|
on Energy Economics |
| By: | Aurélien Saussay (Observatoire français des conjonctures économiques) |
| Abstract: | Over the past decade, the rapid increase in shale gas and shale oil production in the United States has profoundly changed energy markets in North America, and has led to a significant decrease in American natural gas prices. The possible existence of large shale deposits in continental Europe, mainly in France, Denmark, the Netherlands and Germany, has fostered speculation on whether the U.S. shale revolution could be duplicated in Europe. However, a number of uncertainties, notably geological, technological, regulatory, and relating to public acceptance make this possibility unclear. We present a techno-economic model of shale gas production amenable to direct estimation on historical production data to analyze the main determinants of the profitability of shale wells and plays. We contribute an in-depth analysis of an extensive production dataset covering 40,000 wells and accounting for nearly 90% of shale gas production in the six main plays of the continental United States from 2004 to 2014. We combine this analysis with a discussion of the main differences between the American and European contexts to calibrate our model and conduct Monte-Carlo simulations. This enables us to estimate the distribution of breakeven prices for shale gas extraction in continental Europe. We find a median gross breakeven price before taxes and royalties of $10.1 per MMBtu. This would make extraction unprofitable in Europe in the current natural gas price environment, with |
| Keywords: | Shale gas; Extraction costs; Europe; United States |
| JEL: | Q31 Q32 Q33 Q41 Q47 Q54 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/2b9jeu7kmm94kq22avt9ejbu5k&r=ene |
| By: | Catherine Hausman |
| Abstract: | Energy price pass-through receives a lot of academic attention, for several reasons: energy prices can be highly volatile, they impact every consumer and every industry in the economy, and they are frequently impacted by regulations including gas taxes and carbon regulations. Like the pass-through literature in general, the energy pass-through literature focuses on pass-through to marginal prices. However, multi-part pricing is common in energy retail pricing. In this paper, I examine pass-through to retail natural gas prices. I show that marginal prices exhibit one-to-one pass-through, but fixed fees exhibit negative pass-through. This is consistent with the stated desire by utilities and price regulators to prevent "bill shock." The results have implications for how pass-through is estimated, as well as for understanding the implications of proposed alternative pricing structures for regulated utilities. |
| JEL: | L11 L95 Q41 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24558&r=ene |
| By: | Imelda (Department of Economics, University of Hawaii at Manoa); Matthias Fripp (Department of Electrical Engineering, University of Hawaii at Manoa; UHERO; Renewable Energy and Island Sustainability); Michael J. Roberts (Department of Economics, University of Hawaii at Manoa; UHERO; Sea Grant at University of Hawaii at Manoa) |
| Abstract: | On a levelized-cost basis, solar and wind power generation are now competitive with fossil fuels, and still falling. But supply of these renewable resources is variable and intermittent, unlike traditional power plants. As a result, the cost of using flat retail pricing instead of dynamic, marginal-cost pricing--long advocated by economists--will grow. We evaluate the potential gains from dynamic pricing in high-renewable systems using a novel model of power supply and demand in Hawai'i. The model breaks new ground in integrating investment in generation and storage capacity with chronological operation of the system, including an account of reserves, a demand system with different interhour elasticities for different uses, and substitution between power and other goods and services. The model is open source and fully adaptable to other settings. Consistent with earlier studies, we find that dynamic pricing provides little social benefit in fossil-fuel-dominated power systems, only 2.6 to 4.6 percent of baseline annual expenditure. But dynamic pricing leads to a much greater social benefit of 8.5 to 23.4 percent in a 100 percent renewable power system with otherwise similar assumptions. High renewable systems, including 100 percent renewable, are remarkably affordable. The welfare maximizing (unconstrained) generation portfolio under the utility's projected 2045 technology and pessimistic interhour demand flexibility uses 79 percent renewable energy, without even accounting for pollution externalities. If overall demand for electricity is more elastic than our baseline (0.1), renewable energy is even cheaper and variable pricing can improve welfare by as much as 47 percent of baseline expenditure. |
| Keywords: | Renewable energy, variable pricing, storage, demand response, optimization |
| JEL: | Q41 Q42 Q53 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:hae:wpaper:2018-2&r=ene |
| By: | Stefan Nabernegg (University of Graz, Austria); Birgit Bednar-Friedl (University of Graz, Austria); Pablo Munoz (United Nations University, Bonn, Germany); Michaela Tietz (Environment Agency Austria, Vienna, Austria); Johanna Vogel (Environment Agency Austria, Vienna, Austria) |
| Abstract: | In a world with diverging emission reduction targets, national climate policies might be ineffective in reducing consumption-based CO2 emissions (carbon footprints), i.e. emissions of final demand that are embodied in domestic and international supply chains. We analyse a set of different policies in three areas with particularly high consumption-based emissions in Austria: building construction, public health, and transport. To capture both, substitution possibilities triggered by these policies and the induced emission reductions along the full global supply chain, our analysis combines a Computable General Equilibrium with a Multi-Regional Input-Output model. For building construction we find that a carbon added tax is highly effective in reducing consumption-based emissions whereas an information obligation on vacant dwellings combined with a penalty payment when vacant buildings are not made available is ineffective because of reallocated investment capital. Mandatory energy efficiency improvements in public health and mobility are found equally effective in reducing consumption- and production-based emissions while a decarbonization of domestic logistics stronger reduces production-based emissions. Overall, the effectiveness of policies, to mitigate consumption-based emissions, is therefore determined by the backward and forward linkages of the sector addressed by the policy as well as the substitution effects within final demand. |
| Keywords: | Carbon footprint; National climate policy; Emissions embodied in trade; Policy analysis; Computable general equilibrium analysis; Multi-regional input-output model |
| JEL: | C67 C68 F18 Q56 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2018-10&r=ene |
| By: | Karel Janda |
| Abstract: | This paper analyses Slovak electricity market with a focus on photovoltaic energy. It evaluates the impact of the solar electricity penetration into electricity mix on spot prices, seeks evidence of the merit order effect in the Slovak electricity market and quantifies it based on hourly data. The multivariate regression analysis covers the period 2011-2016. The rather small merit order effect estimated by an OLS time series model leads to the small decrease of Slovak electricity wholesale prices. This spot price reduction attributable to the photovoltaics does not outweigh the costs of the support scheme borne by end users what implies a consumer loss. |
| Keywords: | Slovakia, Photovoltaics, Energy policy, Merit order effect |
| JEL: | Q42 H23 M21 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2018-22&r=ene |
| By: | Moreno-Cruz, Juan B. (Georgia Institute of Technology); Wagner, Gernot (Harvard University); Keith, David w. (Harvard University) |
| Abstract: | This paper introduces geoengineering into an optimal control model of climate change economics. Together with mitigation and adaptation, carbon and solar geoengineering span the universe of possible climate policies. We show in the context of our model that: (i) a carbon tax is the optimal response to the unpriced carbon externality only if it equals the marginal cost of carbon geoengineering; (ii) the introduction of solar geoengineering leads to higher emissions yet lower tempera- tures, and, thus, increased welfare; and (iii) solar geoengineering,in effect, is a public goods version of adaptation that also lowers temperatures. |
| JEL: | D90 O44 Q48 Q54 Q58 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp17-028&r=ene |
| By: | Khobai, Hlalefang |
| Abstract: | Knowledge of the direction of causality between electricity generation from renewables and economic growth is essential if energy policies which will support economic growth of the country are to be devised. This study explores the causal relationship between electricity generated from the renewables and economic growth in South Africa using carbon dioxide emissions, employment and capital as the additional variables. The study uses the Johansen co-integration model to detect the long run relationship between the variables and the Vector Error Correction Model (VECM) to determine the direction of causality. The findings from Johansen co-integration evidenced a long run relationship between electricity generated from renewables, economic growth, carbon dioxide emissions, employment and capital. The VECM revealed unidirectional causality running from electricity generated from renewables to economic growth. The findings indicate that electricity generation from renewables enhance economic growth. Therefore, the government should make appropriate efforts to select energy policies that do not negatively affect economic growth. |
| Keywords: | Electricity generation, carbon dioxide emissions, economic growth |
| JEL: | C32 D04 Q01 Q42 Q47 |
| Date: | 2018–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86485&r=ene |
| By: | Xavier Timbeau (Observatoire français des conjonctures économiques); Pawel Wiejski |
| Abstract: | The EU ETS is one of the main European climate policies, covering 45 percent of EU’s greenhouse gas emissions. Its main goal is to limit emissions cost-effectively, and to trigger innovations using a strong price signal, making low-carbon technologies more competitive. While emissions reduction targets for 2020 have already been achieved, the exact role of the ETS in this success remains controversial. The assessment is crucial, as more and more countries and regions plan to adopt similar policies to achieve their targets expressed in the Intended Nationally Determined Contributions, communicated at the Paris Conference of the Parties. The EU ETS, as the longest running and largest carbon market in the world, will undoubtedly serve as a point of reference. This paper attempts to provide a comprehensive analysis of the policy. First part outlines the historical development of emission trading systems, as well as the development of the EU ETS since its inception in 2005. Second part uses FASTER principles developed by the World Bank and the OECD to perform a multi-criteria, qualitative analysis of the EU ETS in its current form. Third part concentrates on the upcoming revision for the fourth phase, evaluating whether the proposals correctly address the policy’s shortcomings. It also provides some alternative reform proposals. |
| Keywords: | Cap and trade; EU ETS; Market stability reserve; Carbon price |
| JEL: | H23 H87 Q56 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/3rqefhgkm689ibvcj2hnil8dho&r=ene |
| By: | Lucas W. Davis; Shaun McRae; Enrique Seira Bejarano |
| Abstract: | Retail petroleum markets in Mexico are on the cusp of a historic deregulation. For decades, all 11,000 gasoline stations nationwide have carried the brand of the state-owned petroleum company Pemex and sold Pemex gasoline at federally regulated retail prices. This industry structure is changing, however, as part of Mexico's broader energy reforms aimed at increasing private investment. Since April 2016, independent companies can import, transport, store, distribute, and sell gasoline and diesel. In this paper, we provide an economic perspective on Mexico's nascent deregulation. Although in many ways the reforms are unprecedented, we argue that past experiences in other markets give important clues about what to expect, as well as about potential pitfalls. Turning Mexico's retail petroleum sector into a competitive market will not be easy, but the deregulation has enormous potential to increase efficiency and, eventually, to reduce prices. |
| JEL: | L11 L51 Q31 Q48 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24547&r=ene |
| By: | Shahbaz, Muhammad; Sinha, Avik |
| Abstract: | This paper provides a survey of the empirical literature on Environmental Kuznets Curve (EKC) estimation of carbon dioxide (CO2) emissions over the period of 1991-2017. This survey categorizes the studies on the basis of single country and cross-country contexts. It has been hypothesized that the EKC is an inverted U-shaped association between economic growth and CO2 emissions. For both single country and cross-country contexts, the results of EKC estimation for CO2 emissions are inconclusive in nature. The reasons behind this discrepancy can be attributed to the choice of contexts, time period, explanatory variables, and methodological adaptation. The future studies in this context should not only consider new set of variables (e.g., corruption index, social indicators, political scenario, energy research and development expenditures, foreign capital inflows, happiness, population education structure, public investment towards alternate energy exploration, etc.), but also the dataset should be refined, so that the EKC estimation issues raised by Stern (2004) can be addressed. |
| Keywords: | Environmental Kuznets Curve; Carbon Emissions; Economic Growth |
| JEL: | A1 |
| Date: | 2018–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86281&r=ene |
| By: | Giovanni Marin; Francesco Vona (Observatoire français des conjonctures économiques) |
| Abstract: | This paper evaluates the historical influence of energy prices on a series of measures of environmental and economic performance for a panel of French manufacturing establishments over the period 1997-2010. The focus on energy prices is motivated by the fact that changes in environmental and energy policies have been dominated by substantial reductions in discounts for large consumers, making the evaluation of each policy in isolation exceedingly difficult. To identify price effects, we construct a shift-share instrument that captures only the exogenous variation in establishmentspecific energy prices. Our results highlight a trade-off between environmental and economic goals: although a 10 percent increase in energy prices brings about a 6 percent reduction in energy consumption and to a 11 percent reduction in CO2 emissions, such an increase also has a modestly negative impact on employment (-2.6 percent) and very small impact on wages and productivity. The negative employment effects are mostly concentrated in energyintensive and trade-exposed sectors. Simulating the effect of a carbon tax, we show that job losses for the most exposed sectors can be quite large. However, these effects are upper bounds and we show that they are significantly mitigated in multi-plant firms by labor reallocation across establishments. |
| Keywords: | Energy prices; Establishment performance; Environmental policy; Energy Policy |
| JEL: | Q52 Q48 H22 D22 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/1jrfjrj6fp8t6q12fv5lra520c&r=ene |
| By: | Baranzini, Andrea; Borzykowski, Nicolas; Carattini, Stefano |
| Abstract: | Following the entry into force of the Paris Agreement in November 2016, governments around the world are now expected to turn their nationally determined contributions into concrete climate policies. Given the global public good nature of climate change mitigation and the important cross-country differences in marginal abatement costs, distributing mitigation efforts across countries could substantially lower the overall cost of implementing climate policy. However, abating emissions abroad instead of domestically may face important political and popular resistance. We ran a lab experiment with more than 300 participants and asked them to choose between a domestic and an international reforestation project. We tested the effect of three informational treatments on the allocation of participants’ endowment between the domestic and the international project. The treatments consisted in: (1) making more salient the cost-effectiveness gains associated with offsetting carbon abroad; (2) providing guarantees on the reliability of reforestation programmes; (3) stressing local ancillary benefits associated with domestic offset projects. We found that stressing the cost-effectiveness of the reforestation programme abroad did increase its support, the economic argument in favour of offsetting abroad being otherwise overlooked by participants. We relate this finding to the recent literature on the drivers of public support for climate policies, generally pointing to a gap between people's preferences and economists’ prescriptions. |
| Keywords: | forest policy; climate policy; carbon offsets; reforestation; acceptability |
| JEL: | Q23 Q54 Q58 |
| Date: | 2018–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87732&r=ene |
| By: | Halkos, George |
| Abstract: | The environment is changing in a dynamic way. Sustainable development consists of both natural environmental changes as well as changes caused by humans. Nowadays environmental changes occur more often and much quicker and these changes challenge ecosystems and human societies. The aim of this special issue is to address the achievement of sustainable development by addressing the current issues of concern. Specifically, the green economy concept is an important term in international agendas. Together with the current economic crisis and the view that policies to attain sustainability cannot be put into operation efficiently, policy makers anticipate a solution from the greening of the economy. Green growth, more energy efficiency, cleaner energy technologies and sustainable development are regularly considered as harmonizing goals by international policy makers. |
| Keywords: | Energy consumption; trade; energy security risk; decoupling; green industrialization; greening workplace; digitalization; green communication. |
| JEL: | O11 Q40 Q43 Q56 Q58 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86534&r=ene |
| By: | Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Demeke, Eyoual (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Tesemma, Tewodros (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | Having a reliable supply of electricity is essential for the operation of any firm. In most developing countries, however, electricity supply is highly unreliable. In this study, we estimate the cost of power outages for micro, small, and medium-sized enterprises in Addis Ababa, Ethiopia, using a stated preference survey. We find that the willingness to pay, and thus the cost of power outages, is substantial. The estimated willingness to pay for a reduction of one power outage corresponds to a tariff increase of 16 percent. The willingness to pay for reducing the average length of a power outage by one hour corresponds to a 33 percent increase. The compensating variation for a zero-outage situation corresponds to about three times the current electricity cost. There is, however, considerable heterogeneity in costs across sectors, firm sizes, and levels of electricity consumption. Policy makers could consider this observed heterogeneity when it comes to aspects such as where to invest to improve reliability and different types of electricity contracts. |
| Keywords: | power outages; willingness to pay; choice experiment; Ethiopia |
| JEL: | D22 Q41 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0731&r=ene |
| By: | Aldy, Joseph (Harvard University); Gerarden, Todd (Harvard University); Sweeney, Richard (Boston College) |
| Abstract: | This paper examines the choice between subsidizing investment or output to promote socially desirable production. We exploit a natural experiment in which wind farm developers could choose an investment or output subsidy to estimate the impact of these instruments on productivity. Using regression discontinuity and matching estimators, we find that wind farms claiming the investment subsidy produced 10 to 11 percent less power than wind farms claiming the output subsidy, and that this effect reflects subsidy incentives rather than selection. The introduction of investment subsidies caused the Federal government to spend 12 percent more per unit of output from wind farms. |
| JEL: | H23 Q42 Q48 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp18-012&r=ene |
| By: | Frédéric Klopfert; Olivier Mortehan; Hélène Joachain |
| Abstract: | Increasing the rate of renovation for the existing building stock is a crucial challenge for EU’s energy policy. The Smart City Block (SCB) project proposes an innovative answer to this challenge. The underlying hypothesis is that introducing a collective dimension to renovation could result in increasing rates of renovation while also impacting positively the efficiency of the renovation and the social ties within urban areas. The collective dimension considered is the city block in Brussels.The first part of this paper describes the theoretical part of the project that was necessary to develop an adapted methodology. It describes the SCB offering, Brussels segmentation and some results of surveys.The SCB offering shows that many different options can be proposed to the city block dwellers, ranging from a collective insulation, efficient heating systems and shared photovoltaics to collective kitchen garden in the inner space of the block, shared vehicles or shared spaces. This is especially relevant for Brussels where city blocks often have an inner space that could be used. Besides, the segmentation of Brussels based on city block characteristics offers a typology that can be further used to target specific environmental or social deficit.However, the collective dimension introduced in the project is challenging for western individualistic minds. In order to evaluate the acceptance of households, a survey was conducted on 4 city blocks in Brussels, representing over 450 households. It shows a clear willingness to investigate the concept further but only if concrete proposals with estimations of energy and financial savings are provided. Sharing space, equipment and activities was more positively accepted than what we initially expected. Although the attitude-behaviour gap must not be underestimated, this opening can be viewed as an evolution of lifestyles in some segments of the population. Governance and institutional arrangements are expected to play a critical role in supporting this evolution.The second part of the paper relates to the practical part of the research.Our selection process aimed at locating two types of city blocks: a “fuel poor” city block - where the inhabitants face comfort and energy cost difficulties – and a so-called “early adopter” city block – where inhabitants have a positive attitude for the SCB concept.In the “early adopter” city block, located in Uccle, brainstorming meetings and coelaboration meetings were held as to elaborate an SCB model, with the inhabitants and in accordance with their aspirations and needs. Different solutions, including district heating, shared photovoltaics, shared vehicles and collective insulation were modelled both technically and economically. Financing solutions were also proposed.In the “fuel poor” city block, located in Saint-Josse, we conducted a survey on the needs of inhabitants, commercial activities and owners (occupants or landlords). The need for increased energy efficiency is clearly expressed but we also identified the important barriers related to the ownership structure of the block.Prior to the conclusions and proposal for further research on this topic, a section is dedicated to a discussion on the methodology and the hypotheses used during this research. |
| Keywords: | Retrofit; mobility; shared resources; urban planning; energy efficiency; households; collective action; co-haousing |
| Date: | 2017–08–17 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/270614&r=ene |
| By: | Mai Miyamoto (Graduate School of Economics, Kobe University); Kenji Takeuchi (Graduate School of Economics, Kobe University) |
| Abstract: | This paper examines the Kyoto Protocol's impact on the international diffusion of renewable energy technologies. Using patent application data from 133 countries from 1990 to 2013, we find that the Kyoto Protocol increased international patent applications from the countries with emission targets. When we focus on countries with more stringent targets, the effect of the Kyoto Protocol is even stronger. We find a similar effect in international patent applications to four developing countries that are large emitters of greenhouse gases (GHGs): China, India, Brazil, and Mexico. These results suggest that the Kyoto Protocol stimulated international patenting activities from countries that are committed to stringent targets for climate mitigation. |
| Keywords: | Renewable energy; Kyoto Protocol; International patent applications |
| JEL: | F14 O33 Q55 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:1820&r=ene |
| By: | Denise Trebes |
| Abstract: | Zusammenfassung (deutsch): Die Klimaerwärmung schreitet unaufhörlich voran, so dass eine Regulierung der Treibhausgasemissionen großer Industriezweige unerlässlich ist. Einer der größten Verursacher von CO2-Emissionen ist der Transportsektor. Für den Flugsektor hat die ICAO daher eine globale marktbasierte Maßnahme, namens CORSIA beschlossen. Dabei handelt es sich um einen Offsetting-Mechanismus, mit dem die Emissionen des Flugsektors mit Hilfe von Zertifikaten aus umweltfreundlichen Projekten ausgeglichen werden sollen. Ziel CORSIAs ist es, ein kohlenstoffneutrales Wachstum ab 2020 zu gewährleisten und damit zu einer Emissionsreduktion beizutragen. Ziel der vorliegenden Arbeit war es, den Beschluss und die Effektivität von ICAOs marktbasierter Maßnahme zu analysieren. Die Untersuchungen haben ergeben, dass die derzeitige Ausgestaltung CORSIAs vermutlich nicht ausreichend ist, um eine Vereinbarkeit mit dem 1,5 Grad Ziel des Pariser Abkommens zu gewährleisten. Ursache hierfür sind im Wesentlichen die zu schwachen Regelungen des Offsetting-Systems. Dazu zählen die einseitige Betrachtung von ausschließlich CO2-Emissionen, die zahlreichen Ausnahmen von Nationen sowie der Zeithorizont CORSIAs, da die Maßnahme erst 2021 mit einer freiwilligen Phase beginnt. Abstract (english): The climate change is progressing incessantly. Hence, the regulation of greenhouse gas emissions from large industrial sectors is indispensable. One of the main sources of carbon dioxide emissions is the transport sector. For aviation ICAO therefore adopted a global market-based measure called CORSIA. This offsetting mechanism will be used to offset emissions from the aviation sector with the help of certificates from environmental projects. The aim of CORSIA is to ensure carbon-neutral growth from 2020 onwards and thus contribute to a reduction in emissions. The aim of this work was to analyze the decision and effectiveness of ICAO’s market-based measure. The investigations have shown that the current design of CORSIA is probably not sufficient to ensure compatibility with the 1.5 degree objective of the Paris Convention. This is mainly because of the weak regulation of the offsetting system. These include the one-sided view of solely carbon dioxide emissions, the numerous exemptions of nations and the time horizon of CORSIA, since the measure begins with a voluntary phase in 2021. |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:euv:dpaper:27&r=ene |
| By: | Mai Miyamoto (Graduate School of Economics, Kobe University); Kenji Takeuchi (Graduate School of Economics, Kobe University) |
| Abstract: | This study investigates the trade flows of renewable energy products, focusing on the role of technological development. We estimate a gravity model that explains the trade flows among 35 OECD countries from 1996 to 2010 using patent counts as a proxy for technology level. We compare the pattern of the trade flows between two representative renewable energy products: those related to wind and solar electricity generation. The results suggest that technological level is correlated with trade flows and this correlation is weaker in the model for solar products than that for wind products. When we include China in the sample in estimation, the technological level of solar energy is no longer correlated with the exports of solar power products. |
| Keywords: | Renewable energy products; Trade; Technological development; Patent; Gravity model |
| JEL: | F14 O33 Q55 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:1819&r=ene |
| By: | Noh, Nadia Mohd; Masih, Mansur |
| Abstract: | Energy plays a crucial role in the economic development of most economies. The causality nexus between energy consumption and economic growth is important in enacting energy consumption policy and environmental policy. This paper tries to investigate the relationship between energy consumption and economic growth for Thailand over the period from 1976 to 2014 applying NARDL approach. The main finding from the NARDL evidence cointegration among economic growth, energy consumption, capital formation and trade openness and found asymmetry is significant for both the long run and short run for economic growth, which implies that taking nonlinearity and asymmetry into account is important when studying the relationship between economic growth and energy consumption. This paper also found that most of the independent variables are found to be significant in the long run compared to the short run. In addition, this paper also discerned Granger-causal chain between the variables through the application of VECM, VDC and IRF analyses. |
| Keywords: | Energy consumption, Economic growth, NARDL, VECM, VDC, Thailand |
| JEL: | C58 Q43 |
| Date: | 2017–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86384&r=ene |
| By: | Houde, Sebastien (University of Maryland); Aldy, Joseph E. (Harvard University) |
| Abstract: | The behavioral responses to taxes and subsidies are often subject to various behavioral biases and transaction costs—what we define as “microfrictions.†We develop a theoretical framework to show how these microfrictions—and their heterogeneity across the population and policy instruments—affect the design of Pigouvian policies. Standard Pigouvian pricing still holds with transaction costs, but requires adjustment with behavioral biases. We use transaction-level data from the US appliance market to estimate the heterogeneous behavioral responses to an array of energy fiscal policies and to quantify microfrictions. We then assess optimal fiscal policies and find that it is rarely optimal to couple a Pigouvian tax on energy with an investment subsidy in this context. We also find that energy labels—intended to increase the salience of energy information—can interact in perverse ways with both taxes and subsidies. |
| JEL: | H31 Q48 Q58 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp17-047&r=ene |
| By: | Tatyana Bulavskaya (The Netherlands Organisation for Applied Scientific Research (TNO)); Frédéric Reynés (Observatoire français des conjonctures économiques) |
| Abstract: | This study evaluates the economic impact of a shift towards renewable electricity mix in the Netherlands using the neo-Keynesian CGEM ThreeME (Multi-sector Macroeconomic Model for the Evaluation of Environmental and Energy policy). This scenario has been inspired by the Urgenda's report ‘Energy 100% Sustainable in the Netherlands by 2030’, which have been quantified using the Energy Transition Model (ETM) developed by Quintel. Using the output of the ETM regarding the change in the electricity generation shares as input in ThreeME, we derive the impact in terms of key economic variables (GDP, employment, investment, value-added, prices, trade, tax revenue, etc.). We find that transition to renewable energy may have a positive impact on the Dutch economy, creating almost 50 000 new jobs by 2030 and adding almost 1% of gross domestic product |
| Keywords: | Energy transition; Climate policy; Energy-economy modeling; Netherlands |
| JEL: | E12 E17 E27 E47 D57 D58 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/11505qn4ak95irt0cafaeim81j&r=ene |
| By: | Hesamzadeh, Mohammad Reza (Royal Institute of Technology (KTH)); Holmberg, Pär (Research Institute of Industrial Economics (IFN)); Sarfati, Mahir (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Zonal pricing with countertrading (a market-based redispatch) gives arbitrage opportunities to the power producers located in the export-constrained nodes. They can increase their profit by increasing the output in the dayahead market and decrease it in the real-time market (the inc-dec game). We show that this leads to large inefficiencies in a standard zonal market. We also show how the inefficiencies can be significantly mitigated by changing the design of the real-time market. We consider a two-stage game with oligopoly producers, wind-power shocks and real-time shocks. The game is formulated as a two-stage stochastic equilibrium problem with equilibrium constraints (EPEC), which we recast into a two-stage stochastic Mixed-Integer Bilinear Program (MIBLP). We present numerical results for a six-node and the IEEE 24-node system. |
| Keywords: | Two-stage game; Zonal pricing; Wholesale electricity market; Bilinear programming |
| JEL: | C61 C63 C72 D43 L13 L94 |
| Date: | 2018–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1211&r=ene |
| By: | Jozef Barun\'ik; Ev\v{z}en Ko\v{c}enda |
| Abstract: | We analyze total, asymmetric and frequency connectedness between the oil and forex markets using high-frequency intra-day data over 2007 -- 2015. Methodologically, we extend the Diebold-Yilmaz spillover index in two ways to account for asymmetric and frequency connectedness. Empirically, our results show that by combining crude oil with the set of currencies a total connectedness of the portfolio is lower than the total connectedness of the forex market itself. Further, in terms of asymmetries we show that bad volatility dominates connectedness on the forex market. However, when we add oil into a hypothetical portfolio of oil and foreign currencies, asymmetry in connectedness between the two classes of assets reverses in favor of the good volatility. Finally, the frequency connectedness analysis reveals that dynamic of the shorter and longer term connectedness dramatically differs. While shorter-term connectedness is usually low, the long-term connectedness sharply rises during the global financial crisis, European debt crisis, and after the oil price drop in 2014. Hence, the long-term connectedness reflects worrisome beliefs of investors and correlates with the increased market uncertainty. |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1805.03980&r=ene |
| By: | Jean Pierre Ponssard (Department of Economics, École Polytechnique, Palaiseau Cedex, 91128, France - affiliation inconnue); Guy Meunier (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique) |
| Date: | 2018–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ciredw:halshs-01777499&r=ene |
| By: | Daniel Puig (United Nations Environmental Programme); Oswaldo Morales Napoles; Fatemeh Bakhtiari; Gissela Landa (Observatoire français des conjonctures économiques) |
| Abstract: | Governmental climate change mitigation targets are typically developed with the aid of forecasts of greenhouse-gas emissions. The robustness and credibility of such forecasts depends, among other issues, on the extent to which forecasting approaches can reflect prevailing uncertainties. We apply a transparent and replicable method to quantify the uncertainty associated with projections of gross domestic product growth rates for Mexico, a key driver of greenhouse-gas emissions in the country. We use those projections to produce probabilistic forecasts of greenhouse-gas emissions for Mexico. We contrast our probabilistic forecasts with Mexico’s governmental deterministic forecasts. We show that, because they fail to reflect such key uncertainty, deterministic forecasts are ill-suited for use in target-setting processes. We argue that (i) guidelines should be agreed upon, to ensure that governmental forecasts meet certain minimum transparency and quality standards, and (ii) governments should be held accountable for the appropriateness of the forecasting approach applied to prepare governmental forecasts, especially when those forecasts are used to derive climate change mitigation targets. |
| Keywords: | Uncertainty; Projections; Structured expert judgment; Accountability; Emission-reduction targets; Gross domestic product growth rates |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/5cu79nktr182k9k26ecvt6f8p2&r=ene |
| By: | Malik, Meheroon Nisa Abdul; Masih, Mansur |
| Abstract: | This study aims to examine the short-run and long-run relationship between economic growth, energy consumption, financial development, capital formation and population by using data set of Malaysia for the period 1971–2014. An emerging economy like Malaysia has high energy consumption which is intensified by its growing population. Economic growth and energy consumption in Malaysia have been rising over the past several years. The motivation to this study is related to four policy objectives of Malaysia; economic growth, financial development, energy conservation and reduction on pollution. The auto regressive distributed lag (ARDL) bounds testing approach to test the long run relationship among the variables, while short run dynamics were investigated using the Vector Error Correction Model (VECM). Variance decomposition (VDC) technique was used to provide Granger causal relationship between the variables. The findings suggest that energy consumption is influenced by economic growth and financial development, both in the short and the long run. The population–energy relationship however only holds in the long run. The results have important policy implications for balancing economic growth vis-à-vis energy consumption for Malaysia, and other emerging nations to explore new and alternative sources of energy to meet the rising demand of energy to sustain economic growth. |
| Keywords: | GDP, Energy consumption, Financial Development, Capital, Population Growth, Malaysia |
| JEL: | C58 E44 |
| Date: | 2017–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86374&r=ene |
| By: | Jorn van de Wetering; Franz Fuerst |
| Abstract: | Since 2008 in the UK the operational energy consumption of premises that are regularly accessed by members of the public has been assessed on an annual basis. Details of these assessments are published as Display Energy Certificates (DECs). A significant number of these premises can be categorized as commercial office space. This represents an opportunity to investigate the relationship between operational energy assessment ratings and value.By supplementing the energy assessment data recorded on DECs with market transaction data, this study investigates the effects of operational energy certification on rental values. DECs are annually assessed and the significance of the relationship between energy consumption and value can therefore be assessed over time. This research also applies hedonic price modelling techniques to control for other factors that affect office rental value in order to determine whether there is a significant relationship between operationally energy efficient buildings in the UK and values, particularly when compared to their relatively energy inefficient counterparts. |
| Keywords: | Commercial Office Space; Display Energy Certificate; Environmental Assessment Methods; Hedonic Pricing Method; Rateable value |
| JEL: | R3 |
| Date: | 2017–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2017_301&r=ene |
| By: | Jina J. Kim; Daniel A. Axelrad; Chris Dockins |
| Abstract: | Preterm birth (PTB) is a predictor of infant mortality and later-life morbidity. Despite recent declines, PTB rates remain high in the United States. Growing research suggests a relationship between a mother’s exposure to air pollution and PTB of her baby. Many policy actions to reduce exposure to common air pollutants require benefit-cost analysis (BCA), and it’s possible that PTB will need to be included in BCA in the future. However, an estimate of the willingness to pay (WTP) to avoid PTB risk is not available, and a comprehensive alternative valuation of the health benefits of reducing pollutant-related PTB currently does not exist. This paper demonstrates a potential approach to assess economic benefits of reducing PTB resulting from environmental exposures when an estimate of WTP to avoid PTB risk is unavailable. We utilized a recent meta-analysis and county-level air quality and PTB data to estimate the potential health and economic benefits of a reduction in air pollution-related PTB, with fine particulate matter (PM2.5) as our case study pollutant. Using this method, a simulated 10% decrease from 2008 PM2.5 levels resulted in a reduction of 5,016 PTBs and savings of at least $339 million, potentially reaching over one billion dollars when considering later-life effects of PTB. |
| Keywords: | air pollution, preterm birth, benefits, PM2.5 |
| JEL: | D61 I18 J13 Q51 Q53 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201803&r=ene |
| By: | Bobylev, Yuri (Russian Presidential Academy of National Economy and Public Administration (RANEPA), Gaidar Institute for Economic Policy); Rasenko, O.A. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | The paper considers the state tax policy towards the oil industry of the Russian economy, analyzes possible measures of such a policy, including structural adjustment of the tax system and the introduction of a special tax on additional income. Various approaches to the construction of a tax on additional income have been analyzed, and an additional tax on profits with a progressive tax rate has been proposed as the most preferable form of this tax. The paper formulates recommendations aimed at increasing the effectiveness of the tax system and creating the necessary conditions for the development of the oil industry. |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:041817&r=ene |
| By: | Mehling, Michael A. (Massachusetts Institute of Technology); Metcalf, Gilbert E. (Tufts University); Stavins, Robert N. (Harvard University) |
| Abstract: | The Paris Agreement has achieved one of two key necessary conditions for ultimate success – a broad base of participation among the countries of the world. But another key necessary condition has yet to be achieved – adequate collective ambition of the individual nationally determined contributions. How can the climate negotiators provide a structure that will include incentives to increase ambition over time? An important part of the answer can be international linkage of regional, national, and sub-national policies, that is, formal recognition of emission reductions undertaken in another jurisdiction for the purpose of meeting a Party’s own mitigation objectives. A central challenge is how to facilitate such linkage in the context of the very great heterogeneity that characterizes climate policies along five dimensions – type of policy instrument; level of government jurisdiction; status of that jurisdiction under the Paris Agreement; nature of the policy instrument’s target; and the nature along several dimensions of each Party’s Nationally Determined Contribution. We consider such heterogeneity among policies, and identify which linkages of various combinations of characteristics are feasible; of these, which are most promising; and what accounting mechanisms would make the operation of respective linkages consistent with the Paris Agreement. |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp17-042&r=ene |
| By: | Theodoros Chatzivasileiadis (Institute for Environmental Studies, Vrije Universiteit, Amsterdam); Richard S.J. Tol (Department of Economics, University of Sussex, Brighton, UK; Department of Spatial Economics, Vrije Universiteit, Amsterdam; Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Tinbergen Institute, Amsterdam; CESifo, Munich); Francisco Estrada (Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Centro de Ciencias de la Atmósfera, Universidad Nacional Autónoma de México, Ciudad Universitaria, Mexico); Marjan W. Hofkes (Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Department of Economics, Vrije Universiteit, Amsterdam) |
| Abstract: | Climate change already has widespread impacts on society, including the performance of stock markets. Previous studies have focused on how financial markets react to natural disasters such as extreme weather events and provided empirical evidence and mechanistic processes on how this information is assimilated by the investors. Market efficiency theory indicates that investors and financial institutions rely on all available information when managing their portfolios, and change their position as new information arises. Based on empirical analysis, here we show for the first time that investors closely follow the discussion generated by the Intergovernmental Panel on Climate Change (IPCC) and its Working Groups and we quantify the U.S. stock market’s reactions to the publication of their reports. Our results show that the market recognises the importance of the IPCC findings, although there seems to be a reduction in the stock market’s reaction with every passing IPCC report. This highlights the effectiveness of scientific bodies in communicating knowledge to different sectors of society, and the importance of maintaining these institutions as honest brokers of scientific information. |
| Keywords: | IPCC; stock market; event study |
| JEL: | G14 Q54 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:sus:susewp:1118&r=ene |
| By: | Giovanis, Eleftherios; Ozdamar, Oznur |
| Abstract: | Environmental quality is an important determinant of individuals’ well-being and one of the main concerns of the governments is the improvement on air quality and the protection of public health. This is especially the case of sensitive demographic groups, such as the old aged people. However, the question this study attempts to answer is how do individuals value the effects on the environment. The study explores the effects of old and early public pension schemes, as well as the impact of air pollution on health status of retired citizens. The empirical analysis relies on detailed micro-level data derived from the Survey of Health, Ageing and Retirement in Europe (SHARE). As proxies for health, we use the general health status and the Eurod mental health indicator.We examine two air pollutants: the sulphur dioxide (SO2) and ground-level ozone (O3). Next, we calculate the marginal willingness-to-pay (MWTP) which shows how much the people are willing to pay for improvement in air quality. We apply various quantitative techniques and approaches, including the fixed effects ordinary least squares (OLS) and the fixed effects instrumental variables (IV) approach. The last approach is applied to reduce the endogeneity problem coming from possible reverse causality between the air pollution, pensions and the health outcomes. For robustness check, we apply also a structural equation modelling (SEM) which is proper when the outcomes are latent variables. Based on our favoured IV estimates and the health status, we find that the MWTP values for one unit decrease in SO2 and O3 are respectively €221 and €88 per year. The respectiveMWTP values using the Eurod measure are €155 and €68. Overall, improvement of health status implies reduction in health expenditures, and in previous literature, ageing has been traditionally considered the most important determinant. However, this study shows that health lifestyle and socio-economic status, such as education and marital status, are more important, and furthermore, air pollution cannot be ignored in the agenda of policy makers. |
| Keywords: | Air pollution; Early retirements; Health status; Old age pensions; Structural equation modelling |
| JEL: | H0 H00 I10 Q51 Q53 |
| Date: | 2018–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86483&r=ene |
| By: | Birg, Laura; Voßwinkel, Jan S. |
| Abstract: | This paper studies the effect of an emission tax on the relocation decision in a duopoly with exogenous vertical product differentiation. We establish the relationship between quality difference, relocation cost, and marginal damage of emissions in a two-country-setting for three cases: An environmental tax set only by one country, non-cooperative environmental taxation in both countries, and coordinated environmental taxation. We consider two different timings, a time-consistent government, and a committed government. The higher the quality difference is, the more likely it is that at least one firm relocates to the foreign country. A lower marginal damage decreases the equilibrium tax rate and lowers the incentive for relocation. If also the foreign country applies an emission tax, there is no equilibrium in which both firms relocate to the foreign country. If both governments set taxes non-cooperatively, the low-quality firm never relocates in equilibrium. If both countries set taxes cooperatively, it is more likely that both fi rms remain in the home country. Also, relocation only of the low-quality firm is a possible outcome of cooperative taxation. |
| Keywords: | relocation,environmental policy,vertical quality differences,emission tax |
| JEL: | H23 F18 L13 Q58 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:347&r=ene |
| By: | Bonev, Petyo; Glachant, Matthieu; Söderberg, Magnus |
| Abstract: | This is the first study that uses a natural experiment to test the Regulatory Threat Hypothesis. We use a unique novel dataset on unregulated Swedish local district heating monopolists and a new measure of threat - customer complaints. Our results support the Regulatory Threat Hypothesis: firms reduce prices when they feel threatened by price regulation. We also find evidence that (otherwise unrelated) monopolists homogenize locally prices to reduce complaints and thus to reduce threat of regulation. This mechanism is related to Yardstick competition and to behavioral theories of fair pricing. |
| Keywords: | Regulatory Threat, Monopoly, Price Setting, Spatial Interaction, Natural Experiment |
| JEL: | L11 L12 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2018:05&r=ene |