|
on Energy Economics |
| By: | Murali, Palanichamy; Hari, Kuppusamy; Karpagam, Chidambara; Govindaraj, Gurrappa; Subhagowri, Jaganthan |
| Abstract: | Biofuels provide only around 2% of total transport fuel today, by 2050, 32 exajoules of biofuels will be used globally, accounting 27% of the world transport fuel. Some biofuels already perform well in economic terms, particularly sugarcane ethanol and other low cost agricultural biofuels. The biofuel program in India at niche stage though the policy has been rolled out well in advance. India has carefully designed the biofuel policy and blending ratio to reduce CO2 emissions and import of the crude oil. The log linear demand function was used to estimate the crude oil, diesel and petrol demand. Based on the demand, the bioethanol and biodiesel requirements were estimated. The possible ways to meet out the biofuel demand and production frontier were elaborated. Proper policy making, domestic production support measures for sustainable biofuel production and infrastructure for anhydrous ethanol storage are the guidepost for successful biofuel program in India. |
| Keywords: | sugarcane, demand, supply, biofuels, sustainability, Agricultural and Food Policy, Environmental Economics and Policy, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:212512&r=ene |
| By: | Jin, Wei; Zhang, ZhongXiang |
| Abstract: | Whether China continues its business-as-usual investment-driven, environment-polluting growth pattern or adopts an investment and innovation-driven, environmentally sustainable development holds important implications for both national and global environmental governance. Building on a Ramsey-Cass-Koopmans growth model that features endogenous technological change induced by R&D and knowledge stock accumulation, this paper presents an exposition, both analytically and numerically, of the mechanism underlining China’s economic transition from an investment-driven, pollution-intensive to an investment and innovation-driven, environmentally sustainable growth path. We show that if R&D technological innovation is incorporated into China’s growth mechanism, then at some tipping point in time when marginal welfare gain of R&D for knowledge accumulation becomes equalized with that of investment for physical asset deployment, China’s economy will launch capital investment and R&D simultaneously and make a transition to a sustainable growth path along which consumption, capital investment, and R&D have a balanced share of 5: 4: 1, consumption, capital stock, and knowledge stock all grow at a rate of 4.9%, and environmental quality improves at a rate of 2.5%. In contrast, if R&D technological innovation is not harnessed as a new growth engine, then China’s economy will follow its business-as-usual investment-driven growth path along which standalone accumulation of dirty physical capital stock will lead to an more than 200-fold increase in environmental pollution. |
| Keywords: | Endogenous Technological Change, Sustainable Development, Economic Growth Model, China’s Economic Transition, Resource /Energy Economics and Policy, Q55, Q58, Q43, Q48, O13, O31, O33, O44, F18, |
| Date: | 2016–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemei:232926&r=ene |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:bei:00bewp:0023&r=ene |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1566&r=ene |
| By: | Yatang Lin |
| Abstract: | Are "greener" investments less efficient? This paper looks at the location choices by wind power investors. I measures the efficiency loss in this sector due to wrong project location and explore the factors contributing to it. Using extensive information on wind resources, transmission, electricity price and other restrictions that might affect the siting of wind farms, I calculate the predicted profitability of wind power projects for all the possible places across the contiguous US, use it as a counterfactual for profit-maximizing wind power investment and compare it to the actual placement of wind farms. |
| Keywords: | Spatial misallocation, renewable energy policies, productivity, green preferences |
| JEL: | R12 R38 Q42 Q48 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1424&r=ene |
| By: | Matthieu Glachant (Cerna MINES ParisTech); Julie Ing (ETH Zurich, Switzerland); Jean Philippe Nicolai (ETH Zurich, Switzerland) |
| Abstract: | The need to transfer climate mitigation technologies towards the developing world has been acknowledged since the beginning of climate negotiations. Little progress has however been made as shown by Article 10 of the Paris Agreement. One reason is that these technologies could become vital assets to compete on global markets. This paper presents a partial equilibrium model with two regions, the North and the South, and imperfect competition in the international polluting goods market to analyze the North’s incentives to accept technology transfer. Results crucially depend on the existence of environmental cooperation. When both northern and southern governments set emission quotas non-cooperatively, inducing fewer global emissions is a necessary, but not sufficient condition for the North to accept the transfer. In contrast, when governments set quotas cooperatively, the North never accepts the transfer because it only leads to a partial relocation of pollutant goods production to the South. We derive the implications for the global regulation of climate change. |
| Keywords: | Technology transfer, Imperfect competition, Climate policy, Environmental cooperation, Cap and trade |
| JEL: | D43 F18 Q5 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:16-242&r=ene |
| By: | Clay, Karen (Carnegie Mellon University); Lewis, Joshua (University of Montreal); Severnini, Edson R. (Carnegie Mellon University) |
| Abstract: | Pollution is a common byproduct of economic activity. Although policymakers should account for both the benefits and the negative externalities of polluting activities, it is difficult to identify those who are harmed and those who benefit from them. To overcome this challenge, our paper uses a novel dataset on the mid-20th century expansion of the U.S. power grid to study the costs and the benefits of coal-fired electricity generation. The empirical analysis exploits the timing of coal-fired power plant openings and annual variation in plant-level coal consumption from 1938 to 1962, when emissions were virtually unregulated. Pollution from the burning of coal for electricity generation is shown to have quantitatively important and nonlinear effects on county-level infant mortality rates. By 1962, it was responsible for 3,500 infant deaths per year, over one death per thousand live births. These effects are even larger at lower levels of coal consumption. We also find evidence of clear tradeoffs associated with coal-fired electricity generation. For counties with low access to electricity in the baseline, increases in local power plant coal consumption reduced infant mortality and increased housing values and rental prices. For counties with near universal access to electricity in the baseline, increases in coal consumption by power plants led to higher infant mortality rates, and lower housing values and rental prices. These results highlight the importance of considering both the costs and benefits of polluting activities, and suggest that demand for policy intervention may emerge only when the negative externalities are significantly larger than the perceived benefits. |
| Keywords: | mid-20th century air pollution, coal-fired electricity generation, infant mortality, housing values, tradeoffs |
| JEL: | N32 N52 N72 N92 Q40 Q48 Q53 Q56 I15 J24 J30 R11 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9884&r=ene |
| By: | Elvira M. Orbetta (Resources, Environment and Economics Center for Studies, Inc. (REECS), Suite 405, The Tower at Emerald Square, J.P. Rizal cor. P. Tuazon Streets, Project 4, Quezon City 1109, Philippines); Carlito M. Rufo Jr (Resources, Environment and Economics Center for Studies, Inc. (REECS)); Anabeth L. Indab (Resources, Environment and Economics Center for Studies, Inc. (REECS)) |
| Abstract: | The study assessed the incremental benefits and costs of different options to control PM10 and SO2 emissions from fossil-fired power plants using two power plants in Region IV (Southern Tagalog), Philippines, as case studies. Benefits were estimated by modeling the changes in ambient concentrations arising from the control, estimating the improvements, and valuing these in economic terms. The study focused on adverse health effects, using dose-response function established in other studies, and economic values based on the benefit transfer technique. Control costs were estimated using the engineering cost approach. Impacts were assessed within 10 and 50 km radius from each plant. The study showed that existing controls for particulates met the emissions standard. However, the use of fuel with standard sulfur content was not sufficient to meet SO2 emissions standard. Thus, a review of the sulfur content standard in fuel was recommended. SO2 emissions from each of the two power plants translated to maximum predicted ambient concentrations that were significant relative to the maximum allowable ambient concentration. The value of the health effects avoided was much larger when the impact area was extended from 10- to 50-km radius, it was much larger for oil than for coal, with the value of mortality effects avoided dominating the total. Among the different options analyzed only the switch to cleaner fuel for oil and increased thermal efficiency for coal were justified. With a switch to cleaner fuel, the value of health damage avoided considering a 50-km impact area was 0.08% to 3.34% of the current average selling price of electricity, implying a 0.11 % to 4.31 % increase in the average cost of power service if the power plants were made to internalize the health damages. |
| Keywords: | cost benefits, power plant, Philippines |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:eep:report:rr2016034&r=ene |
| By: | Rasetti, Michele; Filho, Joaquim B.S. Ferreira; Finco, Adele; Pena-Levano, Luis M.; Zhao, Xin; Opgrand, Jeffrey |
| Abstract: | For many years, biofuels have been considered a cleaner, greener alternative to fossil fuels in order to reduce greenhouse gas (GHG) emissions in the transportation sector. For this reason, in recent years, many European policies has tried to promote biofuels production and consumption. However, some concerns on the actual sustainability of biofuels have arisen. In particular, scientific studies have pointed out that additional emissions from indirect land-use change (ILUC) could cancel out biofuels benefits on climate change. This paper analyzes the global economic and environmental consequences of an increase in biofuel production, as established by the RE Directive, for the period 2001-2020. The GTAP-BIO general equilibrium model was used for the simulation. The results suggest a total emission of 168 gCO2/MJ per year over 20 years of biodiesel production, which would mean that the GHG reduction requirements established by the policies could not be fulfilled. |
| Keywords: | European biofuel policy, Biodiesel, GTAP-BIO, Land use change, GHG emissions, Environmental Economics and Policy, Land Economics/Use, D58, Q16, Q58, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:212489&r=ene |
| By: | Dhaoui, Elwardi |
| Abstract: | Oil prices have fallen by about half since September 2014. The Organization of Petroleum Exporting Countries (OPEC) decided not to reduce production. The euro zone, China, Japan and Russia recorded slower rates of economic growth than expected. All combine to keep a sharp decline of oil prices which can be persistent. This new situation has profoundly changed the economic environment of the country. The impact will vary depending on the countries if they are exporters or importers of oil. For Tunisia, this new situation offers the opportunity to reform energy subsidies and accelerate structural reforms to support growth and employment. |
| Keywords: | oil, budget balance, external account, subsidies, growth, employment, Tunisia. |
| JEL: | E62 F62 F66 J50 Q31 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70676&r=ene |
| By: | Wang, Zidong; Fan, Xin Xin; Liu, Pan; Dharmasena, Senarath |
| Abstract: | United States spends more than one quarter of its energy on transportation. Historically, crude oil has been the primary source for generating this energy. Though ethanol has been proposed to substitute conventional transportation fuel since the 1970s, the expansion of ethanol industry slowed down after 2010 when the ethanol blended reached around 10% of the total gasoline, the so-called “blend-wall effect”. This study focused on estimating the demand for ethanol in the United States and analyzed the effect of blend-wall on this demand and its relationship to conventional fuels. The almost ideal demand model (AIDS) is adopted to analyze the US expenditure on transportation fuels including petroleum, natural gas and biomass energy. Both monthly and annual data are collected and the presence of unit roots at different frequencies (monthly, quarterly, annually) is identified and used to help improve the structural model. Preliminary results showed that, though ethanol was proposed as a substitute for gasoline, the substitution effect faded away as the ethanol share in the blend increased, and turning ethanol to be a complement under the state-of-the-art technology. |
| Keywords: | Demand for ethanol, blend wall, almost ideal demand system, transportation fuel, Demand and Price Analysis, Resource /Energy Economics and Policy, Q41, Q42, |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea16:229960&r=ene |
| By: | Zhong, Sheng (UNU-MERIT); Verspagen, Bart (UNU-MERIT & SBE, Maastricht University) |
| Abstract: | We argue that the analysis level of a technological trajectory is very suitable to analyse the decisions of firms in latecomer countries with regard to the technological area that they should focus on. Technological trajectories are the main focal points along which technological innovation develops, and they are more detailed than the common sectors, like electronics of pharmaceuticals, that are used in the analysis of catching-up based growth. We present a collection of methods that has been proposed in the literature to identify technological trajectories. These methods use patent citation networks, and are applied to two separate fields in energy efficiency technologies. We identify the relevant technological trajectories, and analyse how the main countries active in these fields can be classified as either latecomer or incumbent countries. We then present a measure for how much patents from a particular country contribute to the main technological trajectories in the field, and to what extent they are derived from these trajectories. We use an explorative regression model to establish that latecomer countries tend to contribute to a lesser extent than incumbents to the main technological trajectories in the fields we investigate. |
| Keywords: | technological trajectories, patent citation networks, latecomer innovation strategy |
| JEL: | O31 O33 O47 |
| Date: | 2016–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2016013&r=ene |
| By: | Evgenii Monastyrenko |
| Abstract: | European electricity industry has recently come through liberalization. Surge of intakes with high share of cross-border deals was market players’ response. Measuring of post-merger performance alterations is a central question of M&A literature. EU energy sector is responsible for significant part of global greenhouse gas emissions. Its efficiency should be regarded with respect to ecological dimension. This study addresses combined economic and environmental performance of 15 biggest European energy producers in 2005-2013. I exploit Data envelopment analysis (DEA) with CO2 as an undesirable output. Panel fractional regression model with financial controls is used to isolate effects of completed mergers. Results suggest that in short term firms profit from selling their subsidiaries to foreign counter-parties. This effect doesn’t sustain over time. Same-type domestic deals are detrimental in short run, but performance-enhancing in long term. Domestic and cross-border acquisitions immediately damage performance. Later ones stimulate efficiency in the long run. |
| Keywords: | Mergers and acquisitions, Firm performance, Data envelopment analysis, Fractional regression model, Electric power industry, Carbon dioxide emissions |
| JEL: | F21 G34 L25 L94 D24 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:wpaper:y:2016:i:169&r=ene |
| By: | Junker, Franziska; Wolf, Verena; Marquardt, Sandra; Ledebur, Oliver |
| Abstract: | Due to concerns regarding possible negative impacts of conventional biofuels on food security, biodiversity, land use change and greenhouse gas emission savings, the EU wants to restrict the use of food crop based biofuels. Current legislation stipulates a minimum share of ten percent renewables in fuel consumption in the transport sector. Recent policy proposals limit the share of food crop based biofuels counting towards the achievement of this share to six and seven percentage points. This policy change will have an effect on biofuel as well as on feedstock markets. To analyze the magnitude of such a policy change on relevant domestic and international markets, we extend and apply a computable general equilibrium model. Main findings are that limiting the use of food crop based biofuels in the EU only slightly affects domestic rapeseed production but significantly reduces vegetable oil imports. |
| Keywords: | Biofuel policies, CGE modeling, Agricultural markets, Agricultural and Food Policy, Q16, Q18, Q20, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:211819&r=ene |
| By: | Morana, Claudio |
| Abstract: | The paper investigates the macroeconomic and financial effects of oil prices shocks in the euro area since its creation in 1999, with a special focus on the recent slump. The analysis is carried out episode by episode, within a time-varying parameter framework, consistent with the view that "not all the oil price shocks are alike", yet without imposing any a priori identification assumption. We find evidence of recessionary effects triggered not only by oil price hikes, but also by oil price slumps in some cases, likewise for the most recent episode, which is also rising deflation risk and financial distress. In addition through uncertainty effects, the current slump might then be depressing aggregate demand by increasing the real interest rate, as ECB monetary policy is already conducted at the zero lower bound. The increase in real money balances following the slump points to the accommodation of the shock by the ECB, concurrent with the implementation of the Quantitative Easing policy (Q.E.). Yet, in so far as Q.E failed to generate inflationary expectations within the current and expected environment of soft oil prices, the case for a more expansionary use of fiscal policy than in the past would become compelling, in order to counteract the deflationary and recessionary threats to the euro area. |
| Keywords: | Oil Price Shocks, Oil Price-macroeconomy Relationship, Risk Factors, Semiparametric Dynamic Conditional Correlation Model, Time-varying Parameter Models, Financial Economics, E30, E50, C32, |
| Date: | 2016–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemes:232925&r=ene |
| By: | Christiane Baumeister; Lutz Kilian |
| Abstract: | Futures markets are a potentially valuable source of information about price expectations. Exploiting this information has proved difficult in practice, because time-varying risk premia often render the futures price a poor measure of the market expectation of the price of the underlying asset. Although this expectation in principle may be recovered by adjusting the futures price by the estimated risk premium, a common problem is that there are as many measures of the market expectation as there are estimates of the risk premium. We propose a general solution to this problem that allows us to select the most accurate estimate of the expectation for any set of risk premium estimates. We illustrate this approach by solving the long-standing problem of how to estimate the market expectation of the price of crude oil. We provide a new measure of oil price expectations that is substantially more accurate than the alternatives and more economically plausible. Our analysis has implications for the estimation of economic models of energy-intensive durables, for oil price forecasting and for the measurement of oil price shocks. |
| Keywords: | Econometric and statistical methods, International topics |
| JEL: | C53 D84 G14 Q43 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:16-18&r=ene |
| By: | Perez, Rafael; Zepeda, Eduardo |
| Abstract: | The United Nations’ Sustainable Development Goal 7 (SDG7) consists in ensuring access to affordable, reliable, sustainable and modern energy for all. Before Mexico can achieve this goal, a deeper insight into the prevailing status of rural households’ energy access needs to be identified. The primary purpose of this study is to evaluate how does the consumption for different energy carriers vary with income in Mexican rural households. Using household survey data an approach to the income elasticities of different energy carriers (electricity, liquefied petroleum gas (LPG), natural gas, coal, and firewood) is computed. The preliminary results suggest that all variables reported the expected sign except for firewood. When the income of Mexican rural households increases by 1%, their consumption of electricity, LPG, natural gas, and firewood, increases by 0.35%, 0.24%, 0.44%, and 0.12%, respectively. Additionally, when the income varies by 1%, the coal consumption decreases by 0.09%. |
| Keywords: | Modern energy, income elasticity, rural households, Sustainable Development Goals., Resource /Energy Economics and Policy, O13, 012, Q01, |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea16:229869&r=ene |
| By: | Schleicher, Stefan P.; Köppl, Angela; Zeitlberger, Alexander |
| Abstract: | Pursuing an evidence based approach we summarize the key elements of the European Commission’s proposal of July 2015 for a reform of the EU Emissions Trading System and offer facts about the current state of EU ETS that underline the needs for such a reform. We supply key data for understanding the current state of EU ETS and report in particular the share of freely allocated allowances in emissions for the various sectors since the start of EU ETS in 2005. This is the most relevant parameter for evaluating the stringency and cost impacts of the EU ETS on sectors and installations. We provide propositions for enhancing the allocation procedure of both free and auctioned allowances, the fundamental element in the cap and trade design of this system. We link this procedure closely to the relevant suggestions of the Commission proposal and offer extensions that can make in particular the allocation of free allowances more targeted and effective. We indicate how the impacts of free allowances can be calculated both for sectors and installations and conclude that these reform steps could reduce the administrative burden of the system. |
| Keywords: | EU Emissions Trading System, Reform Options, EU Commission’s Proposal, Environmental Economics and Policy, Q53, Q54, |
| Date: | 2016–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemei:234308&r=ene |
| By: | Eregha, Bright; Mesagan, Ekundayo; Ayoola, Olawale |
| Abstract: | It is well documented in the literature that there exists a positive relationship between oil price and inflation. In this study, we found that the price of Premium Motor Spirit (PMS) remained stable until the entry of the military into the administration of the country when the then military heads of state arbitrarily increased the prices of petroleum products. We also found that there exists high positive relationship between the prices of PMS and AGO and inflation in Nigeria. We therefore conclude that rises in petroleum products prices, especially PMS and AGO, significantly impact inflation in Nigeria. With this result, we recommend that government should shelve the idea of removing subsidy on PMS for now and should focus on deregulating the downstream sector to attract private investment with the aim of encouraging local refining of petroleum products instead of importing them. This will in turn reduce domestic prices for petroleum products and consequently inflation. |
| Keywords: | Premium Motor Spirit, Automotive Gas Oil, Dual Purpose Kerosene, Inflation, Nigeria. |
| JEL: | E31 Q4 Q43 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70251&r=ene |
| By: | Sambit Bhattacharyya (Department of Economics, University of Sussex); Louis Conradie (Department of Economics, University of Sussex); Rabah Arezki (Research Department, IMF) |
| Abstract: | If the central government is a revenue maximizing Leviathan then resource discovery and democratization should have a discernible impact on the degree of fiscal decentralization. We systematically explore this effect by exploiting exogenous variation in giant oil and mineral discoveries and permanent democratization. Using a global dataset of 77 countries over the period 1970 to 2012 we find that resource discovery has very little effect on revenue decentralization but induces expenditure centralization. Oil discovery appears to be the main driver of centralization and not minerals. Resource discovery leads to centralization in locations which have not experienced permanent democratization. Tax and intergovernmental transfers respond most to resource discovery shocks and democratization whereas own source revenue, property tax, educational expenditure, and health expenditure do not seem to be affected. Higher resource rent leads to more centralization and the effect is moderated by democratization. |
| Keywords: | Resource discovery; Resource rent; Democratization; Fiscal decentralization |
| JEL: | H41 H70 O11 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:sus:susewp:8916&r=ene |
| By: | Sam, Anh; Bi, Xiang |
| Abstract: | Anaerobic digestion (AD) systems can reduce methane emissions and ground water contamination by turning livestock wastes into renewable energy. However,the adoption of AD systems is costly,and the initial capital investment is formidable especially for medium and small farms. To promote adoption of AD systems,the EPA and state governments have implemented various incentive programs providing technical and financial assistance. The objective of this study is to examine the effectiveness of state-level incentives in promoting the adoption of AD systems in the U.S. We compile a panel data for 48 states in the U.S. from 2003 to 2015 on the state-level adoption rate of AD systems,livestock production,and incentive programs to promote the adoption of AD systems. We compare the effectiveness of performance-based incentives,loan,and tax credit while controlling for state-level adoption of renewable portfolio standards and net metering,climate,livestock production,and types of AD systems. We expect to find that adoption rates for AD systems are significantly greater with performance-based incentives than with loan and tax credits. |
| Keywords: | Environmental Economics and Policy, Resource /Energy Economics and Policy, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea16:230102&r=ene |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1565&r=ene |
| By: | Potori, Noorbert; Stark, Andras |
| Abstract: | The oil produced from sunflower seed is primarily used for human consumption. It can substitute for other edible vegetable oils, such as rapeseed oil, processed into biodiesel in the EU. This paper assesses the influence of crude oil futures on new crop sunflower seed futures in Hungary during the growing seasons of sunflower by applying standard cointegration analysis for the period 2004-2013. Tests were performed for the entire period and each sunflower growing season. For comparison, the influence of Paris rapeseed futures on sunflower seed futures was also assessed. The contrasting estimations for the global and seasonal characteristics of the variables suggest that standard cointegration analysis may not be appropriate for multiannual price series of agricultural commodities with strong seasonality in production because it will not capture the periodical shocks in supply and demand. The results are briefly discussed from the aspect of the fundamentals of the sunflower seed market. |
| Keywords: | Price cointegration, sunflower seed, crude oil, growing seasons, Hungary, Agribusiness, Crop Production/Industries, Demand and Price Analysis, C18, O13, Q11, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:212710&r=ene |
| By: | Karoline Rogge (SPRU – Science Policy Research Unit, University of Sussex, Brighton BN1 9SL, UK; Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI), Karlsruhe, Germany) |
| Abstract: | The Paris Climate Agreement calls for decarbonization of the economy in the second half of this century. This requires a radical redirection and acceleration of technological change towards low- and particularly zero-carbon solutions. Global carbon pricing is seen as a key enabler for such decarbonization, with the European Union’s Emission Trading System (EU ETS) serving as an important pillar. In this paper, I therefore re-view the evidence on the innovation impact of the EU ETS. The review shows a very limited effect of the scheme on technological innovation, but there are clear signs of it having stimulated organizational innovation, with the impact being more pronounced for the electricity sector than for industry. The initially high expectations of the EU ETS regarding technological innovation largely dissipated once the scheme’s lack of strin-gency became apparent and prices collapsed accordingly. Also, for many of the rather incremental innovations that have taken place, the EU ETS was shown to be only one contributing factor among others, with the broader policy mix and long-term targets playing a particularly pivotal role in stimulating innovation. In contrast, there is clear evidence that the EU ETS has been a key driver of various organizational innovations, including making climate change a top management issue. However, so far, these or-ganizational innovations have only had limited effects on shifting corporate strategies towards low-carbon solutions because of low carbon prices, the relatively high share of free allocations in industry, and more pressing business concerns. Despite this, the scheme’s positive impact on organizational innovations should not be underestimated, as these constitute a necessary precondition for future technological innovations. The findings suggest that the Commission’s proposal for the fourth trading period of the EU ETS points in the right direction, but further efforts will be needed to significantly in-crease the scarcity of EU allowances and the share of auctioning in order to fully un-leash the scheme’s transformative power. If the identified shortcomings are not ad-dressed, the EU ETS cannot play its foreseen role in guiding the decarbonization of the European economy, for which innovations in low-carbon solutions are a fundamental requirement. |
| Keywords: | climate policy, emission trading, EU ETS, innovation |
| JEL: | O31 O38 Q54 Q55 Q58 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2016-09&r=ene |
| By: | ZEKI AYAG (Kadir Has University) |
| Abstract: | Solar energy is the most readily available source of energy, and one of the most important sources of the renewable energy, because it is non-polluting and helps in lessening the greenhouse effect. Main problem of establishing a solar power plant is to determine its location. In the presence of many location alternatives and evaluation criteria, a multiple-criteria decision making problem arises. In this work, the location problem will be solved by using analytic hierarchy process (AHP) to figure out the most satisfying alternative. A numerical example is also included to show the proposed methodology in Turkey. . . . . |
| Keywords: | Solar energy, multiple-criteria decision making, analytic hierarchy process |
| JEL: | C00 |
| URL: | http://d.repec.org/n?u=RePEc:sek:ibmpro:3405942&r=ene |
| By: | Mugera, Harriet; Gilbert, Christopher |
| Abstract: | High fuel prices combined with legislative policies have increased biofuel production causing high food prices and establishing a link between energy and agricultural markets. This paper examines price relationships between agricultural food and energy commodities over the recent decade. A structural change analysis on weekly prices of crude oil, gasoline, ethanol, corn and wheat is conducted. The presence and the nature of structural breaks are empirically tested on single prices and on the price relationships. A cointegration analysis is conducted accounting for the presence of structural breaks. We find that commodity prices have experienced structural changes both at price levels and in the price relationships. The energy and food commodity prices exhibit long run relationships when structural breaks are considered. The break dates identified are in line with biofuel policy interventions and changes in policy regimes in the United States. |
| Keywords: | commodity prices, energy prices, structural breaks, co-breaking cointegration, policies. JEL codes:, Financial Economics, Food Consumption/Nutrition/Food Safety, C10, C32, Q10, Q18, Q28, Q42, Q48, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:212505&r=ene |
| By: | Amendola, Alessandra; Candila, Vincenzo; Scognamillo, Antonio |
| Abstract: | Modeling crude oil volatility is of substantial interest for both energy researchers and policy makers. This paper aims to investigate the impact of the U.S. monetary policy on crude oil future price (COFP) volatility. By means of the recently proposed generalized autoregressive conditional hetroskedasticity mixed data sampling (GARCH-MIDAS) model, a proxy of the U.S. monetary policy is included into the COFP volatility equation, alongside with other macroeconomic determinants. Strong evidence that an expansionary monetary policy is associated with an increase of the COFP volatility is found. In particular, an expansionary (restrictive) variation in monetary policy anticipates a positive (negative) variation in COFP volatility. Furthermore, an out of sample forecasting procedure shows that the estimated GARCH-MIDAS model has a superior predictive ability with respect to that of the GARCH(1,1), when the U.S. monetary policy exhibits severe changes in the run-up period. |
| Keywords: | volatility, garch-midas, firecasting, crude oil, Agricultural and Food Policy, c22, c58, e30, q43, |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aiea15:207860&r=ene |
| By: | Spiller, Jörg; Bolle, Friedel |
| Abstract: | In a laboratory experiment we investigate inter-generational concerns and myopia in a dynamic Public Good game. Groups of four played a 15-period game where they could either invest in a green sector or in a more profitable brown sector that builds a pollution stock. We find that subjects are more cooperative when their final pollution stock will be inherited by another group in a later session. Furthermore, we observe that defection from a negotiated common plan is higher when subjects are in a loss frame, negotiated plans are more ambitious. We analyze our results in reference to several social preference theories and find that Linear Altruism is most supported in such a dynamic environment. |
| Keywords: | Dynamic,Environmental Economics,Experimental Economics,Inter-Generation,Public Good |
| JEL: | H41 C91 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:euvwdp:383&r=ene |
| By: | Stefan Seifert |
| Abstract: | Scale characteristics are key properties of production functions that determine optimal firm sizes, and have considerable policy implications for sectors undergoing restructuring. However, estimates of scale characteristics typically vary with the assumptions of the underlying empirical model. This paper derives estimators of scale efficiency and scale elasticity for semi-parametric stochastic non-smooth envelopment of data (StoNED) that are based on few assumptions and rely neither on a functional form nor on distributional assumptions, but satisfy basic microeconomic properties. The estimators are applied to a unique sample covering 124 natural gas-fired power plants operating in Germany in 2011. Results indicate that on average plants operate under constant to slightly decreasing returns-to-scale, and scale inefficiency is found to be overall rather low. However, considerable improvement potential exists due to technical inefficiency. The results allow the strong fragmentation of gas-fired electricity generation in Germany, but emphasize the importance of using best practices on plant level. |
| Keywords: | Stochastic Non-Smooth Envelopment of Data (StoNED), Returns-to-scale, Scale Elasticities, Scale Effciency, Gas-fired Electricity Generation, Germany |
| JEL: | D24 C14 O13 L94 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1571&r=ene |
| By: | Eliasson, Jonas (KTH); Pyddoke, Roger (VTI); Swärdh, Jan-Erik (VTI) |
| Abstract: | We analyse distributional effects of four car-related tax instruments: an increase of the fuel tax, a new kilometre tax, an increased CO2-differentiated vehicle ownership tax, and a CO2-differentiated purchase tax on new cars. Distributional effects are analysed with respect to income, lifecycle category and several spatial dimensions. All the analysed taxes are progressive over most of the income distribution, but just barely regressive if the absolutely highest and lowest incomes are included. However, the variation within income groups is substantial; the fraction of the population who suffer substantial welfare losses relative to income is much higher in lower income groups. The two most important geographical distinctions are between rural and urban areas (including even small towns), and between central cities and satellites/suburbs; these spatial dimensions matter much more for distributional effects than for example whether an area is remote or sparsely populated. |
| Keywords: | Distributional effects; Equity effects; Fuel tax; Car ownership tax |
| JEL: | D63 H23 R48 |
| Date: | 2016–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2016_011&r=ene |
| By: | Isabell Koske; Faisal Naru; Philipp Beiter; Isabelle Wanner |
| Abstract: | This paper provides analysis of the regulatory governance of network sector regulators in electricity, gas, telecommunications, rail, airport and ports within the OECD as it stood in 2013. The paper explores the governance arrangements of network sector regulators as described by law and analyses key institutional characteristics of network sector regulators such as appointments of board members, to whom regulators are formally accountable to, and what functions are most carried out by regulators. The paper also includes a new set of indicators on the regulatory management of the network sectors in terms of their independence, accountability and scope of action, reflecting the OECD Best Practice Principles on Regulatory Policy for the Governance of Regulators and as part of the updated 2013 Product Market Regulation (PMR) Indicators. Pratiques de gestion réglementaire dans les pays de l'OCDE Ce document fournit une analyse, au sein de l'OCDE, de la gouvernance des organismes de réglementation en vigueur en 2013 dans les secteurs de réseau, électricité, gaz, télécommunications, transport ferroviaire, aéroport et ports. Le document explore les modalités de gouvernance des organismes de réglementation des secteurs de réseau, comme décrit par la loi et analyse les caractéristiques institutionnelles fondamentales de ces organismes telles que les nominations des membres du conseil d'administration, auxquels les régulateurs doivent formellement rendre compte, et les fonctions le plus effectuées par les organismes de réglementation. Le document comprend également une nouvelle série d'indicateurs sur la gestion de la réglementation dans les industries de réseau en fonction de leur indépendance, leur responsabilité et la portée de leur action fondée sur le principe des meilleures pratiques de l'OCDE en terme de politique réglementaire pour la gouvernance des organismes de réglementation ; ces indicateurs s’inscrivent dans le cadre de la mise à jour 2013 des indicateurs de réglementation du marché des produits (RMP). |
| Keywords: | electricity, gas, regulators, economic regulator, regulatory powers, pouvoirs de réglementation, organismes de réglementation, électricité, organismes de réglementation économique, gaz |
| JEL: | K2 L5 |
| Date: | 2016–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1296-en&r=ene |
| By: | Siegmeier, Jan |
| Abstract: | Long-lived public infrastructure (for example roads) complements private goods (cars) and may perpetuate carbon-intensive demand patterns and technologies far into the future. Thus, climate policy must combine `direct' instruments such as carbon taxation with public investment shifts (from roads towards rails or bicycle paths). This is particularly important and complex because infrastructure supply changes slowly and carbon taxation may be politically constrained: This paper shows that if carbon taxation is non-optimal, infrastructure provision should be used to actively change private behavior. Nevertheless, if one instrument is restricted, the other may also have to be less ambitious: Intuitively, if clean infrastructure provision is non-optimal, polluting should also be penalized less (and vice versa), unless welfare gains from environmental quality are large. More precisely, for two public goods complementing private goods in utility, general second-best policy conditions are derived and applied to a specific utility function. Constrained public spending composition leaves the (Pigouvian) tax rule unchanged, but constrained taxation implies that the environmental externality enters the condition for public spending composition. Nevertheless, the second-best level of either policy instrument is below its first-best when `dirty' consumption is sufficiently important in utility. |
| Keywords: | infrastructure, public spending, carbon price, environmental tax, second-best, transport |
| JEL: | H23 H41 H54 R48 |
| Date: | 2015–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:69046&r=ene |
| By: | Watson, Dorothy; Maître, Bertrand |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb2015/2/3&r=ene |
| By: | Fischer, Carolyn |
| Abstract: | Globally and locally, government support policies for green goods (like renewable energy) are much more popular internationally than raising the cost of bads (as through carbon taxes). These support policies may encourage downstream consumption (renewable energy deployment) or upstream development and manufacturing of those technologies. The use of subsidies—particularly upstream ones—is disciplined by World Trade Organization agreements, and its subsidies code lacks exceptions for transboundary externalities like human health or resource conservation, including those related to combating global climate change. The strategic trade literature has devoted little attention to the range of market failures related to green goods. This paper considers the market for a new environmental good that when consumed downstream may provide external benefits like reduced emissions. The technology is traded internationally but provided by a limited set of upstream suppliers that may operate in imperfect markets, such as with market power or external scale economies. We examine the national incentives and global rationales for offering production and consumption subsidies in producer countries, allowing that some of the downstream market may lie in nonregulating third-party countries. Although technology producer countries can benefit from restraints on upstream subsidies, global welfare is higher without them, and market failures imply that optimal subsidies are even higher. We supplement the analysis with numerical simulations of the case of renewable energy, exploring optimal subsidies for the major renewable energy producing and consuming regions and the cost of restrictions on upstream subsidies. |
| Keywords: | International Trade, Subsidies, Imperfect Competition, Externalities, Emissions Leakage, Environmental Economics and Policy, F13, F18, H21, Q5, |
| Date: | 2016–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemmi:234311&r=ene |
| By: | Dirk Schoenmaker; Rens van Tilburg |
| Abstract: | THE ISSUE Real economic imbalances can lead to financial crisis. The current unsustainable use of our environment is such an imbalance. Financial shocks can be triggered by either intensified environmental policies, cleantech breakthroughs (both resulting in the stranding of unsustainable assets), or the economic costs of crossing ecological boundaries (eg floods and droughts due to climate change). Financial supervisors and risk managers have so far paid little attention to this ecological dimension, allowing systemic financial imbalances resulting from ecological pressures to build up. Inattention also leads to missed economic and financial opportunities from the sustainability transition. Policy Challenge To address the risk, financial institutions should measure their exposure to ecological imbalances using methodologies such as carbon and natural capital accounting. The European Union should develop and implement standards for this. Financial supervisors require financial institutions to conduct risk analysis on the basis of these exposures (stress tests). A Finance and Sustainability Risk Forum could develop and promote best practices in this field. To grasp the opportunities of green finance, financial institutions should move to long-term investing with active ownership. The European Commission and member states could create the conditions for financing the transition to a sustainable economy through an EU Green Capital Markets Plan. Transition pathways to stay within a 2°C global temperature rise Source - IPCC (2014). For references and footnotes, please download the PDF version of this Policy Brief. We face large and growing ecological imbalances. The overuse of the environment as a sink for greenhouse-gas emissions and pollution and over-exploitation of water and raw materials have led to climate change, depletion of natural resources and loss of biodiversity. The development of these ecological imbalances is partly linear and thus predictable, but is partly also highly unpredictable, especially as imbalances become larger, with sudden tipping points and feedback loops after which recovery is no longer possible (IPCC, 2014). A set of nine planetary boundaries has been identified within which there is a “safe operating space for humanity” (Rockström et al, 2009). Three boundaries have already been passed (climate change, biodiversity and the nitrogen cycle) and two are coming close to being passed (ocean acidification and the phosphorus cycle). In the Paris Agreement on climate change, concluded at the end of 2015, countries reconfirmed the target of limiting the rise in global average temperatures relative to those in the pre-industrial world to two degrees Celsius, and to pursue efforts to limit the temperature increase to 1.5°C (UNFCCC, 2015). Doing this would ensure that the stock of carbon dioxide and other greenhouse gases in the atmosphere does not exceed a certain limit. The Intergovernmental Panel on Climate Change (IPCC) estimates that the remaining carbon budget amounts to 900 gigatonnes of CO2 from 2015 onwards. The speed with which the limit is reached depends on the emissions pathway. If current emissions are not drastically cut, the 2°C limit would be reached in less than two decades (Figure 1)1. Figure 1 - Possible carbon emission trajectories Source - UK Prudential Regulation Authority (2015). The risk of late and sudden transition There are many uncertainties about climate change. Will the world succeed in limiting global warming to 1.5-2°C? If so, what will the energy system look like? What role will energy saving, carbon capture and storage and the different forms of renewable energy play? The future of technological innovation is inherently uncertain (Weitzman, 2013) as is the political will globally to address climate change. The technological uncertainties are compounded by policy uncertainty. Policy is also a driver of technological change, for instance through the amount of investment in research, and as a market maker for cleantech. If governments make an early start a ‘soft landing’ is more likely. The transition to a low-carbon economy would be orderly, allowing enough time for the physical capital stock to be replenished and for technological progress so that energy costs are kept at bearable levels (Stern, 2015). However, there is a risk of late adjustment, resulting in a hard landing. In this adverse scenario, the underlying political economy – the short-term political costs of the transition, combined with the need for global coordination of emission cuts – would lead to belated and sudden implementation of constraints on the use of carbon-intensive energy. This back-loaded policy intervention would force more severe immediate reductions in emissions. The economic impact of the energy transition On the economics of climate change, Stern (2008) calculated that starting the transition sooner rather than later is preferable2 – a finding recently confirmed by the Global Commission on the Economy and Climate (2014). |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polbrf:13952&r=ene |
| By: | Benjamin Ouvrard (ETA, CNRS and University of Strasbourg); Sandrine Spaeter (ETA, CNRS and University of Strasbourg) |
| Abstract: | We consider a model where individuals can voluntarily contribute to improve the quality of the environment. They differ 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 distortion, tax |
| JEL: | Q50 D8 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2016.15&r=ene |
| By: | Crampes, Claude; Moreaux, Michel |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:30420&r=ene |
| By: | Jean-Thomas Bernard (Department of Economics, University of Ottawa); Lynda Khalaf (Carleton University); Maral Kichian (Graduate School of Public and International Affairs, University of Ottawa); Clement Yelou (Laval University) |
| Abstract: | Expert outlooks on the future path of oil prices are often relied on by industry participants and policymaking bodies for their forecasting needs. Yet little attention has been paid to the extent to which these are accurate. Using the regular publications by the Energy Information Administration (EIA), we examine the accuracy of annual recursive oil price forecasts generated by the National Energy Modeling System model of the Agency for forecast horizons of up to 15 years. Our results reveal that the EIA model is quite successful at beating the benchmark random walk model, but only at either end of the forecast horizons. We also show that, for the longer horizons, simple econometric forecasting models often produce similar if not better accuracy than the EIA model. Among these, time-varying specifications generally also exhibit stability in their forecast performance. Finally, while combining forecasts does not change the overall patterns, some additional accuracy gains are obtained at intermediate horizons, and in some cases forecast performance stability is also achieved. |
| Keywords: | Oil price, expert outlooks, long run forecasting, forecast combinations |
| JEL: | Q47 C20 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ott:wpaper:1510e&r=ene |