nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒04‒09
35 papers chosen by
Roger Fouquet
London School of Economics

  1. Renewable energy targets in the context of the EU ETS: Whom do they benefit exactly? By Landis, Florian; Heindl, Peter
  2. Evaluation of Strategy of Power Generation Business under Large-Scale Integration of Renewable Energy By Gert Brunekreeft; Marius Buchmann; Toru Hattori; Roland Meyer
  3. Assessing energy security in a lowcarbon context: the case of electricity in the UK. By Emily Cox
  4. Dynamic Relationships among CO2 Emissions, Energy Consumption, Economic Growth, and Economic Complexity in France By Can, Muhlis; Gozgor, Giray
  5. Energy, Environment, and Economy Interactions in Iran with Cointegrated and ECM Simultaneous Model By Mohamad Taghvaee, Vahid; Seifi Aloo, Alireza; Khodaparast Shirazi, Jalil
  6. Environmental Policy and Technological Innovation in Shipbuilding By James Corbett; Nick Johnstone; Karin Strodel; Laurent Daniel
  7. The Carbon Footprint of European Households and Income Distribution By Mark Sommer; Kurt Kratena
  8. Bridging the Industrial Energy Efficiency Gap: Assessing the Evidence from the Italian White Certificate Scheme By Jan Stede
  9. Effectiveness, earmarking and labeling: testing the acceptability of carbon taxes with survey data By Andrea Baranzini; Stefano Carattini
  10. Air Pollution Causes Violent Crime By Anthony Heyes; Soodeh Saberian
  11. The response of industrial production to the price of oil: new evidence for Thailand By Jiranyakul, Komain
  12. Carbon emissions from electricity: The influence of the North Atlantic Oscillation By Curtis, John; Lynch, Muireann Á.; Zubiate, Laura
  13. Auction-Based Allocation of Shared Electricity Storage Resources through Physical Storage Rights By Tom Brijs; Daniel Huppmann; Sauleh Siddiqui; Ronnie Belmans
  14. L'Europe de l'énergie : de la concurrence à la solidarité By Frédéric Marty;
  15. Price vs. Risk – the Effect of Wind Generation on Modern Electricity Systems By Lynch, Muireann Á.; Curtis, John
  16. Do not incentivize eco-friendly behavior - Go for a competition to go green! By Christoph Bühren; Maria Daskalakis
  17. Finding the Right Yardstick: Regulation under Heterogeneous Environments By Bjørndal, Endre; Bjørndal, Mette; Cullmann, Astrid; Nieswand, Maria
  18. Beyond carbon pricing: the role of banking and monetary policy in financing the transition to a low-carbon economy By Emanuele Campiglio
  19. Has the Restructuring of EU Electricity Markets Reduced Industrial Electricity Prices? By Hyland, Marie
  20. Irish and British Electricity Prices: What Recent History Implies for Future Prices By Deane, Paul; FitzGerald, John; Malaguzzi Valeri, Laura; Tuohy, Aidan; Walsh, Darragh
  21. On the optimum timing of the global carbon-transition under conditions of extreme weather-related damages: further green paradoxical results By Zon, Adriaan van
  22. Environmental pollution as engine of industrialization By Angelo Antoci; Marcello Galeotti; Serena Sordi
  23. Gasoline Price Wars: Spatial Dependence Awakens By Eleftheriou, Konstantinos; Polemis, Michael
  24. Shutting Down the Thermohaline Circulation By Richard S.J. Tol; David Anthoff; Francisco Estrada
  25. Betting and Belief: Prediction Markets and Attribution of Climate Change By John J. Nay; Martin Van der Linden; Jonathan M. Gilligan
  26. On the reactions of sectoral equity returns to oil price in France: Implications for portfolio allocation By Bouoiyour, Jamal; Selmi, Refk; Miftah, Amal
  27. Survival to Adulthood and the Growth Drag of Pollution By Andreas Schaefer
  28. Towards modelling of innovation systems: An integrated TIS-MLP approach for wind turbines By Walz, Rainer; Köhler, Jonathan Hugh; Lerch, Christian
  29. Is there a Fairer Way to Finance Energy Subsidies? By Farrell, Niall; Lyons, Seán
  30. La discutible curva de Kuznets By Fander Falconi; Rafael Burbano; Pedro Cango
  31. Climate policy confidence indicator: final report to CCCEP By Will McDowall; Dimitri Zenghelis; Paul Drummond
  32. Central and East European diversification under new gas market conditions By Csaba Weiner
  33. Policy instruments for the Green Climate Fund By Kris Bachus; Kristine Van Herck; Lize Van Dyck
  34. Endogenous Growth, Green Innovation and GDP Deceleration in a World with Polluting Production Inputs By Kerstin Burghaus; Peter Funk
  35. Does speculation in the oil market drive investor herding in net exporting nations? By Mehmet Balcilar; Riza Demirer; Talat Ulussever

  1. By: Landis, Florian; Heindl, Peter
    Abstract: We study how European climate and energy policy targets affect different member states and households of different income quintiles within the member states. We find that renewable energy targets in power generation, by reducing EU ETS permit prices, may make net permit exporters worse off and net permit importers better off. This effect appears to dominate the effciency cost of increasing the share of energy provided by renewable energy sources in the countries that adopt such targets. While an increase in prices for energy commodities, which is entailed by the policies in question, affects households in low income quintiles the most, recycling revenues from climate policy allows governments to compensate them for the losses. If renewable targets reduce the revenues from ets permit auctions, member states with large allocations of auctionable permits will lose some of the ability to do so.
    Keywords: distributional effects,EU climate policy,renewable energy target
    JEL: H23 Q52 Q54
    Date: 2016
  2. By: Gert Brunekreeft; Marius Buchmann; Toru Hattori; Roland Meyer
    Abstract: The German energy transition massively alters the market structure of electricity supply and forces incumbent electric utilities to rethink their business strategies. We analyze three main developments that undermine the former market dominance of the “Big 4” incumbents in Germany. First, nuclear phase-out reduces their market shares and creates financial risk of nuclear waste decommissioning. Second, the large-scale integration of renewables fosters market entry from third parties and intensifies competition. Third, a possible coal-phase out in combination may have positive effects on market revenues but tends to increase regulatory risk. In total, incumbents face “disruptive Challenges” and need to find new value-creating products and services beyond sole energy supply. Promising focus areas are renewable energies, the distribution business, and smart, customer-oriented solutions.
    Keywords: Electric Utilities, Market Structure, Firm Strategy
    JEL: L94 L11
    Date: 2016–03
  3. By: Emily Cox (SPRU (Science Policy Research), University of Sussex)
    Abstract: As part of a growing body of research into potential ways of achieving a secure transition to a low-carbon energy system, this paper assesses the future security of the UK electricity system in a low-carbon context. A new mixed-method set of indicators for assessing security of both supply and demand has been developed and applied to a set of three transition pathways for the UK electricity system, all of which seek to reduce UK carbon emissions by 80% by 2050. This paper uses the results to highlight some of the key risks and trade-offs which may emerge under different routes to a low-carbon electricity transition. In particular, the results indicate that a major risk may be experienced by a lack of flexible, responsive supply capacity in low-carbon electricity pathways. A trade-off is also identified between ‘affordability’ and ‘environmental sustainability’ objectives. The paper finds that energy security is often conceptualised as the avoidance of causes of insecurity (such as insecure fuel imports), but that an equally important aspect of security lies in maximising responses to insecurity, for example by increasing the flexibility and responsiveness of both supply and demand.
    Keywords: energy security; low-carbon transition; electricity systems
    Date: 2016–07
  4. By: Can, Muhlis; Gozgor, Giray
    Abstract: Environmental degradation is most often brought to the agenda by arousing the attention of scholars, and there has been an increase in the studies on this issue. This paper re-estimates the environmental Kuznets curve in France over the period of 1964–2011. To this end, the unit root test with one structural break and a cointegration analysis with multiple endogenous structural breaks are considered. The impacts of the energy consumption and the economic complexity on CO2 emissions are also included in dynamic empirical models. First, it is found that the environmental Kuznets curve hypothesis is valid in France in both the short and the long run. Second, the positive impact of energy consumption on CO2 emissions is also observed in the long run. Third, it is observed that a higher economic complexity suppresses CO2 emissions in the long run. The evidence suggests important environmental policy implications to suppress CO2 emissions in France.
    Keywords: environmental Kuznets curve; energy consumption; economic complexity; time series modeling; structural breaks; French economy
    JEL: C32 O13 Q55 Q56
    Date: 2016–03–30
  5. By: Mohamad Taghvaee, Vahid; Seifi Aloo, Alireza; Khodaparast Shirazi, Jalil
    Abstract: Nobody on the planet is going to be untouched by the impacts of climate change. This study aims to arrange the various socioeconomic elasticities of environmental pollution in order of priority, depending on the length of time period, to establish the most effective policy. We employed a simultaneous equations system to find out the various socioeconomic elasticities in the long run and short run in Iran during 1974-2012. Based on the results, per capita CO2 emissions, GDP, energy consumption show the strongest interactions (relationships and elasticities) in the equations system as a whole in the long run. Moreover, it is the trade openness, labour force, financial development, and urbanization which show the most decisive effects in the short run. So the effectiveness of the system variables depends on the time period. Trade openness, labour force, and financial development play the most leading role in the short run, notwithstanding their limited role in the long run. However, energy consumption elasticity of CO2 emissions and urbanization elasticity of energy consumption are among the largest elasticities both in short run and long run. Therefore, energy consumption, economic growth and urbanization should be reduced and financial sector should be grown to decrease the environmental pollution. Moreover, economic growth is an effective factor for the long run; and trade openness and financial development are effective for the short run but urbanization and energy consumption are influential for both the long run and short run policies.
    Keywords: Energy Consumption; Environmental Pollution; Economic Growth
    JEL: Q4 Q5
    Date: 2016
  6. By: James Corbett; Nick Johnstone; Karin Strodel; Laurent Daniel
    Abstract: This paper examines the relationship between environmental policy and “green” innovation in shipbuilding. The primary motivating question of this work is whether there is evidence of: i) technology push from innovation that enables environmental policy initiatives; and/or, ii) policy pull that induces innovation leading to “green” ships. This paper focuses on four environmental categories of technological innovation in the shipbuilding industry, encompassing oil spill recovery, emissions control, climate change mitigation and ballast water treatment. The analysis draws upon documents filed at the International Maritime Organization (IMO) to proxy for policy measures, and uses patent data of the Worldwide Statistical Patent Database, maintained by the European Patent Office (EPO), to account for innovation. Our results show a similar trend between patent activity and IMO document submissions over the years 1998 to 2012 for the two environmental categories, climate change mitigation and emissions control. The key contribution of this work are to provide more insights into environmental policy in shipbuilding and its role in innovation activity, as well as to develop a rich dataset focused on IMO policies aimed at encouraging improved environmental performance by ships.
    Date: 2016–03–25
  7. By: Mark Sommer; Kurt Kratena
    Abstract: This paper calculates the CO2e (CO2 equivalents) footprint of private consumption in the EU27 by five groups of household income, using a fully fledged macroeconomic input-output model covering 59 industries and five groups of household income for the EU27. Due to macroeconomic feedback mechanisms, this methodology not only takes into account intermediate demand induced by the demand of a household group, but also: (i) private consumption induced in the other household groups, (ii) impacts on other endogenous final demand components, and (iii) negative feedback effects due to output price effects of household demand. Direct household emissions from household energy consumption are taken into account in a non-linear specification. Emissions embodied in imports are calculated using the results of a static MRIO (Multi-Regional Input-Output) model. The footprint is calculated separately for the consumption vector of each of the five income groups. The simulation results yield an income elasticity of direct and indirect emissions at each income level that takes all macroeconomic feedbacks of consumption into account and differs from the ceteris paribus emission elasticity in the literature. The results further reveal that a small structural ‘Kuznet effect’ exists.
    Keywords: Carbon footprint, CGE modeling, income distribution
    JEL: C67 Q52 Q54
    Date: 2016–03
  8. By: Jan Stede
    Abstract: The Italian white certificate scheme is the main national policy instrument to incentivise energy efficiency of the industrial sector. The mechanism sets binding energy-saving targets on electricity and gas distributors with at least 50,000 clients and includes a voluntary opt-in model for participation from other parties. This paper investigates and assesses the elements of the scheme that help overcome several barriers to deliver industrial energy efficiency. Results from a survey conducted among leading experts indicate that the Italian system provides a strong financial incentive to energy efficiency investments, covering a significant share of investment costs and thus reducing payback time. Moreover, the scheme fosters the development of energy service companies (ESCOs), which are key to developing, installing and arranging finance for projects on the ground. In conjunction with other policies, the mechanism also raises awareness of energy efficiency investment opportunities, thus helping overcome the market failure of insufficient information. Core challenges remain, including tackling regulatory uncertainty and improving access to finance.
    Keywords: White certificates, energy efficiency obligations, financial incentives, policy evaluation, ESCOs, industrial energy savings, market barriers
    JEL: D22 D82 L14 L97 Q48
    Date: 2016
  9. By: Andrea Baranzini; Stefano Carattini
    Abstract: This paper analyzes the drivers of carbon taxes acceptability with survey data and a randomized labeling treatment. Based on a sample of more than 300 individuals, it assesses the effect on acceptability of specific policy designs and individuals’ perceptions of carbon taxes advantages and disadvantages. We find that the lack of perception of primary and ancillary benefits is one of the main barriers to the acceptability of carbon taxes. In addition, policy design matters for acceptability and in particular earmarking fiscal revenues for environmental purposes can lead to larger support. We also find an effect of labeling, comparing the wording “climate contribution” with “carbon tax”. We argue that proper policy design coupled with effective communication on the effects of carbon taxes may lead to a substantial improvement in acceptability.
    Keywords: climate policy; carbon tax; CO2 emissions; political economy
    JEL: D72 H23 Q48 Q52 Q58
    Date: 2016–02–24
  10. By: Anthony Heyes (Department of Economics, University of Ottawa); Soodeh Saberian (PhD student, Department of Economics, University of Ottawa)
    Abstract: Scientific evidence is that ozone exposure induces aggression, irritability, impulsivity and loss-of-control in humans, mice, monkeys and other animals. Consistent with this we use data from Los Angeles to generate the first evidence causally linking day-to-day variations in air quality to violent crime. The effect is substantial. Using IV methods with wind direction as instrument our preferred specification points to a 17% increase in assaults for a 10 ppb increase in daily fine particulate pollution. We also identify very small positive impacts of carbon monoxide (CO). The results satisfy a wide set of robustness checks. Cost-benefit analyses that fail to account for these effects will substantially under-estimate the case for air quality regulation.
    Keywords: Valuation of air quality, Non-health impacts of pollution, crime
    Date: 2015
  11. By: Jiranyakul, Komain
    Abstract: This paper examines the oil price-industrial production nexus in Thailand by using multivariate cointegration test. In addition, Granger causality is also used to examine the impact of oil price uncertainty on industrial production growth. The main focus of this paper is on one sector of the economy, i.e., manufacturing sector. Monthly data from 1993 to 2015 are utilized. Empirical results reveal that there is a stable long-run relationship between industrial production and real oil price along with other variables. Industrial production adjusts rapidly to shocks to lending rate, price level and oil price. Furthermore, there exists long-run causality running from lend rate, price level and oil price to industrial production. Furthermore, industrial production growth does not respond to oil price shock and oil price uncertainty. These findings give policy implication.
    Keywords: Industrial production, oil price shock, oil price volatility, cointegration, causality
    JEL: C22 Q43
    Date: 2016–04
  12. By: Curtis, John; Lynch, Muireann Á.; Zubiate, Laura
    Date: 2015–11
  13. By: Tom Brijs; Daniel Huppmann; Sauleh Siddiqui; Ronnie Belmans
    Abstract: This article proposes a new electricity storage business model based on multiple simultaneously considered revenue streams, which can be attributed to different market activities and players. These players thus share electricity storage resources and compete to obtain the right to use them in a dynamic allocation mechanism. It is based on the design of anew periodically organized auction to allocate shared storage resources through physical storage rights between different market players and ac-companying applications. Through such a flexibility platform owners of flexible resources can commercialize their flexible capacity over different applications, while market players looking for additional flexibility can obtain this through a pay-per-use principle and thus not having to make long-term investment commitments. As such, they can quickly adapt their portfolio according to the market situation. Alternatively, through such an allocation mechanism players can effectively share storage re-sources. Players may be incentivized to participate as they can share the investment cost, mitigate risk, exploit economies of scale, overcome regulatory barriers, and merge time-varying and player-dependent flexibility needs. The mechanism allocates the limited storage resources to the most valuable application for each market-clearing, based on the competing players' willingness-to-pay. An illustrative case study is provided in which three players share storage resources that are allocated through a daily auction with hourly market-clearings.
    Keywords: electricity storage, shared storage resources, auction-based allocation, (Generalized) Nash Equilibrium, Mixed Complementarity Problem
    Date: 2016
  14. By: Frédéric Marty (OFCE Sciences Po & GREDEG Université Nice Sophia Antipolis);
    Abstract: L’article 194 du TFUE a conféré de bouveaux pouvoirs aux instances européennes notamment dans le domaine de l’énergie. Une politique énergétique peut être menée dans une logique de solidarité afin de garantir des objectifs communs, tels la sécurité d’approvisionnement. Ce faisant le Traité de Lisbonne semble donner de nouveaux leviers à la Commission dans le domaine de l’énergie en addition des politiques de concurrence etenvironnementale. Cependant, ces possibilités semblent entravées par leur subordination aux Etats membres qui demeurent libres de déterminer leur mix énergétique et leur politique d’approvisionnement extérieur. Ce faisant, la politique de concurrence semble s’avérer le seul levier de mettre en oeuvre une politique énergétique européenne. Cependant, dans le même temps, la capacité de l’outil concurrentiel à créer des marchés dans le secteur de l’énergie reste questionnable. Notre article montre sous quelles conditions une action publique européenne basée sur les principes de solidarité et desubsidiarité pourrait répondre aux limites des « energy only markets ». A cette fin, nous nous penchons plus en détail sur la question des contrats de long terme et nous mobilisons le cadre théorique de l’économie des conventions.
    Keywords: Energie, Concurrence, Contrats de long terme, Sécurité d'approvisionnement
    JEL: L94 L13 K21 N74
    Date: 2016–02
  15. By: Lynch, Muireann Á.; Curtis, John
    Date: 2015–08
  16. By: Christoph Bühren (University of Kassel); Maria Daskalakis (University of Kassel)
    Abstract: Which behavior-based interventions are more appropriate to induce energy saving: energy saving goals with or without incentive, energy saving products, environmentally related information, social comparison or competition? We try to answer this question in a comprehensive study. First, we designed energy bills with different behavioral interventions. Second, we evaluated their appropriateness in an empirical survey with 457 participants. Third, we tested behavioral consequences in real effort lab experiments with 550 subjects in 11 treatments and one baseline. Our results indicate that monetary incentives to save energy might foster the intention to invest effort in energy saving but backfire if factual performance is required. Instead, fostering non-incentivized self-set goals and providing social comparison induced substantial effort to protect the environment. Non-incentivized competition to save energy provided the best results. Our study concludes with implications for practical policy design and further need of research.
    Keywords: Environmental behavior; Goals; Incentives; Social Comparison; Competition; Experiment
    JEL: D03 D12 C91
    Date: 2015
  17. By: Bjørndal, Endre (Dept. of Business and Management Science, Norwegian School of Economics); Bjørndal, Mette (Dept. of Business and Management Science, Norwegian School of Economics); Cullmann, Astrid (DIW Berlin); Nieswand, Maria (DIW Berlin)
    Abstract: Revenue cap regulation is often combined with systematic benchmarking to reveal the managerial inefficiencies when regulating natural monopolies. One example is the European energy sector, where benchmarking methods are based on actual cost data, which are influenced by managerial inefficiency as well as operational heterogeneity. This paper demonstrates how a conditional nonparametric method, which allows the comparison of firms operating under heterogeneous technologies, can be used to estimate managerial inefficiency. A dataset of 123 distribution firms in Norway is used to show aggregate and firm-specific effects of conditioning. By comparing the unconditional model to our proposed conditional model and the model presently used by the Norwegian regulator, we see that the use of conditional benchmarking methods in revenue cap regulation may effectively distinguish between managerial inefficiency and operational heterogeneity. This distinction leads first to a decrease in aggregate efficient costs and second to a reallocation effect that affects the relative profitability of firms and relative customer prices, thus providing a fairer basis for setting revenue caps.
    Keywords: Data Envelopment Analysis; Yardstick Regulation; Electricity Distribution
    JEL: C44 L51 L94
    Date: 2016–02–25
  18. By: Emanuele Campiglio
    Abstract: It is widely acknowledged that introducing a price on carbon represents a crucial precondition for filling the current gap in low-carbon investment. However, as this paper argues, carbon pricing in itself may not be sufficient. This is due to the existence of market failures in the process of creation and allocation of credit that may lead commercial banks – the most important source of external finance for firms – not to respond as expected to price signals. Under certain economic conditions, banks would shy away from lending to low-carbon activities even in presence of a carbon price. This possibility calls for the implementation of additional policies not based on prices. In particular, the paper discusses the potential role of monetary policies and macroprudential financial regulation: modifying the incentives and constraints that banks face when deciding their lending strategy - through, for instance, a differentiation of reserve requirements according to the destination of lending - may fruitfully expand credit creation directed towards low-carbon sectors. This seems to be especially feasible in emerging economies, where the central banking framework usually allows for a stronger public control on credit allocation and a wider range of monetary policy instruments than the sole interest rate.
    Keywords: green investment; low-carbon finance; banking; credit creation; green macroprudential regulation; monetary policy
    JEL: E50 G20 Q56
    Date: 2015–03–27
  19. By: Hyland, Marie
    Date: 2016–01
  20. By: Deane, Paul; FitzGerald, John; Malaguzzi Valeri, Laura; Tuohy, Aidan; Walsh, Darragh
    Date: 2014–06
  21. By: Zon, Adriaan van (UNU-MERIT & SBE, Maastricht University)
    Abstract: An optimal growth model is constructed in a context of irreversible investment in different concurrent production technologies in order to study the optimum timing of the various stages that can be identified in the transition from a carbon-based economy to a carbon-free economy. Such a transition is necessary to avoid runaway global warming. The model is based on the AK-model by Rebelo (1991) and uses multi-stage optimal control methods to illustrate the importance of the notion of capital goods as a produced means of production and as the physical carriers/manifestations of different technologies for the timing and intensity of the use of carbon-based and carbon-free technologies during a just-in-time transition. The transition needs to happen within a given cumulative emissions constraint in order to avoid runaway global warming and corresponding runaway welfare losses. It is shown that the expectation of extreme weather-related damages in such a setting may induce a welfare maximizing central planner to step-up carbon-based production rather than reducing such activity, for similar reasons as the green paradox arises. A further paradoxical result is that increases in the productivity of carbon-free technologies relative to carbon-based technologies do not necessarily imply an earlier phasing in of those carbon-free technologies, but rather allow for a more gradual (and more prolonged) transition towards a carbon-free future. Finally, it is shown that having a productive carbon-based production system facilitates the transition towards a carbon-free system, i.e. investment in carbon intensive technologies may be an effective instrument in securing a carbon-free future.
    Keywords: Energy transition, global warming, climate tipping point, optimal timing of investment and production, multi-stage optimal control
    JEL: O10 O21 O44
    Date: 2016–02–25
  22. By: Angelo Antoci; Marcello Galeotti; Serena Sordi
    Abstract: This paper analyzes the dynamics of a small open economy characterized by two sectors (a farming sector and an industrial sector), heterogeneous agents (workers and entrepreneurs) and free inter-sectoral labor mobility. Labor productivity in the farming sector is negatively affected by environmental pollution generated by both sectors. Labor productivity in the industrial sector is positively affected by physical capital accumulated by entrepreneurs. We show that, as in the seminal contribution by Matsuyama (1992), low productivity of labor in the farming sector can be an engine of the industrialization process. However, in contrast with Matsuyama’s results, our analysis shows that the accumulation of pollution may fuel a self-enforcing process such that the expansion of the industrial sector generates a decrease in workers’ revenues.
    Keywords: Two-sector model; structural change; negative externalities; pollution; self-protection behavior
    JEL: D62 E32 C61 B41 E12
    Date: 2016–01
  23. By: Eleftheriou, Konstantinos; Polemis, Michael
    Abstract: We build an Asymmetric Spatial Error Correction Model (ASpECM) to investigate the role of spatial dependence at the retail gasoline price adjustment mechanism. We find evidence that the symmetric price pattern is fully reversed when we account for spatial spillover effects, indicating that retail prices adjust more rapidly in an upward than a downward direction. This finding raises the possibility that retailers are more likely to engage in anti-competitive practices which may be ignored when the regulators bypass the role of spatial dependence.
    Keywords: ASpECM; Spatial dependence; Asymmetric gasoline price adjustment
    JEL: C23 L13
    Date: 2016–02–16
  24. By: Richard S.J. Tol (UK Department of Economics, University of Sussex, UK Institute for Environmental Studies and Department of Spatial Economics, Vrije Universiteit, Amsterdam, The Netherlands Tinbergen Institute, Amsterdam, The Netherlands); David Anthoff (University of California, Berkeley, Energy and Resources Group, 310 Barrows Hall # 3050, Berkeley, CA 94703, USA); Francisco Estrada (Universidad Nacional Autónoma de México, Circuito Exterior S/N, Mexico DF, 04510; Institute for Environmental Studies, Vrije Universiteit Amsterdam)
    Abstract: Past climatic changes were caused by a slowdown of the thermohaline circulation. We use results from experiments with three climate models to show that the expected cooling due to a slowdown of the thermohaline circulation is less in magnitude than the expected warming due to increasing greenhouse gas concentrations. The integrated assessment model FUND and a meta-analysis of climate impacts are used to evaluate the change in human welfare. We find modest but by and large positive effects on human welfare since a slowdown of the thermohaline circulation implies decelerated warming.
    Keywords: Climate change; thermohaline circulation; integrated assessment; climate impacts
    JEL: Q54
    Date: 2016–03
  25. By: John J. Nay; Martin Van der Linden; Jonathan M. Gilligan
    Abstract: Despite much scientific evidence, a large fraction of the American public doubts that greenhouse gases are causing global warming. We present a simulation model as a computational test-bed for climate prediction markets. Traders adapt their beliefs about future temperatures based on the profits of other traders in their social network. We simulate two alternative climate futures, in which global temperatures are primarily driven either by carbon dioxide or by solar irradiance. These represent, respectively, the scientific consensus and a hypothesis advanced by prominent skeptics. We conduct sensitivity analyses to determine how a variety of factors describing both the market and the physical climate may affect traders' beliefs about the cause of global climate change. Market participation causes most traders to converge quickly toward believing the "true" climate model, suggesting that a climate market could be useful for building public consensus.
    Date: 2016–03
  26. By: Bouoiyour, Jamal; Selmi, Refk; Miftah, Amal
    Abstract: Instead of conducting overall stock market index analysis, this paper focuses on the reactions of sectoral equity returns (Industrials, Financials and Banks, Health care, Information Technology, Consumer goods, Materials, Oil and Gas, Telecommunications) to oil price changes in France. From a methodological perspective, this study uses a new method, called the quantile-on-quantile (QQ) approach. Even though this technique is based on the quantile regression paradigm, it departs from the conventional framework as the exogenous variable may be itself a quantile. It allows looking further into hidden factors driving the link between oil price and stock returns which the standard econometric methods are unsuitable to accommodate. QQ views the nature and sensitivity of the stock returns responses to oil price shocks change greatly across sectors of activity and tail distributions. Specifically, Industrials, Materials, and Oil and Gas equities are typically more reactive towards oil price shocks. The response of Financials and Banks is relatively weak, while it appears negligible for Health care, Information Technology, Consumer goods and Telecommunications. The frequency domain causality test (relying on signal theory) has demonstrated its functionality and adequacy in this exercise. On the basis of this article’ outcomes, market participants could enhance the risk-adjusted return of their portfolios by pursuing a sector-based portfolio investment strategy. Also, introducing oil asset into a diversified portfolio of stocks enables to invigorate its risk-return features.
    Keywords: Oil price; stock market; sector indices; France; QQ approach; frequency domain causality test.
    JEL: C50 C58 Q43
    Date: 2016–03–28
  27. By: Andreas Schaefer (ETH Zurich, Switzerland)
    Abstract: Environmental pollution adversely affects children’s probability to survive to adulthood, reduces thus parental expenditures on child quality and increases the number of births necessary to achieve a desired family size. We argue that this mechanism will be intensified by economic inequality because wealthier households live in cleaner areas. This is the key mechanism through which environmental conditions may impose a growth drag on the economy. Moreover, the adverse effect of inequality and pollution on children’s health may be amplified, if the population group that is least affected decides about tax-financed abatement measures. Our theory provides a candidate explanation for (1) the observed positive correlation between inequality and the concentration of pollutants at the local level, and (2) the humpshaped evolution of child mortality ratios between cleaner and more polluted areas during the course of economic development.
    Keywords: Endogenous Growth, Endogenous Fertility, Inequality, Mortality, Pollution
    JEL: O10 Q50 I10
    Date: 2016–03
  28. By: Walz, Rainer; Köhler, Jonathan Hugh; Lerch, Christian
    Abstract: Meeting sustainability challenges requires not only innovations but also transitions towards sustainability paths. Studies which use technological innovation systems and multi-level-perspective approaches show that the development of innovation systems is a complex process, with many direct and indirect interdependencies of the different variables. The paper looks into the feasibility to support such analysis with system dynamics models. It is analysed how a combined TIS-MLP approach could form the conceptual basis for analysing the dynamics which drives the development of the system to be modelled. The feasibility of such a concept is further investigated by implementing it for China and Germany using wind energy as a case study. In order to develop a perspective how to build the model in technical terms, the dynamics of the innovation systems is translated in software based causal loop diagrams. In addition to methodological insights about the feasibility of modelling, the paper also yields insights into differences and similarities in the drivers of system dynamics in both countries. Furthermore, general conclusions for the potential of regime shift in countries catching up and the relation to leapfrogging are drawn. Thus, the paper augments more general conceptual advances with an evidence based case study and extends theoretical analysis towards empirical modelling.
    Keywords: sustainability transitions,system dynamics,wind energy,technological innovation systems,multi level perspective,system dynamics
    Date: 2016
  29. By: Farrell, Niall; Lyons, Seán
    Date: 2015–06
  30. By: Fander Falconi (Facultad Latinoamericana de Ciencias Sociales, Ecuador); Rafael Burbano (Departamento de Matemática, Escuela Politécnica Nacional, Ecuador); Pedro Cango (Facultad Latinoamericana de Ciencias Sociales, Ecuador)
    Abstract: La curva ambiental de Kuznets (CAK) examina la relación entre crecimiento económico y calidad ambiental. Esta hipótesis asume que en el corto plazo el desarrollo económico empeora el medio ambiente; pero en el largo plazo, a partir de un cierto nivel de ingresos, el crecimiento económico provoca menores niveles de contaminación. La curva ambiental de Kuznets asume la forma de una U invertida. Bajo este supuesto, de manera coherente con la evidencia empírica, el presente estudio demuestra que solo en ciertos países desarrollados se verifica la hipótesis de una curva ambiental de Kuznets entre el ingreso per cápita y las emisiones de dióxido de carbono (CO2) per cápita. Sin embargo, dado que el CO2 es el principal gas de efecto invernadero que provoca el cambio climático global, esta investigación examina la relación entre las emisiones globales de CO2 y el ingreso per cápita. Con este objetivo, utilizamos una regresión por tramos. Los resultados muestran que a partir de un ingreso per cápita de $22.258 (US$ 2005) las emisiones de CO2 se estabilizan (no aumentan ni disminuyen). Es decir, no se cumple la curva ambiental de Kuznets, se cumpliría una forma débil de la CAK. El artículo analiza además las implicaciones de este hecho para el ambiente.
    Keywords: eficiencia energética, divergencia, brechas de conocimiento, curva ambiental de Kuznets
    JEL: Q57
    Date: 2016–03
  31. By: Will McDowall; Dimitri Zenghelis; Paul Drummond
    Abstract: The CCCEP Policy Innovation fund supported a project to explore the feasibility and perceived usefulness of an indicator of confidence in climate change policies. This final report presents the analysis that was undertaken by the project team, the outcomes of a workshop, and highlights ongoing steps to further develop the work. A stakeholder workshop was held to inform the proposed indicator. This took place on November 18th 2015 at UCL (see the annexes for a list of participants, and for the slides presented at the workshop by the project team). Prior to the workshop, a discussion paper was developed and circulated to participants. This report first provides the background and rationale of the idea itself, and examines why an indicator of confidence in policy might be useful. Section 3 then examines key issues relating to the scope and focus of such an indicator, and illustrates the views of stakeholders that participated in the project workshop on these issues. Sections 4 and 5 examine existing attempts or methods for measuring confidence or policy uncertainty in climate and energy fields, and in other related fields, and draws lessons for how a better climate policy confidence indicator might be developed. A summary of the methodological options for developing an indicator is presented in section 6, while section 7 draws conclusions and highlights next steps. Throughout the report, the perspectives of stakeholders consulted during the workshop are provided in text boxes.
    Date: 2016–03
  32. By: Csaba Weiner (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: The Russo–Ukrainian gas crisis of January 2009 encouraged Central and Eastern Europe (CEE) to diversify away from Russian gas supplies and new gas market conditions have afforded some opportunities for doing so. This paper assesses these achievements, as well as factors preventing CEE countries from benefiting therefrom. The paper addresses four main areas of CEE diversification: (1) gas demand, (2) domestic gas production, (3) transit, as well as (4) gas supply and physical infrastructure for source diversification. There is great variation in the degree of dependence on gas, gas imports, Russian gas and transit countries, across the CEE states. Some progress has been made in diversifying, but the degree of progress and the patterns vary significantly from country to country. Due to long-term gas import commitments and the lack of available import capacity, CEE countries can take only limited advantage of changed gas market conditions. But some countries have genuinely benefited from ongoing developments. Transit-avoidance pipelines can also increase security of supply for CEE consumers by providing the opportunity to arbitrage across gas transit corridors. Despite many criticisms, the EU has taken steps that may help mitigate Russian influence.
    Keywords: Central and Eastern Europe, Russian gas, dependence, diversification, security of supply
    JEL: L71 L95 O13 P28 Q4
    Date: 2016–02
  33. By: Kris Bachus (HIVA, KU Leuven); Kristine Van Herck (HIVA, KU Leuven); Lize Van Dyck (HIVA, KU Leuven)
    Abstract: This research paper provides an overview of the main international climate finance and governance bodies, such as the Green Climate Fund (GCF), where Belgium was a Board member in 2015. The specific objectives of the study are to provide a comprehensive overview of the financial instruments that a donor can use to make contributions to the GCF taking into account the aim of the GCF and the institutional context (“upstream financial instruments”), the financial instruments that the Board of the GCF and national and regional intermediaries can use to mobilize private finance (“instream financial instruments”) and the financial instruments that the Board of the GCF can use to finance projects (“downstream financial instruments”).
    Keywords: Green Climate Fund, climate finance, climate flows, climate-related development finance, climate change, UNFCCC
    JEL: F35
    Date: 2015–06
  34. By: Kerstin Burghaus; Peter Funk
    Abstract: We study economic growth and pollution control in a model with endogenous rate and direction of technical change. Economic growth results from growth in the quantity and productivity of polluting intermediates. Pollution can be controlled by reducing the pollution intensity of a given quantity through costly research (green innovation) and by reducing the share of polluting intermediate quantity in GDP. Without clean substitutes, saving on polluting inputs implies that the rate of GDP growth remains below productivity growth (deceleration). While neither green innovation nor deceleration is chosen under laissez-faire, both contribute to long-run optimal pollution control for reasonable parameter values.
    Keywords: Endogenous Growth, Direction of Technical Change, Pollution, Green Innovation, Rebound Effect
    JEL: O30 O41 O44 Q55
    Date: 2016–02–01
  35. By: Mehmet Balcilar (Department of Economics, Eastern Mediterranean University); Riza Demirer (Department of Economics and Finanace, Southern Illinois University Edwardsville); Talat Ulussever (Department of Economics and Finance, College of Industrial Management,King Fahd University of Petroleum & Minerals)
    Abstract: This paper examines whether speculation in the global oil market contributes to herd behavior in the stock markets of net exporting nations. Using firm level data from the Gulf Arab stock markets, we show that investors display herd behavior during periods of high volatility while anti-herding is prevalent during calm markets. Anti-herding in the stock market is also found to be positively related to speculative activities in the global oil market as investors use signals from the oil market in their trades by trading away from the market consensus. We argue that traders take the speculative signals from the oil market as a sign of positive expectations and try to generate superior profits by going against the crowd in their local market.
    Keywords: Herd behavior, Equity return dispersion, Crude Oil, Speculative ratio, Markov switching.
    JEL: C32 G14 G15
    Date: 2016

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.
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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.