nep-ene New Economics Papers
on Energy Economics
Issue of 2020‒05‒11
28 papers chosen by
Roger Fouquet
London School of Economics

  1. Green New Deal Act 2020 By McGaughey, Ewan
  2. The Hungarian utility cost reduction programme : An impact assessment By Csaba Weiner; Tekla S. Szép
  3. Short- and long-run dynamics of energy demand By Marek Antosiewicz; Jan Witajewski-Baltvilks
  4. Macroeconomic and distributional consequences of energy supply shocks in Nigeria By Adeola F. Adenikinju; Niyi Falobi
  5. What Can We Learn from EU ETS? By Herman R. J. Vollebergh; Corjan Brink
  6. Residential Electricity Pricing in Texas’s Competitive Retail Market By Brown, David P.; Tsai, Chen-Hao; Woo, Chi-Keung; Zarnikau, Jay; Zhu, Shuangshuang
  7. Commitments and sunk costs in private mobility: A study of Swiss households facing green transport choices By Jeremy van Dijk; Mehdi Farsi; Sylvain Weber
  8. Time-Consistent Carbon Pricing: The Role of Carbon Contracts for Differences By Olga Chiappinelli; Karsten Neuhoff
  9. Resource rents and happiness on a global perspective: The resource curse revisited By Mignamissi, Dieudonné; Kuete, Flora Yselle
  10. The welfare effects of persuasion and taxation: Theory and evidence from the field By Rodemeier, Matthias; Löschel, Andreas
  11. Hedging and machine learning driven crude oil data analysis using a refined Barndorff-Nielsen and Shephard model By Humayra Shoshi; Indranil SenGupta
  12. Improving renewable energy resource assessments by quantifying landscape beauty By McKenna, Russell; Weinand, Jann Michael; Mulalic, Ismir; Petrovic, Stefan; Mainzer, Kai; Preis, Tobias; Moat, Helen Susannah
  13. Electricity Demand Modeling in Saudi Arabia: Do Regional Differences Matter By Jeyhun Mikayilov; Fakhri Hasanov; Waheed Olagunju; Mohammad H. Al-Shehri
  14. Calculations of gaseous and particulate emissions from German agriculture 1990 - 2018: Report on methods and data (RMD) Submission 2020 By Haenel, Hans-Dieter; Rösemann, Claus; Dämmgen, Ulrich; Döring, Ulrike; Wulf, Sebastian; Eurich-Menden, Brigitte; Freibauer, Annette; Döhler, Helmut; Schreiner, Carsten; Osterburg, Bernhard; Fuß, Roland
  15. Designing Transport Policy for Sustainable Freight Movement in Saudi Arabia By Hector G. Lopez-Ruiz; Nora Nezamuddin; Abdelrahman Muhsen
  16. Sequential hypothesis testing in machine learning driven crude oil jump detection By Michael Roberts; Indranil SenGupta
  17. Ensemble Forecasting for Intraday Electricity Prices: Simulating Trajectories By Micha{\l} Narajewski; Florian Ziel
  18. Balancing partner preferences for logistics costs and carbon footprint in a horizontal cooperation By Hacardiaux, Thomas; Defryn, Christof; Tancrez, Jean-Sébastien; Verdonck, Lotte
  19. The Environmental Bias of Trade Policy By Shapiro, Joseph S.
  20. Do environmental and economic performance go together? A review of micro-level empirical evidence from the past decade or so By Dechezleprêtre, Antoine; Koźluk, Tomasz; Kruse, Tobias; Nachtigall, Daniel; De Serres, Alain
  21. Spruce budworm and oil price: a biophysical analogy By Luciano Celi; Claudio Della Volpe; Luca Pardi; Stefano Siboni
  22. National energy efficiency monitoring report of Guyana By Wood, Shevon; Rowena, Candice
  23. The role of precautionary and speculative demand in the global market for crude oil. By Cross, James L.; Nguyen, Bao H.; Tran, Trung Duc
  24. Wahrheit und Moral in der Umweltpolitik By Pies, Ingo
  25. Vertical Integration and Capacity Investment in the Electricity Sector By Brown, David P.; Sappington, David E.M.
  26. Climate change and "growth traps" By Golub, Alexander (Голуб, Александр)
  27. Joe Kaeser, Luisa Neubauer und die Moral der Klimapolitik: Ordonomische Reflexionen zur Wirtschafts- und Unternehmensethik By Pies, Ingo
  28. Climate change awareness: Empirical evidence for the European Union By Donatella Baiardi; Claudio Morana

  1. By: McGaughey, Ewan (King's College, London)
    Abstract: This is a draft Green New Deal Act 2020, designed to decarbonise the economy, and make society wealthier and healthier, at next to zero cost to taxpayers. It includes provisions on: (1) establishing a Green New Deal commission to report on progress and recommend future changes to Parliament, (2) decarbonisation of transport, namely all buses, taxis, delivery vehicles, cars, and rail, limitation of plane flights, and golden shares in auto-manufacturers to switch production, (3) decarbonisation of energy generation, (4) a duty on the Coal, and Oil and Gas Authorities to eliminate the coal, oil and gas industries, and the creation of civil and criminal liability for climate damage, (5) a just transition with full employment, an income guarantee, and training for all affected workers, (6) changing agricultural subsidies to ensure carbon neutral practices, carbon traffic light labelling in all supermarkets, and recycling, (7) duties of the Bank of England, financial regulators, and all company directors to divest from fossil fuels and invest in clean energy, (8) empowerment of local government in transport, energy, building and agriculture, and (9) duties on the Secretary of State to negotiate for decarbonisation in all international agreements and military affairs. These statutory measures will ensure an end to climate damage by 2025.
    Date: 2020–03–27
  2. By: Csaba Weiner (Institute of World Economics, Centre for Economic and Regional Studies); Tekla S. Szép (Faculty of Economics, University of Miskolc)
    Abstract: In Hungary, regulated energy prices have been crucial in supplying electricity, district heating and natural gas to households, and as a result of a utility cost reduction programme, implemented in several stages starting from 2013, a sharp decline has been seen in these prices. However, this state intervention was performed without a strong policy background and the energy policy documents were just later adjusted to the prevailing situation. This paper focuses on the direct and indirect effects of this programme. The logarithmic mean Divisia index (LMDI) method is applied to decompose the absolute change in residential energy consumption between 2010 and 2017. We calculate price, intensive structure, extensive structure, expenditure and population effects. The results are in line with our expectations that decreasing energy prices for households had a positive impact on their energy use in the first few years. Overall, it induced an additional energy use of as much as 18.9 PJ between 2013 and 2017, while residential energy consumption stood at 263 PJ in 2017. We find that the state intervention created a new situation where the ratio of residential expenditure on energy services to total expenditure significantly decreased, the inflation rate declined and the economic and income situation of the majority, especially that of the middle class, considerably improved. However, the efficiency of the applied measures is still doubtful and several negative effects have also been detected. The utility cost reduction programme discourages energy conservation and energy efficiency; erodes the competitiveness of renewables; reduces gross capital formation in the energy sector; deteriorates security of supply; and increases energy prices for non-household customers. Despite these drawbacks, the utility cost reduction programme is expected to continue with some adjustments at most.
    Keywords: utility cost reduction, decomposition, energy consumption, residential sector, energy prices, energy efficiency, energy poverty, energy policy, energy investment
    JEL: P22 P28 Q41 Q48
    Date: 2020–03
  3. By: Marek Antosiewicz; Jan Witajewski-Baltvilks
    Abstract: The timing of the response of CO2 emissions to a carbon tax depends crucially on the timing of response of energy demand of changes in energy prices. In this paper, we investigate the path of changing energy demand from the moment of a change in price until it reaches its new steady state. First, by applying the LeChatelier principle, we show that the response of energy demand in the short run must be smaller than in the long run if firms are only able to adjust their choices of technology in the long run. Then, using a putty-clay model with induced technological change, we show that the elasticity of demand approaches its long-run level exponentially at the rate that is determined by the capital depreciation rate and the growth rate of the economy. Thus, according to the model, it takes more than 8 years from the introduction of the carbon tax until half of the long-run effect of induced technological change on energy demand is realised in developed countries. We also examine the macroeconomic consequences of the long-run adjustment of energy demand. To this end, we incorporate the theoretical model into a large-scale multi-sector DSGE model. We find that the adjustment of energy demand reduces the negative impact of CO2 tax on GDP.
    Keywords: induced technological change, rebound effect, general equilibrium model, mitigation costs
    JEL: Q33 Q41 Q43 Q55
    Date: 2019–12
  4. By: Adeola F. Adenikinju; Niyi Falobi (Department of Economics and Centre for Econometric and Allied Research University of Ibadan Ibadan, Nigeria)
    Abstract: In spite of its vast oil endowments, Nigeria continues to experience sporadic domestic oil supply shortages. These oil shortages manifest in regular queues at fuel stations that are often empty and in thriving parallel markets that sprout all over the country. The shortages have resulted in huge economic and non-economic costs to the economy. Thisstudy investigates the causes of the shortages and provides quantitative estimates of theeconomic costs to the Nigerian economy using a survey and a computable general equilibrium (CGE) model. The findings from this study show very clearly that oil sector supply shocks are costly both directly and indirectly. Oil supply shocks result in lower real GDP, higher average prices and greater balance of payment deficits. Other macroeconomic variables such as private consumption, investment, government revenueand employment also decline. In addition, the distributional impact of the quantitative energy supply shocks is higher for poor households than rich households. We also findthat the sectoral impacts are mixed, often depending on the oil intensity of the sector. Finally, our survey results show that many economic agents on the demand side arewilling to pay higher prices if that will guarantee a stable oil supply. Few players in the market chain benefit from supply disruptions, while consumers and the poor bear themain burden of these shocks.
  5. By: Herman R. J. Vollebergh; Corjan Brink
    Abstract: This paper discusses lessons that other regions could learn from European Union’s effort to implement carbon pricing through EU Emission Trading System (EU ETS). Our lessons are, first of all, that a cap-and-trade system like EU ETS is very helpful in guaranteeing a credible and binding reduction of emissions through its cap within the sectors subject to this regulation. Second, providing enough flexibility for trade, in particular intertemporal trade, is essential but should also be guided with care. The current quantity rules for the Market Stability Reserve to steer the abundancy of allowances seems a promising new feature for cap-and-trade policies, although price collars for newly designed systems create more transparency. Third, it is far from obvious why EU ETS should cover the entire carbon emissions base if other instruments, like (implicit) carbon taxes are already available. Finally, EU ETS seems at least partially responsible for the observed steady reduction of carbon emission within the EU ETS sectors. However, the gradual tendency to outsource emissions to other regions justifies carbon border adjustment mechanisms for selected sectors if other regions do not impose carbon pricing rules.
    Keywords: climate policy, carbon pricing, European Union Emission Trading System, Market Stability Reserve
    JEL: D47 D62 Q54 Q58
    Date: 2020
  6. By: Brown, David P. (University of Alberta, Department of Economics); Tsai, Chen-Hao (Midcontinent Independent System Operator); Woo, Chi-Keung (Education University of Hong Kong); Zarnikau, Jay (University of Texas at Austin); Zhu, Shuangshuang (Frontier Energy)
    Abstract: Using a large sample of residential retail electricity plans advertised on the Public Utility Commission of Texas’s Power-to-Choose website between during January 2014 to December 2018, our panel regression analysis finds changes in the projected wholesale price of electricity are not fully reflected as changes in these plans’ price quotes. The estimated rates of wholesale price pass-through range from 43% to 45%. Retailers tend to charge risk premia that increase with wholesale price volatility. Prepayment and time-of-use plans likely contain price premia. The price premia associated with higher-than-average renewable energy contents in the early years of our sample have largely vanished by 2018. Longer contract terms come at a higher price. Finally, increased customer switching tends to reduce retail price quotes, implying that Texas’s residential retail market can be made more price competitive through consumer education on plan choices and dissemination of credible price information.
    Keywords: Retail Electricity Pricing; Procurement Cost Pass-Through; Risk Premium; Renewable Premium; ERCOT
    JEL: D47 G12 Q31 Q41
    Date: 2020–04–27
  7. By: Jeremy van Dijk; Mehdi Farsi; Sylvain Weber
    Abstract: This paper experimentally investigates the existence of behavioural deviations from the oft-assumed rationality in private transport decisions, avoiding the selection-biases in revealed data. Through a choice experiment answered by 995 Swiss respondents, we explore the linkages between long- and medium-term travel investment decisions, and the choice of transport mode. We test the existence of commitment device usage in car and public transport pass purchases, and the sunk cost fallacy, as well as the impact of electric vehicles on mode choice. We find little evidence to support the existence of commitment devices, and no sunk cost fallacy. We further show that electric vehicle owners are equally likely to commute in their car, however use a greater mix of transport modes for leisure and long-distance trips. Our results support the importance of marginal travel costs in transport policy, as well as demonstrate the wide impact of rising EV consumption.
    Keywords: Transport, Behaviour, Choice experiment, Commitment, Sunk cost, Electric vehicles, Energy technology adoption, Environmental policy.
    Date: 2020–04
  8. By: Olga Chiappinelli; Karsten Neuhoff
    Abstract: Carbon pricing decisions by governments are prone to time-inconsistency, which causes the private sector to underinvest in emission-reducing technologies. We show that incentives for decarbonization can be improved if complementing carbon pricing with carbon contracts for differences, where the government commits to pay a fixed carbon price level to the investors. We derive conditions under which the government is willing to “tie its hands” with the contracts.
    Keywords: Carbon pricing, time-inconsistency, green technology, climate policy, carbon contracts
    JEL: C73 L51 O31 Q58
    Date: 2020
  9. By: Mignamissi, Dieudonné; Kuete, Flora Yselle
    Abstract: We revisit resource curse theory by providing empirical evidence for the effects of natural resource on the subjective wellbeing. Using cross-sectional model based on a global sample of 149 countries, we highlight that resources rents tend to reduce happiness but this effect differs according to (i) the political system and the level of development, (ii) the types and the measures of natural resources and (iii) the scale of happiness. Specifically, the negative effect of natural resources on happiness tends to be amplified in developing and weak democracy countries. Furthermore, the disaggregation of natural resource rents show that while oil rents and natural gas rent have a significant negative effect, forest, coal and mineral rents do not. However, after using the quantile regression approach, we find that these effects vary at different intervals throughout the happiness distribution.
    Keywords: Resource Rents, Happiness, Resource Curse
    JEL: C31 I31 Q34
    Date: 2020–03
  10. By: Rodemeier, Matthias; Löschel, Andreas
    Abstract: How much information should governments reveal to consumers if consumption choices have uninternalized consequences to society? How does an alternative tax policy compare to information disclosure? We develop a price theoretic model of information design that allows empiricists to identify the welfare effects of any arbitrary information policy. Based on this model, we run a natural field experiment in cooperation with a large European appliance retailer and randomize information regarding the financial benefits of energy-efficient household lighting among more than 640,000 subjects. We find that full information disclosure strongly decreases demand for energy efficiency, while partial information disclosure increases demand. More information reduces social welfare because the increase in consumer surplus is outweighed by the rise in environmental externalities. By randomizing product prices, we identify the optimal tax vector as an alternative policy and show that sizable taxes on energy-inefficient products yield larger welfare gains than any information policy. We also document an important policy interaction: information provision dramatically reduces attention to pecuniary incentives and thereby limits the effectiveness of taxes.
    Keywords: persuasion,optimal taxation,internality taxes,field experiments,energy efficiency,behavioral public economics
    JEL: D61 D83 H21 Q41 Q48
    Date: 2020
  11. By: Humayra Shoshi; Indranil SenGupta
    Abstract: In this paper, a refined Barndorff-Nielsen and Shephard (BN-S) model is implemented to find an optimal hedging strategy for commodity markets. The refinement of the BN-S model is obtained with various machine and deep learning algorithms. The refinement leads to the extraction of a deterministic parameter from the empirical data set. The problem is transformed to an appropriate classification problem with a couple of different approaches: the volatility approach and the duration approach. The analysis is implemented to the Bakken crude oil data and the aforementioned deterministic parameter is obtained for a wide range of data sets. With the implementation of this parameter in the refined model, the resulting model performs much better than the classical BN-S model.
    Date: 2020–04
  12. By: McKenna, Russell; Weinand, Jann Michael; Mulalic, Ismir; Petrovic, Stefan; Mainzer, Kai; Preis, Tobias; Moat, Helen Susannah
    Abstract: A cost-efficient and sustainable energy transition requires reliable information about the distribution of renewable energy resources. Here we draw on over 1.5 million scenicness ratings of around 200,000 geotagged photographs from Scenic-Or-Not to quantify the aesthetic value of the landscapes in which onshore wind energy installations could be situated in Great Britain. An analysis of planning applications provides quantitative evidence that onshore wind projects are more likely to be rejected when proposed in more scenic areas. Exploiting further open data sources including OpenStreetMap, we build on these findings to generate new estimates of the feasible potential and costs for onshore wind in Great Britain, which we find to be around 1700 TWh and £280 billion respectively. We also uncover a strong spatial correlation between scenicness and the quality of the wind resource, implying inevitable trade-offs between cost-efficiency and public acceptance.
    Date: 2020
  13. By: Jeyhun Mikayilov; Fakhri Hasanov; Waheed Olagunju; Mohammad H. Al-Shehri (King Abdullah Petroleum Studies and Research Center)
    Abstract: Energy is a pervasive input to all business and recreational activities. As such, total energy demand is an important indicator that helps explain the pattern of economic development within a country. Identifying and understanding the key determinants of electricity demand is therefore important for the economic prosperity of a country, since the availability of reliable electricity directly affects the prospects of economic development. With mega projects already in the works in Saudi Arabia, and Saudi Vision 2030’s National Industrial Development and Logistics Program (NIDLP 2019) being implemented, understanding the Kingdom’s existing and projected patterns of electricity demand is arguably more important now than ever before.
    Keywords: Electricity Demand, Economic Modelling, Energy Demand, Saudi Vision 2030
    Date: 2020–04–30
  14. By: Haenel, Hans-Dieter; Rösemann, Claus; Dämmgen, Ulrich; Döring, Ulrike; Wulf, Sebastian; Eurich-Menden, Brigitte; Freibauer, Annette; Döhler, Helmut; Schreiner, Carsten; Osterburg, Bernhard; Fuß, Roland
    Abstract: Der vorliegende Berichtsband einschließlich des umfangreichen Datenanhangs dient als Begleitdokument zum National Inventory Report (NIR) über die deutschen Treibhausgas-Emissionen sowie zum Informative Inventory Report (IIR) über die deutschen Schadstoffemissionen (insbesondere Ammoniak). Der Bericht dokumentiert die im deutschen landwirtschaftlichem Inventarmodell GAS-EM integrierten Berechnungsverfahren sowie die Eingangsdaten, Emissionsergebnisse und Unsicherheiten der Berichterstattung 2018 für die Jahre 1990 bis 2017. Der Bereich Landwirtschaft umfasst dabei die Emissionen aus der Tierhaltung und der Nutzung landwirtschaftlicher Böden sowie aus der Vergärung von Energiepflanzen. Emissionen aus dem Vorleistungsbereich, aus der Nutzung von Energie sowie Landnutzungsänderungen werden den Regelwerken entsprechend an anderer Stelle in den nationalen Inventaren berichtet. Die Berechnungsverfahren beruhen in erster Linie auf den internationalen Regelwerken zur Emissionsberichterstattung und wurden durch die Arbeitsgruppe 'Landwirtschaftliche Emissionsinventare' des Thünen-Instituts in den vergangenen Jahren beständig weiterentwickelt, teilweise in Zusammenarbeit mit dem KTBL. Dies betrifft im Wesentlichen die Berechnung des Energiebedarfs, der Fütterung und der tierischen N-Bilanz bei den wichtigen Tierkategorien. Zusätzlich wurden technische Maßnahmen wie Abluftreinigung (Minderung von Ammoniakemissionen) und die Vergärung von Wirtschaftsdünger (Minderung von Methan- und Lachgasemissionen) berücksichtigt. Für die Berechnung von Emissionen aus der Vergärung von Wirtschaftsdünger und Energiepflanzen (einschließlich Gärrestausbringung) entwickelte die vorgenannte Arbeitsgruppe in Zusammenarbeit mit dem KTBL eine deutsche Methodik ...
    Keywords: Emission inventory,agriculture,livestock husbandry,agricultural soils,anaerobic digestion,energy crops,renewable primary products,greenhouse gases,air pollutants,methane,laughing gas,ammonia,particulate matter,Emissionsinventar,Landwirtschaft,Tierhaltung,landwirtschaftliche Böden,anaerobe Vergärung,Energiepflanzen,nachwachsende Rohstoffe,Treibhausgase,Luftschadstoffe,Methan,Lachgas,Ammoniak,luftgetragene Partikel,Staub
    Date: 2020
  15. By: Hector G. Lopez-Ruiz; Nora Nezamuddin; Abdelrahman Muhsen (King Abdullah Petroleum Studies and Research Center)
    Abstract: Logistics and infrastructure policy will play key roles in Saudi Arabia’s economic diversification and reform efforts. This study provides a quantitative assessment of specific measures related to freight transport, taking into consideration the heterogeneity of urban, regional and inter-regional localities in Saudi Arabia. This paper, mirroring the global approach developed by the European Commission’s Joint Research Centre, analyzes the potential impact of logistics policy. It sheds light on how transport regulations can help rationalize fuel consumption and reduce greenhouse gas emissions and other air pollutants in the Kingdom.
    Keywords: Freight Transport Activity, Freight Transport Energy Demand, Multimodal Freight transport, Saudi Freight Transport, Transport Policy Design
    Date: 2020–04–26
  16. By: Michael Roberts; Indranil SenGupta
    Abstract: In this paper we present a sequential hypothesis test for the detection of general jump size distrubution. Infinitesimal generators for the corresponding log-likelihood ratios are presented and analyzed. Bounds for infinitesimal generators in terms of super-solutions and sub-solutions are computed. This is shown to be implementable in relation to various classification problems for a crude oil price data set. Machine and deep learning algorithms are implemented to extract a specific deterministic component from the crude oil data set, and the deterministic component is implemented to improve the Barndorff-Nielsen and Shephard model, a commonly used stochastic model for derivative and commodity market analysis.
    Date: 2020–04
  17. By: Micha{\l} Narajewski; Florian Ziel
    Abstract: Recent studies concerning the point electricity price forecasting have shown evidence that the hourly German Intraday Continuous Market is weak-form efficient. Therefore, we take a novel, advanced approach to the problem. A probabilistic forecasting of the hourly intraday electricity prices is performed by simulating trajectories in every trading window to receive a realistic ensemble to allow for more efficient intraday trading and redispatch. A generalized additive model is fitted to the price differences with the assumption that they follow a mixture of the Dirac and the Student's t-distributions. Moreover, the mixing term is estimated using a high-dimensional logistic regression with lasso penalty. We model the expected value and volatility of the series using i.a. autoregressive and no-trade effects or load, wind and solar generation forecasts and accounting for the non-linearities in e.g. time to maturity. Both the in-sample characteristics and forecasting performance are analysed using a rolling window forecasting study. Multiple versions of the model are compared to several benchmark models. The study aims to forecast the price distribution in the German Intraday Continuous Market in the last 3 hours of trading, but the approach allows for application to other continuous markets. The results prove superiority of the mixture model over the benchmarks gaining the most from the modelling of the volatility.
    Date: 2020–05
  18. By: Hacardiaux, Thomas; Defryn, Christof (RS: GSBE Theme Data-Driven Decision-Making, QE / Operations research, RS: FSE DKE Mathematics Centre Maastricht); Tancrez, Jean-Sébastien; Verdonck, Lotte
    Abstract: Horizontal cooperation in logistics has gathered momentum in the last decade as a way to reach economic as well as environmental benefits. In the literature, these benefits are most often assessed through aggregation of demand and supply chain optimization of the partnership as a whole. However, such an approach ignores the individual preferences of the participating companies and forces them to agree on a unique coalition objective. Companies with different (potentially conflicting) preferences could improve their individual outcome by diverging from this joint solution. To account for companies preferences, we propose an optimization framework that integrates the individual partners’ interests directly in a cooperative model. The partners specify their preferences regarding the decrease of logistical costs versus reduced CO2 emissions. Doing so, all stakeholders are more likely to accept the solution, and the long-term viability of the collaboration is improved. First, we formulate a multi-objective, multi-partner location-inventory model. Second, we distinguish two approaches for solving it, each focusing primarily on one of these two dimensions. The result is a set of Pareto-optimal solutions that support the decision and negotiation process. Third, we propose and compare three different approaches to construct a unique solution which is fair and efficient for the coalition. Extensive numerical results not only confirm the potential of collaboration but, more importantly, also reveal valuable managerial insights on the effect of dissimilarities between partners with respect to size, geographical overlap and operational preferences.
    JEL: C44
    Date: 2020–02–17
  19. By: Shapiro, Joseph S.
    Abstract: This paper documents a new fact, then analyzes its causes and consequences: in most countries, import tariffs and non-tariff barriers are substantially lower on dirty than on clean industries, where an industry’s “dirtiness” is defined as its carbon dioxide (CO2) emissions per dollar of output. This difference in trade policy creates a global implicit subsidy to CO2 emissions in internationally traded goods and so contributes to climate change. This global implicit subsidy to CO2 emissions totals several hundred billion dollars annually. The greater protection of downstream industries, which are relatively clean, substantially accounts for this pattern. The downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized. A quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods, global CO2 emissions would decrease and global real income would change little
    Keywords: Social and Behavioral Sciences, climate change, trade policy, trade and the environment
    Date: 2020–05–02
  20. By: Dechezleprêtre, Antoine; Koźluk, Tomasz; Kruse, Tobias; Nachtigall, Daniel; De Serres, Alain
    Abstract: This article reviews the empirical literature combining economic and environmental performance data at the micro-level, i.e. firm or facility level. The literature has generally found a positive and statistically significant correlation between economic performance, as measured by profitability indicators or stock market returns, and environmental performance, as measured by emissions of pollutants or adoption of international environmental standards. The main reason for this finding seems to be that firms that reduce their material and energy costs experience both better economic performance and lower emissions. Only a small and recent literature analyses the joint causal impact of environmental regulations on environmental and economic performance. Interestingly, this literature shows that environmental regulations tend to improve environmental performance while not weakening economic performance. However, the evidence so far is limited to a handful of environmental regulations that are not extremely stringent, so the result cannot be easily generalized. More research is needed to assess the joint effects of environmental regulations on environmental and economic performance, to explore the heterogeneity of these effects across sectors, countries and types of policies, and to understand which policy designs allow improving environmental quality while not coming at a cost in terms of economic performance of regulated businesses.
    Keywords: Environmental performance; Environmental regulation; Financial performance; Porter hypothesis; Research synthesis; ES/R009708/1
    JEL: O32 Q52 Q55 Q58
    Date: 2019–04–26
  21. By: Luciano Celi (Department of Civil, Environmental and Mechanical Engineering, University of Trento, Italy; Institute for Chemical and Physical Processes, National Research Council, Pisa, Italy); Claudio Della Volpe (Department of Civil, Environmental and Mechanical Engineering, University of Trento, Italy); Luca Pardi (Institute for Chemical and Physical Processes, National Research Council, Pisa, Italy); Stefano Siboni (Department of Civil, Environmental and Mechanical Engineering, University of Trento, Italy)
    Abstract: The behavior of complex systems is one of the most intriguing phenomena investigated by recent science; natural and artificial systems offer a wide opportunity for this kind of analysis. The energy conversion is both a process based on important physical laws and one of the most important economic sectors; the interaction between these two aspects of energy production suggests the possibility to apply some of the approaches of the dynamic systems' analysis. In particular, a phase plot, which is one of the methods to detect a correlation between quantities in a complex system, provides a good way to establish qualitative analogies between the ecological systems and the economic ones and may shed light on the processes governing the evolution of the system. The aim of this paper is to highlight the analogies between some peculiar characteristics of the oil production vs. price and show in which way such characteristics are similar to some behavioral mechanisms found in Nature.
    Date: 2020–04
  22. By: Wood, Shevon; Rowena, Candice
    Abstract: Although oil production is just starting in Guyana, the Government of Guyana is well aware that fossil fuels are a finite resource and do not last forever. It therefore continues to take a strategic approach to the development of a sustainable and cleaner energy sector, and the Guyana Energy Agency (GEA) is considering energy efficiency measurements as a tool for strengthening energy security, securing a long-term reduction in greenhouse gas emissions and increasing revenue and cost savings. With the support of the Regional Observatory on Sustainable Energies (ROSE), GEA has built a database of energy efficiency indicators that allows for their subsequent analysis. Most of the indicators are based on data available from the Guyana Bureau of Statistics, Guyana Power and Light Inc., the Guyana Civil Aviation Authority and many other stakeholders. This report analyses the information collected on the main sectors of the country, including energy, industry, transportation, agriculture and services, as well as households, and explains the energy efficiency trends in Guyana. This research seeks to strengthen institutional capacities not only to collect, collate and analyse energy efficiency data, but also to strengthen national, evidence-based policymaking capacities.
    Date: 2020–04–23
  23. By: Cross, James L. (BI Norwegian Business School, Centre of Applied Macroeconomics and Commodity Prices (CAMP)); Nguyen, Bao H. (Tasmanian School of Business & Economics, University of Tasmania); Tran, Trung Duc (The University of Sydney)
    Abstract: Contemporary structural models of the global market for crude oil treat storage demand as a composite of precautionary responses to uncertainty and speculative behavior, due to difficulties in jointly identifying these distinct demand components. This difficulty arises because the underlying expectation shifts are latent and operate through similar transmission mechanisms. In this paper, we extend the workhorse oil market model by jointly identifying these distinct demand components. Our main insight is that precautionary demand is the primary driver of the real price of crude oil, previously associate with storage demand shocks. Historically, precautionary demand shifts associated with adverse sociopolitical conditions in the Middle-East, can explain the oil price spikes during the 1979 oil crisis and the Wars of 1980 and 1990, while speculative demand was a more important driver during the disbandment of OPEC. Finally, we find that these newly identified shocks have distinct consequences for the U.S. economy: precautionary demand shocks reduce real GDP, while speculative demand shocks cause inflation.
    Keywords: oil price uncertainty, oil market, SVAR, narrative sign restrictions
    JEL: C32 C52 Q41 Q43
    Date: 2020
  24. By: Pies, Ingo
    Abstract: Die umweltpolitische Debatte leidet unter einem verbreiteten Diskursversagen. Zugrunde liegt eine Moralkonfusion. Sie verstellt der demokratischen Öffentlichkeit den Blick auf die ordnungspolitische Option, das moralische Anliegen einer nachhaltigen Entwicklung - inklusive Klimaschutz - durch die kluge Indienstnahme marktwirtschaftlicher Prinzipien zu verwirklichen. Ohne Produktionseffizienz und Innovationsdynamik - und insbesondere ohne intensives Wachstum - wird es keine ökologisch nachhaltige Entwicklung geben (können).
    Keywords: Umweltpolitik,Klimapolitik,Emissionen,Marktwirtschaft,intensives Wachstum,Innovation,Wettbewerb,Gewinnorientierung,environmental policy,climate policy,emissions,market economy,intensive growth,competition,profit orientation
    Date: 2020
  25. By: Brown, David P. (University of Alberta, Department of Economics); Sappington, David E.M. (University of Florida)
    Abstract: We examine the incentives for and the effects of vertical integration in the electricity sector. We find that vertical integration generally reduces retail prices and increases industry capacity investment, consumer surplus, and total welfare. Unilateral vertical integration is pro table, so it arises in equilibrium. However, ubiquitous vertical integration can reduce aggregate industry pro fit.
    Keywords: Vertical Integration; Capacity Investment; Electricity Sector
    JEL: L51 L94 Q28 Q40
    Date: 2020–04–27
  26. By: Golub, Alexander (Голуб, Александр) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: Reliance of the Russian economy on carbon dependent sectors may induce a long-term stagnation and convergence of the economy into the development trap. A theoretical model of economic growth model presents the Russian economy as a combination of two sectors: dominating carbon-dependent industries and emerging knowledge-based sectors. Exposure of carbon-dependent industries to the emerging global and regional climate policies and to climate change itself determine elevated investment risks and high risk-adjusted cost of capital. The reliance of Russia on resource and energy-intensive sectors will increase investment risks and the cost of capital for the Russian economy. For the theoretical analysis, we apply the Ramsey economic growth model with a convex-concave production function. For the analysis of investment risks, we use the real options analysis.
    Keywords: development trap; investment risks; climate policy: concave-convex production function
    Date: 2020–03
  27. By: Pies, Ingo
    Abstract: Dieser Artikel reflektiert die öffentliche Auseinandersetzung zwischen Joe Kaeser und Luisa Neubauer. Er nimmt die Perspektive des ordonomischen Forschungsprogramms ein und formuliert zehn Thesen zum Themenkomplex "Klimapolitik und Moral".
    Keywords: Ordonomik,Wachstum,De-Growth,Klimapolitik,Dekarbonisierung,Emissionshandel,Flugscham,ordonomics,growth,climate politics,de-carbonisation,emission trading,flight shame
    Date: 2020
  28. By: Donatella Baiardi (University of Parma, Italy; Center for European Studies); Claudio Morana (University of Milano-Bicocca, Italy; Center for European Studies; Center for Research on Pensions and Welfare Policies; Rimini Centre for Economic Analysis)
    Abstract: In this paper we assess public attitudes on climate change in Europe over the last decade. Using aggregate figures from the Special Eurobarometer surveys on Climate Change, we find that climate change attitudes have evolved according to the “S-shaped” information dissemination model, conditional to various socioeconomic and climatological factors. In particular, we find that environmental awareness is directly related to per capita income, social trust, secondary education, the physical distress associated with hot weather and loss caused by extreme weather episodes. It is also inversely related to greenhouse gas emissions and tertiary education. Moreover, consistent with our epidemics-like narrative, we find a negative impact for Donald Trump's denial campaigns and a larger positive effect for Greta Thunberg's environmental activism. In terms of policy implications, this paper calls on the EU to take up leadership in the fight against climate change and declare a climate emergency. It also calls on teachers to introduce their students to climate change, science journals to allow wide access to any climate change article they publish and public institutions to protect climate change evidence from politicization. This paper finally calls for the close coordination of monetary and fiscal policies, to allow the green bonds market to reach rapidly the size required for the implementation of effective climate change mitigation policies.
    Keywords: climate change, environmental attitude, green bonds, mitigation policy, EU
    JEL: Q50 Q54 Q58
    Date: 2020–04

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