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on Energy Economics |
| By: | Raphaël Boroumand (PSB - Paris School of Business); Stéphane Goutte (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis); Thomas Porcher (ESG Research Lab - ESG Management School) |
| Abstract: | Our article provides a better understanding of risk management strategies for all energy market stakeholders. A good knowledge of optimal risk hedging strategies is not only important for energy companies but also for regulators and policy makers in a context of climate emergency. Indeed, the electricity sector is key to achieve energy and ecological transition. Electricity companies should be on frontline of climate change struggle. Taking the perspective of electricity retailers, we analyze a range of portfolios made of forward contracts and/or power plants for specific hourly clusters based on electricity market data from the integrated German-Austrian spot market. We prove that intra-day hedging with forward contracts is sub-optimal compared to financial options and physical assets. By demonstrating the contribution of intra-day hedging with options and physical assets, we highlight the specificities of electricity markets as hourly markets with strong volatility during peak hours. By simulating optimal hedging strategies, our article proposes a range of new portfolios for electricity retailers to manage their risks and reduce their sourcing costs. A lower hedging cost enables to allocate more resources to digitalization and energy efficiency services to take into account customers' expectations for more climate-friendly retailers. This is a virtuous circle. Retailers provide high value-added energy efficiency services so that consumers consume less. The latter contributes to reach electricity reduction targets to fight climate warming. |
| Keywords: | Diversification,Climate,Electricity,Risk,Intra-day,Hedging |
| Date: | 2019–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02175358&r=all |
| By: | Katarzyna Maciejowska |
| Abstract: | The literature on renewable energy sources indicates that an increase of the intermittent wind and solar generation affects significantly the distribution of electricity prices. In this article, the influence of two types of renewable energy sources (wind and solar photo voltaic) on the level and variability of German electricity spot prices is analyzed. The quantile regression models are built to estimate the merit order effect for different quantiles of electricity prices. The results indicate that both types of renewable generations have a similar, negative impact on the price level, approximated by the price median. When the price volatility, measured by the inter-quantile range (IQR), is considered, the outcomes show that wind and solar influence prices differently. Conditional on the level of the total demand, the wind generation would either increase (when the demand is low) or decrease (when the demand is high) the IQR. Meanwhile, the increase of solar power stabilizes the price variance for moderate demand level. Thus, policy supporting the development and integration of RES should search for a balance between the wind and solar power. |
| Keywords: | Electricity prices; Quantile regression; Merit order effect; Price variability |
| JEL: | C22 C32 C51 Q41 |
| Date: | 2019–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:wuu:wpaper:hsc1902&r=all |
| By: | Csaba Weiner (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | This paper aims to assess the security of stationary fuel supply in Hungary by applying the three-dimensional approach, encompassing availability, affordability and sustainability. The main focus is on primary energy fuels in relation to electricity, but the approach is also applied, in part, to electricity itself. It is shown how select influencing factors affect the choices made from among security of supply dimensions. Although providing a source-by-source review, special attention is paid to nuclear energy and natural gas. For a long time, natural gas has been the fuel that Hungary is particularly sensitive to in terms of security of energy supply. Thus, gas diversification has become a key issue, analysed here also by using my own gas diversification scheme. I find that considerable progress has been made in this area. However, along with the 2014 decision on the construction of new units at the Paks Nuclear Power Plant (Paks II), aimed at achieving self-sufficiency in Hungarian electricity supplies, the energy agenda has changed considerably. With Paks II, Hungary’s dependence will both decrease and increase – as new types of risks emerge. In such circumstances, a Nuclear–Solar/Biomass–Natural Gas concept of the electricity mix seems to be emerging in Hungary. |
| Keywords: | Hungary, Russia, energy security, security of supply, gas diversification, stationary fuels |
| JEL: | L71 L95 O13 P28 Q4 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:iwe:workpr:254&r=all |
| By: | Victor von Loessl (University of Kassel); Heike Wetzel (University of Kassel) |
| Abstract: | Energy efficiency provides a substantial opportunity to tackle increasing greenhouse gas emissions. However, in traditionally regulated energy markets, energy providers maximize their profits by selling electricity or heat as long as their marginal revenue exceeds their marginal costs of production. This so called ’throughput incentive’ fundamentally restricts the motivation of utilities to invest in energy efficiency. This paper therefore investigates the relation between the regulatory policy revenue decoupling, that separates utilities’ revenue from sales fluctuations, and electricity customers’ energy demand and efficiency in the U.S. To address the research question at hand, we follow recent developments in energy demand function modeling and Stochastic Frontier Analysis (SFA) estimation techniques that allow to account for persistent as well as transient efficiency. The estimation results show a significant negative correlation between revenue decoupling and electricity consumption patterns.Furthermore, we find electricity customers have small transient inefficiency. However, results indicate an underlying persistent inefficiency across the entire electric sector. |
| Keywords: | Revenue decoupling, energy efficiency, stochastic frontier analysis, demand frontier function, transient and persistent efficiency |
| JEL: | C23 L51 L94 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201918&r=all |
| By: | Carrara, Samuel |
| Abstract: | Nuclear is considered as a valuable option for the decarbonization of the power generation, as it is a no-carbon, yet commercially consolidated technology. However, its real prospects are uncertain: if some countries, especially in the non-OECD area, have been extensively investing in nuclear, many OECD countries, which host the vast majority of operational reactors worldwide, feature old fleets which will not be replaced, as phase-out policies are being implemented. Research scenarios often consider polarized conditions based on either a global unconstrained nuclear development or a generalized phase-out. The main aim of this work is instead to explore the techno-economic implications of policy-relevant scenarios, designed on the actual nuclear prospects in the world regions, i.e. mainly differentiating policy constraints between the OECD and the non-OECD regions. The analysis, conducted via the Integrated Assessment Model WITCH, shows that nuclear generation constantly grows over the century, even if in general the nuclear share in the electricity mix does not significantly change over time, both at a global and at a European level. Over time, and especially if constraints are applied to nuclear deployment, the nuclear contribution is compensated by renewables (mainly wind and solar PV) and, to a lower extent, by CCS (only marginally in the EU). The policy costs related to the nuclear phase-out are not particularly high (0.4% additional global GDP loss with respect to the unconstrained policy scenario), as they are almost completely compensated by innovation and technology benefits in renewables and energy efficiency. Phase-out policies applied only to the OECD regions do not entail any additional policy costs, while non-OECD regions marginally benefit from lower uranium prices. A sudden shutdown of nuclear reactors in the OECD regions results in a doubling of these losses and gains. |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemfe:291804&r=all |
| By: | Ewa Lazarczyk; L. (Lisa B.) Ryan |
| Abstract: | Modern electricity markets are characterized by increasing shares of intermittent production which has almost zero marginal costs. The effect of introducing large amounts of cheap power into the system is known as the merit order effect – a shift of a supply curve to the right which delivers lower equilibrium prices. The lower prices and the fact that fossil-fuel generators are used less often exacerbate adequacy problems – there is a threat that not enough generating capacity will be available in the system since generators´ revenues are low and investment needs are not met. This and the fact that energy markets are often capped in order to prevent market power leads to the so called “missing money problem” (Teirila and Ritz, 2018, Bublitz et al., 2019). One possible remedy is to supplement the energy only markets with capacity markets (Newbery, 2016; Cramton et al, 2013; Joskow, 2007). Recently the electricity market on the island of Ireland has been completely restructured, a change that affected also the capacity mechanism, transforming it from an administrative decision-based to a market-based mechanism, an auction. The move however has not been a smooth one, with a supply of Dublin put at risk as one of the main suppliers in the area wanted to withdraw from the market as a result of not being able to successfully secure the operation of its two units. Since Irish electricity demand is forecast to grow by between 15% and 47% over the next ten years, with over a quarter of all electricity consumed by data centres, many of which will be in the Dublin region (EirGrid, 2018a), the threat of losing one of the suppliers become even more serious. In this case study we show how even with considerable analysis and preparation, the introduction of an auction system is not without risk. |
| Keywords: | Capacity markets; Electricity markets; Auctions; Energy economics |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:oapubs:10197/10915&r=all |
| By: | Dorothée Charlier (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Bérangère Legendre (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Anna Risch (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes) |
| Abstract: | Between 50 and 125 million Europeans are unable to afford the energy needed for adequate heating, cooking, light, and use of appliances in the home. Tackling fuel poverty has thus become a public policy challenge. In this paper, we assess the effectiveness of social energy subsidies and social housing to reduce fuel poverty. The literature reports that rising fuel prices, low incomes, and energy-inefficient housing are the main causes of fuel poverty. Existing public policies focus mainly on price-and income-based measures to reduce fuel poverty, such as social energy subsidies. This type of policy is palliative as it does not permit to sustainably eradicate fuel poverty. Other policies aim to encourage renovation in order to improve energy efficiency. Those policies are curative as they sustainably reduce one cause of fuel poverty : energy inefficiency. In this paper, we focus on another public policy to tackle fuel poverty : social housing. We believe that this policy could be preventive, as the literature reports the better energy efficiency of social housing. We use matching methods and find that living in social housing decreases fuel poverty by 5.4% to 9.1%. On the contrary, social energy subsidies have no effect on fuel poverty. |
| Keywords: | Fuel poverty,social housing,social energy subsidy,matching method |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02145950&r=all |
| By: | Pasche, Markus |
| Abstract: | The Hotelling rule is applied to the case of a fixed CO2 budget restriction which has to be met in order to reach the global warming goal according to the Paris Agreement. While the theoretical result is well-known and simple, the practical implementation under technological uncertainty suggests that tradable emission certificates are superior to CO2 taxes. The practical implementaion has also to consider that production chains are globalized, and that decarbonization strategies will be pointless if the Global South is not part of it. |
| Keywords: | climate change; CO2 reduction, Hotelling rule, CO2 taxes, emission trading system, globalization |
| JEL: | O30 Q30 Q37 Q38 Q54 Q58 |
| Date: | 2019–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94803&r=all |
| By: | Brown, Austin PhD; Fuller, Sam; Gregory, Jack |
| Abstract: | How, and how effectively, different electric vehicle (EV) related policies will work is an immediate and important question for California as the state updates its EV policies. Adding urgency, Assembly Bill (AB) 615, which was signed by the Governor, requires the California Air Resources Board (CARB) to produce a report by December 2018 on related topics, in consultation with the University of California Institute of Transportation Studies (UC ITS). Senate Bill (SB) 498, also signed, also requires CARB reporting with somewhat different but overlapping topics. The need is to define the state of the research on policies to support EV deployment in a manner that is directly usable by California in updating policies. The specific need for CARB is material estimates of these factors (called out in AB 615): "impact of income caps, increased rebates for low-income consumers, and increased outreach on the electric vehicle market, as well as a quantification of emissions reductions attributable to the Clean Vehicle Rebate Project." This white paper is one in a series summarizing recent research findings for the state of California. The topic of the series is evaluating the important components of electric vehicle adoption and its effects. The goals of these white papers are to: 1. Synthesize the best published and on-going research available on each topic; 2. Highlight important research gaps and propose areas for future research; 3. Provide the reader with a framework for understanding the various dimensions of each topic; 4. Make a clear link between research findings and policy implications, if possible; and 5. Be accessible to an informed and interested, but non-technical audience. |
| Keywords: | Social and Behavioral Sciences, Electric vehicles, policy analysis, automobile ownership, market penetration, incentives, emissions, California |
| Date: | 2019–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt28x636nr&r=all |
| By: | Jan Stede |
| Abstract: | In energy efficiency networks, groups of firms exchange experiences on energy conservation in regular meetings over several years. The companies implement energy efficiency measures in order to reach commonly agreed energy savings and CO2 reduction goals. Energy efficiency networks exist in several countries, such as Germany, Sweden and China. Existing evaluations of such voluntary regional networks in Germany claim that participants improved energy efficiency at twice the speed of the industry average. Based on comprehensive data from the German manufacturing census, this paper examines whether participation in energy efficiency networks has a causal impact on energy conservation and CO2 emissions. I employ both a difference-in-differences estimator, using companies that joined energy efficiency networks at a later point in time as a control group, as well as a semiparametric matching estimator. I demonstrate that for the average participant there is no evidence of a statistically significant effect on energy productivity or CO2 emissions due to the network activities. However, there is some indication that exporters may have benefitted from the networks by reducing their CO2 emissions. |
| Keywords: | Business networks, voluntary agreements, energy conservation, policy evaluation |
| JEL: | D22 Q40 Q51 C50 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1813&r=all |
| By: | Javier Ojea Ferreiro |
| Abstract: | This article proposes a flexible methodology that captures the asymmetry in the relationship between the stock market and the oil market jointly with potential structural changes. It deals with the challenge of modelling the sharp increase in dependence across markets in stress situations. The study analyses the response of the European stock market to an extreme energy-related scenario. This exercise is of particular significance given the growing interest in the consequences of energy prices for the real economy and the risks of a disruptive transition to a low-carbon economy. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:cnv:wpaper:69_ojea_working_paperen&r=all |
| By: | Achim Voss (University of Hamburg, Department of Economics) |
| Abstract: | I analyze energy-efficiency policy as a prescription of a minimum-efficiency standard for energy-using household goods like cars, building insulation, and home appliances. Such a policy has two effects. At the intensive margin, a household that invests will choose a more efficient device. At the extensive margin, there will be more households that choose not to invest at all. Thus, additional to and different from rebound effects, energy-efficiency policy may have unintended consequences. I analyze the equilibrium effects of a minimum-efficiency standard, taking price adjustments and household heterogeneity into account. A moderate minimum-efficiency standard increases demand for efficiency-enhancing household capital goods, and reduces energy demand. More stringent policy is shown to be less effective or even counterproductive. For the case of a fixed supply of efficiency-enhancing capital, it is shown that minimum-efficiency standards increase equilibrium energy demand. Finally, I analyze which households benefit from minimum-efficiency standards and which ones lose. A standard induces investing households to expend more for household capital and less for energy. The wedge between the induced expenditures and the private optimum is analyzed as a deadweight loss. |
| Keywords: | Energy Efficiency, Rebound Effects, Household Heterogeneity, Extensive Margin, Gruenspecht Effect, Investment, Theory of Environmental Policy |
| JEL: | Q41 Q48 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2019.13&r=all |
| By: | Govorukha, Kristina; Mayer, Philip; Rübbelke, Dirk; Vögele, Stefan |
| Abstract: | The main drivers of transformation processes of electricity markets stem from climate policies and changing economic environments. In order to analyse the respective developments, modelling approaches regularly rely on multiple structural and parametric simplifications. For example, discontinuities in economic development (recessions and booms) are frequently disregarded. Distorting effects that are caused by such simplifications tend to scale up with an extension of the time horizon of the analysis and can significantly affect the accuracy of long-term projections. In this study, we include information on economic discontinuities and elaborate on their influences on short-and long-term modelling outcomes. Based on historical data, we identify the impact of a high-amplitude change in economic parameters and examine its cumulative effect on the German electricity market by applying a techno-economic electricity market model for the period from 2005 to 2014. Similar changes may consistently occur in the future and we expect that a more comprehensive understanding of their effects on long-term scenarios will increase the validity of long-term models. Results indicate that policy decision making based on modelling frameworks can benefit from a comprehensive understanding of the underlying simplifications of most scenario studies. |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemfe:291802&r=all |
| By: | Zhang, Lin; Adom, Philip Kofi |
| Abstract: | This study examines the energy efficiency transitions in China using provincial data covering the period 2003–2015. Sustainable progress in energy efficiency achievements is beneficial to energy insecurity and the achievement of the Paris Agreement. This article combines the stochastic frontier method with the panel Markov-switching regression to model energy efficiency transitions. Estimated energy efficiency scores showed significant regional and provincial heterogeneity. Also, while human capital development, urbanization, and foreign direct investment promote energy efficiency, price and income per capita reduce it. The transition probabilities indicate that the high energy-efficient state is less sustainable, and the movement towards the frontier seems less persistent than movement from the frontier. Thus, it appears that China is not making sustainable progress in energy efficiency. The unsustainable nature of the high energy-efficient state suggests that in China, there are weak energy efficiency efforts and energy efficiency policies lack robustness. |
| Keywords: | Energy efficiency transitions, Panel Markov, Stochastic frontier, China |
| JEL: | O4 O47 Q4 Q40 Q43 Q48 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94797&r=all |
| By: | Moyo Alfred |
| Abstract: | This paper investigates whether Southern African Development Community countries that are vulnerable to changes in oil prices could instead substitute oil and petroleum products with biofuels and gas from within the region.A pooled mean group estimator was used to determine the impact of oil prices on the gross domestic product of 15 Southern African Development Community countries. Results indicate that Mauritius, Mozambique, Tanzania, and Zambia would be negatively affected by oil price changes. Next, two gravity models capturing bilateral trade between South Africa and Zambia and those countries identified as being vulnerable were estimated using pseudo-Poisson maximum likelihood.The main finding, based on the gross domestic products of the exporter and importer countries, is that potential for trade is higher with South Africa than Zambia. This implies that these countries are more likely to import gas and biofuels from there. Transport costs are the main impediments to importing from Zambia. |
| Keywords: | oil prices,Panel data analysis,Regional integration,SADC,Economic growth |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2019-36&r=all |
| By: | Casini, Paolo; Valentini, Edilio |
| Abstract: | There is a large consensus that low levels of carbon price cannot provide adequate incentives to invest in cleaner technologies and abate emissions. Since carbon demand and price tend to decrease during recessions, economists and policy makers have proposed different types of price stabilizing mechanisms (PSM) for emissions markets to prevent carbon price from falling too low. We investigate the effects of a PSM on investments and emissions and show that when unfavorable macroeconomic conditions reduce emissions, adjusting the supply of allowances to sustain their price may inhibit investments. Moreover, when firms invest in an integrated abatement technology, not only can emissions increase - an effect previously examined in the literature - but a PSM can exacerbate this effect when an exogenous negative shock curbs the demand of carbon. |
| Keywords: | Research Methods/ Statistical Methods |
| Date: | 2019–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemec:291801&r=all |
| By: | Woroniuk, D.; Karam, A.; Jamasb, T. |
| Abstract: | We apply network theory to analyse the interactions of trading hub prices, and to assess the harmonisation of the European gas market. We construct dynamic networks, where the nodes correspond to the twelve EU trading hubs, and where the edges weight the causality between the variations of the respective gas prices. Network density dynamically calculates the aggregate quantity of causal interactions recorded within the system, which provides information pertaining to the integration of the European gas network. We document a number of spikes in network density, suggesting short periods of improved connectivity of European gas markets. We argue that these results appear to be driven by exogenous factors, such as unseasonal weather patterns, seismic activity and pipeline capacity reductions or outages. The findings elucidate the time varying nature of European gas market dynamics, and the importance of continual monitoring of market evolution. |
| Keywords: | Market Integration, Information Transmissions, Natural Gas, Network Theory |
| JEL: | C32 F18 Q43 Q47 Q48 |
| Date: | 2019–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1964&r=all |
| By: | Katarzyna Maciejowska; Rafal Weron |
| Abstract: | Electricity price forecasting (EPF) is an actively developing research field, which aims at predicting the spot and forward prices in wholesale electricity markets. Since day-ahead forecasting has gained the most attention, in this article we review the modeling approaches for short-term predictions, with a particular focus on variable selection. |
| Keywords: | Forecasting; Electricity Spot Price; Day-ahead Market; Variable Selection; Regularization; Regression; Quantile Regression |
| JEL: | C22 C32 C45 C51 C53 C70 L11 Q41 Q47 |
| Date: | 2019–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:wuu:wpaper:hsc1901&r=all |
| By: | Zhang, Lin; An, Yao |
| Abstract: | This study employs Vector Auto-regression model with Generalized Response Impulse Function to analyse the dynamic nexus between economic growth and the industrial environmental pollution intensity for six specific pollutants in Shanxi province of China from 1995 to 2015. The results show there exists bi-directional effects, with stronger impact running from economic development to industrial pollution is stronger. We also find Shanxi government shows significant capacity in the management of industrial solid waste and waste gas. The provincial government has higher capacity in controlling Sulfur Dioxide compared to soot/dust. Our results verify the existence of Environmental Kuznets Curve through dynamic interactions between industrial pollution intensity and economic growth impulse. Three out of the six environmental pollution intensity responses are in the shape of inverted U curve. There are exceptions for three pollutants: N curve for Chemical Oxygen Demand and U curve for solid waste and waste gas. |
| Keywords: | Environmental pollution intensity; Economic growth; Government capacity; Industrial pollutions control; Environmental Kuznets Curve |
| JEL: | Q00 Q56 Q58 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94796&r=all |
| By: | Felipe Carozzi; Sefi Roth |
| Abstract: | We study whether urban density affects the exposure of city dwellers to ambient air pollution using satellite-derived measures of air quality for the contiguous United States. For identification, we rely on an instrumental variable strategy, which induces exogenous variation in density without affecting pollution directly. For this purpose, we use three variables measuring geological characteristics as instruments for density: earthquake risks, soil drainage capacity and the presence of aquifers. We find a positive and statistically significant pollution-density elasticity of 0.13. We also assess the health implications of our findings and find that doubling density in an average city increases annual mortality costs by as much as $630 per capita. Our results suggest that, despite the common claim that denser cities tend to be more environmentally friendly, air pollution exposure is higher in denser cities. This in turn highlights the possible trade-off between reducing global greenhouse gas emissions and preserving environmental quality within cities. |
| Keywords: | air pollution, urban congestion, density, health |
| JEL: | Q53 R11 I10 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1635&r=all |
| By: | Lars Sorge; Anne Neumann |
| Abstract: | This paper analyzes the impact of urbanization on CO2 emissions within the STIRPAT framework over the period 1971 to 2014 for a panel of 76 countries clustered into income groups. Using dynamic panel estimations techniques, the empirical results robustly show an inverted N-shaped relationship between urbanization and CO2 emissions in the long-term associated with the ecological modernization theory in particular for the lower- and middle-income panel: increasing levels of urbanization tend to reduce CO2 emissions in the long-term. The estimated turning point for the urbanization ratio after which CO2 emissions decline is almost identical and around 54% both for the lower- and middle-income panel. The long-term relationship for CO2 emissions and its relevant impact factors tends to be similar across groups. The impact of population determines CO2 emissions significantly only in the long-term within any panel. Different from previous studies, the results robustly indicate that GDP per capita does impact CO2 emissions greater than population in any panel. This suggests, that it is rather the growth in consumption than the number of people leading CO2 emissions to increase. Energy efficiency reductions most harmfully effect CO2 emissions within the high-income panel in the long- and short-run. |
| Keywords: | STIRPAT, carbon dioxide emissions, urbanization, ecological modernization, level of economic development, panel data data methods |
| JEL: | Q5 Q43 R11 C23 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1812&r=all |
| By: | Lars Sorge; Anne Neumann; Christian von Hirschhausen; Ben Wealer |
| Abstract: | This paper analyzes the nature of democratic development in a nation on the process of introducing nuclear power over the period 1960 - 2017 for an unbalanced panel of 171 countries. Given the involved political process of introducing nuclear power and its political importance, as well as the current tendency of about 30 countries to “go nuclear”, this question is both of historic and current interest. We apply a multinomial logistic regression approach that relates the likelihood of a country to introduce nuclear power to its level of democratic quality and nuclear warhead possession. The model results suggest that countries with lower levels of democratic development are more likely to introduce nuclear power. Our results moreover indicate that countries which possess at least one nuclear warhead are more likely to continue to use nuclear power instead of not using nuclear power at all. We discuss these results in the context of the public policy debate on nuclear power, yet beyond energy and environmental issues addressing international relations, conflict, and security issues connected to nuclear energy. |
| Keywords: | Nuclear power, nuclear warhead, democracy, multinomial logit, panel data |
| JEL: | P48 Q34 Q01 C35 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1811&r=all |
| By: | Frédérique Bec (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique); Heino Bohn Nielsen (Department of Economics - University of Copenhagen - KU - University of Copenhagen = Københavns Universitet); Sarra Saïdi (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper stresses the bimodality of the widely used Student's t likelihood function applied in modelling Mixed causal-noncausal AutoRegressions (MAR). It first shows that a local maximum is very often to be found in addition to the global Maximum Likelihood Estimator (MLE), and that standard estimation algorithms could end up in this local maximum. It then shows that the issue becomes more salient as the causal root of the process approaches unity from below. The consequences are important as the local maximum estimated roots are typically interchanged , attributing the noncausal one to the causal component and vice-versa, which severely changes the interpretation of the results. The properties of unit root tests based on this Student's t MLE of the backward root are obviously affected as well. To circumvent this issues, this paper proposes an estimation strategy which i) increases noticeably the probability to end up in the global MLE and ii) retains the maximum relevant for the unit root test against a MAR stationary alternative. An application to Brent crude oil price illustrates the relevance of the proposed approach. Keywords: Mixed autoregression, non-causal autoregression, maximum likelihood estimation, unit root test, Brent crude oil price. |
| Date: | 2019–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02175760&r=all |
| By: | Cédric Clastres (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Jacques Percebois (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier - UM3 - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CEC - Chaire Economie du Climat - Université Paris-Dauphine, PSL Research University); Olivier Rebenaque (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes, CEC - Chaire Economie du Climat - Université Paris-Dauphine, PSL Research University); Boris Solier (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier - UM3 - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CEC - Chaire Economie du Climat - Université Paris-Dauphine, PSL Research University) |
| Abstract: | The deployment of renewable energies relies upon incentive policies to make their use profitable for the owner. Increasing costs of renewable support result in rising public service obligation tariffs to fund these policies. The photovoltaic prosumption could help decreasing the cost of developing renewables but induces cross-subsidies between prosumers and other users of the network that may compensate the benefits. We show that such cross-subsidies do occur but are dependent on the self-consumption rate that will remain low in the coming years. The regulator could fund these cross-subsidies by increasing the fixed part of the network tariff for prosumers only. |
| Keywords: | network tariff,cross-subsidies,self-consumption |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02146533&r=all |
| By: | Holowach, Monique C.; Parkins, John; Anders, Sven M.; Meyerhoff, Juergen |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291103&r=all |
| By: | Holmberg, P.; Ritz, R. |
| Abstract: | Capacity mechanisms are increasingly used in electricity market design around the world yet their role remains hotly debated. In this paper, we introduce a new benchmark model of a capacity mechanism in a competitive electricity market with many different generation technologies. We consider two policy instruments, a wholesale price cap and a capacity payment, and show which combinations of these instruments induce socially-optimal investment by the market. Changing the price cap or capacity payment affects investment only in peak generation plant, with no equilibrium impact on baseload or mid-merit plant. We obtain a rationale for a capacity mechanism based on the internalization of a system-cost externality – even where the price cap is set at the value of lost load. In extensions, we show how increasing renewables penetration enhances the need for a capacity mechanism, and outline an optimal design of a strategic reserve with a discriminatory capacity payment. |
| Keywords: | Investment, wholesale electricity market, capacity mechanism, capacity auction, strategic reserve |
| JEL: | D41 L94 |
| Date: | 2019–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1960&r=all |
| By: | Christensen, Peter; Francisco, Paul; Myers, Erica; Nogueira Meirelles De Souza, Mateus |
| Keywords: | Resource/ Energy Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291226&r=all |
| By: | Stoerk, Thomas; Wagner, Gernot; Ward, Robert E. T. |
| Abstract: | Large discrepancies persist between projections of the physical impacts of climate change and economic damage estimates. These discrepancies increase with increasing global average temperature projections. Based on this observation, we recommend that in its Sixth Assessment Report (AR6), the Intergovernmental Panel on Climate Change (IPCC) improve its approach to the management of the uncertainties inherent in climate policy decisions. In particular, we suggest that the IPCC: (i) strengthen its focus on applications of decision-making under risk, uncertainty, and outright ambiguity; and (ii) estimate how the uncertainty itself affects its economic and financial cost estimates of climate damage and, ultimately, the optimal price for each ton of carbon dioxide released. Our hope is that by adopting these recommendations, AR6 will be able to resolve some of the documented inconsistencies in estimates of the physical and economic impacts of climate change and more effectively fulfill the IPCC’s mission to provide policy-makers with a robust and rigorous approach for assessing the potential future risks of climate change. |
| Keywords: | climate change; global warming; damages; risk; uncertainty; unknowns; ES/K006576/1 |
| JEL: | D81 Q54 |
| Date: | 2018–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87957&r=all |
| By: | Dana Kassem |
| Abstract: | I ask whether electrification causes industrial development. I combine newly digitized data from the Indonesian state electricity company with rich manufacturing census data. To understand when and how electrification can cause industrial development, I shed light on an important economic mechanism - firm turnover. In particular, I study the effect of the extensive margin of electrification (grid expansion) on the extensive margin of industrial development (firm entry and exit). To deal with endogenous grid placement, I build a hypothetical electric transmission grid based on colonial incumbent infrastructure and geographic cost factors. I find that electrification causes industrial development, represented by an increase in the number of manufacturing firms, manufacturing workers, and manufacturing output. Electrification increases firm entry rates, but also exit rates. Empirical tests show that electrification creates new industrial activity, as opposed to only reorganizing industrial activity across space. Higher turnover rates lead to higher average productivity and induce reallocation towards more productive firms in electrified areas. This is consistent with electrification lowering entry costs, increasing competition and forcing unproductive firms to exit more often. Without the possibility of entry or competitive effects of entry, the effects of electrification are likely to be smaller. |
| JEL: | D24 L60 O13 O14 Q41 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2018_052_1&r=all |
| By: | Dana Kassem |
| Abstract: | I ask whether electrification causes industrial development. I combine newly digitized data from the Indonesian state electricity company with rich manufacturing census data. To understand when and how electrification can cause industrial development, I shed light on an important economic mechanism - firm turnover. In particular, I study the effect of the extensive margin of electrification (grid expansion) on the extensive margin of industrial development (firm entry and exit). To deal with endogenous grid placement, I build a hypothetical electric transmission grid based on colonial incumbent infrastructure and geographic cost factors. I find that electrification causes industrial development, represented by an increase in the number of manufacturing firms, manufacturing workers, and manufacturing output. Electrification increases firm entry rates, but also exit rates. Empirical tests show that electrification creates new industrial activity, as opposed to only reorganizing industrial activity across space. Higher turnover rates lead to higher average productivity and induce reallocation towards more productive firms in electrified areas. This is consistent with electrification lowering entry costs, increasing competition and forcing unproductive firms to exit more often. Without the possibility of entry or competitive effects of entry, the effects of electrification are likely to be smaller. |
| JEL: | D24 L60 O13 O14 Q41 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2019_052_2&r=all |
| By: | Kuralbayeva, Karlygash |
| Abstract: | This paper develops a general equilibrium model that incorporates specific features pertaining to developing countries: a large informal sector and rural-urban migration. A calibrated version of the model is used to study the effects of energy tax changes and a reduction in agricultural-sector energy subsidies on labor market outcomes. The results indicate that the incidence of energy taxes is partly shifted on to the rural sector through rural-urban migration. The results thus highlight the importance of modeling the features particular to developing countries and the economic general equilibrium effects when assessing the impact of environmental taxation in those countries. |
| Keywords: | informal sector; matching frictions; energy taxes; subsidies; rural-urban migration |
| JEL: | H20 H23 H30 |
| Date: | 2018–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:76561&r=all |
| By: | Mary O. Agboola (Riyadh, Saudi Arabia); Festus V. Bekun (Eastern Mediterranean University, Turkey) |
| Abstract: | This study empirically investigates the agriculture-induced environmental Kuznets curve (EKC) hypothesis in an agrarian framework. Annual time series data from 1981–2014 was employed using Augmented Dickey–Fuller and the Phillips–Perron (PP) unit root test complemented by the Zivot and Andrews unit root test that accounts for a single structural break to ascertain stationarity properties of variables under consideration. For the cointegration analysis, an autoregressive distributive lag methodology and the recent novel Bayer and Hanck combined cointegration technique is employed. For the direction of causality, the Granger causality test is used as estimation technique. Empirical findings lend support for the long-run equilibrium relationship among the variables under consideration. This study also validates the inverted U-shaped pattern of EKC for the case of Nigeria, affirming that Nigeria remains at the scale-effect stage of its growth trajectory. Further empirical results show that foreign direct investment attraction helps mitigate carbon emissions in Nigeria. Based on these results, several policy prescriptions on the Nigerian energy mix and agricultural operations in response to quality of the environment were suggested for policymakers, stakeholders, and environmental economists that formulate and design environmental regulations and strategies to realise the Goal 7 of sustainable development goals (SDGs). |
| Keywords: | Agriculture ecosystem, Energy consumption, Granger Causality, EKC, Nigeria |
| JEL: | C32 Q1 Q4 Q5 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:19/040&r=all |
| By: | Högl, Maximilian |
| Abstract: | Interdisciplinary research shows that, in contrast to the assumptions of the “homo oeconomicus” paradigm, human beings frequently cooperate in the face of common-pool resource problems and public-good dilemmas. Seven factors that drive cooperation in these scenarios have been found: trust, communication, reputation, fairness, enforcement, we-identity and reciprocity. However, can these insights be transferred to the discipline of international relations, where not just individuals, but also nation states interact? As climate change constitutes a global-scale, common-pool resource problem, climate negotiations provide a great playing ground to examine the transferability of the theory of enabling factors for cooperation to the level of international relations. This paper undertakes a first attempt at this, comparing two high-level climate summits: COP 15, which took place in Copenhagen in 2009, and COP 21, which was held in Paris in 2015. It is asked whether it is plausible to argue that the failure of COP 15 to produce a generally accepted agreement and the respective success of COP 21 can be explained by a change in the provision of enabling factors for cooperation? A mixed methodological approach is applied: Interviews with official country delegates representing developing and developed countries are conducted as a first step, and the reports of the Earth Negotiations Bulletin (ENB) are analysed as a second step. Although the cooperation patterns and rates of reciprocation can be examined and visualised based on a coding system of the ENB reports, the interviews provide a deeper understanding of the causality behind the observations. The major changes between COP 15 and COP 21 took place in the fields of communication and trust, enforcement and fairness, reputation and reciprocity. The factors communication and trust are strongly affected by the performance of the COP presidency, which has the role of facilitating the process. The negotiations during COP 15 were perceived as being non-transparent and exclusive, which resulted in a lack of trust towards the presidency. Furthermore, a high envisaged level of enforcement in the form of a “global deal” with legally binding emission-reduction obligations resulted in distributional conflicts. A situation of mutual blame-shifting and exclusively negatively reciprocal relations between developed and developing countries ensued. During COP 21, in contrast, the presidency built trust by communicating transparently and cultivating a manner of listening to all parties equally. The envisaged level of enforcement was lowered, and the allowance for self-differentiation based on “nationally determined contributions” sidelined impeding fairness debates. Reputation was used as a negotiation strategy, and several positive reciprocal relations between developed and developing countries emerged, maintaining and deepening cooperation. Even though climate negotiations are shaped by many exogenous factors, it can be argued that an agreement in Paris would not have been possible without these changes in the provision of enabling factors for cooperation. Besides these major findings, this paper provides evidence for the role of informal communication and personal relations at the negotiations. Therefore, it also offers interesting insights into the behind-the-scenes dynamics that are not captured in official reports. |
| Keywords: | Regionale + globale + transnationale Governance,Klimawandel |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:diedps:142018&r=all |
| By: | Mary O. Agboola (Riyadh, Saudi Arabia); Festus V. Bekun (Eastern Mediterranean University, Turkey) |
| Abstract: | This study empirically investigates the agriculture-induced environmental Kuznets curve (EKC) hypothesis in an agrarian framework. Annual time series data from 1981–2014 was employed using Augmented Dickey–Fuller and the Phillips–Perron (PP) unit root test complemented by the Zivot and Andrews unit root test that accounts for a single structural break to ascertain stationarity properties of variables under consideration. For the cointegration analysis, an autoregressive distributive lag methodology and the recent novel Bayer and Hanck combined cointegration technique is employed. For the direction of causality, the Granger causality test is used as estimation technique. Empirical findings lend support for the long-run equilibrium relationship among the variables under consideration. This study also validates the inverted U-shaped pattern of EKC for the case of Nigeria, affirming that Nigeria remains at the scale-effect stage of its growth trajectory. Further empirical results show that foreign direct investment attraction helps mitigate carbon emissions in Nigeria. Based on these results, several policy prescriptions on the Nigerian energy mix and agricultural operations in response to quality of the environment were suggested for policymakers, stakeholders, and environmental economists that formulate and design environmental regulations and strategies to realise the Goal 7 of sustainable development goals (SDGs). |
| Keywords: | Agriculture ecosystem, Energy consumption, Granger Causality, EKC, Nigeria |
| JEL: | C32 Q1 Q4 Q5 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:19/040&r=all |
| By: | Chen, Luoye; Khanna, Madhu; Blanc, Elena; Hudiburg, Tara; DeLucia, Evan |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291091&r=all |