nep-ene New Economics Papers
on Energy Economics
Issue of 2018‒03‒05
34 papers chosen by
Roger Fouquet
London School of Economics

  1. Leveraging the Smart Grid: The Effect of Real-Time Information on Consumer Decisions By Nicholas Rivers
  2. The Light and the Heat: Productivity Co-benefits of Energy-saving Technology By Achyuta Adhvaryu; Namrata Kala; Anant Nyshadham
  3. Designing Dynamic Subsidies to Spur Adoption of New Technologies By Ashley Langer; Derek Lemoine
  4. Threshold Policy Effects and Directed Technical Change in Energy Innovation By Lionel Nesta; Elena Verdolini; Francesco Vona
  5. Fuel Subsidy Pass-Through and Market Structure: Evidence from the Renewable Fuel Standard By Gabriel E. Lade; James Bushnell
  6. Electric Appliance Ownership and Usage: Application of Conditional Demand Analysis to Japanese Household Data By Shigeru Matsumoto
  7. Negawatt Trading and Energy Efficiency in Adjustment Markets (Japanese) By KURAKAWA Yukihide; TANAKA Makoto
  8. Path creation, global production networks and regional development: a comparative international analysis of the offshore wind sector By Danny MacKinnon; Stuart Dawley; Markus Steen; Max-Peter Menzel; Asbjørn Karlsen; Pascal Sommer; Gard Hopsdal Hansen; Håkon Endresen Normann
  9. Mission (im)possible? The role of innovation (and innovation policy) in supporting structural change & sustainability transitions By Jan Fagerberg
  10. Data as an Enabler in the Off-Grid Sector By Christopher Arderne; Yann Tanvez; Pepukaye Bardouille
  11. Incentive regulation: Evidence from German electricity networks By Hellwig, Michael; Schober, Dominik; Cabral, Luís M. B.
  12. Rural Electrification Using Shield Wire Schemes By Franklin K. Gbedey; David Vilar Ferrenbach; Tatia Lemondzhava
  13. Energy Tax Reform and Poverty Alleviation in Mexico By José M. Labeaga; Xavier Labandeira; Xiral López-Otero
  14. Urban and Rural Households' Energy Use: Sets, Shocks, and Strategies in the Philippines By Dacuycuy, Connie B.; Dacuycuy, Lawrence B.
  15. Electricity Industrial Policies in the Middle East and their Implications for Korean Companies By Lee, Kwon Hyung; Son, Sung Hyun; Jang, Yun Hee; Ryou, Kwang Ho
  16. Deliberations on Japanese Nuclear Policy During the Sato Administration: Studies by the Cabinet Research Office By Toshimitsu Kishi
  17. Autonomous Vehicles in Japan: Latent demand and social dilemma (Japanese) By MORITA Tamaki; MANAGI Shunsuke
  18. A Single Economic Entity of Chinese SOEs: EDF/CGN/NNB Group of Companies merger case (2016) (Japanese) By TAKEDA Kuninobu
  19. Effects of Automated Driving on Vehicle Miles Traveled: An empirical analysis of Japanese household survey data (Japanese) By IWATA Kazuyuki; MANAGI Shunsuke
  20. Natural Gas Price Elasticities and Optimal Cost Recovery Under Consumer Heterogeneity: Evidence from 300 million natural gas bills By Maximilian Auffhammer; Edward Rubin
  21. La confrontation des systèmes institutionnels nationaux dans l'interdépendance : les échanges gaziers UE-Russie By Locatelli, C.
  22. OPEC in the News By Plante, Michael D.
  23. Analyzing the Risk of Transporting Crude Oil by Rail By Charles F. Mason
  24. Renewable Energy, Oil Prices, and Economic Activity: A Granger-causality in Quantiles Analysis By Troster, Victor; Shahbaz, Muhammad; Uddin, Gazi Salah
  25. Oil Price Shocks and Economic Growth: The Volatility Link By John M. Maheu; Yong Song; Qiao Yang
  26. La eficiencia en el uso del agua y la energía en los procesos mineros: casos de buenas prácticas en Chile y el Perú By Lewinsohn, José Luis
  27. Resources, Conflict, and Economic Development in Africa By Achyuta Adhvaryu; James E. Fenske; Gaurav Khanna; Anant Nyshadham
  28. Estimates of air pollution in Delhi from the burning of firecrackers during the festival of Diwali. By Ghei, Dhananjay; Sane, Renuka
  29. Emissions Trading Subject to Kantian Preferences By Hennlock, Magnus; Löfgren, Åsa; Sterner, Thomas; Martinsson, Peter
  30. An evaluation of policy options for reducing greenhouse gas emissions in the transport sector: The cost-effectiveness of regulations versus emissions pricing By Nicholas Rivers, Randall Wigle
  31. Can climate mitigation help the poor? Measuring impacts of the CDM in rural China By Yimeng Du; Kenji Takeuchi
  32. The Effect of Inequality Aversion on a Climate Coalition Formation: Theory and Experimental Evidence By Lin, Yu-Hsuan
  33. A bottom-up, non-cooperative approach to climate change control: Assessment and comparison of Nationally Determined Contributions (NDCs) By Carraro, Carlo
  34. Measuring Impact of Uncertainty in a Stylized Macro-Economic Climate Model within a Dynamic Game Perspective By Stienen, V.F.; Engwerda, Jacob

  1. By: Nicholas Rivers (University of Ottawa)
    Abstract: This report reviews the literature on the impact of real-time information provision on consumer decision-making. In addition, it describes the results of a study in which about 7000 households in Ontario, Canada were provided with in-home displays linked to smart meters that provided real-time feedback on electricity consumption. The results show that electricity consumption declines by about 3% as a result of information feedback, that the reduction in demand is sustained for at least five months, and that it is highly correlated with outdoor temperature.
    Keywords: Electricity demand, energy conservation, information provision, time-of-use pricing
    JEL: D12 L94 Q41 Q48
    Date: 2018–03–01
  2. By: Achyuta Adhvaryu; Namrata Kala; Anant Nyshadham
    Abstract: Measurement of the full costs and benefits of energy-saving technologies is often difficult, confounding adoption decisions. We study consequences of the adoption of energy-efficient LED lighting in garment factories around Bangalore, India. We combine daily production line-level data with weather data and estimate a negative, nonlinear productivity-temperature gradient. We find that LED lighting, which emits less heat than conventional bulbs, decreases the temperature on factory floors, and thus raises productivity, particularly on hot days. Using the firm’s costing data, we estimate the pay-back period for LED adoption is nearly one-sixth the length after accounting for productivity co-benefits.
    JEL: J24 O14 Q56
    Date: 2018–02
  3. By: Ashley Langer; Derek Lemoine
    Abstract: We analyze the efficient subsidy for durable good technologies. We theoretically demonstrate that a policymaker faces a tension between intertemporally price discriminating by designing a subsidy that increases over time and taking advantage of future technological progress by designing a subsidy that decreases over time. Using new empirical estimates of household preferences for residential solar in California, we show that the efficient subsidy increases strongly over time if households are myopic and is much flatter if households have rational expectations. The regulator's spending increases by 70% when households anticipate future technological progress and future subsidies.
    JEL: H21 H23 H71 Q48
    Date: 2018–02
  4. By: Lionel Nesta (Université Côte d'Azur, CNRS, Gredeg, & OFCE Sciences Po Paris, France); Elena Verdolini (FEEM & CMCC, Italy); Francesco Vona (OFCE Sciences Po Paris France & Université Côte d'Azur, CNRS, Gredeg,)
    Abstract: This paper analyzes the effect of environmental policies on the direction of energy innovation across countries over the period 1990-2012. Our novelty is to use threshold regression models to allow for discontinuities in policy effectiveness depending on a country's relative competencies in renewable and fossil fuel technologies. We show that the dynamic incentives of environmental policies become effective just above the median level of relative competencies. In this critical second regime, market-based policies are moderately effective in promoting renewable innovation, while commandand-control policies depress fossil based innovation. Finally, market-based policies are more effective to consolidate a green comparative advantage in the last regime. We illustrate how our approach can be used for policy design in laggard countries.
    Keywords: Directed technical change, threshold models, environmental policies, policy mix.
    JEL: Q58 Q55 Q42 Q48 O34
    Date: 2018–01–30
  5. By: Gabriel E. Lade (Center for Agricultural and Rural Development (CARD)); James Bushnell
    Abstract: The Renewable Fuel Standard (RFS) is among the largest renewable energy mandates in the world. The policy is enforced using tradeable credits that implicitly subsidize biofuels and tax fossil fuels. The RFS relies on these taxes and subsidies to be passed through to consumers to stimulate demand for biofuels and decrease demand for gasoline and diesel. Using station-level prices for E85 (a high-ethanol blend fuel) from over 450 retail fuel stations, we show that pass-through of the ethanol subsidy is, on average, complete. However, we find that full pass-through takes four to six weeks and that local market structure of gasoline stations influences both the speed and overall level of pass-through. JEL Codes: Q42, Q58, H23
    Keywords: retail fuel markets, E85, renewable fuel standard, subsidy pass-through
    Date: 2016–12
  6. By: Shigeru Matsumoto
    Abstract: Although both appliance ownership and usage patterns determine residential electricity consumption, it is less known how households actually use their appliances. In this study, we conduct conditional demand analyses to break down total household electricity consumption into a set of demand functions for electricity usage, across 13 appliance categories. We then examine how the socioeconomic characteristics of the households explain their appliance usage. Analysis of micro-level data from the Nation Survey of Family and Expenditure in Japan reveals that the family and income structure of households affect appliance usage. Specifically, we find that the presence of teenagers increases both air conditioner and dishwasher use, labor income and nonlabor income affect microwave usage in different ways, air conditioner usage decreases as the wife’s income increases, and microwave usage decreases as the husband’s income increases. Furthermore, we find that households use more electricity with new personal computers than old ones; this implies that the replacement of old personal computers increases electricity consumption.
  7. By: KURAKAWA Yukihide; TANAKA Makoto
    Abstract: This paper investigates the impacts of demand side energy efficiency on cost efficiency in an adjustment market which includes negawatt trading. Comparative statics about the determinants of optimal energy efficiency is also carried out. It is shown that improvements in energy efficiency increase consumer benefit in energy use, but, on the other hand, raises negawatt cost and consequently lowers cost efficiency in an adjustment market. In the presence of externality of fossil fuel power generation, a declining proportion of fossil fuel generation in electricity for baseline demand increases the relative impact of thermal generation in an adjustment market, and decreases the optimum level of efficiency in energy use. For the same reason, higher externality costs decrease the optimum level of energy efficiency if the rate of fossil fuel generation for the baseline demand is sufficiently low. Finally, comparing the case where an optimal carbon tax is implemented with the case where a carbon tax is not implemented reveals that the latter induces an excessive level of energy efficiency.
    Date: 2018–01
  8. By: Danny MacKinnon; Stuart Dawley; Markus Steen; Max-Peter Menzel; Asbjørn Karlsen; Pascal Sommer; Gard Hopsdal Hansen; Håkon Endresen Normann
    Abstract: The question of how regions and nations develop new sources of industrial growth is of recurring interest in economic geography and planning studies. From an evolutionary economic geography (EEG) perspective, new growth paths emerge out of existing economic activities and their associated assets and conditions. In response to the micro-economic and endogenous focus of much EEG research, this paper utilises a broader evolutionary perspective on path creation which stresses the dynamic interplay between four sets of factors: regional assets; key economic and organisational actors; mechanisms of path creation; and multi-scalar institutional environments and policy initiatives. Reflecting the importance of extra-regional networks and institutions, this framework is also informed by the Global Production Networks (GPN) approach, which highlights the process of strategic coupling between firms and regions and its political and institutional mediation by state institutions at different spatial scales. We deploy this framework to investigate regional path creation in the context of renewable energy technologies, focusing specifically on the offshore wind industry. We adopt a comparative cross-national approach, examining the evolution of offshore wind in Germany, the UK and Norway. Of the three cases, Germany has developed the most deep-rooted and holistic path to date, characterised by leading roles in both deployment and manufacturing. By contrast, path creation in the UK and Norway has evolved in more partial and selective ways. The UK's growth path is developing in a relatively shallow manner, based largely upon deployment and 'outside in' investment, whilst Norway?s path is emerging in an exogenous, ?inside-out? fashion around a fairly confined set of actors and deployment and supply functions. In conclusion, the paper emphasises the important role of national states in orchestrating the strategic coupling of regional and national assets to particular mechanisms of path creation.
    Keywords: Evolutionary economic geography, path creation, national states, global production networks, offshore wind, international comparative analysis
    JEL: L1 L5 O1 O25 O43 O44 R5
    Date: 2018–02
  9. By: Jan Fagerberg (TIK Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: The topics addressed in this paper concern the (much-needed) transition to sustainability, the structural changes it entails and what role (innovation) policy can play in speeding up such changes. While it is easy to argue that innovation must play an important role in the transition towards sustainability, it is more challenging to provide good models for how policy may help in mobilizing innovation for this purpose. Such models, it is argued, needs to be based on the accumulated knowledge base on the role of innovation in social and economic change. The paper therefore starts by distilling some important insights on innovation from the accumulated research on this topic, and, with this in mind, discusses various policy approaches that have been suggested for influencing innovation and sustainability transitions. To allow for a more in-depth discussion the paper then goes into more detail about three cases in which policy arguably had a large impact, namely renewable energy in Denmark and Germany and electric cars in Norway. The final part of the paper sums up the discussion about the role of (innovation) policies in sustainability transitions.
    Date: 2018–02
  10. By: Christopher Arderne; Yann Tanvez; Pepukaye Bardouille
    Keywords: Energy - Electric Power Energy - Energy Policies & Economics Energy - Power & Energy Conversion Rural Development - Rural and Renewable Energy
    Date: 2017–10
  11. By: Hellwig, Michael; Schober, Dominik; Cabral, Luís M. B.
    Abstract: We propose a difference-in-differences (DiD) approach to estimate the impact of incentives on cost reduction. We show theoretically, and estimate empirically, that German electricity distribution system operators (DSOs) incur higher costs when subject to a lower-powered regulation mechanism. The difference is particularly significant (about 7%) for firms in the upper quartile of the efficiency distribution, a pattern which is consistent with the pooling of types under the threat of ratcheting.
    Keywords: regulation,ratchet effect,electricity utilities,difference-in-differences,efficiency analysis
    JEL: K23 L51 L94 L98 D24 D82
    Date: 2018
  12. By: Franklin K. Gbedey; David Vilar Ferrenbach; Tatia Lemondzhava
    Keywords: Energy - Electric Power Energy - Energy Policies & Economics Energy - Rural Energy Poverty Reduction - Access of Poor to Social Services Rural Development - Rural Communications Rural Development - Rural and Renewable Energy
    Date: 2017–10
  13. By: José M. Labeaga; Xavier Labandeira; Xiral López-Otero
    Abstract: Equity and efficiency are crucial issues behind any tax reform, but they are particularly relevant in countries with high inequality and large shares of poverty. This paper provides a comprehensive socio-economic empirical assessment of Mexico’s recently implemented tax reforms in the energy domain, and of a hypothetical (partial) removal of existing electricity subsidies. Using the rich National Household Income and Expenditure Survey within the context of a demand system adjustment of non-durable goods, this article provides the publicrevenue, environmental and distributional impacts from the simulation of different combinations of energy taxation, subsidyremoval and distributive offsets.
    Keywords: Distribution; equity; emissions; subsidy
    JEL: D12 D31 H23 Q48
    Date: 2018–01
  14. By: Dacuycuy, Connie B.; Dacuycuy, Lawrence B.
    Abstract: The paper aims to analyze the determinants of household energy portfolio in urban and rural areas and to determine how price shocks and weather variabilities affect energy use in the Philippines. It confirms that energy switching is observed among high-income urban and rural households while energy stacking is observed among rural households---a response to heat index deviation and LPG price shock. The paper also finds that households’ energy portfolios have components comprising of modern sources as energy anchors and a component that is most likely to adjust in response to price and weather-related shocks.
    Keywords: Philippines, energy portfolio, energy stacking, energy switching, energy anchors, energy shocks
    Date: 2018
  15. 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); Ryou, Kwang Ho (Korea Institute for International Economic Policy)
    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 sector, examining industrial policies and various business in the sector. Government policies that help Korean companies expand their market in the Middle East can be suggested as follows. First, financial support policies should be considered, to help these companies deal with project-developing costs incurred, for instance, for feasibility studies. More financial incentives could also be provided as more Korean contents are used in the projects. Second, more support should be considered for small- and medium-sized enterprises that cannot advance into the Middle Eastern market by themselves due to a lack of financial resources and track record in the region. Third, new business projects that incorporate ICT in the electricity industry, such as smart grids, AMI (Advanced Metering Infrastructure), ESS (Energy Storage System) should be systematically developed in the region. Fourth, a control tower should be set up in order to coordinate different interests among companies, banks and supporting institutions. It could also work as a platform to build a strategy to win government contracts.
    Keywords: Middle East; Electricity sector; Electricity policy; Renewable Energy
    Date: 2018–02–08
  16. By: Toshimitsu Kishi (Mainichi Shimbun)
    Abstract: During the Sato Administration period, the Cabinet Research Office, which was an intelligence agency directly under the Cabinet office, commissioned many studies regarding the nuclear policy of Japan. This chapter introduces seventeen of them with emphasis on three of them which seems to have influenced the development of non-nuclear policy of the Sato Administration. Scholars and intellectuals like Kei Wakaizumi, Teiji Yabe, Kiichi Saeki, Yonosuke Nagai, and Michio Royama were involved in these studies.
    Date: 2018–02
  17. By: MORITA Tamaki; MANAGI Shunsuke
    Abstract: This study, using an online survey with large samples, analyzes the latent demand for autonomous vehicles in Japan. The analysis is twofold. First, we applied the choice-based conjoint analysis to estimate the respondents' willingness to pay (WTP) for the auto driving system (conditional automation and full automation) as well as the fuel types (hybrid and electricity) of a car that respondents would buy. We also estimate the factors affecting each of the five respondents' classes grouped by the latent class conditional logit, to elicit the consumer heterogeneity. We find that those who do not favor driving and those who trust the safeness of autonomous driving tend to have higher WTP for automation. Contrast to the preferences to fuel choice, the environmental concern and altruism of the respondents did not affect the selection of automation. Second, we deal with consumers' attitudes toward the moral dilemma that artificial intelligence (AI) armed in vehicles should face: "the trolley problem" of choosing between two evils, such as running over pedestrians or sacrificing themselves and their passenger to save the pedestrians. We find that, like in the United States, there exists a particular gap between the Japanese consumers' morality and their expected purchasing behavior. Considering it, we alert that autonomous vehicles may cause the social dilemma, and insist the need to pay more attention to this social dilemma when we design the AI algorithm or traffic laws.
    Date: 2018–01
  18. By: TAKEDA Kuninobu
    Abstract: EDF/CGN/NNB Group of Companies (2016) has made a great impact on mergers and acquisitions conducted in the European Union (EU) of Chinese state-owned enterprises (SOEs), particularly those controlled by the State-owned Assets Supervision and Administration Commission (SASAC). With respect to the calculation of turnovers by the Chinese SOEs concerned—China General Nuclear Power Group (CGN)—the Commission, for the first time, considered CGN and other energy-sector SOEs as a single economic entity, thereby accumulating in the number of turnovers of these SOEs. If the Commission continues to hold the same position, numerous mergers concerning Chinese SOEs will be reviewed under EU merger regulations. This paper studies how EU merger regulations grasp SOEs as a single economic entity, and how that standard was applied in the EDF/CGN/NNB Group of Companies case.
    Date: 2018–01
  19. By: IWATA Kazuyuki; MANAGI Shunsuke
    Abstract: It is expected that autonomous vehicles will become commonplace because of the convenience they provide to drivers. However, this enhanced convenience may increase vehicle driving demand. Therefore, using a household survey conducted in Japan, this paper examines the effects of automated driving on vehicle miles traveled. In the analysis, we assume that automated driving halves both the number of traffic accident risks and driving fatigue incidents. The estimation results show that a household's annual vehicle miles traveled, on average, increase by about 630km to 3,237km due to the introduction of automated driving. If all vehicles in Japan were to be replaced with autonomous vehicles, the annual increase in vehicle driving demand would raise greenhouse gas emissions by 6.5 million to 33.8 million t-CO2. Therefore, authorities need to pay attention to the relation between autonomous vehicles and climate change when promoting and distributing autonomous vehicles.
    Date: 2018–02
  20. By: Maximilian Auffhammer; Edward Rubin
    Abstract: Half of American households heat their homes with natural gas furnaces and 43% use it to heat their water. Hence, understanding residential natural gas consumption behavior has become a first-order problem. In this paper, we provide the first ever causally identified, microdata-based estimates of residential natural gas demand elasticities using a panel of approximately 300 million bills in California. To overcome multiple sources of endogeneity, we employ a two-pronged empirical strategy: (1) we exploit a discontinuity along the border between two major natural-gas utilities in conjunction with (2) an instrumental variables strategy based upon the differences in the utilities’ rules/behaviors for internalizing changes in the upstream natural gas spot market. We estimate that the elasticity of demand for residential natural gas is between -0.23 and -0.17. We also provide evidence of significant seasonal and income-based heterogeneity in this elasticity. This heterogeneity suggests unexplored policy avenues that may be simultaneously efficiency-enhancing–in the absence of first best pricing—and pro-poor.
    JEL: O13 Q41
    Date: 2018–02
  21. By: Locatelli, C.
    Abstract: Les interdépendances fortes entre l’UE et ses fournisseurs extérieurs en matière de gaz naturel mettent au premier plan les problématiques de conflits et de logiques contradictoires liées à la coexistence d’arrangements institutionnels différents dans l’échange. Cet enjeu émerge clairement sur la relation entre l’UE et la Russie. Dans le même temps, la confrontation de ces deux espaces institutionnels semble avoir un « impact transformatif » sur les régulations, les systèmes institutionnels et les politiques énergétiques de la Russie et de l’UE. Elle ouvre en particulier de nouvelles structures d’opportunités pour les acteurs impliqués. L’objet de cet article est d’analyser les conflits et risques économiques et institutionnels qui résultent de la confrontation de ces deux espaces de régulation. Il est ensuite de mettre en évidence les changements induits par l’interdépendance tant du côté de la Russie que du côté de l’UE.
    JEL: Q31 Q41
    Date: 2018
  22. By: Plante, Michael D. (Federal Reserve Bank of Dallas)
    Abstract: This paper introduces a newspaper article count index related to OPEC that rises in response to important OPEC meetings and events connected with OPEC production levels. I use this index to measure how interest in OPEC varies over time and investigate how oil price volatility behaves when the index unexpectedly changes. I find that unexpected increases in the newspaper index are strongly associated with higher levels of oil price volatility, both realized and implied. In some cases, interest levels and price volatility appear to be driven by the OPEC event itself, such as the Iraq invasion of Kuwait. In other cases, such as the oil price collapses in late 2008 and late 2014, price volatility and interest levels in an OPEC event appear to be responding endogenously to developments in the oil market or broader economy. The newspaper index is highly correlated with Google search volume data on OPEC, an alternative measure of the amount of attention paid to OPEC events.
    Keywords: Oil price volatility; OPEC; attention; Google search activity
    JEL: C32 D80 G12 Q43
    Date: 2018–02–01
  23. By: Charles F. Mason
    Abstract: In this paper, I combine data on incidents associated with rail transportation of crude oil and detailed data on rail shipments to appraise the relation between increased use of rail to transport crude oil and the risk of safety incidents associated with those shipments. I find a positive link between the accumulation of minor incidents and the frequency of serious incidents, and a positive relation between increased rail shipments of crude oil and the occurrence of minor incidents. I also find that increased shipments are associated with a rightward shift in the distribution of economic damages associated with these shipments; the implied marginal impact of an additional 1,000 rail cars carrying oil between two states in a given month is $1,836. In addition, I find larger average effects associated with states that represent the greatest source of tight oil production.
    JEL: C14 L71 L92
    Date: 2018–02
  24. By: Troster, Victor; Shahbaz, Muhammad; Uddin, Gazi Salah
    Abstract: This paper analyzes the causal relationship between renewable energy consumption, oil prices, and economic activity in the United States from July 1989 to July 2016, considering all quantiles of the distribution. Although the concept of Granger-causality is defined for the conditional distribution, the majority of papers have tested Granger-causality using conditional mean regression models in which the causal relations are linear. We apply a Granger-causality in quantiles analysis that evaluates causal relations in each quantile of the distribution. Under this approach, we can discriminate between causality affecting the median and the tails of the conditional distribution. We find evidence of bi-directional causality between changes in renewable energy consumption and economic growth at the lowest tail of the distribution; besides, changes in renewable energy consumption lead economic growth at the highest tail of the distribution. Our results also support the unidirectional causality from fluctuations in oil prices to economic growth at the extreme quantiles of the distribution. Finally, we find evidence of lower-tail dependence from changes in oil prices to changes in renewable energy consumption. Our findings call for government policies aimed at developing renewable energy markets, to increase energy efficiency in the U.S.
    Keywords: Granger-causality; Quantile Regression; Oil Prices; Renewable Energy Consumption; Economic Growth
    JEL: A1
    Date: 2018–01–04
  25. By: John M. Maheu (DeGroote School of Business, McMaster University, Canada; Rimini Centre for Economic Analysis); Yong Song (University of Melbourne, Australia; Rimini Centre for Economic Analysis); Qiao Yang (School of Entrepreneurship and Management, ShanghaiTech University, China)
    Abstract: This paper shows that oil shocks primarily impact economic growth through the conditional variance of growth. We move beyond the literature that focuses on conditional mean point forecasts and compare models based on density forecasts. Over a range of dynamic models, oil shock measures and data we find a robust link between oil shocks and the volatility of economic growth. A new measure of oil shocks is developed and shown to be superior to existing measures and indicates that the conditional variance of growth increases in response to an indicator of local maximum oil price exceedance. The empirical results uncover a large pronounced asymmetric response of growth volatility to oil price changes. Uncertainty about future growth is considerably lower compared to a benchmark AR(1) model when no oil shocks are present.
    Keywords: Bayes factors, predictive likelihoods, nonlinear dynamics, density forecast
    JEL: C53 C32 C11 Q43
    Date: 2018–02
  26. By: Lewinsohn, José Luis
    Abstract: El uso del agua y la energía en los procesos mineros, en especial en los países andinos, planteará múltiples desafíos en el futuro, ya que la necesidad de capturar la renta derivada de la actividad extractiva exigirá, entre otros aspectos, el uso intensivo de estos insumos. En el presente ya existe una creciente preocupación social y ambiental respecto del uso múltiple del agua (gestión integrada), así como del aumento del impacto ambiental originado por la generación de energía (emisiones de gases de efecto invernadero). Uno de los caminos para promover el uso racional de estos y otros recursos es la integración de metodologías e instrumentos que permitan dotar de la eficiencia y la eficacia necesarias a los procesos mineros. En este documento se presenta el análisis de dos casos de estudio de la industria minera. El primero se relaciona con la gran minería del cobre de Chile, en la que se examina la incorporación de la herramienta de análisis de macrodatos (big data) en la toma de decisiones para reconocer alertas tempranas en determinados procesos de la producción (condiciones de riesgo, episodios críticos y otros). En el segundo se pasa revista al proceso de modernización de operaciones en el uso del agua y la energía en dos minas de mediana producción de oro en la zona andina del Perú.
    Date: 2018–12–31
  27. By: Achyuta Adhvaryu; James E. Fenske; Gaurav Khanna; Anant Nyshadham
    Abstract: Natural resources have driven both growth and conflict in modern Africa. We model the interaction of parties engaged in potential conflict over such resources. The likelihood of conflict depends on both the absolute and relative resource endowments of the parties. Resources fuel conflict by raising the gains from expropriation and by increasing fighting strength. Economic prosperity, as a result, is a function of equilibrium conflict prevalence determined not just by a region's own resources but also by the resources of its neighbors. Using high-resolution spatial data on resources, conflicts, and nighttime illumination across the whole of sub-Saharan Africa, we find evidence confirming each of the model's predictions. Structural estimates of the model reveal that conflict equilibria are more prevalent where institutional quality (measured by, e.g., risk of expropriation, property rights, voice and accountability) is worse.
    JEL: D74 O13 Q34
    Date: 2018–02
  28. By: Ghei, Dhananjay (Department of Economics, University of Minnesota); Sane, Renuka (National Institute of Public Finance and Policy)
    Abstract: Delhi is one of the most polluted cities in the world, especially in the winter months from October - January. These months coincide with the religious festival of Diwali. It is argued that air quality gets worse in the aftermath of Diwali on account of firecrackers that get burned during the festival. We use hourly data on PM 2.5 particulate matter from 2013 to 2017 to estimate the Diwali effect on air quality in Delhi. We improve on existing work by using the event study technique as well as a difference-in-difference regression framework to estimate the Diwali effect on air quality. The results suggest that Diwali leads to a small, but statistically significant increase in air pollution. The effect is different across locations within Delhi. To our knowledge, this is the first causal estimate of the contribution of Diwali firecracker burning to air pollution.
    Date: 2018–02
  29. By: Hennlock, Magnus (IVL Swedish Environmental Research Institute); Löfgren, Åsa (Department of Economics, School of Business, Economics and Law, Göteborg University); Sterner, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We study a cap-and-trade market equilibrium where different regions belonging to an emissions trading regime have different ambitions about the stringency of the cap. Specifically, we introduce a segment of consumers with Kantian preferences and show that they would prefer a more stringent cap compared to other regions. When a region sets up a voluntary more stringent cap within a cap-and-trade market, dual carbon markets with dual prices on allowances can emerge with trade against both caps. We then show that labelling a subset of the allowances in a cap-and-trade market captures the higher willingness to pay driven by different ambition levels among agents within a trading scheme. We show under what circumstances a socially efficient outcome from carbon markets can be achieved by labelling allowances when there are heterogeneous preferences among regions about the ambition level in an emissions trading regime. Being voluntary, trade in labelled allowances is consistent with a bottom-up approach where efforts are built up gradually by actors, countries and regions that wants to take leadership in international climate policy.
    Keywords: emissions trading; emissions allowances; carbon markets; public goods; ethics; Kant
    JEL: D03 D62 D63 Q54
    Date: 2018–01
  30. By: Nicholas Rivers, Randall Wigle (Wilfrid Laurier University)
    Abstract: The reduction of greenhouse gas emissions from road transport is a key policy goal that is being pursued by both federal and provincial governments using a range of policies. This paper considers the cost of alternative approaches to reducing emissions from road passenger travel in Canada. Our findings reinforce the widely-held belief that a revenue-neutral carbon tax is the most cost-effective tool to reduce greenhouse gas emissions. Regulatory instruments on their own, such as a low carbon fuel standard, vehicle greenhouse gas intensity regulation, or zero emission vehicle mandate, achieve a given reduction at much higher cost. We show, however, that a combination of regulatory instruments can better approach the cost-effectiveness of a carbon tax than individual regulations. We provide insight about the optimal combination of regulatory instruments in the Canadian context, and find that both a low carbon fuel standard and an zero emission vehicle mandate can be jointly used to reduce GHG emissions from the transport sector. Our analysis is timely, given the rapidly evolving policies in this sector.
    Keywords: Greenhouse gas emissions, low carbon fuel standard, electric vehicles, carbon tax, road transport
    Date: 2018–01–01
  31. By: Yimeng Du (Graduate School of Economics, Kobe University); Kenji Takeuchi (Graduate School of Economics, Kobe University)
    Abstract: This study aims to examine whether investment in climate change mitigation plays a role in poverty alleviation. We investigate impacts of the renewable energy-based clean development mechanism (RE-CDM) on rural communities in China. The impacts of RE-CDM projects are estimated by combining propensity score matching with the difference-in-differences approach. We found that the promotion of biomass-based CDM projects significantly contribute to income improvement, employment generation, and industrial transformation in rural communities in China. On the other hand, our estimation results reveal that large-scale wind and solar energy-based CDM projects have the potential to increase the labor force in the primary industry in rural areas.
    Keywords: CDM; renewable energy; poverty alleviation; rural development; propensity score matching; difference-in-differences
    Date: 2018–02
  32. By: Lin, Yu-Hsuan
    Abstract: This chapter examines the impact of inequality-averse attitudes on the individual incentives of participating in international environmental agreements by a laboratory experiment. The experimental result shows that the inequality-averse attitudes have significantly positive impact on the incentives of participation. Particularly, when they are non-critical players, egalitarians are likely to give up the free riding benefit by joining a coalition. It helps us to understand the coalition formation in the international conventions.
    Keywords: Social preference, experimental design, international environmental agreement, inequality aversion, heterogeneous countries
    JEL: C91 D71 Q01 Q54 Q58
    Date: 2017–01
  33. By: Carraro, Carlo
    Abstract: International negotiations on climate change control are moving away from a global cooperative agreement (at least from the ambition to achieve it) to adopt a bottom-up framework composed of unilateral pledges of domestic measures and policies. This shift from cooperative to voluntary actions to control GHG emissions already started in Copenhagen at COP 15 in 2007 and became a platform formally adopted by a large number of countries in Paris at COP 21. The new architecture calls for a mechanism to review the nationally determined contributions (NDCs) of the various signatories and assess their adequacy. Most importantly, countries' voluntary pledges need to be compared to assess the fairness, and not only the effectiveness, of the resulting outcome. This assessment is crucial to support future, more ambitious, commitments to reduce GHG emissions. It is therefore important to identify criteria and quantitative indicators to assess and compare the NDCs.
    Keywords: Climate change negotiations; GHG emissions; mitigation; Paris agreement
    Date: 2018–01
  34. By: Stienen, V.F.; Engwerda, Jacob (Tilburg University, Center For Economic Research)
    Abstract: In this paper we try to quantify/measure the main factors that influence the equilibrium outcome and pursued strategies in a simplistic model for the use of fossil versus green energy over time. The model is derived using the standard Solow macro-economic growth model in a two-country setting within a dynamic game perspective. After calibrating the model for a setting of OECD versus non-OECD countries we study what kind of uncertainties affect the outcomes of the linearized model most, assuming both countries use Nash strategies to cope with shocks that impact the model. The main outcome of this study is that the parameters that occur in the objective of both players seem to carry the most uncertainty for both the outcome of the model and strategies.
    Keywords: Differential games; environemental engineering; uncertain dynamic systems; linearization; economic systems; open-loop control systems
    JEL: Q43 Q54 Q56 Q58 C61 C72 C73
    Date: 2018

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