nep-ene New Economics Papers
on Energy Economics
Issue of 2016‒12‒11
fifty-one papers chosen by
Roger Fouquet
London School of Economics

  1. Long-run estimates of interfuel and interfactor elasticities By Ma, Chunbo; Stern, David I.
  2. Measuring Plant Level Energy Efficiency and Technical Change in the U.S. Metal-Based Durable Manufacturing Sector Using Stochastic Frontier Analysis By Gale Boyd; Jonathan M. Lee
  3. Causality between energy, carbon, and economic growth: empirical evidence from the European Union By Janda, Karel; Torkhani, Marouan
  4. Does Carbon Tax Makes Sense? Assessing Global Scenario and Addressing Indian Perspective By Mohana Mondal; Zareena Begum Irfan; Sunder Ramaswamy
  5. What drives carbon dioxide emissions in the long-run? Evidence from selected South Asian Countries By Ahmed, Khalid; Ur Rehman, Mujeeb; Ozturk, Ilhan
  6. Charging Ahead: Prepaid Electricity Metering in South Africa By B. Kelsey Jack; Grant Smith
  7. Brown coal exit: a market mechanism for regulated closure of highly emissions intensive power stations By Jotzo, Frank; Mazouz, Salim
  8. Efficiency or Equity? Simulating the Carbon Emission Permits Trading Schemes in China Based on an Inter-Regional CGE Model By Wu, Libo; Tang, Weiqi
  9. Economic growth and particulate pollution concentrations in China By Stern, David I.; Zha, Donglan
  10. Determinants of Energy and CO2 Emission Intensities: A Study of Manufacturing Firms in India By Santosh K. Sahu; Deepanjali Mehta
  11. The environmental Kuznets curve after 25 years By Stern, David I.
  12. Product Homogeneity, Knowledge Spillovers, and Innovation: Why Energy Sector is Perplexed by a Slow Pace of Technological Progress By Jin, Wei; Zhang, ZhongXiang
  13. Gain and loss of money in a choice experiment. The impact of financial loss aversion and risk preferences on willingness to pay to avoid renewable energy extarnalities. By Anna Bartczak; Susan Chilton; Mikołaj Czajkowski; Jürgen Meyerhoff
  14. Energy, carbon, and economic growth: Brief literature review By Janda, Karel; Torkhani, Marouan
  15. Does Daylight Saving Save Energy? A Meta-Analysis By Tomas Havranek; Zuzana Irsova; Dominik Herman
  16. Intermediate input linkage and carbon leakage By Zhang, Zengkai; Zhang, ZhongXiang
  17. Evaluating the Role of Electricity Storage by Considering Short-Term Operation in Long-Term Planning By Tom Brijs; Arne van Stiphout; Sauleh Siddiqui; Ronnie Belmans
  18. Overview of Czech and German Renewable Energy Policies By Janda, Karel; Tyuleubekov, Sabyrzhan
  19. Market power rents and climate change mitigation: a rationale for coal taxes? By Richter, Phillip M.; Mendelevitch, Roman; Jotzo, Frank
  20. Empirical evidence on renewable electricity, greenhouse gas emissions and feed-in tariffs in Czech Republic and Germany By Janda, Karel; Tyuleubekov, Sabyrzhan
  21. Using Income Contingent Loans for the Financing of the Next Million Australian Solar Rooftops By Baldwin, K.G.H.; Chapman, Bruce; Raya, Umbu
  22. Climate policy decisions under uncertainty By Clarke, Harry
  23. Levelling the playing field: On the missing role of network externality in designing renewable energy technology deployment policies By Jin, Wei; Zhang, ZhongXiang
  24. Robust Consumption and Energy Decisions By Anderson, Evan W.; Brock, William; Sanstad, Alan H.
  25. Natural cycles and pollution By Stefano Bosi; David Desmarchelier
  26. Drivers of Industrial and Non-Industrial Greenhouse Gas Emissions By Sanchez, Luis F.; Stern, David I.
  27. Fracking: the boost to US manufacturing By Rabah Arezki; Thiemo Fetzer; Frank Pisch
  28. ‘Climate value at risk’ of global financial assets By Simon Dietz; Alex Bowen; Charlie Dixon; Philip Gradwell
  29. Carbon Emissions Trading in China: The Evolution from Pilots to a Nationwide Scheme By Zhang, ZhongXiang
  30. Do all oil price shocks have the same impact? Evidence from the Euro Area By Evgenidis, Anastasios
  31. Macroeconomics and the Nexus between Energy and Agricultural Commodities Prices By Weaver, R. D.; Tian, Jiachuan
  32. In brief... Fear of fracking: the impact on UK house prices By Stephen Gibbons; Stephan Heblich; Esther Lho; Christopher Timmins
  33. Optimal tariffs and firm technology choice: An environmental approach By Steffen, Nico
  34. Is the price elasticity of demand for coal in China increasing? By Burke, Paul J.; Liao, Hua
  35. Modeling the Emissions-Income Relationship Using Long-Run Growth Rates By Anjum, Zeba; Burke, Paul J.; Gerlagh, Reyer; Stern, David I.
  36. Biogas3: Sustainable and Economical Production of Biogas from Food Waste of European Agrifood Industry By Berruto, Remigio; Boero, Valter; Busato, Patrizia; Calvo, Angela; Sopegno, Alessandro; Venudo, Lorenzo; Rossi, Daniele; Gomez, Paz; Ruiz, Begoña; Kachniarz, Małgorzata
  37. China’s pursuit of environmentally sustainable development: Harnessing the new engine of technological innovation By Jin, Wei; Zhang, ZhongXiang
  38. Environmental Kuznets Curve in Bulgaria By Kalchev, Georgi
  39. Driving forces of different productivity models By Halkos, George; Bampatsou, Christina
  40. Economic growth and global particulate pollution concentrations By Stern, David I.; van Dijk, Jeremy
  41. A climate treaty without the US Congress: Using executive powers to overcome the ‘Ratification Straitjacket’ By Kemp, Luke
  42. Splitting the difference: can limited coordination achieve a fair distribution of the global climate financing effort? By Pickering, Jonathan; Jotzo, Frank; Wood, Peter J.
  43. The Nordic Model and the Oil Nation By Roberto Iacono
  44. Making China the transition to a low-carbon economy: Key challenges and responses By Zhang, ZhongXiang
  45. Corrective Policy and Goodhart's Law: The Case of Carbon Emissions from Automobiles By Reynaert, Mathias; Sallee, James M.
  46. Green Premium, Ecolabel, and Environmental Damage By Aditi Sengupta
  47. The rebound in oil prices: OPEC “fine tuning” in question By Yves Jégourel
  48. Population Growth and Carbon Emissions By Casey, Gregory; Galor, Oded
  49. Pollution and City Size: Can Cities be Too Small? By Rainald BORCK; TABUCHI Takatoshi
  51. Are China’s climate commitments in a post-Paris agreement sufficiently ambitious? By Zhang, ZhongXiang

  1. By: Ma, Chunbo; Stern, David I.
    Abstract: Meta-analyses of interfuel and capital-energy elasticities of substitution show that elasticity estimates are dependent on the type of data – time series, panel, or crosssection – and the estimators used. Econometric theory suggests that the between estimator might generate the best estimates of long-run elasticities but no existing estimates of elasticities of substitution have used it. Alternatively, Chirinko et al. argued in favor of estimating long-run elasticities of substitution using a long-run difference estimator. We provide estimates of China’s interfuel and interfactor elasticities of substitution using the between and long-run difference estimators. To address potential omitted variables bias, we add province level inefficiency and national technological change terms to our regression model. The results show that demand for coal and electricity in China is very inelastic, while demand for diesel and gasoline is elastic. With the exception of gasoline and diesel, there are limited substitution possibilities among the fuels. Substitution possibilities are greater between energy and labor than between energy and capital. The results are quite different to some previous studies for China but coincide well with the patterns found in meta-analyses for long-run estimates of elasticities of substitution.
    Keywords: Energy, substitution, elasticity, demand, China, Demand and Price Analysis, Resource /Energy Economics and Policy, D24, Q40,
    Date: 2016–01
  2. By: Gale Boyd; Jonathan M. Lee
    Abstract: This study analyzes the electric and thermal energy efficiency for five different metal-based durable manufacturing industries in the United States from 1987-2012 at the 3 digit North American Industry Classification System (NAICS) level. Using confidential plant-level data on energy use and production from the quinquennial U.S. Economic Census, a stochastic frontier regression analysis (SFA) is applied in six repeated cross sections for each five year census. The SFA controls for energy prices and climate-driven energy demand (heating degree days - HDD - and cooling degree days - CDD) due to differences in plant level locations, as well as 6-digit NAICS industry effects. A Malmquist index is used to decompose aggregate plant technical change in energy use into indices of efficiency and frontier (best practice) change. Own energy price elasticities range from -.7 to -1.0, with electricity tending to have slightly higher elasticity than fuel. Mean efficiency estimates (100 percent equals best practice level) range from a low of 32 percent (thermal 334 - Computer and Electronic Products) to a high of 86 percent (electricity 332 - Fabricated Metal Products). Electric efficiency is consistently better than thermal efficiency for all NAICS. There is no clear pattern to the decomposition of aggregate technical Thermal change. In some years efficiency improvement dominates; in other years aggregate technical change is driven by improvement in best practice.
    Date: 2016–01
  3. By: Janda, Karel; Torkhani, Marouan
    Abstract: This paper examines the relationship between energy consumption and economic growth and between energy consumption and greenhouse emissions for the EU countries, using time series data from 1996 to 2012 within a multivariate framework for 26 EU countries. The energy sources considered are oil consumption, natural gas consumptions, and renewable energies including biomass as a distinct part. Unit Root Tests, cointegration test, Pairwise Granger causality tests, and Error Correction Model are employed to find out the type of the causal relationship. We find out that there is in the short run, a positive unidirectional causal relationship running from oil consumption to economic growth. There is also a positive bidirectional causal relationship between renewable energies and economic growth and between greenhouse emissions and economic growth. However, there is also an unexpected negative bidirectional causal relationship between biomass consumption and gas consumption. From the greenhouse emissions perspective, we can see in the short run, a negative bidirectional causal relationship between greenhouse emissions and renewable energies, and a positive unidirectional causal relationship running from both oil consumption and biomass consumption to greenhouse emissions.
    Keywords: Economic growth, energy consumption, oil consumption, natural gas, renewable energies, biomass
    JEL: Q28 Q42 Q43
    Date: 2016–12–05
  4. By: Mohana Mondal (Joint Director, National Institute of Labour Economics Research and Development (NILERD), NITI Aayog, Govt. of India.); Zareena Begum Irfan (Madras School of Economics); Sunder Ramaswamy (Madras School of Economics)
    Abstract: Carbon taxes have been frequently advocated as a cost-effective instrument for reducing emissions. However, in the practice of environmental policies, only few countries have implemented taxes based on the carbon content of the energy products. Current circumstances of climate science may permit a reconsideration of direction for existing policy efforts related to global warming issues. This paper presents a plan that provides an achievable path toward a global policy on Green House Gas (GHG) emissions. At the heart of it is a small carbon tax (actually a GHG tax). The proceeds of that tax are to be used strategically to provide stable, long term support of a broad based research and development effort focused on energy sources, energy use, and emission mitigation. Hence, the aim of framing a concept note is to compare the carbon taxation system across nations. The scenario prevailing in different countries is examined and addressed for the Indian structure. Carbon taxes with regard to their competitiveness, distributional and environmental impacts. The evidence shows that carbon taxes may be an interesting policy option and that their main negative impacts may be compensated through the design of the tax and the use of the generated fiscal revenues.
    Keywords: Pollution, Pollution Control, Carbon tax, India, Environmental Impact, GHG tax, Air Pollution, Ecotax, Environmental Regulation Classification-JEL: O330, O380, Q520, Q530, Q560, Q580
    Date: 2016–03
  5. By: Ahmed, Khalid; Ur Rehman, Mujeeb; Ozturk, Ilhan
    Abstract: This study empirically investigates the relationship between CO2 emission and four of its potentially contributing factors (i.e., energy consumption, income, trade openness and population) using time series data from 1971-2013 on five selected economies of South Asia. After confirming that all the series are stationary using unit root test process, the study incorporates three different and advance panel cointegration tests i.e. Pedroni- Kao- and Johansen-Fisher-panel cointegration. All the panel cointegration tests confirm that all the variables cointegrated. The long-run association between the variables is checked using FMOLS-grouped and individual cross-section country in the panel. The FMOLS grouped results show that energy consumption, trade openness and population increases environmental degradation in the panel countries with exception of income which has negative impact and sounds the existence of Environmental Kuznet curve between income and emission. The innovative accounting approach using variance decomposition test and impulse response function is applied to examine the causality amongst the underlined vectors. The results show that there is bidirectional causality between energy consumption and trade openness and uni-directional causality running from energy consumption, trade openness and population to CO2 emission. The results enumerate that the energy consumption and population density will increase in long-run and foresee further environmental degradation in the region.
    Keywords: Carbon dioxide emissions; energy consumption; income; trade openness; population growth
    JEL: Q4 Q43 Q5 Q56 Q57
    Date: 2016–01–10
  6. By: B. Kelsey Jack; Grant Smith
    Abstract: The standard approach to recovering the cost of electricity provision is to bill customers monthly for past consumption. If unable to pay, customers face disconnection, the utility loses revenue, and the service provision model is undermined. A possible solution to this problem is prepaid metering, in which customers buy electricity upfront and use it until the prepaid amount is consumed. We use data from Cape Town, South Africa to examine the effects of prepaid electricity metering on residential consumption and returns to the electric utility. Over 4,000 customers on monthly billing were involuntarily assigned to receive a prepaid electricity meter, with exogenous variation in the timing of the meter replacement. Electricity use falls by about 13 percent as a result of the switch, a decrease that persists for the following year. This creates a tradeoff for the utility: revenue from consumption falls but more of it is recovered on time and at a lower cost. The benefits to the electric utility outweigh the costs, on average, though results are very heterogeneous. Poorer customers and those with a history of delinquent payment behavior show the greatest improvement in profitability when switched to a prepaid meter. These findings point to an important role for metering technologies in expanding energy access for the poor.
    JEL: H2 L94 O13 Q41
    Date: 2016–12
  7. By: Jotzo, Frank; Mazouz, Salim
    Abstract: In this paper we propose a market mechanism for regulated exit of highly emissions intensive power stations from the electricity grid. The starting point is that there is surplus capacity in coal fired power generation in Australia. In the absence of a carbon price signal, black coal generation capacity may leave the market instead of high emitting brown coal power stations. We lay out options for a mechanism of regulated power station closure using a market mechanism. Plants bid competitively over the payment they require for closure, the regulator chooses the most cost effective bid, and payment for closure is made by the remaining power stations in proportion to their carbon dioxide emissions. This could overcome adverse incentive effects for plants to stay in operation in anticipation of payment for closure and solve the political difficulties and problems of information asymmetry that plague government payments for closure and direct regulation for exit. We explore the issues theoretically and provide empirical illustrations. These suggest that closure of a brown coal fired power station in Australia could yield emissions savings at costs that are lower than the social benefits. The analysis in this paper is applicable to other countries.
    Keywords: Greenhouse gas emissions, electricity, brown coal, early retirement, regulation, market mechanism, contract for closure., Marketing, Resource /Energy Economics and Policy, Q48, Q58,
    Date: 2015–11
  8. By: Wu, Libo; Tang, Weiqi
    Abstract: Energy conservation and greenhouse gas (GHG) abatement have been included in the national development strategy of China. However, the rigidity in command-and-control mechanisms and arbitrariness in assignment of GHG abatement burden across regions have caused unnecessary losses in both economic efficiency and social equity. In this paper, we use an Inter-Regional Dynamic CGE (IRD-CGE) model to simulate economic and welfare impacts of climate policies on national and regional level, including carbon intensity targets, regional emission constraints and cap-and-trade mechanism. Comparison among alternative emission reduction policy mechanisms indicates that emission trading scheme can not only moderate the economic and social welfare losses, but also improve social equity by decoupling the allocation of emission permits from economic optimization of emission reduction scheme. From this perspective, emissions trading bridges the concerns for economic efficiency and social equity, since emission permits could be reallocated as an income transfer so as to promote inter-regional equity, while economic efficiency is maintained.
    Keywords: Greenhouse gas emissions, energy conservation, emission reduction, pollution, cap-and-trade mechanism, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q54, Q56,
    Date: 2015–05
  9. By: Stern, David I.; Zha, Donglan
    Abstract: Though the environmental Kuznets curve (EKC) was originally developed to model the ambient concentrations of pollutants, most subsequent applications have focused on pollution emissions. Yet, it seems more likely that economic growth could eventually reduce the concentrations of local pollutants than emissions. We examine the role of income, convergence, and time related factors in explaining recent changes in PM 2.5 and PM 10 particulate pollution in 50 Chinese cities using new measures of ambient air quality that the Chinese government has published only since the beginning of 2013. We use a recently developed model that relates the rate of change of pollution to the growth of the economy and other factors as well as the traditional environmental Kuznets curve model. Pollution fell sharply from 2013 to 2014. We show that economic growth, convergence, and time effects all served to lower the level of pollution. The results also demonstrate the relationship between the two modeling approaches.
    Keywords: Air pollution, economic growth, environmental Kuznets curve, China, Environmental Economics and Policy, O44, P28, Q53, Q56,
    Date: 2016–02
  10. By: Santosh K. Sahu (Madras School of Economics); Deepanjali Mehta (Madras School of Economics)
    Abstract: This paper investigates the determinants of energy and emission intensities of manufacturing firms in India, from 2000 to 2014. Given that Indian manufacturing sector is one of the world’s most polluting sectors in terms of CO2 emissions; we arrive at firm level determinants of energy and carbon dioxide emission intensities from consumption of three primary sources of energy, namely (1) Coal, (2) Natural Gas and (3) Petroleum. Based on the methodological argument by Barrows and Olliviery (2014), we employ two different definitions in calculating energy intensity and relate with firm characteristics. Data for this study is collected from Prowess 4.0. The results of the regression analysis suggest that there are inter-firm differences in energy and emission intensity. Given that the emission coefficients are derived from the bottom-up approach, firms that are energy intensives are also found to be emission intensives. The results of the study indicate that smaller and larger firms are both energy and emission intensives compared to the medium sized firms. Similarly, firms spending more in research and development activities are found to be energy and emission efficient compare to others. Hence, in the global competitive business environment, Government of India should carefully formulate policies suitable for the medium sized firms to make them energy and emission efficient.
    Keywords: Energy Consumption, CO2 Emission, Indian Manufacturing Industries Classification-JEL: Q4, B23
    Date: 2015–08
  11. By: Stern, David I.
    Abstract: The environmental Kuznets curve (EKC) has been the dominant approach among economists to modeling aggregate pollution emissions and ambient pollution concentrations over the last quarter century. Despite this, the EKC was criticized almost from the start and decomposition approaches have been more popular in other disciplines working on global climate change. More recently, convergence approaches to modeling emissions have become popular. This paper reviews the history of the EKC and alternative approaches. Applying an approach that synthesizes the EKC and convergence approaches, I show that convergence is important for explaining both pollution emissions and concentrations. On the other hand, while economic growth has had a monotonic positive effect on carbon and sulfur emissions, the EKC holds for concentrations of particulates. Negative time effects are important for sulfur emissions. The EKC seems to be most useful for modeling the ambient concentrations of pollutants it was originally applied to.
    Keywords: Air pollution, economic growth, environmental Kuznets curve, convergence, climate change, Environmental Economics and Policy, Q53, Q56,
    Date: 2015–12
  12. By: Jin, Wei; Zhang, ZhongXiang
    Abstract: There is a growing body of literature mentioning the slow pace of energy technological progress as compared to other technologies like information technology (IT), but the reasons why energy sector is perplexed by slow innovation remain unexplained. Based on a variety-expanding endogenous technological change model, this paper provides a rigorous economic exposition of the mechanism that underlies the slow progress of energy technological innovation. We show that in decentralized market equilibrium the growth rate of energy technology variety is lower than that of IT variety. This stems from both market fundamentals where the homogeneity of end-use energy goods is less likely to harness the pecuniary externality embedded in the household’s love-for-variety preference, and technology fundamentals where the capital-intensiveness of energy technology inhibits the non-pecuniary technological externality due to knowledge spillovers. We further show that a social planner solution can promote energy technological progress, yet still cannot achieve an outcome in which energy technology variety grows faster than IT variety. By targeting subsidies on energy technology R&D and the use of intermediate primary energy inputs by secondary energy producers, the decentralized market equilibrium can achieve an outcome in which energy technology grows faster than IT.
    Keywords: Energy Technological Innovation, Product Homogeneity, Knowledge Spillovers, Love-for-variety Effect, Research and Development/Tech Change/Emerging Technologies, Teaching/Communication/Extension/Profession, Q55, Q58, Q41, Q43, Q48, O31,
  13. By: Anna Bartczak (Faculty of Economic Sciences, University of Warsaw; Warsaw Ecological Economics Center); Susan Chilton (Newcastle University Business School); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Jürgen Meyerhoff (Institute for Landscape and Environmental Planning, Technische Universität Berlin)
    Abstract: We examine how the direction of price changes affects the value people place on avoiding renewable energy externalities in Poland. Additionally, we investigate the influence of individuals’ financial loss aversion and financial risk preferences on this valuation. In our study we conduct a choice experiment survey in which respondents’ choices indicate the value they place on avoiding wind, solar, and biomass externalities. We combine this survey with a financial lottery choice task that elicits the respondents’ risk preferences and degree of loss aversion. In the choice experiment we use both increases and decreases in electricity bills to depict the uncertain effect of new sources of energy generation on the current price level. This design allows us to investigate if obtained values are independent of the payment mechanism. In the analyzed context, our results indicate that marginal utility of money seems to be lower with a rebate on the energy bill than with a surcharge. Moreover, financial risk preferences affect people’s choices in a case of a surcharge, while loss aversion for money affects them in the case of a rebate. We find that the more loss averse people are with regard to money, the more they require compensation before they accept externalities from renewable electricity production. In contrast, the more risk seeking people are in a financial domain, the less cost sensitive they are and the more willing they are to pay for proposed changes in renewable electricity generation.
    Keywords: choice experiment, externalities of renewable energy, loss aversion, lottery experiment, marginal utility of money, risk preferences
    JEL: D81 Q20 Q42 Q49 Q51
    Date: 2016
  14. By: Janda, Karel; Torkhani, Marouan
    Abstract: This paper serves as a brief introduction to the complex relationship between energy consumption and economic growth and between energy consumption and greenhouse emissions. We provide a critical overview of recent literature dealing with energy, carbon emissions and economic growth. We focus mainly on econometric literature examining causal effects between energy consumption and economic growth and on literature adding carbon emissions into the investigation of this topic.
    Keywords: Economic growth, energy consumption, oil consumption, natural gas consumption, renewable energies, biomass
    JEL: O40 Q28 Q42
    Date: 2016–12–05
  15. By: Tomas Havranek (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic; Czech National Bank); Zuzana Irsova (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic); Dominik Herman (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic)
    Abstract: The original rationale for adopting daylight saving time (DST) was energy savings. Modern research studies, however, question the magnitude and even direction of the effect of DST on energy consumption. Representing the first meta-analysis in this literature, we collect 162 estimates from 44 studies and find that the mean reported estimate indicates modest energy savings: 0.34% during the days when DST applies. The literature is not affected by publication bias, but the results vary systematically depending on the exact data and methodology applied. Using Bayesian model averaging we identify the most important factors driving the heterogeneity of the reported effects: data frequency, estimation technique (simulation vs. regression), and, importantly, the latitude of the country considered. Energy savings are larger for countries farther away from the equator, while subtropical regions consume more energy because of DST.
    Keywords: Daylight saving time, energy savings, Bayesian model averaging, meta-analysis, publication bias
    JEL: C42 Q48
    Date: 2016–11
  16. By: Zhang, Zengkai; Zhang, ZhongXiang
    Abstract: Climate regulations tend to target energy intensive sectors whose products are widely used in industrial production as intermediate inputs, such as electricity, and the carbon abatement may be partially offset by intermediate input-led leakage. This paper aims to examine the impact of intermediate input linkage on the carbon leakage both theoretically and empirically. We develop a Harberger-type model with an input-output linkage structure, identify four leakage effects and derive closed-form solutions for these leakage effects. For empirical simulation, we build a computable general equilibrium model of China’s economy and introduce Structural Decomposition Analysis to link both the theoretical and empirical models. When imposing a carbon price on the electricity generation sector, our results show significant carbon leakage. Our decomposition analysis further suggests that such leakage is mainly through the production substitution effect, followed by the multiplier effect. Both of the two effects are closely related to the intermediate input linkage, and thus shed some light on the importance of considering sectoral linkage when discussing the carbon leakage issue of climate policies.
    Keywords: Carbon leakage, sectoral linkage, climate regulation, general equilibrium model, production substitution effect, multiplier effect, Environmental Economics and Policy, Production Economics, Q55, Q58, Q43, Q48, O13, O31, O33, O44, F18,
    Date: 2016–09
  17. By: Tom Brijs; Arne van Stiphout; Sauleh Siddiqui; Ronnie Belmans
    Abstract: Short-term operating requirements and constraints in power systems are becoming increasingly important with the greater flexibility needed due to the integration of variable renewables. However, large problem sizes and computational barriers have limited the extent to which they are included in long-term planning models. Our objective is to understand the role of electricity storage in future renewable-based systems by including an accurate representation of short-term operation within a long-term planning framework. Specifically, we discuss the development of a long-term investment model including a continuous relaxation of the technology- clustered formulation of the short-term unit commitment problem. This model is applied to a test system having similar characteristics to the Belgian power system in a greenfield setting, i.e., assuming no pre-existing capacities, to analyze the role of storage at different renewable penetration levels. Both pumped-hydro storage and battery energy storage is considered, and their role in providing energy services and frequency control is investigated. We derive conclusions on the benefits and role of electricity storage to motivate why it may be built and operated. Results show that, in general, the integration of storage resources decreases total system cost, partially replaces flexible power plants, facilitates the integration of renewable energy sources, and allows inflexible technologies to perform better.
    Keywords: Electricity storage, renewable energy, power system flexibility, long-term power system planning, short-term power system operation
    JEL: C61 D4 L94 Q42
    Date: 2016
  18. By: Janda, Karel; Tyuleubekov, Sabyrzhan
    Abstract: This paper provides an overview of the renewable energy policies in Germany and Czech Republic. The description of major renewable policies in both countries is complemented with the description of financial support schemes for these policies. National renewable energy plans in both countries are discussed. The emphasis is on renewable electricity energy.
    Keywords: Renewable energy, feed-in tariff, Czech renewables, German Renewables
    JEL: Q28
    Date: 2016–12–05
  19. By: Richter, Phillip M.; Mendelevitch, Roman; Jotzo, Frank
    Abstract: In this paper we investigate the introduction of an export tax on steam coal levied by an individual country (Australia), or a group of major exporting countries. The policy motivation would be twofold: generating tax revenues against the background of improved terms-of-trade, while CO2 emissions are reduced. We construct and numerically apply a two-level game consisting of an optimal policy problem at the upper level, and an equilibrium model of the international steam coal market (based on COALMOD-World) at the lower level. We find that a unilaterally introduced Australian export tax on steam coal has little impact on global emissions and may be welfare reducing. On the contrary, a tax jointly levied by a "climate coalition" of major coal exporters may well leave these better off while significantly reducing global CO2 emissions from steam coal by up to 200 Mt CO2 per year. Comparable production-based tax scenarios consistently yield higher tax revenues but may be hard to implement against the opposition of disproportionally affected local stakeholders depending on low domestic coal prices.
    Keywords: Export tax, steam coal, supply-side climate policy, carbon leakage, Australia, Mathematical Program with Equilibrium Constraints (MPEC), Environmental Economics and Policy, Resource /Energy Economics and Policy, Q48, F13, Q58, Q41, C61,
    Date: 2017–08
  20. By: Janda, Karel; Tyuleubekov, Sabyrzhan
    Abstract: In this paper we estimated relation between greenhouse gas abatement and share of renewable energy resources in Germany and Czech Republic. We also analysed the dependence between annual installed capacities of RES and respective feed-in tariffs. We took the empirical data of annual installed capacities and regressed it on respective feed-in tariffs (FIT) and/or their polynomials. The analysis resulted in optimum intervals for some types of RES, which are summarised in our paper. We could not collect most of the data for the Czech Republic, since the Energy Regulatory Office of the Czech Republic does not publish the time series for RES, unlike Germany, which publishes a comprehensive database regarding RES. Optimum intervals in our paper indicate at which values of FIT the biggest amount of installed capacities is anticipated. Thus, if FIT scheme to be continued after 2017, FITs should be set inside these intervals. These intervals assume that there are not any caps and restrictions.
    Keywords: Renewable energy, feed-in tariff, Czech renewables, German Renewables
    JEL: G32 L94 Q28
    Date: 2016–12–05
  21. By: Baldwin, K.G.H.; Chapman, Bruce; Raya, Umbu
    Abstract: Rooftop solar systems have two major benefits: a reduction of carbon emissions (a public good) and future energy bill savings for consumers. However, the availability of solar energy systems to low-income households is constrained by access to finance for the initial investment cost, an issue which could potentially be addressed with the use of income contingent loans (ICLs). By applying unconditional quantile econometric methods to HILDA income data we illustrate that for a $10,000 loan for home owners ICLs can be used with little or no cost to government to help finance the next one million solar energy devices.
    Keywords: Income contingent loans, solar energy, Financial Economics, Resource /Energy Economics and Policy, Q28, Q27,
    Date: 2015–08
  22. By: Clarke, Harry
    Abstract: The economics of global climate mitigation is discussed when there is imperfect knowledge of future climatic changes, of policy effectiveness and of the policy responses by different countries. Uncertainty is accounted for by using heuristics derived from classical decision rules. These heuristics provide plausible policy rules that depend on only limited information. They emphasize the possibility of “getting it wrong” in terms of the appropriate scale of policy response and from policy failure itself. The minimax rule or Precautionary Principle, which targets “worst case” situations, is not useful unless policies are effective with certainty. However the widespread presumption that policy action is warranted if climate-induced losses without action are “large" relative to costs of policy can be justified using minimax regret reasoning. The global analysis is extended to individual national decision-making when nations jointly play a game against nature with policy spillovers. Simultaneous moves game solutions as well as heuristics are provided and indicate how policy actions are best determined for individual countries rather than for a global authority.
    Keywords: Climate risks and uncertainties, mitigation policy, Environmental Economics and Policy, Risk and Uncertainty, D84, Q54, C70, F64,
    Date: 2015–11
  23. By: Jin, Wei; Zhang, ZhongXiang
    Abstract: In creating a level playing field that facilitates the deployment of renewable energy technology (RET), the traditional energy policy regime based on eliminating RET’s cost gaps versus fossil energy technology (FET) may be not sufficient. Building on an economic model of energy technology adoption that features network externality, this paper takes an explicit account of the potential importance of network externality in the design of RET adoption policies. We argue that as incumbent FET has established pervasive deployment and installed base advantages within the existing energy production, distribution and service network, it would create a network externality mechanism that makes it difficult to dislodge the dominant FET-based technological regime, leading to an inertia against the adoption of newly emerging RET even if energy policy regulations have been put in place to eliminate RET’s cost disadvantage. We hence propose that a reformulation of RET policy paradigm should consider extending the traditional scheme centring on eliminating cost gap to a new one that corrects for both cost and network externality gaps.
    Keywords: Renewable energy deployment, energy technology adoption, network externality, climate technology policies, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy, Q41, Q42, Q48, Q54, Q55, Q58, H23, O13,
    Date: 2015–08
  24. By: Anderson, Evan W.; Brock, William; Sanstad, Alan H.
    Abstract: We study a simple model of economic growth where society’s preferences are a function of consumption per capita and climate quality; and the specification of the climate dynamics is inspired by recent work in climate science. The model is estimated to establish a reference model and we develop a new method that determines the reasonable size of a set of surrounding models which are difficult to distinguish from the reference model. We show that robust agents who deny the effects of climate change on the economy, behave more like agents who believe climate changes are real. This happens because robust non-believers design policies that hedge against their worst case model which does include an anthropogenic effect of their emissions on climate and these changes in climate have negative effects on preferences and productivity.
    Keywords: Consumer/Household Economics, Resource /Energy Economics and Policy,
    Date: 2016–11
  25. By: Stefano Bosi; David Desmarchelier
    Abstract: In this paper, we study a competitive Ramsey model where a pollution externality, coming from production, impairs a renewable resource which affects the consumption demand. A proportional tax, levied on the production level, is introduced to finance public depollution expenditures. In the long run, two steady states may coexist, the one with a low resource level, the other with a high level. Interestingly, a higher green tax rate lowers the resource level of the low steady state, giving rise to a Green Paradox (Sinn, 2008). Moreover, the green tax may be welfareimproving at the high steady state but never at the low one. Therefore, at the latter, it is optimal to reduce the green tax rate as much as possible. Conversely, the optimal tax rate is positive when the economy experiences the high steady state. This rate is unique. In the short run, the two steady states may collide and disappear through a saddle-node bifurcation. Since consumption and natural resources are substitutable goods, a limit cycle may arise around the high stationary state. To the contrary, this kind of cycles never occur around the low steady state whatever the resource effect on consumption demand. Finally, focusing on the class of bifurcations of codimension two, we find a Bogdanov-Takens bifurcation.
    Keywords: nature, logistic dynamics, Ramsey model, depollution, saddle-node bifurcation, Hopf bifurcation, Bogdanov-Takens bifurcation.
    JEL: E32 O44
    Date: 2016
  26. By: Sanchez, Luis F.; Stern, David I.
    Abstract: There has been extensive analysis of the drivers of carbon dioxide emissions from fossil fuel combustion and cement production, which constituted only 55% of global greenhouse gas (GHG) emissions in 1970 and 65% in 2010. But there has been much less analysis of the drivers of greenhouse gases in general and especially of emissions of greenhouse gases from agriculture, forestry, and other land uses, which we call non-industrial emissions in this paper, that constituted 24% of total emissions in 2010. We statistically analyse the relationship between both industrial and non-industrial greenhouse gas emissions and economic growth and other potential drivers for 129 countries over the period from 1971 to 2010. Our analysis combines the three main approaches in the literature to investigating the evolution of emissions and income. We find that economic growth is a driver of both industrial and non-industrial emissions, though growth has twice the effect on industrial emissions. Both sources of emissions decline over time though this effect is larger for non-industrial emissions. There is also convergence in emissions intensity for both types of emissions but given these other effects there is no evidence for an environmental Kuznets curve.
    Keywords: Greenhouse gas emissions, economic growth, decoupling, pollution, environmental Kuznets curve, convergence, Environmental Economics and Policy, Q54, Q56,
    Date: 2015–03
  27. By: Rabah Arezki; Thiemo Fetzer; Frank Pisch
    Abstract: Research by Rabah Arezki, Thiemo Fetzer and Frank Pisch shows that the surge in shale gas production - 'fracking' - since the early 2000s has not only made the United States the world's largest producer of natural gas. It has also given a big boost to output, employment, and exports in US manufacturing, particularly in energy-intensive industries. Their study finds that energy prices for US manufacturing firms have plummeted due to fracking, especially relative to Europe. Lower input costs for energy-intensive US industries have made them more globally competitive. What's more, the shale gas boom helped the US economy to recover faster after the financial crisis.
    Keywords: manufacturing, exports, energy prices, shale gas
    JEL: Q33 O13 N52 R11 L71
    Date: 2016–12
  28. By: Simon Dietz; Alex Bowen; Charlie Dixon; Philip Gradwell
    Abstract: Investors and financial regulators are increasingly aware of climate-change risks. So far, most of the attention has fallen on whether controls on carbon emissions will strand the assets of fossil-fuel companies1, 2. However, it is no less important to ask, what might be the impact of climate change itself on asset values? Here we show how a leading integrated assessment model can be used to estimate the impact of twenty-first-century climate change on the present market value of global financial assets. We find that the expected ‘climate value at risk’ (climate VaR) of global financial assets today is 1.8% along a business-as-usual emissions path. Taking a representative estimate of global financial assets, this amounts to US$2.5 trillion. However, much of the risk is in the tail. For example, the 99th percentile climate VaR is 16.9%, or US$24.2 trillion. These estimates would constitute a substantial write-down in the fundamental value of financial assets. Cutting emissions to limit warming to no more than 2 °C reduces the climate VaR by an expected 0.6 percentage points, and the 99th percentile reduction is 7.7 percentage points. Including mitigation costs, the present value of global financial assets is an expected 0.2% higher when warming is limited to no more than 2 °C, compared with business as usual. The 99th percentile is 9.1% higher. Limiting warming to no more than 2 °C makes financial sense to risk-neutral investors—and even more so to the risk averse.
    Keywords: environmental economics; governance
    JEL: F3 G3
    Date: 2016–04–04
  29. By: Zhang, ZhongXiang
    Abstract: The Chinese central government has approved the seven pilot carbon trading schemes. These seven pilot regions are deliberately selected to be at varying stages of development and are given considerable leeway to design their own schemes. These pilot trading schemes have features in common, but vary considerably in their approach to issues such as the coverage of sectors, allocation of allowances, price uncertainty and market stabilization, potential market power of dominated players, use of offsets, and enforcement and compliance. This article explains why China opts for emissions trading, rather than carbon or environmental taxes at least initially, discusses the key common and varying features of these carbon trading pilots and their first-year performance, draws the lessons learned, discusses the potential pathways for evolution of regional pilot carbon trading schemes into a nationwide carbon trading scheme, and raises fundamental issues that must be addressed in order to make such an emissions trading scheme to work reliably and effectively and with an increasingly expanded coverage and scope.
    Keywords: Pilot carbon trading schemes, environmental taxes, compliance, carbon offsets, energy prices, China, Demand and Price Analysis, Environmental Economics and Policy, H23, O13, P28, Q43, Q48, Q52, Q54, Q58,
    Date: 2015–04
  30. By: Evgenidis, Anastasios (Central Bank of Ireland)
    Abstract: In setting policy, central banks need to understand the impact of oil prices on inflation. During the euro area financial and sovereign debt crisis, oil price shocks drove inflation up, while since mid-2014, large negative oil price shocks have been contributed to deflationary pressures in the euro area. This Letter considers whether the impact of oil price shocks is different in periods of uncertainty, such as the financial crisis, and whether positive and negative, large and small oil price shocks affect inflation differently. The findings suggest that there are significant differences in the impact in all these cases; which should be taken into account by policy makers when they are choosing how to respond to oil price shocks
    Date: 2016–11
  31. By: Weaver, R. D.; Tian, Jiachuan
    Abstract: The variation of energy prices has been a traditional source of shocks to the real economy. In many cases, this variation has manifested in jumps in energy prices that were characterized by some persistence. From another perspective, energy price volatility has historically been noted and its effects on real economy debated. Historically, the importance of the shocks to the real economy has led them to be labeled as energy crises, as they were argued to have resulted in substantial changes in real prices that induced changes in behavior on the demand and supply sides of the many markets. However, empirical studies of transmission of energy prices into the real economy have produced no consensus and have been challenged by a number of significant specification issues that have resulted in substantial variation in inference drawn from results. Among these issues is the question of completeness of model specification. This paper examines the question of whether such models need to incorporate macroeconomic indicators. Clearly, macroeconomic factors such as interest rates and exchange rates play a role in the determination of energy and commodity prices, however, considerable specification uncertainty characterizes the question of which macro metrics to incorporate. This paper examines this issue from the perspective of weak exogeneity and finds evidence that the parameter estimates associated with time series models that exclude consideration of macro indicators are not compromised by their exclusion. We examine this issue using Italian, U.S. grain, and Brent crude oil prices.
    Keywords: Agribusiness,
    Date: 2015–05
  32. By: Stephen Gibbons; Stephan Heblich; Esther Lho; Christopher Timmins
    Abstract: Shale gas offers the prospect of a low-cost energy future - but does extracting it invoke anxieties about the possibility of environmental catastrophe among local residents? Research by Steve Gibbons and colleagues detects a distinct 'fear of fracking', as indicated by falling house prices in the one part of the country where exploratory drilling has taken place. Their study finds that house prices fell by up to 5% in the months after fracking triggered minor earthquakes. Compensation to local communities for the 'psychological costs' of fracking could be very costly.
    Keywords: shale gas, fracturing, property valuation, housing prices, consumer expectation, hedonic price, united kingdom
    JEL: Q5 Q42 Q51
    Date: 2016–12
  33. By: Steffen, Nico
    Abstract: This paper analyzes environmental concerns by a government in a setting of rent-extracting strategic trade policy with endogenous firm investment into production technologies. The simple analysis highlights the importance of investment incentives caused by tariffs in general and shows that the resulting implications for the optimal tariff decision can be completely different between traditional tariff considerations and an environmentally conscious government. We show that an importing country in a dynamic setting with endogenous firm technology choices prefers to impose discriminatory tariffs both ex post and ex ante when emissions matter, while a commitment to uniform tariffs is optimally chosen when environmental concerns do not play a role.
    Keywords: Climate policy,Carbon tariffs,Technology choice,Discriminatory tariffs
    JEL: F13 F18 D24 Q58
    Date: 2016
  34. By: Burke, Paul J.; Liao, Hua
    Abstract: China’s dependence on coal is a major contributor to local and global environmental problems. In this paper we estimate the price elasticity of demand for coal in China using a panel of province-level data for the period 1998–2012. We find evidence that provincial coal demand has become increasingly price elastic. As of 2012 we estimate that this elasticity was in the range –0.3 to –0.7 when responses over two years are considered. The results imply that China’s coal market is becoming more suited to price-based approaches to reducing emissions. Our estimates suggest that the elimination of coal consumption subsidies could reduce national coal use and related emissions by around 2%.
    Keywords: Coal, price elasticity, demand, China, provincial, Demand and Price Analysis, Resource /Energy Economics and Policy, O13, Q41, P28, Q48,
    Date: 2015–06
  35. By: Anjum, Zeba; Burke, Paul J.; Gerlagh, Reyer; Stern, David I.
    Abstract: We adopt a new representation of the relationship between emissions and income using long-run growth rates. Our approach allows us to test multiple hypotheses about the drivers of per capita emissions in a single framework and avoid several of the econometric issues that have plagued previous studies. We find that for carbon dioxide emissions, scale, convergence, and resource endowment effects are statistically significant. For sulfur emissions, the scale and convergence effects are significant, there is a strong negative time effect, and non-English legal origin and higher population density are associated with more rapidly declining emissions. The environmental Kuznets effect is not statistically significant in our full sample for either carbon or sulfur.
    Keywords: Economic growth, decoupling, pollution, environmental Kuznets curve, convergence, Environmental Economics and Policy, Q56, O44,
  36. By: Berruto, Remigio; Boero, Valter; Busato, Patrizia; Calvo, Angela; Sopegno, Alessandro; Venudo, Lorenzo; Rossi, Daniele; Gomez, Paz; Ruiz, Begoña; Kachniarz, Małgorzata
    Abstract: The purpose of this work is to promote the sustainable production of renewable energy from the biogas obtained from agrifood waste in small‐scale concepts for pursuing energy self‐sufficiency. Stakeholders were interviewed and two different questionnaires were offered: the first for agrifood industries, the second for biogas plants and component providers. Information obtained was elaborated to have a view of wastage amounts in agrifood sector and get information of available small‐scale biogas plants. Obtained data were used in different project phases: for Smallbiogas calibration (a web application to facilitate small‐scale biogas plant business plan setup), plant models calibration and to write Biogas3 Handbook. The activities of this work were based on Biogas3 project, co‐funded by the Intelligent Energy Europe Programme of the European Union Contract N° IEE‐13‐477.
    Keywords: Food Waste, Small‐scale, Biogas, Renewable Energies, Web Applications, Tool for Farmers, Agribusiness,
    Date: 2015–05
  37. By: Jin, Wei; Zhang, ZhongXiang
    Abstract: Whether China continues its business-as-usual investment-driven, environment-polluting growth pattern or adopts an investment and innovation-driven, environmentally sustainable development holds important implications for both national and global environmental governance. Building on a Ramsey-Cass-Koopmans growth model that features endogenous technological change induced by R&D and knowledge stock accumulation, this paper presents an exposition, both analytically and numerically, of the mechanism underlining China’s economic transition from an investment-driven, pollution-intensive to an investment and innovation-driven, environmentally sustainable growth path. We show that if R&D technological innovation is incorporated into China’s growth mechanism, then at some tipping point in time when marginal welfare gain of R&D for knowledge accumulation becomes equalized with that of investment for physical asset deployment, China’s economy will launch capital investment and R&D simultaneously and make a transition to a sustainable growth path along which consumption, capital investment, and R&D have a balanced share of 5: 4: 1, consumption, capital stock, and knowledge stock all grow at a rate of 4.9%, and environmental quality improves at a rate of 2.5%. In contrast, if R&D technological innovation is not harnessed as a new growth engine, then China’s economy will follow its business-as-usual investment-driven growth path along which standalone accumulation of dirty physical capital stock will lead to a more than 200-fold increase in environmental pollution.
    Keywords: Endogenous technological change, sustainable development, economic growth model, China’s economic transition, Research and Development/Tech Change/Emerging Technologies, Q55, Q58, Q43, Q48, O13, O31, O33, O44, F18,
    Date: 2016–01
  38. By: Kalchev, Georgi
    Abstract: This paper carries out an empirical test of the Environmental Kuznets Curve hypothesis with Bulgarian data on pollution and GDP per capita for the years 1970-2008. The existence of such a curve is confirmed in most cases.
    Keywords: Environmental Kuznest Curve,pollution
    Date: 2016
  39. By: Halkos, George; Bampatsou, Christina
    Abstract: In the present study, Data Envelopment Analysis (DEA) is used for the period spanning from 1980 to 2012 and for a total of 32 countries which are classified into four groups, according to their level of development (Developing, BRICS, Developed, G7). DEA allows us to measure technical efficiency under constant (CRS) and variable (VRS) returns to scale and also the Malmquist index and its components (TECHCH, EFFCH, PECH, SECH). Furthermore, we develop an order-α approach for the determination of partial frontiers. An output oriented model is applied. Labor and capital are used as inputs while the GDP index is used as output. Subsequently, energy is incorporated in the model as an additional input variable and CO2 emissions as undesirable output. A comparison of productivity indices as derived from the analysis, allows us to highlight the different levels of productivity before and after the integration of energy and CO2 emissions as additional variables, for each group of countries and therefore their sustainability gaps.
    Keywords: Data Envelopment Analysis; Malmquist Index; Order-α approach; Energy; CO2 emissions.
    JEL: O11 O57 Q0 Q01 Q4 Q43 Q5 Q50 R15
    Date: 2016–12
  40. By: Stern, David I.; van Dijk, Jeremy
    Abstract: Though the environmental Kuznets curve (EKC) was originally developed to model the ambient concentrations of pollutants, most subsequent applications focused on pollution emissions. Yet, previous research suggests that it is more likely that economic growth could eventually reduce the concentrations of local pollutants than emissions. We examine the role of income, convergence, and time related factors in explaining changes in PM2.5 pollution in a global panel of 158 countries between 1990 and 2010. We find that economic growth has positive but relatively small effects, time effects are also small but larger in wealthier and formerly centrally planned economies, and, for our main dataset, convergence effects are small and not statistically significant. There is no in-sample income turning point for regressions that include both the convergence variables and a set of control variables.
    Keywords: Air pollution, economic growth, environmental Kuznets curve, Environmental Economics and Policy, O44, Q53, Q56,
    Date: 2016–02
  41. By: Kemp, Luke
    Abstract: The issue of US ratification of international environmental treaties is a recurring obstacle for environmental multilateralism, including the climate regime. Despite the perceived importance of the role of the US to the success of any future international climate agreement, there has been little direct coverage in terms of how an effective agreement can specifically address US legal participation. This paper explores potential ways of allowing for US legal participation in an effective climate treaty. Possible routes forward include the use of domestic legislation such as section 115 (S115) of the Clean Air Act (CAA), and the use of sole-executive agreements, instead of Senate ratification. Legal participation from the US through sole-executive agreements is possible if the international architecture is designed to allow for their use. Architectural elements such as varying legality and participation across an agreement (variable geometry) could allow for the use of sole-executive agreements. Two broader models for a 2015 agreement with legal participation through sole-executive agreements are constructed based upon these options: a modified pledge and review system and a form of variable geometry composed of number of opt-out, voting based protocols on specific issues accompanied with bilateral agreements on mitigation commitments with other major emitters through the use of S115 and sole-executive agreements under the Montreal Protocol and Chicago Convention (Critical Mass Governance). While there is no single solution, Critical Mass Governance appears to provide the optimum combination of tools to effectively allow for US legal participation whilst ensuring an effective treaty.
    Keywords: Climate regime, ratification, US, climate policy, UNFCCC, Environmental Economics and Policy, Q54, Q56,
    Date: 2015–11
  42. By: Pickering, Jonathan; Jotzo, Frank; Wood, Peter J.
    Abstract: Mobilizing climate finance for developing countries is crucial for achieving a fair and effective global climate regime. To date developed countries retain wide discretion over their national contributions. We explore how different degrees of international coordination may influence the fairness of the global financing effort. We present quantitative scenarios for (i) the metrics used to distribute the collective effort among countries contributing funding; and (ii) the number of contributing countries. We find that an intermediate degree of coordination—combining nationally determined financing pledges with a robust international review mechanism—may reduce distortions in relative efforts as well as shortfalls in overall funding, while reflecting reasonable differences over what constitutes a fair share. Broadening the group of contributors may do little to improve adequacy or equity unless the more heterogeneous group can converge on credible measures of responsibility and capacity. The analysis highlights the importance of building common understandings about effort-sharing.
    Keywords: Climate policy, climate finance, equity, fairness, climate change mitigation, climate change adaptation, development assistance, Environmental Economics and Policy, Research and Development/Tech Change/Emerging Technologies,
    Date: 2015–04
  43. By: Roberto Iacono (NTNU - Norwegian University of Science and Technology [Trondheim, Norway])
    Abstract: This paper investigates the long-run economic effects of large natural resource endowments, through a comparative quantitative case study. Focusing on three economic features of the so-called Nordic model, namely low income inequality, high labour productivity growth, and high welfare spending, this study estimates the shocks to these key features in Norway after the country became one of the world's largest oil exporters. A synthetic control unit constructed by weighting Nordic countries that resemble the economy of Norway without being oil producers provides the most reliable comparison unit to estimate the causal effects constituting the papers threefold contribution. First, results show that the resource windfall contributed to relatively higher top income shares, adding natural resources to the set of drivers of income inequality in Norway. Second, the resource windfall boosted labour productivity. Third, resource revenues contributed to financing the steadily increasing gap between Norway and other Nordic countries in the degree of welfare generosity. Sensitivity tests through in-time placebo tests and difference-in-differences estimations confi rm the validity of these results.
    Keywords: Nordic Model, Resource windfall, Synthetic Control Method,Norway
    Date: 2016–09–01
  44. By: Zhang, ZhongXiang
    Abstract: China has realized that for its own sake and from the international community’s perspective, it cannot afford to continue along the conventional path of encouraging economic growth at the expense of the environment. Accordingly, the country has placed ecological goals at the same level of priority as policies on economic, political, cultural and social development. Specifically, to meet the grand goal involves not only capping China’s nationwide coal consumption to let it peak before 2020 and carbon emissions peak around 2030, but also putting in place a variety of flagship programs and initiatives, prices and policies. This paper argues that the 2030 carbon emissions peak goal is ambitious but achievable and concludes by arguing why China’s anti-pollution outcomes this time might be different from the previous ones.
    Keywords: Low-carbon economy, carbon emissions peaks, coal consumption, carbon pricing, energy prices, resource tax reform, renewable energy, China, Resource /Energy Economics and Policy, H23, P28, Q42, Q43, Q48, Q53, Q54, Q58,
  45. By: Reynaert, Mathias; Sallee, James M.
    Abstract: Firms sometimes comply with externality-correcting policies by gaming the measure that determines policy. We show theoretically that such gaming can benefit consumers, even when it induces them to make mistakes, because gaming leads to lower prices by reducing costs. We use our insights to quantify the welfare effect of gaming in fuel-consumption ratings for automobiles, which we show increased sharply following aggressive policy reforms. We estimate a structural model of the car market and derive empirical analogs of the price effects and choice distortions identified by theory. We find that price effects outweigh distortions; on net, consumers benefit from gaming.
    Keywords: gaming, corrective taxation, environmental regulation, carbon emissions, automobiles, fuel economy
    JEL: H2 L5 Q5
    Date: 2016–12
  46. By: Aditi Sengupta
    Abstract: In markets where differences in environmental performance of competing firms arise due to differences in technology and other attributes that cannot be altered in the short run and firms have private information about these attributes, an ecolabel may allow firms to credibly communicate their private information to environmentally conscious uninformed consumers. This may ameliorate the distortion in pricing and consumption patterns in the market outcomes, when there is no credible direct disclosure mechanism and pricing is the only channel of signaling private information. In an incomplete information duopoly market with price competition, I show that even if a credible ecolabel is available freely, clean firms may not always find it individually advantageous to adopt the ecolabel. The adoption of the ecolabel by the clean firms removes price and welfare distortions (caused by price signaling); in this case, the availability of the ecolabel makes competition more intense, reduces market power, increases market shares of the clean firms, and lowers the expected environmental damage. The effect of the ecolabel on the incentives to invest in the development of a clean technology is more complex; the presence of an ecolabel may reduce the level of aggregate investment.
    Keywords: Financial Stress Index; Duopoly; Ecolabel; Green premium; Incomplete information; Investment; Mandatory disclosure; Signaling
    JEL: D43 D82 L51 Q55
    Date: 2016–12
  47. By: Yves Jégourel
    Abstract: In late September 2016, the Organization of Petroleum Exporting Countries’ (OPEC) agreement to reduce crude supply was particularly telling. Combined with the improvement of some fundamentals, the agreement in principle created the conditions for a rebound in oil prices. Speculative dynamics to benefit from this upturn are however at work in a market context where production overcapacity remains present. The price recovery remains fragile and a paradigm shift will occur only if OPEC manages to give the agreement an operational scope in the medium term. In addition to (geo)constraints and the strong policies that it implies, it is clear that the task will be a challenge. OPEC should indeed deal with the reality of global supply and engage in a policy of "fine tuning" to keep prices within a fluctuation band for improving the financial situation of its members, without however boosting the production (too much) of other producing countries.
    Date: 2016–11
  48. By: Casey, Gregory (Brown University); Galor, Oded (Brown University)
    Abstract: We provide evidence that lower fertility can simultaneously increase income per capita and lower carbon emissions, eliminating a trade-off central to most policies aimed at slowing global climate change. We estimate the effect of lower fertility on carbon emissions accounting for the fact that changes in fertility patterns affect carbon emissions through three channels: total population, the age structure of the population, and economic output. Our analysis proceeds in two steps. First, we estimate a version of the STIRPAT equation on an unbalanced yearly panel of cross-country data from 1950-2010. We demonstrate that the coefficient on population is nearly seven times larger than the coefficient on income per capita and that this difference is statistically significant. Thus, regression results imply that 1% slower population growth could be accompanied by an increase in income per capita of nearly 7% while still lowering carbon emissions. In the second part of our analysis, we use a recently constructed economic-demographic model of Nigeria to estimate the effect of lower fertility on carbon emissions accounting for the impacts of fertility on population growth, population age structure, and income per capita. The model was constructed to estimate the effect of lower fertility on economic growth, making it well-suited for this application. We find that by 2100 C.E., moving from the medium to the low variant of the UN fertility projection leads to 35% lower yearly emissions and 15% higher income per capita. These results strongly suggest that population policies should be a part of the approach to combating global climate change.
    Keywords: climate change, economics, demography
    JEL: J11 O40 Q50
    Date: 2016–11
  49. By: Rainald BORCK; TABUCHI Takatoshi
    Abstract: We study the optimal and equilibrium size of cities in a city system model with environmental pollution. Pollution is related to city size through the effect of population on production, commuting, and housing consumption. With symmetric cities, if pollution is local or per capita pollution increases with population, we find that equilibrium cities are too large. When pollution is global and per capita pollution declines with city size, however, equilibrium cities may be too small. With asymmetric cities, the largest cities are too large and the smallest too small when pollution is local or per capita pollution increases with population; when pollution is global and per capita pollution decreases with population, the largest cities are too small and the smallest too large. We also calibrate the model to US cities and find that the largest cities may be undersized by 3-4%.
    Date: 2016–10
  50. By: Idowu Raheem (U.I - University of Ibadan.)
    Abstract: This study investigated the role of oil and non-oil exports on the Nigerian economy over the period of 1981 to 2015. The ADF and PP unit root test, Johansen cointegration test, Granger causality test, impulse response functions (IRF) and variance decomposition (VD) were used in the analysis of the study. The cointegration test indicates that GDP, Oil and Non-oil exports were cointegrated. The Granger causality test indicates short run unidirectional causality running from oil export to GDP. There are also bidirectional long run causality relationship between oil export and GDP, and unidirectional long run causality running from non-oil export to GDP. The study result indicates that oil exports have inverse relationship with economic growth while non-oil exports have positive relationship with economic growth.
    Keywords: oil exports,non-oil exports and Granger causality,Economic growth
    Date: 2016–11–24
  51. By: Zhang, ZhongXiang
    Abstract: In international climate change negotiations, China’s role is an issue of perennial concern. In particular, the lack of quantitative, absolute emissions commitments from China has been the focus. In line with changing domestic and international contexts, China is recalibrating its stance and strategy. Its participation in international climate change negotiations has evolved from playing a peripheral role to gradually moving to the centre. This article examines China’s stance and role in international climate change negotiations from a historical perspective. In so doing, the article discusses the evolution of international climate negotiations and China’s stance in the lead-up to and at the Paris conference. The focus is now turning to the implementation of the Paris Agreement. The article discusses post-Paris issues in the international context and in particular in China’s context. These affect the post Paris negotiations and hold the key to achieving desired outcomes.
    Keywords: International climate negotiations, Copenhagen accord, Paris agreement, China, Environmental Economics and Policy, International Relations/Trade, Q52, Q54, Q58, Q43, Q48, O31, O33, O44,
    Date: 2016–09

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