nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒06‒18
43 papers chosen by
Roger Fouquet
London School of Economics

  1. Boundedly rational consumers, energy and investment literacy, and the display of information on household appliances By Julia Blasch; Nilkanth Kumar; Massimo Filippini
  2. Global trends in the political economy of smart grids: A tailored perspective on .smart. for grids in transition By Cherrelle Eid; Rudi Hakvoort; Martin de Jong1
  3. Falling oil prices and sustainable energy transition : Towards a multilateral agreement on fossil-fuel subsidies By Henok Asmelash
  4. The role of community leadership in the development of grassroots innovations By Mari Martiskainen
  5. Understanding indicator choice for the assessment of research, development, and demonstration financing of low-carbon energy technologies : Lessons from the Nordic countries By Jonas Sonnenschein
  6. The impact of green innovation on energy intensity: an empirical analysis for 14 industrial sectors in OECD countries By Jules-Daniel Wurlod; Joëlle Noailly
  7. Governing clean energy transitions in China and India A comparative political economy analysis By Karoliina Isoaho; Alexandra Goritz; Nicolai Schulz
  9. Consumer Responses to Food Products Produced Near the Fukushima Nuclear Plant By Aruga, Kentaka
  10. Is there a Future for Nuclear Power? Wind and Emission Reduction Targets in Alberta By G. Cornelis van Kooten; Rachel Lynch; Jon Duan
  11. Renewable energy in the Brazilian Amazon The drivers of political economy and climate By Sabrina McCormick
  12. The political economy of clean energy transitions at sub-national level Understanding the role of international climate regimes in energy policy in two Brazilian states By Jose de Oliveira; Celio Andrade
  13. Electricity consumption and economic growth in China: assessing Granger causality at provincial, electricity-market, and national levels By Xenophon, Aleksis
  14. Analyzing the Impact of Electricity Market Structure Changes and Mergers: The Importance of Forward Commitments By Brown, David P.; Eckert, Andrew
  15. Things are not always what it is measured: On the importance of adequately assessing energy poverty By Sandrine Meyer; Laurence Holzemer; Thiago Nyssens Moraes Da Silva; Kevin Maréchal
  16. Fossil energy in economic growth: A study of the energy direction of technical change, 1950-2012 By Gregor Semieniuk
  17. European energy security Challenges and green opportunities By Almas Heshmati; Shahrouz Abolhosseini
  18. The political economy of energy innovation By Shouro Dasgupta,; Enrica De Cian; Elena Verdolini
  19. Productivity effects of eco-innovations using data on eco-patents By Giovanni Marin; Francesca Lotti
  20. The political economy of energy transitions and thermal energy poverty Comparing the residential LPG sectors in Indonesia and South Africa By Johannes Kruger; Louise Tait; Jiska de Groot
  21. Energy efficiency gains from trade in intermediate inputs: Firm-level evidence from Indonesia By Michele Imbruno; Tobias D Ketterer
  22. Energy, trade and innovation: the tragedy of the locals By Chiara Ravetti; Tania Theoduloz; Giulia Valacchi
  23. Climate change policy and power sector reform in Mexico under the .golden age of gas. By José Maria Valenzuela; Isabel Studer
  24. Fracking and Regional Economic Development Based on an Exhaustable Resource: An Economic Model of Tradeoffs By Keith Willett
  25. The Impact of Resource Wealth on Economic Growth: A Review of Foreign Experience and Estimates for Russia By Lubimov, I.L.
  26. The impact of oil price shocks on the US stock market: A note on the roles of US and non-US oil production By Wensheng Kang; Ronald A. Ratti; Joaquin Vespignani
  27. Oil price, exchange rate and consumer price co-movement: A continuous-wavelet analysis By Habimana, Olivier
  28. The Impacts of Underground Petroleum Releases on a Homeowner's Decision to Sell: A Difference-in-Differences Approach By Dennis B. Guignet; Adan L. Martinez-Cruz
  29. Optimal Resource Extraction in Regime Switching L\'{e}vy Markets By Moustapha Pemy
  30. Cycle-Trend Dichotomy of the Dutch Disease Phenomenon By Boufateh, Talel
  31. World Financial 2014-2016 Market Bubbles: Oil Negative - US Dollar Positive By Marcin W\k{a}torek; Stanis{\l}aw Dro\.zd\.z; Pawe{\l} O\'swi\k{e}cimka
  32. Do political economy factors matter in explaining the increase in the production of bioenergy? By Eric Nazindigouba Kere
  33. The Feasibility, Costs, and Environmental Implications of Large-scale Biomass Energy By Winchester, Niven; Reilly, John
  34. Travel Behavior, Energy Use, and Carbon Emissions: Evidence from Shenzhen, China By Shengyuan Zhang; Jimin Zhao; Albert Park
  35. Low-Carbon Futures for Shenzhen’s Urban Passenger Transport System By Shengyuan Zhang; Jimin Zhao
  36. Approaches and issues in valuing the costs of inaction of air pollution on human health By Anna Alberini; Andrea Bigano; Jessica Post; Elisa Lanzi
  37. Carbon Taxes and Feed-in Tariffs: Using Screening Curves and Load Duration to Determine the Optimal Mix of Generation Assets By G. Cornelis van Kooten; Rachel Lynch; Jon Duan
  38. How do we prioritize the GHG mitigation options ? development of a marginal abatement cost curve for the building sector in Armenia and Georgia By Timilsina,Govinda R.; Sikharulidze,Anna; Karapoghosyan,Eduard; Shatvoryan,Suren
  39. Double Dividend of Low-carbon Growth in Mexico: A Dynamic General Equilibrium Assessment By Gissela Landa; Frédéric Reynès; Ivan Islas; François-Xavier Bellock; Fabio Grazi
  40. Unpacking provisions related to transparency of mitigation and support in the Paris Agreement By Gregory Briner; Sara Moarif
  41. Paris Agreement By Jotzo, Frank
  42. Does Climate Aid Affect Emissions? Evidence from a Global Dataset By Sambit Bhattacharyya; Maurizio Intartaglia; Andy McKay
  43. The value of commitment and delegation for the control of greenhouse gas emissions By Paul Pichler; Gerhard Sorger

  1. By: Julia Blasch (Institute for Environmental Studies (IVM), VU University Amsterdam); Nilkanth Kumar (ETH Zurich, Switzerland); Massimo Filippini (ETH Zurich, Switzerland)
    Abstract: It is an ongoing debate how to increase the adoption of energy-efficient light bulbs and household appliances in the presence of the so-called ’energy efficiency gap’. One measure to support consumers’ decision-making towards the purchase of more efficient appliances is the display of energy-related information in the form of energy-efficiency labels on electric consumer products. Another measure is to educate the consumers in order to increase their level of energy and investment literacy. Thus, two questions arise when it comes to the display of energy-related information on appliances: (1) What kind of information should be displayed to enable consumers to make rational and efficient choices? (2) What abilities and prior knowledge do consumers need to have to be able to process this information? In this paper, using a series of recursive bivariate probit models and three samples of 583, 877 and 1, 375 Swiss households from three major Swiss urban areas, we show how displaying information on the future energy consumption of electrical appliances in monetary terms, i.e. as an estimate of yearly energy cost (CHF) rather than in physical units (kWh), increases the probability that an individual performs an investment analysis and hence chooses the most (cost-)efficient appliance. In addition, our econometric results suggest that individuals with a higher level of energy and, in particular, investment literacy are more likely to perform an optimization rather than relying on a decision-making heuristic and are more likely to identify the most (cost-)efficient appliance.
    Keywords: energy-efficiency, bounded rationality, energy-using durables, information, energy label, energy literacy, choice experiment
    JEL: D12 D80 Q41 Q48
    Date: 2016–05
  2. By: Cherrelle Eid; Rudi Hakvoort; Martin de Jong1
    Abstract: The global transition towards sustainable, secure, and affordable electricity supply is driving changes in the consumption, production, and transportation of electricity. This paper shows the different policy aims that are promoted with smart grids in Europe, the United States, and China. In all cases, the developments are motivated by the possible improvements in reliability and affordability yielded by smart grids, while sustainability of the electricity sector is not a central motivation.
    Keywords: electricity, regulation, innovation, policy, smart systems.
    Date: 2016
  3. By: Henok Asmelash
    Abstract: Fossil-fuel subsidies are economically inefficient and harmful for the environment yet efforts to phase them out at the national and international levels have not been effective. The existing international legal framework is too weak and fragmented to support this process and an international agreement is essential.This paper explores the challenges and prospects of, and avenues for negotiating a binding multilateral agreement on phasing out fossil-fuel subsidies. The paper posits that the Friends of Fossil-Fuel Subsidy Reform are in a position to take the lead and that the ball is in the court of the World Trade Organization.
    Keywords: International trade, Nonrenewable natural resources, Prices
    Date: 2016
  4. By: Mari Martiskainen (Centre on Innovation and Energy Demand, Sussex Energy Group, SPRU)
    Abstract: This article focuses on the role of community leadership in the development of grassroots innovations. It asks: When community leaders initiate energy projects, what types of skills and knowledge practices do they utilise to nurture grassroots innovations? Grassroots innovations are usually driven by social and sustainability motives, and developed by civil society groups. Based on a mixed methods approach including research interviews and site visits, the article draws on previous literature on community leadership, grassroots innovations and niche literature. Community leadership is analysed via two in-depth community energy cases in the UK. Research findings show that community leadership can aid the development of grassroots innovations, which operate in niches and require nurturing. Community leadership benefits from being embedded into social networks, shared vision and decision making, but pre-existing skills and tacit knowledge also play a role. Community leaders can also assist niche building by working closely with intermediary actors.
    Keywords: community leadership, grassroots innovations, nurturing, intermediaries, community energy
    Date: 2016–10
  5. By: Jonas Sonnenschein
    Abstract: Rapid decarbonization of whole countries requires additional research, development, and demonstration of low-carbon energy technologies. Governments support research, development, and demonstration in this area with various financing instruments. These instruments are frequently assessed by carrying out indicator-based evaluations. So far there is no standard set of indicators for this purpose.This study looks at research, development, and demonstration financing in the Nordic countries, which are frequently mentioned as leading countries with respect to eco-innovation. Different indicators are identified, selected, and analysed. The analysis of the indicator-based evaluation method includes the acceptance of an indicator, its ease of monitoring, and its robustness as assessment criteria. No indicator or set of indicators emerges as clearly superior from the analysis. Indicator choice is subject to trade-offs. This means in turn that there is room for directing evaluation results by choosing certain indicators over others.The study concludes by discussing potential policy implications of biases in indicator-based evaluation of low-carbon energy technologies research, development, and demonstration funding.
    Keywords: Nonrenewable natural resources
    Date: 2016
  6. By: Jules-Daniel Wurlod; Joëlle Noailly
    Abstract: This paper analyses the impact of green innovation on energy intensity in a set of 14 industrial sectors in 17 OECD countries over the 1975-2005 period. We create a stock of green patents for each industrial sector and estimates a translog cost function to measure the impact of green innovation on energy intensity, next to other factors such as input substitution and autonomous technical change. We find that green innovation has contributed to the decline in energy intensity in the majority of sectors: the median elasticity of energy intensity with respect to green patenting is estimated at -0.03 in our sample. Hence, a 1% increase in green patenting activities in a given sector is associated with a 0.03% decline in energy intensity. The magnitude of the effect is larger in energy-intensive sectors and in more recent years. We also find that the impact of an additional green patent on energy intensity is larger than an average non-green patent. Our results are robust to alternative definitions of patents.
    Keywords: Energy intensity, Green innovation; Patents; Technology; Cost function.
    JEL: Q41 O33
    Date: 2016–06–03
  7. By: Karoliina Isoaho; Alexandra Goritz; Nicolai Schulz
    Abstract: China and India will have to radically transform their electric power systems in order to decouple economic growth from unsustainable resource consumption. While the majority of transition literature has focused on the diverse socio-technical factors that could enable such a transformation, more recently scholars have called for a deeper analysis of political economy factors.This paper contributes to this approach by studying how a ruling coalition.s ability and willingness to promote a clean energy transition is shaped by societal pressures, vested interests, and its power and cohesiveness. In doing so, we identify central drivers and barriers to a clean energy transition in China and India.
    Keywords: Economic growth, Environmental policy, Political science, Renewable energy sources, State governments
    Date: 2016
  8. By: Laurie, Alexander; Mounter, Stuart; Villano, Renato
    Keywords: Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2016–02
  9. By: Aruga, Kentaka
    Keywords: Agricultural and Food Policy,
    Date: 2016–02
  10. By: G. Cornelis van Kooten; Rachel Lynch; Jon Duan
    Abstract: This paper explores the viability of relying on wind power to replace upwards of 60% of electricity generation in Alberta that would be lost if coal-fired generation is phased out. Using hourly wind data from 17 locations across Alberta, we are able to simulate the potential wind power output available to the Alberta grid when modern, 3.5 MW-capacity wind turbines are spread across the province. Using wind regimes for the years 2006 through 2015, we find that available wind power is less than 60% of installed capacity 98% of the time, and below 30% of capacity 74% of the time. In addition, although there is insignificant correlation between wind speeds at different locations, it will still be necessary to rely on fossil fuel generation because winds are generally too variable and weak to replace reliable sources of power. Then, based on the results from a grid allocation model, we find that CO2 emissions can be reduced by about 30%, but only through a combination of investment in wind energy and reliance on purchases of hydropower from British Columbia. Only if nuclear energy is permitted into the generation mix would Alberta be able to meet its CO2-emissions reduction target in the electricity sector. With nuclear power, emissions can be reduced by upwards of 85%.
    Keywords: Electricity; renewable energy and climate change; wind power; intermittent energy; nuclear power
    JEL: H41 L51 L94 Q42 Q48 Q54
    Date: 2016–06
  11. By: Sabrina McCormick
    Abstract: Understanding the political economic drivers of energy planning in the Brazilian Amazon is critical since the forest is increasingly vulnerable to destruction and related, increased poverty. This research investigates how political economy affects biomass and hydroelectricity development in that region. It focuses on political economy as characterized by: 1) the needs and agenda of local communities, 2) economic interests and politics at the national level, and 3) international social actors and financial interests.Findings advance our understanding of the political economy of renewable energy by first, focusing on a critical global resource, and second, by implementing a multi-scalar framework that also considers impacts and drivers of climate change.
    Keywords: Climatic changes, Quantitative research, Renewable energy sources, Sustainable development
    Date: 2016
  12. By: Jose de Oliveira; Celio Andrade
    Abstract: This paper examines the political economy aspects, particularly the influence of the Clean Development Mechanism, in clean energy and climate change policies in the states of Bahia and Rio Grande do Sul in Brazil. The different mechanisms for responding to climate change are financing opportunities in some of the .green. industries, but the results show a gap between the initial objectives of global policies and their results.The research identified pitfalls and opportunities for new strategies and mechanisms for boosting clean energy in Brazil and the role that the Clean Development Mechanism and future mechanisms can play in the political economy of clean energy transitions. The paper concludes with a discussion on the lessons learned from experience of the Clean Development Mechanism and its implications for the future of the Paris Agreement.
    Keywords: Climatic changes, Renewable energy sources, Sustainable development
    Date: 2016
  13. By: Xenophon, Aleksis
    Keywords: Resource /Energy Economics and Policy,
    Date: 2016–02
  14. By: Brown, David P. (University of Alberta, Department of Economics); Eckert, Andrew (University of Alberta, Department of Economics)
    Abstract: We investigate how the effects of market structure changes and mergers in restructured electricity markets depend on the level of forward contracting. Following Bushnell, Mansur, and Saravia (2008), we develop a Cournot model of Alberta's wholesale electricity market that incorporates firms' forward positions. Using data from 2013 - 2014, we estimate the monthly forward positions of the five largest firms in the market, and simulate the effects of different market structure changes, including variations of a hypothetical merger with asset divestitures. We examine the sensitivity of the simulated effects of mergers and other market structure changes to assumptions regarding firms' forward commitments. We demonstrate that the wholesale market impacts of mergers and market structure changes depend critically on firms' forward commitments in the post market structure change equilibrium. Our paper demonstrates the importance of establishing a clear understanding of the size and nature of forward commitments in forecasting the effects of mergers and other market structure changes in wholesale electricity markets.
    Keywords: Electricity; Mergers; Forward Contracts; Market Power
    JEL: D43 L40 L51 L94 Q40
    Date: 2016–06–13
  15. By: Sandrine Meyer; Laurence Holzemer; Thiago Nyssens Moraes Da Silva; Kevin Maréchal
    Abstract: Energy poverty is a major societal issue with both economic impacts and solidarity implications. Although its main drivers (e.g. insufficient income, bad quality housing, high energy prices) are widely recognised, there is no common definition of energy poverty at the European level, let alone a common way of measuring the phenomenon. The energy poverty barometer for Belgium has been developed accordingly. It draws on a set of composite indicators with the aim of grasping the multifaceted nature of energy poverty: excessive energy bills compared to available income (measured energy poverty), restriction in energy consumption below basic needs (hidden energy poverty) and self-reported difficulties to heat the housing correctly (perceived energy poverty). The results of the barometer are enriched and complemented with the insights of a field survey carried out in collaboration with municipal Public Centres for Social Action from the Brussels-Capital Region. The usefulness of combining an indicatorbased approach relying on macro statistics with a more qualitative field study leads us to support the setting up of a dedicated platform involving stakeholders. This broader and more systemic understanding would help moving beyond a ‘one size fits all’ approach to intervention which could be detrimental for some affected households.
    Keywords: Energy poverty; Barometer; Indicators; Social inclusion
    JEL: Q40 D10 D63
    Date: 2016–06–07
  16. By: Gregor Semieniuk (Science Policy Research Unit, University of Sussex)
    Abstract: Climate change mitigation challenges national economies to increase productivity while reducing fossil energy consumption. Fossil energy-saving technical change has been as- sumed to accomplish this, yet empirical evidence is scarce. This paper investigates the long-run relationship between the rate and direction of technical change with respect to fossil energy and labor in the world economy. Growth rates of labor productivity and the fossil energy-labor ratio are examined for more than 95% of world output be- tween 1950 and 2012. The average elasticity of the energy-labor ratio with respect to labor productivity is close to one, implying highly energy-using technical change, but no trade-o between factor productivity growth rates. This stylized fact suggests the importance of a cheap, abundant energy supply for robust global growth, and a more important role for renewable energy. Integrated assessment models do not incorporate this restriction which may result in poorly speci ed baseline scenarios.
    Keywords: labor productivity, fossil energy productivity, energy-using technical change, decoupling, long-run trends, stylized fact
    JEL: N10 O44 O47 Q43
    Date: 2016–11
  17. By: Almas Heshmati; Shahrouz Abolhosseini
    Abstract: This research reviews relevant literature on the current state and effectiveness of developing renewable energy on energy security in general, and on energy security in the European Union in particular. The paper elaborates on primary energy import sources, possible alternatives, and how energy security is affected by the sources of supply. It also gives an analysis of the effects of the Ukrainian crisis, the isolation of Iran on diversification sources, and on European energy security. It examines European Union.s energy policy, analyses the best motivation for a new energy policy direction within Europe, and suggests alternative solutions for enhanced energy supply security. The aim is to suggest suitable solutions for energy security in Europe through energy supply diversification. Supply diversification includes alternative energy corridors for reducing dependency on Russia as a supplier and enhancing the power generated by renewable energy sources under the European Union 2020 strategy.
    Keywords: energy security, green energy, renewable energy, Ukraine crisis, Iran sanctions
    Date: 2016
  18. By: Shouro Dasgupta,; Enrica De Cian; Elena Verdolini
    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
    Date: 2016
  19. By: Giovanni Marin (IRCrES-CNR); Francesca Lotti (Bank of Italy)
    Abstract: We investigate the productivity effects of eco-innovations at the firm level using a modified version of the CDM model (Crepon et al., 1998). The distinctive nature of environmental innovations, especially as regards the need for government intervention to create market opportunities, is likely to affect the way they are pursued and their effect on productivity. The analysis is based on an unbalanced panel sample of Italian manufacturing firms merged with data on patent applications and balance sheet information. When looking at innovation’s return on productivity , we observe that eco-innovations exhibit a generally lower return relative to other innovations, at least in the short run. This differential effect is more pronounced for polluting firms, which are likely to face higher compliance costs for environmental regulations than other firms. This result holds for both the extensive (probability of patenting) and intensive (patent count) margin.
    Keywords: R&D, innovation, productivity, patents, eco-patents.
    JEL: L60 Q55
    Date: 2016–06
  20. By: Johannes Kruger; Louise Tait; Jiska de Groot
    Abstract: Indonesia and South Africa are both trying address energy poverty through subsidized energy provision. South Africa has implemented one of the largest electrification programmes in the world, and 80 per cent of the population now have access to the national grid. But this alone is unlikely to achieve universal energy access goals.Indonesia recently implemented one of the largest household energy transition projects to date: the kerosene-to-LPG (liquid petroleum gas) conversion programme. Exploring these projects makes more visible the political economic factors that have affected the adoption of certain energy carriers.
    Keywords: Gas utilities, Political science, Poverty, Power resources
    Date: 2016
  21. By: Michele Imbruno; Tobias D Ketterer
    Abstract: This paper investigates whether importing intermediate goods improves firm-level environmental performance in a developing country, using data from the Indonesian manufacturing sector. We build a simple theoretical model showing that trade integration of input markets entails energy efficiency improvements within importers relative to nonimporters. To empirically isolate the impact of firm participation in foreign intermediate input markets we use ‘nearest neighbour’ propensity score matching and difference-indifference techniques. Covering the period 1991-2005, we find evidence that becoming an importer of foreign intermediates boosts energy efficiency, implying beneficial effects for the environment.
    Keywords: Trade, Intermediate Inputs, Energy Efficiency, Environment, Indonesia.
    Date: 2016
  22. By: Chiara Ravetti; Tania Theoduloz; Giulia Valacchi
    Abstract: This paper analyses the use of different energy sources in a dynamic trade model with endogenous innovation. We consider two countries, North and South, the first with high environmental concerns and the second endowed with abundant fossil fuel resources. In this asymmetric setting, the South specializes in energy production using fossil fuels, causing local and global environmental damages. The North, instead, specializes in other manufacturing and imports energy inputs from the South. Endogenous innovation reinforces this pattern of specialization over time. We show that the North can unilaterally stop the use of fossil fuels and avoid a global climate disaster with two different strategies: either redirecting the comparative advantage of the South towards manufacturing, relocating the production of energy to the North, or buying fossil fuel deposits in the South. These two policies have different implications in terms of monetary costs and environmental outcomes for the North. The choice between the two depends on the valuation of the environment, the energy requirements of final goods’ production, the starting time of the policy and the time preferences of the North. Overall, however, there is no costless way for the North to stop unilaterally the use of fossil fuels.
    Keywords: Energy, technical change, international trade, comparative advantage, fossil fuels.
    JEL: F18 O32 O38
    Date: 2016–01–20
  23. By: José Maria Valenzuela; Isabel Studer
    Abstract: Mexico.s low-carbon technology perspectives show lack of coherence with the rising ambition in climate change commitments, for which Mexico is internationally praised. The comparison of two recent energy reforms, corresponding to two administrations, explains this lack of coherence by, on the one hand, the permanence of a strong climate institutional framework devised as a means to increase energy security and, on the other hand, the political commitment to reduce electricity tariffs through the access to low-priced gas in North America. This paper underscores the political economy trade-offs between the need for a strong climate commitment that provides a stable long-term energy transition pathway and the political and economic short-term benefits derived from low electricity tariffs.
    Keywords: power sector, climate change, renewable energy, natural gas, market reform, energy transition
    Date: 2016
  24. By: Keith Willett
    Date: 2016
  25. By: Lubimov, I.L. (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: We will address key papers in which the authors try to find or, on the contrary, to show the absence of the resource curse, in particular, we give a description of one of the key mechanisms of the resource curse, Dutch disease. We also conduct a small study, which are trying to establish a link between oil wealth and economic growth.
    Keywords: resource curse, Dutch disease, economic growth, oil wealth
    Date: 2016–04–20
  26. By: Wensheng Kang; Ronald A. Ratti; Joaquin Vespignani
    Abstract: Kilian and Park (IER 50 (2009), 1267-1287) find shocks to oil supply are relatively unimportant to understanding changes in U.S. stock returns. We examine the impact of both U.S. and non-U.S. oil supply shocks on U.S. stock returns in light of the unprecedented expansion in U.S. oil production since 2009. Our results underscore the importance of the disaggregation of world oil supply and of the recent extraordinary surge in the U.S. oil production for analysing impact on U.S. stock prices. A positive U.S. oil supply shock has a positive impact on U.S. real stock returns. Oil demand and supply shocks are of comparable importance in explaining U.S. real stock returns when supply shocks from U.S. and non-U.S. oil production are identified.
    Keywords: Oil prices, Stock returns, U.S. oil production
    JEL: E44 G12 Q43
    Date: 2016–06
  27. By: Habimana, Olivier
    Abstract: Using the cross-wavelet coherency, partial-wavelet coherency and wavelet phase-difference, this paper investigates the time-frequency co-movement among crude oil price, Rwandan Franc/USD exchange rate and consumer price index. The time-frequency analysis unveils the strong dependency between oil prices and exchange rate; the two series are in phase at a short cycle of three to four months. This co-movement intesnfied and expanded to intermediate scales of four to sixteen months beginning late 2007, the onset of global financial crisis. There is evidence that oil prices might have significantly contributed to the depreciation of the Rwandan Franc that depreciated by 446% in only 21 years. This effect varies in time and frequency. Our findings suggest that there is no singificant time-frequency relationship between, on one side oil prices and consumer prices, and exchange rate and consumer prices on the other side. This implies that oil prices are not inflationary, which provides greater freedom for pursuing an independent monetary policy, and makes it easier for the Central Bank to possibly implement inflation targeting in the future. However, fiscal and monetary authorities need to devise policies to attenuate the effect of oil shocks on macroeconomic stability, including the effect of continuous depreciation of the Rwandan Francs on the balance of trade, and on external debt servicing since debt is denominated in foreign currencies.
    Keywords: Consumer prices, continuous wavelet, exchange rate, oil price, time-frequency analysis, wavelet coherency
    JEL: C63 F1 F31
    Date: 2016–04–05
  28. By: Dennis B. Guignet; Adan L. Martinez-Cruz
    Abstract: Actual and perceived damages from environmental disamenities may disrupt a household’s otherwise optimal decision of when to sell their home. This study examines this relatively under-investigated topic with an empirical application to petroleum releases from leaking underground storage tanks, like those commonly found at gas stations. The ubiquity and relative homogeneity of this potential disamenity facilitates a difference-in-differences methodology. The results reveal that the optimal timing of home sales is impacted by leak and cleanup events at these disamenities; leading to both selling sooner and delaying a sale, depending on the event, presence of the primary exposure pathway, and the quality of the home. The implications of these results are discussed.
    Keywords: housing market, property transaction, discrete time duration model, underground storage tank, groundwater contamination
    JEL: D62 I18 Q51 Q53 R20
    Date: 2016–06
  29. By: Moustapha Pemy
    Abstract: This paper studies the problem of optimally extracting nonrenewable natural resource in light of various financial and economical restrictions and constraints. Taking into account the fact that the market values of the main natural resources i.e. oil, natural gas, copper,...,etc, fluctuate randomly following global and seasonal macro-economic parameters, these values are modeled using Markov switching L\'evy processes. We formulate this problem as finite-time horizon combined optimal stopping and optimal control problem. We prove that the value function is the unique viscosity of the corresponding Hamilton-Jacobi-Bellman equations. Moreover, we prove the convergence of a finite difference approximation of the value function. Numerical examples are presented to illustrate these results.
    Date: 2016–06
  30. By: Boufateh, Talel
    Abstract: This paper aims to study the simultaneous effects of Dutsh Disease (DD) phenomenon on the industrial and agricultural sectors for five oilexporting countries with different development levels. To proceed, we propose to study the dynamic relationship between oil rent, industrial added value and agricultural added value in a structural multivariate framework. The idea is to capture both short and long term dynamics of this relationship, by performing the model’s cycle-trend dichotomy using SVECM approach. The results have shown that the DD phenomenon effects both agricultural and industrial sectors in the considered countries with one exception for each sector. The impacts and adverse effects that might have the DD phenomenon on each sector accordingly whether it is permanent or transient, depend on the economy nature and the strategy adopted. The findings confirmed that the DD phenomenon affecting the industrial sector ephemerally however the agricultural sector is rather being affected in the long term.The results also, have indicated that developing countries notably Morocco, is model to consolidate, and that the case of great emerging countr
    Keywords: Dutch Disease, industrial sector, agricol sector, cycle-trend, SVECM
    JEL: Q10 Q40
    Date: 2016–06–04
  31. By: Marcin W\k{a}torek; Stanis{\l}aw Dro\.zd\.z; Pawe{\l} O\'swi\k{e}cimka
    Abstract: Based on the Log-Periodic Power Law (LPPL) methodology, with the universal preferred scaling factor $\lambda \approx 2$, the negative bubble on the oil market in 2014-2016 has been detected. Over the same period a positive bubble on the so called commodity currencies expressed in terms of the US dollar appears to take place with the oscillation pattern which largely is mirror reflected relative to oil price oscillation pattern. This documents recent strong anti-correlation between the dynamics of the oil price and of the USD. A related forecast made at the time of FENS 2015 conference (beginning of November) turned out to be quite satisfactory. These findings provide also further indication that such a log-periodically accelerating down-trend signals termination of the corresponding decreases.
    Date: 2016–06
  32. By: Eric Nazindigouba Kere
    Abstract: In this paper, we analyse the impact of political economy factors on the production of bioenergy. We theoretically and empirically show that the quality of governance and environmental policy stringency instruments promote the development of bioenergy production. We also find that the factors that favour oil production and renewable energy negatively influence the development of bioenergy, whereas the conditions of production (cereal yield) and demand factors (gross domestic product, population density, and urbanization) tend to favour the production of bioenergy.
    Keywords: bioenergy, ethanol, biodiesel, governance, oil, panel data modelling Handle: RePEc:unu:wpaper:wp2016-025
    Date: 2016
  33. By: Winchester, Niven; Reilly, John
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2016–02
  34. By: Shengyuan Zhang (Division of Social Science, Hong Kong University of Science and Technology); Jimin Zhao (Division of Social Science, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Albert Park (Division of Social Science, Hong Kong University of Science and Technology; Department of Economics, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology)
    Abstract: In many developing and emerging economies, rapid income growth and changing demographics is leading to heightened demand for energy-intensive urban transportation. This study provides a comprehensive empirical framework for analyzing how income, age, and education influence individual energy use and carbon emissions through multiple dimensions of travel behavior, including number of trips, trip distance, transportation mode choice, vehicle ownership, and fuel economy of cars. Analyzing travel diary survey data collected by the authors in Shenzhen in 2014, we find that energy consumption and carbon emissions increase almost proportionally to income, and that older age and more education increase energy use and carbon emissions substantially, with the relative importance of different channels varying by factor.
    Keywords: ASIF, carbon emissions, energy consumption, urban transportation, scenario analysis, transportation policy
    Date: 2016–06
  35. By: Shengyuan Zhang (Division of Social Science, Hong Kong University of Science and Technology); Jimin Zhao (Division of Social Science, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology)
    Abstract: China has established ambitious CO2 emission reduction targets, and sustainable urban passenger transport is a key to reaching them. Shenzhen, one of China’s leading cities, has the potential to be a model for achieving low-carbon development. Using an Activity Structure–Intensity–Fuel (ASIF) framework and a human-based approach that incorporates individual transport behavior using data from a travel diary survey in Shenzhen in 2014, we model different scenarios for future urban passenger transport energy consumption and CO2 emissions from 2014 to 2050. We find that if Shenzhen successfully constructs urban structures with greater density around the public transportation network, and finds effective ways to restrict vehicle ownership and use (either through mandatory schemes or pricing) while making substantial investments in the walking and cycling environment, it is possible for total urban passenger transport emissions to peak at 4.3 MtCO2 in 2025, and individual emissions would fall by over 65% compared to its 2014 level, reaching 118 kgCO2/person by 2050.
    Keywords: ASIF, carbon emissions, energy consumption, urban transportation, scenario analysis, transportation policy
    Date: 2016–06
  36. By: Anna Alberini; Andrea Bigano; Jessica Post; Elisa Lanzi
    Abstract: This paper presents a review of existing approaches to estimate the costs of inaction, as well as the benefits of policy action, for air pollution. It focuses primarily on health impacts from air pollution. The paper presents the “impact pathway approach”, which includes various steps in the analysis of the costs of air pollution. These include quantifying emissions, calculating the concentrations of the pollutants, applying epidemiologic studies to calculate the physical health effects and applying valuation methods to calculate the economic costs of the health impacts. The report also reviews applications of the impact pathway approach to applied economic studies that aim at calculating the macroeconomic costs of air pollution. It proposes possible approaches for including the feedbacks from the health impacts of air pollution in an applied economic framework. While ideally this requires serious modifications of the modelling frameworks and an improvement of the available empirical results, some impacts, such as changes in health expenditures and labour productivity, can easily been incorporated, following the literature on the economic costs of the health impacts of climate change. Ce document présente une revue des études existantes qui estiment les coûts de l'inaction, ainsi que les effets bénéfiques de l'action politique, relatif à la pollution de l'air. Il se concentre principalement sur les impacts de la pollution atmosphérique sur la santé. Le document présente l'approche qui se base sur une "analyse de voies d'impact” et ses différentes étapes. Il s’agit notamment de quantifier les émissions, de calculer des concentrations de polluants, d’appliquer les résultats des études épidémiologiques pour calculer les effets sur la santé physique et des méthodes d'évaluation pour calculer les coûts économiques des impacts sur la santé. Le rapport passe également en revue les applications de l'analyse de voies d'impact dans les études économiques appliquées qui calculent les coûts macroéconomiques de la pollution de l'air. Il propose des stratégies possibles pour inclure une évaluation des impacts de la pollution de l'air sur la santé dans un modèle économique appliquée. Bien qu'idéalement cela nécessite des modifications importantes des cadres de modélisation et une plus grande disponibilité des résultats empiriques, certains impacts tels que les changements de dépenses de santé et de productivité du travail peuvent facilement être incorporés en se basant sur la littérature sur les coûts économiques des impacts sur la santé liés au changement climatique.
    Keywords: water scarcity, water use, CGE model, economic growth
    JEL: C68 O44 Q15 Q25
    Date: 2016–06–07
  37. By: G. Cornelis van Kooten; Rachel Lynch; Jon Duan
    Abstract: Mitigating climate change will require reduced use of fossil fuels to generate electricity. To do so and eschewing nuclear power, countries have turned to wind energy. In this study, we discuss how screening curves and load duration can be used to determine the optimal investment in generating assets, and extend this method to include wind and nuclear energy sources. We then use this approach to investigate the effects of carbon taxes and feed-in tariffs (FITs) on the optimal generation mix and the potential for reducing CO2 emissions. We find that a carbon tax is likely more effective than a feed-in tariff for removing fossil fuel assets and incentivizing investment in wind power. The tax leads to the removal of coal-fired capacity that is replaced by combined-cycle gas generation. However, if nuclear energy is permitted to enter the mix, the tax results in coal capacity replaced by nuclear power instead of gas, which leads to a significant reduction in greenhouse gas emissions compared to any other alternative considered. We also find that, because wind cannot substitute for baseload generation, the additional investment in wind resulting from a carbon tax or FIT is small compared to the absence of any incentives (only 7%). Finally, if the tax and FIT lead to the same mix of generating assets, the income distributional effects can be quite large. It is the distributional effects of policy, and associated rent seeking activities to implement a FIT, that could be the deciding factor in choosing between a carbon tax and feed-in tariff.
    Keywords: Electricity; renewable energy and climate change policy; wind power; nuclear energy
    JEL: H41 L51 L94 Q42 Q48 Q54
    Date: 2016–06
  38. By: Timilsina,Govinda R.; Sikharulidze,Anna; Karapoghosyan,Eduard; Shatvoryan,Suren
    Abstract: Armenia and Georgia are taking the climate change agenda seriously and contributing to efforts for mitigating global climate change through various ways, including preparation of low-carbon development strategies for their future economic growth. The improvement of energy efficiency is one of the key elements of the low-carbon development strategies. This study develops a methodology to estimate a marginal abatement cost curve for energy efficiency measures and applies it to the building sector in both countries. The study finds that among the various energy efficiency measures considered, the replacement of energy inefficient lightbulbs (incandescent lamps) with efficient lightbulbs is the most cost-effective measure in saving energy and reducing greenhouse gas emissions from the building sector. Most energy efficiency improvement options considered in the study would produce net economic benefits even if the value of reduced carbon is not taken into account.
    Keywords: Climate Change Economics,Energy Production and Transportation,Environment and Energy Efficiency,Climate Change Mitigation and Green House Gases,Energy and Environment
    Date: 2016–06–16
  39. By: Gissela Landa (OFCE (OFCE)); Frédéric Reynès (Nederlandse Organisatie voor Toegepast Natuurwetenschappelijk Onderzoek); Ivan Islas (Instituto Nacional de Ecología y Cambio Climático (INEC)); François-Xavier Bellock (Agence Française de Développement); Fabio Grazi (Agence Française de Développement (AFD))
    Abstract: This paper simulates the medium- and long-term impact of proposed and expected energy policy on the environment and on the Mexican economy. The analysis has been conducted with a Multi-sector Macroeconomic Model for the Evaluation of Environmental and Energy policy (Three-ME). This model is well suited for policy assessment purposes in the context of developing economies as it indicates the transit ional effects of policy intervention. Three-ME estimates the carbon tax required to meet emissions reduction targets within the Mexican “Climate Change Law”, and assesses alternative policy scenarios, ach reflecting a different strategy for the recycling of tax revenues. With no compensation, the taxation policy if successful will succeed in reducing CO2 e missions by more than 75% by 2050 with respect to Business as Usual (BAU), but at high eco nomic costs. Under full redistribution of carbon tax revenues, a double dividend arises and t he policy is beneficial both in terms of GDP and CO2 emissions reduction
    Keywords: Energy; Low carbon emission; Mexican economy
    JEL: Q3 Q4
    Date: 2015–11
  40. By: Gregory Briner; Sara Moarif
    Abstract: The agreement of an enhanced transparency framework was a key outcome of the COP 21 climate change conference in Paris. This enhanced transparency framework will play an important role in tracking progress towards the individual and collective goals agreed at COP 21 and in understanding achievement of nationally determined contributions under the Paris Agreement. This paper unpacks the transparency-related provisions within the Paris Agreement and Decision 1/CP.21 relating to mitigation and support. It also explores the relationship between the existing and future transparency framework, information required to track progress towards nationally determined contributions for mitigation, and fulfilling reporting provisions on finance provided, mobilised and received. Les dispositions en matière de transparence des mesures d'atténuation et de l'appui dans l'Accord de Paris L’accord sur un cadre renforcé de transparence a constitué un résultat essentiel de la Conférence de Paris sur le climat (COP21). Ce cadre de transparence jouera un rôle important en permettant de suivre les progrès accomplis au regard des objectifs individuels et collectifs convenus lors de la COP21, et en permettant la compréhension des contributions déterminées au niveau national des Parties au titre de l’Accord de Paris. Le présent document éclairci les dispositions de cet accord et de la décision 1/CP.21 en matière de transparence des mesures d’atténuation et de l’appui. Il étudie aussi le rapport entre le cadre de transparence actuel et futur, les informations requises pour suivre les progrès accomplis dans la mise en oeuvre des contributions déterminées au niveau national pour l’atténuation, et le respect des dispositions relatives à la notification des moyens de financement fournis, mobilisés et reçus.
    Keywords: transparency, mitigation, UNFCCC, climate change, climate finance
    JEL: F53 Q54 Q56 Q58
    Date: 2016–06–07
  41. By: Jotzo, Frank
    Keywords: Environmental Economics and Policy,
    Date: 2016–02
  42. By: Sambit Bhattacharyya; Maurizio Intartaglia; Andy McKay
    Abstract: We perform an empirical audit of the effectiveness of climate aid in tackling CO2 and SO2 emissions. Using a global panel dataset covering up to 131 countries over the period 1961 to 2011 and estimating a parsimonious model using the Anderson and Hsiao estimator we do not find any evidence of a systematic effect of energy related aid on emissions. We also find that the non-effect is not conditional on institutional quality or level of income. Countries located in Europe and Central Asia does better than others in utilising climate aid to reduce CO2 emissions. Our results are robust after controlling for the Environmental Kuznets Curve, country fixed effects, country specific trends, and time varying common shocks.
    Keywords: Climate Aid; Emissions; Energy
    JEL: D72 O11
    Date: 2016
  43. By: Paul Pichler; Gerhard Sorger
    Abstract: We analyze a stylized model of a world consisting of a large number of countries, which derive utility from energy consumption but suffer both from the emission of greenhouse gases (smog, black carbon, etc.) as well as from the external effects caused by climate change. The countries decide individually on investments in clean (i.e., emission free) technologies for energy production, whereas a supranational environmental authority decides for each country on the maximally permitted amount of emissions of greenhouse gases. We demonstrate that the authority faces a dynamic inconsistency problem that leads to welfare losses. Yet these welfare losses can be kept small if the mandate for the authority penalizes the local cost of emissions very heavily but puts little or no weight at all on the cost of climate change.
    JEL: F53 H87 O33 O44 Q43 Q54
    Date: 2016–06

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