nep-ene New Economics Papers
on Energy Economics
Issue of 2018‒08‒20
forty-one papers chosen by
Roger Fouquet
London School of Economics

  1. The Changing Role of Natural Gas in Nigeria By Occhiali, Giovanni; Falchetta, Giacomo
  2. Energy Price Reform in China By Zhang, ZhongXiang
  3. Modelling Electric Vehicles as an Abatement Technology in a Hybrid CGE Model By Stefan Schmelzer; Michael Miess; Vedunka Kopecna; Milan Scasny
  4. The French Nuclear Bet By Quentin Perrier
  5. The French nuclear bet By Quentin Perrier
  6. Variable Pricing and the Cost of Renewable Energy By Imelda; Matthias Fripp; Michael J. Roberts
  7. Optimal Allocation of Variable Renewable Energy Considering Contributions to Security of Supply By Peter, Jakob; Wagner, Johannes
  8. Income-FDI-Environmental degradation nexus for developing countries: A panel analysis of America continent By Khan, Hamad Hasul; Khan, Oshin
  9. Decomposition analysis of corporate carbon dioxide and greenhouse gas emissions in Japan: Integrating corporate environmental and financial performances By Yagi, Michiyuki; Managi, Shunsuke
  10. Environmental Degradation in France: The Effects of FDI, Financial Development, and Energy Innovations By Shahbaz, Muhammad; Nasir, Muhammad Ali; Roubaud, David
  11. Exploring the diffusion of low energy houses: An empirical study in the European Union By Olsthoorn, Mark; Schleich, Joachim; Faure, Corinne
  12. Abatement Cost Uncertainty and Policy Instrument Selection under a Stringent Climate Policy. A Dynamic Analysis By Bosetti, Valentina; Golub, Alexander; Markandya, Anil; Massetti, Emanuele; Tavoni, Massimo
  13. Biomass gasification in Southeast Asia: Factors influencing technology adoption in Cambodia By Hong Nam Nguyen; Hoai-Son Nguyen; Minh Ha-Duong; Laurent Van de Steene
  14. Calling for Nexus Thinking in Africa’s Energy Planning By Lucia de Strasser
  15. Policy Implications of a World with Renewables, Limited Dispatchability, and Fixed Load By Mathias Mier
  16. Difficulties in the forecasting of iron ore price: a review By Bazhanov, Andrei
  17. Methodological Issues of Assessing Investment Risks in Projects Weakening the Dependence of the Russian Economy on Natural Resources and Providing a Transition to Low-Carbon Development By Golub, Alexander (Голуб, Александр)
  18. Strategic Demand Response to Dynamic Pricing: A Lab Experiment for the Electricity Market By Atasoy, Ayse Tugba; Harmsen-van Hout, Marjolein; Madlener, Reinhard
  19. Oil Price Changes and U.S. Real GDP Growth: Is this Time Different? By Thomas Walther; Lanouar Charfeddine; Tony Klein;
  20. The Effect of Increased Transmission and Storage in an Interconnected Europe: an Application to France and Ireland By Valeria Di Cosmo; Sean Collins; Paul Deane
  21. Testimony Before the U.S. House Committee on Energy and Commerce Subcommittee on Environment By Gabriel E. Lade
  22. The Impact of Energy Prices on Employment and Environmental Performance: Evidence from French Manufacturing Establishments By Marin, Giovanni; Vona, Francesco
  23. Time-varying relationship between oil price and exchange rate By Castro Rozo, César; Jiménez-Rodríguez, Rebeca
  24. Determinants of household direct CO2 emissions: Empirical evidence from Nigeria By Olaniyan, Olanrewaju; Sulaimon, Mubaraq Dele; Ademola, Wasiu
  25. Biofuels: review of policies and impacts By Janda, Karel; Kristoufek, Ladislav; Zilberman, David
  26. Oil price pass-through into inflation in Spain at national and regional level By Topan, Ligia; Castro, César; Jerez, Miguel; Barge-Gil, Andrés
  27. Moral Hazard and the Energy Efficiency Gap: Theory and Evidence By Louis-Gaëtan Giraudet; Sébastien Houde; Joseph Maher
  28. Output, renewable and non-renewable energy production, and international trade: Evidence from EU-15 countries By HALICIOGLU, Ferda; Ketenci, Natalya
  29. Extracting Information or Resource? The Hotelling Rule Revisited under Asymmetric Information By David Martimort; Jérôme Pouyet; Francesco Ricci
  30. If You Build It, Will They Consume? Key Challenges for Universal, Reliable, and Low-Cost Electricity Delivery in Kenya By Jay Taneja
  31. Analysis of Public Subsidies to the Solar Energy Sector: Corruption and the Role of Institutions By Moliterni, Fabio
  32. Escalation of Scrutiny: The Gains from Dynamic Enforcement of Environmental Regulations By Wesley Blundell; Gautam Gowrisankaran; Ashley Langer
  33. Air Pollution and Mental Health: Evidence from China By Shuai Chen; Paulina Oliva; Peng Zhang
  34. Do Global Financial Markets Capitalise Sustainability? Evidence of a Quick Reversal By Moliterni, Fabio
  35. How Public Investment Could Help Strengthen Iran’s Growth Potential: Issues and Options By Amir Sadeghi
  36. The Morbidity Cost of Air Pollution: Evidence from Consumer Spending in China By Panle Jia Barwick; Shanjun Li; Deyu Rao; Nahim Bin Zahur
  37. When social norms and self-image conflict: A public good experiment with social comparison feedback By Serhiy Kandul; Bruno Lanz
  38. Projection bias in decision-making: Daily air pollution and willingness to pay for better air quality By Jie He; Bing Zhang
  39. "Policy Development for the Energy Mix in Indonesia Using System Dynamics" By Kartono Sani
  40. Policy analysis of perennial energy crops cultivation at the farm level: the case of short rotation coppice (SRC) in Germany By Spiegel, Alisa; Britz, Wolfgang; Djanibekov, Utkur; Finger, Robert
  41. Overcoming public resistance to carbon taxes By Carattini, Stefano; Carvalho, Maria; Fankhauser, Samuel

  1. By: Occhiali, Giovanni; Falchetta, Giacomo
    Abstract: Nigeria is richly endowed with energy resources, and the Government has been making large profits from their export. However, windfall revenues have also been affecting the Government’s responsiveness and accountability towards the people and they have brought it into collusive relationship with international oil and gas companies operating in the country. A skewed distribution of petroleum resources costs and benefits, as well as the dependence on exports exposing the public finances to volatility in the international markets have represented further major issues. As a result, energy access and power generation still represent urgent issues for action in the country. Solid biomass accounts for 74% of the primary energy consumption, while the electrification rate stands at 34% in rural areas. Active power plants are mainly gas-fired, but they face capacity, maintenance, and financial constraints. While historically natural gas has been disregarded or flared into the atmosphere because it was considered a by-product of oil due to lacking market conditions and processing capacity, today the development of a domestic market for natural gas is seen as a key priority to guarantee energy security and boost industrial development in Nigeria. A more efficient and equitable governance of the sector and management of export revenues can play a major role in this sense. In this context, this paper highlights the main current issues and underpins key policy conditions for this transition to take place in Nigeria.
    Keywords: Resource /Energy Economics and Policy
    Date: 2018–03–12
  2. By: Zhang, ZhongXiang
    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: Resource /Energy Economics and Policy
    Date: 2018–06–07
  3. By: Stefan Schmelzer (Institute for Advanced Studies, Vienna; Institute for Ecological Economics, WU - Vienna University of Economics and Business); Michael Miess (Institute for Advanced Studies, Vienna; Institute for Ecological Economics, WU - Vienna University of Economics and Business; Complexity Science Hub Vienna); Vedunka Kopecna (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic); Milan Scasny (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic)
    Abstract: We present a novel methodology to quantify the social costs and benefits (net social costs) of electric vehicles as an endogenous, demand-driven abatement technology in a general equilibrium framework. This new costing approach relates general equilibrium effects resulting from an increased market penetration of electric vehicles to the external environmental and health effects of the corresponding change in emissions. To this end, we develop a hybrid model combining a computable general equilibrium (CGE) with a discrete choice (DC) model that is capable of depicting an endogenous demand-driven uptake of alternative fuel vehicles. The discrete choice model of the consumer purchase decision between conventional, hybrid, plug-in hybrid, and electric vehicles is directly integrated into the CGE model. This hybrid CGE-DC model features a detailed accounting of vehicle fleet development, including yearly numbers of vehicle purchases and cohort depreciation. It depicts nine households differentiated by the degree of urbanization and education, accounts for detailed consumer preferences for the purchase of a passenger vehicle and mode choice decisions. The hybrid CGE-DC model is additionally hard-linked to a bottom-up module for elektricity production by several technologies to provide input for an established impact pathway analysis to quantify the external costs relating to the changed composition of the vehicle fleet and technologies to generate electricity. We apply this methodology to Austria as an empirical example, considering current measures and trends for the uptake of electric vehicles into the vehicle fleet. In particular, we quantify the net social costs of additional measures to foster the introduction of electromobility that are part of the current policy discussion in Austria, and thus provide a blueprint for further application in different national contexts.
    Keywords: hybrid CGE model; discrete choice; electric vehicles; environmental benefits
    JEL: C68 D12 D58 H22 H23 Q43 Q52 R42
    Date: 2018–08
  4. By: Quentin Perrier
    Abstract: Following the first oil crisis, France launched the world’s largest ever nuclear energy program, commissioning 58 new reactors. These reactors are now reaching 40 years of age, the end of their technological lifetime. This places France at an energy policy crossroads: should the reactors be retrofitted or should they be decommissioned? The cost-optimal decision depends on several factors going forward, in particular the expected costs of nuclear energy production, electricity demand levels and carbon prices, all of which are subject to significant uncertainty. To deal with these uncertainties, we apply the Robust Decision Making framework to determine which reactors should be retrofitted. We build an investment and dispatch optimization model, calibrated for France. Then we use it to study 27 retrofit strategies for all combinations of uncertain parameters, which amounts to nearly 3,000 runs. Our analysis produces two robust strategies, which involve shutting down between 7 and 14 of the 14 oldest reactors, while extending the lifetime of all remaining reactors. These strategies provide a hedge against the risks of unexpected increases in retrofit costs, low demand and low carbon price. Our robust strategies differ from the official French government scenarios on the timing and number of reactors suggested to be decommissioned. They provide a timely contribution to the current debate on the extension of lifetime of nuclear plants in France.
    Keywords: Resource /Energy Economics and Policy
    Date: 2017–04–12
  5. By: Quentin Perrier (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: Following the first oil crisis, France launched the world's largest ever nuclear energy program, commissioning 58 new reactors. These reactors are now reaching 40 years of age, the end of their technological lifetime. This places France at an energy policy crossroads: should the reactors be retrofitted or should they be decommissioned? The cost-optimal decision depends on several factors going forward, in particular the expected costs of nuclear energy production, electricity demand levels and carbon prices, all of which are subject to significant uncertainty. To deal with these uncertainties, we apply the Robust Decision Making framework to determine which reactors should be retrofitted. We build an investment and dispatch optimization model, calibrated for France. Then we use it to study 27 retrofit strategies for all combinations of uncertain parameters, which amounts to nearly 3,000 runs. Our analysis produces two robust strategies, which involve shutting down between 7 and 14 of the 14 oldest reactors, while extending the lifetime of all remaining reactors. These strategies provide a hedge against the risks of unexpected increases in retrofit costs, low demand and low carbon price. Our robust strategies differ from the official French government scenarios on the timing and number of reactors suggested to be decommissioned. They provide a timely contribution to the current debate on the extension of lifetime of nuclear plants in France.
    Keywords: Power system,Nuclear power,Uncertainty,Investment optimization,Robust Decision Making
    Date: 2017–03–11
  6. By: Imelda; Matthias Fripp; Michael J. Roberts
    Abstract: On a levelized-cost basis, solar and wind power generation are now competitive with fossil fuels. But supply of these renewable resources is variable and intermittent, unlike traditional power plants. As a result, the cost of using flat retail pricing instead of dynamic, marginal-cost pricing—long advocated by economists—will grow. We evaluate the potential gains from dynamic pricing in high-renewable systems using a novel model of power supply and demand in Hawai’i. The model breaks new ground in integrating investment in generation and storage capacity with chronological operation of the system, including an account of reserves, a demand system with different interhour elasticities for different uses, and substitution between power and other goods and services. The model is open source and fully adaptable to other settings. Consistent with earlier studies, we find that dynamic pricing provides little social benefit in fossil-fuel-dominated power systems, only 2.6 to 4.6 percent of baseline annual expenditure. But dynamic pricing leads to a much greater social benefit of 8.5 to 23.4 percent in a 100 percent renewable power system with otherwise similar assumptions. High renewable systems, including 100 percent renewable, are remarkably affordable. The welfare maximizing (unconstrained) generation portfolio under the utility’s projected 2045 technology and pessimistic interhour demand flexibility uses 79 percent renewable energy, without even accounting for pollution externalities. If overall demand for electricity is more elastic than our baseline (0.1), renewable energy is even cheaper and variable pricing can improve welfare by as much as 47 percent of baseline expenditure.
    JEL: Q41 Q42 Q53
    Date: 2018–06
  7. By: Peter, Jakob (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Wagner, Johannes (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: Electricity markets are increasingly influenced by variable renewable energy such as wind and solar power with a pronounced weather-induced variability and imperfect predictability. As a result, the evaluation of the capacity value of variable renewable energy, i.e. its contribution to security of supply, gains importance. This paper develops a new methodology to endogenously determine the capacity value in large-scale investment and dispatch models for electricity markets. The framework allows to account for balancing effects due to the spatial distribution of generation capacities and interconnectors. The practical applicability of the methodology is shown with an application for wind power in Europe. We find that wind power can substantially contribute to security of supply in a decarbonized European electricity system in 2050, with regional capacity values ranging from 1 - 40%. Analyses, which do not account for the temporal and spatial heterogeneity of the contribution of wind power to security of supply therefore lead to inefficient levels of dispatchable back-up capacity. Applying a fixed wind power capacity value of 5% results in an overestimation of firm capacity requirements in Europe by 66GW in 2050. This translates to additional firm capacity provision costs of 3.8 bn EUR per year in 2050, which represents an increase of 7%.
    Keywords: Reliability of supply; Capacity adequacy; Multi-regional power system; Wind power; Power system modeling
    JEL: C61 C63 L50 Q42 Q48
    Date: 2018–08–06
  8. By: Khan, Hamad Hasul; Khan, Oshin
    Abstract: The study attempts to find out relationships among income, FDI and environmental degradation for developing countries of America continent. Moreover, study examines existence of environmental Kuznets curve and pollution haven hypothesis for developing countries of America continent. The study uses panel data from 1990 to 2014 for America continent and employs four techniques i-e pooled OLS, fixed effects (FEM), random effects (REM) and two stages least square (2SLS). Findings of the study do not confirm existence of both EKC and PHH for America continent. The study also concludes that energy use, population density, globalization and human capital have significant impact on environmental degradation in America continent. The study recommends that policies should target CO2 emissions reduction either by setting threshold or by penalizing pollution intensive industries. Further, cleaner energy and technological developments should be promoted.
    Keywords: Environmental degradation, environmental Kuznets curve, pollution haven hypothesis, FDI, income, globalization
    JEL: Q43 Q53 Q54 Q56
    Date: 2018–06–01
  9. By: Yagi, Michiyuki; Managi, Shunsuke
    Abstract: Recent empirical studies often support the positive relationship between corporate environmental performance (CEP) in terms of carbon dioxide (CO2) and greenhouse gas (GHG) emissions and corporate financial performance (CFP). However, this depends on the measurements of CEP (the absolute and relative CEP) and CFP (accounting-based and market-based CFP). To understand the relationship structurally, based on the literature, this study proposes identity models that integrate CO2 and GHG emissions and financial factors. The models decompose CO2 (GHG) emissions into carbon intensity (GHG intensity), energy intensity, the cost-to-sales ratio, the total-assets-turnover ratio (TATR), leverage, and equity. The model of supply-chain GHG emissions additionally adopts supply-chain GHG intensity. As a decomposition method, this study uses the log-mean Divisia index (LMDI). As an application example of the carbon dioxide model, this study targets Japanese manufacturing firms in 16 sectors from fiscal years (FY) 2011 to 2015. Results show that the change in CO2 emissions as of 2015 (−802.1 kilotonnes [kt]) is decomposed into 2922.5 kt for carbon intensity, −26036.3 kt for energy intensity, −6350.5 kt for the cost-to-sales ratio, −8495.6 kt for the TATR, −7912.3 kt for leverage, and 45070.1 kt for equity. Average values of relative contribution ratios are 20.6% for carbon intensity, 19.1% for energy intensity, and the remaining approximately 60% for financial factors. Among the 16 sectors, as of 2015, the change in total CO2 emission is statistically significantly positive for equity and significantly negative for the TATR and leverage, and it is not significantly correlated to the carbon intensity, the energy intensity, and the cost-to-sales ratio.
    Keywords: Carbon dioxide and greenhouse gas emissions; Japanese manufacturing sectors; Kaya identity; index decomposition analysis; log-mean Divisia Index
    JEL: M11 M20 Q54
    Date: 2018
  10. By: Shahbaz, Muhammad; Nasir, Muhammad Ali; Roubaud, David
    Abstract: This paper explores the determinants of carbon emissions in France by accounting for the significant role played by foreign direct investment (FDI), financial development, economic growth, energy consumption and energy research innovations in influencing CO2 emissions function. In this endeavour, we employ the novel SOR (Shahbaz et al. 2017) unit root test on French time series data over the period 1955-2016 to examine the order of integration in the presence of sharp and smooth structural breaks in the variables. We also apply the bootstrapping bounds testing approach, recently developed by McNown et al. (2018), to investigate the presence of cointegration and the empirical findings underscore the presence of cointegration among the time series. Moreover, we find that FDI has a positive impact, while energy research innovations have a negative impact, on French carbon emissions. Financial development lowers carbon emissions, thereby improving the French environmental quality. FDI degrades the environment, and thus supports the pollution-haven hypothesis in France. Similarly, financial development suggests that financial stability is a required condition for improving environmental quality, so are energy research innovations. Contrarily, energy consumption is positively linked with carbon emissions. However, the relationship between economic growth and CO2 emissions is an inverted-U, which is a validation of the environmental Kuznets curve (EKC).
    Keywords: FDI, Carbon Emissions, Financial Development, Energy Research Innovations
    JEL: A10
    Date: 2018–07–06
  11. By: Olsthoorn, Mark; Schleich, Joachim; Faure, Corinne
    Abstract: Diffusion of low-energy houses is an important part of energy and climate policy in the European Union (EU) and in individual EU countries. Key barriers to the adoption of low-energy houses include additional construction costs and uncertainty surrounding actual energy and cost savings. In this paper, we econometrically analyze determinants of low-energy house adoption, including time and risk preferences. We rely on original data from a large survey conducted among households in eight EU countries. To our knowledge, this is the first empirical study of low-energy building adoption to rely on a demographically representative sample. Our set of covariates includes parameters of time and risk preferences that were elicited via state-of-the-art incen-tivized multiple price list experiments and via self-assessment scales. We find mixed results for the effects of time discounting on low-energy house adoption. Risk preferences do appear to matter: as risk proneness increases, so does the adoption of zero net or energy plus building (but not passive houses). Consistent with the low-cost hypothesis about environmental attitude and action, we find no results for environmental attitudes and social norms.
    Keywords: passive houses,low-energy houses,adoption,buildings,risk,patience
    Date: 2018
  12. By: Bosetti, Valentina; Golub, Alexander; Markandya, Anil; Massetti, Emanuele; Tavoni, Massimo
    Abstract: This paper investigates the relative economic and environmental outcomes of price versus quantity mechanisms to control GHG emissions when abatement costs are uncertain. In particular, we evaluate the impacts on policy costs, CO2 emissions and energy R&D for a stringent mitigation target of 550 ppmv CO2 equivalent (i.e. 450 for CO2 only) concentrations. The analysis is performed in an optimal growth framework via Monte Carlo simulations of the integrated assessment model WITCH (World Induced Technical Change Hybrid). Results indicate that the price instrument stochastically dominates the quantity instrument when a stringent stabilization policy is in place.
    Keywords: Environmental Economics and Policy
  13. By: Hong Nam Nguyen (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi); Hoai-Son Nguyen (NEU - National Economics University (Ha Noi, Vietnam), CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi); Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi); Laurent Van de Steene (USTH - University of sciences and technologies of hanoi, CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: Electricity price in Cambodia is among the highest in the region due to limited fossil resources. The national grid provides electricity with cheapest tariff, from $0.11 to $0.27 per kWh, but only 25% of Cambodians are having access to it. Since 2003, scores of rice mills have installed rice husk gasification systems (RHGs) to produce electricity with a cost from $0.06 to $0.27 per kWh. RHG development is showing signs of slowing down while national grid is continuing to expand its supply area. The study was carried out to identify some factors influencing RHG adoption in Cambodian rice mills, based on data of rice mills (n=396) and report on power sector of the Kingdom of Cambodia in 2015. Field trips to rice mills (n=8) and interviews with RHG stakeholders (n = 66) were also conducted. Results indicated that technical support for RHG and annual production of rice mills had positively influenced adoption of RHG. In contrarily, results showed an insignificant correlation between the presence of national grid and RHG adoption. This study will help planners, policy makers, researchers and farmers prioritize factors affecting RHG adoption decisions and hence provide insight on pathways to increase RHG adoption.
    Keywords: rice husk, national grid, gasification, Cambodia,biomass
    Date: 2016–12–24
  14. By: Lucia de Strasser
    Abstract: The simultaneous achievement of the sustainable development goals (SDGs) is, to say the least, challenging. In a situation of increasing and multiple demands over limited resources, pursuing each goal separately could lead to increased competition. The situation in Africa is particularly problematic, as the continent lags behind all others in terms of quality and quantity of infrastructure and counts the highest shares of population living in poverty and without access to food, safe water, and energy. At the same time, natural resources are under increasing pressure from population growth, environmental degradation, and climate change. Given the entity of the challenge, finding synergies and strengthening coordination across sectors will be crucial and the energy sector has an important role to play. As recognized in the Agenda 2030, the energy sector holds the key to many aspects of development, however no energy solution (albeit green or synergetic) should be casually labelled as a nexus solution. This could be deceiving also because of the ambiguities that surround the concept of nexus. In order to give concrete insights to policy makers, this paper proposes a pragmatic approach to the nexus that allows on one hand to detect areas where cooperation needs to be strengthened, on the other to explore the nexus potential of energy solutions. This is in line with a view of the nexus as a way of thinking, which can apply both at the level of policy making and in the actual implementation of projects. We will give three concrete examples to improve energy access at different levels: multipurpose hydropower for large-scale electricity production, solar pumps for irrigation in farms, and efficient cookstoves in households. These can catalyse much needed action in other areas (notably water supply, agriculture, and forestry) but realizing their potential requires stronger cooperation and coordination across sectors. Moreover, their successful implementation requires an honest and thorough assessment of the local context in terms of constraints as well as opportunities.
    Keywords: Resource /Energy Economics and Policy
    Date: 2017–09–14
  15. By: Mathias Mier (ifo Institute, Munich, Germany)
    Abstract: Most electricity systems face contractual fixed consumer prices in the short term, that is, load and price are fixed before the random supply of renewables like wind or solar realizes. Steam power plants also make production decisions before such a random supply realizes. These capacities cannot react instantly, which creates a demand for gas turbines to balance renewables. We approach these dynamics by considering different types of dispatchability in a more general framework of peak-load pricing and contribute to the debate on market design and capacity payments. Steam power always recovers costs, gas turbines never do so, and renewables might. We describe possible transfer schemes to overcome this problem and provide a more market-oriented solution. However, consumers must always be compensated for lost load.
    Keywords: renewable energies, peak-load pricing, electricity market design, missing market, missing money, capacity payments
    Date: 2018–07
  16. By: Bazhanov, Andrei
    Abstract: The interest in the analysis of the iron ore market significantly increased after a sharp spike in the iron ore price in 2008-2010 and consecutive decline. Understanding of the reasons for these shifts are crucial for further development of the industry because a high price motivates investments in developing new mines but a long lead time for new projects and high price volatility make these investments very risky. The analysis of the studies of the iron ore market shows that the short-run behavior of iron ore price is highly dependent on oil price and variations in supply and demand, and is very difficult to predict. There are strong chances that the iron ore price will remain highly volatile with a low average in the long-run. The dependence on the price of oil and the corresponding volatility can be reduced by a gradual shift of iron ore sellers to non-fossil-fuel transport. This shift can be facilitated by the public policy regulations, offered in Ali et al. (2017) if this approach dominates the "modestly optimistic perspective" offered in Tilton et al. (2018), which relies mostly on market forces in the intergenerational distribution of nonrenewable resources. However, this approach also allows for a more stable iron ore price in the case of cartelization of iron ore sellers. Using the arguments of Jones (1986), fortified by an incentive compatibility mechanism, the current situation in the iron ore market is quite favorable for coordinated actions of iron ore sellers.
    Keywords: iron ore; price forecast; government policies; cartelization
    JEL: L13 Q31 Q38
    Date: 2018–04–01
  17. By: Golub, Alexander (Голуб, Александр) (Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The work analyzes the role of rental incomes in the Russian economy demonstrates the cointegration of GDP growth and oil prices in the previous 15 years. On the example of a comparative assessment of low-carbon and carbon-intensive technologies, the methodology for evaluating investment projects based on the application of the real options method is illustrated.
    Date: 2018–07
  18. By: Atasoy, Ayse Tugba (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Harmsen-van Hout, Marjolein (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: Despite the efforts of restructuring power markets over the last decades, the lack of demand response in the retail electricity markets remains a significant concern. Possible demand response would help to reduce prices and volatility by better matching supply and demand through improved price signals. In this paper we develop a laboratory tool to experimentally investigate the demand response in the electricity market. The baseline treatment constitutes a two-period ‘wait-or-buy’ game with an exogenous first period, an automated supplier, and twenty subject buyers. While the seller offers a fixed number of a product in the market, consumers decide on purchasing the product immediately or waiting until the next period, taking (i) price uncertainty and (ii) inventory risk into account. This treatment captures demand response in the retail market with scarce products. We design an additional treatment by removing the inventory constraint and introducing a devaluation rule, where consumers only bear the price risk – thus mimicking the demand response in the electricity market. We find that in both retail and electricity market treatments consumers play on average the equilibrium predictions and buy strategically. However, there are systematic deviations from rationality in both settings, i.e., consumers buy too soon or wait too long.
    Keywords: Demand Response; Electricity; Dynamic Pricing; Strategic Behavior
    JEL: C92 D01 D81 M11 Q31
    Date: 2018–04
  19. By: Thomas Walther; Lanouar Charfeddine; Tony Klein;
    Abstract: This paper contributes to the large debate regarding the impact of oil price changes on U.S. GDP growth. Firstly, it replicates empirical findings of prominent studies and finds that the proposed oil price measures have a dissipating effect with recent data up to 2016Q4. Secondly, it re-examines the issue and provides evidence that oil price decreases affect the GDP growth, when taking into consideration mixed data sampling technique. Finally, it puts particular focus on nonlinearity and a possible instability and shows that combining Markov switching and mixed data sampling models allows to identify different regimes permanently changing with the Great Moderation.
    Keywords: Oil prices, GDP growth, Asymmetry, Nonlinearity, Markov switching models, Mixed Data Sampling
    JEL: C24 E32 F43 Q43
    Date: 2018–05
  20. By: Valeria Di Cosmo; Sean Collins; Paul Deane
    Abstract: A longstanding goal of the European Union (EU) is to promote efficient trading between price zones via electricity interconnection to achieve a single electricity market between the EU countries. This paper uses a power system model (PLEXOS-EU) to simulate one vision of the 2030 EU electricity market based on European Commission studies to determine the effects of a new interconnector between France and the Single Electricity Market of Ireland and Northern Ireland (SEM). We use the same tool to understand the effects of investment in storage, and the effects of the interaction between storage and additional interconnection. Our results show that both investments in interconnection and storage reduce wholesale electricity prices in France and Ireland as well as reduce net revenues of thermal generators in most scenarios in both countries. However, France is only marginally affected by the new interconnector. Renewable generators see a modest increase in net revenues. The project has the potential for a positive impact on welfare in Ireland if costs are shared between countries and remain below 45 million €/year for the scenarios examined. The owners of the new interconnector between France and SEM see increased net revenues in the scenarios without storage. When storage is included in the system, the new interconnector becomes less profitable.
    Keywords: Resource /Energy Economics and Policy
    Date: 2017–09–12
  21. By: Gabriel E. Lade (Center for Agricultural and Rural Development (CARD))
    Abstract: My testimony focuses on the purpose and operation of Renewable Identification Numbers, better known as RINs, as the compliance mechanism for meeting the Renewable Fuel Standard (RFS) mandates. In particular, my remarks emphasize RINs' accounting and economic role under the RFS, as well as summarize the empirical evidence on RIN price determinants and their impact on downstream fuel prices. I also address the potential effects of certain proposed changes to the RFS on RIN prices, and their implications for future biofuel use in the United States.
    Date: 2018–07
  22. By: Marin, Giovanni; Vona, Francesco
    Abstract: This paper evaluates the historical influence of energy prices on a series of measures of environmental and economic performance for a panel of French manufacturing establishments over the period 1997-2010. The focus on energy prices is motivated by the fact that changes in environmental and energy policies have been dominated by substantial reductions in discounts for large consumers, making the evaluation of each policy in isolation exceedingly difficult. To identify price effects, we construct a shift-share instrument that captures only the exogenous variation in establishment-specific energy prices. Our results highlight a trade-off between environmental and economic goals: although a 10 percent increase in energy prices brings about a 6 percent reduction in energy consumption and an 11 percent reduction in CO2 emissions, such an increase also has a modestly negative impact on employment (-2.6 percent) and very small impact on wages and productivity. The negative employment effects are mostly concentrated in energy-intensive and trade-exposed sectors. Simulating the effect of a carbon tax, we show that job losses for the most exposed sectors can be quite large. However, these effects are upper bounds and we show that they are significantly mitigated in multi-establishment firms by labor reallocation across establishments.
    Keywords: Resource /Energy Economics and Policy
    Date: 2017–12–21
  23. By: Castro Rozo, César; Jiménez-Rodríguez, Rebeca
    Abstract: This paper contributes to better understand the dynamic interaction between U.S. effective exchange rate (EER) and oil price by considering a Time-Varying Parameter VAR model with the use of monthly data from 1974 to 2017. Our findings show a depreciation after an oil price shock in the short-run for any period of time, although the pattern of long-run responses of U.S. EER is diverse across different period of time, with an appreciation being observed before the mid-2000s and a depreciation afterwards. This diversity of response should lead policy makers to react differently in order to counteract such shocks. Furthermore, the reaction of oil price to an appreciation of U.S. EER is negative, with the response being similar in the short-run but different in the long-run for each period of time. Thus, the different responses may generate different adverse effects on investment and the knowledge of such effects may help financial investors to diversify their investments in order to optimize the risk-return profile of their portfolios.
    Keywords: Oil price, Exchange rate, TVP-VAR model
    JEL: F31 F32 Q31 Q37
    Date: 2018–03–28
  24. By: Olaniyan, Olanrewaju; Sulaimon, Mubaraq Dele; Ademola, Wasiu
    Abstract: The excess concentration of carbon dioxide (CO2) in the earth’s atmosphere has been identified by scientists as the major cause of climate change. If left uncontrolled, this has grave implication for sustainable development. Hence, there is need to formulate and implement informed based climate change mitigation policy. Data on household socio-economic and demographic variables were obtained from the 2015 General Household Survey and household direct CO2 emissions was estimated using the Linear Multiplier Factor Method. An Environmental Kuznets Curve based econometric model was specified and the parameters were estimated using the Ordinary Least Squares technique. At the national level, results revealed that household income, household size, household head gender, literacy ratio and motorisation have significant positive impacts on carbon emissions. However, literacy ratio contradicts a priori expectation. Male population, polygamy and age of household head have insignificant effects. Both age and household income show significant non-linear relationship with household carbon emissions. For urban and rural households, results revealed that household income, household size and household head gender have significant positive effects. Age and motorisation significantly affects urban household carbon emissions. Other factors do not have significant effects on urban household and rural household carbon emissions. The study concludes that household income, household size, motorisation and literacy ratio are the quantitative factors that influence the level of Nigerian household carbon emissions. Based on the research results, the study recommends policies to the government.
    Keywords: Carbon dioxide (CO2); Environmental Kuznets curve; Household; Nigerian; Rural; Urban
    JEL: O13
    Date: 2018–05–30
  25. By: Janda, Karel; Kristoufek, Ladislav; Zilberman, David
    Abstract: This paper provides an overview of the environmental, economical, and policy considerations related to biofuels. While the biofuel production and consumption exhibited significant increase over the first decade of the new millennium, this and further increases in biofuel production are driven primarily by government policies. Currently available first generation biofuels are with a few exceptions not economically viable in the absence of fiscal incentives or high oil prices. Also the environmental impacts of biofuels as an alternative to fossil fuels are quite ambiguous. The review of the most recent economic models dealing with biofuels and their economic impacts provides a distinction between structural and reduced form models. The review of reduced models is structured toward the time series analysis approach to the dependencies between prices of feedstock, biofuels, and fossil fuels.
    Keywords: Political Economy, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy
  26. By: Topan, Ligia; Castro, César; Jerez, Miguel; Barge-Gil, Andrés
    Abstract: Oil price showed sharp fluctuations in recent years which have revived the interest on its effect on inflation rates. In this paper we discuss the relationship between oil price and inflation in Spain. We adjust econometric models to predict the effect of oil price shocks on inflation both at national and regional level and under different scenarios. Our results show that almost half of inflation rates are explained by variations in oil price, that one-year ahead inflation will likely be moderate and that important differences across regions exist.
    Keywords: inflation; deflation; oil price; forecasting; simulation
    JEL: E31 E37 Q43
    Date: 2017–01
  27. By: Louis-Gaëtan Giraudet (ENPC - École des Ponts ParisTech, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement); Sébastien Houde (University of Maryland [College Park]); Joseph Maher (University of Maryland [College Park])
    Abstract: We investigate how moral hazard problems can cause sub-optimal investment in energy efficiency, a phenomenon known as the energy efficiency gap. We focus on contexts where both the quality offered by the energy efficiency provider and the behavior of the energy user are imperfectly observable. We first formalize under-provision of quality and compare two policy instruments: energy-savings insurance and minimum quality standards. Both instruments are second-best, for different reasons. Insurance induce over-use of energy, thereby requiring incomplete coverage in equilibrium. Standards incur enforcement costs. We then provide empirical evidence of moral hazard in the U.S. home retrofit market. We find that for those measures, the quality of which is deemed hard to observe, realized energy savings are subject to day-of-the-week effects. Specifically, energy savings are significantly lower when those measures were installed on a Friday—a day particularly prone to negative shocks on workers' productivity—than on any other weekday. The Friday effect explains 65% of the discrepancy between predicted and realized energy savings, an increasingly documented manifestation of the energy efficiency gap. We finally parameterize a model of the U.S. market for attic insulation and find that the deadweight loss from moral hazard is important over a range of specifications. Minimum quality standards appear more desirable than energy-savings insurance if energy-use externalities remain unpriced.
    Keywords: minimum quality standard, energy-savings insurance, credence good, day-of-the-week effect,Energy efficiency gap, moral hazard
    Date: 2016–12–10
  28. By: HALICIOGLU, Ferda; Ketenci, Natalya
    Abstract: This research presents first empirical evidence on the dynamic relationship between output, renewable and non-renewable energy production, international trade, capital and labour in the case of the EU-15 countries over the period of 1980-2015 for individual countries as well as a group. A simple production function of capital and labour is extended as such that it incorporates the impact of renewable and non-renewable energy inputs, and international trade on output level. Econometric estimations of the extended production equations are carried out via ARDL approach to cointegration for individual country cases and panel GMM econometric technique for the entire EU-15. The ARDL empirical results indicate the existence of cointegration relationships amongst the variables in the case of seven countries of the EU-15, in addition to the GMM based, long-run relationship for the entire EU-15 as a panel. The ARDL procedure suggests that the relative impact of renewable and non-renewable energy inputs on output levels vary considerably for individual countries. The GMM results demonstrate the existence of the relative importance of renewable and non-renewable energy inputs along with international trade on output in the EU-15 countries. This paper also discusses policy implications of the empirical results, as well as offering policy recommendations.
    Keywords: Output, International trade, renewable and non-renewable energy, Cointegration, EU-15 countries
    JEL: C22 F14 F18 Q43
    Date: 2018
  29. By: David Martimort (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Jérôme Pouyet (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Francesco Ricci (ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - UM3 - Université Paul-Valéry - Montpellier 3 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We characterize the optimal extraction path when a concessionaire has private information on the initial stock of resource. Under asymmetric information, a `virtual Hotelling rule' describes how the resource price evolves over time and how extraction costs are compounded with information costs along an optimal extraction path. In sharp contrast with the case of complete information, elds which are heterogeneous in terms of their initial stocks follow di erent extraction paths. Some resource might be left unexploited in the long-run as a way to foster incentives. The optimal contract may sometimes be implemented through royalties and license fees. With a market of concessionaires, asymmetric information leads to a `virtual Her ndahl principle' and to a new form of heterogeneity across active concessionaires. Under asymmetric information, the market price converges faster to its long-run limit, exhibiting more stability.
    Keywords: Optimal,Contract,Non-Renewable resource, Delegated Management, Asymmetric Information
    Date: 2017–01
  30. By: Jay Taneja (STIMA Lab, University of Massachusetts – Amherst; Energy for Growth Hub)
    Abstract: Kenya’s rapid electrification in the past decade has improved the lives of millions, and can serve as a template for other countries that are growing their electricity systems and coverage. However, significant challenges remain: many more remain without access, there is low consumption among those that are connected, and the electricity supply has poor reliability and quality. This paper provides analysis that shows electrification can be improved by considering cheaper options that still meet the needs of low consumers and that low consumption is a first-order problem for the sustainability of utilities.
    Date: 2018–07–25
  31. By: Moliterni, Fabio
    Abstract: This study investigates the connection between rent-seeking behaviour, corruption activity and quality of institutions to empirically evaluate the unexpected implications of an energy policy for criminal activity. The object of this research is a program of public subsidies introduced in Italy in 2005, which successfully boosted the solar energy sector but seems to have generated a growth of corruption activity, arisen from the opportunity of rent extraction. In particular, according to the main hypothesis of this research, bribery is expected to rise significantly where big photovoltaic plants are concentrated and administrative procedures are more complicated. To determine the causal effect of the subsidies on corruption, the study employs a Difference-in-Difference methodology on a sample of 76 Italian provinces and exploits solar radiation as exogenous variable to discriminate the profitability of investments and bribing. Results confirm that, in poor-institutions areas, the growth of the solar sector in sunniest provinces has gone hand in hand with increasing corruption. Results suggest that policy makers should pay additional attention to the potential distortions of public policies implying large rent opportunities, in areas where the weakness of institutional settings and the bureaucratic complexities encourage illegal behaviour.
    Keywords: Resource /Energy Economics and Policy
    Date: 2017–07–13
  32. By: Wesley Blundell; Gautam Gowrisankaran; Ashley Langer
    Abstract: The U.S. Environmental Protection Agency uses a dynamic approach to environmental enforcement for air pollution, with repeat offenders subject to high fines and designation as high priority violators (HPV). We estimate the benefits of dynamic monitoring and enforcement by developing and estimating a dynamic model of a plant and regulator, where plants decide when to invest in pollution abatement technologies. We use a fixed grid approach to estimate random coefficient specifications. Investment, fines, and HPV designation are very costly to most plants. Eliminating dynamic enforcement would have large adverse impacts on the number of high priority violators and pollutants emitted.
    JEL: Q53 Q58
    Date: 2018–07
  33. By: Shuai Chen; Paulina Oliva; Peng Zhang
    Abstract: A large body of literature estimates the effect of air pollution on health. However, most of these studies have focused on physical health, while the effect on mental health is limited. Using the China Family Panel Studies (CFPS) covering 12,615 urban residents during 2014 – 2015, we find significantly positive effect of air pollution – instrumented by thermal inversions – on mental illness. Specifically, a one-standard-deviation (18.04 μg/m3) increase in average PM2.5 concentrations in the past month increases the probability of having a score that is associated with severe mental illness by 6.67 percentage points, or 0.33 standard deviations. Based on average health expenditures associated with mental illness and rates of treatment among those with symptoms, we calculate that these effects induce a total annual cost of USD 22.88 billion in health expenditures only. This cost is on a similar scale to pollution costs stemming from mortality, labor productivity, and dementia.
    JEL: I15 I18 O53 Q51 Q53
    Date: 2018–06
  34. By: Moliterni, Fabio
    Abstract: This study investigates the growing importance of sustainability in equity markets by estimating whether company commitment to sustainability matters in corporate valuation. The spreading concern for social and environmental issues, and especially for the material risks of climate change, induces policy to encourage companies to prioritise sustainability in their decision making. There is growing evidence that points to a rationale for a profit-driven response to social and environmental problems, uncovering the role of sustainability in investors’ decisions. Exploring a panel of 3,311 listed companies in 58 countries for the period 2010-2016, this study reveals that sustainability contributes to the creation of market value for listed companies, over the considered period. Furthermore, it investigates how this relationship changes according to environmental policy stringency and sector sensitivity to climate policies.
    Keywords: Financial Economics
    Date: 2018–07–10
  35. By: Amir Sadeghi
    Abstract: Public investment is key to growth in developing oil-exporting countries and oil revenue is an important source of finance for public investment. Assessing the growth impact of public investment in Iran under various investment scaling-up (gradual, aggressive, and conservative) and oil price (baseline and adverse) scenarios, this paper shows that because of absorptive capacity constraint and investment inefficiency the growth outcome of an aggressive investment scaling-up is not significantly different from a conservative or a gradual scenario while its costs, in terms of fiscal adjustment, are significantly higher, especially during low oil price periods. An improvement in investment efficiency has a significant positive impact on growth outcome and leads to higher private consumption and investment. Using an oil fund, on the other hand, can help contain the size of fiscal adjustments, although it would result in a larger appreciation of real exchange rate and deterioration in the current account balance.
    Keywords: Middle East;Iran, Islamic Republic of;Public Investment; Growth; Oil Revenue; Investment Efficiency; Iran, Public Investment, Growth, Oil Revenue, Investment Efficiency, Iran, General, Exhaustible Resources and Economic Development
    Date: 2018–06–08
  36. By: Panle Jia Barwick; Shanjun Li; Deyu Rao; Nahim Bin Zahur
    Abstract: Developing and fast-growing economies have some of the worse air pollution in the world, but there is a lack of systematic evidence on the health especially morbidity impact of air pollution in these countries. Based on the universe of credit and debit card transactions in China from 2013 to 2015, this paper provides to our knowledge the first analysis of the morbidity cost of PM2.5 for the entire population of a developing country. To address potential endogeneity in pollution exposure, we construct an instrumental variable by modeling the spatial spillovers of PM2.5 due to long-range transport. We propose a flexible distributed-lag model that incorporates the IV approach to capture the dynamic response to past pollution exposure. Our analysis shows that PM2.5 has a significant impact on healthcare spending in both the short and medium terms that survives an array of robustness checks. The annual reduction in national healthcare spending from complying with the World Health Organization’s annual standard of 10 mg/m3 would amount to $42 billion, or nearly 7% of China’s total healthcare spending in 2015. In contrast to the common perception that the morbidity impact is modest relative to the mortality impact, our estimated morbidity cost of air pollution is about two-thirds of the mortality cost from the recent literature.
    JEL: I15 Q51 Q53
    Date: 2018–06
  37. By: Serhiy Kandul; Bruno Lanz
    Abstract: Social comparison feedback, i.e. informing people about the behavior of others, has been shown to influence prosocial behavior in many domains, including tax compliance and energy conservation. We argue that heterogeneity in consumers' (un)willingness to consult the corresponding information mitigates the effect of these interventions, and hypothesize that self-image concerns can induce people to deliberately ignore feedback about own behavior. We substantiate this idea by introducing social comparison feedback in a standard public good game, and study conditions in which subjects can elect to consult or deliberately avoid feedback information. Our results show that information avoidance is three times higher for feedback on own contributions as compared to feedback on group-level contributions. Our overall findings suggest that the effectiveness of informational intervention leveraging preferences for conformism with social norms could be enhanced by mitigating self-image costs associated with individual feedback interventions.
    Keywords: Social norms; Social comparison feedback; Deliberate ignorance; Public good game; Self-image concerns; Prosocial behavior; Externalities; Energy use
    JEL: C91 D12 D62 D91 H41 Q41
    Date: 2018–08
  38. By: Jie He (Département d'économique, École de gestion, Université de Sherbrooke); Bing Zhang (Nanjing University)
    Abstract: Previous psychological and economic studies have observed systematic biases in people’s predictions of their future utilities. In this paper, using repeated contingent valuation (CV) surveys conducted with a very high frequency (every two weeks, in total 29 waves) in Nanjing, China during July 2014 to June 2015, we tested whether people’s expected future utility for better air quality is overly influenced by the air quality at the moment of valuation. As air quality, in general, is subject to high day-to-day variability, its negative impact on people’s utility (health, happiness etc.), according to rational logic, should be essentially stationary in the long-run and dependent on the yearly average air quality. Following this logic, based on the classical random utility model, we should not expect the daily air quality to be a determining factor in a rational person’s valuation decision. Our results show, however, that people’s willingness to pay (WTP) is significantly and positively affected by the level of PM2.5 concentration, one of the key air pollution indicators that has been well understood for several years and is widely available on different media platforms for almost all large cities in China. We explored a range of rational explanations but found that our results were more consistent with the effects of psychological mechanisms, in particular, projection bias.
    Keywords: Psychological effects, projection bias, contingent valuation, air quality, China
    Date: 2018–08
  39. By: Kartono Sani (School of Business and Management, Institut Teknologi Bandung, Indonesia. Author-2-Name: Manahan Siallagan Author-2-Workplace-Name: School of Business and Management, Institut Teknologi Bandung, Indonesia. Author-3-Name: Utomo Sarjono Putro Author-3-Workplace-Name: School of Business and Management, Institut Teknologi Bandung, Indonesia. Author-4-Name: Kuntoro Mangkusubroto Author-4-Workplace-Name: School of Business and Management, Institut Teknologi Bandung, Indonesia. Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: "Objective – This paper discusses a literature review regarding finding system dynamics modeling as the preferred approach to building the national energy system model in Indonesia and introduces the uniqueness of the initial system dynamics model of the Indonesia energy mix today. Methodology/Technique – A literature review about system modeling of energy portfolio management worldwide to find the research gaps and to screen for the preferred modeling approach for the country. Along with past statistics in the background, a combination of system dynamics modeling and focus group discussion is subsequently expected to answer the research questions, bridge the research gaps, and contribute a new invention to management science. Findings – The theoretical testing reveals that system dynamics modeling is suitable to simplify and simulate very large, complex dynamic systems of energy supply that get feedback from many subsystems in non-linear fashions and is a good methodology for holistic approaches to understand underlying behavior over time, taking into account all sorts of feedback, including time delays and feedback loops, and those cannot be easily represented by conventional models, vastly applied in a study of sustainable development. Novelty – The uniqueness of the proposed system dynamics approach lies in the inclusion of a series of new variables developed from common characteristic impediments in public policy development using a traditional non-simulation approach, besides its focus on the unprecedented energy supply quality side of the archipelagic country with its unique parameters being highlighted."
    Keywords: "Portfolio Management; Past Performance; System Dynamic Modelling; Initial Model of Energy Close Loop Diagram of Indonesia Today."
    JEL: Q40 Q48
    Date: 2017–07–14
  40. By: Spiegel, Alisa; Britz, Wolfgang; Djanibekov, Utkur; Finger, Robert
    Abstract: Perennial energy crops such as short rotation coppice (SRC) have gained interest among both farmers and policy makers. SRC is characterized by fast biomass production, low-input use and high managerial flexibility. In addition, SRC provides environmental benefits compared with competing crops and contributes to the transition process towards renewable energy sources. Yet, the combination of high irreversible costs and uncertainties hampers SRC adoption by farmers. Policy instruments that are currently implemented to foster SRC adoption in Germany show limited success. In this study, we therefore assess different policy measures to incentivize the adoption of SRC in terms of their efficiency and farm-level effect while taking into account uncertainties related to SRC cultivation. We use the combination of the stochastic programming and the real options approaches. Our case study focuses on poplar production in Germany. We analyse four policy measures to foster SRC cultivation, i.e. a planting subsidy, a price floor, a guaranteed price and increasing the “Ecological Focus Area” (EFA) weighting coefficient within the Common Agricultural Policy of the European Union. Our results show that the recently implemented planting subsidy could create incentives to adopt SRC by leading to a substantial increase in farm income. However, increasing the EFA coefficient and a price floor are more efficient in terms of governmental expenditures; while a guaranteed price triggers immediate introduction of SRC.
    Keywords: Agribusiness, Agricultural Finance, Crop Production/Industries, Farm Management, Financial Economics, Land Economics/Use, Production Economics, Resource /Energy Economics and Policy, Risk and Uncertainty
    Date: 2017–09–18
  41. By: Carattini, Stefano; Carvalho, Maria; Fankhauser, Samuel
    Abstract: Carbon taxes represent a cost-effective way to steer the economy towards a greener future. In the real world, their application has however been limited. In this paper, we address one of the main obstacles to carbon taxes: public opposition. We identify drivers of and barriers to public support, and, under the form of stylized facts, provide general lessons on the acceptability of carbon taxes. We derive our lessons from a growing literature, as well as from a combination of policy “failures” and “successes”. Based on our stylized facts, we formulate a set of suggestions concerning the design of carbon taxes. We consider the use of trial periods, tax escalators, environmental earmarking, lump-sum transfers, tax rebates, and advanced communication strategies, among others. This paper aims to contribute to the policy debate, ideally leading to more success stories, and less policy failures.
    Keywords: carbon taxes; carbon pricing; acceptability; public support; revenue recycling
    JEL: J1
    Date: 2018–06–06

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