nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒07‒18
thirty-two papers chosen by
Roger Fouquet
London School of Economics

  1. Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program By Meredith Fowlie; Michael Greenstone; Catherine Wolfram
  2. Case study; Paper on the energy efficiency evolution in the European road freight transport sector By Riccardo Basosi; Franco Ruzzenenti
  3. The Pass-Through of RIN Prices to Wholesale and Retail Fuels under the Renewable Fuel Standard By Christopher R. Knittel; Ben S. Meiselman; James H. Stock
  4. The political economy of renewable energy policies in Germany and the EU By Strunz, Sebastian; Gawel, Erik; Lehmann, Paul
  5. The Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives and Rebates By Severin Borenstein
  6. The provision of electricity to rural communities through Micro-Hydro Power in rural Indonesia: Micro Hydro Power pilot programme within the national programme for community development (PNPM) supported by the Netherlands through energising development By Peters, Jörg; Sievert, Maximiliane
  7. A Welfare Analysis of the Electricity Transmission Regulatory Regime in Germany By Claudia Kemfert; Friedrich Kunz; Juan Rosellón
  8. Nuclear and financial meltdowns; The impact of the Fukushima accident on the transition to a low-carbon economy By Alessandro Vercelli
  9. Italian Industrial Production, 1861 1913: A Statistical Reconstruction. J. The Utilities Industries By Stefano Fenoaltea
  10. Rice husk gasification for electricity generation in Cambodia in December 2014 By Hong Nam Nguyen; Minh Ha-Duong
  11. Who Needs a Fracking Education? The Educational Response to Low-Skill Biased Technological Change By Elizabeth U. Cascio; Ayushi Narayan
  12. Mining and Quasi-Option Value By Christopher Costello; Charles D. Kolstad
  13. Medium and Long Term Crude Oil Price Outlook: Economic research on shale oil and gas production behavior in the United States (Japanese) By KAINOU Kazunari
  14. Oil prices and the US economy: Where is the boom? By Arora, Vipin
  15. Clean energy firms’ stock prices, technology, oil prices, and carbon price By Mara Madaleno; Alfredo Marvão Pereira
  16. Labor Market Flexibility and FDI Flows: Evidence from Oil-Rich GCC and Middle Income Countries By Wasseem Mina; Louis Jaeck
  17. Resource Discovery and Conflict in Africa: What Do the Data Show? By Rabah Arezki; Sambit Bhattacharyya; Nemera Mamo
  18. An analysis of the effects of policies; the case of coal By Massimo Di Matteo; Silvia Ferrini; Virna Talia
  19. How to stop VAT frauds on the fuel market: a usual price rule By Pavel Semerad
  20. Effects of fossil fuel prices on the transition to a low-carbon economy By Franco Ruzzenenti; Andreas A. Papandreou
  21. Environmental Effects of a Vehicle Tax Reform: Empirical Evidence from Norway By Ciccone, Alice
  22. The Great Recession and the transition to a low-carbon economy By Andreas A. Papandreou
  23. A New Carbon Tax in Portugal: A Missed Opportunity to Achieve the Triple Dividend? By Alfredo Marvão Pereira; Pedro G. Rodrigues
  24. Modelling the impacts of a national carbon tax in a country with inhomogeneous regional development: an actor-based system-dynamic approach By Dmitry V. Kovalevsky; Klaus Hasselmann
  25. The allocation of carbon emission permits; theoretical aspects and practical problems in the EU ETS By Simone Borghesi; Massimiliano Montini
  26. Lobbying for carbon permits in Europe By Julien HANOTEAU
  27. The Dynamics of Linking Permit Markets By Holtsmark, Katinka; Midttømme, Kristoffer
  28. Has trade openness reduced pollution in China? By José de Sousa; Laura Hering; Sandra Poncet
  29. Europe's Mechanism for Countering the Risk of Carbon Leakage By Aleksandar Zaklan; Bente Bauer
  30. Going Green for Esteem: An Extended Uzawa-Lucas Model with Status Driven Environmentalism By Zhou, Sophie Lian
  31. Reducing CO2 from cars in the European Union: Emission standards or emission trading? By Paltsev, Sergey; Chen, Y.-H. Henry; Karplus, Valerie; Kishimoto, Paul; Reilly, John; Loeschel, Andreas; von Graevenitz, Kathrine; Koesler, Simon
  32. Ethics, equity and the economics of climate change paper 2: economics and politics By Nicholas Stern

  1. By: Meredith Fowlie; Michael Greenstone; Catherine Wolfram
    Abstract: Conventional wisdom suggests that energy efficiency (EE) policies are beneficial because they induce investments that pay for themselves and lead to emissions reductions. However, this belief is primarily based on projections from engineering models. This paper reports on the results of an experimental evaluation of the nation’s largest residential EE program conducted on a sample of more than 30,000 households. The findings suggest that the upfront investment costs are about twice the actual energy savings. Further, the model-projected savings are roughly 2.5 times the actual savings. While this might be attributed to the “rebound” effect – when demand for energy end uses increases as a result of greater efficiency – the paper fails to find evidence of significantly higher indoor temperatures at weatherized homes. Even when accounting for the broader societal benefits of energy efficiency investments, the costs still substantially outweigh the benefits; the average rate of return is approximately -9.5% annually.
    JEL: Q4 Q48 Q5
    Date: 2015–07
  2. By: Riccardo Basosi (Department of Biotechnology, Chemistry and Pharmacy, University of Siena, Italy); Franco Ruzzenenti (Department of Biotechnology, Chemistry and Pharmacy, University of Siena, Italy)
    Abstract: One of the goals of WP7 is that of analyzing the energy crisis within the global economic crisis and assess to what extent fuel prices can promote the transition towards a more sustainable and efficient energy regime. This paper addresses the European freight transport system, national and cross-boarder, and assesses the evolution of its efficiency and intensity during the period 1998-2011, when oil prices globally increased, up the hike of the 2008. It will also be investigated the rebound effect in the sector according to two different approaches: 1) a standard, econometric approach based on regressing the elasticity of energy efficiency and energy service; 2) a new methodology based on network theory and statistical mechanics. According to the econometric approach to the European freight transport sector there was a positive rebound of about 40% globally and 38% on cross-border trade, whereas there was no significant (cross-border) rebound in Europe according to the model based on network theory. Interestingly, this latter model showed that the cross-border European freight transport network is more efficient compared to other regional networks and to the world, because weights more mass than money in its exchanges.
    Keywords: Energy Efficiency, European Freight Transport Sector, Rebound Effect, Network Theory
    JEL: R4 Q4
    Date: 2014–01–01
  3. By: Christopher R. Knittel; Ben S. Meiselman; James H. Stock
    Abstract: The U.S. Renewable Fuel Standard (RFS) requires blending increasing quantities of biofuels into the U.S. surface vehicle fuel supply. In 2013, the fraction of ethanol in the gasoline pool effectively reached 10%, the ethanol capacity of the dominant U.S. gasoline blend (the “E10 blend wall”). During 2013-2015, the price of RINs—tradeable electronic certificates for complying with the RFS—fluctuated through a wide range, largely because of changes in actual and expected policy combined with learning about the implications of the E10 blend wall. RINs are sold by biofuels producers and purchased by obligated parties (refiners and importers), who must retire RINs in proportion to the petroleum they sell for surface transportation. As a result, RINs in effect serve as a charge on obligated fuels and a corrective subsidy for lower-carbon renewable fuels, and are neutral for fuels outside the RFS. In theory, RIN prices provide incentives to consumers to use fuels with a high renewable content and to biofuels producers to produce those fuels, and as such are a key mechanism of the RFS. This paper examines the extent to which RIN prices are passed through to the price of obligated fuels, and provides econometric results that complement the graphical analysis in Burkholder (2015). We analyze daily data on RINs and fuel prices from January 1, 2013 through March 10, 2015. When we examine wholesale prices on comparable obligated and non-obligated fuels, for example the spread between diesel and jet fuel in the U.S. Gulf, we find that that roughly one-half to three-fourths of a change in RIN prices is passed through to obligated fuels in the same day as the RIN price movement, and this fraction rises over the subsequent few business days. Using six different wholesale spreads between obligated and non-obligated fuels, we estimate a pooled long-run pass-through coefficient of 1.01 with a standard error of 0.12. We also examine the transmission of RIN prices to retail fuel prices. The net RIN obligation on E10 is essentially zero over this period, and indeed we find no statistical evidence linking changes in RIN prices to changes in E10 prices. We also examine the price of E85 which, with an estimated average of 74% ethanol, generates more RINs than it obligates and thus in principle receives a large RIN subsidy. In contrast to the foregoing results, which are consistent with theory, the pass-through of RIN prices to the E85-E10 spread is precisely estimated to be zero if one adjusts for seasonality (as we argue should be done), or if not, is at most 30%. Over this period, on average high RIN prices did not translate into discounted prices for E85.
    JEL: C32 Q42
    Date: 2015–07
  4. By: Strunz, Sebastian; Gawel, Erik; Lehmann, Paul
    Abstract: In this paper, we employ a public choice perspective to analyze the development of policies for renewable energy sources (RES) in the EU in general and in Germany more specifically. In doing so, we explain the main characteristics of current RES policies in the EU by reference to the selfinterest driven motivations of voters, stakeholders and political actors. One important puzzle, which we address, is the following: How could effective RES-policies be introduced against the political opposition of fossil-fuel interest groups in the past? Via analyzing the German example in more detail, we show how over time a self-reinforcing interplay of ideological and financial RES support has emerged. Moreover, we demonstrate that observed specific design choices for EU RES policies, such as largely riskless remuneration schemes, high degrees of technology differentiation and decentralized decision-making across Member States, can be traced back to politicians' need to balance a variety of partly opposing interests. A major benefit of the presented analysis is that it provides a realistic assessment of the challenges for RES policy reform - any reform effort critically depends on its ability to balance stakeholder interests.
    Keywords: lobbying,public choice,renewable energy sources,subsidies,support policies
    JEL: D72 D78 H25 K32 Q42
    Date: 2015
  5. By: Severin Borenstein
    Abstract: With dramatic declines in the cost of solar PV technology over the last 5 years, the electricity industry is in the midst of discussions about whether to use this low-polluting renewable energy source in grid-scale generation or in distributed generation (DG), mostly with rooftop solar PV. California has led the growth in DG solar in the U.S. I use 2007 to early 2014 residential data from Pacific Gas & Electric – the utility with largest number of residential solar customers in the U.S. – to examine the full range of private incentives for installing residential solar, from the direct payments and tax credits to the indirect incentives that result from the residential tariff design and the crediting of solar production under “net energy metering.” I then study the income distribution of solar adopters and how that has changed over time. I find the skew to wealthy households adopting solar is still significant, but has lessened since 2011. Adoption continues to be dominated by the heaviest electricity-consuming households, probably because the steeply-tiered tariff structure greatly increases the private value of solar to such customers while reducing the incentive for consumers who are below median consumption. In fact, the financial incentive for those who adopt solar over the sample period may have been due nearly as much to California's tiered tariff structure as to the 30% federal tax credit. The California experience suggests that rate design can greatly influence the economic incentives for residential solar adoption and which customers receive those benefits.
    JEL: L94 Q42 Q52 Q58
    Date: 2015–07
  6. By: Peters, Jörg; Sievert, Maximiliane
    Abstract: This final report is part of an evaluation commissioned by the Policy and Operations Evaluation Department (IOB) of the Netherlands Ministry of Foreign Affairs. It belongs to a series of impact evaluations of renewable energy and development programmes supported by the Netherlands, with a focus on the medium and long-term effects of these programmes on end-users or final beneficiaries. The Indonesian government has proclaimed rural access to electricity as one major objective and has set the target for the electrification rate at 95 percent for the year 2025 (DESDM 2005). At the same time, the promotion of renewable energies is high on the government's agenda and in particular the remote areas lend itself to decentralized electrification using solar or hydro power. Against this background, the Micro Hydro Power pilot programme (MHP pilot in the following) strives to promote the development of micro hydro power fed minigrids in remote areas. It is the major purpose of this evaluation to assess the impacts of micro-hydro power electrification has on the local population's welfare measured by various indicators including lighting usage, energy expenditures, activity patterns, and security aspects.
    Date: 2015
  7. By: Claudia Kemfert; Friedrich Kunz; Juan Rosellón
    Abstract: We analyze the current regulatory regime for electricity transmission in Germany, which combines network planning with both cost-plus and revenue-cap regulations. After reviewing international experiences on transmission investment, we first make a qualitative assessment of the overall German regime. The German TSOs have in general incentives to overinvest and inefficiently inflate costs. We further develop two models to analyze the transmission planning process. In the first model there is no trade-off between transmission expansion and generation dispatch. This is a modeling set-up similar to the one actually used in the German transmission planning (Netzentwicklungsplan). A second model alternatively allows for such a trade-off, and thus represents an optimal way of transmission network planning. Simulations with the two models are carried out and compared so as to illustrate the amount of excessive transmission capacity investment and welfare losses associated with the current regime.
    Keywords: Transmission planning, nodal prices, congestion management, electricity, Germany.
    JEL: L50 L94 Q40
    Date: 2015
  8. By: Alessandro Vercelli (DEPS University of Siena)
    Abstract: The paper is articulated in two parts. In the first part the consequences of the Fukushima incident are briefly described and analyzed offering a post-Fukushima reassessment of the advantages and disadvantages of nuclear power generation as compared to those of alternative energy sources. In the second part of the paper the intrinsic structural instability of the process of nuclear power generation is analyzed by comparing it with that of financial processes and showing that a thorough understanding of their critical dynamic nature puts serious constraints on their controllability. The Fukushima accident made evident, and further worsened, the shortcomings of the existing energy system based on fossil sources. A crucial consequence was that it reduced significantly the current and prospective contributions of nuclear energy to the global supply of energy aggravating for a foreseeable future a trend characterized by structural excess demand of energy. A persistent increase in the price of nuclear energy and, more in general, in the trend of energy prices may frustrate any attempt to resume a sustained rate of growth within the business-as-usual paradigm. This calls for a more rapid transition towards a low carbon economy.
    Keywords: Fukushima accident, nuclear power generation, critical systems, structural instability, financial crisis, climate change policy, carbon prices, low-carbon economy
    JEL: B41 G01 Q01 Q28 Q38 Q42 Q43 Q48 Q54
    Date: 2014–12–15
  9. By: Stefano Fenoaltea
    Abstract: This paper is the tenth section of Italian Industrial Production, 1861 1913: A Statistical Reconstruction (in progress). It documents the derivation, from the historical sources, of the eight time series that trace the product of the utilities industries, and of the corresponding estimates of value added per unit at 1911 prices. The electric utilities are relatively well documented by data on capacity and utilization; separate series trace the production (and distribution) of thermal power on the one hand and hydraulic power on the other. The production of the gas utilities is tracked by separate series for gas, coke, and tar. Data are abundant from the 1890s; the estimates for the earlier years are anchored by an early benchmark, but otherwise largely interpolated. The water utilities are represented by separate series for the exceptional Apulian aqueduct, the other aqueducts, and the local distribution systems. The real product of the Apulian aqueduct, still incomplete, is tracked by the embodied capital. The real product of the other aqueducts is tracked by their equivalent ton-kilometers (the square root of the yield, to allow for economies of scale, times length), estimated from cross-section evidence that includes construction dates. The real product of the local nets is measured by their length (augmented to allow for wells and cisterns), itself reconstructed from sporadic local data.
    Keywords: method, utilities, Italy
    JEL: E01 N13 N63
    Date: 2015
  10. By: Hong Nam Nguyen (CleanED - Clean Energy and Sustainable Development Lab - Université des Sciences et des Technologies de Hanoi - USTH (VIETNAM) - Université des Sciences et des Technologies de Hanoi - USTH (VIETNAM)); Minh Ha-Duong (CleanED - Clean Energy and Sustainable Development Lab - Université des Sciences et des Technologies de Hanoi - USTH (VIETNAM) - Université des Sciences et des Technologies de Hanoi - USTH (VIETNAM), CIRED - Centre International de Recherche sur l'Environnement et le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - CIRAD - Centre de coopération internationale en recherche agronomique pour le développement - École des Ponts ParisTech (ENPC) - CNRS)
    Abstract: Rice husks are the indigestible coatings of grains of rice. They are produced in large quantities by the rice milling industry, more than 1 million ton per year in Cambodia. In recent years, Cambodian enterprises have installed gasifiers, which burn rice husks to generate electricity. This is a two stage process: the biomass is first fed into a gasifier which produces syngas and ashes, then the syngas is cleaned and burned into an engine where it saves diesel fuel. Many of these enterprises have been in local communities currently without electricity or in fuel poverty. To learn more about the benefits and drawbacks of using rice-husk gasifiers, and to study about the sustainability challenges for deploying these technologies, the Clean energy and sustainable development lab (CleanED lab) of the University of Science and Technology of Hanoi (USTH), and the SNV Netherlands Development Organisation (SNV) have conducted a visit of several rice mills and rural electricity enterprises from 18 th to 22nd December 2014. Five rice mills and a rural electricity enterprise in Battambang, Siem Reap and Kampong Thom provinces were selected for the field survey. In addition with desk research, semi-structured interviews with gasifier users, with the representatives of Canadia Bank PLC and the Federation of Cambodian Rice Millers Association (FCRMA) during the field surveys were also conducted. This report present and justifies the main conclusions of the visit.
    Date: 2014–12–24
  11. By: Elizabeth U. Cascio; Ayushi Narayan
    Abstract: Over the past decade, a technological breakthrough – hydraulic fracturing or “fracking” – has fueled a boom in oil and natural gas extraction by reaching shale reserves inaccessible through conventional technologies. We explore the educational response to fracking, taking advantage of the timing of its widespread introduction and the spatial variation in shale oil and gas reserves. We show that local labor demand shocks from fracking have been biased toward low-skilled labor and males, reducing the return to high school completion among men. We also show that fracking has increased high school dropout rates of male teens, both overall and relative to females. Our estimates imply that, absent fracking, the male-female gap in high school dropout rates among 17- to 18-year-olds would have narrowed by about 11% between 2000 and 2013 instead of remaining unchanged. Our estimates also imply an elasticity of high school completion with respect to the return to high school of 0.47, a figure below historical estimates. Explanations for our findings aside from fracking’s low-skill bias – changes in school inputs, population demographics, and resource prices – receive less empirical support.
    JEL: I20 J2 J3 O33 Q33 R23
    Date: 2015–07
  12. By: Christopher Costello; Charles D. Kolstad
    Abstract: We study the timing-of-extraction problem facing a decentralized mine owner when extraction entails environmental damage. As expected, when the environmental damage from mining is known, the socially optimal timing will depend on the magnitude of the damage relative to these costs in the rest of the world. But when environmental damage is uncertain, and these costs are revealed over time, a quasi-option value arises. We show that even if expected environmental costs are identical to those in the rest of the world, any uncertainty over these costs will cause the social planner to optimally delay mining until better information arrives. We show conditions under which it is optimal to postpone the mining decision indefinitely, and conditions when it is optimal to postpone only for a finite duration. The analysis leverages a crucial observation that distinguishes the non-renewable resource problem from the traditional quasi-option value framework. In the traditional framework, the presence of an irreversible investment and uncertainty can help nudge the decision maker to preserve an option, but it by no means implies the decision maker should always preserve the option. In contrast, for a non-renewable resource model, the arbitrage condition underpinning the Hotelling rule suggests that in the absence of uncertainty, the marginal mine owner is completely indifferent between mining immediately and at any point in the future. Thus, for our problem, any uncertainty will convince her to defer the mining decision.
    JEL: Q31 Q32 Q38 Q52
    Date: 2015–07
  13. By: KAINOU Kazunari
    Abstract: It has been pointed out that the steep fall in crude oil prices after the latter half of 2014 has been strongly affected by both demand side factors such as the slowdown of world economic growth and supply side factors such as a massive increase in shale oil production in the United States and other structural factors. Shale oil and gas production is well known for its different aspects compared to conventional oil and gas production such as differences in oil and gas reserves, differences in production well construction technology, and so on, but production behavior and/or relationship of price and quantity of shale oil and gas production have not yet been well analyzed.This paper tries to analyze the relationship of shale oil and gas production and rig count trends and the relationship of price and rig count trends in the United States, applying econometrical approaches based on official statistics of the United States Energy Information Agency (EIA).The analysis indicates that the rig counts are affected by price changes with an average time lag of 7-10 months and four months in the fastest case, and that the elasticity of rig count change to oil price change is plus 0.3 to 0.4, with a maximum of 1.4.The analysis also indicates that shale oil and gas production change occurs after rig count changes with an average time lag of eight months and two months in the fastest case. Furthermore, the analysis indicates that the contribution of one rig month unit of rig count change to the oil and gas production change is approximately 0.1 to 0.3 petajoule per month. But in the shale oil case, the time lag from the start of rig operations to the start of oil production varies widely due to the waiting time for intermediate processes such as hydro pressure fracture cracking; "fracking" process exists.This paper tries to forecast the shale oil and gas rig count and production in major U.S. oil and gas field regions based on these outcomes, and finds that if the current crude oil price level continues for a long period, the oil rig count will be decreased by almost half of its current level until the end of 2015, and that shale oil production will stop its increase and may start to fall in the latter half of 2016.It is necessary to continue a periodical re-quantification of the above analysis, to expand the scopes to other regions and to start demand side quantitative analysis.
    Date: 2015–07
  14. By: Arora, Vipin
    Abstract: The author argues that the economic benefits of low gasoline prices for the U.S. economy have fallen substantially since the reemergence of America as a major oil producer. The old rule-ofthumb that a 10% fall in the oil price raises inflation-adjusted U.S. GDP by 0.2% is too large - the impact on economic activity should be closer to zero, and may even be negative if consumption grows slowly. The reasons for this change are straightforward, if underappreciated: (i) the value of oil production accounts for a larger share of the U.S. economy; and (ii) consumers are not spending the windfall like they used to because of higher debt levels, limited access to credit, slow wage growth, and an older population.
    Keywords: oil price,economic activity,input-output,consumption
    JEL: C67 E20 E60 Q43
    Date: 2015
  15. By: Mara Madaleno (Department of Economics, Management and Industrial Engineering, University of Aveiro Aveiro, Portugal); Alfredo Marvão Pereira (Department of Economics, The College of William and Mary)
    Abstract: Production costs of alternative energies are still high, but increased demand for oil, future oil supply shortage concerns and climate change concerns, have led to the fast development of renewable energy firms. The sector accomplished has accomplished remarkable progress and attracted attention to clean energy, both at the industry level and at the academic side. With this work we attempt to determine whether or not the placement of a price on carbon emissions encourages investments in clean energy firms. Unlike previous literature we focus on the German case and we address the issue at the individual company level. We were able to verify this link but only for the case of companies whose weight over the amount of total energy produced is relevant, which is the case of solar in Germany.
    Keywords: Clean Energy; Firm Stock Prices; Oil Prices; Carbon Prices; Technology.
    Date: 2015–07–05
  16. By: Wasseem Mina (Department of Economics and Finance, College of Business and Economics, United Arab Emirates University); Louis Jaeck (Department of Economics and Finance, College of Business and Economics, United Arab Emirates University)
    Abstract: In this paper we empirically examine the impact of labor market flexibility on FDI flows to oil-rich GCC and compare it to middle income countries in 2006-2011. We account for potential endogeneity and nonstationarity and adopt system GMM and IV estimation methodologies. Our findings show that in middle income countries overall flexibility increases FDI flows under both system GMM and IV methodologies. In GCC countries overall LMF decreases FDI flows under system GMM methodology. Results also show a positive “GCC region” influence outweighing the negative flexibility influence. Growth potential and infrastructure development matter for both GCC and middle income countries.
    Date: 2015–05–08
  17. By: Rabah Arezki; Sambit Bhattacharyya; Nemera Mamo
    Abstract: The empirical relationship between natural resources and conflict in Africa is not very well understood. Using a novel geocoded dataset on resource discovery and conflict we are able to construct a quasi-natural experiment to explore the causal effect of (giant and major) oil and mineral discoveries on conflict in Africa at the grid level corresponding to a spatial resolution of 0.5 x 0.5 degree covering the period 1946 to 2008. Contrary to conventional wisdom, we find no evidence of natural resources triggering conflict in Africa after controlling for grid-specific fixed factors and time varying common shocks. Resource discovery appears to have improved local income measured by nightlights which could be reducing the conflict likelihood. We observe little or no heterogeneity in the relationship across resource type, size of discovery, pre and post conclusion of the cold war, and institutional quality. The relationship remains unchanged at the regional and national levels.
    Keywords: Resource discovery; Conflict onset; Conflict incidence; Conflict intensity
    JEL: D72 O11
    Date: 2015
  18. By: Massimo Di Matteo (Department of Political Science and International studies, University of Siena.); Silvia Ferrini (Department of Political Science and International studies, University of Siena.); Virna Talia (Department of Political Science and International studies, University of Siena.)
    Abstract: The shift to more sustainable energy regimes requires the implementation of the right mix of policy options to internalize fossil fuel externalities. In this paper the attention is dedicated to the coal. Coal is the main fossil fuel for energy production and also the key driver of emerging economies (China, India). On the other end, the coal has been the driver of developed economies (EU, US) and a systematic review of policy options can offer several insights on the path to sustainability. Whereas coal combustion externalities (mainly CO2) are well regulated, policies for coal mining externalities are mainly neglected. Policy options present several characteristics and a formal discussion of the nexus externality and efficiency is provided. The result of a systematic web search for the coal mining externalities is presented. The strength of this search is to review several national and international reports/papers on coal mining effects. Policies for environmental and societal externalities are reviewed. Results show that the command and control is still the most popular instrument. However, mature economies (e.g. US) have successfully shifted towards voluntary agreements. These instruments promote efficiency and minimize distributional effects. It also emerges that landscape and biodiversity lost are not well regulated.
    Keywords: Externalities, Redistributive Effects, Valuation of Environmental Effects, Valuation of Environmental Policies Correlation Index
    JEL: Q51 Q58 H23 Q48
    Date: 2015–01–01
  19. By: Pavel Semerad (Department of Accounting and Taxation, Faculty of Business and Economics, Mendel university in Brno)
    Abstract: VAT fraud has now grown extensive and complex. One of the biggest problems is carousel fraud which causes huge losses to public budgets in many countries. Attention is devoted to the fuel market. A methodological tool that allows recognizing potential tax fraud on the basis of unusual sale prices was developed. For this reason, sale prices were collected and these could be available to judges and tax administrators when they make a decision about whether the price was usual or not. To get closer to reality, modified prices, which reflect real conditions on the market, e.g. placing goods in a tax warehouse, were also used.
    Keywords: Carousel frauds, fuels, tax evasion, usual price, value added tax
    JEL: H20 H26
    Date: 2015–07
  20. By: Franco Ruzzenenti (University of Siena); Andreas A. Papandreou (National and Kapodistrian University of Athens)
    Abstract: The purpose of this paper is to shed light on the role that fossil fuel prices have in bringing about a transition to a low carbon economy. This is a very broad, complex and potentially ambiguous question. It requires a good understanding of the factors that can shape long run fossil fuel price trends as well as an understanding of how energy transitions take place, and more specifically how an unprecedented policy-driven global energy transition can be orchestrated. The paper starts with the theory and historical evidence of resource and energy prices with a key message that over the very long run prices of energy services have shown a steady decline. The paper explains why a focus on oil is warranted, discusses the key determinants of oil prices and presents a brief history of recent oil price patterns. It also considers the connection of oil prices with recessions, what the future might bring for fossil fuel prices, and the potential implications of an end to cheap oil for the transition to a low-carbon economy. Finally, it looks into some facets of the interaction between fossil fuel prices and climate policy with a special focus on the role of carbon prices and how these must ultimately be part of a much broader strategy for an effective transition to a low carbon economy that is robust to alternative oil price trajectories.
    Keywords: oil prices, energy prices, energy policy, climate change policy, carbon prices, green paradox, socio-economic transitions, low-carbon economy
    JEL: L98 O13 Q32 Q38 Q41 Q43 Q47 Q48 Q54
    Date: 2015–01–01
  21. By: Ciccone, Alice (Dept. of Economics, University of Oslo)
    Abstract: In 2007, the Norwegian government reformed the vehicle registration tax in order to reduce the carbon intensity of the new car fleet by incentivizing the purchase of more fuel efficient cars. This paper identifies the impact of the new tax structure on three main dimensions: (i) the average CO2 emissions intensity of new registered vehicles, (ii) the relative change in sales between low and high polluting cars and (iii) the market share of diesel cars. A Difference in Difference approach is employed to estimate the short run effects on each outcome variable of interest. The results show that the average CO2 intensity of new vehicles was reduced in the year of the implementation of the reform by about 7.5 g of CO2/km. This reduction is the result of a 12 percentage points drop in the share of highly polluting cars and of an increase of about 20 percentage points in the market share of diesel cars.
    Keywords: CO2 emissions intensity; New vehicles; Vehicle registration tax; Tax reform; Norway; Diesel
    JEL: H25 L62 Q51 Q53 Q54 R48
    Date: 2015–02–11
  22. By: Andreas A. Papandreou (National and Kapodistrian University of Athens)
    Abstract: The objective of this paper is to consider the potential implications of the recent financial and economic crisis on the transition to a low carbon economy. This is unavoidably an exercise in tenuous conjectures given both our proximity to the still unfolding crisis, and the inherent complexity, confusing and highly contested nature of global scale crisis. It is also difficult because our understanding of major energy transitions are still very much in thier infancy, not to mention the unprecedented nature of a transition to a sustainable energy system. The paper begins with a breif review of the Great Recession, considers what lessions can be drawn from past energy transitions and the potential ways that crises, socio-economic transitions and sustainability might be linked. The historical relationship between past recessions and C)2 emissions is presented along with where we stand with respect to meeting mitigation targets. The Great Recession coincided with a relative peak in climate action and the rise of a Green Growth narrative that provides some hope of a joint attack on climate change and economic malaise. This paper will briefly review the idea of Green Growth and Green Keynesianism and look at the evidence on the extent and effectiveness of green demand stimulus following the Great Recession. The paper will argue that despite some early hope and some worthy global developments on the renewables front, public and political priorities shifted dramatically so that on balance the Great Recession can be associated with a 'policy peak' and a lost opportunity to propel the low carbon transition. Moreover, it raises concerns that the continued fragility of the economic recovery will further delay the needed transition.
    Keywords: Financial crisis, Great Recession, climate change policy, carbon prices, Green Growth, Green New Deal, socio-economic transitions, low carbon economy.
    JEL: E62 G01 O13 Q38 Q43 Q48 Q54 Q58
    Date: 2015–01–01
  23. By: Alfredo Marvão Pereira (Department of Economics, The College of William and Mary); Pedro G. Rodrigues (aCAPP, Center for Administration and Public Policies, Universidade de Lisboa, Portugal)
    Abstract: a carbon-tax proposal designed to achieve three dividends: to help Portugal meet the European Union’s target for emissions reductions by 2030, to boost long-term employment and GDP above their pre-carbon tax levels, and to strengthen public finances by lowering public indebtedness. A key feature of this proposal was a judicious set of mixed strategies to recycle all carbon-tax revenues back into the economy. In this note, we show how the carbon tax that the Portuguese Parliament eventually approved deviated from such guidelines, and ultimately failed to achieve the triple dividend. We argue that authorities need to quickly amend the existing legislation to avoid this misguided attempt turning into a missed opportunity to improve environmental, macroeconomic, and fiscal outcomes.
    Keywords: Carbon Tax; Triple Dividend; Economic Growth; Fiscal Consolidation; Dynamic General Equilibrium; Portugal.
    JEL: D58 H63 O44
    Date: 2015–07–05
  24. By: Dmitry V. Kovalevsky; Klaus Hasselmann
    Abstract: Different countries of the world are affected differently by the adverse impacts of anthropogenic climate change. For a large country consisting of several regions with different geographical conditions, the direct geographical impacts of climate change may differ significantly. Given the inhomogeneous regional economic development typical for many large countries already for the present climate, this suggests that regional economic disparities may increase even further as global warming develops. It is thus important that the impacts of climate mitigation policies are assessed not only on global and national levels, but also on the regional level. The key tool for assessing the efficiency of climate mitigation policies and their impacts are Integrated Assessment models (IAMs), i.e. dynamic models of the coupled climate?socioeconomic system. The family of IAMs described in the present paper represent extensions and modifications of a set of actor-based system-dynamics models reported earlier in Hasselmann K. (2013), Detecting and responding to climate change, Tellus B 65, 20088, (open access). The models focus on the strategies of key decision-making aggregate economic actors (often pursuing conflicting goals) that jointly govern the dynamic evolution of the socio-economic system. We start from a global IAM in which both fossil-fuel-based capital and renewable-energy-based capital determine the production function. We compare a business-as-usual scenario (no mitigation policy) with various mitigation scenarios with different global carbon tax rates. The revenues from the carbon tax in the mitigation scenarios are recirculated into the economy in the form of investments in renewable-energy-based capital. We explore both the case of constant productivity of renewable-energy-based capital and the case with endogenous improvement of renewable-energy productivity through learning-by-doing effects. The model simulations demonstrate that efficient mitigation policies are feasible with readily affordable costs. From this we develop a regionalized IAM along the same methodological lines. We consider a large country composed of two regions characterized by different climates and levels of economic development. This is coupled to large residual "country" representing the "rest of the world". It is assumed that a harmonized carbon tax is imposed in both regions of the country and also in the rest of the world. We explore to which extent the transfer of money from carbon tax revenues between the two regions undertaken by a national government can moderate regional disparities in economic development and climate change impacts. The research leading to these results has received funding from the European Community's Seventh Framework Programme under Grant Agreement No. 308601 (COMPLEX).
    Keywords: actor-based modelling; system dynamics; climate change; mitigation; carbon tax; multi-region models; inhomogeneous regional development; codes Q54; O44; R11
    Date: 2014–11
  25. By: Simone Borghesi (University of Siena); Massimiliano Montini (University of Siena)
    Abstract: The paper investigates the effectiveness of the progressive shift towards the auctioning system within the EU ETS and the practical difficulties that such a shift is encountering on its way. For this purpose, it first examines the theoretical debate on the optimal allocation method underlying the ETS and describes the current allocation regime of the European Union Allowances, presenting the general rules as well as the special provisions to address specific sectors (e.g. aviation and electricity generation). Then it discusses the main problems that have been emerging so far in terms of:(i) possible carbon leakage arising in some of the ETS sectors, (ii) unsatisfactory results of the NER (New Entrant Reserve) program, (iii) intertemporal evolution of the auction price and corresponding revenues, and (iv) the much debated backloading proposal, that is the idea of temporarily halting and postponing further auctions due to the lack of permits’ demand. The comparison of the theoretical debate with the practical difficulties arising in real world applications, highlights that a long way is still to go to achieve an optimal allocation method.
    Keywords: Emission Trading Scheme, Grandfathering, Auctioning, Backloading, New Entrants Reserve.
    JEL: L11 Q42 Q43 Q48
    Date: 2015–01–01
  26. By: Julien HANOTEAU (KEDGE Business School and Université d’Aix-Marseille, GREQAM)
    Abstract: Using cross-sector and cross-country data, this paper evidences that rent seeking influenced the allocation of CO2 emission permits in the two first phases of the European emissions trading scheme. Industry lobbies effectively used the ‘job loss’ and ‘competitiveness’ arguments, as unemployment proxy variables significantly impacted the allocation in both phases, and carbon intensity influenced it in the second phase. The countries that adopted a partial auction scheme also gave relatively more permits and in particular to the politically more powerful sectors. This suggests a compensation mechanism and supports the assumption of a political tradeoff between the quantity of permits issued and the decision between free grant and auction. It also confirms that the initial allocation is not neutral in the presence of special interest lobbying.
    Keywords: Lobbying, Emission trading, Permits allocation
    JEL: D72 Q58 C10
    Date: 2014–03–01
  27. By: Holtsmark, Katinka (Dept. of Economics, University of Oslo); Midttømme, Kristoffer (Dept. of Economics, University of Oslo)
    Abstract: We present a novel benefit of linking emission permit markets. We consider a dynamic setting, and let the countries issue permits non-cooperatively. With exogenous technology levels, there are only gains from permit trade if countries are different. With endogenous technology, however, we show that there are gains from trade even if countries are identical. In this case, linking the permit markets of different countries will turn permit issuance into intertemporal strategic complements: If one country issues fewer permits today, other countries will respond by issuing fewer permits in the future. This happens because issuing fewer permits today increases current investments in green energy capacity in all permit market countries, and countries with a higher green energy capacity will respond by issuing fewer permits in the future. Hence, each country faces incentives to withhold emission permits. Even though countries cannot commit to reducing their own emission, or punish other countries that do not, the outcome is reduced emissions, higher investments, and increased welfare, compared to a benchmark with only domestic permit trade. The more frequently participating countries reset their caps, the higher the gain from linking permit markers.
    Keywords: International agreements; permit markets; dynamic games; green technology investments
    JEL: F53 H87 Q54
    Date: 2015–01–30
  28. By: José de Sousa; Laura Hering; Sandra Poncet
    Abstract: We use recent detailed Chinese data on trade and pollution emissions to assess the environmental consequences of China’s integration into the world economy. We rely on a panel dataset covering 235 Chinese cities over the 2003-2012 period and examine whether environmental repercussions from trade openness depends on whether it emanates from processing or ordinary activities. In line with our theoretical predictions, we find a negative and significant effect of trade on emissions that is magnified for processing trade and activities undertaken by foreign firms: much lower environmental gains result from either ordinary trade activities or domestic firms, even though these are today the main drivers of China’s export and import growth. This result invites caution about the prospects for pollution in a context of decline role of processing trade.
    Keywords: Trade openness;Pollution;SO2 emissions;China
    JEL: F10 F14 O14
    Date: 2015–07
  29. By: Aleksandar Zaklan; Bente Bauer
    Abstract: The EU’s Emissions Trading System (EU ETS) is a regional cap-and-trade program in a world with no binding international climate agreement. This climate regulation may induce a relocation of production away from Europe, with potentially negative consequences for the European economy. This relocation could lead to carbon leakage, i.e. a shift of greenhouse gas emissions from Europe into regions with less stringent climate policy. In response, installations in sectors deemed to be vulnerable receive compensatory free emissions allowances. The European Commission compiles a carbon leakage list of vulnerable sectors. The current mechanism distinguishes two levels of leakage risk. The criteria used lead to the majority of European industry regulated under the EU ETS benefiting from the additional compensation. Whereas industry representatives argue that the current level of compensation should be maintained if not increased, the evidence suggests that under the current framework overcompensation may occur. We describe the mechanism currently used to address the risk of carbon leakage in Europe, and for comparison outline the more differentiated system of assessing leakage risk used in the Californian cap-and-trade system. Applying such a more differentiated mechanism in the European context would lead to a re-distribution of compensation from sectors with an intermediate level of leakage risk to highrisk sectors.
    Date: 2015
  30. By: Zhou, Sophie Lian
    Abstract: Conspicuous conservation is a newly emerged phenomenon of status driven environmentalism, where individuals undertake publicly visible conservation activities for the purpose of gaining social esteem. This paper studies the role of conspicuous conservation as an additional means of regulating environmental issues in an extended Uzawa-Lucas model with leisure choice, environmental externality and social status. Particular attention is paid to the long-term impact of conspicuous conservation on environmental quality, production culture, and the overall welfare along the balanced growth path (BGP) in a decentralized economy. Conspicuous conservation is found to aid pollution taxation and always increase environmental quality by providing additional incentives for pollution abatement. It however also increases the dirtiness of the aggregate technology, and encourages the use of the polluting factor. The overall welfare impact is positive when pollution control is absent or weak, but eventually turns negative as pollution taxation becomes increasingly stringent. The numerical example further suggests that strong status comparison is generally undesirable except at zero or extremely low pollution control.
    Keywords: Conspicuous conservation, social status, pollution, economic growth, Environmental Economics and Policy, Institutional and Behavioral Economics, Resource /Energy Economics and Policy, Q50, D62, D91, O41, O44,
    Date: 2015–06–30
  31. By: Paltsev, Sergey; Chen, Y.-H. Henry; Karplus, Valerie; Kishimoto, Paul; Reilly, John; Loeschel, Andreas; von Graevenitz, Kathrine; Koesler, Simon
    Abstract: CO2 emissions mandates for new light-duty passenger vehicles have recently been adopted in the European Union (EU), which require steady reductions to 95 g CO2/km in 2021. Using a computable general equilibrium (CGE) model, we analyze the impact of the mandates on oil demand, CO2 emissions, and economic welfare, and compare the results to an emission trading scenario that achieves identical emissions reductions. We find that vehicle emission standards reduce CO2 emissions from transportation by about 50 MtCO2 and lower the oil expenditures by about €6 billion, but at a net added cost of €12 billion in 2020. Tightening CO2 standards further after 2021 would cost the EU economy an additional €24-63 billion in 2025 compared with an emission trading system achieving the same economy-wide CO2 reduction. We offer a discussion of the design features for incorporating transport into the emission trading system.
    Date: 2015
  32. By: Nicholas Stern
    Abstract: Both intergenerational and intratemporal equity are central to the examination of policy towards climate change. However, many discussions of intergenerational issues have been marred by serious analytical errors, particularly in applying standard approaches to discounting; the errors arise, in part, from paying insufficient attention to the magnitude of potential damages, and is part from overlooking problems with market information. Some of the philosophical concepts and principles of Paper 1 are applied to the analytics and ethics of pure-time discounting and infinite-horizon models, providing helpful insights into orderings of welfare streams and obligations towards future generations. Such principles give little support for the idea of discrimination by date of birth. Intratemporal issues are central to problematic and slow-moving international discussions and are the second focus of this paper. A way forward is to cast the policy issues and analyses in a way that keeps equity issues central and embeds them in the challenge of fostering the dynamic transition to the low-carbon economy in both developed and developing countries. This avoids the trap of seeing issues primarily in terms of burden-sharing and zero-sum games – that leads to inaction and the most inequitable outcome of all.
    JEL: J1
    Date: 2014

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