nep-ene New Economics Papers
on Energy Economics
Issue of 2017‒03‒26
forty-one papers chosen by
Roger Fouquet
London School of Economics

  1. Synthesis Report on Socio-environmental Impacts of Coal and Coal-fired Power Plants in Vietnam By Minh Ha-Duong; An Truong; Hong Nam Nguyen; Hoang Anh Nguyen Trinh
  2. Power Sector Vision Towards 100% Renewable Electricity by 2050 In Greater Mekong Region - Vietnam Report Part A By Jean-Philippe Denruyter; Thu Trang Nguyen; Thanh Binh Hoang; Lee Poston; Kelsey Hartman; Shoon So Oo; Aung Myint; David Allan; Pierre-Marc Blanchet; Richard De Ferranti; John Mcginley; Cam Nhung Pham; Khanh Nguy Thi; Decharut Sukkumnoed; Trine Glue Doan; Hoang Anh Nguyen Trinh; Minh Ha-Duong; Hai Long Nguyen; Hoai-Son Nguyen
  3. On the Heterogeneity of the Economic Value of Electricity Distribution Networks: an Application to Germany By Marius Stankoweit; Markus Groth; Daniela Jacob
  4. An Analysis of the Costs of Energy Saving and CO2 Mitigation in Rural Households in China Abstract: Households may imperfectly implement energy saving measures. This study identifies two factors resulting in imperfect use of energy-saving technology by households. First, households often continue to use old technologies alongside new ones, and, second, technologies have shorter actual lifetimes than their designed lifetimes. We take these factors into account when computing marginal energy conservation cost and marginal CO2 abatement cost using data collected from a survey of rural households in three provinces in China. The results show that most space heating technologies are cost negative and their marginal abatement cost under full implementation ranges from -60 to 15 USD/t-CO2, while the marginal abatement cost of cooking technologies ranges from 12 to 85 USD/t-CO2. The marginal abatement costs of the majority of technologiesincreased after accounting for the two implementation factors. The marginal abatement cost in the imperfect implementation scenario is higher, with a range of -1 to 15 USD/t-CO2 for space heating, and 18 to 165 USD/t-CO2 for cooking. Assuming implementation factors are constant until 2035, annually achievable CO2 mitigation by 2035 is estimated to be 57, 11, and 10 Mt-CO2/y in Hebei, Guizhou, and Guangxi Provinces, respectively. By Weishi Zhang; David I. Stern; Xianbing Liu; Wenjia Cai; Can Wang
  5. Partial equilibrium model of Czech energy sector – scenarios of future development By Lukáš Rečka; Milan Ščasný
  6. Individual preference for the alternative fuel vehicles and their attributes in Poland. By Milan Scasny; Milan Scasny; Iva Zverinova; Mikolaj Czajkowski
  7. What factors affect the competiveness of power generation sector in China? An analysis based on game cross-efficiency By Bai-Chen Xie; Jie Gao; Shuang Zhang; ZhongXiang Zhang
  8. Technology Choices in the U.S. Electricity Industry before and after Market Restructuring By Zsuzsanna Csereklyei; David I. Stern
  9. What Factors Affect the Competiveness of Power Generation Sector in China? An Analysis Based on Game Cross-efficiency By Bai-Chen Xie; Jie Gao; Shuang Zhang; ZhongXiang Zhang
  10. The French nuclear bet By Quentin Perrier
  11. Energy prices, environmental policies and investment: Evidence from listed firms By Dennis Dlugosch; Tomasz Kozluk
  12. Foreign Direct Investment and The Pollution Haven Hypothesis: Evidence from Listed Firms By Grégoire Garsous; Tomasz Kozluk
  13. Adopting a Cleaner Technology: The Effect of Driving Restrictions on Fleet Turnover By Hernán Barahona; Francisco Gallego; Jeanne Juan-Pablo Montero
  14. Vertical and Horizontal Redistributions from a Carbon Tax and Rebate By Julie Anne Cronin; Don Fullerton; Steven E. Sexton
  15. Energy Paths in the European Union: A Model-Based Clustering Approach By Zsuzsanna Csereklyei; Paul W. Thurner; Johannes Langer; Helmut Küchenhoff
  16. The Surprising Pass-Through of Solar Subsidies By Jacquelyn Pless; Arthur A. van Benthem
  17. Effects of Institutions and Natural Resources in a Multiple Growth Regime By Yacine Belarbi; Lylia Sami; Said Souam
  18. Does Oil Predict Gold? A Nonparametric Causality-in-Quantiles Approach By Shahbaz, Muhammad; Balcilar, Mehmet; Ozdemir, Zeynel Abidin
  19. Technology Treaties and Climate Change By Hans Gersbach; Marie-Catherine Riekhof
  20. Moral Hazard and the Energy Efficiency Gap: Theory and Evidence By Louis-Gaëtan Giraudet; Sébastien Houde; Joseph Maher
  21. A quest for significance: Gulf oil monarchies' international 'soft power' strategies and their local urban dimensions By Steffen Hertog
  22. Fiscal Institutions and Macroeconomic Managment in Resource Rich Economies: the Case of Yemen By Mahmoud Al Iriani; Yahsob Al Eriani
  24. A regime-switching stochastic volatility model for forecasting electricity prices By Peter Exterkate; Oskar Knapik
  25. Modelling Realized Volatility in Electricity Spot Prices: New insights and Application to the Japanese Electricity Market By Aitor Ciarreta; Peru Muniainy; Ainhoa Zarraga
  26. The Impact of Macroeconomic News Surprises and Uncertainty of Major Economies on Returns and Volatility of Oil Futures By Walid Bahloul; Rangan Gupta
  27. Biomass gasification in Southeast Asia: Factors influencing technology adoption in Cambodia By Hong Nam Nguyen; Hoai-Son Nguyen; Minh Ha-Duong; Laurent Van de Steene
  28. Providing Efficient Network Access to Green Power Generators : A Long-term Property Rights Perspective By Petropoulos, G.; Willems, Bert
  29. Outdoor cooking prevalence in developing countries and its implication for clean cooking policies By Langbein, Jörg; Peters, Jörg; Vance, Colin
  30. The Impact of the EU-ETS on the Aviation Sector: Competitive Effects of Abatement Efforts by Airlines. By Nava, Consuelo R.; Meleo, Linda; Cassetta, Ernesto; Morelli, Giovanna
  31. A Simple Framework for Climate-Change Policy under Model Uncertainty By Stergios Athanasoglou; Valentina Bosetti; Laurent Drouet
  32. Country-Specific Oil Supply Shocks and the Global Economy: a Counterfactual Analysis By Kamiar Mohaddes; M. Hashem Pesaran
  33. Estimating the Income Counterfactual for Oil Producing Countries of the MENA Region By Mahdi Majbouri
  34. Evolution of Modeling of the Economics of Global Warming: Changes in the DICE model, 1992-2017 By William D. Nordhaus
  35. Smog in Our Brains: Gender Differences in the Impact of Exposure to Air Pollution on Cognitive Performance By Chen, Xi; Zhang, Xiaobo; Zhang, Xin
  36. Do Natural Resources Inhibit Transparency? By Hamid Mohtadi; Michael Ross; Stefan Ruediger
  37. Weathering Collapse: An Assessment of the Financial and Operational Situation of the Venezuelan Oil Industry By Igor Hernandez; Francisco Monaldi
  38. Do the effects of social nudges persist? Theory and evidence from 38 natural field experiments By Alec Brandon; Paul Ferraro; John List; Robert Metcalfe; Michael Price; Florian Rundhammer
  39. Building a Northeast Asian Economic Community By Cho , Lee-Jay; Lee , Chang-Jae
  40. Checking Gollier and Weitzman's solution of the "Weitzman-Gollier puzzle" By Szekeres, Szabolcs
  41. Reducción de Emisiones Globales de Carbono Refinar el Cobre en Chile By Guino Sturla Zerene; Eugenio Figueroa B.; Massimiliano Sturla Z.; Jose Flores P.

  1. By: Minh Ha-Duong (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); An Truong (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi); Hong Nam Nguyen (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi); Hoang Anh Nguyen Trinh (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi)
    Abstract: This report shows the impacts of coal mining and coal-based electricity generation on the Vietnamese society and environment. Five impacts categories were examined: water, air and soil pollution, local people’s livelihood and health. We studied impacts now and extrapolated according to Vietnam’s current Power Development Plan –namely PDP VII revised– which prescribes to expand the coal-fired power capacity from about 10 GW today in 2015 to 55 GW by 2030. Results show that coal mining and coal-based electricity generation have high, unsustainable, local impacts. Our studies found that levels of dust in the air systematically exceeded the legal safe standards. So did the level of heavy metals and other toxic pollutants in the water we studied. We observed resettlement issues which were not solved appropriately, and local job creation promises which were not followed up in action. We assess that by 2030, Vietnam’s coal power plants would create 30 million tonnes of coal ash to be disposed. We estimate that the PDP VII entails importing at least 50 million tonnes of coal per year in 2030. This would compromise energy independence, creating national security risks. We argue further that a fivefold expansion of coal power generation capacity is incompatible with the humanity’s goal of stabilizing climate change below 2°C of global warming. In conclusion, we propose engineering and public policy recommendations towards the green growth strategy of Vietnam, which would better integrate the country in the world’s energy transition towards a low carbon society.
    Keywords: vietnam, impact, charbon
    Date: 2016–06–30
  2. By: Jean-Philippe Denruyter (WWF - Fonds mondial pour la nature); Thu Trang Nguyen (VSEA - Vietnam Sustainable Energy Alliance); Thanh Binh Hoang (VSEA - Vietnam Sustainable Energy Alliance); Lee Poston (VSEA - Vietnam Sustainable Energy Alliance); Kelsey Hartman (VSEA - Vietnam Sustainable Energy Alliance); Shoon So Oo (VSEA - Vietnam Sustainable Energy Alliance); Aung Myint (VSEA - Vietnam Sustainable Energy Alliance); David Allan (VSEA - Vietnam Sustainable Energy Alliance); Pierre-Marc Blanchet (VSEA - Vietnam Sustainable Energy Alliance); Richard De Ferranti (VSEA - Vietnam Sustainable Energy Alliance); John Mcginley (VSEA - Vietnam Sustainable Energy Alliance); Cam Nhung Pham (VSEA - Vietnam Sustainable Energy Alliance); Khanh Nguy Thi (VSEA - Vietnam Sustainable Energy Alliance); Decharut Sukkumnoed (VSEA - Vietnam Sustainable Energy Alliance); Trine Glue Doan (VSEA - Vietnam Sustainable Energy Alliance); Hoang Anh Nguyen Trinh (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi); Minh Ha-Duong (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Hai Long Nguyen (GreenID - Trung tâm Phát triển Sáng tạo Xanh, VSEA - Vietnam Sustainable Energy Alliance); Hoai-Son Nguyen (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Although electricity from renewable resources, primarily from hydro energy, has been increasing in Vietnam in the last two decades, fossil fuel-based electricity still dominates the power generation system in the country. The share of power generation capacity from coal and gas was nearly 54% in 2015 . This share is expected to further increase in the coming years based on the official power development plan of Vietnam, despite Vietnamese fossil energy resources being scarce, with its oil and gas reserves likely to be depleted in the few decades to come . Hence, a necessary question is: could Vietnam be successful in achieving a low carbon power system and pursue a low carbon economy in the next few decades? Or will the country continue its dependence on fossil fuels? The Intelligent Energy Systems Pty Ltd (“IES”) and Mekong Economics (“MKE”) were commissioned by WWF – Greater Mekong Programme Office (“WWF-GMPO”) to undertake a project called “Power Sector Vision: Alternatives for power generation in the Greater Mekong Sub-region”. This was to develop scenarios for the power sector of countries in the Greater Mekong Sub-region (GMS) that are in line with WWF’s Global Energy Vision that outlines a 100% renewable energy supply by 2050. The objectives of WWF’s energy vision are: (i) contribute to reduction of global greenhouse emissions (reduction by >80% based on1990 levels by 2050); (ii) reduce dependency on unsustainable hydro and nuclear power; (iii) enhance energy access; (iv) take advantage of new technologies and solutions; (v) enhance power sector planning frameworks: multi-stakeholder participatory process; and (vi) develop enhancements for energy policy frameworks. The purpose of Power Sector Vision report is to provide detailed country-level descriptions of three scenarios for the power sector of the Socialist Republic of Viet Nam (Viet Nam): • Business as Usual (BAU) power generation development path which is based on current power planning practices, current policy objectives. • Sustainable Energy Sector (SES) scenario, where measures are taken to maximally deploy renewable energy and energy efficiency measures to achieve a near-100% renewable energy power sector; and • Advanced Sustainable Energy Sector (ASES) scenario, which assumes a more rapid advancement and deployment of new and renewable technologies as compared to the SES. The scenarios were based on public data, independent assessments of resource potentials, information obtained from published reports and power system modelling of the GMS region for the period 2015 to 2050.
    Keywords: électricité, scénarios, Vietnam
    Date: 2016
  3. By: Marius Stankoweit (Leuphana University Lueneburg, Germany; Climate Service Center Germany (GERICS)); Markus Groth (Leuphana University Lueneburg, Germany; Climate Service Center Germany (GERICS)); Daniela Jacob (LLeuphana University Lueneburg, Germany; Climate Service Center Germany (GERICS))
    Abstract: The reliability of the electricity grid is of vital signicance for the proper functioning of a society and its economy. The aim of this study is to develop a methodology to quantify differences in the electricity distribution grid's economic importance, and investigate limitations from its application to Germany. To this end, the economic value created from electricity consumption is related to the infrastructure installed to generate that economic value. Based on the Value of Lost Load concept, which captures a consumer's willingness to pay for avoided electricity outages, a macroeconomic approach is applied to determine the economic value generated per kWh on the spatial resolution of counties. Each voltage level's grid length is selected as a proxy for the infrastructure installed. Geographic intersections between counties and network operators are exploited to harmonise these data such that both relate to the same reference unit. The results highlight electricity distribution grids of distinct relative economic importance. Especially under consideration of relevant climate risks, the outcomes strengthen the scientic basis for climate services to the energy sector, and can contribute to the design planning of the distribution grid with respect to for example resilience, redundancy, maintenance and retrotting measures.
    Keywords: Blackout costs, Climate Risks, Economic assessment, Electricity distribution networks, Energy transition, Supply Security, Value of lost grid, Value of lost load
    JEL: D61 L94 Q40 Q41 Q54
    Date: 2017–03
  4. By: Weishi Zhang (Department of Geography and Resource Management & Institute of Environment, Energy and Sustainability, The Chinese University of Hong Kong, Hong Kong, China); David I. Stern; Xianbing Liu; Wenjia Cai; Can Wang
    Keywords: Energy saving technology, cost estimation, rural households, China
    JEL: Q41 Q42 Q54
    Date: 2017–03
  5. By: Lukáš Rečka; Milan Ščasný
    Abstract: What is the optimal strategy for the Czech energy sector: Stay by brown coal dominance, build new nuclear power reactors or increase the share of natural gas and renewables? Will it be profitable to build two new nuclear reactors and to open new brown mines with parallel investments into current and new brown coal power and CHP plants at the same time? We try to find the answer to these highly topical questions. A public tender process for contractors to build two new nuclear reactors was cancelled in its final stage in April 2014. But there is a plan to open new tender in 2016. At the same time, public and political discussion about opening new brown coal mines is back in the game. This is all occurring in a situation when power market prices are at their long term minimum. Monthly average baseload power prices are in a downward trend since 2012 August and since the second quarter of 2013 they have been fluctuating slightly above the level of 30 €/MW. Neither increasingly important role of renewables in the power mixes of many European countries nor the low carbon prices bring incentives for significant rise of the power price in the near future. In the Central and Eastern Europe and in the Czech Republic as well, only a few partial equilibrium or CGE models with special focus on energy sector have been applied so far (Rečka & Ščasný, 2013, Ščasný, et al., 2009), therefore we construct partial equilibrium, Czech energy model in TIMES model generator (Filar & Haurie, 2010) taking into account externalities from emitting classical air pollutants and CO2 during heat and power generation. We quantify the externalities using so called ExternE method (see for instance Weinzettel et al., 2012) and incorporate their monetary values into the model objective function. We assess several policy and market development scenarios to bring more light into the strategic decision making about new energy sources in the Czech Republic. We use TIMES model generator (Filar & Haurie, 2010) to construct partial equilibrium model of Czech energy sector with detail technological structure. We quantify the externalities from emitting classical air pollutants and CO2 during heat and power generation using the so called ExternE method (see for instance Weinzettel et al., 2012) and incorporate them into the model objective function. This approach allows us to internalise the externalities from heat and power generation. The model includes the interconnection with and the import and export of electricity is an endogenous variable depending on power spot market price. In our scenarios, we focus on remaining brown coal reserves in currently operating mines and brown coal reserves available only after opening new coalmines that has been prohibited by a government resolution since 1991. Allowing or not allowing construction of two new nuclear reactors is second important dimension for our scenarios (It is more or less political decision because the government owns the majority in the largest power company in the Czech Republic that is supposed to build the new nuclear reactors.). We take into account the new 2030 framework for climate and energy policies agreed on 23 October 2014 by the EU leaders. Last set of important scenario parameters includes subsidy for renewable energy sources, fuels and carbon prices development. We compare our baseline scenario assuming current and ongoing environmental regulation and no restriction on new nuclear power plants with scenarios assuming introduction of proposed environmental regulation; relaxing the prohibition of opening new brown coalmines; and continuation of new renewable energy sources subsidizing. A special scenario reacts on a possible threat of the natural gas deliveries from Russia via Ukraine. We provide a sensitivity analysis on European power, fuels and carbon prices for all scenarios.The preliminary results show that: 1) The price of CO2 allowances is the main factor for decision about installation of new nuclear power plant. From €20 per ton of CO2 it is reasonable to build new nuclear power plant 2) It is not necessary to open new brown coal mines to satisfy the Czech’s power demand even without the construction of new nuclear reactors. However, it will be highly recommended to introduce regulatory measures on the usage of the brown coal from the operating brown coal mines to avoid destabilization of district heating sector if no new coal mines open; 3) Future advanced renewable technologies (mainly wind and biomass) will be competitive without any submissions. The final results will provide projection of emissions and optimal fuel mix and technology portfolio under the assumptions defined in each scenario. Based on these results and sensitivity analysis, we will provide a policy recommendation for optimal energy policy of the Czech Republic.
    Keywords: The Czech Republic and its interconnection with neighbouring countries., Forecasting and projection methods, Energy and environmental policy
    Date: 2015–07–01
  6. By: Milan Scasny; Milan Scasny; Iva Zverinova; Mikolaj Czajkowski
    Abstract: Low-carbon vehicles due to their relatively lower fuel intensity directly affect CO2 emissions and are thus technologic solutions that may mitigate climate change. Electric vehicles and hybrid electric vehicles can be a component of a smart grid and thus could help to accommodate more electricity from renewable energy in the grid. Overall effect on GHG and local air pollutants of course will depend on fuel mix used to generate electricity. Alternative fuel vehicles (AFVs) are usually more expensive than conventional cars. Besides the purchase costs, other characteristics of vehicles are also important for a car driver. The purpose of this study is to contribute to the literature that have examined individual preferences for various characteristics of passenger vehicles, including passenger vehicles with very small market share or which recently do not appear at the market. With the onset of alternative fuel vehicles on the market, large amount of studies focusing on consumer preferences of AFVs have been already conducted worldwide. Consumers’ demand for vehicle described with several specific characteristics can be modelled using existing data on market penetration or consumption decisions, i.e. through analysis of revealed preferences. However, if the supply of certain durable goods is constraint or almost zero as is the case for new device or not yet existing technology, potential demand can be examined using stated preferences technique. In our case, the main aim of this survey is to review individual traveller’s preferences for passenger vehicle, specifically for a vehicle that is recently characterized by negligible market penetration. In other words, the stated preferences, as elicited via a stated preference surveys, for the demand for cars with alternative drive technologies are examined. There are several stated preference studies on consumers’ preferences for the uptake of alternative fuel vehicles. However, our study is the first of this kind that has ever been conducted in a post-transition CEE country, in Poland. We surveyed 2,600 individuals in order to elicit preferences for the passenger AFV technologies. We specifically examine individual preferences for three types of alternative technologies (hybrid vehicle - HV, plug-in electric vehicle - PHEV, and electric vehicle - EV) and a conventional car that vary in technology characteristics (driving range, refuelling/recharging time), policy incentives (free parking, public transportation, and availability of fast mode infrastructure) and costs (purchase price, operational and fuel cost), following partly a design by Hoen and Koetse (2012). Our sampling allows us to analyse the preferences for segment of new car buyers as well as buyers of second-hand cars that dominates passenger vehicle market in Poland. Individual preferences are elicited by using the labelled discrete choice experiments (Hensher, Rose, Greene, 2005; Carson and Louviere, 2011). The choice cards include always four technology-specific alternatives and we ask to choose the best option eight times. The choice sets are based on efficient design with the priors estimated from the pilot study (N=400). Our econometric model is based on a random utility framework. We assume that respondents chose a vehicle alternative if their willingness to pay for such vehicle is greater than the cost of this alternative. The corresponding indirect utility function is additive in vehicle’s characteristics and costs. We assume that the random component is an independent and identically distributed type I extreme value error term with a scale parameter equal to 1. It implies that the statistical model of the responses is a conditional logit that is linear in the parameters, and the probability is the contribution to the likelihood of the conditional logit model. In order to analyse preference heterogeneity, we allow controlling for the effect of socio-demographics or other respondent-specific indicators, and also estimate random parameter (mixed) logit.We reveal that the Polish consumers have the lowest preference for hybrid cars, followed then by PHEVs and EVs. In general, we found similar preferences among Polish respondents as found elsewhere in the literature. Driving range and recharging time are quite important attributes of a car which Polish consumers intend to buy. On average, Polish drivers are willing to pay about 3,000 zł for each 100 kms of driving range, and the drivers who intend to buy a second-hand car value the driving range less (about 2,000 zł) than respondents who intend to buy a new car (5,000 zł). As expected, the coefficient on recharging time is negative and significant; on average, Polish drivers are willing to pay slightly less than 1,000 zł for each hour saved for recharging. Again, the new car buyers are willing to pay more than the second-hand car buyers. Their willingness to pay (WTP) for availability of fast mode recharging infrastructure is almost one order of magnitude larger than their WTP for reducing the recharging time by one hour. Providing other benefits, such as free parking and public transport, increases the probability to choose the AFVs. References: Carson, R. T., Louviere, J. J. (2011). A Common Nomenclature for Stated Preference Elicitation Approaches. Environmental and Resource Economics, 49(4), 539–559. doi:10.1007/s10640-010-9450-x Hensher, D., Rose, J.M., Greene, W.H. (2005). Applied Choice Analysis. Cambridge University Press. Hoen, A., Koetse, M.J. (2014). A choice experiment on alternative fuel vehicle preferences of private car owners in the Netherlands. Transportation Research Part A: Policy and Practice, 61, pp. 199-215.
    Keywords: Poland, Energy and environmental policy, Microsimulation models
    Date: 2015–07–01
  7. By: Bai-Chen Xie (College of Management and Economics, Tianjin University, Tianjin, China; APEC Sustainable Energy Center, Tianjin University, Tianjin, China); Jie Gao; Shuang Zhang; ZhongXiang Zhang
    Abstract: China’s unbundling reform in 2002 aimed to introduce competitiveness into the power industry, especially the generation sector, to improve its operational efficiency. Meanwhile, great concern about a range of environmental problems and global climate change increasingly calls for saving energy and abating emissions. Thus, the ability to balance the reduction of carbon emissions with economic benefits may to a great extent determine the competitiveness of power generation sector. This study first adopts the game cross-efficiency approach to evaluate the environmental efficiency of the generation sectors in China’s 30 provinces. It then employs a system generalized method of moments model to explore the determinants of their performance while eliminating the associated endogeneity problem. The results of this first study combining the two methods indicate that efficiency gaps do exist among the regions even though overall efficiency has been improved. Despite the negative correlation between environmental efficiency and the thermal power ratio, the power mix should be adjusted gradually. The average firm size and capacity utilization rates are positive factors boosting the environmental efficiency. The incentive policies for clean energy development should be differentiated across regions according to their power mix and self-sufficiency ratio.
    Keywords: Game cross-efficiency; Data envelopment analysis; Generalized method of moments; Power industry; Environmental efficiency; China
    JEL: Q54 Q55 Q58 Q43 Q48 O13 O44 R11
    Date: 2017–02
  8. By: Zsuzsanna Csereklyei (Crawford School of Public Policy, The Australian National University); David I. Stern
    Abstract: We study the drivers of the adoption of electricity generation technologies between 1970 and 2014 in the lower 48 U.S. states. Since the 1990s, major electricity market restructuring took place in some parts of the United States. We explore the implications of changing from a regulated “cost-of-service” or rate of return system to a partly and fully deregulated market on technology and fuel choices. We find that electricity market deregulation resulted in significant immediate investment in various natural gas technologies, and a reduction in coal investments. However, market deregulation impacted less negatively on high efficiency coal technologies. In states that adopted wholesale electricity markets, high natural gas prices resulted in more investment in coal and renewable technologies.
    JEL: Q40
    Date: 2017–03
  9. By: Bai-Chen Xie (College of Management and Economics and APEC Sustainable Energy Center, Tianjin University); Jie Gao (College of Management and Economics, Tianjin University); Shuang Zhang (College of Management and Economics and APEC Sustainable Energy Center, Tianjin University); ZhongXiang Zhang (College of Management and Economics and China Academy of Energy, Environmental and Industrial Economics, Tianjin University)
    Abstract: China’s unbundling reform in 2002 aimed to introduce competitiveness into the power industry, especially the generation sector, to improve its operational efficiency. Meanwhile, great concern about a range of environmental problems and global climate change increasingly calls for saving energy and abating emissions. Thus, the ability to balance the reduction of carbon emissions with economic benefits may to a great extent determine the competitiveness of power generation sector. This study first adopts the game cross-efficiency approach to evaluate the environmental efficiency of the generation sectors in China’s 30 provinces. It then employs a system generalized method of moments model to explore the determinants of their performance while eliminating the associated endogeneity problem. The results of this first study combining the two methods indicate that efficiency gaps do exist among the regions even though overall efficiency has been improved. Despite the negative correlation between environmental efficiency and the thermal power ratio, the power mix should be adjusted gradually. The average firm size and capacity utilization rates are positive factors boosting the environmental efficiency. The incentive policies for clean energy development should be differentiated across regions according to their power mix and self-sufficiency ratio.
    Keywords: Game Cross-efficiency, Data Envelopment Analysis, Generalized Method of Moments, Power Industry, Environmental Efficiency, China
    JEL: Q54 Q55 Q58 Q43 Q48 O13 O44 R11
    Date: 2017–03
  10. By: Quentin Perrier (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Following the first oil crisis, France launched the world's largest ever nuclear energy program, commissioning 58 new reactors. These reactors are now reaching 40 years of age, the end of their technological lifetime. This places France at an energy policy crossroads: should the reactors be retrofitted or should they be decommissioned? The cost-optimal decision depends on several factors going forward, in particular the expected costs of nuclear energy production, electricity demand levels and carbon prices, all of which are subject to significant uncertainty. To deal with these uncertainties, we apply the Robust Decision Making framework to determine which reactors should be retrofitted. We build an investment and dispatch optimization model, calibrated for France. Then we use it to study 27 retrofit strategies for all combinations of uncertain parameters, which amounts to nearly 3,000 runs. Our analysis produces two robust strategies, which involve shutting down between 7 and 14 of the 14 oldest reactors, while extending the lifetime of all remaining reactors. These strategies provide a hedge against the risks of unexpected increases in retrofit costs, low demand and low carbon price. Our robust strategies differ from the official French government scenarios on the timing and number of reactors suggested to be decommissioned. They provide a timely contribution to the current debate on the extension of lifetime of nuclear plants in France.
    Keywords: Power system,Nuclear power,Uncertainty,Investment optimization,Robust Decision Making
    Date: 2017–03–11
  11. By: Dennis Dlugosch (OECD); Tomasz Kozluk (OECD)
    Abstract: The 2°C (or less) limit on global warming agreed at the UN Climate Change Conference of 2015 in Paris effectively implies that manufacturing industries in developed countries have to undertake significant investments, in particular in more energy efficient production technology. To implement policies making the most of such a change, policymakers need to know what consequences climate policies have on business investment. This paper sheds light on the relationship between environmental policies, energy prices and firm-level investment using a sample of listed firms over the period 1995-2011 in 30 OECD economies. Higher energy price inflation is associated with a small, but statistically significant decrease in total investment across firms, though in the most energy intensive sectors, total investments are actually found to increase. However, for domestic investment, effects of higher energy price inflation are negative, independent of the energy intensity of industries. The gap in reactions between total and domestic investment is likely driven by increased offshoring in response to higher energy price inflation, in line with the Pollution Haven Hypothesis. We also find tentative evidence that the negative effects of rising energy prices on investment can be largely attributed to tightening upstream environmental policies.
    Keywords: energy prices, environmental policies, investment
    JEL: E22 Q41 Q58
    Date: 2017–03–23
  12. By: Grégoire Garsous (OECD); Tomasz Kozluk (OECD)
    Abstract: Business has often been arguing against the introduction of a carbon tax because it would induce a pollution haven effect – reducing the competitiveness of domestic production and shifting both production and emissions to countries where fossil fuels are cheaper. In this paper, we shed light on such claims by estimating the effect of energy prices on one of the possible channels of the pollution haven effect - foreign direct investment (FDI). Using data for listed firms in 23 OECD countries, we find that the effect of higher domestic energy prices on firms’ outward stock of FDI has been significant and positive, but small in magnitude. This effect seems driven by more permanent shocks to energy prices, in particular by those coming from more stringent upstream environmental policies.
    Keywords: energy prices, environmental policies, FDI, pollution haven
    JEL: F21 Q41 Q58
    Date: 2017–03–23
  13. By: Hernán Barahona; Francisco Gallego; Jeanne Juan-Pablo Montero
    Abstract: Driving restrictions —limits on car use based on the last digit of a car’s license plate— are increasingly popular forms of pollution and congestion control, notwithstanding the literature has shown they typically result in more pollution by moving the fleet composition toward higher emitting vehicles. We study a design feature present in some restriction programs but much overlooked in the literature: that cleaner cars be exempted from the restriction. Based on evidence from Santiago- Chile’s 1992 program, we find this exemption feature to have a large impact on fleet composition toward cleaner vehicles. We also develop and calibrate for Santiago a vertical differentiation model of the car market to show that driving restrictions that make optimal use of these exemptions can be way more effective in the fight against local air pollution than alternative instruments such as scrappage subsidies and gasoline taxes.
    Date: 2016
  14. By: Julie Anne Cronin; Don Fullerton; Steven E. Sexton
    Abstract: Because electricity is a higher fraction of spending for those with low income, carbon taxes are believed to be regressive. Many argue, however, that their revenues can be used to offset the regressivity. We assess these claims by employing data on 322,000 families in the U.S. Treasury’s Distribution Model to study vertical redistributions between rich and poor, as well as horizontal redistributions among families with common incomes but heterogeneous energy intensity of consumption (different home heating and cooling demands). Accounting for the statutory indexing of transfers, and measuring impacts on annual consumption as a proxy for permanent income, we find that the carbon tax burden is progressive, rising across deciles as a fraction of consumption. The rebate of revenue via transfers makes it even more progressive. In every decile, the standard deviation of the change in consumption as a fraction of consumption varies around 1% or 2% and is larger than the average burden (about 0.7%). When existing transfer programs are used to rebate revenue, the tax and rebate together increase that variation to more than 3% within each decile. The average family in the poorest decile gets a net tax cut of about 1% of consumption, but 44% of them get a net tax increase. Relative to no rebate, every type of rebate we consider increases this variation within most deciles.
    JEL: H22 H23 Q48 Q54
    Date: 2017–03
  15. By: Zsuzsanna Csereklyei (Crawford School of Public Policy, The Australian National University); Paul W. Thurner; Johannes Langer; Helmut Küchenhoff
    Abstract: This paper examines typical “energy paths”, i.e. the intertemporal development of the energy mixes of the member states of the European Union over 1971-2010. We apply model based clustering to detect major energy profiles and their compositional dynamics. The seven identified clusters show typical combinations of energy carriers dominating the primary energy consumption of a country. We find that countries tend to take a path towards higher quality energy mixes over time, however path inertia and dependencies arise from both infrastructure and resource endowments. Higher energy quality profiles are usually associated with higher national income and energy use per capita, supporting some evidence on the existence of a national-level energy ladder. We also find convergence in energy intensity over time, and a relationship between own resources and import dependency.
    Keywords: European Union, energy paths, path dependencies, model based clustering
    JEL: Q40 Q48 O33 C11 C38
    Date: 2017–01
  16. By: Jacquelyn Pless; Arthur A. van Benthem
    Abstract: We estimate the pass-through of solar energy subsidies to solar system prices. Rich micro-level transaction and subsidy data from California indicate that pass-through is remarkably high and differs substantially for consumers who buy versus lease solar systems. Buyers capture nearly the full subsidy, while there is more-than-complete pass-through to lessees. We formalize pass-through over-shifting as an under-utilized test for market power that can also be applied in other contexts. We rule out alternative explanations for over-shifting and conclude that our estimates provide evidence for imperfectly competitive solar markets. Our findings have implications for the distributional effects of energy subsidies.
    JEL: H22 Q42 Q48 Q58
    Date: 2017–03
  17. By: Yacine Belarbi (Centre de recherche en économie appliquée pour le développement (CREAD)); Lylia Sami; Said Souam
    Abstract: The dependence to natural resource is currently the object of a wide debate in the analysis of economic growth in rentier states. In this work, we examine the interaction effect between oil resources dependence and the quality of institutions on economic growth by employing a panel threshold regression methodology. Our results show that the effect of oil resource dependence on economic growth becomes positive, as the quality of institutions improves. In other side, contrary to many precedent results in this area, an increase in oil dependence wipes out the positive effect of institutional quality on growth. Indeed, a positive variation of the institution quality doesn’t necessary lead to a positive variation in economic growth.
    Date: 2015–04
  18. By: Shahbaz, Muhammad; Balcilar, Mehmet; Ozdemir, Zeynel Abidin
    Abstract: This paper examines the predictive power of oil price for gold price using the novel nonparametric causality-in-quantiles testing approach. The study uses weekly data over the April 1983-August 2016 period for both the spot and 1-month to 12-month futures markets. The new approach, the causality-in-quantile, allows one to test for causality-in-mean and causality-in-variance when there may be no causality in the first moment but higher order interdependencies may exist. The tests are preferred over the linear Granger causality test that might be subject to misleading results due to misspecification. Contrary to no predictability results obtained under misspecified linear structure, the nonparametric causality-in-quantiles test shows that oil price has a weak predictive power for the gold price. Moreover, the causality-in-variance tests obtain strong support for the predictive capacity of oil for gold market volatility. The results underline the importance of accounting for nonlinearity in the analysis of causality from oil to gold.
    Keywords: Gold, Oil, Spot and futures markets; Quantile Causality
    JEL: C32
    Date: 2017–03–01
  19. By: Hans Gersbach (ETH Zurich, Switzerland); Marie-Catherine Riekhof (ETH Zurich, Switzerland)
    Abstract: We introduce an international technology treaty that couples the funding of research for a more advanced abatement technology with an international emissions permit market. Under the treaty, each country decides on the amount of permits for its domestic industries, but a fraction of these permits is auctioned on the permit market, and the revenues are used to scale up license revenues for the innovators of abatement technologies. We discuss the conditions under which such a technology treaty can slow down climate change through technological innovations and whether it creates complementary incentives for countries to tighten permit issuance. Finally, we discuss how participation in Tech Treaties can be fostered and how such treaties might be implemented.
    Keywords: Climate change mitigation, Technology promotion, International permit markets, International treaty, Externalities
    JEL: H23 Q54 O31
    Date: 2017–03
  20. By: Louis-Gaëtan Giraudet (ENPC - École des Ponts ParisTech, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Sébastien Houde (University of Maryland [College Park]); Joseph Maher (University of Maryland [College Park])
    Abstract: We investigate how moral hazard problems can cause sub-optimal investment in energy efficiency, a phenomenon known as the energy efficiency gap. We focus on contexts where both the quality offered by the energy efficiency provider and the behavior of the energy user are imperfectly observable. We first formalize under-provision of quality and compare two policy instruments: energy-savings insurance and minimum quality standards. Both instruments are second-best, for different reasons. Insurance induce over-use of energy, thereby requiring incomplete coverage in equilibrium. Standards incur enforcement costs. We then provide empirical evidence of moral hazard in the U.S. home retrofit market. We find that for those measures, the quality of which is deemed hard to observe, realized energy savings are subject to day-of-the-week effects. Specifically, energy savings are significantly lower when those measures were installed on a Friday—a day particularly prone to negative shocks on workers’ productivity—than on any other weekday. The Friday effect explains 65% of the discrepancy between predicted and realized energy savings, an increasingly documented manifestation of the energy efficiency gap. We finally parameterize a model of the U.S. market for attic insulation and find that the deadweight loss from moral hazard is important over a range of specifications. Minimum quality standards appear more desirable than energy-savings insurance if energy-use externalities remain unpriced.
    Keywords: minimum quality standard, energy-savings insurance, credence good, day-of-the-week effect,Energy efficiency gap, moral hazard
    Date: 2016–12–10
  21. By: Steffen Hertog
    Abstract: This paper documents how the GCC oil monarchies have been using their oil wealth to buy the accoutrements of ‘good citizenship’ and ‘progressiveness’ in the international arena through costly policy projects that involve urban interventions like the building of international museums, universities and ‘zero-carbon cities’ – urban enclaves with an audience that is almost exclusively international. The paper explains how these projects reflect a desire to comply with Westerndefined ‘liberal’ international norms and tastes to gain international recognition, shows how they reflect broader patterns of segmented state building in the Gulf, and explores some of the social tensions they create locally.
    JEL: N0
    Date: 2016–09
  22. By: Mahmoud Al Iriani (Dubai Economic Council, UAE); Yahsob Al Eriani
    Abstract: The link between natural resource outcomes and the quality of institutions has attracted considerable attention in natural resource literature. But only very recently has its link to fiscal rules and institutions been discussed, focusing mainly on developed economies. We conduct an assessment of the role fiscal rules and institutions play in Yemen, both an oil-producing and developing country. The analysis attempts to evaluate fiscal discipline and the resulting fiscal side of macroeconomic policies in this populous Arab country. The structure and quality of fiscal institutions in Yemen, and the rules governing them, are central in determining the developmental impact of the country’s oil and natural gas endowments. We show that Yemen’s economic volatility, and hence poor development experience, was in fact a natural result of the two-way interaction between fiscal institutions and natural resource rents. On one hand, realizing the benefits from natural resource endowments in Yemen requires adopting an appropriate set of working rules that reduce the unfavorable effects of resource abundance on the quality of institutions. On the other hand, high quality institutions and rules may help improve resource management, contributing to the realization of better economic performance in the future.
    Date: 2015–08
  23. By: KPEMOUA, Palakiyem
    Abstract: The purposes of this paper are to investigate empirically the impact of carbon dioxide emission and its restriction on Togo’s economic growth with a model that relies on a STIRPAT (Stochastic Impacts by Regression on Population, Affluence and Technology) suggested by Ehrlich and Holden (1971; 1972) modified, augmented with the restriction of carbon dioxide emission, and to test the causality between that emission and the economic growth. The empirical methodology is based on the autoregressive distributed lag approach suggested by Mohammad H. Pesaran and al. (2001) and on the cointegration and Toda and Yamamoto’s causality tests. The data cover the period 1960-2011. The results obtained indicate that the impact of carbon dioxide emission on Togo’s economic growth in the long-run is positive and significant. The results show also the existence of causality between carbon dioxide emission and economic growth according to Toda and Yamamoto and significant. Besides, the results indicate that the restriction of carbon dioxide emission by Togo compared with Benin in the long-run is negative and significant, while that restriction compared with Ghana’s is positive and significant on Togo’s economic growth. The results reveal also that Togo undertakes fewer efforts in reduction of carbon dioxide emission compared with Benin but more efforts compared with Ghana.
    Keywords: Carbon dioxide, Economic growth, ARDL, cointegration, causality, Togo.
    JEL: C32 H63 O49 Q50
    Date: 2016–09–06
  24. By: Peter Exterkate (University of Sydney and CREATES); Oskar Knapik (Aarhus University and CREATES)
    Abstract: In a recent review paper, Weron (2014) pinpoints several crucial challenges outstanding in the area of electricity price forecasting. This research attempts to address all of them by i) showing the importance of considering fundamental price drivers in modeling, ii) developing new techniques for probabilistic (i.e. interval or density) forecasting of electricity prices, iii) introducing an universal technique for model comparison. We propose new regime-switching stochastic volatility model with three regimes (negative jump, normal price, positive jump (spike)) where the transition matrix depends on explanatory variables. Bayesian inference is explored in order to obtain predictive densities. The main focus of the paper is on shorttime density forecasting in Nord Pool intraday market. We show that the proposed model outperforms several benchmark models at this task.
    Keywords: Electricity prices, density forecasting, Markov switching, stochastic volatility, fundamental price drivers, ordered probit model, Bayesian inference, seasonality, Nord Pool power market, electricity prices forecasting, probabilistic forecasting
    JEL: C22 C24 Q41 Q47
    Date: 2601
  25. By: Aitor Ciarreta; Peru Muniainy; Ainhoa Zarraga
    Abstract: The paper analyzes volatility of the electricity prices in the Japanese day-ahead market using realized volatility. We use several jump tests to decompose total realized variation into jump and continuous components. Then, we estimate several HAR models that show the time-dependence structure of the volatility. Our results show that even though that market is narrow, it is relevant to identify jumps in volatility. Besides, modelling residuals improve estimation results. The time-dependent structure of the prices is present in volatility as well.
    Date: 2017–02
  26. By: Walid Bahloul (Governance, Finance and Accounting Laboratory, Faculty of Business and Economics, University of Sfax, Sfax, Tunisia); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa)
    Abstract: Unlike the literature on macroeconomic news surprises and oil markets, which concentrates on spot prices and US news primarily, we analyze the impact of macroeconomic news surprises of Canada, Euro area, Japan, and UK (besides the US) on returns and volatility of oil futures for the West Texas Intermediate and Brent crude. We look at futures markets, since it is widely believe to predict the spot market movements. In addition, we also analyze possibility of asymmetric impact due to good and bad macroeconomic news surprises, as well as, the role of economic uncertainty of these economies in affecting the oil futures markets movements. We can draw two major conclusions: (a) Macroeconomic surprises, as well as uncertainties, of other economies (over and above that of the US) are found to be important in driving oil futures, with the effect of these other economies being relatively stronger than the US in some instances, and; (b) There is strong evidence of asymmetric effects, especially for volatility.
    Keywords: Macroeconomic news surprises, Uncertainty, Oil Futures, Returns and Volatility
    JEL: C32 Q41
    Date: 2017–03
  27. By: Hong Nam Nguyen (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi); Hoai-Son Nguyen (NEU - National Economics University (Ha Noi, Vietnam), CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi); Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi); Laurent Van de Steene (USTH - University of sciences and technologies of hanoi, CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: Electricity price in Cambodia is among the highest in the region due to limited fossil resources. The national grid provides electricity with cheapest tariff, from $0.11 to $0.27 per kWh, but only 25% of Cambodians are having access to it. Since 2003, scores of rice mills have installed rice husk gasification systems (RHGs) to produce electricity with a cost from $0.06 to $0.27 per kWh. RHG development is showing signs of slowing down while national grid is continuing to expand its supply area. The study was carried out to identify some factors influencing RHG adoption in Cambodian rice mills, based on data of rice mills (n=396) and report on power sector of the Kingdom of Cambodia in 2015. Field trips to rice mills (n=8) and interviews with RHG stakeholders (n = 66) were also conducted. Results indicated that technical support for RHG and annual production of rice mills had positively influenced adoption of RHG. In contrarily, results showed an insignificant correlation between the presence of national grid and RHG adoption. This study will help planners, policy makers, researchers and farmers prioritize factors affecting RHG adoption decisions and hence provide insight on pathways to increase RHG adoption.
    Keywords: rice husk, national grid, gasification, Cambodia,biomass
    Date: 2016–12–24
  28. By: Petropoulos, G.; Willems, Bert (Tilburg University, Center For Economic Research)
    Abstract: Coordinating the timing of new production facilities is one of the challenges of liberalized power sectors. It is complicated by the presence of transmission bottlenecks, oligopolistic competition and the unknown prospects of low-carbon technologies. We build a model encompassing a late and early investment stage, an existing dirty (brown) and a future clean (green) technology and a single transmission bottleneck, and compare dynamic efficiency of several market designs. Allocating network access on a short-term competitive basis distorts investment decisions, as brown firms will preempt green competitors by investing early. Dynamic efficiency is restored with long-term transmission rights that can be traded on a secondary market. We show that dynamic efficiency does not require the existence of physical rights for accessing the transmission line, but financial rights on receiving the scarcity revenues generated by the transmission line suffice.
    Keywords: network access; congestion management; renewable energy sources; power markets
    JEL: L94 L13 C72 D43
    Date: 2017
  29. By: Langbein, Jörg; Peters, Jörg; Vance, Colin
    Abstract: More than 3 billion people use wood fuels for their daily cooking needs, with detrimental health implications related to smoke emissions. Global initiatives to disseminate clean cooking stoves emphasize technologies that are either expensive, such as electricity and gasifier stoves, or for which supply chains hardly reach rural areas, such as LPG. This emphasis neglects that many households in the developing world cook outdoors. Our calculations demonstrate that for such households, already the use of less expensive biomass cooking stoves can substantially reduce smoke exposure. The costeffectiveness of clean cooking policies can thus be improved by taking cooking location and ventilation into account.
    Keywords: air pollution,health behavior,energy access
    JEL: Q53 I12 O13
    Date: 2017
  30. By: Nava, Consuelo R.; Meleo, Linda; Cassetta, Ernesto; Morelli, Giovanna (University of Turin)
    Abstract: In the next few years, it is estimated that the aviation sector will account for more than 15% of total GHG emissions against the current 5%. In order to curb emissions, Directive 101/2008/EC has included the aviation sector within the scope of the European Union Emission Trading Scheme (EU-ETS). The EU-ETS is generating additional costs for airline companies. The present article develops an original model with which to analyse the impact of EU-ETS on the aviation sector's market equilibrium. Our study expands prior research by explicitly allowing for abatement efforts in the cost function of airline companies and by highlighting interactions among strategies to reduce emissions, firm's actions in the secondary market, free allowances, and fines. The results contribute to enhancing policy makers understanding of the impact of the EU-ETS on the aviation sector also in light of its potential global-level extension that is currently under negotiation.
    Date: 2017–03
  31. By: Stergios Athanasoglou (University of Milan - Bicocca and CMCC); Valentina Bosetti (Bocconi University and FEEM); Laurent Drouet (FEEM and CMCC)
    Abstract: We propose a novel framework for the economic assessment of climate-change policy. Our main point of departure from existing work is the adoption of a "satisficing", as opposed to optimizing, modeling approach. Along these lines, we place primary emphasis on the extent to which different policies meet a set of goals at a specific future date instead of their performance vis-à-vis some intertemporal objective function. Consistent to the nature of climate-change policy making, our model takes explicit account of model uncertainty. To this end, the value function we propose is an analogue of the well-known success-probability criterion adapted to settings characterized by model uncertainty. We apply this decision criterion to probability distributions constructed by Drouet et al. (2015) linking carbon budgets to future consumption. The main result that emerges is the superiority of "medium" carbon budgets in line with a 3°C target (i.e., 2000-3000 GtCO2) in preventing large future consumption losses with high probability. Insights from computational geometry facilitate computations considerably, and allow for the efficient application of the model in high-dimensional settings.
    Keywords: Satisficing, Model Uncertainty, Climate Change, Computational Geometry
    JEL: C60 D81 Q42 Q48
    Date: 2017–03
  32. By: Kamiar Mohaddes (University of Cambridge); M. Hashem Pesaran
    Abstract: This paper investigates the global macroeconomic consequences of country-specific oil-supply shocks. Our contribution is both theoretical and empirical. On the theoretical side, we develop a model for the global oil market and integrate this within a compact quarterly model of the global economy to illustrate how our multi-country approach to modelling oil markets can be used to identify country-specific oil-supply shocks. On the empirical side, estimating the GVAR-Oil model for 27 countries/regions over the period 1979Q2 to 2013Q1, we show that the global economic implications of oil-supply shocks (due to, for instance, sanctions, wars, or natural disasters) vary considerably depending on which country is subject to the shock. In particular, we find that adverse shocks to Iranian oil output are neutralized in terms of their effects on the global economy (real outputs and financial markets) mainly due to an increase in Saudi Arabian oil production. In contrast, a negative shock to oil supply in Saudi Arabia leads to an immediate and permanent increase in oil prices, given that the loss in Saudi Arabian production is not compensated for by the other oil producers. As a result, a Saudi Arabian oil supply shock has significant adverse effects for the global economy with real GDP falling in both advanced and emerging economies, and large losses in real equity prices worldwide.
    Date: 2015–07
  33. By: Mahdi Majbouri (Babson College)
    Abstract: How much richer would oil producing countries in the Middle East be if they invested all their natural resource rents? This study tries to answer this question by calculating the counterfactuals of capital stock and income under two major scenarios. Combining several data sets, including a unique set on sovereign wealth funds, it finds that oil-producing MENA economies could have had, on average, around a 0.55 percentage point higher growth rate if they had used their natural resource rents efficiently. This difference in growth rate translates to around 25% higher income over a 40 year period. These numbers are separately calculated for each country and their important policy implications are discussed.
    Date: 2015–04
  34. By: William D. Nordhaus (Cowles Foundation, Yale University)
    Abstract: Many areas of the natural and social sciences involve complex systems that link together multiple sectors. Integrated assessment models (IAMs) are approaches that integrate knowledge from two or more domains into a single framework, and these are particularly important for climate change. One of the earliest IAMs for climate change was the DICE/RICE family of models, first published in Nordhaus (1992), with the latest version in Nordhaus (2017, 2017a). A difficulty in assessing IAMs is the inability to use standard statistical tests because of the lack of a probabilistic structure. In the absence of statistical tests, the present study examines the extent of revisions of the DICE model over its quarter-century history. The study find that the major revisions have come primarily from the economic aspects of the model, whereas the environmental changes have been much smaller. Particularly sharp revisions have occurred for global output, damages, and the social cost of carbon. These results indicate that the economic projections are the least precise parts of IAMs and deserve much greater study than has been the case up to now, especially careful studies of long-run economic growth (to 2100 and beyond).
    Keywords: Climate change, Integrated assessment models, DICE model, Revisions
    JEL: Q5 Q54 H4
    Date: 2017–03
  35. By: Chen, Xi; Zhang, Xiaobo; Zhang, Xin
    Abstract: While there is a large body of literature on the negative health effects of air pollution, there is much less written about its effects on cognitive performance for the whole population. This paper studies the effects of contemporaneous and cumulative exposure to air pollution on cognitive performance based on a nationally representative survey in China. Bymerging a longitudinal sample at the individual level with local air-quality data according to the exact dates and counties of interviews, we find that contemporaneous and cumulative exposure to air pollution impedes both verbal and math scores of survey subjects. Interestingly, the negative effect is stronger for men than for women. Specifically, the gender difference is more salient among the old and less educated in both verbal and math tests.
    Keywords: cognitive performance,air pollution,gender difference
    JEL: I24 Q53 Q51 J16
    Date: 2017
  36. By: Hamid Mohtadi (University of Wisconsin); Michael Ross; Stefan Ruediger
    Abstract: Using a new dataset on transparency across 177 countries from 1970 to 2010 and new data on oil values that is measured independently of countries’ reporting mechanisms, we examine whether the presence of income derived from the extraction of oil and other mineral resources induces governance institutions to become less transparent. The new transparency data permits panel estimates that were not previously feasible, while the new oil data addresses an endogeneity problem otherwise inherent in countries’ own reporting of data to the World Bank, thus a major improvement over WDI data. Our results confirm the previous findings that the presence of oil adversely influences transparency, but contradict findings on mineral resources. Transparency is measured by the frequency and extent of data that countries report to international agencies. Our findings suggest that transparency is robustly and adversely linked to income from oil, but not other mineral resources. Conducting “era regressions,” we shed some light on the evolution of this effect across decades.
    Date: 2015–04
  37. By: Igor Hernandez; Francisco Monaldi
    Abstract: Venezuela has one of the most abundant geological endowments in the world. Oil proven reserves are among the largest globally, even if a more conservative criterion than the one used by the current government is applied. However, these resources are qualitatively different than those of other abundant regions such as the Middle East. The large majority constitutes extra-heavy oil, which generally requires higher oil prices to be extracted profitably. During the last decade, the Venezuelan oil industry wasted a unique opportunity to increase investment and production. At the high oil prices that prevailed, the massive oil reserves could have been monetized by rapidly increasing production with a large margin of profitability. Quite to the contrary, production steadily dropped due either to lack of investment in the new unconventional oil projects or for failing to compensate the decline of the older conventional fields. It is a tragic story of great potential with dismal performance. A series of trends were negatively impacting the Venezuelan oil industry even before the oil price collapse in 2014. From the revenue side, although oil prices showed an increase in real terms of 120% between 2000 and 2014, the barrels that effectively generate cash for Venezuela have shown a continuous decline. This is not just because production has been declining for the most part during the last eighteen years (a trend that has gotten significantly worse during the last year), but also because of a number of developments. First, during that period, total exports have declined more rapidly than production, and recently, net exports have declined more than total exports. Consumption in the massively subsidized domestic market increased until 2013 (when it started to decline likely because of the recession in the local economy), while imports of oil products for the domestic market have increased since 2012. The domestic market not only generates negative cash-flow for the national oil company (NOC), PDVSA, but also its expansion reduced the barrels available to export. More recently, there has also been an increase in imports of light oil and naphtha as diluents for the extra-heavy oil. Second, the Venezuelan production basket has become heavier and the share of unconventional production, generally less profitable, has increased. Third, the production wholly operated by PDVSA has been falling much more rapidly, while the production share of joint-ventures increased. Fourth, a significant share of the exports to Latin America and the Caribbean is subsidized (although these exports have declined recently). Fifth, some oil exports are committed to repay debts of PDVSA and specially the Venezuelan government, limiting the actual cash flow received by the company. In particular, the government’s debt agreements with China involve a significant and increasing amount of production, although recently those agreements were restructured, allowing for a grace period with no capital amortization. From the expenditure side, PDVSA was increasingly responsible of carrying social expenditures and activities not related to the oil industry, which limited the resources for highly profitable investments. That is in addition to the increased fiscal take due to changes in the tax legislation. Also, higher investment requirements due to an increase in the equity share of PDVSA in joint venture projects, has had an impact on its cash flow. The explanations for the underperformance of the Venezuelan oil industry basically fall into two connected categories: the multiple problems facing PDVSA; and the increase in above-ground risks for foreign investors operating in the country. The deterioration of the institutional framework, led to radical fiscal and regulatory changes, and to the nationalization of the majority of the industry. In addition, the substantial over-extraction of resources from the NOC, the significant macroeconomic distortions affecting the cost structure of oil companies, and the constraints imposed by the energy infrastructure and human capital availability; have combined to produce dismal results. The massive firing of the majority of the management and technical experts from PDVSA in 2003 following the political conflict that led to a strike, has left the company with limited capabilities to operate effectively. The recent decline in oil prices, and the changes in the international market structure, have exposed more dramatically the difficulties facing the Venezuelan oil sector, and call into question its ability to prevent a continuation of the declining trend in oil extraction. This situation becomes particularly severe if we take into account the cash flow constraints facing PDVSA, as well as its multiple operational problems, power cuts, and conflicts with oilfield services providers. These challenges are proportional to the enormous investments required to finance the projects in the Orinoco Oil Belt, where most of the reserves in Venezuela are located, and where the quality of the crude and the lack of development of the region, are just two of the many issues that need to be addressed. Since this paper is part of a wider project to understand the macroeconomic challenges facing the country in 2016-17, it focuses narrowly on the financial problems of the oil industry in the short-term and the operational challenges that could impede its recovery in the next couple of years. Within this context, it largely analyzes the upstream operations, i.e. oil extraction, rather than the downstream, given that in the former is where the oil rents are generated and constitutes the main source of foreign exchange and fiscal revenues of Venezuela. Other areas for further research are mentioned at the end of the document.2 Official figures are used to the extent that they are publicly available. An important aspect that prevents an exhaustive evaluation of the oil sector in Venezuela is the lack of available information regarding key performance indicators affecting the cost structure of oil projects, the cash flow of PDVSA, and the fiscal contributions of the oil sector to the government, among other important variables. Thus, on occasion, estimations for variables of interest and explanations for their divergence from official figures are provided. The paper has two main sections. The first one analyzes the issues affecting the cash flow of PDVSA, the effects of macroeconomic and fiscal variables on both revenues and costs, as well as other financial issues affecting the performance of the company. The second section discusses some of the operational challenges facing the industry and mentions areas for further research. 2For a more general overview of the recent developments of the oil sector in Venezuela see Monaldi (2015) 2For a more general overview of the recent developments of the oil sector in Venezuela see Monaldi (2015)
    Date: 2016–11
  38. By: Alec Brandon; Paul Ferraro; John List; Robert Metcalfe; Michael Price; Florian Rundhammer
    Abstract: This study examines the mechanisms underlying long-run reductions in energy consumption caused by a widely studied social nudge. Our investigation considers two channels: physical capital in the home and habit formation in the household. Using data from 38 natural field experiments, we isolate the role of physical capital by comparing treatment and control homes after the original household moves, which ends treatment. We find 35 to 55 percent of the reductions persist once treatment ends and show this is consonant with the physical capital channel. Methodologically, our findings have important implications for the design and assessment of behavioral interventions.
    Date: 2017
  39. By: Cho , Lee-Jay (Northeast Asia Economic Forum); Lee , Chang-Jae (Korea Institute for International Economic Policy)
    Abstract: The Northeast Asia Economic Forum (NEAEF) is a regional nongovernmental organization created in 1991 to sponsor and facilitate research, networking, and dialogue relevant to the economic and social development of Northeast Asia. The Forum is also committed to promoting understanding and relations among the peoples of Northeast Asia, North America, and Europe. The main objective is for NEAEF to conduct research and conference activities aimed at functional economic cooperation such as cross-border energy, transportation and logistics infrastructure development, and capital mobilization. The Forum holds annual conferences, workshops, and seminars for planning, facilitating, coordinating, and implementing international and interdisciplinary solutions to common policy problems. It is the only nongovernmental regional organization in which all the nations of Northeast Asia and the US are consistent and active participants. In collaboration with the Korea Institute for International Economic Policy (KIEP), in 2015 NEAEF carried out activities on building a Northeast Asian Economic Community based on lessons learned from NEAEF’s previous work on financing cross-border functional economic cooperation. For the first year of this collaborative project the focus was on regional cooperation and strategies in Northeast oriented toward North Korea ― this work focused on functional economic cooperation in cross-border resources, energy supplies, infrastructure construction, capital mobilization, and institutional development.
    Keywords: Economic Development; Economic Integration; Northeast Asia
    Date: 2015–12–30
  40. By: Szekeres, Szabolcs
    Abstract: In "How should the distant future be discounted when discount rates are uncertain?" (2010) Gollier and Weitzman claimed having solved the Weitzman-Gollier puzzle, concluding from a risk-averse utility maximizing model that Weitzman discounting is qualitatively correct and that when uncertain annual interest rates are highly correlated, long term discount rates are declining functions of time. This paper quantifies a similar model and comes to the opposite conclusion. Weitzman discounting is wrong; there is no puzzle if the correct method is used. Risk-neutral discount rates are growing, rather than declining functions of time under the Weitzman assumptions. Risk-averse discount rates can be declining, but must not be used to discount risky project's cash flows; risk adjusted rates must be used instead. When long term market yields are a growing function of time, it makes no sense to invest in projects of similar risk but lesser yield, irrespective of one's degree of risk-aversion.
    Keywords: Weitzman-Gollier puzzle,declining discount rates,discounting
    JEL: D61 H43
    Date: 2017
  41. By: Guino Sturla Zerene; Eugenio Figueroa B.; Massimiliano Sturla Z.; Jose Flores P.
    Abstract: En este estudio se estima, por primera vez, el monto total de emisiones de carbono asociadas al trasporte de material estéril contenido en el concentrado de cobre exportado desde Chile hacia el resto del mundo. Utilizando datos oficiales del año 2014, se estiman las emisiones de CO2 evitables que ese año se emiten innecesariamente a la atmósfera global por refinar el cobre en Chile, en vez de exportarlo como concentrado de cobre. Se calcula la distancia de las rutas náuticas (origen-destino) utilizadas para todos los embarques de concentrados exportados realizados en año 2014. Además, las estimaciones muestran un análisis de sensibilidad para 4 escenarios, resultantes de considerar dos valores para cada uno de dos parámetros que presentan incertidumbre: i) consumo de combustible de los barcos que trasportan el mineral; y, ii) la distancia efectiva que recorren estos barcos, ya que no viajan directo a los puertos de destino. Las emisiones evitables de CO2 estimadas resultan ser de entre 1,5 y 2,0 millones de toneladas de CO2 el año 2014, para los dos escenarios extremos considerados. La gran relevancia de estos resultados desde el punto de vista de política ambiental queda demostrada por el hecho que, si en vez de exportar concentrados de cobre al resto del mundo, Chile refinara domésticamente dichos concentrados, como resultado de las emisiones de gases de efecto invernadero evitadas con esto, el sector minero chileno cumpliría holgadamente con la meta comprometida por Chile para el año 2030, de reducir en 30% sus emisiones por unidad de PIB generado respecto del nivel alcanzado el año 2007 (Contribución Nacional Tentativa de Chile anunciada en New York en septiembre de 2015 para la COP 21 de París).
    Date: 2017–03

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