nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒06‒04
fifty-six papers chosen by
Roger Fouquet
London School of Economics

  1. Policies for decarbonizing a liberalized power sector By David Newbery
  2. Energy subsidies at times of economic crisis: A comparative study and scenario analysis of Italy and Spain By Arjun Mahalingam; David Reiner
  3. Subsidies, Clean Energy and Climate Change By Daniel Rais
  4. Which Smart Electricity Service Contracts Will Consumers Accept? The demand for compensation in a platform market By Laura-Lucia Richter; Michael G. Pollitt
  5. Distributional and Welfare Impacts of Renewable Subsidies in Italy By Distante, Roberta; Verdolini, Elena; Tavoni, Massimo
  6. Understanding The Impact of Offshore Wind Energy Development on Beach Trip Demand to the Coast of North Carolina By Harker, Amanda; Landry, Craig; Bergstrom, John
  7. How does renewables competition affect forward contracting in electricity markets? By Robert A. Ritz
  8. Energy efficiency standard and labeling program and consumer welfare : a case of the air conditioner market in China By Watanabe, Mariko; Kojima, Michikazu
  9. Experimental Evidence on the Demand for and Costs of Rural Electrification By Kenneth Lee; Edward Miguel; Catherine Wolfram
  10. Overcoming barriers to electrical energy storage: Comparing California and Europe By Francisco Castellano; Michael G. Pollitt
  11. The EU power sector needs long-term price signals By Genoese, Fabio; Drabik, Eleanor; Egenhofer, Christian
  12. Strategic bidding, wind ownership and regulation in a decentralised electricity market By Walsh, Darragh; Malaguzzi Valeri, Laura; Di Cosmo, Valeria
  13. Lock-in of mature innovation systems, The transformation toward clean concrete in the Netherlands By Wesseling, Joeri H.; van der Vooren , Alexander
  14. Transition to clean technology By Acemoglu, Daron; Akcigit, Ufuk; Hanley, Douglas; Kerr, William R.
  15. Temperature Effects are more Complex than Degrees: A Case Study on Residential Energy Consumption By Lee, Gi-Eu
  16. Energy Prices, Pass-Through, and Incidence in U.S. Manufacturing By Sharat Ganapati; Joseph S. Shapiro; Reed Walker
  17. The Political Economy of Energy Innovation By Shouro Dasgupta; Enrica De Cian; Elena Verdolini
  18. Elasticity Estimation for Nested Production Functions with Generalized Productivity By Frieling, Julius; Madlener, Reinhard
  19. The Role of Risk and Trust Attitudes in Explaining Residential Energy Demand: Evidence from the United Kingdom By Benjamin Volland
  20. Renewable Natural Gas as a Solution to Climate Goals: Supply Estimates and Response to California’s Low Carbon Fuel Standard By Scheitrum, Daniel P.; Parker, Nathan C.
  21. The Heath Implications of Unconventional Natural Gas Development in Pennsylvania By Peng, Lizhong; Meyerhoefer, Chad; Chou, Shin-Yi
  22. Who adopts LPG as the main cooking fuel and why? Empirical evidence on Ghana based on national survey By Karimu, Amin; Mensah, Justice Tei; Adu, George
  23. Federal Coal Program Reform, the Clean Power Plan, and the Interaction of Upstream and Downstream Climate Policies By Todd Gerarden; W. Spencer Reeder; James H. Stock
  24. Export Restrictions in relation to Extractive Industries By Daniel Rais
  25. The U.S. Oil Supply Revolution and the Global Economy By Kamiar Mohaddes; Mehdi Raissi
  26. OPEC vs US shale oil: Analyzing the shift to a market-share strategy By Alberto Behar; Robert A. Ritz
  27. Flexible-fuel automobiles and CO2 emissions in Brazil: a semiparametric analysis using panel data By Almeida, Alexandre N.; Santos, Augusto S.; Halmenschlager, Vinícius; Gilio, Leandro; Diniz, Tiago B.; Ferreira, Alexandre A. S.
  28. What is the role of Emerging Asia in global oil prices? By Melolinna, Marko
  29. Estimating relative price impact: The case of Brent and WTI By Ye, Shiyu; Karali, Berna
  30. The effects of opportunity costs, supply chain logistics and carbon balances on advanced biofuel production By De Laporte, Aaron; Ripplinger, David
  31. The effect of the ethanol mandate on the Conservation Reserve Program By Ifft, Jenny; Rajagopal, Deepak; Ryan, Weldzius
  32. Stochastic Techno-Economic Analysis of Alcohol-to-Jet Fuel Production By Yao, Guolin; Staples, Mark; Malina, Robert; Tyner, Wallace
  33. Biofuel Potential in Mexico: Land Use, Economic and Environmental Effects By Nuñez, Hector M.
  34. Corn Ethanol and US Biofuel Policy Ten Years Later: A Systematic Review and Meta-analysis By Hochman, Gal; Zilberman, David
  35. A Review of the Current State of Research on the Water, Energy, and Food Nexus By Aiko Endo; Izumi Tsurita; Kimberly Burnett; Pedcris M. Orencio
  36. Contracting for Perennial Energy Crops Under Uncertainty and Costly Reversibility By McCarty, Tanner; Sesmero, Juan; Gramig, Ben
  37. Assessing the potential for food and energy self-sufficiency on the island of Kauai, Hawaii By Karl Kim; Kimberly Burnett; Jiwnath Ghimire
  38. Pushing and Pulling Environmental Innovation: R&D Subsidies and Carbon Taxes By Clancy, Matthew; Moschini, GianCarlo
  40. Spatial spillover effects in determining China's regional CO2 emission growth : 2007-2010 By Meng, Bo; Xue, Jinjun
  41. Southeast Asia and the Economics of Global Climate Stabilization - Report By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  42. An Economic and Environmental Assessment of New Zealand's GHG Mitigation Policies: Modelling with E3ME By Sina Ahmadzadeh Mashinchi
  43. Financing for climate change in Latin America and the Caribbean in 2014 By Samaniego, Joseluis; Schneider, Heloísa
  44. Potential Greenhouse Gas Emission Reductions from Optimizing Urban Transit Networks By Madanat, Samer; Horvath , Arpad; Mao, Chao; Cheng, Han
  45. El impacto de la forma y estructura espacial urbana sobre las emisiones de CO2 en Concepción (Chile). ¿Es compatible una baja densidad residencial con un bajo nivel de emisiones? By Ivan Muñiz Olivera; Carolina Rojas; Carles Busuldu; Alejandro García; Mariana Filipe
  46. Globis final report on Integrated Scenarios D30 By Florian Leblanc; C. Cassen; Thierry Brunelle; Patrice Dumas; Aurélie Méjean
  47. A State-specific Analysis of Environmental Kuznets Curve for the United States By Yang, Meng; Qiu, Feng
  48. Klimaschutzpolitik in Europa: Wie kann ein Politikmix gestaltet werden? By Andor, Mark Andreas; Frondel, Manuel; Neuhoff, Karsten; Petrick, Sebastian; Rüster, Sophia
  49. Aggregate green productivity growth in OECD’s countries By Zhiyang Shen; Jean-Philippe Boussemart
  50. The Wisdom of the Economic Crowd: Calibrating Integrated Assessment Models Using Consensus By Howard, Peter H.; Derek, Sylvan
  51. Are Free Trade Agreements Good for the Environment? A Panel Data Analysis By Nemati, Mehdi; Hu, Wuyang; Reed, Michael
  52. The Impact of Pollution Burden on Micro-Level Residential Sorting By Connolly, Cristina; Livy, Mitchell R.
  53. Long-Run Health Consequences of Air Pollution: Evidence from Indonesia's Forest Fires of 1997 By Younoh Kim; Scott Knowles; James Manley; Vlad Radoias
  54. From financial instability to green finance: the role of banking and monetary policies in the Eurace model By Marco Raberto; Bulent Ozel; Linda Ponta; Andrea Teglio; Silvano Cincotti
  55. Calibrating Market Model to Commodity and Interest Rate Risk By Patrik Karlsson; Kay F Pilz; Erik Schlogl
  56. By Doruk Ä°riÅŸ; Alessandro Tavoni

  1. By: David Newbery
    Abstract: Given the agreed urgency of decarbonizing electricity and the need to guide decentralized private decisions, an adequate and credible carbon price appears essential. The paper defines and quantifies the useful concept of the break-even carbon price for mature zero-carbon electricity investments. It appears an attractive alternative given the difficulty of measuring the social cost of carbon, but modelling shows it extremely sensitive to projected fuel prices, the rate of interest, and the capital cost of generation options, all of which are very uncertain. This has important implications, and justifies combining a carbon price floor with suitable long-term contracts for electricity investments. The same sensitivity demonstrated for the break-even carbon price translates into similar sensitivities for marginal abatement cost curves.
    Keywords: carbon price, electricity, investment, renewables, marginal abatement cost
    JEL: C65 Q42 Q48 Q51 Q54
    Date: 2016–02–24
  2. By: Arjun Mahalingam; David Reiner
    Abstract: From 2005-2012, Spain and Italy saw significant investment in renewable energy, most notably in onshore wind and solar, driven by generous subsidies, the expectation of rising carbon prices and falling renewables (especially solar panel) costs. As a result of the Global Financial Crisis, both countries were faced with massive fiscal deficits and were forced to curtail their renewable support schemes, although these efforts took several years to take effect after the onset of the initial crisis. Ironically, both Spain and Italy incurred the lion’s share of their liability for renewables support after the onset of the crisis particularly because of the rapid drop in costs of solar PV panels, while subsidy levels remained high. In spite of changes to their support regimes, Italy is likely to meet its 2020 climate and renewable targets, whereas Spain is unlikely to meet its 2020 renewables target based on current trajectories. Following a comparative historical survey of the two large EU member states, we present a scenario analysis that contrasts alternative futures of 2030 where renewable support remain at current levels (essentially zero) or is revived and where carbon prices stay at current low levels (€5/t CO2) or rises to levels needed to accomplish the proposed 40% EU 2030 reduction target. We find that, by 2030, in large parts of Spain, solar PV will be cost-competitive even under low-carbon price and low renewable support regimes, whereas concentrated solar power (CSP) and onshore wind, will require at least either a sustained renewable support regime or a high carbon price to become cost competitive. In Italy, solar PV becomes cost competitive in the low-carbon, low-renewable support scenario except when fossil fuel prices are unusually low. By 2030, there would be large-scale penetration of onshore wind and geothermal in Italy if there is either a high-carbon price or a high renewable support regime or both. In general, if the current levels of carbon price were to exist post-2020, both Italy and Spain would find it rather difficult to increase the penetration of renewables in their electricity mix. A high subsidy world, on the other hand, would be result in the most favourable outcome, particularly for Spain, although it may incur additional costs in comparison to a high carbon price world.
    Keywords: Renewable energy; Electricity; Scenarios; Subsidies; EU energy and climate policy, Spain; Italy
    JEL: H23 Q42 N74 O13 Q28
    Date: 2016–02–12
  3. By: Daniel Rais
    Abstract: Abstract Estimates show that fossil fuel subsidies average USD 400–600 billion annually worldwide while renewable energy (RE) subsidies amounted to USD 66 billion in 2010 and are predicted to rise to USD 250 billion annually by 2035. Domestic political rationales for energy subsidies include promoting innovation, job creation and economic growth, energy security, and independence. Energy subsidies may also serve social and environmental goals. Whether and to what extent subsidies are effective to achieve these goals or instead lead to market distortions is a matter of much debate and the trade effects of energy subsidies are complex. This paper offers an overview of the types of energy subsidies that are used in the conventional and renewable energy sectors, and their relationship with climate change, in particular greenhouse gas emissions. While the WTO’s Agreement on Subsidies and Countervailing Measures (ASCM) is mostly concerned with harm to competitors, this paper considers the extent to which the Agreement could also discipline subsidies that cause harm to the environment as a global common. Beyond the existing legal framework, this paper surveys a number of alternatives for improving the ability of subsidies disciplines to internalize climate change costs of energy production and consumption. One option is a new multilateral agreement on subsidies or trade remedies (with an appropriate carve-out in the WTO regime to allow for it if such an agreement is concluded outside it). Alternatively, climate change-related subsidies could be included as part of another multilateral regime or as part of regional agreements. A third approach would be to incorporate rules on energy subsidies in sectorial agreements, including a Sustainable Energy Trade Agreement such as has been proposed in other ICTSD studies.
    Date: 2015–02–13
  4. By: Laura-Lucia Richter; Michael G. Pollitt
    Abstract: This paper considers the heterogeneity of household consumer preferences for electricity service contracts in a smart grid context. The analysis is based on original data from a discrete choice experiment on smart electricity service contracts that was designed and conducted in collaboration with Accent and 1,892 UK electricity consumers in 2015. The results suggest that while customers are willing to pay for technical support services, they are likely to demand significant compensation to share their usage and personally identifying data and to participate in automated demand response programs. Based on these findings potential platform pricing strategies that could incentivise consumers to participate in a smart electricity platform market are discussed. By combining appropriate participation payments with sharing of bill savings, service providers could attract the number of customers required to provide the optimal level of demand response. We also examine the significant heterogeneity among customers to suggest how, by targeting customers with specific characteristics, smart electricity service providers could significantly reduce their customer acquisition costs.
    Keywords: Discrete Choice Experiment, smart energy, Willingness-to-Accept, platform markets
    JEL: C18 C38 D12 L94 Q42 Q55
    Date: 2016–05–16
  5. By: Distante, Roberta; Verdolini, Elena; Tavoni, Massimo
    Abstract: We empirically assess the distributional impacts and welfare effects of policies to incentivize renewable electricity production for the case of Italy. We use data from the Household Budget Survey between 2000 and 2010 to estimate a demand system in which energy goods' shares of expenditure are modelled using different empirical approaches. We show that the general Exact Affine Stone Index (EASI) demand system provides more robust estimates of price elasticities of each composite good than the commonly used Almost Ideal Demand System (AIDS). The estimated coefficients are used to perform a welfare analysis of the Italian renewable electricity production incentive policy. We show that different empirical approaches give rise to significantly different estimates of price elasticities and that methodological choices are the reasons for the very high elasticities of substitutions estimated using similar data by previous contributions. We find no evidence of regressivity of the incidence of the Italian renewable incentive scheme in the period under consideration. The renewable subsidies act as a middle-class tax, with the higher welfare losses experienced by households in the second to fourth quintiles of the expenditure distribution.
    Keywords: Energy Taxes, Consumer Demand System, Welfare Effects, Equity, Resource /Energy Economics and Policy, D12, H22, Q48,
    Date: 2016–05–26
  6. By: Harker, Amanda; Landry, Craig; Bergstrom, John
    Abstract: Since the OPEC oil embargo of the 1970’s, U.S. energy policy has been increasingly concentrated on the advancement of domestic renewable energy resources. In order to reduce environmental impacts, promote energy security, and provide energy for an ever-growing population the U.S. has started to transition away from conventional fossil fuels and push forward towards the use of renewables. According to the Energy Information Administration (2015), the production and consumption of one renewable resource in particular, wind energy, has experienced a substantial increase over the past decade. Wind energy is often favored due to its inexhaustible nature, capacity to produce zero greenhouse gas emissions, positive impact on local job growth, and overall cost effectiveness. However, proponents of wind energy are frequently averse to the construction of turbines due to inadequate available land, possible decreases in property values generated by increased noise levels, impaired visual aesthetics, and the intermittence of the wind resource. The objective of our study is to estimate changes in economic welfare resulting from offshore wind farm expansion in coastal North Carolina. Specifically we estimate a fixed effects negative binomial model using a combination of both revealed and stated preference data.
    Keywords: Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2016
  7. By: Robert A. Ritz
    Abstract: Higher renewables penetration reduces the incentive of conventional electricity generators to make forward commitments via forward- or retail-market contracts. This can undermine the role of forward contracting in mitigating market power. More renewables raise wholesale electricity prices in states of the world where their capacity utilizaton is low due to intermittency.
    Keywords: Electricity markets, renewable energy, forward contracting
    JEL: L13 L94 Q21 Q41
    Date: 2016–03–21
  8. By: Watanabe, Mariko; Kojima, Michikazu
    Abstract: Improving energy efficiency is an unarguable emergent issue in developing economies and an energy efficiency standard and labeling program is an ideal mechanism to achieve this target. However, there is concern regarding whether the consumers will choose the highly energy efficient appliances because of its high price in consequence of the high cost. This paper estimates how the consumer responds to introduction of the energy efficiency standard and labeling program in China. To quantify evaluation by consumers, we estimated their consumer surplus and the benefits of products based on the estimated parameters of demand function. We found the following points. First, evaluation of energy efficiency labeling by the consumer is not monotonically correlated with the number of grades. The highest efficiency label (Label 1) is not evaluated to be no less higher than labels 2 and 3, and is sometimes lower than the least energy efficient label (Label UI). This goes against the design of policy intervention. Second, several governmental policies affects in mixed directions: the subsidies for energy saving policies to the highest degree of the labels contribute to expanding consumer welfare as the program was designed. However, the replacement for new appliances policies decreased the welfare.
    Keywords: Energy, Consumers, Consumer surplus, Energy efficiency standard and labeling, Promotion policies
    JEL: F15 O14 O30
    Date: 2016–05
  9. By: Kenneth Lee; Edward Miguel; Catherine Wolfram
    Abstract: We present results from an experiment that randomized the expansion of electric grid infrastructure in rural Kenya. Electricity distribution is the canonical example of a natural monopoly. Randomized price offers show that demand for electricity connections falls sharply with price. Experimental variation in the number of connections combined with administrative cost data reveals considerable scale economies, as hypothesized. However, consumer surplus is far less than total costs at all price levels, suggesting that residential electrification may reduce social welfare. We discuss how leakage, reduced demand (due to red tape, low reliability, and credit constraints), and spillovers may impact this conclusion.
    JEL: L12 L94 O13 Q41
    Date: 2016–05
  10. By: Francisco Castellano; Michael G. Pollitt
    Abstract: Multiple market drivers suggest that electrical energy storage (EES) systems are going to be essential for future power systems within the next decade. However, the deployment of the technology is proceeding at very different rates around the world. Whereas the sector is progressing quickly in California, it is not gaining much traction, so far, in Europe. This research aims to clarify why the prospects for energy storage in Europe are not as good as they are in California. The market and regulatory framework in California and Europe are analysed critically, and changes to overcome the main barriers are recommended. The research shows that the main barriers are: inadequate definition and classification of EES in legislation; lack of markets for some ancillary services; inadequate market design that benefits traditional technologies; and the lack of need for EES in some jurisdictions. The prospects are better in California because regulation is more advanced and favourable for the technology, and regulators are collaborating with developers and utilities to analyse barriers and solutions for the technology. In Europe, there is a need to clarify the definition of EES, create new markets for ancillary services, design technology-neutral market rules and study more deeply the necessity of EES.
    Keywords: electrical energy storage, battery, market design
    JEL: L98
    Date: 2016–05–06
  11. By: Genoese, Fabio; Drabik, Eleanor; Egenhofer, Christian
    Abstract: By 2030, half of the EU’s electricity demand will be covered by renewables and will need to be accompanied by flexible conventional back-up resources. Due to the high upfront costs inherent to renewables and the progressively lower running times associated with back-up capacity, the cost of capital will have a proportionately greater impact on total costs than today. This report examines how electricity markets can be designed to provide long-term price signals, thereby reducing the cost of capital for these technologies and allowing for a more efficient transition. It finds that current market arrangements are unable to provide long-term price signals. To address this issue, we argue that a system for long-term contracts with a regulated counterparty could be implemented. A centralised system where capacity or energy or a combination of both is contracted, could be introduced for conventional and renewable capacity, based on a regional adequacy assessment and with a competitive bidding system in place to ensure cost-effectiveness. Member states face a number of legislative barriers while implementing these types of systems, however, which could be reduced by merging legislation and setting EU framework rules for the design of these contractual agreements.
    Date: 2016–04
  12. By: Walsh, Darragh; Malaguzzi Valeri, Laura; Di Cosmo, Valeria
    Abstract: Market power often emerges in wholesale electricity markets. Regulators use several strategies to limit market power: adopting bidding rules, compulsory forward markets and enhancing demand response. We study the case of the Irish Single Electricity Market (SEM), where the market will eliminate strict bidding rules to comply with the European Target Electricity Model. Using the PLEXOS unit-commitment model, we simulate the price that emerges in Cournot competition and find that it is more than 60% higher than in perfect competition. We then study how much the price varies with three measures that influence market power. Limiting thermal generators’ ownership of wind generation does not affect prices. Forcing the largest firm to sell some of its output forward decreases prices, but keeps them well above competitive levels. The most effective measure is an increase in price elasticity of demand, although existing evidence shows that it is hard to achieve. We conclude that regulatory oversight of bids will have to continue, although the Target Model will be associated with limited transparency, creating further challenges.
    Keywords: regulation; oligopoly; wind generation; forward contracts; demand response
    JEL: L1 L9
    Date: 2016–05–20
  13. By: Wesseling, Joeri H. (CIRCLE, Lund University); van der Vooren , Alexander (Sustainable Development Department, PBL)
    Abstract: Energy-intensive processing industries like the concrete industry form the base of the economy and account for a large part of greenhouse gas emissions. Sectoral transformation to cleaner basic materials is therefore crucial, and institutional pressure to do so is increasing. These sectors have nevertheless been largely omitted by socio-technical studies. This paper therefore sets out to analyze the systemic problems that inhibit the transformation of the mature innovation system of the concrete sector toward the development, diffusion and adoption of clean concrete innovations, for the case of the Netherlands. A coupled structural-functional approach has been frequently applied to identify such systemic problems, but has been limited to emerging technological innovation systems. Consequently, the approach tends to overlook the systemic lock-in that arises from interdependent systemic problems and vested interests that characterize mature innovation systems. This paper analyzes these characteristics to extend the application of the structural-functional approach to the transformation of mature innovation systems. Interviews with 28 stakeholders were conducted and triangulated with reports, websites and other documents. A list of systemic problems was identified that originate within actors, institutions, networks, technology and infrastructure and that impaired the performance of all system functions except knowledge development. Systemic problems are indeed found to be strongly interdependent, leading to systemic lock-in. Through strategic, often collective action, established firms with vested interests were able to reinforce these systemic problems to inhibit clean concrete innovation. The study concludes that systemic lock-in inhibits the sustainability transformation of the mature innovation system of concrete in the Netherlands and confirms that the application of the structural-functional approach can be extended from emerging to mature innovation systems.
    Keywords: system failures; system functions; vested interest; sectoral innovation system; sectoral system of innovation and production; technological innovation system
    JEL: O25 O31 O33 O38 Q01
    Date: 2016–05–13
  14. By: Acemoglu, Daron; Akcigit, Ufuk; Hanley, Douglas; Kerr, William R.
    Abstract: We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation–in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several rungs to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model’s quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.
    Keywords: carbon cycle, directed technological change, environment, innovation, optimal policy
    JEL: O30 O31 O33 C65
    Date: 2015–12–10
  15. By: Lee, Gi-Eu
    Abstract: An emerging body of research about climate change impacts has explored temperature effects on human activities. However, most studies use simpler identification strategies that can only explore one or two attributes relating to temperature or to its abnormalities. These simpler strategies limit the understanding of temperature effects, and there is dispute about the effectiveness of simple identification strategies. To better understand complex temperature effects on human activities, this study uses residential energy consumption as an example and develops identification strategies to capture the temperature effects resulting from temporal patterns (temperature fluctuation), abnormality (temperature departure from normal), and the interdependence among these attributes. For comparison, we use the same data set and model specification as in Deschênes and Greenstone (2011) except for specifications to capture complex temperature effects. We construct variables to capture additional temperature attributes and create the interaction terms among these attributes and temperature levels. Our findings verify the existence of complex temperature effects on energy consumption, and our paper may provoke the discussion of different strategies to better capture climate impacts on human activities.
    Keywords: Complex Temperature Effects, Energy Consumption, Climate Change, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q5, Q4,
    Date: 2016–08
  16. By: Sharat Ganapati; Joseph S. Shapiro; Reed Walker
    Abstract: This paper studies how increases in energy input costs for production are split between consumers and producers via changes in product prices (i.e., pass-through). We show that in markets characterized by imperfect competition, marginal cost pass-through, a demand elasticity, and a price-cost markup are sufficient to characterize the relative change in welfare between producers and consumers due to a change in input costs. We find that increases in energy prices lead to higher plant-level marginal costs and output prices but lower markups. This suggests that marginal cost pass-through is incomplete, with estimates centered around 0.7. Our confidence intervals reject both zero pass-through and complete pass-through. We find heterogeneous incidence of changes in input prices across industries, with consumers bearing a smaller share of the burden than standards methods suggest.
    JEL: H22 H23 L11 Q40 Q54
    Date: 2016–05
  17. By: Shouro Dasgupta (Fondazione Eni Enrico Mattei (FEEM) and CMCC); Enrica De Cian (Fondazione Eni Enrico Mattei (FEEM) and CMCC); Elena Verdolini (Fondazione Eni Enrico Mattei (FEEM) and CMCC)
    Abstract: This paper empirically investigates the effects of environmental policy, institutions, political orientation, and lobbying on energy innovation and finds that they significantly affect the incentives to innovate and create cleaner energy efficient technologies. We conclude that political economy factors may act as barriers even in the presence of stringent environmental policy, implying that, to move towards a greener economy, countries should combine environmental policy with a general strengthening of institutional quality, consider the influence of government’s political orientation on environmental policies, and the implications of the size of energy intensive sectors in the economy.
    Keywords: Energy Innovation, Environmental Policy, Patents, Political Economy
    JEL: C23 D02 O30 Q58
    Date: 2016–05
  18. By: Frieling, Julius (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: The elasticity of substitution between production factors is one of the main determinants of factor shares and their reaction to technical change. We show how using a system of simultaneously estimated equations can help to identify parameters in a nested CES production function. We evaluate how the system approach can be applied to a nested CES production function using energy as a third production factor in addition to capital and labor. We demonstrate how fixing the elasticity of the nested process substantially improves the identification of the model parameters. Using data for Germany, we find that the elasticity of substitution between energy and the capital-labor composite is only around 0.3, which implies a very low substitutability of energy in the production process. This indicates that energy availability could be a strong limiting factor for growth.
    Keywords: elasticity of substitution; factor productivity; multifactor production; econometric estimation; impossibility theorem
    JEL: C15 C30 E23 O33 O41 O47 Q43
    Date: 2016–03
  19. By: Benjamin Volland (Institute of economic research IRENE, Faculty of Economics, University of Neuchâtel, Switzerland)
    Abstract: Recent research into the determinants of household energy consumption has aimed to incorporate findings from economics, sociology and psychology in order to obtain a more comprehensive understanding of the factors determining energy demand. The current paper contributes to this nascent stream of literature by studying the relationship between risk attitudes, trust propensity and energy consumption at the household level. Drawing on the British Household Panel Survey, a well-known data set in the context of energy studies, I show that trust is negatively correlated with household energy demand, while higher risk tolerance leads to increases in residential energy use. Potential explanations for these findings are investigated, suggesting that risk preferences may be related with overall appliance stock and the size of the rebound effect.
    Keywords: Risk attitudes, Trust, Energy expenditures, BHPS, UK Households.
    JEL: Q40 Q50
    Date: 2016–05
  20. By: Scheitrum, Daniel P.; Parker, Nathan C.
    Abstract: Natural gas is a growing portion of transportation fuel consumed in California. While, natural gas has a slight environmental benefit relative to the use of conventional liquid fuels such as gasoline and diesel, the environmental performance of natural gas can be greatly improved by procuring the gas from renewable sources. We estimate the supply curves of producing natural gas from four renewable sources: (1) dairy manure, (2) municipal solid waste, (3) wastewater treatment plants, and (4) landfill gas. We also evaluate how the production of RNG will respond to California's Low Carbon Fuel Policy (LCFS) and compare the welfare impacts of the LCFS policy to an equivalent carbon tax.
    Keywords: Natural Resource Economics, Environmental Policy, Food and Agricultural Policy, Carbon Emissions, Agricultural and Food Policy, Environmental Economics and Policy, Livestock Production/Industries, Resource /Energy Economics and Policy,
    Date: 2016–05
  21. By: Peng, Lizhong; Meyerhoefer, Chad; Chou, Shin-Yi
    Abstract: We investigate the health impacts of unconventional natural gas development of Marcellus shale in Pennsylvania between 2001 and 2013 by merging well permit data from Pennsylvania Department of Environmental Protection with a database of all inpatient hospital admissions. Through a difference-in-differences regression analysis that compares changes in hospitalization rates over time for air pollution-sensitive disease in counties with unconventional gas wells to changes in hospitalization rates in non-well counties, we find significant associations between shale gas development and hospitalizations for acute myocardial infarction (AMI), pneumonia, and upper respiratory infections (URI). In particular, we find that county-level hospitalization rates for AMI among young adults (aged 20-44) increased by 24 percent due to shale gas development. Hospitalizations for pneumonia and URI also increased by 8.5 percent and 17 percent, respectively, among the elderly. These adverse effects on health are consistent with higher levels of air pollution resulting from unconventional natural gas development.
    Keywords: shale gas development, air pollution, pneumonia, asthma, Community/Rural/Urban Development, Environmental Economics and Policy, Health Economics and Policy, I15, Q53, O13,
    Date: 2016–05
  22. By: Karimu, Amin (CERE and the Department of Economics, Umeå University); Mensah, Justice Tei (Department of Economics, Swedish University of Agricultural Sciences); Adu, George (The Nordic Africa Institute and Department of Economics, Kwame Nkrumah University of Science and Technology Kumasi)
    Abstract: The aim of this paper is to identify the factors that influence the probability of adopting LPG as the main cooking fuel in Ghana using household level data gleaned from last two nationwide household surveys (GLSS 5 & GLSS 6). Using a flexible semi-parametric specification, the following were uncovered. First, we find socioeconomic and demographic factors such as income, education, access to urban infrastructure, location of household, as key drivers of households' choice of LPG as main cooking energy source. Again the influences of these factors are stable across time, and with a strong price effect. The evidence shows that urban households with better socioeconomic and demographic factors are likely to adopt LPG as the main cooking fuel relative to households in rural areas and also urban households with poor socioeconomic and demographic factors. Finally, we observe that the imposition of fully parametric structure (functional form) prior to estimation on factors such as age of household head, income and household size as done in the literature is inappropriate, at least in the case of Ghana and tend to bias the marginal effects. There is strong evidence of variations in the response rate of LPG adoption over the domains of income, household size and the age of the household head. The results suggest a policy dichotomy between rural and urban dwellers for it to be effective.
    Keywords: Fuels; cooking; households; development; energy poverty; Ghana
    JEL: C14 O13 Q41 Q42
    Date: 2016–04–26
  23. By: Todd Gerarden; W. Spencer Reeder; James H. Stock
    Abstract: Coal mined on federally managed lands accounts for approximately 40% of U.S. coal consumption and 13% of total U.S. energy-related CO2 emissions. The U.S. Department of the Interior is undertaking a programmatic review of federal coal leasing, including the climate effects of burning federal coal. This paper studies the interaction between a specific upstream policy, incorporating a carbon adder into federal coal royalties, and downstream emissions regulation under the Clean Power Plan (CPP). After providing some comparative statics, we present quantitative results from a detailed dynamic model of the power sector, the Integrated Planning Model (IPM). The IPM analysis indicates that, in the absence of the CPP, a royalty adder equal to the social cost of carbon could reduce emissions by roughly 3/4 of the emissions reduction that the CPP is projected to achieve. If instead the CPP is binding, the royalty adder would: reduce the price of tradeable emissions allowances, produce some additional emissions reductions by reducing leakage, and reduce wholesale power prices under a mass-based CPP but increase them under a rate-based CPP. A federal royalty adder increases mining of non-federal coal, but this substitution is limited by a shift to electricity generation by gas and renewables.
    JEL: Q38 Q54 Q58
    Date: 2016–04
  24. By: Daniel Rais
    Abstract: This paper considers concrete policy options to better regulate the use of export restrictions in relation to extractive industries. It briefly describes recent trends in the use of export restrictions on mineral and energy resources. It gives an account of the main shortcomings in the WTO legal treatment of export restrictions. It accordingly discusses possible avenues for reforming existing WTO disciplines in the interest of secure access to supplies, while still taking into account the need to preserve some policy space for host countries to use such measures as legitimate development tools.
    Date: 2015–05–01
  25. By: Kamiar Mohaddes; Mehdi Raissi
    Abstract: This paper investigates the global macroeconomic consequences of falling oil prices due to the oil revolution in the United States, using a Global VAR model estimated for 38 countries/regions over the period 1979Q2 to 2011Q2. Set-identification of the U.S. oil supply shock is achieved through imposing dynamic sign restrictions on the impulse responses of the model. The results show that there are considerable heterogeneities in the responses of different countries to a U.S. supply-driven oil price shock, with real GDP increasing in both advanced and emerging market oil-importing economies, out-put declining in commodity exporters, inflation falling in most countries, and equity prices rising worldwide. Overall, our results suggest that following the U.S. oil revolution, with oil prices falling by 51 percent in the .first year, global growth increases by 0.16 to 0.37 percentage points. This is mainly due to an increase in spending by oil importing countries, which exceeds the decline in expenditure by oil exporters.
    Keywords: Tight oil, shale oil, fracking revolution, oil price decline, oil supply, global macroeconometric modeling, and international business cycle
    JEL: C32 E17 F44 F47 O13 Q43
    Date: 2016–01–09
  26. By: Alberto Behar; Robert A. Ritz
    Abstract: In November 2014, OPEC announced a new strategy geared towards improving its market share. Oil-market analysts interpreted this as an attempt to squeeze higher-cost producers, notably US shale oil, out of the market. Over the next year, crude oil prices crashed, with large repercussions for the global economy. We present a simple equilibrium model that explains the fundamental market factors that can rationalize such a “regime switch” by OPEC. These include: (i) the growth of US shale oil production; (ii) the slowdown of global oil demand; (iii) reduced cohesiveness of the OPEC cartel; (iv) production ramp-ups in other non-OPEC countries. We show that these qualitative predictions are broadly consistent with oil market developments during 2014-15. The model is calibrated to oil market data; it predicts accommodation up to 2014 and a market-share strategy thereafter, and explains large oil-price swings as well as realistically high levels of OPEC output.
    Keywords: Crude oil, OPEC, price crash, shale oil, market share, limit pricing
    JEL: L12 L71 Q41
    Date: 2016–03–31
  27. By: Almeida, Alexandre N.; Santos, Augusto S.; Halmenschlager, Vinícius; Gilio, Leandro; Diniz, Tiago B.; Ferreira, Alexandre A. S.
    Abstract: The objective of this paper is to investigate the relationship between the fleet of flex-fuels vehicles and CO2 emissions in Brazil. We analyzed the robustness of parametric and semiparametric analyses using a panel data set at the state level from 1998 to 2013. In both analyses, we find that there is a strong negative correlation between CO2 emissions and flex-fuels vehicles. Moreover, our results also suggest that there are: 1) there is evidence of an Environment Kuznets Curve for flex-fuel vehicles; 2) a negative relationship between sugar cane cropped area (due to carbon sequestration) and CO2 emissions and; 3) a positive relationship between livestock and CO2 emissions.
    Keywords: flex-fuels vehicles, CO2 emissions, semiparametric models, Brazil, Environmental Economics and Policy, C14, O13, Q53,
    Date: 2016–05–24
  28. By: Melolinna, Marko
    Abstract: This paper studies the effects of demand shocks caused by Emerging Asian (EMA) countries on oil prices over the past two decades, using vector autoregression models. The analysis builds on previous work done on identifying different types of oil shocks using structural time series methods. However, uniquely, this paper introduces a commodity demand indicator for EMA economies that is based on data independent of oil production and consumption data, thus properly accounting for oil demand pressures stemming from macroeconomic conditions in the EMA economies and the rest of the world. The analysis strongly suggests that EMA demand shocks have had a persistent and statistically significant effect on the level and variation of global oil prices over the past two decades. This result differs from some of the previous literature and hence proves that the choice of oil demand indicator in an oil-market VAR makes a material difference for the results. Furthermore, tentative evidence suggests that the effect of EMA demand is mainly driven by demand dynamics in China. The results of the benchmark model are robust to different sample periods and to variations in the definition of the oil demand indicators, as well as to an alternative identification strategy based on sign restrictions. Publication keywords: macroeconomic shocks, oil markets, sign restrictions, vector autoregression
    JEL: C32 E32 Q43
    Date: 2014–09–29
  29. By: Ye, Shiyu; Karali, Berna
    Keywords: Demand and Price Analysis,
    Date: 2016–05–25
  30. By: De Laporte, Aaron; Ripplinger, David
    Abstract: Changes in crop prices have encouraged farmers to consider alternatives, such as potential advanced bioenergy feedstocks, including energy beets. This paper employs an integrated biophysical, economic and GIS-based transportation model to examine the supply of beet-bioethanol from five sites in North Daktoa. The study finds that beet bioethanol could provide net benefits to farmers and ethanol producers in the state, under current market conditions, but only if the bioethanol plant site is carefully selected. More specifically, a 20,000,000 gallon ethanol plant in Valley City could have net returns of $436,049. This plant would acquire 760,000 tons of beets from around the plant site and further east toward the Red River Valley from 22,682 acres of cropland an average distance of 15.7 miles away. The average yield of the selected cropland is 33.5 tons/ac with average net farm returns of $26.09/acre above opportunity costs. Opportunity and transportation costs can substantially change the attractiveness of croplands for beet production. The current market opportunity presented by beet bioethanol at $1.50/gal ethanol is not particularly attractive, but as ethanol prices increase, this opportunity could become attractive at a number of sites throughout the state.
    Keywords: Energy Beets, Bioenergy Supply, Bioethanol, Agribusiness, Community/Rural/Urban Development, Crop Production/Industries, Farm Management, Industrial Organization, Production Economics,
    Date: 2016–08–01
  31. By: Ifft, Jenny; Rajagopal, Deepak; Ryan, Weldzius
    Keywords: corn, ethanol refineries, biofuels, Renewable Fuel Standard, Conservation Reserve Program, agricultural land use, land use change, Community/Rural/Urban Development, Crop Production/Industries, Environmental Economics and Policy, Land Economics/Use, Political Economy, Resource /Energy Economics and Policy, Q14, Q15, Q16, Q18,
    Date: 2016–05
  32. By: Yao, Guolin; Staples, Mark; Malina, Robert; Tyner, Wallace
    Abstract: This study assesses the alcohol-to-jet (ATJ) biofuel production pathway for three biomass feedstocks, and advances existing techno-economic analyses (TEA) of biofuels in three ways. First, we incorporate technical uncertainty for all by-products and co-products though statistical linkages between conversion efficiencies and input and output levels. Second, future price uncertainty is based on case-by-case time-series estimation. Third, breakeven price distributions are developed to present profitability at each price level. The stochastic dominance results show that sugarcane is the lowest cost feedstock over the entire range of uncertainty, followed by corn grain and switchgrass, with the mean breakeven jet fuel prices being $0.96/liter ($3.65/gal), $1.01/liter ($3.84/gal), and $1.38/liter ($5.21/gal), respectively. With a 75% profitability level, the breakeven prices for corn grain, sugarcane and switchgrass become $1.07/liter ($4.05/gal), $1.05/liter ($3.97/gal), and $1.53/liter ($5.81/gal), respectively. Sensitivity analyses show that technical uncertainty significantly impacts breakeven prices and NPV distributions.
    Keywords: Stochastic techno-economic analysis, breakeven price distribution, stochastic dominance, aviation biofuel, alcohol-to-jet, Environmental Economics and Policy, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy, Risk and Uncertainty, P47, Q16, Q42,
    Date: 2016
  33. By: Nuñez, Hector M.
    Abstract: This paper aims to develop a framework to forecast biofuel policies impacts about fifteen years ahead in Mexico, where there have been several attempts to introduce biofuels into the market but so far no success. Technically, we develop an endogenous-price mathematical programming model emphasizing the Mexican agricultural and fuel sectors, which are embedded in a multi-region, multi-product, spatial partial equilibrium model of the world economy. There is a module for the U.S. and another for Rest of the World. Mexico is disaggregated into 193 crop districts. Production functions are specified for 14 major crops as well as livestock. Biofuel can be produced both from dedicated crops and from agroindustrial residues. We consider three policy alternatives as well as a base case in which, as now, liquid fuels are all derived from fossil sources. The first alternative consists of subsidies to biofuel producers, the second of blending mandates and the third of both combined. Biofuel imports are allowed in all cases. Results show some losses for fuel and agricultural consumers, that are not offset by both ethanol producer and GHG emissions reduction gains. This suggests that some compensating redistribution may be needed if these policies are to be seen as politically sustainable.
    Keywords: Mexico, Land Use, Biofuels, Gasoline, Fuel Policies, Agricultural and Food Policy, Crop Production/Industries, Demand and Price Analysis, Environmental Economics and Policy, Land Economics/Use, C61, Q10, Q42, Q48, Q54,
    Date: 2016–05
  34. By: Hochman, Gal; Zilberman, David
    Abstract: We use data and estimates on biofuel impacts reported in the literature to assess some of the controversy surrounding the introduction of biofuels by conducting meta-analyses on the impacts of corn ethanol on food and fuel prices, greenhouse gases, employment, rural income, balance of trade, the United States government budget, and learning-by-doing. The meta-analyses suggest that corn ethanol has had a relatively significant impact on the income of agricultural and related agribusiness industries, employment in farm states, fuel security in terms of reducing the import of oil from abroad, and the overall balance of trade. These effects are likely the main drivers behind biofuel policies.
    Keywords: Biofuels, Energy policy, Impacts, Meta-analysis, Environmental Economics and Policy, Political Economy, Resource /Energy Economics and Policy, Q4,
    Date: 2016–05–18
  35. By: Aiko Endo (Research Department, Research Institute for Humanity and Nature); Izumi Tsurita (Department of Cultural Anthropology, Graduate School of Arts and Sciences, The University of Tokyo); Kimberly Burnett (University of Hawaii Economic Research Organization, University of Hawaii at Manoa); Pedcris M. Orencio (Catholic Relief Service Philippines (Manila Office) Urban Disaster Risk Reduction Department)
    Abstract: 1. Study region Asia, Europe, Oceania, North America, South America, Middle East and Africa. 2. Study focus The purpose of this paper is to review and analyze the water, energy, and food nexus and regions of study, nexus keywords and stakeholders in order to understand the current state of nexus research. 3. New hydrological insights Through selected 37 projects, four types of nexus research were identified including water-food, water-energy-food, water-energy, and climate related. Among them, six projects (16%) had a close linkage with water-food, 11 (30%) with water-energy-food, 12 (32%) with water-energy, and eight (22%) with climate. The regions were divided into Asia, Europe, Oceania, North America, South America, Middle East and Africa. North America and Oceania had a tendency to focus on a specific nexus type, water-energy (46%) and climate (43%), while Africa had less focus on water-energy (7%). Regarding keywords, out of 37 nexus projects, 16 projects listed keywords in their articles. There were 84 keywords in total, which were categorized by the author team depending on its relevance to water, food, energy, climate, and combination of water-food-energy-climate, and 40 out of 84 keywords were linked with water and only 4 were linked with climate. As for stakeholders, 77 out of 137 organizations were related to research and only two organizations had a role in media.
    Keywords: nexus type; nexus region; nexus keywords; nexus stakeholders
    Date: 2016–05
  36. By: McCarty, Tanner; Sesmero, Juan; Gramig, Ben
    Abstract: This paper addresses the impact that different contracts can have on a farmer’s willingness to grow perennial crops, and both the risk the cost effectiveness of each type. Growing perennial energy crops such as poplar, requires large up front capital costs that are largely irreversible. It is also associated with highly volatile returns that can discourage cultivation. Traditional approaches to predict the entry threshold for a given project, such as NPV or Marshallian entry neglect to account for the uncertain, sunk, and intertemporal nature of these types of problems and thus under-estimate the profitability required for entry (Dixit and Pindyck, 1994). This study addresses this problem by using real options analysis. Higher degrees of uncertainty and irreversibility translate into higher premiums on entry due to the value of waiting for more information. Our results suggest that different contracts can erode some of this premium. This study finds the specific type of contract that would trigger cultivation at the lowest possible cost to the biofuel plant. This study considers three different types of payment (performance, acreage, and cost index) to induce investment into poplar tree cultivation. It solves for the entry and exit net revenue thresholds under multiple levels and payment types, using real options. It then uses this threshold to calculate performance, acreage, and the total payment required for entry on a per ton of biomass basis.
    Keywords: real options, contracting, uncertainty, costly reversibility, Crop Production/Industries, Resource /Energy Economics and Policy, Risk and Uncertainty,
    Date: 2016
  37. By: Karl Kim (Department of Urban and Regional Planning, University of Hawaii at Manoa); Kimberly Burnett (University of Hawaii Economic Research Organization, University of Hawaii at Manoa); Jiwnath Ghimire (Department of Urban and Regional Planning, University of Hawaii at Manoa)
    Abstract: Food and energy security are major concerns in the Pacific and around the world. They are key planning priorities in the state of Hawaii as well. Approximately 90 percent of energy and food resources are imported to Hawaii from the continental USA or other parts of the world. While food and energy independence is a goal in many jurisdictions, assessment of the potential for local food and energy production is lacking. Research is needed to examine how agricultural lands can be used to meet food and energy demands, particularly on islands where land is limited. The contribution of this paper is the development of a community-orientated method for evaluating and prioritizing lands for food and energy self-sufficiency, based on local preferences and production possibilities. Based on a review of the literature, community meetings, and expert interviews, three scenarios were developed to assess food and energy production possibilities on Kauai. The first scenario considers maximum food production, the second assigns equal importance to food and energy production, and the third scenario maximizes energy production. This work broadens policy discussions regarding the preservation of agricultural lands on small islands.
    Keywords: Food self-sufficiency, energy production, agricultural zoning, GIS, Kauai
  38. By: Clancy, Matthew; Moschini, GianCarlo
    Abstract: We use a novel modeling framework that incorporates free entry into the R&D sector and uncertainty about technological opportunity to evaluate three policy regimes (relative to laissez faire) designed to address a market with negative environmental externalities: a carbon tax, an R&D subsidy, and a mix of the two instruments. We show carbon taxes on their own are sufficient to obtain most of the welfare gains achieved by an optimal policy mix, and that the optimal carbon tax level is relatively robust to changing modeling assumptions, in contrast to optimal R&D subsidies. We also show R&D subsidies tend to produce more disperse outcomes than a carbon tax: either more R&D entrants (when technological opportunity is favorable) or none at all (when technological opportunity is unfavorable).
    Keywords: Carbon tax, Incentive, Innovation, Renewable energy, R&D subsidy, Welfare, Environmental Economics and Policy, Industrial Organization, Research and Development/Tech Change/Emerging Technologies, H23, O31, Q42, Q55, Q58,
    Date: 2016
    Date: 2016
  40. By: Meng, Bo; Xue, Jinjun
    Abstract: This paper proposes an alternative input-output based spatial-structural decomposition analysis to elucidate the role of domestic-regional heterogeneity and interregional spillover effects in determining China's regional CO2 emission growth. Our empirical results based on the 2007 and 2010 Chinese interregional input-output tables show that the changes in most regions' final demand scale, final expenditure structure and export scale give positive spatial spillover effects on other regions' CO2 emission growth, the changes in most regions' consumption and export preference help the reduction of other regions' CO2 emissions, the changes in production technology, and investment preference may give positive or negative impacts on other region's CO2 emission growth through domestic supply chains. For some regions, the aggregate spillover effect from other regions may be larger than the intra-regional effect in determining regional emission growth. All these facts can significantly help better and deeper understanding on the driving forces of China's regional CO2 emission growth, thus can enrich the policy implication concerning a narrow definition of "carbon leakage" through domestic-interregional trade, and relevant political consensus about the responsibility sharing between developed and developing regions inside China.
    Keywords: Environmental problems, Global warming, Input-output tables, Regional heterogeneity, Spillover effect, CO2 emissions, Input-output, Supply chain
    JEL: C65 Q56 R15
    Date: 2016–03
  41. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Economic Research and Regional Cooperation Department, ADB); Asian Development Bank (ADB) (Economic Research and Regional Cooperation Department, ADB); Asian Development Bank (ADB)
    Abstract: Climate change is a global concern of special relevance to Southeast Asia, a region that is both vulnerable to the effects of climate change and a rapidly increasing emitter of greenhouse gases (GHGs). This study focuses on five countries of Southeast Asia that collectively account for 90% of regional GHG emissions in recent years—Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam. It applies two global dynamic economy–energy–environment models under an array of scenarios that reflect potential regimes for regulating global GHG emissions through 2050. The modeling identifies the potential economic costs of climate inaction for the region, how the countries can most efficiently achieve GHG emission mitigation, and the consequences of mitigation, both in terms of benefits and costs. Drawing on the modeling results, the study analyzes climate-related policies and identifies how further action can be taken to ensure low-carbon growth.
    Keywords: indonesia, malaysia, philippines, thailand, viet nam, southeast asia, ghg, climate change, greenhouse gas, emissions mitigation, low-carbon growth, climate policy
    Date: 2015–12
  42. By: Sina Ahmadzadeh Mashinchi (University of Auckland)
    Abstract: This paper analyses the potential environmental and macroeconomic impacts of implementing GHG mitigation policies, notably an Environmental Tax Reform (ETR), in New Zealand using the E3M3 model, a global macroeconometric model that links the world’s economies to their energy systems and associated emissions. A number of different scenarios including a baseline are constructed to investigate the performance of the NZ ETS and other complementary mitigation policies over the commitment period (2021-2030). In the light of the model results, it is notable that the higher carbon prices especially in the early years would be necessary to achieve the ambitious GHG emissions target in New Zealand. The results also suggest that a combined NZ ETS and carbon tax approach with revenue recycling could lead to significant economic benefits. Therefore, a double dividend effect could be achievable, if New Zealand’s government recycles the revenues from carbon taxes efficiently.
    Keywords: Environmental tax reform, GHG mitigation policies, NZ ETS, Energy–environment–economy modelling, Carbon tax
  43. By: Samaniego, Joseluis; Schneider, Heloísa
    Abstract: Quantifying the resources mobilized to tackle climate change makes it possible to ascertain the region’s status in this area and the opportunities it offers. It provides countries with the detailed information they need to move forward and prepare to meet the objectives of the United Nations Framework Convention on Climate Change (UNFCCC). With accurate, up-to-date information on climate finance flows, countries can define their strategies for the transition to more sustainable development scenarios with a smaller environmental footprint and fiscal agents can identify gaps between supply and demand for specific financial instruments. The hope is that, rather than investment by fund providers and managers in sustainable initiatives with a smaller environmental footprint being an exception or anomaly, it will become a business model that gradually decouples economic development, investment and social inclusion from greenhouse gas (GHG) emissions.
    Date: 2015–12
  44. By: Madanat, Samer; Horvath , Arpad; Mao, Chao; Cheng, Han
    Abstract: Public transit systems with efficient designs and operating plans can reduce greenhouse gas (GHG) emissions relative to low-occupancy transportation modes, but many current transit systems have not been designed to reduce environmental impacts. This motivates the study of the benefits of design and operational approaches for reducing the environmental impacts of transit systems. For example, transit agencies may replace level-of-service (LOS) by vehicle miles traveled (VMT) as a criterion in evaluating design and operational changes. Previous studies have demonstrated in an idealized singletechnology transit system the potential of reducing GHG emissions by lowering the transit level-of-service (LOS) provided to the users. In this research, we extend the analysis to account for a more realistic case: a transit system with a hierarchical structure (trunk and feeder lines) providing service to a city where demand is elastic. By considering the interactions between the trunk and the feeder systems, the study provides a quantitative basis for designing and operating integrated urban transit systems that can reduce GHG emissions and costs to both transit users and agencies. The study shows that highly elastic transit demand may cancel emission reduction potentials resulting from lowering LOS, due to demand shifts to lower occupancy vehicles, causing unintended consequences. However, for mass transit modes, these potentials are still significant. Transit networks with buses, bus rapid transit or light rail as trunk modes should be designed and operated near the cost-optimal point when the demand is highly elastic, while this is not required for metro. We also find that the potential for unintended consequences increases with the size of the city. The results are robust to uncertainties in the costs and emissions parameters. The study also includes a discussion of a current transit system. Since many current transit systems have not yet been optimally designed, it should be possible to reduce their GHG emissions without sacrificing the LOS. A case study of the MUNI bus system in San Francisco is used to validate this conjecture. The analysis shows that reductions in GHG emissions can be achieved when societal costs are reduced simultaneously. The cost-optimal MUNI bus system has a societal cost of 0.15 billion $/year and emits 1680 metric tons of greenhouse gases. These figures only amount to about half of the cost and a third of the emissions in the current MUNI bus system. The optimal system has a lower spatial availability but a higher temporal availability of bus service than the current system, which highlights the potential benefits of providing more frequent express bus services.
    Keywords: Engineering, transit system design, greenhouse gas emission, feeder transit, elasticity, cost minimization, continuum approximation
    Date: 2016–05–01
  45. By: Ivan Muñiz Olivera (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona); Carolina Rojas; Carles Busuldu; Alejandro García; Mariana Filipe (Marc Quintana)
    Abstract: Esta investigación persigue dos objetivos, en primer lugar, calcular las emisiones de CO2 asociadas a la movilidad y a la vivienda de los habitantes de Concepción. El segundo objetivo es estimar el impacto de la forma y estructura espacial sobre el volumen de emisiones. A partir de un amplio cuestionario se estimaron las emisiones individuales en 19 barrios, dando como resultado un volumen llamativamente inferior al calculado en otros trabajos de naturaleza similar. En cuanto al impacto de la forma y estructura urbana, contrariamente a lo esperado, la densidad no parece ejercer impacto alguno sobre las emisiones de CO2. Sí lo hace en cambio la distancia al CBD, por lo que políticas urbanísticas orientadas a frenar la expansión suburbana pueden resultar indicadas para reducir el volumen total de emisiones.
    Date: 2016–04
  46. By: Florian Leblanc (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique); C. Cassen (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique); Thierry Brunelle (CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique); Patrice Dumas (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement); Aurélie Méjean (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The final objective of the project is to provide an integrated vision of these four case studies in WP4. This deliverable will specifically analyze the conflicts and synergies between various sustainability issues that stem from these four cross sectors linkages under different visions of globalization and development pathways. The challenge is thus to integrate sector-based analysis in a common economic framework capturing the interplay between innovation, the evolution of life styles, macroeconomic constraints (investments, trade...) in a world experiencing strong economic transitions. This report will then develop a set of comprehensive scenarios at the World and European levels. These numerical experiments will aim at analyzing i) the mechanisms that explain the tensions and synergies between various sustainability issues (climate change, land availability, energy security) under various views of the future of economic globalization and ii) ways to mitigate these tensions within the framework of each scenario. We will specifically assess the implementation of climate policies. CO2 emissions have indeed continued to grow in the past decade even more rapidly than predicted (Peters et al., 2011; Raupach et al., 2007; IPCC, 2014). This context is the result of both the diculty to decouple growth and carbon emissions in developed regions, where development styles cannot be changed overnight, and the rapid carbon-intensive growth patterns of emerging countries (IEA, 2012). It also highlights the necessity to implement ambitious measures to trigger a strong bifurcation away from carbon-intensive development paths (IPCC, 2007, 2014). Despite this scientific consensus, the implementation of ambitious global carbon emission reduction targets remains highly uncertain as shown by the difficulties to reach a global climate agreement under the United Framework Convention on Climate Change (UNFCCC), in particular since the failure of the Copenhagen Conference in 2009. This is essentially due to the concerns about (a) significant welfare and economic losses consecutive to carbon restrictions and (b) the interplay of climate measures with other sensitive political issues such as the financial crisis, poverty alleviation, job creation, energy and food security, or health and local environmental protection (e.g., see the dilemma of the climate development Gordian knot discussed in (Hourcade et al., 2008)). An integrated vision between sustainable development and the globalisation process can be a precondition to overcome this dilemma in view of post 2015 climate policies.
    Keywords: Globalisation, sustainable development, climate change.
    Date: 2014–07–25
  47. By: Yang, Meng; Qiu, Feng
    Abstract: As the regulation of carbon dioxide emissions play an increasingly important role in fighting against global warming, tracking carbon dioxide emissions trends, estimating the determinants of driving emissions, and identifying opportunities for reducing emissions will be necessary. This paper studies the relationship among carbon dioxide emissions, energy consumption and economic growth in United States at state level during the period from 1960 to 2011. It is essential to study state level determinants of carbon dioxide emissions especially for a country that differs from coast to coast in energy use, economic development strategy, and carbon dioxide reduction policy. Based on the EKC long run analysis of CO2 emissions in each state of US, we found that 13 states show inverted-U relationship between CO2 emissions and economic development, 18 states display N relationship, 6 states indicate increasing linear relationship, 6 states appear decreasing linear relationship, and the rest states show no cointegration among the variables. We also found that energy consumption always having significant and positive effect on carbon dioxide emissions. States in US have already tried a variety of strategies to reduce emission over the past decades, vary by state results of estimated EKC relationship may help indicate the past successes and failures of efforts, and provide guidance for future environmental policy.
    Keywords: Environmental Economics and Policy,
    Date: 2016
  48. By: Andor, Mark Andreas; Frondel, Manuel; Neuhoff, Karsten; Petrick, Sebastian; Rüster, Sophia
    Abstract: Zum Schutz des Klimas ergreift die Politik in Deutschland und Europa eine Vielzahl an Maßnahmen. So wird der europäische Emissionshandel durch zahlreiche Arten der Innovations- und Investitionsförderung ergänzt, aber auch durch andere Anreize sowie Informationsbereitstellung und durch Regulierungsmaßnahmen zur Nutzung neuer Technologien. Dieser Politikmix wirft die Frage auf, welche Politikinstrumente benötigt werden und nach welchen Kriterien diese bewertet werden sollten. Dieser Beitrag geht diesen Fragen nach und präsentiert als Resultat der Begleitaktivitäten des Förderschwerpunkts "Ökonomie des Klimawandels" des Bundesforschungsministeriums (BMBF) einen Konsens zwischen den Autoren über grundsätzliche Handlungsempfehlungen für eine konkrete Ausgestaltung von Klimaschutzpolitik. Die Autoren sind sich insbesondere einig, dass ein Politikmix notwendig ist, um die klimapolitischen Ziele zu erreichen. Allerdings sollte nicht jedes Instrument vorbehaltlos zum Einsatz kommen. Vielmehr sollte ein jedes Instrument in Bezug auf Effektivität, Effizienz, aber auch politische und institutionelle Umsetzbarkeit bewertet, durch ein zeitnahes Monitoring überprüft und gegebenenfalls auch abgeschafft werden. Diesbezüglich ist zu kritisieren, dass moderne Evaluationsmethoden in Deutschland bislang kaum angewandt werden, obwohl die Wissenschaft in den vergangenen Jahren erhebliche Fortschritte bei der Evaluierung von Politikmaßnahmen erzielt hat. Es wäre daher besonders wichtig, dass bei der geplanten Fortsetzung des BMBF-Förderschwerpunktes "Ökonomie des Klimawandels" ein besonderes Augenmerk auf die empirische Evaluation von Klimaschutzmaßnahmen auf Basis umfangreicher, auf die jeweilige Maßnahme speziell zugeschnittene Datenerhebungen gelegt würde.
    Keywords: Carbon Leakage,Forschung und Entwicklung,Spillover-Effekte
    JEL: Q28 Q42 Q48
    Date: 2016
  49. By: Zhiyang Shen (IESEG School of Management (LEM 9221-CNRS)); Jean-Philippe Boussemart (University of Lille 3 and IESEG School of Management (LEM 9221-CNRS); CNRS-LEM 9221 and IESEG School of Management)
    Abstract: Most of previous research about Total Factor Productivity (TFP) at the macro level only emphasizes technical effect and technological progress at the country level, but it ignores structural effect for a group of countries at the aggregate level. This paper attempts to measure the green productivity evolution incorporating carbon dioxide emissions based on the Luenberger TFP indicator for a group of 30 OECD countries over the period of 1971-2011. We propose a novel decomposition for green productivity growth at the aggregate level which separates TFP changes into three components: technological progress, technical efficiency change, and structural efficiency change. The structural effect captures the heterogeneity in the combination of input and output mixes among countries that can impact TFP growth at a more aggregate level. In the literature, this effect has not been quantified for a group of nations such as the OECD countries. Our results indicate that the traditional TFP index underestimates green growth which is motivated by the effective and efficient environmental policies of the OECD. The green productivity growth is mainly driven by technology progress which has become a dominant force in the 21st century.
    Keywords: Undesirable Output; Carbon Dioxide Emissions; Total Factor Productivity; Weak Disposability
    JEL: O44 O47 Q50 D24
    Date: 2015–12
  50. By: Howard, Peter H.; Derek, Sylvan
    Abstract: The social cost of carbon (SCC) is one of the primary tools used to shape greenhouse gas (GHG) emissions reduction policies in the United States. The U.S. government’s SCC estimates are derived from three integrated assessment models (IAMs), developed by four climate economists. However, some economists – most prominently Robert Pindyck (2015) – argue that IAMs are over-reliant on the opinions of their modelers and fail to capture the wider consensus of experts. Pindyck (2015) recommends abandoning IAMs altogether, and calculating a simple “average SCC” to reflect the general opinion of experts on climate change. We propose and test an alternate approach: instead of replacing IAMs, we use expert elicitation as a method for calibrating key uncertain parameters in IAMs (Nordhaus (1994), Schauer (1995) and Roughgarden and Schneider (1999) used similar efforts in the 1990s). This approach ensures that official U.S. SCC estimates reflect the wider consensus of the economic community. To test this methodology, we conduct a 15-question online survey of all those who have published an article related to climate change in a highly ranked, peer-reviewed economics or environmental economics journal since 1994. This survey included questions on the appropriate inter-generational discount rate and expected climate damages – two important, highly uncertain parameters in IAMs. We sent the survey to 1,103 experts who met our selection criteria, and received 365 completed surveys. We find strong evidence that expert consensus has shifted since the last expert elicitation studies on the economics of climate change were conducted, more than 20 years ago. In particular, the consensus discount rate has declined and expected damages have increased, such that IAMs – which have been relatively stagnant in their discount rate and damage assumptions – do not reflect the current economic consensus. Our data can help establish a baseline for IAMs, in addition to providing other useful information for policymakers. To illustrate this point, we use the results from this survey to re-calibrate an IAM (DICE-2013R) to reflect the current state of expert opinion on expected climate damages and discount rates, and re-calculate the SCC. In general, we find a significant increase in the SCC – more than 10-fold under most scenarios – supporting the hypothesis that current IAMs do not reflect the current scientific consensus.
    Keywords: social cost of carbon, integrated assessment models, climate damage functions, inter-inter-generational discount rate, expert, expert elicitation, Environmental Economics and Policy, Research Methods/ Statistical Methods, Risk and Uncertainty, Q54,
    Date: 2016
  51. By: Nemati, Mehdi; Hu, Wuyang; Reed, Michael
    Abstract: This study attempts to empirically re-examine the relationship between free trade agreements (FTAs) and greenhouse gas (GHG) emissions. For this aim, we chose three different free trade agreements: Southern Common Market (MERCOSUR), North American Free Trade Agreement (NAFTA), and the Australia-United States Free Trade Agreement (AUSFTA). These FTAs are between developing countries, developed and developing countries, and only developed countries, respectively. Panel unit root, panel cointegration, and fully modified OLS (FMOLS) estimators are employed to find the longrun relationship between GHG emission, trade liberalization, and other economic factors. The results indicate that the environmental effect of a free trade agreement depends on the agreement type. When the agreement is among only developed or only developing countries, there is no environmental damage to the world and these types of FTAs can be beneficial for the world environment. However, when developing and developed countries are in the agreement, world GHG emissions increase.
    Keywords: Economic Factors, EKC, FTAs, GHG Emissions, Panel Cointegration, Environmental Economics and Policy, International Relations/Trade, F18, Q56,
    Date: 2016–05–25
  52. By: Connolly, Cristina; Livy, Mitchell R.
    Abstract: The presence of environmental degradation results in significant costs to residents that are likely to affect location choices at the micro-level. This paper utilizes unique Census tract level pollution data to examine the extent that homeowners sort across measurable environmental quality, and to endogenizes the grant process for high-pollution communities. Initial results indicate that drinking water and PM 2.5 pollution burden levels significantly impact sorting behaviors.
    Keywords: Residential sorting, environmental quality, location choice, pollution., Community/Rural/Urban Development, Environmental Economics and Policy,
    Date: 2016
  53. By: Younoh Kim (Department of Economics, Eastern Michigan University); Scott Knowles; James Manley (Department of Economics, Eastern Michigan University); Vlad Radoias (Department of Economics, Towson University)
    Abstract: While many studies in the medical literature documented causal relationships between air pollution and negative health outcomes immediately following exposure, much less is known about the long run health consequences of pollution exposure. Using the 1997 Indonesian forest fires as a natural experiment, we estimate the long term effects of air pollution on health outcomes. We take advantage of the longitudinal nature of the Indonesia Family Life Survey (IFLS), which collects detailed individual data on a multitude of health outcomes, in both 1997 and 2007. We find significant negative effects of pollution, which persist in the long run. Men and the elderly are impacted the most, while children seem to recover almost completely from these early shocks.
    Keywords: Air Pollution, Health, Indonesia.
    JEL: I1 Q53
    Date: 2016–05
  54. By: Marco Raberto (DIME-CINEF, Università di Genova, Italy); Bulent Ozel (Department of Economics, Universitat Jaume I, Castellón, Spain); Linda Ponta (DIME-CINEF, Università di Genova, Italy); Andrea Teglio (Department of Economics, Universitat Jaume I, Castellón, Spain); Silvano Cincotti (DIME-CINEF, Università di Genova, Italy)
    Abstract: We investigate appropriate banking and monetary policies aimed to pressure the banking and financial sector to shift from speculative lending, cause of asset bubbles and economic crises, to green investments lending, in order to foster the transition to a more energy efficient production technology. For this purpose, we consider an enriched Eurace model, which include new features such as a residential housing market, mortgage lending and heterogenous capital goods allowing for different degrees of energy efficiency in the production technology. Credit money in Eurace is endogenous and limited by Basel capital adequacy regulation on the supply side, while on the demand side it is determined by firms’ investments and households’ house purchasing. We introduce a differentiation of capital requirements according to the destination of lending, demanding higher banks’ capital in the case of speculative lending, thus encouraging banks to finance firms investments. As up-to-date capital goods have better energy efficiency in the model design, a higher pace of investments implies also a positive environmental effect. Results suggest that the proposed regulation is able to foster investments and capital accumulation in the short term, improving the energy efficiency of firms. However, reducing mortgages with a restrictive regulation has a negative impact on total private credit, and thus on endogenous money supply, weakening consumption and aggregated demand. In the long term, the contraction of total credit becomes stronger, and the negative outcomes on aggregated demand also affect investments. Therefore, in the long run, the positive effects on capital and energy efficiency become negligible, while the main economic indicators deteriorate.
    Keywords: Green finance, Capital requirements, Energy efficiency, Agent-based modelling
    JEL: E51 Q58 C63
    Date: 2016
  55. By: Patrik Karlsson (Quantitative Analytics, ING Bank); Kay F Pilz (RIVACON GmbH); Erik Schlogl (Finance Discipline Group, UTS Business School, University of Technology, Sydney)
    Abstract: Based on the multi-currency LIBOR Market Model (LMM) this paper constructs a hybrid commodity interest rate market model with a time-dependent stochastic local volatility function allowing the model to simultaneously fit the implied volatility surfaces of commodity and interest rate options. Since liquid market prices are only available for options on commodity futures, rather than forwards, a convexity correction formula for the model is derived to account for the difference between forward and futures prices. A procedure for efficiently calibrating the model to interest rate and commodity volatility smiles is constructed. Finally, the model is fitted to an exogenously given correlation structure between forward interest rates and commodity prices (cross–correlation). When calibrating to options on forwards (rather than futures), the fitting of cross–correlation preserves the (separate) calibration in the two markets (interest rate and commodity options), while in the case of futures a (rapidly converging) iterative fitting procedure is presented. The fitting of cross–correlation is reduced to finding an optimal rotation of volatility vectors, which is shown to be an appropriately modified version of the “orthonormal Procrustes” problem in linear algebra. The calibration approach is demonstrated in an application to market data for oil futures.
    Keywords: Calibration; Commodity markets; Derivative pricing; Interest rate modelling; Interest rate derivatives; Oil futures; Energy derivatives
    Date: 2016–05–01
  56. By: Doruk Ä°riÅŸ; Alessandro Tavoni
    Abstract: We study the impact of loss-aversion and the threat of catastrophic damages, which we jointly call threshold concerns, on international environmental agreements. We aim to understand whether a threshold for dangerous climate change is an effective coordination device for countries to overcome the free-riding problem, so that they abate emissions sufficiently to avoid disaster. We focus on loss-averse countries negotiating under the threat of either high environmental damages (loss domain) or low damages (gain domain). Under symmetry, when countries display identical degrees of threshold concern, we show that such beliefs have a positive effect on reducing the emission levels of both signatories to the treaty and non-signatories, leading to weakly larger coalitions of signatories. We then introduce asymmetry, by allowing countries to differ in the degree of concern about the threat of disaster. We show that stable coalitions are mostly formed by the countries with higher threshold concerns. When enough countries have no threshold concern, coalition size may diminish, regardless of whether the other countries have mild or strong threshold concerns.
    Date: 2016–05

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