nep-ene New Economics Papers
on Energy Economics
Issue of 2017‒12‒18
25 papers chosen by
Roger Fouquet
London School of Economics

  1. Latitudinal Effect on Energy Savings from Daylight Savings Time By Bergland, Olvar; Mirza, Faisal
  2. Determinants of residential heating system choice: an analysis of Irish households By Curtis, John; McCoy, Daire; Aravena Novielli, Claudia
  3. Renewable energy consumption and unemployment in South Africa By Moyo, Clement; Dingela, Siyasanga; Kolisi, Nwabisa; Khobai, Hlalefang; Anyikwa, Izunna
  4. An Economic and Stakeholder Analysis for the Design of IPP Contracts for Wind Farms By Sener Salci; Glenn Jenkins
  5. El gran impulso ambiental en el sector de la energía By Arroyo, Andrés
  6. Avances en materia de energías sostenibles en América Latina y el Caribe: resultados del Marco de Seguimiento Mundial, informe de 2017 By Coviello, Manlio; Ruchansky, Beno
  7. Residential Battery Systems and the Best Time to Invest A case study of Hawaii By Aida Arik
  8. Efficient large-scale energy storage dispatch: challenges in future high renewables systems By Ciara O'Dwyer; L. (Lisa B.) Ryan; Damian Flynn
  9. The In fluence of Government Incentives on Electric Vehicle Adoption: Cross-national Comparison By Sarah Fluchs; Dr. Garnet Kasperk
  10. A new stochastic frontier model with cross-sectional effects in both noise and inefficiency terms By Orea, Luis; Álvarez, Inmaculada C.
  11. Some Physics Notions on Monetary Standard By Tiago Fernandes
  12. Is the Fuel Cell Vehicle’s Technological Innovation System built at a global or national scale? An analysis of carmakers\' co-patents’ portfolios By Vincent FRIGANT; Stéphane MIOLLAN; Maëlise PRESSE; David VIRAPIN
  13. Blurred boundaries: a flexible approach for segmentation applied to the car market By Laura Grigolon
  14. Exchange rates of oil exporting countries and global oil price shocks: A nonlinear smooth-transition approach By Haug, Alfred A.; Basher, Syed Abul
  15. Middle Class in Iran: Oil Rents, Modernization, and Political Development By Mohammad Reza Farzanegan; Pooya Alaedini; Khayyam Azizimehr
  16. Economic Feasibility of the Profitability of Insurances Related to Oil and Gas Wells By Sadeghi Shahedani, Mehdi; Askari, Mohammad Mahdi; Maleki Nejad, Amir
  17. A replication of Pindyck’s willingness to pay: on the sacrifice needed to obtain results By Luca Gerotto; Paolo Pellizzari
  18. Forecasting of a Hierarchical Functional Time Series on Example of Macromodel for Day and Night Air Pollution in Silesia Region: A Critical Overview By Daniel Kosiorowski; Dominik Mielczarek; Jerzy. P. Rydlewski
  19. Impact of the First-Time Car Buyer Program on the Environmental Cost of Air Pollution in Bangkok By Attavanich, Witsanu
  20. Policy making as collective bricolage: the role of the electricity sector in the making of the European carbon market By Mélodie Cartel; Franck Aggeri; Eva Boxenbaum; Jean-Yves Caneill
  21. Do parents leave a smaller carbon footprint? By Jonas Nordström; Jason F. Shogren; Linda Thunström
  22. Macroeconomic implications of switching to process-emission-free iron and steel production in Europe By Jakob Mayer; Gabriel Bachner; Karl W. Steininger
  23. Enhancing mitigation and finance reporting: Building on current experience to meet the Paris Agreement requirements By Lola Vallejo; Sara Moarif
  24. Accounting for mitigation targets in Nationally Determined Contributions under the Paris Agreement By Christina Hood; Carly Soo
  25. Intergenerational equity under catastrophic climate change By Aurélie Méjean; Antonin Pottier; Stéphane Zuber; Marc Fleurbaey

  1. By: Bergland, Olvar (School of Economics and Business, Norwegian University of Life Sciences); Mirza, Faisal (Department of Economics, University of Gujrat)
    Abstract: This paper looks at the potential systematic variation in energy savings resulting from daylight saving time(DST)in a number of geographic areas varying in latitude ranging from Northern to Southern Europe. We are using the same econometric specification and estimation method for a consistent dataset of electricity load covering 35 countries in Europe. Thus our results provide a comprehensive set of consistent and comparable estimates of the DST effect. The average treatment effect results obtained from difference-in-difference regression for 46 electricity load zones ranges from zero in northern most parts of Norway and Sweden to more than 2.5 % in a number of locations. We find some evidence that energy savings from DST decreases with latitude, and especially for homogeneous groups of countries. The diversity in estimated effects cuts across geographical, cultural and economic factors.
    Keywords: daylight savingstime; electricityconsumption; di erence-in-di erence
    JEL: C21 C24 Q40
    Date: 2017–12–07
  2. By: Curtis, John; McCoy, Daire; Aravena Novielli, Claudia
    Abstract: The paper uses a multinomial logit model to study the determinants of domestic space heating systems in Ireland. Nine types of heating systems are considered, classified by fuel type (liquid, electric, gas and solids or combinations thereof). Heating system choice is modelled as a function of household socio-demographic variables and dwelling attributes; information on occupants’ knowledge of fuel costs, energy efficiency, and fuel emissions; as well as actual environmental behaviours. Key findings are that environmental concerns, including knowledge of fuel costs, emissions, or engagement in environmentally sustainable behaviours, are not an important determining factor in heating system choice across the majority of households. No clear trend emerges on the likelihood of specific heating systems being associated with a broad range of socio-demographic variables, including age, income, and working status. Certain building attributes are associated with specific heating system types, with analyses segregated by new build properties, properties with their original heating system, and also by tenure type (i.e. mortgage, rental, etc.). For example, we find public sector landlords’ properties have a substantially higher likelihood that the heating system is solid fuel based compared to other heating systems, which identifies an obvious opportunity to target de-carbonisation of heating systems.
    Date: 2017–12
  3. By: Moyo, Clement; Dingela, Siyasanga; Kolisi, Nwabisa; Khobai, Hlalefang; Anyikwa, Izunna
    Abstract: The importance of renewable energy consumption has grown to a large extent over the recent years. The benefits of renewable energy consumption ranging from improved environmental quality to higher economic growth are well documented. However, the impact of renewable energy consumption on unemployment has received relatively less attention. This study examines the relationship between renewable energy consumption and unemployment in South Africa over the period 1990-2014. The Autoregressive Distributed Lag (ARDL) model was employed to test the long-run and short-run impacts of renewable energy consumption on unemployment. The results reveal that renewable energy consumption has a negative and significant effect on unemployment in the long-run. However, in the short-run the variables have an insignificant relationship. The study therefore advocates for an increase in the production and consumption of renewable energy in order to boost employment levels.
    Keywords: Renewable energy consumption, unemployment, ARDL, South Africa
    JEL: C50 Q20
    Date: 2017–12–06
  4. By: Sener Salci (Department of Economics, Queen’s University, Kingston, ON, Canada); Glenn Jenkins (Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada)
    Abstract: In this paper, we undertake an integrated financial, economic, stakeholder analysis of a grid-connected onshore wind project that is owned and operated by an independent power producer (IPP) in Santiago Island, Cape Verde. This IPP project has received considerable positive publicity and has won many awards. Cape Verde has a very good wind resource, but due to its location it suffers from high transportation costs for petroleum fuels. Hence, it would appear to be an ideal site for an IPP investment in a wind farm. This analysis is conducted from the perspectives of the electric utility, the country’s economy, the government and the private sector investor. The key question is whether the design of the power purchase agreement (PPA) can simultaneously yield a high enough cash flow for the project to be bankable, while at the same time yielding a positive net financial and economic present value to the electric utility and the country respectively. The analysis in this paper shows the negotiated PPA results in a negative outcome for the economy of Cape Verde in almost all circumstances. In contrast, the owners of the IPP are guaranteed under all circumstances a very substantial return for their modest investment.
    Keywords: : electricity, wind power, power purchase agreement, public–private partnership, Santiago Island (Cape Verde)
    JEL: D61 L94 O55 Q28 Q42
    Date: 2016
  5. By: Arroyo, Andrés
    Abstract: Para América Latina y el Caribe su tránsito hacia el cambio estructural progresivo y de neutralidad carbónica, implica la necesidad presente de diversificar y complementar las actuales matrices energéticas dado el requerimiento climático de reducir la producción de hidrocarburos a mediano plazo. En este sentido la producción sostenible de petróleo y gas natural debiera darse dentro de buenas prácticas y en aplicación de principios de precaución, prevención, mitigación y remediación. El gran impulso ambiental en el sector de la energía ambiental así como de transparencia y participación social en alianzas capaces de adecuarse a la denominada mayor disrupción histórica del mercado petrolero. En este estudio se analizan, entre otros, los compromisos de reducción de emisiones de gases de efecto invernadero fruto del Acuerdo de París del año 2015 y los desafíos que enfrentan los países y el sector de la energía a nivel global y regional; se aborda el alcance del escenario de sostenibilidad energética y cómo algunas políticas y tecnologías pueden ayudar a encaminarse a una senda acorde a los desafíos climáticos; se analiza la huella ambiental del sector y cómo las regulaciones ambientales de la Argentina, el Brasil, Colombia, Ecuador y México son implementadas dentro las políticas corporativas y de sostenibilidad de las empresas estatales de hidrocarburos.
    Date: 2017–11
  6. By: Coviello, Manlio; Ruchansky, Beno
    Abstract: Este documento sobre la región de América Latina y el Caribe ha sido preparado por la Comisión Económica para América Latina y el Caribe (CEPAL) como complemento de la segunda parte del informe de 2017 del Marco de Seguimiento Mundial. Su intención es explorar los hallazgos de dicho informe, considerar otras fuentes de datos que puedan ofrecer más información y reflexionar sobre indicadores alternativos para una evaluación más sólida del progreso regional hacia el uso de energías compatibles con el desarrollo sostenible. También se intenta establecer una perspectiva orgánica del sistema energético en la región, para destacar las interconexiones entre la demanda, el suministro, las políticas y los mecanismos de precios que puedan satisfacer las necesidades energéticas de la sociedad de manera sostenible, sin olvidar las interdependencias del sector energético con otros sectores como los de la salud y el agua.
    Date: 2017–11
  7. By: Aida Arik (University of Hawaii at MÄ noa)
    Abstract: Battery storage is a complementary technology to intermittent renewable energy sources. In particular, it pairs well with solar photovoltaic (PV) systems to capture excess solar generation during daylight hours and to draw energy from it when needed. Technological advancements and rapidly declining costs have made batteries more economically feasible for households, especially in the state of Hawai‘i, which faces the highest cost of electricity in the U.S. With the sunset of net energy metering (NEM) in 2015, and technical limitations from interconnecting additional PV systems capable of exporting energy to the grid, non-exportable PV systems are increasingly a viable option for residential customers in Hawai‘i. This paper analyzes whether the installation of a PV plus battery system is economically compensatory for households on Oahu, with the power grid as a back-up option. Given the importance of state and federal tax incentives in reducing capital costs, this paper compares household savings in the decision to invest now or later, given that the federal tax credit of 30% is set to decline in 2020 and expire by 2022. Installing a PV plus battery system in 2019 could increase net savings by 17-32% in Oahu compared to installing the same system in 2017.
    Date: 2017–12
  8. By: Ciara O'Dwyer; L. (Lisa B.) Ryan; Damian Flynn
    Abstract: Future power systems with high penetrations of variable renewables will require increased levels of flexibility from generation and demand-side sources in order to maintain secure and stable operation. One potential flexibility source is largescale energy storage, which can provide a variety of ancillary services across multiple time-scales. In order for appropriate levels of investment to take place, and in order for existing assets to be utilized optimally, it is essential that market signals are present which encourage suitable levels of flexibility, either from storage or alternative sources. Suboptimal storage plant dispatch due to uncertainty and inefficient market incentives are represented as operational constraints on the storage plant, and the impact of these inefficiencies are highlighted. Thus changes required in operational practices for storage plant at different installed wind capacity levels, and the challenges that private storage plant operators will face in generating appropriate bids in a market environment at high variable renewable penetrations are explored. The impacts on system generating costs and storage profits are explored under different plant operating assumptions.
    Keywords: Energy storage; Power system simulation; Pumped storage power generation; Wind energy
    Date: 2017–09
  9. By: Sarah Fluchs (RWTH Aachen University); Dr. Garnet Kasperk
    Abstract: This paper examines the infl uence of political incentives which are set by the government and aim at promoting the adoption of electric vehicles (EVs). More specifically, battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) are considered. A classification and categorization of different incentives is provided and specified for five countries, namely Norway, Netherlands, Germany, United States and China. Additionally, an empirical study was performed for China and the Netherlands employing the method of time series (TS) analysis. Results reveal that government incentives affect EV market penetration but exact effects differ for both country and type of EV. In China, especially direct rebates increase EV adoption under certain circumstances. In the Netherlands, PHEVs' market share increases more compared to BEVs' market share if both vehicle types receive the comparable incentives.
    Keywords: public policy, electric vehicles, political incentives, technology diffusion
    Date: 2017
  10. By: Orea, Luis; Álvarez, Inmaculada C.
    Abstract: This paper develops a new stochastic frontier model that allows for cross-sectional (spatial) correlation in both the noise and inefficiency terms. The model proposed is useful in efficiency analyses when there are omitted but spatially-correlated variables and firms benefit from best practices implemented by other (adjacent) firms. Unlike the previous literature, our model can be estimated by maximum likelihood using standard software. The model is illustrated with an application to the Norwegian electricity distribution sector.
    Date: 2017
  11. By: Tiago Fernandes
    Abstract: The economic concept of monetary standard of currencies is reviewed in a classical physics standpoint. Are analyzed the physical characteristics of the material elements used to represent value and how the energy matrix of an economy can play an important role in the sustained growth, through the adoption of a new monetary standard, based on the energy supply capacity.
    Date: 2017–11
  12. By: Vincent FRIGANT; Stéphane MIOLLAN; Maëlise PRESSE; David VIRAPIN
    Abstract: This paper wishes to contribute to the Technological Innovation System (TIS) literature. More precisely, we study the geographic delineation issue of a focal TIS. In a first part, we discuss the geographic delineation debate in TIS framework, and we explain why co-patents are a good tool for mapping a TIS. Then considering the Fuel Cell Vehicle (FCV) as a focal TIS, we analyse 10 carmakers’ co-patent networks in FCV technologies between 2000 and 2013. Our database includes 3,250 co-patents. First, we build the networks corresponding to the three periods 2000-2004, 2000-2009, and 2000-2013. Second, we measure the nationalization index of their networks. Third, we study with whom they have established formal collaborations. The results show: 1) the internationalization increased slowly during the time span. We observe an extension of the network until 2009 and then, a consolidation trend; 2) the nationalization index is rather strong for 5 carmakers, and very weak for 3 others; 3) carmakers call upon different kinds of partners, located, moreover, in different places. The final section learns the lessons from the empirical study.
    Keywords: Technological Innovation System, TIS, Fuel Cell Vehicle, Geography of innovation, Co-patent, Automobile.
    JEL: O31 O33 L62
    Date: 2017
  13. By: Laura Grigolon
    Abstract: Prominent features of differentiated product markets are segmentation and product proliferation that blurs the boundaries between segments. I develop a tractable demand model,the Ordered Nested Logit, which allows for over lap between neighboring segments.I apply the model to the automobile market where segments are ordered from small to luxury. I find that consumers, when substituting outside their vehicle segment, are more likely to switch to a neighboring segment. Accounting for such a symmetric substitution matters when evaluating the impact of new product introduction or studying the effect of subsidies on fuel-efficient cars.
    Date: 2017–11–30
  14. By: Haug, Alfred A.; Basher, Syed Abul
    Abstract: This paper considers logistic (asymmetric) and exponential (symmetric) smooth transition adjustments of real and nominal exchange rates for six major oil-exporting countries in response to different shocks affecting oil prices. Real exchange rate movements affect the terms of trade and hence may affect relative competitiveness. We detect no statistically significant non-linearities for the adjustment process of real exchange rate returns, be they asymmetric or symmetric, in response to oil supply shocks, idiosyncratic oil-market-specific shocks, and speculative (crude oil inventory) oil-market shocks. On the other hand, global aggregate demand shocks, which are shocks that do not directly originate in the oil market, have nonlinear asymmetric effects on real exchange rate returns for Canada, Mexico, Norway and Russia, and linear effects for the UK. These qualitative results mostly hold for nominal exchange rate returns as well. Exceptions are that linear effects are found for aggregate demand shocks for Brazil and for idiosyncratic shocks for Norway, whereas the aggregate demand shocks for the UK have nonlinear and asymmetric effects instead of linear ones.
    Keywords: Logistic and exponential smooth transition; oil price shocks; exchange rates
    JEL: F31 Q43
    Date: 2017–12–07
  15. By: Mohammad Reza Farzanegan (University of Marburg); Pooya Alaedini (University of Tehran); Khayyam Azizimehr (University of Tehran)
    Abstract: This study probes the middle class in Iran in relation to oil rents and political development. We begin by discussing how the Iranian middle class has evolved through the 1979 Revolution and in the post-revolutionary period. We then empirically examine the relationships among per capita oil-rent shocks, the growth of the middle class, and the quality of political institutions as well as political conflict. We use annual time series data for 1965-2012 and employ a Vector Autoregressive (VAR) model along with impulse response and variance decomposition analyses. According to our results, the middle class response to positive oil shocks is positive and significant. Yet, positive oil shocks and the growth of the middle class have contrary effects on the quality of political institutions in the short term—negative and positive respectively. This prompts us to employ a weighted measure of conflict, whose positive response to the growth of the middle class in Iran we then capture. These results are robust when controlling for other channels in the nexus of oil rents and middle class. The estimated Autoregressive Distributed Lag (ARDL) models illustrated the long-run effects of oil rents on the size of middle class and long-run effects of both middle class and oil rents on conflict. Our findings hint at potential conflicts after oil shocks, whereby oil rents increase government’s control over political institutions but at the same time give impetus to the growth of the middle class that is in turn associated with political instability.
    Keywords: Middle class; Oil rents; Political institutions; Conflict; VAR model; ARDL model; Iran; Middle East
    JEL: O1 O4 Q3
    Date: 2017
  16. By: Sadeghi Shahedani, Mehdi; Askari, Mohammad Mahdi; Maleki Nejad, Amir
    Abstract: Insurance is among the most important tools that have been devised to prepare readiness for dealing with threats. These valuable man-made tools with their capabilities have controlled many undesirable effects of unforeseen events. In each country, growth and development of insurance industry is considered as an indicator for evaluating the level of development. From the perspective of insurers, the risks of energy, especially the oil and gas industry, are known as high risks. Economic feasibility of the profitability of insurance related to oil and gas wells is the aim of this study that was performed through damage coefficient indicators and profit margin with scenario planning using engineering economics method. The results of this research indicate that the damage coefficient of this field of insurance is much lower than the whole insurance industry and have a suitable and very high profit margin. Therefore, due to the low damage coefficient and high profit margin and the stability of these types of insurance, their profitability is confirmed economically and investment and providing insurance coverage is adequately justifiable for these types of risk.
    Keywords: economic feasibility, profit margin, insurance, oil and gas wells.
    JEL: G22 P48
    Date: 2017–08–15
  17. By: Luca Gerotto (Department of Economics, University Of Venice Cà Foscari); Paolo Pellizzari (Department of Economics, University Of Venice Cà Foscari)
    Abstract: We present a verification, an extension and a reanalysis of “Uncertain outcomes and climate change policy”, R. Pindyck, Journal of Environmental Economics and Management, 2012. As far as verification is concerned, we are able to reproduce the results provided in Pindyck’s work in many cases and convincingly confirm the quality of the work. Some discrepancies are present, they are due to rounding or related to specific sets of parametric values and do not change the economic interpretation or significance of the results. The re-estimation of the model with more recent data on climate change made available in 2014 shows that temperature increments are now deemed to be higher in mean but less dispersed. As a consequence, the willingness to pay doesn’t vary much with respect to the original paper. We also modify the functional form describing the impact of temperature increase on the growth rate of consumption and obtain much bigger and potentially problematic increments of the willingness to pay. Finally, the paper demonstrates that the numerical results are sensitive to a variety of technical settings used in the computations and suggests that great care is needed in obtaining estimates and employing results in policy discussions.
    Keywords: Replication, environmental policy, climate change, economic impact, willingness to pay
    JEL: D81 Q51 O44
    Date: 2017
  18. By: Daniel Kosiorowski; Dominik Mielczarek; Jerzy. P. Rydlewski
    Abstract: In economics we often face a system, which intrinsically imposes a structure of hierarchy of its components, i.e., in modelling trade accounts related to foreign exchange or in optimization of regional air protection policy. A problem of reconciliation of forecasts obtained on different levels of hierarchy has been addressed in the statistical and econometric literature for many times and concerns bringing together forecasts obtained independently at different levels of hierarchy. This paper deals with this issue in case of a hierarchical functional time series. We present and critically discuss a state of art and indicate opportunities of an application of these methods to a certain environment protection problem. We critically compare the best predictor known from the literature with our own original proposal. Within the paper we study a macromodel describing a day and night air pollution in Silesia region divided into five subregions.
    Date: 2017–11
  19. By: Attavanich, Witsanu
    Abstract: Despite facing with the air pollution caused by traffic congestion ranked top ten in the world, the Thai government launched a tax refund policy for first time car buyers between 16 September 2011 and 31 December 2012 aiming to give an opportunity to low-to-middle income people to own their first car with discounted price and stimulate economic growth. Although past studies evaluated the impacts of the program on several aspects, the environment aspect has been ignored. The objective of this study is therefore to evaluate the impact of the first-time car buyer program on environmental cost of air pollution in Bangkok using hourly air pollution records from monitoring stations for five major pollutants and the happiness data. The article finds that the program increased the levels of air pollution. Using the estimated willingness to pay for a unit reduction of each pollutant, this study reveals that the value of total environmental cost generated from the program is approximately equal to $6.173 billion dollars annually.
    Keywords: First-Time Car Buyer Program; Environmental Cost; Air Pollution; Bangkok; Subjective Well-Being; Interrupted Time Series; Program Evaluation
    JEL: Q51 Q53 Q58
    Date: 2017–04–17
  20. By: Mélodie Cartel (GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM)); Franck Aggeri (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Eva Boxenbaum (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Jean-Yves Caneill (EDF R&D - Electricité de France Recherche et Développement)
    Keywords: Carbon markets,Institutional innovation,Corporate political activity,climate change,Collective bricolage
    Date: 2017
  21. By: Jonas Nordström (Department of Food and Resource Economics, University of Copenhagen); Jason F. Shogren (Department of Economics, University of Wyoming); Linda Thunström (Department of Economics, University of Wyoming)
    Abstract: While becoming a parent is transformational as one focuses more on the future, the time constraints are more binding right now. Using a unique data set that allows us to compare CO2 emissions from Swedish two-adult households with and without children, we find becoming a Swedish parent causes a person to leave a larger carbon footprint—due to changes in transportation patterns and food consumption choices.
    Keywords: Children, parent, CO2 emissions, sustainable consumption, time constraints, food, transportation
    JEL: D10 D90 Q54
    Date: 2017–12
  22. By: Jakob Mayer (University of Graz, Austria); Gabriel Bachner (University of Graz, Austria); Karl W. Steininger (University of Graz, Austria)
    Abstract: Options to significantly reduce global greenhouse gas emissions in line with long-term political targets include switches in production technologies to those free of industrial process emissions. Exemplifying this transition, we analyse such a switch of the European iron and steel industry and its sectoral, macroeconomic and social implications. We employ a recursive-dynamic multi-region multi-sector computable general equilibrium approach in order to cover feedback effects originating from the integration of European sectors in a globally embedded context. Against the backdrop of a globally implemented CO2 price trajectory, we investigate how the range of macroeconomic implications depends on (i) the timing of the switch (either starting early in 2020 or late in 2035) and (ii) the investment and operating cost of two promising low-carbon technologies. We distinguish between high-cost and low-cost technological specifications, though both face cost disadvantages relative to conventional iron and steel production for current intermediate inputs and primary factors. An early implementation of a `high-cost' technological alternative further reduces long-term GDP in 2050 among EU regions (-2.3% to -0.5% as compared to -1.4% to -0.3% for a late implementation starting in 2035). By contrast, GDP implications in 2050 seem to be unconstrained by early or late implementation of a `low-cost' technology (regional range of -0.3% to 0.9% for both). However, welfare is reduced, particularly during the initial implementation phase since additional investment to build up new facilities reduces output available for other consumption needs. This `build-up' might represent a barrier to such transitions, as the generation to decide on implementation and potentially bearing (macro)economic costs might not be the generation benefitting from it.
    Keywords: Iron and Steel; Process Emissions; Mitigation; CGE
    JEL: Q54 D58 O3 L61
    Date: 2017–12
  23. By: Lola Vallejo (OECD); Sara Moarif (IEA)
    Abstract: The future enhanced transparency framework outlined in the Paris Agreement and its accompanying Decision is to build on, enhance and eventually supersede the existing measurement, reporting and verification (MRV) system established under the Cancún Agreements. This paper explores the issues of “building on” and “enhancing” as they relate to the biennial reporting of information on mitigation and finance, by drawing lessons from the existing MRV system and examining the Paris Agreement’s provisions. It examines four areas: greenhouse gas (GHG) inventories, reporting on progress with the mitigation component of nationally determined contributions (NDCs), finance provided and mobilised, and financial support received and needed. The paper also highlights the challenges met by Parties while reporting information for these areas to date, and provides suggestions on how forthcoming modalities, procedures and guidelines (MPGs) might reduce these difficulties.
    Keywords: climate change, climate finance, mitigation, transparency, UNFCCC
    JEL: F53 O44 Q54 Q56 Q58
    Date: 2017–11–03
  24. By: Christina Hood (IEA); Carly Soo (OECD)
    Abstract: Accounting for Nationally Determined Contributions (NDCs) under the Paris Agreement is needed to allow Parties to track individual progress towards their own mitigation-related NDC targets, understand others’ NDC targets and their progress toward them, and assess collective progress towards the long-term mitigation goal. This paper aims to assist Parties and stakeholders in framing thinking around the nature of accounting for mitigation targets given the diversity of target types in NDCs, and also to discuss how accounting guidance could be applied at various stages in the NDC cycle. It provides a summary and unpacking of the key accounting provisions under the Paris Agreement and Decision text, discusses the implications of the range of NDC target types, then discusses the particular issues of accounting for co-operative approaches and for the land sector. It then explores how accounting guidance may be applied within the NDC cycle.
    Keywords: accounting, carbon pricing, climate change, mitigation, UNFCCC
    JEL: F53 O44 Q54 Q56 Q58
    Date: 2017–11–03
  25. By: Aurélie Méjean (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Antonin Pottier (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stéphane Zuber (CNRS - Centre National de la Recherche Scientifique, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Marc Fleurbaey (Princeton University)
    Abstract: Climate change raises the issue of intergenerational equity. As climate change threatens irreversible and dangerous impacts, possibly leading to extinction, the most relevant trade-off may not be between present and future consumption, but between present consumption and the mere existence of future generations. To investigate this trade-off, we build an integrated assessment model that explicity accounts for the risk of extinction of future generations. We compare different climate policies, which change the probability of catastrophic outcomes yielding an early extinction, within the class of variable population utilitarian social welfare functions. We show that the risk of extinction is the main driver of the preferred policy over climate damages. We analyze the role of inequality aversion and population ethics. Usually a preference for large populations and a low inequality aversion favour the most ambitious climate policy, although there are cases where the effect of inequality aversion is reversed.
    Keywords: Climate change,catastrophic risk,Equity,Population,Climate-economy model
    Date: 2017–09

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