nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒10‒30
thirty-two papers chosen by
Roger Fouquet
London School of Economics

  1. Quantification of the Energy Efficiency Gap in the Swedish Residential Sector By Eoin Ó Broin; Érika Mata; Jonas Nässén; Filip Johnsson
  2. What makes consumers adopt to innovative energy services in the energy market? By Anna Kowalska-Pyzalska
  3. The influence of price and non-price effects on demand for heating in the EU residential sector By Eoin Ó Broin; Jonas Nässén; Filip Johnsson
  4. Notes on the Economics of Energy Storage By Geoffrey Heal
  5. Harvesting Solar Power in India By Gulati, Ashok; Manchanda, Stuti; Kacker, Rakesh
  6. Rice husk gasification for electricity generation in Cambodia in December 2014 By Hong Nam Nguyen; Minh Ha-Duong
  7. Are South African consumers arm-chair environmentalists? Implications for renewable energy By Nomsa Phindile Nkosi; Johane Dikgang
  8. Energy recovery from domestic and agro-waste streams in Uganda: a socioeconomic assessment By Gebrezgabher, Solomie; Amewu, Sena; Taron, Avinandan; Otoo, Miriam
  9. Pathways toward Zero-Carbon Electricity Required for Climate Stabilization By Richard Audoly; Adrien Vogt-Schilb; Céline Guivarch
  10. On the Role of Maximum Demand Charges in the Presence of Distributed Generation Resources By Brown, David P.; Sappington, David E. M.
  11. Market Power and Heterogeneous Pass-through in German Electricity Retail By Tomaso Duso; Florian Szücs
  12. A Comparison of Various Electricity Tariff Price Forecasting Techniques in Turkey and Identifying the Impact of Time Series Periods By T. O. Benli
  13. Economic Growth, Financial Development, Urbanization and Electricity Consumption Nexus in UAE By SBIA, Rashid; Shahbaz, Muhammad; Ozturk, Ilhan
  14. China as a Potential Partner for Latin American Electricity Projects By Thomas Rawski
  15. Impact of Demand Response Participation in Energy, Reserve and Capacity Markets By Nolan, Sheila; Devine, Mel; Lynch, Muireann; O'Malley, Mark
  16. Co2 content of electricity losses By Daniel Daví-Arderius; María-Eugenia Sanin; Elisa Trujillo-Baute
  17. Intangible capital and sectoral energy intensity: Evidence from 40 economies By Shenglang Yang;
  18. Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain By Steve Gibbons; Stephan Heblich; Esther Lho; Christopher Timmins
  19. On the link between current account and oil price fluctuation in diversified economies: The case of Canada. By Blaise Gnimassoun; Marc Joëts; Tovonony Razafindrabe
  20. Oil price and economic growth: a long story? By María Dolores Gadea; Ana Gómez-Loscos; Antonio Montañés
  21. The Historical “Roots” of U.S. Energy Price Shocks: Supplemental Results By Huntington, Hillard
  22. Business cycles in an oil economy: Lessons from Norway By Drago Bergholt; Vegard Høghaug Larsen
  23. On the link between current account and oil price fluctuations in diversified economies: The case of Canada By Blaise Gnimassoun; Marc Joëts; Tovonony Razafindrabe
  24. Cost performance on the Norwegian continental shelf By Lorentzen, Sindre; Osmundsen, Petter
  25. Technological innovation systems for biorefineries – A review of the literature By Bauer, Fredric; Coenen, Lars; Hansen, Teis; McCormick, Kes; Palgan, Yuliya Voytenko
  26. Effects of Stricter Environmental Regulations on Resource Development By Ian Lange; Michael Redlinger
  27. Which Factors Influence Investments of Ukrainian Agroholdings in Biogas? By Romets, Dmytro; Menrad, Klaus
  28. The Effect of Air Pollution on Investor Behavior: Evidence from the S&P 500 By Anthony Heyes; Matthew Neidell; Soodeh Saberian
  29. National climate policies in times of the European Union Emissions Trading System (EU ETS) By Burmeister, Johannes; Peterson, Sonja
  30. The causal factors of international inequality in CO2 emissions per capita: A regression-based inequality decomposition analysis By Duro Moreno, Juan Antonio; Teixidó Figueras, Jordi; Padilla, Emilio
  31. Financial development and environmental quality: The way forward By Shahbaz, Muhammad; Shahzad, Syed Jawad Hussain; Ahmad, Nawaz; Alam, Shaista
  32. Corporate Carbon Emission and Financial Performance: Does Carbon Disclosure Mediate the Relationship in the UK? By Yang Stephanie Liu; Xiaoyan Zhou; Jessica Yang; Andreas Hoepner

  1. By: Eoin Ó Broin (CIRED - Centre International de Recherche sur l'Environnement et le Développement - ENGREF - Ecole Nationale du Génie Rural, des Eaux et des Forêts - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, Chalmers University of Technology [Gothenburg]); Érika Mata (Chalmers University of Technology [Gothenburg]); Jonas Nässén (Chalmers University of Technology [Gothenburg]); Filip Johnsson (Chalmers University of Technology [Gothenburg])
    Abstract: We present a method for quantifying the energy efficiency gap ex-ante. To do this we define the energy efficiency gap as being the difference between the ex-ante market and techno-economic energy savings potentials. The estimation of market potential is based on top-down (econometric) modelling of energy demand using data from the period 1970–2005. The techno-economic estimates are made using a bottom-up building stock model (ECCABS), to assess the effects and cost-efficiency of various energy efficiency measures. Common to these two modelling approaches are two scenarios of energy prices, which differ only with respect to the carbon tax component. We implement the method for the case of useful energy demand for space and water heating in the Swedish residential sector up to 2030. In comparison to the level of energy use in 2005 (74 TWh), the top-down model predicts for 2030 reductions in demand for the two price scenarios of 17 TWh and 21 TWh, respectively. The bottom-up model predicts corresponding reductions in demand of 25 TWh and 31 TWh, respectively. Thus, there is an energy efficiency gap between the two models of at least 8 TWh in 2030. An implicit discount rate of 10% would render the results from the bottom-up modelling identical to those from the top-down modelling. However the presence of the energy efficiency gap indicates that there is a need for enhanced policies in order to make future reductions in energy demand reach the levels predicted by the bottom-up modelling.
    Keywords: Residential,Top-down,Heating,Ex-ante,Energy efficiency gap,Bottom-up
    Date: 2015–10–26
  2. By: Anna Kowalska-Pyzalska
    Abstract: The paper discusses the incentives and barriers of the successful adoption of the innovative energy services in the energy market. The literature review of the outcomes from field experiments and research surveys is enhanced by the results from a pilot study regarding willingness to pay for green energy and by an agent-based model of diffusion of innovative dynamic electricity tariffs. It was found out that to achieve large market penetration rates of the innovative energy services, the consumers must be aware of them. They must be also supported by the access to reliable information and advice to limit their confusion of choice. The perceived difficulty of adoption should be reduced to encourage consumers to get interested in the energy services. Also the distribution channels of the innovation, namely social influence in the consumers' social networks and advertisement in mass-media should be effectively used to boost the diffusion. The great attention should be put on the negative word of mouth, which may limit or even stop the diffusion of innovation.
    Keywords: Diffusion of innovation; Incentives and barriers of adoption; Energy market; Willingness to pay; Agent-based modeling and simulation
    JEL: C63 O33 Q48 Q55
    Date: 2016–10–19
  3. By: Eoin Ó Broin (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, Chalmers University of Technology [Gothenburg]); Jonas Nässén (Chalmers University of Technology [Gothenburg]); Filip Johnsson (Chalmers University of Technology [Gothenburg])
    Abstract: This paper models energy demand for space and water heating from 1970 to 2005 in the residential sector of four EU countries (France, Italy, Sweden, and UK) using index decomposition, ARDL econometric models and cointegration analysis. The partial and temporal influences on energy demand in each country of the number of households, floor area per household (m2) and unit consumption for space and water heating (kWh/m2/year) are disaggregated. The long-run price elasticity of demand at the unit consumption level is found to be low (around -0.25 over the four countries) while the long-run income elasticity of floor area per household is found to be around 0.25 for Italy, Sweden and the UK but insignificant for France. In an exercise using the model to estimate demand to 2050 under annual increases in energy prices of between 0% and 3% it is found that non-price effects such as building codes and autonomous technical progress (represented in the model as a time trend) are equally or more important than the price effect in reducing demand. Thus achieving significant reductions in EU residential sector energy demand by 2050 would require additional non-price policies and measures for success.
    Keywords: Heating,Residential,Scenarios,Price and non-price effects
    Date: 2015–10–22
  4. By: Geoffrey Heal
    Abstract: The increasing importance of intermittent renewable energy sources suggests a growing importance for energy storage as a way of smoothing the variable output. In this paper I investigate factors affecting the amount of energy storage needed, including the degree of intermittency and the correlations between wind and solar power outputs at different locations.
    JEL: Q4 Q53
    Date: 2016–10
  5. By: Gulati, Ashok; Manchanda, Stuti; Kacker, Rakesh
    Abstract: Prime Minister Narendra Modi has set an ambitious target of 100,000 MW of solar power capacity to be achieved by 2022, when India celebrates 75 years of her independence. This is a grand vision for ushering in a sort of revolution in clean energy in India in the next six years. In a country that generates more than 60 percent of its power by burning coal, and where air quality is fast worsening in several Indian cities, the need for clean energy cannot be overstated. Interestingly, Prime Minister Modi has also set another ambitious target of doubling farmers' incomes by 2022! The uppermost question in everyone's mind is: can these targets be achieved by 2022? This is particularly so when the current solar power capacity in the country has just touched 8000 MW by July end, 2016, and no country in the world has such an ambitious target as India has set out for 2022. On farmers' real incomes, the compound annual growth rate (CAGR) in the recent past (FY2003 to FY 2013) has been mere 3.5 percent; and doubling these incomes by 2022 would mean increasing this CAGR from 3.5 percent to more than 12 percent. Despite these stunningly ambitious targets, our take in this paper is that a significant progress can be made towards achievement of both of these goals, provided both are conceived and implemented in unison, a sort of marrying each other, with innovative policies- like the guaranteed feed-in-tariffs (FIT) for solar power generated on farmers' fields- to back this alliance. It should not be a difficult proposition as FIT already exists in case of wind energy, the scale of which is much more (27 GW) than that of solar power (8GW). Since the costs of solar power have come down drastically during the last couple of years, and now compete very well with the costs of power generation from burning coal, this would help generate clean energy in a cost effective manner as well as help augment farmers' real incomes. A true model of competitiveness with inclusiveness, and this can be scaled up in a sustainable manner. This will also help to reduce power subsidies of state electricity boards (SEBs), wherever solar power can substitute existing connections. Our confidence in approaching these twin goals comes from the rapidly falling costs of solar power (by about 70percent since 2010-11) and its champion support, which comes from the highest political level, i.e., the Prime Minister himself, and no opposition from any other political parties for such a bold initiative. The only thing to be seen is how to raise advance capital funds to get this going, how to organize farmers on these lines, how to convince the discoms for guaranteed feed-in-tariffs, and how long it is persevered till the goals are reached! In undertaking such gigantic twin missions, it is always wise to look for best practices and technologies around the world. Japan, China, UK, Israel all offer interesting examples, but the global leader in solar power today is Germany. And it has a lot to offer India, with a win-win collaboration between business to business (B2B) on both sides as well as government to government (G2G) Memorandum of Understanding (MOU) to facilitate transfer of technologies, skills, training and practices, and above all some long term finances. Such an Indo-German alliance for solar power can be a catalyst of change not only generating clean energy but also building green Indian agri-value chains and directly augmenting farmers' incomes. This will be a global showcase of competiveness with inclusiveness and the time to take up this idea and scale it up is NOW!
    Keywords: Solar Power, Agriculture, Feed-in-Tariffs, India, Farmer Income, Agricultural and Food Policy, Industrial Organization, Land Economics/Use, L94, Q180, Q150,
    Date: 2016–09
  6. By: Hong Nam Nguyen (CleanED - Clean Energy and Sustainable Development Lab - USTH - Université des Sciences et des Technologies de Hanoi); Minh Ha-Duong (CleanED - Clean Energy and Sustainable Development Lab - USTH - Université des Sciences et des Technologies de Hanoi, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Rice husks are the indigestible coatings of grains of rice. They are produced in large quantities by the rice milling industry, more than 1 million ton per year in Cambodia. In recent years, Cambodian enterprises have installed gasifiers, which burn rice husks to generate electricity. This is a two stage process: the biomass is first fed into a gasifier which produces syngas and ashes, then the syngas is cleaned and burned into an engine where it saves diesel fuel. Many of these enterprises have been in local communities currently without electricity or in fuel poverty. To learn more about the benefits and drawbacks of using rice-husk gasifiers, and to study about the sustainability challenges for deploying these technologies, the Clean energy and sustainable development lab (CleanED lab) of the University of Science and Technology of Hanoi (USTH), and the SNV Netherlands Development Organisation (SNV) have conducted a visit of several rice mills and rural electricity enterprises from 18 th to 22nd December 2014. Five rice mills and a rural electricity enterprise in Battambang, Siem Reap and Kampong Thom provinces were selected for the field survey. In addition with desk research, semi-structured interviews with gasifier users, with the representatives of Canadia Bank PLC and the Federation of Cambodian Rice Millers Association (FCRMA) during the field surveys were also conducted. This report present and justifies the main conclusions of the visit.
    Keywords: gasification,bioenergy,rice husk,cambodia
    Date: 2014–12–24
  7. By: Nomsa Phindile Nkosi; Johane Dikgang
    Abstract: Discussions between policymakers about renewable energy have gained momentum in recent years, amid growing recognition of the need for more investment in green energy sources. The question is whether households in developing countries like South Africa will support green energy actions if it comes at an additional cost or whether they are simply arm-chair environmentalist. To assess this, we use the contingency valuation method (CVM) to identify the determinants of support for renewable energy. It is vital that households’ determinants of the additional cost burden associated with renewable energy are assessed, in an effort to win public acceptance of the introduction of renewable energy. The US$966 willingness to pay (WTP) for renewable energy represents a significant premium over generation costs, and signals social acceptance of renewable energy. Most importantly, given the wide degree of heterogeneity in WTP models, a clear message to policymakers and stakeholders is that they need to do more to communicate the economic and environmental benefits associated with renewable energy.
    Keywords: bivariate probit, renewable energy, willingness to pa
    JEL: Q20 Q40 Q50
    Date: 2016–10
  8. By: Gebrezgabher, Solomie; Amewu, Sena; Taron, Avinandan; Otoo, Miriam
    Abstract: Recovering energy from waste offers dual benefits – a) improved waste management, and b) provision of reliable energy to households, institutions and commercial entities. In this report, we present a socioeconomic assessment of three energy business models (briquette manufacturing, on-site (public toilet) energy generation, and agro-waste electricity generation) based on feasibility studies carried out in the city of Kampala, Uganda. We assess the potential economic, environmental and social impacts of waste-to-energy business models taking into consideration a life cycle of emissions to provide decision makers with the overall costs and benefits of the models to society versus a business-as-usual scenario.
    Keywords: Resource recovery, Water reuse, Energy generation, Business management, Models, Socioeconomic environment, Environmental impact assessment, Economic analysis, Fuels, Fuelwood, Agriculture, Residues, Transport, Briquettes, Social impact, Gasification, Biogas, Greenhouse gases, Methane, Emission, Benefits, Household wastes, Electricity generation, Sanitation, Excreta, Waste management, Wastewater, Farmers, Public health, Rivers, Uganda, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Farm Management, Health Economics and Policy, Production Economics,
    Date: 2016
  9. By: Richard Audoly (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique); Adrien Vogt-Schilb (The World Bank - The World Bank, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique); Céline Guivarch (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper covers three policy-relevant aspects of the carbon content of elec-tricity that are well established among integrated assessment models but under-discussed in the policy debate. First, climate stabilization at any level from 2 • C to 3 • C requires electricity to be almost carbon-free by the end of the century. As such, the question for policy makers is not whether to decarbonize electricity but when to do it. Second, decarbonization of electricity is still possible and required if some of the key zero-carbon technologies — such as nuclear power or carbon capture and storage — turn out to be unavailable. Third, progres-sive decarbonization of electricity is part of every country's cost-effective means of contributing to climate stabilization. In addition, this paper provides cost-effective pathways of the carbon content of electricity — computed from the results of AMPERE, a recent integrated assessment model comparison study. These pathways may be used to benchmark existing decarbonization targets, such as those set by the European Energy Roadmap or the Clean Power Plan in the United States, or inform new policies in other countries. These pathways can also be used to assess the desirable uptake rates of electrification technolo-gies, such as electric and plug-in hybrid vehicles, electric stoves and heat pumps, or industrial electric furnaces.
    Keywords: climate change mitigation,life cycle assessment,power supply,carbon intensity JEL: Q01,Q4,Q54,Q56
    Date: 2014–11–03
  10. By: Brown, David P. (University of Alberta, Department of Economics); Sappington, David E. M. (University of Florida, Department of Economics)
    Abstract: We examine the role that maximum demand charges (MDCs) can play in avoiding the death spiral that some utilities may otherwise face as the distributed generation (DG) of electricity proliferates. We find that MDCs generally secure gains for consumers that do not undertake DG, and often secure gains for consumers that undertake DG. However, the welfare gains tend to be modest in plausible settings. Furthermore, time-of-use pricing often secures larger welfare gains than do MDCs.
    Keywords: maximum demand charges; distributed generation; time-of-use prices; electricity regulation
    JEL: D47 L50 L94 Q40
    Date: 2016–10–17
  11. By: Tomaso Duso; Florian Szücs
    Abstract: We analyze the pass-through of cost changes to retail tariffs in the German electricity market over the 2007 to 2014 period. We find an average pass-through rate of around 60%, which significantly varies with demand factors: while the pass-through rate to baseline tariffs, where firms have higher market power, is only 50%, it increases to 70% in the competitive segment of the market. Although the pass-through rate of independent firms is significantly higher than that of other firms in the competitive market segment, the extent of supply-side heterogeneity is limited. Thus, the firms’ ability to exercise market power appears to be constrained by competition and largely determined by demand side factors. Finally, we find that the pass-through rate in the competitive market segment has been approaching unity over the past years, indicating a rise in competitive pressure.
    Keywords: Electricity retail, pass-through, Germany
    JEL: C23 D22 D43 L13 L94 Q41
    Date: 2016
  12. By: T. O. Benli
    Abstract: It is very vital for suppliers and distributors to predict the deregulated electricity prices for creating their bidding strategies in the competitive market area. Pre requirement of succeeding in this field, accurate and suitable electricity tariff price forecasting tools are needed. In the presence of effective forecasting tools, taking the decisions of production, merchandising, maintenance and investment with the aim of maximizing the profits and benefits can be successively and effectively done. According to the electricity demand, there are four various electricity tariffs pricing in Turkey; monochromic, day, peak and night. The objective is find the best suitable tool for predicting the four pricing periods of electricity and produce short term forecasts (one year ahead-monthly). Our approach based on finding the best model, which ensures the smallest forecasting error measurements of: MAPE, MAD and MSD. We conduct a comparison of various forecasting approaches in total accounts for nine teen, at least all of those have different aspects of methodology. Our beginning step was doing forecasts for the year 2015. We validated and analyzed the performance of our best model and made comparisons to see how well the historical values of 2015 and forecasted data for that specific period matched. Results show that given the time-series data, the recommended models provided good forecasts. Second part of practice, we also include the year 2015, and compute all the models with the time series of January 2011 to December 2015. Again by choosing the best appropriate forecasting model, we conducted the forecast process and also analyze the impact of enhancing of time series periods (January 2007 to December 2015) to model that we used for forecasting process.
    Date: 2016–08
  13. By: SBIA, Rashid; Shahbaz, Muhammad; Ozturk, Ilhan
    Abstract: This study aims to explore the relationship between economic growth, urbanization, financial development and electricity consumption in United Arab Emirates for 1975-2011 period. ARDL bounds testing approach is employed to examine long run relationship between the variables in the presence of structural breaks. The VECM Granger causality is applied to investigate the direction of causal relationship between the variables. Our empirical exercise validated the cointegration between the series in case of United Arab Emirates. Further, results reveal that inverted U-shaped relationship is found between economic growth and electricity consumption. Financial development adds in electricity consumption. The relationship between urbanization and electricity consumption is also inverted U-shaped. This implies that urbanization increases electricity consumption initially and after a threshold level of urbanization, electricity demand falls. The causality analysis finds feedback hypothesis between economic growth and electricity consumption i.e. economic growth and electricity consumption are interdependent. The bidirectional causality is found between financial development and electricity consumption. Economic growth and urbanization Granger cause each other. The feedback hypothesis is also found between urbanization and financial development, financial development and economic growth and same is true for electricity consumption and urbanization.
    Keywords: Economic growth, urbanization, electricity consumption, financial development
    JEL: C5
    Date: 2016–10–10
  14. By: Thomas Rawski
    Abstract: As Chinese firms ramp up participation in Latin American electricity infrastructure projects, this brief study reviews the strengths and possible shortcomings of Chinese electricity firms. Large state-controlled generation, grid and nuclear firms have made big contributions to the recent transformation of China’s power sector, which has delivered huge expansion, technological upgrading, increased reliability, universal service and many other benefits. Excess capacity throughout China’s electricity supply chain arising from an unexpected demand slowdown provides a powerful incentive to pursue international marketing opportunities. Beijing’s “go outward†campaign assures financial and policy backing for overseas investment initiatives. Potential difficulties include Chinese firms’ lack of experience with the regulatory complexity and public controversy that often surrounds Latin American infrastructure projects as well as the tendency of Chinese equipment makers to deliver products that incorporate what Chinese specialists describe as “small defects.â€
    Date: 2016–01
  15. By: Nolan, Sheila; Devine, Mel; Lynch, Muireann; O'Malley, Mark
    Abstract: Demand response is capable of providing multiple services, including energy and reserve. As a consequence of providing energy, demand response is also inherently contributing to generation adequacy, and thus may be in entitled to avail of revenue from a capacity remuneration mechanism. Participation in multiple markets may result in a trade-off, thus necessitating simultaneous optimization of the demand response provision of such services. This paper uses Mixed Complementarity Problems to investigate these trade-offs and resulting market outcomes in the presence of load-shifting demand response. An approach to approximate the capacity value of the demand response resource, thereby permitting its participation in the capacity market, is also presented. It is found that, for the case study examined here, that demand response has its most significant impact on the energy market, with marginal and negligible impacts on the capacity and reserve market, respectively. The results also suggest that considerable cost savings are attainable by the DR aggregator through participation in the energy market, but that significant further cost savings are not forthcoming through participation in the reserve or capacity market.
    Keywords: Demand Response, Load-Shifting, Mixed Complementarity Problem, Markets, Reserve, Capacity
    JEL: C60 Q40
    Date: 2016–10–20
  16. By: Daniel Daví-Arderius (University of Barcelone & Chair of Energy Sustainability, IEB); María-Eugenia Sanin (Université d´Evry Val d´Essonne & Ecole Polytechnique); Elisa Trujillo-Baute (University of Warrick & Chair of Energy Sustainability, IEB)
    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.
    Keywords: Electricity losses; CO2 Emissions; Electricity markets; Renewable energy
    JEL: L11 Q40 Q50 Q54
  17. By: Shenglang Yang;
    Abstract: Intangible capital has been found to be an increasingly important source of productivity and economic growth. However, its effects on energy intensity have received little attention. Given the importance of reducing energy intensity, this study tests the relationship between sectoral intangible capital and sectoral energy intensity in 40 economies from 1995 to 2007 using data from World Input Output Database (WIOD). It is found that the increase in sectoral intangible capital is associated with the decline in sectoral energy intensity. The results remain robust given various forms of econometric specification (OLS, random effects, fixed effects and system GMM). Compared with previous literature, this study proposes a simple theoretical linkage between sectoral intangible capital and sectoral energy intensity, and for the first time confirms this relationship worldwide. This study also provides policies implications in promoting intangible investment and the knowledge economy.
    Keywords: Intangible capital, Energy intensity, Sectoral level, World Input Output Database
    JEL: Q40 Q57 O33 O50
    Date: 2016–10
  18. By: Steve Gibbons; Stephan Heblich; Esther Lho; Christopher Timmins
    Abstract: Shale gas has grown to become a major new source of energy in countries around the globe. While its importance for energy supply is well recognized, there has also been public concern over potential risks - such as damage to buildings and contamination of water supplies - caused by geological disturbance from the hydraulic fracturing ('fracking') extraction process. Although commercial development has not yet taken place in the UK, licenses for drilling were issued in 2008 implying potential future development. This paper examines whether public fears about fracking are evident in changes in house prices in areas that have been licensed for shale gas exploration. Our estimates suggest differentiated effects. Licensing did not affect house prices but fracking the first well in 2011, which caused two minor earthquakes, did. We find a 2.7-4.1 percent house price decrease in the area where the earthquakes occurred. Robustness checks confirm our findings.
    Keywords: shale gas, fracturing, property valuation, housing prices, consumer expectation, hedonic price, United Kingdom
    JEL: Q5 Q42 Q51
    Date: 2016–10
  19. By: Blaise Gnimassoun; Marc Joëts; Tovonony Razafindrabe
    Abstract: This study revisits the important link between oil prices and current account for oil exporting countries by paying particular attention to the time-varying nature of this link. To this end, we rely on an innovative method, the time-varying parameter vector autoregressive (TVP-VAR) model with sign restriction. We find that while an oil supply shock has a non-significant impact on the current account, an oil demand shock has a positive and significant impact, which tends to increase over time. In addition, by studying the economic factors underlying the evolution of this relation, we find that although the propensity to spend oil revenues on imports has a significant negative influence on the pass-through of oil demand shocks on current account, a deepening of the domestic financial market and an accumulation of foreign exchange reserves have a significant positive effect.
    Keywords: Curent account, Oil prices, Time-varying parameters.
    JEL: F32 Q43 C32
    Date: 2016
  20. By: María Dolores Gadea (UNIVERSITY OF ZARAGOZA); Ana Gómez-Loscos (Banco de España); Antonio Montañés (UNIVERSITY OF ZARAGOZA)
    Abstract: This study investigates changes in the relationship between oil prices and the US economy from a long-term perspective. Although neither of the two series (oil price and GDP growth rates) presents structural breaks in mean, we identify different volatility periods in both of them, separately. From a multivariate perspective, we do not observe a significant effect between changes in oil prices and GDP growth when considering the full period. However, we find a significant relationship in some subperiods by carrying out a rolling analysis and by investigating the presence of structural breaks in the multivariate framework. Finally, we obtain evidence, by means of a time-varying VAR, that the impact of the oil price shock on GDP growth has declined over time. We also observe that the negative effect is greater at the time of large oil price increases, supporting previous evidence of nonlinearity in the relationship.
    Keywords: oil price, business cycle, structural breaks
    JEL: C22 C32 E32 Q43
    Date: 2016–10
  21. By: Huntington, Hillard
    Abstract: Sustained energy price increases in the United States have preceded declines in economic activity as far back as 1890. This finding applies to two different historical GDP data sets. It suggests a much longer national experience with rising energy prices that began well before the period after World War Two. This problem emerged well before the US transition towards petroleum products when coal was an important energy source. This relationship varies with the state of the economy and appears less evident during some periods, as in the years following the 1929 stock market crash.
    Keywords: economic history, supply shocks, energy and the economy
    JEL: N51 N71 O51 Q43
    Date: 2016–05
  22. By: Drago Bergholt (Norges Bank (Central Bank of Norway)); Vegard Høghaug Larsen (Norges Bank (Central Bank of Norway))
    Abstract: The recent oil price fall has created concern among policy makers regarding the consequences of terms of trade shocks for resource-rich countries. This concern is not a minor one – the world's commodity exporters combined are responsible for 15–20% of global value added. We estimate a two-country New Keynesian model in order to quantify the importance of oil price shocks for Norway – a large, prototype petroleum exporter. Domestic supply chains link mainland (non-oil) Norway to the off-shore oil industry, while fiscal authorities accumulate income in a sovereign wealth fund. Oil prices and the international business cycle are jointly determined abroad. These features allow us to disentangle the structural sources of oil price fluctuations, and how they affect mainland Norway. The estimated model provides three important results: First, pass-through from oil prices to the oil exporter implies up to 20% higher business cycle volatility. Second, the majority of spillover effects stem from non-oil disturbances such as innovations in international investment efficiency. Conventional oil market shocks, in contrast, explain at most 10% of the Norwegian business cycle. Third, the prevailing fiscal regime provides substantial protection against external shocks while domestic supply linkages make the oil exporter more exposed.
    Date: 2016–10–20
  23. By: Blaise Gnimassoun; Marc Joëts; Tovonony Razafindrabe
    Abstract: This study revisits the important relationship between oil prices and current account for oil exporting countries by paying particular attention to the time-varying nature of this link. To this end, we rely on an innovative method, the time-varying parameter vector autoregressive (TVP-VAR) model with sign restriction. We find that while an oil supply shock has non-significant impact on the current account, an oil demand shock has a positive and significant effect, which tends to increase over time. In addition, by studying the economic factors underlying the evolution of this relation, we show that the propensity to spend oil revenues on imports has a significant negative infuence on the pass-through of oil demand shocks on current account. However, a deepening of the domestic financial market and an accumulation of foreign exchange reserves have a significant positive effect on this relationship.
    Keywords: Current account, Oil prices, Time-varying parameters.
    JEL: F32 Q43 C32
    Date: 2016
  24. By: Lorentzen, Sindre (UiS); Osmundsen, Petter (UiS)
    Abstract: The oil and gas sector plays a crucial role in the Norwegian economy. It accounts for a very large proportion of gross domestic product, government revenues, investment and exports. A sharp fall in oil prices has had a significant impact on the economy and focused great attention on the cost side of the sector. Enhancing cost efficiency and curbing cost overruns now top the agenda. It is not difficult to find examples of projects suffering extensive cost overruns. What factors underlie these overruns? Media coverage might easily give the impression that Norway’s oil and gas sector is suffering from a lack of ability and competence to plan and execute projects to budget. Is this reputation deserved? Does the oil sector perform more poorly in Norway than in other producer nations? Can we see learning effects? How do the Norwegian and the international oil industry compare with other industries with respect to cost performance?
    Keywords: cost overrun; petroleum industry; experience; comparison
    JEL: D22 D24 G31
    Date: 2016–10–17
  25. By: Bauer, Fredric (Department of Chemical Engineering, Lund University); Coenen, Lars (CIRCLE, Lund University); Hansen, Teis (Department of Human Geography, Lund University); McCormick, Kes (IIIEE, Lund University); Palgan, Yuliya Voytenko (IIIEE, Lund University)
    Abstract: The concept of a bioeconomy can be understood as an economy where the basic building blocks for materials, chemicals and energy are derived from renewable biological resources. Biorefineries are considered an integral part of the development towards a future sustainable bioeconomy. The purpose of this literature review is to synthesize current knowledge about how biorefinery technologies are being developed, deployed, and diffused, and to identify actors, networks and institutions relevant for these processes. A number of key findings can be obtained from the literature. First, investing more resources in R&D will not help to enable biorefineries to cross the ‘valley of death’ towards greater commercial investments. Second, while the importance and need for entrepreneurship and the engagement of small and medium-sized enterprises (SMEs) is generally acknowledged, there is no agreement how to facilitate conditions for entrepreneurs and SMEs to enter into the field of biorefineries. Third, visions for biorefinery technologies and products have focused very much on biofuels and bioenergy with legislation and regulation playing an instrumental role in creating a market for these products. But there is a clear need to incentivize non-energy products to encourage investments in biorefineries. Finally, policy support for biorefinery developments and products are heavily intertwined with wider discussions around legitimacy and social acceptance.
    Keywords: bioeconomy; biorefineries; biorefinery technology; technological innovation systems
    JEL: L73 O33 Q23 Q55
    Date: 2016–10–19
  26. By: Ian Lange (Division of Economics and Business, Colorado School of Mines); Michael Redlinger (Department of Natural Resources, State of Alaska)
    Abstract: As technology and our ability to alter the natural world expand, it may lead to change in the level or type of externalities that economic activity places on society. This may prompt changes in the laws and regulations governing activity to limit the new externalities. While new regulations will change the distribution of rents around, welfare is impacted if the regulations alter the pace of economic activity. This analysis seeks to understand whether changes in oil and gas regulation brought about by the shale revolution have restricted the pace of drilling and production. This hypothesis is tested using data on North Dakota and Montana both before and after North Dakota increased the level of bonding required to operate in the state as well as stricter rules on waste disposal. Using regression discontinuity and difference-in-differences methods, results generally find that the new regulations had no statistical impact on the pace of drilling and production. While the average impact of the regulations on production was statistically indistinguishable from zero, it is found that smaller operators reduced their production and larger operators increased theirs. These results are instructive for policymakers who weigh the loss of economic welfare against improved environmental quality when deciding on new regulations.
    Keywords: Oil and Gas Regulation, Shale Oil, Drilling, Firm Exit
    JEL: L51 L71 Q35 Q53
    Date: 2016–10
  27. By: Romets, Dmytro; Menrad, Klaus
    Abstract: Investments in biogas technologies are regarded with increasing interest as an effective instrument for natural gas substitution, accelerating the recovery from the recent financial crisis in Ukraine. Yet, despite economic, environmental and social advantages of biogas and regulations implemented to support it, biogas investments remain below expectations. Therefore, it is necessary to understand the investment behaviour of Ukrainian agricultural companies regarding biogas and their reactions to the support measures. This paper aims to empirically analyse the willingness-to-invest in biogas of large Ukrainian agroholdings. Top-managers of 68 agroholdings in Ukraine were interviewed personally. We proposed and tested a conceptual model that examines the institutional and individual factors affecting the investment behaviour of agricultural companies in the context of biogas. Our findings reveal that, confirming a rational evaluation of investment opportunities, primarily financial factors affect the willingness-to-invest in biogas in Ukraine. The investment behaviour of interviewed companies is mainly influenced by payback period, investment costs and subjective perception of relative advantages of biogas. Furthermore, other decision relevant parameters like feed-in tariff and natural gas price seem to play only minor roles. However, there are systemic problems which hamper biogas investments, such as lack of capital, geopolitical uncertainty and non-reliable legislative framework for biogas production. Our results shed new light on impact of institutional and individual factors on biogas investments in the agricultural sector of Ukraine and have meaningful implications for policy actions.
    Keywords: Investment behaviour, agricultural sector, biogas technologies, Agribusiness, Farm Management,
    Date: 2016–09–20
  28. By: Anthony Heyes; Matthew Neidell; Soodeh Saberian
    Abstract: We provide detailed empirical evidence of a direct effect of air pollution on the efficient operation of the New York Stock Exchange, linking short-term variations in fine particulate matter (PM2.5) in Manhattan to movements in the S&P 500. The effects are substantial – a one standard deviation increases in ambient PM2.5 reduces same-day returns by 11.9% in our preferred specification – and remarkably robust to a variety of specifications and a battery of robustness and falsification checks. Furthermore, the intra-day effects that we observe are difficult to reconcile with competing hypotheses. Despite investors being dispersed geographically we find strong evidence that the effect is strictly local in nature, consistent with the high concentration of market influencers in New York. While we are agnostic as to the underlying mechanism, we provide evidence suggestive of the role of decreased risk tolerance operating through pollution-induced changes in mood or cognitive function.
    JEL: G02 J24 Q53
    Date: 2016–10
  29. By: Burmeister, Johannes; Peterson, Sonja
    Abstract: Given that the carbon price in the EU Emissions Trading System is only around 5€/tCO2 while consensus about a more stringent EU climate policy is very unlikely in the near future, we explore the potential scope and optimal design of additional national climate policies in the current EU policy framework. In particular, we suggest to implement a type of carbon price floor in the national EU ETS sectors that either allows for i) shifting emissions to non-ETS sectors like housing and transport or ii) retiring EU-wide emission allowances. In a simple theoretical framework with two countries and two sectors, we show that these two policy options are efficient up to a certain carbon price threshold. Moreover, efficiency is the highest at an optimal carbon price level equaling a weighted sum of the price differentials between ETS and non-ETS sectors. In order to determine the empirical relevance, we conduct a numerical partial equilibrium analysis of the EU carbon market in 2020. We find that Germany shows the highest potential to reduce EU-wide inefficiencies. With a price floor of 36€/tCO2 in 2020, Germany could reduce national climate policy costs by 13% if emissions are shifted from the ETS to non-ETS sectors. If they are willing to take on additional costs by retiring emission allowances, they are able to reduce EU ETS emissions by 1.6%.
    Keywords: Climate policy,EU Emission Trading System,Overlapping regulation,Carbon price floors,Abatement costs
    JEL: Q58 H21 H23 D58
    Date: 2016
  30. By: Duro Moreno, Juan Antonio; Teixidó Figueras, Jordi; Padilla, Emilio
    Abstract: This paper uses the possibilities provided by the regression-based inequality decomposition (Fields, 2003) to explore the contribution of different explanatory factors to international inequality in CO2 emissions per capita. In contrast to previous emissions inequality decompositions, which were based on identity relationships (Duro and Padilla, 2006), this methodology does not impose any a priori specific relationship. Thus, it allows an assessment of the contribution to inequality of different relevant variables. In short, the paper appraises the relative contributions of affluence, sectoral composition, demographic factors and climate. The analysis is applied to selected years of the period 1993–2007. The results show the important (though decreasing) share of the contribution of demographic factors, as well as a significant contribution of affluence and sectoral composition. JEL classification: C19; D39; Q43. Keywords: CO2 emissions, international emissions inequality, regression-based decomposition.
    Keywords: Models economètrics, Distribució (Teoria econòmica), Energia -- Aspectes econòmics, 33 - Economia, 504 - Ciències del medi ambient,
    Date: 2016
  31. By: Shahbaz, Muhammad; Shahzad, Syed Jawad Hussain; Ahmad, Nawaz; Alam, Shaista
    Abstract: The present paper re-examines the asymmetric impact of financial development on environmental quality in Pakistan for the period 1985Q1 to 2014Q4. A comprehensive index of financial development is generated using Bank- and Stock market-based financial development indicators. The results show that inefficient use of energy adversely affects the environmental quality. This suggests adoption of energy efficient technology at both production and consumption levels. These technologies would be helpful to improve environmental quality, enhance the productivity in long-run and save energy. Bank-based financial development also impedes the environment. The government should encourage lenders to ease the funding for energy sector and allocate financial resources for environment friendly businesses rather than wasting them in consumer financing.
    Keywords: Financial development, Growth, Energy, CO2 emissions
    JEL: C1
    Date: 2016–10–07
  32. By: Yang Stephanie Liu (Keele Management School, Keele University); Xiaoyan Zhou (ICMA Centre, Henley Business School, University of Reading); Jessica Yang (Henley Business School, University of Reading); Andreas Hoepner (ICMA Centre, Henley Business School, University of Reading)
    Abstract: Academic debate relating to the link between corporate environmental disclosures, environmental performance and financial performance is persistent and controversial. In this paper, we investigate whether and if so, how, carbon emission performance is related to corporate financial performance and how disclosures of carbon emission in the annual and standalone reports mediate such relationship. Specifically, we construct a 42-item disclosure index to quantify the quality of corporate carbon emission information of 62 FTSE 100 companies from the period of 2010 to 2012. We find that while carbon emission is negatively associated with financial performance, it is positively related to the level of carbon disclosures which is significantly and positively related to financial performance. The findings show that market responses to excessive carbon emission; however, companies with poor carbon performance tend to use disclosure strategically to manage the legitimacy threat and to reduce the information asymmetry.
    Keywords: carbon emission, carbon disclosure, financial performance, firm value, mediation analysis
    Date: 2016–06

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