nep-ene New Economics Papers
on Energy Economics
Issue of 2018‒03‒19
forty papers chosen by
Roger Fouquet
London School of Economics

  1. Value for money in energy efficiency retrofits in Ireland: grant provider and grant recipients By Collins, Matthew; Curtis, John
  2. More information, lower costs: a new electricity market mechanism By Devine, Mel; Lynch, Muireann Á
  3. Irish residents’ views of energy-related technologies By Bertsch, Valentin; Hyland, Marie; Mahony, Michael
  4. Fluctuations in renewable electricity supply: Gains from international trade through infrastructure? By Ziesemer, Thomas
  5. "The Role of Street-Level Bureaucrats in Implementing Renewable Energy Policy in Indonesia" By Anugerah Yuka Asmara
  6. An Econometric Analysis of Divergence of Renewable Energy Invention Efforts in Europe By Grafström, Jonas
  7. Renewable Energy Policy in Indonesia: The Qur'anic Scientific Signals in Islamic Economics Perspective By Jaelani, Aan; Firdaus, Slamet; Jumena, Juju
  8. Investing in the electric utilities sector: the implications of carbon risk By Enrico Bernardini; Johnny Di Giampaolo; Ivan Faiella; Riccardo Poli
  9. Why are Megaprojects, Including Nuclear Power Plants, Delivered Overbudget and Late? Reasons and Remedies By Giorgio Locatelli
  10. The Security of the United Kingdom Electricity Imports under Conditions of High European Demand By Anthony D Stephens; David R Walwyn
  11. Family size, Increasing block tariff and Economies of scale of household electricity consumption in Vietnam from 2010 to 2014 By Hoai-Son Nguyen; Minh Ha-Duong
  12. The Macroeconomic Effects of Efficiency Gains in Electricity Production in Malta By Noel Rapa
  13. Is electricity affordable and reliable for all in Vietnam? By Minh Ha-Duong; Hoai Son Nguyen
  14. Macroeconomic modelling of electrified mobility systems in 2030 European Union By Frédéric Ghersi
  15. Household tipping points in the face of rising electricity tariffs in South Africa By Angelika Goliger; Aalia Cassim
  16. The tipping point: The impact of rising electricity tariffs on large firms in South Africa By Angelika Goliger; Landon McMillan
  17. Flexible Use of Residential Heat Pumps - Possibilities and Limits of Market Participation By Jessica Raasch
  18. Le droit à l'énergie : dangereuse chimère ou juste exigence ? By Minh Ha-Duong
  19. Compensating households from carbon tax regressivity and fuel poverty: a microsimulation study By Audrey Berry
  20. How to reduce energy poverty in Poland? By Jan Rutkowski; Katarzyna Salach; Aleksander Szpor; Konstancja Ziolkowska
  21. The Energy Consumption and Economic Growth Nexus in Top Ten Energy-Consuming Countries: Fresh Evidence from Using the Quantile-on-Quantile Approach By Shahbaz, Muhammad; Zakaria, Muhammad; Syed, Jawad; Kumar, Mantu
  22. The Role of Globalization in Energy Consumption: A Quantile Cointegrating Regression Approach By Shahbaz, Muhammad; Lahiani, Amine; Abosedra, Salah; Hammoudeh, Shawkat
  23. Energy, knowledge, and demo-economic development in the long run: a unified growth model By Victor Court; Emmanuel Bovari
  24. Energy consumption and economic growth in oil importing and oil exporting countries: A Panel ARDL approach By Afees A. Salisu; Tirimisyu F. Oloko; Ismail Okunoye; Olaide Opeloyeru; Nafisat Olabisi
  25. Capital-energy substitutability in manufacturing sectors: methodological and policy implications By Valeria Costantini; Francesco Crespi
  26. A set of state space models at an high disaggregation level to forecast Italian Industrial Production By Corradini, Riccardo
  27. The role of natural resources in production: Georgescu-Roegen/ Daly versus Solow/ Stiglitz By Quentin Couix
  28. Fuel prices and road deaths in Australia By Paul J Burke; Ataklti Teame
  29. Oil price pass-through into core inflation By Cristina Conflitti; Matteo Luciani
  30. Decomposing the links between oil price shocks and macroeconomic indicators: Evidence from SAARC region By Ahmed, Khalid; Bhutto, Niaz Ahmed; Kalhoro, Muhammad Ramzan
  31. US shale oil and the behaviour of commodity prices By Afees A. Salisu; Idris Adediran
  32. Monetary Policy, Oil Stabilization Fund and the Dutch Disease By Jean-Pierre Allegret; Mohamed Tahar Benkhodjay; Tovonony Razafindrabe
  33. E15 and E85 Demand Under RIN Price Caps and an RVP Waiver By Gabriel E. Lade; Sebastien Pouliot; Bruce A. Babcock
  34. Did the Paris Agreement Plant the Seeds of a Climate Consistent International Financial Regime? By Dipak Dasgupta; Etienne Espagne; Jean Charles Hourcade; Irving Mintzer; Seyni Nafo; Baptiste Perrissin Fabert; Nick Robins; Alfredo Sirkis
  35. Trade and Climate: Towards Reconciliation By Dominique Bureau; Lionel Fontagné; Katheline Schubert
  36. Application of a green jobs SAM with employment and CO2 satellites for informed green policy support the case of Indonesia By Alarcon, J. V.; Ernst, C.
  37. Optimal fiscal policy with environmental tax and abatement spending in a model with pollution and utility-enhancing environmental quality: the case of Bulgaria By Vasilev, Aleksandar
  38. CO2 mitigation in developing countries: the role of foreign aid By Mohamed BOLY
  39. La politique commerciale au service de la politique climatique By Lionel Fontagné; Jean Fouré
  40. A Real-Business-Cycle model with pollution and environmental taxation: the case of Bulgaria By Vasilev, Aleksandar

  1. By: Collins, Matthew; Curtis, John
    Date: 2017
  2. By: Devine, Mel; Lynch, Muireann Á
    Date: 2017
  3. By: Bertsch, Valentin; Hyland, Marie; Mahony, Michael
    Date: 2017
  4. By: Ziesemer, Thomas (UNU-MERIT, and SBE, Maastricht University)
    Abstract: 113 countries report producing electricity from non-hydro renewable sources and thereby participate in the global energy transition. This paper shows through a dynamic panel data analysis that imports of electric currents have increased and exports have decreased through the higher share of renewables in electricity production, controlling for other factors. On the one hand more cables have been built recently; but on the other hand some countries are blocking electricity shocks technologically as they suffer from free trade temporarily when receiving supply shocks. This shows that trade currently helps dealing with fluctuations of supply, but temporary losses for recipients of shocks may require payments to leave the borders open.
    Keywords: Gains from trade, electric current, gravity, infrastructure, renewables, fluctuations, electricity supply, electricity shocks
    JEL: F14 F15 F18 F59 H54 O33
    Date: 2018–02–27
  5. By: Anugerah Yuka Asmara (Researcher of Science-Technology-Innovation Policy at Indonesian Institute of Sciences (LIPI) Master Student of Public Administration and Policy at University of Indonesia (UI))
    Abstract: "Objective – This empirical paper aims to describe what action the Government of Indonesia is taking to provide alternative energy sources, such as solar cells, biomass, wind energy, ocean energy, and other renewable energy (RE) sources. Methodology/Technique – The method of analysis used in this study consists of an individual factor, a contextual factor, an external factor, an organizational factor, and a political factor. Findings – The results show that the role of street level bureaucrats in implementing RE policy in Indonesia is influenced by legal regulation and specific values in internal organizations, created by themselves. Novelty – The study highlights that street-level bureaucrats in Dirjen-EBTKE have a discretion when introducing and implementing new RE programs. The paper involves qualitative research by providing descriptive data through a case study"
    Keywords: Role; Street-Level Bureaucrats; Renewable Energy; Policy; Indonesia.
    JEL: P40 P48 P59
    Date: 2017–12–26
  6. By: Grafström, Jonas (The Ratio Institute)
    Abstract: The objective of this paper is to investigate the presence of convergence (or divergence) of invention efforts per capita in the renewable energy field across European Union (EU) countries. Divergence may imply a risk of a lower level of goal fulfilment regarding the share of renewable energy in the EU energy mix. This is due to free-rider issues and sub-optimal investment levels, in turn making it more expensive and cumbersome to expand renewable energy production. Convergence suggests a possible faster renewable energy goal achievement. The econometric analysis is based on patent application counts per capita for 13 EU Member States over the time period 1990–2012. The methods used draw on the economic convergence literature. First, we rely on a panel data set to test for conditional β-convergence. Moreover, a distributional dynamics approach is employed to test for σ- and γ-convergence, and analyse the intra-distributional dynamics. The results indicate conditional β- and σ-divergence in renewable energy invention capabilities across the 13 countries, thus suggesting that some EU countries tend to free-ride on the development efforts of other Member States.
    Keywords: convergence; divergence; renewable energy development; patent counts; EU
    JEL: O30 O40 O44
    Date: 2017–12–04
  7. By: Jaelani, Aan; Firdaus, Slamet; Jumena, Juju
    Abstract: This study confirms that renewable energy sources become the solution for energy development in Indonesia due to the increasingly depleted use of fossil-based energy, due to an increase in the population that increases energy consumption and waste in fuel consumption. The Qur'an has provided simple concepts and illustrations about renewable energy sources that can be utilized by humans, energy conservation, and energy enrichment. With the codification and content analysis approach to energy policy in Indonesia and energy themes in the Qur'an, this paper asserts that the Government of Indonesia's renewable energy policy focuses on providing and developing renewable energy as part of sustainable development. This renewable energy policy can be proven scientifically with the implementation of scientific Qur'anic terms about renewable energy sources such as water, geothermal, ocean, vegetation, and wind. The policy on energy conservation through energy saving becomes a religious obligation for every person, institution, and government because to meet the needs of consumers, maintain the survival of the community, and preserve the environment.
    Keywords: renewable energy, energy conservation, energy efficiency, energy economy
    JEL: Q20 Q28 Q42 Q48 Q58
    Date: 2017–06–01
  8. By: Enrico Bernardini (Bank of Italy); Johnny Di Giampaolo (Bank of Italy); Ivan Faiella (Bank of Italy); Riccardo Poli (Bank of Italy)
    Abstract: The decarbonization process has made the traditional value-creation model of companies operating in the electricity sector (energy utilities - UEN) obsolete, particularly affecting those with a greater share of fossil fuels in their energy mix that have been forced to write down their carbon-intensive activities with a negative impact on operating income, equity and leverage. Institutional investors have a significant exposure to UEN risk capital and debt: if the transition process towards a low-carbon system is faster than expected by the market, the risk that these weaknesses may spread across the financial system shouldn’t be underestimated. Analyses based on risk-premium factor models show that there was a significant low-carbon premium during the years in which the decarbonization process increased; in the period considered, an investment strategy that focused more on low-carbon companies would have delivered higher returns without modifying the overall risk profile.
    Keywords: carbon risk, climate change, factor models
    JEL: C58 G11 Q54
    Date: 2017–11
  9. By: Giorgio Locatelli
    Abstract: In the first section, this report analyses Nuclear Power Plants (NPPs) in the context of megaprojects, explaining why they are often delivered over budget and late. In the second section, the report discusses how Small Modular Reactors (SMRs) might address these issues. Megaprojects are extremely risky and often implemented after a sub-optimal phase of project planning leading to underestimations of the costs and overestimation of short-term benefits. When considering adherence to schedule and budget, often megaprojects might be considered a failure, and optimism bias, strategic mis-rapresentation, complexity, poor planning, poor risk allocation, poor scope management are all reasons to explain their over budget and delay. For megaprojects, especially in the nuclear field, a key strategy to achieve good performances appears to be the standardization. This standardization needs to be twofold: (i) technical standardisation, i.e. the construction of very similar design over and over, and (ii) the project delivery chain standardisation, i.e. the same stakeholders involved in the delivery of a project that is replicable multiple times. Under this perspective, given their size and standardisation potential, SMRs, might be a suitable class of NPP for several countries. Yet, if the economy of scale is the only driver considered, SMRs are hardly competitive with large NPPs (or even with gas or coal power plants). However, a fleet of standard SMRs might balance the lack of economy of scale with the economy of multiples, and the delivery of several standardised SMR projects might be the key to achieve good project management performances in the nuclear sector. However, the deployment of SMRs faces a number of challenges from several perspectives, such as the licencing, supply chain and financing ones. These challenges might be enormous, but so are the potential rewards too.
    Date: 2018–02
  10. By: Anthony D Stephens; David R Walwyn
    Abstract: Energy policy in Europe has been driven by the three goals of security of supply, economic competitiveness and environmental sustainability, referred to as the energy trilemma. Although there are clear conflicts within the trilemma, member countries have acted to facilitate a fully integrated European electricity market. Interconnection and cross-border electricity trade has been a fundamental part of such market liberalisation. However, it has been suggested that consumers are exposed to a higher price volatility as a consequence of interconnection. Furthermore, during times of energy shortages and high demand, issues of national sovereignty take precedence over cooperation. In this article, the unique and somewhat peculiar conditions of early 2017 within France, Germany and the United Kingdom have been studied to understand how the existing integration arrangements address the energy trilemma. It is concluded that the dominant interests are economic and national security; issues of environmental sustainability are neglected or overridden. Although the optimisation of European electricity generation to achieve a lower overall carbon emission is possible, such a goal is far from being realised. Furthermore, it is apparent that the United Kingdom, and other countries, cannot rely upon imports from other countries during periods of high demand and/or limited supply.
    Date: 2018–02
  11. By: Hoai-Son Nguyen (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi, ABIES Doctoral School); Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi)
    Abstract: Household electricity consumption potentially offers economies of scale, since lighting, cooling or cooking can be shared among household members. This idea needs to be tested empirically. Under an increasing block tariff schedule the marginal and average price of electricity increases with total consumption. Does this effect offset economies of scale in the larger families? This paper uses data from Vietnam Household Living Standard Survey (VHLSS) in 2010, 2012 and 2014 to investigate whether there are economies of scale for Vietnam household electricity consumption in that period. The data will be tested formally by an OLS model and checked robustness by visualization of local linear regressions. Estimated results and robustness check confirm that in general, economies of scale do exist for household electricity consumption in Vietnam from 2010-2014.
    Keywords: electricity use,increasing block tariffs,household economies of scale
    Date: 2018–02–22
  12. By: Noel Rapa
    Abstract: This note studies the impact energy market reforms might have on the Maltese economy in the medium-to-long run using a DSGE model. Contrary to previous studies, this note takes in consideration the changes in the marginal cost of electricity production of Enemalta under a number of energy production setups. Results show that the decommissioning of the Marsa power plant and the installation of an undersea interconnector results in a fall in marginal costs, and therefore an increase in long run output, under both baseline and high oil price scenarios ranging between 1.61% and 2.53%. This energy setup is however consistent with an increase in marginal costs, and therefore a fall in long run output of 0.41% in the case of a low oil price scenario. The future setup of natural gas fired turbines results in a fall in marginal costs and an increase in long run output in all oil price scenarios, ranging between 0.81% in the low oil price scenario to 3.00% in case of high oil prices.
    JEL: E37 D58 Q43
  13. By: Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement); Hoai Son Nguyen (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: Access to clean and affordable energy for all is the seventh sustainable development goal. This manuscript examines the state of access to electricity for all in Vietnam, based on national households’ surveys conducted in the time period 2008-2014. We find that in Vietnam, the problem of providing access to clean energy for all is largely solved for now: the fraction of households without access to electricity is below two percent, the median level of electricity usage in 2014 was 100 kWh per month per household, the fraction of households declaring unsatisfied electricity needs is below three percent. We find that electricity is becoming a heavier burden in Vietnamese households’ finances. In 2010, the electricity bill exceeded 6% of income for 2.4% of households, but in 2014 that number reached 5.5% of households. In practical terms, we discuss the challenge of a socially just increase of electricity tariff, necessary to finance a clean development of energy system. Our theoretical contribution to debates on energy poverty is to account for the human dimension by using a self-reported satisfaction indicator. Our study shows that subjective energy poverty indicators –designed from surveys asking people if they had enough electricity to meet their households needs– are as relevant as objective indicators –from engineering or economic data. While objectivity is laudable, development is not only about technology and money: measuring human satisfaction matters.
    Keywords: Electricity,Vietnam,Sustainable Development Goals,Indicators
    Date: 2018–01–25
  14. By: Frédéric Ghersi (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: This working paper details in 3 sections (i) the data collection and treatment that were necessary to apply IMACLIM-P to a 28-country European Union (EU); (ii) the particulars of a version of IMACLIMP dedicated to a prospective outlook on the penetration of electric passenger cars in the EU, including how results of the PAN-EU TIMES model of energy systems can be imported in IMACLIMP, together with the complete set of equations of the model; (iii) model implementation.
    Date: 2018–01–24
  15. By: Angelika Goliger; Aalia Cassim
    Abstract: Since the start of sharp electricity tariff increases in 2008, South African household demand for electricity has not been significantly affected. However, the combination of economic realities and ongoing electricity tariff increases will eventually compel households to reduce their electricity usage. This research explores the ability of South African households to make alternative-energy and/or energy-efficient investments in two tariff increase scenarios. It is found that middle-income households are the most vulnerable to rising electricity tariffs, due to their limited ability to invest in technologies that would significantly reduce their electricity usage, yet they are unlikely to opt for the alternatives used by low-income households. Assuming that 20 per cent of households that can afford to invest in particular technologies do so, then around one quarter of total residential electricity sales in South Africa could potentially go off-grid in the base case tariff scenario by 2030.
    Date: 2018
  16. By: Angelika Goliger; Landon McMillan
    Abstract: While much research has been done on the economic impacts of load-shedding in South Africa, fewer studies have focused on the effects of the rapidly rising electricity tariffs. The issue of tariff increases has now become even more critical, with technological developments making it easier and cheaper for consumers to reduce their demand for grid-based electricity. There have been some South African studies that have attempted to estimate the price elasticity of electricity demand or to show vulnerable sectors, but all have struggled to demonstrate the potential impacts on the competitiveness of individual firms and their decisions to invest in their own generation, and the longer-run impacts on electricity demand. This study examines the timing and type of own-generation investment decisions that are viable for 21 large companies, and the likely impactof this on South Africa’s electricity utility.
    Date: 2018
  17. By: Jessica Raasch (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen (Campus Essen))
    Abstract: The increased amount of electricity supply from intermittent renewable energy sources leads more and more to high price volatility in electricity spot markets. An increasing share of generation is less dispatchable than in the past, and therefore higher amounts of flexible demand, which can be adjusted towards supply, are required. Even residential consumers are potential market participants, if the smart equipment of buildings and the electricity grid are readily available. This paper investigates the possibility for heat-pump operators to participate in spot markets. Especially problems and possible benefits are investigated when uncertainties in ambient temperatures or prices are considered. Therefore an optimization model, including an air-to-water heat pump, a storage tank and the heated building is implemented in MATLAB. In order to investigate the heat-pumps operation according to optimized heat-supply schedules. Along different scenarios, an agent-based model is used. Namely operations with day-ahead and intraday market participation are investigated, using historical EPEX spot electricity prices for 2014. Results show that uncertainty is a critical issue when private consumers participate in electricity markets. Even with a certain amount of system flexibility, there are tight operational constraints for the heating device, which are hard to fulfill. Short-term decisions including responses to current information are required. The system behavior is acceptable with very shortterm decision making, namely a hourly reoptimization with intraday-market participation. Further on, benefits can be yielded, when a combination of procurement before (day-ahead) and adjustments in the very short term (intraday) are applied.
    Keywords: Heat-Pump Operation, Flexible Consumption, Residential Market Participation, Spot-Market Bidding
    JEL: Q41 Q48
    Date: 2018–03
  18. By: Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: Survivre au froid en hiver et au chaud en été sont des besoins humains essentiels, tout comme manger cuit dans un air intérieur libre de fumée. L’objectif de développement durable « Accès à une énergie propre et abordable pour tous » reconnaît ainsi un droit à l’énergie comme une juste exigence universelle. Mais le garantir au quotidien pour sept milliards de contemporains soulève des questions pratiques : Les pays en développement ont ils le droit d’utiliser les énergies fossiles comme l’ont fait les pays riches ? Comment définir et repérer les ménages en situation de précarité énergétique, et comment les aider ? Ce texte propose quelques réponses concrètes, qui s’appuient sur le cas d’un pays riche la France, et d’un pays à revenu intermédiaire le Vietnam.
    Date: 2018–01–25
  19. By: Audrey Berry (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    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
    Date: 2018–01–23
  20. By: Jan Rutkowski; Katarzyna Salach; Aleksander Szpor; Konstancja Ziolkowska
    Abstract: 4.6 million people in Poland live in energy poverty. In order to significantly reduce the scale of this problem, more effective and better addressed public policy instruments are needed. We propose three new instruments. First, targeted fuel allowance, aimed at alleviating the symptoms of energy poverty. Second, advisory services and energy saving improvements. Third, thermal retrofit coupled with professional energy counselling. The latter two instruments are meant to eliminate the causes of energy poverty. Thermal retrofit is the most expensive but the most effective tool. Developing a mechanism for practical identification of energy poor households is a major challenge. It is to be tackled by local governments, especially social assistance centres.
    Keywords: energy poverty, public policy
    JEL: I32 Q40
    Date: 2018–02
  21. By: Shahbaz, Muhammad; Zakaria, Muhammad; Syed, Jawad; Kumar, Mantu
    Abstract: This paper empirically examines the inter-linkages between energy consumption and economic growth in top ten energy-consuming countries i.e. China, the USA, Russia, India, Japan, Canada, Germany, Brazil, France and South Korea. We use the quantile-on-quantile (QQ) approach of Sim and Zhou (2015) to explore some nuanced features of the energy-growth nexus and to capture the relationship in its entirety. The results show a positive association between economic growth and energy consumption, with considerable variations across economic states in each country. A weak effect of economic growth on energy consumption is noted for the lower quantiles of economic growth in China, India, Germany and France, which suggests that energy as an input has less importance at low levels of economic growth. A weak effect of economic growth on energy consumption is also noted for the highest quantiles of income in the United States, Canada, Brazil and South Korea, which indicates that energy demand decreases with the increase in economic growth as these countries have become more energy efficient. The weakest effect of energy consumption on economic growth is observed at lower quantiles of energy consumption in China, Japan, Brazil and South Korea. The results of the present study can help in the design of energy development and conservation policies for sustainable and long-term economic development.
    Keywords: Energy Consumption, Economic Growth, Quantile-on-Quantile Approach
    JEL: A1
    Date: 2018–02–16
  22. By: Shahbaz, Muhammad; Lahiani, Amine; Abosedra, Salah; Hammoudeh, Shawkat
    Abstract: This paper examines the quantile behavior of the relationship between the nuances of globalization and energy consumption while incorporating capital and economic growth in case of top-two most globalized countries – Netherlands and Ireland - by employing the recently developed quantile autoregressive distributed lag (QARDL) model of Cho et al. (2015). The model is estimated using quarterly data over the period 1970Q1-2015Q4. The results indicate that the relationship is quantile-dependent, which may reveal misleading results in studies using traditional analyses that address the averages. The Wald test confirms our findings by rejecting the null hypothesis of parameter constancy for both the Netherlands and Ireland. The changes in energy consumption are more responsive to past levels and past changes in globalization than the adjustment provided by the error-correction method (ECM). Interestingly, the findings indicate that globalization is positively correlated with energy consumption in the long-term for the two countries. Furthermore, globalization shares a robust long-term relationship with energy consumption. Energy consumption is strongly related to globalization in the long-term. However, the short-term effects of globalization on energy demand are limited for those countries. Important policy implications are then suggested based on the empirical results.
    Keywords: Globalization nuances, Energy Consumption, Quantile ARDL
    JEL: A1
    Date: 2018–02–02
  23. By: Victor Court (CERES-ERTI - Centre d'Enseignement et de Recherche sur l'Environnement et la Societé / Environmental Research and Teaching Institute - ENS Paris - École normale supérieure - Paris); Emmanuel Bovari (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article provides a knowledge-based and energy-centered unified growth model of the economic transition from limited to sustained growth. In an overlapping generation framework, we introduce final energy as a production factor of a composite final good sector, along with human capital, a learning-by-doing technology, and a Schumpeterian technology. Final energy results from a CES aggregation of energy inputs that come from renewable (biomass, wind, water) and exhaustible (coal, oil, gas) primary resources. The production of those inputs also requires human capital along with specific learning-by-doing and Schumpeterian technologies. Furthermore, with an endogenous sequence of General Purpose Technologies (GPTs), we explicitly feature pure technological externalities that foster the efficiency of both learning-by-doing and R&D-based technological progress. This setting allows us to distinguish two economic regimes: (i) a pre-modern organic regime dominated by limited growth in per capita output, high fertility, low levels of human capital, technological progress generated by learning-by-doing, and rare GPT arrivals; and (ii) a modern fossil regime characterized by sustained growth of per capita output, low fertility, high levels of human capital, technological progress generated by profit-motivated R&D, and increasingly frequent GPT arrivals. Most importantly, these economic, technological and demographic regimes' changes are associated with an energy transition. This transition results from the endogenous shortage of renewable resources availability and the arrival of new GPTs, which redirect technological progress towards the exploitation of previously unprofitable exhaustible energy carriers. Calibrations of the model are currently in progress and will allow a simulation of the historical experience of England for the period 1560-2010. In a second step, we plan to reiterate these simulations to compare the different trajectories of Western Europe and Eastern Asia.
    Keywords: Unified Growth Theory,Useful Knowledge,Energy Transition,Demography
    Date: 2018–01–31
  24. By: Afees A. Salisu (Centre for Econometric and Allied Research, University of Ibadan); Tirimisyu F. Oloko (Centre for Econometric and Allied Research, University of Ibadan); Ismail Okunoye (Department of Economics, University of Ibadan); Olaide Opeloyeru (Department of Economics, University of Ibadan); Nafisat Olabisi (Department of Economics, University of Ibadan)
    Abstract: In this paper, we examine the relationship between energy consumption and economic growth in selected oil exporting and oil importing countries using annual data form from 1980 to 2014. The paper contributes to the extant literature on energy consumption-growth nexus in the following three ways. First, it compares energy consumption-growth nexus of oil importing countries with that of oil exporting countries. Second, it accounts for any inherent heterogeneity feature of these categories of countries as well as non-stationarity concern in long panels by using the mean group and pooled group estimators. Thirdly, it employs Panel ARDL model which facilitates the estimation of both long run and short run elasticities in panel form. From the empirical analysis, we find that, in the long run, energy consumption has positive and significant effect on economic growth both for oil exporting and oil importing countries although the effect is observed to be higher for the former than the latter. In the presence of shock however, oil importing countries tend to adjust faster than oil exporting countries. This can be attributed to the structure of economy of most oil exporting countries which is largely oil-based and therefore, any shock to the variable will have a greater impact on their macro-economy compared to a well-diversified economy of oil importing countries.
    Keywords: US, Shale revolution, oil shocks, commodity prices, SVAR
    Date: 2018–02
  25. By: Valeria Costantini; Francesco Crespi
    Abstract: The debate on the capacity of the production system to adequate to a low-carbon economy is addressed by computing the capital-energy substitution elasticities ( for manufacturing sectors. We estimated the at aggregate level for the whole manufacturing industry and for 10 distinguished sectors for 21 OECD countries (1990-2008); average substitution values are also computed at sector level comparing alternative econometric methods and for separate sub-periods to trace the time dynamics. Such methodology allows assessing how different sectors could respond to the introduction of new (energy saving) technologies, as in terms of factor productivity and substitutability opportunities. This corresponds to a dynamic evaluation of the speed of reaction of each sector in improving its energy efficiency and the capacity to be on track in a sustainable transition. Such assessment also helps policy makers to individuate sectors deserving transition support according to the speed of adjustment of elasticity values over time.
    Keywords: Sustainable energy transition; Manufacturing sectors; OECD countries; Capital-energy substitutability; Allen elasticity; Translog function
    JEL: D24 L60 Q43 Q47
    Date: 2018–03
  26. By: Corradini, Riccardo
    Abstract: Normally econometric models that forecast Italian Industrial Production Index do not exploit pieces of information already available at time t+1 for its own main industry groupings. A new strategy is sketched here using state space models and aggregating the estimates to obtain improved results. The endogenous variables available at time t+1 are Consumption of Electricity, Compressed Natural Gas distributed on its own net, Production of Compressed Natural Gas, Registration of commercial vehicles for Italy, Germany, France and Spain. Unfortunately for the other main industry groupings there are not available variables not prone to high revisions. A new strategy exploiting univariate or bivariate state space models for these time series is used. The issue coming out from holidays taken during Tuesday or Friday will be tackled. How to handle in-sample forecast with different aggregating weights will be considered for the period before the first of January of 2010 where is impossible to use the same structure for the base year 2010.
    Keywords: Industrial Production Index, forecasting, Vector Autoregressive Models, disaggregation, Kalman filter, unobserved components models
    JEL: C43 C51 C53 Q47
    Date: 2018–02–07
  27. By: Quentin Couix (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper proposes a historical and epistemological account of one of the key controversy between natural resources economics and ecological economics, lasting from early 1970s to the end of 1990s. It shows that the theoretical disagreement on the scope of the economy's dependence to natural resources, such as energy and minerals, has deep methodological roots. On one hand, Solow's and Stiglitz's works are built on a “model-based methodology”, where the model precedes and supports the conceptual foundations of the theory and in particular the assumption of “unbounded resources productivity”. On the other hand, Georgescu-Roegen's counter-assumption of “thermodynamic limits to production”, later revived by Daly, rest on a methodology of “interdisciplinary consistency” which considers thermodynamics as a relevant scientific referent for economic theory. While antagonistic, these two methodologies face similar issues regarding the conceptual foundations that arise from them, which is a source of confusion and of the difficult dialogue between paradigms.
    Keywords: natural resources,thermodynamics,growth,sustainability,model,theory,methodology
    Date: 2018–01
  28. By: Paul J Burke; Ataklti Teame
    Abstract: After years of general progress in reducing Australia’s road death toll, road deaths increased in 2015 and 2016, reaching 1,293 per annum. These were also years of relatively cheap fuel following the dramatic decline in the world oil price in late 2014. This study uses monthly data to model the number of road deaths in Australia. Our estimates suggest that low fuel prices have contributed to knocking Australia off track for meeting its 2020 road safety target. The paper also provides a discussion of other factors that may have contributed to the rise in Australia’s road death toll.
    Keywords: road safety, road deaths, gasoline price, fuel price, Australia
    JEL: R41 Q41 Q43
    Date: 2018–03
  29. By: Cristina Conflitti (Bank of Italy); Matteo Luciani (Federal Reserve Board)
    Abstract: This work estimates the effect that fluctuations in oil prices have on changes in consumer prices in both the United States and the euro area. For many of the basic items in the basket of goods used to estimate inflation, the effects of oil price trends are divided into two components: the first is linked to the specific characteristics of individual products (such as, for example, the importance of energy in the production process), while the second is related to macroeconomic factors which are in turn connected with changes in oil prices. The results show that changes in oil prices mainly pass through to core inflation (or rather to inflation excluding food and energy products) by means of macroeconomic factors; while the effect is limited, it is statistically different from zero and persists over time.
    Keywords: Core inflation, oil price, dynamic factor model, pass-through, disaggregate consumer prices
    JEL: C32 E31 E32 Q43
    Date: 2017–11
  30. By: Ahmed, Khalid; Bhutto, Niaz Ahmed; Kalhoro, Muhammad Ramzan
    Abstract: This study examines the impact of oil price shocks on key macroeconomic variables (i.e., real GDP, interest rate, inflation and exchange rate) for five SAARC countries (i.e., India, Pakistan, Bangladesh, Sri Lanka and Bhutan). For this purpose, we adopt contemporary macroeconomic policy modeling tool called impulse response function (IRF) and forecast error variance decomposition method (FEVDM) in the structural vector autorepression (SVAR) setting using time series data over the extended period from 1982 to 2014. In addition, Johansen and Juselius (1990) cointegration method is applied for long-run relationship. The results of cointegration test confirms the long-run equilibrium relationship between all the underlying variables. However, the empirical findings of IRF explained significant variation among all underlying macroeconomic variables in response to exogenous oil price shocks at different time horizons. It means the macroeconomic factors are sensitive to even small oil price shocks and possess various socio-economic implications in the region. The results of FEVDM evidence that each country in a study group responds differently to oil price shocks, it corresponds their independent policies, macroeconomic fundamentals, sector constructions and heterogeneity across the countries. The findings help governments to reform public policies in the region by controlling macroeconomic fluctuations due to oil price shocks.
    Keywords: Oil price shocks; Interest rate; GDP; SAARC; SVAR model
    JEL: E2 E20 E4 E64 O4
    Date: 2017–12–01
  31. By: Afees A. Salisu (Centre for Econometric and Allied Research, University of Ibadan); Idris Adediran (Department of Economics, Obafemi Awolowo University, Nigeria.)
    Abstract: The US is committed to technological improvements in horizontal drilling and hydraulic fracturing in its drive of toppling the world’s leading oil producers by the mid-2020s and evolving into a net oil exporter by 2030. Consequently, the technological innovations revolutionised the US oil sector and the international oil market with increasing relevance of the shale oil and attendant shock spill overs to financial and commodity markets. Upon these attractions and consistent with evidence in the literature, we trace the oil price and commodity price dynamics to the shale revolution using a recursive structural VAR model of the shale supply shocks. In line with the standard practice of ensuring sensitivity of results, we also conduct analyses such as impulse responses, forecast-error variance decomposition and historical decompositions for the total US oil production shocks. We show that the shale revolution, rather than the total US oil supply shocks, is associated with the recent oil price plunge while both oil supply shocks are associated with mild shock spill over to all- and nonfuel- commodity prices.
    Keywords: US, Shale revolution, oil shocks, commodity prices, SVAR
    Date: 2018–02
  32. By: Jean-Pierre Allegret (Université Côte d'Azur, France; GREDEG CNRS); Mohamed Tahar Benkhodjay (ESSCA, School of Management); Tovonony Razafindrabe (CREM, Université Rennes 1)
    Abstract: This paper contributes to the literature on the Dutch disease effect in a small open oil exporting economy. Specifically, our contribution to the literature is twofold. On the one hand, we formulate a DSGE model in line with the balanced-growth path theory. On the other hand, besides alternative monetary rules, the model introduces an oil stabilization fund, an oil price rule, and a fiscal rule. Our aim is to analyze to what extent the combinations between our alternative monetary rules and fiscal policy are effective to prevent a Dutch disease effect in the aftermath of a positive oil price shock. Our main findings show that the Dutch disease, through the spending effect, occurs only in the case of inflation targeting regime. An expansionary fiscal policy contributes to improve the state of the economy through its impact on the productivity of the manufacturing sector.
    Keywords: Monetary Policy, Oil Stabilization Fund, Dutch disease, Oil Prices, DSGE model
    JEL: E52 F41 Q40
    Date: 2018–03
  33. By: Gabriel E. Lade (Center for Agricultural and Rural Development (CARD)); Sebastien Pouliot (Center for Agricultural and Rural Development (CARD)); Bruce A. Babcock
    Abstract: An understanding of several technical and economic factors is needed to understand the current discussions about the RFS and E15. Here we briefly discuss how the EPA could implement a RIN price cap. We then summarize how fuel content restrictions currently limit year-round sales of mid-ethanol blend fuels. Last, we summarize the role of RINs in incentivizing consumption of high ethanol-blend fuels.
    Date: 2018–03
  34. By: Dipak Dasgupta; Etienne Espagne (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement); Jean Charles Hourcade (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement); Irving Mintzer (JHU - Johns Hopkins University); Seyni Nafo; Baptiste Perrissin Fabert (CGDD - Commissariat Général au Développement Durable - Ministère de l'Ecologie, du Développement Durable, des Transports et du Logement); Nick Robins; Alfredo Sirkis
    Keywords: Paris Agreement,COP 21,Climate finance
    Date: 2018–01–25
  35. By: Dominique Bureau; Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Katheline Schubert
    Abstract: To limit greenhouse-gas emissions, is it necessary to restrict international trade? By dissociating where products are produced from where they are consumed, international trade contributes significantly to greenhousegas emissions worldwide, especially when goods are transported. It also displaces the location of emissions: the consumption-induced carbon footprint of OECD countries is higher than their level of emissions. Large emerging countries find themselves in the opposite case. However, halting international trade would be particularly ineffective to reduce GHG emissions. According to oursimulations, raising average import tariffs to 17% (as opposed to current 5%, except for agricultural products) and accepting a fall in aggregate production of 1.8% would only lead to 3.5% GHG emission reduction by 2030. We confirm that a uniform and moderate import tariff imposed by a “club” of countries adopting ambitious and binding policies to fight climate change, against all imports from countries outside of the club, would be effective.
    Keywords: international trade, international transport, greenhouse gas emissions
    Date: 2017–01–30
  36. By: Alarcon, J. V.; Ernst, C.
    Abstract: Climate change is a challenge world-wide; hence countries must adjust their economies as well as their labour markets. Recently, most economies attempt to shift to more environmentally friendly consumption and production patterns as well as compatible technologies, among others, to improve labour conditions and reduce emissions. The Green Jobs Social Accounting Matrix (GJ- SAM) -based analysis, combined with scenario simulation, has the ambition to provide helpful inputs for policy discussion and decision-making. The results based on the analysis of derived SAM model indicators and two sets of simulations results form the core of this study. The scenario simulations refer to a counter-factual of a fiscal stimulus package that can help test green-jobs sectors performance vis-à-vis brown-jobs sectors, in particular, and hybrid sectors, in general, by providing insights into how to comparatively evaluate policies aimed at shifting towards ecologically friendly technologies. This study shows that shifting towards a green economy may help reducing green-house gas emissions in Indonesia, however, as expected, the process situation is more complex and less straightforward. It also shows clearly the inter-dependencies between the economic, the environmental and the labour spheres; hence a successful sustainable and inclusive development strategy would need to take into account all three spheres simultaneously.
    Keywords: 1, 2, 3, 4
    Date: 2017
  37. By: Vasilev, Aleksandar
    Abstract: This paper characterized optimal fiscal policy - with environmental taxes, and public spending on abatement - in the presence of pollution, and evaluated it relative to the exogenous (observed) one in Bulgaria, an economy with a largely unreformed and polluting industry. The results are evaluated in light of the optimal environmental taxation of dirty production and the optimal spending on abatement, and the effect of those fiscal measures on the utility-enhancing environmental quality. To this end, a dynamic general-equilibrium model is calibrated to Bulgarian data (1999-2016). The main findings from the computational experiments performed are: (i) The optimal steady-state income tax rate is zero; (ii) The benevolent Ramsey planner provides twenty percent higher utility-enhancing environmental quality; (iii) The optimal level of carbon taxes is almost three times higher, and the optimal level of abatement spending is six times higher; (iv) The optimal steady-state consumption tax is twice lower.
    Keywords: Ramsey policy,pollution,environmental tax,environmental quality
    JEL: C68 Q58
    Date: 2018
  38. By: Mohamed BOLY
    Abstract: This paper empirically investigates the link between foreign aid and pollution, specifically CO2 emissions in developing countries. We use a more complete and recent dataset to re-assess the environmental impact of foreign aid. Focusing on 112 aid recipient countries over the period 1980 - 2013, we find that the effect of aid depends on the donor, with multilateral aid more likely to reduce pollution than bilateral aid for which we find no effect. However, when we more precisely look at the composition of bilateral aid, we find it has an effect when specifically targeted toward environment. This effect is non-linear, since we observe a pollution-reducing effect only for important amounts of bilateral environmental aid.
    Keywords: CO2 emissions, Foreign aid, Environmental aid, Threshold effect.
    JEL: Q54 Q53 O11 F35 E6
    Date: 2018–03
  39. By: Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Jean Fouré (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)
    Abstract: S’il constitue une avancée, l’Accord de Paris, entré en vigueur en novembre 2016, pose un certain nombre de questions, notamment quant à la responsabilité « commune mais différenciée » – qui se traduit par des engagements très variables d’un pays signataire à l’autre –, mais aussi concernant l’articulation entre politique climatique et politique commerciale. Pour réduire les émissions de gaz à effet de serre (GES), une politique commerciale ferait-elle mieux qu’une politique climatique ? À défaut, pourrait-elle inciter à des engagements plus ambitieux de réduction des émissions ? Cette Lettre montre, à partir de simulations d’un modèle dynamique de l’économie mondiale développé au CEPII, que la politique commerciale seule n’est pas un bon outil pour limiter les émissions de CO2, mais qu’elle peut venir compléter une politique plus ambitieuse.
    Keywords: gaz à effet de serre, protectionnisme, commerce international,climat
    Date: 2017–01–25
  40. By: Vasilev, Aleksandar
    Abstract: We introduce an environmental dimension into a real-business-cycle model augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We investigate the quantitative importance of utility-enhancing environmental quality, and the mechanics of environmental ("carbon") tax on polluting production, as well as the effect of government spending on pollution abatement over the cycle. In particular, a positive shock to pollution emission in the model works like a positive technological shock, but its effect is quantitatively very small. Allowing for pollution as a by-product of production improves the model performance against data, and in addition this extended setup dominates the standard RBC model framework, e.g., Vasilev (2009).
    Keywords: Business cycles,pollution,environmental quality,environmental tax,abatement spending
    JEL: E32 C68 Q58
    Date: 2018

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