nep-ene New Economics Papers
on Energy Economics
Issue of 2018‒04‒16
forty papers chosen by
Roger Fouquet
London School of Economics

  1. Policy options for a decarbonisation of passenger cars in the EU: Recommendations based on a literature review By Damert, Matthias; Rudolph, Frederic
  2. Mirage on the Horizon: Geoengineering and Carbon Taxation Without Commitment By Daron Acemoglu; Will Rafey
  3. Understanding the US natural gas market: A Markov switching VAR approach By Chenghan Hou; Bao H. Nguyen
  4. Electricity consumption and economic growth: A panel data approach to BRICS countries By Hlalefang Khobai
  5. Regulating Mismeasured Pollution: Implications of Firm Heterogeneity for Environmental Policy By Eva Lyubich; Joseph S. Shapiro; Reed Walker
  6. How natural gas tariff increases can influence poverty: results, measurement constraints and bias By Krauss, Alexander
  7. Investment-Uncertainty Relationship in the Oil and Gas Industry By Maryam, Ahmadi; Matteo, Manera; Mehdi, Sadeghzadeh;
  8. Coal Demand, Market Forces, and US Coal Mine Closures By Brett Jordan; Ian Lange; Johsua Linn
  9. Optimal Scheduling of Greenhouse Gas Emissions under Carbon Budgeting and Policy Design By Elettra Agliardi; Anastasios Xepapadeas
  10. Renewable energy consumption and economic growth in Indonesia. Evidence from the ARDL bounds testing approach By Khobai, Hlalefang
  11. Effect of natural resources extraction on energy consumption and carbon dioxide emission in Ghana By Kwakwa, Paul Adjei; Alhassan, Hamdiyah; Adu, George
  12. Optimal Stabilization in an Emission Permits Market By Reyer Gerlagh; Roweno J.R.K. Wan
  13. The Long-Run Decoupling of Emissions and Output: Evidence from the Largest Emitters By Gail Cohen; João Tovar Jalles; Prakash Loungani; Ricardo Marto
  14. Carbon emissions and economic growth in South Africa: A quantile regression approach By Babalwa Mapapu; Andrew Phiri
  15. Regional Climate Change Policy under Positive Feedbacks and Strategic Interactions By William Brock; Anastasios Xepapadeas
  16. Investigating the linkage between Renewable Energy Consumption and Economic Growth: The case of Turkey By Khobai, Hlalefang
  17. Establishing National Carbon Emission Prices for China By Chia-Lin Chang; Te-Ke Mai; Michael McAleer
  18. Does renewable energy consumption drive economic growth: Evidence from granger-causality techniques By Hlalefang Khobai; Pierre Le Roux
  20. Renewable energy consumption and economic growth in Argentina: A multivariate co-integration analysis By Hlalefang Khobai
  21. A Review of the Nexus Between Energy consumption and Economic growth in the Brics countries By Hlalefang Khobai; Sanderson Abel; Pierre Le Roux
  22. Causal effects of PetroCaribe on sustainable development: a synthetic control analysis By Acel Jardón; Onno Kuik; Richard S.J. Tol
  23. The timing of environmental tax policy with a consumer-friendly firm By Leal, Mariel; Garcia, Arturo; Lee, Sang-Ho
  24. Spatially Structured Deep Uncertainty, Robust Control, and Climate Change Policies By Anastasios Xepapadeas; Athanasios Yannacopoulos
  25. Eco-strategies and firm growth in European SMEs By Jové Llopis, Elisenda,; Segarra Blasco, Agustí, 1958-
  26. Benefits and Challenges of Expanding Grid Electricity in Africa: A review of Rigorous Evidence on Household Impacts in Developing Countries By Kristine Bos; Duncan Chaplin; Arif Mamun
  27. City Size, Pollution and Emission Policies By Pflüger, Michael P.
  28. Climate change : Behavioral responses from extreme events and delayed damages By Ghidoni, Riccardo; Calzolari, Giacomo; Casari, Marco
  29. Suspended in legal limbo: Protecting investment in renewable energy in the EU By Alessi, Monica; Núñez Ferrer,Jorge; Egenhofer, Christian
  30. Elecricity intensity and unemployment in South Africa: A quantile regression analysis By Tafadzwa Ruzive; Thando Mkhombo; Simba Mhaka; Nomahlubi Mavikela; Andrew Phiri
  31. China's Footprint in Global Commodity Markets By Christina Kolerus; Papa M N'Diaye; Christian Saborowski
  32. Spatiotemporal distribution of inclusive wealth data: An illustrated guide By Halkos, George; Managi, Shunsuke; Tsilika, Kyriaki
  33. Energy Security, Employment and the Policy-Industry Interlock: Explaining the Role of Multi-Scalar Socio-Spatial Embeddedness in Industry Destabilization By Silver Sillak; Laur Kanger
  34. Congestion Pricing, Air Pollution and Children’s Health By Emilia Simeonova; Janet Currie; Peter Nilsson; Reed Walker
  35. Prediction bands for solar energy: New short-term time series forecasting techniques By Michel Fliess; Cédric Join; Cyril Voyant
  36. Interacting collective action problems in the commons By Nicolas Querou
  37. Climate Policy under Cooperation and Competition between Regions with Spatial Heat Transport By Yongyang Cai; William Brock; Anastasios Xepapadeas; Kenneth Judd
  38. Energy for Sustainable Development By Anonymous
  39. Water Energy and Food Security Nexus By Anonymous
  40. Environmental Kuznets Curve (EKC): A Review of Theoretical and Empirical literature By Usenata, Nnyeneime

  1. By: Damert, Matthias; Rudolph, Frederic
    Abstract: In this policy paper we discuss policy instruments which can help to decarbonise passenger cars in the European Union. We elaborate to what extent these policy instruments are effective, technology-neutral, predictable, cost-effective and enforceable. Based on these criteria, we develop recommendations for the European Union and its Member States on (1) how to shape their policy frameworks in order to achieve existing climate change mitigation targets; (2) how to support car manufacturers in selling innovative and competitive products; and (3) how to encourage consumers in Europe to purchase appropriate vehicles. We conclude that favourable policy instruments are used, but there is a strong need for adjustment and further development. The effectiveness of the current EU emission standard should be further increased by turning away from granting "supercredits" and introducing a size-based (instead of weight-based) credit system. Moreover, its overall ambition is questionable and the existing compliance mechanisms should be sharpened. Fuel taxes are an effective means to push consumers to buy energy-efficient cars. However, a sharp increase may not have the desired effects. Instead, the Member States should harmonise their excise duties at the level of those Member States, which currently impose the highest taxes (Netherlands, Italy). This includes the abolition of any diesel tax bonus. An introduction and harmonisation of vehicle taxes (purchase and circulation) should be based on a vehicle's energy consumption. Additionally, reformation efforts should aim to change the taxation of company cars in a way that vehicle sizes are reduced over time. Ambitious Member States may also want to introduce a sales quota for electric vehicles. Sales quotas are a very cost-effective policy instrument provided that the mandated technology will achieve a certain market share. This may be assumed for battery-electric vehicles. Further supportive instruments that should be considered are eco-labelling, public procurement and purchase incentives. However, the latter instrument's effectiveness is debatable and its implementation should therefore not be a Member State's priority.
    Date: 2018
  2. By: Daron Acemoglu; Will Rafey
    Abstract: We show that, in a model without commitment to future policies, geoengineering breakthroughs can have adverse environmental and welfare effects because they change the (equilibrium) carbon taxes. In our model, energy producers emit carbon, which creates a negative environmental externality, and may decide to switch to cleaner technology. A benevolent social planner sets carbon taxes without commitment. Higher future carbon taxes both reduce emissions given technology and encourage energy producers to switch to cleaner technology. Geoengineering advances, which reduce the negative environmental effects of the existing stock of carbon, decrease future carbon taxes and thus discourage private investments in conventional clean technology. We characterize the conditions under which these advances diminish - rather than improve - environmental quality and welfare.
    JEL: C65 O30 O31 O33 Q01 Q4 Q54 Q55 Q58
    Date: 2018–03
  3. By: Chenghan Hou; Bao H. Nguyen
    Abstract: Over the past three decades, the US natural gas market has witnessed significant changes. Utilizing a standard Bayesian model comparison method, this paper formally determines four regimes existing in the market. It then employs a Markov switching vector autoregressive model to investigate the regime-dependent responses of the market to its fundamental shocks. The results reveal that the US natural gas market tends to be much more sensitive to shocks occurring in regimes existing after the Decontrol Act 1989 than the other regimes. The paper also finds that shocks to the natural gas demand and price have negligible effects on natural gas production while the price of natural gas is mainly driven by specific demand shocks. Augmenting the model by incorporating the price of crude oil, the results show that the impacts of oil price shocks on natural gas prices are relatively small and regime-dependent.
    Keywords: Natural gas market, Bayesian model comparison, Markov Switching VAR model
    JEL: C32 E32 Q4
    Date: 2018–04
  4. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University)
    Abstract: This paper serves to investigate the causal relationship between electricity consumption and economic growth in the Brics countries during the period 1990 – 2014. Carbon dioxide emissions and urbanisation were included as additional variables to form a multivariate framework. The Kao panel co-integration and Johansen Fisher panel co-integration techniques are applied to analyse the co-integration relationship between the variables while the Vector Error Correction Model (VECM) Granger-causality test is used to estimate the causality relationship among the variables. The study’s results reveal that there is a long run relationship between the variables. The research outcome further detected a unidirectional causality flowing from economic growth to electricity consumption in the long run in Brics countries. So in the light of determination of the study, the policy implication is that a significant transformation of low carbon technologies such as renewable energy should be implemented to curb the emissions and sustain economic growth and development.
    Keywords: Energy consumption, Economic growth, Causality, BRICS countries
    JEL: D04 Q43 Z00
    Date: 2017–08
  5. By: Eva Lyubich (UC Berkeley); Joseph S. Shapiro (Cowles Foundation, Yale University); Reed Walker (University of California, Berkeley, IZA, & NBER)
    Abstract: This paper provides the first estimates of within-industry heterogeneity in energy and CO2 productivity for the entire U.S. manufacturing sector. We measure energy and CO2 productivity as output per dollar energy input or per ton CO2 emitted. Three findings emerge. First, within narrowly de ned industries, heterogeneity in energy and CO2 productivity across plants is enormous. Second, heterogeneity in energy and CO2 productivity exceeds heterogeneity in most other productivity measures, like labor or total factor productivity. Third, heterogeneity in energy and CO2 productivity has important implications for environmental policies targeting industries rather than plants, including technology standards and carbon border adjustments.
    JEL: F18 H23 Q56
    Date: 2018–01
  6. By: Krauss, Alexander
    Abstract: Energy tariff increases are generally essential to address environmental and fiscal concerns but they can also push households into poverty. This paper estimates the expected poverty and distributional effects of a significant natural gas tariff reform in the context of Armenia that increased the country’s residential tariff by about 40%. It is the first paper in the literature on energy tariff reforms to simultaneously try and control for substitution between all major energy sources (not just some), to take into account the seasonality of consumption over the full annual cycle, and to apply different methods to assess changes in household consumption on natural gas and shifts in natural gas between main and supplementary heating sources. Existing papers thus generally overestimate the potential effects of energy price increases on household welfare. The results here – which face, like any statistical study, a set of important methodological constraints – suggest nonetheless that this significant tariff increase led to an estimated 8% of households shifting away from gas, mainly towards wood, as their heating source. It consequently resulted in an estimated 2.8% of households falling below the national poverty line, while likely also influencing non-monetary human welfare that cannot be well captured econometrically. Finally, methodological assumptions and limitations in assessing these relationships, as well as potential policy implications are outlined.
    Keywords: Energy price reform; Gas tariff increase; Methodological issues; Methods; Poverty; Armenia
    JEL: B4 D12 D60 Q41 Q48
    Date: 2016–11–01
  7. By: Maryam, Ahmadi; Matteo, Manera; Mehdi, Sadeghzadeh;
    Abstract: Recent studies on oil market demonstrate endogeneity of oil price by modeling it as a function of consumption and precautionary demands and producers’ supply. However, studies analysing the effect of oil price uncertainty on investment, do not disentangle uncertainties raised by underlying components playing a role in oil market. Accordingly, this study investigates the relationship between investment and uncertainty for a panel of U.S. firms operating in oil and gas industry with a new approach. We decompose oil price volatility to be driven by structural shocks that are recognized in oil market literature, over and above other determinants, to study whether investment uncertainty relationship depends on the drivers of uncertainty. Our findings suggest that oil market uncertainty lowers investment only when it is caused by global consumption demand shocks. Stock market uncertainty is found to have a negative effect on investment with a year of delay. The results suggest no positive relation between irreversible investment and uncertainty, but interestingly, positive relation exists for reversible investment. This finding is in line with the option theory of investment and implies that irreversibility effect of increased uncertainty dominates the traditional convexity effect.
    Keywords: Oil Market, Investment, Uncertainty, SVAR-GARCH
    JEL: C3 G11 Q41 Q43
    Date: 2018–04–10
  8. By: Brett Jordan (University of Alaska Anchorage); Ian Lange (Division of Economics and Business, Colorado School of Mines); Johsua Linn (University of Maryland and Resources for the Future)
    Abstract: Economic transitions have the potential to displace workers and cause social unrest. Coal mine closures in the eastern United States due to the changing electricity system and the resulting employment losses in rural areas have become salient issues for all levels of government. Previous research has not distinguished among the potential causes of recent mine closures, such as rising production costs and decreasing coal demand from the electricity sector. This analysis utilizes unique data on coal mine and power plant operation to estimate the impact of supply and demand factors on mine closure. We model closure as a function of expected profits, which allows us to compare the effects on mine closure of specific demand and supply shocks to expected mine profits. Our results suggest that each shock substantially affected coal mine employment. Increasing costs of producing Appalachian coal have had the largest impact on closures with lower natural gas prices and lower electricity demand each accounting for a substantial number of closures additionally.
    Keywords: Coal Mining; Firm Exit; Fuel Procurement
    JEL: L51 L71 Q53
    Date: 2018–04
  9. By: Elettra Agliardi (University of Bologna); Anastasios Xepapadeas
    Abstract: We solve a problem of optimal scheduling of GHG emissions for a climate change policy that is consistent with the COP21 targets and has to be monitored at a fixed time horizon. Our model is dynamic and stochastic where production, and therefore well-being, increase in carbon emissions, but, at the same time, anthropogenic cumulative emissions determine a super-linear impact on the observed stochastic damage. We compare the optimal unconstrained path of emissions and the constrained path of emissions and evaluate when the carbon budget is exhausted. A sensitivity analysis is also developed to examine the effects of resilience, impact of emissions on damage and uncertainty. Our results have direct implications in terms of policy and show that uncertainty and the way we introduce it in the model are likely to influence the efficacy of the climate change policies for the foreseeable future
    Date: 2018–01–18
  10. By: Khobai, Hlalefang
    Abstract: This study serves to examine the effects of renewable energy consumption on economic growth in Indonesia. Quarterly time series data was used for the period 1990 – 2014. Applying the autoregressive distributed lag (ARDL) bounds testing approach, the study established that there is a long run relationship between economic growth, renewable energy consumption, carbon dioxide emissions, capital and employment. It is established that renewable energy consumption has a significant positive effect on economic growth both in the long run and short run. The findings from the vector error correction model (VECM) technique suggest that there is a long run causality flowing from renewable energy consumption, carbon dioxide emissions, capital and employment to economic growth. The findings of this study suggest that the government, energy policy makers and associated bodies should act together to improve on the renewable energy infrastructure and lower carbon growth in Indonesia
    Keywords: Renewable energy consumption, Economic growth, Co-integration, Causality, Indonesia
    JEL: C32 D04 Q01 Q42 Q47
    Date: 2018–03–09
  11. By: Kwakwa, Paul Adjei; Alhassan, Hamdiyah; Adu, George
    Abstract: Even though many studies have attempted to understand the drivers of carbon dioxide emission and energy consumption to help tackle environmental issues, not much has been done to estimate the effect of natural resources extraction on these two variables. This study analyzes the long run environmental effect of natural resources extraction in Ghana under the Stochastic Impacts by Regression on Population, Affluence and Technology model for the period of 1971-2013. Estimation results indicate that income, urbanization, and extraction of natural resources contribute to Ghana’s environmental problems of rising carbon emission and energy consumption. However, international trade is found to reduce carbon emission. The implications from the results are discussed and the paper recommends among other things the need to strictly enforce laws regulating extractive activities in the country to ensure safe environment; and also to raise tariff and non-tariff barriers on products that do not promote friendly environment and vice versa.
    Keywords: CO2 emission; energy consumption; Ghana; STIRPAT model; mining; natural resources
    JEL: O2 Q4 Q5
    Date: 2018–03–20
  12. By: Reyer Gerlagh; Roweno J.R.K. Wan
    Abstract: We develop a 2-period emission trading model for a stock pollutant with demand shocks resolving over time. We find precise conditions for efficiency of a stabilization mechanism where cumulative available permits decrease with excess supply in early periods. Our model describes the stabilization rule, and identifies optimal parameters. The market stability mechanism substantially increases welfare, increases the domain of parameter values where (Stabilized) Banking outperforms Prices, and reduces price volatility. Our findings are important for emission trading schemes worldwide, such as California's Global Warming Solutions Act Scoping Plan, the U.S. Regional Greenhouse Gas Initiative, EU-ETS, and China's National ETS, the world’s largest carbon market.
    Keywords: prices, quantities, emission trading, regulatory instruments, pollution, climate change
    JEL: H23 Q54 Q58
    Date: 2018
  13. By: Gail Cohen; João Tovar Jalles; Prakash Loungani; Ricardo Marto
    Abstract: For the world's 20 largest emitters, we use a simple trend/cycle decomposition to provide evidence of decoupling between greenhouse gas emissions and output in richer nations, particularly in European countries, but not yet in emerging markets. If consumption-based emissions—measures that account for countries' net emissions embodied in cross-border trade—are used, the evidence for decoupling in the richer economies gets weaker. Countries with underlying policy frameworks more supportive of renewable energy and climate change mitigation efforts tend to show greater decoupling between trend emissions and trend GDP, and for both production- and consumption-based emissions. The relationship between trend emissions and trend GDP has also become much weaker in the last two decades than in preceding decades.
    Date: 2018–03–13
  14. By: Babalwa Mapapu (Department of Economics, Nelson Mandela University); Andrew Phiri (Department of Economics, Nelson Mandela University)
    Abstract: Of recent carbon emissions have become an increasing concern for economies worldwide. In this study we investigate the relationship between carbon emissions and economic growth for the South African economy, one of the largest emitters of carbon dioxide worldwide. We employ the quantile regression methodology which is applied to annual data covering a period of 1970 to 2014. Our empirical results indicate that very low levels of carbon emissions are most beneficial towards economic growth. Our results thus encourage policymakers to continue to embark on energy efficiency programmes which specifically target lower levels of carbon pollution.
    Keywords: Carbon Emissions, Economic growth, Environmental Kuznets curve, South Africa, Quantile regressions.
    JEL: C13 C32 C51 Q43 Q53
    Date: 2017–10
  15. By: William Brock; Anastasios Xepapadeas
    Abstract: The surface albedo feedback, along with heat and moisture transport from the Equator to the Poles, is associated with polar amplification which is a well-established scientific fact. The present paper extends Brock and Xepapadeas (2017a) to a non-cooperative framework with polar amplification, where regions decide emissions by maximizing own welfare. This can be regarded as a case of regional non-cooperation regarding climate change.Open loop and feedback solutions are derived and compared, in terms of temperature paths and welfare, with the cooperative solution. Carbon taxes which could bridge the gap between cooperative and non-cooperative emissions path are also derived. Finally, the framework is extended to a Ramsey set-up in which it is shown how the regional climate model can be coupled with standard optimal growth models. Numerical simulations confirm the theoretical results and provide insights about the size and the direction of deviations between the cooperative and the non-cooperative solutions.
    Keywords: Arctic amplification, Spatial heat and moisture transport, Optimal policy, Emission taxes, Open loop, Feedback Nash Equilibrium
    JEL: Q54 Q58
    Date: 2018–02–20
  16. By: Khobai, Hlalefang
    Abstract: The study purposes to investigate the relationship between renewable energy consumption and economic growth in Turkey using annual data covering the period 1990–2014. The Autoregressive Distributed Lag (ARDL) model is applied and the findings suggest existence of a long run relationship among the variables. The ARDL long run estimation results discovered that renewable energy consumption has a positive and significant effect on economic growth. The results from the Vector Error Correction Model (VECM) reveals that there is a unidirectional causality flowing from economic growth to renewable energy consumption without feedback. This findings bring a fresh perspective for policy makers for long run and sustainable economic development in Turkey.
    Keywords: Renewable energy consumption, Economic growth, Causality, Turkey
    JEL: C32 D04 Q01 Q42 Q47
    Date: 2018–03–09
  17. By: Chia-Lin Chang (National Chung Hsing University, Taiwan); Te-Ke Mai (National Tsing Hua University, Taiwan); Michael McAleer (Asia University, Taiwan; Erasmus University Rotterdam, The Netherlands)
    Abstract: The purpose of the paper is to establish national carbon emissions prices for the People’s Republic of China, which is one of the world’s largest producers of carbon emissions. Several measures have been undertaken to address climate change in China, including the establishment of a carbon trading system. Since 2013, eight regional carbon emissions markets have been established, namely Beijing, Shanghai, Guangdong, Shenzhen, Tianjin, Chongqing, Hubei and Fujian. The Central Government announced a national carbon emissions market, with power generation as the first industry to be considered. However, as carbon emissions prices in the eight regional markets are very different, for a variety of administrative reasons, it is essential to create a procedure for establishing a national carbon emissions price. The regional markets are pioneers, and their experience will play important roles in establishing a national carbon emissions market, with national prices based on regional prices, turnovers and volumes. The paper considers two sources of regional data for China’s carbon allowances, which are based on primary and secondary data sources, and compares their relative strengths and weaknesses. The paper establishes national carbon emissions prices based on the primary and secondary regional prices, for the first time, and compares both national prices and regional prices against each other. The carbon emission prices in Hubei, Guangdong, Shenzhen and Tianjin are highly correlated with the national prices based on the primary and secondary sources. Establishing national carbon emissions prices should be very helpful for the national carbon emissions market that is under construction in China, as well as for other regions and countries worldwide.
    Keywords: Pricing Chinese carbon emissions; National pricing policy; Energy; Volatility; Energy finance; Provincial decisions
    JEL: C22 C58 G12 Q48
    Date: 2018–03–30
  18. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University); Pierre Le Roux (Department of Economics, Nelson Mandela University)
    Abstract: This study investigates the causal relationship between renewable energy consumption and economic growth in South Africa. It incorporates carbon dioxide emissions, capital formation and trade openness as additional variables to form a multivariate framework. Quarterly data is used for the period 1990 – 2014 and is tested for stationarity using the Augmented Dickey Fuller (ADF), Dickey Fuller Generalised Least Squares (DF-GLS) and Phillips and Perron (PP) unit root tests. The study employs the Autoregressive distributed lag (ARDL) model to examine the long run relationship among the variables. Lastly, the study determines the direction of causality between the variables using the Vector Error Correction Model (VECM). The results validated an existence of a long run relationship between the variables. Moreover, a unidirectional causality flowing from renewable energy consumption to economic growth was established in the long run. The short run results suggested a unidirectional causality flowing from economic growth to renewable energy consumption. The findings of the study suggest that an appropriate and effective public policy is required in the long run, while considering sustainable economic growth and development.
    Keywords: Renewable energy consumption, Economic growth, Causality, South Africa.
    JEL: C22 C23 Q43
    Date: 2017–08
  19. By: Sonia Benghida (Woosong University); Djamil Benghida (Department of Architecture - Dong-A University)
    Abstract: The year 2017 has been dominated by a series of events and challenges, which among them the oil market is still challenged by high stocks and slow prices development. The overall events can be resumed to: a) OPEC and allied nations are trying to make gains in curbing oil output, not only they extend their cuts, but they also adhere to them, b) US oil production will keep growing and keep costs down, and c) oil demand growth is recently strengthening. This paper intends to answer the question: what is the current state of the oil and gas industry and where is it heading? Since July 2014, the oil market is in a contango situation, i.e., a situation where the future price is above the expected future spot price. The market structure has been benefiting American manufacturers for almost 3 years, and this is the order that OPEC is currently trying to subvert. Much of the oil and gas industry has survived tough years with weak demand and low prices. This article describes first the evolution of the price of gas and oil in the main oil markets and second the rebalancing of the market that can push the price level upwards affecting positively the future equilibrium of many countries.
    Keywords: Contango market,Gas market,Oil market,Strategic plan,Shale gas
    Date: 2018
  20. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University)
    Abstract: This paper applied the ARDL bounds test approach and the VECM test technique to examine the long run relationship and direction of causality between renewable energy consumption and economic growth in Argentina. Quarterly time series data was employed in this study covering a period between 1990 and 2014. Trade openness, capital and employment were included in the study to form a multivariate framework. The results established that there is a long run relationship between the variables. The VECM test technique confirmed a unidirectional causality flowing from economic growth to renewable energy consumption. This implies that energy conservation policies may not harm the economic growth. The study, therefore, suggest that an appropriate and effective energy policy should be implemented in the long run.
    Keywords: Renewable energy consumption, Economic growth, Causality, Argentina.
    JEL: D04 Q47 Q42 Q01
    Date: 2018–01
  21. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University); Sanderson Abel (Bankers Association of Zimbabwe); Pierre Le Roux (Department of Economics, Nelson Mandela University)
    Abstract: The study investigates the long run relationship and causal relationship between energy consumption and economic growth in the Brics countries during the period 1990 – 2013. The Pedroni panel co-integration method is applied to analyse the co-integration relationship among the variables. The causality relationship among the variables is analysed using Pair-wise Granger-causality technique. The study’s results reveal that there is a long run relationship between economic growth, energy consumption, employment and trade openness in Brics countries. The research outcome further detected a unidirectional causality flowing from economic growth to energy consumption. This implies that the conservation policies that curb unnecessary loss in energy could be implemented in the Brics countries without adversely affecting economic growth.
    Keywords: Energy consumption, Economic growth, Causality, Brics countries.
    JEL: C22 C23 Q43
    Date: 2017–11
  22. By: Acel Jardón (Institute for Environmental Studies, Vrije Universiteit, Amsterdam); Onno Kuik (Institute for Environmental Studies, Vrije Universiteit, Amsterdam); Richard S.J. Tol (Department of Economics, University of Sussex; Department of Spatial Economics, Vrije Universiteit, Amsterdam; Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Tinbergen Institute, Amsterdam; CESifo, Munich)
    Abstract: We examine the causal effects of the energy subsidy programme PetroCaribe in the three dimensions of sustainable development: economic, social and environmental. We use the synthetic control method to construct a counterfactual and compare it to the outcomes of the beneficiary countries and thus estimate the magnitude and direction of the PetroCaribe effect. PetroCaribe had a positive effect on economic growth in most of the beneficiary countries without a deterioration of their environmental quality. However, this economic boost was not followed by an improvement in social development.
    Keywords: energy subsidy; synthetic control method; sustainable development
    JEL: Q43 Q48 Q54 Q56
    Date: 2018–04
  23. By: Leal, Mariel; Garcia, Arturo; Lee, Sang-Ho
    Abstract: This study considers a Cournot duopoly model with a consumer-friendly firm and analyzes the interplay between the strategic choice of abatement technology and the timing of government’s commitment to the environmental policy. We show that the optimal emission tax under committed policy regime is always higher than that under non-committed one, but both taxes can be higher than marginal environmental damage when the consumer-friendliness is high enough. We also show that the non-committed policy will induce not only more outputs and higher profits but also more abatement and less emissions when the consumer-friendliness is high and the efficiency of abatement technology is not so high. Thus, the emergence of a consumer-friendly firm might yield better outcomes to both welfare and environmental quality without the commitment to the environmental policy.
    Keywords: abatement technology; commitment; consumer-friendly firm; environmental policy; emission tax
    JEL: L13 L31 Q58
    Date: 2018–03–03
  24. By: Anastasios Xepapadeas; Athanasios Yannacopoulos
    Abstract: In view of the ambiguities and the deep uncertainty associated with climate change, we study the features of climate change policies that account for spatially structured ambiguity. Ambiguity related to the evolution of the damages from climate change is introduced into a coupled economy-climate model with explicit spatial structure due to heat transport across the globe. We seek to answer questions about how spatial robust regulation regarding climate policies can be formulated; what the potential links of this regulation to the weak and strong version of the precautionary principle (PP) are; and how insights about whether it is costly to follow a PP can be obtained. We also study the emergence of hot spots, which are locations where local deep uncertainty may cause robust regulation to break down for the whole spatial domain.
    Keywords: Climate change, ambiguity, robust control, spatial regulation
    JEL: Q54 R11 D81 C61
    Date: 2018–03–27
  25. By: Jové Llopis, Elisenda,; Segarra Blasco, Agustí, 1958-
    Abstract: This study investigates the effects of eco-strategies on firm performance in terms of sales growth in an extensive sample of 11,336 small and medium-sized enterprises (SMEs) located in 28 European countries. Our empirical results suggest that not all eco-strategies are positively related to better performance, at least not in the short term. We find that European companies using renewable energies, recycling or designing products that are easier to maintain, repair or reuse perform better. Those that aim to reduce water or energy pollution, however, seem to show a negative correlation to firm growth. Our results, also, indicate that high investment in eco-strategies improves firm growth, particularly in new members that joined the EU from 2004 onwards. Finally, we observe a U-shaped relationship between eco-strategies and firm growth, which indicates that a greater breadth of eco-strategies is associated with better firm performance. However, few European SMEs are able to either invest heavily or undertake multiple eco-strategies, thus leaving room for policy interventions. Keywords: eco-strategy, firm growth, Europe, SMEs
    Keywords: Empreses petites i mitjanes -- Aspectes ambientals -- Unió Europea, Països de la, Planificació estratègica -- Aspectes ambientals, Empreses -- Creixement, 33 - Economia, 65 - Gestió i organització. Administració i direcció d'empreses. Publicitat. Relacions públiques. Mitjans de comunicació de masses,
    Date: 2017
  26. By: Kristine Bos; Duncan Chaplin; Arif Mamun
    Abstract: Electrification rates have risen dramatically in many developing countries, but most low-income African countries lag far behind.
    Keywords: Grid electricity , Electricity connection rates , Africa or African development, Infrastructure , Literature review
    JEL: F Z
  27. By: Pflüger, Michael P. (University of Würzburg)
    Abstract: This paper develops a micro-founded city systems model with an endogenous number of cities to explore whether local governments establish the optimal city size when production processes involve environmental pollution. Our analysis delivers two key insights. First, if an optimal scheme to regulate environmental pollution is implemented, cities chosen by local governments are never too large. They are too small if pollution is purely global, but at the optimal size, if pollution is purely local. Second, if no emission scheme is implemented or if emission policies are too lax, then cities steered by local governments, become too large, however.
    Keywords: city systems, environmental pollution, emission policies
    JEL: H73 R12 Q50
    Date: 2018–02
  28. By: Ghidoni, Riccardo (Tilburg University, School of Economics and Management); Calzolari, Giacomo; Casari, Marco
    Abstract: Understanding how to sustain cooperation in the climate change global dilemma is crucial to mitigate its harmful consequences. Damages from climate change typically occur after long delays and can take the form of more frequent realizations of extreme and random events. These features generate a decoupling between emissions and their damages, which we study through a laboratory experiment. We find that some decision-makers respond to global emissions, as expected, while others respond to realized damages also when emissions are observable. On balance, the presence of delayed/stochastic consequences did not impair cooperation. However, we observed a worrisome increasing trend of emissions when damages hit with delay.
    Date: 2017
  29. By: Alessi, Monica; Núñez Ferrer,Jorge; Egenhofer, Christian
    Abstract: This paper focuses on the damage – and the potential for inflicting further damage – to investor confidence arising from legal uncertainties surrounding renewable energy support in some EU member states. A higher-than-expected expansion of the renewables sector, resulting in higher costs of the support, combined with the financial crisis, has driven some member states to radically curtail renewable energy support schemes. Loss-making investors unsuccessfully challenged these EU governments in national courts, arguing that their rights had been violated and denounced reforms that they considered to be retroactively punitive in nature. A number of EU-based international investors turned to international arbitration courts under the provisions of the Energy Charter Treaty (ECT), which protects cross-border investment in the energy sector. This move, however, has called into question the legal framework of the single market and EU state aid rules. A dispute on the jurisdiction of the ECT within the single market has ensued, which highlights a complex and unresolved situation. While the legal disputes accumulate, the concern is that investors may shy away from the EU as a result of the regulatory and legal uncertainties. The main aim of the paper is to provide some clarity for non-specialists on a complex situation, and to highlight the need to find workable solutions that de facto restore investor confidence.
    Keywords: Energy Charter Treaty, ECT, retroactive changes, RES, renewables, renewable energy Directive, investors, single market, arbitration, state aids
    Date: 2018–01
  30. By: Tafadzwa Ruzive (Department of Economics, Nelson Mandela University); Thando Mkhombo (Department of Economics, Nelson Mandela University); Simba Mhaka (Department of Economics, Nelson Mandela University); Nomahlubi Mavikela (Department of Economics, Nelson Mandela University); Andrew Phiri (Department of Economics, Nelson Mandela University)
    Abstract: Our study investigates the relationship between electricity intensity and unemployment in South Africa. Our mode of empirical investigation is the quantile regressions approach which has been applied to quarterly interpolated time series data collected between 2000:01 and 2014:04. As a further development to our study, we split our empirical data into two sub-samples, the first corresponding to the pre-financial crisis period and the other corresponding to the post-financial crisis period. Our empirical results point to electricity intensity being significantly and positively correlated with unemployment in periods before the crisis at all estimated quantiles, whereas this relationship turns significantly negative in periods subsequent to the crisis at all quantile levels. In other words, since the financial crisis, increased electricity intensity (i.e. lower electricity efficiency) appears to reduce domestic unemployment rates, a result which indicates that policymakers should be discouraged from implementing electricity conversation strategies and encouraged to rely on environmental friendly methods of supplying electricity.
    Keywords: Electricity intensity, Unemployment, South Africa, SSA, Quantile regressions.
    JEL: C31 C51 E24 Q43
    Date: 2017–09
  31. By: Christina Kolerus; Papa M N'Diaye; Christian Saborowski
    Abstract: This note assesses empirically the role Chinese activity plays in global commodities markets, showing that the strength of China’s economic activity has a significant bearing on commodity prices, but that the impact differs across commodity markets, with industrial production shocks having a substantial impact on metals and crude oil prices and less so on food prices. The size of the impact on the prices of specific commodities varies with China’s footprint in the market for those commodities; the empirical estimates indicate that, over a one-year horizon, a 1 percent increase in industrial production leads to a 5–7 percent rise in metals and fuel prices. The surprise component in Chinese industrial production announcements has a bearing on commodity prices that is comparable in magnitude to that of industrial production surprises in the United States, and this impact is much larger when global risk aversion is high.
    Keywords: Crude oil;Food prices;Asia and Pacific;Commodities;Commodity prices;China;Spillovers;Industrial production;footprint, global commodity markets, shocks, metals, metals prices, crude oil prices, risk, risk aversion, imports, commodity imports, futures, commodity futures
    Date: 2016–09–27
  32. By: Halkos, George; Managi, Shunsuke; Tsilika, Kyriaki
    Abstract: In this paper we develop an illustrated guide for IWR2017 data. Graphical representations aim to reveal the multi-layer nature of IWR data with self-explanatory schemes. There are four parts of the analysis. In the first part, we present the spatial distribution of the three types of capitals - natural, human and produced - associated to social well-being. In the second part, we illustrate capitals’ temporal variation over 1990-2014, on different geographical and economic backgrounds. We investigate the dynamic evolution of capital assets and capture the key trend among different geographical regions and among regions with different economic growth. The third part makes an additional focus on natural capital and its spatial distribution over different income levels and regions. The forth part examines the causal relation between pollution and wealth. All four research questions are confronted with ease, clarity, and accuracy, with digital methods for mapping. A variety of graphical styles and/or forms is employed to indicate the resource use, capital exploitation trends of countries of different economic integration, uncover policies per income level.
    Keywords: Wealth creation, natural capital, visual analytics, visual interfaces.
    JEL: C63 C88 P28 Q51 Q53 Q58
    Date: 2018–04
  33. By: Silver Sillak (Institute of Social Studies, University of Tartu, Estonia); Laur Kanger (Science Policy Research Unit, University of Sussex, UK; Institute of Social Studies, University of Tartu, Estonia)
    Abstract: Existing literature on industry destabilization has relatively neglected the embeddedness of industries to their regional and national contexts. This might result in overestimating the potential for industry destabilization in specific localities. Combining the Dialectic Issue LifeCycle (DILC) model and the geography of transitions literature this article analyses the developments in the Estonian oil shale energy industry between 1995-2016. We show that the ties between the industry and its local context serve as an important stabilizing mechanism offsetting the destabilizing pressures as conceptualized by the DILC model. The cancelling out of two mechanisms on a local level leads to a misalignment of scales where the continued presence of global pressure of climate change is not matched by local dynamics. Hence in contrast to what the DILC model implies, there is no straightforward transmission of international pressures on local industries: instead this process is mediated through and likely heavily influenced by national and regional considerations. The findings imply that for industry destabilization and energy transitions to occur, not only the regime but also its connections to the local context need to be destabilized and transformed.
    Keywords: energy transitions, industry destabilization, geography of transitions, socio-spatial embeddedness, multi-scalarity
    Date: 2018–04
  34. By: Emilia Simeonova; Janet Currie; Peter Nilsson; Reed Walker
    Abstract: This study examines the effects of implementing a congestion tax in central Stockholm on both ambient air pollution and the population health of local children. We demonstrate that the tax reduced ambient air pollution by 5 to 15 percent, and that this reduction in air pollution was associated with a significant decrease in the rate of acute asthma attacks among young children. The change in health was more gradual than the change in pollution suggesting that it may take time for the full health effects of changes in pollution to be felt. Given the sluggish adjustment of health to pollution changes, short-run estimates of the pollution reduction programs may understate the long-run health benefits.
    JEL: H23 I18
    Date: 2018–03
  35. By: Michel Fliess (AL.I.E.N. - ALgèbre pour Identification & Estimation Numériques, LIX - Laboratoire d'informatique de l'École polytechnique [Palaiseau] - CNRS - Centre National de la Recherche Scientifique - Polytechnique - X); Cédric Join (AL.I.E.N. - ALgèbre pour Identification & Estimation Numériques, CRAN - Centre de Recherche en Automatique de Nancy - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique, NON-A - Non-Asymptotic estimation for online systems - Inria Lille - Nord Europe - Inria - Institut National de Recherche en Informatique et en Automatique - CRIStAL - Centre de Recherche en Informatique, Signal et Automatique de Lille (CRIStAL) - UMR 9189 - Université de Lille, Sciences et Technologies - Ecole Centrale de Lille - Inria - Institut National de Recherche en Informatique et en Automatique - Université de Lille, Sciences Humaines et Sociales - Institut Mines-Télécom [Paris] - CNRS - Centre National de la Recherche Scientifique); Cyril Voyant (SPE - Sciences pour l'environnement - UPP - Université Pascal Paoli - CNRS - Centre National de la Recherche Scientifique, Centre hospitalier d'Ajaccio)
    Abstract: Short-term forecasts and risk management for photovoltaic energy is studied via a new standpoint on time series: a result published by P. Cartier and Y. Perrin in 1995 permits, without any probabilistic and/or statistical assumption, an additive decomposition of a time series into its mean, or trend, and quick fluctuations around it. The forecasts are achieved by applying quite new estimation techniques and some extrapolation procedures where the classic concept of "seasonalities" is fundamental. The quick fluctuations allow to define easily prediction bands around the mean. Several convincing computer simulations via real data, where the Gaussian probability distribution law is not satisfied, are provided and discussed. The concrete implementation of our setting needs neither tedious machine learning nor large historical data, contrarily to many other viewpoints.
    Keywords: mean,quick fluctuations,time series,prediction bands,short-term forecasts,Solar energy,persistence,risk,volatility,normality tests
    Date: 2018
  36. By: Nicolas Querou
    Abstract: We consider a setting where agents are subject to two types of collective action problems, any group user’s individual extraction inducing an externality on others in the same group (intra-group problem), while aggregate extraction in one group induces an externality on each agent in other groups (intergroup problem). One illustrative example of such a setting corresponds to a case where a common-pool resource is jointly extracted in local areas, which are managed by separate groups of individuals extracting the resource in their respective location. The interplay between both types of externality is shown to affect the results obtained in classical models of common-pool resources. We show how the fundamentals affect the individual strategies and welfare compared to the benchmark commons problems. Finally, different initiatives (local cooperation, inter-area agreements) are analyzed to assess whether they may alleviate the problems, and to understand the conditions under which they do so
    Date: 2018–02
  37. By: Yongyang Cai (The Ohio State University); William Brock; Anastasios Xepapadeas; Kenneth Judd (Hoover Institution)
    Abstract: We build a novel stochastic dynamic regional integrated assessment model (IAM) of the climate and economic system including a number of important climate science elements that are missing in most IAMs. These elements are spatial heat transport from the Equator to the Poles, sea level rise, permafrost thaw and tipping points. We study optimal policies under cooperation and various degrees of competition between regions. Our results suggest that when the elements of climate science which are accounted for in this paper are ignored, important policy variables such as the social cost of carbon and adaptation could be seriously biased.
    Keywords: Integrated Assessment Model, spatial heat transport, social cost of carbon, carbon taxes, adaptation, sea level rise, permafrost, stochastic tipping points, Epstein-Zin preferences
    JEL: Q54 Q58 C61 C63
    Date: 2018–03–26
  38. By: Anonymous
    Keywords: Environmental Economics and Policy,
    Date: 2016–09
  39. By: Anonymous
    Keywords: Water-food-energy nexus, Adaptation to climate change, South Asia, Policy coherence, Trade-offs, Synergies, Agribusiness, Agricultural and Food Policy, Environmental Economics and Policy,
    Date: 2016–08
  40. By: Usenata, Nnyeneime
    Abstract: The Environmental Kuznets Curve (EKC) conjecture seeks to establish an inverted U-shaped nexus between income per capita and environmental degradation. It posits that at early stages of economic growth and development, environmental degradation rises or increases at an increasing rate. Nonetheless, after some threshold of economic development, the co-movement tends to reverse at higher levels of economic progress.
    Keywords: pollution, economic growth, GDP per capita
    JEL: Q40
    Date: 2018–02–10

This nep-ene issue is ©2018 by Roger Fouquet. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.