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on Energy Economics |
| By: | Heather Klemick; Elizabeth Kopits; Ann Wolverton |
| Abstract: | Commercial buildings offer opportunities for companies to reduce energy use that, according to engineering analyses, should save them money while also lowering greenhouse gas (GHG) and other polluting emissions. Supermarket refrigeration is one sector with ample energy-efficiency and emission-reducing investment options. This study explores the evidence of an energy efficiency paradox for supermarket refrigeration technologies that are estimated to reduce energy and emissions while providing net cost savings for firms. We conduct interviews and focus groups with representatives from 44 small, medium, and large US supermarket chains. We focus on the refrigeration system given its dominant role in determining store electricity consumption and GHG emissions. Consistent with the economics literature on the energy-efficiency paradox, we distinguish between market failures, behavioral anomalies, and other factors not accounted for in typical NPV or payback calculations for supermarket refrigeration technologies. Imperfect information and uncertainty about the performance of new technologies were the most pervasive barriers among participants, though split incentives between firms and contractors or employees, liquidity constraints, tradeoffs with other valued system attributes like reliability and customer appeal, and certain behavioral anomalies also play a role among some firms. |
| Keywords: | energy efficiency paradox, market failures, technology investment barriers, supermakets |
| JEL: | Q48 Q52 Q58 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201503&r=ene |
| By: | Heather Klemick; Elizabeth Kopits; Keith Sargent; Ann Wolverton |
| Abstract: | Economic theory suggests that profit maximizing firms should have an incentive to incorporate technologies into their products that are cost-effective, absent consideration of externalities. Even in the presence of uncertainty and imperfect information – conditions that hold to some degree in every market – firms are expected to make decisions that are in the best interest of the company owners and/or shareholders. However, simple net present value calculations comparing upfront costs of fuel-saving technologies to future savings suggest this is not always the case. This puzzle has been observed in a variety of contexts and is commonly referred to as the “energy efficiency paradox.” A growing number of empirical studies in the peer-reviewed literature examine why households may under-invest in energy efficiency. To our knowledge, far fewer studies examine whether similar undervaluation occurs on the part of businesses. While a variety of hypotheses could explain this behavior, lack of empirical evidence on why businesses do not always invest in seemingly cost-effective energy saving technologies limits our ability to judge whether and when a given hypothesis is likely to be valid. In this paper, we explore capital investment decisions within the heavy duty trucking sector for fuel-saving technologies. Given the lack of readily available data sources to study this industry, we collect information via a combination of focus groups and interviews. While the sample is not representative, we gain insight into what factors might explain apparent underinvestment in emission reducing technologies absent government regulation. |
| Keywords: | energy efficiency paradox, technology investment decisions, heavy duty trucking |
| JEL: | Q48 Q52 Q58 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201402&r=ene |
| By: | Karimu, Amin (CERE and the Department of Economics, Umeå University); Brännlund, Runar (CERE and the Department of Economics, Umeå University) |
| Abstract: | This paper present a different perspective in the debate on energy efficiency and energy demand by classifying the impact of efficiency measures into direct and indirect effect (rebound effect). It examines the direct effect of energy efficient R&D capital on energy demand. Using a sample of OECD countries, we find evidence of negative own-R&D capital elasticity with respect to energy demand. Moreover, we find evidence of heterogeneity in the predicted impact of energy efficient R&D capital, with the USA having the largest accumulated reduction in energy demand and Portugal with the smallest. Overall, our empirical results suggest a reasonable reduction in energy demand and the associated CO2 emissions from an increase in energy efficient R&D investment based on the direct effect, which differ between the countries, suggesting possible differences in abatement cost and the level of implementation of energy efficient R&D activities. |
| Keywords: | Efficiency Policy; Energy Demand; Heterogeneity; R&D capital; Spillovers |
| JEL: | C33 Q41 Q49 |
| Date: | 2015–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2015_014&r=ene |
| By: | Fateh Belaid (CSTB - Centre scientifique et technique du bâtiment - Ministère de l'écologie, du développement durable et de l'énergie); Thomas Garcia (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Analysing household energy-saving behaviours is crucial to improve energy consumption predictions and energy policy making. How should we quantitatively measure them? What are their determinants? This study explores the main factors influencing residential energy-saving behaviours based on a bottom-up multivariate statistical approach using data from the recent French PHEBUS survey. Firstly, we assess energy-saving behaviours on a one-dimension scale using IRT. Secondly, we use linear regression with an innovative variable selection method via adaptive lasso to tease out the effects of both macro and micro factors on the behavioural score. The results highlight the impact of five main attributes incentivizing energy-saving behaviours based on cross-variable analyses: energy price, household income, education level, age of head of household and dwelling energy performance. In addition, our results suggest that the analysis of the inverted U-shape impact of age enables the expansion of the energy consumption life cycle theory to energy-saving behaviours. Abstract Analysing household energy-saving behaviours is crucial to improve energy consumption predictions and energy policy making. How should we quantitatively measure them? What are their determi-nants? This study explores the main factors influencing residential energy-saving behaviours based on a bottom-up multivariate statistical approach using data from the recent French PHEBUS survey. Firstly, we assess energy-saving behaviours on a one-dimension scale using IRT. Secondly, we use linear regression with an innovative variable selection method via adaptive lasso to tease out the effects of both macro and micro factors on the behavioural score. The results highlight the impact of five main attributes incentivizing energy-saving behaviours based on cross-variable analyses: energy price, household income, education level, age of head of household and dwelling energy performance. In addition, our results suggest that the analysis of the inverted U-shape impact of age enables the expansion of the energy consumption life cycle theory to energy-saving behaviours. |
| Keywords: | Energy-saving behaviours,Residential energy use,Econometric modelling,IRT,Lasso |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01244215&r=ene |
| By: | Farrell, Niall; Devine, Mel |
| Abstract: | Renewable energy deployment costs comprise both internal generation costs and external location-related infrastructure, environmental and social costs. To minimise generation costs, competitive connection contract auctions are becoming increasingly common. Should external costs have considerable influence on site selection outside of the auction process, optimal bidding strategies may be affected by the resulting re-ranking of winning bids. This paper elicits the impact this may have on optimal bidding behaviour. Specifically, we address the impact internalisation of external costs may have on bidding strategy. With deterministic generation costs, optimal bidding strategies include a markup. The optimal markup is lower if external costs are internalised into the investment decision. If investors have the ability to appropriate rents, due to market dominance or asymmetric information, non-internalised external costs lower markup. Generation cost uncertainty may result in below-cost bidding. This is less likely when externalities are not internalised. For markets where bids are competitively priced, this paper provides evidence to suggest that methods to minimise externalities associated with renewables deployment should be integrated with competitive pay-as-bid auctions. |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp517&r=ene |
| By: | Strunz, Sebastian; Gawel, Erik; Lehmann, Paul; Söderholm, Patrik |
| Abstract: | The literature on policy convergence has identified numerous aspects and possible causal drivers of convergence. We classify and condense these into a comprehensive framework, which is operationalized for support policies for renewable energy sources in the EU. Our analysis advances the conceptual discussion in two ways. First, we demonstrate that conceptual specifications of convergence (e.g., whether to focus on policy targets, instrument design or policy outcomes) rely on normative assumptions. Second, we argue that theories of economic and political convergence processes complement each other: studies of economic convergence are apolitical as they do not aim to explain why states choose or should choose the same policies to solve a given problem. At the same time, economic convergence yields a necessary condition for successful policy convergence. The empirical evidence, in turn, suggests conditional convergence of support policies and renewables shares in the EU, but does not hint at absolute convergence. |
| Keywords: | economic convergence,policy convergence,renewable energy sources,support policies |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ufzdps:142015&r=ene |
| By: | Emily Cox (Science Policy Research Unit, University of Sussex, UK) |
| Abstract: | Despite much literature on energy security, the term continues to resist a commonly-accepted definition. Nevertheless, policy decisions are frequently made on the basis of ‘improving energy security’, despite the lack of any clear understanding of what improving energy security actually means. Therefore this paper explores the meaning of energy security for key experts in the UK energy sector, with a particular focus on the security of electricity systems in the context of a lowcarbon transition. A set of 22 energy security indicators is discussed with 25 experts from across the energy sector in the UK, in order to get a grasp on which aspects or dimensions of energy security are felt to be most important, and to discover the underlying concepts which are used by experts when making or justifying these choices. The results from the interviews show that there is a real need to attempt to take into account multiple competing and context-specific views on energy security, instead of trying to close the discussion down around a small number of simple quantifiable indicators or metrics. The results also show that there is no alignment between experts’ perspectives and the organisation or constituency for which they work. |
| Keywords: | energy security; perceptions; low-carbon transition; electricity; UK energy policy |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2015-37&r=ene |
| By: | Ben Jebli, Mehdi; Ben Youssef, Slim |
| Abstract: | This paper uses panel cointegration techniques and Granger causality tests to investigate the dynamic causal links between per capita renewable energy consumption, agricultural value added (AVA), carbon dioxide (CO2) emissions, and real gross domestic product (GDP) for a panel of five North Africa countries spanning the period 1980-2011. In the short-run, the Granger causality tests show the existence of a bidirectional causality between CO2 emissions and agriculture, a unidirectional causality running from agriculture to GDP, a unidirectional causality running from GDP to renewable energy consumption, and a unidirectional causality running from renewable energy consumption to agriculture. In the long-run, there is bidirectional causality between agriculture and CO2 emissions, a unidirectional causality running from renewable energy to both agriculture and emissions, and a unidirectional causality running from output to both agriculture and emissions. Long-run parameter estimates show that an increase in GDP and in renewable energy consumption increase CO2 emissions, whereas an increase in agricultural value added reduces CO2 emissions. As policy recommendation, North African authorities should encourage renewable energy consumption, and especially clean renewable energy such as solar or wind, as this improves agricultural production and help to combat global warming. |
| Keywords: | Renewable energy; Agriculture; CO2 emissions; Panel cointegration; North Africa. |
| JEL: | C33 Q15 Q42 Q54 |
| Date: | 2015–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68477&r=ene |
| By: | Jacques Després (équipe EDDEN - PACTE - Politiques publiques, ACtion politique, TErritoires - CNRS - Centre National de la Recherche Scientifique - Grenoble 2 UPMF - Université Pierre Mendès France - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UJF - Université Joseph Fourier, LITEN - Laboratoire d'Innovation pour les Technologies des Energies Nouvelles et les nanomatériaux - CEA - Université Grenoble Alpes - Grenoble 2, G2ELab - Laboratoire de Génie Electrique de Grenoble - UJF - Université Joseph Fourier - Institut Polytechnique de Grenoble - Grenoble Institute of Technology - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Renewable sources of electricity production are strongly increasing in many parts of the world. The production costs are going down quickly, thus accelerating the deployment of new solar and wind electricity generation. In the long-term, these variable sources of electricity could represent a high share of the power system. However, long-term foresight energy models have difficulties describing precisely the integration challenges of Variable Renewable Energy Sources (VRES) such as wind or solar. They just do not represent the short-term technical constraints of the power sector. The objective of this paper is to show a new approach of the representation of the challenges of variability in the long-term foresight energy model POLES (Prospective Outlook on Long-term Energy Systems). We develop a short-term optimization model for the power sector operation, EUCAD (European Unit Commitment And Dispatch) and we couple it to POLES year after year. The direct coupling, with bi-directional exchanges of information, brings technical precision to the long-term coherence of energy scenarios. |
| Keywords: | renewable electricity production , scenario , power system |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01245554&r=ene |
| By: | Tiziana D'Alfonso (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Changmin Jiang (Asper School of Business, University of Manitoba, 181 Freedman Crescent, Winnipeg, Canada); Valentina Bracaglia (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy) |
| Abstract: | We develop a duopoly model to analyse the environmental impact of high-speed rail (HSR) introduction in a market for travel served by air transport. We take into account simultaneously the effects on the environment of induced demand, schedule frequency and HSR speed and we show that competition between the two modes may be detrimental to the environment depending on the magnitude of the pollution level of HSR relative to air transport. We conduct a simulation study based on the LondonÐParis market and we find that the introduction of HSR increases local air pollution (LAP) but decreases greenhouse gases (GHG) emissions. Moreover, we perform a sensitivity analysis of our results towards the level of HSR and air transport emissions. We find that modal competition is more likely to be detrimental to the environment when such ratio is relatively high. Furthermore, when mixed public/private-owned HSR takes into account the surplus of consumers and the surplus that the other (air) transport operator brings about, we find that modal competition is more likely to be detrimental to the environment than in the case of a fully private HSR. Finally, we provide an interpretive discussion of the results with respect to the different mitigation strategies available to the two transport modes and EU policy measures for the environment Ð which might jointly affect the ratio between HSR and air transport emissions. |
| Keywords: | High-speed rail ; Airlines ; Competition ; Environment ; Mitigation Policies ; London-Paris market |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:aeg:report:2015-15&r=ene |
| By: | Misund, Bård (UiS); Oglend, Atle (UiS) |
| Abstract: | Since 2008, the U.K. natural gas market has witnessed a marked drop in volatility. This fall has coincided with specific events in oil and gas sector such as the onset of the U.S. "shale gas revolution" and the subsequent rerouting of liquefied natural gas (LNG) shipments from the U.S. to other markets such as Asia and Europe. LNG cargoes, along with other sources of flexibility such as underground storages and interconnector import, can potentially reduce volatility. On the other hand, demand shocks can increase volatility. To examine the dynamics relationship between daily shocks in U.K. gas demand and supply, and the gas spot price volatility, we use a vector autoregressive (VAR) model . While we find evidence that daily deviations in aggregated gas demand significantly impacts volatility, we are unable to find direct evidence for an impact from shocks in disaggregated demand or supply. In fact, one important contribution of the paper is to suggest that flexible sources of supply such as LNG, storage and interconnector flows react to shocks in retail demand, dampening their potential effects on volatility. |
| Keywords: | UK gas market; volatility; LNG; GARCH; vector autoregression |
| JEL: | G13 Q31 Q40 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2015_010&r=ene |
| By: | Misund, Bård (UiS); Osmundsen, Petter (UiS) |
| Abstract: | Oil and gas reserves are the most important assets of oil and gas companies. A source of confusion for investors in oil companies is that reserves quantities and values are uncertain estimates. Reserves are typically classified according to probabilities of recovery from underground reservoirs. All U.S. listed companies have to disclose proved reserves but not probable reserves, thus leaving out potentially important information for investors and financial analysts. This study addresses the impact on market valuation of various classifications of reserves amounts. Using a data sample of 94 companies that do disclose information on probable reserves, we compare the relation between three classifications of reserves and oil company returns. While we find that information on probable reserves do not have an impact on stock returns measured over the entire time period, this is not the case since 2009, coinciding with the onset of the shale gas revolution. |
| Keywords: | Oil and gas reserves; probably reserves; value relevance; accounting figures |
| JEL: | G13 G14 Q22 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2015_017&r=ene |
| By: | Viktar Fedaseyeu; Erik Gilje; Philip E. Strahan |
| Abstract: | Local interests change sharply after the energy booms that began in 2003, when hydraulic fracturing spurred extraction of formerly uneconomic oil and gas reserves. Support for conservative interests rises and Republican political candidates gain votes after booms, leading to a near doubling in the probability of a change in incumbency. All of this change occurs at the expense of Democrats. Voting records of U.S. House members from boom districts become sharply more conservative across a wide range of issues, including issues unrelated to energy policy. At the level of the individual, marginal candidates skew their voting behavior somewhat toward more conservative causes, but generally not enough to maintain power. Thus, even when the stakes are high and politicians risk losing power, ideology trumps ambition. |
| JEL: | P16 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21789&r=ene |
| By: | Misund, Bård (UiS) |
| Abstract: | Oil and gas exploration companies (E&Ps) exhibit large variations in earnings due to volatile oil and gas prices. Furthermore, their primary asset, oil and gas reserves, is accumulated through highly risky exploration activities. In contrast, integrated oil and gas companies display lower variability in their earnings due a more diversified asset base. The literature suggests that companies with higher earnings volatility and higher levels of intangibles among their assets should have lower value relevance of accounting information than companies with higher levels of tangible assets on their balance sheets. For that reason E&P companies should have lower value relevance than integrated companies. Contrary to expectations, we do not find lower value relevance for E&Ps earnings than integrated oil and gas companies. In fact, the results suggest that the presence of supplementary fair value estimates for oil and gas reserves mitigate the potential problem associated with the presence of intangible assets experienced in other industries. |
| Keywords: | Company Valuation; Value-relevance; Oil and Gas Industry; Vertical Integration |
| JEL: | G12 M21 M40 Q49 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2015_014&r=ene |
| By: | Misund, Bård (UiS) |
| Abstract: | For more than 40 years oil and gas companies have been able to choose between two competing methods for accounting for exploration activities. The literature suggests that accounting method discretion can potentially signal managements' private information with the benefit of improving the relevance of accruals for forecasting future cash flows. However, if accounting method flexibility is used for financial window-dressing, accruals can lose their value-relevance and investors will resort to cash flows measures instead. In this study we compare the value-relevance of earnings versus cash flow for oil and gas companies from 1992 to 2013. Our results suggest that earnings are not significant, independent of accounting method choice, consistent with the view that accruals have limited value in the oil and gas industry. Rather, it seems that cash flow measures of both current and future profitability are significantly associated with oil company returns. These findings suggest that the financial markets lack confidence in oil company earnings, irrespective of accounting method choice. |
| Keywords: | Full cost versus successful efforts; oil and gas company valuation; petroleum accounting; value-relevance. |
| JEL: | G12 M40 Q33 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2015_015&r=ene |
| By: | Misund, Bård (UiS); Osmundsen, Petter (UiS) |
| Abstract: | This paper studies financial statement information from the largest oil and gas companies and evaluates their relation to firm market value. The accounting literature states that an important feature of financial statements and, in particular net income, is the usefulness for predicting future cash flows. However, financial analysts covering this sector prefer a number of alternative non-GAAP income measures to disclosed net income. Using a dataset of 72 largest integrated and exploration and production companies (E&Ps) during 1993-2013, we examine the relative value-relevance of net income versus eight alternative profitability measures. Despite the analyst preference for non-GAAP measures, our results suggest that net income is the most value relevant earnings measure for integrated oil & gas companies. By contrast, cash flow measures dominate for exploration and production companies. However, we find that free cash flow, which many oil company analysts refer to these days, has low value relevance. |
| Keywords: | Company Valuation; Value-relevance; Financial Analysts; Oil & Gas Industry |
| JEL: | G12 M21 M40 Q49 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2015_019&r=ene |
| By: | Wang, Weimin; Adams, Patrick |
| Abstract: | This paper presents a growth accounting framework in which subsoil mineral and energy resources are recognized as natural capital input into the production process. It is the first study of its kind in Canada. Firstly, the income attributable to subsoil resources, or resource rent, is estimated as a surplus value after all extraction costs and normal returns on produced capital have been accounted for. The value of a resource reserve is then estimated as the present value of the future resource rents generated from the efficient extraction of the reserve. Lastly, with extraction as the observed service flows of natural capital, multifactor productivity (MFP) growth and the other sources of economic growth can be reassessed by updating the income shares of all inputs, and then, by estimating the contribution to growth coming from changes in the value of natural capital input. This framework is then applied to the Canadian oil and gas extraction sector. |
| Keywords: | Crude oil and natural gas, Economic accounts, Energy, Productivity accounts |
| Date: | 2015–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp3e:2015372e&r=ene |
| By: | Asche, Frank (UiS); Misund, Bard (UiS) |
| Abstract: | This study presents a novel approach to selecting comparable companies in equity valuation. While valuation multiples is probably the most common valuation method in practice, discounted cash flow and residual income valuation models are advocated by academics. A key aspect in valuation by multiples is peer group selection. In this paper we examine the usefulness of econometric techniques in peer-group selection for the largest companies in the international oil and gas sector. Using Chow tests we are able to identify firms with similar relationships between valuation multiples and relevant value drivers. |
| Keywords: | Oil and gas companies; valuation; valuation multiples; peer groups |
| JEL: | G12 Q33 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2015_018&r=ene |
| By: | Wang, Weimin; Adams, Patrick |
| Abstract: | Le present document propose un cadre comptable de la croissance ou les ressources minerales et energetiques souterraines sont reconnues comme etant un facteur capital naturel dans le processus de production. Il s?agit de la premiere etude en ce genre au Canada. Le revenu attribuable aux ressources souterraines, ou rente des ressources, est estime comme plus-value apres comptabilisation de tous les couts d?extraction et du rendement normal du capital produit. La valeur d?une reserve de ressources est ensuite estimee comme valeur actuelle des futures rentes de ressources generees par une extraction efficace de la reserve. Enfin, avec l?extraction comme flux de services observes du capital naturel, on peut reevaluer la croissance de la productivite multifactorielle (PMF) et les autres sources de croissance economique en mettant a jour la repartition du revenu entre tous les facteurs, puis en estimant la contribution a la croissance decoulant des fluctuations de la valeur du facteur capital naturel. Le present cadre est ensuite applique au secteur canadien de l?extraction de petrole et de gaz. |
| Keywords: | Crude oil and natural gas, Economic accounts, Energy, Productivity accounts |
| Date: | 2015–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp3f:2015372f&r=ene |
| By: | Misund, Bård (UiS) |
| Abstract: | This paper examines how oil and gas companies' reserves growth affects their share price returns. In particular we examine three issues affecting the relation between reserves changes and oil and gas firm returns. First, we examine if investors value reserves replacement as a result of exploration activities differently to reserves growth through acquisitions. In the second analysis we test if reserves replacement of oil reserves impacts stock returns differently than changes in gas reserves do. Third, we examine the impact of the Shale gas revolution and the subsequent oil and gas price divergence on the association between returns and replacement of oil versus gas reserves. The results suggest that investors seem to be indifferent to reserves replacement strategy (exploration or acquisition). However, we find that changes in oil reserves impact oil and gas company returns differently than changes in gas reserves does. Moreover, we find that there has been a structural shift in the relation between returns and changes in gas reserves (but not changes in oil reserves) after 2008, coinciding with the Shale gas revolution and the break in the oil-gas price link. This latter result can be relevant for understanding the impact of the recent fall in oil prices on investor valuation of oil and gas reserves |
| Keywords: | Oil and gas reserves; reserves replacement; stock returns |
| JEL: | G12 Q33 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2015_011&r=ene |
| By: | Emek Basker; Lucia Foster; Shawn Klimek |
| Abstract: | Employment by gasoline stations increased between 1977 and 1992, a period during which many stations converted from full-service to self-service pumps, outsourcing to customers tasks previously performed by employees. Applying several identification strategies to establishment-level data from the Census of Retail Trade over this period, we show that self-service stations employ approximately 0.4 fewer workers per pump. At the same time, stations that adopted self service expanded their size and diversified operations by adding convenience stores, mitigating the job-loss impact of self service. |
| Keywords: | Customer-labor substitution, retail, gasoline station, self service, full service, outsourcing |
| JEL: | D22 D24 J23 L81 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:15-45&r=ene |
| By: | Paula Kivimaa (Science Policy Research Unit SPRU, University of Sussex, Jubilee Building, Falmer, Brighton BN1 9SL, UK.; Finnish Environment Institute, P.O. Box 140, 00260 Helsinki, Finland.); Mikael Hildén (Finnish Environment Institute, P.O. Box 140, 00260 Helsinki, Finland.); Dave Huitema (IVM Institute for Environmental Studies, VU University Amsterdam, De Boelelaan 1087 1081 HV Amsterdam, The Netherlands.; Department of Science, Netherlands Open University, Valkenburgerweg 177, 6419 AT Heerlen, The Netherlands.); Andrew Jordan (Tyndall Centre, University of East Anglia, Norwich, UK.); Jens Newig (Leuphana University Lüneburg, Germany.) |
| Abstract: | Experimentation has been proposed as one of the ways in which public policy can drive sus-tainability transitions, notably by creating or delimiting space for experimenting with innova-tive solutions to sustainability challenges. In this paper we report on a systematic review of articles published between 2009 and 2015 that have addressed experiments aiming either at understanding decarbonisation transitions or enhancing climate resilience. Using the case survey method, we find few empirical descriptions of real-world experiments in climate and energy contexts in the scholarly literature, being observed in only 25 articles containing 29 experiments. We discuss the objectives, outputs and outcomes of these experiments noting that explicit experimenting with climate policies could be identified only in 12 cases. Based on the results we suggest a definition of climate policy experiments and a typology of experi-ments for sustainability transitions that can be used to better understand the role of and learn more effectively from experiments in sustainability transitions. |
| Keywords: | policy innovation; experiment; experimentation; sustainability transitions; climate policy |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2015-36&r=ene |
| By: | Matthew Ranson; Lauren Morris; Alex Kats-Rubin |
| Abstract: | This paper reviews recent evidence on the potential impacts of climate change on energy demand for space heating in residential and commercial buildings. We cover two main topics. First, we review empirical studies of the historical relationship between temperature and energy use for heating and cooling. These studies show consistent evidence of a U-shaped relationship between temperature and energy demand, in which energy use for heating is greatest at very low temperatures, and energy use for cooling is greatest at very high temperatures. The temperature at which energy use is minimized varies across geography and time periods, but in most studies is between 53°F and 72°F (12°C and 22°C). Second, we review studies that estimate how climate change will affect future energy use for space heating and cooling. Most studies predict that climate change will result in reductions in demand for heating and increases in demand for cooling. Although the sign of the net global effect depends on the time frame and climate change scenario, a very robust conclusion is that there is considerable variation across geographies, with the largest magnitude effects predicted for countries that currently have either very low or very high average temperatures. Overall, the results summarized in this paper will be useful for understanding the potential magnitude of the benefits of climate-related reductions in space heating, and for improving the damage functions used in integrated assessment models of climate change. |
| Keywords: | climate change, space heating, space cooling, energy use, integrated assessment models |
| JEL: | Q41 Q54 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201407&r=ene |
| By: | Karsten Wasiluk (Department of Economics, University of Konstanz, Germany) |
| Abstract: | This paper presents an endogenous growth model that captures the origins of path dependence and technological lock-in and introduces a mechanism of induced innovation, which can trigger new research. Imperfect spillovers of secondary development can make the development of new technologies unattractive until research ceases in the long run. Changes in the relative supply of primary factors act as a stimulus for research as new technologies are better suited for the new environment. A simulation using changes of crude oil prices in the US shows the quantitative significance of the model's implications. The model is able to explain long waves of economic development where growth cycles are triggered by changes in the relative factor supply. It also provides a new rationale for governmental regulations such as Pigouvian taxes and pollution permits as they can stimulate innovation and provide the base for the development of "green" technologies. |
| Keywords: | Path Dependence, Induced Innovation, Directed Technological Change, Growth Cycles |
| JEL: | O30 O31 O33 O44 |
| Date: | 2015–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:knz:dpteco:1522&r=ene |
| By: | Lucas Bretschger (ETH Zurich, Switzerland); Filippo Lechthaler (ETH Zurich, Switzerland); Sebastian Rausch (ETH Zurich, Switzerland); Lin Zhang (ETH Zurich, Switzerland) |
| Abstract: | This paper examines the effects of knowledge diffusion on growth and costs of climate policy. We develop a general equilibrium model with endogenous growth which represents knowledge diffusion between sectors and regions. Knowledge diffusion depends on accessibility and absorptive capacity which we estimate econometrically using patent and citation data. Knowledge diffusion leads to a “greening” of economies boosting productivity of “clean” carbon-extensive sectors. Knowledge diffusion lowers the costs of global climate policy by about 90% for emerging countries (China) and 20% for developed regions (Europe and USA), depending on the substitutability between different knowledge types. |
| Keywords: | Technological Change: Choices and Consequences, Environment and Growth,Technological Innovation, Computable General Equilibrium Models |
| JEL: | O33 O44 Q55 C68 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:15-226&r=ene |
| By: | Ann Harrison; Benjamin Hyman; Leslie Martin; Shanthi Nataraj |
| Abstract: | India has a multitude of environmental regulations but a history of poor enforcement. Between 1996 and 2004, India's Supreme Court required 17 cities to enact Action Plans to reduce air pollution through a variety of command-and-control (CAC) environmental regulations. We compare the impacts of these regulations with the impact of changes in coal prices on establishment-level pollution abatement, coal consumption, and productivity growth. We find that higher coal prices reduced coal use within establishments, with price elasticities similar to those found in the US. In addition, higher coal prices are associated with lower pollution emissions at the district level. CAC regulations did not affect within-establishment pollution control investment or coal use, but did impact the extensive margin, increasing the share of large establishments investing in pollution control and reducing the entry of new establishments. For reducing SO2 emissions, our results suggest that higher coal prices were more effective in improving environmental outcomes than command and control measures. |
| JEL: | O14 O33 O44 Q4 Q52 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21763&r=ene |
| By: | Ann Ferris; Ronald J. Shadbegian; Ann Wolverton |
| Abstract: | The effect of regulation on employment is of particular interest to policy-makers in times of high sustained unemployment. In this paper we use a panel data set of fossil fuel fired power plants to examine the impact of Phase I of the SO2 trading program created by Title IV of the 1990 Clean Air Act Amendments (CAAA) on employment in the electric utility sector and a two-stage estimation technique that pairs propensity score matching with a difference-in differences estimator. Overall, we find little evidence that power plants subject to Phase I of the SO2 trading program had significant decreases in employment during Phase I of the program relative to non-Phase I power plants. We also find that accounting for utility-level fixed effects is important when examining how electric utilities chose to comply. For instance, when using plant-level fixed effects we find significant negative employment effects for power plants that chose to comply by switching to low sulfur coal. However, utilities took advantage of the flexibility offered under the trading program by switching to low sulfur coal at a subset of the power plants they owned to generate excess allowances to meet compliance needs at other power plants. When we include utility-level fixed effects in this case, we find that the negative employment effect is no longer statistically significant, offering some evidence that utilities used the flexibility of the regulations to minimize the overall impact on employment. When we control for a more traditional NOX rate-based standard that partially overlaps with Phase I of the SO2 trading program, we find that employment effects associated with the SO2 program continue to be insignificant. |
| Keywords: | SO2 regulations, cap and trade, employment effects |
| JEL: | Q52 Q53 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201403&r=ene |
| By: | Evan Herrnstadt; Erich Muehlegger |
| Abstract: | A large and growing literature documents the adverse impacts of pollution on health, productivity, educational attainment and socioeconomic outcomes. This paper provides the first quasi-experimental evidence that air pollution causally affects criminal activity. We exploit detailed location data on over two million serious crimes reported to the Chicago police department over a twelve-year period. We identify the causal effect of pollution on criminal activity by comparing crime on opposite sides of major interstates on days when the wind blows orthogonally the direction of the interstate and find that violent crime is 2.2 percent higher on the downwind side. Consistent with evidence from psychology on the relationship between pollution and aggression, the effect is unique to violent crimes – we find no effect of pollution on the commission of property crime. |
| JEL: | K42 Q53 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21787&r=ene |
| By: | Glenn Sheriff; Ann E. Ferris; Ronald J. Shadbegian |
| Abstract: | Policy makers are keenly interested in environmental regulation’s employment impacts. Empirical research has relied on restrictive assumptions regarding institutional structure and definition of the regulated sector that can lead to mis-characterization of which plants get regulated, when they get regulated, and how stringent their regulations are. We relax these assumptions to develop a nuanced understanding of how the Clean Air Act’s Ozone National Ambient Air Quality Standards affected the U.S. electric power sector in the 1990s. We find that abstracting from regulatory details can lead to underestimation of relative historical local impacts and overestimation of relative projected local impacts of possible future regulation. |
| Keywords: | environment, regulation, energy, labor |
| JEL: | Q52 Q53 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201501&r=ene |
| By: | Muzhe Yang; Shin-Yi Chou |
| Abstract: | We conduct the first study on the impacts of prenatal exposure to a uniquely identified large polluter, a coal-fired power plant located near the border of two states, on the birth outcomes of the downwind state. For mothers who live as far as 20 to 40 miles away but downwind of the power plant, being exposed to power plant emissions, in particular sulfur dioxide, during the first month of pregnancy could increase the likelihood of having full-term babies but with low birth weight, an indicator of slow fetal growth, by as much as 42 percent. This adverse impact could be driven by reactive sulfur species-induced intrauterine oxidative stress, arising from maternal exposure to emissions of sulfur dioxide, whose travelling from the emission source to the downwind region has been confirmed in the Portland Rule. In light of EPA’s continual efforts in regulating power plant emissions, our study is aimed at broadening the scope of cross-border pollution analysis by taking into account adverse infant heath impacts from upwind polluters, which can burden the downwind states disproportionately. |
| JEL: | H23 I1 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21723&r=ene |
| By: | Hassan BENCHEKROUN; Guiomar MARTÍN-HERRÁN |
| Abstract: | We study the impact of foresight in a transboundary pollution game; i.e. the ability of a country to control its emissions taking into account the relationship between current emissions and future levels of pollution and thus on future damages. We show that when all countries are myopic, i.e., choose the 'laisser-faire' policy, their payoffs are smaller than when all countries are farsighted, i.e., non-myopic. However, in the case where one myopic country becomes farsighted we show that the welfare impact of foresight on that country is ambiguous. Foresight may be welfare reducing for the country that acquires it. This is due to the reaction of the other farsighted countries to that country's acquisition of foresight. The country that acquires foresight reduces its emissions while the other farsighted countries extend their emissions. The overall impact on total emissions is ambiguous. Moreover, our results suggest that incentive mechanisms, that involve a very small (possibly zero) present value of transfers, can play an important role in inducing a country to adopt a farsighted behavior and diminishing the number of myopic countries. These incentives would compensate the myopic country for the short-run losses incurred from the acquisition of foresight and can be reimbursed by that country from the gains from foresight that it enjoys in the long run. |
| Keywords: | myopia, differential games, transboundary pollution |
| JEL: | C73 D90 Q59 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:mtl:montec:11-2015&r=ene |
| By: | MacMartin, Douglas G.; Kravitz, Ben; Keith, David |
| Abstract: | Solar geoengineering (or Solar Radiation Management, SRM) refers to any intentional, large-scale manipulation of the Earth's incoming solar radiation to offset some of the effects of anthropogenic greenhouse gases, reducing the associated risks from climate changes. Examples of such methods are injecting aerosols into the stratosphere or increasing marine cloud reflectivity, both of which would reflect some sunlight back to space. There are many serious concerns associated with any such approach, and also many challenges. One often overlooked aspect in geoengineering research is that this is a control problem, requiring (a) feedback of the observed climate state to manage significant uncertainty in both the radiative forcing and the climate's dynamic response to this forcing, and (b) optimization of the distribution of radiative effect to minimize regional disparities as well as side-effects from the geoengineering implementation. We present recent progress on control for this challenging problem, building on [1, 2], and discuss open research gaps. This is the first time an explicit external feedback loop has been implemented in a fully coupled general circulation model of the Earth's climate. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:hksfac:23936193&r=ene |
| By: | Ricke, Katharine L; Cole, Jason N S; Curry, Charles L; Irvine, Peter J; Ji, Duoying; Kravitz, Ben; MacMartin, Douglas G; Robock, Alan; Rasch, Philip J; Keith, David; Egill Kristjánsson, Jón; Moore, John C; Muri, Helene; Singh, Balwinder; Tilmes, Simone; Watanabe, Shingo; Yang, Shuting; Yoon, Jin-Ho |
| Abstract: | Global-scale solar geoengineering is the deliberate modification of the climate system to offset some amount of anthropogenic climate change by reducing the amount of incident solar radiation at the surface. These changes to the planetary energy budget result in differential regional climate effects. For the first time, we quantitatively evaluate the potential for regional disparities in a multi-model context using results from a model experiment that offsets the forcing from a quadrupling of CO2 via reduction in solar irradiance. We evaluate temperature and precipitation changes in 22 geographic regions spanning most of Earthʼs continental area. Moderate amounts of solar reduction (up to 85% of the amount that returns global mean temperatures to preindustrial levels) result in regional temperature values that are closer to preindustrial levels than an un-geoengineered, high CO2 world for all regions and all models. However, in all but one model, there is at least one region for which no amount of solar reduction can restore precipitation toward its preindustrial value. For most metrics considering simultaneous changes in both variables, temperature and precipitation values in all regions are closer to the preindustrial climate for a moderate amount of solar reduction than for no solar reduction. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:hksfac:23936192&r=ene |
| By: | Garth Heutel; Juan Moreno-Cruz; Katharine Ricke |
| Abstract: | This article reviews and evaluates the nascent literature on the economics of climate engineering. The literature distinguishes between two broad types of climate engineering: solar radiation management and carbon dioxide removal. We review the science and engineering characteristics of these technologies and analyze the implications of those characteristics on economic policy design. We discuss optimal policy and carbon price, inter-regional and inter-generational equity issues, strategic interaction in the design of international environmental agreements, and the sources of risk and uncertainty surrounding these technologies. Along with mitigation and adaptation, climate engineering technologies can be incorporated into future domestic and global climate policy design. More research on the topic is needed. |
| JEL: | Q54 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21711&r=ene |
| By: | Andrés Camilo ÁLVAREZ-ESPINOSA; Daniel Alejandro ORDOÑEZ; Alejandro NIETO; William WILLS; German ROMERO; Silvia Liliana CALDERÓN |
| Abstract: | Este documento presenta el análisis de los impactos económicos que tendría la implementación de las medidas de mitigación de gases de efecto invernadero que hacen parte del compromiso de Colombia de reducir sus emisiones en un 20% con respecto a las emisiones proyectadas para el año 2030. La ejecución de las medidas que contribuyan al cumplimiento del compromiso adquirido traerá consigo un aumento del PIB de 2,3% en el 2040, equivalente a un aumento en la tasa de crecimiento del PIB de 0,15% anual para el periodo 2020- 2040, frente a un escenario de no hacer nada. Otra consecuencia es que, en el largo plazo, se reduce la tasa de desempleo debido a que se generarán empleos directos en el uso y capacitación de las nuevas formas de producción, e indirectos en el suministro de insumos, servicios, industria. Las inversiones requeridas por las medidas de mitigación son aplicadas a sectores intensivos en trabajo, como lo es el transporte y el sector agropecuario. Debido a la estructura económica y la matriz de emisiones, la implementación de medidas asociadas a la eficiencia energética en el sector de transporte, industrial, y residencial generarían los mayores impactos positivos sobre el crecimiento económico. |
| Keywords: | Acuerdo de París, mitigación, cambio climático, modelo deequilibrio general. |
| JEL: | Q54 E17 |
| Date: | 2015–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:col:000118:014157&r=ene |
| By: | Gerard van der Meijden (VU University Amsterdam, the Netherlands); Karolina Ryszka (VU University Amsterdam, the Netherlands); Cees Withagen (VU University Amsterdam, the Netherlands) |
| Abstract: | We study resource extraction by a non-renewable resource supplier who faces demand from two regions, one of which employs a tax on the imported resource and a subsidy on the available backstop technology, and one that has no environmental policy in place. The resource extraction path possibly contains two limit pricing phases, both in the presence and in the absence of speculators on the market. In the case with speculators, the resource price is continuous. Without speculators, the price jumps upward when demand from the region with climate policy drops to zero. A tightening of climate policies results in lower initial resource consumption; no Weak Green Paradox occurs. Yet, a decrease in the backstop production cost or an increase in the backstop subsidy shorten the overall extraction period, potentially resulting in higher total climate costs in the case without speculators. An analysis of the welfare effects reveals that the regulated region faces differential non-green and green incentives to tighten its climate policies in the two price regimes. We find that, even though climate damages might go down, unilateral policy tightening is possibly detrimental to the regulated region's non-green welfare due to a resource supply shift to the unregulated region. |
| Keywords: | limit pricing; non-renewable resource; monopoly; climate change; carbon tax; renewables subsidy |
| JEL: | Q31 Q37 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150136&r=ene |
| By: | Giovanni Marin (IRCrES-CNR, Milano, Italy; SEEDS, Ferrara, Italy.); Claudia Pellegrin (CEMI-CDM-EPFL, Lausanne, Switzerland.); Marianna Marino (Department of Strategy and Innovation, ICN Business School, Nancy/Metz; France and Bureau d'Économie Théorique et Appliquée (BETA), Université de Lorraine, France) |
| Abstract: | The European emission trading scheme (EU ETS) has introduced a price for carbon and has thus led to an additional cost for companies that are regulated by the scheme. There is a growing body of empirical literature that investigates the effects of the EU ETS on firm economic performance. However, the results found to date are mixed. The objective of this paper is to provide empirical evidence on the effect of the EU ETS on economic performance at the firm level. Differently from the previous literature, we test the effect of the EU ETS on a larger set of indicators of economic performance: value added, turnover, employment, investment, labour productivity, total factor productivity and markup. Moreover, we evaluate the extent to which the impact of the EU ETS differs depending on some observable features of firms. Our results, based on a large panel of European firms, provide a comprehensive picture of the economic impact of the EU ETS in its first and second phases of implementation. The evidence suggests that the EU ETS had a positive impact on the scale of treated firms, whereas it had a negative impact on scale-free aspects of economic performance. |
| Keywords: | European Emission Trading Scheme, economic performance, difference-in-differences, emission intensity, allowance trading, environmental patents |
| JEL: | Q52 Q58 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:2015&r=ene |
| By: | Malikov, Emir |
| Abstract: | The impulse-response-function-based Wald test has been gaining wide popularity among researchers seeking to formally test for (a)symmetries in dynamic responses of various macroeconomic aggregates to oil price shocks. However, because the IRF-based Wald test is conditional on the magnitude of an oil price shock, it can sometimes prove to be impractical, especially when producing contrasting evidence for shocks of different sizes. To circumvent this problem, this paper suggests considering a nonparametric IRF-density-based test in addition to the Wald. The former allows the analysis of (a)symmetries in dynamic impulse responses to positive and negative oil price shocks of a wide range of magnitudes. The test permits inference about a general tendency of (a)symmetries in impulse responses as opposed to (a)symmetries pertinent to a shock of a given size only. The examined (a)symmetry is thus unconditional of the magnitude of a shock. Importantly, the testing procedure allows accounting for the relative likelihood of observing the disturbance of a given size. |
| Keywords: | Asymmetry, Impulse Response, Job Creation and Destruction, Macroeconomy, Nonlinearity, Oil Price, SVAR |
| JEL: | Q43 |
| Date: | 2015–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68453&r=ene |
| By: | Andreas Karpf (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Antoine Mandel (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Stefano Battiston (Department of Banking and Finance - UZH - University of Zürich [Zürich]) |
| Abstract: | This paper analyses the European Emission Trading System (ETS) from a network perspective. It is shown that the network exhibits a strong core-periphery structure also reflected in the network formation process. Due to a lack of centralized market places, operators of installations which fall under the EU ETS regulations have to resort to local networks or financial intermediaries if they want to participate in the market. This undermines the central idea of the ETS to exploit marginal abatement costs. |
| Keywords: | network,emission market,ETS,network topology |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01243694&r=ene |
| By: | Achim I. Czerny (Hong Kong Polytechnic University, Hong Kong, PR China); Vincent A.C. van den Berg (VU University Amsterdam, the Netherlands); Erik T. Verhoef (VU University Amsterdam, the Netherlands) |
| Abstract: | This paper analyzes the effect of carrier collaboration on fleet capacity, fleet structures in terms of the number and the size of vehicles, and load factors. The model features complementary networks, scheduling, price elastic demands, and demand uncertainty. For the case of a given number of vehicles, the analysis shows that carrier collaboration increases vehicle sizes (thus, fleet capacity) if marginal seat costs are low while fleet capacity remains unchanged if marginal seat costs are high. If both vehicle sizes and vehicle numbers can be varied, then collaboration will always increase vehicle numbers and fleet capacity, while the effects on vehicle sizes and, thus, also load factors, are ambiguous and therewith hard to predict. Numerical simulations indicate that collaboration increases expected load factors also when the number of vehicles is endogenous. |
| Keywords: | Alliances; fleet capacity; load factors; scheduling; uncertainty |
| JEL: | L40 L50 M21 R42 R49 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150134&r=ene |
| By: | Stefano Giglio; Matteo Maggiori; Johannes Stroebel; Andreas Weber |
| 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. |
| JEL: | G11 G12 R30 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21767&r=ene |
| By: | Hyland, Marie; Haller, Stefanie |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp513&r=ene |
| By: | Alex L. Marten |
| Abstract: | The benefits of carbon mitigation are subject to numerous sources of uncertainty and accounting for this uncertainty in policy analysis is crucial. One often overlooked source uncertainty are the forecasts of future baseline conditions (e.g., population, economic output, emissions) from which carbon mitigation benefits are assessed. Through,in some cases highly non-linear relationships, these baseline conditions determine the forecast level and rate of climate change, exposed populations, vulnerability, and way in which inter-temporal tradeoffs are valued. We study the impact of explicitly considering this uncertainty on a widely used metric to assess the benefits of carbon dioxide mitigation, the social cost of carbon (SCC). To explore this question a detailed integrated assessment that couples economic and climate systems to assess the damages of climate change is driven by a library of consistent probabilistic socioeconomic-emission scenarios developed using a comprehensive global computable general equilibrium model. We find that scenario uncertainty has a significant effect on estimates of the SCC and that excluding this source of uncertainty could lead to an underestimate of the mitigation benefits. A detailed decomposition finds that this effect is driven primarily through the role that uncertainty regarding future consumption per capita growth has on the value of inter-temporal tradeoffs through the consumption discount rate. |
| Keywords: | social cost of carbon, integrated assessment, scenario uncertainty |
| JEL: | Q51 Q54 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201404&r=ene |
| By: | Farrell, Niall |
| Abstract: | Carbon taxes increase the cost of necessary household energy expenditures. In many developed countries, carbon taxes are regressive as they comprise a greater proportion of a poorer household’s income. Certain socioeconomic groups are more negatively affected by these impacts than others. While inequality of incidence by income group has received great attention in the literature, a gap exists to quantify the inequality associated with socioeconomic characteristics. This information is policy-relevant as it may inform the most effective means to offset negative welfare impacts through changes to taxes and/or social transfers. This paper provides this contribution. First, the inequality of carbon tax incidence across the income spectrum is quantified using the concentration index methodology. A subsequent multivariate decomposition quantifies the contribution each socioeconomic factor makes towards this inequality of incidence. This is carried out for electricity, motor fuel and all other home fuels to elicit variation of socioeconomic incidence by source. While income contributes a great deal towards inequality of incidence for other home fuels, socioeconomic characteristics are the primary determinants of electricity and motor fuel-related carbon tax incidence. The relative importance of each characteristic in determining regressive impacts is quantified and this varies by carbon tax source. |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp519&r=ene |
| By: | Dr. Markus Flaute (GWS - Institute of Economic Structures Research); Anett Großmann (GWS - Institute of Economic Structures Research); Dr. Christian Lutz (GWS - Institute of Economic Structures Research); Anne Nieters (GWS - Institute of Economic Structures Research) |
| Abstract: | Im Zuge des Ausbaus der erneuerbaren Energien produzieren private Haushalte zunehmend selbst Strom und Wärme. Prosumer-Haushalte verbrauchen zumindest einen Teil der erzeugten Energie selbst. In einem ersten Schritt sind aus einer großen Zahl von Prosumer-Haushalten, welche sich hinsichtlich verschiedener Eigenschaften (z. B. Haushaltsgröße, Gebäudestruktur, eingesetzte Energieerzeugungstechnologie) unterscheiden, 10 Durchschnittstypen ausgewählt und in das Energiewirtschaftsmodell PANTA RHEI integriert worden. Das vorliegende Discussion Paper beschreibt die Auswahl der Typen und die Einbindung in das Modell PANTA RHEI. Anhand beispielhafter Modellrechnungen, in denen jeweils jährlich 100.000 Prosumer-Haushalte neu auf den Markt treten, werden die grundlegenden Wirkungszusammenhänge beschrieben. Es werden sowohl die energiebezogenen als auch die ökonomischen Effekte dargestellt. Abschließend werden weitere Arbeitsschritte für den Fortgang des Forschungsvorhabens diskutiert. |
| Keywords: | Energiewende, Prosumer, Energie, nachhaltiger Konsum, Modellierung |
| JEL: | Q4 D1 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gws:dpaper:15-14&r=ene |
| By: | Devine, Mel; Lynch, Muireann Á. |
| Abstract: | Liberalised electricity markets often include a capacity remuneration mechanism to allow generation firms recover their fixed costs. Various de-rating factors and/or penalties have been incorporated into such mechanisms in order to award the unit based on the contribution they make to system security, which in turn depends on the unit’s reliability. However, this reliability is known to the firm but not to the regulator. We propose an adaptation of menu regulation to design capacity payments based on a declaration by the firm of their reliability. We scale payments and penalties according to this declared reliability such that the firm’s profit-maximising strategy is to truthfully reveal their reliability. We apply the methodology to an illustrative test system. Truth-telling is induced, increasing the efficiency of capacity payments while eliminating the requirement for the regulator to allocate resources to discovering reliability. |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp518&r=ene |
| By: | Damien Sans (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS) |
| Abstract: | The literature on the micro-economics of the eco-industry often assumed interiority of pollutant net emissions. In a perfectly competitive final good market vertically integrated with an upstream monopoly supply this assumption implies that an optimal tax is always greater than its associated marginal social damage. In this short note we will relax this assumption and challenge that result. The market structure generates a unique threshold on the scale of the marginal social damage, whereby for any value above the threshold an optimal tax is strictly lower and net emissions are zero. |
| Keywords: | Microeconomics, eco-industry, Imperfect Competition, Optimal Taxation |
| JEL: | D42 D62 H23 L11 Q58 |
| Date: | 2015–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1549&r=ene |
| By: | Aldy, Joseph Edgar |
| Abstract: | The emerging pledge and review approach to international climate policy provides countries with substantial discretion in how they craft their intended emission mitigation contributions. The resulting heterogeneity in mitigation pledges places significant demands for a well-functioning transparency and review mechanism. In particular, the specific forms of intended contributions necessitate economic analysis in order to estimate the aggregate effects of these contributions as well as to permit "apples-to-apples" comparisons of mitigation efforts. This paper discusses the tools that can inform such analyses as well as the institutional needs of climate transparency. In light of the negotiating challenges with respect to transparency, the paper describes the potential for countries to implement Living Mitigation Plans that include regular updating of domestic mitigation programs with data and analyses on their outcomes. Such Living Mitigation Plans can serve as the foundation for independent, expert review of domestic mitigation programs. Moreover, they can include the inputs necessary to assess the mitigation value of domestic mitigation. Such assessments could inform the linkage of domestic mitigation policies, especially among disparately designed mitigation policies. This paper builds in part on the proceedings of a research workshop conducted May 7–8, 2015 at the Harvard Kennedy School, "Comparison and Linkage of Mitigation Efforts in a New Paris Regime." For more information on the workshop and links to most presentations, see here. The author and the Harvard Project on Climate Agreements acknowledge the support and collaboration of the International Emissions Trading Association and the World Bank Group's Networked Carbon Markets Initiative, with regard to the workshop, the paper, and a related side-event panel to be conducted at the Twenty-First Conference of the Parties of the United Nations Framework Convention on Climate Change in Paris in December 2015. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:hksfac:23936083&r=ene |
| By: | Dr. Jochen Diekmann (DIW Berlin) (GWS - Institute of Economic Structures Research); Dr. Barbara Breitschopf (Fraunhofer ISI) (GWS - Institute of Economic Structures Research); Dr. Ulrike Lehr (GWS - Institute of Economic Structures Research) |
| Abstract: | Das Papier analysiert verschiedene Optionen der Milderung von Verteilungseffekten der Förderung von Strom aus erneuerbaren Energien (EE). Ausgehend von der bestehenden Regelung in Deutschland, der Umverteilung durch die EEG-Umlage, werden eine Senkung der Differenzkosten, eine Verringerung der Privilegierung, eine alternative Finanzierung aus öffentlichen Haushalten oder einem Fond, die Reduzierung der Stromsteuer, die Erhöhung von Sozialtransfers und die Verbesserung der Energieeffizienz diskutiert. Es stellt sich heraus, dass kein alternatives Instrument allein die bessere Lösung bietet. Vielmehr scheinen eine kritische Überprüfung von Ausnahmen, die Senkung von Differenzkosten der jeweiligen Technologien und die Unterstützung der Verbraucher bei der Entscheidung für die und den Kauf der besten verfügbaren Technologien sich als die beste Mischung zu erweisen. The paper analyses different options to alleviate the distribution effects of the support mechanism for electricity from renewable energy (RE). Starting from the existing burden sharing scheme in Germany, the EEG (Renewable energy law) surcharge, a lowering of the additional costs, a cut in privileged consumption, alternative financing from public budgets or an RE-Fond, reduction of the electricity tax, increases in social transfers and support of energy efficiency are discussed. It turns out that neither single alternative instrument presents the single better solution. Moreover, a critical review of the exemptions from the surcharge, a focus on cost decreases in the respective technologies and support of consumers in deciding for and buying the best available technologies turn out as the best mix. |
| Keywords: | Verteilungseffekte, erneuerbare Energien, EEG-Umlage, Fördermaßnahmen |
| JEL: | H23 Q48 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gws:dpaper:15-18&r=ene |
| By: | Richard Schmalensee; Robert Stavins |
| Abstract: | This essay provides an overview of the major emissions trading programs of the past thirty years on which significant documentation exists, and draws a number of important lessons for future applications of this environmental policy instrument. References to a larger number of other emissions trading programs that have been implemented or proposed are included |
| JEL: | Q40 Q48 Q54 Q58 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21742&r=ene |