nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒04‒04
forty-five papers chosen by
Roger Fouquet
London School of Economics

  1. The Environmental Cost of Global Fuel Subsidies By Lucas W. Davis
  2. Global Energy Demand in a Warming Climate By Enrica De Cian; Ian Sue Wing
  3. Labels as nudges? An experimental study of car eco-labels By Francesco Bogliacino; Cristiano Codagnone; Giuseppe Alessandro Veltri; Francisco Lupiáñez-Villanueva; George Gaskell; Andriy Ivchenko
  4. Why does real-time information reduce energy consumption? By John Lynam; Kohei Nitta; Tatsuyoshi Saijo; Nori Tarui
  5. Information Management in Smart Grids - Who Should Govern Information Management to Balance Between Coordination and Competition on the Distribution Grid Level? By Marius Buchmann
  6. Distribution Planning and Pricing in View of Increasing Shares of Intermittent, Renewable Energy in Germany and Japan By Christine Brandstätt; Gert Brunekreeft; Ken Furusawa; Toru Hattori
  7. Investments in a Combined Energy Network Model: Substitution between Natural Gas and Electricity? By Jan Abrell; Hannes Weigt
  8. Combining Energy Networks By Jan Abrell; Hannes Weigt
  9. Rare events and risk perception: evidence from Fukushima accident By Renaud Coulomb; Yanos Zylberberg
  10. The Labor Market Consequences of Electricity Adoption: Concrete Evidence from the Great Depression By Miguel Morin; ; ;
  11. Precautionary Storage in Electricity Markets By Durmaz, Tunç
  12. Modelling the Electricity and Natural Gas Sectors for the Future Grid: Developing Co-Optimisation Platforms for Market Redesign By Foster, John; Wagner, Liam; Liebman, Ariel
  13. Modelling financial development and electricity consumption nexus for Ghana By Yeboah Asuamah, Samuel
  14. A generalized exponential time series regression model for electricity prices By Niels Haldrup; Oskar Knapik; Tommaso Proietti
  15. Hedging strategies in energy markets: The case of electricity retailers By Raphaël Homayoun Boroumand; Stéphane Goutte; Simon Porcher; Thomas Porcher
  16. On the importance of the long-term seasonal component in day-ahead electricity price forecasting By Jakub Nowotarski; Rafal Weron
  17. Caribbean Energy; Macro-Related Challenges By Arnold McIntyre; Ahmed El-Ashram; Marcio Ronci; Julien Reynaud; Natasha Xingyuan Che; Ke Wang; Sebastian Acevedo Mejia; Mark Scott Lutz
  18. Household Fuel Use in Developing Countries: Review of Theory and Evidence By Christophe Muller; Huijie Yan
  19. Nord Stream 2. Un gazoduc à contre-courant de la politique énergétique européenne ? By Céline Bayou
  20. Au-delà d'une "guerre des prix" sur le marché européen du gaz : que peuvent faire les fournisseurs traditionnels ? By Sadek Boussena; Catherine Locatelli
  21. Kvantifikace environmentálních a zdravotních dopadů (externích nákladů) z povrchové těžby hnědého uhlí v Severočeské hnědouhelné pánvi v těžebních lokalitách velkolomů Bílina a ČSA a využití vydobytého hnědého uhlí ve spalovacích procesech pro výrobu elektřiny a tepla na území ČR By Ščasný, Milan; Máca, Vojtěch; Melichar, Jan; Rečka, Lukáš
  22. Price and Income Elasticities of Gasoline Demand in Iran: Using Static, ECM, and Dynamic Models in Short, Intermediate, and Long Run By Mohamad Taghvaee, Vahid; Hajiani, Parviz
  23. Une nouvelle stratégie pétrolière de l'Arabie Séoudite ? By Sadek Boussena
  24. Remittances and public finances: Evidence from oil-price shocks By Asatryan, Zareh; Bittschi, Benjamin; Doerrenberg, Philipp
  25. Box-Jenkins modelling and forecasting of Brent crude oil price By Mensah, Emmanuel Kwasi
  26. Cyclical properties of supply-side and demand-side shocks in oil-based commodity markets By Tomas Krehlik; Jozef Barunik
  27. Oil price pass-through along the price chain in the euro area By Castro, César; Jiménez-Rodríguez, Rebeca
  28. Energy Boom and Gloom? Local Effects of Oil and Natural Gas Drilling on Subjective Well-Being By Maguire, Karen; Winters, John V.
  29. A comparison of the roles of privately and state-owned oil companies in developing the Arctic shelf By Kaznacheev, Peter; Bazaleva, Regina
  30. Log-normal creaming and the likelihood of discovering additional giant petroleum fields By Lillestøl, Jostein; Sinding-Larsen, Richard
  31. Winning the Oil Lottery; The Impact of Natural Resource Extraction on Growth By Tiago Cavalcanti; Daniel Da Mata; Frederik G Toscani
  32. An Input-Output Model of the U.S. Economy with Pollution Externality By Nicholas Z. Muller
  33. The behavioural aspect of green technology investments: a general positive model in the context of heterogeneous agents By F. Knobloch; J. -F. Mercure
  34. From Physical to Human Capital Accumulation with Pollution By Takumi Motoyama
  35. An Economic and GHG Analysis of LNG in Hawaii By Makena Coffman; Paul Bernstein; Sherilyn Wee; Clarice Schafer
  36. Trading Off Global Fuel Supply, CO2 Emissions and Sustainable Development By Wagner, Liam; Ross, Ian; Foster, John; Hankamer, Ben
  37. From Primary Resources to Useful Energy: The Pollution Ceiling Efficiency Paradox By Jean-Pierre Amigues; Michel Moreaux
  38. Modeling Uncertainty in Climate Change: A Multi-Model Comparison By Kenneth Gillingham; William Nordhaus; David Anthoff; Valentina Bosetti; Haewon McJeon; Geoffrey Blanford; Peter Christensen; John Reilly; Paul Sztorc
  39. Sufficient Statistics for Imperfect Externality-Correcting Policies By Mark R. Jacobsen; Christopher R. Knittel; James M. Sallee; Arthur A. van Benthem
  40. Climate Policy Must Favour Mitigation Over Adaptation By Ingmar Schumacher
  41. Environmental Kuznets curve and environmental convergence: A unified empirical framework for CO2 emissions. By Roberto Martino; Phu Nguyen-Van
  42. Environment, Energy, and Environmental Productivity of Energy: A Decomposition Analysis in China and the US By Mohamad Taghvaee, Vahid; Hajiani, Parviz
  43. An Analysis of the Relationship between U.S. State Level Carbon Dioxide Emissions and Health Care Expenditure By Nicholas Apergis; Rangan Gupta; Chi Keung Marco Lau; Zinnia Mukherjee
  44. Economic Targets and Loss-Aversion in International Environmental Cooperation By Doruk Iris
  45. Climate Finance at COP21 and After: Lessons Learnt By Etienne Espagne

  1. By: Lucas W. Davis
    Abstract: Despite increasing calls for reform many countries continue to provide subsidies for gasoline and diesel. This paper quantifies the external costs of global fuel subsidies using the latest available data and estimates from the World Bank and International Monetary Fund. Under preferred assumptions about supply and demand elasticities, current subsidies cause $44 billion in external costs annually. This includes $8 billion from carbon dioxide emissions, $7 billion from local pollutants, $12 billion from traffic congestion, and $17 billion from accidents. Government incentives for alternative fuel vehicles are unlikely to cost-effectively reduce these externalities as they do little to address traffic congestion or accidents, and only indirectly address carbon dioxide and local pollutants.
    JEL: H23 Q31 Q41 Q48 Q52 Q53 Q54 Q58 R41
    Date: 2016–03
  2. By: Enrica De Cian (Centro Euro-Mediterraneo sui Cambiamenti Climatici and Fondazione Eni Enrico Mattei); Ian Sue Wing (Dept. of Earth & Environment, Boston University)
    Abstract: This paper combines an econometric analysis of the response of energy demand to temperature and humidity exposure with future scenarios of climate change and socioeconomic development to characterize climate impacts on energy demand at different spatial scales. Globally, future climate change is expected to have a moderate impact on energy demand, in the order of 6-11%, depending on the degree of warming, because of compensating effects across regions, fuels, and sectors. Climate-induced changes in energy demand are disproportionally larger in tropical regions. South America, Asia, and Africa, increase energy demand across all sectors and climate scenarios, while Europe, North America and Oceania exhibit mixed responses, but with consistent reductions in the residential sector. Even so, only Europe and Oceania in the moderate warming scenario experience aggregate reductions in energy use, as commercial electricity use increases significantly. We find that climate change has a regressive impact on energy demand, with the incidence of increased energy demand overwhelmingly falling on low- and middle-income countries, raising the question whether climate change could exacerbate energy poverty.
    Keywords: Panel Data, Climate Change, Adaptation, Energy
    JEL: N5 O13 Q1 Q54
    Date: 2016–03
  3. By: Francesco Bogliacino; Cristiano Codagnone; Giuseppe Alessandro Veltri; Francisco Lupiáñez-Villanueva; George Gaskell; Andriy Ivchenko
    Abstract: This article presents the results of a laboratory experiment and an online multi-country experiment testing the effect of motor vehicle eco-labels on consumers. The laboratory study featured a discrete choice task and questions on comprehension, while the ten countries online experiment included measures of willingness to pay and comprehension. Labels focusing on fuel economy or running costs are better understood, and influence choice about money-related eco-friendly behaviour. We suggest that this effect comes through mental accounting of fuel economy. In the absence of a cost saving frame, we do not find a similar effect of information on CO2 emissions and eco-friendliness. Labels do not perform as well as promotional materials. Being embedded into a setting, which is designed to capture the attention, the latter are more effective. We found also that large and expensive cars tend to be undervalued once fuel economy is highlighted.
    Keywords: eco-label; nudge; willingness to pay; fuel economy; experiments
    JEL: C9 D3 Q56 Q58
    Date: 2016–03–16
  4. By: John Lynam (UHERO, University of Hawai‘i at Manoa); Kohei Nitta (University of Hawai‘i at Manoa, UHERO); Tatsuyoshi Saijo; Nori Tarui (UHERO, University of Hawai‘i at Manoa)
    Abstract: A number of studies have estimated how much energy conservation is achieved by providing households with real-time information on energy use via in-home displays. However, none of these studies tell us why real-time information changes energy-use behavior. We explore the causal mechanisms through which real-time information affects energy consumption by conducting a randomized-control trial with residential households. The experiment disentangles two competing mechanisms: (i) learning about the energy consumption of various activities, the “learning effect”, versus (ii) having a constant reminder of energy use, the “saliency effect”. We have two main results. First, we find a statistically significant treatment effect from receiving real-time information. Second, we find that learning plays a more prominent role than saliency in driving energy conservation. This finding supports the use of energy conservation programs that target consumer knowledge regarding energy use.
    Keywords: energy efficiency; energy conservation; real-time information; experiment
    JEL: D03 D12 Q41 Q48
    Date: 2014–10
  5. By: Marius Buchmann
    Abstract: Smart grids should increase coordination on the distribution grid level and facilitate new market opportunities (I.e. competition on a level playing field). Information management is becoming a new task in the electricity supply chain. It is an enbaler for the development of smart grids. Therefore, the governance of information management should as well efficiently balance between coordination and competition. Within this paper we analyse which role from the energy sector could govern the information management system. We conclude that neither of identified roles within the energy sector governing information management could secure both coordination and competition, at the same time. Therefore, new governance approaches (or new roles) are required.
    Keywords: Smart Grid, Information Management, Governance, Coordination
    JEL: L12 L51 L94
    Date: 2016–03
  6. By: Christine Brandstätt; Gert Brunekreeft; Ken Furusawa; Toru Hattori
    Abstract: In response to the global climate challenge many countries are faced with increasing shares of energy from renewable sources in their power supply. The integration of RES (renewable energy sources) generation however entails technical as well as institutional challenges for power grids. This study relies on recent experiences of German distribution network operators in network planning and network pricing and looks at their transferability to Japan. Distributed generation may cause problems of voltage variation and asset overloading in conventional power grids. Technical solutions for these problems are available and well-known yet require considerable investments. The study presents regulatory incentives for network operators to take efficient means to maintain supply quality. With distributed generation self-supplying customers may contribute too little to network cost and new generators and flexible consumers may cause significant investment by uncoordinated siting and operation. An adequate pricing scheme can serve to sustainably finance the infrastructure while at the same time giving incentives to coordinate network users. This study points out options for network charging in grids with high shares of distributed generation from renewable sources.
    Keywords: Electric Utilities, Regulation, Market Structure
    JEL: L1 L43 L51 L94
    Date: 2015–03
  7. By: Jan Abrell (ETH Zürich, Switzerland); Hannes Weigt (University of Basel, Switzerland)
    Abstract: Natural gas plays an important role in the future development of electricity markets, as it is the least emission-intensive fossil generation option and additionally provides the needed plant operating flexibility to deal with intermittent renewable generation. As both the electricity and the natural gas market rely on networks, congestion in one market may lead to changes in the other. In addition, investment in one market impacts investment in the other market to the extent that these investments may even become substitutes for each another. The objective of this paper is to develop a dynamic model representation of coupled natural gas and electricity network markets to test the potential interaction with respect to investments. The model is tested under simplified conditions as well as for a stylized European network setting. The results indicate that there is sufficient potential for investment substitution and market interactions that warrant the application of coupled models, especially with regard to simulations of long-term system developments.
    Keywords: Electricity network, Natural gas network, Europe, MCP
    JEL: L94 L95 C63
    Date: 2016–03
  8. By: Jan Abrell (ETH Zürich, Switzerland); Hannes Weigt (University of Basel, Switzerland)
    Abstract: Electricity markets depend on upstream energy markets to supply the fuels needed for generation. Since these markets rely on networks, congestion in one can quickly produce changes in another. In this paper we develop a combined partial equilibrium market model which includes the interactions of natural gas and electricity networks. We apply the model to a stylized representation of Europe’s electricity and natural gas markets to illustrate the upstream and downstream feedback effects which are not obvious on first sight. We find that both congestion and loop-flow effects in electricity markets impact prices and quantities in markets located far from the initial cause of the market changes.
    Keywords: Electricity network, Natural gas network, Europe, MCP
    JEL: L94 L95 C63
    Date: 2016–03
  9. By: Renaud Coulomb; Yanos Zylberberg
    Abstract: We study changes in nuclear-risk perception following the Fukushima nuclear accident of March 2011. Using an exhaustive registry of individual housing transactions in England and Wales between 2007 and 2014, we implement a difference-in-difference strategy and compare housing prices in at-risk areas to areas further away from nuclear sites before and after Fukushima incident. We find a persistent price malus of about 3.5% in response to the Fukushima accident for properties close to nuclear plants. We show evidence that this price malus can be interpreted as a change in nuclear-risk perception. In addition, the price decrease is much larger for high-value properties within neighborhoods, and deprived zones in at-risk areas are more responsive to the accident. We discuss various theoretical channels that could explain these results.
    Date: 2016–03
  10. By: Miguel Morin; ; ;
    Abstract: When the adoption of a new labor-saving technology increases labor productivity, it is an open question whether the economy adjusts in the medium-term by decreasing employment or increasing output. This paper studies the effects of cheaper electricity on the labor market during the Great Depression. The first-stage of the identification strategy uses geography as an instrument for changes in the price of electricity and the second-stage uses labor market outcomes from the concrete industry—a non-traded industry whose location decisions are independent of the instrument. The paper finds that electricity was an important labor-saving technology and caused an increase in capital intensity and labor productivity, as well as a decrease in the labor share of income. The paper also finds that firms adjusted to higher labor productivity by decreasing employment instead of increasing output, which supports the theory of technological unemployment.
    Keywords: electricity, technical change, Great Depression, labor market, employment, labor productivity, labor share of income.
    JEL: J24 N12 N62 O33
    Date: 2015–04–24
  11. By: Durmaz, Tunç (School of Energy and Environment, City University of Hong Kong)
    Abstract: As renewable energy depends on meteorological shocks and is non-controllable, the overall energy production becomes riskier with the rising renewable share. Although this has led to a renewed interest in storage technologies, not much consideration has been given to energy storage due to precautionary motives. In our study, we look at to what extent a convex marginal utility (prudence) and a convex marginal cost (frugality) can spur precautionary energy storage. We set up a simple theoretical model of energy consumption and production with intermittent renewable sources, dispatchable systems, and energy storage. First, we characterize the optimum and demonstrate how prudence and frugality can lead to higher levels of energy storage. By applying our findings to perfectly competitive markets, we further show that prudence and frugality increase the market energy price through higher demand for energy storage and decrease price volatility. Our analysis can have implications for inventory decisions in various other industries where firms face capacity constraints and are exposed to production risks.
    Keywords: Precautionary energy storage; Intermittency; Renewable energy; Fossil fuel energy; Prudence; Frugality; Rational Expectations Equilibrium
    JEL: D24 D41 D81 D84 Q41 Q42
    Date: 2016–02–25
  12. By: Foster, John; Wagner, Liam; Liebman, Ariel
    Abstract: This report provides detail on the modelling and scenario frameworks for the economic analysis of the Future Grid. These frameworks and modelling platforms have been constructed to support the Future Grid Cluster in examining policy and market issues which will affect the electricity and natural gas markets in Australia. Initially we provide an overview of the co-optimisation and expansion of transmission networks and electricity generation for the future grid. In this section we outline not only the key mechanisms and analyses required, but also how we have and will continue to collaborate with the other projects within the Future Grid Cluster. In section 3 we provide an extensive analysis of the electricity market modelling platform PLEXOS. This section will outline, not only the mechanistic components of modelling electricity markets, but also some of the assumptions which are required to examine issues such as generation investment under uncertainty. The following section is a discussion of the natural gas modelling platform ATESHGAH. This model has been in construction for several years prior to the commencement of the Future Grid Cluster and represents a significant shift in gas market modelling methodology for Australia, compared to previous approaches. This model is capable of examining multiple issues associated with policy, market, economic, and physical aspects of gas production, transmission, sale and liquefied natural gas (LNG) export simultaneously. We have used this model to examine how Australia’s eastern gas market could be affected by the commencement of LNG exports from Curtis Island in 2015/16. In the remaining section, we present the scenario modelling framework as an overview and present some initial results for Scenario 1: Set and Forget. These results represent the first set of simulations and should thus be viewed as an initial attempt to undertake the large search space that the four scenarios evaluated in the Future Grid Forum encompass.
    Keywords: Energy Economics, Electricity Markets
    JEL: Q41 Q47 Q48
    Date: 2015–12–01
  13. By: Yeboah Asuamah, Samuel
    Abstract: The paper contributes to the body of knowledge in the area of energy consumption and financial sector development by empirically assessing the long run and short run links and causality between electricity consumption and financial development (proxied by credit to the private sector). The paper is based on quantitative causal study using time series data from 1970-2011. Data were analysed using Autoregressive Distributed Lag Model (ARDL) and Granger Causality Test. There is significant cointegration relationship among the series variables in the model estimated. There is no statistical significant long run and short run relationship between financial development (proxied by credit to the private sector) and electricity consumption. There is bidirectional causality between financial development and electricity consumption. This calls for future studies to contribute to the debate by assessing structural breaks in the series. Policy makers should consider these findings in planning for electricity consumption to avoid unplanned energy shortage which might have adverse effect on the economy.
    Keywords: Financial Development; Capital Stock; Electricity Consumption; Bi-directional Causality; Credit to the Private Sector.
    JEL: O11 O16
    Date: 2016–03–17
  14. By: Niels Haldrup (Aarhus University and CREATES); Oskar Knapik (Aarhus University and CREATES); Tommaso Proietti (University of Rome “Tor Vergata” and Creates)
    Abstract: We consider the issue of modeling and forecasting daily electricity spot prices on the Nord Pool Elspot power market. We propose a method that can handle seasonal and non-seasonal persistence by modelling the price series as a generalized exponential process. As the presence of spikes can distort the estimation of the dynamic structure of the series we consider an iterative estimation strategy which, conditional on a set of parameter estimates, clears the spikes using a data cleaning algorithm, and reestimates the parameters using the cleaned data so as to robustify the estimates. Conditional on the estimated model, the best linear predictor is constructed. Our modeling approach provides good fit within sample and outperforms competing benchmark predictors in terms of forecasting accuracy. We also find that building separate models for each hour of the day and averaging the forecasts is a better strategy than forecasting the daily average directly.
    Keywords: Robust estimation, long-memory, seasonality, electricity spot prices, Nord Pool power market, forecasting, robust Kalman lter, generalized exponential model
    JEL: C1 C5 C53 Q4
    Date: 2016–03–18
  15. By: Raphaël Homayoun Boroumand (ESG Research Lab - ESG Management School, City University London - City University London); Stéphane Goutte (Banque-Finance - LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8, Vincennes-Saint-Denis); Simon Porcher (LSE - Department Mathematics [London] - LSE - London School of Economics); Thomas Porcher (ESG Research Lab - ESG Management School)
    Abstract: As market intermediaries, electricity retailers buy electricity from the wholesale market or self generate for re(sale) on the retail market. Electricity retailers are uncertain about how much electricity their residential customers will use at any time of the day until they actually turn switches on. While demand uncertainty is a common feature of all commodity markets, retailers generally rely on storage to manage demand uncertainty. On electricity markets, retailers are exposed to joint quantity and price risk on an hourly basis given the physical singularity of electricity as a commodity. In the literature on electricity markets, few articles deals on intra-day hedging portfolios to manage joint price and quantity risk whereas electricity markets are hourly markets. The contributions of the article are twofold. First, we define through a VaR and CVaR model optimal portfolios for specific hours (3am, 6am,. .. ,12pm) based on electricity market data from 2001 to 2011 for the French market. We prove that the optimal hedging strategy differs depending on the cluster hour. Secondly, we demonstrate the significantly superior efficiency of intra-day hedging portfolios over daily (therefore weekly and yearly) portfolios. Over a decade (2001-2011), our results
    Keywords: VaR,Intra-day,Retailer,Electricity,Risk,Hedging,Portfolio,CVaR
    Date: 2015
  16. By: Jakub Nowotarski; Rafal Weron
    Abstract: In day-ahead electricity price forecasting (EPF) the daily and weekly seasonalities are always taken into account, but the long-term seasonal component (LTSC) is believed to add unnecessary complexity to the already parameter-rich models and is generally ignored. Conducting an extensive empirical study involving state-of-the-art time series models we show that (i) decomposing a series of electricity prices into a LTSC and a stochastic component, (ii) modeling them independently and (iii) combining their forecasts can bring - contrary to a common belief - an accuracy gain compared to an approach in which a given time series model is calibrated to the prices themselves.
    Keywords: Electricity spot price; Forecasting; Day-ahead market; Long-term seasonal component
    JEL: C14 C22 C51 C53 Q47
    Date: 2016–03–15
  17. By: Arnold McIntyre; Ahmed El-Ashram; Marcio Ronci; Julien Reynaud; Natasha Xingyuan Che; Ke Wang; Sebastian Acevedo Mejia; Mark Scott Lutz
    Abstract: High energy costs contribute to dampening Caribbean competitiveness and potential growth. This paper overviews power sector challenges and takes stock of national and regional strategies to address them. It presents recommendations to move the energy agenda forward based on analyses of macro-aspects of energy reform. These include: i) quantitative assessment of the impact of energy costs on growth and competitiveness; ii) evaluation of gains from implementing announced renewable energy and energy efficiency targets; and iii) analysis of the impact of energy investments on debt sustainability. The paper argues for a bigger role for the private sector in energy reform and discusses prerequisites for good public-private partnerships.
    Date: 2016–03–08
  18. By: Christophe Muller (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université); Huijie Yan (LEA, Faculty of Arts, Humanities, Languages, and Social Sciences, Aix-Marseille University)
    Abstract: Because of recent concerns about the negative externalities of traditional fuel use on the environment and health, the issue of the household fuel transition in developing countries, from dirty fuels towards clean fuels, has received growing research attention. This paper provides an up-to-date survey of the economic literature on household fuel use in these countries. First, we present the conceptual and theoretical frameworks. Then, we discuss the empirical results that show how a wide range of factors drive the household fuel transition. Finally, we suggest priorities for policy initiatives and highlight areas of future research.
    Keywords: household decisions,fuel transition,energy consumption
    Date: 2016–03
  19. By: Céline Bayou (CREE EA 4513 - Centre de recherches Europes-Eurasie - Inalco - Institut National des Langues et Civilisations Orientales)
    Abstract: En septembre 2015, cinq entreprises européennes de poids ont signé un accord avec Gazprom en vue de doubler le Nord Stream, qui achemine du gaz russe jusqu’en Allemagne par voie maritime. Présenté comme un simple accord commercial qui contribuera à accroître la sécurité énergétique des pays de l’Union européenne, ce projet soulève pourtant nombre de questions concernant les politiques communes et la solidarité européenne. Il révèle des incohérences, des stratégies d’évitement législatif et des doubles discours qui laissent peu d’espoir quant à la mise en œuvre de l’Union de l’énergie que la Commission européenne appelle pourtant de ses vœux.
    Keywords: Russie, gaz, Gazprom, Allemagne, gazoduc, Nord Strem, mer Baltique, Union européenne, Politique énergétique
    Date: 2016–03–09
  20. By: Sadek Boussena (UGA - Université Grenoble Alpes); Catherine Locatelli (GAEL - Laboratoire d'Economie Appliquée de Grenoble - UGA - Université Grenoble Alpes - CNRS - Centre National de la Recherche Scientifique - Institut national de la recherche agronomique (INRA) - Grenoble INP - Institut Polytechnique de Grenoble)
    Abstract: Au-delà des prix bas du gaz naturel sur le marché européen, les fournisseurs traditionnels de l'UE peuvent-ils initier une stratégie en instrumentalisant, en leur faveur, l'incertitude qui pèse sur les prix futurs du gaz ? Face à l'accroissement de la concurrence sur le marché gazier européen, cette option pourrait être une alternative à une simple « guerre des prix » nuisible pour tous. Avec plus de 30 % des livraisons de l'UE, Gazprom peut avoir un rôle prédominant. Souhaite-t-il préserver sa part de marché et contrer l'arrivée de GNL américain ? Est-il condamné à adopter une position passive en tant que fournisseur résiduel ou va-t-il gérer positivement cette situation en utilisant les incertitudes sur les prix ? Peut-il jouer ce rôle comme leader de facto d'un groupe de gros fournisseurs ?
    Keywords: marché européen du gaz , Gazprom
    Date: 2016–03–07
  21. By: Ščasný, Milan; Máca, Vojtěch; Melichar, Jan; Rečka, Lukáš
    Abstract: This study quantifies environmental and health impacts attributable to revoking the territorial ecological restrictions on open-pit mining of brown coal at Bílina and ČSA mines in the Northern Bohemia mining area, following four options as proposed in 2015 by the Czech government. These impacts are attributable to brown coal mining and burning brown coal in combustion processes to generate electricity and heat and are relevant to the area of the Czech Republic only. Environmental and health impacts are monetarized and mean the external cost from mining and usage of brown coal. Dose response function and Impact pathway analysis are applied to quantify the external costs. External cost of not revoking the territorial ecological restrictions (option 1) declines from 1,200 mil. CZK per annum to zero in 2038, when the mining of brown coal is terminated. For the whole period 2015-2050 the external cost reaches 14 billion CZK cumulatively. Revoking the territorial ecological restrictions at Bílina mine (option 2) increases the external cost by 200 – 500 mil. CZK per annum and by 10 billion CZK cumulatively for the whole period 2015-2050. Revoking the territorial ecological restrictions at Bílina mine and partly at ČSA mine (option 3) differs from option 2 only during 2024-2033 due to partial revoking the territorial ecological restrictions at ČSA mine, when the external cost increases by additional 700 mil. CZK per annum compared to option 1. The cumulative external cost is 14 billion CZK higher in option 3 than in option 1. The complete revoking the territorial ecological restrictions (option 4) leads to cumulative external cost higher by 25 billion CZK compared to option 1. With respect to international pollution transfer and global effects on climate change, the scope of the analysis has crucial role for evaluation of impacts of the national regulation. The underlying scenario of this analysis assumes the impacts on Czech inhabitants only which account for 8-10% of the impacts on the whole EU population. Impacts on energy mix are analysed by partial equilibrium model TIMES.
    Keywords: external cost; health benefits; ExternE; impact pathway analysis; coal mining; burning coal; electricity generation; TIMES model
    JEL: D62 I31 Q47 Q51
    Date: 2015–08–31
  22. By: Mohamad Taghvaee, Vahid; Hajiani, Parviz
    Abstract: Price and income elasticities of gasoline demand show whether the price policy, pursued by the Iranian government, can decrease the high gasoline consumption sufficiently or not. Since the two oil price shocks in 1970 and 1973, interest in the study of oil products demand has increased considerably, especially on gasoline. High gasoline consumption is a serious crisis in Iran, posing economically, politically, and environmentally threats. In this study, the elasticities are estimated over three intervals, short run, intermediate run, and long run in Iran during 1976-2010, by putting the estimates of Error Correction Model (ECM), static model, and dynamic model in an increasing order, respectively. The short run, intermediate run, and long run price elasticities are −0.1538, −0.1618, and −0.3612 and the corresponding income elasticities are 0.2273 - 0.3581, 0.4636, and 0.7284, respectively. Not only do these elasticities imply that the gasoline demand is price and income inelastic but also the adjustment velocity, estimated by ECM, is a low point at −0.1942. Based on the estimations, the gasoline demand responds to the changes of price and income slightly and slowly. Therefore, policy makers should develop more strategies to reduce gasoline consumption, for example, substitute goods, public transportation systems, and environmental standards settings
    Keywords: Gasoline Demand, Price Elasticity, Income Elasticity, Static Model, ECM, Dynamic Model
    JEL: O13 Q3 Q31 Q41
    Date: 2014–06–26
  23. By: Sadek Boussena (UGA - Université Grenoble Alpes)
    Abstract: La récente série de changements d’attitude, parfois radicaux, de l’Arabie Séoudite dans plusieurs domaines d’importance - pétrole, géopolitique, militaire, politique intérieure - soulève bien des questions. S’agissant de la politique pétrolière, on est en droit de s’étonner d’une action dont le résultat est, pour l’instant, de faire baisser drastiquement ses recettes d’exportations.
    Keywords: politique pétrolière , Arabie Saoudite
    Date: 2016–03–14
  24. By: Asatryan, Zareh; Bittschi, Benjamin; Doerrenberg, Philipp
    Abstract: We study the effect of inflowing remittances - a major source of capital for many countries - on tax-revenues and tax-policy. Instrumenting remittances with changes in the oil-price interacted with a country's distance to oil-producing countries, we find that remittances have a large positive effect on VAT revenues but no effect on income-tax revenues. This suggests that remittances often escape the income tax but can be taxed via consumption. We further show that tax policy is responsive to shocks in incoming remittances: remittances make the adoption of VAT-systems more likely, and they lead to lower VAT-rates and higher income-tax rates.
    Keywords: Remittances,Tax revenue,Tax policy,Value added tax,Personal income tax,Migration,Development
    JEL: F24 H20 O23
    Date: 2016
  25. By: Mensah, Emmanuel Kwasi
    Abstract: The volatility in the crude oil price in the international market has risen much interest into the investigation of its price swing. In this project, we examine the dynamics of the monthly Brent oil price for the last two decades using the Box Jenkins ARIMA techniques and show that such model is not able to capture the volatility inherent in the crude oil price for an accurate forecast. We first divided the data into two. The first seventeen years used for the model construction and the last three years validating forecasting accuracy. The data is first differenced for stationarity and autocorrelation and residuals techniques used to select different ARIMA models for analysis. The performance of different models were compared and the result shows that a non-parsimonious ARIMA (1,1,1) model was the best forecasting model amidst the volatilities in the oil price.
    Keywords: Brent crude oil, ARIMA, stationarity, forecasting
    JEL: C22 C51 C52 E37
    Date: 2015–02
  26. By: Tomas Krehlik; Jozef Barunik
    Abstract: Oil markets influence profoundly world economies through determination of prices of energy and transports. Using novel methodology devised in frequency domain, we study the information transmission mechanisms in oil-based commodity markets. Taking crude oil as a supply-side benchmark and heating oil and gasoline as demand-side benchmarks, we document new stylized facts about cyclical properties of transmission mechanism. Our first key finding is that shocks with shorter than one week response are increasingly important to the transmission mechanism over studied period. Second, demand-side shocks are becoming increasingly important in creating the short-run connectedness. Third, the supply-side shocks resonating in both long-run and short-run are important sources of connectedness.
    Date: 2016–03
  27. By: Castro, César; Jiménez-Rodríguez, Rebeca
    Abstract: This paper analyzes how oil price shocks are transmitted downstream to producer and consumer prices in the euro area at the highest disaggregate level. In doing so, we first generate an appropriate database that identifies each industrial production sector with its corresponding price of consumer goods for the euro area. We next estimate a constrained vector autoregressive model. Our findings show a statistically significant increase in producer prices after an oil price shock for branches with high oil consumptions, although this statistical pass-through is only partial. However, there is no evidence of a significant oil price pass-through to consumer prices for most branches, which suggests the adaptability of European producers from the most branches to higher oil price pressures without transmitting them to consumers (exceptions: mining, chemical and metal).
    Keywords: Oil price; Industrial prices; Consumer prices; Disaggregation
    JEL: E31 Q4
    Date: 2016–03–22
  28. By: Maguire, Karen (Oklahoma State University); Winters, John V. (Oklahoma State University)
    Abstract: The United States experienced a considerable increase in oil and natural gas extraction in recent years due to technological advancements including horizontal drilling and hydraulic fracturing. Increased energy development likely creates both benefits and costs, but the net effects for local residents are not well understood. This paper examines effects of conventional and horizontal oil and natural gas drilling in Texas on subjective assessments of life-satisfaction and bad mental health days for nearby residents. Horizontal drilling has statistically significant deleterious effects on well-being, but the effects are driven by the Dallas-Fort Worth (DFW) metropolitan area, an area with both very high levels of horizontal drilling and a large urban population.
    Keywords: energy, drilling, subjective well-being, mental health, natural gas, environment
    JEL: I10 Q40
    Date: 2016–03
  29. By: Kaznacheev, Peter (Russian Presidential Academy of National Economy and Public Administration, School of public policy, Centre For Resource Economics); Bazaleva, Regina (Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The Arctic shelf is the richest region of the world by overall volumes of oil and gas resources. However, countries of the Arctic basin have progressed unequally in developing them. In this article, the authors suggest that the diverging result of these countries in many ways depends on the structure of their oil and gas sectors. This article provides a comparative analysis of privately and state-owned companies’ participation in Arctic projects for those countries that are at the stage of commercial production on the Arctic shelf, namely the US, Norway and Russia. An analysis of oil companies’ performance indicators allows us to conclude that private companies are more efficient at developing the region than state-owned ones.
    Keywords: Arctic, shelf, oil production, gas production, state company, private company, economic efficiency
    Date: 2016–01
  30. By: Lillestøl, Jostein (Dept. of Business and Management Science, Norwegian School of Economics); Sinding-Larsen, Richard (Department of Geology and Mineral Resources Engineering)
    Abstract: This paper considers sampling proportional to expected size from a partly unknown distribution. The applied context is the exploration for undiscovered resources, like oil accumulations in different deposits, where the most promising deposits are likely to be drilled first, based on some geologic size indicators (“creaming”). A Log-normal size distribution turns out to have nice analytical features in this context, and fits available data reasonably well. The theoretical and practical consequences for the accumulation of knowledge on the underlying distribution based on this scheme, named Log-normal creaming, are explored in some detail. The theory is applied on the prediction of remaining oil accumulations to be found on the Norwegian Continental Shelf.
    Keywords: Log-normal distribution; sampling proportional to size; resource prediction
    JEL: C00 C10 C13
    Date: 2016–01–27
  31. By: Tiago Cavalcanti; Daniel Da Mata; Frederik G Toscani
    Abstract: This paper provides evidence of the causal impact of oil discoveries on development. Novel data on the drilling of 20,000 oil wells in Brazil allows us to exploit a quasi-experiment: Municipalities where oil was discovered constitute the treatment group, while municipalities with drilling but no discovery are the control group. The results show that oil discoveries significantly increase per capita GDP and urbanization. We find positive spillovers to non-oil sectors, specifically, an increase in services GDP which stems from higher output per worker. The results are consistent with greater local demand for non-tradable services driven by highly paid oil workers.
    Date: 2016–03–14
  32. By: Nicholas Z. Muller
    Abstract: Input-output (I-O) analysis represents the flows of goods and services within the market. Environmentally-extended I-O (EEIO) models include flows of both pollution and consumption of resources and energy. The present paper proposes a conceptual structure for EEIO accounts that builds on the work of Leontief (1970) and Hendrickson, Lave, and Matthews (2006), and then estimates empirical EEIO accounts for the U.S. economy in 1999 and 2011. The empirical accounts provide the first complete characterization of the air pollution damage flows throughout the U.S. economy. Pollution intensity fell from 7 percent of value-added in 1999 to 2 percent in 2011. The utility sector exhibits the highest ratio of pollution damage from value-added production to supply chain damage; this ratio was 22 in 1999 and 54 in 2011. About one-half of all damage comes from intermediate demand, one-third from household consumption, and about 7 percent each from fixed investment and government use of commodities. In both 1999 and 2011, damages would have been about 7 percent higher had all imports been made domestically. The damages from exported goods nearly doubled from 5 percent to almost 10 percent of total pollution damage.
    JEL: C67 Q53 Q56
    Date: 2016–03
  33. By: F. Knobloch; J. -F. Mercure
    Abstract: Studies report that firms do not invest in cost-effective green technologies. While economic barriers can explain parts of the gap, behavioural aspects cause further under-valuation. This could be partly due to systematic deviations of decision-making agents' perceptions from normative benchmarks, and partly due to their diversity. This paper combines available behavioural knowledge into a simple model of technology adoption. Firms are modelled as heterogeneous agents with different behavioural responses. To quantify the gap, the model simulates their investment decisions from different theoretical perspectives. While relevant parameters are uncertain at the micro-level, using distributed agent perspectives provides a realistic representation of the macro adoption rate. The model is calibrated using audit data for proposed investments in energy efficient electric motors. The inclusion of behavioural factors reduces significantly expected adoption rates: from 81% using a normative optimisation perspective, down to 20% using a behavioural perspective. The effectiveness of various policies is tested.
    Date: 2016–03
  34. By: Takumi Motoyama (Graduate School of Economics, Osaka University)
    Abstract: This study examines the process of economic development in an overlapping generations model where higher physical capital involves pollution and deteriorates the productivity of education. In this setting, households may not invest into education and multiple steady states of the physical/human capital ratio can arise, leading long-run production with low initial endowment (physical capital) to be higher than that with high initial endowment. This occurs because, owing to the low productivity of education caused by pollution, only physical capital accumulation occurs with high initial endowment, while physical and human capital accumulation occur with low initial endowment. This result is consistent with the resource curse. We also show that higher abatement technology can solve the resource curse problem since it helps households redirect physical capital accumulation toward human capital accumulation.
    Keywords: Semiconductor Human capital, Pollution, Resource curse
    JEL: I15 O13 Q52
    Date: 2016–03
  35. By: Makena Coffman (UHERO, University of Hawai‘i at Manoa); Paul Bernstein (University of Hawai‘i at Manoa, UHERO); Sherilyn Wee (UHERO, University of Hawai‘i at Manoa); Clarice Schafer (UHERO, University of Hawai‘i at Manoa)
    Abstract: Hawaii currently meets the majority of its electricity needs through costly oil-fired generation causing rates to be nearly four times the national average (EIA, 2013a). The “shale gas revolution” has led to rapidly declining natural gas prices within the continental U.S. The emergence of a natural gas market that is de-linked from oil prices has renewed Hawaii’s interest in natural gas imports. Potentially lower natural gas prices as well as the view that it will help to reduce greenhouse gas (GHG) emissions and increase energy supply security through domestic sourcing are major reasons why the State and key stakeholders are deliberating over importing large amounts of natural gas in liquefied form (liquefied natural gas or LNG). This study uses detailed models of Hawaii’s electric sector and overall economy to estimate the impacts of Hawaii importing LNG for use in the electric sector.
    Date: 2014–10
  36. By: Wagner, Liam; Ross, Ian; Foster, John; Hankamer, Ben
    Abstract: The United Nations Conference on Climate Change (Paris 2015) reached an international agreement to keep the rise in global average temperature ‘well below 2°C’ and to ‘aim to limit the increase to 1.5°C’. These reductions will have to be made in the face of rising global energy demand. Here a thoroughly validated dynamic econometric model (Eq 1) is used to forecast global energy demand growth (International Energy Agency and BP), which is driven by an increase of the global population (UN), energy use per person and real GDP (World Bank and Maddison). Even relatively conservative assumptions put a severe upward pressure on forecast global energy demand and highlight three areas of concern. First, is the potential for an exponential increase of fossil fuel consumption, if renewable energy systems are not rapidly scaled up. Second, implementation of internationally mandated CO2 emission controls are forecast to place serious constraints on fossil fuel use from ~2030 onward, raising energy security implications. Third is the challenge of maintaining the international ‘pro-growth’ strategy being used to meet poverty alleviation targets, while reducing CO2 emissions. Our findings place global economists and environmentalists on the same side as they indicate that the scale up of CO2 neutral renewable energy systems is not only important to protect against climate change, but to enhance global energy security by reducing our dependence of fossil fuels and to provide a sustainable basis for economic development and poverty alleviation. Very hard choices will have to be made to achieve ‘sustainable development’ goals.
    Keywords: Energy Economics, Environmental Economics, Development Economics, Climate Change, Carbon Emissions, Coal, Natural Gas, Oil, Wind, Solar, Economic History, Energy Policy
    JEL: E17 Q40 Q41 Q42 Q43 Q47 Q48 Q54 Q56 Q57
    Date: 2016–03–09
  37. By: Jean-Pierre Amigues (Toulouse School of Economics(INRA, IDEI and LERNA)); Michel Moreaux (Toulouse School of Economics (IDEI, IUF and LERNA))
    Abstract: We study an economy producing energy services from a polluting fossil fuel and a carbon free renewable resource under a constraint on the admissible atmospheric carbon concentration, equivalently under a constraint on the admissible temperature. The transformation rates of natural primary resources energy into useful energy are costly endogenous variables. Choosing higher efficiency rates requires to bring into operation more sophisticated ones, that is more costly ones. We show that, independently of technical progress, along a perfect foresight equilibrium path which is Pareto optimal, the transformation rate of any exploited resource should increase though out time, excepted within the period during which the carbon constraint is binding, what we call the 'ceiling paradox'.
    Keywords: energy efficiency, carbon pollution, non-renewable resources, renewable resources
    JEL: Q00 Q32 Q43 Q54
    Date: 2016–03
  38. By: Kenneth Gillingham (Yale University, New Haven, CT, USA); William Nordhaus (Yale University, New Haven, CT, USA); David Anthoff (University of California, Berkeley, USA); Valentina Bosetti (Bocconi University, Milan, Italy); Haewon McJeon (PNNL, College Park, Maryland, USA); Geoffrey Blanford (EPRI, USA); Peter Christensen (Aarhus University, Denmark); John Reilly (MIT, Cambridge, MA, USA); Paul Sztorc (Yale University, New Haven, USA)
    Abstract: The economics of climate change involves a vast array of uncertainties, complicating both the analysis and development of climate policy. This study presents the results of the first comprehensive study of uncertainty in climate change using multiple integrated assessment models. The study looks at model and parametric uncertainties for population, total factor productivity, and climate sensitivity. It estimates the pdfs of key output variables, including CO2 concentrations, temperature, damages, and the social cost of carbon (SCC). One key finding is that parametric uncertainty is more important than uncertainty in model structure. Our resulting pdfs also provide insights on tail events.
    Keywords: Climate Change, Integrated Assessment Models
    JEL: Q54
    Date: 2016–03
  39. By: Mark R. Jacobsen; Christopher R. Knittel; James M. Sallee; Arthur A. van Benthem
    Abstract: Pigouvian taxes can fully correct for market failures due to externalities, but actual policies are commonly forced to deviate from the Pigouvian ideal due to administrative or political constraints. This paper derives sufficient statistics, which require a minimum of market information, that quantify the efficiency costs of such constraints on policy design. We demonstrate that, under certain intuitive conditions, standard output from a regression of true externalities on policy variables, including the R2 and the sum of squared residuals, have immediate welfare interpretations—they are sufficient statistics that compare alternative policies. We utilize our approach in three diverse empirical applications: random mismeasurement in externalities, imperfect spatial policy differentiation, and heterogeneity in the longevity of energy-consuming durable goods. Regarding the latter, we use our method and a novel data set and find that policies that regulate vehicle fuel-economy, but ignore the differences in average longevity across types of automobiles, recover only about one-quarter to one-third of the welfare gains achievable by a policy that also takes product longevity into account. In contrast, our other two empirical applications suggest that policy imperfections have only small welfare costs.
    JEL: H2 L5 L9 R4
    Date: 2016–03
  40. By: Ingmar Schumacher
    Abstract: In climate change policy, adaptation tends to be viewed as being as important as mitigation. In this article we present a simple yet gen- eral argument for which mitigation must be preferred to adaptation. The argument rests on the observation that mitigation is a public good while adaptation is a private one. This implies that the more one disag- gregates the units in a social welfare function, i.e. the more one teases out the public good nature of mitigation, the lower is average income and thus less money (per region, country or individual) is available for adaptation and mitigation. We show that, while this reduces incen- tives to invest in the private good adaptation, it increases incentives to invest in the public good mitigation since even small contributions of everyone can have signi cant impacts at the large. Conclusively, private adaptation thus must be viewed as a signi cant loss to global welfare. When taking this result to the data we nd that a representa- tive policy maker who relies on world-aggregated data would invest in both adaptation and mitigation, just as the previous literature recom- mends. However, a representative policy maker who relies on country- level data, or data at further levels of disaggregation, would optimally only invest in mitigation.
    Keywords: climate change, mitigation, adaptation.
    JEL: Q58 Q54
    Date: 2016–03–17
  41. By: Roberto Martino; Phu Nguyen-Van
    Abstract: This paper provides a unified framework to investigate simultaneously environmental convergence and the environmental Kuznets curve hypothesis, which were usually separately investigated in existing literature. We propose an application on CO2 emissions data consisting of 106 countries observed over the period 1970-2010. We adopt an instrumental semiparametric panel data model and we compare the estimates with standard parametric methods. There is no evidence supporting the environmental Kuznets hypothesis, even for the OECD countries, while a convergence process takes place, even though it is not associated with a reduction in CO2 emissions. Results are robust across specifications.
    Keywords: CO2 emissions; environmental Kuznets curve; instrumental variable; semiparametric model; panel data.
    JEL: C23 Q50
    Date: 2016
  42. By: Mohamad Taghvaee, Vahid; Hajiani, Parviz
    Abstract: The global warming, if not global burning, is a dire warning about environmental pollution dangers to everyone, living on the only one Earth. This study aims to measure relative contributors to the environmental quality changes during 2002-2011 using Logarithmic Mean Divisia Index in China and the US. Since these countries are the biggest polluters in the world, the decomposition technique is used to cut their wide environmental issues into the tiny bits of problems, being easy to cope with. Moreover, we employed Environmental Performance Index (EPI) to evolve the concept of Environmental Productivity of Energy (EPE). The results suggest that economic growth and income equality are environmentallyfriendly while energy consumption is environmentally-unfriendly; and the Environmental Productivity of Energy (EPE) and technology progress are environmentally-moody (with various effects on environment). Consequently, the policy makers are advised to develop those economic sectors which are independent of pollutant energies; to replace the black energies by the green ones; and to invest on the research about the products whose demand is price inelastic.
    Keywords: Environment, Energy, Productivity, Decomposition
    JEL: Q5
    Date: 2015
  43. By: Nicholas Apergis (Department of Banking and Financial Management, University of Piraeus, Greece); Rangan Gupta (Department of Economics, University of Pretoria); Chi Keung Marco Lau (Newcastle Business School, Northumbria University, UK); Zinnia Mukherjee (Department of Economics, Simmons College, USA)
    Abstract: This paper is the first to provide an empirical analysis of the short run and long run effects of carbon dioxide emissions on health care spending across U.S. states. Accounting for the possibility of non-linearity in the data of the individual variables as well as in the relationship amongst the variables, the analysis estimated various statistical models to show that CO2 emissions increased health care expenditures. Using quantile regressions, the analysis displayed that the effect of CO2 emissions was stronger at the upper-end of the conditional distribution of health care expenditures. The results indicate the effect of CO2 emissions on health care was relatively stronger for states that spend higher amounts in health care expenditures. A key policy message that stems out of the empirical findings is that the health benefits associated with policies implemented to reduce CO2 emissions can more than pay for the costs of implementing these policies.
    Keywords: health care expenditure, carbon dioxide emissions, panel cointegration, panel quantile regression
    JEL: I18 C31 C33
    Date: 2016–03
  44. By: Doruk Iris (Department of Economics, Sogang University, Seoul)
    Abstract: In the standard emission problem, each country¡¯s ruling party decides on an optimal level of emissions by analyzing the cost and benefit to the country. However, such policy decisions are often influenced by political parties¡¯ incentives to be elected. Voters tend to give higher priority to economic issues than they do to environmental ones. As a result, political parties have additional incentives to reach a critical economic benefit level, at a cost of higher emission level, in order to satisfy voters¡¯ expectations in economic issues. Therefore, this study explores the implications of political parties being averse to insufficient economic performance relative to a critical economic target level on sustaining an international environmental agreement on emission levels. In doing so, we allow countries to have asymmetric concerns about economic targets, as well as asymmetric technology levels. We find that stronger concerns about economic targets deter the most cooperative emission levels countries could jointly sustain. Furthermore, technological asymmetry could either deepen or offset this impact. These results suggest that efforts on achieving substantial international environmental agreements should be supported at the citizen level to eliminate the adverse effects.
    Keywords: Emission Problem, Economic Targets, Loss-Aversion, International Environmental Agreements, Repeated Game.
    Date: 2016–02
  45. By: Etienne Espagne
    Abstract: Finance has emerged in the last few years in and outside the Conference of the Parties (COP) process as a key ingredient of climate policy design. It also appears to be a key sector for structural reform in order to align it with the new low-carbon horizon. This policy brief draws lessons from a discussion platform launched jointly by CEPII and France Stratégie, which welcomed more than thirty contributions on climate finance issues from various experts and citizens in the four months leading to COP21. Both these contributions and the final text adopted by the Parties indicate that the financial question will remain essential in the near future in order to consolidate and nurture the Paris Agreement. In this brief, three directions for future debates are analyzed. First, the equity question remains open, through the financing schemes to guarantee a minimum of $100 billion in annual transfers to developing countries in the name of the principle of “common but differentiated responsibilities”. The question of an increasing ambition to implement the “Intended Nationally Determined Contributions” through specific financial instruments is also discussed. Finally, the necessary long-term objective of a net decarbonization of the world economy invites us to look for more structural reforms in the financial sector.
    Keywords: climate change;carbon prices;COP21
    JEL: Q54 Q58
    Date: 2016–02

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.