nep-ene New Economics Papers
on Energy Economics
Issue of 2019‒10‒28
thirty-six papers chosen by
Roger Fouquet
London School of Economics

  1. Squaring the energy efficiency circle: evaluating industry energy efficiency policy in a hybrid model setting By Andersen, Kristoffer Steen; Dockweiler, Steffen; Klinge Jacobsen, Henrik
  2. Additionality, Mistakes, and Energy Efficiency Investment By Ben Gilbert; Jacob LaRiviere; Kevin Novan
  3. The Economics of Energy Efficiency, a Historical Perspective By Louis-Gaëtan Giraudet; Antoine Missemer
  4. Energy sources, environment and public health By Vladimir Grachev; Natalia Kurysheva
  5. The Conditional Relationship between Renewable Energy and Environmental Quality in Sub-Saharan Africa By Simplice A. Asongu; Chimere O. Iheonu; Kingsley O. Odo
  6. Costs of increasing oil and gas setbacks are initially modest but rise sharply By Sean J. Ericson; Daniel T. Kaffine; Peter Maniloff
  7. Be Cautious with the Precautionary Principle: Evidence from Fukushima Daiichi Nuclear Accident By Neidell, Matthew; Uchida, Shinsuke; Veronesi, Marcella
  8. Empowering Residential Customers to Benefit from Net Metering in the Power Market of Georgia By Ekaterine Maglakelidze; Eka Gegeshidze; Maia Veshaguri; Natia Kamushadze
  9. Resource Curse Hypothesis and Role of Oil Prices in USA By Shahbaz, Muhammad; Ahmed, Khalid; Tiwari, Aviral Kumar; Jiao, Zhilun
  10. The Electric Gini: Income Redistribution through Energy Prices By Arik Levinson; Emilson Silva
  11. Oil Curse, Economic Growth and Trade Openness By Vespignani, Joaquin; Raghavan, Mala; Majumder, Monoj Kumar
  12. Multi-Stage Compound Real Options Valuation in Residential PV-Battery Investment By Yiju Ma; Kevin Swandi; Archie Chapman; Gregor Verbic
  13. Why firms invest (or not) in energy efficiency? A review of the econometric evidence By Jose García-Quevedo; Xavier Massa-Camps
  14. Digestate Evaporation Treatment in Biogas Plants: A Techno-economic Assessment by Monte Carlo, Neural Networks and Decision Trees By Vondra, Marek; Touš, Michal; Teng, Sin Yong
  15. Pollution in a globalized world: Are debt transfers among countries a solution? By Marion Davin; Mouez Fodha; Thomas Seegmuller
  16. Electricity market competition when forward contracts are pairwise efficient By Van Moer, Geert
  17. Energy poverty measures and the identification of the energy poor: A comparison between the utilitarian and multidimensional approaches in Chile By Carlos Villalobos Barría; Carlos Chávez; Adolfo Uribe
  18. Effects of Oil Resource Endowment, Natural Gas and Agriculture Output: Policy Options for Inclusive Growth By Ekundayo P. Mesagan; Juliet I. Adenuga
  19. Effects of Using JP8-Diesel Fuel Mixtures in a Pump Injector Engine on Engine Emissions By Hasan AYDOGAN; Emin Cagatay ALTINOK
  20. Oil Bonanza and the Composition of Government Expenditure By Okada, Keisuke; Samreth, Sovannroeun
  21. Demand response within the energy-for-water-nexus: A review By Kirchem, Dana; Lynch, Muireann Á; Casey, Eoin; Bertsch, Valentin
  22. Energy Performance certificates and its capitalization in housing values in Sweden By Wilhelmsson, Mats
  23. Economic Dynamics with Renewable Resources and Pollution By Dam, My; Ha-Huy, Thai; Le Van, Cuong; Nguyen, Thi Tuyet Mai
  24. Consumer preferences for end-use specific curtailable electricity contracts on household appliances during peak load hours By Bertsch, Valentin; Harold, Jason; Fell, Harrison
  25. Convex Relaxation Based Locational Marginal Prices By Anna Winnicki; Mariola Ndrio; Subhonmesh Bose
  26. Sources of Economic Growth in Models with Non-Renewable Resources By Sriket, Hongsilp; Suen, Richard M. H.
  27. Understanding preference heterogeneity in electricity services: the case of domestic appliance curtailment contracts By Curtis, John; Brazil, William; Harold, Jason
  28. Lenkung, Aufkommen, Verteilung: Wirkungen von CO2-Bepreisung und Rückvergütung des Klimapakets By Stefan Bach; Niklas Isaak; Claudia Kemfert; Nicole Wägner
  29. A spatiotemporal framework for the analytical study of optimal growth under transboundary pollution By Raouf Boucekkine; Giorgio Fabbri; Salvatore Federico; Fausto Gozzi
  30. Recent Increases in Air Pollution: Evidence and Implications for Mortality By Karen Clay; Nicholas Z. Muller
  31. Markov-switching score-driven multivariate models: outlier-robust measurement of the relationships between world crude oil production and US industrial production By Licht, Adrian; Escribano, Álvaro; Blazsek, Szabolcs
  32. Assessing Oil and Non-Oil GDP Growth from Space: An Application to Yemen 2012-17 By Majdi Debbich
  33. The Amazon Is a Carbon Bomb: How Can Brazil and the World Work Together to Avoid Setting It Off? By Monica de Bolle
  34. A new rationale for not picking low hanging fruits: The separation of ownership and control By Denis Claude; Mabel Tidball
  35. Macroeconomic Effects of Reforms on Three Diverse Oil Exporters: Russia, Saudi Arabia, and the UK By Samya Beidas-Strom; Marco Lorusso
  36. Assessing the Benefits of Air-Quality Improvements in General Equilibrium: A Review By Jared C.Carbone; Yuzhou Shen

  1. By: Andersen, Kristoffer Steen; Dockweiler, Steffen; Klinge Jacobsen, Henrik
    Abstract: Improving energy efficiency within the industry will play a central role in mitigating greenhouse gas emissions by reducing the use of fossil fuels. Nevertheless, the ex-ante evaluation of energy-efficiency policies largely remains an unresolved challenge. Understood within a theoretical economic framework, the root of the challenge is the simultaneity and interaction between three primary effects: an activity, a price, and a technical effect. This paper demonstrates how the IntERACT model, a Danish hybrid model, captures each effect and their interactions endogenously. The paper finds that a specific energy efficiency policy leads to an additional reduction in industrial energy use of around 5% in the year 2030, of which a policy-induced reduction in the energy efficiency gap accounts for half. The results reflect a total rebound effect of 12.5% and an implied elasticity of energy service demand of 16 around 15% across industrial sectors.
    Keywords: Energy systems analysis; sectoral energy efficiency modelling; energy efficiency policies; energy savings
    JEL: H20 O52 Q38 Q41 Q43 Q48
    Date: 2019–09
  2. By: Ben Gilbert (Division of Economics and Business, Colorado School of Mines); Jacob LaRiviere (Microsoft, University of Tennessee and University of Washington); Kevin Novan (Department of Agricultural and Resource Economics, University of California, Davis)
    Abstract: Investment subsidies, like those for energy efficiency upgrades, often suffer from poor additionality. Using a novel theoretical model, we show when benefits from investments are uncertain, subsidy policies can also lead to inefficient investment decisions that don't pass the full information benefit cost test. We use a unique household-level dataset of energy efficiency audits and investments to test model predictions. We find that households are significantly more likely to schedule audits and installs when first moving into an existing home when, ironically, information uncertainty is greatest. We then build on the theoretical model to inform better policy design.
    Keywords: Durable Goods, Learning, Electricity, Second Best
    JEL: Q D
    Date: 2019–06
  3. By: Louis-Gaëtan Giraudet (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, ENPC - École des Ponts ParisTech); Antoine Missemer (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique)
    Abstract: Energy efficiency can be considered as a central pillar of global warming mitigation, with important co-benefits, including productivity gains, resource conservation or national security. It is also a subject of controversy between engineers and economists, who have divergent conceptions of the notion of optimality that delineates energy efficiency potentials. Modern surveys hardly go back beyond the 1970s and do not fully explore the reasons and conditions for the persistent differences between economists' and engineers' views. This paper provides such a historical account, investigating the positioning of economic analysis in contrast to the technical expertise on key energy efficiency topics – the rebound effect, the energy efficiency gap, and green nudges, from the 19th century to the present day. It highlights the permanence and evolution in the relationship that economists have had with technical expertise. An extension of the current conceptual framework is finally provided to connect our historical findings with avenues for future research.
    Keywords: engineering,nudge,history of economic thought,energy efficiency,market barriers and failures
    Date: 2019
  4. By: Vladimir Grachev (Lomonosov Moscow State University); Natalia Kurysheva (Burnasyan Federal Medical Biophysical Center, Moscow)
    Abstract: The paper discusses the issue of the impact of various energy technologies on public health since the matter is pressing due to the emergence of new ways to harness energy such as waste incineration. The study shows that coal energy, waste incineration, and transport emissions are major hazards to public health. The study reveals nuclear energy is the most environmentally efficient and has the least adverse impact on public health. The paper demonstrates that the use of waste to generate energy is extremely dangerous for public health and can cause emission of polychlorinated dibenzodioxins, which poses a serious hazard. The paper postulates it is uncertain whether waste incineration is beneficial in terms of energy, but it is dangerous for sure. According to the paper, the use of conventional motor fuels is also hazardous due to benzopyrene emissions. Therefore, it is better to use the energy harnessed at nuclear or gas power plants to fir motor vehicles.
    Keywords: public health, natural gas, polychlorinated dibenzodioxins, nuclear, municipal solid waste, air pollution, benzopyrene
    JEL: Q42 Q53 I00
    Date: 2019–10
  5. By: Simplice A. Asongu (Yaoundé/Cameroon); Chimere O. Iheonu (University of Nigeria, Nsukka, Nigeria); Kingsley O. Odo (University of Nigeria, Nsukka, Nigeria)
    Abstract: This paper complements existing literature by assessing the conditional relationship between renewable energy and environmental quality in a sample of 40 African countries for the period 2002 to 2017. The empirical evidence is based on fixed effects regressions and quantile fixed effects regressions. The findings from both estimation techniques show that renewable energy consistently decreases carbon dioxide (CO2) emissions. Moreover, the negative effect is a decreasing function of CO2 emissions or the negative effect of renewable energy on CO2 emissions decreases with increasing levels of CO2 emissions. In other words, countries with higher levels of CO2 emissions consistently experience a less negative effect compared to their counterparts with lower levels of CO2 emissions. Policy implications are discussed.
    Keywords: Panel econometrics; Renewable energy; Carbon emissions; Africa
    JEL: Q32 Q40 O55
    Date: 2019–01
  6. By: Sean J. Ericson (Department of Economics, University of Colorado - Boulder); Daniel T. Kaffine (Department of Economics, University of Colorado - Boulder); Peter Maniloff (Division of Economics and Business, Colorado School of Mines)
    Abstract: Spatial setback rules are a common form of oil and gas regulation worldwide - they require minimum distances between oil and gas operations and homes and other sensitive locations. While setbacks can reduce exposure to potential harms associated with oil and gas production, they can also cause substantial quantities of oil and gas resources to be unavailable for extraction. Using both theoretical modeling and spatial analysis with GIS tools on publicly available data, we determine oil and gas resource loss under different setback distances, focusing on Colorado counties as a case study. We show that increasing setbacks results in small resource loss for setbacks up to 1500 feet, but resource loss quickly increases with longer setbacks. Approximately $5 billion in annual resource revenues would be lost in Colorado under 2500-foot setbacks, a distance recently proposed in Colorado Proposition 112 and California AB 345.
    Keywords: oil and gas, setbacks, fracking, local air pollution
    JEL: Q48 Q53 Q58
    Date: 2019–10
  7. By: Neidell, Matthew (Columbia University); Uchida, Shinsuke (Nagoya City University); Veronesi, Marcella (University of Verona)
    Abstract: This paper provides a large scale, empirical evaluation of unintended effects from invoking the precautionary principle after the Fukushima Daiichi nuclear accident. After the accident, all nuclear power stations ceased operation and nuclear power was replaced by fossil fuels, causing an exogenous increase in electricity prices. This increase led to a reduction in energy consumption, which caused an increase in mortality during very cold temperatures. We estimate that the increase in mortality from higher electricity prices outnumbers the mortality from the accident itself, suggesting the decision to cease nuclear production has contributed to more deaths than the accident itself.
    Keywords: precuationary principle, nuclear energy, electricity, mortality
    JEL: I12 K32 Q41
    Date: 2019–10
  8. By: Ekaterine Maglakelidze (The University of Georgia (UG)); Eka Gegeshidze (The University of Georgia (UG)); Maia Veshaguri (Ivane Javakhishvili Tbilisi State University (TSU)); Natia Kamushadze (Georgian National Energy and Water Supply Regulatory Commission (GNERC))
    Abstract: We continue the series of investigations of the benefits from Demand Side Response (DSR) programme(s) and at present We will concentrate on Net Metering (NEM), as marketing tool, in replacing uneconomic investments in costly power generation and, thus, achieving efficiency goals, with case studies from three residential customers involved in retail-rate NEM.The purpose of our study is twofold: the first is to demonstrate that residential customers in Georgia can save money on their utility bills every year by making excess electricity with their rooftop solar panel systems and sending it back to the grid if they are involved in retail-rate net energy metering program; and the second is to demonstrate that demand flexibility is the most promising and intuitively workable new frontier maximizing the use of renewable approaches. For Georgia, solar is often a solution suitable for the geographical needs of remote communities. While some claim that net metering represents an unfair burden on non-solar electricity customers, Our net metering cost-benefit studies have found the opposite to be true.To meet research objectives 3 (three) case studies have been conducted. Study participants were three residential customers using NEM to export generated excess electricity to the Distribution System Operator (DSO) JSC ?Telasi? that interconnects 358,14kW of the new solar capacity in its service territory (Tbilisi, capital of Georgia) and contributes 49% of total solar capacity (739,75kW) generated by NEM. Their names cannot be divulged due to the confidentiality requirements. To conduct the cost-benefit analyses, We specifically requested the utility to submit data in alternative current (ac) to track the actual solar capacity received by the grid from the study participants between January 31 and December 31, 2018. For the purposes of analyses, We have supplemented survey data with additional information including Georgian National Energy and Water Supply Regulatory Commission (GNERC) resolutions, and the bidding materials obtained from the private company Electroni, Ltd.Under the study the following research hypothesis has been tested: ?Residential customers can benefit from retail-rate net energy metering if they choose to participate in this residential demand response (RDR) program but yet the benefits are not substantial due to the net metering compensation structure and the market barriers to entry.? Our cost-benefit analyses revealed that net metering can save residential customers hundreds of dollars on their utility bills every year, so it?s a good reason to make the money-saving choice.
    Keywords: Residential Demand Response (RDR), Net Metering (NEM), Distributed Energy Resources (DERs), Demand Side Response (DSR), Energy efficiency (EE)
    JEL: D19 M31 Q21
    Date: 2019–10
  9. By: Shahbaz, Muhammad; Ahmed, Khalid; Tiwari, Aviral Kumar; Jiao, Zhilun
    Abstract: This paper employs an augmented production function to examine resource curse hypothesis by incorporating oil prices as an additional determinant of economic growth. In doing so, the bounds testing approach to cointegration is applied in the presence of structural breaks in the series. The directional of causal association between the variables is examined by applying the VECM Granger causality approach. The empirical results show the existence of long run relationship between the variables. Moreover, natural resource abundance is negatively linked with economic growth confirms the validation of resource curse hypothesis. The nonlinear relationship between natural resource abundance and economic growth is inverted U-shaped. Oil prices add in economic growth. Capitalization increases economic growth. Labor boosts economic growth. The causality analysis reveals the unidirectional causal relationship running from natural resource abundance to economic growth. The feedback effect exists between oil prices and economic growth. Capitalization causes economic growth and in return, economic growth causes capitalization in Granger sense.
    Keywords: Natural Resources, Economic Growth, Oil Prices, USA
    JEL: E0
    Date: 2019–10–06
  10. By: Arik Levinson; Emilson Silva
    Abstract: Efficient electricity pricing involves two-part tariffs: a volumetric price equal to the marginal cost of producing an additional kilowatt hour (kWh) and a fixed fee to cover any remaining fixed costs. In this paper we explore how US electricity regulators depart from this simple two-part tariff to address concerns about income inequality. We first show that in theory, price setters concerned about inequality will charge lower fixed monthly fees and higher per-kWh prices, and increasing block prices to target higher users with even higher prices. Then we use a new dataset of 1,300 utilities across the US to show that these theoretical predictions are borne out in practice. Utilities whose ratepayers have more unequal incomes levy more redistributive tariffs, charging less to low users and more to high users. To quantify these comparisons, we develop a new measure of the redistributive extent of utility tariffs that we call the “electric Gini.” Utilities with higher electric Ginis (more redistributive tariffs) shift costs from households that use relatively little electricity to households that use more. But because electricity use is only loosely correlated with income, that redistribution does not meaningfully shift costs from households with low incomes to those with high incomes.
    JEL: Q41 Q48
    Date: 2019–10
  11. By: Vespignani, Joaquin (Tasmanian School of Business & Economics, University of Tasmania); Raghavan, Mala (Tasmanian School of Business & Economics, University of Tasmania); Majumder, Monoj Kumar (Tasmanian School of Business & Economics, University of Tasmania)
    Abstract: An important economic paradox that frequently arises in the economic literature is that countries with abundant natural resources are poor in terms of real gross domestic product per capita. This paradox, known as the ‘resource curse’, is contrary to the conventional intuition that natural resources help to improve economic growth and prosperity. Using panel data for 95 countries, this study revisits the resource curse paradox in terms of oil resources abundance for the period 1980–2017. In addition, the study examines the role of trade openness in influencing the relationship between oil abundance and economic growth. The study finds that trade openness is a possible avenue to reduce the resource curse. Trade openness allows countries to obtain competitive prices for their resources in the international market and access advanced technologies to extract resources more efficiently. Therefore, natural resource–rich economies can reduce the resource curse by opening themselves to international trade.
    Keywords: Oil rents, real GDP per capita, trade openness, dynamic panel data model
    JEL: E23 F13 Q43
    Date: 2019
  12. By: Yiju Ma; Kevin Swandi; Archie Chapman; Gregor Verbic
    Abstract: Strategic valuation of efficient and well-timed network investments under uncertain electricity market environment has become increasingly challenging, because there generally exist multiple interacting options in these investments, and failing to systematically consider these options can lead to decisions that undervalue the investment. In our work, a real options valuation (ROV) framework is proposed to determine the optimal strategy for executing multiple interacting options within a distribution network investment, to mitigate the risk of financial losses in the presence of future uncertainties. To demonstrate the characteristics of the proposed framework, we determine the optimal strategy to economically justify the investment in residential PV-battery systems for additional grid supply during peak demand periods. The options to defer, and then expand, are considered as multi-stage compound options, since the option to expand is a subsequent option of the former. These options are valued via the least squares Monte Carlo method, incorporating uncertainty over growing power demand, varying diesel fuel price, and the declining cost of PV-battery technology as random variables. Finally, a sensitivity analysis is performed to demonstrate how the proposed framework responds to uncertain events. The proposed framework shows that executing the interacting options at the optimal timing increases the investment value.
    Date: 2019–10
  13. By: Jose García-Quevedo (Universitat de Barcelona & Institut d’Economia de Barcelona (IEB)); Xavier Massa-Camps (Universitat de Barcelona)
    Abstract: The motives that firms have for investing in energy efficiency have been widely analysed in the literature. Particularly, there is a huge literature on barriers to energy efficiency investment and adoption. This paper reviews the econometric analyses carried out in this field. The main objective is to provide a general overview of the state of the econometric literature on the barriers and drivers of energy efficiency. We examine the main features of these studies and particularly the results of the explanatory variables used. We have classified them into three groups, barriers, drivers and firm characteristics. The paper ends with some suggestions for further analysis in order to improve our knowledge of energy efficiency investment.
    Keywords: Energy efficiency, Literature review
    JEL: Q40 C01
    Date: 2019
  14. By: Vondra, Marek; Touš, Michal; Teng, Sin Yong
    Abstract: Biogas production is one of the most promising pathways toward fully utilizing green energy within a circular economy. The anaerobic digestion process is the industry standard technology for biogas production due to its lowered energy consumption and its reliance on microbiology. Even in such an environmental-friendly process, liquid digestate is still produced from the remains of digested bio-feedstock and will require treatment. With unsuitable treatment procedure for liquid digestate, the mass of bio-feedstock can potentially escape the circular supply chain within the economy. This paper recommends the implementation of evaporator systems to provide a sustainable liquid digestate treating mechanism within the economy. Studied evaporator systems are represented by vacuum evaporation in combination with ammonia scrubber, stripping and reverse osmosis. Nevertheless, complex multi-dimensional decisions should be made by stakeholders before implementing such systems. Our work utilizes a novel techno-economics model to study the techno-economics robustness in implementing recent state-of-art vacuum evaporation systems with exploitation of waste heat from combined heat and power (CHP) units in biogas plants (BGP). To take into the account the stochasticity of the real world and robustness of the analysis, we used the Monte-Carlo simulation technique to generate more than 20,000 of different possibilities for the implementation of the evaporation system. Favourable decision pathways are then selected using a novel methodology which utilizes the artificial neural network and a hyper-optimized decision tree classifier. Two pathways that give the highest probability of providing a fast payback period are identified. Descriptive statistics are also used to analyse the distributions of decision parameters that lead to success in implementing the evaporator system. The results highlighted that integration of evaporation system are favourable when transport costs and incentives for CHP units are large and while feed-in tariffs for electricity production and specific investment costs are low. The result of this work is expected to pave the way for BGP stakeholders and decision makers in implementing liquid digestate treating technologies within the currently existing infrastructure.
    Keywords: Anaerobic Digestion; Machine Learning; Vacuum Evaporation; Liquid Digestate; Biogas Plant; Energy Consumption; Nutrient Recovery; Circular economy; Ammonium sulphate solution
    JEL: C0 C1 C6 C8 E0 E2 E3 E6 L1 L6 L9
    Date: 2019–09–20
  15. By: Marion Davin (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Mouez Fodha (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Thomas Seegmuller (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article analyzes the impacts of debt relief on production and pollution. We develop a two-country overlapping generations model with environmental externalities, public debts and perfect mobility of assets. Pollutant emissions arise from production, but agents may invest in pollution mitigation. Could debt relief be an efficient tool to encourage less developed countries to engage in the fight against climate change? We consider a decrease of the debt of the poor country balanced by an increase of the richer country's debt. We show that debt relief makes it possible to engage poor countries in the process of pollution abatement. Capital, environmental quality and welfare can increase in both countries. This result relies on the environmental sensitivity and the discount factor in the poor country relative to the rich one: the greater they are the more beneficial the debt relief is.
    Keywords: Capital market integration,Pollution,Abatement,Overlapping generations,Public debt
    Date: 2019–10
  16. By: Van Moer, Geert
    Abstract: This paper investigates competition in electricity markets when each pair of strategic firms exchanges forward obligations pairwise-efficiently. The gains from pairwise trade are specific to the counterparty, which can be horizontally- or vertically-related depending on whether it has access to flexibility in the spot market. The analysis shows that pairwise efficient forward trade rules out a bilateral oligopoly spot market where net buyers and net sellers strategically interact. Firms without flexibility close their position entirely in the forward market. Forward markets serve to absorb renewable energy shocks, even if forward contracts are unobservable and firms are risk-neutral.
    Keywords: Nash-in-Nash bargaining; bilateral oligopoly; renewables
    JEL: D43 L13 L94
    Date: 2019–10–22
  17. By: Carlos Villalobos Barría (Universidad de Talca, Chile); Carlos Chávez (Universidad de Talca / Chile); Adolfo Uribe (Universidad de Talca, Chile)
    Abstract: This work explores the consequences that different energy poverty definitions might have in the energy policy debate. We estimate the ten percent rule index (TPRI) while proposing and measuring a multidimensional energy poverty index (PMEPI). Both indices uses the 2017 National Survey of Public Perception on Energy applied to a sample of 3,500 households in Chile. Although both measures find that the energy poor represents about 15% of the population, energy poverty levels vary differently across the population depending on the employed measure. Moreover, the indices produce different energy poverty rankings across the territory, and most energy poor households are either TPRI poor or PMEPI poor. We found that this discrepancy between both energy poverty measures is mostly explained by territorylinked factors such as public lighting, service quality, service reliability, and thermal comfort. Consequently, an energy poverty analysis based solely on income or energy expenditure information (TPRI) is likely to neglect supply side constraints that are captured by the PMEPI. When identifying and targeting the energy deprived, the conclusion is that both energy poverty measures should not be used as substitutes but as complements.
    Keywords: Energy Poverty; Poverty; Multidimensional Energy Poverty Index, Ten Percent Rules Energy Poverty Index, Affordability, Reliability of Energy Services, Quality of Energy Services
    Date: 2019–10–08
  18. By: Ekundayo P. Mesagan (Pan Atlantic University, Lagos, Nigeria); Juliet I. Adenuga (University of Lagos, Nigeria)
    Abstract: The fact that inclusive growth involves the width of growth, benefit-sharing, and human development pertaining to health care makes this study to examine the impact of crude oil, natural gas and agriculture output on inclusive growth in Nigeria between 1970 and 2017. We use employment, life expectancy, and income per capita to capture inclusive growth, from where we compute inclusive growth index using the Principal Component Analysis. The result of the Autoregressive Distributed Lag suggests that crude oil and natural gas production insignificantly impact inclusive growth while agriculture output is significant. It means that oil resource wealth has neither been maximised to widen growth contribution nor used to deepen the growth spread in Nigeria whereas the agriculture resource is critical for inclusive growth. It is important to focus on expanding human capacity by improving employment, health care delivery, and investing in modular mechanised farming for agriculture graduates to promote inclusive growth.
    Keywords: Crude Oil Production; Natural Gas; Agriculture Output; Inclusive Growth
    JEL: O13 Q10 Q32 Q33
    Date: 2019–01
  19. By: Hasan AYDOGAN (Mechanical Engineering Department, Selcuk University); Emin Cagatay ALTINOK (Mechanical Engineering Department, Selcuk University)
    Abstract: JP-8 fuel used in the aviation industry, especially in military fields, is used as a common military fuel between NATO countries. As the basic substance of JP-8 fuel, kerosene flares at high temperatures directly increases aircraft safety and freezing point is around -49 °C, it is advantageous to use easily in fuel systems. In this study, the effects of jp-8 and diesel fuel mixtures on engine emissions were investigated experimentally. A 3-cylinder, four-stroke, turbocharged diesel engine with pump injector fuel system was used for this purpose. 5% JP8 was added to diesel fuel. It was used as a fuel in the engine and the obtained values were analyzed according to the diesel fuel.
    Keywords: JP8, Engine Emissions, Diesel Fuel
    JEL: Q40
    Date: 2019–10
  20. By: Okada, Keisuke; Samreth, Sovannroeun
    Abstract: Government behavior can be impacted by the benefits arising from natural resources. Benevolent government and political leaders may use them to improve the welfare of people, whereas non-benevolent ones may use them for their own interest. As an attempt to examine the effects of the oil bonanza on government behavior in a comprehensive manner, the current study investigates how giant oilfield discoveries affect the size and composition of government expenditure using the data of 148 countries between 1972 and 2008. We find that giant oilfield discoveries significantly increase total government expenditure in the medium and long term, although they do not have an impact in the short term. We also obtain evidence that democracy plays a mediating role in these effects; if the democracy level in a country is mature, the size of total government spending does not increase even when discovering giant oilfields. Considering each category of government expenditure, giant oilfield discoveries significantly increase expenditure on defense and general public services, whereas they decrease expenditure on public order and safety, and economic affairs. Furthermore, giant oilfield discoveries do not have a significant impact on social spending including health, education, and social protection. Finally, giant oilfield discoveries increase the net implicit gasoline subsidy in the long term. These findings enhance our understanding of the effects of oil bonanza on government behavior.
    Keywords: Resource curse; Petroleum; Government expenditure
    JEL: H10 H50 O13
    Date: 2019–10–22
  21. By: Kirchem, Dana; Lynch, Muireann Á; Casey, Eoin; Bertsch, Valentin
    Date: 2019
  22. By: Wilhelmsson, Mats (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: The impact on energy performance certificates on housing prices has been investigated extensively in recent years. However, the results from these investigations are mixed. We add to the literature by more specifically controlling for potential biases by employing a combination of alternative approaches to estimate the causal relationship between house prices and energy performance certificates. We use a traditional hedonic modeling approach, but we are additionally using propensity score methods to be able to compare treated houses with a control group. We also investigate the impact of outliers, spatial dependency, and parameter heterogeneity of our estimates. Moreover, we use quantile regression technique to test the hypothesis that the capitalization effect varies across the price distribution. Our results indicate there is an upward bias if we are not controlling for outlier and selection bias. Regardless of the propensity score method approach, the results are lower than a model (around 3 percent capitalization compared to 6 percent). However, our results do not support that the impact of energy performance certificates varies in the price distribution. Consequently, the certificates are not differently capitalized in the high-end housing price segment. Finally, our results do not support the hypothesis that the energy performance certificate should be more capitalized into house prices in the northern and colder parts of Sweden than in the south of Sweden.
    Keywords: energy performance certificates; climate; hedonic price equation; selection bias; propensity score method
    JEL: Q40 Q50 R30 R38
    Date: 2019–10–18
  23. By: Dam, My; Ha-Huy, Thai; Le Van, Cuong; Nguyen, Thi Tuyet Mai
    Abstract: This article considers a two-sector economy with externalities. In particular,the analysis involves an industrial sector whose production activities have negative effects on the regeneration of a natural resource in the other sector. Without the usual convexity or the super-modularity structure, we prove that the economy evolves to increase the \textit{net gain of stock}, and establish the conditions ensuring the convergence of the economy in the long run.
    Keywords: Ramsey model, two-sector model, renewable resources, pollution
    JEL: C0 C02 Q2
    Date: 2019–08–21
  24. By: Bertsch, Valentin; Harold, Jason; Fell, Harrison
    Date: 2019
  25. By: Anna Winnicki; Mariola Ndrio; Subhonmesh Bose
    Abstract: We propose and analyze semidefinite relaxation based locational marginal prices (RLMPs) for real and reactive power in electricity markets. Our analysis reveals that when the non-convex economic dispatch problem has zero duality gap, the RLMPs exhibit properties similar to locational marginal prices with linearized power flow equations. Otherwise, they behave similar to convex hull prices. Restricted to radial distribution networks, RLMPs reduce to second-order cone relaxation based distribution locational marginal prices. We illustrate our theoretical results on numerical examples.
    Date: 2019–10
  26. By: Sriket, Hongsilp; Suen, Richard M. H.
    Abstract: This paper re-examines the possibility of endogenous long-term economic growth in neoclassical models with non-renewable resources. Instead of using a Cobb-Douglas production function as in most existing studies, we consider a general form in which physical capital is functionally separable from labour and natural resources. It is shown that if the elasticity of substitution between labour and resources is identical to one, then long-term economic growth is endogenous. But if this elasticity is not equal to one, as suggested by empirical studies, then long-term economic growth is entirely driven by an exogenous technological factor.
    Keywords: Non-Renewable Resources; Endogenous Growth; Elasticity of Substitution.
    JEL: O13 O41 Q32
    Date: 2019–09–27
  27. By: Curtis, John; Brazil, William; Harold, Jason
    Date: 2019
  28. By: Stefan Bach; Niklas Isaak; Claudia Kemfert; Nicole Wägner
    Abstract: Am 20. September hat die Bundesregierung ein Klimapaket beschlossen, mit dem die Klimaziele 2030 in den Sektoren Verkehr und Gebäude erreicht werden sollen. Doch bereits jetzt ist absehbar, dass der vorgeschlagene CO2-Preispfad und der anschließende Emissionshandel mit festgelegter Preisobergrenze als alleinige Instrumente nicht ausreichen. Insbesondere im Verkehrssektor werden die Maßnahmen die Emissionen nicht annähernd genügend mindern, zeigen die Berechnungen des DIW Berlin zur Lenkungswirkung. Trotz Senkung der EEG-Umlage und erhöhter Entfernungspauschale werden die öffentlichen Haushalte durch die CO2-Bepreisung per Saldo bis zu zwölf Milliarden Euro im Jahr mehr einnehmen. Die privaten Haushalte mit niedrigen Einkommen werden dabei deutlich stärker belastet als die mit hohen Einkommen.
    Date: 2019
  29. By: Raouf Boucekkine (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Giorgio Fabbri (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); Salvatore Federico (DEPS - Dipartimento di Economia Politica e Statistica - UNISI - Università degli Studi di Siena); Fausto Gozzi (LUISS - Libera Università Internazionale degli Studi Sociali Guido Carli [Roma])
    Abstract: We construct a spatiotemporal frame for the study of optimal growth under transboundary pollution. Space is continuous and polluting emissions originate in the intensity of use of the production input. Pollution flows across locations following a diffusion process. The objective functional of the economy is to set the optimal production policy over time and space to maximize welfare from consumption, taking into account a negative local pollution externality and the diffusive nature of pollution. Our framework allows for space and time dependent preferences and productivity, and does not restrict diffusion speed to be space-independent. This provides a comprehensive setting to analyze pollution diffusion with a close account of geographic heterogeneity. The involved optimization problem is infinite-dimensional. We propose an alternative method for an analytical characterization of the optimal paths and the asymptotic spatial distributions. The method builds on a deep economic concept of pollution spatiotemporal welfare effect, which makes it definitely useful for economic analysis.
    Keywords: optimal growth,spatiotemporal modelling,transboundary pollution,infinite dimensional optimal control
    Date: 2019–10–04
  30. By: Karen Clay; Nicholas Z. Muller
    Abstract: After declining by 24.2% from 2009 to 2016, annual average fine particulate matter (PM2.5) in the United States in counties with monitors increased by 5.5% between 2016 and 2018. Increases occurred in multiple census regions and in counties that were in and out of attainment with National Ambient Air Quality Standards (NAAQS). We explore channels through which the increase may have occurred including increases in economic activity, increases in wildfires, and decreases in Clean Air Act enforcement actions. The health implications of this increase in PM2.5 between 2016 and 2018 are significant. The increase was associated with 9,700 additional premature deaths in 2018. At conventional valuations, these deaths represent damages of $89 billion.
    JEL: I10 Q51 Q52 Q53 Q54
    Date: 2019–10
  31. By: Licht, Adrian; Escribano, Álvaro; Blazsek, Szabolcs
    Abstract: In this paper, new Seasonal-QVAR (quasi-vector autoregressive) and Markov switching (MS) Seasonal-QVAR (MS-Seasonal-QVAR) models are introduced. Seasonal-QVAR is an outlierrobust score-driven state space model, which is an alternative to classical multivariate Gaussian models (e.g. basic structural model; Seasonal-VARMA). Conditions of the maximum likelihood estimator and impulse response functions are shown. Dynamic relationships between world crude oil production and US industrial production are studied for the period of 1973 to 2019. Statistical performances of alternative models are analyzed. MS-Seasonal-QVAR identies structural changes and extreme observations in the dataset. MS-Seasonal-QVAR is superior to Seasonal-QVAR and, and both are superior to Gaussian alternatives.
    Keywords: Markov Regime-Switching Models; Score-Driven Multivariate Stochastic Location And Stochastic Seasonality Models; Score Models; Dynamic Conditional; United States Industrial Production; World Crude Oil Production
    JEL: C52 C51 C32
    Date: 2019–10
  32. By: Majdi Debbich
    Abstract: This paper uses an untapped source of satellite-recorded nightlights and gas flaring data to characterize the contraction of economic activity in Yemen throughout the ongoing conflict that erupted in 2015. Using estimated nightlights elasticities on a sample of 72 countries for real GDP and 28 countries for oil GDP over 6 years, I derive oil and non-oil GDP growth for Yemen. I show that real GDP contracted by a cumulative 24 percent over 2015-17 against 50 percent according to official figures. I also find that the impact of the conflict has been geographically uneven with economic activity contracting more in some governorates than in others.
    Date: 2019–10–11
  33. By: Monica de Bolle (Peterson Institute for International Economics)
    Abstract: The fires in Brazil’s Amazon rainforest in the summer of 2019 represent a government policy failure over many years, especially recently, as Brazilian public agencies that are supposed to curb man-made fires have been deliberately weakened. In keeping with his far-right nationalist campaign promises, President Jair Bolsonaro’s government has intentionally backed away from efforts to combat climate change and preserve the environment, which has emboldened farmers, loggers, and other players to engage in predatory activities in the rainforest. De Bolle calculates that if the current rate of deforestation is maintained over the next few years, the Amazon would be dangerously close to the estimated “tipping point†as soon as 2021, beyond which the rainforest can no longer generate enough rain to sustain itself. The tragic fires have demonstrated that protecting the Amazon rainforest is a global cause. The international attention provides an opportunity for the governments of Brazil and the United States to stop denying climate change and cooperate on strategies to preserve the rainforest and develop ways to sustainably use its natural resources. The international community should revive and expand the Amazon Fund to invest in ways to reduce deforestation through the possible use of payments for environmental services. Brazil should adopt and enforce regulations on land use in the Amazon region while cracking down on illegal uses, such as logging and mining, and should restore conditional rural credit policies to fight deforestation.
    Date: 2019–10
  34. By: Denis Claude (LEG - Laboratoire d'Economie et de Gestion - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique); Mabel Tidball (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: Recent attempts at explaining the energy-efficiency gap rely on considerations related to organizational and behavioral/cognitive failures. In this paper, we build on the strategic delegation literature to advance a complementary explanation. It is shown that strategic market interaction may encourage business owners to instill a bias against energy efficiency in managerial compensation contracts. Since managers respond to financial incentives, their decisions will reflect this bias, resulting in lack of investment.
    Keywords: energy efficiency,strategic delegation,behavioral bias,energy paradox
    Date: 2019
  35. By: Samya Beidas-Strom; Marco Lorusso
    Abstract: We build and estimate open economy two-bloc DSGE models to study the transmission and impact of shocks in Russia, Saudi Arabia and the United Kingdom. After accounting for country-specific fiscal and monetary sectors, we estimate their key policy and structural parameters. Our findings suggest that not only has output responded differently to shocks due to differing levels of diversification and structural and policy settings, but also the responses to fiscal consolidation differ: Russia would benefit from a smaller state foot-print, while in Saudi Arabia, unless this is accompanied by structural reforms that remove rigidities, output would fall. We also find that lower oil prices need not be bad news given more oil-intensive production structures. However, lower oil prices have hurt these oil producers as their public finances depend heavily on oil, among other factors. Productivity gains accompanied by ambitious structural reforms, along with fiscal and monetary reforms could support these economies to achieve better outcomes when oil prices fall, including via diversifying exports.
    Date: 2019–10–11
  36. By: Jared C.Carbone (Division of Economics and Business, Colorado School of Mines); Yuzhou Shen (Division of Economics and Business, Colorado School of Mines)
    Abstract: The vast majority of existing attempts to measure the benefits and costs of air-quality regulations model assume no interaction between the behavioral responses that determine the market-based costs of these policies and the targeted environmental benefits themselves. Nevertheless, general equilibrium theory suggests a number of channels through which important interdependencies might arise, including health impacts on labor supply and the demand for medical care, complementarities between air quality and demand for leisure activities, and interactions between multiple services derived from a common, impacted ecosystem. We develop a unified theoretical framework to assess the nascent literature focused on incorporating air-quality impacts into general equilibrium models. Our primary focus on quantitative studies employing computable general equilibrium (CGE) models. We conclude by identifying priorities for future research in this field.
    Keywords: air quality, non-market values, computable general equilibrium
    JEL: D58 Q51 Q52
    Date: 2019–07

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