nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒12‒08
thirty-six papers chosen by
Roger Fouquet
London School of Economics

  1. Brown coal exit: a market mechanism for regulated closure of highly emissions intensive power stations By Frank Jotzo; Salim Mazouz
  2. Report on Appendix A-1 of the Virginia Energy Plan: Impacts of Proposed Regulations under Section 111(d) of the Clean Air Act By William M. Shobe
  3. Rational habits in residential electricity demand By Massimo Filippini; Bettina Hirl; Giuliano Masiero
  4. European climate finance: securing the best return By Guntram B. Wolff; Georg Zachmann
  5. Making low-carbon technology support smarter By Georg Zachmann
  6. Installing photovoltaics in Germany: A license to print money? By Andor, Mark; Frondel, Manuel; Vance, Colin
  7. ASIAN SPOT PRICES FOR LNG OTHER ENERGY COMMODITIES By Abdullahi Alim; Peter R. Hartley; Yihui Lan
  8. Long run demand for energy services: income and price elasticities over two hundred years By Roger Fouquet
  9. Energy efficiency of China's industry sector: An adjusted network DEA-based decomposition analysis By Yingnan Liu; Ke Wang
  10. Measuring Productivity When Technologies Are Heteroneneous: A Semi-Parametric Approach for Electricity Generation By Stefan Seifert
  11. Utility-Based Smartphone Energy Consumption Optimization for Cloud-Based and On-Device Application Uses By Baseem Al-athwari; Jorn Altmann
  12. Welcoming remarks: energy interdependence in the western hemisphere conference By Harker, Patrick T.
  13. A climate treaty without the US Congress: Using executive powers to overcome the 'Ratification Straitjacket' By Luke Kemp
  14. European Energy Market Integration: Efficiency Improvements in Electricity Producing Firms By Ferran Armada Ramírez
  15. Air Pollution and Urban Structure Linkages: Evidence from European Cities By Miguel Cárdenas Rodríguez; Laura Dupont-Courtade; Walid Oueslati
  16. Carbon tax, pollution and spatial location of heterogeneous firms By Nelly Exbrayat; Stéphane Riou; Skerdilajda Zanaj
  17. Veinte años de funcionamiento del Mercado Eléctrico Mayorista en Colombia: algunas reflexiones By John J. García; Gustavo López Álvarez; Fredy Marín; Jhonny Moncada
  18. Bribes, Bureaucracies and Blackouts: Towards Understanding How Corruption at the Firm Level Impacts Electricity Reliability By Harrison Fell; Harrison Fell
  19. In Search of ‘Good’ Energy Policy: The Social Limits to Technological Solutions to Energy and Climate Problems By Michael G. Pollitt
  20. Robotic process automation: mature capabilities in the energy sector By Mary Lacity; Leslie P. Willcocks; Andrew Craig
  21. Can current electricity markets cope with high shares of renewables? A comparison of approaches in Germany, the UK and the State of New York By Michael G. Pollitt and Karim L. Anaya
  22. Explaining differences in electric vehicle policies across countries: innovation vs. environmental policy rationale By Wesseling , Joeri H.
  23. Is the price elasticity of demand for coal in China increasing? By Paul J. Burke; Hua Liao
  24. Climate policy decisions under uncertainty By Harry Clarke
  25. On the Quest of Resource blessing : Re-examining the effect of oil on Income Inequality By Thierry Urbain Yogo; Douzounet Mallaye; Gaëlle Tatiana Timba
  26. Water Stress on U.S. Power Production at Decadal Time Horizons By Poulomi Ganguli; Devashish Kumar; Auroop R. Ganguly
  27. Intervenção Regulatória nos Setores de Telecomunicações e Elétrico em 2012: um estudo de eventos com modelo de precificação multifatorial By Gabriel G. Fiuza de Bragança; Marcelo de Sales Pessoa; Katia Rocha
  28. Preferences and pollution cycles By Stefano Bosi; David Desmarchelier; Lionel Ragot
  29. Energy Business Cycles By Meenagh, David; Minford, Patrick; Oyekola, Olayinka
  30. Climate Negotiations: What Can be Expected from the Climate Summit in Paris? By Philipp M. Richter; Hanna Brauers
  31. Making China the transition to a low-carbon economy: Key challenges and responses By ZhongXiang Zhang
  32. Productivity in Electricity Retail after Market Liberalisation: Analysing the Effects of Ownership and Firm's Governance Structure By Caroline Stiel; Astrid Cullmann; Maria Nieswand
  33. Climate Change and Long-Run Discount Rates: Evidence from Real Estate By Giglio, Stefano W; Maggiori, Matteo; Ströbel, Johannes; Weber, Andreas
  34. Impactos de la reglamentación de la ley 1715 de energías renovables no convencionales en Colombia By William Orlando Escobar Caicedo; David Quitian Reyes
  35. Chinese Overseas Hydropower Dams and Social Sustainability: The Bui Dam in Ghana and the Kamchay Dam in Cambodia By Frauke Urban; Johan Nordensvard; Giuseppina Siciliano; Bingqin Li
  36. Imperfect Certification under Cournot Duopoly By Charu Grover; Sangeeta Bansal

  1. By: Frank Jotzo (Crawford School of Public Policy, The Australian National University); Salim Mazouz (EcoPerspectives Pty Ltd)
    Abstract: In this paper we propose a market mechanism for regulated exit of highly emissions intensive power stations from the electricity grid. The starting point is that there is surplus capacity in coal fired power generation in Australia. In the absence of a carbon price signal, black coal generation capacity may leave the market instead of high emitting brown coal power stations. We lay out options for a mechanism of regulated power station closure using a market mechanism. Plants bid competitively over the payment they require for closure, the regulator chooses the most cost effective bid, and payment for closure is made by the remaining power stations in proportion to their carbon dioxide emissions. This could overcome adverse incentive effects for plants to stay in operation in anticipation of payment for closure and solve the political difficulties and problems of information asymmetry that plague government payments for closure and direct regulation for exit. We explore the issues theoretically and provide empirical illustrations. These suggest that closure of a brown coal fired power station in Australia could yield emissions savings at costs that are lower than the social benefits. The analysis in this paper is applicable to other countries.
    Keywords: greenhouse gas emissions; electricity; brown coal; early retirement; regulation; market mechanism; contract for closure
    JEL: Q48 Q58
    Date: 2015–11
  2. By: William M. Shobe (University of Virginia)
    Abstract: A review of the Virginia Center for Coal and Energy Research cost estimates for complying with proposed federal rules limiting greenhouse gas emissions from existing power plants. The report contains a number of serious errors, greatly limiting its usefulness in evaluating state policy options.
    Keywords: VCCER; clean power plan; virginia;energy; climate change
    JEL: Q4 Q5
    Date: 2015–01–07
  3. By: Massimo Filippini (Institute of Economics (IdEP), University of Lugano; Department of Management, Technology and Economics, ETH Zurich, Switzerland); Bettina Hirl (Institute of Economics (IdEP), University of Lugano, Switzerland); Giuliano Masiero (Department of Management, Information and Production Engineering (DIGIP), University of Bergamo, Italy; Institute of Economics (IdEP), University of Lugano, Switzerland)
    Abstract: Dynamic partial adjustment models of residential electricity demand account for the fact that households may not adjust electricity consumption immediately in response to changes in prices, income, and other relevant factors, because of behavioral habits or adjustment costs for the capital stock of appliances. However, forward-looking behavior is generally neglected. Expectations about future prices or consumption may have an impact on current decisions. In this paper we propose rational habit models for residential electricity demand and apply them to a panel of 48 US states between 1995 and 2011. We estimate lead consumption models using fixed effects, instrumental variables, and the GMM Blundell-Bond estimator. We find that expectations about future consumption significantly influence current consumption decisions, which suggests that households behave rationally when making electricity consumption decisions. This novel approach may improve our understanding of the dynamics of residential electricity demand and the evaluation of the effects of energy policies.
    Keywords: Residential electricity, Partial adjustment models, Dynamic panel data models, Rational habits
    JEL: D12 D84 D99 Q41 Q47 Q50
    Date: 2015–11
  4. By: Guntram B. Wolff; Georg Zachmann
    Abstract: An extended version of this paper was presented at the ECOFIN meeting in Luxembourg on 11 September 2015. Click here to download it. The issue Combating climate change is perhaps the most formidable public policy challenge of our times. Unmitigated climate change will be irreversible. It will place significant costs on future generations, and expose them to unexplored risks. To mitigate climate change, global coordination is indispensable. European Union citizens consider climate change a central problem. The EU and its member states have therefore put in place signficant and costly climate mitigation policies. Policy challenge Without an ambitious deal at the United Nations climate summit in Paris in late 2015, much of EU climate policy will be futile. Climate finance is the most important tool the EU has to make a deal likely. A strong and unified EU position backed by common resources would increase the EU’s ability to shape the emerging international climate institutions and their governance, to ensure that climate finance is used to reduce mitigation costs and to ensure that European industry benefits from the opportunities related to climate finance. A redirection of domestic mitigation costs to climate finance and the crowding-in of private money would reduce the burden on taxpayers. Dedicated resources, collected through a revamped emissions trading system and a carbon tax on transport and heating fuels, would increase the predictability and credibility of EU climate finance. Source - Bruegel based on OECD (2015) and Standing Committee on Finance (2014). Addressing climate change – a global challenge Climate change is already affecting our environment - Global average temperatures have risen by almost 1°C above pre-industrial levels. Sea levels have risen by 19cm since the beginning of the last century. The frequency of extreme weather events has increased. Water cycles and certain ecosystems are affected1. Climate simulations show that temperature increases will be different in different parts of the world2. In some vulnerable regions, more extreme temperatures and desertification could trigger migration3. The EU might also be directly affected by substantial increases in droughts and extreme heat phenomena in southern Europe by the end of the century4. The scientific consensus is that this temperature increase is very likely the result of man-made emissions of greenhouse gases (GHG)5. The concentration of CO2 in the atmosphere has increased by about 2 parts per million (ppm) per year since 20026, passing 400 ppm in 20157. Baseline projections suggest that without mitigation, the average global temperature could increase by more than 4°C by the end of the century8. Addressing climate change is arguably imperative for the following main reasons - Ethical - Climate change will hit the poorest parts of the world’s population hardest9. It will also affect future generations much more than current generations. Ethical considerations call for the preservation of the common good of an intact environment10. Risk management - climate change affects a complex system that we do not fully understand. Research has indicated the possibility of potential vicious cycles (such as release of greenhouse gases from melting permafrost) and threshold events (such as a shift in the Gulf Stream). Global warming remains a large-scale experiment on our planet with uncertain outcomes. Irreversibility - climate change is a slow-moving but long-lasting phenomenon that humans cannot easily stop when its effects turn out to be severe. Even after a complete stop of man-made greenhouse-gas emissions, the stock of greenhouse gases in the atmosphere will continue to cause global temperature increases for centuries. Expected economic cost - There is a consensus that above a certain temperature level, climate change will have significant economic costs – but there is no consensus on how big this cost will be11. Addressing climate change involves both adaptation and mitigation. Adaptation policies to cope with the consequences of global warming are primarily carried out by local or national authorities and do not require global cooperation. Mitigation is all policy action aimed at limiting global warming. Mitigation is a truly global challenge because action by countries acting alone would be largely ineffective. Reduced fossil fuel consumption in a few participating countries would lead to lower fossil fuel prices. Countries that opt out would hence increase their production/exports (of energy-intensive products) based on highly competitive fossil fuels, largely off-setting the greenhouse-gas reductions in participating countries. The optimal balance between mitigation, adaptation and endurance is uncertain. In an optimal scenario, the overall costs related to climate change will be spread relatively evenly across all three12. To achieve the politically-set goal of limiting global warming to less than 2°C above pre-industrial level, global emissions must be cut drastically.
    Date: 2015–09
  5. By: Georg Zachmann
    Abstract: The issue Combating climate change on the global level will be much easier when abundant low-carbon technologies that are competitive in their cost and capabilities are available. But private companies underinvest in low-carbon innovation because they cannot capture the climate benefits. There are three policies to address this issue - pricing carbon, supporting deployment of as-yet uncompetitive technologies and supporting research and development. Policy challenge Funding all possible low-carbon technologies with all types of support instruments is not a sensible or viable option. Finite budgets need to be allocated to different technologies, but not all innovation policies are equally efficient. However, the combination of the three support policies and their coordination at European level can improve results and reduce costs. To make low-carbon technology support smarter the European Union should (1) improve carbon pricing, especially provide more long-term visibility for the carbon price; (2) enhance European cooperation, both in terms of deployment and R&D support; (3) balance support for deployment and RD&D; and (4) develop a more methodological approach to technology selection. Source - Bruegel. This Policy Brief summarises previous papers that have benefited from funding under the Simpatic project (http -// Research assistance by Burak Turkoglu and Augustin Lagarde is acknowledged. References can be found in the PDF version of the Policy Brief which is available for download at the bottom of this page. While the specific effects of increasing concentrations of greenhouse-gases in the atmosphere on the climate system cannot be accurately predicted, there is a non-trivial risk that beyond some ex-ante unknown tipping points – in terms of greenhouse- gas concentration and/or global temperature – irreversible and highly expensive events might unfold. This calls for quick action to reduce the probability that such tipping points will be passed. Annual greenhouse gas emissions will have to be reduced dramatically before 2050. In order to stabilise carbon dioxide concentrations in the atmosphere at about 450 parts per million (ppm)1 by 2050, global emissions would have to decline by about 40-70 percent by 2050. Such aggressive global decarbonisation requires an international agreement. Otherwise, fossil fuels not used in some countries will be used in others2. But an agreement is only feasible and stable if the benefit for each country exceeds the cost, which depends on the cost of low-carbon technologies. Consequently, reducing the cost of these technologies in Europe would not only allow cheaper domestic decarbonisation and for a competitive edge to be gained in selling these technologies overseas, but most importantly it would be a major contribution to an international agreement. In this Policy Brief, we describe the interaction between three approaches that are effective in driving innovation in low-carbon technologies. Based on that, we provide four recommendations for making low-carbon technology support smarter - (1) improve carbon pricing; (2) improve European cooperation; (3) combine deployment and research, development and demonstration (RD&D) support; and (4) take a more methodological approach to technology selection. Key strategies to drive low-carbon innovation This is also true for low-carbon innovation, but supporting lowcarbon innovation involves the particular challenge of targeting innovation that brings down the decarbonisation cost. For this, there are three main policies - (i) a price on carbon, (ii) directly support public and private RD&D investment in the targeted lowcarbon technologies, and (iii) create demand for technologies to foster private innovation.Numerous policy instruments support innovation, ranging from patent protection to public research funding and public procurement, to subsidies for private investment in innovation3, but there is no consensus on a single best practise4. There are, however, conventional ‘dos and don’ts’. For example, do regularly conduct independent evaluations of innovation policies, do avoid excessive risk aversion in project selection and do determine clear triggers for cutting support5. Pricing carbon If companies know that they or their (potential) customers will be faced with high carbon prices in the future, they will have every incentive to invest in development of low-carbon alternatives. Calel and Dechezleprêtre (2012) provide evidence that carbon pricing in the EU has increased low-carbon patenting both by companies directly covered by the EU emissions trading system (ETS) and by companies that do not fall under the ETS6 (Figure 1). Creating the expectation of a high future carbon price has one big advantage over all other innovation policies (such as predictably tightening fuel standards) – it is completely technology neutral. At the same time, carbon pricing incentivises investment in lowcarbon power technologies (eg solar photovoltaic), energy-efficient appliances, carbon capture and storage or more resource-efficient processes (eg recycling of aluminium).
    Date: 2015–08
  6. By: Andor, Mark; Frondel, Manuel; Vance, Colin
    Abstract: Using detailed data originating from several hundred households of the German Residential Energy Survey (GRECS), this paper empirically investigates the returns on investment in home-equipped photovoltaics (PV) installations. We find that these returns were particularly high in the years 2009 to 2011, when large subsidies for solar electricity coincided with plummeting module prices. While our empirical analysis demonstrates that such investments also incur substantial risks, there is evidence that, above all, wealthy households tend to benefit from the solar subsidies, whereas the costs of financing these subsidies are borne by electricity consumers at large, not least poverty-endangered households. The resulting redistribution of financial resources raises the question of whether the burden-sharing of Germany's transition to an alternative energy system is fair.
    Abstract: Auf Basis der Erhebungen zum Energieverbrauch der privaten Haushalte von RWI und forsa analysieren wir für mehrere hundert Haushalte, die über eine Photovoltaik-Anlage verfügen, die Renditen der Investitionen in PV-Anlagen. Unsere Ergebnisse verdeutlichen, dass diese Renditen mitunter sehr lukrativ waren, besonders bei Installation in den Jahren 2009 bis 2011, in denen hohe Vergütungssätze für Solarstrom mit stark gesunkenen Anlagekosten einhergingen. Unsere Sensitivitätsanalysen zeigen allerdings auch die nicht unerheblichen Risiken auf, die mit derartigen Investitionen verbunden sind. Zudem sind es tendenziell eher die wohlhabenderen Haushalte, die derartige Investitionen tätigen. Finanziert werden die damit erzielten Renditen von der großen Masse der übrigen Stromverbraucher über die EEG-Umlage, nicht zuletzt auch von den armutsgefährdeten Haushalten. Angesichts dieser Umverteilung finanzieller Ressourcen stellt sich bei der Förderung des Ausbaus der Erneuerbaren in Deutschland mit Hilfe des Erneuerbaren-Energien-Gesetzes (EEG) die Frage nach einer gerechten Lastenverteilung.
    Keywords: solar subsidies,redistribution effects,German Residential Energy Consumption Survey
    JEL: Q28 Q42 Q48
    Date: 2015
  7. By: Abdullahi Alim (Business School, University of Western Australia); Peter R. Hartley (Business School, University of Western Australia); Yihui Lan (Business School, University of Western Australia)
    Abstract: We investigate the relationship between the Japan-Korea Marker (JKM) price of LNG, the price of Brent oil and spot prices of fuel oil and thermal coal in Asia. We focus especially on the JKM price. This is of increasing interest as a result of the increasing proportion of spot and short-term trading of LNG together with proposals to develop an LNG pricing hub in Asia with associated derivatives markets. In addition, since imminent LNG exports from the US Gulf Coast may substantially disrupt historical pricing relationships between natural gas prices in different locations and the relationships between those prices and the price of oil, it is of interest to characterize the behaviour of LNG prices in Asia before such disruptions occur. Finally, our analysis has implications for the suitability of the JKM price as an alternative to oil or other spot natural gas prices for indexing long-term LNG contracts.
    Date: 2015
  8. By: Roger Fouquet
    Abstract: This article investigates how the demand for energy services has changed since the Industrial Revolution. It presents evidence on the income and price elasticities of demand for domestic heating, passenger transport, and lighting in the United Kingdom over the last two hundred years. As the economy developed and energy service prices fell, income elasticities have generally followed an inverse U-shape curve, and price elasticities have generally followed a U-shape curve. However, these general trends also appear to have been affected by energy and technological transitions, which boosted demand (by either encouraging poorer consumers to fully enter the market or offering new attributes of value to wealthier consumers). The evidence presented offers insights that will be helpful for identifying likely future trends in energy use and carbon dioxide emissions, and for developing long-term climate policies.
    Keywords: demand elasticity; energy use; income; price dynamics
    JEL: D12 N73 N74 Q41
    Date: 2014–07
  9. By: Yingnan Liu; Ke Wang
    Abstract: The process of energy conservation and emission reduction in China requires the specific and accurate evaluation of the energy efficiency of the industry sector because this sector accounts for 70 percent of China¡¯s total energy consumption. Previous studies have used a ¡°black box¡± data envelopment analysis (DEA) model to obtain the energy efficiency without considering the inner structure of the industry sector. However, differences in the properties of energy utilization (final consumption or intermediate conversion) in different industry departments may lead to bias in energy efficiency measures under such ¡°black box¡± evaluation structures. Using the network DEA model and efficiency decomposition technique, this study proposes an adjusted energy efficiency evaluation model that can characterize the inner structure and associated energy utilization properties of the industry sector so as to avoid evaluation bias. By separating the energy-producing department and energy-consuming department, this adjusted evaluation model was then applied to evaluate the energy efficiency of China¡¯s provincial industry sector.
    Keywords: Energy consumption, Energy conversion, Structure decomposition
    JEL: Q58 Q40
    Date: 2015–01–02
  10. By: Stefan Seifert
    Abstract: While productivity growth in electricity generation is associated with multiple positive effects from an economic and environmental perspective, measuring it is challenging. This paper proposes a framework to estimate and decompose productivity growth for a sector characterized by multiple technologies. Using a metafrontier Malmquist decomposition and frontier estimation based on stochastic non-smooth envelopment of data (StoNED) allows for productivity estimation with few microeconomic assumptions. Additionally, evaluation of productivity at representative hypothetical units permits distribution-free analysis for the whole distribution of power plant sizes. The proposed framework is used to analyze a unique and rich dataset of coal, lignite, gas, and biomass-fired generators operating in Germany from 2003 to 2010. The results indicate stagnating productivity for the sector as a whole, technical progress for biomass plants, and very high productivity for gas-fired plants.
    Keywords: Productivity estimation, Metafrontier Malmquist Decomposition, Stochastic Non-Smooth Envelopment of Data (StoNED), Electricity and Heat Generation in Germany, 2003 - 2010
    JEL: D24 C14 O13 L94
    Date: 2015
  11. By: Baseem Al-athwari (TEMEP, College of Engineering, Seoul National University); Jorn Altmann (TEMEP, College of Engineering, Seoul National University)
    Abstract: As the use of smartphones and its applications continue their rapid growth, prolonging the smartphone battery lifetime has become one of the main concerns for smartphone users if re-charging is not possible. In this paper, we show that, by taking into account the user preferences, the energy consumption of smartphones can be adjusted to maximize the user utility. The user preferences are reflected through the type of application uses, the perceived costs of energy allocation for the different types of applications, and the perceived value of energy remaining in the battery of the smartphone. In particular, we optimize the energy consumption of smartphones through the use of a utility-based energy consumption optimization model, which we developed. We demonstrate the workings of our model by applying it to a simple scenario, in which we vary the perceived value of energy remaining in the smartphone battery and the user’s perceived costs for energy consumed by the two types of application uses: cloud-based application uses and on-device application uses. Our results show that, by letting users express their preferences, users can allocate the remaining smartphone energy such that it maximizes their utilities.
    Keywords: Smartphones, Apps, Energy Consumption Optimization, Utility Function, Usage Behavior, Cloud Computing, Off-Loading, Application Alassification, Energy Allocation.
    JEL: C13 C61 D01 D11 L82 L86 M15
    Date: 2015–11
  12. By: Harker, Patrick T. (Federal Reserve Bank of Philadelphia)
    Abstract: President Patrick T. Harker highlights the progress of energy development in the Third District and its importance in fostering economic growth as he welcomes participants to the Global Interdependence Center’s conference. This event brings together leaders in science, technology, and business to discuss ways to collaborate and use energy resources wisely.
    Keywords: Economic growth; Global Interdependence Center; Energy
    Date: 2015–11–05
  13. By: Luke Kemp (Fenner School of Environment and Society, The Australian National University)
    Abstract: The issue of US ratification of international environmental treaties is a recurring obstacle for environmental multilateralism, including the climate regime. Despite the perceived importance of the role of the US to the success of any future international climate agreement, there has been little direct coverage in terms of how an effective agreement can specifically address US legal participation. This paper explores potential ways of allowing for US legal participation in an effective climate treaty. Possible routes forward include the use of domestic legislation such as section 115 (S115) of the Clean Air Act (CAA), and the use of sole-executive agreements, instead of Senate ratification. Legal participation from the US through sole-executive agreements is possible if the international architecture is designed to allow for their use. Architectural elements such as varying legality and participation across an agreement (variable geometry) could allow for the use of sole-executive agreements. Two broader models for a 2015 agreement with legal participation through sole-executive agreements are constructed based upon these options: a modified pledge and review system and a form of variable geometry composed of number of opt-out, voting based protocols on specific issues accompanied with bilateral agreements on mitigation commitments with other major emitters through the use of S115 and sole-executive agreements under the Montreal Protocol and Chicago Convention (Critical Mass Governance). While there is no single solution, Critical Mass Governance appears to provide the optimum combination of tools to effectively allow for US legal participation whilst ensuring an effective treaty.
    Keywords: climate regime; ratification; US; climate policy; UNFCCC
    JEL: Q54 Q56
    Date: 2015–11
  14. By: Ferran Armada Ramírez (Universitat de Barcelona)
    Abstract: In this paper, we review and use different methods to measure and compare efficiency scores in energy producing plants. In particular, we use non-parametric and parametric techniques. We focus our attention in electricity producing power plants on eighteen European countries, as well as in thirty energy systems as a whole. This paper also state some results such as that efficiency has widely improved in the period studied, but these positive results are not homogeneous among energy systems or firms. We present some evidence that the greatest part of energy improvement is the consequence of the technological shift and is not necessarily due to alternative factors, such as market integration, increasing competition, or other firm-level decisions.
    Keywords: Market integration, Efficiency, Data Envelopment Analysis, Energy Market, Europe, Industrial Organization.
    JEL: Q40 G14 Q41 Q48
    Date: 2015
  15. By: Miguel Cárdenas Rodríguez; Laura Dupont-Courtade; Walid Oueslati
    Abstract: This paper investigates the relationship between local air pollution and urban structure with an emphasis on urban fragmentation. Using a unique dataset of 249 Large Urban Zones (LUZ) across Europe, a Bayesian Model Averaging selection method is employed to empirically identify the determinants of within-LUZ concentration of three air pollutants: NO2, PM10 and SO2 for the year 2006. Several indices of land use are considered among possible determinants. These are supplemented by a dataset on various economic, demographic and meteorological variables that can explain the variation of air pollution. The results of this econometric analysis support the hypothesis that urban structure has significant effects on pollution concentration. In particular, they suggest that fragmented urban areas experience higher concentrations of NO2 and PM10 and that densely populated urban areas suffer from higher SO2 concentration. The findings suggest that policies favouring continuous urban areas may result in environmental improvements.<BR>Ce rapport s’intéresse à la relation entre la pollution atmosphérique locale et la structure des villes en s’attachant plus particulièrement à la fragmentation urbaine. On applique une méthode d'analyse bayésienne des modèles pour identifier, à partir d’un ensemble de données unique couvrant 249 zones urbaines élargies (LUZ) d’Europe, les facteurs qui déterminent les concentrations de trois polluants atmosphériques (NO2, PM10 et SO2) dans ces zones, pour l’année 2006. Plusieurs indices d’occupation des sols figurent parmi les possibles déterminants. Ils sont complétés par un ensemble de données sur différentes variables économiques, démographiques et météorologiques qui pourraient expliquer les variations de la pollution atmosphérique. Les résultats de cette analyse économétrique confirment l’hypothèse selon laquelle la structure du tissu urbain a des effets importants sur les concentrations de polluants. En particulier, les résultats indiquent des concentrations plus élevées de NO2 et de PM10 dans les espaces urbains fragmentés et des concentrations plus élevées de SO2 dans les zones urbaines densément peuplées. Ces résultats donnent à penser que la mise en oeuvre de politiques favorisant la continuité de l’espace urbain pourrait être bénéfique pour l’environnement.
    Keywords: air pollution, Bayesian model averaging, fragmentation, urban sprawl, étalement urbain, pollution atmosphérique
    JEL: Q52 Q58 R52
    Date: 2015–12–03
  16. By: Nelly Exbrayat (Jean Monnet University, IAE, Saint-Etienne); Stéphane Riou (Jean Monnet University, IAE, Saint-Etienne); Skerdilajda Zanaj (CREA, Université de Luxembourg)
    Abstract: In this paper, we investigate the e¤ects of a global carbon tax and its ability to curb carbon emissions in a two-country setup characterized by an uneven spatial distribution of mobile heterogeneous firms. Trade takes place between the two asymmetric countries and carbon dioxide (CO2) emissions are a by-product of the production activity of manufac- turing firms. We advance the hypothesis that although a global carbon tax is an attractive environmental measure, it may be subject to debate because, among other effects, it can have a significant impact on the location of heterogeneous firms as well as on foreign trade patterns worldwide.
    Keywords: Global carbon tax: spatial selection, heterogeneous firms
    JEL: F12 F15 H87 Q28
    Date: 2015
  17. By: John J. García; Gustavo López Álvarez; Fredy Marín; Jhonny Moncada
    Abstract: The aim of this paper is to analyze wholesale electricity market performance in the twenty years of existence. After describing spot market operation, the market for long-term and reliability charge, we analyzed the effect of variables such as El Niño, the reservoir level, the ratio of the actual availability and market demand and some effects of regulatory changes on the spot price. Also through a stochastic model we set up some recommendations on how to improve the functioning of this market with standardized contracts implementation considering international experience. Despite the market's advance in these twenty years of operation, there are still issues to be resolved, such as contracts standardized long-term implementation, smart grids and lowering the threshold to enter the unregulated market, as these aspects would help to reduce the spot price.
    Keywords: Reliability charge, Colombia; Long-term market; Spot market; ARCH model;Stochastic model; Smart grids.
    JEL: D43 L11 L81
    Date: 2015–09–04
  18. By: Harrison Fell (Division of Economics and Business, Colorado School of Mines); Harrison Fell (Division of Economics and Business, Colorado School of Mines)
    Abstract: This paper looks at whether bribes for electricity connections affect electricity reliability. Using detailed firm-level data, we estimate various specifications based upon repeated cross-sections and means-based pseudo-panels to show that bribes are closely related to poorer electricity reliability. We find that the propensity to bribe for an electricity connection is associated with an increase of 20 power outages per month and a 28% increase in annual sales lost due to power outages on average. The results parallel a tragedy of the commons story: electricity, which exhibits common-pool resource characteristics, suffers from overexploitation as self-interested individual firms rationally bribe for electricity, creating negative impacts in aggregate on the overall quality of the resource. Given the importance of electricity reliability for economic growth and development, the findings imply that improving oversight and enforcement measures at the consumer level targeting the reduction of bribery for electricity connections could contribute to growth and development.
    Keywords: corruption, electricty, reliability, quality of government, institutions, common-pool resource
    JEL: O1 Q4
    Date: 2015–12
  19. By: Michael G. Pollitt
    Abstract: This paper seeks to explore the nature of ‘Good’ Energy Policy by offering a multi-disciplinary social science and humanities perspective on policy making. The objective in doing this is to understand how to get from where we are today to a ‘better’ energy policy. We begin by discussing what we mean by ‘policy’. We then go on to characterise and challenge the technologists’ approach to energy policy. Next we discuss some key intellectual starting points that explain why policy making in this area is so difficult. We then turn to a set of multi-disciplinary social science and humanities perspectives on energy policy that together form promising areas for research. These are: perception; quantification; well-being; public trust; role of the state; competence and hubris in delivery; and parallels with healthcare. We close by discussing how these perspectives can illuminate whether a policy is ‘good’, ‘bad’ or something in between.
    Keywords: energy policy, mult-discipinary, perspective
    JEL: H54 L98
    Date: 2015–12–02
  20. By: Mary Lacity; Leslie P. Willcocks; Andrew Craig
    JEL: J50
    Date: 2015–10
  21. By: Michael G. Pollitt and Karim L. Anaya
    Abstract: This paper looks at the empirical and theoretical background to high shares of renewables in the electricity system. First we examine what is meant by ‘high shares’ of renewables; next we consider what we mean by electricity ‘markets’; then we discuss what the term ‘cope with’ implies; before returning to the suitability of ‘current’ electricity markets. Second, we turn to three examples of jurisdictions – Germany, the UK and the State of New York in the US - with specific aspirations for decarbonisation and the role of renewables. Each exhibits very different approaches to the way they are adjusting their electricity market design to cope with high shares of renewables. We suggest that a new wave of electricity experiments is beginning around the theme of how to incorporate large shares of intermittent renewable generation in to electricity systems.
    Keywords: renewables; electricity markets; Germany; UK; New York
    JEL: L94 L98 Q48
    Date: 2015–11–04
  22. By: Wesseling , Joeri H. (CIRCLE, Lund University)
    Abstract: Transition studies’ understanding of differences in public policy is limited due to its tendency to focus on single-country cases. This paper assesses differences in plug-in electric vehicle (PEV) policies expenditures, comprising RD&D subsidies, infrastructure investments and sales incentives, across 13 countries over the period 2008-2014. I explore three conditions that may influence these policy expenditures. <p>Content and statistical analyses show that national PEV policies differed drastically across countries in intensity and orientation, ranging from a focus on supply-side innovation policy to a focus on demand-side environmental policy. The government’s role across national political economies only explain differences in PEV infrastructure investments, while the government’s EV diffusion targets for 2020 surprisingly do not correlate with any PEV policy. Economic interest in the car industry shows and explains why car countries focus their policy on technology development, and non-car countries on technology diffusion. These findings enhance the understanding of national policies in transitions.
    Keywords: innovation policy; demand-side policy; geography of transition; industry support; varieties of capitalism; 2020 target
    JEL: H23 H31 O25 O38 Q58
    Date: 2015–12–01
  23. By: Paul J. Burke; Hua Liao
    Abstract: China's dependence on coal is a major contributor to local and global environmental problems. In this paper we estimate the price elasticity of demand for coal in China using a panel of province-level data for 1998-2012. We find that provincial coal demand has become increasingly price elastic. As of 2012 we estimate that this elasticity was in the range -0.3 to -0.7 in point estimate terms when responses over two years are considered. The results imply that China's coal market is becoming more suited to price-based approaches to reducing emissions. The elimination of coal consumption subsidies could reduce national coal use and related emissions by around 2%.
    Keywords: coal, price elasticity, demand, China, provincial
    JEL: Q58 Q40
    Date: 2015–10–01
  24. By: Harry Clarke (University of Melbourne)
    Abstract: The economics of global climate mitigation is discussed when there is imperfect knowledge of future climatic changes, of policy effectiveness and of the policy responses by different countries. Uncertainty is accounted for by using heuristics derived from classical decision rules. These heuristics provide plausible policy rules that depend on only limited information. They emphasize the possibility of “getting it wrong” in terms of the appropriate scale of policy response and from policy failure itself. The minimax rule or Precautionary Principle, which targets “worst case” situations, is not useful unless policies are effective with certainty. However the widespread presumption that policy action is warranted if climate-induced losses without action are “large" relative to costs of policy can be justified using minimax regret reasoning. The global analysis is extended to individual national decision-making when nations jointly play a game against nature with policy spillovers. Simultaneous moves game solutions as well as heuristics are provided and indicate how policy actions are best determined for individual countries rather than for a global authority.
    Keywords: climate risks and uncertainties; mitigation policy
    JEL: D84 Q54 C70
    Date: 2015–11
  25. By: Thierry Urbain Yogo; Douzounet Mallaye; Gaëlle Tatiana Timba
    Abstract: This paper provides new insights into how oil rent affects income inequality in 52 developed and developing economies over the period 1984-2008. After taking into consideration the endogeneity aspect, the analysis yields three key findings. First, the effect of oil rent on income inequality is non-linear. Oil productivity wealth induces a decline in income inequality for countries for which the share of oil rent in percentage of GDP is below the threshold of 25%. Above this threshold, we document a positive relationship. Second, the effect of oil rent is heterogeneous across countries, depending upon the institutional quality. Specifically, we find that the decline in income inequality is lower in countries with high corruption, low accountability and weak regulatory quality. Finally, we uncover a time-dependent relationship between oil rent and income inequality. In the short run, the effect of oil rent is negative while in the long run, the opposite is observed
    Keywords: Oil rent, Inequality, institutional quality.
    Date: 2015
  26. By: Poulomi Ganguli; Devashish Kumar; Auroop R. Ganguly
    Abstract: Thermoelectric power production at risk, owing to current and projected water scarcity and rising stream temperatures, is assessed for the contiguous United States at decadal scales. Regional water scarcity is driven by climate variability and change, as well as by multi-sector water demand. While a planning horizon of zero to about thirty years is occasionally prescribed by stakeholders, the challenges to risk assessment at these scales include the difficulty in delineating decadal climate trends from intrinsic natural or multiple model variability. Current generation global climate or earth system models are not credible at the spatial resolutions of power plants, especially for surface water quantity and stream temperatures, which further exacerbates the assessment challenge. Population changes, which are difficult to project, cannot serve as adequate proxies for changes in the water demand across sectors. The hypothesis that robust assessments of power production at risk are possible, despite the uncertainties, has been examined as a proof of concept. An approach is presented for delineating water scarcity and temperature from climate models, observations and population storylines, as well as for assessing power production at risk by examining geospatial correlations of power plant locations within regions where the usable water supply for energy production happens to be scarcer and warmer. Our analyses showed that in the near term, more than 200 counties are likely to be exposed to water scarcity in the next three decades. Further, we noticed that stream gauges in more than five counties in the 2030s and ten counties in the 2040s showed a significant increase in water temperature, which exceeded the power plant effluent temperature threshold set by the EPA. Power plants in South Carolina, Louisiana, and Texas are likely to be vulnerable owing to climate-driven water stresses.
    Date: 2015–11
  27. By: Gabriel G. Fiuza de Bragança; Marcelo de Sales Pessoa; Katia Rocha
    Abstract: Verificamos os efeitos de intervenções regulatórias nos setores de telecomunicação e elétrico no Brasil em 2012. A primeira, ocorrida em 18 de julho, trata-se do anúncio de proibições de vendas de novas linhas pelas concessionárias de serviços de telefonia. A segunda, em 11 de setembro, uma medida provisória (MP no 579) que afetou a renovação dos contratos das empresas do setor elétrico e suas taxas de remuneração. Em estudos de eventos que se aplica um modelo de precificação multifatorial à metodologia de MacKinlay (1997), encontramos efeitos negativos das duas intervenções sobre seus respectivos setores. Na segunda intervenção, notamos uma reação eficiente do mercado, derrubando abruptamente o preço dos ativos. Essa queda rápida pode estar ligada tanto à natureza da medida em si, quanto à prior do mercado obtida com a primeira intervenção apenas dois meses antes. We analyze the effect of two 2012’s regulatory measures in the Brazilian telecommunications and electricity markets. The first intervention was undertaken by the telecommunications regulatory agency (Anatel) in 18th of July and refers to the interruption of the sales of important telecommunications mobile companies due to the poor quality of their services. The second one was undertaken by the Brazil Electricity regulatory agency (Aneel) in 11th of September and consists of the definition of the rules governing the renovation of generation and transmission concessions (MP579). We apply a multifactorial pricing model and event studies techniques and we find negative effects of both regulatory interventions in their respective markets. However, the market reaction to the second one seems to be efficient since the prices fell abruptly afterwards. This quick response might be either related to the particular characteristics of the MP579 or to a market perception towards an increase of regulatory intervention due the previous measure in telecommunications.
    Date: 2015–11
  28. By: Stefano Bosi; David Desmarchelier; Lionel Ragot
    Abstract: We consider a competitive Ramsey economy where a pollution externality affects both consumption demand and labor supply, and we assume the stock of pollution to be persistent over time. Surprisingly, when pollution jointly increases the consumption demand (compensation effect) and lowers the labor supply (leisure effect ), multiple equilibria arise near the steady state (local indeterminacy) through a Hopf bifurcation (limit cycle). This result challenges the standard view of pollution as a fow to obtain local indeterminacy, and depends on the leisure effect which renders the pollution accumulation process more volatile.
    Keywords: pollution, endogenous labor supply, limit cycle, Ramsey model.
    JEL: E32 O44
    Date: 2015
  29. By: Meenagh, David (Cardiff Business School); Minford, Patrick (Cardiff Business School); Oyekola, Olayinka
    Abstract: We find that, when estimated, a two sector computable dynamic stochastic general equilibrium open economy model of the U.S. that formally admits energy into the production process can generate plausible parameter values that can be applied to deal with a broad range of economic issues. As a benchmark, we require that the model fits the data for output, real exchange rate, energy use, and consumption: output because it serves as a measure of a country’s total income; real exchange rate because it serves as a determinant of a country’s relative competitiveness; energy use because it serves as an indicator of special inputs into a country’s production process; and consumption because it serves as a yardstick for evaluating a country’s standard of living. Finally, we argue that this model, with appropriate extensions, some of which we also propose, can help future modelers to tackle other research questions.
    Keywords: Two sector; US DSGE model; Oil price volatility; Open economy; Indirect inference
    JEL: E32 D58 F41 C52 Q43
    Date: 2015–11
  30. By: Philipp M. Richter; Hanna Brauers
    Abstract: Shortly before the upcoming UN climate summit, Angela Merkel wrote in a German newspaper: “With good reason, it is expected from governments and politicians, that they do not longer close their eyes to the pressing scientific results that climate protection requires rapid and vigorous action.” She further calls for a clear negotiation outcome: “The greenhouse gas emissions do not only have to be stabilized, but have to be reduced as quickly as possible.” These words could well have been written today, however, they were actually published on March 26, 1995; at a time, when Mrs. Merkel still was Germany’s Federal Minister of the Environment and designated president of the first climate summit. After 20 years of UN climate talks, the world’s attention is now firmly on the 21st COP (Conference of the Parties) in Paris that will be held from November 30 until December 11, 2015. These climate negotiations are generally perceived as the last chance to reach a global agreement that can prevent severe climate change. In this DIW Roundup we take a closer look at the upcoming COP21, discuss the negotiation status and highlight the pivotal elements currently discussed. Furthermore, we touch upon the economic theory on International Environmental Agreements and present milestones of past climate summits.
    Date: 2015
  31. By: ZhongXiang Zhang (College of Management and Economics, Tianjin University)
    Abstract: China has realized that for its own sake and from the international community’s perspective, it cannot afford to continue along the conventional path of encouraging economic growth at the expense of the environment. Accordingly, the country has placed ecological goals at the same level of priority as policies on economic, political, cultural and social development. Specifically, to meet the grand goal involves not only capping China’s nationwide coal consumption to let it peak before 2020 and carbon emissions peak around 2030, but also putting in place a variety of flagship programs and initiatives, prices and policies. This paper argues that the 2030 carbon emissions peak goal is ambitious but achievable and concludes by arguing why China’s anti-pollution outcomes this time might be different from the previous ones.
    Keywords: low-carbon economy; carbon emissions peaks; coal consumption; carbon pricing; energy prices; resource tax reform; renewable energy; China
    JEL: H23 P28 Q42 Q43 Q48 Q53 Q54 Q58
    Date: 2015–11
  32. By: Caroline Stiel; Astrid Cullmann; Maria Nieswand
    Abstract: This paper, which is one of the first to estimate productivity in retail electricity for a European country after liberalisation, analyses the effect of ownership and governance structure by using a unique dataset of German electricity retailers from 2003 to 2012. An innovative service production function for the retail sector is derived with labour and external services as the main inputs. A structural model is used with a proxy function for productivity to overcome the endogeneity of input choice. Ownership is controlled for in the law of motion for productivity. The results of the dataset used to validate the model show that firm-level productivity did not increase after 2008 and that ownership had no effect on productivity. The results provide useful insights into the link between ownership and productivity in modern public enterprises after liberalisation.
    Keywords: Productivity, structural production function, electricity retail, ownership, governance
    JEL: D24 L11 C23 L94
    Date: 2015
  33. By: Giglio, Stefano W; Maggiori, Matteo; Ströbel, Johannes; Weber, Andreas
    Abstract: The optimal investment to mitigate climate change crucially depends on the discount rate used to evaluate the investment’s uncertain future benefits. The appropriate discount rate is a function of the horizon over which these benefits accrue and the riskiness of the investment. In this paper, we estimate the term structure of discount rates for an important risky asset class, real estate, up to the very long horizons relevant for investments in climate change abatement. We show that this term structure is steeply downward-sloping, reaching 2.6% at horizons beyond 100 years. We explore the implications of these new data within both a general asset pricing framework that decomposes risks and returns by horizon and a structural model calibrated to match a variety of asset classes. Our analysis demonstrates that applying average rates of return that are observed for traded assets to investments in climate change abatement is misleading. We also show that the discount rates for investments in climate change abatement that reduce aggregate risk, as in disaster-risk models, are bounded above by our estimated term structure for risky housing, and should be below 2.6% for long-run benefits. This upper bound rules out many discount rates suggested in the literature and used by policymakers. Our framework also distinguishes between the various mechanisms the environmental literature has proposed for generating downward-sloping discount rates.
    Keywords: asset pricing; climate change; cost-benefit analysis; declining discount rates; environmental economics; real estate
    JEL: G11 G12 R30
    Date: 2015–11
  34. By: William Orlando Escobar Caicedo; David Quitian Reyes
    Abstract: El crecimiento de la economía del país viene atado necesariamente a un incremento de la demanda eléctrica, la cual debe ser garantizada por parte del Estado; la Ley 1715 de 2014 plantea la necesidad de generar nuevas fuentes de energía que sean sostenibles económica y ambientalmente, y que brinden apoyo a la actual oferta de generación de energía. Si bien Colombia tiene un porcentaje alentador de cubrimiento de la demanda energética del 97,21% es necesario lograr la prestación del servicio en todo el territorio geográfico del país especialmente en las zonas de difícil acceso, esto con el fin de disminuir la brecha económica que existe entre las urbes y el territorio rural. Actualmente para llegar a estas zonas de difícil acceso se utilizan generadores de energía de alto impacto ambiental y económico, como las plantas diesel, que si bien cubren la demanda en estas zonas, la calidad del servicio es baja y los costos de funcionamiento son elevados, es por esto que se debe estimular y generar la producción de energía eléctrica por fuentes renovables no convencionales que disminuyan tanto la contaminación ambiental como los costos necesarios para la generación de energía.
    Keywords: Energías renovables, costos unitarios, factor de planta, intermitencia
    JEL: H41 L51 Q28
    Date: 2015–11–19
  35. By: Frauke Urban; Johan Nordensvard; Giuseppina Siciliano; Bingqin Li
    Abstract: There is a shortage of empirical studies on the relationship between Chinese hydropower dams and social sustainability. Comparative research on Chinese-funded and Chinese-built hydropower projects is rare. This article aims to fill parts of this gap by discussing these issues in relation to Chinese overseas hydropower dams in Ghana (Bui Dam) and Cambodia (Kamchay Dam). Both projects are built by Sinohydro and financed by ExIm Bank. This article draws on in-depths interviews and focus group discussions with local communities affected by the dams, institutional actors in Ghana and Cambodia, Chinese actors, and dam builders. The article uses an environmental justice perspective as an analytical framework. The article concludes that the dam projects could improve their social sustainability framework in practice and theory; social benchmarking should be introduced and social policies need to be improved to be in line with international social standards on hydropower projects.
    Keywords: social sustainability;hydropower;China;Ghana;Cambodia
    Date: 2015–09–09
  36. By: Charu Grover (Centre for International Trade and Development,Jawaharlal Nehru University); Sangeeta Bansal (Centre for International Trade and Development,Jawaharlal Nehru University)
    Abstract: Environmental quality is often a credence good and consumers are unable to distinguish between green and brown products. The paper aims to investigate the role of certification in providing information about product quality and reducing market inefficiencies when the certification process is imperfect. We consider a duopoly in a vertically differentiated product model where firms compete in quantities. The papers shows that in the absence of labelling, the brown firm drives out the green firm if the cost of producing green product is sufficiently high. If both firms produce positive quantities in the market, the green firm covers a higher market share and obtains larger revenue. We then characterise pooling and separating equilibrium under imperfect certification contingent on certification fee. The paper shows that under imperfect certification, it is not optimal to subsidize certification.

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