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on Energy Economics |
| By: | Antoine Dechezleprêtre; Caterina Gennaioli; Ralf Martin; Mirabelle Muûls; Thomas Stoerk |
| Abstract: | Does unilateral climate change policy cause companies to shift the location of production, thereby creating carbon leakage? In this paper, we analyse the effect of the European Union Emissions Trading System (EU ETS) on the geographical distribution of carbon emissions of multinational companies. The empirical evidence is based on unique data for the period 2007-2014 from the Carbon Disclosure Project, which tracks emissions of multinational businesses by geographical region. Because they already operate from multiple locations, multinational firms should be the most prone to carbon leakage. Our data includes regional emissions of 1,122 companies, of which 261 are subject to EU ETS regulation. We find no evidence that the EU ETS has led to a displacement of carbon emissions from Europe towards the rest of the world, including in countries with no climate policy in place and within energy-intensive companies. A large number of robustness checks confirm this finding. Overall, the paper suggest that modest differences in carbon prices between countries do not induce carbon leakage. |
| Keywords: | carbon leakage, EU ETS, multinationals |
| JEL: | D22 F23 Q56 Q58 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1601&r=all |
| By: | Amigues, Jean-Pierre; Moreaux, Michel |
| Abstract: | To prevent climate change, three options are currently considered: improve the energy conversion efficiency of primary energy sources, develop carbon free alternatives to polluting fossil fuels and abate potential emissions before they are released inside the atmosphere. We study the optimal mix and timing of these three mitigation options in a stylized dynamic model. Useful energy can come from two sources: a non-renewable fossil fuel resource and a carbon free renewable resource. The conversion efficiency rate of fossil energy into useful energy is open to choice but higher conversion rates are also more costly. The economy can abate some fraction of its potential emissions and a higher abatement rate incurs higher costs. The society objective is to maintain below some mandated level, or carbon cap, the atmospheric carbon concentration. In the empirically relevant case where the economy is actually constrained by the cap, at least temporarily, we show that the optimal path is a sequence of four regimes: a ’pre-ceiling’ regime before the economy is actually constrained by the cap, a ’ceiling’ regime at the cap, a ’post-ceiling’ regime below the cap and a final regime of exclusive exploitation of renewable resources. If the abatement option has ever to be used, it should be started before the beginning of the ceiling regime, first at an increasing rate and at a decreasing rate once the cap constraint binds. The efficiency performance from any source steadily improves with the exception of a time phase under the ceiling regime when it is constant. Renewables take progressively a larger share of the energy mix but their exploitation may be delayed significantly. Absolute levels of carbon emissions drop down continuously but follow a non monotonic pattern in per useful energy unit relative terms.To prevent climate change, three options are currently considered: improve the energy conversion efficiency of primary energy sources, develop carbon free alternatives to polluting fossil fuels and abate potential emissions before they are released inside the atmosphere. We study the optimal mix and timing of these three mitigation options in a stylized dynamic model. Useful energy can come from two sources: a non-renewable fossil fuel resource and a carbon free renewable resource. The conversion efficiency rate of fossil energy into useful energy is open to choice but higher conversion rates are also more costly. The economy can abate some fraction of its potential emissions and a higher abatement rate incurs higher costs. The society objective is to maintain below some mandated level, or carbon cap, the atmospheric carbon concentration. In the empirically relevant case where the economy is actually constrained by the cap, at least temporarily, we show that the optimal path is a sequence of four regimes: a ’pre-ceiling’ regime before the economy is actually constrained by the cap, a ’ceiling’ regime at the cap, a ’post-ceiling’ regime below the cap and a final regime of exclusive exploitation of renewable resources. If the abatement option has ever to be used, it should be started before the beginning of the ceiling regime, first at an increasing rate and at a decreasing rate once the cap constraint binds. The efficiency performance from any source steadily improves with the exception of a time phase under the ceiling regime when it is constant. Renewables take progressively a larger share of the energy mix but their exploitation may be delayed significantly. Absolute levels of carbon emissions drop down continuously but follow a non monotonic pattern in per useful energy unit relative terms. |
| Keywords: | energy efficiency; ; carbon pollution;; non-renewable resources;; renewable resources;; abatement. |
| JEL: | Q00 Q32 Q43 Q54 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:122842&r=all |
| By: | Ciara?n Mac Domhnaill; L. (Lisa B.) Ryan |
| Abstract: | The twenty-first century must see a decarbonisation of electricity production to mitigate the flow of greenhouse gas emissions into the atmosphere. This paper presents an econometric analysis of the factors that motivate the use of renewable energy in electricity production using panel data from EU Member States during the period 2000-2015. The research extends the literature in this area in several ways. Firstly, the econometric analysis is focused on the electricity sector rather than on the overall primary energy supply, which also includes the diverse heating and transport sectors. In addition, an alternative public policy variable is proposed using the tax and levy component of electricity bills. Furthermore, an alternative econometric approach is employed using a hybrid mixed effects estimator. The results of this analysis are found to be broadly as expected, with mixed fossil fuel price effects; electricity grid interconnection and higher levels of greenhouse gas emissions both motivate the development of renewable electricity. Policy implications are that policy support for fossil fuels should be ceased; electricity grid interconnections should be developed between countries; and furthermore, levies on retail electricity prices to fund RE support schemes are effective at promoting renewable electricity. |
| Keywords: | Renewable electricity policy; Energy economics; Climate policy; Hybrid mixed effects econometric model |
| JEL: | Q21 Q4 Q41 Q42 Q58 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201823&r=all |
| By: | Newbery, D. |
| Abstract: | The UK privatized the electricity supply industry from 1989 in the expectation that private ownership and incentive regulation would invest and operate sufficiently more efficiently to offset the higher cost of private finance. This was achieved in the first two decades, assisted by spare capacity, contract-based entry of new efficient and cheap CCGTs, and regulatory pressure on transmission and distribution companies. The climate change imperative to decarbonize requires massive durable and very capital-intensive investment that casts doubt on the liberalised financing model. In the past 30 years, much has been learned about mitigating market power, the failings of an energy-only market, and the potential distortions of poorly designed prices for renewables and tariffs for networks. Innovation has been successfully stimulated though competitions. Efficiency, falling renewable costs and the carbon tax have almost completely driven coal out of the system. |
| Keywords: | British electricity supply, reforms, financing, renewables, tariffs, nuclear |
| JEL: | D43 H23 L94 Q48 Q54 |
| Date: | 2019–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1917&r=all |
| By: | L. (Lisa B.) Ryan; Sarah La Monaca; Linda Mastrandrea; Petr Spodniak |
| Abstract: | Legacy electricity retail tariffs are ill-adapted to future electricity systems and markets, particularly with regard to accommodating the multi-faceted shift toward decarbonisation. We examine how retail tariffs need to be reformed to not only meet the future revenue requirements of energy-suppliers and networks but also to help achieve the environmental objectives of the energy transition. While existing literature has explored the link between retail tariff structure design, wholesale markets and/or network cost recovery, there is less recognition of the impact of tariff structure design on environmental objectives. This paper reviews the demand responsiveness of household customers to electricity prices and implications of retail tariff structure and design for the policy targets of CO2 emissions, energy efficiency, and renewable electricity generation, in addition to electricity system. A review of the literature provides a theoretical basis for price elasticity of demand and electricity retail tariff design, and we explore the environmental implications for future retail tariff design options via examples of various tariff structures in the EU and US. The research links the topics of emissions mitigation policy and market design, and should add empirical insights to the body of academic literature on future electricity markets. It should also be of interest to policy makers wishing to consider retail tariff structures that promote decarbonisation of the electricity system through multiple objectives of improved energy efficiency and increased shares of renewable electricity within future electricity markets. |
| Keywords: | Electricity retail tariffs; Electricity prices; Energy policy; Decarbonisation of electricity |
| JEL: | H2 Q21 Q41 Q42 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201822&r=all |
| By: | Benedikt Downar; Jürgen Ernstberger; Hannes Rettenbacher; Sebastian Schwenen; Aleksandar Zaklan |
| Abstract: | We examine how mandatory disclosure of greenhouse gas (GHG) emissions influences companies’ emission levels. We identify the effect of full transparency by exploiting a mandate requiring UK-incorporated listed companies to disclose information on GHG emissions in their annual reports. Comparing the emissions of installations (e.g. power plants, or oil refineries) owned by listed companies and installations owned by firms not subject to the mandate, we document that disclosing GHG emissions in annual reports reduces emission levels by up to 18%. Emission reductions occur across all industries but are largest for installations from the energy supply industry. Our results are robust to various specifications and document the incremental effect of disclosing emission data in annual reports, as firms had to report emission data to a central register already before the disclosure mandate. |
| Keywords: | Disclosure of non-financial information; greenhouse gas emissions; real effects |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1795&r=all |
| By: | Özdemir, Ö.; Hobbs, B.; van Hout, M., Koutstaal, P.; Koutstaal, P. |
| Abstract: | Policy makers across Europe have implemented renewable support policies with several policy objectives in mind. Among these are achieving ambitious renewable energy targets at the lowest cost and promoting technology improvement through learning-by-doing. Although subsidy mechanisms based on energy out-put are cost-effective for achieving a certain renewable energy target in the short run, policies tied to capacity installation might be more effective in reducing technology costs in the longer term. We address the question of how policies that subsidize renewable energy (feed-in premia and renewable portfolio standards (RPSs)) versus capacity (investment subsidies) impact the mix of renewable investments, electricity costs, renewable share, the amount of subsidies, and consumer prices in the EU electric power market in 2030. Our analysis is unique in its focus on the market impacts of capacity-oriented vs energy-oriented policies while considering a realistic landscape of diverse and time-varying loads and renewable resources (including existing and potential hydro, wind, and solar resources), as well as fossil-fuelled generators and network constraints. |
| Keywords: | Electricity markets, renewable policy, capacity subsidy, energy subsidy, renewable target |
| JEL: | D7 D72 D74 F13 F23 F51 F53 |
| Date: | 2019–03–13 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1927&r=all |
| By: | Chyong, C-K. |
| Abstract: | Recent gas price dynamics in Europe shows convergence to the extent that locational price differentials approached transport tariffs and hence arbitrage was largely saturated – it is a sign of a well-functioning pan-European gas wholesale market. We employ a transaction cost economics framework to understand how we got to where we are in terms of the evolution of the gas industry structure in Europe and its institutional setup. The move towards a single market in gas, which is still ongoing, has allowed European gas consumers to benefit from transparently set, market-based wholesale prices as well as from increased market competition between suppliers. However, as the gas market in Europe matures and with the increased penetration of renewable energy generation in the electricity sector as well as overall decarbonization of the energy sector in Europe, the gas market and its current regulatory regime face a number of challenges. Addressing these challenges may require an update to the current market design and possibly drastic reforms to tariff setting in the gas transport market. |
| Keywords: | Natural gas, European single gas market, security of supply, regulatory policy |
| JEL: | L94 |
| Date: | 2019–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1918&r=all |
| By: | Colmenares, Gloria; Löschel, Andreas; Madlener, Reinhard |
| Abstract: | In this paper, we review the state-of-the-art and common practice of energy and climate modeling vis-à-vis the rebound literature, in particular regarding how macroeconomic energy and climate models quantify and include energy and greenhouse gas rebound effects. First, we focus on rebound effects in models of costless energy efficiency improvement that hold other attributes constant (zero-cost breakthrough), and an energy efficiency policy that may be bundled with other product changes that affect energy use (policy-induced efficiency improvement) (Gillingham et al. 2015). Second, we examine macroeconomic studies focusing on energy efficiency both in industry and in private households. Third, we go through a general theoretical revision from micro- to macroeconomic levels (the aggregation level) to include a review of the so-called meso-level studies (focused on the analysis of the production side). From 118 recent studies along the aggregation level, out of which 25 compute rebound calculations, we find that the average energy rebound effect is 58% with a standard deviation of 58%, and when we include green house gas rebound calculations, the magnitude is of the order of 43% with a standard deviation of 55%. Finally, we argue that the rebound effect is a phenomenon that requires a sound understanding of the complex interactions from different dimensions (e.g. aggregation level, heterogeneity, climate, energy conservation and economic growth), and we provide some ideas and motivations for future research. |
| Keywords: | Rebound effect,Macroeconomic models,Energy efficiency,Energy policy |
| JEL: | E13 Q41 Q43 Q48 Q54 R13 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cawmdp:106&r=all |
| By: | Perino, G., Ritz, R., Van Benthem, A.; Ritz, R.; Van Benthem, A. |
| Abstract: | We present an integrated framework to understand the emissions impact of unilateral overlapping policies within a carbon-pricing system. "Internal carbon leak-age" captures emissions displacement within the system (e.g., due to greater product imports from a neighbouring country). The waterbed effect captures the policy's interaction with the system's overall emissions cap. Current market rules in the reformed EU ETS, California's carbon market and RGGI feature "punctured" waterbeds that allow overlapping policies to affect aggregate emissions. We present simple formulae to estimate internal carbon leakage for different types of policy such as a carbon price floor (perhaps with a border tax adjustment), an energy efficiency program, and renewables support. The sign and magnitude of the climate benefit from an overlapping policy varies widely depending on its design, location and timing. Punctured waterbeds raise the stakes: well-designed overlapping policies can be much more climate-effective but others now backfire. |
| Keywords: | Cap-and-trade, carbon leakage, carbon price floor, carbon pricing, EU ETS, overlapping policy, hybrid policy, waterbed effect |
| JEL: | H23 Q54 |
| Date: | 2019–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1920&r=all |
| By: | Sarah Marie Jordaan (School of Advanced International Studies, Johns Hopkins University); Kate Konschnik (Nicholas Institute for Environmental Policy Solutions, Duke University) |
| Keywords: | Energy and Natural Resources; Environmental Policies and Norms;North American Integration;Oil and Gas;Regulatory Burden |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cdh:ebrief:288&r=all |
| By: | Katinka Kristine Holtsmark; Kristoffer Midttømme |
| Abstract: | This paper presents a novel benefit of linking emission permit markets. We let countries issue permits non-cooperatively, and with endogenous technology we show there are gains from permit trade even if countries are identical. Linking the permit markets of different countries will turn permit issuance into intertemporal strategic complements. The intertemporal strategic complementarity arises because issuing fewer permits today increases investments in green energy capacity in all permit market countries, and countries with a higher green energy capacity will respond by issuing fewer permits in the future. Hence, each country faces incentives to withhold emission permits when permit markets are linked. Even though countries cannot commit to reducing their own emissions, or punish other countries that do not, the outcome is reduced emissions, higher investments, and increased welfare, compared to a benchmark with only domestic permit trade. We also show that permit market linking can arise as an equilibrium outcome. |
| Keywords: | international agreements, permit markets, dynamic games, green technology investments |
| JEL: | F55 Q54 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7548&r=all |
| By: | David Popp |
| Abstract: | Encouraging innovation is an important part of environmental policy. A large literature in environmental economics examines the links between environmental policy and innovation. This paper reviews recent literature on green innovation. I highlight major trends in the literature, including an increased number of cross-country studies and a focus on the effect of different policy instruments on innovation. I include a discussion of the justifications and evidence for technology-specific policy incentives and present evidence on the effectiveness of government R&D spending. My review concludes with a discussion of three promising areas for new research on environmental innovation. |
| Keywords: | green innovation, induced innovation, pollution, climate change, renewable energy, energy efficiency, research and development, technology policy |
| JEL: | O31 O38 Q55 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7544&r=all |
| By: | Kube, Roland; von Graevenitz, Kathrine; Löschel, Andreas; Massier, Philipp |
| Abstract: | Voluntary environmental management programs for firms have become an increasingly popular instrument of environmental policy. However, the literature's conclusion on the effectiveness of such programs is ambiguous, and for the European region there is a lack of evidence based on a large control group. We seek to fill this gap with an evaluation of the Eco-Management and Audit Scheme (EMAS), introduced in 1995 by the European Union as a premium certification of continuous pro-environmental efforts above regulatory minimum standards. It is more demanding than other voluntary programs due to annual public reports of the environmental performance and targets for improvements. We use official firm-level production census data on the German manufacturing sector, a major energy consumer and emitter in Europe. To account for the self-selection of firms, we combine the Coarsened Exact Matching approach with a Difference-in-Differences estimation. Our results do not suggest reductions of firms' CO2 intensity and energy intensity neither before nor after certification. Moreover, program participants do not increase renewable energy consumption or investments into the protection of the environment and climate. Our results are robust to a variety of checks and call into question the effectiveness of the EMAS program concerning these particular outcome variables. |
| Keywords: | Voluntary Environmental Programs,Firm-level Energy Behavior,Matching Difference-in-Differences |
| JEL: | Q58 Q54 Q48 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cawmdp:107&r=all |
| By: | Quentin Coutellier; Greer Gosnell; Ralf Martin; Mirabelle Muûls; Goran Strbac; Mingyang Sun; Simon Tindermans |
| Abstract: | We report first results from a large scale randomized control trial of different forms of energy consumption feedback facilitated by smart meters and smart phone feedback apps. Nearly 40,000 customers of a large energy retailer in the UK were exposed to either very basic feedback apps - i.e. simply giving consumers access to monthly energy consumption - or more advanced feedback involving peer group comparisons as well as dis-aggregation of total electricity consumption. We find that more advanced feedback can lead to an average consumption reduction of nearly 4% (Intent to Treat). Taking into account that a large number of customers never sign in to any feedback apps suggests that the reduction effect among customers that do sign in is up to 12%. The smart meter installation was implemented by different installation firms across our sample and we find the reduction effect only for one customers of one installer who displays higher capabilities along a number of metrics. This could suggest that achieving energy preservation objectives does not only depend on the technology involved but also on the capabilities and skills of firms installing those technologies. In the UK, smart meters are by default installed with In Home Displays (IHD) that provide real time feedback on energy use. Some of the customers in our sample did not receive an IHD and we explore if this had any impact on the consumption reduction effect described above. Customers with (and without) IHD comprise a self-selected sample so we have to be careful in drawing causal conclusions. However, we do not find any evidence that any energy reducing effect is contingent on IHDs. |
| Keywords: | behavioural intervention, household energy demand, randomised controlled trial, information |
| JEL: | D12 Q48 Q54 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1602&r=all |
| By: | Meyer, Peter B.; Schwarze, Reimund |
| Abstract: | Urban infrastructure investment is needed for both, mitigation of climate risks and improved urban resiliency. Financing them requires the translation of those benefits into measurable returns on investment in the context of emerging risks that capital markets can understand and appreciate. This paper develops a generic framework to identify what are the necessary and sufficient factors to economically favor climate-change resilient infrastructure in private investment decisions. We specifically demonstrate that carbon pricing alone will not generate the needed will, because market prices at present systematically fail to account for climate change risks such as the costs of stranded assets and the national and local co-benefits of investments in climate resiliency. Carbon pricing is necessary, but not sufficient for an enhanced private financing of climate-resilient infrastructure. The Paris Agreement and other supra-local policies and actors including city networks can concretely help to generate the sufficient social and political will for investments into climate change mitigation and resiliency at the city level. |
| Keywords: | infrastructure,urban finance,resilience,low carbon economy,city networks,Paris agreement,carbon pricing,Infrastruktur,Finanzierung,Resilienz,Klimaneutralität,Städte,Akteursnetzwerke,Parisabkommen,CO2-Bepreisung |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ufzdps:12019&r=all |
| By: | Karl Zimmermann |
| Abstract: | This paper analyses and compares the performance of carbon taxes and capital taxes in financing public goods with positive effects on private firm productivity. It is motivated by Franks et al. (2017), who ask whether using carbon taxes could be motivated on fiscal grounds rather than by environmental ones, arguing that the advantage of the carbon tax consists in its potential to reap foreign resource rents. I employ an analytical general equilibrium framework of n identical countries, where local firms use internationally mobile capital and imported fossil fuel and in production as well as local public infrastructure. The latter is financed solely by either taxing the input of fossil fuels (carbon tax) or capital. The choice of the policy instrument is exogenous to policy makers and symmetric across countries. I find that the effect of policy on the fossil fuel price (terms-of-trade effect) leads to higher public good provision under carbon taxation. However, tax-competition could cause either policy instrument to yield higher provision depending on how strongly either tax base reacts to changes in the tax rate. And finally, I conclude that the ranking of the two policy scenarios is ambiguous when considering tax competition and the terms-of-trade effect simultaneously. A numerical exercise shows cases for higher provision of either policy. |
| Keywords: | Tax Competition,Public Infrastructure,Carbon Tax |
| JEL: | H21 H54 Q38 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:193458&r=all |
| By: | Kalantzis, Fotios; Revoltella, Debora |
| Abstract: | This paper assesses the role of energy audits in promoting energy-efficiency measures in SMEs. It benefits from the data collected within the European Investment Bank Surveys in 2017 and 2018, involving information about energy audits and energy-efficiency investments of some 12,500 signatures from EU28 Member States per year. Our findings suggest that energy audit is a useful tool in overcoming the information barriers and facilitating investments in energy-efficiency measures. In fact, their information is more crucial for small firms and for investments in support processes such as lighting, wall insulation etc. than in production processes such as replacement of machinery and equipment. However, we found that the beneficial impact of energy audits cease to exist when firms are finance constrained. Finally, our results indicate that information campaigns are one of the most efficient available instruments among other instruments (regulatory, financial and voluntary agreements) for promoting energy audits in SMEs. |
| Keywords: | energy audit,propensity score matching,energy efficiency,European Investment Bank survey |
| JEL: | P28 Q41 Q48 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eibwps:201902&r=all |
| By: | Alexander James (Department of Economics and Public Policy, University of Alaska Anchorage); Brock Smith (Department of Agricultural Economics and Economics, Montana State University) |
| Abstract: | In the mid 2000s, shale-energy-rich U.S. counties experienced a sudden and significant economic shock resulting from energy extraction. While the resulting localized economic effects are relatively well understood, less is known about the geographic dispersion of the effects. We build upon an existing literature, most notably Feyrer, Mansur, and Sacerdote (2017), by examining the conditional economic effects of nearby energy production. Because energy-producing counties tend to be located near each other, producing counties experience inward economic spillovers from other nearby producing counties and this inflates the estimated effect of own-county production. Accounting for this, we identify smaller income effects of hydrocarbon production than Feyrer, Mansur, and Sacerdote (2017), limited to counties within 60-80 miles of the source of production. The proposed estimation strategy can be applied more generally to estimate the dispersion of multiple, simultaneously occurring economic shocks. |
| Keywords: | Economic Shocks; Regional Development; Economic Propagation |
| JEL: | L14 L81 Q33 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2018-02&r=all |
| By: | Weinand, Jann; Kleinebrahm, Max; McKenna, Russell; Mainzer, Kai; Fichtner, Wolf |
| Abstract: | Geothermal plants have been increasingly constructed in recent years to exploit the high geothermal energy potential in Germany in district heating networks at the municipal level. In order to use this potential economically, municipal planners need instruments for designing the district heating network to supply households with the geothermal heat. This paper presents a combinatorial mixed-integer linear optimisation model and a three-stage heuristic to determine the minimum costs for geothermal district heating systems in municipalities. The central innovations are the ability to optimise both the structure of the district heating network and the location of the district heating plant, the consideration of partial heat supply from district heating and the scalability to many larger municipalities. A comparison of optimisation and heuristic for three exemplary municipalities demonstrates the efficiency of the developed heuristic: the optimisation takes between 500% and 10,000,000% more time than the heuristic. The resulting deviations in the calculated total investment for the district heating from the results of the optimisation are in all cases below 5% and in 80% of cases below 0.3%. The efficiency of the heuristic is further demonstrated by the comparison with simpler heuristics like the Nearest-Neighbour-Heuristic. The latter is not only less efficient, it substantially overestimates the total costs by up to 80% in all cases with less than 100% heat coverage. Future work should focus on a more precise consideration of heat losses in the district heating network, as well as taking additional geological and topological conditions in the municipalities into account. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitiip:33&r=all |
| By: | Schoenmaker, Dirk |
| Abstract: | Central banks look at climate related risks at the financial stability side. Should they also take carbon intensity of assets into account at the monetary policy side? After reviewing the central bank mandate, the paper proposes a tilting approach to steer the Eurosystem's asset and collateral framework towards low carbon assets. We find that a modest tilting approach could reduce carbon emissions in the Eurosystem's corporate and bank bond portfolio by over 40 per cent. It could also lower the cost of capital of low carbon companies in comparison with high carbon companies by 4 basis points. Our findings suggest that such a low carbon allocation can be done without undue interference with the transmission mechanism of monetary policy. Price stability, the primary objective, is, and should remain, the priority of the Eurosystem. |
| Keywords: | Assets; Carbon Emissions; Collateral; cost of capital; monetary policy |
| JEL: | E52 E58 Q01 Q52 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13576&r=all |
| By: | Jodie Gatti (Department of Economics and Public Policy, University of Alaska Anchorage); Gavin Triplet (Department of Economics and Public Policy, University of Alaska Anchorage); Alexander James (Department of Economics and Public Policy, University of Alaska Anchorage) |
| Abstract: | Oil-dependent countries suffer from bad institutions, but is oil the culprit? Herein we argue that weak institutions lead to resource dependence, and that this form of reverse causality does not merely bias the estimated effect of oil dependence, it is solely responsible for it. We highlight this point in a novel way. We first document a robust inverse relationship between oil dependence and institutional quality across countries. We then re-estimate this relationship holding the value of resource production constant across all countries. The two sets of results are statistically indifferent, meaning that variation in GDP fully explains why oil-dependent economies suffer from bad institutions. This remarkable finding offers broad implications that reach beyond the resource-development literature and speaks generally to the practice of scaling explanatory variables by GDP. |
| Keywords: | Resource Curse; Resource-Dependent Countries; Estimation Bias |
| JEL: | Q3 Q4 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2018-01&r=all |
| By: | Federico Carril-Caccia (Department of Economic Theory and History, University of Granada (Spain).); Juliette Milgram Baleix (Department of Economic Analysis and Political Economy, University of Seville (Spain).); Jordi Paniagua (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).) |
| Abstract: | The present work reassesses the link between natural resources, institutional quality and foreign direct investment (FDI). In particular, we focus on the impact of good governance and democracy on foreign direct investment in oil-abundant countries. To this end, we estimate the effect of host countries’ institutions on the extensive margin (number of bilateral greenfield investment projects), using a gravity equation for a dataset that covers 182 countries during 2003-2012. Our findings confirm that compliance to rule of law, lack of corruption, political stability and democracy could boost new FDI links through the extensive margin. Our results could not rule out the “oil curse”, meaning that oil producers attract fewer new greenfield projects than similar countries without oil. Unlike other studies, we show that the impact of institutions is not necessarily undermined by the presence of natural resources. |
| Keywords: | Democracy, FDI, gravity equation, institutions, oil |
| JEL: | C23 F21 F23 Q39 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1903&r=all |
| By: | Chang, Youngho (Asian Development Bank Institute) |
| Abstract: | Some Asian countries such as the People’s Republic of China and Japan are very active in green finance. This study reviews how green finance in Singapore is working, examines existing barriers, and suggests some solutions. Singapore, a well-established financial hub in Asia, aims to be a hub for green finance in Asia. The Monetary Authority of Singapore (MAS), the central bank of Singapore, has formed a network with seven other central banks in the world called the Central Banks and Supervisors Network for Greening Financial System, which intends to promote sharing of experience and best practices in green finance with other countries. Along with forming the network, the MAS has established a Green Bond Grant scheme to promote and ensure the issuance of green bonds in Singapore. In parallel, the Association of Banks in Singapore published Guidelines on Responsible Financing to promote and support environmental, social, and governance (ESG) disclosures. The Singapore Exchange asks its member firms to strictly comply with the ESG disclosures. At an individual firm level in Singapore, City Development Limited (CDL), a real estate development company, and Development Bank of Singapore Limited (DBS), a commercial bank, issued Singapore’s first and second green bonds in 2017. The proceeds of the CDL green bond are allocated to finance retrofitting and upgrading of a commercial building in Singapore, while the proceeds of the DBS green bond are to be invested in renewable energy and climate change adaptation, among other uses. How successful the two green bonds are in meeting their pronounced goals and how well and effectively they contribute to the diffusion of renewable energy remains to be seen. |
| Keywords: | green finance; green bond grant scheme; guidelines of responsible financing; CDL green bond; DBS green bond |
| JEL: | G18 G28 G38 |
| Date: | 2019–01–17 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0915&r=all |
| By: | Wes Austin; Garth Heutel; Daniel Kreisman |
| Abstract: | Diesel emissions from school buses expose children to high levels of air pollution; retrofitting bus engines can substantially reduce this exposure. Using variation from 2,656 retrofits across Georgia, we estimate effects of emissions reductions on district-level health and academic achievement. We demonstrate positive effects on respiratory health, measured by a statewide test of aerobic capacity. Placebo tests on body mass index show no impact. We also find that retrofitting districts see significant test score gains in English and smaller gains in math. Results suggest that engine retrofits can have meaningful and cost-effective impacts on health and cognitive functioning. |
| JEL: | I18 I20 Q53 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25641&r=all |
| By: | Lorenzo Esposito (DISCE, Università Cattolica - Banca d’Italia, sede di Milano); Ettore Giuseppe Gatti (DISCE, Università Cattolica); Giuseppe Mastromatteo (DISCE, Università Cattolica) |
| Abstract: | The transition to a green economy is arguably the most important economic transformation of the next decades. To be completed it requires the mobilization of astounding resources, a flow of technological innovation and a whole series of new rules going from technical standards to financial regulation. Given the resources it needs, the transition, to be credible, requires a full engagement of the financial system. On this regard we analyze the policy set-up of Europe, the most advanced area on the issue. We identify a three-layer functioning of the EU project for transition. The first one (“green products”) is fully compatible with the present financial system. A second layer entails changes in the business model and organization of financial operators but it can be phased in with minor overhauls. Finally, there is a third layer, largely incompatible with the present financial system, yet crucial to achieve transition. We show that, according to the same EU analysis, the transition needs a total change in the financial landscape and therefore it is, rebus sic stantibus, intrinsically unfeasible. We suggest ways to escape the dilemma that connects financial stability and green economy. |
| Keywords: | climate change, sustainable finance, EU |
| JEL: | G28 Q54 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie5:dipe0004&r=all |
| By: | Sarfati, M.; Hesamzadeh, M-R.; Holmberg, P. |
| Abstract: | Electricity markets employ different congestion management methods to handle the limited transmission capacity of the power system. This paper compares production efficiency and other aspects of nodal and zonal pricing. We consider two types of zonal pricing: zonal pricing with Available Transmission Capacity (ATC) and zonal pricing with Flow-Based Market Coupling (FBMC).We develop a mathematical model to study the imperfect competition under zonal pricing with FBMC. Zonal pricing with FBMC is employed in two stages, a day-ahead market stage and a re-dispatch stage. We show that the optimality conditions and market clearing conditions can be reformulated as a mixed integer linear program (MILP), which is straightforward to implement. Zonal pricing with ATC and nodal pricing is used as our benchmarks. The imperfect competition under zonal pricing with ATC and nodal pricing are also formulated as MILP models. All MILP models are demonstrated on 6-node and the modified IEEE 24-node systems. Our numerical results show that the zonal pricing with ATC results in large production inefficiencies due to the incdec-game. Improving the representation of the transmission network as in the zonal pricing with FBMC mitigates the inc-dec game. |
| Keywords: | Congestion management, Zonal pricing, Flow-based market coupling |
| JEL: | C61 C72 D43 L13 L94 |
| Date: | 2019–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1919&r=all |
| By: | Suarez, Ronny |
| Abstract: | In this paper, we introduced the Efficiency ($/CO2) at Risk indicator. It could be used to compare performance, to evaluate asset allocation, to execute a portfolio optimization and/or to establish risk appetite policies. |
| Keywords: | Climate finance, Efficiency at Risk |
| JEL: | C0 |
| Date: | 2019–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92713&r=all |
| By: | Auer, Judith |
| Abstract: | Im Rahmen dieser Arbeit soll der mit dem Markthochlauf von Elektrofahrzeugen einhergehende Aufbau von Ladeinfrastruktur unter quantitativen und finanziellen Aspekten untersucht werden. Ziel ist es, die notwendige Anzahl an Ladepunkten und die Höhe der Gesamtinvestitionen für Ladeinfrastruktur bei einer Quote von 100% Elektrofahrzeugen im privaten Verkehr im Jahr 2050 in Deutschland zu simulieren. In diesem Zuge werden das Mobilitätsverhalten der deutschen Bevölkerung analysiert und mögliche Standorte für Ladesäulen auf ihre Funktionalitätsanforderungen geprüft. Mithilfe spezifischer Annahmen für ein Best- und ein Worst-Case-Szenario kann auf Basis dessen eine Simulation der Ladeinfrastruktur entwickelt werden. Die Ergebnisse der Simulation zeigen, dass mit einem quantitativen Bedarf für rund 40 Millionen Ladepunkte und einem Investitionsvolumen von 80 bis 110 Milliarden Euro gerechnet werden kann. Abschließend wird die Simulation evaluiert und die Plausibilität der Ergebnisse geprüft. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitiip:34&r=all |
| By: | Bergantino, Angela Stefania; Di Liddo, Giuseppe; Porcelli, Francesco |
| Abstract: | Using a new measure of urban sprawl, we evaluate the impact of urban sprawl on municipal expenditures of Italian municipalities in local public transport, roads and traffic management, and municipal technical offices for the year 2013. Our results suggest that urban sprawl leads to an increase in standard expenditure needs of Italian municipalities for all expenditure categories considered. The relationship between urban sprawl and expenditure is stronger for expenditures in road and traffic management. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:sit:wpaper:19_4&r=all |