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on Energy Economics |
| By: | Robin Burgess ([Dept of Economics, LSE); Michael Greenstone (Dept of Economics, University of Chicago); Nicholas Ryan (Cowles Foundation, Yale University); Anant Sudarshan (Energy Policy Institute at Chicago, University of Chicago) |
| Abstract: | Nearly a billion people, mostly in rural Africa and South Asia, do not have electricity at home. The advent of off-grid solar power means that many of these households, at the frontier of global electriï¬ cation, have a choice between competing sources of electricity. This paper studies the demand for electricity with a discrete choice model wherein households choose between grid electricity, several off-grid electricity sources, and having no electricity at all. The model is estimated using a randomized experiment that varied the price of solar microgrids for a sample of villages in the state of Bihar, India, an outpost on the global electriï¬ cation frontier. There are three main ï¬ ndings. First, households value electricity, but demand for any one electricity source is highly elastic, because several sources provide similar energy services at similar prices. Second, even in a relatively poor, rural sample, richer households greatly prefer grid electricity. Third, future growth in income will drive an increase in electriï¬ cation due mainly to new grid connections, even if the cost of solar continues to fall. Our analysis suggests that off-grid solar power provides an important stop-gap technology, which ï¬ lls the space between having no electricity at all and grid electricity, but that the future will run on the grid. |
| Keywords: | Energy access, Solar electrification, Electricity demand, Field experiment |
| JEL: | O13 Q41 Q21 C93 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2222&r=all |
| By: | Sievert,Maximiliane; Steinbuks,Jevgenijs |
| Abstract: | Improving electricity access in low-income countries is a challenging problem because of the high costs of grid extension and low demand for grid electricity in rural areas. This study elucidates these constraints by analyzing poor households'willingness-to-pay for different types of electricity access, including lower cost off-grid technologies. The theoretical model illustrates how consumer preferences, operational and capital costs of electricity service delivery, and availability of power supply affect households'decisions to acquire electricity technology. These effects are then assessed empirically by estimating beneficiaries'willingness-to-pay for electricity in three low-income countries that have pockets of households living in extreme poverty -- Burkina Faso, Senegal, and Rwanda. Consistent with the theoretical model, the results indicate very low household willingness-to-pay for electricity access, and that willingness-to-pay diminishes as households'income declines. Therefore, the study recommends concentrating in the nearer term on ultra-low-cost decentralized off-grid solar technologies in programs to provide household electricity to the poor in rural areas. |
| Keywords: | Energy Policies&Economics,Electric Power,Energy Demand,Energy and Mining,Energy and Environment,Energy Technology&Transmission,Inequality |
| Date: | 2019–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8906&r=all |
| By: | Guillermo García Alvarez (Department of Economics, University of Sussex, Falmer, United Kingdom); Richard S.J. Tol (Department of Economics, University of Sussex, Falmer, United Kingdom) |
| Abstract: | The Bono Social de Electricidad (BSE) is a government programme, introduced in 2009, to reduce energy poverty in Spain. The BSE is a discount on the price of electricity, available to vulnerable households who applied. Applying differences-in-differences and propensity score matching to household data between 2008 and 2011, we find no statistically significant impact of the intention to treat on two indicators of energy poverty, viz. the ability to keep the house adequately warm, and the presence of damp walls, rotting windows and leaking roofs. This may be because eligible households did not apply. A third indicator, delays in paying electricity bills, showed a statistically significant deterioration. That is, the BSE has not reduced energy poverty, if anything it has made it worse. This is not because eligible households transferred income to relatives hit harder by the financial crises, but it may be because the BSE discount did not fully compensate for the cold of 2010. |
| Keywords: | Energy poverty, Spain, household data, policy evaluation, Bono Social de Electricidad |
| JEL: | I38 Q48 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:sus:susewp:0420&r=all |
| By: | Congressional Budget Office |
| Abstract: | The electric grid delivers power to about 150 million customers. Although the utility industry has a number of operational and procedural protections that it uses to enhance the security of the electric grid, solar storms, cyberattacks, and other threats could cause widespread, long-lasting disruptions. CBO assesses a range of threats facing the electric grid, examines two illustrative approaches to enhance its security, and highlights some considerations for policymakers. |
| JEL: | H41 H54 H56 L94 L98 Q43 |
| Date: | 2020–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:report:56083&r=all |
| By: | Obolensky,Marguerite Anne Beatrice; Erman,Alvina Elisabeth; Rozenberg,Julie; Maruyama Rentschler,Jun Erik; Avner,Paolo; Hallegatte,Stephane |
| Abstract: | This review examines the literature on the welfare impacts of infrastructure disruptions. There is widespread evidence that households suffer from the consequences of a lack of infrastructure reliability, and that being connected to the grid is not sufficient to close the infrastructure gap. Disruptions and irregular service have adverse effects on household welfare, due to missed work and education opportunities, and negative impact on health. Calibrating costs of unreliable infrastructure on existing willingness to pay assessments, we estimate the welfare losses associated with blackouts and water outages. Overall, between 0.1 and 0.2 percent of GDP would be lost each year because of unreliable infrastructure -- electricity, water and transport. |
| Keywords: | Hydrology,Health Care Services Industry,Energy Policies&Economics,Transport Services,Water and Human Health,Small Private Water Supply Providers,Town Water Supply and Sanitation,Water Supply and Sanitation Economics |
| Date: | 2019–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8902&r=all |
| By: | Maruyama Rentschler,Jun Erik; Kornejew,Martin Gunter Michail; Hallegatte,Stephane; Braese,Johannes Michael; Obolensky,Marguerite Anne Beatrice |
| Abstract: | This study constructs a microdata set of about 143,000 firms to estimate the monetary costs of infrastructure disruptions in 137 low- and middle-income countries, representing 78 percent of the world population and 80 percent of the GDP of low- and -middle-income countries. Specifically, this study assesses the impact of transport, electricity, and water disruptions on the capacity utilization rates of firms. The estimates suggest that utilization losses amount to $151 billion a year -- of which $107 billion are due to transport disruptions, $38 billion due to blackouts, and $6 billion due to dryouts. Moreover, this study shows that electricity outages are causing sales losses equivalent to $82 billion a year. Firms are also incurring the costs of self-generated electricity, estimated to amount to $64 billion a year (including annualized capital expenditure). At almost $300 billion a year, these figures highlight the substantial drag that unreliable infrastructure imposes on firms in developing countries. Yet, these figures are likely to be under-estimates as neither all countries nor all types of impacts are covered. |
| Keywords: | Energy Policies&Economics,Transport Services,Hydrology,Electric Power,Employment and Unemployment |
| Date: | 2019–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8899&r=all |
| By: | Schweikert,Amy Elizabeth; Nield,Lindsey; Otto,Erica; Klemun,Magdalena; Ojanpera,Sanna Maria; Deinert,Mark Robert |
| Abstract: | Considerable work has been done to understand and improve the resilience of individual infrastructure components. However, systems of components, or even systems of systems, are far less well understood. Cascade effects, where the loss of one infrastructure affects others, is a major source of vulnerability which can lead to catastrophic disruptions of essential services. Interdependencies can also lead to large-scale failures when even a single component is disrupted and results in'cascading'failures within and between networks. This is particularly true for power systems, as many other lifeline infrastructure systems rely on electricity. In this study we review the literature and give a primer on the vulnerabilities of networked energy infrastructure. Several recurrent themes emerge from across different systems: (1) Electricity is essential for many lifeline infrastructure systems to function; (2) Electrical distribution systems are particularly vulnerable to disruption from natural and manmade hazards; (3) Highly networked systems can be unstable even when their individual components are functioning as intended; (4) Redundancy and network density can increase reliability but also increase the likelihood of cascade effects when failures do occur; (5) Disruption of ports and roads can limit fuel supplies for generators and replacement components. Based on these insights, this study offers suggestions for further research and policy actions. |
| Keywords: | Energy Policies&Economics,Energy and Mining,Energy and Environment,Energy Demand,Transport Services,Natural Disasters,Ports&Waterways |
| Date: | 2019–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8901&r=all |
| By: | Maruyama Rentschler,Jun Erik; Obolensky,Marguerite Anne Beatrice; Kornejew,Martin Gunter Michail |
| Abstract: | This study finds that natural shocks -- storms in particular -- are a significant and often leading cause for power supply disruptions. This finding is based on 20 years of high frequency (i.e. daily) data on power outages and climate variables in 28 countries -- Bangladesh, the United States and 26 European countries. More specifically: (1) Natural shocks are the most important cause of power outages in developed economies. On average, they account for more than 50 of annual outage duration in both the US and Europe. In contrast, natural shocks are responsible for a small share of outages in Bangladesh, where disruptions occur on a daily basis for a variety of reasons. (2) Outages due to natural shocks are found to last significantly longer than those due to non-natural shocks in -- e.g. more than 4.5 times in Europe. Reasons include the challenge of locating wide-spread damages, and the sustained duration of storms. (3) Several factors can reinforce the adverse effect of natural shocks on power supply. In the US, forest cover is shown to significantly increase the risk of power outages when storms occur. (4) There are significant differences in network fragility. For instance, wind speeds above 35 km/h are found to be 12 times more likely to cause an outage in Bangladesh than in the US. This difference may be explained by a range of factors, including investments in infrastructure resilience and maintenance. |
| Keywords: | Energy Policies&Economics,Energy and Environment,Energy Demand,Energy and Mining,Electric Power,ICT Policy and Strategies,Power&Energy Conversion |
| Date: | 2019–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8897&r=all |
| By: | Annika Kemper; Maren D. Schmeck; Anna Kh. Balci |
| Abstract: | In electricity markets futures deliver the underlying over a period and thus function as a swap contract. In this paper we introduce a market price of risk for delivery periods of electricity swaps. In particular, we suggest a weighted geometric average of an artificial geometric electricity futures price over the corresponding delivery period. This leads to a geometric electricity swap price dynamics without any approximation requirements. Our framework allows to include typical features as the Samuelson effect, seasonalities as well as a stochastic volatility in the absence of arbitrage. We show that our suggested model is suitable for pricing options on electricity swaps using the Heston method. Especially, we illustrate the related pricing procedure for electricity swaps and options in the setting of Arismendi et al. (2016), Schneider and Tavin (2018) and Fanelli and Schmeck (2019). |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2002.07561&r=all |
| By: | Bacon,Robert W. |
| Abstract: | The Philippines power sector underwent a substantial and largely complete reform process. Following a severe shortage of supply in the late 1980s and the Asian Financial crisis of 1997, which made the dollar-denominated debt of the National Power Corporation extremely burdensome, the Electric Power Industry Reform Act was passed in 2001. This was intended to improve the quality of service and reduce power tariffs via the introduction of private participation and competition at the wholesale and retail levels. Although the implementation of the full reform program took longer than originally expected, the unwavering support given to the reform agenda by successive presidents of the country ensured that the planned steps had all been completed by 2013. At that time, retail competition and open access for consumers in Luzon and Visayas of more than one megawatt were introduced. The reform process was not impeded by complications that would have arisen if consumer subsidies had been endemic, but retail prices are even higher than might have been expected in the absence of subsidies, due to domestic taxation and the presence of some inefficiencies that have not yet been eliminated by the onset of competition. |
| Keywords: | Energy Policies&Economics,Economics and Finance of Public Institution Development,Privatization,De Facto Governments,Democratic Government,Public Sector Administrative&Civil Service Reform,State Owned Enterprise Reform,Energy Privatization,Public Sector Administrative and Civil Service Reform,Energy and Mining,Energy Demand,Energy and Environment,Energy Sector Regulation,Power&Energy Conversion |
| Date: | 2019–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8853&r=all |
| By: | Toshihiro Okubo (Faculty of Economics, Keio University); Daiju Narita (The University of Tokyo Graduate School and College of Arts and Sciences); Katrin Rehdanz (Department of Economics, University of Kiel); Carsten Schroeder (DIW Berlin and Freie Universitaet Berlin) |
| Abstract: | Utilizing data of a large nationwide household survey, we investigate determinants of public preferences on nuclear power in Japan after the Fukushima nuclear accident. The comprehensive household survey data we use allow us to examine the roles of 1) household/individual socioeconomic characteristics, 2) psychological status, 3) geographical aspects, and 4) Fukushima accident-related experiences. We find that male, elderly, unmarried, less educated, high-income people, and government party supporters prefer nuclear power, except if they live near nuclear power plants. The experience of blackout and aversion to nuclear power during the Great East Japan Earthquake of 2011 reinforce people's negative feelings toward nuclear power nowadays. |
| Keywords: | Energy mix, Nuclear power plant, Household survey |
| JEL: | Q40 |
| Date: | 2020–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2020-003&r=all |
| By: | Taran Faehn; Gabriel Bachner; Robert Beach; Jean Chateau; Shinichiro Fujimori; Madanmohan Ghosh; Meriem Hamdi-Cherif; Elisa Lanzi; Sergey Paltsev; Toon Vandyck; Bruno Cunha; Rafael Garaffa; Karl Steininger |
| Abstract: | Limiting global warming in line with the goals in the Paris Agreement will require substantial technological and behavioural transformations. This challenge drives many of the current modelling trends. This paper undertakes a review of 17 state-of-the-art recursive-dynamic computable general equilibrium (CGE) models and assesses the key methodologies and applied modules they use for representing sectoral energy and emission characteristics and dynamics. The purpose is to provide technical insight into recent advances in the modelling of current and future energy and abatement technologies and how they can be used to make baseline projections and scenarios 20-80 years ahead. In order to represent likely energy system transitions in the decades to come, modern CGE tools have learned from bottom-up studies. We distinguish between three different approaches to baseline quantification: (a) exploiting bottom-up model characteristics to endogenize responses of technology investment and utilization, (b) relying on external information sources to feed the exogenous parameters and variables of the model, and (c) linking the model with more technology-rich, partial models to obtain bottom-up- and pathway-consistent parameters. |
| Keywords: | computable general equilibrium models, long-term economic projections, energy, technology change, emissions, greenhouse gases |
| JEL: | C68 O13 O14 O18 Q43 Q54 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8072&r=all |
| By: | Devine, Mel; Russo, Marianna; Cuffe, Paul |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp649&r=all |
| By: | Fulton, Lew PhD; Brown, Austin PhD; Compostella, Junia |
| Abstract: | The emergence of “3 Revolutions” in transportation (automation, electrification and shared mobility) presents a range of questions regarding how consumers will travel in the future, and under what conditions there may be rapid adoption of various services. These include individual on-demand taxi-style services, shared mobility in pooled services, and use of public transit, all with or without drivers. There is now enough data and estimates on the costs of these service combinations, and in some cases ridership data, to consider how consumers are making choices and could do so in the future as things evolve. This project involved: (a) reviewing existing literature and data on consumer mode and vehicle choice; (b) developing new “generalized cost” estimates that combine monetary and non-monetary (e.g., hedonic) components of travel choice, notably incorporating value of time; and (c) conducting a comparison of monetary and generalized trip cost for a range of trip types across travel options in the near term (2020) and longer term (2030-35). Three main travel options were considered: privately owned vehicles, ridesourced solo trips, and ridesourced pooled trips. Consideration of internal combustion vs. battery electric and, in the longer term, automated technology was also core to the analysis. The trips considered include urban and suburban types in the San Francisco metro area, using actual trip characteristics. The results suggest that in the near-term, solo ridesourcing is likely to be perceived as significantly more expensive (in terms of monetary and time costs) than pooled ridesourcing or solo private vehicle trips except for those with a very high value of time. Solo ridesourcing does better in dense, slow, urban trips than in faster suburban trips. In the longer term, with automated driverless vehicles, solo ridesourcing could become the cheapest mode for many travelers in a range of situations. This report includes an initial consideration of the implications of these policies for affecting travel choices, presumably to push choices toward pooled ridesourcing as a sustainable option. VMT-based pricing, pricing that could be adjusted with vehicle occupancy, and parking-related approaches are described. A large price signal might be needed to shift travel, given some of the differences in generalized cost found in this analysis. |
| Keywords: | Engineering, Ridesourcing, ridesharing, vehicle sharing, travel costs, travel behavior, autonomous vehicles, automobile ownership, policy analysis |
| Date: | 2020–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt6vz5q4mc&r=all |
| By: | Timilsina,Govinda R.; Pang,Jun; Yang,Xi |
| Abstract: | Many countries have undertaken market-oriented reforms of the power sector over the past four decades. However, the literature has not investigated whether the reforms have contributed to economic development. This study aims to assess the potential macroeconomic impacts of an element of the power sector reform process that China started in 2015. It uses an energy sector TIMES model and a computable general equilibrium model. The study finds that the price of electricity in China would be around 20 percent lower than the country is likely to experience in 2020, if the country follows the market principle to operate the power system. The reduction in the price of electricity would spill over throughout the economy, resulting in an increase in gross domestic product of more than 1 percent in 2020. It would also increase household income, economic welfare, and international trade. |
| Keywords: | Energy Policies&Economics,Energy Demand,Energy and Mining,Energy and Environment,Transport Services,Power&Energy Conversion,Energy Sector Regulation |
| Date: | 2019–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8908&r=all |
| By: | Veronica ACURIO VASCONEZ |
| Abstract: | The consequences of oil price shocks in the real economy have preoccupied economists since the 1970s and the absence of a reaction has stunned them in the 2000s. However, despite the huge literature devoted to the subject, no dynamic stochastic general equilibrium (dsge) model has been able to capture, all at the same time, four of the well-known stylized effects observed after the oil price increase of the 2000s: the absence of recession, coupled with a low but persistent increase in the inflation rate, a decrease in real wages and low price elasticity of oil demand in the short run. One of the reasons is that theoretical papers assume a high degree of substitutability between oil and other factors, an assumption that is not backed up empirically. This paper enlarges the dsge model developed in Acurio-Vásconez et al. (2015) by introducing imperfect substitutability between oil and other factors. The Bayesian estimation of the model over the period 1984:Q1-2007:Q3 suggests that the elasticities of substitution of oil are 0.086 in production and 0.014 in consumption. Furthermore, a sensitivity analysis of the estimated model points towards two main policy conclusions: (a) a stronger anti-inflationary Taylor rule can lead to a recession after an oil shock and; (b) wage flexibility could create a stronger increase in inflation and provoke a decrease in domestic consumption. This latter result contradicts the conclusions of Blanchard and Galí (2009) and Blanchard and Riggi (2013). |
| Keywords: | New-Keynesian model, dsge, oil, ces, stickiness, oil substitution. |
| JEL: | D58 E32 E52 Q43 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2020-08&r=all |
| By: | Yang, Yuting |
| Abstract: | Electricity interconnection has been recognized as a way to mitigate carbon emissions by dispatching more efficient electricity production and accommodating the growing share of renewables. I analyze the impact of electricity interconnection in the presence of intermittent renewables, such as wind and solar power, on renewable capacity and carbon emissions using a two-country model. I find that in the first-best, interconnection decreases investments in renewable capacity and exacerbates carbon emissions if the social cost of carbon (SCC) is low. Conversely, interconnection increases renewable capacity and reduces carbon emissions for a high SCC. Moreover, the intermittency of renewables generates an insurance gain from interconnection, which also implies that some renewable capacity is optimally curtailed in some states of nature when the SCC is high. The curtailment rate and the corresponding carbon emissions increase for more positively correlated intermittency. I calibrate the model using data from the European Union electricity market and simulate the outcome of expanding interconnection between Germany-Poland and France-Spain. I find that given the current level of SCC, the interconnection may increase carbon emissions. The net benefit of interconnection is positive, with uneven distribution across countries . |
| JEL: | D24 D61 F18 F61 Q27 Q48 Q54 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:124097&r=all |
| By: | Karami, Mahdi (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)) |
| Abstract: | The objective of the present study is to explore and better understand how business model inno- vation and technology trends have in uenced electricity suppliers in the electricity retail market. We investigate how electricity suppliers can create and deliver values to private customers and capture the market for themselves through innovative technology and business models. To reach this goal, the collected data from eleven different European existing business models were analyzed and sorted in a systematic way with the "Business Model Canvas" approach (Osterwalder and Pigneur, 2010). To cluster the real world business models investigated, an identification of the applied patterns was carried out according to the "Business Model Navigator". We find that successful retailers are those companies which try to take a more consumer-centric perspective for creating extra value, while en- abling and fostering more sustainable and energy-efficient lifestyles based on the smart orchestration of increasingly distributed energy resources. |
| Keywords: | Electricity suppliers; business model innovation; value creation; private customers; electricity self-sufficient |
| JEL: | M10 M11 M13 |
| Date: | 2018–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2018_015&r=all |
| By: | Hamisu S. Ali (Ahmadu Bello University, Zaria, Nigeria); Solomon P. Nathaniel (University of Lagos, Akoka, Nigeria); Gizem Uzuner (Eastern Mediterranean University, North Cyprus); Festus V. Bekun (Istanbul Gelisim University, Istanbul, Turkey); Samuel A. Sarkodie (Nord University Business School, Norway) |
| Abstract: | In this era of intensive electricity utilization for economic development, the role of urbanization remains inconclusive, especially in developing economies. Here, this study examined the electricity consumption and economic growth nexus in a trivariate framework by incorporating urbanization as an additional variable. Using the recent novel Maki cointegration test, Ng-Perron, Zivot-Andrews, and Kwiatkowski unit root tests along with FMOLS, DOLS and the CCR estimation methods, we relied on an annual frequency data from 1971-2014. Results from FMOLS, DOLS and the CCR regression confirm the electricity consumption-driven economic growth. This is desirable as Nigeria is heavily dependent on energy (electricity) consumption. A unidirectional causality from urbanization to electricity consumption and economic growth was found but the long-run empirical findings revealed urbanization impedes growth — a situation that has policy implications. The study highlights that though urbanization is a good predictor of Nigeria’s economic growth, however, the adjustment of the energy portfolio to meet the growing urban demand will curtail the adverse and far-reaching impact of urbanization on the economy. |
| Keywords: | Economic growth; Electricity consumption; Maki Cointegration; Dynamic Causality; Urbanization |
| JEL: | O41 C32 Q43 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:20/010&r=all |
| By: | Jennifer Considine; Philipp Galkin; Abdullah AlDayel (King Abdullah Petroleum Studies and Research Center) |
| Abstract: | Understanding the relationship between crude oil prices and inventory levels is critical for policymakers and economic actors. The size of the ‘basis,’ or spread between spot and futures prices, reflects the level of inventories and can trigger arbitrage trading. The basis also reflects broader underlying market conditions and can be useful to policymakers such as the International Energy Agency and OPEC attempting to monitor and stabilize world oil markets. |
| Keywords: | Contango, Oil Markets, Oil Price, Oil Price Shocks, Oil Trade, Satelite Data, Spread Option |
| Date: | 2020–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:prc:dpaper:ks--2020-dp02&r=all |
| By: | Mathur, Ajay |
| Abstract: | Water availability, at the right time and in appropriate quantity is at the heart of agricultural practices worldwide; and the availability of water is largely dependent on the use of energy to pump it. Energy use also drives many other farm operations – tilling, sowing, harvesting and the manufacture of chemical fertilisers. We have, over the years, tended to overuse both water and energy in agricultural operations; practices that are now at odds with the challenges due to the emerging changes in hydrology and the increasing global concentration of greenhouse gases (GHGs). It has been argued that water-use efficiency and energy efficiency in agriculture are self-regulating phenomena, largely driven by water and energy prices. This is only partially correct now. Climate change requires us to effectively decarbonise our economies by the third quarter of this century. This implies that agricultural operations will need to become fossil-fuel free in the next two decades. We believe that this requires three parallel interventions: (i) enhance water-use efficiency and energy-use efficiency in agricultural operations; (ii) convert agricultural operations to use electricity instead of fossil fuels; and (iii) decarbonise the electricity supply by converting to renewable sources, instead of fossil fuels, as energy sources for electricity generation. All the three interventions require policies, incentives, and regulations for their initial acceptance, commercial model development, and large-scale replication. However, the first two interventions require actions mainly by farmer-entrepreneurs, while the third intervention requires action both by the farmer-entrepreneurs (through generating their own solar electricity) as well as by electricity generation companies. What would these interventions look like? An example that covers all the three interventions is the promotion of energy-efficient solar pumps for irrigation accompanied by micro-irrigation facilities, with the excess electricity being bought by the electricity distribution company. The micro-irrigation facilities and the energy-efficient pump reduce the requirement for water pumping, and consequently the electricity needed to pump it, thus reducing the cost of the expensive solar panels. At the same time, the purchase, by others, of the excess electricity provides a revenue stream for farmer-entrepreneurs, which enables them to invest in the solar panels, energy-efficient pump and micro-irrigation facilities, as well as minimise fertiliser and water use. Another example is the promotion of energy-efficient electric tillers, harvesters and other farm equipment. These avoid greenhouse gas emissions, at the user level, and provide the potential to contribute to zero-GHG agriculture with the decarbonisation of the electricity grid. Energy-efficient solar pumps with micro-irrigation facilities are already less expensive, on a lifetime cost basis, as compared to flood irrigation by inefficient diesel or electric pumps. Similarly, electric machinery is cheaper than diesel-run machinery, though the capital cost is higher for electricitydriven machinery, such as electric tractors which require onboard storage of electricity in batteries. The major challenge that these interventions face is the creation of demand for the zero-GHG energy-efficient options (so that economies of scale can drive down prices); and the availability of capital (loans) for farmer-entrepreneurs to invest in these options. These are challenges that have been successfully overcome in the past – in enabling the Green Revolution, and more recently in building the market demand for energy-efficient refrigerators and air conditioners, buildings, etc. Drops for crops are essential; energy efficiency provides us with the entry point to enable a perfect storm for change – which addresses the wellbeing of the farmer-entrepreneurs and local water availability, as well as global climate concerns. |
| Keywords: | Crop Production/Industries, Environmental Economics and Policy |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:cfcp19:301977&r=all |
| By: | Timilsina,Govinda R.; Pang,Jun; Yang,Xi |
| Abstract: | Top-down economic models, such as computable general equilibrium models, are the common tools to assess the economic impacts of climate change policies. However, these models are incapable of representing the detailed technological characteristics of the sources of greenhouse gas emissions. The economic impacts measured by the top-down economic models are likely to be overestimated. This study attempts to quantify the overestimation by measuring the economic impacts linking the top-down model with a bottom-up engineering model for the energy sector. The study uses meeting China's pledges under the Paris Agreement for testing this hypothesis. The study shows that the economic impacts measured by the stand-alone top-down model are almost three times as high as those resulting from the model after linking it with the bottom-up model. However, the findings are sensitive to the assumptions and existing or planned policies on energy technologies considered in the bottom-up model. |
| Keywords: | Energy and Environment,Energy Demand,Energy and Mining,Energy Policies&Economics,Transport Services,Oil Refining&Gas Industry,Climate Change Mitigation and Green House Gases |
| Date: | 2019–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8905&r=all |
| By: | Audrey Berry (Cired); Eloi Laurent (OFCE-Sciences Po Paris & Stanford University) |
| Abstract: | La perspective d’une reprise de la hausse de la fiscalité carbone française, suspendue en décembre 2018, s’est précisée à l’occasion du « grand débat national » et plusieurs propositions d’amélioration du dispositif existant ont été avancées dans le débat public, visant en particulier sa dimension sociale. Nous proposons à notre tour dans cet article une nouvelle fiscalité carbone, dénommée « contribution climat anti-pauvreté énergétique », que nous inscrivons dans son cadre écologique, social, juridique et politique. Nous commençons par formuler, à la lumière des trois échecs successifs de 2001, 2010 et 2018, quatre critères de réussite d’une fiscalité carbone : son efficacité écologique, sa justice sociale, sa conformité juridique et enfin son acceptabilité politique. Nous détaillons ensuite pour chaque critère les modalités que nous envisageons afin d’assurer la réussite de notre proposition. Répondant notamment aux revendications de justice sociale et d’équité fiscale du mouvement des « gilets jaunes », la fiscalité carbone que nous proposons permettrait à 50% des ménages français de recevoir plus qu’ils ne paient, les recettes additionnelles dégagées permettant de réduire considérablement la précarité énergétique qui touche des millions de Français. |
| Keywords: | Taxe carbone, justice sociale, transition écologique, précarité énergétique |
| JEL: | H23 Q52 Q58 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1906&r=all |
| By: | Arezki,Rabah |
| Abstract: | The paper deals with the economics of sustainability associated with the transformation of energy markets. It emphasizes the interrelations between technical changes and energy markets and how in turn the resulting transformations alter the sustainability of economic systems that are dependent on these markets. It also explores how innovation (or the lack thereof) is intimately linked to the ability of energy rich economies to adapt and transform. The agenda is especially relevant for oil rich countries that have announced or already put in place policies to help transform their economies and move away from dependence on oil. The agenda is also relevant for the global community, as it relates to the economic consequences of the needed transformation of energy markets to support the goal of limiting global warming by reducing greenhouse gas emissions. |
| Keywords: | Energy and Mining,Energy Demand,Energy and Environment,Public Sector Administrative and Civil Service Reform,State Owned Enterprise Reform,Public Sector Administrative&Civil Service Reform,Economics and Finance of Public Institution Development,Democratic Government,De Facto Governments,Climate Change and Health,Climate Change and Environment,Science of Climate Change,Legal Products,Common Property Resource Development,Regulatory Regimes,Legal Reform,Judicial System Reform,Legislation,Real&Intellectual Property Law,Intellectual Property Rights,Social Policy,Oil Refining&Gas Industry |
| Date: | 2019–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8858&r=all |
| By: | Asongu, Simplice A; Odhiambo, Nicholas M |
| Abstract: | This study assesses whether improving governance standards affects environmental quality in 44 countries in sub-Saharan Africa for the period 2000-2012. The empirical evidence is based on Generalised Method of Moments. Bundled and unbundled governance dynamics are used notably: (i) political governance (consisting of political stability and ?voice & accountability?); (ii) economic governance (entailing government effectiveness and regulation quality), (iii) institutional governance (represented by the rule of law and corruption-control) and (iv) general governance (encompassing political, economic and institutional governance dynamics). The following hypotheses are tested: (i) Hypothesis 1 (Improving political governance is negatively related to CO2 emissions); (ii) Hypothesis 2 (Increasing economic governance is negatively related to CO2 emissions) and (iii) Hypothesis 3 (Enhancing institutional governance is negatively related to CO2 emissions. Results of the tested hypotheses show that: the validity of Hypothesis 3 cannot be determined based on the results; Hypothesis 2 is not valid while Hypothesis 1 is partially not valid. The main policy implication is that governance standards need to be further improved in order for government quality to generate the expected unfavorable effects on CO2 emissions. |
| Keywords: | CO2 emissions; Governance; Economic development; Sustainable development; Africa |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:uza:wpaper:26282&r=all |
| By: | Brutscher, Philipp-Bastian; Ravillard, Pauline |
| Abstract: | Promoting investment in energy efficiency has become increasingly important over the past decade. It is heavily discussed in the context of the EU 2021-2027 Multiannual Financial Framework, and at the core of the EU 2030 Climate and Energy Framework. While the budget allocation and the energy efficiency target have been well defined, less is known about effective ways to promote investments in energy efficiency. This paper sheds light on this issue by showing how effective financial instruments and technical assistance are in increasing investments in energy efficiency. Using new experimental data from the European Investment Bank, we find that a lower and fixed interest rate, a lower collateral requirement and the provision of technical assistance in the implementation of the project can significantly boost investment in energy efficiency. When combining these favourable conditions, the probability that firms invest in energy efficiency increases by more than a third. These results provide important insights into measures to increase energy efficiency investments, and how to optimally design them, which is key for EU policy-makers and lending institutions. |
| Keywords: | Economics,Energy |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eibwps:202001&r=all |
| By: | Telaye,Andualem; Benitez,Pablo; Tamru,Seneshaw; Medhin,Haileselassie Amaha; Toman,Michael A. |
| Abstract: | This study uses a computable general equilibrium model to analyze various policy scenarios for a carbon tax on greenhouse gas emissions from petroleum fuels and kerosene in Ethiopia. The carbon tax starts at $5 per ton of carbon dioxide in 2018 and rises to $30 per ton in 2030. Different scenarios examine the impacts with revenue recycling through a uniform sales tax reduction, reduction of labor income tax, reduction of business income tax, direct transfer back to households, and use by the government to reduce debt. Because petroleum fuels and kerosene are a relatively small part of the Ethiopian economy, the carbon tax has quite small impacts on overall economic activity while having a notable proportionate impact on greenhouse gas emissions from these energy sources, depending on the recycling scenario. The carbon tax can raise significant revenue -- up to $800 million per year by 2030. The impacts on the poor through increased cost of living are not that large, since the share of the poor in total use of petroleum fuels and kerosene is small. In terms of income effects through employment changes, urban households tend to experience more impacts than rural households, but the results also depend on the household skill level and the revenue recycling scenario. |
| Date: | 2019–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8860&r=all |
| By: | Arezki,Rabah |
| Abstract: | This paper examines the role of monetary policy in fossil fuel exporters at different horizons. The main argument is that central banks in these economies need to look beyond the horizon of the business cycle. In the short run, (independent) monetary policy should flexibly target inflation. In the medium run, central banks need to coordinate with fiscal authorities to ensure that monetary policy operates around a credible and sustainable fiscal anchor. In the long run, central banks should beware of the existential threats posed by new risks related to stranded assets. |
| Keywords: | Macroeconomic Management,Inflation,Banks&Banking Reform,Energy Demand,Energy and Mining,Energy and Environment,Financial Structures |
| Date: | 2019–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8881&r=all |
| By: | Thomas Klitgaard; Patrick Russo (Research and Statistics Group) |
| Abstract: | The rise in oil prices from near $30 per barrel in 2000 to around $110 per barrel in mid-2014 was a dramatic reallocation of global income to oil producers. So what did oil producers do with this bounty? Trade data show that they spent about half of the increase in total export revenues on imports and the other half to buy foreign assets. The drop in oil prices will unwind this process. Oil-importing countries will gain from lower oil bills, but they will also see a decline in their exports to oil-producing countries and in purchases of their assets by investors in these countries. Indeed, one can make the case that the drop in oil prices, by itself, is putting upward pressure on interest rates as income shifts away from countries that have had a relatively high propensity to save. |
| Keywords: | balance of payments; oil-exporting countries; global imbalances; imports; financial account; exports; petrodollars; saving; current account; investment spending |
| JEL: | F00 G1 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:87039&r=all |
| By: | Jan J. J. Groen; Patrick Russo (Research and Statistics Group) |
| Abstract: | Oil prices have declined substantially since the summer of 2014. If these price declines reflect demand shocks, then this would suggest a slowdown in global economic activity. Alternatively, if the declines are driven by supply shocks, then the drop in prices might indicate a forthcoming boost in spending as firms and households benefit from lower energy costs. In this post, we use correlations of oil price changes with a broad array of financial variables to confirm that this recent fall in oil prices has been mostly the result of increased global oil supply. We then use a model to assess how this supply shock will affect U.S. economic conditions in 2015. |
| Keywords: | Oil Prices; Oil Supply Shocks; Asset Prices; VAR models |
| JEL: | E2 F00 G1 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:87038&r=all |
| By: | von Graevenitz, Kathrine; Rottner, Elisa |
| Abstract: | The manufacturing sector accounts for a substantial share of German GDP, employment and carbon emissions. Therefore, the manufacturing sector's energy use and carbon emissions are of crucial importance for reaching Germany's climate goals. In this paper, we analyse energy use patterns in German manufacturing between 2003 and 2014, using rich administrative micro-data. We find that although the manufacturing sector has been faced with rising energy costs as a share of total costs, energy use has not declined except briefly during the economic crisis. We also find that energy intensity in the manufacturing sector has not decreased substantially. In contrast, carbon intensity has fallen slightly between 2003 and 2014. This can be attributed to changes in the fuel mix. |
| Keywords: | Energy use,Fuel mix,Energy intensity,Carbon emissions,Manufacturing |
| JEL: | D22 L60 Q41 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:20008&r=all |
| By: | Strand,Jon |
| Abstract: | This paper considers the impacts of"finance blending"whereby climate finance is added to international carbon markets for offset trading. The paper first discusses climate finance and the carbon market as free-standing finance solutions by high-income countries to increase mitigation in low-income countries. Climate finance solutions have advantages for high-income countries due to their greater flexibility and general efficiency. A favorable aspect of well-functioning offset markets is that all participating countries face a similar and robust carbon price. With finance blending and"all attribution to the carbon market,"the market equilibrium is inefficient, as mitigation is excessive in low-income countries and too low in high-income countries. Instead, mitigation outcomes in the offset market should be attributed to the two finance types in proportion to their finance shares provided to the low-income countries through this market. When climate finance is added to the carbon market, the ambition level for emissions reductions for donor countries should be raised equivalently; otherwise, the added climate finance leads to no increase in global mitigation. When low-income country market participants have limited access to credit markets, climate finance can increase mitigation by supplying the capital required to implement efficient mitigation projects. |
| Keywords: | Climate Change Economics,Energy Policies&Economics,Climate Change Mitigation and Green House Gases,Energy and Mining,Energy and Environment,Energy Demand |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8914&r=all |
| By: | Doda, Baran; Fankhauser, Samuel |
| Abstract: | Climate policies do not affect all power producers equally. In this paper, we evaluate the supply-side distributional consequences of emissions reduction policies using a simple and novel partial equilibrium model where production takes place in technology-specific sites. In a quantitative application hydro, wind and solar firms generate power combining capital and sites which differ in productivity. In contrast, the productivity levels of coal, gas and nuclear technologies are constant across sites. We parameterise the model to analyse the effects of stylised tax and subsidy schemes. Carbon pricing outperforms all other instruments and, crucially, leads to more equitable outcomes on the supply side. Technology-specific and uniform subsidies to carbon-free producers result in a greater welfare cost and their supply- side distributional impacts depend on how they are financed. Power consumption taxes have exceptionally high welfare costs and should not be the instrument of choice to reduce emissions or to finance subsidies aiming to reduce emissions. |
| Keywords: | Carbon pricing; renewable subsidies; supply-side distributional implications; ES/R009708/1) |
| JEL: | Q41 Q48 H23 |
| Date: | 2020–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:102960&r=all |
| By: | Pang,Jun; Timilsina,Govinda R. |
| Abstract: | This study analyzes the potential impacts of a national emission trading scheme on provincial economies in China of meeting China's emission reduction pledges, the Nationally Determined Contributions announced under the Paris Agreement. The study developed a multiregional, multisectoral, recursive-dynamic computable general equilibrium model and calibrated it with the latest provincial-level social accounting matrices (2012). The study shows that meeting China's Nationally Determined Contributions through an emission trading scheme would reduce almost 30 percent of the emission reduction from the business as usual scenario in 2030. If the baseline is corrected based on information from a bottom-up energy sector model, TIMES, the required reduction of emissions from the baseline in 2030 drops by half, to 15 percent. At the national level, the emission trading scheme would cause a 1.2 to 1.5 percent reduction in gross domestic product from the business as usual scenario in 2030. If the baseline is corrected, the impact on gross domestic product drops by two-thirds. The emission trading scheme would cause some provincial economies to gain and others to lose. The economic impacts are highly sensitive to the allowance allocation rules. Not only the magnitudes, but also the directions of the economic impacts alter when the allocation rules change. The provinces that rely on coal mining or coal-intensive manufacturing industries are found to experience relatively larger economic losses irrespective of the allowance allocation rules. |
| Keywords: | Energy and Environment,Energy Demand,Energy and Mining,Oil Refining&Gas Industry,Public Sector Administrative&Civil Service Reform,Public Sector Administrative and Civil Service Reform,De Facto Governments,Democratic Government,Energy Policies&Economics,Employment and Shared Growth |
| Date: | 2019–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8909&r=all |
| By: | Schweikert,Amy Elizabeth; Nield,Lindsey; Otto,Erica; Deinert,Mark Robert |
| Abstract: | Resilience against infrastructure failure is essential for ensuring the health and safety of communities during and following natural hazard situations. Understanding how natural hazards impact society in terms of economic cost, recovery time, and damages to critical infrastructure is essential for developing robust approaches to increasing resilience. Identifying specific vulnerabilities allows for better communication, planning, and situation-specific interventions. This is particularly relevant in areas recovering from a natural hazard that have the opportunity to build back their infrastructure, and for those currently planning infrastructure expansions. This study considers recent hurricanes, earthquakes, droughts, heat waves, extreme wind and rainfall events, ice and thunder storms as well as wildfires. For many of these, data are available for the same type of hazard in different geographies which provides information not only on specific vulnerabilities, but whether the impacts are location dependent. Where available, specific design considerations, cost information for repairs, and the recommendations for'building back better'are presented. Above-ground transmission systems were the most commonly affected power system component, with fuel and maintenance supply chains representing a major vulnerability for isolated regions and islands. Generation systems were most commonly affected when a hazard exceeded design limits, particularly in relation to water temperature or wind speeds. Institutional capabilities are important throughout the sector. In all case studies analyzed, the design standards of the infrastructure asset, and the ongoing maintenance of assets and the organized response (or lack of) has major implications for the performance of the electricity grid. |
| Keywords: | Hydrology,Energy Policies&Economics,Energy Demand,Energy and Mining,Energy and Environment,Natural Disasters |
| Date: | 2019–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8900&r=all |