nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒04‒16
23 papers chosen by
Roger Fouquet
London School of Economics

  1. Effects of policies on patenting in wind power technologies By Schleich, Joachim; Walz, Rainer; Ragwitz, Mario
  2. An Economic and Stakeholder Analysis for the Design of IPP Contracts for Wind Farms By Salci, Sener; Jenkins, Glenn
  3. Towards modelling of innovation systems: An integrated TIS-MLP approach for wind turbines By Walz, Rainer; Köhler, Jonathan Hugh; Lerch, Christian
  4. Market Power and Joint Ownership: Evidence from Nuclear Plants in Sweden By Lundin, Erik
  5. The political drivers of renewable energies policies By Isabelle Cadoret; Fabio Padovano
  6. Renewable energy targets in the context of the EU ETS: Whom do they benefit exactly? By Landis, Florian; Heindl, Peter
  7. The dynamics of vehicle energy efficiency: Evidence from the Massachusetts Vehicle Census By Zhong, Sheng
  8. Benchmarking Heterogeneous Distribution System Operators: Evidence from Norway By George Elias
  9. The infernal couple China-Oil Price and the Responses of G7 Equities: A QQ Approach By Bouoiyour, Jamal; Selmi, Refk
  10. Modeling for the world crude oil and natural gas markets By Shibata, Tsubasa
  11. On the reactions of sectoral equity returns to oil price in France: Implications for portfolio allocation By Bouoiyour, Jamal; Selmi, Refk; Miftah, Amal
  12. Environmental Incentives: Nudge or Tax? By Benjamin Ouvrard; Sandrine Spaeter
  13. Not in my backyard: CCS storage sites and public perception of CCS By Braun, Carola
  14. Non-sequential search, competition and price dispersion in retail electricity By Gugler, Klaus; Heim, Sven; Liebensteiner, Mario
  15. Environment, Energy and Environmental Productivity of Energy: A Decomposition Analysis in China and the US By Mohamad Taghvaee, Vahid; Hajiani, Parviz
  16. The Carbon Footprint of European Households and Income Distribution By Mark Sommer; Kurt Kratena
  17. Dynamic Relationships among CO2 Emissions, Energy Consumption, Economic Growth, and Economic Complexity in France By Can, Muhlis; Gozgor, Giray
  18. The Evolution of the Natural Resource Curse Thesis: A Critical Literature Survey By Ramez Badeed; Hooi Hooi Lean; Jeremy Clark
  19. TRADE IN CARBON AND THE EFFECTIVENESS OF CARBON TARIFFS By Christoph Böhringer; Jan Schneider; Emmanuel Asane-Otoo
  20. Beyond carbon pricing: the role of banking and monetary policy in financing the transition to a low-carbon economy By Emanuele Campiglio
  21. Betting and Belief: Prediction Markets and Attribution of Climate Change By John J. Nay; Martin Van der Linden; Jonathan M. Gilligan
  22. Incentives for early adoption of carbon capture technology: Further considerations from a European perspective By Albert Banal-Estañol; Jeremy Eckhause; Olivier Massol
  23. Un modèle de décroissance optimale By Marc Germain

  1. By: Schleich, Joachim; Walz, Rainer; Ragwitz, Mario
    Abstract: This paper explores factors driving innovation in wind power technologies in OECD countries by employing count data panel econometrics. Transnational patent data in wind power technologies serve as the indicator for innovation. In addition to classical supply side policies, the set of explanatory variables also reflects insights from the systems of innovation and policy analysis literature. The findings suggest that patenting is positively related to public R&D in wind power (reflecting supply side regulation), to the stock of wind capacity (learning effects), to the number of patents per capita (innovation capacity), to the share of Green party voters (legitimacy of technology), to targets for electricity from renewable energy sources, to the stability of the regulatory framework, and also to power prices (profitability). Feed-in-tariffs, which have been the predominant support mechanism for electricity from renewables, are not found to be positively related to patenting activity - unless they are implemented within a stable regulatory framework. These findings are robust to alternative model specifications and distributional assumptions.
    Keywords: innovation,supply-side regulation,demand-side regulation,wind power,patent analysis,count data econometrics
    Date: 2016
  2. By: Salci, Sener; Jenkins, Glenn
    Abstract: In this paper we introduce a method for quantifying the benefits and costs of implementing a grid-connected onshore wind project that is owned and operated by an independent power producer (IPP). The proposed policy analysis tool is applied to the appraisal of a wind farm in Santiago Island, Cape Verde. The policy analysis is conducted from the perspectives of the electric utility, the country’s economy, the government and the private sector investor. The key question is whether the design of the power purchase agreement (PPA) will yield a high enough rate of return to the project to be bankable, while at the same time yielding a positive net financial and economic present value to the electric utility and the country respectively. The PPA results in a negative outcome for the economy of Cape Verde in almost all circumstances. In contrast the owners of the IPP are guaranteed a very substantial return for their modest investment under all circumstances.
    Keywords: electricity, wind power, power purchase agreement, public–private partnership, Santiago (Cape Verde)
    JEL: D61 E22 L94 O55 Q42
    Date: 2016–04
  3. 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
  4. By: Lundin, Erik (Research Institute of Industrial Economics (IFN))
    Abstract: This paper presents an empirical test of the anticompetitive effects of joint ownership, by examining the operation of three nuclear plants in Sweden. Since maintenance is the main conduit explaining the variation in output, I formulate a model of intertemporal choice in which firms choose how to allocate a given amount of maintenance within each year. Using data on production and bidding curves on the day-ahead market, I test the model against data given three behavioral assumptions: Unilateral profit maximization; joint profit maximization; and a social planner. Modeling for joint profit maximization best matches data, indicating that joint ownership has facilitated coordination of maintenance decisions. Terminating the joint ownership and modeling for unilateral profit maximization would lead to a 5 percent decrease in prices and a 6 percent decrease in system production costs. I identify positive supply shocks in the form of inflow to the hydro power reservoirs as important determinants of the incentives to exercise market power. Therefore, the mechanisms discussed in this paper should be of relevance also in other electricity markets where the share of intermittent production is increasing. As a motivation for the structural exercise,I use a difference-in-differences estimator to identify a shift in the allocation of maintenance towards the winter season (when demand and prices are peaking) at the time of the introduction of the joint ownership. This is in line with the results from the structural model, as the ability to influence the price is also higher during the winter season.
    Keywords: Joint ownership; Electricity; Nuclear; Maintenance; Collusion
    JEL: D22 D43 D44 D92
    Date: 2016–02–29
  5. By: Isabelle Cadoret (UR1 - Université de Rennes 1, CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique); Fabio Padovano (Roma Tre University, CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper empirically analyzes how political factors affect the deployment of renewable energy (RE) sources and compares their explanatory power to that of other economic, energy and environmental drivers that have received greater attention in the literature so far. The sample encompasses the EU countries bound to attain the target of 20% share of gross final energy consumption by 2020. The panel data analysis shows that lobbying by the manufacturing industry negatively affects RE deployment, whereas standard measures of government quality show a positive effect; furthermore left wing parties promote the deployment of RE more than right wing ones.
    Keywords: renewable energy sources, energy policy, quality of government, lobbying, political ideology
    Date: 2016–03
  6. 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
  7. By: Zhong, Sheng (UNU-MERIT)
    Abstract: Using a rich quarterly panel dataset containing about 3.9 million vehicles in Massachusetts over the period 2008q1 - 2011q4, this paper is attempts to improve the micro level empirical basis of the study of population-level vehicle energy efficiency, and to provide some evidence that supports policy making related to sustainable development with regard to road vehicles. It (1) presents an aggregate vehicle energy efficiency indicator (state and municipality level) by taking into account vehicle heterogeneity, (2) investigates the contribution of changes in the structure of the vehicle population that affect aggregate vehicle energy efficiency and its growth, paying particular attention to vehicles’ entry and exit, (3) explores the convergence and the Ergodic distribution of aggregate vehicle energy efficiency between municipalities, and (4) checks the socio-economic factors affecting the distribution of vehicles over locations, and vehicle exit event. The results confirm the importance of structural chance in the vehicle population, convergence of aggregate vehicle energy efficiency between municipalities and the crucial role of socio-economic factors in shaping vehicles distribution.
    Keywords: vehicle level micro data, vehicle energy efficiency dynamics, decomposition, reallocation, convergence, socio-economic factors
    JEL: O13
    Date: 2016–03–29
  8. By: George Elias
    Abstract: Regulatory authorities in the European electricity sector use benchmarking techniques to determine the cost-e_cient production level for an incentive regulation of distribution system operators (DSOs). With nearly 900 DSOs operating in the German electricity sector, of which 200 subject to incentive regulation, the issue of heterogeneity of DSOs has to be addressed. Using publicly available data of 133 Norwegian DSOs and replicating the model employed by the German regulator (who refuses access to the data), I show its assumption of homogeneous technology cannot be maintained. Quantile regressions (QR) across the cost distribution reveal heterogeneity in the coe_cients of the explanatory variables, resulting in biased e_ciency scores derived from stochastic frontier analysis. To correct for this heterogeneity in coe_cients, I propose a Bayesian estimation of a more flexible SFA with latent classes for selected parameters that reflect variation in technologies. This estimation has better goodness of fit, reduced variance of all coe_cients, and higher e_ciency scores for nearly all DSOs, compared to the conventional alternative.
    Keywords: E_ciency measurement; cost function; incentive regulation; electricity sector
    JEL: C11 C21 D24 L94
    Date: 2016–03
  9. By: Bouoiyour, Jamal; Selmi, Refk
    Abstract: China’s growingly sluggish economy and collapsing oil prices sent ripples through global equities, and G7 countries (United States, United Kingdom, Germany, Canada, Japan, France, Italy) are no exception in this regard. In this article, we address how react G7 stock markets to oil price under potent uncertainty encompassing the extent of China’s slowdown. The main feature of this study is its use of an unwonted method, dubbed the quantile-on-quantile (QQ) approach. Even though this method is based on the quantile regression paradigm, it departs from the conventional framework as the exogenous variable may be itself a quantile. This technique is devoted to unsettled context where standard methods are malapropos. Captivating findings have been shown. First, the QQ approach views the G7 stock markets responses to oil price as highly heterogeneous among taildistributions, where consistent with the notion of asymmetry. Second, the equities of Germany, Italy, Canada and United Kingdom (in this order) are typically more responsive than France, Japan and United States towards oil price. Third, even if the fears over China’s worsening outlook sends G7 countries into a deeper slowdown, United Kingdom, Japan, France and United States appear better positioned to weather the storm. The oil-dependence profile, the dominance of companies belonging to cyclical industries in the stock market index, the role of monetary policy in containing speculative bubbles, and the forceful quantitative easing have been offered to spell out the convolution of the focal issue.
    Keywords: Oil price; China’s slowdown; G7 equities; QQ approach.
    JEL: C58 G11 G15 Q43
    Date: 2016–02
  10. By: Shibata, Tsubasa
    Abstract: Crude oil and natural gas have been essential energy sources and play a crucial role in the world economy. Changes in energy prices significantly impact economic growth. This study builds an econometric model to illustrate the substitute relation between crude oil and natural gas markets. Additionally, the determination of the oil and natural gas prices are endogenized, assuming imperfect competition to reflect a real market strategy. Our empirical results show that the overall performance of this system is acceptable, and the model can be applied to policy analysis for determining monetary or energy policy by introducing this model to the more comprehensive system.
    Keywords: Energy, Petroleum, Natural gas, Econometric model, Imperfect competition
    JEL: C30 Q41
    Date: 2016–03
  11. 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
  12. By: Benjamin Ouvrard; Sandrine Spaeter
    Abstract: We consider a model where individuals can voluntarily contribute to improve the quality of the environment. They di er with regard to their confidence in the announcement made by the regulator about the risk of pollution, modelized in a RDEU model, and to their environmental sensitivity. We compare the efficiency of a tax in increasing individual contributions with the advantages of a nudge based on the announcement of the social optimum to each individual. Under some conditions, a nudge performs better than a tax, in particular, because the individual reaction depends directly on sensitivity, while only indirectly with a tax. Moreover, a nudge does not require information about private contributions, contrary to a tax based on the contributions that are not provided compared to the social optimum. Lastly, its implementation is much cheaper. Yet, some drawbacks are discussed and simulations illustrate our results.
    Keywords: incentives; nudge; environmental sensitivity; probability distorsion; tax.
    JEL: Q50 D8
    Date: 2016
  13. By: Braun, Carola
    Abstract: Carbon capture and storage (CCS) is a technology that counteracts climate change by capturing atmospheric emissions of CO2 from human activities, storing them in geological formations underground. However, CCS also involves major risks and side effects, and faces strong public opposition. Recently, the whereabouts of 408 potential CCS storage sites in Germany have been released. Using detailed survey data on the public perception of CCS, I quantify how living close to a potential storage site affects the acceptance of CCS. I also analyse the influence of other regional characteristics on the acceptance of CCS. I find that respondents who live close to a potential CCS storage place have significantly lower acceptance rates than those who do not. Living in a tourism or mining region also markedly decreases acceptance.
    Keywords: carbon capture and storage,NIMBY,climate change mitigation
    JEL: Q54 D19 C93
    Date: 2016
  14. By: Gugler, Klaus; Heim, Sven; Liebensteiner, Mario
    Abstract: We investigate the impact of consumer search and competition on pricing strategies in Germany's electricity retail. We utilize a unique panel dataset on spatially varying search requests at major online price comparison websites to construct a direct measure of search intensity and combine this information with zip code level data on electricity tariffs between 2011 and 2014. The paper stands out by explaining price dispersion by differing pricing strategies of former incumbents and entrant firms, which are distinct in their attributable shares in informed versus uninformed consumers. Our empirical results suggest causal evidence for an inverted U-shape effect of consumer search intensity on price dispersion in a clearinghouse environment as in Stahl (1989). The dispersion is caused by opposite pricing strategies of incumbents and entrants, with incumbents initially increasing and entrants initially decreasing tariffs as a reaction to more consumer search. We also find an inverted U-shape effect of competition on price dispersion, consistent with theoretical findings by Janssen and Moraga-González (2004). Again, the effect can be explained by opposing pricing strategies of incumbents and entrants.
    Keywords: Search,Information,Competition,Price Dispersion,Electricity Retail
    JEL: D43 D83 L11 L13 Q40
    Date: 2016
  15. 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 environmentally-friendly 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: 2016
  16. 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
  17. 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
  18. By: Ramez Badeed; Hooi Hooi Lean; Jeremy Clark (University of Canterbury)
    Abstract: This paper surveys the literature of the natural resource curse hypothesis. We review the theoretical mechanisms through which natural resource wealth might slow economic growth, and then the empirical studies that test for an effect overall, or an effect on factors typically associated with economic growth. We also review more recent studies suggesting that the findings supporting the resource curse may reflect only empirical mis-specification. The literature has produced conflicting evidence, with no consensus on the net effect of natural resources in an economy. Overall we argue that evidence for a negative effect of natural resource dependence on economic growth remains convincing, particularly for developing economies and particularly working through factors closely associated with growth. We take recent contrarian studies to demonstrate, however, both that a resource curse is not inevitable, and that future studies should better address issues of endogeneity of dependence measures, years of study, and potential non-monotonic relationships.
    Keywords: natural resource curse; natural resource dependence; natural resource abundance; economic growth; literature survey
    JEL: O13 O47 Q32 Q33
    Date: 2016–04–07
  19. By: Christoph Böhringer (University of Oldenburg, Department of Economics); Jan Schneider (University of Oldenburg, Department of Economics); Emmanuel Asane-Otoo (University of Oldenburg, Department of Economics)
    Abstract: Carbon-based import tariffs are discussed as policy measures to reduce carbon leakage and increase the global cost-effectiveness of unilateral CO2 emission pricing. We assess how the potential of carbon tariffs to increase cost-effectiveness of unilateral climate policy depends on the magnitude and composition of carbon embodied in trade. For our assessment, we combine multi-region input-output (MRIO) analysis with computable general equilibrium (CGE) analysis based on data from the World Input-Output Database (WIOD) for the period 1995 to 2007. The MRIO analysis confirms that carbon embodied in trade has sharply increased during this period. Yet, the CGE analysis suggests that the effectiveness of carbon tariffs in reducing leakage and improving global-cost effectiveness of unilateral climate policy does not increase over time, whereas the potential to shift the economic burden of CO2 emissions reduction from abating developed regions to non-abating developing regions increases substantially.
    Keywords: carbon tariffs; unilateral climate policy; computable general equilibrium
    JEL: Q58 D57 D58
    Date: 2016–04
  20. 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
  21. 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
  22. By: Albert Banal-Estañol (Université de Londres - Université de Londres); Jeremy Eckhause (RAND Corp - RAND Corp); Olivier Massol (IFPEN - IFP Energies Nouvelles - IFP Energies Nouvelles, IFP School - IFP Energies Nouvelles)
    Abstract: This note details two comments on a recent policy proposal in Comello and Reichelstein (2014) aimed at favoring the early adoption of Carbon Capture (CC) technology in the next generation of thermal-based power plants to be installed in the United States. First, we examine the implications of a worst-case scenario in which no new CC is adopted internationally beyond what is in place in 2014. Second, we show the potential, under the original proposed subsidy, for the emergence of coordination failures capable of hampering the desired early CC deployment. We propose and evaluate modified schedules of tax-credits sufficient to overcome these concerns. These additions strengthen the argument in the original article: namely, though higher incentive levels are necessary, our findings confirm that the cost of the proposed policy is not out of reach.
    Keywords: Coordination failure,Levelized cost,Learning effects,Tax incentives,Carbon Capture and Storage
    Date: 2016
  23. By: Marc Germain (LEM-CNRS (UMR 9221), Université de Lille 3 and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Dans le cadre d'un modèle de croissance à la Ramsey avec ressource naturelle et pollution et reposant sur certains postulats de l'économie écologique, ce papier étudie les effets de politiques de décroissance volontaire sur la production et le bien-être. L'instrument de ces politiques est une taxe prélevée sur la ressource naturelle. Ces politiques sont appliquées par les pouvoirs publics suite au retournement de la fonction d'utilité des ménages induit par l'augmentation de la pollution. Par rapport à la situation de laisser-faire, leur résultat est à la fois de réduire la production et la pollution d'une part, et d'accroître le bien-être d'autre part. Une réaction plus tardive des autorités publiques suite au retournement de la fonction d'utilité des ménages implique que la taxation de la ressource naturelle doit être plus élevée pendant les premières périodes. Si la préférence pour le futur des autorités est plus grande, alors les gains d'utilité dus à la politique de décroissance sont moindres pour les premières générations de la dynastie et supérieurs pour les suivantes. L'impact du progrès technique économisant la ressource ou améliorant le traitement de la pollution est également analysé. With the help of a growth model à la Ramsey with a natural resource and pollution and relying on postulates of ecological economics, this paper studies the impact of voluntary degrowth policies on production and welfare. The instrument of these policies is a tax levied on the natural resource. These policies are assumed to be applied by the public authorities after the downturn of the households'utility function due to the increase of pollution. With respect to the laisser-faire situation, their impact is to simultaneously decrease production and pollution on the one hand and increase welfare on the other. A delayed reaction of the public authorities after the turnover of the households'utility function implies a higher tax rate on the resource during the first periods. If the authorities'preference for the future is higher, then welfare gains from the degrowth policy are lower for the first generations of the dynasty and higher for the later. The impact of technical progress saving the resource or improving the pollution treatment is also analysed.
    Keywords: degrowth, steady state economics, pollution tax
    JEL: O44 O49 Q57
    Date: 2016–03–16

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