nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒09‒18
34 papers chosen by
Roger Fouquet
London School of Economics

  1. How Does Energy-Cost Lead to Energy Efficiency? Panel Evidence from Canada By Samuel Gamtessa; Adugna Olani
  2. Eficiencia energética y efecto rebote. Conceptos, métodos y políticas By Freire-González, Jaume
  3. Bridging the Gap: Do Fast Reacting Fossil Technologies Facilitate Renewable Energy Diffusion? By Verdolini, Elena; Vona, Francesco; Popp, David
  4. Investing in Photovoltaics: Timing, Plant Sizing and Smart Grids Flexibility By Bertolini, Marina; D’Alpaos, Chiara; Moretto, Michele
  5. Production networks in the wind turbine industry, which place for developing countries in East Asia? By Hoai-Son Nguyen; Minh Ha-Duong
  6. Prospects for Renewable Energy Development in Russia and the World By Barinova, V.A.; Laitner, Skip; Lashina, T.A.
  7. Explaining the slow diffusion of new renewable energy in the Argentine electricity market : a wrong policy mix or an unfavourable context ? By German Bersalli
  8. Turning Human Waste into Renewable Energy: Scope and Options for India By Mukherjee, Sacchidananda; Chakraborty, Debashis
  9. Energy efficiency and rebound effect in European road freight transport By Llorca, Manuel; Jamasb, Tooraj
  10. Energy transition in transportation under cost uncertainty- an assessment based on robust optimization By Claire Nicolas; Stéphane Tchung-Ming; Emmanuel Hache
  11. How individuals cope with institutional complexity in organizations: a case study in the energy transition By Virginie Svenningsen; Eva Boxenbaum; Davide Ravasi
  12. Electric energy consumption and economic growth in Togo By Palakiyem Kpemoua
  13. Analysing the impact of renewable energy regulation on retail electricity prices By Pablo del Rio; Pere Mir-Artigues; Elisa Trujillo-Baute
  14. The financial impact of divestment from fossil fuels By Plantinga, Auke; Scholtens, Bert
  15. Economic impacts of natural gas flow disruptions between Russia and the EU By Oosterhaven, Jan; Bouwmeester, Maaike
  16. Analysis of the relationship between Oil price, Exchange rate and Stock market in Nigeria By Raheem, Aremu Idowu; Ayodeji, Musa Adebiyi
  17. Working Paper 242 - Understanding the prospective local content in the petroleum sector; and the potential impact of high energy prices on production sectors and household welfare in Uganda By AfDB AfDB
  18. The Development of the Oil Sector of the Russian Economy: Main Trends and Public Policy By Bobylev, Yuri; Rasenko, O.A.
  19. Learning in the Oil Futures Markets: Evidence and Macroeconomic Implications By Leduc, Sylvain; Moran, Kevin; Vigfusson, Robert J.
  20. Woody Biomass Processing: Potential Economic Impacts on Rural Regions By Randall Jackson; Amir B. Ferreira Neto; Elham Erfanian
  21. Opportunities for advances in climate change economics By Burke, M.; Craxton, M.; Kolstad, C.D.; Onda, C.; Allcott, H.; Baker, E.; Barrage, L.; Carson, R.; Gillingham, K.; Graff-Zivin, J.; Greenstone, M.; Hallegatte, S.; Hanemann, W.M.; Heal, G.; Hsiang, S.; Jones, B.; Kelly, D.L.; Kopp, R.; Kotchen, M.; Mendelsohn, R.; Meng, K.; Metcalf, G.; Moreno-Cruz, J.; Pindyck, R.; Rose, s.; Rudik, Ivan; Stock, J.; Tol, R.S.J.
  22. Willingness to Pay for Clean Air: Evidence from the air purifier markets in China By ITO Koichiro; ZHANG Shuang
  23. The Strategic Use of Abatement by a Polluting Monopoly By Martín-Herrán, Guiomar; Rubio, Santiago J.
  24. Rebalancing in China—Progress and Prospects By Longmei Zhang
  25. Opportunities & Challenges for Green Technology in 21st Century By Aithal, Sreeramana; Aithal, Shubhrajyotsna
  26. Priority for the Worse Off and the Social Cost of Carbon By Adler, Matthew; Anthoff, David; Bosetti, Valentina; Garner, Greg; Keller, Klaus; Treich, Nicolas
  27. Should the Carbon Price Be the Same in All Countries? By Antoine D'Autume; Katheline Schubert; Cees Withagen
  28. The Impact of Emissions-Based Taxes on the Retirement of Used and Inefficient Vehicles: The Case of Switzerland By Anna Alberini; Markus Bareit; Adan Martinez-Cruz; Massimo Filippini
  29. Climate Engineering under Deep Uncertainty and Heterogeneity By Emmerling, Johannes; Manoussi, Vassiliki; Xepapadeas, Anastasios
  30. Network economics and the environment: insights and perspectives By Sergio Currarini; Carmen Marchiori; Alessandro Tavoni
  31. Climate Database Facilitating Climate Smart Meal Planning for the Public Sector in Sweden By Florén, Britta; Amani, Pegah; Davis, Jennifer
  32. On the relevance of low-carbon stock indices to tackle climate change By Manuel Coeslier; Céline Louche; Jean-François Hétet
  33. Climate-friendly Products – to buy or not to buy? By Zander, Katrin; Feucht, Yvonne
  34. Do Extreme Weather Events Generate Attention to Climate Change? By Sisco, Matthew R.; Bosetti, Valentina; Weber, Elke U.

  1. By: Samuel Gamtessa (University of Regina); Adugna Olani (Queen's University)
    Abstract: An increase in energy-cost can induce energy efficiency improvement - a reduction in energy-output ratio. There are well-established theoretical conjectures of how this can take place. As the relative energy-cost increases, it induces firms to reallocate and selectively utilize the most energy-efficient vintages. In the long-run firms could also achieve energy efficiency through investments in energy-efficient capital. This study uses the Canadian KLEMS panel data set to investigate these relationships. We employ panel vector auto regressions as well as co-integration and error correction techniques to test whether the conjectures hold in the data. Our findings support the theoretical conjectures. The channels we empirically identify suggest that the effect of increased energy-cost can be an increase in energy efficiency: by decreasing energy-capital ratio and increasing output-capital ratio. The latter effect is observed only in the long-run through induced investments in new capital.
    Keywords: Energy intensities, Capital productivity, Energy price, Panel data
    JEL: Q41 Q43 Q48 C33
    Date: 2016–09
  2. By: Freire-González, Jaume
    Date: 2016–01
  3. By: Verdolini, Elena; Vona, Francesco; Popp, David
    Abstract: The diffusion of renewable energy in the power system implies high supply variability. Lacking economically viable storage options, renewable energy integration has so far been possible thanks to the presence of fast-reacting mid-merit fossil-based technologies, which act as back-up capacity. This paper discusses the role of fossil-based power generation technologies in supporting renewable energy investments. We study the deployment of these two technologies conditional on all other drivers in 26 OECD countries between 1990 and 2013. We show that a 1% percent increase in the share of fast-reacting fossil generation capacity is associated with a 0.88% percent increase in renewable in the long run. These results are robust to various modifications in our empirical strategy, and most notably to the use of system-GMM techniques to account for the interdependence of renewable and fast-reacting fossil investment decisions. Our analysis points to the substantial indirect costs of renewable energy integration and highlights the complementarity of investments in different generation technologies for a successful decarbonization process.
    Keywords: Renewable Energy Investments, Fossil Energy Investments, Complementarity, Energy and Environmental Policy, Research and Development/Tech Change/Emerging Technologies, Q42, Q48, Q55, O33,
    Date: 2016–08–30
  4. By: Bertolini, Marina; D’Alpaos, Chiara; Moretto, Michele
    Abstract: In Italy and in many EU countries, the last decade was characterized by a large development of distributed generation power plants. Their presence determined new critical issues for the design and management of the overall energy system and the electric grid due to the presence of discontinuous production sources. It is commonly agreed that contingent problems that affect local grids (e.g. inefficiency, congestion rents, power outages, etc.) may be solved by the implementation of a “smarter” electric grid. The main feature of smarts grid is the great increase in production and consumption flexibility. Smart grids give producers and consumers, the opportunity to be active in the market and strategically decide their optimal production/consumption scheme. The paper provides a theoretical framework to model the prosumer’s decision to invest in a photovoltaic power plant, assuming it is integrated in a smart grid. To capture the value of managerial flexibility, a real option approach is implemented. We calibrate and test the model by using data from the Italian energy market.
    Keywords: Smart Grids, Renewable Energy Sources, Real Options, Prosumer, Resource /Energy Economics and Policy, Q42, C61, D81,
    Date: 2016–09–07
  5. By: Hoai-Son Nguyen (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - AgroParisTech - AgroParisTech, CleanED - Clean Energy and Sustainable Development Lab - USTH - Université des Sciences et des Technologies de Hanoi); Minh Ha-Duong (Université des Sciences et des Technologies de Hanoi - USTH (VIETNAM) - USTH - Université des Sciences et des Technologies de Hanoi, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - AgroParisTech - AgroParisTech, CleanED - Clean Energy and Sustainable Development Lab - USTH - Université des Sciences et des Technologies de Hanoi)
    Abstract: My doctoral research intersects two recent developments of the global economy. The first is the emergence of the wind turbine industry, to provide the machines for climate-friendly electricity generation. The second is the increasing importance of production networks in East Asia. Production networks are defined by the cross-border dispersion of component production/assembly within vertically integrated production processes. In industries where a production network pattern is in place, each country specializes in a particular stage of the production sequence. The ultimate goal of my research is to understand which factors determine the participation of East Asia developing countries in wind turbine industry’s production network. The findings from this research will broaden our understanding on production networks and its policy implications for developing countries in East Asia, Vietnam in particular. This first-year poster presents four preliminary trade data analysis results. A) Except for a unique decline in 2009, the extent of the wind turbine network had been expanding during the period 2007-2014. B) The network was intra-regional rather than inter-regional. C) Europe was the largest one followed by Asia. D) Developing countries in East Asia only account for minor share of the network. Next, these findings will be confronted to the existing theoretical concept models based on neo-classical trade theory; industrial organization theory and global value chain theory. In the following years, such quantitative international trade analysis will be completed by qualitative sector surveys, most likely in Europe.
    Keywords: International Economics, Organization Behavior, Trade, Production fragmentation networks, Renewable Energy, Wind turbine industry
    Date: 2016–04–14
  6. By: Barinova, V.A. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Laitner, Skip (American Council for an Energy-Efficient Economy); Lashina, T.A. (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The paper studied the economic aspects of the use of renewable energy sources (RES) in Russia and the world, studied the world practice of state policy in the field of renewable energy, as well as the characteristic of the main tendencies of development of renewable energy. The analysis of the implementation mechanisms of the state renewable energy incentives in Russia, including content analysis of the legal framework of such incentives.
    Keywords: renewable energy sources, Russia
    Date: 2016–05–18
  7. By: German Bersalli (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes)
    Abstract: The production and consumption of electricity in Latin America has grown strongly in recent decades (about 4% per year) with an increasing share coming from fossil fuels, which has led to an increase in the carbon intensity of the electricity production. Large hydro still represents a substantial part of the electricity mix in most Latin-American countries. However, the construction of new dams has slowed mainly due to their local environmental consequences. In the last decade, most of these countries showed a growing interest in developing renewable energy technologies (RETs) for power generation, especially wind, solar, biomass, geothermal and small hydroelectric dams. This interest is explained primarily by the need of diversifying the power mix and increase security of supply. Additionally, other policy objectives have been considered, such as the electrification of isolated rural areas, the decrease of energy imports, the creation of new jobs and the reduction of GHG emissions. The latter goal became especially important after the COP21 (Paris, 2015), in which most countries agreed to follow decarbonisation pathways for their economies which means, among other measures, an increased effort to develop green energy. In this context, governments have set relatively ambitious targets and implemented public policies to encourage investment in RETs and thus take advantage of the great potential available. Different policy instruments have been implemented: tax exemptions, feed-in tariffs, feed-in premium, auction systems, tradable certificates, etc. However, even though many years of government effort and public resources have been invested in order to speed up the development, diffusion and implementation of RETs, experiences in different countries show that this is a very slow process. The current share of RETs is still low (or extremely low depending on the country), especially when compared to the ambitions of policy objectives. Support policies for RETs in Argentina is an interesting case to analyse the effectiveness of incentive mechanisms in a context of high risk perception. Recent experience in the electricity sector shows that the application of several theoretically effectives instruments did not produce the expected results despite the large potential available. Could it be explained by a failure in the design and implementation of the main promotion tools or by one unfavorable economic and institutional context and the related barriers?
    Keywords: Electricity Market,Renewable energies integration,Argentine
    Date: 2016–06–19
  8. By: Mukherjee, Sacchidananda; Chakraborty, Debashis
    Abstract: With rise in population and the ongoing urbanisation drive, the urge to ensure energy security both for the rural and urban areas has emerged as a major challenge in India. The demand for energy has increased in all spheres of life, e.g. for cooking, cultivation, production purposes, transportation, and so on. Although through various government initiatives, adoption of liquefied petroleum gas (LPG) for cooking has increased, given the vast population, use of biofuels is expected to continue for poorer households. Generation of biogas from cattle waste in India has intensified through policies, but the same from human waste is still in a nascent stage. The present study explores the possibilities of recovering energy and nutrients from human waste by discussing the present system of human waste collection, treatment and disposal in India, followed by the reasons behind the failures of the past initiatives (e.g., Ganga Action Plan, GAP). It further focuses on a few alternative systems and their technical feasibility. It is concluded that various ongoing policies, viz., National Mission for Clean Ganga (NMCG), ‘Swachh Bharat Mission’ (SBM) - should be coordinated for integrating collection and treatment of human waste for generation of renewable energy.
    Keywords: human waste management, urban wastewater management, renewable energy, resource recovery, biogas generation, public health management, government policy, technology adoption, energy policy, India.
    JEL: I18 Q28 Q35 Q37 Q42 Q48
    Date: 2016–09–12
  9. By: Llorca, Manuel; Jamasb, Tooraj
    Abstract: Energy efficiency has become a primary energy policy goal in Europe and many other countries and has conditioned the policies towards energy-intensive sectors such as road freight transport. However, energy efficiency improvements can lead to changes in the demand for energy services that offset some of the expected energy savings in the form of rebound effects. Consequently, forecasts of energy savings can be overstated. This paper analyses the energy efficiency and rebound effects for road freight transport in 15 European countries during the 1992-2012 period. We use a recent methodology to estimate an energy demand function using a stochastic frontier analysis approach and examine the influence of key features of rebound effect in the road freight transport sector. We obtain on average a fuel efficiency of 91% and a rebound effect of 18%. Our results indicate that the achieved energy efficiencies are retained to a large extent. We also find, among other results, that the rebound effect is higher in countries with higher fuel efficiency and better quality of logistics. Finally, a simulation analysis shows significant environmental externalities costs even in countries with lower rebound effect.
    Date: 2016
  10. By: Claire Nicolas; Stéphane Tchung-Ming; Emmanuel Hache
    Abstract: To improve energy security and ensure the compliance with stringent climate goals, the European Union is willing to step up its efforts to accelerate the development and deployment of electrification, and in general, of alternative fuels and propulsion methods. Yet, the costs and benefits of imposing norms on vehicle or biofuel mandates should be assessed in light of the uncertainties surrounding these pathways, in terms of e.g. cost of these new technologies. By using robust optimization, we are able to introduce uncertainty simultaneously on a high number of cost parameters without notably impacting the computing time of our model (a French TIMES paradigm model). To account for the different nature of the uncertain parameters we model two kinds of uncertainty propagation with time. We then apply this formal setting to French energy system under carbon constraint. As uncertainty increases, as does technology diversification to hedge against it. In the transportation sector, low-carbon alternatives (CNG, electricity) appear consistently as hedges against cost variations, along with biofuels. Policy implications of diversification strategies are of importance; in that sense, the work undertaken here is a step towards the design of robust technology-oriented energy policies.
    Keywords: Robust optimization; Climate change; Energy transition; Transportation policy.
    JEL: C61 O33 Q47 R40
    Date: 2016
  11. By: Virginie Svenningsen (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Eva Boxenbaum (Copenhagen Business School - CBS - Copenhagen Business School [Copenhagen], CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Davide Ravasi (Cass Business School - City University London)
    Abstract: The present article examines how employees cope with an organizational setting that is institutionally complex. The empirical setting is a French energy corporation that simultaneously pursues a logic of science and a logic of market through multiple research partnerships with public and private actors engaged in the energy transition. We draw on the literature on institutional logics and hybrid organizations to examine how employees of this French energy corporation deal with this institutionally complex environment. Our findings point to three strategies that individuals use to cope with institutional complexity in their organizational setting: aggregating, selective coupling and compartmentalizing. Each individual uses only one strategy. The findings further suggest three psychological factors that seem to explain which of these strategies a given individual adopts for coping with institutional complexity: tolerance for ambiguity, preference for holism, and preference for reductionism. We integrate these findings into a two-dimensional model. These findings contribute to illuminating how individuals cope with institutional complexity in their organizational setting, an insight that can help shed light on why organizations respond somewhat differently to the same institutionally complex field.
    Keywords: energy transition., hybrid organizations,Institutional complexity, multiple institutional logics
    Date: 2016–07–07
  12. By: Palakiyem Kpemoua (Université de Lomé - Université de Lomé)
    Abstract: The general purpose of this study is to analyze the effect of the consumption of electric energy on Togo’s economic growth and check the direction of the causality between this consumption and economic growth. From a simple methodological approach, the study uses cointegration and causality techniques to meet its objectives and tests the research hypothesis that consumption of electric energy causes, as Granger puts, the economic growth. The results show that there is a positive correlation between economic growth, capital stock and consumption of electric energy with a negative effect energy crisis in 1983. These results also show that there is no causality between economic growth and consumption of electric energy, in other words, the consumption of electric energy dwells a small component of economic growth.
    Abstract: La présente étude a pour objectif général d’analyser l’effet de la consommation de l’énergie électrique sur la croissance économique du Togo et de vérifier le sens de la causalité entre cette consommation et la croissance économique. A partir d'une approche méthodologique simple, l'étude utilise des techniques de cointégration et de causalité pour répondre à l'objectif de l'étude et tester l'hypothèse de recherche selon laquelle, consommation de l’énergie électrique cause au sens de Granger la croissance économique. Les résultats montrent qu’il existe une corrélation, positive entre la croissance économique, le stock de capital et la consommation d’énergie électrique avec un effet négatif en 1983 du à la crise énergétique. Ces résultats montrent également qu’il n’existe pas de causalité entre la croissance économique et la consommation d’énergie électrique, en d’autres termes, cette consommation d’énergie ne représente qu’une infime composante de cette croissance économique.
    Keywords: Electric energy consumption, economic growth, Granger causality
    Date: 2016–02–16
  13. By: Pablo del Rio (IPP-CSIC); Pere Mir-Artigues (UdL & Energy Sustainability Research Group (UB)); Elisa Trujillo-Baute (University of Warwick & Barcelona Institute of Economics,Chair of Energy Sustainability)
    Abstract: Retail electricity prices have substantially increased in the last decade in the European Union (EU) as a result of different regulations, raising the concern of policy makers. The growth in the support costs for electricity from renewable energy sources (RES-E) has often been singled out as a main driver of these prices. The aim of this paper is to analyse the degree of influence of RES-E promotion costs on the evolution of the retail price of electricity in the EU Member States. The analysis is carried out for households as well as for industry, with the help of a panel data econometric model. Our results show that the impact of renewable energy promotion costs on the retail electricity prices is positive and statistically significant, although relatively small. Differences across consumer types can be observed. An increase of 1% in those costs induces an average increase of only 0.023% in industrial retail prices and 0.008% in the residential retail prices. This impact on retail prices is mediated by the type of support scheme being adopted, with price-based support instruments showing a greater effect than quantity-based ones.
    Keywords: Electricity prices, renewable energy, public support
    JEL: L11 Q41 C24
    Date: 2016
  14. By: Plantinga, Auke; Scholtens, Bert (Groningen University)
    Abstract: Divesting from fossil companies has been put forward as a means to address climate change. We study the impact of such divesting on investment portfolio performance. To this extent, we systematically investigate the investment performance of portfolios with and without fossil fuel company stocks. We investigate mispricing in stock returns and test for the impact of (reduced) diversification by excluding fossil fuel companies from the portfolio. While the fossil fuel industry outperforms other industries based on returns only, we show that this is due to the higher systematic risk of this industry, as there is no statistically significant difference between the riskadjusted performance of stocks in the fossil fuel sample and the non-fossil fuel sample. We conclude that divesting from fossil fuels does not have a statistically significant impact on overall portfolio performance, and only a very marginal impact on the utility derived from such portfolios. The policy implication is that investors can divest from fossil fuels without significantly hurting their financial performance.
    Date: 2016
  15. By: Oosterhaven, Jan; Bouwmeester, Maaike (Groningen University)
    Abstract: In this paper we use a non-linear programming approach to predict the wider interregional and interindustry impacts of natural gas flow disruptions. In the short run, economic actors attempt to continue their business-as-usual and follow established trade patters as closely as possible. In the model this is modelled by minimizing the information gain between the original pattern of economic transactions and the situation in which natural gas flows are disrupted. We analyze four scenarios that simulate Russian export stops of natural gas by means of a model calibrated on an international input-output table with six sectors and six regions. The simulations show that at the lower levels of aggregation considerable effects are found. At the aggregate level of the whole economy, however, the impacts of the four scenarios are negligible for Europe and only a little less so for Russia itself. Interestingly, the effects on the size of the economy, as measured by its GDP, are predominantly positive for the various European regions, but negative for Russia. The effects on the welfare of the populations involved, however, as measured by the size of domestic final demand, have an opposite sign; with predominantly negligible but negative effects for European regions, and very small positive effects for the Russian population.
    Date: 2016
  16. By: Raheem, Aremu Idowu; Ayodeji, Musa Adebiyi
    Abstract: The objective of this paper is to analyze the dynamic effects of oil price shock and exchange rate on the Nigeria stock market using monthly data from June 1999 to December 2014, applying Vector Autoregression (VAR) Model. Granger Causality Test, Impulse Response Functions (IRFs) and Variance Decomposition (VDC) were also used to aid in the analysis of the results. The findings showed that oil price, exchange rate and stock market are not co-integrated. Granger Causality Test result indicate that there is bidirectional causality between stock price and exchange rate, also there is bidirectional causality between oil price and exchange rate but unidirectional causality from oil proceed to exchange rate.
    Keywords: Causality,Exchange Rate, Oil Price and Stock market
    JEL: C32 E60
    Date: 2016–09–06
  17. By: AfDB AfDB
    Date: 2016–09–09
  18. By: Bobylev, Yuri (Gaidar Institute for Economic Policy; Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Rasenko, O.A. (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The oil sector is one of the base in the Russian economy and plays a leading role in the formation of government revenues and the country's trade balance. This paper analyzes the main trends in the Russian oil sector, including the production and processing of crude oil, petroleum exports, domestic consumption of oil, the price of oil and petroleum products, government regulation. Proposed public policy measures to ensure the further development of the oil sector of the Russian economy.
    Keywords: Russia, oil, economy
    Date: 2016–06–16
  19. By: Leduc, Sylvain; Moran, Kevin; Vigfusson, Robert J.
    Abstract: We show that a model where investors learn about the persistence of oil-price movements accounts well for the fluctuations in oil-price futures since the late 1990s. Using a DSGE model, we then show that this learning process alters the impact of oil shocks, making it time-dependent and consistent with the muted impact oil-price changes had on macroeconomic outcomes during the early 2000s and again over the past two years. The Spring 2008 increase in oil prices had a larger impact because market participants considered that it was likely driven by permanent shocks.
    Keywords: Kalman filter ; Time-variation ; Inventories ; Conditional response
    JEL: E32 E37 Q43
    Date: 2016–09
  20. By: Randall Jackson (Regional Research Institute, West Virginia University); Amir B. Ferreira Neto (Regional Research Institute, West Virginia University); Elham Erfanian (Regional Research Institute, West Virginia University)
    Abstract: This paper estimates the economic and environmental impacts of introducing woody biomass processing (WBP) in a rural area in central Appalachia. WBP is among the most promising additions to energy generation portfolios for reducing import dependency and at the same time providing economic opportunity to stimulate regional economies, especially in rural regions where economic development options are often limited. We use an input-output framework to assess regional economic impacts of introducing WBP under three different pathways, fast pyrolysis, ethanol and coal/biomass to liquids. Based on an analysis of local biomass feedstock supply and using the results of life cycle assessments to parameterize the three production functions, we find that the proposed WBP will increase the regional output by $333.3 to $564.0 million dollars; it will increase income by $51.31 to $70.75 million dollars and employment by 850.7 to 1670 jobs in the region. Of these impacts, the direct portions are 63% to 77% of the total impact, depending on the chosen pathway. The results from the accompanying environmental assessment show that only the ethanol pathway has both economic and environmental benefits.
    Keywords: woody biomass processing, input output analysis, life cycle assessment, central Appalachia, rural economic development
    JEL: R58 R15 Q51
    Date: 2016–08
  21. By: Burke, M.; Craxton, M.; Kolstad, C.D.; Onda, C.; Allcott, H.; Baker, E.; Barrage, L.; Carson, R.; Gillingham, K.; Graff-Zivin, J.; Greenstone, M.; Hallegatte, S.; Hanemann, W.M.; Heal, G.; Hsiang, S.; Jones, B.; Kelly, D.L.; Kopp, R.; Kotchen, M.; Mendelsohn, R.; Meng, K.; Metcalf, G.; Moreno-Cruz, J.; Pindyck, R.; Rose, s.; Rudik, Ivan; Stock, J.; Tol, R.S.J.
    Date: 2016–04–01
  22. By: ITO Koichiro; ZHANG Shuang
    Abstract: We develop a framework to estimate the willingness to pay (WTP) for clean air from defensive investments. Applying this framework to product-by-store level scanner data on air purifier sales in China, we provide among the first revealed preference estimates of WTP for clean air in developing countries. A spatial discontinuity in air pollution created by the Huai River heating policy enables us to analyze household responses to long-run exposure to pollution. Our model allows heterogeneity in preference parameters to investigate potential heterogeneity in WTP among households. We show that our estimates provide important policy implications for optimal environmental regulations.
    Date: 2016–06
  23. By: Martín-Herrán, Guiomar; Rubio, Santiago J.
    Abstract: This paper evaluates the effects of the lack of regulatory commitment on emission tax applied by the regulator, abatement effort made by the monopoly and social welfare comparing two alternative policy games. The first game assumes that the regulator commits to an ex-ante level of the emission tax. In the second one, in a first stage the regulator and the monopolist simultaneously choose the emission tax and abatement respectively, and in a second stage the monopolist selects the output level. We find that the lack of commitment leads to lower taxation and abatement that yield larger emissions and, consequently, a larger steady-state pollution stock. Moreover, the increase of environmental damages because of the increase in the pollution stock more than compensates the increase in consumer surplus and the decrease in abatement costs resulting in a reduction of social welfare. Thus, our analysis indicates that the lack of commitment has a negative impact of welfare although this detrimental effect decreases with abatement costs.
    Keywords: Monopoly, Commitment, Emission Tax, Abatement, Stock Pollutant, Research Methods/ Statistical Methods, H23, L12, L51, Q52, Q55,
    Date: 2016–09–07
  24. By: Longmei Zhang
    Abstract: China is transitioning to a greener, more inclusive, more consumer and service based, and less credit-driven economy. This paper defines a framework for assessing rebalancing, reviews progress, and discusses medium-term prospects. External rebalancing has advanced well, while progress on internal rebalancing has been mixed, with substantial progress on the supply side, moderate progress on the demand side, and limited progress on the credit side. Rebalancing on income equality and environment has also been mixed, with the energy intensity of growth falling and labor’s share of income rising, but income inequality and local air pollution remaining very high. Going forward, the high national saving is expected to fall owing to demographic change and a stronger social safety net, while the investment ratio is expected to fall similarly, with increasing competition and profit normalization as growth slows. The service sector will continue to gain importance, helping reduce the carbon intensity of output and increase labor’s share of national income and household consumption. Reducing the credit intensity of growth is likely to progress slowly unless decisive corporate restructuring and SOE reforms are implemented.
    Keywords: Transition economies;China;Demand;Supply;Credit;Fiscal policy;Exchange rate policy;Domestic savings;Income distribution;Environment;Demographic transition;Rebalancing, China
    Date: 2016–09–06
  25. By: Aithal, Sreeramana; Aithal, Shubhrajyotsna
    Abstract: Technology has affected the society and its surroundings in many ways and helped to develop more advanced economies including today's global economy. Science has contributed many technologies to the society which include Aircraft technology, Automobile technology, Biotechnology, Computer technology, Telecommunication technology, Internet technology, Renewable energy technology, Atomic & Nuclear technology, Nanotechnology, Space technology etc. have changed the lifestyle of the people and provided comfortability. In order to sustain this comfort of people in the society, they have to worry about the sustainability of the surrounding environment. In this paper, we propose how the technologies can be made sustainable by adding green component so that they can avoid environmental degradation and converted into green technologies to provide a clean environment for future generations. The paper also discuss the opportunities and challenges for green technology for agriculture, green technology for potable water, green technology for renewable energy, green technology for buildings, green technology for aircraft and space exploration, green technology for education, green technology for food & processing, and green technology for health and medicine in 21st century.
    Keywords: Green Technologies, Sustainability, Green Society
    JEL: Q2 Q20 Q42
    Date: 2016–08
  26. By: Adler, Matthew; Anthoff, David; Bosetti, Valentina; Garner, Greg; Keller, Klaus; Treich, Nicolas
    Abstract: The social cost of carbon (SCC) is a monetary measure of the harms from carbon emission. Specifically, it is the reduction in current consumption that produces a loss in social welfare equivalent to that caused by the emission of a ton of CO2. The standard approach is to calculate the SCC using a discounted-utilitarian social welfare function (SWF)—one that simply adds up the well-being numbers (utilities) of individuals, as discounted by a weighting factor that decreases with time. The discounted-utilitarian SWF has been criticized both for ignoring the distribution of well-being, and for including an arbitrary preference for earlier generations. Here, we use a prioritarian SWF, with no time-discount factor, to calculate the SCC in the integrated assessment model RICE. Prioritarianism is a well-developed concept in ethics and theoretical welfare economics, but has been, thus far, little used in climate scholarship. The core idea is to give greater weight to well-being changes affecting worse off individuals. We find substantial differences between the discounted-utilitarian and non-discounted prioritarian SCC.
    Keywords: Prioritarianism, Social Welfare Function, Social Cost of Carbon, Resource /Energy Economics and Policy, Q54, I30,
    Date: 2016–08–30
  27. By: Antoine D'Autume (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Katheline Schubert (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Cees Withagen (Department of Economics - VU University Amsterdam)
    Abstract: International di¤erences in fuel taxation are huge, and may be justi…ed by different local negative externalities that taxes must correct, as well as by di¤erent preferences for public spending. In this context, should a worldwide uniform carbon tax be added to these local taxes to correct the global warming externality? We address this question in a second best framework à la Ramsey, where public goods have to be …nanced through distortionary taxation and the cost of public funds has to be weighted against the utility of public goods. We show that when lump-sum transfers between countries are allowed for, the second best tax on the polluting good may be decomposed into three parts: one, country-speci…c, dealing with the local negative externality, a second one, country-speci…c, dealing with the cost of levying public funds, and a third one, global, dealing with the global externality and which can be interpreted as the carbon price. Our main contribution is to show that the uniformity of the carbon price should still hold in this second best framework. Nevertheless, if lump-sum transfers between governments are impossible to implement, international di¤erentiation of the carbon price is the only way to take care of equity concerns. keywords: carbon price, second best, Pigovian taxation
    Keywords: carbon price, second best, Pigovian taxation
    Date: 2016–03
  28. By: Anna Alberini (University of Maryland,USA); Markus Bareit (ETH Zurich, Switzerland); Adan Martinez-Cruz (ETH Zurich, Switzerland); Massimo Filippini (ETH Zurich, Switzerland)
    Abstract: Many countries have adopted policies designed to reduce CO2 emissions from road vehicles. Taxes linked to the CO2 emissions rate or the fuel economy of a vehicle (which is inversely related to its CO2 emissions rate) are examples of such policies. These taxes are usually imposed on new vehicles, and previous evaluations have estimated the increases in the shares or sales of new and fuel-efficient vehicles associated with such taxes. In contrast, we ask whether taxes on new cars that penalize high emitters induce changes in the retirement of used and inefficient vehicles. We exploit natural experiment conditions in Switzerland to analyze the impact of two different “bonus”/“malus” schemes implemented at the cantonal level. In both schemes, the bonus rewards new efficient vehicles. The malus is retroactive in canton Obwalden, in the sense that it is charged on both new and existing high-emitting cars, but it is only applied prospectively to new cars in Geneva. We use a difference-in-difference design within a survival analysis setting. We find that a bonus/malus accelerates the retirement of existing high-emitting vehicles in Obwalden, shortening the expected lifetime of the three most popular make-models by 7 to 11 months. The effect is the opposite in Geneva, where we estimate that the expected lifetime of these three popular models is extended by 5 to 8 months. These findings have important implications about the desirability of bonus/malus schemes and on their design, as well as on old car scrappage programs.
    Keywords: Vehicle retirement, Emissions-based taxes, bonus/malus, difference-in-difference, survival analysis, Switzerland
    JEL: L62 Q4 Q5
    Date: 2016–09
  29. By: Emmerling, Johannes; Manoussi, Vassiliki; Xepapadeas, Anastasios
    Abstract: Climate Engineering, and in particular Solar Radiation Management (SRM) has become a widely discussed climate policy option to study in recent years. However, its potentially strategic nature and unforeseen side effects provide major policy and scientific challenges. We study the role of the SRM implementation and its strategic dimension in a model with two heterogeneous countries with the notable feature of model misspecification on the impacts from SRM. We find that deep uncertainty leads to a reduction in SRM deployment both under cooperation and strategic behavior, which is a more relevant issue if countries act strategically. Furthermore, we demonstrate that the heterogeneity in impacts from SRM has an asymmetric effect on the optimal policy and could typically lead to unilateral SRM implementation. We also consider heterogeneous degrees of ambiguity aversion, in which case the more confident country only will use SRM.
    Keywords: Climate Change, Solar Radiation Management, Uncertainty, Robust Control, Differential Game, Research and Development/Tech Change/Emerging Technologies, Q53, Q54,
    Date: 2016–08–30
  30. By: Sergio Currarini; Carmen Marchiori; Alessandro Tavoni
    Abstract: Local interactions and network structures appear to be a prominent feature of many environmental problems. This paper discusses a wide range of issues and potential areas of application, including the role of relational networks in the pattern of adoption of green technologies, common pool resource problems characterized by a multiplicity of sources, the role of social networks in multi-level environmental governance, infrastructural networks in the access to and use of natural resources such as oil and natural gas, the use of networks to describe the internal structure of inter-country relations in international agreements, and the formation of bilateral “links” in the process of building up an environmental coalition. For each of these areas, we examine why and how network economics would be an effective conceptual and analytical tool, and discuss the main insights that we can foresee.
    Keywords: networks; environmental externalities; technological diffusion; gas pipelines; common-pool-resources; multi-level governance; coalitions
    JEL: N0
    Date: 2015–09
  31. By: Florén, Britta; Amani, Pegah; Davis, Jennifer
    Abstract: The climate impact of food consumption corresponds to about 2 tons of CO2 eq. per capita, representing around 25 % of the total consumption-driven climate change impact in Sweden. There are several diverse ongoing trends of food consumption in Sweden, and their primary drivers are environmental and health considerations. The results of a market research carried out by YouGov (2010) indicated that nearly 75 percent of respondents would buy climate-labeled food, and nearly 50 percent of the respondents would be willing to pay a higher price for such a product. The climate impact from meals could be significantly decreased through small changes in recipes by reducing the amount of ingredients with high carbon footprints or substituting them with other ingredients with the same function but lower carbon footprints. By making more climate-conscious choices, e.g. eating more vegetables as well as poultry, egg and seafood instead of red meat, the climate impact per person and year could be reduced by half. Several recent studies suggest that dietary changes can reduce food-related environmental impacts significantly (e.g. Tilman and Clark, 2014; Hallström et al., 2015; Stehfest, 2014; Röös et al., 2015; Bryngelsson et al., 2016). These studies have mainly explored theoretical dietary scenarios, and not what people actually eat; for example, in one study a model-based theoretical diet, which reduced GHGs by 90%, included unrealistic amounts of only seven food items (Macdiarmid, 2012). Still, this information is important when aiming to guide food producers, public authorities and consumers towards more sustainable and healthy options. The national food agency Sweden updated their dietary advice in 2015, which now also takes environmental consideration into account, besides health impact (SLV, 2015).
    Keywords: Agribusiness,
    Date: 2016–05
  32. By: Manuel Coeslier (Audencia Business School, LHEEA - Laboratoire de recherche en Hydrodynamique, Énergétique et Environnement Atmosphérique - École Centrale de Nantes - CNRS - Centre National de la Recherche Scientifique); Céline Louche (Audencia Business School); Jean-François Hétet (LHEEA - Laboratoire de recherche en Hydrodynamique, Énergétique et Environnement Atmosphérique - École Centrale de Nantes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In a context where the necessary transition to a climate-resilient economy creates financing needs as well as new and underestimated financial risks for investors, low-carbon or carbonefficient financial indices represent a rapidly growing and promising instrument. By building and testing representative optimization methodologies for low-carbon stock indices, this study investigates their ability to both (i) allow investors to hedge against climate-related financial risks and (ii) promote companies with higher contribution to the energy transition. The analysis is based on a large European stock index for which we benefit from a complete set of bottom-up calculated environmental indicators, including indirect and avoided carbon emissions figures. The results indicate that mainstream low-carbon indices methodologies fail to address the challenges they are based on and call for further improvements in order to align diversified financial instruments with ambitious climate objectives.
    Keywords: Sustainable finance,lowcarbon indices,Carbon footprint,Financed emissions,Avoided emissions
    Date: 2016–08
  33. By: Zander, Katrin; Feucht, Yvonne
    Abstract: Although climate change is reported to be an important issue for European citizens, market relevance of climate-friendly labelled products remains limited. Various barriers such as low knowledge, distrust in labels, time preference and uncertainty/risk prevent consumers from acting according to their ethical attitudes. The aim of this contribution is to better understand the factors which influence consumers’ purchase behaviour of climate-friendly labelled products with emphasis on knowledge, trust in labels and time preference. Based on the data obtained by an online survey with 6007 respondents in six European countries (DE, ES, FR, IT, NO, UK) in July 2015 a multinomial regression was conducted. Dependent variable was the actual buying frequency of climate-friendly food. Higher subjective knowledge had a positive impact while lack of trust in labels negatively influenced the probability of purchasing climate-friendly products. Test persons with higher time preference were less likely to buy climate-friendly products and vice versa. This is in line with theoretical considerations according to which the present saving of money and pleasure gains are valued higher than the possible benefits resulting of less future impacts of climate change. In contrast, the effects of different indicators of risk attitudes were ambiguous.
    Keywords: Food labelling, consumer behaviour, attitude behaviour gap, Agribusiness, Consumer/Household Economics,
    Date: 2016–05
  34. By: Sisco, Matthew R.; Bosetti, Valentina; Weber, Elke U.
    Abstract: We analyzed the effects of 10,748 weather events on attention to climate change between December 2011 and November 2014 in local areas across the United States. Attention was gauged by quantifying the relative increase in Twitter messages about climate change in the local area around the time of each event. Coastal floods, droughts, wildfires, strong wind, hail, excessive heat, extreme cold, and heavy snow events all had detectable effects. Attention was reliably higher directly after events began, compared to directly before. This suggests that actual experiences with extreme weather events are driving the increases in attention to climate change, beyond the purely descriptive information provided by the weather forecasts directly beforehand. Financial damage associated with the weather events had a positive and significant effect on attention, although the effect was small. The abnormality of each weather event’s occurrence compared to local historical activity was also a significant predictor. In particular and in line with past research, relative abnormalities in temperature (“local warming”) generated attention to climate change. In contrast, wind speed was predictive of attention to climate change in absolute levels. These results can be useful to predict short-term attention to climate change for strategic climate communications, and to better forecast long-term climate policy support.
    Keywords: Climate Attention, Social Media, Extreme Weather, Environmental Economics and Policy, Q54, C81, D80,
    Date: 2016–08–30

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