nep-ene New Economics Papers
on Energy Economics
Issue of 2018‒11‒05
thirty-two papers chosen by
Roger Fouquet
London School of Economics

  1. Subsidising Renewables but Taxing Storage? Second-Best Policies with Imperfect Pricing By Carsten Helm; Mathias Mier
  2. From residential energy demand to fuel poverty: income-induced non-linearities in the reactions of households to energy price fluctuations By DorothŽe CHARLIER; Sond s KAHOULI
  3. Promoting the Energy Transition Through Innovation By Lionel Nesta; Elena Verdolini; Francesco Vona
  4. An Economic Impact Analysis of Oil and Natural Gas Development in the Permian Basin By Wang, Haoying
  5. Modeling Coordination between Renewables and Grid: Policies to Mitigate Distribution Grid Constraints Using Residential PV-Battery Systems By Paul Neetzow; Roman Mendelevitch; Sauleh Siddiqui
  6. Competitive Advantage in the Renewable Energy Industry: Evidence from a Gravity Model By Onno Kuik; FrŽdŽric Branger; Philippe Quirion
  7. Permit Markets, Carbon Prices and the Creation of Innovation Clusters By Gersbach, Hans; Riekhof, Marie-Catherine
  8. Integrating electricity markets: Impacts of increasing trade on prices and emissions in the western United States By Steve Dahlke
  9. Renewable energy-economic growth nexus in South Africa: Linear, nonlinear or non-existent? By Bothwell Nyoni; Andrew Phiri
  10. The effect of electricity losses on GDP in Benin By Dakpogan, Arnaud; Smit, Eon
  11. Effect of negative shocks to electricity consumption on negative shocks to economic growth in Benin By Dakpogan, Arnaud; Smit, Eon
  12. Decentralized Environmental Regulations and Plant-Level Productivity By Vivek Ghosal; Andreas Stephan; Jan F. Weiss
  13. Exporting Pollution By Itzhak Ben-David; Stefanie Kleimeier; Michael Viehs
  14. Market liberalization: Price dispersion, price discrimination and consumer search in the German electricity markets By Gugler, Klaus; Heim, Sven; Janssen, Maarten C. W.; Liebensteiner, Mario
  15. Climate Policy and Optimal Public Debt By Runkel, Marco; Kellner, Maximilian
  16. The vertical and horizontal distributive effects of energy taxes By Thomas Douenne
  17. Exchange Rate Pass-Through to Consumer Prices and the Role of Energy Prices By Kim, Hyeongwoo; Lin, Ying
  18. The Shale Oil Boom and the U.S. Economy: Spillovers and Time-Varying Effects By Hilde C. Bjørnland; Julia Zhulanova
  19. Optimal electricity demand response contracting with responsiveness incentives By Ren\'e A\"id; Dylan Possama\"i; Nizar Touzi
  20. A General Sensitivity Analysis Approach for Demand Response Optimizations By Ding Xiang; Ermin Wei
  21. Probabilistic forecasting and simulation of electricity prices By Peru Muniain; Florian Ziel
  22. Shadow prices of direct and overall carbon emissions in China¡¯s construction industry: a parametric directional distance function-based sensitive estimation By Ke Wang; Kexin Yang; Yi-Ming Wei; Chi Zhang
  23. Transport CO2 and the Paris Climate Agreement: Reviewing the Impact of Nationally Determined Contributions By ITF
  24. IRPsim: A techno-socio-economic energy system model vision for business strategy assessment at municipal level By Scheller, Fabian; Johanning, Simon; Bruckner, Thomas
  25. Do government activities determine electricity consumption in Ghana? An empirical investigation By ASUAMAH YEBOAH, SAMUEL
  26. Sustainable consumption and wellbeing: does on-line shopping matter? By Mònica Guillen-Royo
  27. Evaluating regulatory reform of network industries: a survey of empirical models based on categorical proxies By Andrea Bastianin; Paolo Castelnovo; Massimo Florio
  28. Examining the Sustainability of the US Shale Oil Boom By Bejan, Vladimir
  29. Impacts of a Carbon Tax across US Household Income Groups: What Are the Equity-Efficiency Trade-Offs? By Lawrence H. Goulder; Marc A. C. Hafstead; GyuRim Kim; Xianling Long
  30. Longitudinal Environmental Inequality and Environmental Gentrification: Who Gains From Cleaner Air? By John Voorheis
  31. Does strategic commodities price respond to U.S. Partisan Conflict? Evidence from a parametric test of Granger causality in quantiles By Yong Jiang
  32. Measuring electricity security risk By Dakpogan, Arnaud; Smit, Eon

  1. By: Carsten Helm (University of Oldenburg, Department of Economics); Mathias Mier (ifo Institute, Munich)
    Abstract: We consider an economy in which competitive firms use three technologies for electricity production: pollutive fossils, intermittent renewables like wind or solar, and storage. We determine optimal subsidies for renewables and storage capacities when carbon pricing is imperfect. This policy is efficient for low market shares of intermittent renewables in the energy system, but it turns inefficient once there are sucient renewables to partly displace fossil electricity production at times of high availability. Moreover, the subsidy scheme is substantially more complex than a first-best Pigouvian tax. The optimal renewable subsidy is always positive but tends to decrease as electricity production becomes less reliant on fossils. The optimal storage subsidy even changes its sign. It is usually negative as long as fossils contribute to lling the storage, but turns positive if fossils are used only during times of low availability of renewables. This is because more storage capacity reduces the price during times of destorage, but raises it when electricity is taken from the market to fill the storage. This has countervailing effects on firms' incentives to invest in fossil capacities, and these effects are more pronounced the higher the round-trip effciency losses during a storage cycle.
    Date: 2018–10
  2. By: DorothŽe CHARLIER (USMB IREGE); Sond s KAHOULI (UniversitŽ Bretagne Occidentale AMURE)
    Abstract: The residential energy demand is growing steadily and the trend is expected to continue in the near future. At the same time, under the impulse of economic crises and environmental and energy policies, many households have experienced reductions in real income and higher energy prices. In the residential sector, the number of fuel-poor households is thus expected to rise. A better understanding of the determinants of residential energy demand, in particular of the role of income and the sensitivity of households to changes in energy prices, is crucial in the context of recurrent debates on energy efficiency and fuel poverty. We propose a panel threshold regression (PTR) model to empirically test the sensitivity of French households to energy price fluctuations Ð as measured by the elasticity of residential heating energy prices Ð and to analyze the overlap between their income and fuel poverty profiles. The PTR model allows to test for the non-linear effect of income on the reactions of households to fluctuations in energy prices. Thus, it can identify specific regimes differing by their level of estimated price elasticities. Each regime represents an elasticity-homogeneous group of households. The number of these regimes is determined based on an endogenously PTR-fixed income threshold. Thereafter, we analyze the composition of the regimes (i.e. groups) to locate the dominant proportion of fuel-poor households and analyse their monetary poverty characteristics. Results show that, depending on the income level, we can identify two groups of households that react differently to residential energy price fluctuations and that fuel-poor households belong mostly to the group of households with the highest elasticity. By extension, results also show that income poverty does not necessarily mean fuel poverty. In terms of public policy, we suggest focusing on income heterogeneity by considering different groups of households separately when defining energy efficiency measures. We also suggest paying particular attention to targeting fuel-poor households by examining the overlap between fuel and income poverty.
    Keywords: Fuel poverty, Residential energy demand, Price elasticity, Income elasticity, Panel threshold regression
    JEL: C23 C24 C26 Q43 Q48
    Date: 2018–10
  3. By: Lionel Nesta (Observatoire français des conjonctures économiques); Elena Verdolini (Fondazione Eni Enrico Mattei (FEEM), Milan); Francesco Vona (Observatoire français des conjonctures économiques)
    Abstract: With the striking exception of the USA, countries around the world are committed to the implementation of stringent targets on anthropogenic carbon emissions, as agreed in the Paris Climate Agreement. Indeed, for better or for worse, the transition towards decarbonisation is a collective endeavour, with the main challenge being a technological one. The path from a fossil-based to a sustainable and low-carbon economy needs to be paved through the development and deployment of low-carbon energy technologies which will allow to sustain economic growth while cutting carbon emissions. [First paragraph]
    Keywords: Environment; Environmental policies; Sustainable development
    Date: 2018–10
  4. By: Wang, Haoying
    Abstract: This study analyzes the economic impact of oil and natural gas development in the Permian Basin with a focus on the NM part of the Basin. The analysis looks at the impacts on state revenue, local employment and income levels. Several existing economic impact reports from other states have been criticized by the peer-review literature that the impact estimates are very likely overstated due to questionable methodologies. In this analysis, a panel data regression model with county fixed effects and year effects is deployed to identify the impact of oil and natural gas production on employment and per job annual income at the county level. The analysis covers 62 counties (12 counties in NM and 50 counties in TX) for the time period of 1998 – 2016. The main findings of the analysis can be summarized as: 1. Over the last decade, according to different estimates the state revenue generated by the oil and natural gas industries in NM has been consistently exceeding one billion dollars per year. In the meantime, a large amount of intensive direct investment has been capitalized into the southeast NM. 2. In aggregate, per job annual income (in the real term) and the number of jobs have both experienced significant growth in the last two decades of active oil and natural gas development in the region. It is reasonable to speculate that much of the growth can be attributed to the ongoing energy development. 3. It is estimated that on average additional one million BBLs of oil equivalent production brings 54 jobs and about $170 (2015 dollar) extra annual income per job (or a 0.5% increase) in the county of production. 4. The intensive oil and natural gas production around the center of the basin (Lea County and Eddy County in NM) have had significant spatial spillover effects to the surrounding counties. Depending on the distance from the given county to the center of the Basin and for additional one million BBLs of oil equivalent production, the employment effect ranges from 35 to 10 jobs and the income effect ranges from $170 to $90 (2015 dollar) extra annual income per job. The paper also provides details on methodology and guidelines on how to interpret estimation results. The estimated economic impact coefficients can be used for prediction purpose with available future production scenarios. The paper includes instructions and suggestions on how the prediction may proceed.
    Keywords: Oil and Natural Gas, Permian Basin, Economic Impact, New Mexico
    JEL: C33 H2 H71 Q4 R11
    Date: 2018–09–25
  5. By: Paul Neetzow; Roman Mendelevitch; Sauleh Siddiqui
    Abstract: Distributed photo-voltaic (PV) generation is one of the pillars of energy transitions around the world, but its deployment in the distribution grid requires costly reinforcements and expansions. Prosumage - consisting of a household-level PV unit coupled with a battery storage system - has been proposed as an effective means to facilitate the integration of renewable energy sources and reduce distribution grid stress. However, tapping its full potential requires regulatory interventions; otherwise, system costs could rise despite increasing flexibility. We analyze the effectiveness of different policy schemes to mitigate the need for distribution capacity expansion by incentivizing beneficial storage operation. Our novel top-down modeling approach allows analyzing effects on market prices, storage dispatch, induced distribution grid requirements, system costs, and distributional implications. Numerical results for German power system data indicate that required distribution grid requirements can be reduced through simple feed-in policies. A uniform limit on maximum grid feed-in can leave distribution system operators better off, even if they fully compensate prosumage households for foregone revenue. Policies imposing more differentiated limits at the regional level result in only marginal efficiency improvements. Complete self-sufficiency (autarky) is socially undesirable, as it confines important balancing potential and can increase system costs despite adding storage.
    Keywords: Residential storage, renewable integration, distribution system operator, prosumage, policy, multi-level games, MPEC
    JEL: C61 L94 Q41 Q42
    Date: 2018
  6. By: Onno Kuik (IVM, VU Amsterdam); FrŽdŽric Branger (CIRED); Philippe Quirion (CIRED, CNRS)
    Abstract: Pioneering domestic environmental regulation may foster the creation of new eco-industries. These industries could benefit from a competitive advantage in the global market place. This article examines empirical evidence of the impact of domestic renewable energy policies on the export performance of renewable energy products (wind and solar PV). We use a gravity model of international trade with a balanced dataset of 49 (for wind) and 40 (for PV) countries covering the period 1995-2013. The stringency of renewable energy policies are proxied by installed capacities. Our econometric model shows evidence of competitive advantage positively correlated with domestic renewable energy policies, sustained in the wind industry but brief in the solar PV industry. We suggest that the reason for the dynamic difference lies in the underlying technologies involved in the two industries.
    Keywords: Competitive Advantage, Gravity Model, Wind Industry, Solar PV Industry, Green Growth
    JEL: F14 K32 Q42
    Date: 2018–10
  7. By: Gersbach, Hans; Riekhof, Marie-Catherine
    Abstract: Innovation clusters that combine public basic research and applied research performed by private firms may be needed for greater technological advances to slow down climate change. We use a multi-country model with emissions permit trade to examine how international climate policy can induce countries to create such clusters. We allow for a varying degree of cooperation between the countries, represented by different carbon price targets. We find that a minimal carbon price is needed to attract applied research firms, but countries may nevertheless fail to invest in basic research. We construct a mechanism that can overcome this barrier and that can induce the first-best creation of innovation clusters. The mechanism involves a combination of few permits given to the country with the lowest costs for basic research, fair burden-sharing and maximal grandfathering.
    Keywords: International permit markets,Carbon prices,Innovation clusters,Basic research,Applied R&D,Climate change mitigation,Externalities
    JEL: H23 Q54 O32
    Date: 2018
  8. By: Steve Dahlke
    Abstract: This paper analyzes the market impacts of expanding California's centralized electricity market across the western United States and provides the first statistical assessment of this issue. Using market data from 2015-2018, I estimate the short-term effects of increasing regional electricity trade between California and neighboring states on prices, emissions, and generation. Consistent with economic theory, I find negative price impacts from regional trade, with each 1 gigawatt-hour (GWh) increase in California electricity imports associated with an average 0.15 dollar decrease in CAISO price. The price effect yields significant consumer savings well in excess of implementation costs required to set up a regional market. I find a short-term decrease in California carbon dioxide emissions associated with trading that is partially offset by increased emissions in neighboring regions. Specifically, each 1 GWh increase in regional trade is associated with a net 70-ton average decrease in CO2 emissions across the western U.S. A small amount of increased SO2 and NOx emissions are also observed in neighboring states associated with increased exports to California. This implies a small portion (less than 10 percent) of electricity exports to California are supplied by coal generation. This study identifies substantial short-term monetary benefits from market regionalization for California consumers. It also shows that California's cap and trade program is relatively effective in limiting the carbon content of imported electricity, even absent a regional cap on CO2. The conclusions suggest efforts to reduce trade barriers should move forward in parallel with strong greenhouse gas policies that cap emissions levels across the market region.
    Date: 2018–10
  9. By: Bothwell Nyoni (Innoventon and the Downstream Chemicals Technology Station, Nelson Mandela University); Andrew Phiri (Department of Economics, Nelson Mandela University)
    Abstract: With escalating fears of climate change reaching irreversible levels, much emphasis has been recently placed on shifting to renewable sources of energy in supporting future economic livelihood. Focusing on South Africa, as Africa’s largest energy consumer and producer, our study investigates the short-run and long-run effects of renewable energy on economic growth using linear and nonlinear autoregressive distributive lag (ARDL) models. Working with data availability, our empirical analysis is carried out over the period of 1991 to 2016, and our results unanimously fail to confirm any linear or nonlinear cointegration effects of the consumption and production of renewable energy on South African economic growth. We view the absence of cointergation relations as an indication of inefficient usage of renewable energy in supporting sustainable growth in South Africa and hence advise policymakers to accelerate the establishment of necessary renewable infrastructure in supporting future energy requirements.
    Keywords: Renewable energy, economic growth, ARDL, nonlinear ARDL, South Africa, Sub-Sahara Africa (SSA).
    JEL: C13 C32 C52 Q43
    Date: 2018–10
  10. By: Dakpogan, Arnaud; Smit, Eon
    Abstract: The current study has assessed the losses of GDP caused by electricity losses in Benin over the period 1980-2014. The technique used was the Autoregressive Distributive Lags (ARDL). Results showed that in the long run Benin loses 0.16% of its GDP on average because of electricity losses. Benin is a country which faces important losses of electricity. A financing mechanism of the cost associated with reduction of electricity losses has been proposed in the national policy framework for electricity. By investigating the gain in GDP resulting from a reduction in electricity losses, the current study has assessed the feasibility of such mechanism, and thus contributes to the advancement of energy efficiency policy in Benin.
    Keywords: Electricity losses, GDP, financing mechanism, national policy framework, efficiency, Benin.
    JEL: Q43 Q48
    Date: 2018–09–17
  11. By: Dakpogan, Arnaud; Smit, Eon
    Abstract: The current study used an asymmetric approach to establish that negative shocks to electricity consumption have caused negative shocks to economic growth in Benin over the period 1971-2014. In so doing, it has ascertained the conclusion of the national policy framework for electricity which stipulated that shortages of electricity have impeded economic growth. Benin has encountered several electricity shortages in the 1980s, 1990s, and 2000s. Although the share of electricity consumption in total energy consumption is very low in the country, electricity consumption remains essential for of economic growth because shortages of electricity cause reduction in economic growth. This result has some important policy implications in terms of electricity security in Benin.
    Keywords: Asymmetric Causality, Electricity Consumption, Economic Growth, Electricity Shortages.
    JEL: Q43 Q48
    Date: 2018–09–17
  12. By: Vivek Ghosal; Andreas Stephan; Jan F. Weiss
    Abstract: Using a unique plant-level dataset we examine total factor productivity (TFP) growth and its components, related to efficiency change and technical change. The data we use is from Sweden and for their pulp and paper industry, which is heavily regulated due to its historically large contribution to air and water pollution. Our paper contributes to the broader empirical literature on the Porter Hypothesis, which posits a positive relationship between environmental regulation and “green” TFP growth of firms. Our exercise is innovative as Sweden has a unique regulatory structure where the manufacturing plants have to comply with plant-specific regulatory standards stipulated at the national level, as well as decentralized local supervision and enforcement. Our key findings are: (1) prudential regulation limits expansion of plants with high initial pollution; (2) regulation, however, is not conducive to plants’ “green” technical change, which provides evidence against the recast version of the Porter Hypothesis; (3) decentralized command-and-control regulation is prone to regulatory bias, entailing politically motivated discriminatory treatment of plants with otherwise equal characteristics.
    Keywords: pollution, environmental regulations, plant-specific regulation, decentralized regulation, enforcement, political-economy, Porter Hypothesis, TFP, productivity, efficiency, technical change, pulp and paper industry
    JEL: D24 L51 L60 Q52 Q53 Q58
    Date: 2018
  13. By: Itzhak Ben-David; Stefanie Kleimeier; Michael Viehs
    Abstract: Despite awareness of the detrimental impact of CO2 pollution on the world climate, countries vary widely in how they design and enforce environmental laws. Using novel micro data about firms’ CO2 emissions levels in their home and foreign countries, we document that firms headquartered in countries with strict environmental policies perform their polluting activities abroad in countries with relatively weaker policies. These effects are stronger for firms in high-polluting industries and with poor corporate governance characteristics. Although firms export pollution, they nevertheless emit less overall CO2 globally in response to strict environmental policies at home.
    JEL: N50 O13 Q56 R11
    Date: 2018–10
  14. By: Gugler, Klaus; Heim, Sven; Janssen, Maarten C. W.; Liebensteiner, Mario
    Abstract: We study how consumer search affects pricing in markets with incumbents and entrants using panel data on German electricity retail markets. Consumers observe the baseline price of the incumbent and decide whether or not to search. Incumbent providers can price discriminate between searching and loyal consumers. Empirically we show that local incumbents increase their baseline rate while entrants decrease their tariffs if consumer search increases. Moreover, the incumbent price discriminates more strongly in markets with more consumer search. Using a theoretical model, we show that these pricing patterns are consistent with the strategic interaction of profit-maximizing firms.
    Keywords: Search,Price Dispersion,Price Discrimination,Electricity
    JEL: D43 D83 L11 L13 Q40
    Date: 2018
  15. By: Runkel, Marco; Kellner, Maximilian
    Abstract: This paper analyzes the optimal level of public debt when taxes are used not only for funding public expenditures but also for correcting externalities from climate change. Taking into account externalities may imply the optimal policy to deviate from tax smoothing. Provided accumulated marginal damages from today's consumption are larger than those from tomorrow's consumption, the inclusion of environmental externalities decreases (increases) optimal public debt if tax rates are on the increasing (decreasing) side of the Laffer curve. The reversed holds if the accumulated marginal damage increases over time. Allowing for endogenous adaptation investments reduces the deviation from tax smoothing.
    Keywords: environmental externality,public debt,tax smoothing
    JEL: H23 H63 Q54 Q58
    Date: 2018
  16. By: Thomas Douenne (Paris School of Economics)
    Abstract: This paper proposes a micro-simulation assessment of the distributional impacts of the French carbon tax. It shows that the policy is regressive, but could be made progressive by redistributing the revenue through a flat-recycling. However, it would still generate large horizontal distributive effects and harm an important share of low-income households. The determinants of the tax incidence are characterized precisely, and alternative targeted transfers are simulated on this basis. The paper shows that given the importance of unobserved heterogeneity in the determinants of energy consumption, horizontal distributive effects are much more difficult to tackle than vertical ones.
    Keywords: Energy taxes, Distributional effects, Demand-System, Micro-simulation
    JEL: D12 H23 I32
    Date: 2018–09
  17. By: Kim, Hyeongwoo; Lin, Ying
    Abstract: A group of researchers has asserted that the rate of exchange rate pass-through (ERPT) to domestic prices has declined substantially over the last few decades. We revisit this claim of a downward trend in the rate of ERPT to the Consumer Price Index (CPI) by employing the vector autoregressive (VAR) model for the U.S. macroeconomic data under the current floating exchange rate regime. Our VAR approach that nests the conventional single equation method reveals very weak evidence of ERPT during the pre-1990 era. On the other hand, we observe statistically significant evidence of ERPT during the post-1990 era, which sharply contrasts with previous findings. After statistically confirming a structural break in ERPT to the total CPI via Hansen's (2001) test procedure, we seek the source of the structural break using the disaggregate level CPIs, which pinned down a key role of energy prices in explaining the emergence of the break. The dependency of the U.S. energy consumption on imports has increased since the 1990s. This change magnifies the effects of the exchange rate shock on domestic energy prices, resulting in greater responses of the total CPI via this energy price channel.
    Keywords: Exchange Rate Pass Through; Disaggregated CPI; Structural Break; Oil Price Shock
    JEL: E31 F31 F40
    Date: 2018–09
  18. By: Hilde C. Bjørnland; Julia Zhulanova
    Abstract: We analyze if the transmission of oil price shocks on the U.S. economy has changed as a result of the shale oil boom. To do so we allow for spillovers at the state level, as well as aggregate country level effects. We identify and quantify these spillovers using a factor-augmented vector autoregressive (VAR) model, allowing for time-varying changes. In contrast to previous results, we find considerable changes in the way oil price shocks are transmitted: there are now positive spillovers to non-oil investment, employment and production in many U.S. states from an increase in the oil price - effects that were not present before the shale oil boom.
    Keywords: Shale oil boom, FAVAR model, Time-varying changes, Geographical dispersion
    Date: 2018–10
  19. By: Ren\'e A\"id; Dylan Possama\"i; Nizar Touzi
    Abstract: Despite the success of demand response programs in retail electricity markets in reducing average consumption, the literature shows failure to reduce the variance of consumers' responses. This paper aims at designing demand response contracts which allow to act on both the average consumption and its variance. The interaction between the producer and the consumer is modelled as a Principal-Agent problem, thus accounting for the moral hazard underlying demand response programs. The producer, facing the limited flexibility of production, pays an appropriate incentive compensation in order to encourages the consumer to reduce his average consumption and to enhance his responsiveness. We provide closed-form solution for the optimal contract in the case of linear energy valuation. Without responsiveness incentive, this solution decomposes into a fixed premium for enrolment and a proportional price for the energy consumed, in agreement with previously observed demand response contracts. The responsiveness incentive induces a new component in the contract with payment rate on the consumption quadratic variation. Finally, under the optimal contract with optimal consumer behaviour, the resulting consumption volatility may decrease as required, but it may also increase depending on the risk aversion parameters of both actors. This agrees with standard risk sharing effects. The calibration of our model to publicly available data of a large scale demand response experiment predicts a significant increase of responsiveness under our optimal contract, a significant increase of the producer satisfaction, and a significant decrease of the consumption volatility. The stability of our explicit optimal contract is justified by appropriate sensitivity analysis.
    Date: 2018–10
  20. By: Ding Xiang; Ermin Wei
    Abstract: It is well-known that demand response can improve the system efficiency as well as lower consumers' (prosumers') electricity bills. However, it is not clear how we can either qualitatively identify the prosumer with the most impact potential or quantitatively estimate each prosumer's contribution to the total social welfare improvement when additional resource capacity/flexibility is introduced to the system with demand response, such as allowing net-selling behavior. In this work, we build upon existing literature on the electricity market, which consists of price-taking prosumers each with various appliances, an electric utility company and a social welfare optimizing distribution system operator, to design a general sensitivity analysis approach (GSAA) that can estimate the potential of each consumer's contribution to the social welfare when given more resource capacity. GSAA is based on existence of an efficient competitive equilibrium, which we establish in the paper. When prosumers' utility functions are quadratic, GSAA can give closed forms characterization on social welfare improvement based on duality analysis. Furthermore, we extend GSAA to a general convex settings, i.e., utility functions with strong convexity and Lipschitz continuous gradient. Even without knowing the specific forms the utility functions, we can derive upper and lower bounds of the social welfare improvement potential of each prosumer, when extra resource is introduced. For both settings, several applications and numerical examples are provided: including extending AC comfort zone, ability of EV to discharge and net selling. The estimation results show that GSAA can be used to decide how to allocate potentially limited market resources in the most impactful way.
    Date: 2018–10
  21. By: Peru Muniain; Florian Ziel
    Abstract: In this paper we include dependency structures for electricity price forecasting and forecasting evaluation. We work with off-peak and peak time series from the German-Austrian day-ahead price, hence we analyze a bivariate data. We first estimate the mean of the two time series, and then in a second step we estimate the residuals. The mean equation is estimated by OLS and elastic net and the residuals are estimated by maximum likelihood. Our contribution is to include a bivariate jump component on a mean reverting jump diffusion model in the residuals. The models' forecasts are evaluated using four different criteria, including the energy score to measure whether the correlation structure between the time series is properly included or not. In the results it is observed that the models with bivariate jumps provide better results with the energy score, which means that it is important to consider this structure in order to properly forecast correlated time series.
    Date: 2018–10
  22. By: Ke Wang; Kexin Yang; Yi-Ming Wei; Chi Zhang
    Abstract: Construction industry, together with building materials industries supplying it, is one of China¡¯s largest emitters of CO2. Structural change in construction industry has been promoted to mitigate CO2. This paper estimates CO2 shadow price of construction industry and its supporting materials industries in China so as to help them to mitigate CO2 cost-effectively. A parametric directional distance function model, taking into account all possible directional vectors, is applied to address issues regarding arbitrary selection of direction that will affect estimation of shadow price. Results show that there is larger potential for CO2 reduction in supporting material industries than in construction industry itself and shadow price of overall CO2 is much lower than that of direct CO2. The existence of enlarging heterogeneity in shadow prices among different regions provides strong support for introducing a national carbon trading market, thereby helping construction industry and building materials industries to reduce their abatement costs.
    Keywords: Abatement cost; Building material industry; Construction industry; Shadow price
    JEL: Q54 Q40
    Date: 2018–09–08
  23. By: ITF
    Abstract: This report assesses the impact of transport commitments made in the Nationally Determined Contributions (NDCs) of the Paris Climate Agreement on national-level transport CO2 emissions. It contains an introduction to NDCs and provides an overview of economy-wide CO2reduction targets that were defined in these pledges. The methodology, developed specifically for this report, allows a sectoral assessment despite the often limited information regarding specific ambitions for transport and planned CO2mitigation measures.
    Date: 2018–10–16
  24. By: Scheller, Fabian; Johanning, Simon; Bruckner, Thomas
    Abstract: Decision makers of municipal energy utilities responsible for future portfolio strategies are confronted with making informed decisions within the scope of continuously evolving systems. To cope with the increasing flexibility of customers, and their autonomous decision-making processes, determining newly established municipal energy-related infrastructure has become a challenge for utilities, which are struggling to develop suitable business models. Even though business portfolio decisions are already supported by energy system models, models only considering rational choices of economical drivers seem to be insufficient. Structural decisions of different market actors are often related to bounded rationality and thus are not fully rational. A combined analysis of sociological and technological dynamics might be necessary to evaluate new business models by providing insights into the interactions between the decision processes of market actors and the performance of the supply system. This research paper outlines a multi-model vision called IRPsim (Integrated Resource Planning and Simulation) including bounded and unbounded rationality modeling approaches. The techno-socio-economic model enables the determining of system impacts of behavior patterns of market actors on the business performance of the energy supply system. The mutual dependencies of the coupled models result in an interactive and dynamic energy model application for multi-year business portfolio assessment. The mixed-integer dynamic techno-economic optimization model IRPopt (Integrated Resource Planning and Optimization) represents an adequate starting point as a result of the novel actor-oriented multi-level framework. For the socioeconomic model IRPact (Integrated Resource Planning and Interaction), empirically grounded agent-based modeling turned out to be one of the most promising approaches as it allows for considering various influences on the adoption process on a micro level. Additionally, a large share of available applied research already deals with environmental and energy-related innovations.
    Keywords: Techno-socio economic modeling,Bounded and unbounded rationality,Business model assessment,Empirically grounded agent-based modeling of innovation diffusion
    Date: 2018
    Abstract: The paper investigates the long-run relationship between government activities and electricity consumption using annual data collected from world development indicator for a period of 1971 to 2011 in Ghana. The paper adopts the autoregressive distributed lag model of co integration for the estimation. The estimation reveals both short run and long-run relationships between government expenditure and electricity consumption. The findings suggest that government activities explain electricity consumption in Ghana for the period under discussion, and could be considered as a policy variable in the management of electricity consumption.
    Keywords: Government expenditures; Electricity consumption; Co-integration; Short run; long run.
    JEL: H50 H72
    Date: 2018–08–19
  26. By: Mònica Guillen-Royo (TIK Centre, University of Oslo)
    Abstract: Although sustainable consumption is frequently associated with lower quality of life, empirical evidence indicates that practices linked to reducing the environmental impact of travelling, heating, cooling and food consumption are compatible with high levels of wellbeing. More and more people are shopping on-line, which increases the efficiency of consumption, expands choice and information – while also intensifying exposure to consumerism and materialistic messages. This article explores the relationship between sustainable consumption and wellbeing and the role of on-line shopping, analysing survey data from a representative sample in Norway. Wellbeing is addressed in its affective (happiness), cognitive (satisfaction) and eudaimonic dimensions (subjective vitality). Sustainable consumption practices are investigated through a variable that captures the extent to which respondents choose sustainable alternatives as regards travel, household energy use and food. Results based on regression analysis indicate that sustainable consumption practices and wellbeing are positively associated in Norway, but that the relationship weakens when psychological and lifestyle factors are taken into account. The study also shows that internet shopping does not reduce the strength of the relationship, and might even increase life satisfaction by lowering the costs of engaging in sustainable consumption practices.
    Date: 2018–10
  27. By: Andrea Bastianin; Paolo Castelnovo; Massimo Florio
    Abstract: Proxies for regulatory reforms based on categorical variables are increasingly used in empirical evaluation models. We surveyed 63 studies that rely on such indices to analyze the effects of entry liberalization, privatization, unbundling, and independent regulation of the electricity, natural gas, and telecommunications sectors. We highlight methodological issues related to the use of these proxies. Next, taking stock of the literature, we provide practical advice for the design of the empirical strategy and discuss the selection of control and instrumental variables to attenuate endogeneity problems undermining identification of the effects of regulatory reforms.
    Date: 2018–10
  28. By: Bejan, Vladimir
    Keywords: Natural Resource Economics, Research Methods/Econometrics/Stats, Productivity Analysis and Emerging Technologies
    Date: 2018–06–20
  29. By: Lawrence H. Goulder; Marc A. C. Hafstead; GyuRim Kim; Xianling Long
    Abstract: This paper assesses the impacts across US household income groups of carbon taxes of various designs. We consider both the source-side impacts (reflecting how policies affect nominal wage, capital, and transfer incomes) and the use-side impacts (reflecting how policies alter prices of goods and services purchased by households). We apply an integrated general equilibrium framework with extended measures of the source- and use-side impacts that add up to the overall welfare impact. The distributional impacts depend importantly on the revenue recycling method and treatment of transfer income. In the absence of compensation targeted to particular income groups, use-side impacts tend to be regressive and source-side impacts progressive, with the progressive source-side impacts fully offsetting the regressive use-side impacts. Both types of impact are considerably larger under our more comprehensive welfare measures than under more conventional measures. The efficiency costs of targeted compensation to achieve distributional objectives depend critically on the recycling method and compensation target. These costs are an order of magnitude higher when the revenues that remain after compensation are used for corporate income tax cuts than when the remaining revenues are used in other ways. Efficiency costs rise dramatically when targeted compensation extends beyond the lowest income quintiles.
    JEL: D58 H23 Q52 Q54
    Date: 2018–10
  30. By: John Voorheis
    Abstract: A vast empirical literature has convincingly shown that there is pervasive cross-sectional inequality in exposure to environmental hazards. However, less is known about how these inequalities have been evolving over time. I fill this gap by creating a new dataset, which combines satellite data on ground-level concentrations of fine particulate matter with linked administrative and survey data. This linked dataset allows me to measure individual pollution exposure for over 100 million individuals in each year between 2000 and 2014, a period of time has seen substantial improvements in average air quality. This rich dataset can then be used to analyze longitudinal dimensions of environmental inequality by examining the distribution of changes in individual pollution exposure that underlie these aggregate improvements. I confirm previous findings that cross-sectional environmental inequality has been on the decline, but I argue that this may miss longitudinal patterns in exposure that are consistent with environmental gentrification. I find that advantaged individuals at the beginning of the sample experience larger pollution exposure reductions than do initially disadvantaged individuals.
    Date: 2017–05
  31. By: Yong Jiang
    Abstract: Currently, U.S. politics have been characterized by a high degree of partisan conflict, which has led to increasing polarization and high policy uncertainty. Given the importance of U.S. in the global commodity market, we investigate whether U.S. partisan conflict affects the price performance (returns and volatility) of two strategic commodities (oil and gold). To this end, we employ a parametric test of Granger causality in quantiles proposed by Troster (2016), which can discriminate between causality affecting the median and the tails of the conditional distribution. Meanwhile, this approach allows us to investigate whether there exist different effects of U.S. partisan conflict index on the oil market and gold market under different market conditions. The empirical results suggest that U.S. partisan conflict can affect the returns of oil and gold, with the effects cluster around the tail of the conditional distribution of returns. More specifically, the partisan conflict mainly affects the oil returns when the crude oil market is in a bearish state (lower quantiles). By contrast, partisan conflict matters for gold returns only when the gold market is in a bullish scenario (higher quantiles). In addition, for the volatility of oil and gold, the predictability of partisan conflict index virtually covers the entire distribution of volatility. This study provides valuable implications for academics, policymakers, and investors.
    Date: 2018–10
  32. By: Dakpogan, Arnaud; Smit, Eon
    Abstract: The current study has developed a composite index to measure electricity security risk. It has used a set of eight different indicators and index-governance index, efficiency rate, self-sufficiency rate, ratio of urban access to urbanization rate, rate of access, GDP per capita as percentage of the world average GDP per capita, the share of GDP not dedicated to electricity expenditures, the share of renewable electricity in total supply- to construct the composite index of electricity security. The method used was the geometric mean. Results showed that Benin is among countries that have a very high level of disruption risk to electricity supply. Results also indicated that Norway has the lowest level of disruption risk, followed by Denmark, Sweden, Switzerland and other OECD countries. Many African countries have a very high level of disruption risk and Liberia and Niger have the highest disruption risk to electricity supply. Countries of Latin America, Eastern Europe, North Africa and some countries of the Middle East and Asia have a medium level of disruption risk to electricity supply.
    Keywords: Disruption risk, Electricity security, Electricity supply, index
    JEL: Q48
    Date: 2018–09–24

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