nep-ene New Economics Papers
on Energy Economics
Issue of 2017‒11‒19
48 papers chosen by
Roger Fouquet
London School of Economics

  1. Data Center Energy Efficiency Investments: Qualitative Evidence from Focus Groups and Interviews By Heather Klemick; Elizabeth Kopits; Ann Wolverton
  2. Environmental Protectionism: The Case of CAFE By Arik Levinson
  3. Energy Intensity: Prices, Policy, or Composition in US States By Arik Levinson
  4. Energy Efficiency Standards Are More Regressive Than Energy Taxes: Theory and Evidence By Arik Levinson
  5. Energy transition in Germany and regional spillovers: What triggers the diffusion of renewable energy in firms? By Horbach, Jens; Rammer, Christian
  6. Exploring Perceptions of the Credibility of Policy Mixes: The Case of German Manufacturers of Renewable Power Generation Technologies By Karoline S. Rogge; Elisabeth Dütschke
  7. La voiture électrique, mythe ou réalité ? By André Fontana
  8. Impact of Fukushima Nuclear Disaster on Oil-Consuming Sectors of Japan By Taghizadeh-Hesary, Farhad; Yoshino, Naoyuki; Rasoulinezhad, Ehsan
  9. The Competitive Effects of Linking Electricity Markets Across Space and Time By Tangerås, Thomas; Wolak, Frank A.
  10. Variance optimal hedging with application to Electricity markets By Xavier Warin
  11. 중동지역의 전력산업 정책과 국내기업 진출 확대방안 (Electricity Industrial Policies in the Middle East and Their Implications for Korean Companies) By Lee, Kwon Hyung; Son, Sung Hyun; Jang, Yun Hee; Ho, Ryou Kwang
  12. Economic Analysis of Price Premiums in the Presence of Non-convexities - Evidence from German Electricity Markets By Paschmann, Martin
  13. JRC-IDEES: Integrated Database of the European Energy Sector: Methodological note By Leonidas Mantzos; Tobias Wiesenthal; Nicoleta Anca Matei; Stephane Tchung-Ming; Mate Rozsai; Peter Russ; Antonio Soria Ramirez
  14. Fueling the US Economy: Energy as a Production Factor from the Great Depression until Today By Frieling, Julius; Madlener, Reinhard
  15. The energy costs of historic preservation By Christian Hilber, Charles Palmer, Edward Pinchbeck
  16. POLES-JRC model documentation By Kimon Keramidas; Alban Kitous; Jacques Despres; Andreas Schmitz; Ana Diaz Vazquez; Silvana Mima; Peter Russ; Tobias Wiesenthal
  17. Knowledge Spillovers from clean and dirty technologies By Antoine Dechezlepretre, Ralf Martin, Myra Mohnen
  18. Characteristic of Successful Energy Policy from Politics, Economics, Social and Technological Perspective - a qualitative analysis By Yuzran Bustamar; Ian Lange; Elizabeth Van Wie Davis
  19. Resource Efficiency, Environmental Policy and Eco-Innovations for a Circular Economy: Evidence from EU Firms By Giulio Cainelli; Alessio D’Amato; Massimiliano Mazzanti
  20. Public Policy Towards Offshore Oil Spills By Charles F. Mason
  21. Can Cheap Oil Hurt Net Importers? Evidence from the Philippines By Abrigo, Michael R.M.; Brucal, Arlan Z.I.
  22. Oil discovery and macroeconomic management: The recent Ghanaian experience By Mahamudu Bawumia; Håvard Halland
  23. Travel mode and tour complexity: The roles of fuel price and built environment By Simora, Michael; Vance, Colin
  24. The long- and short-run impact of oil price changes on major global economies By Heidorn, Thomas; Van Huellen, Sophie; Ruehl, C.; Woebbeking, F.
  25. OPEC, Shale Oil, and Global Warming - On the importance of the order of extraction By Hassan Benchekroun; Gerard (G.C.) van der Meijden; Cees Withagen
  26. Did the Renewable Fuel Standard Shift Market Expectations of the Price of Ethanol? By Christiane Baumeister; Reinhard Ellwanger; Lutz Kilian
  27. On the direct, indirect and induced impacts of public policies: The European biofuel case. By Alexandre Gohin
  28. Environmental Degradation, Energy consumption, Population Density and Economic Development in Lebanon: A time series Analysis (1971-2014) By Audi, Marc; Ali, Amjad
  29. Air pollution spillovers and U.S. state productivity growth By Neophyta Empora
  30. Global Energy and Climate Outlook 2017: How climate policies improve air quality By Alban Kitous; Kimon Keramidas; Toon Vandyck; Bert Saveyn; Rita Van Dingenen; Joe Spadaro; Mike Holland
  31. Output and Pollution Abatement in a U.S. State Emission Function By Neophyta Empora; Theofanis P. Mamuneas; Thanasis Stengos
  32. Global Energy and Climate Outlook 2017: Greenhouse gas emissions and energy balances: Supplementary material to "Global Energy and Climate Outlook 2017: How climate policies improve air quality" By Alban Kitous; Kimon Keramidas
  33. Public Transport and Urban Pollution By Rainald Borck
  34. Lightening Up: How Less Heavy Vehicles Can Help Cut CO2 Emissions By ITF
  35. Expressways in China: Impacts on Growth and the Environment By Guojun He
  36. Environmental Taxation: Pigouvian or Leviathan ? By Isabelle Cadoret; Emma Galli; Fabio Padovano
  37. Realized volatility of CO2 futures By Thijs Benschop; Brenda López Cabrera;
  38. Multinational corporations and the EU emissions trading system: Asset erosion and creeping deindustrialization? By aus dem Moore, Nils; Großkurth, Philipp; Themann, Michael
  39. Substituting fossil energy sources: the role of the climate funds and effects on the economic growth By Cafora, Alfonso; Romano, Antonio Angelo; Ronghi, Monica; Giuseppe, Scandurra
  40. Information needed to facilitate the clarity, transparency and understanding of mitigation contributions By Sara Moarif
  41. Environmental Engel Curves By Arik Levinson; James O'Brien
  42. Emission Cap Commitment versus Emission Intensity Commitment as Self-Regulation By Hirose, Kosuke; Matsumura, Toshihiro
  43. Is Globalization Detrimental to CO2 Emissions in Japan? New Threshold Analysis By Shahbaz, Muhammad; Shahzad, Syed Jawad Hussain; Kumar, Mantu
  44. Information needs for the 2018 facilitative dialogue: Issues and options By Jane Ellis; Manasvini Vaidyula
  45. Beyond the Question “Is there Decoupling?” A Decoupling Ranking By Mariana Conte Grand
  46. Who Bears the Economic Costs of Environmental Regulations? By Don Fullerton; Erich Muehlegger
  47. Social Cohesion and Carbon Emissions By Ramos-Toro, Diego
  48. Cumulative carbon emissions and economic policy: in search of general principles By Simon Dietz, Frank Venmans

  1. By: Heather Klemick; Elizabeth Kopits; Ann Wolverton
    Abstract: The data center industry is one of the fastest growing energy users in the US. While the industry has improved its energy efficiency over the past decade, engineering analyses suggest that ample opportunities remain to reduce energy use that would save firms money. This study explores potential barriers to energy-efficiency investments in data centers. Given the scarcity of empirical data in this context, we conducted focus groups and interviews with data center managers to elicit information about potential barriers to investment and used content analysis to qualitatively evaluate the results. Split incentives between departments within companies and between colocation data centers and their tenants, uncertainty and imperfect information about the performance of new technologies, and tradeoffs with data center uptime were the most pervasive potential barriers discussed by participants. While these factors have moderately slowed investments in energy-saving technologies for many firms, only in the cases of uncertainty/imperfect information and split incentives are these barriers potentially indicative of market failures.
    Keywords: energy efficiency paradox, market failures, data centers, technology investment barriers
    JEL: Q48 Q52 Q58
    Date: 2017–11
  2. By: Arik Levinson (Department of Economics, Georgetown University)
    Abstract: In 2011 the US changed its automobile fuel economy standards from a uniform, fleet-wide average, miles-per-gallon target, to one that varies with car sizes. Smaller cars now must meet stricter standards. While the motive for any policy change can be disputed, the consequence of this change looks like environmental protectionism, because the favored larger cars are disproportionately assembled in the US. The change imposes costs on imported cars equivalent to a tariff of $50 to $200 per vehicle.
    Keywords: Pollution; Regulations; Fuel economy; Automobiles
    JEL: F1 Q4
    Date: 2017–08–31
  3. By: Arik Levinson (Department of Economics, Georgetown University)
    Abstract: This paper uses the historical experience of US states to consider why energy intensity has declined in some places more than in others, and whether that difference can help guide other states and countries in pursuing less energy-intensive (and therefore less pollution-intensive) economic growth. The variation in energy intensity across US states has been similar to the changes across countries, and some states Ð notably California Ð have been held up as models for the rest of the world by international organizations, such as the World Bank. I show that aggregate US energy intensity fell by 40 percent between 1982 and 2007, and that the decline is not explained by the decreasing industrial share of the US economy or the changing composition of the industrial sector. Across US states, prices and policies are correlated with the decreasing share and composition of manufacturing but not with the technology, or Òtechnique,Ó of production, which appears to be the most important source of US energy intensity gains. Importantly, energy intensity has been declining the most in states where economic growth has been the strongest.
    Keywords: Decomposition, energy efficiency, energy policy
    Date: 2017–08–31
  4. By: Arik Levinson (Department of Economics, Georgetown University)
    Abstract: Economists promote energy taxes as cost-effective. But policymakers raise concerns about their regressivity, or disproportional burden on poorer families, preferring to set energy efficiency standards instead. I first show that in theory, regulations targeting energy efficiency are more regressive than energy taxes, not less. I then provide an example in the context of automotive fuel consumption in the United States: taxing gas would be less regressive than regulating the fuel economy of cars if the two policies are compared on a revenue-equivalent basis.
    Keywords: Regulation, Income Distribution, Pigouvian Tax
    Date: 2017–08–31
  5. By: Horbach, Jens; Rammer, Christian
    Abstract: The success of an energy turnaround towards renewables highly depends on the willingness and ability of firms to adopt energy technologies using renewable sources. Existing studies focused on the role of regulation and energy markets (e.g. the price for fossil energy) to explain the diffusion of green energy technologies. The present paper tries to give a more comprehensive view on the determinants of renewable energy innovations focusing on the crucial role of firms' regional environment (role of regional spillover effects, the greenness of a region and the regional endowment with green energy plants). We use a unique database combining the Community Innovation Survey 2014 for Germany and NUTS 3 data on renewable energy plants, the greenness of a region and other economic control variables. We find that geographical proximity to electricity production based on renewable energy sources and the orientation of a region towards 'green issues' (measured by the share of green party voters) are both major drivers for such innovations. Furthermore, our results show that in addition to regulation, government subsidies for eco-innovation, high energy costs and regional knowledge spillovers contribute to a rapid adoption of renewable energy. The reinforcing nature of this process leads to a diverging regional development of renewable energy innovations.
    Keywords: Eco-Innovation,Renewable Energy,Community Innovation Survey
    JEL: C25 O31 Q20 R11
    Date: 2017
  6. By: Karoline S. Rogge (SPRU– Science Policy Research Unit, University of Sussex, Brighton BN1 9RH, UK; Fraunhofer Institute Systems and Innovation Research ISI, Karlsruhe, Germany); Elisabeth Dütschke (Fraunhofer Institute Systems and Innovation Research ISI, Karlsruhe, Germany)
    Abstract: The credibility of climate policy has been identified as paramount factor for low-carbon investment and innovation and is thus key for the cost-effective achievement of the decarbonization objectives set out in the Paris Agreement. Yet, despite its importance we have only limited insights into how such policy credibility is formed. To address this gap we explore whether and to what extent corporate perceptions of policy credibility depend on the current policy mix with its national targets, concrete policy instruments and their consistency as well as policy making and implementation. For this, we use the case of the German Energiewende and rely on data collected in 2014 through a survey of German manufacturers of renewable power generation technologies. We analyze the answers of 390 companies through a linear regression to identify policy mix related determinants of perceived policy credibility - measured by a novel indicator based on four survey items. We find that corporate perceptions of policy credibility are mainly shaped by two characteristics of the policy mix, namely the coherence of policy making and implementation, followed by the consistency of the policy mix. Elements of the policy mix matter as well, in particular changes in the design of the core demand pull instrument (the Renewable Energy Sources Act, EEG) and the nuclear phase-out policy, but also the German targets for the expansion of renewable energies play a role. These insights enable us to derive more general implications for policy makers around the world interested in promoting the innovation-led decarbonization of the economy by safeguarding and increasing policy credibility.
    Keywords: policy mix, credibility, consistency, coherence, comprehensiveness, energy transition
    Date: 2017–11
  7. By: André Fontana
    Abstract: La comparaison de l’énergie primaire nécessaire pour alimenter une voiture électrique et une voiture équipée d’un moteur thermique moderne fait apparaître que l’option « tout électrique » n’est absolument pas neutre sur le plan environnemental.
    Keywords: voiture électrique; voiture thermique; batteries; émissions dioxyde de carbone; déchets radioactifs; impact environnemental
    Date: 2017–11–07
  8. By: Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Yoshino, Naoyuki (Asian Development Bank Institute); Rasoulinezhad, Ehsan (Asian Development Bank Institute)
    Abstract: The Fukushima Daiichi nuclear disaster was an accident at the Fukushima I Nuclear Power Plant in Fukushima, Japan, which resulted primarily from the tsunami following the Tohoku earthquake on 11 March 2011, and which led to a year-long nuclear shutdown in the country. During the shutdown, Japan substituted fossil fuels for nuclear power and became more dependent on the import and consumption of fossil fuels including oil, gas, and coal. We try to shed light on the elasticity of oil consumption to crude oil price before and after the Fukushima disaster in Japan’s various economic sectors. To do so, we apply a cointegration analysis and perform a vector error correction (VEC) variance decomposition by using quarterly data in two separate subperiods from Q1 1981 to Q4 2010 and from Q1 2011 to Q4 2015. Our findings reveal that the absolute value of elasticities of oil consumption by some economic sectors, such as the industry, non-energy, and transportation sectors to oil prices, was reduced after the disaster because of increased dependency on oil consumption, which endangered energy security in the country. To raise energy self-dependency and energy security, Japan needs to diversify its energy supply resources. For instance, the share of renewable energy in Japan’s energy basket needs to increase. Because renewable energy projects are mainly considered risky and banks are reluctant to finance them, we introduce an innovative form of financing these projects: Hometown Investment Trust Funds, which has been introduced and applied in Japan and other parts of Asia.
    Keywords: oil price; energy consumption; Fukushima disaster; nuclear power; Hometown Investment Trust funds; energy security
    JEL: C32 O49 Q43
    Date: 2017–02–06
  9. By: Tangerås, Thomas (Research Institute of Industrial Economics (IFN)); Wolak, Frank A. (Program on Energy and Sustainable Development and Department of Economics)
    Abstract: We show that a common regulatory mandate in electricity markets that use location-based pricing that requires all customers to purchase their wholesale electricity at the same quantity-weighted average of the locational prices can increase the performance of imperfectly competitive wholesale electricity markets. Linking locational markets strengthens the incentive for vertically integrated firms to participate in the retail market, which increases competition in the short-term wholesale market. In contrast, linking locational markets through a long-term contract that clears against the quantity-weighted average of short-term wholesale prices does not impact average wholesale market performance. These results imply that a policy designed to address equity considerations can also enhance efficiency in wholesale electricity markets.
    Keywords: Electricity markets; Equity; Market design; Market performance; Market power; Vertical integration
    JEL: C72 D43 G10 G13 L13
    Date: 2017–10–17
  10. By: Xavier Warin
    Abstract: In Electricity markets, illiquidity, transaction costs and market price characteristics prevent managers to replicate exactly contracts. A residual risk is always present and the hedging strategy depends on a risk criterion chosen. We present an algorithm to hedge a position for a mean variance criterion taking into account the transaction cost and the small depth of the market. We show its effectiveness on a typical problem coming from the field of electricity markets.
    Date: 2017–11
  11. By: Lee, Kwon Hyung (Korea Institute for International Economic Policy); Son, Sung Hyun (Korea Institute for International Economic Policy); Jang, Yun Hee (Korea Institute for International Economic Policy); Ho, Ryou Kwang (Korea Institute for International Economic Policy)
    Abstract: Korea Abstract: 본 연구의 목적은 최근 중동국가들이 전력부문에서 추진하고 있는 주요 산업정책과 관련 부문에서의 기업 진출사례를 살펴보고, 이를 바탕으로 국내기업의 전력산업 진출 확대를 위한 정책 방향과 효과적인 지원방안을 제시하는 것이다. 2장에서는 중동지역의 전력 수급 구조 및 특성을 파악하고 이에 따른 중동국가들의 주요 정책과제를 도출하였다. 전력 수요 측면에서 중동지역은 빠른 인구증가, 1인당 소득증대, 전력 다소비산업 육성 등의 요인으로 다른 지역에 비해 높은 소비 상승률을 유지해왔으며, 전력 보조금에 따른 저렴한 전기요금으로 1인당 전력 소비량이 상대적으로 높게 나타나고 있다. 공급 측면에서는 석유 및 천연가스를 연료로 하는 화력 발전의 비중이 크고, 노후화된 발전 인프라로 인해 송배전 손실량이 많다는 특성을 보였다.3장과 4장에서는 사우디아라비아, UAE 및 이집트 등 3개국을 중심으로 전력부문의 특성과 정책을 심층적으로 분석하고 기업 진출 확대를 위한 시사점을 도출하였다. 3장에서는 발전 인프라 확충 및 발전원 다변화 정책을 중심으로 살펴보았다. 4장에서는 송배전망 현대화 및 스마트 그리드 도입, 에너지소비효율 개선 등 을 위한 정책 및 기업 진출사례를 분석하고 국가별 유망 진출 분야 및 시사점을 도출하였다. 5장에서는 국내기업의 중동지역 전력산업 진출 확대를 위한 지원방안을 제시하였다. English Abstract: The aim of the research is to suggest policy implications for Korean companies that want to expand their business in the Middle Eastern electricity industry, examining industrial policies in the generation, transmission, distribution, and energy efficiency sectors. Chapter 2 touches upon supply and demand of electricity in the region and their characteristics, deriving some policy trends such as diversification of power sources, improvement of the efficiency of electricity consumption and supply, and more involvement of the private sector in electricity businesses. Chapters 3 and 4 deal with sectoral policies in the cases of Saudi Arabia, UAE and Egypt. Policies in the generation sector have been examined in Chapter 3. The three countries are pushing ahead with policies to modernize transmission and distribution lines, introduce smart grid technology and improve the efficiency of energy consumption shown in Chapter 4. Chapter 5 suggests government policies that help Korean companies expand their market in the Middle Eastern electricity industry.
    Keywords: Electricity Industrial Policies; Middle East; Korean Companies
    Date: 2017–09–29
  12. By: Paschmann, Martin (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: Analyzing price data from sequential German electricity markets, namely the day-ahead and intraday auction, a puzzling but apparently systematic pattern of price premiums can be identified. The price premiums are highly correlated with the underlying demand profile. As there is evidence that widespread models for electricity forward premiums are not applicable to the market dynamics under analysis, a theoretical model is developed within this article which reveals that non-convexities in only a subset of sequential markets with differing product granularity may cause systematic price premiums at equilibrium. These price premiums may be bidirectional and reflect a value for additional short-term power supply system flexibility.
    Keywords: Sequential market organization; electricity markets; short-term market dynamics; price premiums; arbitrage
    JEL: C60 C62 C63 D21 D23 D24 D41 D44 L11
    Date: 2017–11–02
  13. By: Leonidas Mantzos (European Commission – JRC); Tobias Wiesenthal (European Commission – JRC); Nicoleta Anca Matei (European Commission – JRC); Stephane Tchung-Ming (European Commission – JRC); Mate Rozsai (European Commission – JRC); Peter Russ (European Commission – JRC); Antonio Soria Ramirez (European Commission – JRC)
    Abstract: The "Integrated Database of the European Energy Sector" (JRC-IDEES) is a one-stop data-box that incorporates in a single database all information necessary for a deep understanding of the dynamics of the European energy system, so as to better analyse the past and to create a robust basis for future policy assessments. JRC-IDEES offers a consistent set of disaggregated energy-economy-environment data, compliant with the EUROSTAT energy balances, as well as widely acknowledged data on existing technologies. It provides a plausible decomposition of energy consumption, allocating it to specific processes and end-uses. Throughout all sectors it quantifies in a vintage-specific manner the characteristics of the energy (and non-energy related) equipment in use, along with the stock's average operation, identifies different drivers and provides insights on their role by sector, fully acknowledging structural differences across countries. The complete output of JRC-IDEES is accessible to the general public, facilitating its use further by offering an inter-active visualisation tool. An iterative consultation process aims at further improving the data reliability. By making JRC-IDEES publicly available and revise it periodically in order to address experts' and stakeholders' comments, it can become a cost-free common reference point for energy futures assessments, thereby also avoiding redundant work. JRC-IDEES is developed and maintained by the European Commission's Joint Research Centre.
    Keywords: energy system, database
    Date: 2017–10
  14. By: Frieling, Julius (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: We analyze the relationship between factor augmenting technical change and factor substitution through a nested CES function using capital, labor, and energy inputs. We use US aggregate data on output, factor use, and factor prices for the years 1929–2015 to show the interdependence and coevolution of the different input factors. We demonstrate the robustness of the system of equations approach for estimating such a production function. We find that the input factors are gross complements, and that in the time period considered, technical change was mostly labor saving, while the linear time trend of energy augmenting technical change was zero.
    Keywords: aggregate production; technical change; multi-factor production; energy demand
    JEL: C13 C32 E23 O33 Q43
    Date: 2017–05
  15. By: Christian Hilber, Charles Palmer, Edward Pinchbeck
    Abstract: We explore the impact of historic preservation policies on domestic energy consumption. Using panel data for England from 2006 to 2013 and employing a fixed effects strategy, we document that (i) rising national energy prices induce an increase in home energy efficiency installations and a corresponding reduction in energy consumption and (ii) this energy saving effect is significantly less pronounced in Conservation Areas and in areas with high concentrations of Listed Buildings, where the adoption of energy efficiency installations is typically more costly and sometimes legally prevented altogether. The energy costs of preservation are substantial
    Date: 2017–10
  16. By: Kimon Keramidas (European Commission – JRC); Alban Kitous (European Commission – JRC); Jacques Despres (European Commission – JRC); Andreas Schmitz (European Commission – JRC); Ana Diaz Vazquez (European Commission – JRC); Silvana Mima; Peter Russ (European Commission – JRC); Tobias Wiesenthal (European Commission – JRC)
    Abstract: This report is a public manual for the POLES-JRC model, the in-house tool of the European Commission for global and long-term analysis of greenhouse gas (GHG) mitigation policies and evolution of energy markets. The model includes a comprehensive description of the energy system and related GHG emissions for a large set of significant economies and residual regions, covering the world and including international bunkers. Through linkage with specialised tools it also provides a full coverage of GHG emissions, including from land use and agriculture, as well as of air pollutant emissions. The POLES-JRC model builds on years of development of the POLES model while adding specific features developed internally within the JRC. The model version presented in this report is used in particular to produce the JRC Global Energy and Climate Outlook (GECO) series. Complementary information can be found on the JRC Science Hub website: ttp://
    Keywords: POLES, energy, modelling, climate, mitigation, GHG emissions, energy demand, energy supply, energy transformation, power generation, energy prices, energy trade, energy investment, energy technologies, energy scenarios
    Date: 2017–10
  17. By: Antoine Dechezlepretre, Ralf Martin, Myra Mohnen
    Abstract: Government policy in support of innovation often varies across technology areas. An important example are climate change policies that typically try to support so called clean technologies that avoid greenhouse gas pollution and hamper dirty technologies that are associated with polluting emissions. This paper explores the economic consequences of such policy moves in the short run. At the margin private returns of R&D investments in different areas should be equalised. Hence, shifting the composition of R&D activities by a policy intervention will only have a meaningful impact on economic outcomes if the external returns differ. Hence, we compare innovation spillovers between clean, dirty and other emerging technologies using patent citation data. We develop new methodology including the usage of Page rank measures developed by Google to rank web content. Exploring a wide range of robustness checks we consistently find up to 40% higher levels of spillovers from clean technologies. We also use firm-level financial data to investigate the impact of knowledge spillovers on firms’ market value and find that marginal economic value of spillovers from clean technologies is also greater.
    Date: 2017–10
  18. By: Yuzran Bustamar (Division of Economics and Business, Colorado School of Mines); Ian Lange (Division of Economics and Business, Colorado School of Mines); Elizabeth Van Wie Davis (Division of Humanities, Arts and Social Sciences, Colorado School of Mines)
    Abstract: This paper creates a conceptual framework that analyzes successful characteristics of energy policy defined by PEST (Politics, Economics, Social and Technological) determinant indicators. Energy policy that is promoted by a government is meant to ensure reliable energy supply by stimulating energy growth or promoting energy efficiency. Yet, not every policy is successfully implemented or even passed by the lawmakers even one with a clear potential benefit. We performed a qualitative assessment of a review published by International Energy Agency (IEA) of energy policies implemented by the 28 OECD country members within 2003-2014 period. This conceptual framework contributes to our understanding of successful energy policies and lays the foundation for future study to investigate empirical evidence of the determinants of policy success that may lead to security of energy in OECD countries.
    Keywords: Energy Policy Characteristics, Successful Policy, Policy Design, PEST Analysis
    JEL: Q48 P48
    Date: 2017–11
  19. By: Giulio Cainelli (University of Padova & SEEDS); Alessio D’Amato (University of Tor Vergata Rome & SEEDS); Massimiliano Mazzanti (University of Ferrara, IEFE Bocconi Milan & SEEDS)
    Abstract: Innovation adoption and diffusion by firms are key pillars for the EU strategy on resource-efficiency and the development of a circular economy. This paper presents new EU evidence regarding the role of environmental policy and green demand drivers to sustain the adoption of resource efficiency-oriented eco-innovations. This paper originally implements new estimators to address the endogeneity of binary framed policy and demand covariates, which typically characterise firm level survey data. Our results suggest that when endogeneity is accounted for, environmental policy is the only factor always significant in driving the adoption of innovations that reduce the use of waste and material, while demand-side and market-factors do not always play a central role. The result is an important piece of new quantitative-based knowledge, which complements the currently large case study-based evidence on the setting of sound management and policy strategies for the circular economy.
    Keywords: Eco innovation; circular economy; innovation drivers; EU; environmental regulation; market demand
    Date: 2017–11
  20. By: Charles F. Mason
    Abstract: On April 20, 2010, the Macondo well suffered a blowout, causing the mobile offshore drilling unit “Deepwater Horizon†to explode and eventually sink. Oil flowed from the well into the Gulf of Mexico for 87 days. In the aftermath of this event, the US Government proposed significant regulatory changes related to offshore oil and gas exploration and production. In this paper I consider the likely costs and potential benefits from these new regulations. While both costs and benefits are very large, plausibly running into billions of US Dollars, a strong case can be made in favor of the regulations.
    Keywords: public policy, oil spills, catastrophe
    JEL: D61 H00 Q58
    Date: 2017
  21. By: Abrigo, Michael R.M.; Brucal, Arlan Z.I.
    Abstract: Conventional wisdom suggests that oil price increases have a negative effect on the output of oil-importing countries. This is grounded on the experience of the United States between the 1940s and the late 1980s, where recessions were generally preceded by oil price increases. This paper evaluates the impact of oil price shocks on the Philippines--a developing country and a net oil-importing economy. Following Kilian's (2008) structural decomposition of real oil price change, we find indications that the 2008-2009 and 2014-2015 oil price drops may have lowered the Philippine economy's output growth, potentially due to the economy's reliance on remittances from abroad and the export market.
    Keywords: Philippines, oil industry, oil price, oil price shock, oil-importing economy, oil price movement
    Date: 2017
  22. By: Mahamudu Bawumia; Håvard Halland
    Abstract: This paper analyses the evolution of fiscal and monetary variables in Ghana, from the discovery of oil in 2007 through to 2014. It documents the deterioration of fiscal and monetary discipline over this period, which resulted in a rebound of debt, a deterioration of the external balance, and a decrease in public investment. The paper goes on to analyse the potential causes of this deterioration, including the political economy context, and the fiscal and monetary institutional framework. The suggested causes include the politics of Ghana’s dominant two-party system. Finally, the paper discusses what Ghana could have done differently to avoid the various damaging effects associated with the oil discovery. It does not aim to provide specific fiscal policy recommendations for Ghana, but rather to give an empirical account of Ghana’s experience that may be useful for other countries that discover oil.
    Date: 2017
  23. By: Simora, Michael; Vance, Colin
    Abstract: Despite steady increases in fuel economy, CO2 emissions from road transportation in Germany are on the rise, increasing by nearly 4% since 2009. This study analyzes the impact of different policy levers for bucking this trend, focusing specifically on the role of fuel prices and features of the built environment. We estimate two multinomial logit models, one addressing work-related tours and the other non-work related tours. Both models consider two interrelated dimensions of travel on the extensive margin: mode choice and tour complexity. We use the model estimates to predict outcome probabilities for different levels of our policy variables. Our results suggest significant effects of the built environment – measured by bike path density, urbanization, and proximity to public transit – in discouraging car use and increasing tour complexity. Fuel prices, by contrast, appear to have little bearing on these choices.
    Keywords: activity-based approach,travel mode choice,tour complexity,multinomial logit,predicted probabilities
    JEL: D10 R48 R42
    Date: 2017
  24. By: Heidorn, Thomas; Van Huellen, Sophie; Ruehl, C.; Woebbeking, F.
    Abstract: In the context of the recent slump in global oil prices, the paper investigates the effect of oil price shocks on the economic performance of 51 individual OECD and OPEC economies. We propose an error correction model which allows us to differentiate between short- and longrun price effects. For robustness, structural breaks and potential asymmetries are incorporated. Our approach is particularly interesting, since economic performance is not only measured by GDP, but also by equity indices from the MSCI family. The equity indices provide valuable insights into financial transmission mechanisms, in addition to macroeconomic channels, at much higher frequency than conventional GDP data. We are able to present robust estimates for the severity of oil price shocks for individual economies and thereby identify winners and losers under the current oil price regime.
    JEL: C32 E31 F43 Q32 Q43
    Date: 2017
  25. By: Hassan Benchekroun (McGill University, CIREQ); Gerard (G.C.) van der Meijden (Vrije Universiteit Amsterdam; Tinbergen Institute, The Netherlands); Cees Withagen (IPAG Business School (Paris), Vrije Universiteit Amsterdam, Tinbergen Institute)
    Abstract: We show that OPEC's market power contributes to global warming by enabling producers of relatively expensive and dirty oil to start producing before OPEC reserves are depleted. We fully characterize the equilibrium of a cartel-fringe model and use a calibration to examine the importance of this extraction sequence effect. While welfare under the cartel-fringe equilibrium can be significantly lower than under a first-best outcome, almost all of this welfare loss is due to the sequence effect. Moreover, the recent boom in shale oil reserves may reduce social welfare and renewables subsidies can increase the carbon content of current extraction.
    Keywords: cartel-fringe; climate policy; non-renewable resource; Herfindahl rule; limit pricing
    JEL: Q31 Q42 Q54 Q58
    Date: 2017–11–03
  26. By: Christiane Baumeister; Reinhard Ellwanger; Lutz Kilian
    Abstract: It is commonly believed that the response of the price of corn ethanol (and hence of the price of corn) to shifts in biofuel policies operates in part through market expectations and shifts in storage demand, yet to date it has proved difficult to measure these expectations and to empirically evaluate this view. We utilize a recently proposed methodology to estimate the market’s expectations of the prices of ethanol, unfinished motor gasoline and crude oil at horizons from three months to one year. We quantify the extent to which price changes were anticipated by the market, the extent to which they were unanticipated, and how the risk premium in these markets has evolved. We show that the Renewable Fuel Standard (RFS) is likely to have increased ethanol price expectations by as much $1.45 in the year before and in the year after the implementation of the RFS had started. Our analysis of the term structure of expectations provides support for the view that a shift in ethanol storage demand starting in 2005 caused an increase in the price of ethanol. There is no conclusive evidence that the tightening of the RFS in 2008 shifted market expectations, but our analysis suggests that policy uncertainty about how to deal with the blend wall raised the risk premium in the ethanol futures market in mid-2013 by as much as 50 cents at longer horizons. Finally, we present evidence against a tight link from ethanol price expectations to corn price expectations and hence to storage demand for corn in 2005-06.
    Keywords: biofuels, policy uncertainty, term structure of price expectations, price shocks, market integration, anticipation, storage demand, risk premium, crude oil, gasoline, corn
    JEL: Q18 Q28 Q42 Q58
    Date: 2016
  27. By: Alexandre Gohin
    Abstract: This paper deals with the controversial indirect land use changes of the European biodiesel policy. Two studies sponsored by the European Commission finds significant, but contrasted, land use effects for the different vegetable oils used for biodiesel production. The first study uses an aggregate computable general equilibrium model capturing direct, indirect and induced effects. The second recent study uses a biotechnical partial equilibrium model offering a detailed representation of the indirect effects occurring through the livestock sectors. We develop an original economic emulator to understand the diverging key results of these studies and test their sensitivity. We find that the direct and indirect effects on vegetable oil markets explain most of the differences. We also find that indirect effects on the livestock sector and the induced effects do not significantly influence the biodiesel results. However results are critically sensitive to crop yield responses that are considerably underestimated in both studies. The cropland displacement due to the biodiesel policy computed by the recent study is overestimated by a factor of 5.
    Keywords: land use changes, biodiesel, Europe, emulator
    JEL: Q11 Q16
    Date: 2017
  28. By: Audi, Marc; Ali, Amjad
    Abstract: This study has investigated the impact of energy consumption, financial development, economic development, population density and secondary school education on environmental degradation in Lebanon over the period of 1974 to 2014. ADF unit root test and ARDL bound test method of co-integration have been used for empirical analysis. The results show that energy consumption, financial development and population density have positive and significant relationship with environmental degradation in Lebanon. The results show that economic development has positive but insignificant relationship with environmental degradation. The results show that secondary school education has negative and significant relationship with environmental degradation in Lebanon. The estimated results show that for reducing environmental degradation, the Lebanese government should increase energy efficient methods of production as well as increase the educational level.
    Keywords: economic development, population density, environmental degradation
    JEL: O1 Q53 Q56
    Date: 2016
  29. By: Neophyta Empora
    Abstract: This study investigates the effect of pollution and pollution spillovers on the Total Factor Productivity (TFP) growth among the 48 contiguous U.S. states, for the period 1965-2002. Specifically, this study accounts for the spatial relationship between the states that arises from the transboundary nature of Sulphur dioxide (SO2) emissions and investigates how the dispersion of pollution affects economic growth. The relationship between TFP growth, pollution and pollution spillovers is estimated using a semiparametric smooth coefficient model that allows estimating the output elasticity of pollution and pollution spillovers for each state and each period and accounts for possible nonlinearities in the data. According to the results, the effect of spillover pollution on growth is negative and larger in magnitude than the positive effect of a state’s own emissions: decreases in emissions might not be so harmful for productivity growth.
    Keywords: TFP Growth; Pollution; Transboundary Pollution Spillovers; Semiparametric Estimation
    JEL: C14 O13 O40
    Date: 2017–11
  30. By: Alban Kitous (European Commission – JRC); Kimon Keramidas (European Commission – JRC); Toon Vandyck (European Commission – JRC); Bert Saveyn (European Commission – JRC); Rita Van Dingenen (European Commission – JRC); Joe Spadaro (Basque Centre for Climate Change (BC3), Bilbao, Spain); Mike Holland (Ecometrics Research and Consulting (EMRC), Reading, U.K.)
    Abstract: This study shows that achieving the climate change mitigation target of staying below 2°C temperature rise is possible technically – thanks to an acceleration of decarbonisation trends, an increased electrification of final demand and large changes in the primary energy mix that include a phase out of coal and a reduction of oil and gas – and is consistent with economic growth. It yields co-benefits via improved air quality – including avoided deaths, reduction of respiratory diseases and agricultural productivity improvement – that largely offset the cost of climate change mitigation. These co-benefits arise without extra investment costs and are additional to the benefits of avoiding global warming and its impact on the economy.
    Keywords: climate, mitigation, GHG emissions, energy, energy demand, energy supply, power generation, energy investment, modelling, POLES, GEM-E3, TM5-FASST, air pollution, air quality, mitigation cost, macroeconomic impacts, health impacts
    Date: 2017–10
  31. By: Neophyta Empora; Theofanis P. Mamuneas; Thanasis Stengos
    Abstract: This study models the relationship between emissions, output and pollution abatement, by defining an emission function in a manner that is consistent with the residual generation mechanism and firms’ optimizing behavior. The relationship is estimated by applying semiparametric estimation and threshold regression on U.S. state-level data from 1973-1994. The results provide a positive nonlinear relationship between emissions and output, rejecting an inverted-U type of relationship between the two (EKC). In the absence of abatement the relationship turns around, verifying the arguments in the literature, that abatement is one of the driving forces for an EKC to emerge.
    Keywords: Environmental Kuznets Curve; emissions; pollution abatement; residual generation mechanism; semiparametric estimation; threshold regression
    JEL: Q50 Q52 Q53
    Date: 2017–11
  32. By: Alban Kitous (European Commission – JRC); Kimon Keramidas (European Commission – JRC)
    Abstract: This document complements the Global Energy and Climate Outlook 2017 Report. It provides the detailed GHG and energy balances for the Reference, INDC and B2C scenarios described in the main report. The results displayed in this report have been produced with the global energy & GHG model POLES-JRC.
    Keywords: climate, mitigation, GHG emissions, energy, energy statistics, energy demand, energy supply, power generation, modelling, POLES
    Date: 2017–10
  33. By: Rainald Borck
    Abstract: The paper studies the effect of public transport policies on urban pollution. It uses a quantitative equilibrium model with residential choice and mode choice. Pollution comes from commuting and residential energy use. The model parameters are calibrated to replicate key variables for American metropolitan areas. In the counterfactual, I study how free public transport coupled with increasing transit speed affects the equilibrium. In the baseline simulation, total pollution falls by 0.2%, as decreasing emissions from transport are partly offset by rising residential emissions. A second counterfactual compares a city with and without public transit. This large investment decreases pollution by 1.6%. When jobs are decentralized, emissions fall by 0.3% in the first and by 3% in the second counterfactual.
    Keywords: public transport, pollution, discrete choice
    JEL: Q53 Q54 R48
    Date: 2017
  34. By: ITF
    Abstract: This report examines how lowering vehicle mass can reduce CO2 emissions from road transport. The average mass of new passenger cars in the European Union has increased by around 40% over the past four decades. Lowering vehicle mass to levels observed in the mid-1970s could reduce vehicle emissions substantially and help meet European Union targets such as the 60% reduction in transport CO2 emissions by 2050. Based on different scenarios, this study shows that mass reduction across all vehicle technologies has potential to reduce the gap between such ambitions and the current trend and would financially benefit the vehicle user. This report was developed in the context of the International Transport Forum’s Decarbonising Transport project. It is part of the International Transport Forum’s Case-Specific Policy Analysis series. These are topical studies on specific issues carried out by the ITF in agreement with local institutions.
    Date: 2017–11–15
  35. By: Guojun He (Assistant Professor, Division of Social Science, Division of Environment, and Economics Department, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology)
    Abstract: Guojun He, Faculty Associate of HKUST IEMS, explains why a single, unified economic or environmental policy may backfire, using the case of China’s national expressways. He found that while the cross-nation system was originally conceived as a unified economic policy, counties along the roads were affected very differently in terms of economic growth and pollution.
    Date: 2017–09
  36. By: Isabelle Cadoret (CREM CNRS UMR6211, University Rennes 1 & Condorcet Center for Political Economy, France); Emma Galli (DiSSE,Sapienza University of Rome, Rome, Italy); Fabio Padovano (CREM CNRS UMR6211, University Rennes 1 & Condorcet Center for Political Economy, France)
    Abstract: This paper empirically examines for what purposes governments actually use environmental taxes and how efficient they are in achieving such goals. The theoretical literature proposes four alternative interpretations: strictly or loosely Pigouvian, the double dividend and the Leviathan hypotheses. We consider the EU-27 countries that committed themselves to correcting a negative environmental externality, the greenhouse gas (GHG) emissions, by 2020. A dynamic system of simultaneous equations shows that data fail to support both Pigouvian interpretations, since ET neither bring countries closer to the GHG reduction targets, nor governments use them for broader purposes of environmental protection. As no evidence is found that governments substitute ET to more distortive forms of taxation, the analysis suggests that the Leviathan interpretation, which views ET as any other type of tax that governments use to maximize revenues, is the most consistent with reality. Creation-Date: 2017-08
    Keywords: Environmental taxes, environmental policy goals, Pigouvian taxation, double dividend hypothesis, Leviathan government, dynamic simultaneous equations model
    JEL: Q28 H54 H87 D72 D73 D78
  37. By: Thijs Benschop; Brenda López Cabrera;
    Abstract: The EU Emission Trading System (EU ETS) was created to reduce the CO2 and other greenhouse gas emissions at the lowest economic cost. In reality market participants are faced with considerable uncertainty due to price changes and require price and volatility estimates and forecasts for appropriate risk management, asset allocation and volatility trading. Although the simplest approach to estimate volatility is to use the historical standard deviation, realized volatility is a more accurate measure for volatility, since it is based on intraday data. Besides the stylized facts commonly observed in financial time series, we observe long-memory properties in the realized volatility series, which motivates the use of Heterogeneous Autoregressive (HAR) class models. Therefore, we propose to model and forecast the realized volatility of the EU ETS futures with HAR class models. The HAR models outperform benchmark models such as the standard long-memory ARFIMA model in terms of model fit, in-sample and out-of-sample forecasting. The analysis is based on intraday data (May 2007-April 2012) for futures on CO2 certificates for the second EU-ETS trading period (expiry December 2008-2012). The estimation results of the models allow to explain the volatility drivers in the market and volatility structure, according to the Heterogeneous Market Hypothesis as well as the observed asymmetries. We see that both speculators with short investment horizons as well as traders taking long-term hedging positions are active in the market. In a simulation study we test the suitability of the HAR model for option pricing and conclude that the HAR model is capable of mimicking the long-term volatility structure in the futures market and can be used for short-term and long-term option pricing.
    Keywords: EU ETS, Realized Volatility, HAR, Volatility Forecasting, Intraday Data, CO2 Emission Allowances, Emissions Markets, Asymmetry, SHAR, HARQ, MC Simulation JEL Classification: C00
    JEL: C00
    Date: 2017–08
  38. By: aus dem Moore, Nils; Großkurth, Philipp; Themann, Michael
    Abstract: This study investigates the causal effect of the EU Emissions Trading System (EU ETS) on firms' holdings of fixed assets as an early indicator of industrial relocation, exploiting installation level inclusion criteria of the regulation. To single out companies with particularly low relocation costs, global multinational enterprises (MNEs), we identify ownership structures for the full sample of EU ETS-firms. Matched difference-indifferences estimates provide robust evidence that contradicts the idea of an erosion of European asset bases. Baseline results indicate that the EU ETS led on average to an increase of treated firms' asset bases of 11,1%. However, for a particular subgroup of MNEs, this increase is a mere 1.3%. For these companies, the EU ETS may have induced a shift in investment priorities. While the positive overall effect is very robust, the differential effect for the subgroup cannot be extended to all samples.
    Keywords: EU ETS,cap-and-trade,carbon leakage,multinational corporation
    JEL: F23 H23 Q54 Q58 C21
    Date: 2017
  39. By: Cafora, Alfonso; Romano, Antonio Angelo; Ronghi, Monica; Giuseppe, Scandurra
    Abstract: The Green Climate Fund (GCF) is a fund within the framework of the UNFCCC founded as a mechanism to assist developing countries in adaptation and mitigation practices to counter climate change. In this paper, we analyze the flow of funds among countries and investigate, through a counterfactual analysis, their effectiveness. The results show that as result of the receipt of the funds, countries reduced their GHG emission and have been incentivized in the replacement of fossil sources with renewable sources. Finally, also a leverage effect of the funds for economic development of the recipient countries comes into the light.
    Keywords: Renewable and non-renewable energy sources; counterfactual analysis; economic growth; climate finance
    JEL: C21 C54 O44 O47
    Date: 2017–02
  40. By: Sara Moarif (International Energy Agency)
    Abstract: Parties to the United Nations Framework Convention on Climate Change are currently developing the operational elements of the Paris Agreement, including guidance for information to facilitate clarity, transparency and understanding (CTU) when Parties communicate their nationally determined contributions (NDCs). Drawing on Party submissions from 2016 and April 2017, and discussions held during the CCXG Global Forum on the Environment and Climate Change in March 2017, this paper synthesises and discusses views on guidance for CTU in four areas: the purpose of the guidance; where further guidance is needed; the elements of the guidance; and the relationship between guidance for CTU and other operational elements of the Paris Agreement. The paper then suggests ways for Parties to consider selected issues, namely: the structure and content of the guidance; its status; the scope of NDCs; and links between sets of guidance, including timing issues.
    Keywords: accounting, climate change, mitigation, nationally determined contributions (NDCs), transparency, UNFCCC
    JEL: F53 Q54 Q56 Q58
    Date: 2017–06–01
  41. By: Arik Levinson (Department of Economics, Georgetown University); James O'Brien (Department of Economics, Gettysburg College)
    Abstract: Environmental Engel curves (EECs) plot the relationship between householdsÕ incomes and the pollution embodied in the goods and services they consume. The curves provide a basis for estimating the degree to which aggregate environmental improvements, which come in part from changing consumption patterns, can be attributed to income growth. We calculate a set of annual EECs for the United States from 1984 to 2012, revealing three clear results. First, EECs are upward sloping: richer households are indirectly responsible for more pollution. Second, EECs have income elasticities of less than one: pollution increases less than one-for-one with income. Third, EECs have been shifting down and becoming more concave over time: at every level of income households are responsible for decreasing amounts of pollution. We show that even without changes to production techniques, the pollution necessary to produce the goods and services American households consume would have declined up to 12 percent, despite a 19 percent increase in real household after-tax incomes. Most of this improvement is attributable to households consuming a less pollution-intensive mix of goods, driven about equally by two factors: household income growth represented by movement along inelastic EECs; and economy-wide changes represented by downward shifts in EECs.
    Date: 2017–08–31
  42. By: Hirose, Kosuke; Matsumura, Toshihiro
    Abstract: We compare emission cap commitment that restricts total emissions and emission intensity commitment that restricts emissions per unit of output as measures of self-regulation. The monopolist chooses either emission cap commitment or emission intensity commitment and sets the target level under the constraint that the resulting emissions do not exceed the upper limit. We find that profit-maximizing firms choose emission cap commitment, although emission intensity commitment always yields greater consumer surplus. It is ambiguous whether emission intensity commitment or emission cap commitment yields greater welfare. We present two cases in which emission intensity commitment yields greater welfare. One is the most stringent target case (the target emission level is close to zero), and the other is the weakest target case (the target emission level is close to business-as-usual). Our result suggests that the incentive for adopting emission cap commitment is too large for profit-maximizing firms, and thus, governments should encourage the adoption of emission intensity commitment, especially to achieve a zero-emission society efficiently.
    Keywords: self-regulation, emission intensity, emission cap, monopoly, zero-emission
    JEL: L12 L51 Q52
    Date: 2017–11–10
  43. By: Shahbaz, Muhammad; Shahzad, Syed Jawad Hussain; Kumar, Mantu
    Abstract: Using annual data 1970-2014, this paper examines the effects of globalization on CO2 emissions in Japan while accounting for economic growth and energy consumption as potential determinants of carbon emissions. The structural breaks and asymmetries arising due to policy shifts require attention and hence an asymmetric threshold version of the ARDL model is utilized. The results show the presence of threshold asymmetric cointegration between the variables. The threshold-based positive and negative shocks arising in globalization increase carbon emissions, while the impact of the latter is more profound. Energy consumption (economic growth) also has a significant positive effect on carbon emissions. Globalization, economic growth and energy consumption significantly increase carbon emissions in the short run. We suggest that policy makers in Japan should consider globalization and energy consumption as policy tools while formulating their policies towards protecting sustainable environmental quality in the long run. Otherwise, the Japanese economy may continue to face environmental consequences such as undesirable climate change and massive warming at the micro and macro levels as a result of potential shocks arising from globalization and energy consumption.
    Keywords: Carbon emissions, energy consumption, globalization, threshold NARDL
    JEL: A1
    Date: 2017–10–19
  44. By: Jane Ellis (OECD); Manasvini Vaidyula (OECD)
    Abstract: Decision 1/CP.21 adopting the Paris Agreement established a mandate for a facilitative dialogue to be convened among Parties in 2018. This mandate established two main objectives of the 2018 facilitative dialogue (FD2018): to take stock of collective progress made towards long-term climate goals and to inform preparation of nationally determined contributions. Proposal(s) from the COP22 and COP23 presidencies on how the dialogue should be conducted are expected to be made by COP23. This paper “unpacks” the two main objectives of the FD2018 into distinct components, and examines the implications of addressing different components on the information needs of the FD2018. The paper also examines different types of information that could be required for FD2018 and their availability. Finally, the paper looks at other collective review or stocktake processes that have been carried out under the U.N. to identify relevant lessons for the FD2018, particularly regarding inputs and associated outputs.
    Keywords: 2018 facilitative dialogue, climate, information needs, UNFCCC
    JEL: F53 Q54 Q56 Q58
    Date: 2017–06–01
  45. By: Mariana Conte Grand
    Abstract: This study shows that neither decoupling CO2 emissions from production, consumption and GDP, nor reducing emission intensity is good per se. Instead of analyzing decoupling cases, it proposes two orderings: one that balances economy and carbon emissions and, if there is conflict, prioritizes GDP increase, and another that gives priority to the environment. Each country has its own “rank”. The result is that even if the two orderings differ, there are no substantial differences between the decoupling ranking of countries based on production and consumption emissions, and between the ordering that gives priority to the economy over the environment.
    Keywords: decoupling; CO2 emissions; decoupling indicators; consumption emissions; territorial emissions.
    JEL: Q54 Q56
    Date: 2017–10
  46. By: Don Fullerton; Erich Muehlegger
    Abstract: Public economics has a well-developed literature on tax incidence – the ultimate burdens from tax policy. This literature is used here to describe not only the distributional effects of environmental taxes or subsidies but also the likely incidence of non-tax regulations, energy efficiency standards, or other environmental mandates. Recent papers find that mandates can be more regressive than carbon taxes. We also describe how the distributional effects of such policies can be altered by various market conditions such as limited factor mobility, trade exposure, evasion, corruption, or imperfect competition. Finally, we review data on carbon-intensity of production and exports around the world in order to describe implications for effects of possible carbon taxation on countries with different levels of income per capita.
    Keywords: distributional effects, carbon tax, environmental policy, incidence
    JEL: H22
    Date: 2017
  47. By: Ramos-Toro, Diego
    Abstract: This paper demonstrates that population diversity and its adverse effect on social cohesion have a robust, causal, positive effect on the carbon emissions of sufficiently rich economies. An examination of geocoded data on emissions from fossil fuels reveals that such results holds at a subnational level as well. The documented effect of diversity operates through its impact on mistrust and on heterogeneity in preferences, which suggests a social dimension that must be contemplated when setting a strategy to curb human’s carbon footprint.
    Keywords: Carbon Emissions, Cohesion, Population Diversity, Trust
    JEL: O10 Q50 Q52 Z13
    Date: 2017–11–11
  48. By: Simon Dietz, Frank Venmans
    Abstract: We exploit recent advances in climate science to derive a surprisingly simple model of efficient climate policy. The model yields closed-form solutions for optimal peak warming, optimal emissions along the transition to peak warming and optimal carbon prices, with and without a temperature constraint that is consistent with the UN Paris Agreement. We draw five conclusions. First, optimal peak warming has an elasticity of one or more with respect to several parameters that are highly uncertain. This implies optimal peak warming is itself highly uncertain. Second, even if optimal peak warming is high, optimal transient warming over the coming centuries is not. The transition is slow, because of the stock-flow nature of CO2-induced warming. Third, the optimal carbon price grows faster than output this century and the possibly unexpected reason for this is the saturation of carbon sinks, a well-known physical property of the climate system hitherto absent from economic models. Fourth, the optimal carbon price under a binding temperature constraint comprises the social cost of carbon, plus a Hotelling premium. If we take account of damages, then we should abate emissions more quickly than if we simply meet the temperature constraint at the lowest abatement cost. Fifth, when the objective is to minimise abatement costs alone, the optimal carbon price follows the simple Hotelling rule, not various kinds of augmented Hotelling rule, as in previous work. Again this comes from taking into account the effects of saturating carbon sinks, as well as not over-estimating thermal inertia in the climate system.
    Date: 2017–11

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