nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒02‒17
fifty-one papers chosen by
Roger Fouquet
London School of Economics

  1. Evolution of the electricity market in Germany: Identifying policy implications by an agent-based model By Herrmann, Johannes; Savin, Ivan
  2. An Analysis of Allowance Banking in the EU ETS By Zaklan, Aleksandar; Ellerman, Denny; Valero, Vanessa
  3. Productivity Growth and its Sources - A StoNED Metafrontier Analyis of the German Electricity Generating Sector By Seifert, Stefan
  4. The 2016 Power Trading Agent Competition By Ketter, W.; Collins, J.; Weerdt, M.M.
  5. The Market Value of Energy Efficiency in Buildings and the Mode of Tenure By Michelsen, Claus; Kholodilin, Konstantin
  6. Substitution between Purchased Electricity and Fuel for Onsite Power Generation in the Manufacturing Industry: Plant level analysis in Japan By KITAMURA Toshihiko; MANAGI Shunsuke
  7. Strategic technology policy as a supplement to renewable energy standards By Fischer, Fischer; Greaker, Mads; Rosendahl, Knut Einar
  8. Measuring climate policy stringency: A shadow price approach using energy prices By Hille, Erik; Althammer, Wilhelm
  9. Cross-Commodity News Transmission and Volatility Spillovers in the German Energy Markets By Green, Rikard; Larsson, Karl; Lunina, Veronika; Nilsson, Birger
  10. Do Renewable Energy Policies Reduce Carbon Emissions? On Caps and Intra-Jurisdictional Leakage By Perino, Grischa; Jarke, Johannes
  11. The Impact of Wind Power Support Schemes on Technology Choices By May, Nils Günter
  12. Fuel Prices and Station Heterogeneity on Retail Gasoline Markets By Siekmann, Manuel; Haucap, Justus; Heimeshoff, Ulrich
  13. Is Shale Development Drilling Holes in the Human Capital Pipeline? By Rickman, Dan S.; Wang, Hongbo; Winters, John V.
  14. Can technology-specific deployment policies be cost-effective? The case of renewable energy support schemes By Lehmann, Paul; Söderholm, Patrik
  15. Sowing the Wind and Reaping the Whirlwind? The Effect of Wind Turbines on Residential Well-Being By Zerrahn, Alexander; Krekel, Christian
  16. The Aggregation Dilemma in Climate Change Policy Evaluation By Schumacher, Ingmar
  17. Investigating the Carbon Leakage Effect on the Environmental Kuznets Curve Using Luminosity Data By Steinkraus, Arne
  18. Impact evaluation of Netherlands supported programmes in the area of energy and development cooperation in Rwanda: The provision of grid electricity to households through the Electricity Access Roll-out Programme. Electricity Access Roll-out Programme (EARP) supported by the Netherlands through a multi-donor fund By Peters, Jörg; Sievert, Maximiliane; Lenz, Luciane; Munyehirwe, Anicet
  19. On the incidence of renewable energy subsidies into land prices - Evidence from Germany By Simmler, Martin; Haan, Peter
  20. Awareness of Climate Change in a Diverse World By Wiesmeth, Hans; Weber, Shlomo
  21. Unilateral mitigation of climate damage via purchase of fossil fuel deposits By Pethig, Rüdiger; Eichner, Thomas
  22. From fuel taxation to efficiency standards: A wrong turn in European climate protection? By Vance, Colin; Frondel, Manuel
  23. The wave of remunicipalisation of energy networks and supply in Germany : the establishment of 72 new municipal power utilities By Wagner, Oliver; Berlo, Kurt
  24. The Supply-side Effects of Energy Efficiency Labels (Payne Institute Policy Brief) By David Comerford; Ian Lange; Mirko Moro
  25. Lobbying over Exhaustible-Resource Extraction By Schopf, Mark; Voß, Achim
  26. Offset Credits in the EU Emissions Trading System : A Firm-Level Evaluation of Transaction Costs By Naegele, Helene
  27. Self-enforcing intergenerational social contract as a source of Pareto improvement and emission mitigation By Burghaus, Kerstin; Dao, Thang Nguyen; Edenhofer, Ottmar
  28. Green attitude and economic growth By Soretz, Susanne; Ott, Ingrid
  29. Do stringent environmental policies deter FDI? M&A versus Greenfi eld By Bialek, Sylwia; Weichenrieder, Alfons J.
  30. Local and Global Pollution and International Environmental Agreements in a Network Approach By Günther, Michael; Hellmann, Tim
  31. Market Power Rents and Climate Change Mitigation: A Rationale for Coal Export Taxes? By Mendelevitch, Roman; Richter, Phillip; Jotzo, Frank
  32. Global Warming and a Potential Tipping Point in the Atlantic Thermohaline Circulation: The Role of Risk Aversion By Glanemann, Nicole; Belaia, Mariia; Funke, Michael
  33. Regulation and Investment Incentives in Electricity Distribution By Cullmann, Astrid; Nieswand, Maria
  34. Electricity Markets: Designing Auctions Where Suppliers Have Uncertain Costs By Holmberg, Pär; Wolak, Frank A.
  35. Forty years of oil price fluctuations: Why the price of oil may still surprise us By Baumeister, Christiane; Kilian, Lutz
  36. Does a Clean Development Mechanism Facilitate International Environmental Agreements? By Thum, Marcel P.; Konrad, Kai
  37. Forging a global environmental agreement through trade sanctions on free riders? By Eichner, Thomas; Pethig, Rüdiger
  38. Synthesizing Cash for Clunkers: Stabilizing the Car Market, Hurting the Environment By Klößner, Stefan; Pfeifer, Gregor
  39. Impacts of access to solar energy on rural households: An evaluation of a Netherlands supported programme in Burkina Faso By Bensch, Gunther; Grimm, Michael; Langbein, Jörg; Peters, Jörg
  40. How does the development of the financial industry advance renewable energy? A panel regression study of 198 countries over three decades By Scholtens, Bert; Veldhuis, Rineke
  41. “Green” refurbishments under uncertainty By Bonde, Magnus; Song, Han-Suck
  42. Something in the Air? Pollution, Allergens and Children's Cognitive Functioning By Marcotte, Dave E.
  43. On the relevance of ideology and environmental values for climate change beliefs, climate policy support, and climate protection activities: An empirical cross country analysis By Ziegler, Andreas
  44. When Labor Disputes Bring Cities to a Standstill: The Impact of Public Transit Strikes on Traffic, Accidents, Air Pollution, and Health By Hener, Timo; Rainer, Helmut; Bauernschuster, Stefan
  45. Mitigating Hypothetical Bias: Evidence on the Effects of Correctives from a Large Field Study By Frondel, Manuel; Andor, Mark; Vance, Colin
  46. A Review of the Circular Economy and its Implementation By Heshmati, Almas
  47. Environmental policy diffusion and lobbying By Gerigk, Joschka; MacKenzie, Ian; Ohndorf, Markus
  48. The Agency of Politics and Science By Haita-Falah, Corina; Gerber, Anke; Lange, Andreas
  49. Pollution and city size: can cities be too small? By Borck, Rainald; Tabuchi, Takatoshi
  50. Productivity in the Electricity Retail Market: Does Ownership Matter? A Structural Production Function Approach for Germany By Stiel, Caroline; Cullmann, Astrid; Nieswand, Maria
  51. Étude sur les enjeux propres aux plateformes multimodales et aux opérations de transbordement des hydrocarbures au Québec (GTRA01) By Ingrid Peignier; Minh Hoang Bui; Martin Trépanier

  1. By: Herrmann, Johannes; Savin, Ivan
    Abstract: The diffusion of renewable electricity generating technologies is widely consid- ered as crucial for establishing a sustainable energy system in the future. However, currently the required transition is unlikely to be achieved by market forces alone. For this reason, many countries implement various policy instruments to support this process, also by re-distributing costs related to the policy instruments applied among all electricity consumers. This paper presents a novel history-friendly agent-based study aiming to explore efficiency of different mixes of policy instruments by means of a differential evolution algorithm. Special emphasis of the model is devoted to possibility of small scale renewable electricity generation without any further inputs, but also to storage of this electricity using small scale facilities being actively developed over the last decade. Both combined pose an important instrument to be used by electricity consumers to achieve partial or full autarky from the electricity grid, particularly after accounting for decreasing costs and increasing efficiency of both due to continuous innovation. Another distinct feature of this study is attention to stability of the electricity grid since more consumers becoming autarkic make, on the one hand, electricity in the grid more expansive, while on the other hand, supply of the electricity more vulnerable.
    JEL: C63 Q42 Q48
    Date: 2015
  2. By: Zaklan, Aleksandar; Ellerman, Denny; Valero, Vanessa
    Abstract: The existence of some 2 billion unused EU Allowances (EUAs) at the end of Phase II of the EU s Emissions Trading System (EU ETS) has sparked considerable debate about structural shortcomings of the EU ETS. However, there has been a surprising lack of interest in considering the accumulation of EUAs in light of the theory of intertemporal permit trading, i.e. allowance banking. In this paper we adapt basic banking theory to the case of a linearly declining cap, as is common in greenhouse gas control systems. We show that it is perfectly rational for agents to decrease emissions beyond the constraint imposed by the cap initially, accumulating an allowance bank and then drawing it down in the interest of minimizing abatement cost over time. Having laid out the theory, we carry out a set of simulations for a reasonable range of key parameters, geared to the EU ETS, to illustrate the effects of intertemporal optimization of abatement decisions on optimal time paths of emissions and allowance prices. We conclude that bank accumulation as the result of intertemporal abatement cost optimization should be considered at least a partial explanation when evaluating the current discrepancy between the cap and observed emissions.
    JEL: Q54 D92 F18
    Date: 2015
  3. By: Seifert, Stefan
    Abstract: Energy supply in Germany has undergone considerable changes during the last decade, of which especially the nuclear phase-out and enormous installations of renewable energy sources pose new challenges for conventional combustion technologies. To analyze potential adaption processes due to this changing market conditions, this paper analyzes productivity change and its components in the German electricity and heat generation sector. A unique panel data set of 1555 power plants in Germany between 2003 and 2010 allows to estimate production frontiers for coal, lignite, gas and biomass fired power plants. Production functions are estimated using stochastic non-smooth envelopment of data (StoNED) in a meta-frontier framework. Productivity developments and its components are assessed at quantiles of the input value distributions of the different technologies using a metafrontier Malmquist decomposition. Results indicate (1) a dominant position of gas-fired plants in the metafrontier, (2) productivity changes for all technologies and reductions in production potentials (3) a catch-up for biomass plants to the other technologies.
    JEL: L94 D24 C14
    Date: 2015
  4. By: Ketter, W.; Collins, J.; Weerdt, M.M.
    Abstract: This is the specification for the Power Trading Agent Competition for 2016 (Power TAC 2016). Power TAC is a competitive simulation that models a “liberalized” retail electrical energy market, where competing business entities or “brokers” offer energy services to customers through tariff contracts, and must then serve those customers by trading in a wholesale market. Brokers are challenged to maximize their profits by buying and selling energy in the wholesale and retail markets, subject to fixed costs and constraints; the winner of an individual “game” is the broker with the highest bank balance at the end of a simulation run. Costs include fees for publication and withdrawal of tariffs, and distribution fees for transporting energy to their contracted customers. Costs are also incurred whenever there is an imbalance between a broker’s total contracted energy supply and demand within a given time slot. The simulation environment models a wholesale market, a regulated distribution utility, and a population of energy customers, situated in a real location on Earth during a specific period for which weather data is available. The wholesale market is a relatively simple call market, similar to many existing wholesale electric power markets, such as Nord Pool in Scandinavia or FERC markets in North America, but unlike the FERC markets we are modeling a single region, and therefore we approximate locational-marginal pricing through a simple manipulation of the wholesale supply curve. Customer models include households, electric vehicles, and a variety of commercial and industrial entities, many of which have production capacity such as solar panels or wind turbines. All have “real-time” metering to support allocation of their hourly supply and demand to their subscribed brokers, and all are approximate utility maximizers with respect to tariff selection, although the factors making up their utility functions may include aversion to change and complexity that can retard uptake of marginally better tariff offers. The distribution utility models the regulated natural monopoly that owns the regional distribution network, and is responsible for maintenance of its infrastructure. Real-time balancing of supply and demand is managed by a market-based mechanism that uses economic incentives to encourage brokers to achieve balance within their portfolios of tariff subscribers and wholesale market posi- tions, in the face of stochastic customer behaviors and weather-dependent renewable energy sources. Changes for 2016 are focused on a more realistic cost model for brokers, and are highlighted by change bars in the margins. See Section 7 for details.
    Keywords: autonomous agents, electronic commerce, energy, preferences, portfolio management, power, policy guidance, sustainability, trading agent competiton
    Date: 2016–01–12
  5. By: Michelsen, Claus; Kholodilin, Konstantin
    Abstract: Concerns about global warming and growing scarcity of fossile fuels require substantial changes in energy consumption patterns and energy systems, as targeted by many countries around the world. One key element to achieve such transformation is to increase energy efficiency of the housing stock. In this context, it is frequently argued that private investments are too low in the light of the potential energy cost savings. However, heterogenous incentives to invest in energy efficiency, particularly for owner-occupants and landlords, may serve as one explanation. This is particularly important for countries with a large rental sector, like Germany. Nevertheless, previous literature largely focuses on the pay offs owner-occupants receive, leaving out the rental market. This paper addresses this gap by comparing the capitalization of energy efficiency in selling prices (rents) for both types of residences. For this purpose data from the Berlin housing market are analyzed in hedonic regressions. The estimations reveal that energy efficiency is well capitalized in apartment prices and rents. The comparison of implicit prices and the net present value of energy cost savings/rents reveals that investors anticipate future energy and house price movements reasonably. However, in the rental segment, the value of future energy cost savings exceeds tenants' implicit willingness to pay by factor 2.98. This can either be interpreted as a result of market power of tenants, uncertainty in the rental relationship, or the "landlord-tenant dilemma."
    JEL: R21 R31 Q40
    Date: 2015
  6. By: KITAMURA Toshihiko; MANAGI Shunsuke
    Abstract: Using plant level data, we investigate the substitution between purchased electricity and fuel usage for onsite power generation by estimating the cross price elasticities in Japan. We find that the sensitivity of the fuel demand for onsite power generation to the changes in the price of purchased electricity and the degree of sensitivity depend heavily on industrial characteristics. We also calculate the expenditure elasticities for the fuels and find that firms prefer to use electricity generated on site compared to purchased electricity. Furthermore, from the analysis of the preference for fuel types used in onsite generation, we find that coal, which is relatively inexpensive but has relatively high CO₂ emission, is increasingly preferred by firms across industries. Some industries indeed are contributing to the reduction of CO₂ emissions by either replacing oil with scrap materials as fuel and/or utilizing recovered fuel or byproducts to generate onsite power. The results indicate the effort capacity to reduce emissions appears to heavily depend on industrial characteristics.
    Date: 2016–01
  7. By: Fischer, Fischer; Greaker, Mads; Rosendahl, Knut Einar (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: In many regions, renewable energy targets are a primary decarbonization policy. Most of the same jurisdictions also subsidize the manufacturing and/or deployment of renewable energy technologies, some being su¢ ciently aggressive as to engender WTO disputes. We consider a downstream energy-using prod- uct produced competitively but not traded across regions, such as electricity or transportation. A renewable energy technology is available, provided by a limited set of upstream suppliers who exercise market power. With multiple market fail- ures (emissions externality and imperfect competition), renewable market share targets as the binding climate policy, and international trade in equipment, the stage is set to examine rationales for green industrial policy. Subsidies may be provided downstream to energy suppliers and/or upstream to technology sup- pliers; each has tradeo¤s. Subsidies can o¤set underprovision upstream, but they allow dirty generation to expand when the portfolio standard becomes less binding. Downstream subsidies raise all upstream pro…ts and crowd out foreign emissions. Upstream subsidies increase domestic upstream market share but expand emissions globally. In our two-region model, strategic subsidies chosen noncooperatively can be optimal from a global perspective, if both regions value emissions at the global cost of carbon. But if the regions su¢ ciently undervalue global emissions, restricting the use of upstream subsidies can enhance welfare.
    Keywords: Strategic technology policy; Renewable energy standard; Upstream technology market
    JEL: H23 L13 Q54
    Date: 2016–01–11
  8. By: Hille, Erik; Althammer, Wilhelm
    Abstract: To assess the effect of environmental policy on production structures, trade structures or foreign direct investment, a measure for the stringency of policy is necessary. Measures typically used in empirical studies share several disadvantages: They are not available on a sectoral basis to reflect concerns of industry competitiveness; they are not available for a wide range of countries to allow for international comparisons; or they are not broad enough to reflect the multidimensionality of environmental policy. This paper develops a thorough, internationally comparable, sector-specific measure of multidimensional climate policy stringency where a shadow price approach serves as a basis. The approach is applied to climate policy by determining sector-specific emission relevant energy costs on the basis of the sectors usage of emission relevant energy carriers and the carriers respective prices. The resulting shadow price estimates are heterogeneous and can be applied in future research to test for carbon leakage and pollution havens.
    JEL: D22 Q48 Q54
    Date: 2015
  9. By: Green, Rikard (Modity Energy Trading); Larsson, Karl (Department of Economics, Lund University); Lunina, Veronika (Department of Economics, Lund University); Nilsson, Birger (Department of Economics, Lund University)
    Abstract: This paper investigates dynamic interrelations in volatilities and correlations of the returns on the German energy forward markets. Our focus is on the volatility spillovers to electric power from news in the prices of gas, coal and carbon emission allowances. We discuss the relationship between our results and the fundamental developments in the energy markets during the sample period from 2008 to 2013; in particular, the changes over time in spark and dark spreads, and the actual generation mix. We use a general VAR-BEKK model together with the variance response function to analyze and evaluate the spillover effects. Special attention is paid to the selection of an appropriate econometric volatility model. Our results show that spillover effects display significant time variation. Spillovers from coal to power are significant throughout our sample while the spillover from gas has decreased during the most recent period. On the contrary we find that spillovers from carbon have increased in strength over time. These results are consistent with the developments in these markets during the sample.
    Keywords: energy forward markets; time-varying volatility spillovers; volatility impulse response function; skew-Student asymmetric BEKK
    JEL: C32 C58 Q41
    Date: 2016–01–13
  10. By: Perino, Grischa; Jarke, Johannes
    Abstract: Climate policies overlapping a cap-and-trade scheme are generally considered not to change domestic emissions. In a two-sector general equilibrium model where only one sector is covered by a cap, we find that such policies do have a net impact on carbon emissions through inter-sectoral leakage. Promotion of renewable energy reduces emissions if tax-funded, but can increase emissions if funded by a levy on electricity. Replacing fossil fuels by electricity in uncapped sectors (e.g. power-to-heat or electric cars) and increases in the efficiency of electricity use reduce domestic emissions. Moreover, the commonly used measure to assess renewable energy policies is biased.
    JEL: Q58 Q48 H23
    Date: 2015
  11. By: May, Nils Günter
    Abstract: Germany has been a leader in governmental support for renewable energies, which now represent about 27 % of electricity generation. In 2012 (voluntary) / 2014 (obligatory), the country changed from a xed Feed-In Tari (FIT) to a Market Premium Scheme (MPS) for wind power projects. One aim of this adjustment was to align the supply of generated wind electricity with the demand for it, e.g. through more system-friendly wind turbine technology choices. However, based on a wind investment model, I show that the MPS fails to convey strong enough incentives to project developers to alter their investment decision. Furthermore, I analyze an additional change in the reference location model, as it plays an integral part in both the xed FIT and the MPS. The investment model indicates that such a policy manages to incentivize the deployment of more system-friendly wind power technologies. Additionally, I consider a policy approach that is optimized with respect to a future energy system. This policy provides investors with even stronger incentives to adapt their technology choices.
    JEL: Q42 Q55 O38
    Date: 2015
  12. By: Siekmann, Manuel; Haucap, Justus; Heimeshoff, Ulrich
    Abstract: Price levels and movements on gasoline and diesel markets are heavily debated among consumers, policy-makers, and competition authorities alike. In this paper, we empirically investigate how and why price levels differ across gasoline stations in Germany, using eight months of data from a novel panel data set including price quotes from virtually all German stations. Our analysis specifically explores the role of station heterogeneity in explaining price differences across gasoline stations. Key determinants of price levels across fuel types are found to be ex-refinery prices as key input costs, a station's location on roads or highway service areas, and brand recognition. A lower number of station-specific services implies lower fuel price levels, so does a more heterogeneous local competitive environment.
    JEL: L11 L71 L13
    Date: 2015
  13. By: Rickman, Dan S. (Oklahoma State University); Wang, Hongbo (Oklahoma State University); Winters, John V. (Oklahoma State University)
    Abstract: Using the Synthetic Control Method (SCM) and a novel method for measuring changes in educational attainment we examine the link between educational attainment and shale oil and gas extraction for the states of Montana, North Dakota, and West Virginia. The three states examined are economically-small, relatively more rural, and have high levels of shale oil and gas reserves. They also are varied in that West Virginia is intensive in shale gas extraction, while the other two are intensive in shale oil extraction. We find significant reductions in high school and college attainment among all three states' initial residents because of the shale booms.
    Keywords: shale development, synthetic control method, educational attainment
    JEL: Q4 R1 R2
    Date: 2016–01
  14. By: Lehmann, Paul; Söderholm, Patrik
    Abstract: While there is relatively limited disagreement on the general need for supporting the deployment of renewable energy sources for electricity generation (RES-E), there are diverging views on whether the granted support levels should be technology-neutral or technology-specific. In this paper we question the frequently stressed argument that technology-neutral schemes will promote RES-E deployment cost-effectively. A simple partial equilibrium model of the electricity sector with one representative investor is developed to illustrate how the cost-effective support levels to different RES-E technologies will be influenced when selected market failures are introduced. We address market failures associated with technological development, long-term risk taking, path dependencies as well as various external costs, all of which drive a wedge between the private and the social costs of RES-E deployment. Based on these analytical findings and a review of empirical literature, we conclude that the relevance of these market failures is typically heterogeneous across different RES-E technologies. The paper ends by discussing a number of possible caveats to implementing cost-effective technology-specific support schemes in practice, including the role of various information and political economy constraints. While these considerations involve important challenges, neither of them suggests an unambiguous plea for technology-neutral RES support policies either.
    Keywords: technology deployment,renewable energy sources,support schemes,cost-effectiveness
    JEL: H23 O33 Q42
    Date: 2016
  15. By: Zerrahn, Alexander; Krekel, Christian
    Abstract: This paper investigates the effect of wind turbines on residential well-being in Germany, using panel data from the German Socio-Economic Panel (SOEP) and a unique, novel data set on wind turbines for the time period between 2000 and 2012. Using a Geographical Information System (GIS), it calculates the distance from households to the nearest wind turbines to determine whether an individual is affected by disamenities, e.g. through visual pollution. The depth of our unique, novel data set on wind turbines, which has been collected at the regional level and which includes, besides their exact geographical coordinates, their construction dates, allows estimating the causal effect of wind turbines on residential well-being, using difference-in-difference propensity-score and spatial matching techniques. We demonstrate that the construction of a new wind turbine in a treatment area of 4000 metres around households has a significantly negative impact on life satisfaction. Moreover, this effect is found to be of transitory nature. Contrasting the implicit monetary valuation with the damage through CO2 emissions avoided by wind turbines, wind power turns out to be a favorable technology despite robust evidence for negative externalities.
    JEL: C23 Q51 R20
    Date: 2015
  16. By: Schumacher, Ingmar
    Abstract: The results in this paper show that a policy maker who ignores regional data and instead relies on aggregated integrated assessment models will strongly underestimate the carbon price and thus the required climate policy. Using a stylized theoretical model we show that, under the mild and widely-accepted assumptions of asymmetric climate change impacts and declining marginal utility, an Aggregation Dilemma may arise that dwarfs most other policy-relevant aspects in the climate change cost-benefit analysis. Estimates based on the RICE model Nordhaus (2000) suggest that aggregation leads to around 26% higher total world emissions than those from a regional model. The backstop energy use would be zero in aggregated versions of the model, while it is roughly 1.3% of Gross World Product in the regionally-disaggregated models. Though the policy recommendations from fully aggregated models like the DICE model are always used as a benchmark for policy making, the results here suggest that this should be done with the reservations raised by the Aggregation Dilemma in mind.
    JEL: Q54 Q58 Q50
    Date: 2015
  17. By: Steinkraus, Arne
    Abstract: This paper studies the effect of carbon leakage on the environmental Kuznets curve (EKC) using satellite nighttime light data. I show that nighttime lighting is an important variable for estimating carbon dioxide emissions that is superior to other existing indicators and covers all countries in the world. I find evidence of an inverted-U shaped relationship between light and, thus, greenhouse gas emissions and income, with a turning point at approximately US $50,000. However, the relationship is primarily driven by changes in the structure of international trade, implying strong carbon leakage effects. Consequently, environmental regulations that become operative in only one part of the world may fail without global coordination.
    Keywords: Carbon Leakage,Environmental Kuznets Curve,Nighttime Lighting
    JEL: F18 Q50
    Date: 2016
  18. By: Peters, Jörg; Sievert, Maximiliane; Lenz, Luciane; Munyehirwe, Anicet
    Abstract: This report is part of an evaluation commissioned by the Policy and Operations Evaluation Department (IOB) of the Netherlands Ministry of Foreign Affairs. It belongs to a series of impact evaluations of renewable energy and development programmes supported by the Netherlands, with a focus on the medium and long-term effects of these programmes on end-users or final beneficiaries. A characteristic of these studies is the use of mixed methods, that is, quantitative research techniques in combination with qualitative techniques. The purpose of the impact evaluations is to account for assistance provided and to draw lessons from the findings for improvement of policy and policy implementation. The results of these impact evaluations will serve as inputs to a policy evaluation of the "Promoting Renewable Energy Programme" (PREP) to be concluded in 2014.
    Date: 2015
  19. By: Simmler, Martin; Haan, Peter
    Abstract: In 2012, the subsidy for electricity produced by wind turbines - introduced with the Renewable Energy Act (REA) in Germany 2000 - amounts to almost 14 billion Euros or roughly 100% of the corporate income tax revenue. The central aim of this subsidy is to foster investment into renewable energy sources by providing long run financial security. In this analysis, we study the incidence of this subsidy on land prices. Our empirical design exploits variation over time in the return of wind turbines due to the introduction of the REA and relates it to changes in transaction prices for agricultural land for 250 non-urban counties between 1997 and 2012. We employ an instrumental variable estimator to ensure unbiased coefficients despite the endogeneity of the plants' location decision. We find that 11% of the subsidy paid to wind turbine investors is capitalized into land prices. Accounting for investor's costs, the share raises to 24% of investor's profits. The results are robust for a wide range of specifications.
    JEL: H23 H22 Q42
    Date: 2015
  20. By: Wiesmeth, Hans; Weber, Shlomo
    Abstract: "Awareness" for a public good is necessary to stimulate voluntary contributions towards the provision of this commodity. This applies in particular to the global reduction of greenhouse gases and its relevance for mitigation of climate change. The success of the new climate agreement to be concluded in Paris in 2015 thus depends on sufficient "awareness" for climate change, but also on the extent of diversity among the participating countries. This papers develops a formal model with diverse countries mitigating climate change. Diversity thereby refers to awareness for global warming, population, GDP per capita and costs of renewable energy sources. The Nash mechanism coordinates individual decisions, and the effect of diversity on equilibrium contributions can be investigated in various ways. The second part of the paper provides rankings of signatories of the Kyoto Protocol regarding awareness for climate change. In these empirical investigations, estimates for awareness are derived from observable data. Some results on the "Environmental Kuznets Curve" and some final remarks conclude the paper.
    JEL: H41 Q54 H87
    Date: 2015
  21. By: Pethig, Rüdiger; Eichner, Thomas
    Abstract: In a multi-country model with interconnected markets for fossil fuel and deposits some countries fight climate damage by purchasing and preserving fossil fuel deposits, which would be exploited otherwise. We analyze the effectiveness of such a deposit policy, when that policy stands alone or is combined with fuel cap policies. If the stand-alone deposit policy is non-strategic, it implements the first-best allocation; otherwise, it distorts the allocation in the coalition s favor. Following Harstad (2012), we then analyze the policy mix consisting of the deposit policy, a fuel-supply-cap policy and a fuel-demand-cap policy. The fuel-supply-cap policy turns out to be redundant and so is the fuel-demand-cap policy, if it is nonstrategic. Whenever the coalition acts strategically on one of the markets or on both, it distorts the allocation in its own favor and is better off than in the efficient price-taking scenario which contrasts the efficiency result of Harstad.
    JEL: F55 H23 Q54
    Date: 2015
  22. By: Vance, Colin; Frondel, Manuel
    Abstract: Using household travel diary data collected in Germany between 1997 and 2012, we employ an instrumental variable (IV) approach that enables us to consistently estimate both fuel price and efficiency elasticities at once. The aim is to gauge the relative impacts of fuel economy standards and fuel taxes on distance traveled. We find that the magnitude of the elasticity estimates are statistically indistinguishable: higher fuel prices reduce driving by the same degree as higher fuel efficiency increases driving. This finding indicates an offsetting effect of fuel efficiency standards on the effectiveness of fuel taxation, calling into question the efficacy of the European Commission's current efforts to legislate CO2 emissions limits for new cars given prevailing high fuel taxes. The ecological implications of this legislation for emissions reductions is explored through a simple numerical simulation using the econometric estimates.
    JEL: D12 C36 Q41
    Date: 2015
  23. By: Wagner, Oliver; Berlo, Kurt
    Abstract: After a wave of privatizations in the end of the 1990s, the electrical power supply of many municipalities in Germany has been returned into public hands. Many municipalities discover chances and possibilities for local action, which arise with remunicipalisation. The local policy-makers realize that remunicipalisation offers the opportunity of implementing an independent energy policy at local level which is critical in creating a transformation to a sustainable energy system based on energy efficiency and renewable energies. The municipal ownership allows a strong governance towards more political influence in the local energy market. In addition, there is a clear opinion of the population: 81 % of citizens surveyed say they trust their local municipal utility, compared to only 26 % who say they trust corporations (VKU-Survey, 2010). In summary, there are many good reasons for local politicians to establish their own municipal utilities. The payback for municipalities is tangible when the local utility focuses on reliably providing affordable energy rather than on increasing its returns. The new municipal power utilities stimulate competition and contribute to the renewal / restructuring of the traditional energy market. The founding of 72 municipal utilities since 2005 leads us to ask for the reasons. The study reviews the German trend towards municipal ownership of local utilities, assessing their performance based on 10 targets related to the energy transition, climate protection, and the local economic impact: 1. Achieving environmental objectives and organization of the local "Energiewende". 2. Higher local added value. 3. Harnessing tax regulations for improving municipal services. 4. Improving the income situation of the city. 5. Democratization of supply and stronger orientation towards the common good (public value). 6. Creating and protecting good jobs. 7. Acting in social responsibility in energy supply. 8. Expansion of eco-efficient energy services. 9. Harnessing customer relations and public image. 10. Materialising synergies with other sectors. Based on expert opinions, the study finds out that the likelihood of these targets being reached is "high to very high". The aim of this article is to provide a compact and basic understanding of the possible reasons for the phenomenon of remunicipalisation.
    Date: 2015
  24. By: David Comerford (Division of Economics, University of Stirling); Ian Lange (Division of Economics and Business, Colorado School of Mines); Mirko Moro (Division of Economics, University of Stirling)
    Keywords: energy efficiency, bunching, labels, thresholds
    JEL: Q48 L15 Q58 H23
    Date: 2016–01
  25. By: Schopf, Mark; Voß, Achim
    Abstract: Consider a lobby group of exhaustible-resource suppliers, which bargains with the government over the extraction of an exhaustible resource and over contribution payments. We characterize the path of contributions and the resulting extraction path, taking into account how the environmental damage of resource usage and the demand elasticity change optimal extraction. A high marginal environmental flow damage reduces the government s preferred speed of extraction, a low price elasticity of resource demand reduces that of the lobby. Moreover, the lobby s preferred total extraction exceeds that of the government whenever environmental stock damages exist. Contribution payments are usually positive and declining, along with the conflict of interest between the government and the lobby. In some cases, they may be increasing for while, possibly from a negative level, but they eventually decline and vanish in the long run.
    JEL: D72 Q38 Q58
    Date: 2015
  26. By: Naegele, Helene
    Abstract: International offset certificates have systematically traded at a lower price than European Union Allowances (EUAs), although they are perfect substitutes. Firms therefore had a strong incentive to use the cheaper certificates up to the maximum quantity fixed by the regulator. This study highlights that a considerable number of firms did not use their offset credit entitlement and by doing so seemingly forwent profits, which supports the idea that significant transaction costs exist in carbon permit trade. While most of the literature on emission trading evaluates the efficiency of regulation in a frictionless world, firms in reality face managerial costs of compliance with regulation. This study examines the use of international offset credits within the EU Emissions Trading System (EU ETS) for carbon dioxide, in order to assess the relevance of such managerial and information-related transaction costs. This study further establishes a model of firm decision under fixed entry costs and estimates the size of transaction costs rationalizing firm behavior using both standard parametric and semi-parametric binary quantile regression methods. These costs appear to be sizable and make active optimization of compliance unprofitable for many small emitters. It appears that a large portion of these transaction costs stems from participation in the EU ETS in general, rather than additional participation in the offset trade.
    JEL: Q58 H23 D23
    Date: 2015
  27. By: Burghaus, Kerstin; Dao, Thang Nguyen; Edenhofer, Ottmar
    Abstract: We consider, in a general equilibrium overlapping generations (OLG) model with environmental externalities, a contract between successive generations, whereby agents of the current working-age generation privately invest a share of their labor income in pollution mitigation in exchange for a transfer to their old-age capital income paid by the next generation. We analyze under which conditions there exist contracts which are Pareto-improving compared to an equilibrium without contract and characterize the set of Pareto-improving mitigation-transfer combinations, the Pareto frontier and the Nash bargaining solution. Further, we prove that steady state emissions under a Pareto-improving contract are lower than without a contract. In the second part of the paper, we study a non-cooperative setting, taking into account that credibly committing to a contract might not be possible. We show that there exists mitigation transfer schemes which are both Pareto-improving and give no generation an incentive to deviate from the provisions of the contract.
    JEL: Q52 D70 C72
    Date: 2015
  28. By: Soretz, Susanne; Ott, Ingrid
    Abstract: We analyse the interdependence between green attitude and equilibrium development of environmental quality in an endogenous growth model. Individuals take only part of their impact on pollution into account, hence there is a negative externality of capital accumulation on environmental quality. Increasing wealth or increasing pollution enhance green attitude and reduce the externality, because individuals care more about the environment if their income is higher or if pollution is more obvious. The time path of pollution as well as the evolution of equilibrium growth are shown to depend crucially on the determinants of green attitude. If green attitude improves with increasing wealth, e.g. as a consequence of an increase in environmental education, the economy converges to the sustainable growth path and in the long run, also the optimal level of environmental quality is realized. In contrast, pollution remains at a suboptimally high level if individual attitude towards the environment is influenced by pollution itself, that means, if individuals care the more about environmental issues the worse environmental quality.
    JEL: O11 O44 Q56
    Date: 2015
  29. By: Bialek, Sylwia; Weichenrieder, Alfons J.
    Abstract: This study examines how environmental stringency affects the location decision of foreign direct investments. We analyze a fi rm-level data set on German outbound FDI and innovate on previous studies by controlling for the mode of entry and applying a mixed-logit analysis. The results show that Greenfi eld projects react to environmental regulation in a strongly different way than M&As. We fi nd robust support for pollution haven hypothesis for polluting Green fields. M&A investments in low polluting industries, on the other hand, seem to be attracted by stricter environmental regulation. We introduce a novel instrumental variable for environmental stringency and apply it to verify the results.
    JEL: Q50 F20 Q58
    Date: 2015
  30. By: Günther, Michael; Hellmann, Tim
    Abstract: Increasing concerns about climate change have given rise to the formation of International Environmental Agreements (IEAs) as a possible solution to limit global pollution eff ects. In this paper, we study the stability of IEAs in a repeated game framework where we restrict to strategies which are simple and invariant to renegotiation. Our main contribution to the literature on IEAs is that we allow for heterogeneous patterns of pollution such that additional to a global eff ect of pollution there are local pollution e ffects represented by a network structure. We show that stable IEAs exist if the network structure is balanced. Too large asymmetries in the degree of local spillovers may however lead to non-existence of stable structures.
    JEL: C72 D85 Q50
    Date: 2015
  31. By: Mendelevitch, Roman; Richter, Phillip; Jotzo, Frank
    Abstract: In this paper we investigate the introduction of an export tax on steam coal levied by an individual country (Australia), or a group of major exporting countries. The policy motivation would be twofold: generating tax revenues against the background of improved terms-of-trade, while CO2 emissions are reduced. We construct and numerically apply a two-level game consisting of an optimal policy problem at the upper level, and an equilibrium model of the international steam coal market (based on COALMOD-World) at the lower level. We find that a unilaterally introduced Australian export tax on steam coal has little impact on global emissions and may be welfare reducing. On the contrary, a tax jointly levied by a "climate coalition" of major coal exporters may well leave these better of while signifcantly reducing global CO2 emissions from steam coal by up to 200 Mt CO2e per year. Comparable production-based tax scenarios consistently yield higher tax revenues but may be hard to implement against the opposition of disproportionally afected local stakeholders depending on low domestic coal prices.
    JEL: F13 Q58 C61
    Date: 2015
  32. By: Glanemann, Nicole; Belaia, Mariia; Funke, Michael
    Abstract: The risk of catastrophes is one of the greatest threats by climate change. Yet, the most common Integrated Assessment Models produce the counterintuitive result that a higher concern about climate change risks does not lead to stronger near-term abatement efforts. This paper probes whether this result still holds in a more refined DICE model that features Epstein-Zin utility, uncertainty about climate sensitivity and is fully coupled with a dynamic representation of the Atlantic thermohaline circulation. This modelling allows posing the question of whether aversion to this specific tipping point risk has a significant effect on the climate policy efforts. The simulations, however, show that near-term policy is insensitive to this climate change risk. For the more likely climate sensitivity values, a collapse of the circulation would occur in the more distant future, which allows acting after learning. For the more unlikely and higher climate sensitivity values, the collapse is not prevented as climate policy costs would be too high.
    JEL: Q54 C61 C63
    Date: 2015
  33. By: Cullmann, Astrid; Nieswand, Maria
    Abstract: In this paper we analyze the investment behavior of electricity distribution companies. First, we test the hypothesis if the implementation of an incentive-based regulatory scheme with revenue caps impacts the firms' investment decisions in general. Second, we test if the specific regulatory design to determine the revenue caps impacts the firms' investment behavior. The analysis is based on a unique and detailed firm level data for German electricity distribution companies over the 2006-2012 period. Controlling for a large amount of firm specific heterogeneity and ownership, we show that the investment rate is higher after the implementation of incentive regulation in 2009. Furthermore, we find that the design with its specific institutional constraints for determining the revenue-caps, influence the investment decisions of the firms. Especially in the base year, when the rate base is determined for the following regulatory period, investments increase. The analysis demonstrates that the whole design of incentive regulation must be taken into account for a sound assessment of investment behavior in electricity distribution.
    JEL: L94 L51 D22
    Date: 2015
  34. By: Holmberg, Pär (Research Institute of Industrial Economics (IFN)); Wolak, Frank A. (Program on Energy and Sustainable Development (PESD) and Department of Economics, Stanford University)
    Abstract: We analyse how the market design influences the bidding behaviour in multi-unit auctions, such as wholesale electricity markets. It is shown that competition improves for increased market transparency and we identify circumstances where the auctioneer prefers uniform to discriminatory pricing. We note that political risks could significantly worsen competition in hydro-dominated markets. It would be beneficial for such markets to have clearly defined contingency plans for extreme market situations.
    Keywords: cost uncertainty; asymmetric information; uniform-price auction; discriminatory pricing; Bertrand game; market transparency; wholesale electricity market; treasury auction; Bayesian Nash equilibria
    JEL: C72 D43 D44 L13 L94
    Date: 2015–12–18
  35. By: Baumeister, Christiane; Kilian, Lutz
    Abstract: It has been forty years since the oil crisis of 1973/74. This crisis has been one of the defining economic events of the 1970s and has shaped how many economists think about oil price shocks. In recent years, a large literature on the economic determinants of oil price fluctuations has emerged. Drawing on this literature, we first provide an overview of the causes of all major oil price fluctuations between 1973 and 2014. We then discuss why oil price fluctuations remain difficult to predict, despite economists' improved understanding of oil markets. Unexpected oil price fluctuations are commonly referred to as oil price shocks. We document that, in practice, consumers, policymakers, financial market participants and economists may have different oil price expectations, and that, what may be surprising to some, need not be equally surprising to others.
    Keywords: oil market,oil price shock,heterogeneous price expectations,OPEC,peak oil,unconventional oil
    JEL: Q43 C53
    Date: 2015
  36. By: Thum, Marcel P.; Konrad, Kai
    Abstract: When politicians negotiate in international climate conventions they may suffer from incomplete information about each other's preferences about reaching an agreement. As is known, this may cause failure to reach an efficient cooperative agreement. We study the role of the clean development mechanism (CDM) for the likelihood of such failure. The CDM has been introduced in the context of the Kyoto Protocol to allow countries to make efficiency enhancing use of cross-country low- cost mitigation opportunities. We use a simple bargaining framework to uncover why this mechanism may reduce the likelihood for reaching an efficient cooperative climate agreemen
    JEL: Q54 Q58 H41
    Date: 2015
  37. By: Eichner, Thomas; Pethig, Rüdiger
    Abstract: This paper studies the formation of self-enforcing global environmental agreements in a world economy with international trade and two groups of countries that differ with respect to fuel demand and environmental damage. It investigates whether the signatories threat to embargo (potential) free riders secures all countries participation in the agreement. Resorting to numerical analysis, we find that an embargo may be unnecessary, ineffective or even counterproductive - depending on the degree of asymmetry and other parameters. On some subset of parameters, the embargo stabilizes the otherwise unstable global agreement, but the threat of embargo is not credible. However, in some of these cases credibility can be restored by suitable intra-coalition transfers.
    JEL: F18 Q37 Q58
    Date: 2015
  38. By: Klößner, Stefan; Pfeifer, Gregor
    Abstract: We examine the impact of European car scrappage programs on new vehicle registrations and respective CO2 emissions. To construct proper counterfactuals, we develop MSCM-T, the multivariate synthetic control method using time series of economic predictors. Applying MSCM-T to a rich data set covering two outcomes of interest, ten economic predictors, and 23 countries, we first analyze Germany which implemented the largest program. We find that the German subsidy had an immensely positive effect of 1.3 million program-induced new car registrations. Disentangling this effect reveals that almost one million purchases were not pulled forward from future periods, worth more than three times the program's 5 billion budget. However, stabilizing the car market came at the cost of 2.4 million tons of additional CO2 emissions. For other European countries with comparable car retirement schemes, we show further positive results regarding vehicle registrations. Finally, we demonstrate that all non-scrapping countries could have considerably backed their vehicle markets by adopting scrappage subsidies.
    JEL: D04 D12 H23
    Date: 2015
  39. By: Bensch, Gunther; Grimm, Michael; Langbein, Jörg; Peters, Jörg
    Abstract: This impact report is part of an evaluation commissioned by the Policy and Operations Evaluation Department (IOB) of the Netherlands Ministry of Foreign Affairs. It belongs to a series of impact evaluations of renewable energy and development programmes supported by the Netherlands, with a focus on the medium and long term effects of these programmes on end-users or final beneficiaries. A characteristic of these studies is the use of quantitative research techniques, in combination with qualitative techniques, to get insight in the magnitude of effects. The purpose of the impact evaluations is to account for assistance provided and to draw lessons from the findings for improvement of policy and policy implementation. The results of these impact evaluations served as inputs to a policy evaluation of the "Promoting Renewable Energy Programme" (PREP) concluded in 2014.
    Date: 2015
  40. By: Scholtens, Bert; Veldhuis, Rineke
    Abstract: Abstract We investigate how the development of the financial industry connects with renewable energy. We analyze 198 countries over three decades in various model settings (fixed effects, random effects, dynamic panel). We use a wide range of proxies for the development of the financial industry and establish that in general this development has a positive impact on renewable energy capacity. Especially, the relative size of the commercial banking industry as well as of private credit and the size of the financial industry play a crucial role in advancing renewable energy investments.
    JEL: C33 E22 G10
    Date: 2015
  41. By: Bonde, Magnus (Department of Real Estate and Construction Management, Royal Institute of Technology); Song, Han-Suck (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: It is often argued that great energy savings can be accomplished by upgrading existing energy-inefficient building stock. However, even if these investments are profitable at the time, it might be even better to postpone these measures as even better investments can be realized later on. Such behavior can be analyzed by applying the real options analysis (ROA) framework. In addition, the retrofit scenario differs from the new development case, as the former is affected by the value of the already existing building, since this value must be “surrendered” in order to acquire revenues from the retrofitted building. The main purpose of this paper is to evaluate green refurbishments using the real options methodology. In doing so, we are able to accurately estimate the “embedded” real option values of deferring green refurbishments, thereby adding to current explanations of the energy-efficiency gap. This paper also discusses policy suggestions to reduce the value of waiting and thus trigger these refurbishments today.
    Keywords: Refurbishment; Real options; Green building; Timing option; Real estate
    JEL: M21
    Date: 2016–02–01
  42. By: Marcotte, Dave E. (American University)
    Abstract: Poor air quality has been shown to harm the health and development of children. Research on these relationships has focused almost exclusively on the effects of human-made pollutants, and has not fully distinguished between contemporaneous and long-run effects. This paper contributes on both of these fronts. Merging data on plant pollen, human-made pollutants and ECLS-K data on academic skills, I study the relationship between poor air quality in the first years of life on school-readiness, and the effects of ambient air quality on achievement of young children. I find evidence that exposure in early childhood affects school readiness at the start of kindergarten, and that the effects of air quality on the growth of cognitive skills in math and reading continue into elementary school.
    Keywords: pollution, education, cognitive skills
    JEL: I1 I2 Q53
    Date: 2016–01
  43. By: Ziegler, Andreas
    Abstract: Based on unique data from representative computer-based surveys among more than 3400 citizens, this paper empirically examines the determinants of climate change beliefs, climate policy support, and climate protection activities in three countries which are key players in international climate policy, namely the USA, Germany (as largest country in the European Union), and China. Our econometric analysis focuses on the effect of ideological and political identification and especially considers the interrelationship between a right-wing or a left-wing orientation and environmental values. Our estimation results imply that environmental awareness is in all three countries the major factor for attitudes and activities towards climate change. In Germany, citizens with a conservative, but not social or green orientation significantly less often support climate policy and particularly have a significantly lower willingness to pay a price premium for climate-friendly products, whereas ideological differences are negligible for climate change beliefs. In contrast, a right-wing orientation has significantly negative effects on all attitudes and activities towards climate change in the USA. Furthermore, an increasing environmental awareness decreases ideological differences in the support of climate policy in Germany and the USA and especially in general climate change beliefs and beliefs in anthropogenic climate change in the USA. Our estimation results suggest alternative strategies such as specific communication campaigns in order to reduce the climate change skepticism in conservative and right-wing circles in the USA and to increase the support of climate policy among such population groups.
    JEL: Q54 Q58 A13
    Date: 2015
  44. By: Hener, Timo; Rainer, Helmut; Bauernschuster, Stefan
    Abstract: There is widespread concern that major cities and their inhabitants are highly vulnerable to transit strikes. Governments in many countries have addressed this concern by limiting the right of transit workers to strike. Whether or not this can be justified depends, in turn, on whether strikes by transit workers implicate the safety or health of urban populations and impose disproportionate costs on non-involved third parties. We use time series and cross-sectional variation in powerful registry data in order to quantify the effects of public transit strikes in five population-relevant domains: traffic volumes, travel times, accident risk, pollution emissions, and health. The context of our study are the five largest cities in Germany, allowing us to exploit 71 public transit strikes over the period from 2002 to 2011. Generalized difference-in-differences models suggest that strikes lead to a significant increase in car traffic, congestion, accident risk and air pollution. There is also evidence for a substantial increase in accident-related injuries and pollution-related health problems. The third party congestion costs of public transit strikes exceed the private costs of struck employers by at least a factor of four.
    JEL: J00 J58 K31
    Date: 2015
  45. By: Frondel, Manuel; Andor, Mark; Vance, Colin
    Abstract: The overestimation of willingness-to-pay (WTP) in hypothetical responses is a well-known finding in the literature. Various techniques have been proposed to remove or, at least, reduce this bias. Using about 30,000 responses on WTP for a variety of power mixes from a panel of 6,500 German households, this article simultaneously explores the effects of two common ex-ante approaches -- cheap talk and consequential script -- and the ex-post certainty approach to calibrating hypothetical WTP responses. Based on a switching regression model that accounts for the potential endogeneity of respondent certainty and controlling for unobserved heterogeneity using a fixed-effects estimator, we find evidence for a lower WTP among those respondents who classify themselves as definitely certain about their answers. While neither cheap talk nor the consequential-script corrective reduce WTP estimates, receiving either of these scripts increases the probability that respondents indicate definite certainty about their WTP bids.
    JEL: C01 C24 Q41
    Date: 2015
  46. By: Heshmati, Almas (Jönköping University, Sogang University)
    Abstract: Circular economy (CE) is a sustainable development strategy that is being proposed to tackle urgent problems of environmental degradation and resource scarcity. CE's 3R principles are to reduce, reuse and recycle materials. The principles account for a circular system where all materials are recycled, all energy is derived from renewables; activities support and rebuild the ecosystem and support human health and a healthy society and resources are used to generate value. This study is a review of the rapidly growing literature on CE covering its concept and current practices and assessing its implementation. The review also serves as an assessment of the design, implementation and effectiveness of CE related policies. It first presents the concept of CE and compares it with the current linear economy of taking materials, producing goods and disposing waste. It explains why it is imperative to move away from a linear economy towards regenerative sustainable industrial development with a closed loop. The paper then introduces current practices that have been introduced and discusses standards for the assessment of CE's development and performance. The main focus here is on providing a summary of the data analysis of key CE indicators to give a picture of CE practices. Third, based on an analysis of literature, the paper identifies the underlying problems and challenges to CE in an entrepreneurial perspective. Finally, the review provides a conclusion on CE's current development and gives policy suggestions for its future development as part of an entrepreneurial and innovative national level development strategy.
    Keywords: circular economy, environmental policy, national development strategy, sustainable development strategy, entrepreneurial strategy
    JEL: E01 F18 H23 O44 Q50 Q53 Q55 Q58 R11
    Date: 2015–12
  47. By: Gerigk, Joschka; MacKenzie, Ian; Ohndorf, Markus
    Abstract: In this article, we examine the regulation of pollution in open economies when the regulator is influenced by special interest groups. In a setting with free trade, we identify conditions under which a country may unilaterally adopt the stricter regulatory standards of its competitors. In our model, two lobby groups - representing industrial and environmental special interests - influence their government's policy decision. Their lobbying efforts not only depend on the domestic policy, but also on environmental regulation abroad. We find that both market structure and the characteristics of the pollutant are crucial determinants of the political equilibrium: given a local pollutant, the probability of convergence of environmental policies is increasing in the stringency of regulation abroad when product supply is relatively inelastic. This effect is reversed in the case of transboundary pollution. We also extend our framework to cases of imperfect competition.
    JEL: Q50 H73 D72
    Date: 2015
  48. By: Haita-Falah, Corina; Gerber, Anke; Lange, Andreas
    Abstract: Motivated by the recent concerns of the scientists participating in the elaboration of the Intergovernmental Panel on Climate Change assessment reports, we study a principal-agent relationship between a politician and a researcher that captures some stylized facts regarding the involvement of politics into scientific research. The politician contracts with a researcher in order to get some scientific advice about a policy relevant variable. The politician trades off the policy that he would implement in the absence of any reelection concerns with a desire to please voters by choosing a policy that is supported by scientific advice and that turns out to be the ``right'' policy ex post. As a consequence, the politician bribes the researcher to bias his scientific advice towards the ideal policy of the politician. We study the optimal contracts under symmetric and under asymmetric information about the researcher's ability and concern for reputation, as well as the selection of a researcher by the politician. Thereby we identify several conflicts between the interests of the voters and those of the politician.
    JEL: D72 D82 D83
    Date: 2015
  49. By: Borck, Rainald; Tabuchi, Takatoshi
    Abstract: We study the optimal and equilibrium size of cities in a monocentric city model with environmental pollution. Pollution is related to city size through the effect of population on production, commuting, and housing consumption. If pollution is local, we find that equilibrium cities are too large, mirroring standard results in the theory of city systems. When pollution is global and per capita pollution declines with city size, however, equilibrium cities may be too small.
    JEL: R12 Q54 R13
    Date: 2015
  50. By: Stiel, Caroline; Cullmann, Astrid; Nieswand, Maria
    Abstract: This paper examines firm-level productivity for German electricity retailers using a structural production function approach. The sector was subject to fundamental changes in market structure after retail liberalization in 1998. Competition was supposed to increase productivity and reduce retail prices. Despite increased competition, public firms are still accused of being less productive than private firms, although empirical evidence is missing. Based on a theory-driven robust empirical model we test the hypothesis whether ownership has a significant impact on the retailers' productivity. We derive an innovative production function for the retail sector using labour and external services as main inputs. Our econometric model builds on the recently developed control function approach which allows us to correct for the bias which arises when unobserved factors (such as the firm level productivity) are correlated with input choice. We use a proxy function for productivity which relies on deflated expenditure for external services and control for the effect of ownership in the law of motion for productivity. We use a new and unique dataset on German utilities provided by the German Federal Statistical Office which covers the years 2003 to 2012. Empirical results show that firm-level productivity increased during 2004 and 2008 but fell after 2009. We do not find any evidence for ownership having an impact on productivity.
    JEL: D24 C23 L94
    Date: 2015
  51. By: Ingrid Peignier; Minh Hoang Bui; Martin Trépanier
    Date: 2016–01–29

This nep-ene issue is ©2016 by Roger Fouquet. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.