nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒07‒30
35 papers chosen by
Roger Fouquet
London School of Economics

  1. Pricing electricity and supporting renewables in Heavily Energy Subsidized Economies By David Newbery
  2. A comparative analysis of subsidy reforms in the Middle East and North Africa Region By Araar,Abdelkrim; Verme,Paolo
  3. Global Energy Subsidies: An Analytical Taxonomy By Ross McKitrick
  4. The Effect of Energy Efficiency Labeling: Bunching and Prices in the Irish Residential Property Market By Marie Hyland; Anna Alberini; Seán Lyons
  5. Simultaneous use of black, green, and white certificates systems: A rather messy business By Eirik S. Amundsen; Torstein Bye
  6. Transitioning towards a low-carbon economy in Mexico: An application of the ThreeMe model By Gissela Landa
  7. Monitoring Abatement in the Presence of an Import Quota on CERs By Sabine Aresin
  8. Promoting Renewable Energy and Energy Efficiency in Africa: A Framework to Evaluate Employment Generation and Cost-effectiveness By Cantore, Nicola; Nussbaumer, Patrick; Wei, Max; Kammen, Daniel
  9. Cost-effectiveness and Incidence of Renewable Energy Promotion in Germany By Christoph Böhringer; Florian Landis; Miguel Angel Tovar Reaños
  10. Competition in Retail Electricity Markets : An Assessment of Ten Years Dutch Experience By Willems, Bert; Mulder, M.
  11. Automated variable selection and shrinkage for day-ahead electricity price forecasting By Bartosz Uniejewski; Jakub Nowotarski; Rafal Weron
  12. Technology strategies for low-carbon economic growth : a general equilibrium assessment By Sue Wing,Ian Newel James; Timilsina,Govinda R.
  13. Temperature Effects are more Complex than Degrees: A Case Study on Residential Energy Consumption By Lee, Gi-Eu
  14. Global Energy Trends and Their Implications for Russia: A Pathway to the New Energy Wave By Elena Kyzyngasheva; Liliana Proskuryakova
  15. Price and income elasticities of residential energy demand in Germany By Schulte, Isabella; Heindl, Peter
  16. Understanding the energy-GDP elasticity: A sectoral approach By Paul J. Burke; Zsuzsanna Csereklyei
  17. Testing Co-Volatility Spillovers for Natural Gas Spot, Futures and ETF Spot using Dynamic Conditional Covariances By Chang, C-L.; McAleer, M.J.; Wang, Y.
  18. Oil Price Elasticities and Oil Price Fluctuations By Caldara, Dario; Cavallo, Michele; Iacoviello, Matteo
  19. Forecasting Future Oil Production in Norway and the UK: A General Improved Methodology By Lucas FIEVET; Zalàn FORRO; Peter CAUWELS; Didier SORNETTE
  20. Petrol Fiyatlarinda Uzun Donemli Cevrimler By Fatma Pinar Erdem; Ibrahim Unalmis
  21. Forming a Majority Coalition for Carbon Taxes Under a State-Contingent Updating Rule By Ross McKitrick; Jamie Lee
  22. Energy Saving Potential of Natural Ventilation in China: The Impact of Ambient Air Pollution By Chen, Yujiao; Malkawi, Ali; Liu, Zhu; Freeman, Richard Barry; Tong, Zheming
  23. Complexity and the Economics of Climate Change: a Survey and a Look Forward By Tomas Balint; Francesco Lamperti; Antoine Mandel; Mauro Napoletano; Andrea Roventini; Alessandro Sapio
  24. Viable Nash Equilibria in the Problem of Common Pollution By Raouf Boucekkine; Noël Bonneuil
  25. The impact of pollution abatement investments on production technology: new insights from frontier analysis By Jean Pierre Huiban; Camilla Mastromarco; Antonio Musolesi; Michel Simioni
  26. The prisoner’s dilemma in Cournot models: when endogenizing the level of competition leads to competitive behaviors. By Ibrahim Abada; Andreas Ehrenmann
  27. Climate Change and Firm Valuation: Evidence from a Quasi-Natural Experiment By Philipp KRÜGER
  28. Measuring unilateral and multilateral gains from tackling current economic inefficiencies in CO2 reductions: Theory and evidence By Sushama Murty
  29. Will be there New CO2 Emitters in the Future? Evidence of Long-run Panel Co-integration for N-11 Countries By Nasre Esfahani, Mohammad; Rasoulinezhad, Ehsan
  30. Institutions and the Environment: Existing Evidence and Future Directions By Dasgupta, Shouro; De Cian, Enrica
  31. Reduced Allowability and the Allocation of Emission Abatement By Sabine Aresin
  32. Modeling Emission-Generating Technologies: Reconciliation of Axiomatic and By-Production Approaches By Sushama Murty; R. Robert Russell
  33. Climate Feedbacks in DICE-2013R - Modeling and Empirical Results By Heiko Wirths; Joachim Rathmann; Peter Michaelis
  34. Water footprint and carbon footprint: Disparate relatives By Gawel, Erik
  35. Empirically-Constrained Climate Sensitivity and the Social Cost of Carbon By Kevin Dayaratna; Ross Mckitrick; David Kreutzer

  1. By: David Newbery
    Abstract: Heavily Energy Subsidized Economies, defined as having budgetary subsidies above 1.5% of GDP, on average in 2014 spent 4% of GDP on subsidizing energy. Resource rents permit administratively undemanding transfers to citizens to maintain political support. Once in place, benefitting groups will resist their removal, despite the resulting inefficient consumption and the lock-in risk caused by sustained low energy prices. Collapsing energy prices that deliver severe fiscal shocks combined with growing concerns over climate change damage make carefully designed reforms both urgent and politically more acceptable. Understanding their political logic suggests designing reforms that compensate the most vocal interest groups and there is evidence that this is increasingly recognized. The paper presents evidence on the magnitude and impacts of oil gas and electricity subsidies, and discusses how the electricity sector can be weaned of subsidies while reducing its carbon emissions.
    Keywords: Energy subsidies, interest group politics, reforming electricity tariffs, PV
    JEL: H23 H53 Q41 Q48 Q54
    Date: 2016–07–06
  2. By: Araar,Abdelkrim; Verme,Paolo
    Abstract: The paper compares the distribution of energy and food subsidies across households and the impact of subsidy reforms on household welfare in the Middle East and North Africa region. The analysis uses a unified model and harmonized household data. The results show that the distribution of subsidies and the welfare effects of subsidy reforms are quite diverse across countries and products. Energy subsidies tend to be pro-rich in terms of absolute amounts, but tend to be more important for the poor in terms of expenditure shares. Instead, food subsidies are larger for the poor in absolute and relative terms. These findings do not apply everywhere, and the scale of these phenomena are different across countries and products. The welfare effect of a 30 percent reduction in subsidies can be important, especially considering the cumulated effect across products, but the cost of compensating the loss in welfare for the poor is generally low compared with the budget benefits of decreasing subsidies.
    Date: 2016–07–20
  3. By: Ross McKitrick (Department of Economics and Finance, University of Guelph)
    Abstract: Governments around the world have pledged to eliminate or sharply reduce subsidies to energy firms in order to increase economic efficiency and reduce environmental externalities. Yet definitions of subsidies vary widely and, as a result, estimates of their global magnitude vary by orders of magnitude. I review why energy subsidies are so difficult to define and measure. I show why some non-standard measures are very poor proxies for subsidy costs and in fact may vary inversely with them. In particular, recent attempts to treat unpriced externalities as subsidies yield especially misleading results. In general, energy subsidies as conventionally understood do exist but only comprise a small portion of some very large recently-reported estimates, the bulk of which are indirect measures that may have little connection with actual costs to governments or allocational inefficiencies.
    Keywords: Subsidies, energy, oil, gas, externalities, fiscal policy
    JEL: Q35 Q41 Q48
    Date: 2016
  4. By: Marie Hyland (Department of Economics, Trinity College Dublin and Economic and Social Research Institute (ESRI)); Anna Alberini (Department of Agricultural and Resource Economics, University of Maryland); Seán Lyons (Economic and Social Research Institute (ESRI) and Trinity College Dublin)
    Abstract: This paper analyses the system of energy performance certificates in place in Ireland. We find that having a system with discrete energy-efficiency thresholds causes “bunching” among properties just on the more favorable side of the label cut-off points. This indicates that, in the region around the label thresholds, assessors tend to be extra lenient when evaluating the energy performance of dwellings. We examine possible reasons for this finding, including the market returns to energy efficiency using home sales data from the Irish property price register, and conclude that most likely assessors are trying to ingratiate homeowners to get repeat business. We find evidence of a partial “disconnect” between sellers' expectations and buyers' valuation of properties labeled as more efficient.
    Keywords: Residential energy efficiency; Energy Performance Certificates; Bunching
    JEL: Q40 Q48 R21
    Date: 2016–03
  5. By: Eirik S. Amundsen (Department of Economics, the University of Bergen; Department of Food and Resource Economics, University of Copenhagen); Torstein Bye (Statistics Norway; Norwegian University of Life Sciences)
    Abstract: We formulate a model with black, green and white certificates markets that function in conjunction with an electricity market. The markets function well in the sense that a common equilibrium solution exists, where all targets are satisfied (e.g. share of green electricity and share of energy saving/ efficiency increase.) The equilibrium solution adapts to changing targets (e.g. harsher target on energy saving), but it is in general impossible to tell whether this will lead to more, less, or unchanged consumption of ”black”, ”green” or ”white” electricity. These, markets give thus a poor guidance for future investments in green and white electricity. In order to get clear cut results, specific assumptions of parameter values and functional forms are needed. An example of this, based on a calibrated model founded on Norwegian data, is provided in the article. Also, gains and losses in terms of consumer’s and producer’s surpluses are calculated.
    Keywords: renewable energy, electricity, Green Certificates, White Certificates
    JEL: C70 Q28 Q42 Q48
    Date: 2016–06
  6. By: Gissela Landa (Observatoire français des conjonctures économiques)
    Abstract: This document offers an empirical application of the notion of energy transition to the Mexican economy and it takes the next step of simulating medium- and long-term impacts of proposed and future energy and fiscal policy on the environment and the Mexican economy. The starting point of the analysis is the ThreeME framework, a Multi-sectoral Macroeconomic Model based on Keynesian theory. It is designed to address the dynamics of global economic activity, energy system development and carbon emissions causing climate change. The ThreeME model is well- suited for policy assessment purposes in the context of developing economies as it informs the transitional effects of policy intervention. In particular, disequilibrium can arise in the form of involuntary unemployment, the inertia of technical systems and rigidity in labor and energy markets as a result of delayed market clearing in the goods markets and slow adjustment between prices and quantities over the simulation time path.
    Keywords: environment; low carbon; model
    JEL: Q4 Q43
    Date: 2015–11
  7. By: Sabine Aresin
    Abstract: I analyze whether or not a monitoring problem regarding abroad abatement can justify the import quotas on abroad emission certiï¬ cates applied by several emission trading schemes. For this purpose I extend the Becker (1968) Crime and Punishment model by heterogeneity in the observability of compliance. I do so by incorporating a ï¬ rm’s cost minimizing choice of domestic and abroad CO2 abatement into a monitoring framework in which ï¬ rms have to meet an exogenously set emission standard. I ï¬ nd that the government can implement the ï¬ rst best abatement allocation under incomplete information, however, under incomplete information this allocation is not socially optimal. Instead, the government should in the presence of a monitoring problem introduce an import quota for abroad abatement that shifts the allocation from abroad to domestic abatement.
    Keywords: Clean Development Mechanism, Import Quota on Certiï¬ ed Emission Reductions, Import Restrictions, Green House Gas Offset, Abatement, Monitoring, Incomplete Information, Information Asymmetry
    JEL: D21 D82 F53 Q58
    Date: 2015–11
  8. By: Cantore, Nicola; Nussbaumer, Patrick; Wei, Max; Kammen, Daniel
    Abstract: The ongoing debate over the cost-effectiveness of renewable energy (RE) and energy efficiency (EE) deployment often hinges on the current cost of incumbent fossil-fuel technologies versus the long-term benefit of clean energy alternatives. This debate is often focused on mature or ‘industrialized’ economies and externalities such as job creation. In many ways, however, the situation in developing economies is at least as or even more interesting due to the generally faster current rate of economic growth and of infrastructure deployment. On the one hand, RE and EE could help decarbonize economies in developing countries, but on the other hand, higher upfront costs of RE and EE could hamper short-term growth. The methodology developed in this paper confirms the existence of this trade-off for some scenarios, yet at the same time provides considerable evidence about the positive impact of EE and RE from a job creation and employment perspective. By extending and adopting a methodology for Africa designed to calculate employment from electricity generation in the U.S., this study finds that energy savings and the conversion of the electricity supply mix to renewable energy generates employment compared to a reference scenario. It also concludes that the costs per additional job created tend to decrease with increasing levels of both EE adoption and RE shares.
    Keywords: Renewable Energy, Employment, Energy Efficiency, Africa, Resource /Energy Economics and Policy, N77, O13, Q40,
    Date: 2016–07–04
  9. By: Christoph Böhringer (University of Oldenburg, Department of Economics, Germany); Florian Landis (ETH Zürich, Switzerland); Miguel Angel Tovar Reaños (Center for European Research (ZEW), Mannheim, Germany)
    Abstract: Over the last decade Germany has boosted renewable energy in power production by means of massive subsidies. The flip side are very high electricity prices which raises concerns that the transition cost towards a renewable energy system will be mainly borne by poor households. In this paper, we combine computable general equilibrium and microsimulation analysis to investigate the cost-effectiveness and incidence of Germany's renewable energy promotion. We find that the regressive effects of renewable energy promotion could be attenuated by alternative subsidy financing mechanisms which achieve the same level of electricity generation from renewable energy sources.
    Keywords: Renewable energy policy, feed-in tariffs, CGE, microsimulation
    JEL: Q42 H23 C63
    Date: 2016–07
  10. By: Willems, Bert (Tilburg University, Center For Economic Research); Mulder, M.
    Abstract: This paper examines a decade of retail competition in the Dutch electricity market and discusses market structure, regulation, and market performance. We find a proliferation of product variety, in particular by the introduction of quality-differentiated green-energy products. Product innovation could be a sign of a well-functioning market that caters to customer’s preferences, but it can also indicate a strategic product differentiation to soften price competition. Although slightly downward trending, gross retail margins remain relatively high, especially for green products. Price dispersion across retailers for identical products remains high, as also across products for a single retailer. We do not find evidence of asymmetric pass-through of wholesale costs. Overall, the retail market matured as evidenced by fewer consumer complaints and higher switching rates. A fairly intensive regulation of mature energy retail markets appears to be needed to create benefits for consumers.
    Keywords: retail electricity market; competition; regulation; ex-post assessment
    JEL: L94 L43 L11
    Date: 2016
  11. By: Bartosz Uniejewski; Jakub Nowotarski; Rafal Weron
    Abstract: In day-ahead electricity price forecasting (EPF) variable selection is a crucial issue. Conducting an extensive empirical study involving state-of-the-art parsimonious expert models as benchmarks, datasets from three major power markets and five classes of automated selection and shrinkage procedures (single-step elimination, stepwise regression, ridge regression, lasso and elastic nets) we show that using the latter two classes can bring significant accuracy gains compared to commonly used EPF models. In particular, one of the elastic nets - a class that has not been considered in EPF before - stands out as the best performing model overall.
    Keywords: Electricity price forecasting; Day-ahead market; Autoregression; Variable selection; Stepwise regression; Ridge regression; Lasso; Elastic net
    JEL: C14 C22 C51 C53 Q47
    Date: 2016–07–05
  12. By: Sue Wing,Ian Newel James; Timilsina,Govinda R.
    Abstract: This paper investigates the potential for developing countries to mitigate greenhouse gas emissions without slowing their expected economic growth. A theoretical frame- work is developed that unifies bottom-up marginal abatement cost curves and partial equilibrium techno-economic simulation modeling with computational general equilibrium (CGE) modeling. The framework is then applied to engineering assessments of energy efficiency technology deployments in Armenia and Georgia. The results facilitate incorporation of bottom-up technology detail on energy-efficiency improvements into a CGE simulation of the economy-wide economic costs and mitigation benefits of technology deployment policies. Low-carbon growth trajectories are feasible in both countries, enabling reductions of up to 4 percent of baseline emissions while generating slight increases in GDP (1 percent in Armenia and 0.2 percent in Georgia). The results demonstrate how MAC curves can paint a misleading picture of the true potential for both abatement and economic growth when technological improvements operate within a system of general equilibrium interactions, but also highlight how using their underlying data to identify technology options with high opportunity cost elasticities of productivity improvement can lead to more accurate assessments of the macroeconomic consequences of technology strategies for low-carbon growth.
    Date: 2016–07–11
  13. By: Lee, Gi-Eu
    Abstract: An emerging body of research about climate change impacts is exploring temperature effects on human activities. However, most studies use simple identification strategies that only explore one or two attributes relating to temperature or to its abnormalities. These simple strategies limit the understanding of temperature effects, and there is debate about the effectiveness of simple identification strategies. To better understand complex temperature effects on human activities, this study uses residential energy consumption as an example and develops identification strategies to capture the temperature effects resulting from temporal patterns (temperature fluctuation), abnormality (temperature departure from normal), and the interdependence among these attributes. For comparison, we use the same data set and model specification as in Deschênes and Greenstone (2011) except for specifications to capture complex temperature effects. We construct variables to capture additional temperature attributes and create the interaction terms among these attributes and temperature levels. Our findings verify the existence of complex temperature effects on energy consumption, and our paper may provoke the discussion of different strategies to better capture climate impacts on human activities.
    Keywords: Complex Temperature Effects, Residential Energy Consumption, Climate Change, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q41, Q54,
    Date: 2016–08–02
  14. By: Elena Kyzyngasheva (National Research University Higher School of Economics); Liliana Proskuryakova (National Research University Higher School of Economics)
    Abstract: Despite the success of many countries in increasing energy saving and energy efficiency, the global energy consumption is expected to continue its growth. The main reasons are economic development and population growth happening primarily in developing and emerging economies, especially in India and China. In such circumstances fossil fuels will remain the dominant energy source in the medium and even long run. The present research paper aims at analyzing the current global trends in the energy sector identified through literature review and expert tools, and their influence on Russia. Considering a broad range of factors, the paper determined the following main challenges for the Russian energy sector: tightening competition at international energy markets, the need for comprehensive modernization and stronger energy efficiency measures, the need for technological catch-up in a number of energy sector segments, the need to increase recovery factor at traditional oilfields, and the need to diversify energy mix by increasing the share of renewables. The paper also considers the main rationale for the last challenge that include strengthened security, reliability and sustainability of the Russian energy sector. Among the key preconditions for advancements in renewable energy are improvements in investment climate, modernisation of the central grid and changes in energy policy. The paper is based on the outcomes of the first stage of the Foresight project devoted to renewable energy technologies
    Keywords: energy trends, renewable energy, global energy sector, Russian energy sector.
    JEL: O13 P47 Q42 Q43 Q47
    Date: 2016
  15. By: Schulte, Isabella; Heindl, Peter
    Abstract: We apply a quadratic expenditure system to estimate price and expenditure elasticities of residential energy demand (electricity and heating) in Germany. Using official expenditure data from 1993 to 2008, we estimate an expenditure elasticity for electricity of 0.3988 and of 0.4055 for space heating. The own price elasticity for electricity is -0.4310 and -0.5008 in the case of space heating. Disaggregation of households by expenditure and demographic composition reveals that the behavioural response to energy price changes is weaker (stronger) for low-income (top-income) households. There are considerable economies of scale in residential energy use but scale effects are not well approximated by the new OEDC equivalence scale. Real increases in energy prices show a regressive pattern of incidence, implying that the welfare consequences of direct energy taxation are larger for low income households. The application of zero-elasticities in assessments of welfare consequences of energy taxation strongly underestimates potential welfare effects. The increase in inequality is 22% smaller when compared to the application of rich and disaggregated behavioural response patterns as estimated in this paper.
    Keywords: energy consumption,price elasticities,expenditure elasticities
    JEL: D12 Q41 Q54
    Date: 2016
  16. By: Paul J. Burke; Zsuzsanna Csereklyei
    Abstract: This paper uses per capita data for 132 countries over 1960–2010 to estimate elasticities of sectoral energy use with respect to national gross domestic product (GDP). We estimate models in both levels and growth rates and use our estimates to sectorally decompose the aggregate energy-GDP elasticity. Our estimates show that residential energy use is very inelastic to GDP if primary solid biofuels are counted in energy use tallies, especially at low income levels. Residential use of electricity is more tightly linked to GDP, as is energy use by the transportation, industrial, and services sectors. Agriculture typically accounts for a small share of energy use and has a modest energy-GDP elasticity. The aggregate energy-GDP elasticity tends to be higher for countries at higher income levels, in large part because traditional use of primary solid biofuels is less important. Gasoline prices, winter temperature, population, and land area are among other factors influencing sectoral energy use.
    Keywords: elasticity, sectoral, energy use, economic development, economic growth, decomposition
    JEL: O13 Q43 O11
    Date: 2016–07
  17. By: Chang, C-L.; McAleer, M.J.; Wang, Y.
    Abstract: There is substantial empirical evidence that energy and financial markets are closely connected. As one of the most widely-used energy resources worldwide, natural gas has a large daily trading volume. In order to hedge the risk of natural gas spot markets, a large number of hedging strategies can be used, especially with the rapid development of natural gas derivatives markets. These hedging instruments include natural gas futures and options, as well as Exchange Traded Fund (ETF) prices that are related to natural gas stock prices. The volatility spillover effect is the delayed effect of a returns shock in one physical, biological or financial asset on the subsequent volatility or co-volatility of another physical, biological or financial asset. Investigating volatility spillovers within and across energy and financial markets is a crucial aspect of constructing optimal dynamic hedging strategies. The paper tests and calculates spillover effects among natural gas spot, futures and ETF markets using the multivariate conditional volatility diagonal BEKK model. The data used include natural gas spot and futures returns data from two major international natural gas derivatives markets, namely NYMEX (USA) and ICE (UK), as well as ETF data of natural gas companies from the stock markets in the USA and UK. The empirical results show that there are significant spillover effects in natural gas spot, futures and ETF markets for both USA and UK. Such a result suggests that both natural gas futures and ETF products within and beyond the country might be considered when constructing optimal dynamic hedging strategies for natural gas spot prices.
    Keywords: Energy, natural gas, spot, futures, ETF, NYMEX, ICE, optimal hedging strategy, covolatility spillovers, diagonal BEKK
    JEL: C58 D53 G13 G31 O13
    Date: 2016–06–03
  18. By: Caldara, Dario; Cavallo, Michele; Iacoviello, Matteo
    Abstract: We study the identification of oil shocks in a structural vector autoregressive (SVAR) model of the oil market. First, we show that the cross-equation restrictions of a SVAR impose a nonlinear relation between the short-run price elasticities of oil supply and oil demand. This relation implies that seemingly plausible restrictions on oil supply elasticity may map into implausible values of the oil demand elasticity, and vice versa. Second, we propose an identification scheme that restricts these elasticities by minimizing the distance between the elasticities allowed by the SVAR and target values that we construct from a survey of relevant studies. Third, we use the identified SVAR to analyze sources and consequences of movements in oil prices. We find that (1) oil supply shocks and global demand shocks explain 50 and 35 percent of oil price fluctuations, respectively; (2) a drop in oil prices driven by supply shocks boosts economic activity in advanced economies, whereas it depresses economic activity in emerging economies; and (3) the selection of oil market elasticities is essential for understanding the source of oil price movements and to measuring the multipliers of oil prices on economic activity.
    Keywords: Oil Prices ; Vector Autoregressions ; Commodity Prices
    JEL: Q43 C32 E32
    Date: 2016–07
  19. By: Lucas FIEVET (ETH Zurich); Zalàn FORRO (Independent); Peter CAUWELS (ETH Zurich); Didier SORNETTE (ETH Zurich and Swiss Finance Institute)
    Abstract: We present a new Monte-Carlo methodology to forecast the crude oil production of Norway and the U.K. based on a two-step process, (i) the nonlinear extrapolation of the current/past performances of individual oil fields and (ii) a stochastic model of the frequency of future oil field discoveries. Compared with the standard methodology that tends to underestimate remaining oil reserves, our method gives a better description of future oil production, as validated by our back-tests starting in 2008. Specifically, we predict remaining reserves extractable until 2030 to be 188 ± 10 million barrels for Norway and 98 ± 10 million barrels for the UK, which are respectively 45% and 66% above the predictions using the standard methodology.
    Keywords: Monte-Carlo, oil peak, logistic equation, Poisson process, power law distribution
    JEL: C15 C46 O13 Q40
  20. By: Fatma Pinar Erdem; Ibrahim Unalmis
    Abstract: [TR] Petrol fiyatlarinda gectigimiz on yilda yasanan hizli yukselis ve Haziran 2014’ten itibaren devam eden dusus egilimi emtia fiyatlarindaki uzun donemli cevrimlerin tekrar tanimlanmasini gundeme getirmistir. Bu amacla, bu calismada ilk olarak petrol fiyatlarindaki uzun donemli cevrimler tespit edilmeye calisilmis ve fiyatlarin hangi evrede oldugu tartisilmistir. Bulgular, son 150 yilda petrol fiyatlarinda uc uzun donemli cevrimin bulunduguna isaret etmekte ve 1990’larin ikinci yarisinda baslayan son uzun donemli cevrimin 2013 yilindan sonra dusus evresine girdigini ve 2018 yilina kadar devam edecegini gostermektedir. Bu baglamda, petrol fiyatlarinin bir sure daha dusuk seyretmesinin petrol ithal eden ulkelerin buyume ve dis ticaret dengesi uzerinde olumlu, ihrac edenlerin buyume ve petrol gelirleri uzerinde olumsuz etkilerinin olmasi beklenmektedir. [EN] Fast rise in oil prices in the last decade and downward trend since June 2014 have raised the issue of identifying long term cycles (super-cycles) in oil prices. To this aim, in this study firstly super-cycles in oil prices are identified and which phase of the cycles oil prices are in is investigated. Results indicate that in the last 150 years there are three identified super-cycles in oil prices. Latest super-cycle in oil prices, started in the second half of 1990s, has been in the contraction period since 2013 and is expected to last in 2018. As our results indicate, oil prices continue stay low, hence, low level of prices will support economic growth and reduce oil import bill in importing countries and dampen economic growth and reduce oil export revenue in exporting countries.
    Date: 2016
  21. By: Ross McKitrick (Department of Economics and Finance, University of Guelph); Jamie Lee (Department of Economics and Finance, University of Guelph)
    Abstract: Uncertainty and political polarization over global warming make it difficult to achieve a stable majority coalition supporting carbon taxes, especially since expectations about the future optimal values sharply diverge. We present an alternative approach in which the tax path is not announced in advance but is set to track observed future temperatures. Agents thus form expectations which imply the tax path will be correlated with their preferred price trajectory. Whereas greater variance in beliefs about future global warming undermines support for a compromise policy, the state-contingent proposal attracts majority support irrespective of the divergence of views, and even has robustness properties to strategic voting by dishonest agents.
    Keywords: Carbon tax, State-contingent model, Majority voting, Climate change, Uncertainty
    JEL: Q54 Q58 H23 D72
    Date: 2016
  22. By: Chen, Yujiao; Malkawi, Ali; Liu, Zhu; Freeman, Richard Barry; Tong, Zheming
    Abstract: Natural ventilation (NV) is a key sustainable solution for reducing the energy use in buildings, improving thermal comfort, and maintaining a healthy indoor environment. However, the energy savings and environmental benefits are affected greatly by ambient air pollution in China. Here we estimate the NV potential of all major Chinese cities based on weather, ambient air quality, building configuration, and newly constructed square footage of office buildings in the year of 2015. In general, little NV potential is observed in northern China during the winter and southern China during the summer. Kunming located in the Southwest China is the most weather-favorable city for natural ventilation, and reveals almost zero loss due to air pollution. Building Energy Simulation (BES) is conducted to estimate the energy savings of natural ventilation in which ambient air pollution and total square footage must be taken into account. Beijing, the capital city, displays limited per-square-meter saving potential due to the unfavorable weather and air quality for natural ventilation, but its largest total square footage of office buildings makes it become the city with the greatest energy saving opportunity in China. Our analysis shows that the aggregated energy savings potential of office buildings at 35 major Chinese cities is 112 GWh in 2015, even after allowing for a 43 GWh loss due to China’s serious air pollution issue especially in North China. 8–78% of the cooling energy consumption can be potentially reduced by natural ventilation depending on local weather and air quality. The findings here provide guidelines for improving current energy and environmental policies in China, and a direction for reforming building codes.
    Date: 2016
  23. By: Tomas Balint; Francesco Lamperti; Antoine Mandel; Mauro Napoletano; Andrea Roventini; Alessandro Sapio
    Abstract: We provide a survey of the micro and macro economics of climate change from a complexity science perspective and we discuss the challenges ahead for this line of research. We identify four areas of the literature where complex system models have already produced valuable insights: (i) coalition formation and climate negotiations, (ii) macroeconomic impacts of climate-related events, (iii) energy markets and (iv) diffusion of climate-friendly technologies. On each of these issues, accounting for heterogeneity, interactions and disequilibrium dynamics provides a complementary and novel perspective to the one of standard equilibrium models. Furthermore, it highlights the potential economic benefits of mitigation and adaptation policies and the risk of under-estimating systemic climate change-related risks.
    Keywords: climate change, climate policy, climate economics, complex systems, agent-based models, socio-economic networks
    Date: 2016–10–07
  24. By: Raouf Boucekkine (Aix-Marseille Université (AMSE), CNRS and EHESS; Senior member, Institut Universitaire de France); Noël Bonneuil (Institut national d’études démographiques, and Ecole des hautes études en sciences sociales)
    Abstract: Two countries produce goods and are penalized by the common pollution they generate. Each country maximizes an inter-temporal utility criterion, taking account of the pollution stock to which both contribute. The dynamic is in continuous time with possible sudden switches to less polluting technologies. The set of Nash equilibria, for which solutions also remain in the set of constraints, is the intersection of two manifolds in a certain state space. At the Nash equilibrium, the choices of the two countries are interdependent: different productivity levels after switching lead the more productive country to hasten and the less productive to delay the switch. In the absence of cooperation, efforts by one country to pollute less motivate the other to pollute more, or encourage the country that will be cleaner or less productive country after switching to delay its transition.
    Keywords: Pollution, Dynamic game, Nash, Viability theory.
    Date: 2016–06
  25. By: Jean Pierre Huiban (INRA-ALISS, France); Camilla Mastromarco (University of Salento, Lecce, Italy); Antonio Musolesi (University of Ferrara, Italy); Michel Simioni (INRA, UMR 1110 MOISA, Montpellier, France)
    Abstract: This paper estimates the impact of pollution abatement investments on the production technology of firms by pursuing two new directions. First, we take advantage of recent econometric developments in productivity and eciency analysis and compare the results obtained with two complementary approaches: parametric stochastic frontier analysis and conditional nonparametric frontier analysis. Second, we focus not only on the average e ect but also on its heterogeneity across firms and over time and search for potential nonlinearities. We provide new results suggesting that the e ect of pollution abatement investments on the production process is heterogeneous both within firms and over time and also indicating that such an e ect is not monotonic. These results have relevant implications both for modeling and for the purposes of advice on environmentally friendly policy.
    Keywords: Pollution abatement investments, technology, stochastic frontier analysis, conditional nonparametric frontier analysis, full and partial order frontiers, generalized product kernels, infinite order cross-validated local polynomial regression.
    Date: 2016–07
  26. By: Ibrahim Abada; Andreas Ehrenmann
    Abstract: In resource based economies, regulating the production and export activities have always been an important challenge. Examples in oil and gas show that different behaviors have been adopted ranging from the export monopoly to the complete opening of the export market. This paper tries to explain this multitude of solutions via strategic interactions. When modeling imperfect competition, players are separated in two categories: those who exert market power and those who are competitive and propose the good at their marginal supply cost. Letting a player freely choose whether it wants to exert market power or not when it optimizes its utility is not discussed in the literature. This paper addresses this issue by letting the players choose the level of competition they want to exert in the market. To do so, we analyze the behavior of two countries competing to supply a market with a homogeneous good in an imperfect competition setting. Each country decides the number of firms it authorizes to sell in the market. The interaction between the firms is of a Nash-Cournot type, where each one exerts market power and is in competition with all other firms allowed to sell, whether they belong to the same country or not. Each country optimizes its utility, that is the sum of the profits of its firms. We have studied four kinds of interaction between the countries. The first calculates the closed loop Nash equilibrium of the game between the countries. The second setup analyzes the cartel when the countries collude. The third focuses on the open loop Nash equilibrium and the fourth models a bi-level Stackelberg interaction where one country plays before the other. We demonstrate that in the closed loop Nash equilibrium, our setting leads to the prisoner’s dilemma: the equilibrium occurs when both countries authorize all their firms to sell in the market. In other words, countries willingly chose not to exert market power. This result is at first sight similar to the Allaz & Vila (1993) result but is driven by a completely different economic reasoning. In the Stackelberg and coordinated solutions, the market is on the contrary very concentrated and the countries strongly reduce the number of firms that enter the market in order to fully exert market power and increase the price. The open loop result lies in between: the countries let all their firms sell but market power remains strong. These results suggest that the prisoner’s dilemma outcome is due to the conjectural inconsistency of the Nash equilibrium. Finally, in the Stackelberg setting, we give countries the choice of being leader or follower and demonstrate that the counter-intuitive competitive outcome is very unlikely to occur in the market.
    Keywords: Imperfect competition, export oligopoly, open and closed loop Nash equilibrium
    JEL: L13 L7
    Date: 2016–07–21
  27. By: Philipp KRÜGER (University of Geneva and Swiss Finance Institute)
    Abstract: In this paper, I estimate the effect of mandatory greenhouse gas (GHG) emissions disclosure on corporate value. Using the introduction of mandatory GHG emissions reporting for firms listed on the Main Market of the London Stock Exchange as a source of exogenous variation, I find that firms most heavily affected by the regulation experience significantly positive valuation effects. Increases in value are strongest for large firms and for firms from carbon intensive industries (e.g., oil and gas). Valuation increases are driven by capital market effects such as higher liquidity and lower bid -- ask spreads for the most affected firms.
    Keywords: Mandatory disclosure regulation, greenhouse gas emissions, climate change, valuation, difference-in-differences, value
    JEL: D22 G18 G28 G38 K22 K32 L51 M48 Q52 Q54
  28. By: Sushama Murty (Department of Economics, University of Exeter and Jawaharlal Nehru University)
    Abstract: We develop a methodology for (a) constructing unilateral pro t (producer surplus)- increasing and emission-decreasing policy reforms and (b) measuring marginal abatement cost (MAC), when countries operate inefficiently in meeting their self-imposed emission caps and when instantaneous radical jumps from their inefficient status-quos to their emission-constrained optima are infeasible due to existing institutional and political constraints. Data from 118 countries combined with the theoretical methodology developed reveals that (a) allocative inefficiencies are pervasive, (b) our proposed unilateral-efficiency increasing reform can result in more than 8% increase in global profit and 30% reduction in net global emission of CO2 - the biggest gainers being USA, China, Japan, Russia, India, and several countries from western European, and (c) MACs range from zero to 3,000 USD per ton of carbon (USDptc) in 94% of countries in our sample. MAC is more than (resp., less than) 1,000 USDptc in 80% of OECD (resp., 61% of non-OECD) countries. While MACs are zero for many countries in the former Soviet block, they are more than 2,000 USDptc for countries in western Europe. These differences in MACs imply considerable scope for multilateral efficiency improvements in meeting voluntary emission reduction targets through international emission trading and other international climate initiatives.
    Keywords: allocative ineciencies under an emission cap, marginal and non-marginal efficiency-improving policy reforms, marginal abatement costs, ability to abate, reduction in profit.
    JEL: Q5 Q54 Q58
    Date: 2016
  29. By: Nasre Esfahani, Mohammad; Rasoulinezhad, Ehsan
    Abstract: This article tries to explore the long-run nexus between oil consumption, gross domestic product (GDP) and carbon dioxide (CO2) emissions in the next eleven (N-11) countries over the period 1980-2013, by using the panel c-ointegration, the panel dynamic ordinary least squares (DOLS) and the panel fully modified ordinary least squares (FMOLS) approaches.The empirical findings indicate that there is a bidirectional long-run linkage between oil consumption - GDP per capita and oil consumption - CO2 emissions. Moreover the inverted U-shaped linkage between the square of GDP per capita and CO2 emissions, supports the existence of environmental kuznets curve hypothesis. With estimations through the panel DOLS and FMOLS, the long-run elasticity of oil consumption per capita to CO2 emissions per capita is calculated about 0.96% and positive which is in contrast to the coefficient sign of its elasticity to GDP per capita (−0.48%). Moreover, the elasticity of GDP per capita and CO2 emissions per capita to oil consumption per capita are −0.32% and 0.94%, respectively. These findings prove the negative contribution of non-renewable energy (oil) consumption per capita to GDP per capita in the N-11 group. Furthermore, due to the bidirectional long-run relationships between oil consumption and CO2 emissions, these 11 countries should find the efficient energy policies which are in line with CO2 mitigation and reaching a higher GDP per capita growth.
    Keywords: Oil Consumption Per Capita, Gross Domestic Product Per Capita, Carbon Dioxide, Emissions Per Capita
    JEL: Q43 Q47
    Date: 2015–09–20
  30. By: Dasgupta, Shouro; De Cian, Enrica
    Abstract: In this review we synthetize the existing contributions that use econometric approaches to examine the influence of institutions and governance on environmental policy, environmental outcomes, and investments. The paper describes how the relationship between institutions and various response variables related to environmental performance and environmental policy have been conceptualized and operationalized in the literature, and it summarizes the main findings. The second part of the paper outlines avenues for future research in the specific context of energy and climate change. We identify various opportunities for empirical work that have recently emerged with the growing availability of data in the field of green investments, climate, and energy policy. Expanding the current empirical literature towards these research topics is of scientific and policy relevance, and can provide important insights on the broader field of sustainability transition and sustainable development.
    Keywords: Institutions, Environmental Performance, Environmental Policy, Investments, Environmental Economics and Policy, O10, Q5, Q00, P16,
    Date: 2016–07–04
  31. By: Sabine Aresin
    Abstract: Introducing discounts on Certiï¬ ed Emission Reductions from the Clean Development Mechanism is often treated as if it only imposed a substitution effect on a ï¬ rm’s decision between domestic and abroad abatement. Applying a cost minimization approach with a representative ï¬ rm, I can show that reduced allowability generates a quantity effect in addition to the substitution effect. This quantity effect counteracts the substitution effect for abroad abatement. It may even cause abroad abatement to increase as a result of reduced allowability for Certiï¬ ed Emission Reductions. The results are robust to introducing a secondary market for emission credits, given endogenous prices.
    Keywords: Clean Development Mechanism, Import restrictions, Allowability, Green House Gas offset, Abatement
    JEL: D21 F53 Q58
    Date: 2015–11
  32. By: Sushama Murty (Department of Economics, University of Exeter and Jawaharlal Nehru University); R. Robert Russell (University of California, Riverside)
    Abstract: We study the link between the by-production approach of Murty, Russell, and Levkoff [2012 J. Environ. Econ.] (MRL) and the axiomatic approach of Murty [2015 Econ. Theory] to modelling emission-generating technologies. We show that the by-production technology of MRL, obtained as an intersection of two independent sub-technologies, satisfies all the Murty axioms. Conversely, a technology satisfying all these axioms decomposes into two independent subtechnologies having the MRL features. These two sub-technologies, refl ect, respectively, the relations between goods in intended-output production designed by human engineers, on the one hand, and the emission-generating mechanism of nature governed by material-balance considerations, on the other. In either approach, the technology can be functionally represented by two radial distance functions with well-defined properties. These distance functions can also serve as measures of technological and environmental efficiency. We exploit the link between the by-production and axiomatic approaches to offer preliminary suggestions about suitable functional forms for the empirical estimation of the two distance functions.
    Keywords: emission-generating technologies, by-production technologies, free input and output disposability, costly disposability, distance function.
    JEL: D20 D24 Q50
    Date: 2016
  33. By: Heiko Wirths (University of Augsburg, Department of Economics); Joachim Rathmann (University of Augsburg, Department of Applied Computer Science); Peter Michaelis (University of Augsburg, Department of Economics)
    Abstract: Climate feedback mechanisms that have the potential to intensify global warming have been omitted almost completely in the integrated assessment of climate change and the economy so far. With the present paper we try to narrow this gap in literature. We discuss different types of feedback mechanisms and show how to incorporate them into the mathematical setup of the well-known integrated assessment model DICE-2013R. Subsequently, we choose the permafrost carbon feedback (PCF) as specific application for an empirical analysis. We calibrate the parameters for our modified version of the DICE-2013R model and compute the optimal emission mitigation rates that maximize welfare accounting for the impact of the PCF. Finally, we quantify the economic losses resulting from a mitigation policy which ignores this feedback mechanism. Our empirical results generally indicate that accounting for the PCF leads to an increase in the optimal mitigation rates.
    Keywords: integrated assessment, DICE model, climate feedbacks, permafrost
    JEL: O44 Q54 Q58
    Date: 2016–07
  34. By: Gawel, Erik
    Keywords: environmental accounting,carbon footprint,trade,resources policy,water footprint,virtual water
    JEL: Q56 Q58
    Date: 2016
  35. By: Kevin Dayaratna (Heritage Foundation, Washington DC.); Ross Mckitrick (Department of Economics and Finance, University of Guelph); David Kreutzer (Heritage Foundation, Washington DC.)
    Abstract: Integrated Assessment Models (IAMs) require parameterization of both economic and climatic processes. The latter includes Equilibrium Climate Sensitivity (ECS), or the temperature response to doubling CO2 levels, and Ocean Heat Uptake (OHU) efficiency. ECS distributions in IAMs have been drawn from climate model runs that lack an empirical basis,and in Monte Carlo experiments may not be constrained to consistent OHU values. EmpiricalECS estimates are now available, but have not yet been applied in IAMs. We incorporate a new estimate of the ECS distribution conditioned on observed OHU efficiency into two widely-used IAMs. The resulting Social Cost of Carbon (SCC) estimates are much lower than those from models based on simulated parameters. In the DICE model the average SCC falls by 30-50% depending on the discount rate, while in the FUND model the average SCC falls by over 80%. The span of estimates across discount rates also shrinks substantially
    Keywords: Social Cost of Carbon, Climate Sensitivity, Ocean Heat Uptake, Carbon Taxes, Integrated Assessment Models
    JEL: Q54 Q58 H23
    Date: 2016

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