nep-ene New Economics Papers
on Energy Economics
Issue of 2017‒10‒22
24 papers chosen by
Roger Fouquet
London School of Economics

  1. Energy subsidies, international aid, and the politics of reform By Neil McCulloch
  2. Energy policy and the power sector in the long run By Baran Doda, Sam Fankhauser
  3. Consumer surplus from energy transitions By Roger Fouquet
  4. The effects of home energy efficiency upgrades on social housing tenants: evidence from Ireland By Bryan Coyne, Sean Lyons, Daire McCoy
  5. Machine Learning from Schools about Energy Efficiency By Fiona Burlig; Christopher Knittel; David Rapson; Mar Reguant; Catherine Wolfram
  6. Hydrothermal Carbonization (HTC) of Green Waste: An Environmental and Economic Assessment of HTC Coal in the Metropolitan Region of Berlin, Germany By Jakob Medick; Isabel Teichmann; Claudia Kemfert
  7. Planning Ahead for Better Neighborhoods: Long Run Evidence from Tanzania By Michaels, Guy; Nigmatulina, Dzhamilya; Rauch, Ferdinand; Regan, Tanner; Baruah, Neeraj; Dahlstrand-Rudin, Amanda
  8. La liberalizzazione del mercato elettrico - Una proposta per superare la maggior tutela By Stagnaro, Carlo; Amenta, Carlo; Di Croce, Giulia; Lavecchia, Luciano
  9. Leveraging the Benefits of Integrating and Interacting Electric Vehicles and Distributed Energy Resources By Paschmann, Martin
  10. National Level Implications of the Implementation of SDG 7: Access to Modern Cooking Fuels in India By Pooja Vijay Ramamurthi; Shweta Srinivasan; Deepthi Swamy; Rahul Kuttickat
  11. Do Clean Development Mechanism projects generate local employment? Testing for sectoral effects across Brazilian municipalities By Yadira Mori Clement; Birgit Bednar-Friedl
  12. Modeling the Value of Flexible Heat Pumps By Björn Felten; Christoph Weber
  13. Lobbying over Exhaustible-Resource Extraction By Achim Voss; Mark Schopf
  14. The Optimal Use of Exhaustible Resources under Nonconstant Returns to Scale By Kaniovski, Serguei
  15. Accounting for the effect of exogenous non-Economic variables on natural gas demand in oil producing African countries By Ackah, Ishmael
  16. Harvesting a Remote Renewable Resource By Behringer, Stefan; Upmann, Thorsten
  17. Directed Technological Change in a post-Keynesian Ecological Macromodel By Naqvi, Syed Ali Asjad; Engelbert, Stockhammer
  18. Human capital, pollution control, and endogenous growth By Kirschbaum, Birgit; Soretz, Susanne
  19. Public debt, pollution and environmental taxes: Nash and Stackelberg equilibria By Halkos, George; Papageorgiou, George
  20. An Optimized Microeconomic Modeling System for Analyzing Industrial Externalities in Non-OECD Countries By Agnibho Roy; Abhishek Mohan
  21. Global demographic change and climate policies By Gerlagh, Reyer; Jaimes Bonilla, Richard; Motavasseli, Ali
  22. Commitment vs. Discretion in Climate and Energy Policy By Florian Habermacher; Paul Lehmann
  23. Unilateral climate Policy and the Green Paradox: Extraction Costs matter By Kollenbach, Gilbert
  24. On the Effects of Infrastructure Investments on Industrial CO2 Emissions in Portugal By Alfredo Marvão Pereira; Rui Manuel Pereira

  1. By: Neil McCulloch
    Abstract: Energy subsidy reform is critical to achieving the Sustainable Development Goals and tackling climate change. This paper sets out the evidence on the scale of subsidies and their impact. It then reviews the actions of donors in encouraging and supporting energy subsidy reforms. I find that, outside of analytical work in support of international diplomatic efforts, the donor community has devoted remarkably few resources to supporting developing countries to remove energy subsidies. This is despite the fact that energy subsidies exceed all bilateral aid in 59 per cent of recipient countries. The reason for this low level of effort is the political sensitivity of such reforms. The paper then draws on the recent literature on ‘thinking and working politically’ to provide recommendations about how donors might more effectively encourage politically sensitive energy subsidy reform.
    Date: 2017
  2. By: Baran Doda, Sam Fankhauser
    Abstract: This paper simulates the distributional consequences of alternative carbon emission reduction policies on power producers. To that end we propose a simple partial equilibrium model in which power generation takes place at technologyspecific sites which can differ in productivity. We calibrate the model with six technologies. Hydro, wind and solar generation feature site-specific productivity, and combine capital and sites to produce power. The productivity of coal, gas and nuclear generation is constant across sites. We use the calibrated model to analyse effects of alternative tax and subsidy schemes which imply the same reduction in carbon emissions. A carbon tax outperforms all other instruments and does not reduce the profits of carbon-free generators. Technology-specific subsidies are more costly socially, and those directed at output, rather than inputs, imply a larger transfer from the government to the subsidy recipient. Power consumption taxes typically have very high social costs and should not be the instrument of choice to reduce emissions or to finance subsidies aiming to reduce emissions.
    Date: 2017–09
  3. By: Roger Fouquet
    Abstract: Energy transitions have led to major advances in human wellbeing. How- ever, little evidence exists about the scale of the net benefits. By developing a new method for identifying the demand curve, and by using a unique, his- torical data set, this paper estimates the consumer surplus associated with heating, transport and lighting over more than two hundred years and iden- tifies the gains from a number of key energy transitions. For certain energy transitions, the increase was dramatic, re ecting the transformations in soci- ety and lifestyles that mobility and illumination provided in the nineteenth and twentieth centuries. Yet, the net benefits related to heating technologies only rose modestly. Finally, due to saturation effects of the demand for en- ergy services, future technological developments and energy transitions may benefit consumers (though not necessarily society as a whole) less than those in the past.
    Date: 2017–09
  4. By: Bryan Coyne, Sean Lyons, Daire McCoy
    Abstract: This research examines the impact of a home energy efficiency upgrade programme on social housing tenants. Employing a quasi-experimental approach we examine a range of objectively measured and self- reported outcomes, including metered gas consumption, for a control and upgrade group, before and after the upgrade. We draw our sample from a large home energy efficiency programme in Ireland, The SEAI Better Energy Communities Scheme, which provides funding for whole communities to upgrade the efficiency of their dwellings. Dwellings are selected for upgrade based on need, allowing us to control for observable dwelling characteristics correlated with selection into the trial. The upgrades undertaken are extensive relative to the average home energy improvement, with many dwellings receiving a number of measures. Households report improvements across a range of outcomes associated with heating-related deprivation and comfort in the home. Panel regression models examine the elasticity of gas demand with respect to the thermal efficiency of the dwellings. Overall, we find that use of natural gas falls much less than 1:1 for each increment to thermal efficiency of the home. For the average household in this study, about half of a marginal increase in thermal efficiency is reflected in reduced gas demand. This result highlights issues with standard engineering models which are commonly used to assess the energy efficiency of dwellings and points to a behavioural response from households, potentially taking back some of the savings as increased internal temperatures.
    Date: 2017–09
  5. By: Fiona Burlig; Christopher Knittel; David Rapson; Mar Reguant; Catherine Wolfram
    Abstract: In the United States, consumers invest billions of dollars annually in energy efficiency, often on the assumption that these investments will pay for themselves via future energy cost reductions. We study energy efficiency upgrades in K-12 schools in California. We develop and implement a novel machine learning approach for estimating treatment effects using high-frequency panel data, and demonstrate that this method outperforms standard panel fixed effects approaches. We find that energy efficiency upgrades reduce electricity consumption by 3 percent, but that these reductions total only 24 percent of ex ante expected savings. HVAC and lighting upgrades perform better, but still deliver less than half of what was expected. Finally, beyond location, school characteristics that are readily available to policymakers do not appear to predict realization rates across schools, suggesting that improving realization rates via targeting may prove challenging.
    JEL: C14 L9 Q41
    Date: 2017–10
  6. By: Jakob Medick; Isabel Teichmann; Claudia Kemfert
    Abstract: Based on a life-cycle sustainability assessment and the calculation of carbon abatement costs, we quantify the greenhouse-gas emission reductions and costs if green waste in the metropolitan region of Berlin, Germany, is diverted from composting into the production of hydrothermally carbonized coal (HTC coal) that is used as a substitute for hard coal in the generation of electricity and heat. Depending on the geographical origin of the green waste, we specify an urban scenario, a rural-urban scenario, and a rural scenario. Approximately 302 kilogram (kg) of carbon-dioxide equivalents (CO2e) can be saved per megagram (Mg) of fresh-matter (FM) input in the urban scenario, 298 kg CO2e/Mg FM input in the rural-urban scenario, and 316 kg CO2e/Mg FM input in the rural scenario. All three scenarios combined can mitigate a total of 70,511 Mg CO2e per year. This corresponds to about 1.6% of Berlin’s annual greenhouse-gas reduction targets overthe 2005-2020 period. If only private costs are considered, the HTC scenarios are less profitable than their reference cases. However, the inclusion of emissionrelated damage costs has the potential to render them socially preferable. The respective thresholds for social desirability coincide with the carbon abatement costs, about 163 €/Mg CO2e in the urban scenario, 74 €/Mg CO2e in the rural-urban scenario, and 75 €/Mg CO2e in the rural scenario. The lower abatement costs in the latter two scenarios are due to HTC-coal co-firing in an existing power plant rather than mono-firing it in a newly built biomass power plant. This shows that a comparatively favorable use of HTC coal might be as a bridging technology.
    Keywords: Hydrothermal carbonization, char, biocoal, climate change, renewable energy, biomass, waste management, life cycle
    JEL: Q42 Q51 Q54
    Date: 2017
  7. By: Michaels, Guy (London School of Economics); Nigmatulina, Dzhamilya (London School of Economics); Rauch, Ferdinand (University of Oxford); Regan, Tanner (London School of Economics); Baruah, Neeraj (London School of Economics); Dahlstrand-Rudin, Amanda (London School of Economics)
    Abstract: What are the long run consequences of planning and providing basic infrastructure in neighborhoods, where people build their own homes? We study "Sites and Services" projects implemented in seven Tanzanian cities during the 1970s and 1980s, half of which provided infrastructure in previously unpopulated areas (de novo neighborhoods), while the other half upgraded squatter settlements. Using satellite images and surveys from the 2010s, we find that de novo neighborhoods developed better housing than adjacent residential areas (control areas) that were also initially unpopulated. Specifically, de novo neighborhood are more orderly and their buildings have larger footprint areas and are more likely to have multiple stories, as well as connections to electricity and water, basic sanitation and access to roads. And though de novo neighborhoods generally attracted better educated residents than control areas, the educational difference is too small to account for the large difference in residential quality that we find. While we have no natural counterfactual for the upgrading areas, descriptive evidence suggests that they are if anything worse than the control areas.
    Keywords: urban economics, economic development, slums, Africa
    JEL: R31 O18 R14
    Date: 2017–09
  8. By: Stagnaro, Carlo; Amenta, Carlo; Di Croce, Giulia; Lavecchia, Luciano
    Abstract: Italian electricity consumers have been free to choose their supplier since 2007, but about 66 percent are still supplied under the so-called maggior tutela, a regulated regime. Italy’s Annual Competition Law states that regulated prices will be phased out by July 1st, 2019. This paper performs an analysis of the country’s retail electricity market following the structure-conduct-performance paradigm. Two main issues emerge that need to be addressed: market concentration and consumer inertia. The paper proposes several policy tools, aimed at both the supply and the demand side, aimed at promoting supply diversification, market entry and an increased customer engagement.
    Keywords: electricity, gas, liberalization, energy, italy
    JEL: L11 Q41 Q48
    Date: 2017–10
  9. By: Paschmann, Martin (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: In this paper, benefits resulting from the interaction of electric vehicles and photovoltaic generation units are analyzed. In doing so, a bottom-up approach is developed to simulate the driving and charging behavior of electric vehicles. An economic analysis is then performed to determine key findings for households with photovoltaic systems and electric vehicles: First, smart electric vehicle charging concepts may allow households to achieve higher cost-saving potentials by increasing their share of self-consumption by 59% compared to the case of uncontrolled charging. Second, adopting more of a system-oriented perspective, smart electric vehicle charging concepts could react to times of peak load and thereby reduce the average peak-load increase due to electric vehicles to 27%. According to these findings, it may be beneficial for policy makers to encourage peak-load minimizing charging behavior by introducing, e.g., load-sensitive tariff schemes. Technical challenges arising from the peak-load impact of electric vehicles may be regarded as being a coordination problem. Finally, the analysis shows that the potential of electric vehicles to counteract extremes of reverse power lows due to high photovoltaic electricity generation is limited.
    Keywords: Electromobility; distributed energy resources; energy storage; electric vehicle charging; sector coupling; energy self-sufficiency
    JEL: C15 C61 C63 D14 H20 R20
    Date: 2017–10–18
  10. By: Pooja Vijay Ramamurthi; Shweta Srinivasan; Deepthi Swamy; Rahul Kuttickat
    Abstract: Sustainable Development Goal 7 (SDG 7) aims to “ensure access to affordable, reliable, sustainable and modern energy for all†by 2030. India is home to the world’s largest population without access to modern energy – 400 million people do not have access to electricity and 800 million people still cook with traditional biomass. In this context, this study analyses the potential to embed the SDG 7 target of universal access to clean fuels and technologies into India’s national agenda. The analysis of the present paper shows that at the current pace of deployment of clean cooking technology, it seems unlikely that India will meet the SDG 7 target by 2030. In order to progress towards achieving this target, India needs to adopt a two-pronged technological approach – access to modern cooking fuel needs to be increased alongside efforts to make traditional cooking fuels safer to use. Consumer affordability, access and awareness all remain large barriers to the successful uptake of clean cooking technologies. There exists a lack of intra-governmental coordination, and existing networks are not effectively utilised. Non-governmental stakeholders have a key role to play in facilitating market finance, robust ‘last-mile’ distribution, community engagement, awareness-raising and after-sales services. Current data monitoring mechanisms also need to be modified so as to effectively track progress towards the SDG 7 target.
    Keywords: India, modern cooking fuels, Ministry of New and Renewable Energy (MNRE), clean cooking roadmap, SDG
    Date: 2016–11
  11. By: Yadira Mori Clement (University of Graz); Birgit Bednar-Friedl (University of Innsbruck)
    Abstract: Clean Development Mechanism (CDM) investments have the two-fold objective of mitigating greenhouse gas emissions and contributing to sustainable development. But while the contribution to mitigation has been analysed extensively in the literature, the impact on development has barely been quantified empirically. This paper intends to address this latter gap by investigating the impact of different types of CDM investments on local employment generation. A dynamic panel regression model for the period 2004-2014 across Brazilian municipalities supports that some CDM projects have not only stimulated job creation beyond the renewable energy sector, but also had a contractive effect in some economic sectors. We find moreover a clear difference by project type: For waste handling and methane avoidance projects, overall employment increases while no such effect emerges for hydro projects. However, these job effects are mainly transitory, i.e. in the first or second year after the project's registration; the expansion effect can be explained as a result of local employment demands generated during the project's construction and operation phases. The lack of durability or the temporary effects in employment of these projects might question the contribution of their benefits to local sustainable development.
    Keywords: Employment generation; Clean development mechanism; Industry; Regional development; Municipality level; Brazil; Dynamic panel model
    JEL: P48 Q52 Q56 R23
    Date: 2017–05
  12. By: Björn Felten; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen (Campus Essen))
    Abstract: Residential heat pumps are one of the most resource-efficient means for space heating. Their market shares are prospected to rise substantially within the next decades. By installing a thermal energy storage, the operation of heat pumps is – to a certain extent - decoupled from heat demand. Such flexibility is frequently claimed to bear high potentials for demand side management. In this study, we investigate the operational cost savings achievable through such a flexibility option using a dynamic model of the coupled building and heating system combined with model predictive economic control strategies. We derive several model predictive control strategies based on real-time prices for a heat pump in combination with a thermal energy storage supplying a floor-heated building. The algorithms are applied using perfect and imperfect foresight. Furthermore different variations of real-time prices are investigated, considering both historic and future years. Also the markets considered and the level and structure of end consumer charges (being a substantial part of the electricity price) are varied. The obtained operational cost savings are contrasted with different paths of investment cost developments. Results show that – even under optimistic conditions – investments in flexibility measures (additional storage capacity, etc.) are not economically viable.
    Keywords: Heat Pump, Model Predictive Control, Real-Time Pricing, Demand Side Management
    JEL: C61 Q32 Q48 L94
    Date: 2017–10
  13. By: Achim Voss (School of Economics and Social Sciences, University of Hamburg); Mark Schopf (University of Hagen)
    Abstract: We characterize the resource-extraction path that is chosen by a government which is influenced by a resource-supplier lobby group. The lobby group pays the government in exchange for a deviation from welfare-maximization. We show how the development of payments relates to the development of a conflict of interest between profit-maximization and welfare-maximization. Due to stock-pollution damages, the government prefers a lower long-run level of cumulative extraction than the lobby group. Moreover, the resource suppliers’ aim of maximizing profit implies that the distorted extraction may be too slow to maximize welfare, while flow-pollution damages imply that it may be too fast.
    Keywords: Environmental Policy, Exhaustible Resources, Political Economy, Lobbying, Time Consistency, Dynamic Programming
    JEL: D72 Q31 Q38 Q58
    Date: 2017–10
  14. By: Kaniovski, Serguei
    Abstract: The paper offers a complete analysis of the welfare-maximizing capital investment and resource depletion policies in the DHSS model with capital depreciation and any returns to scale. We establish a general existence result and show that an optimal admissible policy may not exist if the output elasticity of the resource equals one. We characterize the optimal policies by applying an appropriate version of the Pontryagin maximum principle for infinite-horizon optimal control problems.
    JEL: C61 O38 Q01 Q56
    Date: 2017
  15. By: Ackah, Ishmael
    Abstract: With less than 50% of the population of Sub-Saharan Africa having access to modern forms of energy and the desire to minimize the impact of energy consumption on the environment, there is a need to invest in an energy source that is affordable, available and environmentally clean. Natural gas is therefore the preferred choice of energy since it has minimum impact on the environment among the fossil fuels and is relatively affordable. In this study, the generalized methods of moments (GMM), a dynamic panel two stage least squares and the general unrestricted model (GUM) through AutometricsTM are employed to estimate the demand for natural gas in oil producing African countries. The GUM suggests that oil producing African countries have been consuming excessive natural gas that seems to offset improved technical efficiency of appliances. The study finds that both economic and technical factors are important drivers of natural gas consumption. In particular, output exerts a positive and significant influence on natural gas demand, whereas energy price and energy resource depletion have a negative and significant effect. It is recommended that energy efficiency measures should be implemented in these countries.
    Keywords: Natural gas demand, Energy, Autometrics, Oil producing African countries, Fossil fuels
    JEL: Q31 Q39 Q4 Q43 Q47
    Date: 2015–10–24
  16. By: Behringer, Stefan; Upmann, Thorsten
    Abstract: In standard models of spatial harvesting, the resource is distributed over the complete domain and the agent is able to control the harvesting activity everywhere. In some cases, it is more realistic to assume that the resource is located at a single point and that the agent is required to travel. The agent faces a combined travelling–and–harvesting problem. We scrutinize this two-stage optimal control problem and characterise the optimal policy of the full travelling–and–harvesting problem.
    JEL: Q20 Q22 C61
    Date: 2017
  17. By: Naqvi, Syed Ali Asjad; Engelbert, Stockhammer
    Abstract: This paper presents a post-Keynesian ecological macro model that combines three strands of literature: the directed technological change mechanism developed in mainstream endogenous growth theory models, the ecological economic literature which highlights the role of green innovation and material ows, and the post-Keynesian school which provides a framework to deal with the demand side of the economy, nancial ows, and inter- and intra-sectoral behavioral interactions. The model is stock-fow consistent and introduces research and development (R&D) as a component of GDP funded by private rm investment and public expenditure. The economy uses three complimentary inputs - Labor, Capital, and (non-renewable) Resources. Input productivities depend on R&D expenditures, which are determined by relative changes in their respective prices. Two policy experiments are tested; a Resource tax increase, and an increase in the share of public R&D on Resources. Model results show that policy instruments that are continually increased over a long-time horizon have better chances of achieving a "green" transition than one-off climate policy shocks to the system, that primarily have a short-run affect.
    Keywords: directed technological change, research and development, green transition, ecological economics,post- keynesian ecomomics, stock-flow consistency
    Date: 2017–10–09
  18. By: Kirschbaum, Birgit; Soretz, Susanne
    Abstract: We analyse an endogenous growth model with pollution and abatement. Human capital is used in the production sector as well as in pollution control. We show that greener preferences may increase the pollution level, driven by the decrease in human capital intensity in the production sector and the human capital reallocation. This can help to explain why environmental quality in emerging countries frequently deteriorates.
    JEL: O1 O4 Q2 Q5
    Date: 2017
  19. By: Halkos, George; Papageorgiou, George
    Abstract: Public debt accumulation and pollution result to disutility while time path must be sustainable. Policy weapons available to the government with regard to public debt is the generation of primary surpluses to sustain public debt while concerning pollution environmental taxation is expected to reduce emissions. In this paper, we address these factors in a simple dynamic game in order to find ways at which the notions of public debt, pollution, and taxation are interrelated. The starting point of the model is the identity of current account as the equation of motion of public debt, while public debt is considering as a stock and the stress of the regulator is to raise the nation’s primary surplus. Nash and Stackelberg differential game solutions are used to explore the strategic interactions. In the Nash equilibrium establishment of cyclical strategies, during the game between the polluters in one hand and the government on the other, requires that the discount rate of the polluters must be greater than government’s discount rate. That is the polluters must be more impatient than the government. In the case of hierarchical setting, the analytical expressions of the strategic variables and the steady state value of public debt stock are provided. Furthermore, we found the analytical expressions of the value functions, making, therefore, the policy implications an easy task. Finally, we found the conditions under which the conflict is more intensive, in the two cases of equilibrium, according to the shadow price of the environmental damages.
    Keywords: Public debt; Pollution; Taxation; Dynamic games; Nash equilibrium; Stackelberg equilibrium.
    JEL: C72 H23 H62 Q52 Q53 Q58
    Date: 2017–10
  20. By: Agnibho Roy; Abhishek Mohan
    Abstract: In this paper, we provide an integrated systems modeling approach to analyzing global externalities from a microeconomic perspective. Various forms of policy (fiscal, monetary, etc.) have addressed flaws and market failures in models, but few have been able to successfully eliminate modern externalities that remain an environmental and human threat. We assess three primary global industries (pollution, agriculture, and energy) with respect to non-OECD entities through both qualitative and quantitative studies. By combining key mutual points of specific externalities present within each respective industry, we are able to propose an alternative and optimized solution to internalizing them via incentives and cooperative behavior rather than by traditional Pigouvian taxes and subsidies.
    Date: 2017–10
  21. By: Gerlagh, Reyer (Tilburg University, Center For Economic Research); Jaimes Bonilla, Richard (Tilburg University, Center For Economic Research); Motavasseli, Ali (Tilburg University, Center For Economic Research)
    Abstract: Between 1950 and 2017, world average life expectancy increased from below-50 to above-70, while the fertility rate dropped from 5 to about 2.5. We develop and calibrate an analytic climate-economy model with overlapping generations to study the effect of such demographic change on capital markets and optimal climate policies. Our model replicates findings from the OLG-demography literature, such as a rise in households’ savings, and a declining rate of return to capital. We also find that demographic change raises the social cost of carbon, at 2020, from 28 euro/tCO2 in a model that abstracts from demography, to 94 euro/tCO2 in our calibrated model.
    Keywords: climate change; social cost of carbon; environmental policy; demographic trends
    JEL: H23 J11 Q54 Q58
    Date: 2017
  22. By: Florian Habermacher; Paul Lehmann
    Abstract: To decarbonize the power sector policy-makers need to commit to long-term credible rules for climate and energy policy. Otherwise, time-inconsistent policy-making will impair investments into low-carbon technologies. However, the future benefits and costs of decarbonization are subject to substantial uncertainties. Thus, there may also be societal gains from allowing policy-makers the discretion to adjust the policies as new information becomes available. We examine how this trade-off between policy commitment and discretion affects the optimal intertemporal design of policies to support the deployment of renewable energy sources. Using a dynamic partial equilibrium model of the power sector, we show that commitment to state-contingent renewable subsidies outperforms both unconditional commitment and discretion. The choice between the practically more feasible approaches of unconditional commitment and discretion is analytically ambiguous. A numerical illustration with naïve assumptions suggests that policy discretion may outperform unconditional commitment in terms of welfare. However, extensions to more realistic cases where only a limited fraction of climate uncertainty resolves, where future policy-makers have own agendas, or with risk-averse investors show commitment as favorable.
    Keywords: climate change, public policy, subsidies, renewable energy, time inconsistency, uncertainty, commitment, hold-up
    JEL: H23 Q42 Q48 Q54 Q58
    Date: 2017
  23. By: Kollenbach, Gilbert
    Abstract: To analyze the effect of unilaterally tightened climate policies, we augment the two country model of Hoel (2011) with fossil fuel extraction costs. It turns out that a tighter climate policy of the country with the initially stricter policy causes neither a weak nor a strong green paradox if the fossil fuel stock is sufficiently small. In case of a tighter climate policy in the country with the initially laxer policy, a weak green paradox depends on the price-elasticity of energy demand.
    JEL: Q41 Q42 Q54 Q58
    Date: 2017
  24. By: Alfredo Marvão Pereira (Department of Economics, The College of William and Mary, Williamsburg VA 23187); Rui Manuel Pereira (Department of Economics, The College of William and Mary, Williamsburg VA 23187)
    Abstract: We estimate how infrastructure investments affect industrial CO2 emissions in Portugal. Using empirical evidence on the economic effects of twelve types of infrastructure investments at the industry level, we consider twenty-two industries and the respective CO2 emission factors. Our conclusions are as follows. First, given the current emission factors for each industry, almost all types on infrastructure investments help the emissions intensity of the economy. Only for investments in airports and in health facilities are such positive effects absent. Second, the relevance of the economic effects of the different types of infrastructure investments on the electrical power industry is central in determining the overall effects on emissions. This is not surprising, given that electric power accounts for nearly 35% of CO2 emissions in Portugal and the extremely high emissions factor of this industry amplifies even small economic effects. Third, under an alternative scenario in which the emissions from the electric power industry have been eliminated – due to the use of renewable energy in production, for example – , or are otherwise ignored, we still see that most infrastructure investments lead to a decline in the CO2 emissions intensity. In this case, however, investments in national roads leave the emissions intensity essentially unchanged, while investments in health infrastructure have adverse effects on emissions. There are several important policy implications of these results when we consider infrastructure investment strategies that are mindful of their CO2 emission effects. Consider, for instance, transportation infrastructures. Given the present electric power generating mix, investment in national roads would be an appropriate policy recommendation from an environmental perspective, while investments in airport infrastructure should be avoided. Under a scenario of aggressive use of renewable energy sources in the production of electricity, however, the best investments would be in railroads and airports, two industries highly dependent on the use of electricity
    Keywords: Infrastructure Investment, CO2 Emissions, Industry-level Economic Effects, Industry-level Emission Effects, VAR, Portugal
    JEL: C32 E22 H54 L90 O52 Q43 Q58
    Date: 2017–10

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