nep-ene New Economics Papers
on Energy Economics
Issue of 2019‒12‒16
thirty-one papers chosen by
Roger Fouquet
London School of Economics

  1. Balancing RES generation: Profitability of an energy trader By Christopher Kath; Weronika Nitka; Tomasz Serafin; Tomasz Weron; Przemyslaw Zaleski; Rafal Weron
  2. Leakage in Regional Climate Policy? Implications of Electricity Market Design By Brittany Tarufelli; Ben Gilbert
  3. Energy Outlooks Compared: Global and Regional Insights By Dawud Ansari; Franziska Holz; Hashem al-Kuhlani
  4. Stranded Fossil Fuel Reserves and Firm Value By Christina Atanasova; Eduardo S. Schwartz
  5. Enhancing load, wind and solar generation forecasts in day-ahead forecasting of spot and intraday electricity prices By Katarzyna Maciejowska; Weronika Nitka; Tomasz Weron
  6. A simplified seasonal forecasting strategy, applied to wind and solar power in Europe By Bett, Philip E; Thornton, Hazel E.; Troccoli, Alberto; De Felice, Matteo; Suckling, Emma; Dubus, Laurent; Saint-Drenan, Yves-Marie; Brayshaw, David J.
  7. Renewable Energy and Employment: The Experience of Egypt, Jordan and Morocco By Shahad Alarenan; Anwar Gasim; Lester C. Hunt
  8. A Principal-Agent approach to study Capacity Remuneration Mechanisms By Cl\'emence Alasseur; Heythem Farhat; Marcelo Saguan
  9. Renewable Energy and Employment: The Experience of Egypt, Jordan and Morocco By Sylvain Cote
  10. Options for wind power in Vietnam by 2030 By Minh Ha-Duong; Sven Teske; Dimitri Pescia; Mentari Pujantoro
  11. Carbon Taxation: A Tale of Three Countries By Patrick Criqui; Mark Jaccard; Thomas Sterner
  12. Using Value-Focused Thinking and Multi-Criteria Group Decision-Making to Evaluate Energy Transition Alternatives By Höfer, Tim; von Nitzsch, Rüdiger; Madlener, Reinhard
  13. Trade, Emissions, and Regulatory (Non-)Compliance: Implications of Firm Heterogeneity By Juin-Jen Chang; Yi-Ling Cheng; Shin-Kun Peng
  14. Smart hedging against carbon leakage By Christoph Böhringer; Knut Einar Rosendahl; Halvor Briseid Storrøsten
  15. Can Clean Technology Exports Affect CO2 Emissions for Partners? Evidence from China. By Shaker, Saber Adly
  16. Trade Liberalization Policies and Renewable Energy Transition in Low and Middle-Income Countries? An Instrumental Variable Approach By Murshed, Muntasir
  17. Refinements of Barndorff-Nielsen and Shephard model: an analysis of crude oil price with machine learning By Indranil SenGupta; William Nganje; Erik Hanson
  18. The economic cost of air pollution: Evidence from Europe By Antoine Dechezleprêtre; Nicholas Rivers; Balazs Stadler
  19. Effects of transaction costs and discount rate on the banking decision of emission permits trading By Karima Fredj; Alain Jean-Marie; Guiomar Martín-Herrán; Mabel Tidball
  20. Driving Behavior and the Price of Gasoline: Evidence from Fueling-Level Micro Data By Christopher R. Knittel; Shinsuke Tanaka
  21. Die Neue E.ON auf dem deutschen Strommarkt - Wettbewerbliche Auswirkungen der innogy-Übernahme By Stöhr, Annika; Budzinski, Oliver; Jasper, Jörg
  22. Learning about climate change uncertainty enables flexible water infrastructure planning By Fletcher, Sarah Marie; Lickley, Megan; Strzepek, Kenneth
  23. Predicting bubble bursts in oil prices using mixed causal-noncausal models By Alain Hecq; Elisa Voisin
  24. Lessons Learned for Designing Programs to Charge for Road Use, Congestion, and Emissions By Jenn, Alan
  25. Performance of AP Oil International Limited By Syed Shaidin Azhar, Sharifah Nur Ain
  26. L'énergie et les fonctions de production agrégées : perspectives historique et méthodologique By Quentin Couix
  27. A new rationale for not picking low hanging fruits: The separation of ownership and control By Denis Claude; Mabel Tidball
  28. Understanding the nexus of households’ attributes and climate change mitigation behavior: empirical evidence from Nsukka area of Nigeria By NwaJesus, Onyekuru Anthony; Okokon, Nfonobong; ChukwumaOtum, Ume
  29. The challenge of meeting climate change goals while avoiding trade protectionism: A South African case of potentially increasing non-tariff measures through carbon tax By Mmatlou, Kalaba; Sifiso, Ntombela; Bohlmann, Heinrich
  30. Rectangular Spiral Inspired Approach for Estimating Area of Solar Photovoltaic Plants in India By Sridhar, Harshid; NC, Thirumalai
  31. Altruistic Foreign Aid and Climate Change Mitigation By Antoine Bommier; Amélie Goerger; Arnaud Goussebaïle; Jean-Philippe Nicolaï

  1. By: Christopher Kath; Weronika Nitka; Tomasz Serafin; Tomasz Weron; Przemyslaw Zaleski; Rafal Weron
    Abstract: Motivated by a practical problem faced by an energy trading company in Poland, we investigate the profitability of balancing intermittent generation from renewable energy sources (RES). We consider a company that buys electricity generated by a pool of wind farms and pays their owners the day-ahead system price minus a commission, then sells the actually generated volume in the day-ahead and balancing markets. We evaluate the profitability (measured by the Sharpe ratio) and market risk faced by the energy trader as a function of the commission charged and the adopted trading strategy. We show that publicly available, country-wide RES generation forecasts can be significantly improved using a relatively simple regression model and that trading on this information yields significantly higher profits for the company. Moreover, we address the issue of contract design as a key performance driver. We argue that by offering tolerance range contracts, which transfer some of the risk to the wind farm owners, both parties can bilaterally agree on a suitable framework that meets individual risk appetite and profitability expectations.
    Keywords: Electricity price; Day-ahead market; Balancing market; RES generation; Wind power forecast; Profitability; Sharpe ratio; Value-at-Risk; Trading strategy; Contract design
    JEL: C51 C52 C53 G11 Q41 Q47
    Date: 2019–12–10
  2. By: Brittany Tarufelli (Louisiana State University); Ben Gilbert (Division of Economics and Business, Colorado School of Mines)
    Abstract: We study how the expansion of a centralized real-time electricity market affects emissions leakage from a regional cap-and-trade program. We find the expansion caused modest leakage increases, despite relatively small trading volumes. Natural gas plants just outside the cap-and-trade region increasingly balance intermittent renewables. Generation from these plants increases at night when average wind generation is high. These same plants systematically ramp down in response to unexpected solar generation because of friction between how the day-ahead and real-time markets commit resources. Our results suggest that reduced transactions costs in trade between regulated and unregulated regions may exacerbate leakage.
    Keywords: Electricity market design, Carbon leakage, Emissions, Solar power
    JEL: L1 H23 Q48 Q52
    Date: 2019–11
  3. By: Dawud Ansari; Franziska Holz; Hashem al-Kuhlani
    Abstract: We compare prominent global energy scenarios of organisations and companies. We supplement the analysis with four own scenarios, which were derived from structured analytic techniques in combination with a numerical global energy and resource market model (Multimod). Our study provides three central contributions: (i) a compact survey of selected outlooks with meta characteristics (conceptual nature, numerical framework, qualitative elaboration) and quantitative energy system indicators at the global and regional (Europe, Asia-Pacific region, North America) level; (ii) numerous observations from a verbal analysis intended to stimulate future research; and (iii) the discussion of our own outlook. Among other conclusions, we find that scenarios essentially carrying forward current policies and/or trends lead to future worlds that do not meet the 2°C target of the Paris Agreement. Interestingly, there are both normative and exploratory scenarios reaching the Paris Agreement, and there is no consensus between outlooks on how to attain low-emission futures towards 2050. Some scenarios rely on a very strong role of renewables, others on a substantial role of negative emission technologies with fossil fuel use, yet others on assuming decreasing energy demand. There is a strong variation between outlooks with respect to transparency on scenario generation, modelling approach, and data. We argue that, in addition to transparency, the actual inclusion of a qualitative analysis of drivers and storylines helps ensure the political, social and technological feasibility of scenarios.
    Keywords: Energy outlook, Scenario, Energy modelling, Climate change, Survey
    JEL: Q40 Q47 Q54 C60
    Date: 2019
  4. By: Christina Atanasova; Eduardo S. Schwartz
    Abstract: Do capital markets reflect the possibility that fossil fuel reserves may become “stranded assets” in the transition to a low carbon economy? We examine the relation between oil firms’ value and their proved reserves. Using a sample of 679 North American oil firms for the period 1999 to 2018, we document that while reserves are an important component of oil firm value, the growth of these reserves has a negative effect on firm value. This negative effect on value is stronger for oil producers with higher extraction costs. When we decompose total reserves into developed and undeveloped reserves, we show that the negative effect of reserves growth on value is due to firms growing their undeveloped oil reserves. Unlike developed, undeveloped reserves require major capital expenditures and longer time before they can be extracted. We also document that the negative effect is stronger for undeveloped oil reserves located in countries with strict climate policies. Our evidence is consistent with markets penalizing future investment in undeveloped reserves growth due to climate policy risk. High level of institutional ownership, stock market liquidity and analyst coverage do not change the negative effect of undeveloped reserves growth on firm value.
    JEL: G12 Q3 Q5
    Date: 2019–11
  5. By: Katarzyna Maciejowska; Weronika Nitka; Tomasz Weron
    Abstract: In recent years, a rapid development of renewable energy sources (RES) has been observed across the world. Intermittent energy sources, which depend strongly on weather conditions, induce additional uncertainty to the system and impact the level and variability of electricity prices. Predictions of RES, together with the level of demand, have been recognized as one of the most important determinants of future electricity prices. In this research, it is shown that forecasts of these fundamental variables, which are published by Transmission System Operators (TSO), are biased and could be improved with simple regression models. Enhanced predictions are next used for forecasting of spot and intraday prices in Germany. The results indicate that improving the forecasts of fundamentals does not bring any gains in case of the spot market, but leads to more accurate predictions of intraday prices. Finally, it is demonstrated that utilization of enhanced forecasts is helpful in a day-ahead choice of a market (spot or intraday) and results in a substantial increase of profits.
    Keywords: Renewables; Electricity prices; Day-ahead market; Intraday market; Forecasting
    JEL: C51 C52 C53 G11 Q41 Q47
    Date: 2019–12–10
  6. By: Bett, Philip E (Met Office); Thornton, Hazel E.; Troccoli, Alberto; De Felice, Matteo; Suckling, Emma; Dubus, Laurent; Saint-Drenan, Yves-Marie; Brayshaw, David J.
    Abstract: We demonstrate the current levels of skill for seasonal forecasts of wind and irradiance in Europe, using forecast systems available from the Copernicus Climate Change Service (C3S). While skill is patchy, there is potential for the development of climate services for the energy sector. Following previous studies, we show that a simple linear regression-based method, using the hindcast and forecast ensemble means, provides a straightforward approach to produce reliable probabilistic seasonal forecasts in the cases where there is skill. This method extends naturally to using a larger-scale feature of the climate, such as the North Atlantic Oscillation, as the climate model predictor, providing opportunities to improve the skill in some cases. We further demonstrate that taking a seasonal average and a regional (e.g. national) average means that wind and solar power generation are highly correlated with single climate variables (wind speed and irradiance): the detailed non-linear transformations from meteorological variables to energy variables, which can be essential for precision on weather forecasting timescales and for climatological studies, are usually not necessary when producing seasonal forecasts of these average quantities. Together, our results demonstrate that, in the cases where there is skill in seasonal forecasts of wind speed and irradiance, or a correlated larger-scale climate predictor, it can be very straightforward to forecast seasonal mean wind and solar power generation based on those climate variables, without requiring complex transformations. This greatly simplifies the process of developing a useful seasonal climate service.
    Date: 2019–04–01
  7. By: Shahad Alarenan; Anwar Gasim; Lester C. Hunt (King Abdullah Petroleum Studies and Research Center)
    Abstract: In 2016 Saudi Arabia’s industrial (or manufacturing) sector accounted for 30.3% of total final energy consumption (IEA 2018a). When non-energy use (mainly feedstock for the petrochemical subsector) is included, the industrial sector᾽s share of total final energy consumption rises to over 50%.
    Keywords: Decomposition analysis, Econometrics, Energy consumption, Energy demand, Energy Efficiency, Energy Policy Reform
    Date: 2019–12–03
  8. By: Cl\'emence Alasseur; Heythem Farhat; Marcelo Saguan
    Abstract: We propose to study electricity capacity remuneration mechanism design through a Principal-Agent approach. The Principal represents the aggregation of electricity consumers (or a representative entity), subject to the physical risk of shortage, and the Agent represents the electricity capacity owners, who invest in capacity and produce electricity to satisfy consumers' demand, and are subject to financial risks. Following the methodology of Cvitanic et al. (2017), we propose an optimal contract, from consumers' perspective, which complements the revenue capacity owners achieved from the spot energy market, and incentivizes both parties to perform an optimal level of investments while sharing the physical and financial risks. Numerical results provide insights on the necessity of a capacity remuneration mechanism and also show how this is especially true when the level of uncertainties on demand or production side increases.
    Date: 2019–11
  9. By: Sylvain Cote (King Abdullah Petroleum Studies and Research Center)
    Abstract: While the renewable energy sector needs more workers per megawatt of energy generated than fossil fuel-based energy sectors, a sound and dynamic labor market is necessary for local populations to enjoy the benefits of employment. A well-functioning market can help improve labor market information and assess the training needs of employees in the renewable energy sector.
    Keywords: Renewables, Labor, Labor Market, Employment, Morocco, Jordan, Eqypt
    Date: 2019–12–03
  10. By: Minh Ha-Duong (VIET - Vietnam Initiative for Energy Transition, 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); Sven Teske (UTS - University of Technology Sydney); Dimitri Pescia (Agora Energiewende); Mentari Pujantoro
    Abstract: Vietnam has an excellent wind resource, and the cost of producing electricity from wind has decreased continuously over the last decade. After the feed in tariff for onshore wind power was raised to 8.5 UScents / kWh in 2018, the sector is finally taking off. The inventory of existing onshore wind power projects in Vietnam shows that the sector is on track to meet the government targets for 2020 and 2025. We explored three scenarios for wind power development in Vietnam up to 2030 and conclude that the wind power installed capacity by that year could be 12-15 GW onshore, 10-12 GW offshore. The policy implications are that first, the next power development plan of Vietnam provides an important opportunity to increase at low costs the level of ambition of wind power development. Second, flexibility should be the guiding principle of that plan. Third, to realize the large potential of offshore wind power, infrastructure planning has to start soon.
    Keywords: wind energy,Vietnam,scenarios 1
    Date: 2019–10–23
  11. By: Patrick Criqui (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); Mark Jaccard (School of Resource and Environmental Management - - Simon Fraser University); Thomas Sterner (GU - University of Gothenburg)
    Abstract: Carbon pricing is considered by most economists as a central dimension to any climate policy. It is assumed to bring simple, transparent, and cost-effective means to change investment and consumption behaviors. The most straightforward method is carbon taxation, but its implementation is more complex. This study provides a comparative analysis of carbon taxation in three countries-Sweden, Canada, and France-aimed at drawing lessons for the future of carbon taxation. Comparing the experience of the three countries reveals that carbon taxes, once in place, do have the intended effect. In this sense, they work well. However, the analysis also reveals very different situations in terms of advances, difficulties, and results, which highlights the need to carefully consider the social and political conditions for the acceptance and effective implementation of such economic instruments. Against this background, the comparative analysis yields four main insights that deserve further research from economics and social scientists: the ability to combine pure economic instruments and other regulation or policies and measures; the management of lobbies and vested interests; the identification of a clear strategy for the recycling of the carbon revenues, whether earmarked or not; and finally, the importance of these three dimensions of carbon taxes in the new settings of zero net emission policies.
    Keywords: GHG abatement,environmental policy,economic instruments,carbon tax,cost-effectiveness,acceptability
    Date: 2019–11
  12. By: Höfer, Tim (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); von Nitzsch, Rüdiger (Chair of Decision Theory and Financial Services); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: The future transformation of the energy system is a contentious topic, involving a variety of conflicting opinions and interests. In order to structure and evaluate these opinions, we develop a group decision-making process with professional stakeholders and energy experts. The aim of this process is to develop a common objective system for the energy transition and to evaluate four possible energy transition alternatives for Germany until 2030. The stakeholders are involved in every step of the decision-making process – the development of the alternatives, the definition of the objective system, and the final evaluation of the alternatives. We apply Value-Focused Thinking (VFT) to define and structure the objectives of the stakeholders and use Multi-Attribute Utility Theory (MAUT) to evaluate the preferences of the stakeholders towards these objectives. The results show that a majority of the stakeholders prefers the energy transition alternative, which has the highest ambitions to limit climate change. A minority prefers the pan-European alternative where Germany’s power system is further integrated into the European energy system.
    Keywords: Group Decision-Making; MAUT; Value-Focused Thinking; Energy Scenarios
    JEL: D70 D81 D90 Q40
    Date: 2019–04–01
  13. By: Juin-Jen Chang (Institute of Economics, Academia Sinica, Taipei, Taiwan); Yi-Ling Cheng (National Sun Yat-sen University); Shin-Kun Peng (Institute of Economics, Academia Sinica, Taipei, Taiwan)
    Abstract: This paper provides the implications of firm heterogeneity for the global environment and trade liberalization in a trade model with endogenous markups and regulatory non-compliance. We show that firms with heterogeneous productivities respond differently to a uniform environmental regulation (emission taxation), which changes the market competition structure within a country and across countries, and disentangles the interaction effects of environmental regulations and trade liberalization. In autarky, raising emission tax generates an average productivity gain and favors efficient firms in the sense that they can expand output but may produce more emissions via non-compliance to escape the regulation and maintain competitiveness. In a symmetric two-country open economy, trade liberalization can break the trade-off between output and environment, not only increasing worldwide output but also decreasing global pollution emissions. Under asymmetric environmental regulations, a unilateral increase in the emission tax decreases average productivity in this country if openness to trade is substantially high, which contrasts with the e§ect under autarky. Our welfare analysis shows a U-shaped relationship between the optimal emission tax and openness to trade regardless of whether under tax harmonization or tax competition. Trade liberalization unambiguously decreases global pollution emissions under tax harmonization but it may increase global pollution emissions under tax competition.
    Keywords: : Firm heterogeneity, environmental regulation, trade liberalization, pollution haven e§ect, environmental tax harmonization and competition
    JEL: F12 F18 Q56 R13
    Date: 2019–11
  14. By: Christoph Böhringer; Knut Einar Rosendahl; Halvor Briseid Storrøsten (Statistics Norway)
    Abstract: Policy makers in the EU and elsewhere are concerned that unilateral carbon pricing induces carbon leakage through relocation of emission-intensive and trade-exposed industries to other regions. A common measure to mitigate such leakage is to combine an emission trading system (ETS) with output-based allocation (OBA) of allowances to exposed industries. We first show analytically that in a situation with an ETS combined with OBA, it is optimal to impose a consumption tax on the goods that are entitled to OBA, where the tax is equivalent in value to the OBA-rate. Then, using a multiregion, multi-sector computable general equilibrium (CGE) model calibrated to empirical data, we quantify the welfare gains for the EU to impose such a consumption tax on top of its existing ETS with OBA. We run Monte Carlo simulations to account for uncertain leakage exposure of goods entitled to OBA. The consumption tax increases welfare whether the goods are highly exposed to leakage or not, and can hence be regarded as smart hedging against carbon leakage.
    Keywords: Carbon leakage; output-based allocation; consumption tax
    JEL: D61 F18 H23 Q54
    Date: 2019–11
  15. By: Shaker, Saber Adly
    Abstract: This paper uses a panel vector error correction model (panel VECM) to examine the impact of Chinese exports of clean technology-intensive goods on carbon dioxide (CO2) emissions in China’s partners between 2001 and 2013. The results suggest that Chinese exports of clean technology-intensive goods play a crucial role in reducing CO2 emissions in the short run but not in the long term. Finally, Carbon dioxide emissions CO2 considered an item of demand factors which affects the production of clean technology-intensive goods in the long run only.
    Keywords: Clean technology; CO2 emissions; Panel VECM
    JEL: F18 F64 O3
    Date: 2019–10–26
  16. By: Murshed, Muntasir
    Abstract: A transition from the traditional dependence on use of non-renewable energy to the relatively environment-friendly renewable energy resources has been a key national agenda of governments across the globe. Keeping the environmental degradation and sustainable supply of energy into cognisance, it is pertinent to address the factors that possibly facilitate the renewable energy transitions worldwide. Against this backdrop, this paper aims to empirically analyse the compatibility of national trade liberalization policies with regards to promoting greater use of renewable energy across 71 low, lower-middle and upper-middle countries from South Asia, East Asia, Pacific, Central Asia, Latin America, Caribbean islands and Sub-Saharan Africa. Annual panel data between 2000 and 2017 is incorporated into the regression analyses using the Instrumental Variable Two-Stage Least Squares (IV-2SLS) and the Instrumental Variable Random Effects Generalized Least Squares (IV-RE-GLS) panel data estimators. The results indicate that greater openness to trade stimulates renewable energy consumption and also enhances the intensities of energy usage within the low and upper-middle income economies only. However, despite these upward pressures, trade openness does not guarantee higher shares of renewable energy use in the total energy consumption within these nations. Thus, the alignment of the trade liberalization policies in these countries with respect to attainment of the renewable energy transition can broadly be questioned. Furthermore, the results also indicate that trade liberalization within the lower middle-income countries is useful only in terms of enhancing the access to clean fuels and technology for cooking. The results, in a nutshell, imply that the impacts of trade liberalization on facilitation of renewable energy transition are large offset by other factors that trigger greater use of the non-renewable energy resources in these countries.
    Keywords: renewable energy, non-renewable energy, renewable energy transition, instrumental variable
    JEL: F1
    Date: 2019
  17. By: Indranil SenGupta; William Nganje; Erik Hanson
    Abstract: A commonly used stochastic model for derivative and commodity market analysis is the Barndorff-Nielsen and Shephard (BN-S) model. Though this model is very efficient and analytically tractable, it suffers from the absence of long range dependence and many other issues. For this paper, the analysis is restricted to crude oil price dynamics. A simple way of improving the BN-S model with the implementation of various machine learning algorithms is proposed. This refined BN-S model is more efficient and has fewer parameters than other models which are used in practice as improvements of the BN-S model. The procedure and the model show the application of data science for extracting a "deterministic component" out of processes that are usually considered to be completely stochastic. Empirical applications validate the efficacy of the proposed model for long range dependence.
    Date: 2019–11
  18. By: Antoine Dechezleprêtre; Nicholas Rivers; Balazs Stadler
    Abstract: This study provides the first evidence that air pollution causes economy-wide reductions in market economic activity based on data for Europe. The analysis combines satellite-based measures of air pollution with statistics on regional economic activity at the NUTS-3 level throughout the European Union over the period 2000-15. An instrumental variables approach based on thermal inversions is used to identify the causal impact of air pollution on economic activity. The estimates show that a 1μg/m3 increase in PM2.5 concentration (or a 10% increase at the sample mean) causes a 0.8% reduction in real GDP that same year. Ninety-five per cent of this impact is due to reductions in output per worker, which can occur through greater absenteeism at work or reduced labour productivity. Therefore, the results suggest that public policies to reduce air pollution may contribute positively to economic growth. Indeed, the large economic benefits from pollution reduction uncovered in the study compare with relatively small abatement costs. Thus, more stringent air quality regulations could be warranted based solely on economic grounds, even ignoring the large benefits in terms of avoided mortality.
    Keywords: air pollution, economic output, instrumental variables, thermal inversions
    JEL: J24 O13 Q53 Q51 R11
    Date: 2019–12–12
  19. By: Karima Fredj (UNBC - University of Northern British Columbia); Alain Jean-Marie (NEO - Network Engineering and Operations - CRISAM - Inria Sophia Antipolis - Méditerranée - Inria - Institut National de Recherche en Informatique et en Automatique); Guiomar Martín-Herrán (IMUVA - Instituto de Investigación en Matemáticas - UVa - Universidad de Valladolid [Valladolid]); 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: This paper characterizes and compares the optimal and the strategic behaviour of two countries or firms that minimize costs facing emission standards. Emission standards can be reached through emission reduction, banking or borrowing, and emission trading in a given and fixed planning horizon. Our model extends the existing theoretical models in this area of research in two directions mainly. First, we revisit the model proposed by Rubin (1996) to introduce and study the impacts of transaction costs in tradeable emission markets. Second, we extend Stavins' (1995) work from a static to a dynamic setting. We analyze the case with and without transaction costs and the case with and without discount rate. We characterize solutions and equilibria in each case and, depending on the initial allocation, characterize the buyer and seller in the emission trading market. Our main findings extend Rubin's paper proving that agents equilibrium is not efficient when transaction cost are positive and expand Stavins' results to a dynamic framework.
    Keywords: Transaction costs,Emission permits trading,Intertemporal continuous time framework
    Date: 2019
  20. By: Christopher R. Knittel; Shinsuke Tanaka
    Abstract: We use novel microdata on on-road fuel consumption and prices paid for fuel in Japan to estimate short-run price elasticities of demand for gasoline consumption. We have three main findings. First, our elasticity estimates of roughly -0.37 are in orders of magnitude larger than previously estimated using more aggregate data. Second, we are one of the first papers to separately estimate both the price elasticities of miles driven (-0.30) and on-road fuel economy (0.07). Lastly, we find that on-road fuel economy is determined by recent prices than distant past prices paid, suggesting limited habit formation of fuel-conserving driving behaviors.
    JEL: D12 L71 Q31 Q41 R48
    Date: 2019–11
  21. By: Stöhr, Annika; Budzinski, Oliver; Jasper, Jörg
    Abstract: Der Deal der beiden größten deutschen Energielieferanten RWE und E.ON zum Tausch verschiedener Geschäftseinheiten, welcher Mitte September 2019 genehmigt wurde, wird den deutschen Energiemarkt wesentlich umstrukturieren und sowohl im Bereich Erzeugung als auch im Vertrieb zu jeweils einem dominanten Wettbewerber führen. E.ON wird dabei durch die Übernahme der innogy Geschäfte im Bereich des klassischen Energievertriebs und der Ladeinfrastruktur für Elektrofahrzeuge wesentliche Wettbewerbsvorteile erhalten. Dazu zählt unter anderem der Zugang zu einer Vielzahl an Messstellen und damit Datensätzen im Bereich des Haushalts- und Geschäftskundenvertriebs. Die Auswertung und Nutzung dieser Datensätze eröffnet dem zusammengeschlossenen Unternehmen neue Geschäftsfelder, aber auch Möglichkeiten die dominante Stellung auf dem Markt zu missbrauchen. Dieser Beitrag widmet sich den potenziellen Auswirkungen der innogy-Übernahme durch E.ON in den Bereichen klassischer Vertrieb und E-Mobilität, in welchen die angesprochenen Aspekte der Datenökonomik eine wesentliche Rolle spielen. Des Weiteren werden die Auswirkungen der Marktumstrukturierung auf den Konzessionsmarkt betrachtet und die politökonomische Dimension des Zusammenschlusses erläutert. Wir schließen mit einer Kurzanalyse der Erlaubnisentscheidung und der damit verbundenen Auflagen und kommen zu dem Schluss, dass diese nicht geeignet sind, die erheblichen anti-kompetitiven Auswirkungen des Zusammenschlusses einzudämmen oder zu verhindern.
    Keywords: Wettbewerbspolitik,Fusionskontrolle,Energieökonomik,Datenökonomik,Preisdiskriminierung,Industrieökonomik,competition policy,merger control,energy economics,data economics,price discrimination,industrial economics
    JEL: Q40 Q41 Q48 K21 K23 K32 L41 L42 L43
    Date: 2019
  22. By: Fletcher, Sarah Marie; Lickley, Megan; Strzepek, Kenneth
    Abstract: Water resources planning requires making decisions about infrastructure development under substantial uncertainty in future regional climate conditions. However, uncertainty in climate change projections will evolve over the 100-year lifetime of a dam as new climate observations become available. Flexible strategies in which infrastructure is proactively designed to be changed in the future have the potential to meet water supply needs without over-building expensive infrastructure. Evaluating tradeoffs between flexible and traditional robust planning approaches requires extension of current scenario-based paradigms for water resources planning under climate uncertainty which take a static view of uncertainty. We develop a new dynamic planning framework that assesses the potential to learn about regional climate change over time and evaluates flexible approaches. We demonstrate it on a reservoir planning problem in Mombasa, Kenya. This approach identifies opportunities to reliably use flexible, incremental approaches, enabling climate adaptation investments to reach more vulnerable communities with fewer resources.
    Date: 2018–09–29
  23. By: Alain Hecq; Elisa Voisin
    Abstract: This paper investigates oil price series using mixed causal-noncausal autoregressive (MAR) models, namely dynamic processes that depend not only on their lags but also on their leads. MAR models have been successfully implemented on commodity prices as they allow to generate nonlinear features such as speculative bubbles. We estimate the probabilities that bubbles in oil price series burst once the series enter an explosive phase. To do so we first evaluate how to adequately detrend nonstationary oil price series while preserving the bubble patterns observed in the raw data. The impact of different filters on the identification of MAR models as well as on forecasting bubble events is investigated using Monte Carlo simulations. We illustrate our findings on WTI and Brent monthly series.
    Date: 2019–11
  24. By: Jenn, Alan
    Abstract: Driving is associated with a series of costs to society, or externalities. These include road damages, traffic congestion, and vehicle emissions (of both local pollutants and greenhouse gases). A fuel tax has been used in the United States to account for some of these costs, particularly road damage. However, other methods of pricing may be more effective and able to cover a variety of externalities. While several successful programs have been implemented in other countries, very few have been attempted in the United States. To inform the optimal design of programs to price road use/damage, emissions, and congestion, researchers at UC Davis reviewed published studies, examined existing programs, and investigated potential design choices for such programs. This policy brief summarizes the findings of that study. View the NCST Project Webpage
    Keywords: Law, Social and Behavioral Sciences, Vehicle pricing, congestion charges, mileage fees
    Date: 2019–12–01
  25. By: Syed Shaidin Azhar, Sharifah Nur Ain
    Abstract: The purpose of this study is to evaluate the quality of the oil and gas industry of AP Oil International Limited in Singapore over five years. This research used the secondary data from the five-year annual reports obtained during the consecutive year from 2014 to 2018This regression analysis shows that Return on Asset (ROA) was the dependent variable to assess its relationship with the independent variable such as liquidity risk, credit risk, operating risk, corporate governance index and economic environment to evaluate the variables influencing profitability.
    Keywords: Return on asset, macroeconomics and corporate governance performance.
    JEL: G32
    Date: 2019–11–18
  26. By: Quentin Couix (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Panthéon-Sorbonne)
    Abstract: From a historical and methodological perspective, this paper focuses on empirical work on energy based on the aggregate production function, from the early 1970s to the late 2000s. It starts with the standard neoclassical approach, and in particular the controversy over the substitutability between capital and energy. Then it tackles the thermodynamic approach, which focuses on the explanation of the long-term growth. It shows continuity in the methodological issues raised by this work. At the theoretical level, the aggregate production function offers little conceptual insight into the physical aspects of the production process. At the empirical level, the results of estimates of energy production functions raise questions. In the neoclassical framework, the estimation is done indirectly through the cost function, so that the result is overdetermined by the marginal productivity pricing assumption. The thermodynamic approach proceeds in the opposite direction to a direct estimate, which encounters statistical problems no less important. If these difficulties relate more generally to the aggregate production function, energy issues reveal them in a very striking way.
    Abstract: Dans une perspective historique et méthodologique, cet article s'intéresse aux travaux empiriques sur l'énergie qui reposent sur la fonction de production agrégée du début des années 1970 à la fin des années 2000. Il traite dans un premier temps de l'approche néoclassique standard, et en particulier de la controverse sur la substituabilité entre le capital et l'énergie. Puis il aborde l'approche thermodynamique, davantage tournée vers l'explication de la croissance à long terme. Il montre une continuité dans les enjeux méthodologiques soulevés par ces travaux. Au niveau théorique, la fonction de production agrégée offre peu de prise conceptuelle pour rendre compte des aspects physiques du processus de production. Au niveau empirique, les résultats des estimations de fonctions de production avec énergie soulèvent des interrogations. Dans le cadre néoclassique, l'estimation est réalisée de manière indirecte via la fonction de coût, de sorte que le résultat est surdéterminé par l'hypothèse de rémunération à la productivité marginale. L'approche thermodynamique procède à l'inverse à une estimation directe, qui rencontre des problèmes statistiques non moins importants. Si ces difficultés concernent de manière plus générale la fonction de production agrégée, la question de l'énergie les révèle de façon très frappante.
    Keywords: energy,aggregate production function,growth accounting,thermodynamics,énergie,fonction de production agrégée,comptabilité de la croissance,thermodynamique
    Date: 2019–11
  27. 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 - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - UM - Université de Montpellier - INRA - Institut National de la Recherche Agronomique)
    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
  28. By: NwaJesus, Onyekuru Anthony; Okokon, Nfonobong; ChukwumaOtum, Ume
    Keywords: Agricultural Finance
    Date: 2019–09
  29. By: Mmatlou, Kalaba; Sifiso, Ntombela; Bohlmann, Heinrich
    Keywords: Environmental Economics and Policy, International Relations/Trade
    Date: 2019–09
  30. By: Sridhar, Harshid (Center for Study of Science Technology and Policy); NC, Thirumalai
    Abstract: In pursuit of achieving its clean energy goals, India is moving aggressively towards establishing large solar plants. Land being a finite resource in a densely populated country like India, an approach for planning for these plants aiming towards better utilisation of available land resource is certainly of interest. There is merit in looking at a design approach which aides planning by offering high packing density leading to reduced land utilisation. The objective of this paper is to propose a method which can provide the rational area estimate of a plant factoring sizing considerations from electrical, maintenance, and shading aspects. The idea for the plant design is inspired by the number pattern illustrated in the Ulam spiral. From the perspective of planning, the proposed approach aims to provide an area estimate which could set the boundary conditions in term of realistic potential estimation and minimum land area required. Further, the paper provides insights with respect to land area requirements across the latitudinal spread for India. Also, it provides an estimate of the solar power potential for ground mounted utility scale plants in India.
    Date: 2019–07–17
  31. By: Antoine Bommier (ETH Zurich); Amélie Goerger (ETH Zurich); Arnaud Goussebaïle (ETH Zurich); Jean-Philippe Nicolaï (Université Paris Nanterre)
    Abstract: This paper emphasizes the value of jointly addressing environmental and development objectives. We consider one altruistic developed country and several heterogeneous developing countries. We demonstrate that the lack of coordination between countries in tackling climate change finds a simple solution if developing countries can expect to receive development aid transfers from the developed country. The timing of the decision is central to the mechanism: development aid transfers should be determined after pollution abatement levels. The main restriction of our result is that it only holds if the developed country is altruistic enough to make positive development aid transfers to developing countries. Nevertheless, even from a purely selfish point of view, it may be profitable for the developed country to be more altruistic, leading to higher welfare for all countries.
    Keywords: Public good provision, Altruism, Climate change, Development aid
    JEL: D6 Q5 O1
    Date: 2019–12

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