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on Energy Economics |
| By: | Sébastien Houde; Joseph E. Aldy |
| Abstract: | The behavioral responses to taxes and subsidies are often subject to various behavioral biases and transaction costs—what we define as “microfrictions.” We develop a theoretical framework to show how these microfrictions—and their heterogeneity across the population and policy instruments—affect the design of Pigouvian policies. Standard Pigouvian pricing still holds with transaction costs, but requires adjustment with behavioral biases. We use transaction-level data from the US appliance market to estimate the heterogeneous behavioral responses to an array of energy fiscal policies and to quantify microfrictions. We then assess optimal fiscal policies and find that it is rarely optimal to couple a Pigouvian tax on energy with an investment subsidy in this context. We also find that energy labels—intended to increase the salience of energy information—can interact in perverse ways with both taxes and subsidies. |
| JEL: | H31 Q4 Q48 Q58 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24103&r=ene |
| By: | Dahlqvist, Anna (The National institute of Economic Research (NIER)); Lundgren, Tommy (CERE and the Department of Economics, Umeå University); Marklund, Per-Olov (The National institute of Economic Research (NIER)) |
| Abstract: | The purpose of this paper is to analyze the direct rebound effect potentially prevailing in energy intense industries. The rebound effect represents economic mechanisms that will offset energy savings from energy efficiency improvements. For this purpose, a factor demand model is applied incorporating an asymmetric energy price response. Asymmetric prices imply that firms respond more strongly to energy price increases than to energy price decreases. In the empirical model we use a firm level, unbalanced panel covering the years 2001 to 2012 and four major Swedish energy-intensive industries; pulp and paper, iron and steel, chemical, and mining. The result indicates that the rebound effect is considerable in these industries. To mitigate this effect, the results suggest that policies stimulating an increase in energy efficiency should be combined with a raise in energy taxes. |
| Keywords: | Asymmetric price response; Energy efficiency; Factor demand model; Ownprice elasticities; Voluntary Energy Efficiency Programs; Rebound effect |
| JEL: | Q41 Q48 |
| Date: | 2017–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2017_010&r=ene |
| By: | Paul Thorsnes (Department of Economics, University of Otago, New Zealand) |
| Abstract: | This paper reports analysis of the results of two stated-choice surveys to elicit the preferences of New Zealand homeowners for attributes of improvements in space and water heating systems. We implement the survey using web-based software especially well-suited to exploration of heterogeneity in preferences across participants; independently for each participant it provides estimates of the relative strength of preference for each attribute. Cluster analysis reveals five groups of participants with similar patterns of preferences. Interestingly, the cluster comprising people who prefer to avoid a large upfront expenditure – those targeted by current subsidy policy – is the smallest of the five clusters. The attributes of most concern to each of the other four groups suggest alternative policy interventions. |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:otg:wpaper:1713&r=ene |
| By: | Gioele Figus (Centre for Energy Policy, University of Strathclyde); Karen Turner (Centre for Energy Policy, University of Strathclyde); Patrizio Lecca; Peter G McGregor (Department of Economics, University of Strathclyde) |
| Abstract: | Previous studies show that improving efficiency in household energy use can stimulate a national economy through an increase and change in the pattern of the aggregate demand. However, this may impact competitiveness. Here we find that in an open region, interregional migration of workers may give additional momentum to the economic expansion, by relieving pressure on the real wage and the CPI. Furthermore, the stimulus will be further enhanced by the greater fiscal autonomy that Scotland is set shortly to enjoy. By considering a range of CGE simulation scenarios we show that there is a tension between the economic stimulus from energy efficiency and the scale of rebound effects. However, we also show that household energy efficiency increases do typically generate a “double dividend†of increased regional economic activity and a reduction in carbon emissions. |
| Keywords: | energy efficiency, regional development policy, energy rebound, regional fiscal autonomy, general equilibrium |
| JEL: | D58 Q43 Q48 R28 R58 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:17-02&r=ene |
| By: | Tomasz Weron; Anna Kowalska-Pyzalska; Rafal Weron |
| Abstract: | Using an agent-based modeling approach we examine the impact of educational programs and trainings on the diffusion of smart metering platforms (SMPs). We also investigate how social responses, like conformity or independence, mass-media advertising as well as opinion stability impact the transition from predecisional and preactional behavioral stages (opinion formation) to actional and postactional stages (decision-making) of individual electricity consumers. We find that mass-media advertising (i.e., a global external field) and educational trainings (i.e., a local external field) lead to similar, though not identical adoption rates. Secondly, that spatially concentrated 'group' trainings are never worse than randomly scattered ones, and for a certain range of parameters are significantly better. Finally, that by manipulating the time required by an agent to make a decision, e.g., through promotions, we can speed up or slow down the diffusion of SMPs. |
| Keywords: | Smart meter; Smart metering platform (SMP); Behavioral strategy; Demand response; Diffusion of innovations; Agent-based model |
| JEL: | C63 O33 Q40 Q55 Q56 |
| Date: | 2017–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:wuu:wpaper:hsc1704&r=ene |
| By: | Jérôme Collet (EDF R&D - Electricité de France Recherche et Développement); Olivier Féron (EDF R&D - EDF R&D - Electricité de France Recherche et Développement); Peter Tankov (CREST - Centre de Recherche en Économie et Statistique - INSEE - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique) |
| Abstract: | We consider the problem of a wind producer who has access to the spot and intraday electricity markets and has the possibility of partially storing the produced energy using a battery storage facility. The aim of the producer is to maximize the expected gain of selling in the market the energy produced during a 24-hour period. We propose and calibrate statistical models for the power production and the intraday electricity price, and compute the optimal strategy of the producer via dynamic programming. |
| Keywords: | stochastic control,intraday electricity market,battery storage,wind power generation |
| Date: | 2017–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01627593&r=ene |
| By: | Broberg, Thomas (CERE and the Department of Economics, Umeå University); Brännlund, Runar (CERE and the Department of Economics, Umeå University); Persson, Lars (CERE and the Department of Economics, Umeå University) |
| Abstract: | The main purpose of the present report is to present the results of the project "The electricity customer, a new power on the electricity market?" The main purpose of the project is to estimate lost values due to various restrictions on household electricity consumption, which gives us "prices" of schematic reductions in power through behavioral adaptations among Swedish households. Another purpose is to estimate households' costs for short power outages, which gives a "price" of a targeted disconnection of electricity. The willingness of households to adjust their electricity consumption is governed by several factors - both economic and non-economic. An additional objective is therefore to analyze the extent to which households are willing to adapt for non-economic reasons, for example, to facilitate the integration of renewable electricity production such as solar and wind power. To achieve the objectives of the project, we analyze household habits and preferences for electricity usage in connection with daily demand peaks during winter time in Sweden. We have chosen an empirical approach where households are subjected to choose between hypothetical electricity contracts where different types of restrictions in the use of large-scale household appliances are included. The different characteristics of the agreements or contracts relate to (1) maximum power usage in watts, (2) the duration of the restriction, (3) number of occasions of restriction and (4) the ability to change the selection of which electrical appliances to be used during the restriction. In addition to the above-mentioned approach, we also study how this relates to other electricity usage (e.g. heating, lighting, TV, etc.). This is done by asking households for compensation requirements to accept full power outages, i.e. black-outs. By studying the difference in compensation requirements between the "soft" limitation and the black-outs, the value of different loads can be estimated. The results reveal that households on average require a compensation of SEK 2000 - 3700 depending on the severity of electricity consumption constraint. Depending on how we define the potential loss in potential electricity usage for different scenarios, the results can be translated to be between SEK 20 and 40 per kWh. In the case of total power outages, the valuation is significantly higher and corresponds to SEK 3000 to 4600. This can in turn be translated to the equivalent of SEK 400 - 600 per kWh. The results thus indicate a significant difference between the value of the load in a soft control DSM program, and the remaining load (e.g. heating, lighting and TV). Compared to previous literature on the value of lost load, VOLL, our estimates fall in the higher range, especially compared to Swedish studies. We believe this is in line with the context outlined in the present study with rather many occasions of disruptions at the peak demand hour. The results also show that a pro-environmental cheap talk make people more likely to opt into a DSM program with load controlled at many occasions. It did not, however, make people see more lenient on hard load controls in general. An immediate policy implication from the results is that specific policies aiming at stimulating behavioral changes probably are very ineffective and/or costly. As a result, policies to affect demand response should focus on automatization and passive response. A related policy implication is that it is far from obvious that demand response is always more cost effective than supply response, i.e., increasing production of electricity. |
| Keywords: | Demand flexibility; choice experiment; electricity market; load control |
| JEL: | Q41 Q42 Q50 |
| Date: | 2017–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2017_009&r=ene |
| By: | Hélène Le Cadre (EnergyVille) |
| Abstract: | In this paper, we analytically compare centralized and decentralized market designs involving a national and local market operators, strategic generators having market power and bidding sequentially in local markets , to determine which design is more efficient for the procurement of energy. In the centralized design, used as benchmark, the national market operator optimizes the exchanges between local markets and the genera-tors' block bids. In the decentralized design, generators act as Stackelberg leaders, anticipating the local market prices and the flows on the transmission lines. Clearing of the local markets can be either simultaneous or sequential. The resulting two-stage game with competitive leaders that are not price takers is formulated as a bilevel mathematical programming problem which is reformulated as a Nash-Cournot game, and conditions for existence and uniqueness of market equilibrium are studied. Imperfect information is also considered, resulting from the lack of incentives from the generators to share their RES-based generations. Through a case study, we determine that the decentralized design is as efficient as the centralized one with high share of renewables, using as performance measure the Price of Anarchy, and that imperfect information has a limited impact on the efficiency of the decentralized market design. Furthermore, we check numerically that there exists an upper-limit on the block bid length maximizing the social welfare under both centralized and decentralized designs. |
| Keywords: | Bilevel Mathematical Programming,Complementarity Theory,Electricity Market,Bidding,Price of Anarchy |
| Date: | 2017–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01619885&r=ene |
| By: | Tommaso Proietti (CEIS & DEF, University of Rome "Tor Vergata"); Niels Haldrup (Aarhus University); Oskar Knapik (Aarhus University) |
| Abstract: | Electricity spot prices are subject to transitory sharp movements commonly referred to as spikes. The paper aims at assessing their effects on model based inferences and predictions, with reference to the Nord Pool power exchange. We identify a spike as a price value which deviates substantially from the normal price, where the latter is defined as the expectation arising from a model accounting for long memory at the zero and at the weekly seasonal frequencies, given the knowledge of the past realizations. Hence, a spike is associated to a time series innovation with size larger than a specified threshold. The latter regulates the robustness of the estimates of the underlying price level and it is chosen by a data driven procedure that focuses on the ability to predict future prices. The normal price is computed by a modified Kalman filter, which robustifies the inferences by cleaning the spikes, i.e. shrinking an observation deviating substantially from the normal price towards the one-step-ahead prediction. Our empirical application illustrates the effects of the spikes on the estimates of the parameters governing the persistence of the series; moreover, a real time rolling forecasting exercise is used to establish the amount of cleaning for optimizing the predicting accuracy at different horizons. |
| Keywords: | Robustness,Kalman Filter,Long Memory. |
| JEL: | C22 C53 Q41 |
| Date: | 2017–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:422&r=ene |
| By: | Uwe Böwer |
| Abstract: | State-owned enterprises (SOEs) play an important role in Emerging Europe’s economies, notably in the energy and transport sectors. Based on a new firm-level dataset, this paper reviews the SOE landscape, assesses SOE performance across countries and vis-à-vis private firms, and evaluates recent SOE governance reform experience in 11 Emerging European countries, as well as Sweden as a benchmark. Profitability and efficiency of resource allocation of SOEs lag those of private firms in most sectors, with substantial cross-country variation. Poor SOE performance raises three main risks: large and risky contingent liabilities could stretch public finances; sizeable state ownership of banks coupled with poor governance could threaten financial stability; and negative productivity spillovers could affect the economy at large. SOE governance frameworks are partly weak and should be strengthened along three lines: fleshing out a consistent ownership policy; giving teeth to financial oversight; and making SOE boards more professional. |
| Date: | 2017–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/221&r=ene |
| By: | Ketter, W.; Collins, J.; de Weerdt, M.M. |
| Abstract: | This is the specification for the Power Trading Agent Competition for 2018 (Power TAC 2018). Power TAC is a competitive simulation that models a “liberalized” retail electrical energy market, where competing business entities or “brokers” offer energy services to customers through tariff contracts, and must then serve those customers by trading in a wholesale market. Brokers are challenged to maximize their profits by buying and selling energy in the wholesale and retail markets, subject to fixed costs and constraints; the winner of an individual “game” is the broker with the highest bank balance at the end of a simulation run. Costs include fees for publication and withdrawal of tariffs, and distribution fees for transporting energy to their contracted customers. Costs are also incurred whenever there is an imbalance between a broker’s total contracted energy supply and demand within a given time slot. The simulation environment models a wholesale market, a regulated distribution utility, and a population of energy customers, situated in a real location on Earth during a specific period for which weather data is available. The wholesale market is a relatively simple call market, similar to many existing wholesale electric power markets, such as Nord Pool in Scandinavia or FERC markets in North America, but unlike the FERC markets we are modeling a single region, and therefore we approximate locational-marginal pricing through a simple manipulation of the wholesale supply curve. Customer models include households, electric vehicles, and a variety of commercial and industrial entities, many of which have production capacity such as solar panels or wind turbines. All have “real-time” metering to support allocation of their hourly supply and demand to their subscribed brokers, and all are approximate utility maximizers with respect to tariff selection, although the factors making up their utility functions may include aversion to change and complexity that can retard uptake of marginally better tariff offers. The distribution utility models the regulated natural monopoly that owns the regional distribution network, and is responsible for maintenance of its infrastructure. Real-time balancing of supply and demand is managed by a market-based mechanism that uses economic incentives to encourage brokers to achieve balance within their portfolios of tariff subscribers and wholesale market positions, in the face of stochastic customer behaviors and weather-dependent renewable energy sources. Changes for 2018 are focused on stability, on simplifying interaction with the balancing market, and on encouraging more vigorous competition, and are highlighted by change bars in the margins. See Sections 3.1.2, 6, and 8.5 for details. |
| Keywords: | Autonomous Agents, Electronic Commerce, Energy, Preferences, Portfolio Management, Power, Policy Guidance, Sustainability, Trading Agent Competition |
| Date: | 2017–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:ems:eureri:103283&r=ene |
| By: | Alfredo Marvão Pereira (Department of Economics, The College of William and Mary, Williamsburg VA 23187); Rui Manuel Pereira (Department of Economics, The College of William and Mary, Williamsburg VA 23187) |
| Abstract: | This article determines the budgetary, economic, distributional and environmental impact of permanently increasing the value-added tax on electricity in Portugal. The analysis is carried out in the context of a new multi-sector and multi-household dynamic general equilibrium model. Simulation results suggest that a permanent increase from 6% to 23% in the statutory VAT on electricity improves the public budget as well as the environment, but both gains have detrimental economic and distributional effects. As the economy in Portugal begins to recover in the aftermath of the Great Financial Crisis, and the public budgetary situation becomes less constraining, pressure is mounting for this VAT increase on electricity to be reversed. This mixed bag of results is an important element for the debate. Reverting to a tax of 6% on electricity is desirable, as it would improve economic performance and have positive distributional effects. The question, then, is how to compensate for the loss of tax revenue and, at the same time, protect the environment. To offset the adverse budgetary and environmental effects of a lower VAT, we propose to increase the tax on petroleum products. This proves to be a dominant strategy from all relevant perspectives – economic, distributional, and environmental. |
| Keywords: | Value-Added Tax on Electricity, Tax on Petroleum Products, Macroeconomic Effects, Distributional Effects, Environmental Effects, Portugal |
| JEL: | C68 E62 H23 Q43 Q48 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0090&r=ene |
| By: | Frondel, Manuel; Sommer, Stephan; Vance, Colin |
| Abstract: | Drawing on the most recent wave of the German Residential Energy Survey (GRECS), this paper estimates the contribution of individual appliances to household electricity consumption. Moving beyond the standard focus of estimating mean effects, we combine the conditional demand approach with quantile regression methods to capture the heterogeneity in the contribution of each appliance to the distribution of household electricity consumption. While reflecting correlations, rather than causal relationships, our results indicate substantial differences in the end-use shares across households originating from the opposite tails of the electricity consumption distribution, highlighting the added value of applying quantile regression methods in estimating consumption rates of electric appliances. |
| Keywords: | Electricity consumption,conditional demand approach,quantile regression methods |
| JEL: | D12 Q41 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:722&r=ene |
| By: | Muhammad Irfan (University of Waikato); Michael P. Cameron (University of Waikato); Gazi Hassan (University of Waikato) |
| Abstract: | Despite the adverse effects of biomass fuels on health and the environment, the use of solid fuels at the household level for cooking, lighting and heating purposes is very common in developing countries such as Pakistan. Globally almost 3 billion people depend on traditional or conventional solid energy sources for cooking. These solid fuels are a major cause of indoor air pollution and can severely damage health and the environment, so there is a need to better understand the factors that lead to the consumption of solid fuels. This study analyzes data from the Pakistan Social and Living Standards Measurement (PSLM) Survey 2013-14 to establish the non-price factors associated with the fuel mix selection of households. A novel aspect of the study is that, rather than treating fuel choices as independent, we first group household fuel mix choices into categories using cluster analysis. We then apply multinomial logit models to investigate the factors associated with households’ fuel mix selection. We find that income, education, agricultural occupation and urban location are strongest factors associated with the selection of a mix of fuels that is substantially made up of clean fuels, while agricultural occupation, large family size, and having cattle are associated with fuel mixes that are more heavily based on solid fuels. Moreover, we show that income growth is unlikely to lead to substantial uptake of cleaner fuels in rural areas. Our results suggest that the government, if concerned about indoor air pollution, should rapidly increase the availability of natural gas and electricity connections to support a shift to cleaner fuel mixes. |
| Keywords: | fuel choice; energy mix; Pakistan |
| JEL: | D71 P28 |
| Date: | 2017–12–27 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:17/28&r=ene |
| By: | Audrey Berry (CIRED) |
| Abstract: | For households, taxing carbon raises the cost of the energy they use to heat their home and to travel. This paper studies the distributional impacts of the recently introduced French carbon tax and the design of compensation measures. Using a microsimulation model built on a representative sample of the French population from 2012, I simulate for each household the taxes levied on its consumption of energy for housing and transport. Without recycling, the carbon tax is regressive and increases fuel poverty. However, I show how compensation measures can offset these impacts. A flat cash transfer offsets tax regressivity by redistributing |
| Keywords: | Carbon tax, Distributional impacts, Fuel poverty, Revenue recycling, Microsimulation |
| JEL: | Q5 I3 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:fae:ppaper:2017.08&r=ene |
| By: | Löschel, Andreas; Großkurth, Philipp; Colombier, Michel; Criqui, Patrick; Xiangwan, Du; Frei, Christoph; Gethmann, Carl Friedrich; Gummer, John; Lecocq, Franck; Parikh, Jyoti K.; Sauer, Dirk Uwe; Schlögl, Robert; Schmidt, Christoph M.; Staiß, Frithjof; Stephanos, Cyril; Tanaka, Kanako; Zhiyu, Tian; Umbach, Eberhard; Wenham, Matt; Yamada, Koichi; Cong, Yu |
| Abstract: | The ongoing transformation of the world's energy systems requires an international monitoring to evaluate the transformation processes and to identify transferable leading practice policies. For this purpose, an independent scientific expert commission should be established for the G20. By actively involving political decision-makers in the discussion of the final results a broad basis of support can be ensured. |
| Keywords: | monitoring,G20,energy transformation,impact evaluation |
| JEL: | Q01 Q48 Q58 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:2017109&r=ene |
| By: | Escañuela Romana, Ignacio |
| Abstract: | The object of this work is to estimate the price elasticity of demand for air transport of passengers in the United States, and review the adequacy of the various methods used to make a quantification of the elasticity of demand for a good or service. The problems to make a robust quantification of that value are classic and well-known. There are omitted variables, on both the demand and supply sides, and the problem of identifiability seems to be serious. The simple regression, which is the most common method, is analyzed. As well as the method of instrumental variables: using the price of oil. But the conclusion reached is that those procedures yield unreliable results. Through the quasi-experimental procedure, I get an estimate of the price elasticity of demand, with the drawback that includes the ability to switch between air routes. It offers a close, reliable quantification of the demand for air routes. Finally, harmonic analysis does suggest a value of the elasticity for the market as a whole. Both methods would give a solution to this econometric problem. |
| Keywords: | Elasticidad, demanda, identificación, estimación |
| JEL: | C13 C29 D12 D43 |
| Date: | 2018–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:83572&r=ene |
| By: | Richard Jaimes; Reyer Gerlagh |
| Abstract: | Between 1997 and 2014, US corn, soybean and cotton production almost fully converted to genetically modified crops. Starting around 2007, improved tight oil and shale gas technologies turned the declining US fossil fuel production into a booming industry. We study the effects of these two resource technology revolutions on US state income. We find that the shale revolution increased income in states abundant in oil and gas resources. States dependent on agricultural production also saw an increase in income, which we, however, attribute not to the GM innovation, but to a demand increase brought by the Energy Policy Act of 2005. We also document the resource boom indirect effects on other growth-enhancing activities, particularly, on private and public education expenditures, and distortionary taxation. |
| Keywords: | natural resources, economic growth, resource curse, resource blessing |
| JEL: | C21 C23 I25 H72 O13 Q33 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6778&r=ene |
| By: | James Cust |
| Abstract: | The governance of natural resource wealth is widely considered to constitute a key determinant in whether the extraction of natural resources proves to be a blessing or a curse. What is meant by governance can span a wide range of components, while the steps to achieving good governance remain subject to debate and uncertainty. In response to this challenge, a variety of international initiatives have emerged seeking to support those striving for better governance in their countries. These initiatives range across efforts to promote transparency, to codify successful historical experiences and effective policies; to help guide decision makers in their choices, and, in some cases, to provide external standards that countries can bind themselves to. These initiatives, such as the Extractives Industry Transparency Initiative, have seen some success in spreading and embedding governance norms, ranging across revenue transparency, contract disclosure, supply chain certification, creation of saving instruments such as resource funds and building institutions for checks and balances such as fiscal rules and accountability bodies. The paper provides a review of initiatives targeting governments as the key agents of change. We find a mixed picture of success, where uptake has been strong, for example in terms of the number of countries engaging with or signing onto normative frameworks. However, evidence for causal impact remains weak and sometimes limited to anecdotal cases. We offer some critical reflections on challenges faced and potential ways forward to build on the lessons and achievements of the past decade and a half. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2017-203&r=ene |
| By: | Maria Kulikova (National Research University Higher School of Economics) |
| Abstract: | Studies of interconnections between social, technological, economic and cultural forces belong to the trend of modernisation studies in the Russian Empire in the second half of the 19th century. Modernisation implies the establishment and growth of institutions and infrastructures that are examined as a set of communication practices between different actors – the state, experts and various offices. This research is an historical study of interconnections between technologies and society. It is focused on the significance of materiality (namely natural oil resources) in these processes |
| Keywords: | technology, natural resources, goods, development of infrastructure, institutions |
| JEL: | Z |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:163/hum/2017&r=ene |
| By: | Baas, Timo; Belke, Ansgar |
| Abstract: | For more than two decades now, current-account imbalances are a crucial issue in the international policy debate as they threaten the stability of the world economy. More recently, the government debt crisis of the European Union shows that internal current account imbalances inside a currency union may also add to these risks. Oil price fluctuations and a contracting monetary policy that reacts on oil prices, previously discussed to affect the current account may also be a threat to the currency union by changing internal imbalances. Therefore, in this paper, we analyze the impact of oil price shocks on current account imbalances within a currency union. Differences in institutions, especially labor market institutions and trade result in an asymmetric reaction to an otherwise symmetric shock. In this context, we show that oil price shocks can have a long-lasting impact on internal balances, as the exchange rate adjustment mechanism is not available. The common monetary policy authority, however, can reduce such effects by specifying an optimum monetary policy target. Nevertheless, we also show that there is no single best solution. CPI, core CPI or an asymmetric CPI target all come at a cost either regarding an increase in unemployment or increasing imbalances. |
| Keywords: | Current account deficit,Oil price shocks,DSGE models,Search and matching labor market,Monetary policy |
| JEL: | E32 F32 Q43 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:160&r=ene |
| By: | Hassan Benchekroun; Gerard C. van der Meijden; Cees A. Withagen |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6746&r=ene |
| By: | Sergi Lanau; Jorge Roldos; Jose Daniel Rodríguez-Delgado |
| Abstract: | This paper uses a multivariate filter and a production function to project potential growth in Colombia, modeling in detail the impact of low oil prices on investment. The framework also captures the impact of current and planned policies on potential growth, including the peace agreement with the FARC, the tax reform, and 4G infrastructure projects. The analysis suggests the growth acceleration of the 2000s is unlikely to repeat itself in a world of lower oil prices. Potential growth is likely to moderate to a range of 2.8 to 4.1 percent. The 4G infrastructure projects and the tax reform will increase investment, partly offsetting the sharp decline in oil investment. Improvements in productivity are essential to lift potential growth, as the large increases in the labor force observed in the last 15 years are unlikely to continue. |
| Keywords: | Western Hemisphere;Colombia;Potential output;Potential output; Colombia; Investment, Investment, General, Financial Markets and the Macroeconomy |
| Date: | 2017–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/238&r=ene |
| By: | Santosh Kumar Sahu (Assistant Professor, Madras School of Economics); Arjun Shatrunjay (Madras School of Economics) |
| Abstract: | The paper attempts to understand the significance of the Green Solow Model, in the context of a developing country such as India. It gives particular importance to the role of population density, in understanding the drawbacks of the Green Solow Model. It further extends the argument to analyse the impacts of the emission regulations on a developing country, by proving relationship between price level on one hand, and abatement costs and emissions on the other. Lastly, interactions between countries, given different price scenarios are studied |
| Keywords: | Green Solow Model, abatement costs, technology, emission regulations, India |
| JEL: | C70 O44 Q52 Q56 |
| URL: | http://d.repec.org/n?u=RePEc:mad:wpaper:2017-160&r=ene |
| By: | Alexandre Volle (Laboratoire CEE-M, Université Montpellier) |
| Abstract: | The present paper investigates the pricing behavior of a green firm competing against a brown firm where the polluting quality is sell in a perfect competitive market. The distorsion of the price to signal a green product is too high to face any demand. Pooling price equilibria emerge as most plausible as long as the brown firm has the possibility to mimic the pricing behavior of the green firm. A green producer is thus constrained to practice uninformative prices which can conduct it to leave the market. |
| Keywords: | Environmental Quality, Asymmetric Information, Price Signaling |
| JEL: | D43 D82 Q5 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2017.30&r=ene |
| By: | Olga Chiappinelli; Karsten Neuhoff |
| Abstract: | In this paper we show that carbon pricing is subject to time-inconsistency and we investigate solutions to improve on the problem and restore the incentive for the private sector to invest in low-carbon innovation. We show that a superior price- investment equilibrium can be sustained in the long-term, if the policy-maker is enough forward looking and allowed to build reputation. In the short-term, time- inconsistency can be alleviated by complementing carbon pricing with project-based carbon price guarantees. |
| Keywords: | Carbon pricing, Time-inconsistency, Low-carbon innovation, Environmental regulation, Repeated games, Carbon contracts |
| JEL: | C73 L51 O31 Q58 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1710&r=ene |
| By: | Simon Quemin (LEDa-CGEMP, Paris-Dauphine University – PSL Research University & Climate Economics Chair, Paris); Christian de Perthuis (LEDa-CGEMP, Paris-Dauphine University – PSL Research University & Climate Economics Chair, Paris) |
| Abstract: | Linkages between Emissions Trading Systems can be an important element in forging the future global climate change architecture, but remain few and far between. This article develops a deterministic partial equilibrium model of bilateral linkage to compare various link restrictions in facilitating linkage negotiations, namely quantitative restrictions, border permit taxes, exchange and discount rates, and unilateral linkage. Because restrictions undermine cost-efficiency and generate rents, they should be used as transitory mechanisms to full linkage. Trial restricted-link periods may allow to test the effects of the link while containing its reach, spur cooperation and provide more time and flexibility in circumventing impediments to full linkage. While quantitative restrictions seem to be the natural route to a full link, they can lead to uncertain distributional effects and weakened price signals. These aspects are mitigated under a border tax on permits, but this policy seems harder to implement. Exchange rates have potential to adjust for programmes' stringencies and increase overall ambition, but are challenging to select. As experience corroborates, unilateral linkage may constitute a practical and promising approach. |
| Keywords: | Climate change, Climate policy architecture, Emissions trading, Linkage, Permit trade restrictions |
| JEL: | Q58 H23 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2017.31&r=ene |
| By: | Simon Quemin (LEDa-CGEMP, Paris-Dauphine University ñ PSL Research University & Climate Economics Chair, Paris); Christian de Perthuis (LEDa-CGEMP, Paris-Dauphine University ñ PSL Research University & Climate Economics Chair, Paris) |
| Abstract: | Linkages between Emissions Trading Systems can be an important element in forging the future global climate change architecture, but remain few and far between. This article develops a deterministic partial equilibrium model of bilateral linkage to compare various link restrictions in facilitating linkage negotiations, namely quantitative restrictions, border permit taxes, exchange and discount rates, and unilateral linkage. Because restrictions undermine cost-efficiency and generate rents, they should be used as transitory mechanisms to full linkage. Trial restricted-link periods may allow to test the effects of the link while containing its reach, spur cooperation and provide more time and flexibility in circumventing impediments to full linkage. While quantitative restrictions seem to be the natural route to a full link, they can lead to uncertain distributional effects and weakened price signals. These aspects are mitigated under a border tax on permits, but this policy seems harder to implement. Exchange rates have potential to adjust for programmes' stringencies and increase overall ambition, but are challenging to select. As experience corroborates, unilateral linkage may constitute a practical and promising approach. |
| Keywords: | Climate change, Climate policy architecture, Emissions trading, Linkage, Permit trade restrictions |
| JEL: | Q58 H23 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:fae:ppaper:2017.09&r=ene |
| By: | Vera Zipperer; Misato Sato; Karsten Neuhoff |
| Abstract: | Greenhouse gas emission benchmarks are widely implemented as a policy tool, as more countries move to implement carbon pricing mechanisms for industrial emissions. In particular, benchmarks are used to determine the level of free allowance allocation in emission trading schemes, which are distributed as a measure to prevent carbon leakage. This paper analyses how benchmark designs impact firms’ production and business model decisions, particularly focusing on the coverage of direct and indirect emissions in the benchmark scope. We develop an analytical model and use the example of a steel mill to analyze and quantify how scope of indirect emissions coverage affect incentives. We seek to clarify generalized principles for efficient benchmark design, that provide a predictable policy framework for innovation and investment to decarbonize energy intensive industry. |
| Keywords: | Emissions Trading, Emission Benchmarking, Free allocation, Incentives, Low-Carbon Innovation |
| JEL: | D04 H25 L51 L61 Q58 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1712&r=ene |
| By: | Loic Berger; Massimo Marinacci |
| Abstract: | We review recent models of choices under uncertainty that have been proposed in the economic literature. The framework that we propose is general and may be applied in many different fields of environmental economics. To illustrate, we provide a simple application in the context of an optimal mitigation policy. Our objective is to offer guidance to policy makers who face uncertainty when designing climate policy. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:616&r=ene |
| By: | Barbara Annicchiarico (CEIS & DEF, University of Rome "Tor Vergata"); Francesca Diluiso (DEF, University of Rome "Tor Vergata") |
| Abstract: | This paper presents a baseline dynamic general-equilibrium model of environmental policy for a two-country economy and studies the international transmission of several asymmetric shocks considering three different economy-wide greenhouse gases (GHG) emission regulations: (i) national cap-and-trade, (ii) carbon tax, and (iii) international cap-and-trade system allowing for cross-border allocation of emission permits. We find that international spillovers of shocks originated in one country are strongly influenced by the environmental regime put in place. We show that, while a national cap-and-trade system diminishes the international spillovers by dampening the response of the country hit by shocks, the cross-border reaction to supply-side shocks is found to be magnified under an international cap-and-trade system, while demand shocks are more intensively transmitted under a carbon tax. The pattern of trade and the underlying monetary regime in uence the cross-border transmission channels interacting with the environmental policy adopted. |
| Keywords: | Open Economy Macroeconomics, GHG Emission Control, Macroeconomic Dynamics |
| JEL: | F41 F42 E32 Q58 |
| Date: | 2017–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:423&r=ene |
| By: | Dominique Bureau (CGDD-CEDD) |
| Abstract: | The concern for universal participation in the Paris Agreement has been costly in terms of ambition. In the absence of corrections to the trajectories envisioned for the 2030 horizon by national contributions, not only the carbon budget compatible with the objective of containing global warming below 2°C will be by far exceeded at this horizon, but the rupture to be made at that time and the emission reduction rates to be achieved beyond that point make the very feasibility of the 2°C objective problematic […]. |
| Keywords: | valeur d'option, négociation climatique |
| JEL: | Q50 Q54 Q56 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:fae:ppaper:2017.07&r=ene |
| By: | Gaël Giraud (Centre d'Economie de la Sorbonne and Agence Française de Développement); Hadrien Lantremange (Centre d'Economie de la Sorbonne, Agence Française de Développement and Chaire Energie et Prospérité); Emeric Nicolas (Chaire Energy et Prospérité); Olivier Rech (Chaire Energie et Prospérité) |
| Abstract: | How could the burden of GHG emission reduction be shared among countries? We address this arguably basic question by purely statistical methods that do not rely on any normative judgment about the criteria according to which it should be answered. The sum of current Nationally Determined Contributions to reducing GHG emissions would result in an average temperature rise in 2100 of the order of 3°C to 3.2°C. Implementing policies that enable to achieve the objective of a worldwide average temperature rise below 2°C obviously requires setting a more consistent and efficient set of national emissions targets. While a scientific consensus has been reached about the global carbon budget that we are acing, given the 2°C target of the Paris Agreement, no such consensus prevails on how this budget is to be divided among countries. This paper proposes a Climate Liabilities Assessment Integrated Methodology (CLAIM) which enables to determine national GHG budgets compliant with any average temperature target and time horizon. Our methodology does neither resort to any scenario nor any simulation-based model. Rather, it computes the allocation of 2°C-compatible national carbon budgets which has a priori the highest probability of emerging from the international discussion, whatever being the criteria on which the latter might be based. As such it provides a framework ensuring the highest probability of reaching a consensus. In particular, it avoids the pitfall of arbitrarily assigning weights according, say, to “capacity” or “responsibility” criteria, and simultaneously unifies the different methodologies that have been proposed in the literature aiming at setting national GHG budgets. Sensitivity tests confirm the robustness of our methodology |
| Keywords: | climate change; global warming; GHG emissions; distribution of GHG emissions; emissions gap; 2°C scenario; carbon budget; Intended Nationally Determined Contributions |
| JEL: | Q54 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:17062&r=ene |
| By: | Schaefer, Thilo |
| Abstract: | Während die potenziellen Koalitionäre in Deutschland in ihren Sondierungsgesprächen um die richtigen klimapolitischen Instrumente ringen, kommen in Bonn in den kommenden beiden Wochen Politiker aus aller Welt zusammen, um im Rahmen der 23. Klimakonferenz der Vereinten Nationen zu beraten, wie die Reduktion des Treibhausgasausstoßes weltweit gelingen kann. Das Problem in Bonn wird sein, die Interessen der vielen Nationen so unter einen Hut zu bringen, dass wirksame Maßnahmen zum Klimaschutz dabei herauskommen. Europa ist insofern schon einen Schritt weiter, denn es gibt ein europäisches Klimaschutzinstrument: den Emissionshandel. Dieser sorgt dafür, dass die politisch festgelegte Obergrenze für Emissionen der Energiewirtschaft und der Industrie in Europa eingehalten wird. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwkkur:802017&r=ene |
| By: | Elisenda Jové-Llopis (Department of Economics – CREIP, Universitat Rovira i Virgili); Agustí Segarra-Blasco (Research Group of Industry and Territory, Universitat Rovira i Virgili) |
| Abstract: | This study investigates the effects of eco-strategies on firm performance in terms of sales growth in an extensive sample of 11,336 small and medium-sized enterprises (SMEs) located in 28 European countries. Our empirical results suggest that not all eco-strategies are positively related to better performance, at least not in the short term. We find that European companies using renewable energies, recycling or designing products that are easier to maintain, repair or reuse perform better. Those that aim to reduce water or energy pollution, however, seem to show a negative correlation to firm growth. Our results, also, indicate that high investment in eco-strategies improves firm growth, particularly in new members that joined the EU from 2004 onwards. Finally, we observe a U-shaped relationship between eco-strategies and firm growth, which indicates that a greater breadth of eco-strategies is associated with better firm performance. However, few European SMEs are able to either invest heavily or undertake multiple eco-strategies, thus leaving room for policy interventions. |
| Keywords: | eco-strategy, firm growth, Europe, SMEs |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2017-15&r=ene |
| By: | Can Askan Mavi (UP1 UFR02 - Université Panthéon-Sorbonne - UFR d'Économie - UP1 - Université Panthéon-Sorbonne) |
| Abstract: | This paper aims to analyze the overlooked link between abrupt events and sustainability, through limit cycle analysis. We use the well known Calvo and Obstfeld (1988) framework in order to distinguish individual's and social planner's discount rate and show that individual discount rate could lead to a Hopf bifurcation, only if the economy is exposed to abrupt event risk. This result is in contrast with the literature which shows that individual discount rate does not have any effect on the optimum trajectory of aggregate consumption. More importantly, the existence of limit cycles implies that consumption and natural resource stock are exposed to cycles at the long run, meaning that the path of utility does not conform with the prominent Sustainable Development criterion. Lastly, we analyze the economic reasons behind limit cycles and show that protecting the environment makes limit cycles less likely to occur. |
| Date: | 2017–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01628682&r=ene |