nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒11‒07
29 papers chosen by
Roger Fouquet
London School of Economics

  1. The Welfare Effects of Nudges: A Case Study of Energy Use Social Comparisons By Hunt Allcott; Judd B. Kessler
  2. Natural Gas Prices and Coal Displacement: Evidence from Electricity Markets By Christopher R. Knittel; Konstantinos Metaxoglou; Andre Trindade
  3. Photovoltaic self-consumption regulation in Spain: profitability analysis and alternative regulation schemes. By Javier Lopez Prol,; Karl W. Steininger
  4. Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution By James Feyrer; Erin T. Mansur; Bruce Sacerdote
  5. Contributions to the institutional economics of the energy transition By Klaus Eisenack; Julien Minnemann; Paul Neetzow; Reutter
  6. Quel traitement des déchets par l'analyse économique ? By Veronique Thireau
  7. Türkiye Elektrik Tüketimi Öngörüsü ve Bu Kapsamda Geliştirilebilecek Politika Önerileri By Murat Mahmutoğlu; Fahriye Öztürk
  8. Convergence of Electricity Consumption in Turkey: A Spatial Dynamic Panel Analysis By Gülsüm Akarsu; Burcu Berke
  9. Levelling the playing field: On the missing role of network externality in designing renewable energy technology deployment policies By Wei Jin; ZhongXiang Zhang
  10. The impact of environmental regulation on productivity: the case of electricity generation under the CAAA-1990 By Hancevic, Pedro
  11. Electricity market integration and the impact of unilateral policy reforms By Grossi, Luigi; Heim, Sven; Hüschelrath, Kai; Waterson, Michael
  12. Modelling Household Cooking Fuel Choice: a Panel Multinomial Logit Approach By Alem, Yonas; Beyene, Abebe D.; Köhlin, Gunnar; Mekonnen, Alemu
  13. Crude Oil Price Pass-Through to Domestic Prices in Turkey: Asymmetric Nonlinear ARDL Approach By Harun Öztürkler; Fatih Demir; Serhat Yılmaz
  14. Oil and Gas Revenue Allocation to Local Governments in Eight States By Richard G. Newell; Daniel Raimi
  15. Examining Price Transmission between Fuels and Food Prices: the Brazilian Sugar-Ethanol Market By Bentivoglio, Deborah; Finco, Adele; Bacchi, Mirian
  16. The Impact of the EU Biofuel Policy Reform on Agricultural and Energy Commodity Prices By Ciaian, Pavel; Drabik, Dusan
  17. The Impact of Different Energy Policy Options on Feedstock Price and Land Demand for Maize Silage: The Case of Biogas in Lombardy By Bartoli, A.; Cavicchioli, D.; Kremmydas, D.; Rozakis, S.; Olper, A.
  18. Modeling Uncertainty in Climate Change: A Multi-Model Comparison By Kenneth Gillingham; William D. Nordhaus; David Anthoff; Geoffrey Blanford; Valentina Bosetti; Peter Christensen; Haewon McJeon; John Reilly; Paul Sztorc
  19. Limit cycles under a negative effect of pollution on consumption demand: the role of an environmental Kuznets curve By Stefano Bosi; David Desmarchelier
  20. Architecture of the EU Emissions Trading System in Phase 3 and the Distribution of Allowance Asset Values By Löfgren, Åsa; Burtraw, Dallas; Wråke, Markus; Malinovskaya, Anna
  21. Spatial Resource Management under Pollution Externalities By Anastasios Xepapadeas; Athanasios Yannacopoulos
  22. Eco-Clusters as Driving Force for Greening Regional Economic Policy By Alina Pohl
  23. Marginal Abatement Cost Curves for Global Agricultural Non-CO2 Emissions By Beach, Robert; Creason, Jared; Ohrel, Sara; Ragnauth, Shaun; Ogle, Stephen; Li, Changsheng; Salas, William
  24. Inequalities of Sectors CO 2 emissions in China, USA and France, 2010-2050 By Wenhui Tian; Pascal Da Costa; Jean-Claude Bocquet
  25. An Alternative Reference Scenario for Global CO2Emissions from Fuel Consumption: An ARFIMA Approach By José Belbute; Alfredo M. Pereira
  26. Who emits most? The environmental impact of food purchases of French households By Caillavet, F.; Darmon, N.; Fadhuile, A.; Nichele, V.
  27. Spatial Heat Transport, Polar Amplification and Climate Change Policy By William Brock; Anastasios Xepapadeas
  28. Toward a low carbon growth in Mexico : is a double dividend possible ? A dynamic general equilibrium assessment By Gissela Landa; Frederic Raynes; Ivan Islas; François-Xavier Bellocq; Fabio Grazi
  29. Strategic Delegation and Non-cooperative International Permit Markets By Habla, Wolfgang; Winkler, Ralph

  1. By: Hunt Allcott; Judd B. Kessler
    Abstract: "Nudge"-style interventions are typically evaluated on the basis of their effects on behavior, not social welfare. We use a field experiment to measure the welfare effects of one especially policy-relevant intervention, home energy conservation reports. We measure consumer welfare by sending introductory reports and using an incentive-compatible multiple price list to determine willingness-to-pay to continue the program. We combine this with estimates of implementation costs and externality reductions to carry out a comprehensive welfare evaluation. We find that this nudge increases social welfare, although traditional program evaluation approaches overstate welfare gains by a factor of five. To exploit significant individual-level heterogeneity in welfare gains, we develop a simple machine learning algorithm to optimally target the nudge; this would more than double the welfare gains. Our results highlight that nudges, even those that are highly effective at changing behavior, need to be evaluated based on their welfare implications.
    JEL: C44 C53 D12 L94 Q41 Q48
    Date: 2015–10
  2. By: Christopher R. Knittel; Konstantinos Metaxoglou; Andre Trindade
    Abstract: We examine the environmental impact of the post-2005 natural gas glut in the United States due to the shale gas boom. Our focus is on quantifying short-term coal-to-gas switching decisions by different types of electric power plants in response to changes in the relative price of the two fuels. In particular, we study the following entities: investor-owned utilities (IOUs) and independent power producers (IPPs) in restructured markets coordinated by Independent System Operators, as well as IOUs in traditional vertically-integrated markets. Using alternative data aggregations and model specifications, we find that IOUs operating in traditional markets are more sensitive to changes in fuel prices than both IOUs and IPPs in restructured markets. We attribute our findings to differences in available gas-fired generating capacity with the most cost-efficient technology: electricity generators reduced their rate of investment in the restructured markets post restructuring. The heterogeneity in the response of fuel consumption to prices has implications for carbon dioxide (CO2) emissions for the entities considered. Using simple back-of-the-envelope calculations, the almost 70% drop in the price of natural gas between June 2008 and the end of 2012 translates to as much as 33% reduction in CO2 emissions for IOUs in traditional markets, but only up to 19% for IOUs in restructured markets.
    JEL: L5 L71 L94 Q4 Q5
    Date: 2015–10
  3. By: Javier Lopez Prol, (University of Graz); Karl W. Steininger (University of Graz)
    Abstract: After three years of discussion, the regulation of photovoltaic self-consumption in Spain has been finally passed on October 9th, 2015. We assess the impact of this regulation on the profitability (reflected by Internal Rate of Return) of potential investors in three different segments: residential and small and medium-size enterprises of the commercial and industrial sectors, paying special attention to the effect of the backup charge and the effect of financing cost. We then analyse three alternative regulation schemes focusing on the price at which the surplus electricity of the PV system is sold to the grid: mere self-consumption, net metering and net billing. For each of the investing segments and regulation schemes, we consider alternative configurations: with and without backup charge, and with own capital versus 80% externally financed capital at market interest rates. The results show that the current regulation will hinder the diffusion of self-consumption PV installations by making them economically infeasible across all segments. We further identify that this regulation creates incentivizes for inefficient behaviour, such as disconnection from the grid. According to our results and to the recommendations of the European Commission, we find that a net billing scheme would be more suitable for promoting PV diffusion at minimum cost for the system.
    Keywords: Net Metering; Net Billing; Internal Rate of Return; Royal Decree 900/2015, PV
    JEL: N74 O13 Q42 Q48
    Date: 2015–10
  4. By: James Feyrer; Erin T. Mansur; Bruce Sacerdote
    Abstract: The combining of horizontal drilling and hydrofracturing unleashed a boom in oil and natural gas production in the US. This technological shift interacts with local geology to create an exogenous shock to county income and employment. We measure the effects of these shocks within the county where production occurs and track their geographic propagation. Every million dollars of oil and gas extracted produces $66,000 in wage income, $61,000 in royalty payments, and 0.78 jobs within the county. Outside the immediate county but within the region, the economic impacts are over three times larger. Within 100 miles of the new production, one million dollars generates $243,000 in wages, $117,000 in royalties, and 2.49 jobs. Thus, over a third of the fracking revenue stays within the regional economy. Our results suggest new oil and gas extraction led to an increase in aggregate US employment of 725,000 and a 0.5 percent decrease in the unemployment rate during the Great Recession.
    JEL: E24 Q33 Q43
    Date: 2015–10
  5. By: Klaus Eisenack (University of Oldenburg, Department of Economics); Julien Minnemann; Paul Neetzow; Reutter
    Abstract: What can institutional economics offer to analyze and shape the transformation of electricity systems towards a low-carbon future? This volume presents papers from a postgraduate research course in “Sustainability Economics and Management” in the winter term 2014/15. The introductory chapter sketches potential contributions from institutional economics and provides an overview of the course’s topic and the other chapters. The second chapter presents an institutional comparison of different options to integrate electricity storage into the system. The third chapter analyses the effect of different market structures for investment in electricity storage. The final chapter proposes and investigates a novel auctioning mechanism for offshore grid expansion.
    Keywords: power, energy, capacity, efficient storage deployment, competitive market, electricity, intermittent RES, system stability, economic efficiency, institutional analysis, Germany, wind energy, network expansion, incentives for cost efficiency, construction and operation bidding, institutional market design
    Date: 2015–10
  6. By: Veronique Thireau (Chrome - EA 7352 - Université de Nîmes)
    Abstract: Les déchets nucléaires ont une traduction juridique sous forme de règles, de normes, de lois mais ont t-ils une (ou plusieurs) existence(s) en termes économiques ? Si oui, que nous révèle cette ou plutôt ces dernières ?
    Keywords: économie,dechets nucléaires
    Date: 2014
  7. By: Murat Mahmutoğlu (Development Bank of Turkey); Fahriye Öztürk (Gazi University, Department of Economics)
    Abstract: Belirli bir makroekonomik değişkenin gelecekte alacağı değerlerin öngörüsü, geliştirilen modeller ve yapılan resmi öngörüler, beklentilere ve ekonominin gelecekteki konjonktürel durumuna göre her zaman belirsizlik içermektedir. Ülke ekonomisinin gidişatı ile doğrudan ilişkili olan elektrik tüketimi için de bu durum geçerlidir. Çalışmada Türkiye’nin elektrik tüketim tahminine ilişkin Box-Jenkins (ARMA-Otoregresif Hareketli Ortalama) öngörü modeli kullanılmıştır. Bu model çerçevesinde Türkiye’ye ilişkin 2015-2023 arası yıllık olarak brüt elektrik tüketim öngörüsü yapılmıştır. Öngörü sonuçları, Türkiye Elektrik İletim A.Ş.(TEİAŞ) tarafından açıklanan resmi elektrik tüketim öngörüleri ile karşılaştırılmıştır. Çalışmanın amacı; Türkiye’nin elektrik üretimine yönelik olarak yenilenebilir enerji politika önerileri oluşturma konusunda bir dayanak oluşturmaktır. Buradan hareketle mevcut durumda yenilenebilir enerji kaynakları ile elektrik talebinin ne derece karşılanabildiği ve bu kaynakların potansiyelleri dikkate alınarak elektrik talebini karşılamada gelecekteki konumunun nasıl olabileceği tartışılmıştır.
    Keywords: Elektrik tüketimi, Otoregresif Hareketli Ortalama, Yenilenebilir Enerji, Enerji Politikası
    JEL: Q43 Q47 C53
    Date: 2015
  8. By: Gülsüm Akarsu (Ondokuz Mayıs University, Faculty of Economic and Administrative Sciences); Burcu Berke (Niğde University, Faculty of Economic and Administrative Sciences)
    Abstract: The issue of convergence has been discussed by many theoretical and empirical studies beginning by the major contributions of Solow (1956), Baumol (1986), and Barro and Sala-i Martin (1991). In the literature, there are two different convergence concepts, as betaconvergence and sigma-convergence. However, in this study, our focus is on the betaconvergence. As per capita electricity consumption has been considered as an indication of economic growth and development, this study aims to test the presence of “conditional betaconvergence” of per capita electricity consumption among the provinces of Turkey for the period between 1987 and 2013. We employ a spatial dynamic panel data model with fixed effects in order to account for spatial spillover, spatial clusters and cross-sectional heterogeneity. Also, we consider two types of spatial models as Spatial Autoregressive Model and Spatial Error Model. We find that our results are robust to the different specifications of model and weight matrices, however, weight matrix based on the nearest three neighbours perform better than others. Findings show the evidence of conditional beta-convergence of per capita electricity consumption among the provinces of Turkey as well as the existence of spatial clusters and spillovers. Therefore, we can conclude that the regional policies are successful to reduce the regional disparities related to the electricity consumption.
    Keywords: : Convergence, Per Capita Electricity Consumption, Spatial Dynamic Panel Data Model, Spatial Effects
    JEL: C50 Q41 R10
    Date: 2015
  9. By: Wei Jin (School of Public Policy, Zheijang University); ZhongXiang Zhang (College of Management and Economics, Tianjin University)
    Abstract: In creating a level playing field that facilitates the deployment of renewable energy technology (RET), the traditional energy policy regime based on eliminating RET’s cost gaps versus fossil energy technology (FET) may be not sufficient. Building on an economic model of energy technology adoption that features network externality, this paper takes an explicit account of the potential importance of network externality in the design of RET adoption policies. We argue that as incumbent FET has established pervasive deployment and installed base advantages within the existing energy production, distribution and service network, it would create a network externality mechanism that makes it difficult to dislodge the dominant FET-based technological regime, leading to an inertia against the adoption of newly emerging RET even if energy policy regulations have been put in place to eliminate RET’s cost disadvantage. We hence propose that a reformulation of RET policy paradigm should consider extending the traditional scheme centring on eliminating cost gap to a new one that corrects for both cost and network externality gaps.
    Keywords: renewable energy deployment; energy technology adoption; network externality; climate technology policies
    JEL: Q41 Q42 Q48 Q54 Q55 Q58 H23 O13
    Date: 2015–10
  10. By: Hancevic, Pedro
    Abstract: This paper measures the impact of the 1990 Clean Air Act Amendment on productivity and output of US coal-fired boilers. The Act led to power units adopting a number of different pollution abating strategies, one of which was an input change to lower SO2 emitting coal. A key feature is that each boiler is designed to burn a particular variety of coal, with significant deviations from the targeted coal characteristics resulting in productivity loss. The main innovation of the paper is to quantify the effect that switching to cleaner coal had on productivity and output. With data spanning over fifteen years, I incorporate the effect of this deviation directly into a production function to explicitly quantify the resulting productivity loss. Estimated output losses range from 0% to more than 6%, varying across regions, over time, and mainly depending on the proximity of generating units to low-sulfur sources.
    Keywords: productivity, production function, environmental regulation, sulfur dioxide, electricity generation, coal, Environmental Economics and Policy, Production Economics, Productivity Analysis, D24 L94 L51 Q51,
    Date: 2015
  11. By: Grossi, Luigi; Heim, Sven; Hüschelrath, Kai; Waterson, Michael
    Abstract: The harmonization and integration of separate national energy markets to an interconnected internal European market is a top priority of the European Commission. However, as energy policy largely remains subject to national sovereignty, a higher degree of integration can cause unilateral national policies to harm interconnected markets. We investigate the impact of two distinct national reforms in Germany - the phase-out of nuclear power plants after the Fukushima incident and the expansion of renewables promoted by fixed feed-in tariffs and unlimited priority feed-in - on neighbouring countries. We find that the phase-out triggered price increases of up to 19 percent in neighbouring countries whilst the renewable energy support schemes caused a price decrease of up to 0.17 percent for each percent of additional generation from German renewables. We also apply a novel approach to estimate the degree of market integration and find large differences between neighbouring countries in a range from 14 percent to 99 percent. Our findings point up the need for increased efforts to harmonize national energy policies, but also the need to consider the impact of unilateral environmental measures on other countries' supplies in the context of a partially integrated and partly unilateral system.
    Keywords: Energy,Electricity,Market Integration,Nuclear Phase-Out,Renewables
    JEL: L51 L94 Q41 Q48 Q54
    Date: 2015
  12. By: Alem, Yonas (Department of Economics, School of Business, Economics and Law, Göteborg University); Beyene, Abebe D. (Environmental Economics Policy Forum, EDRI, Ethiopia); Köhlin, Gunnar (Department of Economics, School of Business, Economics and Law, Göteborg University); Mekonnen, Alemu (Department of Economics, Addis Ababa University, Ethiopia)
    Abstract: We use three rounds of a rich panel data set to investigate the determinants of household cooking fuel choice and energy transition in urban Ethiopia. We observe that the expected energy transition did not occur following economic growth in Ethiopia during the decade 2000-2009. Regression results from a random effects emultinomial logit model suggest that households’economic status, price of alternative energy sources, and education are important determinants of fuel choice in urban Ethiopia. The results also suggest the use of multiple fuels, or “fuel stacking behavior” by households. We argue that policy makers could target these policy levers to encourage transition to cleaner energy sources.
    Keywords: Ethiopia; urban; energy choice; random effects multinomial logit
    JEL: C25 O13 Q23 Q42
    Date: 2015–10
  13. By: Harun Öztürkler (Kırıkkale University, Department of Econometrics); Fatih Demir (Kırıkkale University, Department of Econometics); Serhat Yılmaz (Kırıkkale University, Department of Econometics)
    Abstract: Increasing World population leads to an ever-rising energy need. For every individual in the economic activity and sector the most important energy resource is oil and oil products. Oil is also one of the most important items in the trade between countries. Turkey is a mostly energy dependent country, and this dependency is also the case for oil and oil products. As it is the case for those countries with significant energy dependency, oil price is important for economic stability in Turkey. The effects of oil price on macroeconomic variables are discussed frequently in the related literature. There are empirical studies in the literature investigating the differing effects of oil price rise and fall on economic activity. Some of these studies conclude that the effect is asymmetric. On the other hand, there is no consensus in the literature about the causes of asymmetric price pass-though. This study aims at determining the effects of oil price changes on the inflation in Turkey and whether price pass-through symmetric or asymmetric.
    Keywords: Oil Price, Asymmetric Price Pass-Through, Asymmetric ARDL, Turkey
    JEL: C13 C32 E31 Q43
    Date: 2015
  14. By: Richard G. Newell; Daniel Raimi
    Abstract: This report examines how oil and gas production generates revenue for local governments in eight states through four key mechanisms: (i) state taxes or fees on oil and gas production; (ii) local property taxes on oil and gas property; (iii) leasing of state-owned land; and (iv) leasing of federally-owned land. To compare across states, we show the percentage of total revenue generated by oil and gas production that flows to local governments from these revenue sources. We also connect these calculations to related research to assess whether state and local policies are providing sufficient revenue for local governments to manage increased costs associated with shale development. We find that in most cases, existing policies appear to provide adequate revenue for local governments to manage increased costs associated with growing oil and gas activity. As of 2014, revenues fall short of the costs imposed on local governments in some highly rural regions experiencing rapid, large-scale development, notably the Bakken region of North Dakota and Montana, select counties in Texas, and select local governments in Colorado and Wyoming. Collaboration between industry and local governments, especially on road repairs, could reduce public costs.
    JEL: H25 H71 H72 Q4 Q41 Q43 Q48
    Date: 2015–10
  15. By: Bentivoglio, Deborah; Finco, Adele; Bacchi, Mirian
    Abstract: Nowadays, Brazil is the world’s biggest sugar producer and exporter, as well as the world’s largest producer and consumer of sugarcane ethanol as a transportation fuel. The growth of this market has occurred due to a combination of government policies and technical change, both in the sugarcane processing into ethanol and in the manufacturing of flex-fuel vehicles. However, in recent years, the ethanol production has been questioned due to the possible impact on food prices. This work aims to explore the impact of Brazilian ethanol prices on sugar and gasoline prices. The relationships among these series are investigated using vector error corrections (VECM). Impulse response functions and forecast error variance decompositions are also computed in order to investigate the interrelationships within the series. Results suggests that ethanol prices are affected by both food and fuel price, but there is not strong evidence that changes in ethanol prices affect food prices.
    Keywords: Ethanol, Sugar, Gasoline, VECM, Prices, Agricultural Finance, Crop Production/Industries, C5, Q11, Q18,
    Date: 2015
  16. By: Ciaian, Pavel; Drabik, Dusan
    Abstract: We will build a tractable partial equilibrium model that captures the most important features of the EU biofuel, energy, and biofuel feedstock markets. We consider two representative crops: wheat and rapeseed. Wheat is used for both human consumption and ethanol production (where it yields DDGS as a co-product). Rapeseed is crushed first, yielding joint products: rapeseed oil and meal. Oil is then consumed by humans and is also used in biodiesel production; rapeseed meal is used as animal feed. Waste oil is used for second-generation biodiesel. Because the European Union imports a lot of biofuels and biofuel feedstocks, we allow for trade in these commodities. We explicitly model the multiple counting toward the overall mandate for secondgeneration biofuels produced from non-food crops.
    Keywords: Agribusiness, Agricultural Finance,
    Date: 2015
  17. By: Bartoli, A.; Cavicchioli, D.; Kremmydas, D.; Rozakis, S.; Olper, A.
    Abstract: The growing demand of green maize for biogas production in Northern Italy has triggered an intense debate concerning land rents, maize prices and their possible negative consequences on important agri-food chains. The aim of this work is to quantify the extent to which the rapid spread of biogas raised the maize price at regional level, increasing the demand of land for energy crops. For this purpose we built a partial-equilibrium model simulating the agricultural sector and the biogas industry in Lombardy, under two alternative subsidization schemes. Results show that policy measures implemented in 2013 – reducing the average subsidy per kWh – may contribute to enforce the sustainability of the sector and decreasing its competition with agri-food chains: maize demand for biogas would decrease, compared to the old scheme, lessening the market clearing price and reducing land demand for energy purposes.
    Keywords: biogas, land use, market simulation, mathematical programming, policy anaylsis, Agricultural and Food Policy, Land Economics/Use, C61, Q11, Q21, Q42,
    Date: 2015
  18. By: Kenneth Gillingham; William D. Nordhaus; David Anthoff; Geoffrey Blanford; Valentina Bosetti; Peter Christensen; Haewon McJeon; John Reilly; Paul Sztorc
    Abstract: The economics of climate change involves a vast array of uncertainties, complicating both the analysis and development of climate policy. This study presents the results of the first comprehensive study of uncertainty in climate change using multiple integrated assessment models. The study looks at model and parametric uncertainties for population, total factor productivity, and climate sensitivity. It estimates the pdfs of key output variables, including CO2 concentrations, temperature, damages, and the social cost of carbon (SCC). One key finding is that parametric uncertainty is more important than uncertainty in model structure. Our resulting pdfs also provide insights on tail events.
    JEL: O44 Q48 Q54
    Date: 2015–10
  19. By: Stefano Bosi (EPEE, University of Evry); David Desmarchelier (LEM, University of Lille)
    Abstract: Since Heal (1982), there is a theoretical consensus about the occurrence of limit cycles (through a Hopf bifurcation) under a positive effect of pollution on consumption demand (compensation effect ) and about the impossibility under a negative effect (distaste effect ). However, recent empirical evidence advocates for the relevance of distaste effects. Our paper challenges the conventional view on the theoretical ground and reconciles theory and evidence. The Environmental Kuznets Curve (pollution Þrst increases in the capital level then decreases) plays the main role. Indeed, the standard case à la Heal (limit cycles only under a compensation effect ) only works along the upward-sloping branch of the curve while the opposite (limit cycles only under a distaste effect ) holds along the downward-sloping branch. Welfare effects of taxation also change according to the slope of the EKC.
    JEL: E32 O44
    Date: 2015
  20. By: Löfgren, Åsa (Department of Economics, School of Business, Economics and Law, Göteborg University); Burtraw, Dallas (Resources for the Future); Wråke, Markus (Energy Unit at IVL); Malinovskaya, Anna (Resources for the Future)
    Abstract: Recent changes to the EU Emissions Trading System introduce structural changes regarding the initial distribution of emissions allowances, which are worth tens of billions of euros. A key change is the expanding role for auctions, which account for about half of the allowance allocation now and will be a growing share going forward. The use of revenue from auctions is a decision left to EU Member States and appears increasingly important. Well over half of auction revenue to date has been directed to energy and climate related purposes. Further, we do not find evidence that Member States have used state aid to electricity-intensive firms to strategically support domestic industry. The trading system is evolving in a way that is likely to improve its performance, but there remain important questions related the future price of allowances and the distribution and use of asset value created under the trading system.
    Keywords: auction; cap and trade; European Union; EU ETS; allocation; climate change; policy
    JEL: H23 P48 Q54
    Date: 2015–10
  21. By: Anastasios Xepapadeas; Athanasios Yannacopoulos
    Abstract: Variables describing the state of an environmental system such as resources (renewable or exhaustible), pollutants, greenhouse gases have a profound spatial dimension. This is because resources or pollutants are harvested, extracted, emitted, or abated in a specific location or locations, the impacts of environmental variables, whether beneficial or detrimental, have a strong spatial dimension, and there is transport of environmental state variables across geographical space due to natural processes. In this paper we study dynamic optimization for the joint management of resources and pollution when pollution affects resource growth and when spatial transport phenomena both for the resources and the pollution are present. We present approaches that deal with dynamic optimization in infinite dimensional spaces which can be used as tools in environmental and resource economic. We also present methods which can be used to study the emergence of spatial patterns in dynamic optimizations models. Our methods draw on the celebrated Turing diffusion induced instability but are different from Turing�s mechanism since they apply to forward-optimization models. We believe that this approach provides the tools to analyze a wide range of problems with explicit spatial structure which are very often encountered in environmental and resource economics.
    Keywords: Spatial transport, renewable resource, pollution, optimization, infinite dimensional spaces, Tiring instability, patter formation, policy design
    JEL: C61 Q20 Q52
    Date: 2015–10–29
  22. By: Alina Pohl
    Abstract: This research investigates eco-clusters as driver for greening regional economic policy and examines necessary incentive structures to foster eco-innovation as well as growth and employment in the eco-industry sector. Eco-clusters are seen in context with sustainability and environmental friendly behavior as means for a socio-ecological transition in the long run. The main hypothesis implies that eco-clusters have to be policy driven and established top-down and therefore differ from cluster structures in other industries. Possible reasons are uncertainty on a developing market as well as external effects of eco-innovations; the latter are seen as radical innovations. Based on theoretic findings for the establishment of clusters and general research findings for eco-clusters and eco-innovations, it is differentiated between a spontaneous cluster emergence from private initiatives through self-reinforcing forces of companies in a region (bottom-up), and the formation of a policy-driven network with primarily regional objectives to stimulate the competitive advantage of the regional industrial location (top-down). The hypothesis will be proofed by empirical results gained through personal interviews and complemented by findings in current research literature. Finally, implications for incentive structures to green economic policy are identified. It is shown that eco-clusters are different to other clusters and crucial for a long-term sustainable change and thus need political commitment and public incentives. For empirical observation, eco-clusters in Austria were selected. This research relates to the ongoing debate on green growth and develops policy incentives for establishment of eco-clusters and thus greening of economic policy.
    Keywords: Cluster Analysis, Ecological Cluster, Ecological Innovations, Regional Economic Policy, top-down vs. bottom-up
    JEL: C38 I31 O31 O44 Q01 Q55 Q58
    Date: 2015–10
  23. By: Beach, Robert; Creason, Jared; Ohrel, Sara; Ragnauth, Shaun; Ogle, Stephen; Li, Changsheng; Salas, William
    Abstract: Agricultural emissions account for 53% of 2010 global non-CO2 emissions and are projected to increase substantially in the future, especially in Asia, Latin America and Africa. While agriculture is a substantial source of emissions, it is also a potential source of cost-effective non-CO2 GHG abatement. Previous “bottom-up” analyses provided marginal abatement cost (MAC) curves for use in modeling these options within economy-wide and global mitigation analyses. In this study, we utilize updated economic and biophysical data and models to extend and improve upon previous work. Key enhancements include incorporation of additional mitigation options, updated baseline emissions projections, greater spatial disaggregation, and development of MAC curves to 2030. MAC curves are generated accounting for net GHG reductions, yield effects, livestock productivity effects, commodity prices, labor requirements, and capital costs where appropriate. MAC curves are developed at the country level and reveal large potential for non-CO2 GHG mitigation at low carbon prices.
    Keywords: Environmental Economics and Policy,
    Date: 2015
  24. By: Wenhui Tian (LGI - Laboratoire Génie Industriel - EA 2606 - Ecole Centrale Paris); Pascal Da Costa (LGI - Laboratoire Génie Industriel - EA 2606 - Ecole Centrale Paris); Jean-Claude Bocquet (LGI - Laboratoire Génie Industriel - EA 2606 - Ecole Centrale Paris)
    Abstract: In the context of global warming, academic institutes, international institutions such as the Intergovernmental Panel on Climate Change and governments of numerous countries have proposed global objectives of reducing CO 2 emissions and announced national targets. The purposes of this article are: i) to assess the governmental targets in comparing with the global objectives of various allocation methods, which correspond to different carbon equity principles; ii) to propose technology roadmaps in terms of carbon equity in the energy sectors, under the consideration of the international convergence of technologies in the energy transition period up to 2050. In order to evaluate the technology roadmaps, a Sectoral Emission Model is proposed that covers the sectors responsible for the greatest part of CO 2 emissions (power, transport, residence and industry sector) in studying the impacts of the principle energy technologies (energy mix, electric vehicles and energy efficiency). In the article, the technology roadmaps for the governmental targets on CO 2 emissions are studied for three typical countries: China, France, and the United States. Our results show that under the sectoral carbon equity consideration, coal combustion is projected to be reduced by two thirds in China, and it will have to be almost eliminated in the United States to achieve their CO 2 reduction target. But gas is encouraged to be used in the power sector, especially in the United States. Regarding the transport sector, more than 60% of vehicles should be replaced to electric vehicles in China, and this share will be about up to 90% in France and the United States.
    Keywords: Multi-Objective Optimization,Technology Roadmaps,Sectoral Emission Modeling,Energy Transition,CO2 Emission Prospective Scenarios,Carbon Inequality
    Date: 2015–10–12
  25. By: José Belbute (Department of Economics, University of Évora, Portugal and CEFAGE-UE, Portugal); Alfredo M. Pereira (Department of Economics, College of William and Mary, Williamsburg)
    Abstract: We provide alternative reference forecasts for global CO2 emissions based on an ARFIMA model estimated with annual data from 1750 to 2013. These forecasts are free from additional assumptions on demographic and economic variables that are commonly used in reference forecasts, as they only rely on the properties of the underlying stochastic process for CO2emissions, as well as on all the observed information it incorporates. In this sense, these forecasts are more based on fundamentals. Our reference forecast suggests that in 2030, 2040 and 2050, in the absence of any structural changes of any type, CO2 would likely be at about 25%, 34% and 39.9% above 2010 emission levels, respectively. These values are clearly below the levels proposed by other reference scenarios available in the literature. This is important, as it suggests that the ongoing policy goals are actually within much closer reach than what is implied by the standard CO2reference emission scenarios. Having lower and more realistic reference emissions projections not only gives a truer assessment of the policy efforts that are needed, but also highlights the lower costs involved in mitigation efforts, thereby maximizing the likelihood of more widespread energy and environmental policy efforts.
    Keywords: Forecasting, reference scenario, CO2 emissions, long memory, ARFIMA.
    JEL: C22 C53 O13 Q47 Q54
    Date: 2015
  26. By: Caillavet, F.; Darmon, N.; Fadhuile, A.; Nichele, V.
    Abstract: The environmental impact of food is a major concern for climate change. This paper estimates the CO2 emissions due to food purchases of French households and analyses the disparities between income classes. To combine environment with health concerns, we consider as well the caloric content of foods and normalize CO2 emissions on a daily 2000kcalories basis. Data on French food purchases come from Kantar 1998-2010. Using Life-Cycle-Analysis from Greenext, we obtain CO2equivalent emissions for different food groups. Then we adjust levels of emissions by linear regression on income and age. We find that CO2 emissions of food purchases amount to 3.9kg/day/household. Lowest-income households emit more CO2 compared to richest households (+14.7%), but less on an adjusted 2000kcal basis (-9.6%). In a public policy perspective, richer households should be the first target of diet change since their consumption favours higher CO2 emitting food groups than lower-income households, at caloric level constant.
    Keywords: CO2 emissions, Food purchases, Income disparities., Consumer/Household Economics, Environmental Economics and Policy, Q56, Q18, Q58,
    Date: 2015
  27. By: William Brock; Anastasios Xepapadeas
    Abstract: This paper is, to our knowledge, the first paper in climate economics to consider the combination of spatial heat transport and polar amplification. We simplified the problem by stratifying the Earth into latitude belts and assuming, as in North et al. (1981), that the two hemispheres were symmetric. Our results suggest that it is possible to build climate economic models that include the very real climatic phenomena of heat transport and polar amplification and still maintain analytical tractability. We derive optimal fossil fuel paths under heat transport with and without polar amplification. We show that the optimal tax function depends not only on the distribution of welfare weights but also on the distribution of population across latitudes, the distribution of marginal damages across latitudes and cross latitude interactions of marginal damages, and climate dynamics. We also determine optimal taxes per unit of emission and show that, in contrast to the standard results suggesting spatially uniform emission taxes, poorer latitudes should be taxed less per unit emissions than richer latitudes.
    Keywords: Climate change, Heat transport, Polar Amplification, Welfare maximization, fossil fuels, optimal taxation.
    JEL: Q54 Q58 C61
    Date: 2015–10–25
  28. By: Gissela Landa (OFCE Sciences Po); Frederic Raynes (OFCE-SciencesPo & TNO); Ivan Islas (INECC); François-Xavier Bellocq (AFD); Fabio Grazi (AFD)
    Abstract: This paper simulates the medium- and long-term impact of proposed and expected energy policy on the environment and on the Mexican economy. The analysis has been conducted with a Multi-sector Macroeconomic Model for the Evaluation of Environmental and Energy policy (Three-ME). This model is well suited for policy assessment purposes in the context of developing economies as it indicates the transitional effects of policy intervention. Three-ME estimates the carbon tax required to meet emissions reduction targets within the Mexican “Climate Change Law”, and assesses alternative policy scenarios, each reflecting a different strategy for the recycling of tax revenues. With no compensation, the taxation policy if successful will succeed in in reducing CO2 emissions by more than 75% by 2050 with respect to Business as Usual (BAU), but at high economic costs. Under full redistribution of carbon tax revenues, a double
    Date: 2015–10
  29. By: Habla, Wolfgang (Department of Economics, School of Business, Economics and Law, Göteborg University); Winkler, Ralph (Department of Economics and Oeschger Centre for Climate Change Research, University of Bern Schanzeneckstrasse 1, CH-3012 Bern, Switzerland)
    Abstract: We analyze a principal-agent relationship in the context of international climate policy in a two-country framework. First, the principals of both countries decide whether to link their domestic emission permit markets to an international market. Second, the principals select agents who then non-cooperatively determine the levels of emission permits. Finally, these permits are traded on domestic or international permit markets. We find that the principals in both countries have an incentive to select agents that care (weakly) less for environmental damages than the principals do themselves. This incentive is more pronounced under international permit markets, particularly for permit sellers, rendering an international market less beneficial to at least one country. Our results may explain why we do not observe international permit markets despite their seemingly favorable characteristics and, more generally, suggest that treating countries as atomistic players may be an oversimplifying assumption when analyzing strategic behavior in international policy making.
    Keywords: non-cooperative climate policy; political economy; emissions trading; linking of permit markets; strategic delegation; strategic voting
    JEL: D72 H23 H41 Q54 Q58
    Date: 2015–11

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