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on Energy Economics |
| By: | Christian Pape; Oliver Woll; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen (Campus Essen)) |
| Abstract: | Practitioners in the electricity industry aim to assess the value of power plants or other real options several months or even years ahead of operation. Such a valuation is notably required for hedging purposes. The revenue streams to be earned in the spot market are thereby already secured on future markets. Yet the peculiarities of the electricity market, notably the limited storability of electricity and the incompleteness of the derivative markets, make this problem also theoretically challenging since they prevent the straightforward application of standard approaches for price modeling and for hedging. In this context, the contribution of this article is twofold: (1) We present a novel methodology to model electricity prices based on fundamental expectations and accounting for both short-term and long-term uncertainties. This requires the joint modeling of different commodity prices, namely electricity, fuel and CO2 prices. Moreover price distributions have to be modelled in order to assess the real option value adequately ex ante. Specifically, we compare two different modeling approaches to account for long-term variations in multi-commodity price dynamics. (2) We suggest a test procedure and introduce performance measures to analyze the accuracy of the proposed price modeling. We thereby focus on the practically relevant question, whether the price modeling provides ex ante estimates of the value of the real option that are in line with the ex post realized values. This approach is chosen since no derivative markets exist where the (extrinsic) values for the real options could be observed months or years ahead of actual operation. Nonetheless we show that under well-defined assumptions, the ex-ante values derived using the price model should provide unbiased estimates of the ex post values, which are computed as a sum of hedging and spot exercise revenues. The application part shows results for a state-of-the-art gas power plant. By applying the developed performance measures and test statistics, we find that neither of the two investigated price models clearly outperforms the other. |
| Keywords: | Electricity price forecasting, Futures market, Hedging, Real option Stochastic optimization∙ Valuation |
| JEL: | Q41 Q48 |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:1804&r=ene |
| By: | Rickman, Dan S.; Wang, Hongbo |
| Abstract: | The recent boom and bust in the oil and natural gas sector provide a unique opportunity to assess whether the employment impacts of energy development are symmetric across the differing phases of the energy cycle. This study uses the synthetic control method to examine the boom and bust effects for three key oil and natural gas producing states: Louisiana, North Dakota, and Oklahoma. The three states are chosen as case studies because of their relative intensity in oil production in addition to their production of natural gas. Because of Hurricane Katrina, we examine Louisiana sans New Orleans. The three states also most closely match each other in cyclic movements relative to other energy producing states. The results reveal differing employment impacts across the three states in both the short and long run, with the differences at least in part suggested to be connected to state and local government education expenditure responses to the boom and bust, particularly in terms of their effects on public school teacher salaries. |
| Keywords: | Energy Boom; Resource Curse; Synthetic Control Method |
| JEL: | Q33 R12 R23 |
| Date: | 2018–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87252&r=ene |
| By: | Andor, Mark Andreas; Frondel, Manuel; Sommer, Stephan |
| Abstract: | The production of electricity on the basis of renewable energy technologies is a classic example of an impure public good. It is often discriminatively financed by industrial and household consumers, such as in Germany, where the energy-intensive sector benefits from a far-reaching exemption rule, while all other electricity consumers are forced to bear a higher burden. Based on randomized information treatments in a stated-choice experiment among about 11,000 German households, we explore whether this coercive payment rule affects households' willingness-to-pay (WTP) for green electricity. Our central result is that reducing inequity by abolishing the exemption for the energyintensive industry raises households' WTP substantially. |
| Keywords: | stated-choice experiment,behavioral economics,fairness |
| JEL: | D03 D12 H41 Q20 Q50 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:759&r=ene |
| By: | Brown, Jason P.; Coupal, Roger; Hitaj, Claudia; Kelsey, Timothy W.; Krannich, Richard S.; Xiarchos, Irene M. |
| Abstract: | In the early 2000s, the United States energy landscape began a transformation driven by a dual boom in the expansion of renewable power installations and the extraction of natural gas and oil from shale plays through hydraulic fracturing and horizontal drilling. In this paper, we discuss the multi‐level regulatory context in which these two forms of energy development occur and review how they affect local communities, environment, and infrastructure, as well as government income and spending. In comparing the two, we remark that long‐term employment effects are relatively low for both forms of development, but unconventional fossil energy development has a heightened boom/bust potential with a large influx of workers spending a short amount of time on each well before moving on. Renewable power plants on the other hand can offer a steadier stream of income and tax revenue. Renewable power plants also have longer lasting visual impacts but lower environmental risks than unconventional fossil energy development. Finally, we consider how communities will have to adapt to navigate legacy and infrastructure constraints that accompany the shift from fossil to renewable power generation and from conventional to shale oil and gas resources. |
| Keywords: | Agricultural and Food Policy, Community/Rural/Urban Development, Environmental Economics and Policy, Resource /Energy Economics and Policy |
| Date: | 2017–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usdami:260676&r=ene |
| By: | Makena Coffman (UHERO; Department of Urban and Regional Planning, University of Hawaii); Paul Bernstein (UHERO); Derek Stenclik (GE Energy Consulting); Sherilyn Wee (UHERO); Aida Arik (UHERO) |
| Abstract: | With increasing adoption of intermittent sources of renewable energy, effective integration is paramount to fully realizing societal benefits. This study asks the question, how valuable is residential real-time pricing (RTP) in comparison to time-of-use (TOU) rates to absorb increasing sources of intermittent renewable energy? We couple a detailed power sector model with a residential electricity demand response model to estimate the system and consumer benefits of these two time-varying pricing mechanisms, including greenhouse gas emissions. |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:hae:wpaper:2018-6&r=ene |
| By: | Hoffmann, Martha M.; Ansari, Dawud |
| Abstract: | Swarm grids are an emerging approach for electrification in the Global South that interconnects individual household generation and storage to a small electricity network for making full use of existing generation capacities. Using a simulation tool for demand, weather, and power flows, we analyse the potential of an AC swarm grid for a large preelectrified village in rural Yemen. Service quality and financial indicators are compared to the cases of individual supply and a centralised micro grid. While the swarm grid would, in fact, improve supply security from currently 12.4 % (Tier 2) to 81.7 % (Tier 3) at lower levelised costs, it would be inferior to the micro grid in both service (Tier 4) and costs. This is mainly driven by the large pre-installed fossil-fuel generator and storage capacities in our case study. However, this situation may be representative for other relevant locations. Under these conditions, a swarm grid poses the danger to create (possibly-undesired) incentives to invest in diesel generators, and it may fail to support prosumerism effectively. Nevertheless, the swarm’s evolutionary nature with the possibility for staggered investments (e.g. in smaller yet complementary groups of consumers) poses a central advantage over micro grids in the short-term alleviation of energy poverty. |
| Keywords: | Swarm electrification; swarm grid; micro grid; energy access; distributed generation; Yemen |
| JEL: | C63 O13 O18 Q42 Q49 |
| Date: | 2018–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88166&r=ene |
| By: | Gioele Figus (Centre for Energy Policy, University of Strathclyde); Peter McGregor (Department of Economics, University of Strathclyde); J Kim Swales (Department of Economics, University of Strathclyde); Karen Turner (Centre for Energy Policy, University of Strathclyde) |
| Abstract: | There has been some controversy over the relative sizes of the short- and long-run rebound effects associated with energy efficiency improvements. Theoretical analysis by Wei (2007) and Saunders implied that the rebound effects would always be greater in the long-run than in the short-run. However, Allan et al (2007) and Turner (2009) found evidence from Computable General Equilibrium simulations that contradicted this result. In this paper we systematically explore the impact of energy price stickiness and real wage inflexibility for the evolution of rebound effects. We find that: the degree of energy price, but not wage, stickiness is an important determinant of the time path of rebound effects and of its relative size in the short- and long-runs; and that there is considerable variation in the scale of rebound effects through time, even where short-run rebound effects are lower than in the long-run. However, the most significant finding overall is that rebound reflects the system-wide interaction between energy producing and energy using sectors. |
| Keywords: | energy efficiency, evolution of eneregy rebound, price stickiness, real wage inflexibility |
| JEL: | C68 D58 Q43 Q48 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:1804&r=ene |
| By: | Anthony J. Webster |
| Abstract: | A successful response to climate change needs vast investments in low-carbon research, energy, and sustainable development. Governments can drive research, provide environmental regulation, and accelerate global development, but the necessary low-carbon investments of 2-3% GDP have yet to materialise. A new strategy to tackle climate change through consumer and government action is outlined. It relies on the tactics of ethical investments for sustainable development and low-carbon energy, and voluntary donations for a low-carbon fund to allow adaption to climate change. Together these enable a global response through individual actions and investments. With OECD household savings worth over 5% GDP, ethical savings alone have considerable potential. |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1807.03364&r=ene |
| By: | Manthos D. Delis (Montpellier Business School); Kathrin de Greiff (University Zurich); Steven Ongena (University of Zurich, Swiss Finance Institute, KU Leuven, and Centre for Economic Policy Research (CEPR)) |
| Abstract: | Does neglecting the possibility that fossil fuel reserves become “stranded” result in a “carbon bubble”, i.e., an overvaluation of fossil fuel firms? To address this question, we study whether banks price the climate policy risk. We hand collect global data on corporate fossil fuel reserves, match it with syndicated loans, and subsequently compare the loan rate charged to fossil fuel firms — along their climate policy exposure — to non-fossil fuel firms. We find that before 2015 banks did not price climate policy risk. After 2015, however, the risk is priced, especially for firms holding more fossil fuel reserves. We also provide some evidence that “green banks” charge marginally higher loan rates to fossil fuel firms. |
| Keywords: | Environmental Policy, Climate Policy Risk, Loan Pricing, Carbon Bubble, Fossil Fuel Firms, Stranded Assets |
| JEL: | G2 Q3 Q5 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp1810&r=ene |
| By: | Stuart McIntyre (University of Strathclyde) |
| Abstract: | How households respond to energy prices is central to understanding the impact of a range of energy policies. Many empirical models and applied research rely upon outdated or generic energy price elasticities of demand, with little attention paid to whether these elasticities are the most appropriate. For example, it is typically assumed that the relevant price for the calculation of these elasticities of demand is the contemporaneous price but, except consumers on pre-payment or 'smart meters', consumers do not observe electricity prices contemporaneously. As this paper shows, what one assumes about the reference price, matters empirically. Furthermore, there are good reasons to think that households of different incomes might respond differently to changing energy prices. This matters given the prominence of price as an instrument of energy policy and the need to understand distributional impacts. This paper explores these issues using a QUAIDS model and data from the UK Living Cost and Food survey. We show that different reference prices produce different elasticity estimates, and that there are important differences in how households respond to energy prices across the income distribution. These results have important implications for understanding the impact of energy prices on households and the environment. |
| Keywords: | Distributional analysis; energy elasticity; household energy consumption; microdata |
| JEL: | Q40 Q41 D12 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:1806&r=ene |
| By: | Khan, Saleheen; Jam, Farooq Ahmed; Shahbaz, Muhammad; Mamun, Md Al |
| Abstract: | We investigate the relation between electricity consumption and economic growth by incorporating trade openness, capital, and labor in production function of Kazakhstan using annual data for 1991-2014. We apply the ARDL bounds testing and the VECM Granger causality approach to examine long run and causality relation between the variables. Our results confirm the existence of long run relation among the series. The empirical evidence reveals that electricity consumption adds in economic growth. Trade openness stimulates economic growth, and capital and labor promote economic growth, as well. The causality analysis shows that electricity consumption Granger causes economic growth and trade openness. We also document feedback effect between trade openness and economic growth. Our study provides new insights for policy makers to articulate a comprehensive economic, trade and energy policy to sustain long run economic growth in Kazakhstan. |
| Keywords: | Electricity, Economic growth, Kazakhstan, VECM |
| JEL: | A10 |
| Date: | 2018–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87977&r=ene |
| By: | Severin Borenstein; James B. Bushnell |
| Abstract: | Advocates of market mechanisms for addressing greenhouse gases and other pollutants typically argue that it is a necessary step in pricing polluting goods at their social marginal cost (SMC). Retail electricity prices, however, deviate from social marginal cost for many reasons. Some cause prices to be too low–such as pollution externalities–while others cause prices to be too high–such as recovery of fixed costs. Furthermore, because electricity is not storable, marginal cost can fluctuate widely within even a day, while nearly all residential retail prices are static over weeks or months. We study the relationship between residential electricity prices and social marginal cost, both on average and over time. We find that while the difference between the standard residential electricity rate and the utility's average (over hours) social marginal cost is relatively small on average in the US, there is large regional variation, with price well above average SMC in some areas and price well below average SMC in other areas. Furthermore, we find that for most utilities the largest source of difference between price and SMC is the failure of price to reflect variation in SMC over time. In a standard demand framework, total deadweight loss over a time period is proportional to the sum of squared differences between a constant price and SMC, which can be decomposed into the component due to price deviating from average SMC and the component due to the variation in SMC. Our estimates imply if demand elasticity were the same in response to hourly price variation as to changes in average price, then for most utilities the majority of deadweight loss would be attributable to the failure to adopt time-varying pricing. Nonetheless, the majority of deadweight loss nationally would be attributable to a few areas–led by California–where price greatly exceeds average SMC. |
| JEL: | L51 L94 Q41 Q5 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24756&r=ene |
| By: | Marco Piccirilli; Tiziano Vargiolu |
| Abstract: | We study an optimal portfolio problem designed for an agent operating in intraday electricity markets. The investor is allowed to trade in a single risky asset modelling the continuously traded power and aims to maximize the expected terminal utility of his wealth. We assume a mean-reverting additive process to drive the power prices. In the case of logarithmic utility, we reduce the fully non-linear Hamilton-Jacobi-Bellman equation to a linear parabolic integro-differential equation, for which we explicitly exhibit a classical solution in two cases of modelling interest. The optimal strategy is given implicitly as the solution of an integral equation, which is possible to solve numerically as well as to describe analytically. An analysis of two different approximations for the optimal policy is provided. Finally, we perform a numerical test by adapting the parameters of a popular electricity spot price model. |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1807.01979&r=ene |
| By: | Juncal Cunado (University of Navarra, School of Economics, Pamplona, Spain); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Chi Keung Marco Lau (Huddersfield Business School, University of Huddersfield, Huddersfield, United Kingdom); Xin Sheng (Huddersfield Business School, University of Huddersfield, Huddersfield, United Kingdom) |
| Abstract: | This paper analyses the dynamic impact of geopolitical risks (GPRs) on real oil returns for the period February 1974 to August 2017, using a time-varying parameter structural vector autoregressive (TVP-SVAR) model. Besides the two variables of concern, the model also includes growth in world oil production, global economic activity (to capture oil-demand), and world stock returns. We show that GPRs (based on a tally of newspaper articles covering geopolitical tensions), in general, has a significant negative impact on oil returns, primarily due to the decline in oil demand captured by the global economic activity. Our results, thus, highlight the risk of associating all GPRs with oil supply shocks driven by geopolitical tensions in the Middle East, and hence, ending up suggesting that higher GPRs drive up oil prices. |
| Keywords: | Oil markets, geopolitical risks, time-varying parameter structural vector autoregressive (TVP-SVAR) model |
| JEL: | C32 Q43 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201841&r=ene |
| By: | Fujii, Hidemichi; Iwata, Kazuyuki; Chapman, Andrew; Kagawa, Shigemi; Managi, Shunsuke |
| Abstract: | This study analyzed the relationship between urban CO2 emissions and economic growth applying the environmental Kuznets curve hypothesis. The objective of this study is to investigate how urban CO2 emissions and their composition have changed with urban economic growth, depending on city characteristics, using a dataset of metropolitan areas. We obtained data for 276 cities in 26 countries for the years 2000, 2005, and 2008. The dataset includes urban CO2 emissions, GDP, and population. Additionally, data regarding compact city variables are applied to determinants analysis using an econometric approach. The results demonstrate an inverted U-shape relationship between urban CO2 emissions and urban economic growth. Additionally, an inverted U-shape relationship is observed for the transport and residential & industry sectors. However, the turning points of each inverted U-shape curve varies. This result implies that we can better understand urban policies for reducing urban CO2 emissions by considering the characteristics of each sector. |
| Keywords: | urban CO2 emissions, environmental Kuznets curve, compact city, metropolitan area |
| JEL: | O18 Q54 Q56 R00 |
| Date: | 2018–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87859&r=ene |
| By: | Giovanni Marin (Scuola Superiore Sant'Anna); Francesco Vona (Observatoire français des conjonctures économiques) |
| Abstract: | The political acceptability of climate policies is undermined by job-killing arguments, especially for the least-skilled workers. However, evidence for distributional impacts for different workers remains scant. We examine the associations between climate policies, proxied by energy prices and a stringency index, and workforce skills for 14 European countries and 15 industrial sectors over the period of 1995-2011. We find that, while the long-term decline in employment in most carbon-intensive sectors is unrelated to policy stringency, climate policies have been skill biased against manual workers and have favoured technicians and professionals. This skill bias is confirmed using a shift-share instrumental variable estimator |
| Keywords: | Climate policies; Workforce skills; Cluster analysis; Multiple exposure to structural shocks |
| JEL: | J24 Q52 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/5ahh4t5kfl8nprei89ignlk5nl&r=ene |
| By: | KONISHI Yoko; SAITO Takashi; ISHIKAWA Toshiki |
| Abstract: | The "energy saving labeling program" was introduced in 2006 to the Japan retail market for the purpose of penetrating energy efficient home appliances. In this paper, we investigate the influence of two energy efficiency indices: (1) annual energy consumption (kWh) and (2) energy-saving achievement rate (%) included in the "energy-saving label" on the price and consumer purchasing for high-efficiency refrigerators. We use the point of sale (POS) data of the Japan refrigerators market for 2015 which account for approximately 76% of the domestic market sales share. First, by estimating the hedonic price model, we obtain the willingness to pay for the energy efficiency of refrigerators for each region and unit size. Second, based on the results, we examine the implicit discount rates for the energy saving benefits of high-efficiency refrigerators. The discount rate is 4.3%-7.8% for the index of (1) and 0.7%-10.7% for (2), which are lower than the 11%-300% from the previous studies. Our results suggest that consumers are not myopic when purchasing a refrigerator, and make decisions taking into consideration of the benefits of energy savings obtained during use. We conclude that the two energy efficiency indices contribute to the dispersion of energy-saving refrigerators. |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:18023&r=ene |
| By: | Sirat, Ali Parsa |
| Abstract: | Smart grid as the cleaner alternative to the legacy power system can improve technical, economical, and environmental aspects of the system up to a considerable degree. In smart grids, Distributed Generation (DG) units; which play an important role, should be optimally allocated. In this paper, DG placement is conducted with the goal of loss minimization of the grid considering the technical limitations associated with the voltage profile of the buses as well as the stochastic nature of the DGs. In this paper, three different kinds of DGs are included which are wind turbines, solar panels, and biomass generators. The results related to the case study which is IEEE standard 33 bus system reveals that the costs can be dramatically decreased. |
| Keywords: | Allocation, Distributed Generator (DG), Loss, Reliability, Smart Grid |
| JEL: | L00 L15 L61 L62 O14 O19 O32 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87636&r=ene |
| By: | Gregory Galay (Department of Economics and Finance, University of Guelph, Guelph ON Canada); Henry Thille (Department of Economics and Finance, University of Guelph, Guelph ON Canada) |
| Abstract: | From 2011 until the end of 2014, a larger than normal price spread emerged between West Texas Intermediate (WTI) and Western Canadian Select (WCS). This led many participants in Canada’s energy sector to advocate for the expansion of Canada’s crude oil pipeline system as they believed that excess supply could not be moved from production regions in Northern Alberta to those markets that would yield the highest return. This article considers the impact constrained transportation capacity has on the price spread between WCS and other world prices such as WTI. A Markov-switching model is used to identify regimes associated with binding/non-binding pipeline capacity. Our results confirm the predictions of models of spatial arbitrage under capacity constraints. When there is sufficient transportation capacity the price spreads reflect transport costs (includes fees, insurance, etc.) plus any premium for the quality difference between the crude oils compared. However, during periods of tight capacity the spread becomes more volatile and on average exceeds transport costs plus the quality premium. We compare our results to newly available pipeline data and find that periods of tight capacity as identified through the price data are substantially fewer than that suggested by the pipeline capacity data. |
| Keywords: | Crude oil prices, spatial pricing, pipeline congestion, Markov-switching autoregression |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:gue:guelph:2018-04&r=ene |
| By: | Anthony Garratt; Shaun P. Vahey; Yunyi Zhang |
| Abstract: | Baumeister and Kilian (2015) combine forecasts from six empirical models to predict real oil prices. In this paper, we broadly reproduce their main economic findings, employing their preferred measures of the real oil price and similar real-time variables. Mindful of the importance of Brent crude oil as a global price benchmark, we extend consideration to the North Sea based measure and update the evaluation sample to 2017:12. We model the oil price futures curve using a factor-based Nelson-Siegel specification to fill in missing values of oil price futures in the source data. We find that the combined forecasts for Brent are as effective as for other oil price measures. The extended sample using the oil price measures adopted by Baumeister and Kilian (2015) yields similar results to those reported in their paper. And the futures-based model improves forecast accuracy at longer horizon forecasts. The real-time data set is available for download from shaunvahey.com. |
| Keywords: | Real oil price forecasting, Brent crude oil, Forecast combination |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2018-38&r=ene |
| By: | Collins, Matthew; Dempsey, Seraphim; Curtis, John |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201819&r=ene |
| By: | Huntington, Hillard; Barrios, James; Arora, Vipin |
| Abstract: | This study conducts a selective review of various estimates for energy demand responses. It emphasizes recent empirical studies that include trends from studies published after 2000. Emphasis is placed on the five major emerging or transitional economies in Brazil, China, India, Mexico and Russia, although other important nations like Chile and South Korea are also discussed when studies are available. The review focuses attention on the long-run responses to changes in prices and income after capital stock turnover has been completed. The terminology often refers to elasticities, or the percentage change in energy use divided by the percentage change in price (or income), holding constant all other factors that could influence energy-use decisions. Most studies have focused upon household and transportation use of liquid fuels; many fewer studies have investigated fuels used by industry or commerce or for electric generation. Based upon the available estimates, price and income elasticities for liquid fuels are generally less than one (unity) for many countries and sectors, except for the long-run income effect for transportation purposes, which can range widely by country between 0.24 and 1.75 while averaging 0.94 for all countries. |
| Keywords: | energy demand; industrializing countries; price elasticity; income elasticity |
| JEL: | O13 Q41 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87532&r=ene |
| By: | Klößner, Stefan; Pfeifer, Gregor |
| Abstract: | We examine the impact of the EUR 5 billion German Cash-for-Clunkers program on vehicle registrations and respective CO2 emissions. To construct proper counterfactuals, we develop the multivariate synthetic control method using time series of economic predictors (MSCMT) and show (asymptotic) unbiasedness of the corresponding effect estimator under quite general conditions. Using cross-validation for determining an optimal specification of predictors, we do not find significant effects for CO2 emissions, while the stimulus’ impact on vehicle sales is strongly positive. Modeling different buyer subgroups, we disentangle this effect: 530,000 purchases were simply windfall gains; 550,000 were pulled forward; and 850,000 vehicles would not have been purchased in absence of the subsidy, worth EUR 17 billion. |
| Keywords: | Generalized Synthetic Controls; Cross-Validation; Cash-for-Clunkers; CO2 Emissions |
| JEL: | C31 C32 C52 D04 D12 H23 H24 L62 Q51 |
| Date: | 2018–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88175&r=ene |
| By: | Giovanni Compiani; Philip Haile; Marcelo Sant'Anna |
| Abstract: | An oil lease auction is the classic example motivating a common values model. However, formal testing for common values has been hindered by unobserved auction-level heterogeneity, which is likely to affect both participation in an auction and bidders’ willingness to pay. We develop and apply an empirical approach for first-price sealed bid auctions with affiliated values, unobserved heterogeneity, and endogenous bidder entry. The approach also accommodates spatial dependence and sample selection. Following Haile, Hong and Shum (2003), we specify a reduced form for bidder entry outcomes and rely on an instrument for entry. However, we relax their control function requirements and demonstrate that our specification is generated by a fully specified game motivated by our application. We show that important features of the model are nonparametrically identified and propose a semiparametric estimation approach designed to scale well to the moderate sample sizes typically encountered in practice. Our empirical results show that common values, affiliated private information, and unobserved heterogeneity—three distinct phenomena with different implications for policy and empirical work—are all present and important in U.S. offshore oil and gas lease auctions. We find that ignoring unobserved heterogeneity in the empirical model obscures the presence of common values. We also examine the interaction between affiliation, the winner’s curse, and the number of bidders in determining the aggressiveness of bidding and seller revenue |
| JEL: | L0 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24795&r=ene |
| By: | Julien Daubanes (University of Copenhagen); Pierre Lasserre |
| Abstract: | There exists no formal treatment of non-renewable resource (NRR) supply, systematically deriving quantity as function of price. We establish instantaneous restricted (fixed reserves) and unrestricted NRR supply functions. The supply of a NRR at any date and location depends not only on the local contemporary price of the resource but also on prices at all other dates and locations. Besides the usual law of supply, which characterizes the own-price effect, cross-price effects have their own law. They can be decomposed into a substitution effect and a stock compensation effect. We show that the substitution effect always dominates: A price increase at some point in space and time causes NRR supply to decrease at all other points. Our new—although orthodox—setting takes into account not only NRR supply limitations, but also the heterogeneity of NRR deposits, and the endogeneity of their development and opening. Our analysis extends to NRRs the partial-equilibrium analysis of demand and supply policies. Thereby, it provides a generalization of results about policy-induced changes on NRR markets. |
| Keywords: | Allocating reserves, Supply theory, Substitution effect, Green paradox, Spatial leakage |
| JEL: | Q38 D21 H22 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2018.09&r=ene |
| By: | Collins, Matthew; Curtis, John |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201816&r=ene |
| By: | Grant Allan (Department of Economics, University of Strathclyde); David Comerford (Department of Economics, University of Strathclyde); Peter McGregor (Department of Economics, University of Strathclyde) |
| Abstract: | Natural capital encompasses those assets which are provided by nature and which are valued by economic actors. As such, there is a clear analogy between natural and other assets, such as physical capital, which are routinely included in models of national economies. However, the valuation of natural assets, to the extent that they are included in such economic models, is typically wrapped up in physical capital along with land values or not valued at all. This could be simply a measurement problem - natural capital might be difficult to appropriately disaggregate from other capital - or because they provide non-market goods which are not included within traditional measures of economic output. The purpose of this paper is to set out - both conceptually and practically - how natural capital can be added to a computable general equilibrium (CGE) model. We focus on: the conceptual differences that should be reflected in such an extension; the challenges of implementing the extension in practice; and identifying the value added generated by an appropriately augmented model. We explore the empirical implementation of our approach through the addition of carbon emissions and an agricultural biomass ecosystem service flow to our CGE model of the Scottish economy. This working paper specifies this CGE model development, but does not go as far as fully implementing it in the CGE model. When fully implemented in the context of a CGE with a disaggregated agriculture sector, this will allow us simultaneously to track the impact of disturbances, including policy changes, on the economy and the environment and therefore on sustainable development. In the longer-term comprehensive coverage of natural capital stocks and ecosystem services will allow us to track the impact of disturbances, including policy interventions, on Green GDP and Genuine Savings, as well as on aggregate and sectoral economic activity, energy use and emissions. |
| Keywords: | Natural capital, computable general equilibrium models |
| JEL: | Q57 Q1 C68 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:1808&r=ene |
| By: | Pasche, Markus |
| Abstract: | Taking the Ecological Footprint (EF) as a broad measure of environmental impact of economic activity, there is substantial progress in decoupling economic output from environmental impact. However, this progress has been too slow to compensate the negative environmental impact of economic growth. But since mid of 2000s the EF declines in the OECD countries, and the global EF increase is driven by emerging countries, i.e. China. However, the decline could be mainly explained by a GDP growth slowdown. To achieve a significant reduction (comparable to the goals of the Paris Agreement) a further slowdown could be necessary. Moreover, the paper investigates the role of globalization because the greening of production in OECD countries could be due to a shift of dirty industries to non-OECD countries. Thus OECD countries are net importers of the EF embodied in traded goods. However, the amount of net EF imports is too small and not correlated with the eco-productivity of production. As ecological productivity is strongly correlated with enforced environmental policy, globalization could be used as a vehicle to promote eco-productivity also in non-OECD countries. |
| Keywords: | Environmental Footprint, Carbon Footprint, green growth, degrowth, eco-productivity, globalization, environmental policy |
| JEL: | F18 Q53 Q56 Q58 |
| Date: | 2018–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87726&r=ene |
| By: | Collins, Matthew; Curtis, John |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201812&r=ene |
| By: | F. Marta L. Di Lascio (Free University of Bolzano‐Bozen, Faculty of Economics, Italy); Andrea Menapace (Free University of Bolzano‐Bozen, Faculty of Science and Technology, Italy); Maurizio Righetti (Free University of Bolzano‐Bozen, Faculty of Science and Technology, Italy) |
| Abstract: | This paper examines the complex dependence between the peak district heating demand and the outdoor temperature. The final aim is to provide the probability law of the heat demand given extreme weather conditions and derive useful implications for the management and the production of thermal energy. We propose a copula-based approach and consider the case of the district of the city of Bozen-Bolzano. The analysed data concerns daily maxima of heat demand observed from January 2014 to November 2017 and the corresponding outdoor temperature. We find that the marginal behavior of the univariate time series of the district heating demand and the temperature is well-described by autoregressive integrated moving average models. Moreover, the selected copula model exhibits a symmetric dependence between the two investigated phenomena that tend to comove closely together during the whole heating season. Taking into account the conditional behaviour of the heat demand given the temperature leads to find that the demand is strongly affected by the temperature and, in case of extreme climatic events, the demand of thermal energy reach a peak with high probability. These findings motivate for improving the production schedule, the system design, and the operational strategies. |
| Keywords: | ARIMA models, Copula function, Conditional probability, District heating system, Outdoor temperature, Peak heat demand |
| JEL: | C10 C32 P28 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps53&r=ene |
| By: | Weitzel, Timm; Schneider, Maximilian; Glock, C.; Rinderknecht, Stephan |
| Date: | 2017–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:94568&r=ene |
| By: | Harold, Jason; Lyons, Seán; Cullinan, John |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201822&r=ene |
| By: | Rojas Navarrete, Manuel |
| Abstract: | Este documento presenta información de la producción de energía eléctrica, con datos estadísticos preliminares de 2017, de los ocho países que conforman el Sistema de la Integración Centroamericana (SICA): Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panamá, Belice y la República Dominicana. Los primeros seis países han sido agrupados bajo el Sistema de Interconexión Eléctrica de los Países de Centroamérica (SIEPAC), que corresponde al primer mercado regional de electricidad que ha sido constituido en el continente americano. Las referencias a México corresponden a los intercambios y ventas de energía eléctrica que se hacen desde ese país a Guatemala y marginalmente al resto de países del SIEPAC. También se refieren a las ventas de energía eléctrica de México a Belice. |
| Keywords: | ELECTRICIDAD, ENERGIA ELECTRICA, PRODUCCION, DATOS ESTADISTICOS, ELECTRICITY, ELECTRIC POWER, PRODUCTION, STATISTICAL DATA |
| Date: | 2018–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col094:43784&r=ene |