nep-ene New Economics Papers
on Energy Economics
Issue of 2018‒11‒26
35 papers chosen by
Roger Fouquet
London School of Economics

  1. Power struggle: Decarbonising the electricity sector - Effects of climate policies, policy misalignments and political economy factors on decarbonisation By Dirk Röttgers; Brilé Anderson
  2. Revenue Decoupling for Electric Utilities: Impacts on Prices and Welfare By Arlan Brucal; Nori Tarui
  3. Interventions to Mitigate Indoor Air Pollution: A Cost-Benefit Analysis By Muhammad Irfan; Michael P. Cameron; Gazi Hassan
  4. Decarbonization of Power Markets under Stability and Fairness: Do They Influence Efficiency? By Christoph Weissbart
  5. Consumer Engagement in Energy Markets: The Role of Information and Knowledge By He, X.; Reiner, D.
  6. Operating Storage-Augmented Energy Systems in Industrial and Residential Applications By Weitzel, Timm
  7. A Forward Calibration Method for New Quantitative Trade Models By Pothen, Frank; Hübler, Michael
  8. Energy Contagion Analysis: A New Perspective with Application to a Small Petroleum Economy By Scott M. R. Mahadeo; Reinhold Heinlein; Gabriella Deborah Legrenzi
  9. China’s Response to Nuclear Safety Post-Fukushima: Genuine or Rhetoric? By Lam, J.; Cheung, L.; Han, Y.; Wang, S.
  10. The joint impact of the European Union emissions trading system on carbon emissions and economic performance By Antoine Dechezleprêtre; Daniel Nachtigall; Frank Venmans
  11. On The Benefits of Behind-the-Meter Rooftop Solar and Energy Storage: The Importance of Retail Rate Design By Boampong, Richard; Brown, David P.
  13. Market Liberalization: Price Dispersion, Price Discrimination and Consumer Search in the German Electricity Markets By Gugler, Klaus; Heim, Sven; Janssen, Maarten; Liebensteiner, Mario
  14. Regulation of location-specific externalities By Amundsen, Eirik S.; Gårn Hansen, Lars; Whitta-Jacobsen, Hans Jørgen
  15. Would China¡¯s power industry benefit from nationwide carbon emission permit trading? An optimization model-based ex post analysis on abatement cost savings By Yujiao Xian; Ke Wang; Yi-Ming Wei; Zhimin Huang
  16. Impacts of Green Growth Policies on Labour Markets and Wage Income Distribution: A General Equilibrium Application to Climate and Energy Policies By Jean Chateau; Ruben Bibas; Elisa Lanzi
  17. A Community Microgrid Architecture with an Internal Local Market By Bertrand Corn\'elusse; Iacopo Savelli; Simone Paoletti; Antonio Giannitrapani; Antonio Vicino
  18. The Environmental Reporting Practices of French Public Companies: The Accounting Issues Faced with Climate Risks By Sandra Rigot
  19. Assessing the distributional effects of carbon taxes on food: inequalities and nutritional insights By Caillavet, F.; Fadhuile, A.; Nichèle, V.
  20. The technology and cost structure of a natural gas pipeline: Insights for costs and rate-of-return regulation By Florian Perrotton; Olivier Massol
  21. A review of the empirical literature combining economic and environmental performance data at the micro-level By Antoine Dechezleprêtre; Tobias Kruse
  22. Exploiting Synergies between Rooftop Solar PV and Energy Efficiency Investments in the Built Environment By Pedzi Makumbe
  23. Stock Price Rewards to Climate Saints and Sinners: Evidence from the Trump Election By Ramelli, Stefano; Wagner, Alexander F; Zeckhauser, Richard; Ziegler, Alexandre
  24. Carbon neutral global value chains: demand or desire? - Consumers willingness to pay for a carbon neutrality label on specialty coffee in Germany By Birkenberg, A.
  25. Fostering green investments and tackling climate-related financial risks: which role for macroprudential policies? By Paola D'Orazio; Lilit Popoyan
  26. Carbon Tax Saliency: The Case of B.C. Diesel Demand By Maral Kichian
  27. OECD Progress Update on Approaches to Mobilising Institutional Investment for Sustainable Infrastructure: Background paper to the G20 Sustainable Finance Study Group By Dirk Röttgers; Aayush Tandon; Christopher Kaminker
  29. Europe’s power system in transition: How to couple zonal and locational pricing systems? By Richstein, Jörn C.; Neuhoff, Karsten; May, Nils
  30. Impact of decentralized electrification projects on sustainable development: A meta-analysis By Jean-Claude BERTHELEMY; Arnaud MILLIEN
  31. Relationship between agricultural growth and energy consumption in Indian agriculture: A panel co-integration analysis By Kumar, R.R.; Jha, G.K.; Singh, K.N.
  32. Green Mobility By Holger Dalkmann; Alyssa Fischer; Karl Peet
  33. Explorative Untersuchung zu Erfolgspotentialen bei neugegründeten Stadtwerken: Eine Sondierungsstudie zur kommunalen Energieversorgung. Ergebnisse einer Befragung bei neugegründeten Stadtwerken im Energiebereich By Berlo, Kurt; Herr, Christian; Wagner, Oliver; Companie, Michael
  34. Border Tax Adjustments and Tariff-Tax Reforms with Consumption Pollution By Nikos Tsakiris; Panos Hatzipanayotou; Michael S. Michael
  35. Causal Tree Estimation of Heterogeneous Household Response to Time-Of-Use Electricity Pricing Schemes By O'Neill, E.; Weeks, M.

  1. By: Dirk Röttgers (OECD); Brilé Anderson (OECD)
    Abstract: This report investigates the effects of select climate policies, non-climate policies, as well as political economy factors on the decarbonisation of electricity in OECD countries from 2000 to 2015. Effects are analysed on the three phases of decarbonisation: (1) increasing the share of renewables installed, (2) increasing the use of renewables in generation, and (3) reducing the emissions from electricity.
    Keywords: climate change, Decarbonisation, electricity, political economy, regression analysis
    JEL: H23 L94 P16 P48 Q42 Q48 Q54 Q55 Q58
    Date: 2018–11–28
  2. By: Arlan Brucal (Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science); Nori Tarui (Department of Economics, University of Hawaii at Manoa; University of Hawaii Economic Research Organization (UHERO))
    Abstract: Under traditional (cost-of-service) electric utility regulation, regulated utilities may not recover their fixed costs when their sales are lower than expected. Revenue decoupling (RD) is a mechanism that allows price adjustments so that the regulated utility recovers its required revenue. This paper investigates the welfare and distributional impacts of RD. Theoretically, we find that the excess burden of subsidies for distributed generation is larger with RD than without. Contrary to how RD is specified on dockets in many states, electricity prices appear to demonstrate downward rigidity, while statistically significant upward adjustments on average are observed across utilities that experienced decoupling. We also find empirically that RD has generated negative welfare effects in most states even if we consider the social marginal costs of electricity generation given different energy mix across regional markets.
    Keywords: utility regulation; decoupling; electricity sector
    JEL: D62 L94 Q48 Q58
    Date: 2018–11
  3. By: Muhammad Irfan (University of Waikato); Michael P. Cameron (University of Waikato); Gazi Hassan (University of Waikato)
    Abstract: Globally, around three billion people depend upon solid fuels such as firewood, dry animal dung, crop residues, or coal, and use traditional stoves for cooking and heating purposes. This solid fuel combustion causes indoor air pollution (IAP) and severely impairs health and the environment, especially in developing countries like Pakistan. A number of alternative household energy strategies can be adopted to mitigate IAP, such as using liquid petroleum gas (LPG), natural gas, biogas, electric stoves, or improved cook stoves (ICS). In this study, we estimate the benefit-cost ratio, net present value, and internal rate of return of these interventions over a ten-year period in Pakistan. Annual costs included both fixed and operating costs, whereas benefits covered health, productivity gains, time savings, and fuel savings. We found that LPG has the highest benefit-cost ratio of 3.68, and ICS had the lowest benefit-cost ratio (0.58). Natural gas, electric stoves, and biogas had benefit-cost ratios of 2.87, 2.22, and 1.39 respectively. To maximize the return on investment in cleaner burning technology, the government of Pakistan should consider encouraging the adoption of LPG, piped natural gas, and electric stoves as a means to reduce IAP.
    Keywords: indoor air pollution; interventions; cost-benefit analysis
    JEL: O15 Q42 Q47
    Date: 2018–11–12
  4. By: Christoph Weissbart
    Abstract: Market integration is seen as a complementary measure to decarbonize energy markets. In the context of power markets, this translates into regions that coordinate to maximize welfare in the power market with respect to a climate target. Yet, the maximization of overall welfare through cooperation leads to redistribution and can result in the reduction of a region's welfare compared to the case without cooperation. This paper assesses why cooperation in the European power market is not stable from the perspective of single regions and identifies cost allocations that increase fairness. In a first step, the EU-REGEN model is applied to find the future equilibrium outcome of the European power market under a cooperative, subadditive cost-sharing game. Secondly, resulting cost allocations are analyzed by means of cooperative game theory concepts. Results show that the value of cooperation is a € 69 billion reduction in discounted system cost and rational behavior of regions can maintain at most 16 % of this reduction. The evaluation of alternative cost allocations reveals the trade-off between accounting for robustness against cost changes and individual rationality. Moreover, the cost-efficient decarbonization path of the European power sector under the grand coalition is characterized by the interplay between wind power, gas power, and biomass with geologic storage of CO2. Last, with singleton coalitions only, the market outcome shifts to a higher contribution from nuclear power.
    Keywords: decision under risk, time constraints, opportunity costs, rational behavior, lab experiment, structural estimation, drift diffusion model
    JEL: C60 C70 L90 Q40
    Date: 2018
  5. By: He, X.; Reiner, D.
    Abstract: External information (e.g., monetary and opportunity costs, retailer messaging), internal information (e.g., consumer knowledge, information processing), and the interaction between different forms of information can affect consumer engagement in markets. We employ an analytical framework which embraces both economic and psychological motives behind consumer behavior to investigate the motives and obstacles associated with household behavior in energy markets, using data from over 18,000 randomly selected responses drawn from three annual surveys of British households commissioned by the UK energy regulator. Three forms of household engagement – switching to a new electricity and/or gas supplier, changing electricity or/and gas tariffs, and changing payment methods of energy bills – are explored using a multiple-discrete choice framework. We find that internal information pathways have robust and strong effects on switching suppliers and tariffs. Concretely, a lack of belief in tariff differences discourages participation in energy markets. By contrast, professed knowledge of household energy spending and familiarity with energy tariffs drives consumer engagement. External information – supplier messages and Internet information may enhance each other in promoting market participation, conditional on message source and participation form. We also find that engagement by incumbent retailers (such as through consumer messages) can be effective in discouraging households from switching suppliers.
    Keywords: Consumer switching; services market participation; household engagement; multivariate probit; UK retail gas and electricity markets; information and knowledge effects
    JEL: C25 D21 Q49 R29
    Date: 2018–11–07
  6. By: Weitzel, Timm
    Abstract: This cumulative dissertation investigates the operation of storage-augmented energy systems and their interaction with the overall energy system. A storage-augmented energy system, in this con-text, is defined as an electric energy storage system in close proximity to consumers and distributed generation units under joint control. This work consists of four papers published in scientific, peer-reviewed journals and conference proceedings that aim to answer the following Re-search Questions (RQs): (RQ1): What is the status of research of mathematical decision support models for operating storage-augmented energy systems? (RQ2): How do thermal and electrical energy storage systems in hybrid energy systems influence each other, and how does their interaction influence the way the superordinate system should be operated? (RQ3): Which models are suitable to include battery aging costs into the operation problem, and how does this cost-factor change the way the storage-augmented energy system should be operated? (RQ4): To what extent does including an EESS into an industrial production facility enhance the flexibility offering to the overall energy system? All four papers focus on various combinations of the above RQs, and apply different research methodologies to address them. Paper 1 begins with a systematic and comprehensive literature review on the current status of research of energy management for storage-augmented systems in stationary applications. The paper first develops a conceptual framework, which is then used to structure and discuss the relevant literature. Paper 1 concludes with a set of propositions for future research based on the identified research gaps, and hence prepares Papers 2 to 4. Paper 2 und Paper 4 develop mathematical models for operating storage-augmented energy systems in residential and industrial applications, respectively, and discuss the results of computational studies on exemplary configurations. Paper 3, in contrast, formulates a conceptual framework on demand-side flexibility measures in industrial production facilities as a preliminary work for Paper 4. In the following, the different research areas of Papers 1 to 4 are outlined in more detail, and the specific research gaps addressed by the four papers are explained. The systematic and comprehensive literature review presented in Paper 1 develops an overall view on the current status of research in the field (RQ1). Paper 1 provides an introduction to energy management of electric energy storage systems in general, and the multifarious aspects to be considered when operating stationary systems in particular. Research in this field has received more and more attention in recent years. The vast amount of publications on the management of electric energy storage systems, especially those that appeared in the last ten years, has created a need for a structured review and classification of existing research. Although several papers re-viewing the matter have been published, the review in Paper 1 differs from existing research in terms of its focus on mathematical models and its systematic review approach. In the synthesis of the reviewed publications, Paper 1 outlines propositions for future research, which were partially addressed in Papers 2 to 4. Paper 2 analyzes operations of a storage-augmented, hybrid residential microgrid. The paper con-tributes to research by investigating the case of a local energy supplier. The local energy supplier is responsible for meeting local hybrid, i.e. electrical and thermal, energy demands while interacting with the grid at real-time pricing. The major benefit for the energy supplier comes from efficiently using non-renewable decentralized generation units by leveraging thermal energy storage systems and electric energy storage systems. Compared to classical, thermal power plants, distributed generation units utilize primary energy resources more efficiently as they offer the opportunity to use excess heat to serve local thermal demand. Gas-fired combined heat and power plants can operate at combined efficiencies ranging between 70 % and 80 %. This is well above the efficiency levels of conventional power plants without waste heat utilization that usually do not exceed 30 %. Thermal and electrical energy demand in hybrid systems are for the most part uncorrelated, whereas combined generation units generate thermal and electrical energy simultaneously in a fixed ratio. Therefore, in practice, combined generation units follow either electrical or thermal loads when operated heuristically. Two approaches have been applied in Paper 2 to respond to these challenges. On the on hand, optimization methods support economic and reliable operations of microgrids and have already attracted much attention among researchers and practitioners in recent years. On the other hand, hybrid energy storage systems, a combination of electric and thermal energy storage systems, can be applied to decouple both types of demands. Paper 2 first contributes to research by revisiting current work on optimization models for microgrids that include battery energy storage systems and take battery aging into account (RQ3). Most of current research has focused on using batteries to optimize energy systems for economic, ecological, and technical objectives, but barely considered battery aging in the optimization models. Especially battery aging models that consider specific usage conditions have been underrepresented. Paper 2 addresses this research gap by deriving a weighted cost model, considering both cyclical and calendrical aging components, from the domain-specific literature on battery lifetime prediction. The paper further integrates the piecewise-linearized battery aging model into a mixed-integer linear programming formulation for a hybrid microgrid application. The influence of the battery aging model formulation on microgrid operations in a cost-optimal schedule is illustrated in a computational study for a real-world example. Secondly, Paper 2 contributes to research by investigating the interdependencies of the thermal and electrical systems in a parameter study on component sizing. Sensitivities are investigated through selected key parameters and show that both storage types can significantly reduce the grid-provided energy without losing economic viability. Paper 3 and Paper 4 put the spotlight on the industrial consumer. By size, the industrial sector was responsible for around 42.5% of world-wide electricity consumption in 2014. This entails a large potential for generating flexibility by demand-side management. Paper 3 addresses research efforts undertaken to tap this potential and to enable industrial consumers to offer short-term flexibility. Paper 3 fosters the idea that production facilities incorporate a versatile set of flexibility measures that enable them to modulate their electricity consumption time- and volume-wise and, as a result, to participate in respective flexibility markets. Paper 3 develops a conceptual framework for an energy-aware view on production facilities to identify the various resources of flexibility. Besides the production system, whose energy consumption is adjustable by changing the production schedule, there are many examples for additional resources of flexibility such as local generation, energy conversion systems, and other auxiliary systems, of which many show a storage-equivalent behavior. As a final note, the paper proposes a control architecture to coordinate the different sources of flexibility. Paper 4 concludes this dissertation. The paper elaborates on the ideas outlined in Paper 3 and presents an in-depth analysis of a storage-augmented industrial production facility participating in demand response. For simplicity, this work concentrates on the production system and a co-located battery. Paper 4 outlines challenges for industrial consumers participating in demand response and provides an overview of the corresponding literature. For residential and commercial consumers, interdependencies between the scheduling of different applications (e.g., refrigerators or air conditioning equipment) are negligible and scheduling can be performed independently. Prior research has investigated various residential applications and to what extent they are compatible with demand response, e.g. for air conditioning, cloth dryers, or dishwashers. For industrial consumers, however, participating in demand response is more difficult as the scheduling of processes within facilities is often subject to many interdependencies. While in many traditional demand response programs, system operators require direct control of single consumers for short-term flexibility, the aforementioned complexity within industrial consumers falsifies the appropriateness of such approaches and reveals the need for other solutions. In industrial applications, demand response thus requires sophisticated models that account for the influence of demand response on production processes and vice versa. Firstly, Paper 4 contributes to this research by proposing an incentive-based program according to which the facility operator determines alternative electricity consumption scenarios and communicates discrete load reduction potentials to the system operator without disclosing internal processes. Secondly, Paper 4 develops a flexible flow shop formulation for a discrete manufacturing process. A reference model is extended to account for the operating-mode-specific energy consumption of machines with specific consumption trajectories per product-machine-combination. A mixed-integer linear programming formulation is suggested to model and solve the problem in three stages. First, a base-line solution is developed by minimizing total weighted completion time. Then, based on the baseline solution, additional solutions with different responses to the demand response are calculated and a load reduction curve as a potential means of communication is established. Finally, the effects of using a battery to allow easy-to-apply and economically better responses are studied. A numerical example is provided and analyzed to give a zest of the suggested solution.
    Date: 2018–10–25
  7. By: Pothen, Frank; Hübler, Michael
    Abstract: This article introduces an innovative and exible dynamic forward calibration method for disaggregated new quantitative trade models, particularly the Eaton and Kortum model, within a computable general equilibrium framework. The model is parameterized based on distinct, consistent future development scenario assumptions about EU climate policy, economic growth, energy efficiency, the electricity mix and structural change (sectoral shifts) derived through a complex scenario-creation process. The model equations and the scenario assumptions are implemented as side constraints of an optimization problem minimizing the difference between historical and targeted technology levels (sectoral productivities). This method is combined with input-output data disaggregation methods to separate Northwest Germany from the rest of Germany and to represent different power generation technologies. This setup enables the comparison of alternative regional sustainability-oriented long-term policy pathways. Despite the importance of the policy pathways envisaged by Northwest Germany's governments to society, they have limited macroeconomic effects in the simulations. In contrast, the future development scenario assumptions significantly affect European economies, particularly via the EU climate policy costs that drastically increase towards 2050. If Northwest Germany's energy transition fails, then its climate policy costs will increase extraordinarily.
    Keywords: EU climate policy; forward calibration; regional model; structural estimation; new quantitative trade theory
    JEL: C68 F17 L16 O40
    Date: 2018–11
  8. By: Scott M. R. Mahadeo; Reinhold Heinlein; Gabriella Deborah Legrenzi
    Abstract: We put forward the novel concept of energy contagion, i.e. a deepening of energy-finance linkages under crisis periods in energy markets, and test for this using standard correlation measures and recently proposed adjusted correlation, co-skewness, and co-volatility contagion tests. Our analysis is applied to the oil-exchange rate and oil-stock market relationships of the small petroleum economy of Trinidad and Tobago. By defining our samples for the contagion measures in terms of calm and crisis conditions in the international crude oil market, we are able to compare how various co-moments in the energy-finance nexus change during oil booms and slumps using semi-parametric rule-based algorithms, as well as during relatively tranquil and turbulent oil price volatility episodes with a non-hierarchical k-means clustering algorithm on volatility measures. Our main results show a negative oil-real effective exchange rate dependency; a weak oil-stock returns association; and the existence of several energy contagion channels in both financial relationships, which vanish when we control for the contemporary global financial crash. Energy contagion analysis is essential to financial stability analysis in economies where prosperity is linked to the prices of hard commodities.
    Keywords: contagion, correlation, exchange rate, oil price, stock market, Trinidad and Tobago
    JEL: C58 Q49
    Date: 2018
  9. By: Lam, J.; Cheung, L.; Han, Y.; Wang, S.
    Abstract: The Fukushima crisis has brought the nuclear safety problem to the world’s attention. China is the most ambitious country in the world in nuclear power development. How China perceives and responds to nuclear safety issues carries significant implications on its citizens’ safety and security. This paper examines the Chinese government’s promised and actual response to nuclear safety following the Fukushima crisis, based on (1) statistical analysis of newspaper coverage on nuclear energy, and (2) review of nuclear safety performance and safety governance. Our analysis shows that (i) the Chinese government’s concern over nuclear accidents and safety has surged significantly after Fukushima, (ii) China has displayed strengths in reactor technology design and safety operation, and (iii) China’s safety governance has been continuously challenged by institutional fragmentation, inadequate transparency, inadequate safety professionals, weak safety culture, and ambition to increase nuclear capacity by three-fold by 2050. We suggest that China should improve its nuclear safety standards, as well as safety management and monitoring, reform institutional arrangements to reduce fragmentation, improve information transparency, and public trust and participation, strengthen the safety culture, introduce process-based safety regulations, and promote international collaboration to ensure that China’s response to nuclear safety can be fully implemented in real-life.
    Keywords: nuclear safety, media focus, computational text analysis, regulatory governance, safety management
    JEL: C89 Q42 Q48
    Date: 2018–11–05
  10. By: Antoine Dechezleprêtre; Daniel Nachtigall; Frank Venmans
    Abstract: This paper investigates the joint impact of the European Union Emissions Trading System (EU ETS), Europe’s main climate change policy, on carbon emissions and economic performance of regulated companies. The impact on emissions is analysed using installation-level carbon emissions from national Polluting Emissions Registries from France, Netherlands, Norway and the United Kingdom complemented with data from the European Pollutant Release and Transfer Register (E-PRTR). The impact on firm performance is analysed using firm-level data for all countries covered by the EU ETS. A matching methodology exploiting installation-level inclusion criteria combined with difference-in-differences is used to estimate the policy’s causal impact on installations’ emissions and on firms’ revenue, assets, profits and employment. We find that the EU ETS has induced carbon emission reductions in the order of -10% between 2005 and 2012, but had no negative impact on the economic performance of regulated firms. These results demonstrate that concerns that the EU ETS would come at a cost in terms of competitiveness have been vastly overplayed. In fact, we even find that the EU ETS led to an increase in regulated firms’ revenues and fixed assets. We explore various explanations for these findings.
    Keywords: carbon emissions reductions, competitiveness, EU Emissions Trading System, firm performance
    JEL: Q52 Q54 Q58
    Date: 2018–12–06
  11. By: Boampong, Richard (University of Alberta, Department of Economics); Brown, David P. (University of Alberta, Department of Economics)
    Abstract: We investigate the impact of retail rate design on the investment incentives, avoided utility costs, and cost shifting concerns associated with rooftop solar and rooftop solar plus battery storage systems that are located behind-the-meter. We consider recently proposed changes to California's time-of-use pricing policy for commercial and industrial consumers which shifts on-peak prices from midday hours to the network constrained evening hours. We find that the shift in on-peak hours decreases investment in rooftop solar and has an ambiguous effect on storage investment. We demonstrate that storage reduces utility network costs, but the magnitude of this effect varies critically with the prevailing retail rate structure. Importantly, we show that a shift in the on-peak period to the constrained evening hours does not always elevate the avoided network cost associated with a battery system when demand charges are imposed on a consumer's private maximum demand. We illustrate that this issue can be alleviated by imposing demand charges on consumption that arises in system-constrained hours. We find that cost-shifting concerns are substantially reduced under the proposed rates and tariffs that have a heavy reliance on demand charges. We illustrate that while storage reduces the utility's costs, it can also increase cost-shifting concerns. These findings demonstrate the potential trade-offs between maximizing avoided costs and minimizing cost-shifting concerns under commonly employed retail rate structures.
    Keywords: Retail Rates; Electricity; Regulation; Storage; Solar PV
    JEL: L40 L51 L94 Q48 Q58
    Date: 2018–11–14
  12. By: SUDARSHAN GIRAMKAR (Hon. Shri Babanrao Pachpute Vichardhara Trust?s, Parikrama Institute of Management.)
    Abstract: The global warming is becoming the national as well as international problem; it hampers on destroying the natural resources. For the controlling of global warming problem there should be focus on green and ecofriendly initiatives by all. Banking sector is generally considered as environmental friendly sector in terms of the pollutions and emissions. The Indian banking business is one of the largest banking business in the world which caters to the needs of different strata of society. The development of economy in all sector have the very bad impact on environment. Until the end of twentieth century, green was just the color of money for banks in India. With the introduction of Automated Teller Machines (ATMs) in 2001in the banking sector of India, banking sector took initiative towards an environment-friendly banking system. Green banking means combining operational improvements, technology and changing client habits in banking business. There is need to banks should go for green and play a pro-active role to care environmental and ecological aspects as part of their lending principle, which would force industries to go for mandated investment for environmental management. Thereafter, many initiatives were undertaken viz. use of eco-friendly papers, solar-powered ATMs, green projects, energy efficiency practices, workplace health and safety, organizing awareness campaigns, online banking systems, etc. This paper deals with the green initiatives and developments took place in the banking sector in India and sites international developments. It sites opportunities for banks in areas like carbon credit business, green financial products, core banking solutions, integrated IT environment, etc. that can lead to development in green area and overall environment. The Role of the Reserve Bank of India in formulation of policies on green banking has been focused upon for green growth.
    Keywords: Green initiatives, core banking solution, sustainable development, ecological balance, tech-world, thumb economy, green growth, etc.
    JEL: A10
    Date: 2018–10
  13. By: Gugler, Klaus; Heim, Sven; Janssen, Maarten; 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: electricity; price discrimination; price dispersion; search
    JEL: D43 D83 L11 L13 Q40
    Date: 2018–09
  14. By: Amundsen, Eirik S. (University of Bergen, Department of Economics); Gårn Hansen, Lars (University of Copenhagen); Whitta-Jacobsen, Hans Jørgen (University of Copenhagen)
    Abstract: In this paper, we study regulation of externalities involving many small-scale polluters, where the damages from emissions depend on the polluters’ locations. Examples include nutrient and pesticide emissions from farms, particulate emissions from vehicles and home heating units, emissions of hazardous chemical compounds from small business etc. With such emission problems, regulatory authorities often apply a combination of firm-level, possibly differentiated standards for ‘cleaner’ technologies, and market-level, undifferentiated dirty input regulations. We establish general principles for how such regulations should be designed and combined. We find that the optimal regulation design crucially depends on the type of cleaner technologies available to polluters. If these are ‘emission capturing’, optimal technology standards encourage the use of cleaner technologies in both high and low damage areas, while if they are ‘input displacing’, optimal technology regulation encourages cleaner technologies in high damage areas, but discourages their use in low damage areas. Regulation should always discourage the use of dirty input and the optimal regulation intensity may be substantial, particularly if the available cleaner technologies are input displacing.
    Keywords: Location-specific externalities; Technologies; Regulation; Policy
    JEL: D62 H23 Q58
    Date: 2018–11–12
  15. By: Yujiao Xian; Ke Wang; Yi-Ming Wei; Zhimin Huang
    Abstract: The nationwide carbon emission permit trading scheme has been launched in China¡¯s power industry sector by the end of 2017. The estimation of abatement costs savings from carbon emission permit trading can provide valuable guidelines and support to environmental regulatory policies on controlling CO2 emissions. By applying a parametric and nonparametric integrating approach and conducting an ex post analysis in two scenarios (i.e., with and without carbon emission permit trading simulation), this study provides a simulative calculation of the opportunity abatement cost savings and the marginal abatement cost savings from carbon emission permit trading in China¡¯s power industry of 30 provinces. The simulation results show that: i) A 13% annually average potential on the opportunity abatement cost savings (i.e., 1024 billion yuan) would be realized if introducing a nationwide emission permit trading system in China¡¯s power industry during 2011-2015. ii) Meanwhile, the marginal abatement cost savings that range from 39 to 47 yuan/ton would be realized through emission permit trading. iii) Provinces of Xinjiang and Henan show the largest absolute opportunity abatement cost savings from trading, while Qinghai province shows the highest percentage increase in opportunity abatement cost savings. iv) Although there is significant difference in the marginal abatement cost among provinces, the marginal abatement cost savings from trading would occur for most China¡¯s provinces.
    Keywords: By-production approach; Data Envelopment Analysis; Directional Distance Function; Emission Trading System; Opportunity abatement cost; Marginal abatement cost
    JEL: Q54 Q40
    Date: 2018–11–14
  16. By: Jean Chateau (OECD); Ruben Bibas (OECD); Elisa Lanzi (OECD)
    Abstract: This paper explores the consequences on the labour markets of structural changes induced by decarbonisation policies. These policies are likely going to have consequences on labour-income distribution given i) existing rigidities in the labour markets, and ii) their different impacts on sectors and on job categories. These policies are analysed in a general equilibrium modelling framework, which includes interlinkages between different sectors and regions as well as five different categories of workers.
    Keywords: Climate change mitigation policies, Computable general equilibrium model, Employment & Redistributive Effects, Energy efficiency, Labour markets by occupation
    JEL: D58 J4 Q43 Q52 Q54
    Date: 2018–11–21
  17. By: Bertrand Corn\'elusse; Iacopo Savelli; Simone Paoletti; Antonio Giannitrapani; Antonio Vicino
    Abstract: This work fits in the context of community microgrids, where entities of a community can exchange energy and services among themselves, without going through the usual channels of the public electricity grid. We introduce and analyze a framework to operate a community microgrid, and to share the resulting revenues and costs among the participating units. The proposed method ensures that the solution achieved by each entity within the community is not worse than the solution it would achieve by acting individually. As a consequence, each entity is naturally incentivized to participate in the community on a voluntary basis. The community microgrid operator, acting as a benevolent planner, redistributes revenues and costs among the entities, according to specific sharing policies. In this way, each entity can directly benefit from the community, thanks to the more efficient allocation of resources, the reduction of the peak power to be paid, and the increased amount of reserve, achieved at an aggregate level. An internal local market, implementing the marginal pricing scheme, is designed to determine the community prices. The proposed framework is formulated in the form of a bilevel model, where the lower level problem carries out the market clearing, while the upper level problem enforces the sharing policies among the entities of the community. Numerical results, based on both illustrative examples and a real test case, demonstrate the effectiveness of the proposed approach.
    Date: 2018–10
  18. By: Sandra Rigot (USPC)
    Abstract: The climate change and energy transition issues are a crucial stake for our societies. Indeed, while a large body of scientific work has shown the link between climate change acceleration and greenhouse gas emissions from productive processes, other studies have highlighted that profound changes in the climate would lead to increased risks for economic and financial activity and could have human impacts. The pursuit of high growth based on fossil fuels would lead economies to a disaster scenario. In the worst-case scenario, the IPCC estimates that the planet could heat up by 4.8 ° C compared to the average temperature of the period 1986-2005 and the water rise by nearly a meter (threatening very populous coastal territories) not to mention the upsurge of extreme weather events. These gloomy forecasts highlight the urgency of action to try to contain global warming.This transition to a low-carbon path requires taking on new challenges, including a substantial and sustainable GHG reduction through improved energy efficiency and decarbonation of production systems. This involves many risks related to producers? resilience, technological capabilities, the nature of policy instruments and their calibration to guide the transition. In the end, climate change involves two types of risks that can coexist: on the one hand, physical risks that result from damage directly caused by meteorological phenomena; on the other hand, transition risks resulting from adjustments made for a transition to a low-carbon economy. For companies in particular, they involve new risks but also opportunities that are not well taken into account in their reporting.This article aims to draw up an inventory of the environmental reporting of CAC 40 companies over the period 2015-2017. The choice to study the French case is explained by its leadership in terms of transition. The idea is i) to understand the climate reporting practices of these companies, depending on the sectors and focusing on four areas that reflect how they can exploit, govern, develop their strategies and manage their risks ( in line with the Task Force on Climate-related Financial Disclosure (TCFD) analysis grid, an international initiative launched by Financial Stability Board in late 2015, (ii) to question the appropriateness of an intervention by the accounting standard-setter on the subject.
    Keywords: accounting, environmental reporting, climate risks
    Date: 2018–11
  19. By: Caillavet, F.; Fadhuile, A.; Nichèle, V.
    Abstract: A carbon tax on food could contribute to emissions mitigation and act as a strong signal to economic actors. However, tax regressivity is a major disadvantage. This article addresses equity issues by several means. First, this article includes reallocation proposals in a revenue-neutral approach of several emission-based carbon taxation scenarios at the consumption level on food. Second, this article develops these proposals’ distributional incidence, and it evaluates the role of carbon pricing in policy impacts. With a carbon-based approach, the differing emission potentials of food groups highlight the relevance of using proteins as a tax base to redirect animal to plant sources in the diet. Thus, a scenario taxing foods rich in animal proteins and subsidizing plant proteins ones is built. Scanner data on French households in 2010 are analyzed. Several GHG emissions indicators and related nutritional impacts, such as diet quality scores and the shift from animal to plant proteins, are evaluated. Using individual changes in food expenditure, distributional effects based on continuous distribution and inequality indexes are measured, allowing the discussion of the policy options of a targeted vs nontargeted tax and a revenue-neutral approach in the food sector.
    JEL: H23 Q18 Q54
    Date: 2018
  20. By: Florian Perrotton (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Olivier Massol (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School, University of London [London])
    Abstract: This note details a complete microeconomic characterization of the physical relationships between input use and the level of output of a simple point-to-point gas pipeline system and uses it to contribute to the public policy discussions pertaining to the economic regulation of natural gas pipelines. We show that the engineering equations governing the design and operations of that infrastructure can be approximated by a single production equation of the Cobb-Douglas type. We use that result to inform three public policy debates. First, we prove that the long-run cost function of the infrastructure formally verifies the condition for a natural monopoly, thereby justifying the need of regulatory intervention in that industry. Second, we examine the conditions for cost-recovery in the short-run and contribute to the emerging European discussions on the implementation of short-run marginal cost pricing on interconnector pipelines. Lastly, we analyze the performance of rate-of-return regulation in that industry and inform the regulatory policy debates on the selection of an appropriate authorized rate of return. We highlight that, contrary to popular belief, the socially desirable rate of return can be larger than the market price of capital for that industry.
    Keywords: Production function,Natural gas pipeline,Regulation
    Date: 2018–08–01
  21. By: Antoine Dechezleprêtre; Tobias Kruse
    Abstract: This article reviews the empirical literature combining economic and environmental performance data at the micro-level, i.e. firm- or facility-level. The literature has generally found a positive and statistically significant correlation between economic performance, as measured by stock market returns, and environmental performance, as measured by emissions of pollutants or adoption of international environmental standards. The main reason for this finding seems to be that firms that reduce their material and energy costs experience both better economic performance and lower emissions. There is also evidence that greener firms are able to attract more productive employees and face smaller costs of capital, and that the introduction of green products enhances firms’ profitability. Only a small and recent literature analyses the joint causal impact of environmental regulations on environmental and economic performance. Interestingly, this literature shows that environmental regulations tend to improve environmental performance while not weakening economic performance. However, the evidence so far is limited to a handful of environmental regulations that are not extremely stringent, so the result cannot be easily generalized. More research is needed to assess the joint effects of environmental regulations on environmental and economic performance, to explore the heterogeneity of these effects across sectors, countries and types of policies, and to understand which policy designs allow improving environmental quality while not altering the economic performance of regulated businesses.
    Keywords: environmental performance, firm performance, microdata sources
    JEL: Q50 Q58
    Date: 2018–12–06
  22. By: Pedzi Makumbe
    Keywords: Energy - Electric Power Energy - Energy Conservation & Efficiency Energy - Renewable Energy Energy - Solar Energy
    Date: 2017–12
  23. By: Ramelli, Stefano; Wagner, Alexander F; Zeckhauser, Richard; Ziegler, Alexandre
    Abstract: Donald Trump's 2016 election and the subsequent nomination of Scott Pruitt, a climate skeptic and self-proclaimed opponent of the Environmental Protection Agency's "activist agenda", to lead the EPA drastically shifted expectations on US climate change policy. Firms' stock-price reactions to these events reveal whether their climate strategies affected their valuations. As widely reported, firms in industries with high carbon intensity benefited, at least briefly. It might be expected that companies with "responsible" strategies on climate change would have lost value. In fact, investors actually rewarded such firms. The analysis shows that this observed climate responsibility premium is due, at least in part, to the strategic behavior of long-horizon investors who look into the future to assess the valuation of corporations.
    Keywords: climate change; CSR; election surprise; ESG; event study; Stock returns
    JEL: G14 G38
    Date: 2018–09
  24. By: Birkenberg, A.
    Abstract: The agri-food sector generates between 20-30% of global greenhouse gas emissions. A recent attempt to address an increasing demand for climate change mitigation in global value chains is the use of strict and high quality climate labels. However, very little is known on consumer s preferences and attitudes towards climate labels in the agri-food sector and even less on synergistic effects of climate labels in coexistence with other labels. This study examines the world s first coffee, certified as carbon neutral and consumer preferences. It investigates the willingness to pay (WTP) of German consumers for carbon neutral labels on coffee and potential synergistic effects when carbon neutral certification is combined with uncertified direct trade claims or a Fair Trade certificate. A discrete choice experiment based on a Mixed Logit Model was used to determine consumer s WTP and focus group discussions were conducted to understand the rationales. A marginal WTP of 1.70 for a carbon neutral label was identified on a 250g package of specialty coffee. A positive synergistic effect was found for the combination of a carbon neutral label with direct trade claims. Further, without according information, consumers often perceived coffee as a natural product that is not generating any emissions. Acknowledgement : We kindly acknowledge the contributions of Manuel Narjes, Bettina Reiser and Regina Birner who substantially developed and improved the research. We are also thankful for the scholarship provided by the FAZIT foundation in Germany.
    Keywords: Consumer/Household Economics
    Date: 2018–07
  25. By: Paola D'Orazio; Lilit Popoyan
    Abstract: While there is a growing debate among researchers and practitioners on the possible role of central banks and financial regulators in supporting a smooth transition to a low-carbon economy, the information on which macroprudential instruments could be used for reaching the "green structural change" is still quite limited. Moreover, the achievement of climate goals is still affected by the so-called "green finance gap". The paper addresses these issues by proposing a critical review of existing and novel prudential approaches to incentivizing the decarbonization of banks' balance sheets and align finance with sustainable growth and development objectives. The analysis carried out in the paper allows understanding under which conditions macroprudential policy could tackle climate change and promote green lending, while containing climate-related financial risks.
    Keywords: Climate Change, Climate Finance Gap, Banking Regulation, Macroprudential Policy, Central Banking, Climate-nance risk.
    Date: 2018–11–18
  26. By: Maral Kichian
    Abstract: In 2008, the government of the province of British Columbia broke new ground in North America by introducing a revenue-neutral carbon tax on fossil fuels. The initial rate was set at $10/ton of CO2 which was then increased annually by $5 increments to reach $30/ton in 2012. We focus on monthly diesel use which is mostly related to commercial activities. Our objective is to measure user reaction to the new tax. Exploiting the sample time series properties, we study the long run reaction via a cointegration equation, linking diesel use, its total price, and income, and the short run reaction using an error correction model (ECM). Carbon tax saliency is interpreted as a short run phenomenon that shows up in the dynamic adjustment of the ECM. We find that the long run total price elasticity estimate of diesel demand is -0.52 and that the short run tax saliency effect is statistically significant. However, the total reaction is small relative to CanadaÕs commitment to decrease GHG emissions by 30% in 2030 relative to 2005 levels.
    Keywords: diesel demand, carbon tax, tax saliency
    JEL: Q41 Q58 H23
    Date: 2018
  27. By: Dirk Röttgers (OECD); Aayush Tandon (OECD); Christopher Kaminker (University of Oxford)
    Abstract: The large need for investments in sustainable infrastructure will require investments from the private sector, including institutional investors. This working paper contributes to scaling up investments by analysing public project-level interventions for projects involving institutional investors. It presents findings from an updated database on institutional investments in environmentally sustainable infrastructure with project-level intervention by the public sector.
    Keywords: climate change, finance, financial instruments, financial sector, infrastructure, Institutional investors, sustainable
    JEL: H23 P45 Q42 Q48 Q54 Q58
    Date: 2018–11–26
  28. By: El?bieta Miko?ajczak (Poznan University of Life Sciences); Karol Wajszczuk (Poznan University of Life Sciences)
    Abstract: This paper presents a valuation method for sawmill by-products processed into energy. The method includes a set of indexes enabling entrepreneurs who own sawmill by-products to assess the economic viability of processing them into biofuels and energy. The indexes include: the threshold margin, maximum processing costs, maximum purchase price of by-products intended for processing, and minimum sales price of the product acceptable to the producer. A multidimensional analysis of above indexes was performed, and may provide a basis for assessing the economic viability of various methods of wood by-product management as an alternative to selling by-products in an unprocessed condition. As regards energy production, the method takes into account both the use of energy for own purposes and sale of energy to external customers.
    Keywords: renewable energy, sawmill by-products, index-based analysis
    JEL: C20 D24 Q42
    Date: 2018–10
  29. By: Richstein, Jörn C.; Neuhoff, Karsten; May, Nils
    Date: 2018
  30. By: Jean-Claude BERTHELEMY (Université Paris I Panthéon-Sorbonne); Arnaud MILLIEN
    Abstract: This paper is the first product of a project which aims to build a Collaborative Smart Mapping of Mini-grid Action (CoSMMA), whose principal objective is to identify best practice in decentralized electrification projects.By evaluation of 421 projects, from published research papers, we have built a pilot CoSMMA which proves its feasibility. Its relevance is demonstrated by a meta-analysis, which reveals the principal characteristics of decentralized electrification projects which have positive impacts on sustainable development.Four main characteristics were considered: technology (source or energy), system size (power), decision level (from local to country level), geographic location. When searching for best practice, technology and system size must be considered together, because the chosen technology may constrain the power, which is provided by the system. We find that the most popular projects, which are based on Solar Home Systems (SHS) are not the most effective. The problem with SHS is not the use of solar energy, but the small system size often chosen for SHS. Mini-grids, of larger size, especially those which use hybrid renewable sources of energy, have more positive impacts, because these systems combine the benefits of sustainability and flexibility. In terms of decision level, we find that both top-down and bottom-up approaches have advantages, with the observation of a U-shaped curve for the influence of the decision level on the probability of obtaining positive impacts. Geographical location matters, as it is very often the key to system feasibility. We find that DEPs are more effective in Latin America than in Asia, and more effective in Asia than in Africa.We also attempted to study the type of effects resulting from DEPs. Descriptive data suggest that for some types of effects, positive impacts are more likely than for others. Decentralized electrification projects have a more positive impact on Lifestyle & NICT or Household agenda than on Economic transformation or Community life. However, this pilot CoSMMA does not contain enough information to study precisely the types of effects, because some types of effects have not been studied frequently in the existing literature. This is the case, for instance, for environmental effects, which have been rarely measured scientifically.Finally, we attempted to broaden our information set by including expert data, which was entered into the CoSMMA meta-analysis. We define expert data as data that are not supported by statistical tests with measures of significance, whereas the evaluations based on scientific data were supported by statistical tests of significance. The expert data may be valid, but our attempt to include it in the analysis failed at this stage. The determinants of unproven effects appear to be quite different from the determinants of proven effects in our meta-analysis, and using expert data would imply merging proven and unproven effects, which would totally blur the conclusions.
    Keywords: decentralized electrification, sustainable development, impact assessment, meta-analysis
    JEL: L94 O13 O18 O22
    Date: 2018–11
  31. By: Kumar, R.R.; Jha, G.K.; Singh, K.N.
    Abstract: Abstract This paper empirically examined the long-run co-movement and the causal relationship between electricity consumption and real Gross State Domestic Product (GSDP) from agriculture and allied sector for 17 major states of India during the period 1993-2013. Since the time series analysis may yield unreliable and inconsistent results with the short time spans of datasets, we employed new heterogeneous panel co-integration and panel-based error correction models techniques to investigate the relationship between two variables. The empirical results fully supported a positive long-run co-integrated relationship between GSDP and electricity consumption when the heterogeneous states effect is taken into account. It is found that although agricultural growth and electricity consumption lack short-run causality, there is a long-run unidirectional causality running from electricity consumption to agricultural growth. This implies that reducing electricity consumption does not adversely affect agricultural growth in the short-run but would affect in the long-run. Keywords: Agricultural growth, Electricity consumption, Panel co-integration Acknowledgement : I wish to thank ICAR- Indian Agricultural Statistics Research Institute to provide facilities for the work.
    Keywords: Resource/Energy Economics and Policy
    Date: 2018–07
  32. By: Holger Dalkmann; Alyssa Fischer; Karl Peet
    Keywords: Transport - Transport Economics Policy & Planning Energy - Energy Conservation & Efficiency Energy - Energy Consumption Energy - Energy and Environment Environment - Climate Change Mitigation and Green House Gases Environment - Green Issues
    Date: 2017–12
  33. By: Berlo, Kurt; Herr, Christian; Wagner, Oliver; Companie, Michael
    Abstract: Stadtwerke spielen für die Energiewende eine zentrale Rolle. Zum einen stellen sie in Deutschland weit über die Hälfte der Versorgung an Strom, Gas und Wärme sicher, zum anderen haben Stadtwerke aufgrund ihrer kommunalen Verankerung eine besondere Position im Spannungsgefüge von Politik, Wirtschaft und Privathaushalten. Wenn es aber um die Frage geht, was den Erfolg von neugegründeten Stadtwerken ausmacht, besteht in der Literatur in gewissem Maße eine Forschungslücke. Die vorliegende Studie, die vom Wuppertal Institut und der BLUBERRIES GmbH gemeinsam erstellt wurde, behandelt ausgewählte Handlungsfelder, bei denen ein Einfluss auf den Unternehmenserfolg von neugegründeten Stadtwerken zu vermuten ist. Dabei werden als Rahmen die Ziele der Rekommunalisierung herangezogen und konkret vier Handlungsfelder in den Vordergrund gerückt. Der Fokus der Studie liegt auf Fragestellungen nach dem wirtschaftlichen Erfolg neugegründeter Stadtwerke sowie deren Zielerreichung. Dabei wird auf den klassischen Ansatz der Erfolgsfaktorenforschung zurückgegriffen. Ziel dieser Studie ist die Formulierung erster Aussagen darüber, wie einerseits die unterstellten Handlungsfelder in ihrer Ausgestaltung, andererseits die Erfolgsmaße durch neugegründete Stadtwerke beurteilt werden. [...]
    Date: 2018
  34. By: Nikos Tsakiris; Panos Hatzipanayotou (Athens University of Economics and Business); Michael S. Michael
    Abstract: We develop a model of a small open economy, where pollution per unit of consumption between domestically produced and imported quantities of the same good differs. We show that the first-best policy combination calls for consumption taxes on all polluting goods, and Border Tax Adjustment (BTA) measures, i.e., tariffs or import subsidies. We identify conditions under which well known tariff-tax reform policies for developing economies, such as a consumer-price-neutral piecemeal reform of a trade and a consumption tax, and a consumer-price-neutral reform of all trade and consumption taxes improve welfare. We also evaluate whether a consumer-price-neutral reform of a tariff and a consumption tax is superior to a reform of a tariff alone.
    Keywords: Consumption generated Pollution, Optimal Taxation, Border Tax Adjustments, Trade and Consumption Tax Reforms
    JEL: F13 F18 H20 H21
    Date: 2018–11–13
  35. By: O'Neill, E.; Weeks, M.
    Abstract: We examine the distributional effects of the introduction of Time-of-Use (TOU) pricing schemes where the price per kWh of electricity usage depends on the time of consumption. These pricing schemes are enabled by smart meters, which can regularly (i.e. half-hourly) record consumption. Using causal trees, and an aggregation of causal tree estimates known as a causal forest (Athey & Imbens 2016, Wager & Athey 2017), we consider the association between the effect of TOU pricing schemes on household electricity demand and a range of variables that are observable before the introduction of the new pricing schemes. Causal trees provide an interpretable description of heterogeneity, while causal forests can be used to obtain individual-specific estimates of treatment effects. Given that policy makers are often interested in the factors underlying a given prediction, it is desirable to gain some insight to which variables in this large set are most often selected. A key challenge follows from that fact that partitions generated by tree-based methods are sensitive to subsampling, while the use of ensemble methods such as causal forests produce more stable, but less interpretable estimates. To address this problem we utilise variable importance measures to consider which variables are chosen most often by the causal forest algorithm. Given that a number of standard variable importance measures can be biased towards continuous variables, we address this issue by including permutation-based tests for our variable importance results.
    Keywords: Machine learning, TOU tari s, Smart metering, Household electricity demand
    JEL: Q41
    Date: 2018–10–22

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