikely to be economically competitive in Nepal unless seed yields per hectare are implausibly large and high returns can be obtained from byproduct markets that do not yet exist. In the absence of byproduct markets, even earnings from a carbon credit do not help jatropha biodiesel to compete with diesel unless the credit value exceeds US$50/tCO2 (which is well above current values) and jatropha seed yield is at or above the midrange of the scenarios considered. Declines in diesel prices from the levels observed in 2009?13 only compound the economic competitiveness issue.
    Keywords: Energy Production and Transportation,Economic Theory&Research,Renewable Energy,Climate Change Mitigation and Green House Gases,Environmental Economics&Policies
    Date: 2015–06–08
  28. By: Fatema Alaali (Department of Economics, University of Sheffield); Jennifer Roberts (Department of Economics, University of Sheffield); Karl Taylor (Department of Economics, University of Sheffield)
    Abstract: Energy has long been argued as an essential factor for the development of the economy and therefore it should be brought in line with the other production factors of neoclassical economics, capital and labour. Using panel data for 130 countries from 1981 to 2009, this paper explores the impact of multiple forms of energy consumption and human capital on per capita GDP growth. Generalized method of moments is applied to estimate an augmented neoclassical growth model that includes education and health capital as well as energy consumption. The key outcomes from this study show that education and health capital have a signifficant effect on economic growth. Energy consumption is also found to support higher growth. The results on the differential effects of energy and human capital on the economic growth of the developed and oil exporting countries indicate that energy consumption has a significant positive effect in both types of countries. Education capital affects the developed countries positively while health capital affects the oil exporting countries' economic growth negatively. These results are useful for policy makers, especially in less developed countries encouraging them to implement, for example, compulsory secondary education and child immunizations in order to reach higher standards of living. Moreover, energy must be used more efficiently to ensure sustainable growth.
    Keywords: Growth, Education, Health, Human Capital, Mortality Rates, Energy Consumption.
    JEL: I15 I25 Q43
    Date: 2015–06
  29. By: Simon Dietz; Christian Gollier; Louise Kessler
    Abstract: Reducing emissions of CO2 today is expected to reduce climate damages in the future. In this paper, we examine the question of whether fighting climate change has the additional advantage of reducing the aggregate risk borne by future generations. This raises the question of the ‘climate beta’, i.e. the elasticity of climate damages with respect to a change in aggregate consumption. Using the DICE integrated assessment model, we show that the climate beta is positive and close to unity, due above all to the effect of uncertainty about technological progress. In estimating the social cost of carbon, this justifies using a relatively larger rate to discount expected climate damages. On the other hand, expected climate damages are themselves made larger by this effect and overall the NPV of emissions reductions today is increased by the climate beta.
    Date: 2015–04
  30. By: Hasegawa, Makoto; Salant, Stephen (Resources for the Future)
    Abstract: We review the literature on bankable emission permits, which has developed over the last two decades. Most articles analyze either theoretical or simulation models. The theoretical literature considers the problem of minimizing the discounted sum of social costs and the possibility of decentralizing the solution through competitive permit markets. In some cases, authors do not explicitly consider pollution damages but instead assume that the planner's goal is to minimize the discounted social cost of reducing cumulative emissions by a given amount. In other cases, authors do not explicitly consider an emissions reduction target but assume that the goal is to minimize the discounted sum of pollution damages and abatement costs. Simulations permit evaluation of alternative government policies under uncertainty. We conclude by pointing out directions for future work.
    Date: 2015–05–26
  31. By: Abbas Valadkhani; Israfil Roshdi; Russell Smyth
    Abstract: We employ a multicomponent Data Envelopment Analysis (DEA) framework to examine the interplay between economic and energy efficiency for all 29 OECD countries and then classify each country into one of four categories in terms of their relative economic and energy efficiency. In addition to using a broader set of inputs and improved measure of labour compared with prior studies, we make a methodological contribution in that we develop a new complete multi-component DEA measure for examining the efficiency performance of individual countries. Our proposed measure provides an efficiency index, not only at the country level, but also decomposes overall efficiency into economic and energy components. The G7 countries display the worst performance, in terms of CO2 and energy efficiencies. For the sample as a whole, there is a positive and marginally significant relationship between economic efficiency and energy efficiency. This finding suggests that higher economic and energy efficiencies are not necessarily incompatible goals.
    Keywords: Energy efficiency; CO2 emissions; Real GDP; Data envelopment analysis
    JEL: C61 O44 Q43 Q51
    Date: 2015–01
  32. By: Kamiar Mohaddes and M. Hashem Pesaran
    Abstract: This paper investigates the global macroeconomic consequences of country-specific oil-supply shocks. Our contribution is both theoretical and empirical. On the theoretical side, we develop a model for the global oil market and integrate this within a compact quarterly model of the global economy to illustrate how our multi-country approach to modelling oil markets can be used to identify country-specific oil-supply shocks. On the empirical side, estimating the GVAR-Oil model for 27 countries/regions over the period 1979Q2 to 2013Q1, we show that the global economic implications of oil-supply shocks (due to, for instance, sanctions, wars, or natural disasters) vary considerably depending on which country is subject to the shock. In particular, we find that adverse shocks to Iranian oil output are neutralized in terms of their effects on the global economy (real outputs and financial markets) mainly due to an increase in Saudi Arabian oil production. In contrast, a negative shock to oil supply in Saudi Arabia leads to an immediate and permanent increase in oil prices, given that the loss in Saudi Arabian production is not compensated for by the other oil producers. As a result, a Saudi Arabian oil supply shock has significant adverse effects for the global economy with real GDP falling in both advanced and emerging economies, and large losses in real equity prices worldwide.
    JEL: C32 E17 F44 F47 O53 Q43
    Date: 2015–06–11
  33. By: Beyene,Abebe D.; Bluffstone,Randall; Gebreegziabher,Zenebe; Martinsson,Peter; Mekonnen,Alemu; Vieider,Ferdinand
    Abstract: This paper uses a randomized experimental design and real-time electronic stove use monitors to evaluate the frequency with which villagers use improved biomass-burning Mirt injera cookstoves in rural Ethiopia. Understanding whether, how much, and why improved cookstoves are used is important, because use of the improved stove is a critical determinant of indoor air pollution reductions, and reduced greenhouse gas emissions due to lower fuelwood consumption. Confirming use is, for example, a critical aspect of crediting improved cookstoves? climate change benefits under the United Nations Reducing Emissions from Deforestation and Forest Degradation Programme. The paper finds that Ethiopian households in the study area do use the Mirt stove on a regular basis, taking into account regional differences in cooking patterns. In general, stove users also use their Mirt stoves more frequently over time. Giving the Mirt stove away for free and supporting community-level user networks are estimated to lead to more use. The study found no evidence, however, that stove recipients use the stoves more if they have to pay for them, a hypothesis that frequently arises in policy arenas and has also been examined in the literature.
    Keywords: E-Business,Disease Control&Prevention,Energy Conservation&Efficiency,Climate Change Mitigation and Green House Gases,Energy and Environment
    Date: 2015–06–09
  34. By: Arif Yurtsev (Eastern Mediterranean University, North Cyprus); Glenn P. Jenkins (Queen’s University, Canada and Eastern Mediterranean University, North Cyprus)
    Abstract: This paper reports on an economic cost-effective analysis of water heating systems including solar water heating systems (SWHSs). This study finds that in situations where there is a winter, or a rainy season, the choice of the source of energy for the SWHS’s back-up during this period is critical for its overall cost-effectiveness. It is found that in the conditions of North Cyprus, an SWHS with electricity back-up is far superior to using electricity alone, however, it is inferior to heating water with either a liquefied petroleum gas (LPG) water heater alone or an SWHS with an LPG back-up. Policies to promote water heating systems that reduce the use of electricity should not encourage the installation of SWHSs with electricity back-up. An LPG water heater or an SWHS with an LPG back-up are economically more cost-effective, with or without the inclusion of the social cost of carbon estimates.
    Keywords: Cost-effectiveness analysis; water heater systems; North Cyprus.
    JEL: D61 Q42 Q48 Q50 R20
    Date: 2015–07
  35. By: Bartekova E.; Ziesemer T.H.W. (UNU-MERIT)
    Abstract: In the course of recent years growing concerns over increasing energy prices have emerged in the context of maintaining Europes international competitiveness. In particular, rising electricity price differentials adversely affect firms total production costs and ultimately impact their investment decisions. Nonetheless, electricity prices as locational determinants of foreign direct investment FDI have received little attention in the literature so far. We address this gap by including electricity prices in the traditional framework of FDI analysis and examine the impact of price variation on net FDI inflows in countries of the European Union EU. We use a panel of 27 countries for a period of 2003 - 2013 and system generalised method of moments GMM as method of estimation. The main findings of the paper confirm that besides tax rates, unit labour costs and competitive disadvantage in secondary education, also electricity prices contribute to eroding competitiveness of the countries. Yet, the effect of electricity prices does not seem to be uniform across the EU. In fact, southwestern countries tend to be more adversely affected than north-eastern, both in the short and long run.
    Keywords: International Investment; Long-term Capital Movements; Economywide Country Studies: Europe; Energy and the Macroeconomy;
    JEL: F21 O52 Q43
    Date: 2015
  36. By: José Manuel Belbute (Department of Economics, University of Évora, Portugal Center for Advanced Studies in Management and Economics - CEFAGE, Portugal)
    Abstract: In this paper we measure the degree of fractional integration in final energy demand in Portugal using an ARFIMA model. Our findings suggest the presence of long memory in aggregate and disaggregate energy demand in Portugal. All fractional-difference parameters are positive and lower than 0.5 indicating that the series are stationary, although the mean reversion process will be slower than in the typical short run processes. In addition, our findings also indicate that there is clear seasonal long memory evidence for all the Portuguese components of final energy demand. These results have important implication for the design of environmental policies. First, despite the effects of a policy shock on energy consumption will tend to disappear slowly, they preserve their temporary nature. This is good news for the success of the Portuguese green tax reform since fiscal neutrality may be achieved earlier and cause temporary budget imbalances for a smaller period. Second, given the temporary nature of the effects of the policy shock, long lasting effects on the final energy consumption will be achieved by means of a more permanent policy stance.
    Keywords: Long memory; Final energy demand; Environmental policy; ARFIMA model; Portugal.
    JEL: C22 O13 Q41
    Date: 2015
  37. By: Arlan Brucal (University of Hawaii at Manoa); Michael Roberts (University of Hawaii at Manoa)
    Abstract: We examine the effect of energy efficiency standards on the clothes washers market using a constant-quality price index constructed from same-model price changes for a significant majority of clothes washer models sold in the United States between 2001 and 2011. We find constant-quality prices fell over time, while quality increased, particularly around times energy standards changed. We estimate total welfare changes by assuming the difference between average price and constant-quality price indicates average quality. Further examination shows product entry and exit are associated with changes federal standard for energy efficiency. With policy changes implicitly coordinating entry and exit, average vintage sharply falls when standards change. Controlling for individual model and time effects, we find that lower average vintage is associated with more rapidly falling prices, an effect we attribute to increased competition. We also find a strong relationship between clothes washer prices and average vintage of the same manufacturer, which indicates cannibalism explains much of the declining price of clothes washers over time. We apply the same methodology to other appliances (clothes dryer, room air conditioners and refrigerators) which did not experience simultaneous efficiency standard changes between 2001 and 2011. We see the same cannibalism in the market for clothes dryers, but not for room air conditioners or refrigerators. We also find notable improvements both in the characteristics of clothes washers that directly improve energy efficiency and those that promote convenience and space-saving. Energy efficiency standards appear to facilitate more rapid innovation and price declines.
    Date: 2015–06
  38. By: Kapil Narula (Indira Gandhi Institute of Development Research); B. Sudhakara Reddy (Indira Gandhi Institute of Development Research); Shonali Pachauri
    Abstract: This paper presents a quantitative assessment of Sustainable Energy Security (SES) of the energy demand sub-system for India by calculating a SES index. The demand sub-system has been evaluated for four dimensions of SES, viz., Availability, Affordability, Efficiency and (Environmental) Acceptability using selected metrics. A hierarchical structure has been used to construct indices using 'scores' (objective values of selected metrics), and 'weights' (subjective values, representing importance of each metric) which are then aggregated, to obtain a SES Index. Various sectors of the energy demand sub-system are evaluated and dimensional and sectoral indices are calculated for the years 2002, 2007 and 2012. Assessment of the obtained energy indices is undertaken and the results reveal that all (except one) sectoral indices have shown an increase during the period of assessment. The results show that from 2002 to 2012 the aggregate SES Index has increased by approximately 10 which indicates a gradual improvementin the sustainability and security of the energy demand sub-system.However, the SES index is approximately 0.7 (short of the desired target of 1.0), which implies that there is still a large scope for improvement in the performance of the India's energy demand sub-system. A sensitivity analysis of various indices reveals that the SES index is relatively robust to variation in weights allotted to different dimensions and hence provides a reliable assessment of the SES of the demand sub-system.
    Keywords: Energy Security, Energy Sustainability, Energy Index, Indicators
    JEL: P28 Q41 Q42 Q48
    Date: 2015–05
  39. By: Vinicius A. Vale; Fernando S. Perobelli, Ariaster B. Chimeli
    Abstract: This paper investigates the mechanics of international trade and CO2 emissions in two blocs of countries (“North” and “South”) by analyzing data from the World Input-Output Database. We use and adapt the Miyazawa technique to estimate the linkages between international trade and the environment at a global scale, a contribution that to our best knowledge has not yet appeared in the literature. Our results suggest that both the North and the South have become less pollution intensive (technique effect) over the years. Interestingly and in contrast to much of the literature, we also find support to the hypothesis that the South has specialized in relatively more pollution intensive activities (composition effect).
    Keywords: CO2 Emissions; International Trade; Input-Outout tables; Miyazawa Multiplier
    JEL: Q56 Q53 F18 C67
    Date: 2015–06–10
  40. By: Marie-Laure Nauleau (CIRED); Louis-Gaëtan Giraudet (CIRED, Ecole des PontsParisTech); Philippe Quirion (CIRED, CNRS)
    Abstract: We compare a range of energy efficiency policies in a durable good market subject to both energy-use externalities and price-quality discrimination by a monopolist. We find that the social optimum can be achieved with differentiated subsidies. With ad valorem subsidies, the subsidization of the high-end good leads the monopolist to cut the quality of the low-end good. The rates should always be decreasing in energy efficiency. With per-quality subsidies, there are no such interference and the rates can be increasing if the externality is large enough relative to the market share of low-type consumers. Stand-alone instruments only achieve second-best outcomes. A minimum quality standard may be set at the high-end of the product line if consumers are not too dissimilar, otherwise it should only target the low-end good. An energy tax should be set above the marginal external cost. Likewise, a uniform ad valorem subsidy should be set above the subsidy that would be needed to spec ifically internalize energy-use externalities. Lastly, if, as is often observed in practice, only the high-end good is to be incentivized, a per-quality schedule should be preferred over an ad valorem one. An ad valorem tax on the high-end good may even be preferred over an ad valorem subsidy if the externality is small enough and low-end consumers dominate the market.
    Keywords: energy efficiency, price-quality discrimination, imperfect discrimination, vertical differentiation, subsidy
    JEL: H23 Q48 Q54
    Date: 2015–06
  41. By: Valeria Costantini (Department of Economics, Roma Tre University, Rome (Italy)); Francesco Crespi (Department of Economics, Roma Tre University, Rome (Italy)); Alessandro Palma (Department of Economics, Roma Tre University, Rome (Italy))
    Abstract: This paper provides an empirical investigation of the role played by selected characteristics of the policy mix in inducing innovation in energy efficiency technologies. An original dataset covering 23 OECD countries over the period 1990-2010 combines the full set of policies in the energy efficiency domain for the residential sector with data on patents applied over the same period in this specific technological sector. The evidence of a positive policy inducement effect on innovation dynamics is enriched by the following main results: i) policy mix comprehensiveness is influential since countries adopting different instruments show a relatively higher positive inducement effect; ii) inconsistency problems between the different tools forming the policy mix may negatively influence innovation activities when the variety of policy instruments becomes excessive; iii) the different instruments forming the policy mix need to be well balanced in their relative strength in order to reduce potential negative lock-in effects; iv) the greater the external balance of the national policy strategy with the policy setting of other similar countries, the higher the inducement effect on the technological dynamics of the investigated country. Several suggestions for implementing effective policy strategies can be made in this case study that can be potentially extended to other technology domains.
    Keywords: eco-innovation, policy mix, policy spillovers, energy efficiency, residential sector.
    JEL: O31 O38 Q48 Q55 Q58
    Date: 2015–06
  42. By: Lance Taylor; Armon Rezai (Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria); Duncan K. Foley
    Abstract: A demand-driven growth model involving capital accumulation and the dynamics of greenhouse gas (GHG) concentration is set up to examine macroeconomic issues raised by global warming, e.g. effects on output and employment of rising levels of GHG; offsets by mitigation; relationships among energy use and labor productivity, income distribution, and growth; the economic significance of the Jevons and other paradoxes; sustainable consumption and possible reductions in employment; and sources of instability and cyclicality implicit in the twodimensional dynamical system. The emphasis is on the combination of biophysical limits and Post- Keynesian growth theory and the qualitative patterns of system adjustment and the dynamics that emerge.
    Keywords: Demand-driven growth / climate change / demand and distribution / energy use / energy productivity / labor productivity / employment
    Date: 2015–03
  43. By: Victor M. Peredo-Alvarez (Biological and Environmental Sciences, University of Stirling); Allen S. Bellas (College of Management, Metropolitan State University); Ian Lange (Division of Economics and Business, Colorado School of Mines)
    Abstract: Steam-based electrical generating plants use large quantities of water for cooling. The potential environmental impacts of water cooling systems have resulted in their inclusion in the Clean Water Act's (CWA) Sections 316(a), related to thermal discharges and 316(b), related to cooling water intake. The CWA mandates a technological standard for water cooling systems. This analysis examines how the performance-adjusted rates of thermal emissions and water withdrawals for cooling units have changed over their vintage and how these rates of change were impacted by imposition of the CWA. Though technology standards are believed to hinder technological progress, results show that progress occurred for cooling systems installed after the CWA and no progress occurred previous to it.
    Keywords: Water Withdrawals, Thermal Pollution, Innovation, Environmental Policy
    Date: 2015–06
  44. By: Souhaib Ben Taieb; Raphael Huser; Rob J. Hyndman; Marc G. Genton
    Abstract: A large body of the forecasting literature so far has been focused on forecasting the conditional mean of future observations. However, there is an increasing need for generating the entire conditional distribution of future observations in order to effectively quantify the uncertainty in time series data. We present two different methods for probabilistic time series forecasting that allow the inclusion of a possibly large set of exogenous variables. One method is based on forecasting both the conditional mean and variance of the future distribution using a traditional regression approach. The other directly computes multiple quantiles of the future distribution using quantile regression. We propose an implementation for the two methods based on boosted additive models, which enjoy many useful properties including accuracy, flexibility, interpretability and automatic variable selection. We conduct extensive experiments using electricity smart meter data, on both aggregated and disaggregated scales, to compare the two forecasting methods for the challenging problem of forecasting the distribution of future electricity consumption. The empirical results demonstrate that the mean and variance forecasting provides better forecasts for aggregated demand, while the flexibility of the quantile regression approach is more suitable for disaggregated demand. These results are particularly useful since more energy data will become available at the disaggregated level in the future.
    Keywords: Additive models, boosting, density forecasting, energy forecasting, probabilistic forecasting
    JEL: Q47 C14 C22
    Date: 2015
  45. By: Wang, Zhongmin (Resources for the Future); Lee, Alvin; Polonsky, Michael
    Abstract: Consumer boycotts are triggered by egregious events, but the literature has not distinguished the level of egregiousness from consumers’ preferences or disutility associated with a given level of egregiousness, nor has the literature studied how these two components of egregiousness affect boycott intensity. We provide a model of market-level boycotts that distinguishes the two egregiousness components. Consistent with the predictions of our model, the BP Deepwater Horizon oil spill triggered a market-level boycott effect only after its egregiousness exceeded a threshold level and boycott intensity then increased with its level of egregiousness, approximated by the officially reported daily amount of oil leaked into the ocean, and with consumers’ disutility from egregiousness, approximated by an area’s environmentalism and its proximity to the Gulf of Mexico. We also integrate media coverage within our models and find that the weekly intensity of media coverage affects boycott intensity.
    Keywords: egregiousness, boycott, BP oil spill, environmentalism
    JEL: M3 Q50
    Date: 2015–02–26
  46. By: Faith Euphrasia Mavengere (University of Jyväskylä)
    Abstract: The concept of a green economy, which was developed in the field of environmental economics, has in the past two years entered mainstream policy discourse and been broadened from the industrialized countries to envelop the developing and also the least developed countries. Green economy is perceived as a concept replacing sustainable development as the new driving force of environmental action. However, different green economy approaches have been discussed and researched mainly in the context of industrialized countries. Thus, there is a clear need to bridge this gap by founding research on the green economy’s implications in developing countries hence the purpose of this PhD research is to analyze green growth in relation to energy governance in Cambodia and Laos. The following key research questions are raised: What are the governance processes that influence whether the efforts will be guided towards large-scale solutions, such as large scale hydropower or towards finding locally appropriate solutions for green economy transformations? What are the challenges and possibilities for transforming the energy sectors to be more inclusive? Qualitative research methods will be used to collect data in this research. Research materials and methods which will be used in this research include policy analysis assessing policy documents, development plans and strategies such as the green growth road map of Cambodia and the national renewable energy strategies for Cambodia and Laos. Additionally, in line with the scope of this research, thematic interviews will therefore be carried out with planners in different ministries and provincial authorities as well as among civil society actors to provide relevant information, opinions and thoughts on the topic. The findings of this research will add to the existing body of knowledge with insights for bridging society-science-policy gaps in energy governance planning and decision-making processes in Laos and Cambodia and other least developed countries where local capacity and resources are limited.
    Keywords: green economy, energy
  47. By: Grebel, Thomas; Stützer, Michael
    Date: 2014
  48. By: Shuhua Chang; Xinyu Wang; Alexander Shananin
    Abstract: In this paper, we present a mean field game to model the production behaviors of a very large number of producers, whose carbon emissions are regulated by government. Especially, an emission permits trading scheme is considered in our model, in which each enterprise can trade its own permits flexibly. By means of the mean field equilibrium, we obtain a Hamilton-Jacobi-Bellman (HJB) equation coupled with a Kolmogorov equation, which are satisfied by the adjoint state and the density of producers (agents), respectively. Then, we propose a so-called fitted finite volume method to solve the HJB equation and the Kolmogorov equation. The efficiency and the usefulness of this method are illustrated by the numerical experiments. Under different conditions, the equilibrium states as well as the effects of the emission permits price are examined, which demonstrates that the emission permits trading scheme influences the producers' behaviors, that is, more populations would like to choose a lower rather than a higher emission level when the emission permits are expensive.
    Date: 2015–06
  49. By: Blackman, Allen (Resources for the Future); Alpizar, Francisco; Carlsson, Fredrik; Rivera Planter, Marisol
    Abstract: Little is known about the cost of environmental regulations such as residential zoning restrictions and recycling mandates that target households instead of firms, partly because of significant methodological and data challenges. We use a survey-based approach, the contingent valuation method, to measure the costs of Mexico City’s Day Without Driving program, which seeks to stem pollution and traffic congestion by prohibiting vehicles from being driven one day each week. To our knowledge, ours is the first study of an actual regulation to use this approach. We find that the Mexican program’s costs are substantial: up to US $103 per vehicle per year, about 1 percent of drivers’ annual income. Recent research has questioned whether programs for driving restrictions in Mexico City and several other megacities actually have environmental benefits. Our results suggest that whatever benefits these programs may have, they can be quite costly.
    Keywords: contingent valuation, driving restrictions, regulatory cost
    JEL: Q52 R48 O18
    Date: 2015–05–28
  50. By: Hagem, Cathrine; Hoel, Michael; Holtsmark, Bjart; Sterner, Thomas
    Abstract: We analyze two mechanism designs for refunding emissions payments to polluting firms - outputbased refunding (OB) and expenditure-based refunding (EB). In both instruments, emissions fees are returned to the polluting industry, typically making the policy more politically acceptable than a standard tax. The crucial difference between OB and EB is that the fees are refunded in proportion to output in the former but in proportion to the firms’ expenditure on abatement equipment in the latter. We show theoretically that to achieve a given abatement target, the fee level in the OB design exceeds the standard tax rate, whereas the fee level in the EB design is lower. Furthermore, the use of OB and EB may lead to large differences in the distribution of costs across firms. Both designs imply a cost-ineffective provision of abatement, as firms put relatively too much effort into reducing emissions through abatement technology compared with reducing output or improving management. However, maintaining output may be seen as a political advantage by policymakers if they seek to avoid activity reduction in the regulated sector.
    Keywords: refunded charge, output-based, expenditure-based, NOx, tax subsidy, policy design
    JEL: Q28 Q25 H23
    Date: 2015–02–06
  51. By: Christos Makridis (Stanford University)
    Abstract: This paper estimates the elasticities of substitution between air quality and non-durables consumption, housing services, and leisure in the United States. First, I develop the most comprehensive database to date containing measures of household-level consumption, leisure, and demographics, together with county-level measures of weather, air quality, pollution, and economic development throughout the entire United States between 2005-2010. Second, I formulate and estimate a structural model allowing for nonseparable interactions between air quality and non-durables consumption, housing services, and leisure equal to 1.5, .62, and .32, respectively, and are identified from county-industry-specific deviations in air quality from the county averages after conditioning on shocks common to all counties within a state. Prior literature ignored the ways in which households are able to best respond to changes in environmental amenities through cross-substitution. The multi-dimensionality of the micro-data allows me to characterize heterogeneity in tastes for air quality based on brackets of educational attainment, income, age, and exposure to pollution. Third, applying my elasticity estimates to an analog of the EPA’s evaluation of the Clean Air Act Amendments of 1990, I find that the benefits are many orders of magnitude lower because households are able to substitute across different private goods and services.
    Date: 2015–06
  52. By: L. Lambertini; J. Poyago-Theotoky; A. Tampieri
    Abstract: We examine the relationship between competition and innovation in an industry where production is polluting and R&D aims to reduce emissions (“green” innovation). We present an n-firm oligopoly where firms compete in quantities and decide their investment in “green” R&D. When environmental taxation is exogenous, aggregate R&D investment always increases with the number of firms in the industry. Next we analyse the case where the emission tax is set endogenously by a regulator (committed or time-consistent) with the aim to maximise social welfare. We show that an inverted-U relationship exists between aggregate R&D and industry size under reasonable conditions, and is driven by the presence of R&D spillovers.
    JEL: Q55 Q56 O30 L13
    Date: 2015–06
  53. By: Marcello Tonelli (Australian Centre of Entrepreneurship Research (ACE) - Business School, Queenslands University of Technology); Nicolò Cristoni (WorlDynamics Pty Ltd)
    Abstract: There is strong evidence across the media that humanity has finally come to recognize the certainty and imminence of a global environmental crisis due to man-triggered ecological alterations. This widespread recognition of what is happening around us has matured even further as studies acknowledging that everything on Earth is interconnected begin to mount across various branches of learning. The appreciation of this simple linear and two-dimensional relationship implies enormous consequences for economic and management studies, as alternative business models will eventually have to supersede the old practices that still govern major industry sectors (e.g. energy, cement, agriculture, automotive, pharmaceutical, etc.). This paper argues that traditional knowledge found in developing countries can sometimes harness the potential of sparking genuine alternatives to established business practices. With a focus on the most fundamental geochemical cycles on Earth
    Keywords: Developing countries, geochemical cycles, environmental changes, interconnectedness, traditional knowledge.
    JEL: Q01 Q51 Q54
  54. By: Hooi Hooi Lean; Russell Smyth
    Abstract: We test for convergence in disaggregated petroleum consumption at the sector level for the United States using the recently proposed GARCH unit root test, suitable for high frequency data. We find evidence of convergence for just over half of the series, including total petroleum consumption in each sector and approximately three quarters of the disaggregated petroleum consumption series in transportation.
    Keywords: Convergence; Petroleum consumption, Unit root, United States
    Date: 2015–01

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