nep-ene New Economics Papers
on Energy Economics
Issue of 2018‒06‒25
twenty-six papers chosen by
Roger Fouquet
London School of Economics

  1. Stochastic volatility and leverage effect in energy markets: evidence from high frequency data with VaR and CVaR risk analysis By Christopher F Baum; Paola Zerilli; Liyuan Chen
  2. Managerial Flexibility in Levelized Cost Measures: A Framework for Incorporating Uncertainty in Energy Investment Decisions By Bistline, John E.; Comello, Stephen D.; Sahoo, Anshuman
  3. Instrument Choice and Stranded Assets in the Transition to Clean Capital By Julie Rozenberg; Adrien Vogt-Schilb; Stephane Hallegatte
  4. When is a carbon price floor desirable? By Newbery, D.; Reiner, D.; Ritz, R.
  5. Energy Productivity and Energy Demand: Experimental Evidence from Indian Manufacturing Plants By Nicholas Ryan
  6. Radioinactive: Are nuclear power plant outages in France contagious to the German electricity price? By Rinne, Sonja
  7. Combining Geothermal Energy and CCS: From the Transformation to the Reconfiguration of a Socio-Technical Regime? By X. Galiègue; A. Laude
  8. Evaluation of Romania's potential for producing renewable energy from agriculture and forestry By Șurcă, Elena
  9. A Profit Optimization Approach Based on the Use of Pumped-Hydro Energy Storage Unit and Dynamic Pricing By Ak{\i}n Ta\c{s}cikarao\u{g}lu; Ozan Erdin\c{c}
  10. Global Melting? The Economics of Disintegration of the Greenland Ice Sheet By William D. Nordhaus
  11. Is Energy Transition Beneficial to Sectors with High Employment Content? An Input-Output Analysis for France By Quentin Perrier; Philippe Quirion
  12. Modeling the residential electricity consumption within a restructured power market By Chelsea Sun
  13. Pollution, green union and network industry By Fanti, Luciano; Buccella, Domenico
  14. What do people ‘learn by looking’ at direct feedback on their energy consumption? Results of a field study in Southern France By Adnane Kendel; Nathalie Lazaric; Kevin Maréchal
  15. Carbon Capture and Utilization in the Industrial Sector By Psarras, Peter C.; Comello, Stephen; Bains, Praveen; Charoensawadpong, Panunya; Reichelstein, Stefan J.; Wilcox, Jennifer
  16. Performance of Markets for European Renewable Energy Certificates By Hulshof, Daan; Jepma, Catrinus; Mulder, Machiel
  17. Energy consumption and activity patterns: an analysis extended to total time and energy use for French households By Simona De Lauretis; Frédéric Ghersi; Jean-Michel Cayla
  18. The determinants of cleaner energy innovations of the world’s largest firms: the impact of firm learning and knowledge capital By Patricia Laurens; Christian Le Bas; Stéphane Lhuillery; Antoine Schoen
  19. The Carbon Abatement Game By Christoph Hambel; Holger Kraft; Eduardo S. Schwartz
  20. Dematerialization, decoupling, and productivity Change By Eric Kemp-Benedict
  21. Impact of the Clean Air Act on Air Pollution and Infant Health: Evidence from South Korea By Lee, Soohyung; Yoo, Heesun; Nam, Minhyuk
  22. An environmentally sustainable global economy. A coopetitive model By Carfì, David; Donato, Alessia; Schilirò, Daniele
  23. Economic Impacts of the Marcellus Shale Energy and Environment Laboratory (MSEEL) By Caleb Stair; Randall W. Jackson
  24. Heat and Learning By Joshua Goodman; Michael Hurwitz; Jisung Park; Jonathan Smith
  25. Energy efficient technology adoption and low-income households in the EU: What is the evidence? By Schleich, Joachim
  26. Toxic Truth: Lead and Fertility By Karen Clay; Margarita Portnykh; Edson Severnini

  1. By: Christopher F Baum (Boston College; German Institute for Economic Research (DIW Berlin)); Paola Zerilli (University of York); Liyuan Chen (University of York)
    Abstract: The study of volatility in crude oil and natural gas markets and its interaction with returns (leverage) has a broad range of financial impacts both from an hedging point of view and also for forecasting purposes. The main limitation of using daily data is that volatility is not observable. In contrast, intra-day data provide an almost continuous observation of the return series, making volatility observable so that it can be studied in great detail. From an econometric point of view, the employment of intra-day data leads to the estimation of structural parameters of stochastic volatility models using simple moment conditions while fitting all the relevant empirical features of energy and stock index returns. This paper contributes to the current debate by: 1) exploring evidence of leverage effects in energy futures markets versus financial stock indexes (S&P500) and 2) evaluating the impact of leverage on risk forecasting in a VaR and CVaR sense. We find significant evidence of a leverage e§ect for S&P500 and crude oil markets: a negative shock to returns increases volatility in these markets. We also find evidence of an inverse leverage effect for the natural gas market: volatility becomes higher when energy returns increase. We show that the introduction of leverage improves the forecasting ability of the SV model using the RMSE and MAE criteria for all the markets considered.
    Keywords: stochastic volatility, leverage effect, energy markets, high frequency data, VaR, CVaR
    JEL: C53 C58 G17 G32 Q41 Q47
    Date: 2018–06–15
  2. By: Bistline, John E. (Stanford University); Comello, Stephen D. (Stanford University); Sahoo, Anshuman (Stanford University)
    Abstract: Many irreversible long-run capital investments entail opportunities for managers to respond flexibly to changes in the economic environment. However, common levelized cost measures used to guide decision-making, such as the levelized cost of electricity, implicitly assume that the values of random economic variables are known with certainty when investment decisions are made. This assumption implies, often incorrectly, that managerial flexibility carries zero value. This paper improves levelized cost measures by deriving an expansion that accounts for both uncertainties in relevant variables and the value of managerial flexibility in responding to them. This method is applied to quantify the value of flexibility in two example decision problems. In one, an operator of a natural gas electricity generation facility evaluates whether to invest in carbon capture capabilities. Another considers retirement decisions for U.S. nuclear plants. These examples illustrate that simplified cost metrics can inaccurately guide decision-making by inflating cost estimates relative to the proposed levelized cost measure that accounts for uncertainty and flexibility.
    Date: 2017–08
  3. By: Julie Rozenberg; Adrien Vogt-Schilb; Stephane Hallegatte
    Abstract: To mitigate climate change, some governments opt for instruments focused on investment, like performance standards or feebates, instead of carbon prices. We compare these policies in a Ramsey model with clean and polluting capital, irreversible investment and a climate constraint. Alternative instruments imply different transitions to the same balanced growth path. The optimal carbon price minimizes the discounted social cost of the transition to clean capital, but imposes immediate private costs that disproportionately affect the current owners of polluting capital, in particular in the form of stranded assets. A phased-in carbon price can avoid stranded assets but still result in a drop of income for the owners of polluting capital when it is implemented. Second-best standards or feebates on new investment lead to higher total costs but avoid stranded assets, preserve the revenues of vested interests, and smooth abatement costs over individuals and time. These results suggest a trade-off between political feasibility and cost-effectiveness of environmental policies.
    Keywords: Stranded Assets, Energy efficiency, Greenhouse Gas Emissions, Power plants, Coal, Environmental taxes, Environmental Policy, Climate change mitigation, clean capital, BIDcambioclima, stranded assets
    JEL: L50 O33 O44 Q52 Q54 Q58
    Date: 2017–03
  4. By: Newbery, D.; Reiner, D.; Ritz, R.
    Abstract: The EU carbon price lies well below estimates of the social cost of carbon and “target-consistent” carbon prices needed to deliver ambitious targets such as the 40% reduction target for 2030. In light of this, the UK introduced a carbon price floor (CPF) for its electricity sector in 2013 and the new Dutch Government has recently made a similar commitment, while successive French Governments have called for an EU-wide CPF. This paper analyzes the impacts and design of a power-sector CPF, both at the EU and national level, using a political-economy approach. We find a good case for introducing such a price-based instrument into the EU ETS. We suggest that a CPF should be designed to “top up” the EUA price to €25–30/tCO2, rising annually at 3–5% above inflation, at least until 2030. We argue that the new EU Market Stability Reserve enhances the value of a CPF in terms of delivering climate benefits, and discuss the potential for a regional CPF in North-West Europe. We also review international experience with price floors (and ceilings).
    Keywords: Carbon pricing, electricity markets, market failure, policy failure, political economy, price floor, price corridor
    JEL: H23 L94 Q48 Q54
    Date: 2018–06–15
  5. By: Nicholas Ryan
    Abstract: This paper studies a field experiment among energy-intensive Indian manufacturing plants that offered energy consulting to raise energy productivity, the amount plants can produce with each unit of energy. Treatment plants, after two years and relative to the control, run longer hours, demand more skilled labor and use 9.5 percent more electricity (standard error 7.3 percent). I assume that the treatment acted only through energy productivity to estimate the plant production function. The model estimates imply that energy complements skill and capital and that energy demand therefore responds more strongly to a productivity shock when plants can adjust these inputs.
    JEL: D24 O14 Q41
    Date: 2018–05
  6. By: Rinne, Sonja
    Abstract: Are nuclear power plant outages in France contagious to the German electricity price? In the case of the extensive inspections from October 2016 to February 2017 in 12 French nuclear power plants: Yes. This capacity shock increased the French electricity spot market price by 14.15 Euros per MWh. The German-Austrian electricity spot market price was affected, with an increase of 1.72 Euros per MWh through cross-border trade. Hence, the current market integration between France and Germany to balance supply and demand in times of capacity shocks is limited. These results derive from a quasi-experimental approach based on coarsened exact matching. Thereby, the exogenous nature of the capacity shock is exploited as a random treatment in order to identify causal effects.
    Keywords: electricity price,electricity trade,nuclear power,market integration
    JEL: C21 F15 L94 Q41
    Date: 2018
  7. By: X. Galiègue (LEO - Laboratoire d'économie d'Orleans - UO - Université d'Orléans - Université de Tours - CNRS - Centre National de la Recherche Scientifique); A. Laude (REGARDS - Recherches en Économie Gestion AgroRessources Durabilité Santé- EA - URCA - Université de Reims Champagne-Ardenne - SFR Condorcet - URCA - Université de Reims Champagne-Ardenne - UPJV - Université de Picardie Jules Verne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Combining geothermal energy and CCS (Carbon Capture and Storage) is a technological solution that uses the same aquifer to provide heat and to store CO2, after dissolving it into the brine, leading to a close loop, as proposed in the CO2-DISSOLVED concept. This technology is more relevant for small-scale emitters-such as biorefineries-than CCS with postcombustion and storage at a supercritical state, which requires larger scale effects i.e., most power generation plants using fossil fuels. Based on a techno-economic analysis, we provide insights on the role of CO2-DISSOLVED in the sustainable transition. Contrary to conventional CCS on fossil fuels, CO2-DISSOLVED appears as a bridge towards renewable energies, and acts as a complementary technology, enlarging the potential of CCS for small or medium industrial emitters. This innovation enriches the portfolio of CCS combinations with renewable energies, like BECCS (BioEnergies and CCS). It helps then to overcome the current debates CCS versus renewable energies, showing a large gradient of situations. According to the Multi-Level Perspective (MLP) of sustainable transition, CO2-DISSOLVED could contribute to the transformation of the existing socio-technical system, and to its reconfiguration towards renewable sources of energy. As other competing technologies, it could play a rising role in the modification of the energy system. Then, focusing only on CCS implemented on large-scale emitters constitutes a narrow vision of CCS potential in the sustainable transition.
    Keywords: partial capture,Geothermal energy,Carbon Capture and Storage,CO2-DISSOLVED,Multi-Level Perspective
    Date: 2017
  8. By: Șurcă, Elena
    Abstract: Renewable energy production is an alternative to traditional energy resources that are being depleted, these new resources will gradually replace the exhausting energies by combining the three main features of the present century, so that sustainable development, energy security and environmental protection become defining elements in terms of renewable energy production. The energy sector communicates and is closely linked to the economic sector, the defining resource with a major influence on the economy being oil, where its exhaustion and other natural energy resources would lead to economic and political instability, which is why it is necessary to highlight the possibility of substitution exhaustible resources through different sources of renewable energies: solar, wind, microhydro, geothermal and biomass. In view of the above, we will highlight Romania's potential in the production of renewable energy from biomass, the materials provided by the agricultural sector and the forestry sector, but also the energy consumption in agriculture and forestry, as well as the type of biofuel used (liquid or solid), which draws a parallel between the two categories of biofuels obtained from the same resource. We will also highlight Romania's position in the European Union in this field, highlighting the national and European objectives on this issue.
    Keywords: renewable energy, biomass, energy security
    JEL: Q23 Q42
    Date: 2017–11–16
  9. By: Ak{\i}n Ta\c{s}cikarao\u{g}lu; Ozan Erdin\c{c}
    Abstract: In this study, an optimization problem is proposed in order to obtain the maximum economic benefit from wind farms with variable and intermittent energy generation in the day ahead and balancing electricity markets. This method, which is based on the use of pumped-hydro energy storage unit and wind farm together, increases the profit from the power plant by taking advantage of the price changes in the markets and at the same time supports the power system by supplying a portion of the peak load demand in the system to which the plant is connected. With the objective of examining the effectiveness of the proposed method, detailed simulation studies are carried out by making use of actual wind and price data, and the results are compared to those obtained for the various cases in which the storage unit is not available and/or the proposed price-based energy management method is not applied. As a consequence, it is demonstrated that the pumped-hydro energy storage units are the storage systems capable of being used effectively for high-power levels and that the proposed optimization problem is quite successful in the cost-effective implementation of these systems.
    Date: 2018–06
  10. By: William D. Nordhaus
    Abstract: Concerns about the impact on large-scale earth systems have taken center stage in the scientific and economic analysis of climate change. The present study analyzes the economic impact of a potential disintegration of the Greenland Ice Sheet (GIS). The method is to combine a small geophysical model of the GIS with the DICE integrated assessment model. The result shows that the GIS is likely to disappear over the next millennium or so without climate policy, but an active climate policy may prevent the GIS from crossing the threshold of irreversibility. Additionally, the study estimates the impact of the GIS on the social cost of carbon (SCC) and finds that adding GIS dynamics would add less than 5% to the SCC under alternative discount rates and estimates of the GIS dynamics. Simulations of geo-engineering options indicate that the dynamics of disintegration and rebuilding are extremely asymmetric, implying that GIS disintegration should be treated as irreversible.
    JEL: H4 Q5 Q54
    Date: 2018–05
  11. By: Quentin Perrier (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); Philippe Quirion (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)
    Abstract: Employment has been a key issue in the public debate on the energy transition in France. In this paper, we develop a methodology based on input-output analysis to compare the employment content of each economic sector to the national average. The differences are broken down into five components: the import rates of final goods, the import rates of intermediate goods, taxes and subsidies, salary levels and the share of labor in value added. We then estimate the employment content and the greenhouse gases (GHG) content of all French economic sectors in 2010, in order to study intersectoral substitutions stemming from an energy transition. We find that employment content variations are explained, in order of importance, by salary levels, the share of labor in value added, the import rates of final goods, the import rates of intermediate goods, and finally taxes and subsidies. In addition, our results show that the EU ETS covers sectors with high GHG content and low employ- ment content, but not sectors with high GHG content and high employment content. Concerns about employment impacts might be part of the explanation for this. Finally, we identify intersectoral substitutions that would encourage sectors with lower GHG content and higher employment content.
    Abstract: Dans le débat public sur la transition énergétique en France, l’emploi occupe une place prépondérante. Nous développons une méthode basée sur l’analyse entrées-sorties pour décomposer le contenu en emploi d’une branche et le comparer à la moyenne nationale selon cinq critères : le taux d’importations finales, le taux d’importations intermédiaires, les taxes et subventions, la part du travail dans la valeur ajoutée et le niveau de salaire. Nous évaluons ensuite le contenu en emploi et en émissions de gaz à effet de serre de toutes les branches économiques françaises en 2010, pour étudier les substitutions interbranches d’une transition énergétique. Nos résultats indiquent que les variations de contenu en emploi entre branches s’expliquent, dans l’ordre, par le niveau de salaire, la part du travail dans la valeur ajoutée, le taux d’importations finales, le taux d’importations intermédiaires, et en dernier par les taxes et subventions. Par ailleurs, nous montrons que l’EU ETS couvre les branches intensives en émissions et peu intensives en emploi, mais pas les branches intensives en émissions et en emploi. L’emploi pourrait donc expliquer en partie le choix des branches soumises à l’EU ETS. Enfin, nous identifions des substitutions qui favoriseraient des branches moins intensives en émissions et plus intensives en emploi.
    Keywords: Index decomposition analysis,Input-Output Analysis,Energy transition,Employment
    Date: 2017
  12. By: Chelsea Sun
    Abstract: The United States' power market is featured by the lack of judicial power at the federal level. The market thus provides a unique testing environment for the market organization structure. At the same time, the econometric modeling and forecasting of electricity market consumption become more challenging. Import and export, which generally follow simple rules in European countries, can be a result of direct market behaviors. This paper seeks to build a general model for power consumption and using the model to test several hypotheses.
    Date: 2018–05
  13. By: Fanti, Luciano; Buccella, Domenico
    Abstract: In this paper the authors investigate whether and how, in a network industry, the intensity of network effects affect the total pollution under the presence of a union interested to "local" environmental damages (e.g. polluting production processes damaging workers' health and the local environment where workers live). Under monopoly, it is shown that network effects tend to increase, on the one hand, the investments in the cleaning technology but, on the other hand, the polluting output, so that their effects on the total pollution are theoretically ambiguous. In particular, the authors find that total pollution is reduced (resp. increased) with increasing network effects intensity if the market is sufficiently large (resp. small). Moreover the pollution-reducing result of the increasing network effect is more likely when the existing network effects, the union's environmental concerns and the technological efficiency are sufficiently large. These findings are qualitatively confirmed also under different union's preferences, Government's environmental standard and Cournot duopoly, and thus offer interesting empirical as well as policy implications.
    Keywords: network goods,cleaning technology,pollution production,green unions,monopoly,Cournot duopoly
    JEL: J51 L12
    Date: 2018
  14. By: Adnane Kendel (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS - Centre National de la Recherche Scientifique - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur); Nathalie Lazaric (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS - Centre National de la Recherche Scientifique - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur); Kevin Maréchal (ULB - Université Libre de Bruxelles [Bruxelles])
    Abstract: The abundant literature on consumer feedback shows that it is an efficient instrument for reducing household energy consumption. However, the reported reductions are strongly dependent on contextual factors and on the type of feedback provided. Given the importance of learning to this respect, this dimension constitutes the core focus of the present study which reports the findings of the TICELEC (i.e. French acronym for information technologies for responsible electricity consumption) project in France. The experiment included a control group (G1: the self-monitoring group) and one equipped group (G2). All participants reduced their consumption and learnt either directly from feedback or indirectly through self-monitoring. The amount of energy savings, which is larger than in similar experiments, can be explained by two factors. First, the specificity of our sample (i.e. high income, high consumption) which allows for potentially large energy savings. Second, high involvement of participants and the building of trust. The quantitative and qualitative dimensions of learning are then discussed. Additionally, we focus on peak-load shifting in G2 with 2 subgroups (G21 and G22). The higher proportion of shifters in G22 and the higher 'quality' of their shifting suggest a higher level of learning enabled by the more sophisticated feedback. Although this translated into only a moderately higher rate of energy savings, the higher degree of absorbed knowledge (i.e. through 'learning by looking through connecting') might lead to a qualitatively distinctive type of energy saving.
    Keywords: feedback,learning,Household energy saving,Residential consumption
    Date: 2017
  15. By: Psarras, Peter C. (Colorado School of Mines); Comello, Stephen (Stanford University); Bains, Praveen (Stanford University); Charoensawadpong, Panunya (Stanford University); Reichelstein, Stefan J. (Stanford University); Wilcox, Jennifer (Colorado School of Mines)
    Abstract: The fabrication and manufacturing of industrial commodities such as iron, glass and cement is carbon-intensive. A major reason capture of carbon dioxide from flue gases of industrial processes has not been widely adopted as a climate mitigation strategy is due to the lack of economic incentives for capturing CO2 on a scale that will impact climate. Yet, abatement opportunities do exist for the industrial sector, provided the scale of such processes is aligned well with CO2 utilization. This is important given that this sector accounts for 23% of total global emissions. This work develops a model that examines the full cost of separating, compressing and transporting CO2 of various industrial processes (sources), and pairing them with appropriate utilization opportunities (sinks). We find that--given the relatively higher concentrations of CO2 in flue gases from industrial processes--the full cost of abatement is lower than that of the power sector. Further, we find truck transportation is generally the low-cost alternative compared to pipeline transport for small volumes indicative of this kind of capture activity (100 kt CO2/a). We apply this methodology to a regional case study, which shows steel and cement manufacturing as having the lowest levelized cost of abatement.
    Date: 2017–08
  16. By: Hulshof, Daan; Jepma, Catrinus; Mulder, Machiel (Groningen University)
    Date: 2018
  17. By: Simona De Lauretis (EDF - EDF); Frédéric Ghersi (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); Jean-Michel Cayla (EDF - EDF)
    Abstract: Household lifestyles, and activity patterns in particular, greatly influence household energy use. In this paper we analyse the disparities in current activity patterns and related energy consumptions and expenditures of households, for a comprehensive set of everyday activities covering 24 h. Thanks to detailed data on energy consumption by end use, we are able to allocate the total of household energy consumptions to the appropriate activities. We comment on average energy and expenditure intensities of time uses of the total population as well as of income, household-composition and housing-type subgroups. Income, an obvious driver of energy and expenditure intensities, is revealed to influence time use as well. Household composition and housing type are also associated with substantial variations in activity patterns and in the energy and expenditure intensities of activities, even within a given income group. Indeed, sometimes the variations associated with income are smaller than the variations associated with other variables. We therefore underline the importance of household disaggregation in household energy analyses, to properly account for such disparities.
    Keywords: time use,household consumption,energy consumption,household heterogeneity
    Date: 2017
  18. By: Patricia Laurens (LISIS - Laboratoire Interdisciplinaire Sciences, Innovations, Sociétés - INRA - Institut National de la Recherche Agronomique - UPEM - Université Paris-Est Marne-la-Vallée - ESIEE Paris - CNRS - Centre National de la Recherche Scientifique); Christian Le Bas (ESDES - ESDES - École de management de Lyon - Université Catholique de Lyon); Stéphane Lhuillery (ICN Business School); Antoine Schoen (LISIS - Laboratoire Interdisciplinaire Sciences, Innovations, Sociétés - INRA - Institut National de la Recherche Agronomique - UPEM - Université Paris-Est Marne-la-Vallée - ESIEE Paris - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In this paper, we address the determinants of clean energy inventions by 946 large firms. We use a new set of large firms' patent portfolios and we broaden and deepen existing literature on this issue in two main ways: first, we conduct our study directly at the firm level and not at the industry or national levels and second, we do not focus on a single industry but encompass all industrial sectors. Drawing on firm (internal and external) knowledge and knowledge accumulation, we show there is a robust positive association between the (past) knowledge accumulated capital related to clean technologies and the number of inventions produced in that field, even after controlling for industry and nation fixed effects and other factors. The same relation works for (past) knowledge-accumulated capital in other (non-clean) technologies. However, the relation's impact on the number of clean inventions produced is much lower. The magnitudes of our coefficient are in line with that obtained previously on firms in the auto-industry or at the sectoral level.
    Keywords: knowledge capital,dirty invention,Clean invention,learning,firms
    Date: 2017
  19. By: Christoph Hambel; Holger Kraft; Eduardo S. Schwartz
    Abstract: Climate change is considered as one of the major global challenges. Although countries past and future contributions to the accumulation of greenhouse gases in the atmosphere are different, all countries are affected, but not necessarily in the same way (e.g. rising sea levels). This is the reason why it is so hard to reach global agreements on this matter. We study this issue in a dynamic game-theoretical model (stochastic differential game) with multiple countries that are open economies, i.e. we allow for international trade between the countries. Our framework involves stochastic dynamics for CO2-emissions and economic output of the countries. Each country is represented by a recursive-preference functional. Despite its complexity, the model is tractable and we can quantify each country's decision on consumption, investment, carbon abatement and the social cost of carbon, explicitly. One key finding is that both the country-specific and global social cost of carbon are increasing in the trade volume. This result is robust to adding capital transfers between countries. Our numerical examples suggest that disregarding trade might lead to a significant underestimation of the SCC.
    JEL: D81 Q5 Q54
    Date: 2018–05
  20. By: Eric Kemp-Benedict (Stockholm Environment Institute (SE))
    Abstract: The prospects for long-term sustainability depend on whether, and how much, we can absolutely decouple economic output from total energy and material throughput. While relative decoupling has occurred – that is, resource use has grown less quickly than the economy – absolute decoupling has not, raising the question whether it is possible. This paper proposes a novel explanation for why decoupling has not happened historically, drawing on a recent theory of cost-share induced productivity change and an extension of post-Keynesian pricing theory to natural resources. Cost-share induced productivity change and pricing behavior set up two halves of a dynamic, which we explore from a post-Keynesian perspective. In this dynamic, resource costs as a share of GDP move towards a stable level, at which the growth rate of resource productivity is typically less than the growth rate of GDP. This provides a parsimonious explanation of the prevalence of relative over absolute decoupling. The paper then presents some illustrative applications of the theory.
    Keywords: decoupling, dematerialization, cost-share induced technological change
    JEL: E12 O31 O33 Q32
    Date: 2017–08
  21. By: Lee, Soohyung (Sogang University); Yoo, Heesun (Vanderbilt University); Nam, Minhyuk (Sogang University)
    Abstract: This paper examines the extent to which the 2005 Clean Air Act introduced in South Korea affected air pollution and infant health. To identify the causal effect, we exploit the time and geographical variations in the adoption of the Act between 2003 and 2006. During this period, the Clean Air Act indeed significantly reduced air pollutants. For example, the PM10 level was reduced by 9 percent. However, the Act's impact on infant mortality was not statistically significant.
    Keywords: air pollution, infant mortality, PM10
    JEL: I18 K32 Q52
    Date: 2018–05
  22. By: Carfì, David; Donato, Alessia; Schilirò, Daniele
    Abstract: This paper proposes a model representing a global economy which aims to become environmentally sustainable. The model looks both at the production side and the consumption side of the economy. Regarding the production side, the suggested model considers investment and innovation in climate technologies, whereas on the side of the consumption it takes into account economic and policy instruments to change the patterns of consumption of the households. The model follows a game theory approach and applies a theoretical framework à la Cournot. The results of the paper are the following: the model provides win-win solutions, namely strategic situations in which each country takes advantages by cooperating and competing at the same time within the global economy, and where each country gets a positive return. In fact, the model shows the convenience for each country to cooperate and suggests the implementation of policies in order to satisfy the basic requirements of 2030 Agenda for Sustainable Development, in terms of production, consumption and climate change.
    Keywords: Climate Change; Environmental Sustainability; Model à la Cournot; Coopetitive Games; Green Economy
    JEL: C71 C72 C78 Q40 Q48 Q50
    Date: 2018–06
  23. By: Caleb Stair (Regional Research Institute, West Virginia University); Randall W. Jackson (Regional Research Institute, West Virginia University)
    Abstract: This report summarizes the economic impacts of the MSEEL project for both the state of West Virginia and the Morgantown metropolitan area. It uses two types of data; the first is project data provided by NNE and processed using a Cost Estimation Tool developed by the authors, and second is worker survey data collected during the drilling phase.
    Keywords: Shale Gas, Economic Development, Environmental Economics
    JEL: Q33 Q38 Q40 Q53 R10
    Date: 2018–06–06
  24. By: Joshua Goodman; Michael Hurwitz; Jisung Park; Jonathan Smith
    Abstract: We provide the first evidence that cumulative heat exposure inhibits cognitive skill development and that school air conditioning can mitigate this effect. Student fixed effects models using 10 million PSAT-takers show that hotter school days in the year prior to the test reduce learning, with extreme heat being particularly damaging and larger effects for low income and minority students. Weekend and summer heat has little impact and the effect is not explained by pollution or local economic shocks, suggesting heat directly reduces the productivity of learning inputs. New data providing the first measures of school-level air conditioning penetration across the US suggest such infrastructure almost entirely offsets these effects. Without air conditioning, each 1°F increase in school year temperature reduces the amount learned that year by one percent. Our estimates imply that the benefits of school air conditioning likely outweigh the costs in most of the US, particularly given future predicted climate change.
    JEL: I20 J24 Q5
    Date: 2018–05
  25. By: Schleich, Joachim
    Abstract: This paper studies the adoption of high-cost, medium-cost, and low-cost ener-gy-efficient technologies (EETs) by income categories across eight European Union countries. The statistical-econometric analyses allow the effects of in-come to differ by income quartiles and across countries. They rely on demo-graphically representative household surveys carried out simultaneously among about 15,000 households in France, Germany, Italy, Poland, Romania, Spain, Sweden, and the United Kingdom in 2016. For retrofit measures, the findings suggest that homeowners falling into the lowest income quartile exhibit lower adoption propensities than those falling into the highest income quartile. These findings provide support for policies targeting "poor homeowners", particularly in lower-income countries with a high share of owner-occupiers such as Poland and Romania. Further, differences in adoption propensities across income quar-tiles also exist for medium- and low-cost EETs such as appliances and light bulbs. Finally, analyzing factors related to homeowners' receiving financial sup-port from governments or utilities for retrofit measures suggests that differences in implementation rates between the highest and lowest income quartile would likely have been higher without such support schemes in place. For the United Kingdom (but not for other countries) these schemes appeared to have had a progressive effect.
    Keywords: energy poverty,energy efficiency,adoption,poor homeowners,subsidies,econometrics
    Date: 2018
  26. By: Karen Clay; Margarita Portnykh; Edson Severnini
    Abstract: Using U.S county level data on lead in air for 1978-1988 and lead in topsoil in the 2000s, this paper examines the impact of lead exposure on a critical human function with societal implications – fertility. To provide causal estimates of the effect of lead on fertility, we use two sets of instruments: i) the interaction of the timing of implementation of Clean Air Act regulations and the 1944 Interstate Highway System Plan for the panel data and ii) the 1944 Interstate Highway System Plan for the cross sectional data. We find that reductions in airborne lead between 1978 and 1988 increased fertility rates and that higher lead in topsoil decreased fertility rates in the 2000s. The latter finding is particularly concerning, because it suggests that lead may continue to impair fertility today, both in the United States and in other countries that have significant amounts of lead in topsoil.
    JEL: I18 J13 Q52 Q53
    Date: 2018–05

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