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on Energy Economics |
| By: | Takashi Hattori (Institute of Economic Research, Kyoto University); Yi-chun CHEN (Institute of Economic Research, Kyoto University) |
| Abstract: | This paper assesses whether Japan’s energy and climate policies are aligned by examining its narratives in major energy and climate policy documents announced before and after the Kyoto Protocol came into effect. The study aims to shed light on the country’s recent regressive position compared to other climate and energy policy-leading countries. There is a focus on the government’s attitudes and policies regarding nuclear power, renewable energy, and coal. The results show that although these policies are essentially aligned in terms of renewable energy and nuclear power, but they are inconsistent in terms of coal. The policy examination indicates that the conventional energy security and economic efficiency are dominant factors in Japan’s energy policy; whereas climate change, although an important concern, does not predominate in energy planning. This implies that Japan needs to coordinate its energy and climate policies more than ever before to restore its leading position in dealing with the climate issues. |
| Keywords: | Keywords: energy policy, climate policy, nuclear power, coal, renewable energy, Japan |
| JEL: | Q48 Q58 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:1046&r=all |
| By: | Egüez, Alejandro (Department of Economics, Umeå University) |
| Abstract: | Paper [I] investigates the energy efficiency of multi-dwelling buildings in Sweden to find out whether the ownership type matters. More specifically, we investigate whether rental apartment buildings are less energy efficient than cooperative apartment buildings and whether public ownership has a negative impact on energy efficiency. A conceptual framework is presented to illustrate that such differences could be explained by the split incentives problem and deviations from profit maximizing interests. The empirical analysis is based on a unique dataset that combines data from energy performance certificates with ownership data on residential units. The results indicate that cooperative apartment buildings are significantly more energy efficient than buildings with rental apartments. The results also indicate that publicly owned buildings have somewhat lower energy performance than privately owned ones. Paper [II] Incomplete information may be one reason why some households do not invest in energy efficiency even though it would benefit them to do so. Energy performance certificates (EPCs) have been promoted to overcome such information shortages. In this paper, we investigate whether EPCs together with mandatory home energy audits make households more likely to invest in energy efficiency. Our study takes advantage of the mandatory nature of the EPCs to avoid the potential selection bias problem that typically applies to studies using voluntary energy audits as the treatment. Our treatment group consists of singlefamily houses in Sweden sold from 2008, i.e., when EPCs became legally required in connection with sales of residential buildings, to 2015; while the control group consists of houses sold between 2002 and 2008, i.e., without an EPC. The results show that there is no statistically significant treatment effect for most of the measures that a household can take to improve the energy performance of their house. The significant treatment effect that we do find concerns a few heating system-related measures. Paper [III] The price of district heating in Sweden is unregulated and differs substantially among different networks. This paper investigates if the price variation can partly be explained by ownership status, i.e., whether the network companies are privately- or municipally-owned. The empirical analysis is based on data on district heating prices, ownership status, and network characteristics for the period 2012-2017. The results show that prices are higher in privatelyowned district heating networks than in municipally-owned networks, especially in the fixed component of the price. It is argued that municipal and private companies’ divergent objectives may be part of the explanation for these differences. Finally, district heating prices are positively correlated with the market prices for heat pumps, regardless of ownership, which suggests a general price-setting strategy based on the price of substitutes. Paper [IV] assesses whether and to what extent income and the stringency and enforcement (S&E) of environmental regulation influence compliance with the EU Waste Hierarchy (EWH), i.e., how EU member states treat waste. The EWH prioritizes waste prevention and re-use over recycling, which is ranked above waste to energy (WtE), while incineration and landfilling are the least preferred options. Biennial panel data for the period 2010–2016 is used to create a compliance index based on the waste treatment alternatives in the EWH. The waste (excluding major mineral waste) of 26 European Union countries is examined. This study is the first of its kind to regress an EWH compliance index on income, the stringency and enforcement of environmental regulation, and other variables that are also expected to affect the relative benefits and costs of waste treatment, such as population density, heating demand, and electricity prices. The shares of landfilling, incineration, WtE, and recycling are also modeled to capture the effect of these variables in the waste treatment mix. The stringency and enforcement of environmental regulation are found to have a positive effect on compliance with the EWH, which has increased over time. |
| Keywords: | energy efficiency; energy performance certificates; multi-dwelling; buildings; ownership; principal-agent; public versus private management; split incentives; home energy audits; quasi-natural experimental design; incomplete information; investment decision; energy efficiency gap; policy evaluation; district heating prices; public versus private; natural monopoly; two-part tariff; EU waste hierarchy; waste treatment ladders; income; policy stringency; policy enforcement |
| JEL: | D42 D83 L11 L33 L43 L95 O44 Q41 Q48 Q53 R11 |
| Date: | 2020–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0979&r=all |
| By: | Finn Roar Aune (Statistics Norway); Rolf Golombek |
| Abstract: | In 2018, an agreement between the key EU institutions – the Commission, the European Parliament, and the European Council – was reached after a long-lasting discourse over the 2030 EU climate and energy policy package. This paper offers a comprehensive assessment of the EU package, with its three main targets: lower greenhouse gas emissions, higher renewable share in final energy consumption, and improved energy efficiency. We find that the renewable and energy efficiency targets have been set so high that the derived emissions reduction (50 percent) exceeds the EU climate target (40 percent). Hence, there is no need for an EU climate policy, for example, to use carbon prices to reach the EU climate goals. It is, however, not cost-efficient to achieve the climate target by imposing the three EU targets. We demonstrate that a cost-efficient policy that obtains a 50 percent GHG emissions reduction would increase annual welfare (relative to the Reference scenario) by an amount corresponding to 0.6 percent of GDP in Europe. |
| Keywords: | climate policy; renewables; energy efficiency; energy modeling; EU 2030 |
| JEL: | Q28 Q41 Q48 Q54 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:940&r=all |
| By: | Bobylev Yuri (Gaidar Institute for Economic Policy) |
| Abstract: | The oil and gas sector is among the basic ones of the Russian economy and is playing an important role in the income generation for the state budget and Russia’s trade balance. Implementation of the OPE, Russia and a number of other countries agreement on the production cut with a simultaneous global crude oil demand growth in 2019 has resulted in the world crude oil prices stabilization in the range of $60–70 per barrel. In 2019, the volumes of crude oil production peaked for the entire post-Soviet period and the extraction of the natural gas hit an all-time high. Under the effect the tax maneuver in force in the oil industry, the crude oil refining volumes have stabilized and significantly increased the refining depth, production of fuel oil and its exports have contracted. March 2020 revealed a crucial discrepancy between the positions taken by Russia and the OPEC member states regarding the deal parameters for the subsequent period. Hence, there were no new agreements, the current deal was not extended and Saudi Arabia notified about the intention to ramp up production. In the wake of coronavirus pandemic and a plunge of the global oil demand the crude oil prices have collapsed. |
| Keywords: | Russian economy, oil and gas sector, oil production, oil prices, oil and gas export |
| JEL: | L71 L72 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:gai:ppaper:ppaper-2020-1050&r=all |
| By: | SHAHANI, RAKESH; BANSAL, AASTHA |
| Abstract: | The paper investigates the co-integrating relationship between economic growth, energy and environment for India and China for the period 1970-2014 (using log transformed yearly data). Whereas GDP per capita is taken as the growth proxy , CO2 emissions per capita represents environmental degradation & fossil fuel consumption is the proxy for energy consumption. The methodology adapted is ARDL Partial ‘F’ Bounds Test with single structural break. The results of the study showed that Co-integrating relation was established amongst all the variables except when CO2 (China) is taken as dependent variable. The ECM term was negative and significant in all the cases (except for CO2 China again) Further the speed of adjustment towards equilibrium was highest @16 % per annum for CO2 of India while it was between 3% - 8 % p.a for rest of the variables. Chow Break even confirmed that India CO2 emissions had a break in 1996. |
| Keywords: | Co-integration, ARDL, Serial Correlation, Structural Break, Chow Breakpoint test, error correction, CUSUM |
| JEL: | O1 O13 Q43 Q54 Q56 |
| Date: | 2020–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:103591&r=all |
| By: | Sulikova, Simona (University of Oxford); van den Bijgaart, Inge (Department of Economics, School of Business, Economics and Law, Göteborg University); Klenert, David (Joint Research Centre, European Commission,); Mattauch, Linus (University of Oxford) |
| Abstract: | Transport has a large number of significant externalities including carbon emissions, air pollution, accidents, and congestion. Active travel such as cycling and walking can reduce these externalities. Moreover, public health research has identified additional social gains from active travel due to health benefits of increased physical exercise. In fact, on a per mile basis, these benefits dominate the external social costs from car use by two orders of magnitude. We introduce health benefits and active travel options into an optimal taxation model of transport externalities to study appropriate policy responses. We characterise the optimal second-best fuel tax analytically: when physical exercise is considered welfare-enhancing, the optimal fuel tax increases. Under central parameter assumptions it rises by 49% in the US and 36% in the UK. This is due to the low fuel price elasticity of active travel. We argue that fuel taxes should be implemented jointly with other policies aimed at increasing the uptake of active travel to reap its full health benefits. |
| Keywords: | Transport Externalities; Congestion; Active travel; Fuel; Health Behaviour; Optimal Taxation |
| JEL: | H23 I12 Q58 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0794&r=all |
| By: | Amjadi, Golnaz (Department of Economics, Umeå University) |
| Abstract: | Paper [I] Energy efficiency improvement (EEI) benefits the climate and matters for energy security. The potential emission and energy savings due to EEI may however not fully materialize due to the rebound effect. In this study, we measure the size of the rebound effect for fuel and electricity within the four most energy intensive sectors in Sweden: Pulp and paper, Basic iron and steel, Chemical, and Mining. We use a detailed firm-level panel data set for 2000–2008 and apply a stochastic frontier analysis (SFA) for measuring the rebound effect. We find that neither fuel nor electricity rebound effects fully offset the potential energy and emission savings. Among the determinants, we find the CO2 intensity and the fuel/electricity shares to be useful indicators for identifying firms with higher or lower rebound effects within each sector. Paper [II] Energy efficiency improvement (EEI) is generally known to be a cost-effective measure for meeting energy, climate and sustainable growth targets. Unfortunately, behavioral responses to such improvements (called energy rebound effects) may reduce the expected savings in emissions and energy from EEI. Hence, the size of this effect should be considered to help set realistic energy and climate targets. Currently there are significant differences in approaches for measuring rebound effect. Here, we used a two-step procedure to measure both short- and long-term energy rebound effects in the Swedish manufacturing industry. In the first step, we used data envelopment analysis (DEA) to obtain energy efficiency scores. In the second step, we estimated energy rebound effects using a dynamic panel regression model. This approach was applied to a firm-level panel dataset covering all 14 sectors in the Swedish manufacturing industry over the period 1997–2008. We showed that, in the short run, partial rebound effects exist within most of manufacturing sectors, meaning that the rebound effect decreased, but did not totally offset, the energy and emission savings expected from EEI. The long-term rebound effect was smaller than the short-term effect, implying that within each sector, energy and emission savings due to EEI are larger in the long run compared to the short run. Paper [III] Energy inefficiency in production implies that the same level of goods and services could be produced using less energy. The potential energy inefficiency of a firm may be linked to long-term structural rigidities in the production process and/or systematic shortcomings in management (persistent inefficiency), or associated with temporary issues like misallocation of resources (transient inefficiency). Eliminating or mitigating different inefficiencies may require different policy measures. Studies measuring industrial energy inefficiency have mostly focused on overall inefficiencies and have paid little attention to distinctions between the types. The aim of this study was to assess whether energy inefficiency is transient and/or persistent in the Swedish manufacturing industry. I used a firm-level panel dataset covering fourteen industrial sectors from 1997–2008 and estimated a stochastic energy demand frontier model. The model included a four-component error term separating persistent and transient inefficiency from unobserved heterogeneity and random noise. I found that both transient and persistent energy inefficiencies exist in most sectors of the Swedish manufacturing industry. Overall, persistent energy inefficiency was larger than transient, but varied considerably in different manufacturing sectors. The results suggest that, generally, energy inefficiencies in the Swedish manufacturing industry were related to structural rigidities connected to technology and/or management practices. Paper [IV] The aim of this paper was to investigate whether the environment and employment compete with each other in Swedish manufacturing industry. The effect of a marginal increase in environmental expenditure and environmental investment costs on sector-level demand for labor (employment) was studied using a detailed firm-level panel dataset for the period 2001–2008. The results showed that the sign and magnitude of the net employment effects ultimately depend on the aggregate sector-level output demand elasticity. If the output demand is inelastic, these costs induce small net improvements in employment, while a more elastic output demand suggests negative, but in most sectors relatively small, net effects on demand for labor. Hence, the results did not generally indicate a substantial trade-off between jobs and the environment. The general policy recommendation that can be drawn from this study is that, in the absence of empirically estimated output demand elasticities, a careful attitude regarding national environmental initiatives for sectors exposed to world market competition should be adopted. |
| Keywords: | Energy efficiency improvement; rebound effect; stochastic frontier analysis; data envelopment analysis; stochastic energy demand frontier model; persistent and transient energy inefficiency; energy inefficiency; environmental expenditure and environmental investment costs; output demand elasticity |
| JEL: | C02 C33 C50 D22 J23 K32 L60 Q40 Q50 |
| Date: | 2020–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0982&r=all |
| By: | Jérôme Creel (Observatoire français des conjonctures économiques); Mario Holzner; Francesco Saraceno (Observatoire français des conjonctures économiques); Andrew Watt (Macroeconomic Policy Institute (IMK)); Jérôme Wittwer (Bordeaux population health (BPH)) |
| Abstract: | ■The Recovery Fund recently proposed by the EU Commission marks a sea-change in European integration. Yet it will not be enough to meet the challenges Europe faces. There has been much public debate about financing, but little about the sort of concrete projects that the EU should be putting public money into.■Here we propose a 10-year, €2tn investment programme focusing on public health, transport infrastructure and energy/decarbonisation. ■It consists of two pillars. In a national pillar Member States — broadly as in theCommission proposal — would be allocated €500bn. Resources should be focused on the hardest-hit countries and front-loaded: we suggest over a three-year horizon.■The bulk of the money —€1.5tn — would be devoted to finance genuinely European projects, where there is an EU value added. We describe a series of flagship initiatives that the EU could launch in the fields of public health, transport infrastructure and energy/decarbonisation. ■We call for a strengthened EU public health agency that invests in health-staff skillsand then facilitates their flexible deployment in emergencies, and is tasked withensuring supplies of vital medicines (Health4EU). ■We present costed proposals for two ambitious transport initiatives: a dedicated European high-speed rail network, the Ultra-Rapid-Train, with four-routes cuttingtravel times between EU capitals and regions, and, alternatively, an integrated European Silk Road initiative that combines transport modes on the Chinese model. ■In the area of energy/decarbonisation we seek to “electrify” the Green Deal. We call for funding to accelerate the realisation of a smart and integrated electricity gridfor 100%-renewable energy transmission (e-highway), support for complementary battery and green-hydrogen projects, and a programme, modelled on the SURE initiative, to co-finance member-state decarbonisation and Just Transition policies.■The crisis induced by the pandemic, coming as it does on top of the financial and euro crises, poses a huge challenge. The response needs to take account of the longer-run structural challenges, and above all that of climate change. The European Union should rise to these challenges in the reform of an ambitious medium-runrecovery programme, appropriately financed. An outline of such a programme isset out here by way of illustration, but many permutations and options are available to policymakers. |
| Keywords: | European recovery programme; Covid-19 |
| Date: | 2020–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/2gtm5um5lm9vvo08gf2gn4a066&r=all |
| By: | Alhassan A. Karakara (CEPDeR, Covenant University, Ota, Nigeria); Evans S. Osabuohien (CEPDeR, Covenant University, Ota, Nigeria) |
| Abstract: | There are few studies on the determinants of energy consumption of households in Africa, particularly in Ghana. Thus, this study identifies the drivers of households’ fuel consumption for domestic purposes and examines two fuel categories (‘clean’ fuels versus ‘dirty’ fuels). The study used Demographic and Health Survey data that has a sample of 11,835 households across Ghana. Binary categorical models (binary logistic and binary probit) were used to investigate whether a household uses ‘clean fuel’ or ‘dirty fuel’, which are estimated with socio-economic variables and spatial disparity (regional location). The results suggest that households’ energy consumption is affected by socio-economic variables and rural households are more deprived than urban households in adopting clean fuels. Also, male-headed households have a higher likelihood than female-headed households to adopt clean fuels. Many households choose clean fuels for lighting than they do for cooking as wealth status improves. However, solid fuels such as charcoal and firewood remain the dominant fuel used for cooking by the majority of households. The use of these dirty fuels could hamper the health status of households because of indoor pollution. The study recommends that policies should be geared towards the provision of clean and better energy sources to households. |
| Keywords: | ‘Clean’ fuels, ‘Dirty’ fuels, household fuel adoption, household fuel consumption, Energy usage, Ghana. |
| JEL: | O13 P28 Q42 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:20/075&r=all |
| By: | Ara Jo (Center of Economic Research, ETH Zürich, Zürichbergstrasse 18, 8089 Zürich, Switzerland.) |
| Abstract: | The elasticity of substitution between clean and dirty energy and the direction of technological change are central parameters in discussing one of the most challenging questions today, climate change. Despite their importance, there are few studies that empirically estimate these key parameters. In this paper, I estimate the elasticity of substitution between clean and dirty energy from micro data, jointly with technological parameters that reflect the direction of technological change within the energy aggregate. I find estimates of the elasticity of substitution ranging between 2 and 3. The largely dirty-energy-biased technological change observed in the data validates the framework of directed technological change, given the historical movement of relative energy prices and the estimated elasticity of substitution above unity. However, I also find suggestive evidence that clean-energy-augmenting technology is growing faster than dirty-energy-augmenting technology in recent years with changes in relative energy prices and higher subsidies for clean energy. |
| Keywords: | Elasticity of substitution, directed technical change, climate change |
| JEL: | Q40 Q55 Q54 O33 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:20-344&r=all |
| By: | Marta Castellini (Università degli Studi di Brescia and Fondazione Eni Enrico Mattei); Francesco Menoncin (Università degli Studi di Brescia); Michele Moretto (Università degli Studi di Padova); Sergio Vergalli (Università degli Studi di Brescia and Fondazione Eni Enrico Mattei) |
| Abstract: | The digitization of power system represents one of the main instruments to achieve the target set by the European Union 2030 climate and energy Agenda of affordable energy transition. During the last years, such innovation process has been associated with the Smart Grid (SG) term. In this context, efficiency and flexibility of power systems are expected to increase and energy consumers to be active also on the production side, thus becoming prosumers (agents that both produce and consume energy). This paper provides a theoretical real option framework with the aim to model prosumers’ decision to invest in photovoltaic power plants, assuming that they are integrated in a Smart Grid. Our main focus is to study the optimal plant size and the optimal investment threshold, in a context where exchange of energy among prosumers is possible. The model was calibrated and tested with data from the Northern Italy energy market. Our findings show that the possibility of selling energy between prosumers, via the Smart Grid, increases investment values. This opportunity encourages prosumers to invest in a larger plant compared with the case without exchange possibility and that there is a positive relation between optimal size and (optimal) investment timing. The effect of uncertainty is in line with the literature, showing increasing value to defer with volatility. |
| Keywords: | Smart Grids, Renewable Energy Sources, Real Options, Prosumer, Peer to Peer Energy Trading |
| JEL: | Q42 C61 D81 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2019.28&r=all |
| By: | Alessandro Tavoni; Ralph Winkler |
| Abstract: | In the wake of 25 UN Climate Change Conferences of the Parties (and counting), international cooperation on mitigating greenhouse gas emissions to avoid substantial and potentially irreversible climate change remains an important challenge. The limited impact that the Kyoto Protocol and its successor, the Paris Agreement, have had on curbing emissions demonstrate both the difficulties in negotiating ambitious environmental agreements and the reluctance of countries to comply with their agreed emission targets once they have joined the treaty. Therefore, a better understanding of the obstacles and opportunities that the interactions between domestic and international policy pose for the design of successful international climate cooperation is of utmost importance. To shed light on the roots of the stalemate (and suggest possible ways out), this article reviews, and draws lessons from, a growing theoretical, experimental and empirical literature that accounts for the hierarchical interplay between domestic political pressure and international climate policy |
| JEL: | D31 D63 O15 R10 R12 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1154&r=all |
| By: | Sylvain Leduc; Kevin Moran; Robert J. Vigfusson |
| Abstract: | Using expectations embodied in oil futures prices, we examine how expectations are formed and how they affect the macroeconomic transmission of shocks. We show that an empirical framework in which investors form expectations by learning about the persistence of oil-price movements successfully replicates the fluctuations in oil-price futures since the late 1990s. We then embed this learning mechanism in a model with oil usage and storage. Estimating the model, we document that an increase in the persistence of TFP-driven fluctuations in oil demand largely account for investors' perceptions that oil-price movements became increasingly permanent during the 2000s before declining thereafter. We show that the presence of learning alters the macroeconomic impact of shocks, making the responses time-dependent and conditional on the views of economic agents about the shocks' likely persistence. |
| Keywords: | futures; macroeconomics |
| Date: | 2020–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:88970&r=all |
| By: | Egüez, Alejandro (Department of Economics, Umeå University) |
| Abstract: | This paper assesses whether and to what extent income and the stringency and enforcement (S&E) of environmental regulation influence compliance with the EU Waste Hierarchy (EWH), i.e., how EU member states treat waste. The EWH prioritizes waste prevention and re-use over recycling, which is ranked above waste to energy (WtE), while incineration and landfilling are the least preferred options. Biennial panel data for the period 2010–2016 is used to create a compliance index based on the waste treatment alternatives in the EWH. The waste (excluding major mineral waste) of 26 European Union countries is examined. This study is the first of its kind to regress an EWH compliance index on income, the stringency and enforcement of environmental regulation, and other variables that are also expected to affect the relative benefits and costs of waste treatment, such as population density, heating demand, and electricity prices. The shares of landfilling, incineration, WtE, and recycling are also modeled to capture the effect of these variables in the waste treatment mix. The stringency and enforcement of environmental regulation are found to have a positive effect on compliance with the EWH, which has increased over time. |
| Keywords: | EU waste hierarchy; waste treatment ladders; income; policy stringency; policy enforcement |
| JEL: | O44 Q53 R11 |
| Date: | 2020–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0981&r=all |
| By: | Lauren Cohen; Umit G. Gurun; Quoc H. Nguyen |
| Abstract: | No firm or sector of the global economy is untouched by innovation. In equilibrium, innovators will flock to (and innovation will occur where) the returns to innovative capital are the highest. In this paper, we document a strong empirical pattern in green patent production. Specifically, we find that oil, gas, and energy producing firms – firms with lower Environmental, Social, and Governance (ESG) scores, and who are often explicitly excluded from ESG funds’ investment universe – are key innovators in the United States’ green patent landscape. These energy producers produce more, and significantly higher quality, green innovation. Our findings raise important questions as to whether the current exclusions of many ESG-focused policies – along with the increasing incidence of explicit divestiture campaigns – are optimal, or whether reward-based incentives would lead to more efficient innovative outcomes. |
| JEL: | G11 G30 O31 O32 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27990&r=all |
| By: | Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa); Xin Sheng (Lord Ashcroft International Business School, Anglia Ruskin University, Chelmsford, CM1 1SQ, UK); Renee van Eyden (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa); Mark E. Wohar (College of Business Administration, University of Nebraska at Omaha, 6708 Pine Street, Omaha, NE 68182, USA) |
| Abstract: | We analyze the impact of oil supply, global economic activity, oil-specific consumption demand and oil inventory demand shocks on state-level real housing returns of the United States (US) over the monthly period of 1975:02 to 2019:12. We find that positive economic activity shocks and oil production shocks (associated with increase and decrease in oil prices respectively) increase real hosing returns. At the same time, oil-specific consumption and inventory demand shocks raise oil prices and reduce the state-level real housing returns. Moreover, across the shocks, the strongest effect originates from the global demand shock. In addition, the degree of oil dependency (oil consumed minus oil produced as ratio of oil consumed) does not change the nature of the impact of the four oil shocks on real housing returns drastically, but the size of the effects is relatively muted under low-oil dependence, barring the case of the oil inventory demand shock. Our results have important policy implications. |
| Keywords: | Oil shocks, state-level real housing returns, oil dependency, local projection model, impulse response functions |
| JEL: | C23 Q41 R31 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:202096&r=all |
| By: | Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa); Christian Pierdzioch (Department of Economics, Helmut Schmidt University, Holstenhofweg 85, P.O.B. 700822, 22008 Hamburg, Germany); Afees A. Salisu (Centre for Econometric & Allied Research, University of Ibadan, Ibadan, Nigeria) |
| Abstract: | We analyze the predictive role of oil-price uncertainty for changes in the UK unemployment rate using more than a century of monthly data covering the period from 1859 to 2020. To this end, we use a machine-learning technique known as random forests. Random forests render it possible to model the potentially nonlinear link between oil-price uncertainty and subsequent changes in the unemployment rate in an entirely data-driven way, where it is possible to control for the impact of several other macroeconomic variables and other macroeconomic and financial uncertainties. Upon estimating random forests on rolling-estimation windows, we find evidence that oil-price uncertainty predicts out-ofsample changes in the unemployment rate, where the relative importance of oil-price uncertainty has undergone substantial swings during the history of the modern petroleum industry that started with the drilling of the first oil well at Titusville (Pennsylvania, United States) in 1859. |
| Keywords: | Machine learning, Random forests, Oil uncertainty, Macroeconomic and financial uncertainties, Unemployment rate, United Kingdom |
| JEL: | C22 C53 E24 E43 F31 G10 Q02 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:202095&r=all |
| By: | Ren\'e Aid (UNIBO); Andrea Cosso (UNIBO); Huy\^en Pham (LPSM) |
| Abstract: | We formulate an equilibrium model of intraday trading in electricity markets. Agents face balancing constraints between their customers consumption plus intraday sales and their production plus intraday purchases. They have continuously updated forecast of their customers consumption at maturity with decreasing volatility error. Forecasts are prone to idiosyncratic noise as well as common noise (weather). Agents production capacities are subject to independent random outages, which are each modelled by a Markov chain. The equilibrium price is defined as the price that minimises trading cost plus imbalance cost of each agent and satisfies the usual market clearing condition. Existence and uniqueness of the equilibrium are proved, and we show that the equilibrium price and the optimal trading strategies are martingales. The main economic insights are the following. (i) When there is no uncertainty on generation, it is shown that the market price is a convex combination of forecasted marginal cost of each agent, with deterministic weights. Furthermore, the equilibrium market price follows Almgren and Chriss's model and we identify the fundamental part as well as the permanent market impact. It turns out that heterogeneity across agents is a necessary condition for the Samuelson's effect to hold. (ii) When there is production uncertainty, the price volatility becomes stochastic but converges to the case without production uncertainty when the number of agents increases to infinity. Further, on a two-agent case, we show that the potential outages of a low marginal cost producer reduces her sales position. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.09285&r=all |
| By: | Brown, Austin L.; Fleming, Kelly L.; Lipman, Timothy; Fulton, Lew; Saphores, Jean Daniel; Tal, Gil; Murphy, Colin; Shaheen, Susan; Austin, Bernadette; Garcia Sanchez, Juan Carlos; Martin, Elliot; Miller, Marshall; Hyland, Michael; Handy, Susan; Delucchi, Mark A.; Coffee, Daniel; DeShazo, JR |
| Abstract: | The purpose of this study overall is to explore the policy pathways to achieve a zero carbon transportation system in California by 2045. The purpose of this synthesis report is to describe the existing state of knowledge and policy related to energy use and greenhouse gas (GHG) emissions in the transportation sector, especially in California. It is an interim product of the larger study, which will use this report as the baseline and policy context sections. The report comprises four sections. Section 1 provides an overview of the major components of transportation systems and how those components interact. Section 2 explores key underlying concepts in transportation, including equity, health, employment, and environmental justice (EJ). Section 3 discusses California’s current transportation-policy landscape. Section 4 analyzes projected social, environmental, and economic outcomes of transportation under a “business as usual (BAU)” scenario—i.e., a scenario with no significant transportation-policy changes. |
| Keywords: | Engineering |
| Date: | 2020–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt5zb1238j&r=all |
| By: | Felix Samy Soliman |
| Abstract: | The environmental regulations US firms are exposed to are often place-based, incentivizing firms to move to less regulated counties or states. Consistent with this argument, multiplant firms partially regulated under the ozone regulations of the US Clean Air Act offset regulation-induced reductions among regulated plants with spillovers to unregulated plants and by moving plants out of regulated areas. Taken together, these leakage effects fully offset emissions reductions at regulated plants. Effects are strongest among highly productive firms and those operating in tradable industries. |
| Keywords: | emissions leakage, aggregate effects of regulation, environmental economics, Clean Air Act, industrial emissions |
| JEL: | Q52 Q58 H32 R32 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8619&r=all |
| By: | Jason Brown; Colton Tousey |
| Abstract: | The number of U.S. coal-fired power plants declined by nearly 250 between 2001 and 2018. Given that burning coal generates large amounts of particulate matter, which is known to have adverse health effects, the closure of a coal-fired power plant should improve local air quality. Using spatial panel data from air quality monitor stations and coal-fired power plants, we estimate the relationship between plant closure and local air quality. We find that on average, the levels of particulate matter within 25 and 50 mile buffers around air quality monitors declined between 7 and 14 percent with each closure. We estimate that closure is associated with a 0.6 percent decline in local mortality probabilities. In terms of the value of a statistical life, the median local benefit of a coal power plant closure has ranged between $1 and $4 billion or 5 to 15 percent of local GDP since the early 2000s. |
| Keywords: | Air quality; Coal; Plant closures |
| JEL: | Q35 Q53 R11 |
| Date: | 2020–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:88947&r=all |
| By: | Djamel KIRAT; Claire GAVARD |
| Keywords: | , Emissions trading, European allowances, International credits, causality analysis |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:leo:wpaper:2821&r=all |
| By: | Tong Zhang; Paul J. Burke |
| Abstract: | Understanding how traffic flows respond to fuel price changes is useful for traffic management. This study uses a dataset of 11.9 million hourly observations from 118 traffic count stations over 2010–2017 to investigate the relationship between the gasoline price and traffic flows in the state of New South Wales, Australia. The findings suggest that higher gasoline prices reduce traffic flows, with an average effect size of –0.04 in the hourly estimates. The elasticity is particularly pronounced during off-peak periods, both on weekdays (–0.10) and weekends (–0.07). In contrast, a positive effect of gasoline prices on traffic flows is observed for peak periods on weekdays (0.06). Evidence is also obtained that afternoon peak-hour speeds are faster when gasoline prices are higher, consistent with a lowering of traffic density. The research also finds a negative price elasticity of gasoline demand and that people are more likely to use public transport when gasoline prices are higher. The findings suggest that fuel excise plays a role in both reducing overall road dependence and alleviating the severity of some peak-hour traffic jams. |
| Keywords: | gasoline price, traffic flow, speed, road transport, public transport |
| JEL: | R41 Q41 Q43 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2020-86&r=all |
| By: | Egüez, Alejandro (Department of Economics, Umeå University) |
| Abstract: | The price of district heating in Sweden is unregulated and differs substantially among different networks. This paper investigates if the price variation can partly be explained by ownership status, i.e., whether the network companies are privately- or municipally-owned. The empirical analysis is based on data on district heating prices, ownership status, and network characteristics for the period 2012-2017. The results show that prices are higher in privately-owned district heating networks than in municipally-owned networks, especially in the fixed component of the price. It is argued that municipal and private companies’ divergent objectives may be part of the explanation for these differences. Finally, district heating prices are positively correlated with the market prices for heat pumps, regardless of ownership, which suggests a general price-setting strategy based on the price of substitutes. |
| Keywords: | district heating prices; ownership; public versus private; natural monopoly; two-part tariff |
| JEL: | D42 L11 L33 L43 L95 Q41 |
| Date: | 2020–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0980&r=all |
| By: | ISHIKAWA Jota; KIYONO Kazuharu; YOMOGIDA Morihiro |
| Abstract: | We explore the effects of international trade in goods and emission permits on global warming and welfare in a two-country, two-good, general-equilibrium model with both Ricardian and Heckscher-Ohlin features. According to our findings, international commodity trading cannot successfully reduce greenhouse-gas (GHG) emissions if the comparative advantage stems from differences in per-capita emission allowances; however, it may reduce emissions if the comparative advantage is also based on differences in technologies. International emissions trading cannot mitigate global warming. Whether it improves welfare would depend on how it affects the terms of trade in goods and climate change. A country with high per-capita emission allowances may import permits and suffer from deterioration in the terms of trade in goods. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:20080&r=all |
| By: | Carlos Aller (Department of Economic Theory and Economic History, University of Granada.); Lorenzo Ductor (Department of Economic Theory and Economic History, University of Granada.); Daryna Grechyna (Department of Economic Theory and Economic History, University of Granada.) |
| Abstract: | We synthesize the findings of a large number of recent papers on the determinants of CO2 emissions and identify the most robust determinants accounting for model uncertainty using two different approaches; Bayesian Model Averaging and Cluster-LASSO. Our results show that GDP per capita, the share of fossil fuels in energy consumption, urbanization, industrialization, democratization, the indirect effects of trade (networks effects) and political polarization are the robust determinants of CO2 emissions per capita. All of these determinants negatively affect the environment, with the exception of greater political polarization, which reduces the level of CO2 emissions. We also find that the determinants of CO2 emissions depend on the level of income per capita of a country. In low-income economies, foreign direct investment increases environmental degradation, while tourist arrivals have a negative impact on the environment in high-income economies. |
| Keywords: | Keywords: carbon dioxide emissions; model uncertainty; Bayesian Model Averaging; LASSO estimator |
| JEL: | D14 K42 O17 |
| Date: | 2020–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:20/13&r=all |
| By: | Alexandra Brausmann (Center of Economic Research, CER-ETH, Zurich, Switzerland); Elise Grieg (Center of Economic Research, CER-ETH, Zurich, Switzerland) |
| Abstract: | Empirical literature remains largely inconclusive as to whether resource abundance has significant political effects. In this paper we revisit the "political resource curse" by studying the effect of natural resource discoveries on the duration of autocratic leadership. We first present a dynamic stochastic model of a resource-driven coup. We extend the existing conflict models by considering both the timing of attack on the regime and the probability of its success. Both the incumbent and opposition invest in military arsenal which determines the probability of winning, while the opposition also strategically chooses when to stage a coup. We show that a random resource discovery allows the incumbent to stay in power longer by delaying the attack but also by reducing the probability of coup success under specific conditions. We test these hypotheses with a novel empirical analysis based on duration models and data on discoveries of giant oil and gas fields going back to as far as 1868. Our results show that a large hydrocarbon discovery lowers the hazard faced by an autocrat by 30 - 50%. The delay of the coup is the main driving force behind the stabilizing effect of discoveries in autocratic regimes. |
| Keywords: | Resource discoveries, Dictatorship, Leadership duration |
| JEL: | Q33 Q34 D74 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:20-345&r=all |
| By: | Robert Clark (Queen's University); Mario Samano (HEC Montreal) |
| Abstract: | In an effort to lower costs of provision, authorities have encouraged the consolidation of providers for a number of services such as electricity distributors, school boards, hospitals, and municipalities. In this paper we propose an endogenous merger process to evaluate the impact of government-provided incentives on consolidation patterns,and to evaluate the resulting outcomes. The process takes as input estimates from a stochastic frontier cost model, which yields an average cost curve for the industry. Policy parameters are used to simulate final configurations using offers that are the output of a Nash Bargaining problem. The efficiency of candidate merged entities is determined by a relative-influence function that measures the degree to which the combination of the involved firms' levels of efficiency results in cost-increasing amalgamations, and an interconnection cost that measures the impact of the size of the conglomerate that is formed. We calibrate parameters by applying the merger process to replicate the observed industry reconfiguration and then use these parameters to simulate the consolidation patterns that would have resulted from different policy incentives. We apply the method to the case of Ontario, where past mergers of local electricity distribution companies were incentivized by transfer tax reductions and a further round of mergers was recently proposed. Our findings suggest that the proposed tax incentive would have no impact on efficiency levels and consolidation patterns, and that even a substantial subsidy would still leave about five times as many LDCs as desired by policy makers. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1447&r=all |
| By: | Ritz, R. |
| Abstract: | Since the 2015 Paris Agreement, climate change – and wider environmental, social and governance (ESG) issues – have risen to board-level on the corporate agenda. Under increasing pressure from institutional investors, companies are reformulating their strategies for a climate-constrained world. A novel aspect of the emerging corporate response is that executive compensation is being linked to climate targets. At the world’s largest energy companies, climate metrics now make up 8% of CEO’s short-term incentive plans. This paper explains the case for corporate climate action, summarizes the use to date of climate-linked management incentives, and presents a framework for understanding their benefits and design challenges. |
| Keywords: | Balanced scorecard, corporate climate action, corporate strategy, ESG, executive compensation, management incentives |
| JEL: | L21 M12 Q54 |
| Date: | 2020–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2098&r=all |
| By: | Oindrila Dey (Indian Institute of Foreign Trade (IIFT)); Debalina Chakravarty (Indian Institute of Management (IIM) Calcutta) |
| Abstract: | Electric Street Car (ESC) has established itself as an ideal public transport system for urban agglomeration by offering better safety, minimum pollution and conservation of fossil fuel. Yet, India envisions going all-electric by 2030 by procuring electric buses (e-buses) rather than ESCs. The crucial question is, why not upgrade the existing ESC considering that the e-buses need a profound infrastructural development in India. This paper studies the potential uptake rate of ESC over e-buses using stratified sampling data from 1226 daily public transport commuters of Kolkata, the only Indian city having an operational ESCs. We identify the demographic, psychometric and socio-economic factors influencing the probabilistic uptake of ESC over e-buses using a random utility choice model. It estimates that 38% of the commuters demand ESC over e-buses given the alternatives’ comparative details. ESC can be a model electric public transport if there is an improvement in factors, like frequent availability of ESCs and technological upgradation. By promoting the ESC services over e-buses, the government can potentially save on public investment and reach a low carbon pathway cost-effectively. The findings have crucial implications in exploration of the operational feasibility of ESC in the small and medium-sized cities of developing economies like India. |
| Keywords: | Public Transport, Electric Bus, Electric Street Car, Sustainability, Urban Area |
| JEL: | R58 R49 Q56 Q40 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ift:wpaper:2042&r=all |
| By: | Schwartz, Daniel |
| Keywords: | Public Economics |
| Date: | 2020–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ctrf32:306090&r=all |
| By: | Kanaroglou, Pavlos S.; Anderson, William P.; South, Robert |
| Keywords: | Public Economics |
| Date: | 2020–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ctrf32:306079&r=all |
| By: | Kaiser, Oliver S.; Malanowski, Norbert |
| Abstract: | Zur Erreichung der Klimaschutzziele ist der Einsatz von Wasserstoff aus heutiger Sicht unumgänglich. Zum gegenwärtigen Zeitpunkt aber spielt Wasserstoff für die Direktnutzung sowie zur Weiterverarbeitung im Energiesystem noch kaum eine Rolle. CO2-freier Wasserstoff, der auf Basis erneuerbarer Energien hergestellt wird ("grüner" Wasserstoff), ist auf Dauer nachhaltig. Für den zügigen Markthochlauf der Wasserstoff-technologien zur Dekarbonisierung in verschiedenen Anwendungsbereichen wird zunächst aus ökonomischen Gründen auch CO2-neutraler ("blauer") Wasserstoff eine Rolle spielen müssen. Ein wichtiger Hebel für den Einsatz von Wasserstoff im Verkehr ist eine Preissenkung von Wasserstoff, um Brennstoffzellen-Mobilität wirtschaftlich zu machen. In mobilen Anwendungsfällen stehen Brennstoffzellen in direktem Wettbewerb mit der Batterietechnik. Die hohe Belastung von Strom mit Abgaben und Steuern begrenzt derzeit den verstärkten Einsatz von Wasserstoff aus erneuerbaren Energien z. B. in den Bereichen Verkehr, Chemie und als Energiespeicher. Das Zielmodell für die regulatorischen Rahmenbedingungen sollte sowohl zu einem ökonomisch effizienten Gesamtsystem als auch zu einer weitgehenden Internalisierung von Umweltkosten (u. a. durch CO2-Emissionen) führen. Es ist grundsätzlich technologieoffen zu gestalten. [...] |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hbsfof:193&r=all |
| By: | Abhiroop Mukherjee (Liwei Huang Associate Professor of Business, Department of Finance; The Hong Kong University of Science and Technology); George Panayotov (Associate Professor of Finance; The Hong Kong University of Science and Technology); Janghoon Shon (Ph.D. Candidate in Finance; The Hong Kong University of Science and Technology) |
| Abstract: | Relying on government announcements for macro information creates a potential conflict of interest and macro uncertainty. Many private entities have started using alternative data strategies to predict macro numbers. If alternative data strategies can work for macro predictions, we can get a sense of what is happening in the economy without having to rely on the government to inform us. We find a reduction in implied volatility and in price jumps in the U.S. crude oil market as a result of satellite-based inventory estimates. These findings point to a future in which the resolution of macro uncertainty is smoother, and governments have less control over macro information. |
| Keywords: | Technology, Satellites, macro-economic data |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:hku:briefs:202042&r=all |
| By: | Paul Malliet (Observatoire français des conjonctures économiques) |
| Abstract: | La France s'est dotée en 2015 d'une stratégie nationale bas-carbone qui vise à atteindre la neutralité carbone à l'horizon 2050. Cette neutralité sera effective dès lors que les émissions de GES d'origine anthropique subsistantes sur le territoire national seront intégralement compensées par des puits naturels et/ou artificiels de carbone. Alors que la version révisée de ce document vient d'être officiellement publiée le 24avril 2020, il nous semble important de mettre en exergue un autre point de vue dans la comptabilisation des émissions de GES qui considère non plus les activités de production mais celles associées à une consommation finale comme celles faisant référence dans l'imputation des émissions. Si cette différence peut sembler conceptuelle et sans implication directe dans la démarche de transition écologique d'une société, le degré avancé de fragmentation de la chaîne de valeur globale scindée en plusieurs unités de production, disséminées sur l'ensemble du globe, la rend essentielle à son évaluation. Des objectifs complémentaires à celui de la neutralité carbone inscrits dans la SNBC intègrent déjà des indicateurs relatifs à ces émissions hors du territoire national; cependant Il n'existe pas de système d'information standardisé comme celui officiel des Inventaires Nationaux d'Émissions défini par la Convention-Cadre des Nations Unies sur les Changement Climatiques (United Nations Framework Convention on Climate Change). [Premières lignes] |
| Keywords: | Émissions importées; Empreinte carbone; Changement climatique |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/73f59heh8r9kqpp9n3ooa6vq8g&r=all |
| By: | Paul Malliet (Observatoire français des conjonctures économiques); Ruben Haalebos; Émeric Nicolas (Université de Picardie Jules Verne (UPJV)) |
| Abstract: | La mesure des émissions carbone est devenue un enjeu essentiel du XXIe siècle, dans un contexte ou l’humanité doit réduire drastiquement ses émissions de gaz à effet de serre si elle souhaite pouvoir limiter la hausse des températures à un niveau de 2°C. L’essor des échanges commerciaux et la globalisation de la chaine de valeur rendent par ailleurs de plus en difficile la traçabilité des impacts climatiques et environnementaux des biens et des produits que nous consommons en France. Le concept d’empreinte carbone s’inscrit dans une démarche complémentaire à celle des inventaires nationaux de gaz à effet de serre généralement utilisés dans le cadre des négociations internationales autour des enjeux climatiques, en proposant d’imputer l’ensemble des émissions induites par un processus de production d’un bien ou d’un service, à son consommateur final. |
| Keywords: | Fiscalité carbone; Revenus; Ménages français |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/4m3adkbdj69ti8jp2r95u0a2ko&r=all |
| By: | Garth Heutel; Xin Zhang |
| Abstract: | We study the incidence of pollution taxes and their impact on unemployment in an analytical general equilibrium efficiency wage model. We find closed-form solutions for the effect of a pollution tax on unemployment, factor prices, and output prices, and we identify and isolate different channels through which these general equilibrium effects arise. An effect arising from the efficiency wage specification depends on the form of the workers' effort function. Numerical simulations further illustrate our results and show that this efficiency wage effect can fully offset the sources-side incidence results found in models that omit it. |
| JEL: | H22 J64 Q52 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27960&r=all |
| By: | Fruin, Jerry; Halbach, Dan |
| Keywords: | Public Economics |
| Date: | 2020–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ctrf32:306080&r=all |