nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒06‒14
fifty papers chosen by
Roger Fouquet
London School of Economics

  1. Fossil Fuel Subsidies in Indonesia: Trends, Impacts, and Reforms By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  2. Reaching India’s Renewable Energy Targets Cost-Effectively: A Foreign Exchange Hedging Facility By Farooquee, Arsalan Ali; Shrimali, Gireesh
  3. It’s All Local? How Sub-State Policies Affect Western US Residential Solar Adoption By Wiggins, Seth
  4. Green startups and local knowledge bases: Newborn suppliers of energy-related technologies in Italian Provinces By Colombelli, Alessandra; Quatraro, Francesco
  5. Assessment of Barriers and Opportunities for Renewable Energy Development in Chile By Claudio Agostini; Shahriyar Nasirov; Carlos Silva
  6. Importabhängigkeit und Energiewende: Ein neues Risikofeld der Versorgungssicherheit? By Strunz, Sebastian; Gawel, Erik
  7. Socially Responsible Investment and Market Performance: The Case of Energy and Resource Firms By Graham McIntosh
  8. Forecasting day-ahead electricity load using a multiple equation time series approach By Adam Clements; Stan Hurn; Zili Li
  9. Greenhouse Gas Emissions Effect on Cost Efficiencies of U.S. Electric Power Plants By Lynes, Melissa; Brewer, Brady; Featherstone, Allen
  10. Thresholds and Regime Change in the Market for Renewable Identification Numbers By Markel, Evan; English, Burton C.; Lambert, Dayton
  11. Promotion of Renewable Energy in the EU By Daniel Rais
  12. Gesamtwirtschaftliche Effekte von Prosumer-Haushalten in Deutschland By Dr. Markus Flaute; Anett Großmann; Dr. Christian Lutz
  13. The Political Economy of Energy Innovation By Shouro Dasgupta, Shouro; De Cian, Enrica; Verdolini, Elena
  14. Strategic Charging Infrastructure Deployment for Electric Vehicles By Shen, Max; Li, Meng; He , Fang; Jia, Yinghao
  15. Improving transport and energy infrastructure investment in Poland By Antoine Goujard
  16. Exploring public perception of environmental technology over time By Braun, Carola; Rehdanz, Katrin; Schmidt, Ulrich
  17. Carbon Tax Incidence and Household Energy Demand in the U.S. By Zhang, Jun
  18. To Frack or Not to Frack: Option Value Analysis on the U.S. Natural Gas Market By Davis, Rebecca J.; Sims, Charles
  19. Strategic investment, multimarket interaction and competitive advantage: An application to the natural gas industry By Robert A. Ritz
  20. Assessment of the Oil and Gas Industry Workforce By Hodur, Nancy M.; Bangsund, Dean A.
  21. A Bayesian heterogeneous coefficients spatial autoregressive panel data model of retail fuel price rivalry By Lesage, James P.; Vance, Colin; Chih, Yao-Yu
  22. The potential for improvement in on-road truck fuel economy: evidence from the VIUS By He, Jen; Leard, Benjamin; Linn, Joshua; McConnell, Virginia
  23. Discovering the signs of Dutch disease in Russia By Mironov, V.V.; Petronevich, A.V.
  24. Oil price, exchange rate and the Indian macro economy By Taniya Ghosh
  25. Oil Price Volatility and Asymmetric Leverage Effects By Lee, Eunhee; Han, Doo Bong
  26. Not All Energy Shocks Are Alike: Disentangling Shocks in the U.S. Fertilizer Market By Bejan, Vladimir; Pozo, Veronica F.
  27. The Economic Cost of Including the Indirect Land Use Factor in Low Carbon Fuel Policy: Efficiency and Distributional Implications By Khanna, Madhu; Wang, Weiwei; Hudiburg, Tara; DeLucia, Evan
  28. Policy Shocks and Market-Based Regulations: Evidence from the Renewable Fuel Standard By Gabriel E. Lade; C.Y. Cynthia Lin Lawell; Aaron Smith
  29. The Causes of Two-way U.S.-Brazil Ethanol Trade and the Consequences for Greenhouse Gas Emissions By Debnath, Deepayan; Jarrett, Whistance
  30. Co-movements of Energy-Bioenergy-Agricultural Commodity Prices: New Empirical Evidence from the USA By Iqbal, Md Zabid
  31. Ethanol or Biodiesel More Economically Efficient? Towards an Economic Framework By Drabik, Dusan; Venus, Thomas J.; de Gorter, Harry
  32. Interaction of biofuel, food security, indirect land use change and greenhouse mitigation policies in the European Union By Pena-Levano, Luis M; Rasetti, Michele; Melo, Grace
  33. Estimates of the Demand for E85 Using Stated-Preference Data off Revealed-Preference Choices By Liao, Kenneth; Pouliot, Sébastien
  34. Examining the effects of uncertainty on second-generation biofuel investment by using a two stochastic process approach By Markel, Evan; Sims, Charles; English, Burton C
  35. Analysis of Energy and Agricultural Commodity Markets with the Policy Mandated: A Vine Copula-based ARMA-EGARCH Model By Chen, Kuan-Ju; Chen, Kuan-Heng
  36. The Effects of a CO2 Emissions Tax on American Diets By Canning, Patrick; Rehkamp, Sarah
  37. The Effects of American Diets on Food System Energy Use By Rehkamp, Sarah; Canning, Patrick
  38. India’s climate change mitigation policies – A case for Market Based Instruments By Tyagi, Ashish
  39. Economic Incentives, Transaction Costs and Carbon Trading: The Economics of Alberta’s Reduced Age to Harvest Protocol By Thomassin, Paul J.
  40. Demand for offsetting and insetting in the EU Emissions Trading System By Misato Sato; Marta Ciszawska; Timothy Laing
  41. Optimal Pricing of the Carbon Trading Market Based on a Demand-Supply Model By Liu, Wan Yu
  42. Multicountry Appropriation of the Commons, Externalities, and Firm Preferences for Regulation By Akhundjanov, Sherzod
  43. Is there Life after Death?: The Enduring Effects of the 33/50 Program on Emission Reductions By Hoang, Phi; McGuire, William; Prakash, Aseem
  44. Pollution Rides on the Wind: The Effects of Transboundary Air Pollution from China on Ambient Air Conditions in South Korea By Kim, Moon Joon
  45. A Cost-Effectiveness Analysis for Incineration or Recycling of Dutch Household Plastics By Raymond Gradus; Rick van Koppen; Elbert Dijkgraaf; Paul Nillesen
  46. Equity and the Convergence of Nationally Determined Climate Policies By Lucas Bretschger
  47. Consumption-based accounting of U.S. CO2 emissions from 1990 to 2010 By Hubacek, Klaus
  49. An assessment of the foundational assumptions in high-resolution climate projections: the case of UKCP09 By Roman Frigg; Leonard A. Smith; David A. Stainforth
  50. A Global Carbon Market? By Michael G. Pollitt

  1. 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: Subsidized energy is provided to all Indonesian citizens as a public service obligation. This study measures the size of fossil fuel subsidies such as underpricing of petroleum products and electricity, tax exemptions, and subsidized credit; examines the potential economic, energy, and environmental impacts of reducing them; and discusses options for social safety nets to mitigate the impacts of the reforms. It shows that the short-term adverse impacts of subsidy reform turn positive in the long term as households and industry respond to changing market realities by adjusting energy demand, supply, and production capacity. Policy options for sustainable energy use are provided to aid policymakers in their current subsidy reform process.
    Keywords: indonesia, fossil fuel, energy, fossil fuel subsidies, greenhouse gas emissions, energy use, economic impacts, social programs, developing asia
    Date: 2015–10
  2. By: Farooquee, Arsalan Ali; Shrimali, Gireesh
    Abstract: In India, a significant barrier to market-competitiveness of renewable energy is a shortage of attractive debt. Domestic debt has high cost, short tenors, and variable interest rates, adding 30% to the cost of renewable energy compared to renewable energy projects elsewhere. Foreign debt is as expensive as domestic debt because it requires costly market-based currency hedging solutions. We investigate a government-sponsored foreign exchange facility as an alternative to reducing hedging costs. Using the geometric Brownian motion (GBM) as a representative stochastic model of the INR–USD foreign exchange rate, we find that the expected cost of providing a currency hedge via this facility is 3.5 percentage points, 50% lower than market. This leads to an up to 9% reduction in the per unit cost of renewable energy. However, this requires the government to manage the risks related to unexpected currency movements appropriately. One option to manage these risks is via a capital buffer; for the facility to obtain India's sovereign rating, the capital buffer would need to be almost 30% of the underlying loan. Our findings have significant policy implications given that the Indian government can use this facility to make renewable energy more competitive and, therefore, hasten its deployment.
    Keywords: Foreign exchange risk, Renewable energy, Capital buffer, Energy Finance
    JEL: F3 F31 Q4 Q48 Q5
    Date: 2015–06
  3. By: Wiggins, Seth
    Abstract: Abstract: This paper adds to the literature by investigating whether municipal, county, and utility policies drive residential solar photovoltaic (PV) adoption. While previous studies have investigated the effects of state policies, none have do so while including policies at the sub-state level. I employ spatial econometric techniques, which recently have been used to empirically account for the peer effects and spatial clustering that have been found in residential markets. Results from the largest residential solar market in the US suggest that after controlling for solar resource, environmental preference, and other demographic information, the local policies are an important driver in the residential solar PV market: the average solar policy stimulates a 6.0-7.9% percent increase in installed residential capacity. Further, the residential market exhibits a moderate amount of spatial autocorrelation.
    Keywords: Residential solar PV adoption, renewable energy production, spatial econometrics, Resource /Energy Economics and Policy,
    Date: 2016
  4. By: Colombelli, Alessandra; Quatraro, Francesco (University of Turin)
    Abstract: There is wide consensus about the importance of green technologies for achieving superior economic and environmental performances. The literature on their determinants has neglected the creation of green start-ups as a channel to bring about green technologies in the market. Drawing upon the knowledge spillovers theory of entrepreneurship, we test the relevance of local knowledge stocks, distinguishing between clean and dirty stocks, for the creation of green start-ups. Moreover, the effects of the technological composition of local stocks is investigated, by focusing on technological variety, both related and unrelated, as well as on coherence. Consistently with recent literature, green start-ups are associated to higher levels of variety, pointing to the relevance of diverse and heterogeneous knowledge sources, but in related and complementary technological fields.
    Date: 2016–04
  5. By: Claudio Agostini (Escuela de Gobierno, Universidad Adolfo Ibáñez); Shahriyar Nasirov; Carlos Silva
    Date: 2015–05
  6. By: Strunz, Sebastian; Gawel, Erik
    Abstract: Die fundamentale Transformation der Energieversorgung im Zuge der Energiewende berührt auch die Importabhängigkeit Deutschlands. Einerseits sind durch Reduzierung des Energieverbrauchs und Umstellung auf "heimische" Erneuerbare Synergieeffekte zu erwarten. Andererseits stellen fluktuierende Erneuerbare und der Kohleausstieg mittelfristig einen höheren Verbrauch von Gas als sauberer Backup-Technologie in Aussicht, was wiederum die Importabhängigkeit der deutschen Energieversorgung erhöhen dürfte. Allerdings besteht kein grundsätzlicher Zielkonflikt zwischen Energiewende und Versorgungssicherheit, da spezifische Risiken mit adäquaten Maßnahmen adressiert werden können, etwa einer Diversifizierung der Anbieterstruktur beim Gasimport.
    Date: 2016
  7. By: Graham McIntosh
    Abstract: Energy and resource companies have a crucial role in achieving future sustainable economies. We investigate the performance of international Socially Responsible Investment (SRI) energy and resource companies on the stock market over a 10-year period (February 2005-January 2015). We select portfolios of established energy and resource stocks with substantial environmental and social responsibility activities. Our findings demonstrate that the annual average performance of the energy and resource SRI portfolio was superior to returns of different benchmark indices. The energy and resource SRI stock investments were also more profitable on the risk-adjusted basis. Additionally, we applied Fama-French and Carhart four factor models and found that the returns of our portfolios are more consistently explained by the market factor than by other factors. We also show that oil price has a statistically significant influence on the returns of the SRI energy and resource stocks. However, the performance of the energy and resource SRI portfolio was no longer superior when dividends were excluded from the calculation of total returns. Indeed, the performance of portfolios without dividends was poor compared to the benchmark indices in most sub-periods, in the sub-samples of bullish and bearish markets and in the full sample. This finding demonstrates the importance of dividends in the investment performance of the energy and resource SRI stocks.
    Keywords: Socially Responsible Investment (SRI), SRI Stocks, Energy Stocks, Stock Market Returns, Dividends
    JEL: G10 Q40 Q56
    Date: 2016–02–11
  8. By: Adam Clements (QUT); Stan Hurn (QUT); Zili Li (QUT)
    Abstract: The quality of short-term electricity load forecasting is crucial to the operation and trading activities of market participants in an electricity market. In this paper, it is shown that a multiple equation time-series model, which is estimated by repeated application of ordinary least squares, has the potential to match or even outperform more complex nonlinear and nonparametric forecasting models. The key ingredient of the success of this simple model is the e ective use of lagged information by allowing for interaction between seasonal patterns and intra-day dependencies. Although the model is built using data for the Queensland region of Australia, the methods are completely generic and applicable to any load forecasting problem. The model's forecasting ability is assessed by means of the mean absolute percentage error (MAPE). For day-ahead forecast, the MAPE returned by the model over a period of 11 years is an impressive 1.36%. The forecast accuracy of the model is compared with a number of benchmarks including three popular alternatives and one industrial standard reported by the Australia energy market operator (AEMO). The performance of the model developed in this paper is superior to all benchmarks and outperforms the AEMO forecasts by about a third in terms of the MAPE criterion.
    Keywords: Short-term load forecasting, seasonality, intra-day correlation, recursive equation system
    JEL: C32 Q41 Q47
    Date: 2014–09–06
  9. By: Lynes, Melissa; Brewer, Brady; Featherstone, Allen
    Abstract: Nonparametric DEA models were ran to estimate cost and production frontiers of 503 electric generation plans in 2012. Preliminary results show that the relaxation of the greenhouse gas emission constraint for the constrained electric generation plants would reduce the cost for all greenhouse gas emissions in the study. However, it was found that when the model accounts for these greenhouse gas emissions as a bad output, the electric generation plants that were constrained were more efficient by most of the efficiency measures. This shows that the inclusion of a pollutant, in this case the greenhouse gas emissions of an electric generation plant, are accounted for in the production process, the efficiency scores and the frontier curves of the plant are affected and must be accounted for.
    Keywords: production, electricity, greenhouse gas emissions, Environmental Economics and Policy, Production Economics, Q41, D24,
    Date: 2016
  10. By: Markel, Evan; English, Burton C.; Lambert, Dayton
    Abstract: The coupling of RIN prices appears to be the result of an ethanol market subject to RFS mandates that exceed the blend wall and non-binding mandates in the biodiesel market. It is thought that the ethanol mandate is binding beyond the market absorption ability, and thus the primary drivers of D6 ethanol RIN price are unobserved thresholds in renewable volume obligations, and deterministic variables such as corn price and ethanol blend margins. In regard to the market for biodiesel, the hypothesis is that biodiesel producers are over-complying with the RFS biodiesel mandates to meet an ethanol mandate which has crossed some threshold in proximity to the ethanol blend wall. Therefore biodiesel mandates are essentially non-binding. Nonlinear threshold models are applied to address nonlinearities occurring in the prices. These types of models are well suited to handling nonlinearities and regime changes, such as those which occur with RFS revisions. A candidate set of models are fitted to the data and model selection techniques are carried out to determine the most appropriate fit.
    Keywords: Nonlinear Time Series, Threshold Autoregressive, Self-Exciting Autoregressive, Smooth Transition Autoregressive, Renewable Identification Numbers, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy, C22, Q48,
    Date: 2016–05–25
  11. By: Daniel Rais
    Abstract: Abstract This paper criticizes measures that allow Member States of the European Union (EU) to provide priority treatment for electricity produced from renewable energy sources (RES) in terms of connection and access to the grid, and dispatch of electricity on the grid. It argues against the priority rules set out in the Renewable Energy Directive of 2009 and comes out in favour of grid operation neutrality. To arrive at this conclusion, this paper provides an overview of the nature of priority rules, reviews the distinct problems related to the application of priority rules, objectives of the implementation of Third Energy Package and available legal remedies for the protection of legitimate interests of electricity generators.
    Date: 2015–02–16
  12. By: Dr. Markus Flaute (GWS - Institute of Economic Structures Research); Anett Großmann (GWS - Institute of Economic Structures Research); Dr. Christian Lutz (GWS - Institute of Economic Structures Research)
    Abstract: Im Zuge des Ausbaus der erneuerbaren Energien produzieren private Haushalte zunehmend selbst Strom und Wärme. Prosumer-Haushalte verbrauchen zumindest einen Teil der erzeugten Energie selbst. Zur Bestimmung von gesamtwirtschaftlichen Effekten durch Prosumer-Haushalte in Deutschland wurde das Energiewirtschaftsmodell PANTA RHEI um Prosumer-Haushalte erweitert und in verschiedenen Szenariorechnungen eingesetzt. Das vorliegende Discussion Paper beschreibt die Szenarien und gibt einen Überblick über die wirtschaftlichen und energetischen Wirkungen und Effekte von Prosumer-Haushalten in Deutschland. Die Szenarien unterscheiden sich im Wesentlichen in der Anzahl an Prosumer-Haushalten bzw. deren Verteilung auf die einzelnen Prosumer-Haushaltstypen. Das Prosumieren lohnt sich in der überwiegenden Zahl der betrachteten Prosumer-Haushalte einzelwirtschaftlich. Eine zunehmende Zahl von Prosumer-Haushalten führt zu einem Rückgang der CO2-Emissionen und ist gleichzeitig mit leicht positiven gesamtwirtschaftlichen Effekten verbunden. Insgesamt fallen die Effekte bezogen auf die gesamte Volkswirtschaft aber eher klein aus.
    Keywords: Prosumer, erneuerbare Energien, Energiewirtschaftsmodell, Szenariorechnung
    JEL: Q4 D1
    Date: 2016
  13. By: Shouro Dasgupta, Shouro; De Cian, Enrica; Verdolini, Elena
    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, Political Economy, C23, D02, O30, Q58,
    Date: 2016–04–30
  14. By: Shen, Max; Li, Meng; He , Fang; Jia, Yinghao
    Abstract: Electric vehicles (EV) are promoted as a foreseeable future vehicle technology to reduce dependence on fossil fuels and greenhouse gas emissions associated with conventional vehicles. This paper proposes a data-driven approach to improving the electrification rate of the vehicle miles traveled (VMT) by taxi fleet in Beijing. Specifically, based on the gathered real-time vehicle trajectory data of 46,765 taxis in Beijing, we conduct timeseries simulations to derive insight for the public charging station deployment plan, including the locations of public charging stations, the number of chargers at each station and their types. The proposed simulation model defines the electric vehicle charging opportunity from the aspects of time window, charging demand and charger availability, and further incorporates the heterogeneous travel patterns of individual vehicles. Although this study only examines one type of fleet in a specific city, the methodological framework is readily applicable to other cities and types of fleet with similar dataset available, and the analysis results contribute to our understanding on electric vehicle’s charging behavior. Simulation results indicate that: i) locating public charging stations to the clustered charging time windows is a superior strategy to increase the electrification rate of VMT; ii) deploying 500 public stations (each includes 30 slow chargers) can electrify 170 million VMT in Beijing in two months, if EV’s battery range is 80 km and home charging is available; iii) appropriately combining slow and fast chargers in public charging stations contributes to the electrification rate; iv) breaking the charging stations into smaller ones and spatially distribute them will increase the electrification rate of VMT; v) feeding the information of availability of chargers in charging stations to drivers can increase the electrification rate of VMT; vi) the impact of stochasticity embedded in the trajectory data can be significantly mitigated by adopting the dataset covering a longer period.
    Keywords: Engineering, trajectory dataset, plug-in hybrid electric vehicle, charging opportunity, electrification rate, public charging stations, vehicle miles traveled
    Date: 2016–05–01
  15. By: Antoine Goujard
    Abstract: Poland has significantly upgraded its infrastructure network over the past decade. However, bottlenecks still weigh on productivity growth and environmental and health outcomes. The EU 2014-20 programming period is an opportunity to improve the management of infrastructure investment. In the transport sector, the country allocated most recent funding to roads, but it plans significant investment in railway and urban public transport in 2014-20. Strengthening metropolitan governance, building up medium-term infrastructure management capabilities and reducing funding uncertainty would ensure more efficient spending. In the energy sector, electricity generation capacity is tight, while regulatory uncertainty, administrative burdens and a lack of interregional and international trade capacity has hampered the development of renewables. The authorities are seeking to develop nuclear power, but they need to take fully into account tail risks involved and its long-term costs. More energy efficiency investment would also be valuable, as current support systems do not provide sufficient incentives. Améliorer l'investissement en infrastructures de transports et énergétiques en Pologne La Pologne a significativement renforcé son réseau d’infrastructures au cours de la dernière décennie. Cependant, des goulets pèsent toujours tant sur la croissance de la productivité que sur la santé de la population et l’environnement. La période de programmation 2014-20 de l’UE est une opportunité d’améliorer la gestion de l’investissement en infrastructures. Dans le secteur des transports, après avoir financé principalement les infrastructures routières, la Pologne prévoit de consacrer d’importants investissements aux transports ferroviaires et publics urbains entre 2014 et 2020. Une meilleure gouvernance des métropoles, des capacités accrues de gestion des infrastructures à moyen terme et une réduction de l’incertitude des financements garantiraient une plus grande efficience des dépenses. Par ailleurs, dans le secteur de l’énergie, les installations de production électrique satisfont tout juste les besoins, tandis que l’incertitude réglementaire, le poids des charges administratives et les capacités commerciales insuffisantes aux niveaux interrégional et international freinent le développement des énergies renouvelables. Les autorités cherchent à développer le nucléaire, mais elles doivent tenir pleinement compte des risques extrêmes et de ses coûts à long terme. La Pologne aurait également intérêt à investir davantage dans l’efficacité énergétique car les dispositifs de soutien actuels ne fournissent pas des incitations suffisantes.
    Keywords: investment, transport, regulation, energy, infrastructure
    JEL: E62 H54 H57 L91 L94 L95 L96 O43
    Date: 2016–06–02
  16. By: Braun, Carola; Rehdanz, Katrin; Schmidt, Ulrich
    Abstract: Public opinion has a substantial impact on political actions. However, public opinion might be driven by temporary emotions. If these emotions cool off over time, public opinion might change as well. This paper analyses how emotions drive public opinion over time for the case of an environmental climate engineering technology, namely solar radiation management (SRM). SRM is a possible strategy to fight climate change by injection of sulphate aerosols into the stratosphere. Its potential implementation involves major risks and faces strong public opposition. Using panel survey data, we show that most respondents initially show strong negative emotions towards SRM and reject the technology. However, emotions cool off over time and acceptance increases. The increase in acceptance is larger, the longer the cooling-off period between two surveys is.
    Keywords: Public perception,social movements,Climate engineering,Cooling-off
    JEL: Q54 D19 C93
    Date: 2016
  17. By: Zhang, Jun
    Abstract: This paper develops a model based on the general equilibrium framework to evaluate Household’s excess burden of carbon tax levied on energy goods (electricity and natural gas). The model accounts for tax distortion on labor market and cross-price effects between energy goods. With data from the U.S. Residential Energy Consumption Survey, own price and cross-price elasticities of energy goods are estimated. Substitution effects are found between electricity and natural gas, and omitting such effects will overestimate the excess burden of carbon tax. The results indicate that carbon tax performs differently on affecting excess burden of low, middle and high income households. With a low pre-set labor tax rate, higher income households have lower excess burden comparing to lower income households, but with a high pre-set labor tax rate, the effect is reverse.
    Keywords: Tax distortion, general equilibrium, energy demand, excess burden, Consumer/Household Economics, Demand and Price Analysis, Industrial Organization, Public Economics,
    Date: 2016–05–23
  18. By: Davis, Rebecca J.; Sims, Charles
    Keywords: risk and uncertainty, real options, energy economics, Resource /Energy Economics and Policy, Risk and Uncertainty, Q41,
    Date: 2016–05
  19. By: Robert A. Ritz
    Abstract: This paper presents a game-theoretic analysis of multimarket competition with strategic capacity investments, motivated by recent developments in international natural gas markets. It studies the competitive implications of heterogeneity in firm structure arising from asset specificity. A single-market focus confers advantage even in the absence of superior value or cost. Lower costs and a sharper organizational focus are self-enforcing in generating competitive advantage. This establishes a novel connection between two of Porter’s “generic strategies”. The model speaks to competition between pipeline gas and liquefied natural gas (LNG) and the global impacts of the Fukushima nuclear accident.
    Keywords: Competitive advantage, strategic commitment, generic strategies, cost pass-through, value capture
    Date: 2016–01–12
  20. By: Hodur, Nancy M.; Bangsund, Dean A.
    Keywords: Community/Rural/Urban Development, Demand and Price Analysis, Environmental Economics and Policy, Financial Economics, Land Economics/Use, Production Economics, Public Economics,
    Date: 2016–05
  21. By: Lesage, James P.; Vance, Colin; Chih, Yao-Yu
    Abstract: We apply a heterogenous coefficient spatial autoregressive panel model from Aquaro, Bailey and Pesaran (2015) to explore competition/cooperation by Berlin fueling stations in setting prices for diesel and E5 fuel. Unlike the maximum likelihood estimation method set forth by Aquaro, Bailey and Pesaran (2015), we rely on a Markov Chain Monte Carlo (MCMC) estimation methodology. MCMC estimates as applied here with non-informative priors will produce estimates equal to those from maximum likelihood, a point we demonstrate with a Monte Carlo experiment. We explore station-level price mark-ups using over 400 fueling stations located in and around Berlin, average daily diesel and E5 fuel prices, and refinery cost information covering more than 487 days. The heterogeneous coefficients spatial autoregressive panel data model uses the large sample of daily time periods to produce spatial autoregressive model estimates for each fueling station. These estimates provide information regarding the price reaction function of each station to neighboring stations. This is in contrast to conventional estimates of price reaction functions that average over the entire cross-sectional sample of stations. We show how these estimates can be used to infer competition versus cooperation in price setting by individual stations. The empirical results reveal a mix of competitive and collusive price setting, with some evidence that stations located near others of the same brand tend toward collusion, while those located near rival brands tend toward competition.
    Abstract: Wir nutzen ein räumliches autoregressives Panel-Datenmodell von Aquaro, Bailey und Pesaran (2015), um Wettbewerbs- bzw. Kooperationsverhalten bei der Preissetzung für Diesel und E5-Benzin von Berliner Tankstellen zu untersuchen. Es wird das Markov-Chain-Monte-Carlo-Verfahren (MCMC-Verfahren) angewandt, welches in diesem Zusammenhang die gleichen Schätzungen wie die Maximum-Likelihood-Methode von Aquaro, Bailey und Pesaran (2015) liefert. Wir nutzen Informationen über mehr als 400 Tankstellen in und um Berlin, Tagesdurchschnittspreise für Diesel und E5 und Raffineriekosten von mehr als 487 Tagen, um Preisaufschläge zu untersuchen. Das angewandte Modell schätzt die Preisreaktionsfunktion - anders als übliche Schätzungen - jeder Tankstelle auf umliegende Tankstellen. Wir zeigen, wie mit diesen Schätzungen auf das das Wettbewerbs-/ Kooperationsverhalten bei der Preissetzung einzelner Tankstellen geschlossen werden kann. Die empirischen Ergebnisse zeigen eine Mischung aus wettbewerblicher und kooperativer Preissetzung mit Evidenz, dass Tankstellen mit Tankstellen derselben Marke in der Nähe zu Kooperation tendieren und Tankstellen mit Tankstellen konkurrierender Marken in der Umgebung zu Wettbewerb tendieren.
    Keywords: spatial panel data models,Markov Chain Monte Carlo,spatial autoregressive model,observation-level spatial interaction
    JEL: C11 C23 L11
    Date: 2016
  22. By: He, Jen; Leard, Benjamin; Linn, Joshua; McConnell, Virginia
    Abstract: This study looks at the evidence about fuel economy and other truck attributes from VIUS, and provides implications for a dynamic baseline of improvements in fuel economy. We discuss the engine technologies and vehicle designs that potentially improve truck fuel economy. The combined effects of these advances are estimated as technological progress in our specifications. The rich information from VIUS about vehicle characteristics equips us to estimate the trade-off effects – how vehicle weight and engine power affect fuel economy.
    Keywords: Environmental Economics and Policy, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy,
    Date: 2016
  23. By: Mironov, V.V.; Petronevich, A.V.
    Abstract: ​This paper examines the problem of Dutch disease in Russia during the oil boom of the 2000s, from both the theoretical and empirical points of view. Our analysis is based on the classical model of Dutch disease by Corden and Neary (1982). We examine the relationship between changes in the real effective exchange rate of the ruble and the evolution of the Russian economic structure during the period 2002 – 2013. We empirically test the main effects of Dutch disease, controlling for specific features of the Russian economy, namely the large role of state-owned organizations. We estimate the resource movement and spending effects as determined by the theoretical model and find the presence of several signs of Dutch disease: the negative impact of the real effective exchange rate on growth in the manufacturing sector, the growth of total income of workers, and the positive link between the real effective exchange rate and returns on capital in all three sectors. Although also predicted by the model and clearly observable, the shift of labor from manufacturing to services cannot be explained by ruble appreciation alone. Publication keywords: Dutch disease, resource curse, real effective exchange rate, cointegration model, economic policy, Russia
    JEL: F41 F43 C32
    Date: 2015–01–19
  24. By: Taniya Ghosh (Indira Gandhi Institute of Development Research)
    Abstract: The general discussions on the Indian macro economy have centered on two things in the recent past: how will the economy be impacted by falling value (depreciation) of rupee and the effects of falling world oil prices. However the exact impact of a depreciation of rupee or fall in oil prices on different macroeconomic variables of the Indian economy is still open to debates. The paper investigates the dynamic relationship between movements in oil prices and exchange rates with macroeconomic variables like price, output, interest rate and money by using structural vector auto regression (SVAR) approach. Additionally, a comparative analysis is done to show how each of these structural shocks historically has affected price, output and exchange rate. The results are in favor of a strong link among these variables. Three results have important policy implications: first, the world price of oil has a great potential to impact India's output. Second, targeting depreciation of Indian rupee to expand output may not be an effective policy tool for the RBI. Third, variation in rupee's value can have medium to long term impact on world price of oil that the world should care about.
    Keywords: Monetary Policy; Structural VAR; Oil Price, Exchange Rate; Output, Inflation, Depreciation
    Date: 2016–05
  25. By: Lee, Eunhee; Han, Doo Bong
    Abstract: This study adopts a stochastic volatility (SV) model with two asymptotic regimes and a smooth transition for oil returns. We find that SV models with a smooth transition between two regimes imply an asymmetric leverage effect with different regimes. In particular, the half-life of a negative volatility shock is longer than that of a positive shock.
    Keywords: Oil prices, stochastic volaility, leverage effect, half-life of volatility shock, Resource /Energy Economics and Policy, Risk and Uncertainty,
    Date: 2016–05–23
  26. By: Bejan, Vladimir; Pozo, Veronica F.
    Keywords: Nitrogen fertilizer, energy markets, natural gas, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,
    Date: 2016–07
  27. By: Khanna, Madhu; Wang, Weiwei; Hudiburg, Tara; DeLucia, Evan
    Keywords: biofuels, indirect land use change, welfare costs, Environmental Economics and Policy,
    Date: 2016
  28. By: Gabriel E. Lade; C.Y. Cynthia Lin Lawell; Aaron Smith
    Abstract: The Renewable Fuel Standard (RFS2) mandates large increases in U.S. biofuel consumption and is implemented using a market for tradable compliance credits, known as RINs. In early 2013, RIN prices soared, causing the regulator to propose reducing future mandates. We develop a dynamic model of RFS2 compliance to demonstrate how changes in expectations about future policy affect current compliance costs, and we use a market effciency test to demonstrate that RIN markets have behaved in accordance with our model. We then estimate empirically the effect of three "policy shocks" that reduced the expected mandates in 2013. The largest of these shocks decreased the total cost of compliance by nearly $8 billion. The burden of the mandate reductions fell primarily on advanced biofuel firms and on commodity markets of the marginal compliance biofuel. We argue that the policy shocks reduced the incentive to invest in the technologies required to meet the future objectives of the RFS2. JEL Codes: Q42, Q50, H23
    Keywords: tradable credits, policy design, quantity mechanisms, renewable fuel standard
    Date: 2016–05
  29. By: Debnath, Deepayan; Jarrett, Whistance
    Abstract: The biofuels policy in the U.S. and Brazil lead to a situation in which both the countries are exporting to each other. A structural economic model as well as a greenhouse gas (GHG) saving table is developed and exploited to determine the consequences of the US Renewable Fuel Standard (RFS) and Brazil Gasoline C price control scenarios. Results shows that ethanol and feedstock prices decrease in the scenario without the US RFS, while the GHG savings decrease. In the case of Brazil without state control Gasoline C Price both the ethanol and feedstock price increases. GHG savings decreases because of reduction in anhydrous ethanol use. Before implementing any biofuels policy, the government should take into account negative environmental impacts.
    Keywords: Crop Production/Industries, Demand and Price Analysis, Environmental Economics and Policy, International Relations/Trade, Resource /Energy Economics and Policy,
    Date: 2016
  30. By: Iqbal, Md Zabid
    Keywords: Demand and Price Analysis, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,
    Date: 2016
  31. By: Drabik, Dusan; Venus, Thomas J.; de Gorter, Harry
    Keywords: Agricultural and Food Policy,
    Date: 2016
  32. By: Pena-Levano, Luis M; Rasetti, Michele; Melo, Grace
    Abstract: The European Union is putting a lot of effort in mitigating climate change effects and lessen the dependence of fossil fuels. Several policies are being proposed in the Renewable Energy Directives (RED), such as increasing the share of renewable sources in fuel mix, specific increases in fuel production? and anti-dumping strategies. However, these policies raise concerns with respect to competition with food production, and indirect increases GHG emissions caused by land use change. Our study evaluates the RED policies together with additional climate mitigation policies using a computable general equilibrium modeling. Our results suggest that, for the case of the European Union (EU), an increase in biofuel production does not represent a threat in food security. In addition, we found that the land use change in the EU are modest compared to previous studies in developing regions. Our findings illustrate how the imposition of a regime can vary depending on the economic development of a region.
    Keywords: European biofuel policy, Biodiesel, GTAP-BIO-FCS, Land use change, GHG emissions, Agricultural and Food Policy, Crop Production/Industries, Food Consumption/Nutrition/Food Safety, International Development, Land Economics/Use, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy, D58, Q16, Q58,
    Date: 2016
  33. By: Liao, Kenneth; Pouliot, Sébastien
    Abstract: This paper estimates the relative preferences of motorists for E10 and E85 from an intercept survey of motorists with flex-fuel vehicles at E85 fuel stations in Arkansas, California, Colorado, Iowa, and Oklahoma. The information collected includes prices observed at fuel stations, fuel choices by flex motorists, and responses to a series of opinion questions about ethanol and gasoline. We also proposed a hypothetical scenario to each motorist in which either the price of the fuel selected was increased or the price of the fuel not selected was decreased. We first estimate fuel preferences using the revealed preference data from the observed choices. We then use the stated preference data from the hypothetical price scenario to estimate preferences in empirical models that correct for endogeneity from unobservable demand shifters that carry over to the stated preference empirical model. We find that motorists significantly discount E85 compared to E10 even when accounting for the different energy content of the two fuels and that the distribution of willingness to pay for E85 does not vary significantly between regions, except for California where motorists are willing to pay significantly more for E85.
    Keywords: Ethanol, Gasoline, Renewable Fuel Standard, Willingness to pay, Intercept survey, Agricultural and Food Policy, Demand and Price Analysis, Environmental Economics and Policy, Institutional and Behavioral Economics, Marketing, Resource /Energy Economics and Policy, Q18, Q41, Q42,
    Date: 2016–05
  34. By: Markel, Evan; Sims, Charles; English, Burton C
    Abstract: Investment in the production of advanced biofuel has been encouraged by the federal regulation which enacted the Renewable Fuel Standard (RFS). However, investments and production of advanced biofuel has been lower than expected in recent years, leading regulators to substantially reduce required volumes of advanced biofuel. Real option analysis is used to help explain why uncertainty has reduced investment in advanced biofuel and eroded the requirements put forth by USEPA. This study examines the effect of uncertainty and irreversibility on a second-generation biofuel investment while considering the volatility of Renewable Identification Number (RIN) price, conventional fuel price and their correlations by applying a two stochastic variable approach.
    Keywords: Uncertainty, Irreversibility, Two-Variable Stochastic Process, Second-Generation Biofuels, Resource /Energy Economics and Policy, Risk and Uncertainty, D81, Q16, Q48,
    Date: 2016–05–25
  35. By: Chen, Kuan-Ju; Chen, Kuan-Heng
    Abstract: The Energy Independence and Security Act (EISA) of 2007 states an increase in ethanol production to 36 billion gallons per year by 2022. Biofuels mainly are produced from agricultural commodities, so that increasing demand of biofuels would have an impact on agricultural commodity prices. The linear relationships between crude oil prices and prices for agricultural commodities are well documented, but not appropriate to explain the asymmetric dependency. Vine copula modeling which is used in this study can extend to higher dimensions easily and provide a flexible measurement to capture an asymmetric dependence among commodities. The purpose of this study is to analyze the degree and the dependence structure of commodities with the policy effect of EISA 2007 along the biofuel supply chain in the United States agricultural market. We employ vine copulas in order to better capture an asymmetric dependence among commodities using six U.S. agricultural commodities’ and crude oil. The empirical results provide that vine Copula-based ARMA-EGARCH (1,1) is an appropriate model with the skewed Student t innovations to analyze returns dependency of crude oil and agricultural commodities before EISA 2007 (January 1st, 2003- January 17th, 2007) and after EISA 2007 (January 18th, 2007-December 31st, 2012). Our findings on the relationship among agricultural commodities can provide policymakers and industry participants appropriate strategies for risk management, hedging strategies, and asset pricing.
    Keywords: Dependence, Agricultural commodity, Oil future, EISA 2007, Copula, Time Series, Agricultural Finance, Financial Economics, Resource /Energy Economics and Policy, G13, Q11, Q13,
    Date: 2016
  36. By: Canning, Patrick; Rehkamp, Sarah
    Keywords: CO2 tax, climate change, diet, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Resource /Energy Economics and Policy,
    Date: 2016
  37. By: Rehkamp, Sarah; Canning, Patrick
    Keywords: energy, diet, U.S. food system, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Resource /Energy Economics and Policy,
    Date: 2016
  38. By: Tyagi, Ashish
    Keywords: Climate Change, Carbon Tax, Environmental Economics and Policy,
    Date: 2016
  39. By: Thomassin, Paul J.
    Abstract: Economic Incentives, Transaction Costs and Carbon Trading: The Economics of Alberta’s Reduced Age to Harvest Protocol. Climate change is a global problem that requires individual countries to take action to reduce their greenhouse gas (GHG) emissions. Canada’s GHG emissions have increased from 613 megatonnes (Mt) in 1990 to 726Mt in 2013; an 18 percent increase (Environment and Climate Change Canada, 2015). The agriculture sector produces approximately 10 percent of the GHG emissions in Canada and methane and nitrous oxide are the two largest sources of emissions (AAFC, 2015). The main sources of methane emissions are from cattle and sheep production and animal manure. The amount of methane produced during the production process can be reduced by changing the animal’s diet, the age at harvest and the addition of various agents and compounds to the feed (AAFC, 2014a). GHG emissions in the province of Alberta increased from 175Mt in 1990 to 267 Mt in 2013 (Environment and Climate Change Canada, 2015). To address this increase in GHG emissions, Alberta introduced a carbon traded system where large emitters of GHG emissions are regulated (Boyle, 2008-09). Regulated firms can satisfied their required reductions by: (1) reducing their GHG emission intensity, (2) purchasing Emission Performance Credits from other regulated firms, (3) purchasing Technical Fund Credits or (4) purchasing Carbon Offset Credits. The province of Alberta has been active in the development of agricultural protocols that can be used to produce Carbon Offset Credits. However, agricultural producers will only undertake these management changes if there are economic incentives to do so. This paper investigates the transaction costs that will be incurred in generating Carbon Offset Credits from the Reduce Age to Harvest protocol and the economic incentives that will be generated for the aggregator and the feedlot operator. The Reduce Age to Harvest (RAH) Protocol was designed to quantify the GHG emissions that result from reducing the age of cattle when harvested. The protocol is designed to measure the GHG emissions per kilogram of carcass weight of beef. The RAH protocol includes the GHG emissions from the pasture, backgrounding, and feedlot operation as well as manure storage and handling. When the age to harvest is decreased the amount of GHG emissions also decreases (AESRD, 2011). A greenhouse gas calculator that was specifically designed for the feedlot industry was used to estimate the impact of decreasing the age of harvest from 19 months to 15 months. The change in management required bringing steer or heifer calves into the feedlot instead of yearling animals. This change in management resulted in a reduction of 2.3 tCO2e per head for steers and 2.49 tCO2e for heifers. The transaction costs of developing Carbon Offset Credits plays an important role in estimating the economic incentives of the RAH protocol. The RAH protocol will require the services of an aggregator who will manage the transaction costs of generating the Carbon Offset Credits from the feedlot operator to selling the Offset Credits on the market. In order to estimate the costs of the aggregation function, a series of semi structured and structured surveys and interviews were undertaken with aggregators who worked with feedlot operators as project developers. The semi-structure survey was an open discussion with one aggregator to define the types of costs that would be associated with developing a project using the RAH protocol. These costs were broken down into three categories. The first category was fixed costs that would be required no-matter the number of credits that would be generated and included: legal costs, accounting costs, office space, project planning, website development, computer software development, computer storage, etc. The second category of costs varied with the number of carbon offset credits that are generated. These included data collecting costs, de-listing costs, registration costs, and insurance costs. The third set of costs was based on the number of projects in the aggregator’s portfolio. These included the project listing costs and the verification costs. Once these detailed costs were identified a group of aggregators were surveyed to provide estimates of the various costs. Once these estimates were received, a consensus group of estimates were developed. These were then reviewed by the aggregators to provide an indication of the accuracy of the estimates. Once these costs were deemed acceptable a net present value calculation was undertaken to determine the economic feasibility of providing project development services for a RAH project. This analysis includes a sensitivity analyses on the variables that had an impact on the economic feasibility of being an aggregator. The economic incentive for the feedlot operator was also investigated. This included variations in the carbon price, the share of carbon revenue between the aggregator and the feedlot operator and the change in the cost of production from the change in management. This study estimated the benefits and costs for the aggregator and the feedlot operator of generating Carbon Offset Credits using the RAH protocol in the Alberta Carbon Market. Three carbon price scenarios were investigated and a sensitivity analysis was undertaken on some of the key variables that would impact the results. The analysis indicated that there are economic incentives for aggregators to get involved in the Carbon Offset Market with the RAH protocol. The economic incentives change with the carbon price, quantity of offset credits generated and the share of carbon revenue going to the aggregator. There are also favourable economic incentives for the feedlot operator. These results are sensitive to the carbon offset price, the share of offset revenue received and the change in the cost of production. The analysis indicated that the economics from carbon offset generation is positive, however, the revenue generated is substantially less significant than the revenue from the cattle production.
    Keywords: Transaction Cost, GHG Emissions, Carbon Offset Protocol, Agricultural and Food Policy, Farm Management, Resource /Energy Economics and Policy, Q18, Q54,
    Date: 2016
  40. By: Misato Sato; Marta Ciszawska; Timothy Laing
    Abstract: International carbon offsetting can help reduce compliance costs in emissions trading schemes and at the same time support carbon mitigation projects in developing countries. A surprising observation from the European Union Emissions Trading System’s experience with offsetting is that companies do not fully utilise offsetting for compliance despite the cost advantage in doing so. However, so far there has been limited research evaluating what factors influence companies’ decisions to utilise offsets. This paper fills this gap by investigating the demand for carbon offsets in tradable permit emissions markets. To do so, we use detailed firm-level data on 279 companies regulated under the EU ETS during 2008-2012. Our findings suggest that there are clear sectoral differences and that, contrary to expectations, transaction costs and over-allocation of free allowances are not the key determining factors. We find some evidence to support the existence of ‘insetting’, that is, companies with subsidiaries in key offset countries are more likely to use a larger share of their offset allowance for compliance. Semi-structured interviews with companies supported these findings.
    Date: 2016–05
  41. By: Liu, Wan Yu
    Abstract: The Kyoto Protocol has clearly specified various methods and measures of reducing greenhouse gases, and the reduction of emissions using the land-use change and forestry (LUCF) methods has become legally enforced as well. Countries all over the world are actively developing their local emission trading mechanisms in hopes of aligning with those international standards. Among them, the carbon trading mechanism has been widely perceived by the world as an important economic instrument for reducing greenhouse gases. In this study, we first established a theoretical economic model of supply and demand for four carbon trading mechanisms, and then derived the optimal conditions to decide the optimal trading price and trading duration of carbon contract with endogenous and exogenous carbon prices.
    Keywords: carbon trading contract, afforestation, carbon sequestration, afforestation on agricultural land, forest management, Environmental Economics and Policy,
    Date: 2016–08–02
  42. By: Akhundjanov, Sherzod
    Abstract: This paper analyzes a common property resource (such as oil field or water reservoir) shared by two countries in the presence of two forms of bilateral externalities: the tragedy of the commons, and the environmental damage resulting from the exploitation of the resource. We demonstrate that both cooperative and non-cooperative forms of regulation produce a negative effect on firms' profits, as they increase firms' unit production costs. However, regulation can also entail a positive effect on profits, given that it mitigates industry overproduction. We show that the magnitude of these two effects depends not only on the type of regulatory instrument, but also on the rate of resource extraction and the environmental damage in each country. We identify conditions under which the positive effect of regulation dominates its negative effect, thus increasing firms' profits and ultimately incentivizing them to support the introduction of regulation, either at the national or international level.
    Keywords: Common property resource, Bilateral externalities, Transboundary externalities, Environmental Economics and Policy, Industrial Organization, Public Economics, Resource /Energy Economics and Policy, H23, Q38, C71, C72,
    Date: 2016
  43. By: Hoang, Phi; McGuire, William; Prakash, Aseem
    Keywords: 33/50, voluntary environmental programs, Environmental Economics and Policy, Q53, Q58, Q52,
    Date: 2016
  44. By: Kim, Moon Joon
    Abstract: South Korea has suffered from high levels of air pollution in recent years. South Korea experiences sand storms originating from deserts in west China and Inner Mongolia every spring for over 2,000 years. Over the last decade, as the coal-based Chinese economy continues to grow explosively, air pollutants from industrial zones and coal-combusting power plants started blowing over on the prevailing westerly wind to the nearby countries, Korea and Japan. Further, the problem gets more severe when more fossil fuels are burned for winter heating in China. The Chinese government also acknowledges that a part of emissions generated in their mainland may travel long distances and affect air quality in neighboring countries, however, the level of contribution is still a subject of considerable debate. The long-range transport of air pollutants from China accounts for roughly 26-50% of annual contributions of PM_10 in Korea (Korean Government 2013, Li et al. 2014, Park and Han 2014). In this study, I attempt to econometrically identify the role of wind in the local air quality as a transport of air pollution. The regression models analyze the marginal effects of long-range transport and determines which specific wind directions have the greatest effects each season on South Korean ambient air quality. This paper uses two sets of panel data: daily average concentrations of PM_10 and weather monitoring data (precipitation, temperature, wind speed, and wind direction). The data are collected from seven metropolitan cities and nine provinces in South Korea for nine years (2006-2014). I find that westerly wind increases PM_10 concentrations in South Korea. The marginal effect of the westerlies on annual PM_10 is 0.883 μg/m^3 higher than the east wind, accounting for 3.38% with the annual mean wind speed. Seasonally, the effect of westerlies peaks in winter (8.13%) when more pollutants are generated in China, followed by summer (7.55%), spring (5.99%), and fall (3.21%). More specifically, the northwest (NW) wind has the greatest effects in summer (13.75%) and winter (11.11%) and is in the direction from Beijing to South Korea. Furthermore, the west-southwest (WSW) shows the largest impacts in spring (8.36%) and fall (7.71%), and southwest wind (SW) is the greatest year-round, accounting for 12.26% of the annual mean PM_10. These winds correspond to the direction from Shanghai to South Korea. This is important because it not only shows the effects of transboundary air pollution from China, but also informs us about the air pollutants’ likely main contributing sources, Beijing and Shanghai in China. Based on the results, the average effects of the transboundary air pollution are estimated to account for 7.71-13.75% of the mean PM_10 concentrations depending on season. This brings about a sharp contrast with that of previous studies that estimate the Chinese contribution on PM_10 in South Korea of approximately 26-50%.
    Keywords: Transboundary air pollution, particulate matter, Environmental Economics and Policy, International Relations/Trade, O13, P28, Q53,
  45. By: Raymond Gradus (VU University Amsterdam, the Netherlands); Rick van Koppen (PricewaterhouseCoopers); Elbert Dijkgraaf (Erasmus University Rotterdam, the Netherlands); Paul Nillesen (PricewaterhouseCoopers)
    Abstract: The cost-effectiveness of plastic recycling is compared to energy recovery from plastic incineration in a waste-to-energy plant using data for the Netherlands. Both options have specific benefits and costs. The benefits of recycling are the avoidance of both CO2 that otherwise would be emitted during incineration and the production of virgin (new) material. There are significant costs, such as collection costs and recycling costs involved for plastic recycling by municipalities. The benefits of energy recovery from plastic are heat and electricity production leading to fewer emissions in the regular energy production sector, but this requires a waste-to-energy plant with the associated capital investments. Summing all the costs and benefits results in an implicit CO2 abatement price of 172 Euro per tonne of CO2 in case of plastic recycling. In general, this implicit price is much higher than current (or historic) ETS prices, the estimated external costs of CO2 emissions, or alternatives to reduce CO2 emissions (e.g. renewable energy). A sensitivity analysis shows that this conclusion is robust.
    Keywords: recycling; incineration; plastics; cost-effectiveness analysis
    JEL: H43 Q38 Q42
    Date: 2016–05–19
  46. By: Lucas Bretschger (ETH Zurich, Switzerland)
    Abstract: By adopting the Paris Agreement on climate change the world community has agreed on global goals for climate policy. However, by relying on voluntary contributions and respecting "national circumstances" it does not ensure efficient and equitable country policies. To derive guidelines for a fair burden sharing between countries the paper applies welfare theory and combines it with general equity principles. The procedure selects those "national circum- stances" which are suitable for internationally acceptable policies. The concept is then compared to policies formulated by purely selfish countries. A convergence process closing the gap between country contributions and the optimum international climate policy is developed. It is argued that equity-based signals can be a forceful means supporting this process.
    Keywords: Climate policy, equity, climate agreements, social welfare
    JEL: Q54 Q56 D63 H40
    Date: 2016–05
  47. By: Hubacek, Klaus
    Abstract: To tackle global climate change, it is desirable to reduce CO2 emissions associated with household consumption in particular in developed countries, which tend to have much higher per capita household carbon footprints than less developed countries. Our results show that carbon intensity of different consumption categories in the U.S. varies significantly. The carbon footprint tends to increase with increasing income but at a decreasing rate due to additional income being spent on less carbon intensive consumption items. This general tendency is frequently compensated by higher frequency of international trips and higher housing related carbon emissions (larger houses and more space for consumption items). Our results also show that more than 30% of CO2 emissions associated with household consumption in the U.S. occur outside of the U.S. Given these facts, the design of carbon mitigation policies should take changing household consumption patterns and international trade into account.
    Keywords: Environmental problems, Household, CO2 emissions, Household consumption, Income group, Carbon intensity
    JEL: C67 E01 F18 H23 F64
    Date: 2016–03
    Date: 2016
  49. By: Roman Frigg; Leonard A. Smith; David A. Stainforth
    Abstract: The United Kingdom Climate Impacts Programme’s UKCP09 project makes highresolution projections of the climate out to 2100 by post-processing the outputs of a large-scale global climate model. The aim of this paper is to describe and analyse the methodology used and then urge some caution. Given the acknowledged systematic, shared shortcomings in all current climate models, treating model outputs as decision relevant projections can be significantly misleading. In extrapolatory situations, such as projections of future climate change impacts, there is little reason to expect that postprocessing of model outputs can correct for the consequences of such errors. This casts doubt on our ability, today, to make trustworthy, high-resolution probabilistic projections out to the end of this century.
    Keywords: climate change; prediction; projection; simulation; model; probability; reliability; emulation; systematic error; decision-making;
    JEL: C1
    Date: 2015
  50. By: Michael G. Pollitt
    Abstract: This paper explores the prospects for a global carbon market as the centrepiece of any serious attempt to reach the ambitious goal for greenhouse gas (GHG) reductions set by climate scientists. My aim is to clarify the extent to which we know what policy might best support global decarbonisation. I begin by discussing what we might mean by a global carbon market and its theoretical properties. I proceed to discuss the EU Emissions Trading System experience and the recent experience with the Australian carbon tax. Next, I assess the evolving carbon market initiatives in the US and in China. In the conclusion, I apply some principles of ‘good’ energy policy making to the prospects for a successful global carbon market.
    Keywords: carbon market, carbon tax, EU ETS
    JEL: Q54
    Date: 2016–03–07

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