nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒08‒13
thirty-two papers chosen by
Roger Fouquet
London School of Economics

  1. Balancing Opportunities and Costs in Hawaii’s Increasingly Green Grid By Karl Jandoc; Michael Roberts
  2. Road transport energy consumption in the G7 and BRICS: 1973-2010 By Yi-Xuan Gao; Hua Liao; Paul J. Burke; Yi-Ming Wei
  3. Introducing MOZLEAP: an integrated long-run scenario model of the emerging energy sector of Mozambique By Mahumane, Gilberto; Mulder, Peter
  4. Do costs fall faster than revenues? Dynamics of renewables entry into electricity markets By Green, Richard; Léautier, Thomas-Olivier
  5. Project finance in Hungarian electricity sector. Effect of feed-in tariff system’s change onto power plant investments By Madácsi, Roland
  6. Mozambique Energy Outlook, 2015-2030. Data, scenarios and policy implications By Mahumane, Gilberto; Mulder, Peter
  7. Econometric Models of Climate Systems: The Equivalence of Two-Component Energy Balance Models and Cointegrated VARs By Felix Pretis
  8. Gone with the wind? The impact of wind turbines on tourism demand By Broekel, Tom; Alfken, Christoph
  9. Building a Cross-Sector Coalition: Sustainable Communities for All and CA’s Cap-and-Trade Program By Choi, Laura
  10. Has Oil Price Predicted Stock returns for Over a Century? By Paresh K Narayan; Rangan Gupta
  11. Impacto de la regulación en la eficiencia asignativa del mercado spot eléctrico colombiano By John J. García; Santiago Arango Tamayo; Andrés F. Ortiz Rico
  12. Climate policy with the chequebook: Economic considerations on climate investment support By Kempa, Karol; Moslener, Ulf
  13. Going Dutch? The Impact of Oil Price Shocks on the Canadian Economy By Kenneth James McKenzie; Jared C. Carbone
  14. Carbon-motivated border tax adjustment: a proposal for the EU By Paola Rocchi; Iñaki Arto; Jordi Roca; Mònica Serrano
  15. Modeling and Forecasting Carbon Dioxide Emission Allowance Spot Price Volatility: Multifractal vs. GARCH-type Volatility Models By Segnon, Mawuli; Lux, Thomas; Gupta, Rangan
  16. Households' willingness to pay for reliable electricity services in Ghana By Taale, Francis; Kyeremeh, Christian
  17. The oil cycle, the Federal Reserve, and the monetary and exchange rate policies of Qatar By Khalid Rashid, Alkhater; Syed Abul, Basher
  18. Stock Return Forecasting: Some New Evidence By Dinh H B Phan; Susan S Sharma; Paresh K Narayan
  19. How to make a carbon tax reform progressive: The role of subsistence consumption By Klenert, David; Mattauch, Linus
  20. Has trade openness reduced pollution in China? By Sandra PONCET; Laura HERING; José DE SOUSA
  21. What drives the global official/policy interest rate? By Ronald A. Ratti; Joaquin L. Vespignani
  22. The influence of collective action on the demand for voluntary climate change mitigation in hypothetical and real situations By Sturm, Bodo; Uehleke, Reinhard
  23. The experience of Italy and the US with exceptional regulatory incentives for exceptional electricity transmission investments By Nico Keyaerts; Leonardo Meeus
  24. A Unit Root Model for Trending Time-series Energy Variables By Paresh K Narayan; Ruipeng Liu
  25. Intraday Volatility Interaction between the Crude Oil and Equity Markets By Dinh H B Phan; Susan S Sharma; Paresh K Narayan
  26. The International Distribution of Energy Intensities: some synthetic results By Duro Moreno, Juan Antonio
  27. On Abatement Services: Market Power and Efficient Environmental Regulation By Damien Sans; Sonia Schwartz; Hubert Stahn
  28. Between a rock and a hard place: International market dynamics, domestic politics and Gazprom's strategy By Andrei V. Belyi; Andreas Goldthau
  29. Precios y desempeño regulatorio en el pool eléctrico español By John J. García Rendón; Jhonny Moncada Mesa
  30. Economic Impact of the New England Aqua Ventus (Phases I and II) Offshore Wind Power Program in Maine By Gabe, Todd
  31. Do inflation expectations propagate the inflationary impact of real oil price shocks?: Evidence from the Michigan survey By Benjamin Wong
  32. أثر أزمة منطقة اليورو على الإيرادات النفطية للجزائر للفترة 2005 - 2012 By ABDELLAOUI, Okba; Zergoune, Mohamed

  1. By: Karl Jandoc (University of Hawaii at Manoa, Department of Economics); Michael Roberts (University of Hawaii at Manoa, Department of Economics)
    Abstract: Hawaii’s tourism-dependent economy and oil-fired power plants make it the most oil dependent state in the United States. It also has the nation’s highest electricity prices, often between 3 and 4 times the national average over the last decade. These high prices, the state’s sunny and windy climate that make it amendable to increasingly economical renewable energy, plus a relatively progressive political culture have pushed the state to adopt an ambitious goal of being 100 percent renewable by 2045. Focusing mainly on the state’s largest grid on Oahu, where most people live, we discuss the cost structure of the current electricity system, the potential benefits and challenges of growing the share of renewable energy, and make a few policy suggestions. In particular, we argue that all homes and businesses should be given an opportunity to buy and sell electricity at the marginal cost of generation. Variable pricing could greatly the cost of renewable energy, and perhaps seed development of Hawaii as a technology center focused on batteries and smart machines that can help shift electricity demand to align with the variable supply of solar and wind energy.
    Date: 2015–07
  2. By: Yi-Xuan Gao; Hua Liao; Paul J. Burke; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: Road transport will account for a large share of developing countries¡¯ future energy demand. This paper reviews the trends in road transport energy consumption in 12 countries (Group of 7 and BRICS) over the period 1973-2010. We report several stylised facts: road transport energy use and its share in total energy use have been rising; there were large differences in road transport energy use per capita across countries, resulting from differences in country size, resource endowments, fuel prices, and other factors; oil accounts for approximately 95% of road transport energy in the selected countries (except Brazil); oil will likely be the dominant road transport energy source in most countries for some years to come but not in the long run; and the use of alternative road transport energy sources is increasing.
    Keywords: Road transport, Energy consumption, Historical
    JEL: Q41
    Date: 2014–09–20
  3. By: Mahumane, Gilberto; Mulder, Peter
    Abstract: Since recently Mozambique is actively developing its large reserves of coal, natural gas and hydropower. Against this background, we present in this paper the first integrated long-run scenario model of the Mozambican energy sector. Our model makes use of the LEAP framework and is calibrated on the basis of recently developed local energy statistics, demographic and urbanization trends as well as cross-country based GDP elasticities for biomass consumption, sector structure and vehicle ownership. We develop four scenarios to evaluate the impact of the anticipated surge in natural resources exploration on aggregate trends in energy supply and demand, the energy infrastructure and economic growth in Mozambique. Our analysis shows that until 2030, primary energy production is likely to increase at least six-fold, and probably much more. This is roughly 10 times the expected increase in energy demand; most of the increase in energy production is destined for export. As a result, Mozambique is rapidly developing into an important player at international energy markets. Therefore, a major challenge for energy policy in Mozambique is to strike a balance in meeting domestic and international demand for energy, such that energy production benefits the entire Mozambican population.
    Keywords: Mozambique, Energy Sector, Energy Modeling, LEAP, Scenarios
    JEL: Q43 Q47
    Date: 2015–02
  4. By: Green, Richard; Léautier, Thomas-Olivier
    Abstract: In many countries, entry of renewable electricity producers has been supported by subsidies and financed by a tax on electricity consumed. This article is the first to analytically derive the dynamics of the generation mix, subsidy, and tax as renewable capacity increases. This enables us to complement and extend previous work by providing analytical expressions for previously obtained simulation results, and deriving additional results. The analysis yields three main findings. First, the subsidy to renewable may never stop, as the value of the energy produced may decrease faster than the cost as renewable capacity increases. Second, high renewable penetration leads to a discontinuity in marginal values, after which the subsidy and tax grow extremely rapidly. Finally, reducing the occurrence of negative prices, for example by providing renewable producers with financial instead of physical dispatch insurance, yields significant benefits.
    Keywords: Electric power markets, Renewables, Public policy
    JEL: D61 L11 L94
    Date: 2015–07
  5. By: Madácsi, Roland
    Abstract: The research analyses the former and the current status of the small gas-motor power plant investments in the Hungarian energy sector. It discusses the development of project financing in the segment and the major changes and effects of new regulations and subsidy-policy implemented in 2010. The objective of this paper is to present the results of an empirical research of the so called GCHP projects, and to draw conclusion concerning how classic project financing conditions were present and changed during the last decade, and how regulation affected the current and future financial status of these projects.
    Keywords: project financing, corporate financing, energy sector
    JEL: G32 G38 L94
    Date: 2015–06–01
  6. By: Mahumane, Gilberto; Mulder, Peter
    Abstract: This paper presents the first comprehensive Energy Outlook for Mozambique, a country that since long is one of the poorest nations of the world but since recently also developing into a leading energy producer. We present projections until 2030, based on a newly developed integrated long-run scenario model, new national and regional energy statistics, demographic and urbanization trends as well as cross-country based GDP elasticities for biomass consumption, sector structure and vehicle ownership. Our analysis shows an emerging ‘energy-dichotomy’ in Mozambique. On the one hand, the energy sector is characterized by a rapid and huge expansion. Until 2030, exploitation of the country’s reserves of coal, natural gas and hydropower is likely to increase primary energy production at least six-fold and probably much more, most of which is destined for export. We show that, as a result, Mozambique is rapidly developing into an important player at international energy markets; it may well become one of the leading global producers of natural gas and coal. On the other hand, our analysis shows that households continue to account for the major part of total energy consumption, with the majority of the population still being deprived from access to modern energy fuels by 2030. Hence, despite the spectacular rise of the extractive industry sector, population growth continues to be a key driver of energy consumption growth in Mozambique. Finally, we discuss the major challenges these findings pose for energy policy in Mozambique.
    Keywords: Mozambique, Energy Outlook, Energy Scenarios, Energy Policy
    JEL: Q4 Q43 Q47
    Date: 2015–05
  7. By: Felix Pretis
    Abstract: Climate policy target variables including emissions and concentrations of greenhouse gases, as well as global mean temperatures are non-stationary time series invalidating the use of standard statistical inference procedures. Econometric cointegration analysis can be used to overcome some of these inferential difficulties, however, cointegration has been criticised in climate research for lacking a physical justification for its use. Here I show that a physical two-component energy balance model of global mean climate is equivalent to a cointegrated system that can be mapped to a cointegrated vector autoregression, making it directly testable, and providing a physical justification for econometric methods in climate research. Doing so opens the door to investigating the empirical impacts of shifts from both natural and human sources, and enables a close linking of data-based macroeconomic models with climate systems. My approach finds statistical support of the model using global mean surface temperatures, 0-700m ocean heat content and radiative forcing (e.g. from greenhouse gases). The model results show that previous empirical estimates of the temperature response to the doubling of CO2 may be misleadingly low due to model mis-specification.
    Keywords: Cointegration; VAR, Climate, Energy Balance.
    JEL: C32 Q54
    Date: 2015–06–25
  8. By: Broekel, Tom; Alfken, Christoph
    Abstract: While wind energy production is relatively free from environmental externalities such as air pollution, it is frequently considered to negatively impact landscapes’ visual aesthetic values, thereby inducing negative effects on tourism demand. Ex- isting evidence for Germany indeed points towards a negative relationship between tourism demand and wind turbine construction. However, the existing studies pri- marily rely on interview data and simple bivariate statistics. In contrast, we make use of secondary statistics on tourism and wind turbine locations at the level of German municipalities. Using spatial panel regression techniques, we confirm a negative relation between wind turbines around municipalities and tourism demand for municipalities not located near the coast. In the latter regions, the relation between wind turbines and tourism demand is more complex.
    Keywords: wind turbines, tourism, Germany, externality, spatial panel regres- sion
    JEL: L83 Q42 Q48 R10
    Date: 2015–08–04
  9. By: Choi, Laura (Federal Reserve Bank of San Francisco)
    Abstract: Why should community developers care about cap-and-trade and what do carbon emissions have to do with low-income households? As it turns out, the fields of environmental sustainability and community development have significant overlap, particularly in the area of transit-oriented development, where issues of affordability, equity, and displacement converge with concerns such as vehicle miles traveled and greenhouse gas (GHG) emissions.
    Date: 2015–04–08
  10. By: Paresh K Narayan (Deakin University); Rangan Gupta (University of Pretoria)
    Abstract: This paper contributes to the debate on the role of oil prices in predicting stock returns. The novelty of the paper is that it considers monthly time-series historical data that span over 150 years (1859:10-2013:12) and applies a predictive regression model that accommodates three salient features of the data, namely, a persistent and endogenous oil price, and model heteroskedasticity. Three key findings are unraveled: First, oil price predicts US stock returns. Second, in-sample evidence is corroborated by out-sample evidence of predictability. Third, both positive and negative oil price changes are important predictors of US stock returns, with negative changes relatively more important. Our results are robust to the use of different estimators and choice of in-sample periods.
    Keywords: Stock returns; Predictability; Oil price.
  11. By: John J. García; Santiago Arango Tamayo; Andrés F. Ortiz Rico
    Abstract: This paper uses an ARCH regression model to analyze the effect of several regulatory measures and fundamental factors (the relationship between commercial demand and real availability, El Niño, and water supplies) on the spot price in the Colombian wholesale power market. The results indicate that the regulations established by the Electricity and Gas Regulatory Commission have had a substantial and statistically-significant effect on spot prices. In addition, El Niño and hydro supplies have a positive and negative respectively effect on the spot price, due to the large share of hydropower in this market.
    Keywords: Regulación; Mercado de Energía Mayorista, precio spot; ARCH; Colombia.
    JEL: D43 L13 L51
    Date: 2015–07–15
  12. By: Kempa, Karol; Moslener, Ulf
    Abstract: Across the globe climate policy is shifting away from a carbon price towards investment subsidies, such as grants, interest-subsidised loans or guarantees. This increases the risk of inefficient public spending. This paper shows how the main market imperfections related to the emission externality, knowledge spillovers and capital market imperfections negatively affect the risk-return-profile of a climate investment. To some extent these negative impacts can be compensated through different forms of investment subsidies. Minimising the risk of inefficient public spending is, however, challenging and requires detailed understanding of technologies and markets at the project level. The analysis provides guidance for the design of appropriate investment subsidy schemes. Carbon prices and investment subsidies are not perfect substitutes, and - at least for developed economies - a carbon price remains the single most efficient instrument. This price should, however, coexist with other instruments, e.g. investment support schemes, which can be tailored to address the non-emission market imperfections related to climate change.
    Keywords: climate finance,investment support,policy instruments,environmental externality,innovation spillover,capital market failure
    Date: 2015
  13. By: Kenneth James McKenzie (University of Calgary); Jared C. Carbone
    Abstract: We examine the steady-state impact of a 10 percent reduction in the price of oil using a CGE model of the Canadian economy. The model includes a high degree of disaggregation at both the sectoral and provincial level, international and interprovincial flows of goods and services, labour which is mobile between sectors, capital which is partly mobile both inter-provincially and inter-sectorally, and equilibrium exchange rate adjustments arising from the oil price shock. The key result of our simulations is that - on balance - a negative oil price shock leaves Canadians worse off. We also find that the welfare losses associated with a negative oil price shock are shared broadly across the provinces. The corollary, of course, is that a positive price shock leaves Canadians better off. Our results have implications for the presence (or significance) of Dutch Disease in Canada; we argue that the "disease" is just one of a number of effects generated by oil-price changes.
    Date: 2015–07–23
  14. By: Paola Rocchi (Facultat d'Economia i Empresa; Universitat de Barcelona (UB)); Iñaki Arto (Basque Centre of Climate Change); Jordi Roca (Facultat d'Economia i Empresa; Universitat de Barcelona (UB)); Mònica Serrano (Facultat d'Economia i Empresa; Universitat de Barcelona (UB))
    Abstract: The analysis focuses on carbon-motivated border tax adjustment (CBTA). CBTA are tariffs applied to imports designed to avoid drawbacks of emission reduction policies when only one or few regions (the abating regions) implement them. Through CBTA the abating regions level out different treatment applied to domestic and imported products. In this paper we focus on CBTA metric. Through a multi-region and multi-sector analysis we compute and compare two possible CBTA systems that the European Union could implement to complement a hypothetical carbon tax applied to domestic products. In one system, tariffs are computed based on the emissions generated abroad to produce the goods imported by the European Union. In the second system, tariffs are based on the emissions that the European Union would have generated to produce domestically the same products. Results at country and sector level contribute to better understand the effects of this instrument and to add information to the political debate on it. Moreover, an important contribution of this analysis is that we explore methodological issues that arise from the use of multi-region and multi-sector models to compute different CBTA metrics.
    Keywords: Carbon-motivated border tax adjustmen, European Union, Embodied emissions, Avoided emissions, WIOD database.
    JEL: C67 D57 H23 Q56
    Date: 2015
  15. By: Segnon, Mawuli; Lux, Thomas; Gupta, Rangan
    Abstract: This paper applies Markov-switching multifractal (MSM) processes to model and forecast carbon dioxide (CO2) emission price volatility, and compares their forecasting performance to the standard GARCH, fractionally integrated GARCH (FIGARCH) and the two-state Markov-switching GARCH (MS-GARCH) models via three loss functions (the mean squared error, the mean absolute error and the value-at-risk). We evaluate the performance of these models via the superior predictive ability test. We find that the forecasts based on the MSM model cannot be outperformed by its competitors under the vast majority of criteria and forecast horizons, while MS-GARCH mostly comes out as the least successful model. Applying various VaR backtesting procedures, we do, however, not find significant differences in the performance of the candidate models under this particular criterion. We also find that we cannot reject the null hypothesis of MSM forecasts encompassing those of GARCH-type models. In line with this result, optimally combined forecasts do indeed hardly improve upon the best single models in our sample.
    Keywords: carbon dioxide emission allowance prices,GARCH,Markov-switching GARCH,FIGARCH,multifractal Processes,SPA test,encompassing test,backtesting
    JEL: Q47
    Date: 2015
  16. By: Taale, Francis; Kyeremeh, Christian
    Abstract: Access to reliable electricity is important in increasing the living standards of households and promoting sustainable development. However, Ghanaian households have had to grapple with frequent power outages and poor quality electricity services in recent times. This study examines the factors influencing households’ willingness to pay for reliable electricity services in Ghana. Using data collected from 950 households in the Cape Coast Metropolitan Area and the tobit regression technique, it was revealed that monthly income, prior notice on power outages, business ownership, separate meter ownership, household size and education significantly affect willingness to pay for reliable electricity services. On the average, households were prepared to pay 44 percent (GH¢6.8) more, relative to the mean monthly electricity bill in the sample, to improve electricity services. It is envisaged that the findings would be used by policy makers and utility companies to make electricity generation and distribution more sustainable and efficient.
    Keywords: reliable electricity services, households, separate meter, education, willingness to pay, Ghana
    JEL: D1 D11 H41
    Date: 2015–07–27
  17. By: Khalid Rashid, Alkhater; Syed Abul, Basher
    Abstract: Supporters of the Arab oil-exporting countries’ decades-long fixed exchange rate regime argue that since, oil is traded in United States (US) dollars, pegging to the dollar is optimal. However, the weakening relationship between oil prices and the US economy in terms of the Federal Reserve’s expansionary monetary stance amid soaring oil prices for much of the previous decade has raised questions about the viability of the peg. Using Qatar as a case study, this paper empirically analyzes whether the synchronization pattern of business cycles has recently changed between Qatar and the US. The results of the analysis show a pronounced desynchronization or decoupling of business cycles between Qatar and the US during 2001–2010. Moreover, the dissimilarly of demand shocks between the two countries suggests that the imported monetary policy stance of the Federal Reserve has not been viable for Qatar in recent years. A natural implication of our findings is the need for a truly independent monetary policy oriented towards domestic goals.
    Keywords: Oil price, Business cycle synchronization, Counter-cyclical monetary policy, Exchange rate regimes.
    JEL: E32 E61 F44
    Date: 2015–06–03
  18. By: Dinh H B Phan (Deakin University); Susan S Sharma (Deakin University); Paresh K Narayan (Deakin University)
    Abstract: This paper makes three contributions to the literature on forecasting stock returns. First, unlike the extant literature on oil price and stock returns, we focus on out-of-sample forecasting of returns. We show that the ability of the oil price to forecast stock returns depends not only on the data frequency used but also on the estimator. Second, out-of-sample forecasting of returns is sector-dependent, suggesting that oil price is relatively more important for some sectors than others. Third, we examine the determinants of out-of-sample predictability for each sector using industry characteristics and find strong evidence that return predictability has links to certain industry characteristics, such as book-to-market ratio, dividend yield, size, price earnings ratio, and trading volume.
    Keywords: Stock returns; Oil price; Predictability; Forecasting; Out-of-sample.
  19. By: Klenert, David; Mattauch, Linus
    Abstract: A major obstacle for introducing carbon pricing are its distributional implications: climate policy is believed to be regressive. We illuminate the role of carbon-intensive subsistence consumption for the prospect of making carbon pricing progressive. The distributional impacts of a carbon tax reform depend on the revenue recycling options: we prove that lump-sum transfers proportional to income and linear income tax cuts make the reform regressive and that this is due only to subsistence consumption. By contrast, returning the revenue as uniform lump-sum transfers renders the carbon tax reform progressive.
    Keywords: carbon tax reform, distribution, revenue recycling, inequality, non-homothetic preferences
    JEL: D3 D60 E62 H22 H23
    Date: 2015–08–03
  20. By: Sandra PONCET (Université de Paris I); Laura HERING (FERDI); José DE SOUSA (FERDI)
    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 to see whether the environmental repercussions from trade openness depend on whether the latter concerns processing or ordinary activities. In line with our theoretical predictions, we find a negative and signicant effect of trade on emissions that is larger for processing trade and activities undertaken by foreign firms: the environmental gains from either ordinary trade activities or domestic firms are much lower, even though these today represent the main drivers of China’s export and import growth. This result suggests some caution regarding pollution prospects in the context of the declining role of processing trade.
    JEL: F10 F14 O14
    Date: 2015–07
  21. By: Ronald A. Ratti; Joaquin L. Vespignani
    Abstract: We construct a GFAVAR model with newly released global data from the Federal Reserve Bank of Dallas to investigate the drivers of official/policy interest rate. We find that 62% of movement in global official/policy interest rates is attributed to changes in global monetary aggregates (21%), oil prices (18%), global output (15%) and global prices (8%). Global official/policy interest rates respond significantly to increases in global output and prices and oil prices. Increases in global policy interest rates are associated with reductions in global prices and global output. The response in official/policy interest rate for the emerging countries is more to global inflation, for the advanced countries (excluding the U.S.) is more to global output, and for the U.S. is to both global output and inflation.
    Keywords: Global interest rate, global monetary aggregates, oil prices, GFAVAR
    JEL: E44 E50 Q43
    Date: 2015–07
  22. By: Sturm, Bodo; Uehleke, Reinhard
    Abstract: In this experiment, we investigate determinants of the individual demand for voluntary climate change mitigation. Subjects decide between a cash prize and an allowance from the EU Emissions Trading Scheme for one ton of CO2 that will be deleted afterwards. We vary the incentives of the decision situation in which we distinguish between real monetary incentives and a hypothetical decision situation with and without a cheap talk script. Furthermore, decisions were implemented either as purely individual or as a collective action using majority voting. We observe a significant hypothetical bias in the demand for voluntary climate change mitigation. In case of the individual decision situation this bias is caused solely by subjects with low income. Collective decision making affects demand positively in the hypothetical decision situation only.
    Keywords: demand for voluntary climate change mitigation,public goods,collective action,hypothetical bias
    JEL: Q51 Q54 C93
    Date: 2015
  23. By: Nico Keyaerts; Leonardo Meeus
    Abstract: There is a trend in regulatory practice towards exceptional incentives for exceptional investments. Italy and the US have the longest experience with a regulatory framework for strategically important investments that deviates from the default framework. In these countries, the incentives provided to the project promoter are based on a case-by-case assessment of the project. Policy makers and regulatory authorities in countries that are considering setting up such a framework can learn from these experiences. In this paper, we therefore analyze them in detail. We find that the Italian scheme is simpler, which reduces the administration costs. The US scheme is more advanced in the case-by-case assessment of the requested incentives. However, both schemes have evolved, each becoming more sophisticated and complex. Countries that are considering the introduction of exceptional regulatory incentives for exceptional electricity transmission investments should note that this is a process that will require fine-tuning).
    Keywords: Electricity Transmission, Transmission grid, Interconnection, Incentive Regulation
    Date: 2015–06
  24. By: Paresh K Narayan (Deakin University); Ruipeng Liu (Deakin University)
    Abstract: In this paper, we propose a GARCH-based unit root test that is flexible enough to account for; (a) trending variables, (b) two endogenous structural breaks, and (c) heteroskedastic data series. Our proposed model is applied to a range of time-series, trending, and heteroskedastic energy variables. Our two main findings are: first, the proposed trend-based GARCH unit root model outperforms a GARCH model without trend; and, second, allowing for a time trend and two endogenous structural breaks are important in practice, for doing so allows us to reject the unit root null hypothesis.
    Keywords: Time-series; Energy; Unit Root; Trending Variables.
  25. By: Dinh H B Phan (Deakin University); Susan S Sharma (Deakin University); Paresh K Narayan (Deakin University)
    Abstract: This paper investigates the price volatility interaction between the crude oil and equity markets in the US using five-minute data over the period 2009 to 2012. Our main findings can be summarised as follows. First, we find strong evidence to demonstrate that the integration of the bid-ask spread and trading volume factors leads to a better performance in predicting price volatility. Second, trading information, such as bid-ask spread, trading volume, and the price volatility from cross-markets, improves the price volatility predictability for both in-sample and out-of-sample analyses. Third, the trading strategy based on the predictive regression model that includes trading information from both markets provides significant utility gains to mean-variance investors.
    Keywords: volatility; trading volume; bid-ask spread; cross-market; predictability; forecasting.
  26. By: Duro Moreno, Juan Antonio
    Abstract: The paper examines the international distribution of energy intensities as a conventional proxy indicator of energy efficiency and sustainability in the consumption of resources, by employing some descriptive tools from the analysis of inequality and polarization. The analysis specifically focuses on the following points: firstly, inequalities are evaluated synthetically based on diverse summary measures and Lorenz curves; secondly, different factorial decompositions are undertaken that assist in investigating some explanatory factors (weighting factors, multiplicative factors and decomposition by groups); and thirdly, an analysis is made of the polarization of intensities when groups of countries are defined endogenously and exogenously. The results obtained have significant implications from both academic and political perspectives.
    Keywords: Energia -- Distribució, Energia Consum -- Aspectes ambientals, 338 - Situació econòmica. Política econòmica. Gestió, control i planificació de l'economia. Producció. Serveis. Turisme. Preus,
    Date: 2015
  27. By: Damien Sans (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS); Sonia Schwartz (CERDI, Université d’Auvergne); Hubert Stahn (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS)
    Abstract: In this paper, we study an eco-industry providing an environmental service to a competitive polluting sector. We show that even if this eco-industry is highly concentrated, a standard environmental policy based on a Pigouvian tax or a pollution permit market reaches the first-best outcome, challenging the Tinbergen rule. To illustrate this point, we first consider an upstream monopoly selling eco-services to a representative polluting firm. We progressively extend our result to heterogeneous downstream polluters and heterogeneous upstream Cournot competitors. Finally, we underline some limits of this result. It does not hold under the assumption of abatement goods or downstream market power. In this last case, we obtain Barnett's result.
    Keywords: environmental regulation, eco-industry, Imperfect Competition, abatement services
  28. By: Andrei V. Belyi; Andreas Goldthau
    Abstract: Gazprom, Russian's prime state owned gas producer, is facing severe pressure stemming from international gas market dynamics, EU regulation and the Ukraine crisis. Slowing gas demand coupled with shifting pricing models and a persisting transit issue pose significant challenges for Gazprom's business going forward. Domestic pressure emerges from competition arising from private companies, mainly Notatek, but also state owned rival Rosneft, and is reinforced by governmental moves toward more market oriented Russian gas sector organization. Gazprom's options include pivoting to alternative markets, notably China; reverting to international legal bodies and market principles to counter EU regulatory pressures; and to depoliticize gas trade in order to generate long term expectations on its prime market - Europe. We pose that neither of these options is likely to fully solve Gazprom's dilemma, whose competitive position will arguably further weaken both domestically and internationally. We believe that Gazprom's best option would be to aim for depoliticizing gas trade, by way of giving up its de facto monopoly on gas exports to Europe.
    Keywords: Energy security, gas markets, Gazprom, European Union, regulation
    Date: 2015–04
  29. By: John J. García Rendón; Jhonny Moncada Mesa
    Abstract: This study examines the relation between the gap of the system marginal price and other common variables in the market such as industrial organization and regulatory changes in the Spanish electricity pool. We estimate a long panel model where the time is larger than the number of firms. Our findings show that high market concentration and the possibility of being a pivot agent generate adverse effects on price determination. In addition, regulatory changes did not generate the expected effects, creating distortion and incorrect incentives in the market.
    Keywords: Regulación; precios; cointegración en panel; pool eléctrico español
    JEL: L51 L13 C23
    Date: 2015–07–15
  30. By: Gabe, Todd
    Abstract: The purpose of this study is to examine the statewide economic impacts of the New England Aqua Ventus offshore wind power program in Maine. Phase I of this program involves the planning and construction, and ongoing operations of a 12 MW pilot project; and Phase II of Aqua Ventus involves a 500 MW offshore wind power installation along with the production of VolturnUS floating platforms and towers that could be used in other offshore wind projects.
    Keywords: Off-shore Wind Power, Economic Impact, Maine
    JEL: L94 Q42 R15
    Date: 2013–09
  31. By: Benjamin Wong (Reserve Bank of New Zealand)
    Abstract: This paper presents evidence that inflation expectations, as measured by the Michigan Survey of consumers, only play a minimal role in the propagation of real oil price shocks into inflation. This is despite evidence which confirms in flation expectations are sensitive to real oil price shocks. Further analysis exploring structural breaks suggest at some point after the mid-1990s, inflation expectations may have played no part in propagating real oil price shocks into inflation.
    JEL: C32 D84 E31
    Date: 2015–04
  32. By: ABDELLAOUI, Okba; Zergoune, Mohamed
    Abstract: Like most developing underdeveloped countries Algerian exports is characterized by unilateralism that nature granted a comparative advantage in the production of hydrocarbons, that accounted for 98% of the export structure. In light of the survival nature of the rentier economy and structure of exports in the short and medium term as it is, with no clear strategies for action to change this structure, the Algerian economy and its growth, and economic policies made known remain closely linked to fluctuations in oil prices and global demand. This study highlights the periods of crisis as an exceptional situation affects tion centers financially and economically, causing cases of economic recession, which may live up to a ceiling of recession, affecting the most national macroeconomic variables, and moving from local dye to a regional and global scale through economic infection channels, perhaps the most important is the business deals channel, which considered exports including one of the most important vulnerability and impact entrances. Accordingly, we follow in this study the impact of The euro zone crisis on the Algerian oil revenues, and through the econometric model formulated.
    Keywords: financial crisis, oil revenue, exchange rate, inflation
    JEL: E31 F31 G0 H2
    Date: 2015–04–30

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