nep-ene New Economics Papers
on Energy Economics
Issue of 2018‒06‒18
thirty-six papers chosen by
Roger Fouquet
London School of Economics

  1. Energy Price Reform in China By ZhongXiang Zhang
  2. The Impact of China’s Electricity Deregulation on Coal and Power Industries: Two-stage Game Modeling Approach By HuiHui Liu; ZhongXiang Zhang; ZhanMing Chen; DeSheng Dou
  3. And Then He Wasnùt a She: Climate Change and Green Transitions in an Agent-Based Integrated Assessment Model By Francesco Lamperti; Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Alessandro Sapio
  4. An Economic Anatomy of Optimal Climate Policy By Juan Moreno-Cruz; Gernot Wagner; David W. Keith
  5. Latent Volatility Granger Causality and Spillovers in Renewable Energy and Crude Oil ETFs By Chia-Lin Chang; Michael McAleer; Yu-Ann Wang
  6. Carbon dating: when is it beneficial to link ETSs? By Doda, Baran; Taschini, Luca
  7. Investment-Uncertainty Relationship in the Oil and Gas Industry By Maryam Ahmadi; Matteo Manera; Mehdi Sadeghzadeh
  8. Evaluation Design Report for the Benin Power Compact's Electricity Generation Project and Electricity Distribution Project By Christopher Ksoll; Kristine Bos; Arif Mamun; Anthony Harris; Sarah Hughes
  9. Does the presence of wind turbines have negative externalities for people in their surroundings? evidence from well-being data By Krekel, Christian; Zerrahn, Alexander
  10. Optimal Policy and Network Effects for the Deployment of Zero Emission Vehicles By Guy Meunier; Jean-Pierre Ponssard
  11. A Note on Growth, Energy Intensity and the Energy Mix: A Dynamic Panel Data Analysis By Antonia Díaz; Gustavo A. Marrero; Luis Puch; Jesús Rodríguez-López
  12. Climate Change and Kuznets Curve: Portuguese Experience By Nuno Carlos Leitão
  13. Not All Regions Are Alike: Evaluating the Effect of Oil Price Shocks on Local and Aggregate Economies By Arlan Brucal; Michael J. Roberts
  14. Hysteresis and the Welfare Effect of Corrective Policies: Theory and Evidence from an Energy-Saving Program By Francisco Costa; François Gerard
  15. Peak and off-peak demand for electricity: subsistence levels and price elasticities By Brännlund, Runar; Vesterberg, Mattias
  16. The Oil Price Collapse and the Birth of a Tourist Nation By Xie, Jinghua; Tveterås , Sigbjorn
  17. The energy efficiency rebound effect in general equilibrium By Christoph Boehringer; Nicholas Rivers
  18. Recalculating the Social Cost of Carbon By Soheil Shayegh; Valentina Bosetti; Simon Dietz; Johannes Emmerling; Christoph Hambel; Svenn Jensen; Holger Kraft; Massimo Tavoni; Christian Traeger; Rick Van der Ploeg
  19. Effects of Stricter Environmental Regulations on Resource Development By Ian A. Lange; Michael Redlinger
  20. Geographic Environmental Kuznets Curves: The Optimal Growth Linear-Quadratic Case By Raouf Boucekkine; Giorgio Fabbri; Salvatore Federico; Fausto Gozzi
  21. Oil Price and Exchange Rate Volatilities: Its Implications on the Cost of Living in OPEC Member Country - Nigeria. By Udabah, Sylvester; Okolo, Chimaobi
  22. Directed Technological Change and Technological Congruence: A New Framework for the Smart Specialization Strategy. By Antonelli, Cristiano; Feder, Christophe; Quatraro, Francesco
  23. Day-ahead electricity price forecasting with high-dimensional structures: Univariate vs. multivariate modeling frameworks By Florian Ziel; Rafal Weron
  24. Economic assessments of the benefits of regulating mercury: A review By Richard Dubourg
  25. Monetary Policy, Oil Stabilization Fund and the Dutch Disease By Jean-Pierre Allegret; Mohamed Benkhodja; Tovonony Razafindrabe
  26. Enhancing global climate policy ambition towards a 1.5 °C stabilization: a short-term multi-model assessment By Zoi Vrontisi; Gunnar Luderer; Bert Saveyn; Kimon Keramidas; Lara Aleluia Reis; Lavinia Baumstark; Christoph Bertram; Harmen Sytze De Boer; Laurent Drouet; Kostas Fragkiadakis; Oliver Fricko; Shinichiro Fujimori; Céline Guivarch; Alban Kitous; Volker Krey; Elmar Kriegler; Eoin Broin; Leonidas Paroussos; Detlef Van Vuuren
  27. Pollution urbaine : la France sous le dôme By Eloi Laurent
  28. Linking national emissions inventories to economic accounting By Instituto de Pesquisa Econômica Aplicada
  29. Die Energiewende wird nicht an Stromspeichern scheitern By Wolf-Peter Schill; Alexander Zerrahn; Claudia Kemfert; Christian von Hirschhausen
  30. A project towards bridging tables between national accounts and emissions By Institute for Applied Economic Research
  31. Monetary Policy under Climate Change By George Economides; Anastasios Xepapadeas
  32. Liberalizing markets, liberalizing welfare? Economic reform and social regulation in the EU's electricity regime By Haber, Hanan
  33. International experiences in climate change-related statistics By Institute for Applied Economic Research
  34. Effects of driverless vehicles: A review of simulations By Pernestål Brenden , Anna; Kristoffersson , Ida
  35. Pollution and Growth: The Role of Pension on the Efficiency of Health and Environmental Policies By Armel Ngami; Thomas Seegmuller
  36. Fake News and Indifference to Scientific Fact: President Trump's Confused Tweets on Global Warming, Climate Change and Weather By David Allen; Michael McAleer; David McHardy Reid

  1. By: ZhongXiang Zhang (Ma Yinchu School of Economics and China Academy of Energy, Environmental and Industrial Economics, Tianjin University)
    Abstract: The Chinese leadership has determined to assign the market a decisive role in allocating resources. To have the market to play that role, getting the energy prices right is crucial because this sends clear signals to both producers and consumers of energy. While the overall trend of China’s energy pricing reform since 1984 has been moving away from the prices set by the central government in the centrally planned economy and towards a more market-oriented pricing mechanism, the pace and scale of the reform differ across energy types. This article discusses the evolution of price reforms for coal, petroleum products, natural gas, electricity and renewable power in China, and provides some analysis of these energy price reforms, in order to have the market to play a decisive role in allocating resources and help China’s transition to a low-carbon economy.
    Keywords: Energy Prices, Tiered Prices, Differentiated Tariffs, Coal, Electricity, Natural Gas, Petroleum Products, Renewable Power, Desulfurization and Denitrification, State-owned Enterprises, China
    JEL: H23 H71 O13 O53 P22 Q41 Q43 Q48 Q53 Q58
    Date: 2018–05
  2. By: HuiHui Liu (Academy of Chinese Energy Strategy, China University of Petroleum); ZhongXiang Zhang (Ma Yinchu School of Economics and China Academy of Energy, Environmental and Industrial Economics, Tianjin University); ZhanMing Chen (Department of Energy Economics, School of Economics, Renmin University of China); DeSheng Dou (Academy of Chinese Energy Strategy, China University of Petroleum)
    Abstract: The regulated price mechanism in China’s power industry has attracted much criticism because of its incapability to optimize the allocation of resources. To build an “open, orderly, competitive and complete” power market system, the Chinese government launched an unprecedented marketization reform in 2015 to deregulate the electricity price. This paper examines the impact of the electricity price deregulation in the industry level. We first construct two-stage dynamic game models by taking the coal and coal-fired power industries as the players. Using the models, we compare analytically the equilibriums with and without electricity regulation, and examine the changes in electricity price, electricity generation, coal price and coal traded quantity. The theoretical analyses show that there are three intervals of the regulated electricity sales prices which influence the impact of electricity price deregulation. Next, we collect empirical data to estimate the parameters in the game models, and simulate the influence of electricity deregulation on the two industries in terms of market outcome and industrial profitability. Our results suggest that the actual regulated electricity price falls within the medium interval of the theoretical results, which means the price deregulation will result in higher electricity sales price but lower coal price, less coal traded amount and less electricity generation amount. The robustness analysis shows that our results hold with respect to the electricity generation efficiency and price elasticity of electricity demand.
    Keywords: China, Electricity Deregulation, Reform, Coal Industry, Power Industry
    JEL: Q41 Q43 Q48 L94 L98
    Date: 2018–05
  3. By: Francesco Lamperti; Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Alessandro Sapio
    Abstract: In this work, we employ an agent-based integrated assessment model to study the likelihood of transition to green, sustainable growth in presence of climate damages. The model comprises heterogeneous fossil-fuel and renewable plants, capital- and consumption-good firms and a climate box linking greenhouse gasses emission to temperature dynamics and microeconomic climate shocks affecting labour productivity and energy demand of firms. Simulation results show that the economy possesses two statistical equilibria: a carbon-intensive lock-in and a sustainable growth path characterized by better macroeconomic performances. Once climate damages are accounted for, the likelihood of a green transition depends on the damage function employed. In particular, aggregate and quadratic damage functions overlook the impact of climate change on the transition to sustainability; to the contrary, more realistic micro-level damages are found to deeply influence the chances of a transition. Finally, we run a series of policy experiments on carbon (fossil fuel) taxes and green subsidies. We find that the effectiveness of such market-based instruments depends on the different channels climate change affects the economy through, and complementary policies might be required to avoid carbon-intensive lock-ins.
    Keywords: climate change; agent based models; transitions; energy policy; growth
    Date: 2018–06–07
  4. By: Juan Moreno-Cruz; Gernot Wagner; David W. Keith
    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. Their wildly different characteristics have important implications for climate policy. We show in the context of our model that: (i) the optimal carbon tax equals the marginal cost of carbon geoengineering; (ii) the introduction of either form of geoengineering leads to higher emissions yet lower temperatures; (iii) in a world with above-optimal cumulative emissions, only a complete set of instruments can minimize climate damages.
    Keywords: climate change, climate policy, mitigation, adaptation, carbon geoengineering, carbon dioxide removal, solar geoengineering, solar radiation management
    JEL: D90 O44 Q48 Q54 Q58
    Date: 2018
  5. By: Chia-Lin Chang (National Chung Hsing University); Michael McAleer (Asia University, University of Sydney Business School, EUR); Yu-Ann Wang (National Chung Hsing University)
    Abstract: The purpose of the paper is to examine latent volatility Granger causality for four renewable energy Exchange Traded Funds (ETFs) and crude oil ETF (USO), namely solar (TAN), wind (FAN), water (PIO), and nuclear (NLR). Data on the renewable energy and crude oil ETFs are from 18 June 2008 to 20 March 2017. From the underlying stochastic process of a vector random coefficient autoregressive (VRCAR) process for the shocks of returns, we derive Latent Volatility Granger causality from the Diagonal BEKK multivariate conditional volatility model. We follow Chang et al. (2015)’s definition of the co-volatility spillovers of shocks, which calculate the delayed effect of a returns shock in one asset on the subsequent volatility or co-volatility in another asset, and extend the effects of the co-volatility spillovers of shocks to the effects of the co-volatility spillovers of squared shocks. The empirical results show there are significant positive latent volatility Granger causality relationships between solar (TAN), wind (FAN), nuclear (NLR), and crude oil (USO) ETFs, specifically significant volatility spillovers of shocks from solar ETF on the subsequent wind ETF co-volatility with solar ETF, and wind ETF on the subsequent solar ETF co-volatility with wind ETF. Interestingly, there are significant volatility spillovers of squared shocks for the renewable energy ETFs, but not with crude oil ETFs.
    Keywords: Renewable Energy; Latent Volatility; Granger Causality; Co-volatility Spillovers; Solar; Wind; Water; Nuclear Power.
    JEL: C32 C58 G12 G15 Q42
    Date: 2018–05–25
  6. By: Doda, Baran; Taschini, Luca
    Abstract: We propose a theory of the economic advantage (EA) of regulating carbon emissions by linking two emissions trading systems versus operating them under autarky. Linking implies that permits issued in one system can be traded internationally for use in the other. We show how the nature of uncertainty, market sizes, and sunk costs of linking determine EA. Even when sunk costs are small so EA>0, autarky can be preferable to one partner, depending on jurisdiction characteristics. Moreover, one partner’s permit price volatility under linking may increase without making linking the less preferred option. An empirical application calibrates jurisdiction characteristics to demonstrate the economic significance of our results which can make linking partner match crucial for the effectiveness and success of the Paris Agreement.
    Keywords: emission trading; climate change policy; market-based regulation; linking
    JEL: H23 Q58
    Date: 2017–09
  7. By: Maryam Ahmadi (University of Milan-Bicocca); Matteo Manera (University of Milan-Bicocca and Fondazione Eni Enrico Mattei (FEEM)); Mehdi Sadeghzadeh (Institute for Management and Planning Studies (IMPS))
    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: 2018–05
  8. By: Christopher Ksoll; Kristine Bos; Arif Mamun; Anthony Harris; Sarah Hughes
    Abstract: The evaluation design report for Mathematica Policy Research’s evaluation of two activities of MCC’s Benin II Energy Compact. The evaluation of these two projects involves a comprehensive mixed-methods approach, which will seek to measure the impacts of and understand the changes related to the Electricity Generation and Distribution Projects.
    Keywords: Benin, power, electricity, MCC
    JEL: F Z
  9. By: Krekel, Christian; Zerrahn, Alexander
    Abstract: Throughout the world, governments foster the deployment of wind power to mitigate negative externalities of conventional electricity generation, notably {CO2} emissions. Wind turbines, however, are not free of externalities themselves, particularly interference with landscape aesthetics. We quantify these negative externalities using the life satisfaction approach. To this end, we combine household data from the German Socio-Economic Panel Study (SOEP) with a novel panel dataset on over 20,000 installations. Based on geographical coordinates and construction dates, we establish causality in a difference-in-differences design. Matching techniques drawing on exogenous weather data and geographical locations of residence ensure common trend behaviour. We show that the construction of wind turbines close to households exerts significant negative external effects on residential well-being, although they seem both spatially and temporally limited, being restricted to about 4,000 metres around households and decaying after five years at the latest. Robustness checks, including view shed analyses based on digital terrain models and placebo regressions, confirm our results.
    Keywords: SOEP
    JEL: N0
    Date: 2017–11–29
  10. By: Guy Meunier; Jean-Pierre Ponssard
    Abstract: We analyze the impact of indirect network effects in the deployment of zero emission vehicles in a static partial equilibrium model. In most theoretical analysis direct and indirect effects are conflated, and relatively few authors have explicitly considered indirect network effects. We also introduce the market power of vehicle producers and scale effects in the production function. The model exhibits a multiplicity of local social extrema and of market equilibria, suggesting a possibility of lock-in. The optimal set of subsidies is derived so that the Pareto dominating market equilibrium would coincide with the social optimum. This framework is applied to the case of the fuel cell electric (hydrogen) vehicles.
    Keywords: E-mobility, network effects, joint incentives for infrastructure and car rebates
    JEL: C61
    Date: 2018
  11. By: Antonia Díaz (Universidad Carlos III de Madrid); Gustavo A. Marrero (Universidad de La Laguna); Luis Puch (Universidad Complutense de Madrid); Jesús Rodríguez-López (U. Pablo de Olavide)
    Abstract: This paper explores how changes in energy intensity and the switch to renewables can boost economic growth. In doing so, we implement a dynamic panel data approach on a sample of 134 countries over the period 1960 to 2010. We incorporate a set of control variables, related to human and physical capital, socio-economic conditions, and policies which are widely used in the associated literature. According to our results, and given the current state of technology, improving energy intensity is an approach that could reconcile growth and the environment at the worldwide level. Moving to conventional renewables (biomass and hydro) may reduce CO2 emissions, consistent with the related literature, although we do not find evidence that supports a growth enhancing effect. However, moving to frontier renewables (wind, solar, wave or geothermic) does reconcile the reduction of CO2 emissions with economic growth. Our results are robust to the specification of the dynamic panel with respect to three alternative methods, namely, the pooled OLS regression, the regression under fixed effects, and the GMM estimation.
    Keywords: Economic growth, energy intensity, renewable energy, dynamic panel data models.
    JEL: C23 C33 O5 Q2 Q3 Q41 Q43 Q42 Q48
    Date: 2018–06
  12. By: Nuno Carlos Leitão (Polytechnic Institute of Santarém, ESGTS and CEFAGE-UE, Évora University)
    Abstract: The climate change has inspired the interest of the academic community in the most diverse areas of knowledge. This study tests and revisited the environmental Kuznets curve assumptions for Portugal. The econometric strategy used in this research is time series (ARIMA model, OLS estimator, ARCH regression, VAR model, and Granger causality) for the time period 1980-2013.The econometric results show that the income per capita and squared income per capita are according to the expected signs, i.e. a positive impact of income per capita on carbon dioxide emissions, and a negative effect of squared income per capita on carbon dioxide emissions. The empirical study also demonstrates that Portugal presents a dependence on energy consumption. The openness trade and foreign direct investment are negatively correlated with carbon dioxide emissions.
    Keywords: Environmental Kuznets Curve, Climate Changes, Time Series and Openness Trade
    JEL: C50 Q43 Q53
    Date: 2018–05
  13. By: Arlan Brucal (Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science); Michael J. Roberts (Department of Economics, University of Hawaii at Manoa; UHERO; Sea Grant at University of Hawaii at Manoa)
    Abstract: Using a sample of 48 contiguous U.S. states for the period 1973-2013, we study how oil price shocks influence state-level economic growth. The analysis incorporates (1) a structural decomposition of the supply and demand factors that drive the real price of crude oil; (2) heterogeneity of states in terms of their production and consumption of oil and natural gas; and (3) economic spillovers across neighboring states. Oil price effects vary across states, depending on the underlying source of the price shock and a state's average production of oil relative to its average consumption. Oil-exporting states are more vulnerable to unanticipated changes in oil prices, and the direct effect of oil price shocks can magnify or temper effects on neighboring states. Aggregated predictions from the state-level model also differ modestly from stand-alone aggregate model (Kilian, 2009). The aggregated state-level model implies that the recent (2005-2016) decline in U.S. dependence on foreign oil reduced aggregate sensitivity to exogenous supply shocks by more than a third.
    Keywords: Oil price shocks, economic spillovers, dynamic
    JEL: E32 Q43
    Date: 2018–06
  14. By: Francisco Costa; François Gerard
    Abstract: A growing body of evidence documents that policies can affect household behaviors persistently, even if they are no longer in place. This paper studies the importance of such "hysteresis" – the failure of an effect to reverse itself as its underlying cause is reversed – for the welfare evaluation of corrective policies. First, we introduce hysteresis into the textbook framework used to derive canonical sufficient statistics formulas for the welfare effect of corrective policies. We then derive new formulas allowing for hysteresis. We show that, under certain conditions, the persistent effect of a short-run (i.e., temporary) policy becomes a new key statistic for evaluating the welfare effect of such a policy, and also of a long-run (i.e., permanent) version of a similar policy. Second, we estimate the persistent effect of a short-run policy, for which we argue that these conditions are met, in a policy-relevant context: residential electricity use in a developing country setting. We estimate that about half of the dramatic short-run reductions in residential electricity use induced by a 9-month-long policy that was imposed on millions of Brazilian households in 2001 persisted for at least 12 years after the policy ended. Finally, we combine our estimates with our framework to illustrate the implications that hysteresis can have for the welfare evaluation of corrective policies.
    JEL: D62 H23 Q50
    Date: 2018–05
  15. By: Brännlund, Runar (CERE - the Center for Environmental and Resource Economics); Vesterberg, Mattias (CERE - the Center for Environmental and Resource Economics)
    Abstract: In this paper, we explore subsistence levels and price elasticities for residential electricity demand in Sweden. Using a Stone-Geary functional form and unique Swedish data on residential electricity usage, we estimate demand Equations for peak and off-peak demand. We find that the subsistence levels are larger during peak than off-peak, and that there is a substantial variation in these subsistence levels across months. As a result, price responsiveness varies across hours and seasons. This has important policy implications, not the least with respect to effects of real time pricing, as it suggests that there are limits to households’ price responsiveness.
    Keywords: Dynamic price; Structural modeling; Stone Geary; Real time pricing
    JEL: D10 D12 Q41
    Date: 2018–05–25
  16. By: Xie, Jinghua (University of Stavanger); Tveterås , Sigbjorn (University of Stavanger)
    Abstract: In this paper, we have estimated hotel revenue functions at the regional level in Norway. The purpose is to investigate the effects of the oil price collapse on tourism demand. The oil industry is a dominant economic sector in Norway. Its high demand for economic resources has inflated the general price level nationally. A side effect is that the Norwegian tourism industry has struggled with poor price competitiveness. We find the downfall in oil revenues caused by the fall in crude oil prices has boosted tourism growth through a weakening of the local currency, Norwegian kroner. This result suggests that a subset of rich countries where wealth inflate prices of tourism services can have problem in developing its tourism industry.
    Keywords: Oil price; tourism; exchange rate; price competitiveness; Norway
    JEL: A10
    Date: 2018–06–07
  17. By: Christoph Boehringer (University of Oldenburg, Department of Economics); Nicholas Rivers (Graduate School of Public and International Affairs and Institute of the Environment, University of Ottawa)
    Abstract: We develop a stylized general equilibrium model to decompose the rebound effect of energy efficiency improvements into its partial and general equilibrium components. In our theoretical analysis, we identify key drivers of the general equilibrium rebound effect, including a composition channel, an energy price channel, a labor supply channel, and a growth channel. Based on numerical simulations with both the stylized model as well as a large-scale computable general equilibrium model of the global economy, we show that both general and partial equilibrium components of the rebound effect can be substantial. Our benchmark parameterization suggests a total rebound effect due to an exogenous energy efficiency improvement in the US manufacturing sector of 67% with roughly two-thirds occurring through the partial equilibrium rebound channel and the remaining one-third occurring through the general equilibrium rebound channel
    Keywords: energy efficiency, climate change, rebound effect, general equilibrium
    Date: 2018–06
  18. By: Soheil Shayegh (Fondazione Eni Enrico Mattei (FEEM)); Valentina Bosetti (Fondazione Eni Enrico Mattei (FEEM) and Bocconi University); Simon Dietz (London School of Economics); Johannes Emmerling (Fondazione Eni Enrico Mattei (FEEM)); Christoph Hambel (Goethe University Frankfurt); Svenn Jensen (Oslo Metropolitan University); Holger Kraft (Goethe University Frankfurt); Massimo Tavoni (Fondazione Eni Enrico Mattei (FEEM) and Politecnico di Milano); Christian Traeger (University of Oslo and University of California Berkeley); Rick Van der Ploeg (University of Oxford)
    Abstract: Over the last few decades, integrated assessment models (IAM) have provided insight into the relationship between climate change, economy, and climate policies. The limitations of these models in capturing uncertainty in climate parameters, heterogeneity in damages and policies, have given rise to skepticism about the relevance of these models for policy making. IAM community needs to respond to these critics and to the new challenges posed by developments in the policy arena. New climate targets emerging from the Paris Agreement and the uncertainty about the signatories’ commitment to Nationally Determined Contributions (NDCs) are prime examples of challenges that need to be addressed in the next generation of IAMs. Given these challenges, calculating the social cost of carbon requires a new framework. This can be done by computing marginal abatement cost in cost-effective settings which provides different results than those calculated using constrained cost-benefit analysis. Here we focus on the areas where IAMs can be deployed to asses uncertainty and risk management, learning, and regional heterogeneity in climate change impacts.
    Keywords: Integrated Assessment Models, Climate Policy, Carbon, Uncertainty
    JEL: Q54
    Date: 2018–05
  19. By: Ian A. Lange; Michael Redlinger
    Abstract: This analysis seeks to understand whether changes in oil regulation brought about by the shale revolution have restricted the pace of drilling and production. This hypothesis is tested using data on North Dakota and Montana both before and after North Dakota increased the level of bonding required. Results generally find that the new regulations had no statistical impact on the pace of drilling and production, however it is found that smaller operators reduced their production and exited. These results are instructive for policymakers who weigh the loss of economic welfare against improved environmental quality when deciding on new regulations.
    Keywords: oil and gas regulation, shale oil, drilling, firm exit
    JEL: L51 L71 Q53
    Date: 2018
  20. By: Raouf Boucekkine (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales, IMéRA - Institute for Advanced Studies - Aix-Marseille University, IUF - Institut Universitaire de France - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche); Giorgio Fabbri (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Salvatore Federico (Università degli Studi di Siena, Dipartimento di Economia Politica e Statistica); Fausto Gozzi (Dipartimento di Economia e Finanza, Università Luiss - Guido Carli)
    Abstract: We solve a linear-quadratic model of a spatio-temporal economy using a polluting one-input technology. Space is continuous and heterogenous: locations differ in productivity, nature self-cleaning technology and environmental awareness. The unique link between locations is transboundary pollution which is modelled as a PDE diffusion equation. The spatio-temporal functional is quadratic in local consumption and linear in pollution. Using a dynamic programming method adapted to our infinite dimensional setting, we solve the associated optimal control problem in closed-form and identify the asymptotic (optimal) spatial distribution of pollution. We show that optimal emissions will decrease at given location if and only if local productivity is larger than a threshold which depends both on the local pollution absorption capacity and environmental awareness. Furthermore, we numerically explore the relationship between the spatial optimal distributions of production and (asymptotic) pollution in order to uncover possible (geographic) Environmental Kuznets Curve cases.
    Keywords: growth,geography,transboundary pollution,infinite dimensional optimal control problems
    Date: 2018–05
  21. By: Udabah, Sylvester; Okolo, Chimaobi
    Abstract: As the large exporter of crude oil, Nigeria heavily depends on oil earnings to fund economic activities. The country also rely heavily on imports of consumables, both oil and non oil consumables. Nigerias vulnerability to crude oil price shock at the international oil market exposes the nation to certain negative shocks. The study investigated the dynamics of crude oil price and exchange rate volatilities and its implication on the cost of living in Nigeria. Structural Generalized Autoregressive Conditional Heteroscedasticity (S-GARCH) was employed to measure the influence of crude oil price volatility on the exchange rate fluctuation as well as their influence on the consumer price index. Oil price and exchange rate volatilities did not significantly pass-through to the consumer price index in Nigeria. However, information on previous volatilities proved a significant determinant of current volatilities. The media should be significantly utilized as a strategic tool to better predict and manage oil price and exchange rate volatilities in Nigeria. Government should further reconsider allowing the importation of certain consumable goods which are also produced in Nigeria, while boosting domestic production and export.
    Keywords: cost of living, exchange rate, oil price, pass-through, volatilities.
    JEL: E31 F13 F31 F41
    Date: 2018
  22. By: Antonelli, Cristiano; Feder, Christophe; Quatraro, Francesco (University of Turin)
    Abstract: Technological congruence implements the analysis of directed technological change showing how the match between the relative size of outputs’ elasticity and the relative abundance and cost of production factors has powerful effects on total factor productivity (TFP). Smart specialization strategies can rely upon technological congruence to support the introduction and diffusion of new directed technologies characterized by the best mix of factors relative cost -as determined by pecuniary externalities in the regional factor markets- and output elasticity. The evidence of 278 European regions in the years 1980-2011 confirms that the levels and the changes in technological congruence, brought about by the introduction of directed technological changes, have significant effects on the levels and the changes of TFP. The key policy implication is that the optimal S3 policy mix should not only look at the history of local industrial or technological specializations, but it should also take into account the pecuniary externalities that characterize local factor markets to promote technological changes directed to augmenting the output elasticity of the cheaper regional production factors.
    Date: 2018–04
  23. By: Florian Ziel; Rafal Weron
    Abstract: We conduct an extensive empirical study on short-term electricity price forecasting (EPF) to address the long-standing question if the optimal model structure for EPF is univariate or multivariate. We provide evidence that despite a minor edge in predictive performance overall, the multivariate modeling framework does not uniformly outperform the univariate one across all 12 considered datasets, seasons of the year or hours of the day, and at times is outperformed by the latter. This is an indication that combining advanced structures or the corresponding forecasts from both modeling approaches can bring a further improvement in forecasting accuracy. We show that this indeed can be the case, even for a simple averaging scheme involving only two models. Finally, we also analyze variable selection for the best performing high-dimensional lasso-type models, thus provide guidelines to structuring better performing forecasting model designs.
    Date: 2018–05
  24. By: Richard Dubourg (The Economics Interface Limited)
    Abstract: This paper gives an overview of economic assessments of the benefits of the control of emissions of mercury compounds, discusses their completeness from a social cost point of view, and discusses the relative magnitudes of the values attached to mercury compounds in different contexts. The majority of the assessments have been conducted in the context of coal-fired electricity generation and the valuation of human health impacts linked to ingestion of methylmercury.
    Keywords: benefits, impacts, Mercury, policy, valuation
    JEL: Q51 Q53 Q58
    Date: 2018–06–06
  25. By: Jean-Pierre Allegret (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique); Mohamed Benkhodja (ESSCA School of Management); Tovonony Razafindrabe (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Date: 2018–05–19
  26. By: Zoi Vrontisi; Gunnar Luderer (PIK - Potsdam Institute for Climate Impact Research); Bert Saveyn; Kimon Keramidas; Lara Aleluia Reis; Lavinia Baumstark; Christoph Bertram (PIK - Potsdam Institute for Climate Impact Research); Harmen Sytze De Boer; Laurent Drouet; Kostas Fragkiadakis; Oliver Fricko; Shinichiro Fujimori (NIES - National Institute for Environmental Studies); Céline Guivarch (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); Alban Kitous (Enerdata S.A. - Université de Lille, Sciences Humaines et Sociales); Volker Krey (IIASA - International Institute for Applied Systems Analysis [Laxenburg]); Elmar Kriegler (PIK - Potsdam Institute for Climate Impact Research); Eoin Broin; Leonidas Paroussos (NTUA - National Technical University of Athens [Athens]); Detlef Van Vuuren (PBL Netherlands Environmental Assessment Agency)
    Date: 2018–04–01
  27. By: Eloi Laurent (Observatoire français des conjonctures économiques)
    Abstract: Un an exactement après avoir accueilli la COP21, Paris suffoquait début décembre sous un dôme de pollution, mais aussi Lyon, Villeurbanne, Marseille, Avignon, Rouen ou Grenoble. Airparif, qui a relevé un niveau de particules fines de 146 µg/m3 à Paris en moyenne pour le 1er décembre, précisait dans un communiqué qu’il s’agissait là d’un des pics hivernaux de pollution les plus sévères de ces dix dernières années, les précédents remontant à janvier 2009 et décembre 2007.
    Keywords: Environnement; Pollution; Qualité de l'air
    Date: 2017–01
  28. By: Instituto de Pesquisa Econômica Aplicada (IPC-IG)
    Abstract: "How can emissions reporting be transformed into emissions accounts? Maria Lidén, Senior Advisor, Environmental Accounts and Natural Resources at Statistics Sweden, asserted that this endeavour is possible. Statistics Sweden has managed to successfully improve each successive inventory of air emissions. Every new set of national economic accounts has been better than the preceding one. There is no need for extra services to account for emissions?the only need is to transform the data". (?)
    Keywords: Linking, national, emissions, inventories, economic, accounting
    Date: 2017–12
  29. By: Wolf-Peter Schill; Alexander Zerrahn; Claudia Kemfert; Christian von Hirschhausen
    Abstract: Die Umsetzung der Energiewende erfordert einen weiteren starken Ausbau der erneuerbaren Energien in Deutschland. Jedoch werden in der energiepolitischen Debatte immer wieder Zweifel geäußert, ob eine weitgehend auf fluktuierender Wind- und Solarenergie basierende Energieversorgung möglich sei. So droht einer aktuell diskutierten Analyse Hans-Werner Sinns zufolge der weitere Ausbau der Wind- und Solarenergie in Deutschland aufgrund fehlen-der Stromspeicher an eine Grenze zu stoßen. In diesem Beitrag wird gezeigt, dass der dabei ermittelte Speicherbedarf aufgrund methodischer Schwächen weit höher liegt als in anderen relevanten Studien. Er kann um rund zwei Größenordnungen niedriger ausfallen, wenn eine moderate Abregelung erneuerbarer Stromerzeugungsspitzen erlaubt wird, wenn also nicht jede von Wind-kraft- und Solaranlagen erzeugbare Kilowattstunde eingespeichert werden muss. Zudem können neue flexible Stromnachfrager den Speicherbedarf noch deutlich weiter verringern. Der Stromspeicherbedarf stellt somit, anders als von Hans-Werner Sinn behauptet, kein Hindernis für den weiteren Fortgang der Energiewende dar.
    Date: 2018
  30. By: Institute for Applied Economic Research (IPC-IG)
    Abstract: "A two-year project to study compatibility tables between national accounts and greenhouse gas (GHG) emissions is being developed by experts in accounting and climatic issues. What can be done, in practical terms, to establish GHG emissions accounts in Brazil? Inventory data, as usually presented, are too aggregated. When the Ministry of Science, Technology, Innovation and Communication (MCTIC) creates the GHG emissions inventory, it follows the guidelines of the Intergovernmental Panel on Climate Change (IPCC). For the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística?IBGE), developing climate accounts using the inventory as a data source implies adjusting inventory data into a format which is compatible with national accounts". (...)
    Keywords: project, bridging, tables, national, accounts, emissions
    Date: 2018–02
  31. By: George Economides; Anastasios Xepapadeas
    Abstract: We study monetary policy under climate change in order to answer the question of whether monetary policy should take into account the expected impacts of climate change. The setup is a new Keynesian dynamic stochastic general equilibrium model of a closed economy in which a climate module that interacts with the economy has been incorporated, and the monetary authorities follow a Taylor rule for the nominal interest rate. The model is solved numerically using common parameter values and fiscal data from the euro area. Our results, which are robust to a large number of sensitivity checks, suggest non-trivial implications for the conduct of monetary policy.
    Keywords: climate change, monetary policy, new Keynesian model, Taylor rule
    JEL: E50 E10 Q50
    Date: 2018
  32. By: Haber, Hanan
    Abstract: This article argues that the European Union (EU) is promoting a liberal model of welfare through social regulation. Focusing on the liberalization and regulation of the electricity sector, the article asks how and for what reasons social protection of vulnerable consumers was introduced into this sector, and what kind of welfare policy this represents. This article shows that social measures grew substantially between the second and third directives on electricity sector liberalization (2005–2009), advanced by the European Parliament and reluctantly adopted by the Commission. This development runs counter to our understanding of electricity sector reform as focused primarily on liberalization, competition and efficiency. It is argued that the introduction of social protection advanced the process of economic reform, even when the measures introduced were in themselves inefficient. This social regulation, however, not only reflects a liberal, targeted and minimal understanding of welfare, but also pushes social policy in member states in this same direction.
    Keywords: Electricity; liberalization; regulation; utilities; welfare
    JEL: J1
    Date: 2018
  33. By: Institute for Applied Economic Research (IPC-IG)
    Abstract: "The International Seminar on Linking Climate Change and National Accounting showed that the state-of-the-art for accounting in Brazil and around the world requires the integration of actors and information systems to meet a challenging new era, where people and economies will be evaluated according to their ability to diminish the human impacts of greenhouse gas (GHG) emissions in the atmosphere". (...)
    Keywords: International, experiences, climate change, related, statistics
    Date: 2017–12
  34. By: Pernestål Brenden , Anna (CTS - Centre for Transport Studies Stockholm (KTH and VTI)); Kristoffersson , Ida (VTI)
    Abstract: The development of driverless vehicles is fast, and the technology has the potential to significantly affect the transport system, society and environment. However, there are still many open questions regarding what this development will look like and there are several counteracting forces. This paper addresses the effects of driverless vehicles by performing a literature review of twenty papers that use simulation to model effects of driverless vehicles. By combing and analysing the results from these simulation studies, an overall picture of the effects of driverless vehicles is presented. The paper shows that focus in existing literature has been on effects of driverless taxi applications in urban areas. Some parameters, such as trip cost and waiting time, show small variations between the reviewed papers. Other parameters, such as vehicle kilometres travelled (VKT), show larger variations and depend heavily on the assumptions concerning value of time and level of sharing. In general, increases in VKT are predicted for most applications. Ride sharing has the potential to reduce VKT, and thereby energy consumption and congestion, but the analysis indicates that a sufficient level of ride sharing to reduce VKT will not be achieved without incentives or regulations. Furthermore, the VKT of driverless vehicles is unevenly distributed from a time and space perspective, with larger increases in VKT during peak hours than in off-peak, and in the suburbs compared to city centres. The reviewed papers provide a first prediction of factors such as waiting time, VKT and trip cost, in particular for urban areas and for schemes where there is one service provider present. To get a deeper understanding of the effects of driverless vehicles, aspects such as local spatial considerations, e.g. at pick-up stations, and more complex schemes with competition between service providers should be studied. Furthermore, there is a need for sensitivity analyses regarding travel demand.
    Keywords: Driverless vehicle; Automated vehicle; Autonomous taxi; Traffic simulation; Societal effects
    JEL: R40 R41
    Date: 2018–06–11
  35. By: Armel Ngami (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales); Thomas Seegmuller (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales)
    Abstract: This paper analyses the effect of a pay-as-you-go pension system on the evolution of capital and pollution, and on the efficiency of an environmental versus health policy. In an overlapping generations model (OLG), we introduce endogenous longevity that depends on pollution and health expenditures. Global dynamics may display multiple balanced growth paths (BGP). We show that by discouraging savings, a policy that promotes the pension system enlarges the environmental poverty trap. More surprisingly, the environmental policy has contrasted effects according to the significance of the pension system. If it has a low size, a raise of the environmental policy enlarges the environmental poverty trap and leads to a rise in capital over pollution at the highest stationary equilibrium. In contrast, in economies where intergenerational solidarity is well developed, capital over pollution decreases at the highest BGP. In such a case, the environmental policy does not necessarily lead to a better longevity and growth.
    Keywords: longevity,environment,health,pension system,growth,pollution
    Date: 2018–05
  36. By: David Allen (University of Sydney); Michael McAleer (Asia University, University of Sydney Business School, EUR); David McHardy Reid (Seattle University)
    Abstract: A set of 115 tweets on climate change by President Trump, from 2011 to 2015, are analysed by means of the data mining technique, Sentiment Analysis. The intention is to explore the contents and sentiments of the messages contained, the degree to which they differ, and their implications about his understanding of climate change. The results suggest a predominantly negative emotion in relation to tweets on climate change, but they appear to lack a clear logical framework, and confuse short term variations in localised weather with long term global average climate change.
    Keywords: Sentiment Analysis; Polarity; Climate Change; Scientific Verification; Weather
    JEL: A1 C88 C44 Z0
    Date: 2018–05–25

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