nep-ene New Economics Papers
on Energy Economics
Issue of 2017‒01‒08
forty-four papers chosen by
Roger Fouquet
London School of Economics

  1. Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence By Arik Levinson
  2. Long-Run Welfare Effect of Energy Conservation Regulation By Matsumura, Toshihiro; Yamagishi, Atsushi
  3. Asymmetric Effects of Non-Pecuniary Signals on Search and Purchase Behavior for Energy-Efficient Durable Goods By J. Scott Holladay; Jacob LaRiviere; David M. Novgorodsky; Michael Price
  4. Interaction between CO2 emissions trading and renewable energy subsidies under uncertainty: feed-in tariffs as a safety net against over-allocation By Oskar Lecuyer; Philippe Quirion
  5. University spin-off firms in sustainable energy in five countries: What determines their reaching of the market? By Marina Van Geenhuizen; Razie Nejabat
  7. Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda By Grimm, Michael; Lenz, Luciane; Peters, Jörg; Sievert, Maximiliane
  8. Cost-benefit analysis of small hydroelectric generation project utilizing resident volunteers By Eiji Ohno; Ryuta Mori; Akira Matsumoto
  9. An Economic Assessment of Low-Carbon Investment Flows in the U.S. Power Sector By Wang, Lu; Favero, Alice; Brown, Marilyn
  10. La transition énergétique est-elle favorable aux branches à fort contenu en emploi ? Une approche input-output pour la France By Quentin Perrier; Philippe Quirion
  11. Financing energy innovation: The role of financing constraints for directed technical change from fossil-fuel to renewable innovation By Noailly, Joëlle; Smeets, Roger
  12. Fuel Poverty: A Composite Index Approach By Dorothée Charlier; Bérangère Legendre
  13. Reducing the Energy Burden of the Poor and Greenhouse Gas Emissions: Can We Kill Two Birds with One Stone? By Dorothée Charlier; Anna Risch; Claire Salmon
  14. Fuel for inequality: Distributional effects of environmental reforms on private transport By Tovar Reaños, Miguel Angel; Sommerfeld, Katrin
  15. Transition Towards a Green Economy in Europe: Innovation and Knowledge Integration in the Renewable Energy Sector By Conti, Chiara; Mancusi, Maria Luisa; Francesca, Sanna-Randaccio; Roberta, Sestini; Elena, Verdolini
  16. Improving Decision Making for Public R&D Investment in Energy: Utilizing Expert Elicitation in Parametric Models By Chan, G.; Anadon, L-D.
  17. Energy consumption and CO2 emissions in the northern cities (case of Yakutia) By Tuyara Gavrilyeva
  18. Conditional Convergence in Australia's Energy Consumption at the Sector Level By Vinod Mishra; Russell Smyth
  19. A Tale of Two Tails: Commuting and the Fuel Price Response in Driving By Kenneth Gillingham; Anders Munk-Nielsen
  20. An Energy-centric Theory of Agglomeration By Juan Moreno-Cruz; M. Scott Taylor
  21. Spatial issues revisited: A note on the role of shared transportation modes By Marion Drut
  22. Price asymmetry and retailers heterogeneity in Brazilian gas stations By Leonardo Cardoso; Mauricio Bittencourt; Elena Irwin
  23. Ownership and Enterprise Performance in the Russian Oil Industry 1992-2012 By Nat Moser
  24. Fuel Consumption and Gasoline Prices: The Role of Assortative Matching between Households and Automobiles By H. Spencer Banzhaf; Taha Kasim
  25. Atmospheric Pollution and Child Health in Late Nineteenth Century Britain By Bailey, Roy E.; Hatton, Timothy J.; Inwood, Kris
  26. An Integrated Approach to Climate Change, Income Distribution, Employment, and Economic Growth* By Taylor, Lance; Rezai, Armon; Foley, Duncan K.
  27. Environmental Productivity Change in World Air Emissions: A new Malmquist-Luenberger Index Approach By Juan Aparicio; Javier Barbero; Magdalena Kapelko; Jesús T. Pastor; José L. Zofío
  28. Cumulative Emissions, Unburnable Fossil Fuel and the Optimal Carbon Tax By Rezai, Armon; Van der Ploeg, Frederick
  29. The impacts of the EU ETS on efficiency: An empirical analyses for German manufacturing firms By Löschel, Andreas; Lutz, Benjamin Johannes; Managi, Shunsuke
  30. Voluntary Individual Carbon Trading By Spash, Clive L.; Theine, Hendrik
  31. A general equilibrium cost-bene t rule for green certi ficates By Kriström, Bengt
  32. The power of active choice: Field experimental evidence on repeated contribution decisions to a carbon offsetting program By Kesternich, Martin; Römer, Daniel; Flues, Florens
  33. The role of trade openness and investment in examining the energy-growth-pollution nexus: Empirical evidence for China and India By Nguyen, Duc Khuong; Sévi, Benoît; Sjö, Bo; Salah Uddin, Gazi
  34. Decarbonization Pathways in Southeast Asia: New Results for Indonesia, Malaysia, Philippines, Thailand and Viet Nam By Bosello, Francesco; Orecchia, Carlo; Raitzer, David A.
  35. Modeling Growth, Distribution, and the Environment in a Stock-Flow Consistent Framework By Naqvi, Syed Ali Asjad
  36. The Cost of Climate Stabilization in Southeast Asia, a Joint Assessment with Dynamic Optimization and CGE Models By Bosello, Francesco; Marangoni, Giacomo; Orecchia, Carlo; Raitzer, David A.; Tavoni, Massimo
  37. The Role of Development Finance in Climate Action Post-2015 By Tara Shine; Gisela Campillo
  38. Financing Climate Policies Through Climate Bonds By Michael Flaherty; Arkady Gevorkyan; Siavash Radpour; Willi Semmler
  39. Carbon footprint decomposition in MRIO models: identifying EU supply-chain hot spots and their structural changes over time By Wieland, Hanspeter; Giljum, Stefan
  40. Policy- v. Individual Heterogeneity in the Benefits of Climate Change Mitigation: Evidence from a Stated-Preference Survey By Alberini, Anna; Ščasný, Milan; Bigano, Andrea
  41. Projections and Uncertainties About Climate Change in an Era of Minimal Climate Policies By William D. Nordhaus
  42. The Paris Agreement to Ignore Reality By Spash, Clive L.
  43. Intergenerational altruism: A solution to the climate problem?* By Nesje, Frikk; Asheim, Geir
  44. The Economics and Ethics of Human Induced Climate Change By Spash, Clive L.; Gattringer, Clemens

  1. By: Arik Levinson
    Abstract: Economists promote energy taxes as cost-effective. But policymakers raise concerns about their regressivity, or disproportional burden on poorer families, preferring to set energy efficiency standards instead. I first show that in theory, regulations targeting energy efficiency are more regressive than energy taxes, not less. I then provide an example in the context of automotive fuel consumption in the United States: taxing gas would be less regressive than regulating the fuel economy of cars if the two policies are compared on a revenue-equivalent basis.
    JEL: H23
    Date: 2016–12
  2. By: Matsumura, Toshihiro; Yamagishi, Atsushi
    Abstract: We investigate the long-run effect of energy conservation regulation, which forces firms to raise energy-saving investment above the cost-minimising level (i.e. the business-as-usual level). If Pigovian tax is imposed, additional regulation always harms social welfare under perfect competition. However, under imperfect competition, additional regulation can improve welfare even if Pigovian tax is imposed. Thus, under imperfect competition, there is a rationale for additional energy conservation regulation even in the presence of Pigovian tax. Our result under imperfect competition holds regardless of whether strategies are strategic substitutes or complements in contrast to direct entry regulation.
    Keywords: energy-saving, environmental tax, free entry market, consumer-benefiting regulation
    JEL: D61 H54 L13
    Date: 2016–11–13
  3. By: J. Scott Holladay; Jacob LaRiviere; David M. Novgorodsky; Michael Price
    Abstract: We report the results of a field experiment where we exogenously vary the use of social comparisons "nudges" and subsidies for participation in an in-home energy audit program, and follow subjects through to the subsequent purchase of durable goods. We therefore can compare the causal effect of financial incentives and nudges along two margins, audits, which we liken to search, and purchase of durables. Using data on nearly 100,000 households, we document an asymmetry; nudges increase audits, but lead to lower rates of purchase. We find no evidence of a differential response for those offered a financial incentive. These differences suggest heterogeneity in the motives of the marginal consumer induced by nudges versus prices.
    JEL: C93 D01 D83 Q41
    Date: 2016–12
  4. By: Oskar Lecuyer (OCCR,University of Bern); Philippe Quirion (CNRS, CIRED)
    Abstract: We study the interactions between a CO2 emissions trading system (ETS) and renewable energy subsidies under uncertainty over electricity demand and energy costs. We first provide evidence that uncertainty has generated over-allocation (defined as an emissions cap above business-as-usual emissions) during at least part of the history of most ETSs in the world. We then develop an analytical model and a numerical model applied to the European Union electricity market in which renewable energy subsidies are justified only by CO2 abatement. We show that in this context, when uncertainty is small, renewable energy subsidies are not justified, but when it is big enough, these subsidies increase expected welfare because they provide CO2 abatement even in the case of over-allocation. The source of uncertainty is important when comparing the various types of renewable energy subsidies. Under uncertainty over electricity demand, renewable energy costs or gas prices, a feed-in tariff brings higher expected welfare than a feed-in premium because it provides a higher subsidy when it is actually needed i.e. when the electricity price is low. Under uncertainty over coal prices, the opposite result holds true. These results shed new light on the ongoing switch from feed-in tariffs to feed-in premiums in Europe.
    Keywords: Willingness to pay, Social capital, Environmental protection, Ordered logistic regression, Sweden
    JEL: Q28 Q48 Q58
    Date: 2016–04
  5. By: Marina Van Geenhuizen; Razie Nejabat
    Abstract: An entrepreneurial perspective to introduction of sustainable energy solutions to the market has been recognized as important for decades, but mainly concerning large firms. Today, attention is increasingly turning to young high-technology ventures which, compared to large incumbents, are more flexible, creative, responsive and willing to take risks enabling them to work as a trigger or accelerator of profound changes. At the same time, these young firms suffer from a lack of resources, specifically investment capital, the last mainly caused by a slow development due to resistance from society, among others, existing energy infrastructures (?valley of death?). In this context, an often advised strategy is to partner with a larger company. This paper explores the time dimension in market introduction of sustainable energy solutions while taking an in-depth approach to collaboration and investment capital amidst a set of other firm-specific and external factors. First, we compare the five countries, Netherlands, Norway, Sweden, Denmark and Finland, with regard to favorable circumstances to adoption of sustainable energy solutions, particularly continuity in supporting policies. Next, we build a carefully selected sample of 37 university spin-off firms representing different ?theoretical positions? regarding country, but also established collaboration networks, amount of investment capital granted, and type of energy system - solar, wind, biomass, etc. - and we apply rough-set analysis as a ?qualitative? causal analysis. In addition, we deploy five in-depth case studies for deepening understanding. We found that out of nine firm-specific and firm-external factors, three factors have a strong influence on speed of market introduction. These are first of all country, but also type of energy technology (system) and richness in collaboration networks. Country was found to have a positive influence on reaching the market at a higher level of innovation (Nordic ?innovation leader? countries) and, conversely, a negative influence at lower levels of innovation (Netherlands and Norway). Furthermore, rich network collaboration turned out to work positively in an already positive situation (?innovation leader? country). Lacking such collaboration contributed to problematic developments, specifically in combination with solar technology. Evidence on influence of lack of capital investment turned out to be rather weak. Further, the case study analysis yielded the additional insight that speed in market introduction may also work negatively, namely, if large amounts of investment capital put pressure on the firm and market introduction occurs actually too early. The paper concludes with issues on ?theoretical? generalization, extending the sample to a larger random sample, and additional research questions.
    Keywords: Sustainable energy (system); young ventures; market introduction; national innovation system; collaboration; investment capital
    JEL: D22 Q42 Q48 M13
    Date: 2016–12
  6. By: Thiago Pastorelli Rodrigues; Solange Ledi Gonçalves, André Luis Squarize Chagas
    Abstract: The debate about the wind power comes in the context of the discussions on climate change. Wind energy is renewable, clean, and low environmental impact. Moreover, in terms of economic development, the literature indicates that the implementation of wind power plants can be an important channel for local development by generating jobs and income in its neighborhood. Thus, this study aims to analyze the impact of the installation of wind farms in the municipalities of northeastern Brazil, region that concentrates approximately 80% of the installed capacity of this technology in the country. The analyzes are carried out for the year 2013 and the variables used are constructed from ANEEL, RAIS, IBGE and INPE databases. The methodology employed is the propensity score matching to estimate the average effect of treatment on the treated. Due to the spatial nature of the units observed, the existence of spatial dependence is considered in the estimation. The results suggest that the implementation of wind farms may raise wages in the construction, transportation and logistics sectors. Moreover, the presence of these plants may shift resources to the agricultural sector, stimulating the activity in the local economy
    Keywords: wind energy; propensity score matching; spatial dependence; local development
    JEL: Q42 C21 R58
    Date: 2016–12–07
  7. By: Grimm, Michael (University of Passau); Lenz, Luciane (RWI); Peters, Jörg (RWI); Sievert, Maximiliane (RWI)
    Abstract: Providing electricity to the unconnected 1.1 billion people in developing countries is one of the top political priorities of the international community, yet the costs of reaching this objective are very high. The present paper examines whether the objective and the associated costs are justified by the value that target beneficiaries assign to electricity. We provide experimental evidence on the revealed willingness-to-pay (WTP) for three types of off-grid solar electricity devices. Our findings show that households are willing to dedicate a substantial part of their expenditures to electricity. In absolute terms, though, the WTP does not suffice to reach cost-covering prices. Different payment schemes, which we randomized across our sample, do not alter the WTP significantly. If universal electricity access is to be achieved, direct subsidies might be necessary. We argue that from a public policy perspective it is more rationale to promote off-grid solar than grid-based electrification because of its better cost-benefit performance.
    Keywords: technology adoption, electrification, willingness-to-pay, real-purchase offer game, energy access
    JEL: D12 O12 O13 Q28 Q41
    Date: 2016–12
  8. By: Eiji Ohno; Ryuta Mori; Akira Matsumoto
    Abstract: Small-scale renewable electricity generation projects have the potential to address not just the need to reduce greenhouse gas emissions to combat climate change, but also to provide local, sustainable economic and community revitalization. In this paper, we have proposed a small hydroelectric generation project with citizen participation which includes cooperation in some activities such as cleaning and patrols, and have evaluated the project economically by using the regional input-output (I-O) analysis in which the willingness to work (WTW) is incorporated. The WTW for the project have been estimated by using the conjoint analysis as a function of its various attributes, namely revenue from the project?s electricity sales, profits earned for the local community, and rewards given to contributors. The results show that the amount of WTW provided by resident volunteers will increase with increasing unit value of reward, but the amount of reward paid to volunteers will also increase. On the other hand, the operating income of the establishment that has contracted maintenance of the small hydroelectric supply sector will decrease, and its influence will spread through the inter-industry relations. Then, we have analyzed such economic ripple effect by using the regional I-O table for analysis of small hydroelectric generation project. By considering the range of the "unit value of reward" and the "substitution rate of resident volunteers", even if the project is deficit, we have found a good countermeasure which can be expected positive effects. As a result, it is possible to reduce the subsidies of regional governments with respect to the project, and it is possible to devote that amount of budget to improvement of other administrative services. Although introduction of volunteer activities is finished when the amount of WTW exceeds the consignment work load in this case study, more volunteer activities may be introduced if external economic benefits of volunteers are expected. For example, if the bond of community are strengthened by that residents participate in volunteer activities, the bond strengthened can compensate for the lack of government services such as disaster prevention and welfare, and improvement of resident satisfaction may be expected. By evaluating such external economic benefits and practicing social cost benefit analysis, it is possible to discuss that more volunteer activities should be introduced or not. Such external economic benefits can be measured by the opportunity cost of volunteer activities or the time value of WTW, but this matter will be discussed at the next stage. When this type of small hydroelectric generation project utilizing resident volunteers is introduced, household utility levels increase. Understanding the dynamism between these factors can allow regional governments to adapt the scheme to best fit the needs of individual regions.
    Keywords: small hydroelectric generation; resident volunteers; regional input-output analysis; willingness to work
    JEL: Q42 Q51 R13
    Date: 2016–12
  9. By: Wang, Lu; Favero, Alice; Brown, Marilyn
    Abstract: This study used the GT NEMS model to analyze how the proposed federal regulation on carbon emissions will impact investments in the U.S. electricity generating capacity at the federal and Census Division level for 2016-2030. Results show that in order to reduce emissions by 32% by 2030, cumulative investments will increase from 399 to 414 billion USD by 2030. Under the scenario which addresses carbon leakage - covering new and existing power plants - cumulative investment will reach 475 billion USD by 2030. Addressing carbon leakage will affect not only the size of the investments but also the direction: when only existing power plants are covered investments in natural gas remains almost unchanged (123 billion USD) relative to the Reference case; while under the scenario that covers all power plants, investment in natural gas will be 24% lower and the investments in renewable will be 64% higher than the Reference. Carbon regulation will produce not only losers and winners among energy sources but also among U.S. states. While the South and Midwest states will experience much higher increase in cumulative investments with respect to the national average; Northeast and West states will reduce their overall investments by 2030 under the policy scenarios.
    Keywords: Clean Power Plan, Climate Change Mitigation Policy, Investment, Electricity, United States, Environmental Economics and Policy, Q42, Q43, Q48, Q58,
    Date: 2016–12–23
  10. By: Quentin Perrier (CIRED, Engie); Philippe Quirion (CIRED, CNRS)
    Abstract: In the public debate on energy transition in France, employment figures prominently. We calculate, for the French economy in 2010, the employment content and greenhouse gas intensities in different branches, that is to say the number of jobs and tonne-CO2 equivalent per million euro of final demand. For this we use the input-output table at the most disaggregated level available (64 branches). We develop and then apply a unique methodology to decompose the differences in job content between industries in five factors: the rate of imports of final products, the rate of imports of intermediate goods, the rates of taxes and subsidies, the levels of wages and the share of labor compensation in value added. Finally, we study some intersectoral substitutions that would result from an energy transition to reduce emissions of greenhouse gases.
    Keywords: Emploi, Transition énergétique, Emissions de gaz à effet de serre, Substitutions intersectorielles, Input-output
    JEL: E2 Q5 O13
    Date: 2016–02
  11. By: Noailly, Joëlle; Smeets, Roger
    Abstract: Addressing both the challenge of climate change and the world's growing energy needs will only be possible by achieving a breakthrough in clean technologies in order to deliver safe, clean and sustainable energy for future generations. Such a large-scale technological transition will require massive investments in research and development (R&D) of clean energy production. Within the sector of electricity generation, renewable (REN) energy technologies, such as solar, wind or geothermal energy, can provide a clean alternative to electricity produced from carbon-intensive fossil-fuels (FF). Nonetheless, private firms' investments in advancing innovation for renewable energy technologies face important challenges. [...]
    Date: 2016
  12. By: Dorothée Charlier (University of Montpellier); Bérangère Legendre (IAE Savoie Mont-Blanc, IREGE)
    Abstract: Although fuel poverty is an increasingly serious problem across countries, it has not been well defined or measured in the literature. Currently, an objective measure that takes into account monetary constraints, poor energy efficiency of the dwelling and heating restrictions does not exist. Fuel poverty has been mainly treated as a problem of monetary poverty. However, fuel-impoverished households may differ from those with monetary poverty. Thus, this paper provides a fuel poverty index that takes into account all dimensions of the definition. This index is calculated using objective measures such as disposable income to account for monetary constraints, energy consumption as a measure of energy efficiency and indoor temperature to capture heating restrictions.
    Keywords: Fuel Poverty, Matching Method, Composite indicator, Heating restriction, Energy efficiency
    JEL: Q41 Q48 Q58 C21 C61
    Date: 2016–05
  13. By: Dorothée Charlier (University of Montpellier); Anna Risch (IAE Savoie Mont-Blanc, IREGE); Claire Salmon (IAE Savoie Mont-Blanc, IREGE)
    Abstract: In this article, we assess current public policies, designed to reduce greenhouse gas (GHG) emissions, lower energy consumption, and fight the “energy burden” in the long term, so that it might offer relevant policy recommendations. We develop an existing partial equilibrium model to take into consideration key determinants of excessive energy burden. This analysis reveals that public policies are not sufficient to reach the ambitious objectives for reducing energy consumption and GHG emissions in France. Moreover, the decreases that might occur disguise significant social disparities across households. The joint implementation of multiple instruments leads to interactions that diminish overall policy outcomes. Overall, current public policies produce estimated free-riding rates of 75%. Energy efficiency measures are thus insufficient; governments need to focus more on monetary poverty as a cause of low renovation rates and consider subsidies of renovation costs as a potential solution.
    Keywords: energy burden; public policies; bottom-up simulation; energy consumption; GHG emissions
    JEL: Q41 Q48 Q58 C21 C61
    Date: 2016–02
  14. By: Tovar Reaños, Miguel Angel; Sommerfeld, Katrin
    Abstract: This paper provides the first empirical evidence of the distributional effects of subsidies for the purchase of alternative vehicles based on an extended version of Hausman's exact consumer surplus. Consistently with economic theory, we estimate changes in household welfare, inequality and social welfare corresponding to different reforms. First, we find that an additional tax on conventional fuel is regressive. However, returning the additional tax revenue via lump-sum transfers can alleviate this effect. Second, when the additional revenue is also used to finance subsidies for electrical and compressed natural gas (CNG) vehicles, households that own such vehicles experience welfare gains. However, this policy also increases income inequality and decreases social welfare.
    Keywords: Transport policies,Distributional effects,Electrical vehicles,Passenger cars
    JEL: Q41 R48 C33
    Date: 2016
  15. By: Conti, Chiara; Mancusi, Maria Luisa; Francesca, Sanna-Randaccio; Roberta, Sestini; Elena, Verdolini
    Abstract: A major concern regarding innovation in clean technologies in the EU is that the fragmentation of its innovation system may hinder knowledge flows and, consequently, spillovers across member countries. A low intensity of knowledge flows across EU states can negatively impact their technological base, suppressing opportunities for further innovations and hindering the movement towards the technological frontier. This paper evaluates the fragmentation of the EU innovation system in the field of renewable energy sources (RES) by examining the intensity and direction of knowledge spillovers over the years 1985-2010. We modify the original double exponential knowledge diffusion model to provide information on the degree of integration of EU countries’ innovation efforts and to assess how citation patterns changed over time. We show that EU RES inventors have increasingly built “on the shoulders of the other EU giants”, intensifying their citations to other member countries and decreasing those to domestic inventors. Furthermore, the EU strengthened its position as source of RES knowledge for the US. Finally, we show that this pattern is peculiar to RES, with other traditional (i.e. fossil-based) energy technologies behaving in a completely different way.
    Keywords: Knowledge Spillovers, Renewable Energy Technologies, Fossil Energy Technologies, EU Innovation, Research and Development/Tech Change/Emerging Technologies, Q55, Q58, Q42, O31, O33,
    Date: 2016–12–15
  16. By: Chan, G.; Anadon, L-D.
    Abstract: Effective decision making to allocate public funds for energy technology research, development, and demonstration (R&D) requires considering alternative investment opportunities that can have large but highly uncertain returns and a multitude of positive or negative interactions. This paper proposes and implements a method to support R&D decisions that propagates uncertainty through an economic model to estimate the benefits of an R&D portfolio, accounting for innovation spillovers and technology substitution and complementarity. The proposed method improves on the existing literature by: (a) using estimates of the impact of R&D investments from one of the most comprehensive sets of expert elicitations on this topic to date; (b) using a detailed energy-economic model to estimate evaluation metrics relevant to an energy R&D portfolio: e.g., system benefits, technology diffusion, and uncertainty around outcomes; and (c) using a novel sampling and optimization strategy to calculate optimal R&D portfolios. This design is used to estimate an optimal energy R&D portfolio that maximizes the net economic benefits under an R&D budget constraint. Results parameterized based on expert elicitations conducted in 2009-2011 in the United States provide indicative results that show: (1) an expert-recommended portfolio in 2030, relative to the BAU portfolio, can reduce carbon dioxide emissions by 46 million tonnes, increase economic surplus by $29 billion, and increase renewable energy generation by 39 TWh; (2) uncertainty around the estimates of R&D benefits is large and overall uncertainty increases with greater investment levels; (3) a 10-fold expansion from 2012 levels in the annual R&D budget for utility-scale energy storage, bioenergy, advanced vehicles, fossil energy, nuclear energy, and solar photovoltaic technologies can be justified by returns to economic surplus; (4) the greatest returns to public R&D investment are in energy storage and solar photovoltaics; and (5) the current allocation of energy R&D funds is very different from optimal portfolios. Taken together, these results demonstrate the utility of applying new methods to improve the cost-effectiveness and environmental performance in a deliberative approach to energy R&D portfolio decision making.
    Keywords: decision-making under uncertainty, research policy, public R&D, energy R&D, energy technology
    JEL: O32 O38 G11 Q48 D81
    Date: 2016–12–19
  17. By: Tuyara Gavrilyeva
    Abstract: The huge territory and long distances between settlements (up to 700 km) determine the complex structure of the energy system of Yakutia. The average duration of the heating season in the region is 8-9 months, and 12 months in the Arctic. Electricity generation is carried out mostly by low-capacity boilers using coal and diesel fuel. About 85% of fuel is imported from outside of Yakutia. The northern provision is seasonal, due to a complicated transport scheme. The time of fuel delivery reaches 18 - 30 months. As a result, the net cost of electricity generation in the Arctic is higher than in Central Yakutia in 7-40 times. There are considerable territorial disparities of net costs of heating generation too. The settlements of Yakutia are not compact, have a large area because of the specific agricultural specialization. Construction of new buildings of public services increases the number of low-capacity boilers. There are 1355 heating units operating in villages and cities of Yakutia. The share of houses with central heating varies greatly. In settlements with significant proportion of houses with stove heating there is a reduction in forest area within a radius of 20-40 km, which leads to an increase in environmental problems. Yakutia obtains a certain effect from programs of local energy optimization systems and implementation of energy saving measures, including gasification of settlements, but budget costs are still very significant. This is a common problem for all northern countries. At present the system of cross-subsidization of energy consumption changes. It meant that a part of the energy consumption costs of economic agents have been paid by other economic agents, including the state. Its main reason is population poverty. Actually Inhabitants compensate by own funds only 25.5% of the real cost of central heating, 78.2% - of electricity. It is considerably lower than in Russia in general. The transition to rates, based on real costs, will lead to a rapid loss of population in the Arctic and other remote areas. At the same time the crisis in Russia dictates the necessity of reform of the energy sector, in particular by reducing energy consumption. Some programs envisage the improvement of urban planning, concentration and increase in the density of population in large settlements and towns of Yakutia. Concentration allows to get a significant saving in energy costs, however it leads to an increase in the anthropogenic impact on the environment. Areas, where the largest power plants are located, provide the highest CO2 emission. These are Serebryany Bor (Neryungri district), Yakutsk and Svetly (Mirninsky district). These settlements are the centers of intensive anthropogenic impact on the environment by energy generation activity. The reform of energy system in Yakutia is complicated. It is closely related to the transformation of the spatial structure. Liquidation of the Arctic settlements is objectively impossible due to national security interests, historical and cultural traditions of indigenous peoples that we have to protect. The searching for new technological, spatial, financial and social mechanisms for wellbeing of northern communities is needed. Republic of Sakha (Yakutia) needs a new spatial structure. Moreover, it can be fundamentally new. For example, decentralized, allowing disperse anthropogenic load on the environment, if in the near future, new technologies will provide individual livelihoods and access to basic social services to households in rural areas. Alternatively, it could be more concentrated, not linear-focal and linear as now. When large urban settlements will be located on the main highways or rivers. This problem can be solved in the framework of strategic planning in the region. Continuing of studies of transport isolation, market and economic potential of northern communities are needed.
    Keywords: North; energy system; net cost; energy consumption; heat energy; cross-subsidization; Arctic settlements; population; territorial disparities
    JEL: Q28 Q41 Q56 R32
    Date: 2016–12
  18. By: Vinod Mishra; Russell Smyth
    Abstract: We examine the convergence of energy consumption per capita at the sector level in Australia over the period 1973-74 to 2013-14. To do so, we employ recently developed LM and RALS-LM unit root tests that accommodate up to two endogenously determined structural breaks. The results provide significant support for energy consumption per capita convergence among sectors in Australia.
    Date: 2016–01
  19. By: Kenneth Gillingham; Anders Munk-Nielsen
    Abstract: The consumer price responsiveness of driving demand is central to the welfare consequences of fuel price changes. This study uses rich data covering the entire population of vehicles and consumers in Denmark to find a medium-run price elasticity of driving of -0.30. We uncover an important feature of driving demand: two small groups of much more responsive households that make up the lower and upper tails of the work distance distribution. The first group lives close to work in urban areas. The second group lives outside of major urban areas and has the longest commutes. Access to public transport appears to be the force behind the existence of the tails, enabling the switch away from driving. We find that a fuel price increase of 1 DKK/liter implies an average deadweight loss of 0.66 DKK/liter, but there is considerable heterogeneity and the tails bear a larger share of the loss.
    JEL: Q4 Q5 R2 R4
    Date: 2016–12
  20. By: Juan Moreno-Cruz; M. Scott Taylor
    Abstract: This paper sets out a simple spatial model of energy exploitation to ask how the location and productivity of energy resources affects the distribution of economic activity across geographic space. By combining elements from energy economics and economic geography we link the productivity of energy resources to the incentives for economic activity to agglomerate. We find a novel scaling law links the productivity of energy resources to population sizes, while rivers and roads effectively magnify productivity. We show how our theory's predictions concerning a single core, aggregate to predictions over regional landscapes and city size distributions at the country level.
    JEL: N0 Q0 R0
    Date: 2016–12
  21. By: Marion Drut
    Abstract: Spatial and environmental issues related to mobility are exacerbated in urban areas. Road congestion, rivalry of use for parking spaces and air pollution are major issues regularly at the heart of local transportation policies. They have been dealt with through various approaches. Mass transit have recently been fostered as a solution against road congestion and rivalry of use. These spatial issues relate to the space consumed by transportation modes. Private cars are assumed to consume larger quantities of space than mass transit, while offering similar services, namely origin-to-destination trips. Similarly, cars are the most polluting mode and transportation policies fostering bicycles have thrived in order to reduce air pollution, in particular CO2, and NOX emissions and PM. However, private cars remain the leading transportation mode for commuting trips (except in some large cities, such as Paris where mass transit is the leading mode). On the contrary, shared modes such as taxis, car-sharing and self-service cars or bicycles are often overlooked in transportation policies. In this article, I focus on shared modes, namely vehicle-sharing and self-service vehicles. The contribution is twofold. First, I explore the mechanisms through which shared modes help reduce road congestion and rivalry of use for parking spaces, as well as air pollution, compared to private modes. Second, I highlight the fact that transportation modes do not provide similar services to users. Therefore, gross comparisons in terms of time-space consumptions between modes (Marchand, 1993) are oversimplifying. I suggest to put these gross estimations into perspective accounting for additional services provided by transportation modes. Refined measures of time-space consumptions are presented. When the service provided is accounted for, the gap between mass transit and private cars is reduced. More importantly, the results show that car-sharing and self-service cars constitute relevant alternatives to private cars in terms of time-space consumption per unit of service provided. The analysis provides guidelines for decision-makers since it clearly indicates orders of magnitude for time-space consumptions from various transportation modes. The study reveals that both types of shared modes help reduce spatial and environmental issues related to mobility in urban areas and as such constitute key components of a comprehensive and efficient transportation system. For instance, I demonstrate that shared low-carbon modes, such as self-service bicycles, have the potential to reduce simultaneously both spatial (congestion and rivalry of use) and environmental (air pollution) issues in medium-sized city. Furthermore, I mention the limits of the present organization for shared modes. More precisely, the need for institutionalizing is highlighted for car-sharing, and network expansion required for self-service vehicles.
    Keywords: mobility; shared modes; spatial issues; time-space consumption
    JEL: D6 D61 Q28 Q30
    Date: 2016–12
  22. By: Leonardo Cardoso; Mauricio Bittencourt; Elena Irwin
    Abstract: In a competitive market situation, a symmetric price transmission is expected, and the speed of adjustment of the market should be equal, no matter in which direction input prices are going (up or down). When inputs? prices increase, firms need to pass on costs to avoid negative profit situation. When they go down, firms? reaction is in a direction to avoid market share losses. Therefore, if firms react faster when inputs? prices increase than when they decrease (positive asymmetry), it means a capture of consumers? surplus by the firms. When firms? reaction is slowly when inputs? prices decrease than when they decreases (negative asymmetry), the surplus transfer is from firms to consumers. So far, studies regarding price asymmetry in Brazil used only aggregated database, which likely suffers by summation bias. In a hypothetical city with just two gas stations, one with positive asymmetric behavior and other with negative one, there is high chance that this city accepts the null of a symmetric behavior. The present study will try to overcome this problem with a gas station level dataset. The National Agency for Petroleum, Natural Gas and Biofuels (ANP) has a detailed database with weekly information for gas stations in an unbalanced database, where more than 40% of population is covered every week. This firm-level database has information as purchase and selling price for gasoline, name of gas stations, brand and complete address. This information allows answering if there is price asymmetry in Brazil at firm level. Because database has more than 2 million of observations for more than 17.000 different gas stations, it is also possible to obtain results of price asymmetry against fixed effects to check which of these effects matter to change the likelihood of firms to have price asymmetry. Results indicate that there is heterogeneity regarding price transmission among firms: 71% of gas stations had no asymmetry, 23% had a positive asymmetry pattern and 6% of them had negative asymmetry. Regarding which fixed effects could explain the probability to have a positive asymmetry, higher margins, and a minor number of rivals nearby and be a non-white flag increase the probability of having positive asymmetry. These results strength relations between market power and positive asymmetry and inaugurate a link between spatial competition and price asymmetry transmission.
    Keywords: Firms heterogeneity; asymmetric price; gas stations; gasoline
    JEL: C24 D22 L11 R32
    Date: 2016–12
  23. By: Nat Moser (UCL School of Slavonic and East European Studies)
    Abstract: This paper examines enterprise performance in Russian oil companies between 1992 and 2012. The analysis is based upon longitudinal trend output data, and distinguishes between four different types of owners - outsider private, insider private, federal state and regional state. In comparison with previous studies which considered just 1999-2004, and identified outsider private companies as the best performers, this paper finds that over the longer period 1992-2012 federal state and insider private owned companies actually performed best. The explanation for this relates to ‘institutions’ and the business environment.
    Keywords: Oil; Russia
    Date: 2015–02
  24. By: H. Spencer Banzhaf; Taha Kasim
    Abstract: Analyses of polities to reduce gasoline consumption have focused on two effects, a compositional effect on the fuel economy of the automotive fleet and a utilization effect on how much people drive. However, the literature has missed a third effect: a matching effect, in which high-utilization households are matched to fuel-efficient vehicles in equilibrium. We show that higher gas prices should lead to stronger assortative matching. Empirical estimates using US micro-level data are consistent with this hypothesis. We find the effect of a gas tax through the matching effect is larger than the compositional effect, with a $1 tax saving 1.7% of gas consumption.
    JEL: Q4 Q5
    Date: 2016–12
  25. By: Bailey, Roy E. (University of Essex); Hatton, Timothy J. (University of Essex); Inwood, Kris (University of Guelph)
    Abstract: Atmospheric pollution was an important side effect of coal-fired industrialisation in the nineteenth century. In Britain emissions of black smoke were on the order of fifty times as high as they were a century later. In this paper we examine the effects of these emissions on child development by analysing the heights on enlistment during the First World War of men born in England and Wales in the 1890s. We use the occupational structure to measure the coal intensity of the districts in which these men were observed as children in the 1901 census. We find strong negative effects of coal intensity on height, which amounts to difference of almost an inch between the most and least polluted localities. These results are robust to a variety of specification tests and they are consistent with the notion that the key channel of influence on height was via respiratory infection. The subsequent reduction of emissions from coal combustion is one factor contributing to the improvement in health (and the increase in height) during the twentieth century.
    Keywords: atmospheric pollution, health and height
    JEL: I15 N13 Q53
    Date: 2016–12
  26. By: Taylor, Lance; Rezai, Armon; Foley, Duncan K.
    Abstract: A demand-driven growth model involving capital accumulation and the dynamics of greenhouse gas (GHG) concentration is set up to examine macroeconomic issues raised by global warming, e.g. effects on output and employment of rising levels of GHG; offsets by mitigation; relationships among energy use and labor productivity, income distribution, and growth; the economic significance of the Jevons and other paradoxes; sustainable consumption and possible reductions in employment; and sources of instability and cyclicality implicit in the twodimensional dynamical system. The emphasis is on the combination of biophysical limits and Post- Keynesian growth theory and the qualitative patterns of system adjustment and the dynamics that emerge.
    Keywords: Demand-driven growth; climate change; demand and distribution; energy use; energy productivity; labor productivity; employment
    Date: 2015–03
  27. By: Juan Aparicio (Center of Operations Research (CIO), Universidad Miguel Hernández de Elche); Javier Barbero (European Commission - JRC); Magdalena Kapelko (Institute of Applied Mathematics, Department of Logistics, Wroclaw University of Economics); Jesús T. Pastor (Center of Operations Research (CIO), Universidad Miguel Hernández de Elche); José L. Zofío (Departamento de Análisis Económico: Teoría Económica e Historia Económica. Universidad Autónoma de Madrid)
    Abstract: Over the last twenty years an accelerating number of studies have relied on the standard definition of the Malmquist-Luenberger index proposed by Chung et al. (1997) [J. Environ. Manage., 51 229-240], to assess environmental sensitive productivity change. While recent contributions have shown that it suffers from relevant drawbacks related to inconsistencies and infeasibilities, no one has studied systematically the performance of the original model, and to what extent the existing results are unreliable. This paper introduces the optimization techniques that allow implementing the first model solving these problems, and using a country level database including air pollutants, systematically compares the results obtained with both approaches. We discuss the relative number, magnitude and significance of the disparities that researchers should expect if resorting to the original model. Results show that inconsistencies and infeasibilities in the original model are increasing in the number of undesirable outputs included, reaching remarkable values that seriously question the reliability of results, and compromise any policy recommendation based on them.
    Keywords: Malmquist-Luenberger Index, Technical Change, Data Envelopment Analysis, Computational Analysis
    JEL: C61 D24 O47 Q53
    Date: 2016–12
  28. By: Rezai, Armon; Van der Ploeg, Frederick
    Abstract: A new IAM is used to calculate the optimal tradeoff between, on the one hand,locking up fossil fuel and curbing global warming, and, on the other hand,sacrificing consumption now and in the near future. This IAM uses the Oxford carbon cycle, which differs from DICE, FUND and PAGE in that cumulative emissions are the key driving force of changes in temperature. We highlight how time impatience, intergenerational inequality aversion and expected trend growth affect the time paths of the optimal global carbon tax and the optimal amount of fossil fuel reserves to leave untapped. We also compare these with the adverse and deleterious global warming trajectories that occur if no policy actions are taken. (authors' abstract)
    Keywords: unburnable fossil fuel; cumulative emissions; optimal carbon tax; Oxford carbon cycle; trend growth; intergenerational inequality aversion; time impatience
    Date: 2016
  29. By: Löschel, Andreas; Lutz, Benjamin Johannes; Managi, Shunsuke
    Abstract: We investigate the effect of the European Union Emissions Trading System (EU ETS) on the economic performance of manufacturing firms in Germany. Our difference-in-differences framework relies on several parametric conditioning strategies and nearest neighbor matching. As a measure of economic performance, we use the firm specific distance to the stochastic production frontier recovered from official German production census data. None of our identification strategies provide evidence for a statistically significant negative effect of emissions trading on economic performance. On the contrary, the results of the nearest neighbor matching suggest that the EU ETS rather had a positive impact on the economic performance of the regulated firms, especially during the first compliance period. A subsample analysis confirms that EU ETS increased the efficiency of treated firms in at least some two-digit industries.
    Keywords: Control of Externalities,Emissions Trading,Economic Performance,Manufacturing,Difference-in-Differences,Nearest Neighbor Matching,Stochastic Production Frontier
    JEL: Q52 D22 Q38 Q48
    Date: 2016
  30. By: Spash, Clive L.; Theine, Hendrik
    Abstract: In recent years, the search for regulatory regimes in order to effectively address human induced climate change have become a prominent political and academic issue. Emission trading schemes have risen in popularity and are widely believed to be an effective, as well as economically efficient, measure and have become a favoured government strategy. On the individual level, many individuals in the industrialised nations now undertake actions to offset their personal direct greenhouse gas (GHG) emissions by voluntarily purchasing carbon credits, normally in association with product or service purchase. While this is a fast growing market, advertised as creating a carbon neutral consumer society, the voluntary carbon credit sector raises fundamental problems with respect to verification and credibility of the claimed offsets and associated projects. Lack of regulation and legal oversight leads to the impossibility of actually obtaining or verifying information on the consequences of voluntary credit purchases. Providers of offset credits who are driven by greed and easy profits will underfunded emissions abatement projects and pay little attention to quality standards. Corporate "green washing" is also likely through voluntary offsets marketed as going carbon neutral. This paper connects voluntary offsets to psychological and behavioural impacts on the individual. We identify three specific issues: the psychology of marketing and purchasing of voluntary offsets, commodification and crowding out of intrinsic motivations and the implicit ethics with its own psychological implications. We also discuss the political economy of voluntary carbon markets and their geo-political implications in terms of the global North- South divide and ethical responsibility for action on human induced climate change. This raises serious concerns over the individualisation of a collective problem, what can and should be expected of individuals as ethical consumers and how markets operate in practice. Such aspects place individual behaviour within a broader social and institutional context that questions the trend in market environmentalism and its impacts on the capability of humans to relate to nature. (authors' abstract)
    Date: 2016–10
  31. By: Kriström, Bengt (CERE and the Department of Forest Economics, SLU)
    Abstract: I embed a electricity certificate system, mandating that a certain fraction of total electricity production must come from renewable sources, in a stylized competitive economy and derive a general equilibrium cost-benefit rule from perturbing the regulation. The welfare consequences (ignoring distributional effects) of the perturbation are compactly summarized in a simple formula.
    Keywords: general equilibrium; cost-benefit
    JEL: D50 D61
    Date: 2016–12–09
  32. By: Kesternich, Martin; Römer, Daniel; Flues, Florens
    Abstract: We study the effect of a subtle change in the choice architecture on offsetting behavior. In a large-scale field experiment, we examine repeated voluntary contributions to a carbon offsetting program during the online purchase of long-distance bus tickets. In the control group, travelers had the option to offset their carbon emissions resulting from their bus trip, but they could also simply ignore the offer. In the treatment group, travelers were forced to actively choose whether to offset their carbon emissions or not. This "active choice" requirement immediately increased participation in the offsetting program by almost 50%. Investigating returning customers, we find that this treatment remains effective over time. We report evidence that some customers tend to keep avoiding active contribution decisions in subsequent booking decisions.
    Keywords: voluntary carbon offsets,randomized field experiment,default setting,choice architecture
    JEL: H41 C93 D03 L92
    Date: 2016
  33. By: Nguyen, Duc Khuong; Sévi, Benoît; Sjö, Bo; Salah Uddin, Gazi
    Abstract: Most of the existing literature dealing with the relationship between carbon emissions, energy consumption and economic growth either suffers from ignoring relevant variables such as trade openness or investment, or suffers from using econometric methods that are unable to distinguish between short and long-term causality and are not robust to the degree of integration of time series used for the analysis. This paper suggests using the autoregressive distributed lag (ARDL) approach along with additional explanatory variables such as measures of trade and investment to shed a new light on the link between emissions, energy consumption and income in the two largest and energy-intensive developing economies: China and India. Our results, over the 1971-2009 period, provide evidence that investment plays a major role in shaping the relationship between carbon emissions, energy consumption and income in China while this is not the case in India. Furthermore, trade openness is found to play a key function in the short-term in China but does not contribute to the emissions-energy-growth scenario in India.
    Keywords: Energy; carbon emissions; income; ARDL approach; India; China.
    JEL: Q43 Q53 Q56
    Date: 2015–09
  34. By: Bosello, Francesco; Orecchia, Carlo; Raitzer, David A.
    Abstract: Southeast Asia is one of the most vulnerable regions of the world to the impacts of climate change. At the same time, the region is also following a trajectory that could make it a major contributor to greenhouse gas emissions in the future. Understanding the economic implications of policy options for low carbon growth is essential to formulate instruments that achieve the greatest emissions reductions at lowest cost. This study focuses on five developing countries of Southeast Asia that collectively account for 90% of regional emissions in recent years—Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam. The analyses are based on the CGE economy-energy-environment model ICES under an array of scenarios reflecting business as usual, fragmented climate policies, an approximately 2.4°C post 2020 global climate stabilization target, termed 650 parts per million (ppm) carbon dioxide (CO2) equivalent (eq), and an approximately 2°C global target (termed 500 ppm CO2 eq). Averted deforestation through reducing emissions from forest degradation and deforestation (REDD) is included in some scenarios. The study shows that global and coordinated action is found to be critical to the cost effectiveness of emissions stabilization policies. A 650ppm stabilization scenario (below 3°C in 2100) has a similar cost to the region to current fragmented targets, but achieves much higher levels of emissions reductions. However, only some of the countries have short-term emissions targets that are consistent with a stabilization scenario at 650ppm: these are Indonesia, Philippines and Viet Nam. None of the countries’ mid-term targets are coherent with more ambitious stabilization scenario at 500ppm.
    Keywords: Climate Change Mitigation, Asian Economies, Computable General Equilibrium Models, Environmental Economics and Policy, Q54, Q58, C68,
    Date: 2016–12–15
  35. By: Naqvi, Syed Ali Asjad
    Abstract: Economic policy in the EU faces a trilemma of solving three challenges simultaneously - growth, distribution, and the environment. In order to assess policies that address these issues simultaneously, economic models need to account for both sector-sector and sector-environment feedbacks within a single framework.This paper presents a multi-sectoral stock-flow consistent (SFC) macro model where a demand-driven economy consisting of multiple institutional sectors - firms, energy, households, government, and financial - interacts with the environment. The model is calibrated for the EU region and five policy scenarios are evaluated; low consumption, a capital stock damage function, carbon taxes, higher share of renewable energy, and technological shocks to productivity. Policy outcomes are tracked on overall output, unemployment, income and income distributions, energy, and emission levels. Results show that investment in mitigation technologies allows for absolute decoupling and ensures that the above three issues can be solved simultaneously. (author's abstract)
    Keywords: ecological macroeconomics; stock-grow consistent; growth; distribution; environment; European Union
    Date: 2015–02–06
  36. By: Bosello, Francesco; Marangoni, Giacomo; Orecchia, Carlo; Raitzer, David A.; Tavoni, Massimo
    Abstract: Southeast Asia is at a time one of the most vulnerable region to the impacts of a changing climate, with millions of its inhabitants still trapped in extreme poverty without access to energy and employed in climate-sensitive sectors, and, potentially, one of the world’s biggest contributors to global warming in the future. Fortunately, major Southeast Asian countries are also implementing policies to improve their energy and carbon efficiency and are discussing if and how to extend these further. The present study aims to assess the implications for energy consumption, energy intensity and carbon intensity in the Southeast Asia region of a set of short-term and long-term de-carbonization policies characterized by different degrees of ambition and international cooperation. The analysis applies two energy-climate-economic models. The first, the fully dynamic Integrated Assessment model WITCH, is more aggregated in the sectoral and country representation, but provides a detailed technological description of the energy sector. The second, the ICES Computable General Equilibrium model, offers a richer sectoral breakdown of the economy and of international trade patterns, but is less refined in the representation of technology. The joint application of these two complementary models allows the capture of distinct and key aspects of low- carbon development paths in Southeast Asia.
    Keywords: Climate Change Mitigation, Asian Economies, Computable General Equilibrium Models, Environmental Economics and Policy, Q54, Q58, C68,
    Date: 2016–12–23
  37. By: Tara Shine (OECD); Gisela Campillo (OECD)
    Abstract: This working paper reflects on the outcomes of the 2015 agreements on development and environment including the Sendai Framework, the Addis Ababa Action Agenda, the 2030 Agenda and the Sustainable Development Goals, and the Paris Agreement. It identifies common themes emerging from the international agreements and their implications for development co-operation providers and their partners. The paper outlines existing synergies between climate and development finance and proposes factors to improve coherence for sustainable development with a particular focus on the role of development co-operation providers in the post-2015 context. The paper contributes to the discussion about how the international community can successfully deliver on the commitments to sustainable development and climate action made in 2015.
    Keywords: climate change, climate finance, development co-operation, development finance, sustainable development
    JEL: N5 O19 P48 Q56
    Date: 2016–12–22
  38. By: Michael Flaherty; Arkady Gevorkyan; Siavash Radpour; Willi Semmler (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: The funding of climate mitigation and adaptation policies has become an essential issue in climate negotiations. Emissions trading schemes (ETS) and carbon tax policies are widely disccussed as viable mitigation strategies, the revenue from which might then be used for adaptation efforts. In most current models, the burden of enacting mitigation and adaptation policies falls on current generations. This paper expands on a recent article by Sachs (2014) that proposes intertemporal burden sharing, suggesting that implementation of climate policies would represent a Pareto improving strategy for both current and future generations. In particular, this paper proposes that green bonds (also referred to as climate bonds) represent an immediately implementable opportunity to initiate Sachs' plan; the issuance of green bonds could fund immediate investment in climate mitigation such that the debt might be repaid by future generations, those who benefit most from reduced environmental damages. The Sachs model is a discrete time overlapping generations model which we generalize and turn into a continuous time version exhibiting three major stages. We solve this three phase model by using a new numerical procedure called NPMC that allows for finite horizon solutions and phase changes. We show that the issued bonds can be repaid and the debt is sustainable within a finite time horizon. We also study econometrically whether the current macroeconomic environment is conducive to successfully phasing in such climate bonds.
    Keywords: Cimate Bonds, Finance, NMPC
    JEL: Q54 F37
    Date: 2016–03
  39. By: Wieland, Hanspeter; Giljum, Stefan
    Abstract: Politics' demand for informative consumption-based emission assessments based on multi-regional input output (MRIO) databases is steadily increasing. Based on the MRIO database EXIOBASE 3, we exemplify the utility of a range of analytical tools and discus their potential insights for consumption-based policies. The analysis decomposes the overall EU carbon footprint into product groups as well as into emitting regions. Subsequently, we illustrate the potential of applying production layer decomposition (PLD) and structural path analysis (SPA) for the assessment of global supply-chains related to the EU carbon footprint and their structural changes over time. We close with some policy ecommendations on reducing carbon footprint hot spots.
    Keywords: Carbon footprint, multi-regional input-output analysis, analytical tools, supply chains, production layer decomposition, structural path analysis
    Date: 2016–11
  40. By: Alberini, Anna; Ščasný, Milan; Bigano, Andrea
    Abstract: The implementation of decarbonization policies depends crucially on the public’s willingness to pay for them. We use stated preference methods to investigate the public’s preferences for such policies. We ask three research questions. First, does the willingness to pay (WTP) for each ton of CO2 emissions reductions depend on the policies and on individual characteristics of the respondents? Second, how extensive is the variation associated with these factors? Third, what factors affect support for or opposition to a carbon tax? Based on the responses to discrete choice experiments from a sample of Italians, we find that the WTP per ton of CO2 ranges between € 6 and 130, depending on whether the public program is based on taxes, incentives, information-based approaches or standards. Further allowing for individual characteristics of the respondents, such as gender or education, and knowledge of climate change, results in a 300% change in WTP, holding the policy instrument the same. We conclude that the variation associated with the policy instrument is approximately of the same order of magnitude as that associated with individual characteristics of the respondents.
    Keywords: Climate Change Mitigation, WTP per ton of CO2 Emissions Reduced, Choice Experiments, Environmental Economics and Policy, Q41, Q48, Q54, Q51,
    Date: 2016–12–23
  41. By: William D. Nordhaus
    Abstract: Climate change remains one of the major international environmental challenges facing nations. Yet nations have to date taken minimal policies to slow climate change. Moreover, there has been no major improvement in emissions trends as of the latest data. The current study uses the updated DICE model to present new projections and the impacts of alternative climate policies. It also presents a new set of estimates of the uncertainties about future climate change and compares the results will those of other integrated assessment models. The study confirms past estimates of likely rapid climate change over the next century if there are not major climate-change policies. It suggests that it will be extremely difficult to achieve the 2°C target of international agreements even if ambitious policies are introduced in the near term. The required carbon price needed to achieve current targets has risen over time as policies have been delayed.
    JEL: C15 F6 Q5 Q54
    Date: 2016–12
  42. By: Spash, Clive L.
    Abstract: At the 21st session of the Conference of the Parties to the United Nations Framework Convention on Climate Change held in Paris, France, 30 November to 11 December 2015, an Agreement was reached by the international community including 195 countries. The Agreement has been hailed, by participants and the media, as a major turning point for policy in the struggle to address human induced climate change. The following is a short critical commentary in which I briefly explain why the Paris Agreement changes nothing. I highlight how the Agreement has been reached by removing almost all substantive issues concerning the causes of human induced climate change and offers no firm plans of action. Instead of substantive cuts in greenhouse gas emissions, as soon as possible, the intentions of the parties promise escalation of damages and treat worst case scenarios as an acceptable 50:50 chance. The Paris Agreement signifies commitment to sustained industrial growth, risk management over disaster prevention, and future inventions and technology as saviour. The primary commitment of the international community is to maintain the current social and economic system. The result is denial that tackling greenhouse gas emissions is incompatible with sustained economic growth. The reality is that Nation States and international corporations are engaged in an unremitting and ongoing expansion of fossil fuel energy exploration, extraction and combustion, and the construction of related infrastructure for production and consumption. The targets and promises of the Paris Agreement bear no relationship to biophysical or social and economic reality. (author's abstract)
    Date: 2016–01–26
  43. By: Nesje, Frikk (Dept. of Economics, University of Oslo); Asheim, Geir (Dept. of Economics, University of Oslo)
    Abstract: The future effects of climate change may induce increased intergenerational altruism. But will increased intergenerational altruism reduce the threat of climate change? In this chapter we investigate this question. In a second-best setting with insufficient control of greenhouse gas emissions in the atmosphere, increased transfers to future generations through accumulation of capital might result in additional accumulation of greenhouse gases, and thereby aggravate the climate problem. In contrast, transfers to the future through control of greenhouse gas emissions will alleviate the climate problem. Whether increased intergenerational altruism is a means for achieving accumulation of consumption potential (through accumulation of capital) without increasing the climate threat depends on how it affects factors motivating the accumulation of capital and the control of emissions of greenhouse gases. An argument is provided for why increased intergenerational altruism in fact will aggravate the climate problem. We use the models of Jouvet et al. (2000), Karp (forthcoming) and Asheim and Nesje (forthcoming) to facilitate the discussion.
    Keywords: Intergenerational altruism; climate change
    JEL: D63 D64 Q01 Q54
    Date: 2016–09–11
  44. By: Spash, Clive L.; Gattringer, Clemens
    Abstract: Human induced climate change poses a series of ethical challenges to the current political economy, although it has often be regarded by economists as only an ethical issue for those concerned about future generations. The central debate in economics has then concerned the rate at which future costs and benefits should be discounted. Indeed the full range of ethical aspects of climate change are rarely even discussed. Despite recent high profile and lengthy academic papers on the topic the ethical remains at best superficial within climate change economics. Recognising the necessary role of ethical judgment poses a problem for economists who conduct exercises in cost-benefit analysis and deductive climate modelling under the presumption of an objectivity that excludes values. Priority is frequently given to orthodox economic methodology, but that this entails a consequentialist utilitarian philosophy is forgotten while the terms of the debate and understanding is simultaneously restricted. We set out to raise the relevance of a broader range of ethical issues including: intergenerational ethics as the basis for the discount rate, interregional distribution of harm, equity and justice issues concerning the allocation of carbon budgets, incommensurability in the context of compensation, and the relationship of climate ethics to economic growth. We argue that the pervasiveness of strong uncertainty in climate science, incommensurability of values and nonutilitarian ethics are inherent features of the climate policy debate. That mainstream economics is ill-equipped to address these issues relegates it to the category of misplaced concreteness and its policy prescriptions are then highly misleading misrepresentations of what constitutes ethical action. (authors' abstract)
    Keywords: Climate change; economics; ethics; carbon budgets; discounting; compensation; harm; intergenerational equity; intragenerational distribution; justice; consequentialism; utilitarianism; incommensurability; risk; uncertainty; cost-benefit analysis; growth economy
    Date: 2016–06

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