nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒09‒25
25 papers chosen by
Roger Fouquet
London School of Economics

  1. Fuel Poverty: Evidence from housing perspective By Paloma Taltavull de la Paz; Francisco Juárez; Paloma Monllor
  2. Understanding the Intensity of UK Policy Commitments to Nuclear Power By Emily Cox; Phil Johnstone; Andy Stirlng
  3. Top down strategy for renewable energy investment: sizing methodologies and Integrated Renewable Energy System models By Ahmadian, Peyman; Jalilzadeh, Afshin
  4. A bidding strategy for minimizing the imbalances costs for renewable generators in Spanish power markets By Francisco Javier Eransus
  5. The Effect of Undesirable Land Use Facilities on Property Values: New Evidence from Australian Regional Fossil-Fired Plants By Renuka K. Ganegodage; Peyman Khezr; Rabindra Nepal
  6. Negative price spikes at power markets: The role of energy policy By Gerster, Andreas
  7. CO2 Content of Electricity Losses By Daniel Daví Arderius; María-Eugenia Sanin; Elisa Trujillo-Baute
  8. The Incidence of Subsidies to Residential Public Services in Argentina: The Subsidy System in 2014 and Some Alternatives By Christoph Lakner; Maria Ana Lugo; Jorge Puig; Leandro Salinardi; Martha Viveros
  9. Where are natural gas prices heading, and what are the environmental consequences for Latin America? By Arturo L. Vásquez Cordano; Abdel M. Zellou
  10. Impactos Económicos Regionales del “Shale Gas” en la Reforma Energética de México By Joana Chapa Cantú; Javier Oyakawa Nakamoto
  11. Oil Prices and Urban Housing Demand By William D. Larson; Weihua Zhao
  12. Oil and macroeconomic (in)stability By Hilde C. Bjørnland; Vegard H. Larsen; Junior Maih
  13. Oklahoma Oil and Gas Severance Taxes: A Comparative Analysis By Mary N. Gade; Karen Maguire; Francis Makamu
  14. Empirical Hedging Performance on Long-dDted Crude Oil Derivatives By Benjamin Cheng; Christina Nikitopoulos-Sklibosios; Erik Schlogl
  15. Pro-Cyclical Petroleum Investments and Cost Overruns in Norway by Roy Endré Dahl, Sindre Lorentzen, Atle Oglend, and Petter Osmundsen. By Dahl, Roy Endre; Lorentzen, Sindre; Oglend, Atle; Osmundsen, Petter
  16. Fiscal Rules for Resource Windfall Allocation; The Case of Trinidad and Tobago By Keyra Primus
  17. From a rise in B to a fall in C? SVAR analysis of environmental impact of biofuels By Pavel Ciaian; d'Artis Kancs; Giuseppe Pirolix; Miroslava Rajcaniova
  18. -Environment, Imperfect Competition, and Trade: Insights for Optimal Policy in General Equilibrium By Rudy Colacicco
  19. Tradable emission permits: beyond pollution abatement motives By Maria Eugenia Sanin
  20. Complexity and the Economics of Climate Change : a survey and look forward. By T. BALINT; F. LAMPERTI; A. Mandel; A. Roventini Author-Workplace-Name : OFCE-Sciences Pp and SKEMA Businees School; A. Sapio Author-Workplace-Name : Parathenope Universtiy of Naples
  21. A Conceptual Framework for Integrated Economic-Environmental Modelling By Onil Banerjee; Martin Cicowiez; Mark Horridge; Renato Vargas
  22. Does environmental regulation create merger incentives? By Anna CRETI; María-Eugenia SANIN
  23. Does the Environment Kuznets Curve exist in Singapore? By Choon-Yin Sam
  24. Making the implicit explicit: A look inside the implicit discount rate By Joachim Schleich; Xavier Gassmann; Corinne Faure; Thomas Meissner
  25. Confronting Deep and Persistent Climate Uncertainty By Wagner, Gernot; Zeckhauser, Richard J.

  1. By: Paloma Taltavull de la Paz (University of Alicante); Francisco Juárez (University of Alicante); Paloma Monllor (University of Valencia)
    Abstract: The literature has traditionally approached fuel poverty as a result of poverty. Fuel poor are those households who cannot pay fuel bill and have to live in cold ambient, with grave effects on their health. As fuel poverty is actually considered in poverty’s analysis, there is little discussion about whether homeowners (who own housing wealth and, theoretically, cannot be poor) could suffer this problem. This paper assesses fuel poverty amongst Spanish households. It deeps on how poverty situations triggers fuel poverty in the context of housing and discusses whether or not housing tenure causes fuel poverty due to housing characteristics, those usually evaluated as poverty component. The paper finds empirical evidence about the relevance of tenancy when it comes to explain the likelihood of falling under the poverty line as well as about the fact that fuel poverty has become a systematic situation in all poor Spanish households regardless of their tenant status. Using micro-data obtained from the Quality of Life Survey (EU-SILC) for Spain, the data are segmented by residential tenure and household type, calculating poverty lines for homeowners, renters (both at market prices and below them), and free-rent housing ‒the four tenure formulas existing in the Spanish housing market‒ and including two variables to capture fuel poverty situations. A logistic regression model is applied and results suggest that fuel poverty clearly appears as an expression of poverty at any tenancy type.
    Keywords: Housing poverty, fuel poverty, Spain, tenancy types, homeownership, rental market
    JEL: Q43 R21 I32
    Date: 2016
  2. By: Emily Cox (Science Policy Research Unit, University of Sussex, UK); Phil Johnstone (Science Policy Research Unit, University of Sussex, UK); Andy Stirlng (Science Policy Research Unit, University of Sussex, UK)
    Abstract: The UK Government has long been planning to build up to 16 GWe of new nuclear power – a proportional level of support unparalleled in other liberalised energy markets. Despite many challenging developments, these general nuclear attachments show no sign of easing. With many viable alternative strategies for efficient, secure, low-carbon energy services, it is difficult to explain these commitments solely in terms of officially-declared policy rationales.
    Keywords: civil nuclear power; nuclear energy strategies; UK energy policy; nuclear weapons; nuclear-propelled submarines; incumbency; lock-in; renewable energy; technological discontinuation; sociotechnical transformation; theories of power; institutional theory; political science; science and technology studies
    Date: 2016–09
  3. By: Ahmadian, Peyman; Jalilzadeh, Afshin
    Abstract: In this paper, we present a top down strategy for renewable energy investment. The proposed approach is a three-step framework. By applying the approach, renewable energy global market leaders and trends will be identified and analyzed that included: (1) economics and renewable energy policy, (2) specific renewable energy sectors that presents the most attractive investment opportunity, (3) and finally the most promising renewable energy investment vehicles for investors. Other stakeholders can also use the developed framework, such as consumers and policymakers, to make socio-economic decisions and assess renewable energy investments. This paper presents an extensive review on various issues related to Integrated Renewable Energy System (IRES) based power generation. Issues related to integration configurations, storage options, sizing methodologies and system control for energy flow management are discussed in detail.
    Keywords: Renewable energy, Renewable energy policy, Renewable energy investment, integrated systems, Renewable energy resources, Renewable energy policies
    JEL: O1 O18
    Date: 2016–01–02
  4. By: Francisco Javier Eransus (Instituto Complutense de Análisis Económico (ICAE) – Facultad de Ciencias Económicas y Empresariales, Universidad Complutense de Madrid)
    Abstract: The aim of this paper is to suggest a simple methodology to be used by renewable power generators to bid in Spanish markets in order to minimize the cost of their imbalances. As it is known, the optimal bid depends on the probability distribution function of the energy to produce, of the probability distribution function of the future system imbalance and of its expected cost. We assume simple methods for estimating any of these parameters and, using actual data of 2014, we test the potential economic benefit for a wind generator from using our optimal bid instead of just the expected power generation. We find evidence that Spanish wind generators savings would be from 7% to 26%.
    Keywords: Power markets, Renewable energy, Uncertainty, Optimal bidding, Forecasting.
    JEL: C22 C44
    Date: 2016–02
  5. By: Renuka K. Ganegodage (School of Economics, The University of Queensland, St Lucia, Brisbane, Australia); Peyman Khezr (School of Economics, The University of Queensland, St Lucia, Brisbane, Australia); Rabindra Nepal (CDU Business School, Charles Darwin University, Darwin, Australia)
    Abstract: This paper investigates the effect of fossil-fired power plants on the value of neighborhood properties in the state of New South Wales, Australia. Fossil-fuels accounts for significant proportion of electricity generation in Australia. Thus, there are growing community concerns regarding the possible negative environmental effects of these power plants given the high level of emission produced by these plants. We use a comprehensive data with the exact location of each property to estimate the effect of an existing fossil-fuel power plant on the value of neighborhood properties. We use spatial econometric models to estimate these effects with controls over several characteristics of properties. Our results suggest that coal-fired power plants have significant negative effects on property values within a specific radius. These effects are less but still negative for gas and gas reciprocating power plants.
    Keywords: Fossil-fired; power plants; emissions; property price
    JEL: Q51 Q53 R11 R30
    Date: 2016–09–12
  6. By: Gerster, Andreas
    Abstract: In Germany, substantial drops in wholesale power prices have become a regular phenomenon. While such price drops have far-reaching implications for the functioning of the power market, their underlying determinants remain poorly understood. To fill this gap, we propose a Markov regime-switching model to investigate low-price events at the European Power Exchange. Our analysis focuses on the role of energy policies that promote renewable energies and have led to significant reductions of nuclear capacities after the Fukushima accident. We find that high electricity infeed from renewable sources increases negative price spike probabilities, while the decommissioning of nuclear plants under the Nuclear Moratorium had an opposing effect. Simulations of market outcomes under different energy policies indicate that reaching ambitious renewable energy targets increases the frequency of low-price events and compromises the financial viability of conventional generation units, while a nuclear phase-out or an increase in storage capacities mitigates these effects.
    Abstract: Im deutsch-österreichischen Marktgebiet der Strombörse European Power Exchange (EPEX) kam es in den letzten Jahren zu einem vermehrten Auftreten sehr niedriger und sogar negativer Preise. Obwohl solche negativen Preisspitzen weitreichende Folgen für das Funktionieren des Strommarkts haben, gibt es bislang nur wenige Untersuchungen zu ihren treibenden Ursachen. Um diese Lücke zu füllen, entwickelt dieser Artikel ein Markov Regime Switching-Modell zur Analyse ihres Auftretens an der EPEX. Im Mittelpunkt der Analyse stehen die Effekte einer Förderung erneuerbarer Energien und einer Reduktion von Kapazitäten nuklearer Kraftwerke im Rahmen des Atom-Moratoriums nach dem Unfall in Fukushima. Die Modellergebnisse zeigen auf, dass ein Anstieg von Strom aus erneuerbaren Quellen die Wahrscheinlichkeit von negativen Preisspitzen erhöht, während das Atom-Moratorium einen gegensätzlichen Effekt hatte. Weitere Simulationen von Marktergebnissen unter unterschiedlichen Politik-Szenarien legen nahe, dass das Erreichen ambitionierter Ziele für den Ausbau erneuerbarer Energien das Aufkommen von negativen Preisspitzen weiter fördern und die Rentabilität vieler konventioneller Kraftwerke in Frage stellen würde. Diese Effekte könnten allerdings sowohl durch einen vollständiger Atomausstieg oder einen Ausbau an Speicherkapazitäten abgemildert werden.
    Keywords: renewable energies,nuclear phase-out,day-ahead prices,regimeswitching models,price spikes
    JEL: C32 L94 Q40 Q41
    Date: 2016
  7. By: Daniel Daví Arderius (Cátedra de Sustentabilidad, Universidad de Barcelona); María-Eugenia Sanin (EPEE, Université d´Evry Val d´Essonne); Elisa Trujillo-Baute (University of Warrick)
    Abstract: Worldwide, countries are implementing policies to develop greener energy markets. In Europe, the ¨2030 Energy and Climate Package¨ asks for further reductions of GHG, renewable sources integration, and energy efficiency targets. These objectives may counterbalance each other modifying the electricity flows, and hence, affecting the electricity losses. Precisely, the extra amount of energy necessary to cover losses is the departure point from which we analyze the impact of losses on CO2 emissions. With this purpose we use Spanish market and system data with hourly frequency from 2011 to 2013. Our results show that electricity losses significantly explain CO2 emissions, with higher CO2 emissions when covering losses that those on the average system. Additionally, we find that the market closing technologies used to cover losses have positive and significant impacts on CO2 emissions: when polluting technologies (coal or combined cycle) close the market, the impact of losses on CO2 emissions is greater in comparison with the rest of technologies (CHP, renewables or hydropower). From these results we make some policy recommendations to reduce the impact of losses on CO2 emissions.
    Date: 2016
  8. By: Christoph Lakner (Poverty and Equity Global Practice - World Bank); Maria Ana Lugo (Poverty and Equity Global Practice - World Bank); Jorge Puig (CEDLAS - UNLP); Leandro Salinardi (CEDLAS - UNLP); Martha Viveros (Poverty and Equity Global Practice - World Bank)
    Abstract: More than a decade of energy and transport subsidies have weakened Argentina’s fiscal capacity. Following the 2001 crisis, public services tariffs were frozen in an attempt to offset the negative effects on households’ real purchasing power. However, these subsidies steadily increased over the years, particularly since 2006, becoming a significant fiscal burden. Though subsidies can be a tool to protect the poor, in Argentina they led to distortions and a large share have been absorbed by upper classes and non-residential consumers. This paper first analyzes the incidence of the 2014 system of residential federal subsidies to residential public services (defined as electricity, gas, water and transport) and then simulates the distributional impacts of alternative subsidy structures. Simulations on the electricity sector suggest that targeting consumption levels through a simple lifeline tariff is not sufficient to achieve a propoor incidence of subsidies. Instead, explicit targeting is necessary (though not sufficient) and needs to ensure comprehensive coverage of the poorest households. Similarly, on the transport sector show that the existing tariffs are not well-targeted, but that an expanded set of social programs could improve coverage of the poorest. Gas subsidy simulations showed that a social tariff would virtually eliminate the subsidy, suggesting that there is little overlap between the receipt of social programs and access to piped gas.
    Date: 2016–08
  9. By: Arturo L. Vásquez Cordano (GERENS Graduate School of Business and Osinergmin); Abdel M. Zellou (Clear Future Consulting)
    Abstract: There was an upward trend in energy commodity prices since 2000, but with the surge in supply coming from unconventional oil and gas resources in North and South America, the trend in natural gas prices has become downward in recent years. However, the exploitation of these resources is generating public concerns due to the possible adverse environmental impacts of using hydraulic fracturing and other techniques on underground water. The purpose of this paper is to address the following questions: are there super cycles in natural gas prices? What are the environmental consequences in Latin America of the exploitation of unconventional gas given the cyclical behavior of gas prices and how can governments implement environmental policies to regulate unconventional gas extraction? Three super cycles in natural gas prices are identified with the last peak occurring in 2006. Our analysis indicates that the instable political situation and institutional weakness, the governmental intervention through asset nationalization and state-owned oil companies, the lack of transparent investment rules, high capital expenditures to develop LNG export projects and the exploration of shale resources, as well as the pre-salt discoveries in Brazil make uncertain that the shale gas boom achieve a large impact in Latin America during the current gas price super cycle.
    Keywords: Super Cycles, Long Cycles, Exhaustible Resources, Natural Gas Prices, Environment, Shale Gas, Trend-Cycle Decomposition, Christiano-Fitzgerald Band-Pass Filter
    JEL: E32 L71 Q41 E37 L51 Q48 Q58
    Date: 2016–09
  10. By: Joana Chapa Cantú (Universidad Autónoma de Nuevo León); Javier Oyakawa Nakamoto (Universidad de Texas en San Antonio)
    Abstract: El estudio tiene como objetivo estimar los impactos económicos de algunos aspectos de la Reforma Energética de 2013 en el Noreste de México, particularmente los relacionados con los recursos de gas de esquisto (lutitas) o de “shale gas”. En específico, el reporte presenta estimaciones preliminares de los efectos de los nuevos proyectos de construcción y operación de gasoductos en la región Noreste. Para medir dichos impactos se construyeron matrices insumo-producto y de contabilidad social regionales. Para ello, se partió de las matrices nacionales del Instituto Nacional de Estadística y Geografía para el año 2012. Al análisis tradicional de insumo-producto se le ha añadido información de cuentas sociales que presentan las transacciones no sólo entre sectores industriales sino que además incluyen a instituciones como los hogares, las sociedades y los trabajadores por cuenta propia.
    Keywords: insumo-producto, matriz de contabilidad social, shale gas, impacto económico, México, reforma energética, gas de esquisto, gas de lutitas, economía regional, petróleo, gas natural
    JEL: C67 D57 E16 L71 L90 R10 R50
    Date: 2016–09
  11. By: William D. Larson (Federal Housing Finance Agency); Weihua Zhao (University of Lousiville)
    Abstract: We develop a model of a monocentric, oil-exporting city. The model predicts a "twist" (rotation combined with a level shift) of the house price gradient with an oil price change due to the combined producer price and transportation cost effects. Using ZIP code level house price indices between 1975 and 2015, we show the slope of the house price gradient steepens in all cities when the price of oil is high and flattens when the price of oil is low. Areas specialized in oil and gas-related industries have house price changes that are positively linked with the price of oil. These results are consistent with theoretical predictions, and they quantify the large and differential risks to house prices associated with oil price changes both within and across all cities.
    Keywords: transportation cost, gasoline price, industrial specialization, input-output model, economic base model
    JEL: R30 Q4
    Date: 2016–09
  12. By: Hilde C. Bjørnland (BI Norwegian Business School and Norges Bank (Central Bank of Norway)); Vegard H. Larsen (Norges Bank (Central Bank of Norway) and BI Norwegian Business School); Junior Maih (Norges Bank (Central Bank of Norway) and BI Norwegian Business School)
    Abstract: We analyze the role of oil price volatility in reducing U.S. macroeconomic instability. Using a Markov Switching Rational Expectation New-Keynesian model we revisit the timing of the Great Moderation and the sources of changes in the volatility of macroeconomic variables. We find that smaller or fewer oil price shocks did not play a major role in explaining the Great Moderation. Instead oil price shocks are recurrent sources of economic fluctuations. The most important factor reducing overall variability is a decline in the volatility of structural macroeconomic shocks. A change to a more responsive(hawkish) monetary policy regime also played a role.
    JEL: C11 E32 E42 Q43
    Date: 2016–09–06
  13. By: Mary N. Gade (Oklahoma State University); Karen Maguire (Oklahoma State Univeristy); Francis Makamu (Oklahoma State University)
    Abstract: Oklahoma assesses a production tax of seven percent on the extraction of oil, natural gas, and other minerals. However, since July 2002, it has taxed production from horizontal wells at only one percent for the first 48 months of production. This is a significant tax incentive relative to its neighboring states, Texas and Kansas, particularly considering the limited evidence as to the effectiveness of severance tax incentives for increasing in-state development of immobile resources. This paper empirically examines whether the severance tax incentive has encouraged horizontal development in Oklahoma relative to Texas and Kansas. Our findings indicate that the Oklahoma tax exemption has not had a significant influence on horizontal drilling.
    Keywords: Severance Tax, Oil and Natural Gas, Hydraulic Fracturing
    JEL: H71 H73 Q32 Q35 Q48
    Date: 2016–09
  14. By: Benjamin Cheng (Finance Discipline Group, UTS Business School, University of Technology, Sydney); Christina Nikitopoulos-Sklibosios (Finance Discipline Group, UTS Business School, University of Technology, Sydney); Erik Schlogl (Finance Discipline Group, UTS Business School, University of Technology Sydney)
    Abstract: This paper presents an empirical study on hedging long-dated crude oil futures options with forward price models incorporating stochastic interest rates and stochastic volatility. Several hedging schemes are considered including delta, gamma, vega and interest rate hedge. Factor hedging is applied to the proposed multi-dimensional models and the corresponding hedge ratios are estimated by using historical crude oil futures prices, crude oil option prices and Treasury yields. Hedge ratios from stochastic interest rate models consistently improve hedging performance over hedge ratios from deterministic interest rate models, an improvement that becomes more pronounced over periods with high interest rate volatility, such as during the GFC. An interest rate hedge consistently improves hedging beyond delta, gamma and vega hedging, especially when shorter maturity contracts are used to roll the hedge forward. Furthermore, when the market experiences high interest rate volatility and the hedge is subject to high basis risk, adding interest rate hedge to delta hedge provides an improvement, while adding gamma and/or vega to the delta hedge worsens performance.
    Keywords: Stochastic interest rates; Delta hedge; Interest rate hedge; Long-dated crude oil options
    JEL: C13 C60 G13 Q40
    Date: 2016–09–01
  15. By: Dahl, Roy Endre (UiS); Lorentzen, Sindre (UiS); Oglend, Atle (UiS); Osmundsen, Petter (UiS)
    Abstract: Development projects in the oil industry often have cost overruns. Through analysis of data from Norwegian development projects in the petroleum industry, this paper investigates the common effect of business cycle developments on cost overruns. Lack of capacity and expertise in a tight supplier market yield cost inflation and difficulties in managing projects. Unlike previous analyses of cost overruns, we analyse projects over a long time period to capture the cyclical effects. We document a statistically significant positive relationship between oil price developments and cost overruns, with shocks or surprises to the oil price during the project implementation having a larger impact on cost overruns than the oil price level itself. Cost overrun ultimately leads to reduced competitiveness for the industry, and we discuss consequences and policy implications for business and society of these cost overruns.
    Keywords: Cost overruns; petroleum projects; business cycle; oil price
    JEL: D22 D24 G31
    Date: 2016–09–15
  16. By: Keyra Primus
    Abstract: Managing resource revenues is a critical policy issue for small open resource-rich countries. This paper uses an open economy dynamic stochastic general equilibrium model to analyze the transmission of resource price shocks and a shock to resource production in the Trinidad and Tobago economy. It also applies alternative fiscal rules to determine the optimal allocation of resource windfalls between spending today and saving in a sovereign wealth fund. The results show that spending all the resource windfall on consumption and investment creates more volatility and amplifies Dutch disease effects, when compared to the case where all the excess revenues are saved. Also, neither a policy of full spending nor full saving of the surplus revenue inflows is optimal if the government is concerned about both household welfare and fiscal stability. In order to minimize deviations from both objectives, the optimal fiscal response suggests that a larger fraction of the resource windfalls should be saved.
    Date: 2016–09–16
  17. By: Pavel Ciaian; d'Artis Kancs; Giuseppe Pirolix; Miroslava Rajcaniova
    Abstract: This is the first paper that econometrically estimates the impact of rising Bioenergy production on global CO2 emissions. We apply a structural vector autoregression (SVAR) approach to time series from 1961 to 2009 with annual observation for the world biofuel production and global CO2 emissions. We find that in the medium- to long-run biofuels significantly reduce global CO2 emissions: the CO2 emission elasticities with respect to biofuels range between -0.57 and -0.80. In the short-run, however, biofuels may increase CO2 emissions temporarily. Our findings complement those of life-cycle assessment and simulation models. However, by employing a more holistic approach and obtaining more robust estimates of environmental impact of biofuels, our results are particularly valuable for policy makers.
    Keywords: SVAR, time-series econometrics, biofuels, C02 emissions, environment.
    JEL: C14 C22 C51 D58 Q11 Q13 Q42
    Date: 2015
  18. By: Rudy Colacicco (Department of Economics, Finance and Accounting, Maynooth University.)
    Abstract: I build a two-country general oligopolistic equilibrium model, in which sectors differ in emissions and technologies, and pollution can be transboundary. I derive the optimal bilateral environmental policy for the economy as a whole, for the cases in which the environmental damage either linearly or quadratically increases in total pollution. The analysis highlights that the optimal emission tax can even be negative, and bilateral trade liberalization should be matched with either a rise or a fall in the optimal emission tax. The moments of the emission distribution and technology distribution across sectors are fundamental to implement optimal environmental policies.
    Keywords: Cournot Competition; Environmental Policy; Emission Tax; General Oligopolistic Equilibrium (GOLE); Trade Liberalization; Transboundary Pollution
    JEL: F12 F13 F18 Q53 Q56 Q58
    Date: 2016
  19. By: Maria Eugenia Sanin (EPEE, Université d´Evry Val d´Essonne; Chaire Energie et Prospérité - École Polytechnique; Chaire European Electricity Markets - Dauphine Foundation.)
    Abstract: In this paper we study how the electricity market character- istics determines the choices made by electricity generators in the U.S. market for SO2 allowances. Counterparts can be cho- sen among three alternatives: market makers, brokers or another generator. We find that the SO2 allowances market is de facto regionalized due to the regionalization of the electricity market. The national dimension only appears when there are local im- balances in the electricity market that give strong incentives to search for a better price outside of the region. Additionally, we identify the influence of the regulatory framework, i.e. the divi- sion in phases and the chosen allowance surrender date. Finally, we show that the previous results are robust to Enron's abnormal behavior during 2000-2001 and its posterior bankruptcy.
    Keywords: radable emission permits, counterpart choice, acid rain market
    JEL: D22 D40 D62 L50 L94 Q58
    Date: 2015
  20. By: T. BALINT (Université Paris I, Panthéon -Sorbonne and CNRS); F. LAMPERTI (Université Paris I Panthéon - Sorbonne and CNRS Institute of Economic and LEM, Scuola Superiore Sant'Anna); A. Mandel (Université Paris1, Panthéon-Sorbonne and CNRS PSE Paris School of Economics Author-Name : M. Napoletano Author-Workplace-Name : OFCE Sciences PO and SKEMA Business School); A. Roventini Author-Workplace-Name : OFCE-Sciences Pp and SKEMA Businees School; A. Sapio Author-Workplace-Name : Parathenope Universtiy of Naples
    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) di usion 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
    JEL: C63 Q40 Q50
    Date: 2016–07
  21. By: Onil Banerjee (Inter-American Development Bank); Martin Cicowiez (UNLP - FCE); Mark Horridge (Victoria University); Renato Vargas (World Bank)
    Abstract: Economy-wide models such as Computable General Equilibrium (CGE) Models are powerful tools that provide insights on policy impacts on standard economic indicators. With the recent publication of the System of Environmental-Economic Accounts (SEEA), the power of this approach is amplified. This paper addresses an important gap in economy-wide policy modelling applications and literature by developing a conceptual framework for the integration of the SEEA in the CGE framework, enabling for the first time the analysis of policy impacts on the economy and the environment in a quantitative, comprehensive and consistent framework. Previous integrated modelling efforts have generally focused on the interaction between the economy and one environmental resource in isolation, requiring significant data reconciliation. Integration of SEEA into a CGE circumvents this resource intense process, enhancing analytical power, obviating the need for strong assumptions in reconciling economic-environmental data, reducing start-up costs, and increasing the timeliness of evidence-based policy advice.
    Date: 2016–09
  22. By: Anna CRETI (Dauphine University and Ecole Polytechnique); María-Eugenia SANIN (EPEE, Evry-Val-d'Esssone University and Ecole Polytechnique)
    Abstract: This paper studies merger incentives for polluting Cournot firms under a competitive tradable emission permits market. Such setting is relevant to assess the observed mergers between power generators in the Regional Greenhause Gas Initiative (RGGI) allowing us to derive policy recommendations. We find that when firms are symmetric and marginal costs are constant, an horizontal merger that generates efficiency gains is welfare enhancing, but efficiency gains must be high enough with respect to the case without permits markets for the merger to take place. Secondly, the presence of a competitive (or monopolistic) outside market that also trades in the permits market makes profitable a merger that would not happen otherwise. When firms are vertically related in an input-output chain, an horizontal merger in one of the markets increases profits in that market and in the other market due to the decrease in permits price. Finally we consider an oligopoly-fringe model in which firms differ both in their marginal costs of production and in their pollution intensity. A merger between the oligopolistic firms decreases permits price and is always profitable as opposed to the symmetric Cournot case in which there is a critical size for profitability.
    Keywords: mergers, environmental externality, tradable emission permits, social welfare, Cournot competition
    JEL: L13 L41 Q51
    Date: 2016
  23. By: Choon-Yin Sam (PSB Academy, Singapore)
    Abstract: The Environment Kuznets Curve (EKC) shows that there exists an inverted 'U' relationship between indicators of environmental degradation and economic growth. This means that environmental degradation first increases (worsens), and then decreases as per capita income increases. The hypothesis is tested for the case of Singapore. The paper finds that Granger causality flows from export performance, trade intensity and energy consumption to CO 2 emission, and the EKC exists in the long run, but not in the short run.
    Keywords: environment, Singapore
    Date: 2016–08–10
  24. By: Joachim Schleich (Fraunhofer ISI - Fraunhofer Institute for Systems and Innovation Research - Fraunhofer Institute for Systems and Innovation Research, MTS - Management Technologique et Strategique - Grenoble École de Management (GEM)); Xavier Gassmann (MKT - Marketing - Grenoble École de Management (GEM)); Corinne Faure (MKT - Marketing - Grenoble École de Management (GEM)); Thomas Meissner (TECHNICAL UNIVERSITY OF BERLIN, MKT - Marketing - Grenoble École de Management (GEM))
    Abstract: Implicit discount rates (IDRs) are employed in energy models to capture household investment decisions, yet the factors behind the IDR and their respective implications for policy-making usually remain blurred and fractional. The proposed comprehensive framework distinguishes three broad categories of factors underlying the IDR for household adoption of energy-efficient technologies (EETs): preferences (notably over time, risk, loss, debt, and the environment), predictable (ir)rational behavior (bounded rationality, rational inattention, behavioral biases), and external barriers to energy efficiency. Existing empirical findings suggest that the factors underlying the IDRs that differ across household characteristics and technologies should be accounted for in energy models. Furthermore, the framework allows for a fresh look at the interplay of IDRs and policies. We argue that a simple observation of high IDRs (or observing correlations between IDRs and socio-economic characteristics) does not provide guidance for policy-making since the underlying sources cannot be identified. Instead, we propose that some of the factors underlying the IDR - notably external barriers - can be changed (through directed policy interventions) whereas other factors - notably preferences and predictable (ir)rational behavior - are innate and can only be taken into account (through reactive policy interventions).
    Keywords: Energy efficiency, Energy modeling, Implicit discount rate, Energy policy, Behavioral economics
    Date: 2016–10
  25. By: Wagner, Gernot (Harvard University); Zeckhauser, Richard J. (Harvard University)
    Abstract: Deep-seated, persistent uncertainty is a pernicious feature of climate change. One key parameter, equilibrium climate sensitivity, has eluded almost all attempts at pinning it down more precisely than a 'likely' range that has stalled at 1.5-4.5 degrees C for over thirty-five years. The marginal damages due to temperature increase rise rapidly. Thus, uncertainty in climate sensitivity significantly raises the expected costs of climate change above what they would be if the temperature increases were known to be close to a mean value 3.0 degrees C. The costs of this uncertainty are compounded given that the distribution of possible temperature changes is strongly skewed toward higher values.
    JEL: D81 Q54
    Date: 2016–08

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