nep-ene New Economics Papers
on Energy Economics
Issue of 2021‒03‒01
34 papers chosen by
Roger Fouquet
London School of Economics

  1. Renewing Energy Access Approaches By Stéphanie LEYRONAS; Stéphane BAUDÉ (Nomadéis); Jérémy GASC
  2. Spectral nature of soiling and its impact on multi-junction based concentrator systems By Fernandez, Eduardo F.; Chemisana, Daniel; Micheli, Leonardo; Almonacid, Florencia
  3. European Countries on a green path. Connections between environmental quality, renewable energy and economic growth By Abbruzzese, Matteo; Infante, Davide; Smirnova, Janna
  4. A review of challenges from increasing renewable generation in the Indian Power System By Debnath, R.; Mittal, V.; Jindal, A.
  5. Trade as a channel for environmental technologies diffusion: The case of the wind turbine manufacturing industry By Grégoire Garsous; Stephan Worack
  6. Internal hydro- and wind portfolio optimisation in real-time market operations By Hans Ole Riddervold; Ellen Krohn Aasg{\aa}rd; Lisa Haukaas; Magnus Korp{\aa}s
  7. The legitimacy of wind power in Germany By Dehler-Holland, Joris; Okoh, Marvin; Keles, Dogan
  8. Inflation expectations and the pass-through of oil prices By Knut Are Aastveit; Hilde C. Bjørnland; Jamie L. Cross
  9. The macroeconomic effects of oil supply news: Evidence from OPEC announcements By Känzig, Diego Raoul
  10. Navigating transfer pricing risk in the oil and gas sector: Essential elements of a policy framework for Trinidad and Tobago and Guyana By McLean, Sheldon; Charles, Don; Rajkumar, Antonio
  11. The Place and Importance of Oil in Terms of the Kurdistan Regional Economy: Contract Oriented Oil Production By Toptancı, Ali İskan
  12. Energising Mexico: Historical Energy Consumption, Transitions and Economic Growth 1880-2015 By Castañeda Garza, Diego
  13. Can Technology Solve the Principal-Agent Problem? Evidence from China’s War on Air Pollution By Michael Greenstone; Guojun He; Ruixue Jia; Tong Liu
  14. Air Pollution and COVID-19 Transmission in China By Guojun He; Yuhang Pan; Takanao TANAKA
  15. Testing environmental regulations, green innovation and social distribution as determinants of environmental sustainability: a case of ASEAN region By Ichsan Anwary; Yahya Ahmad Zein
  16. Technology Transfer and Innovation for Low-Carbon Development. By Miria A. Pigato; Simon J. Black; Damien Dussaux; Zhimin Mao; Miles Mckenna; Ryan Rafaty; Simon Touboul
  17. Drivers and challenges of electric vehicles integration in corporate fleet: An empirical survey By Di Foggia, Giacomo
  18. Indoor Air Quality, Information, and Socio-Economic Status: Evidence from Delhi By Michael Greenstone; Kenneth Lee; Harshil Sahai
  19. Early Results from an Electric Vehicle Carsharing Service in Rural Disadvantaged Communities in the San Joaquin Valley By Rodier, Caroline PhD; Harold, Brian MBA; Zhang, Yunwan MS
  20. Optimal dynamic regulation of carbon emissions market: A variational approach By Ren\'e A\"id; Sara Biagini
  21. The investment portfolio of the Swiss National Bank and its carbon footprint By Naef, Alain
  22. Whatever it takes to save the planet? Central banks and unconventional green policy By Alessandro Ferrari; Valerio Nispi Landi
  23. Fuentes de Energía Renovable, Recursos Energéticos Distribuidos y Almacenamiento en Colombia: una revisión de la normatividad By John Jairo Garcia Rendon; Alejandro Gutiérrez Gómez
  24. Adapting Fiscal Decentralization Design to Combat Climate Change By Jorge Martinez-Vazquez
  25. Climate Finance and Carbon Pricing in the Context of Africa’s Continental Free Trade Area By Duho, King Carl Tornam; Senan Charlie Carine, Bonou
  26. Patent landscaping using 'green' technological trajectories By Nomaler, Önder; Verspagen, Bart
  27. Sweden's Energy Investment Challenge By Holmberg, Pär; Tangerås, Thomas
  28. Short-windedness Would Weaken Effective Climate Policy By Rickels, Wilfried; Peterson, Sonja
  29. Consumer preferences towards alternative fuel vehicles. Results from the conjoint analysis By Anna Kowalska-Pyzalska; Rafał Michalski; Marek Kott; Anna Skowrońska-Szmer; Joanna Kott
  30. An Analysis of Vice President Biden's Economic Agenda: The Long Run Impacts of its Regulation, Taxes, and Spending By Timothy Fitzgerald; Kevin Hassett; Cody Kallen; Casey B. Mulligan
  31. Updating the United States Government's Social Cost of Carbon By Tamma Carleton; Michael Greenstone
  32. Resource efficiency, the circular economy, sustainable materials management and trade in metals and minerals By Paulo de Sa; Jane Korinek
  33. Strategic Behavior and Market Design in Regional Climate Policy By Tarufelli, Brittany L.
  34. Fuel-mining exports and economic growth: evidence from the UAE By Chamberlain, Trevor W.; Kalaitzi, Athanasia S.

  1. By: Stéphanie LEYRONAS; Stéphane BAUDÉ (Nomadéis); Jérémy GASC
    Abstract: When it comes to energy access projects (electrificationand thermal energy), approaches introducing a commons perspective can be distinguished by the fact that users play anactive role. This role is constructed “from the bottom,” basing thelegitimacy of operational rules on the proximity of social relations.These approaches may serve to address the recurring problemsre lating to mini-grid maintenance and to fraud and non-payment, as well as those associated with the sustainable developmentof natural resources. They also offer responses to specificchallenges, such as long-term support for the local community, the structuring of an ad hoc governance model, and recognitionby national authorities of the community capacity to organize itself. Thus considered, a commons dimension can be introduced to energy access projects or to those involving the management of vulnerable primary energy sources, such as water or biomass, in various institutional and contractual formats: rather than running counter to public action and the market,it complements them.
    JEL: Q
    Date: 2021–02–19
  2. By: Fernandez, Eduardo F.; Chemisana, Daniel; Micheli, Leonardo; Almonacid, Florencia
    Abstract: Soiling, which consists in the dust, dirt and particles accumulated on the surface of conventional or concentrator photovoltaic modules, absorbs, scatters, and reflects part of the incoming sunlight. Therefore, it reduces the amount of energy converted by the semiconductor solar cells. This work focuses on the effect of soiling on the performance of multi-junction (MJ) cells, widely used in concentrator photovoltaic (CPV) applications. Novel indexes, useful to quantify the spectral impact of soiling are introduced, and their meanings are discussed. The results of a one-year experimental investigation conducted in Spain are presented and are used to discuss how soiling impacts each of the subcells of a MJ cell, as well as in the cell current-matching. Ideal conditions for the mitigation of soiling are found in blue-rich environments, where the higher light intensity at the shorter wavelengths can limit the impact of soiling on the overall production of the CPV system.
    Keywords: soiling transmittance; spectral effects; multi-junction solar cells; outdoor performance; concentrator photovoltaics.
    JEL: Q42
    Date: 2019–03–19
  3. By: Abbruzzese, Matteo; Infante, Davide; Smirnova, Janna
    Abstract: The paper investigates the environment-energy-growth relationship by exploring a panel data on 30 European economies for the period 1995-2015. We start by exploring traditional relation between environmental pollution expressed in green houses gases emissions as a whole (Kyoto Basket) as well as their three main components, carbon dioxide (CO2), dioxide of methane (CH4) and nitrous oxide (N2O), and per capita income extending the model by considering the role of renewable energy sources (RES). Our results, based on both fixed effects and instrumental variable methodology, demonstrate that traditional U-shape environment-growth relationship that holds for European countries is strongly influenced by the presence of RES through the shift of the turning point to higher per capita income levels. Moreover, the estimates show that with the increase of per capita consumption based on RES, environmental pollution tends to decrease in different measures, in according to the specific pollutant. As argued in the economic literature, the increase in consumption from renewable sources may generate a substitution effect, which mostly influences nuclear energy rather than fossil fuels, leading to increasing the income level of the turning point. Our results show that this increase could be due to the endogenous nature of income and to omitted variables distortion, thus revealing the true turning point. This would suggest that the process of energy transition, through the diffusion of low-emission energy sources, should accelerate to produce significant impact on pollution reduction.
    Keywords: Environmental Kuznets Curve; economic growth; Kyoto basket; energy renewable sources; European Countries
    JEL: O33 Q42 Q55 Q56
    Date: 2020–05–12
  4. By: Debnath, R.; Mittal, V.; Jindal, A.
    Abstract: About 70% of India’s current energy mix comprises of coal, and the increase in generation from renewable energy (RE) sources is affecting the health of the power system. We investigated this effect through a cross-sectional of asset utilisation, cost and the social disruption caused by accelerating RE into the Indian Power System. We also derived a challenge-roadmap for the power system using bibliometric analysis. The review-driven interpretivist results revealed that increasing RE generation is pushing the coal plants to operate in low-loading conditions, causing heightened wear and tear of the plant as they are not suitable for flexible operation. It had tremendously increased the operation and maintenance costs of the brownfield plants. While there is a growing scope for cross border trade of electricity, the existing regulatory mechanism poses severe implementation challenges. Social disruption due to shift from coal-economy illustrated a holistic view of the political economy of the Indian power system that can potentially cause large-scale conflict and disrupt the national economy at an unprecedented scale. Policy implications outlined by our study for the draft Electricity (Amendment) Bill 2020 include scoping a socio-technical framework which supports just energy transition through better financial support mechanisms for flexible operation of coal plants. Focusing on clean-up over shut-down of coal plants and facilitating investments in battery storage technologies and cross-border electricity trade as RE and conventional fuel reach market parity.
    Keywords: Power System, Flexibility, Coal economy, Social disruption, Energy Transition, Electricity Bill 2020
    JEL: Q4 Q42 Q48
    Date: 2020–11–17
  5. By: Grégoire Garsous; Stephan Worack
    Abstract: Only a small number of companies, located in a few countries, have specific technological expertise in wind turbine manufacturing. New quantitative analysis shows this expertise to be a significant driver of trade in wind turbines. Moreover, countries’ wind power generation efficiency is shown to depend on access to higher quality wind turbines available in international markets. Trade in wind turbines thus provides access to technologies with a level of efficiency that cannot be replicated domestically in importing countries. These results have important policy implications: i) barriers to trade in wind turbines are also barriers to the dissemination of key environmental technologies which are not otherwise widely available; ii) trade-discriminatory measures can also negatively impact non-manufacturing job creation in the renewable sector, as this relies on the continuous deployment of wind energy, which in turn depends on access to high quality turbines from international markets; and iii) policies should not focus on the creation of national champions, but rather on ensuring that domestic firms can apply their specific capabilities to new opportunities in the global value chains of renewables industries.
    Keywords: Environmental technologies, Patents, Trade, Wind energy
    JEL: F13 F18 O13 O33 O42
    Date: 2021–02–02
  6. By: Hans Ole Riddervold; Ellen Krohn Aasg{\aa}rd; Lisa Haukaas; Magnus Korp{\aa}s
    Abstract: In this paper aspects related to handling of intraday imbalances for hydro and wind power are addressed. The definition of imbalance cost is established and used to describe the potential benefits of shifting from plant-specific schedules to a common load requirement for wind and hydropower units in the same price area. The Nordpool intraday pay-as-bid market has been the basis for evaluation of imbalances, and some main characteristics for this market has been described. We consider how internal handling of complementary imbalances within the same river system with high inflow uncertainty and constrained reservoirs can reduce volatility in short-term marginal cost and risk compared to trading in the intraday market. We have also shown the the imbalance cost for a power producer with both wind and hydropower assets can be reduced by internal balancing in combination with sales and purchase in a pay-as-bid intraday market
    Date: 2021–02
  7. By: Dehler-Holland, Joris; Okoh, Marvin; Keles, Dogan
    Abstract: Legitimacy is a crucial factor determining the success of technologies in the early stages of development and for maintaining resource flows as well as public and political support across the technology life cycle. In sustainability transitions that unfold over long periods of time, the maintenance of legitimacy of technologies identified as vital for sustainability becomes a key challenge. In the energy sector, wind power contributes to the transition to an energy system with low greenhouse gas emissions. In Germany, wind power recently faced a series of lawsuits and decreasing investment activity. Therefore, we assess the legitimacy of wind power in Germany by analyzing newspaper articles from four national newspapers from 2009 to 2018. A large amount of articles motivates the use of topic models and statistical methods to shed light on the changing alignment of wind power with its context. The results show that various issues temporarily gain prominence on the agenda. Lately, the legitimacy of wind power in Germany is increasingly challenged by adverse effects on humans, animals, and landscapes. Policymakers and project developers may address aspects of pragmatic legitimacy, such as civic participation and the local distribution of profits.
    Keywords: Technology legitimacy,wind power Germany,structural topic model,natural language processing,text mining
    Date: 2021
  8. By: Knut Are Aastveit; Hilde C. Bjørnland; Jamie L. Cross
    Abstract: Do inflation expectations and the associated pass-through of oil price shocks depend on demand and supply conditions underlying the global market for crude oil? We answer this question with a novel structural vector autoregressive model of the global oil market that jointly identifies transmissions of oil demand and supply shocks through the real price of oil to both expected and realized inflation. Our main insight is that US households form their expectations of inflation differently when faced with long sustained increases in the price of oil, such as the early millennium oil price surge of 2003 to 2008, as compared to short and sharp price fluctuations that characterized much of the twentieth century. We also find that oil demand and supply shocks can explain a large proportion of expected and realized inflation dynamics during multiple periods of economic significance, and resolve disagreements around the role of oil prices in explaining the missing deflation puzzle of the Great Recession.
    Keywords: inflation expectations, inflation pass-through, oil prices
    JEL: E31 D84 Q41 Q43
    Date: 2020–06–30
  9. By: Känzig, Diego Raoul
    Abstract: This paper studies how changes in oil supply expectations affect the oil price and the macroeconomy. Using a novel identification design, exploiting institutional features of OPEC and high-frequency data, I identify an oil supply news shock. These shocks have statistically and economically significant effects. Negative news leads to an immediate increase in oil prices, a gradual fall in oil production and an increase in inventories. This has consequences for the U.S. economy: activity falls, prices and inflation expectations rise, and the dollar depreciates—providing evidence for a strong channel operating through supply expectations.
    Keywords: Business cycles, oil supply, news shocks, external instruments, high-frequency identification, OPEC announcements
    JEL: C32 E31 E32 Q43
    Date: 2020–11
  10. By: McLean, Sheldon; Charles, Don; Rajkumar, Antonio
    Abstract: This study explores the oil and gas value chain by first examining the oil and gas taxation framework and assessing the mechanics of the industry’s natural creation of opportunities for transfer pricing. The results of the analysis are then used to identify the most appropriate regime with which to address transfer pricing and provide sound policy recommendations for its implementation. Consequently, the study posits that inherent pricing risk can be mitigated by developing an appropriate fiscal and legislative framework complemented by the designation of a competent revenue authority to ensure that multinationals set fair hydrocarbon prices. Further research possibilities however remain, particularly by expanding the focus of the analysis to include Latin American economies and employing a game theory framework.
    Date: 2021–02–17
  11. By: Toptancı, Ali İskan
    Abstract: A production sharing agreement is a contract that regulates the relations between an oil-producing country and an international oil company, or between a national oil company and an international oil company. An international oil company bears all petroleum operating expenses and in return covers the cost value and its shares and expenses from oil production. An oil-producing country receives its share of oil production and receives taxes. Iraq signed oil sharing agreements with West Al Qurna, a Russian oil company, in 2007 and 2008 to develop an oil field. The Kurdistan Region has used production sharing agreements with international oil companies by the Kurdistan Region Oil and Gas Law No. 28 2007. This was done although the oil contracts were not recognized by the Iraqi federal governments. The Kurdistan Region Administration claimed that such oil contracts encourage and attract international investments in the Kurdistan Region and that these agreements have legitimacy according to Article 112 of the Iraqi Constitution. Article 112 gives the Kurdistan Regional Government the right to oil contracts with international oil companies. International oil companies carry the most risk in production sharing contracts, but oil contracts are also more suitable for them. Because these contracts provide a framework for maximum recovery and oil production. In the Kurdistan Region, oil contracts have become a political issue rather than a legal and economic problem between the Kurdistan Region and Iraq. The study shows that production sharing agreements are more attractive than Iraqi oil contracts for the Kurdistan Regional Government. Therefore, international oil companies demand to invest more in the Kurdistan Region. In this case, there are some disadvantages. International oil companies generally have more control over setting contract terms. They can negotiate long-term and broad contract terms against oil-producing countries.
    Keywords: Kurdistan Region,Oil Sharing Contracts,Oil
    Date: 2021
  12. By: Castañeda Garza, Diego
    Abstract: This paper employs archival data to reconstruct the historical pattern of primary energy consumption in Mexico during the 1880-2015 period. The study highlights the characteristics of the energy transitions between different primary energy sources and offers the first account of both traditional and modern energy carriers. It performs a trend and level analysis to explain how the economic structure, population and economic growth have impacted energy intensity and productivity. Thus, the paper provides a first approximation to the long-term relationship between economic growth and energy utilisation in Mexico. The period 1880- 1920 saw both growths in population and income increase energy consumption, the period 1921-1960 is mostly driven by income growth, 1961-2000, both growths in population and income drive consumption, and finally, between 2001 and 2015, population growth is the dominant force.
    Date: 2021–02–20
  13. By: Michael Greenstone (University of Chicago - Department of Economics; NBER); Guojun He (The Hong Kong University of Science and Technology); Ruixue Jia (University of California San Diego - School of Global Policy and Strategy; CIFAR; NBER); Tong Liu (The Hong Kong University of Science and Technology - Division of Social Science)
    Abstract: We examine the introduction of automatic air pollution monitoring, which is a central feature of China’s “war on pollution.†Exploiting 654 regression discontinuity designs based on city-level variation in the day that monitoring was automated, we find that reported PM10 concentrations increased by 35% immediately post–automation and were sustained. City-level variation in underreporting is negatively correlated with income per capita and positively correlated with true pre-automation PM10 concentrations. Further, automation’s introduction increased online searches for face masks and air filters, suggesting that the biased and imperfect pre-automation information imposed welfare costs by leading to suboptimal purchases of protective goods.
    Keywords: Technology, automation, air pollution, China, monitoring and surveillance, moral hazard, data quality
    Date: 2020
  14. By: Guojun He (Division of Social Science, Division of Environment and Sustainability, and Department of Economics, Hong Kong University of Science and Technology); Yuhang Pan (Division of Environment and Sustainability, Hong Kong University of Science and Technology, Clear Water Bay,Hong Kong); Takanao TANAKA (Division of Social Science, Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong)
    Abstract: Accurately estimating the effect of air pollution on COVID-19 transmission requires researchers to account for the epidemiological characteristics, deal with endogeneity, and capture the dynamic impact of air pollution. To do so, we propose a new econometric framework by combining the Susceptible-Infectious-Recovered-Deceased model, the Instrument Variable model, and the Flexible-Distributed-Lag model. Using data covering all Chinese cities, we find that a 10-point increase in the Air Quality Index would lead to a 2.80 percentage point increase in the daily COVID-19 growth rate with 2 to 13 days of delay, implying that improving air quality can help slow the COVID-19 spread.
    Date: 2020–12
  15. By: Ichsan Anwary (Lambung Mangkurat University); Yahya Ahmad Zein (Borneo Tarakan University)
    Abstract: Regulations and policies regarding environment and green and environment friendly innovations play an important role in the reduction in pollution and to make the environment clean to live a better life. In this regard, people play a critical part by following these policies and regulations and by promoting the green innovations. The current study has been designed with the aim to find out and investigate the impact of environmental regulations, green innovation, and social distribution on the environmental sustainability of ASEAN countries. Therefore, the data for the study has been gathered from ASEAN countries covering the period of 29 years. The accuracy of the results obtained by the analysis of data collection has been ensured by the collection of data from World Bank Development Indicators and Global Economy. Various tests and techniques have been applied on the collected data such as panel unit root test, panel cointegration test, FMOLS coefficient estimation and Granger Casualty test. The result obtained by the analysis indicated that all the independent (environmental regulations, green innovation, and social distribution) and control variables (per capita income and human development) have significant impact on environmental sustainability. Moreover, the researcher also found the casual relationships between various variables of the study.
    Keywords: Environmental Regulations,Green Innovation,Social Distribution,Environmental Sustainability,ASEAN Countries
    Date: 2020
  16. By: Miria A. Pigato; Simon J. Black; Damien Dussaux; Zhimin Mao; Miles Mckenna; Ryan Rafaty; Simon Touboul (CERNA i3 - Centre d'économie industrielle i3 - CNRS - Centre National de la Recherche Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres)
    Date: 2020–03–24
  17. By: Di Foggia, Giacomo
    Abstract: Low-carbon economy roadmaps aim to reduce transport emissions by relying, at least to some extent, on electric vehicles. The uptake of electric vehicles on a mass scale requires the simultaneous adoption of such vehicles for private and commercial purposes. Although literature regarding the private sphere is consistent, there is comparatively less empirical research seeking to explain the factors that enable and hinder the uptake of electric vehicles at a commercial level at which fleet managers have a prominent role. Based on an empirical survey conducted in Italy, this paper investigates the role of technical and financial information in fleet managers’ procurement decision-making. Results suggest a lack of awareness regarding technical characteristics of vehicles, given that 59% of the fleet managers surveyed scored low to medium. Furthermore, a misalignment related to the expected investment payback period was observed, considering that 49% declared that they expect a payback period within three years. Given that exposure to electric vehicles within fleets constitutes an incentive for private purchase, well-designed policies for corporate fleets’ electrification would lead to remarkable growth of the electric vehicles market.
    Date: 2021–02–11
  18. By: Michael Greenstone (University of Chicago - Department of Economics; NBER); Kenneth Lee (University of Chicago - Department of Economics); Harshil Sahai (University of Chicago - Department of Economics)
    Abstract: Delhi faces some of the world’s highest concentrations of PM2.5, the most damaging form of air pollution. Although awareness of outdoor air pollution is rising across the world, there is limited information on indoor air pollution (IAP) levels, particularly in heavily polluted cities like Delhi. Even less evidence exists on how IAP varies by socio-economic status (SES), and whether or not addressing information gaps can change defensive investments against IAP. In this paper, we deploy Indoor Air Quality Monitors (IAQMs) in thousands of Delhi households across varying socio-economic strata in order to document IAP levels during the peak wintertime air pollution period. Across high and low SES households, we document indoor PM2.5 levels that are: (1) extraordinarily high — more than 20 times World Health Organization (WHO) standards; (2) only 10 percent lower in high (versus low) SES households; and (3) significantly higher than levels reported by the nearest, outdoor government monitors, the main source of public information on air pollution in this setting. We then report on a field experiment that randomly assigned IAQMs, as well as an opportunity to rent an air purifier at a subsidized price, across medium and high SES homes during the 2019-20 winter season.
    Date: 2020
  19. By: Rodier, Caroline PhD; Harold, Brian MBA; Zhang, Yunwan MS
    Abstract: In rural areas, cost-effective transit service is challenging to provide due to greater travel distances, lower population densities, and longer travel times than in cities. The people who rely on public transit contend with infrequent and slow service. Access to a personal car is often essential to the quality of life for most residents, enabling them to more easily access work, health care, education, healthy food, and other essential services. However, keeping two (or sometimes even one) car in reliable working order can consume an estimated 22% to 56% of the household budget for low-income families in California. Rural residents often have lower incomes than their urban counterparts, and the most fuel-efficient vehicles, particularly electric vehicles (EVs), are often outside their financial reach. An EV carsharing pilot, called Míocar, was launched in August 2019 to explore the potential of a shared mobility service to offer a cost-effective mobility option for residents of rural disadvantaged communities and to help reduce greenhouse gas emissions. Affordable housing complexes host the round-trip EV carsharing hubs in southern San Joaquin Valley (CA) communities with low levels of intercity transit service and personal vehicles. The goals of the pilot program are (a) to provide carsharing at a price point that is more affordable than owning a personal vehicle to price-sensitive populations with low transit access; and (b) to help reduce greenhouse gas emissions. This report summarizes the data collected during the 10-month operational rampup of the Míocar service—the entire dataset links members and their service use data with results from member and post reservation surveys. The results provide initial insights into who, how, and why members are using Míocar.
    Keywords: Social and Behavioral Sciences, Electric vehicles, vehicle sharing, social equity, rural areas, rural transportation, pilot studies, low income groups, data collection
    Date: 2021–02–01
  20. By: Ren\'e A\"id; Sara Biagini
    Abstract: We consider the problem of reducing the carbon emissions of a set of firms over a finite horizon. A regulator dynamically allocates emission allowances to each firm. Firms face idiosyncratic as well as common economic shocks on emissions, and have linear quadratic abatement costs. Firms can trade allowances so to minimise total expected costs, from abatement and trading plus a quadratic terminal penalty. Using variational methods, we exhibit in closed-form the market equilibrium in function of regulator's dynamic allocation. We then solve the Stackelberg game between the regulator and the firms. Again, we obtain a closed-form expression of the dynamic allocation policies that allow a desired expected emission reduction. Optimal policies are not unique but share common properties. Surprisingly, all optimal policies induce a constant abatement effort and a constant price of allowances. Dynamic allocations outperform static ones because of adjustment costs and uncertainty, in particular given the presence of common shocks. Our results are robust to some extensions, like risk aversion of firms or different penalty functions.
    Date: 2021–02
  21. By: Naef, Alain
    Abstract: This paper details the nature of the equity holdings of the Swiss National Bank (SNB) and estimates its carbon footprint. By analysing SNB holdings in the 100 most polluting companies in the world, I find that the share of assets owned by the SNB is responsible for at least a quarter of Switzerland’s domestic CO2 emissions. This represents as much as the greenhouse gas emissions of all Swiss households combined or 0.05% of global greenhouse gas emissions. Using two different estimation methods, I find that the SNB’s portfolio generates between 12 and 20 million metric tons of CO2 per year. This could be reduced by 99.7% with an investment reallocation of just 2% of the equity portfolio of the SNB.
    Date: 2020–12–09
  22. By: Alessandro Ferrari (Bank of Italy); Valerio Nispi Landi (Bank of Italy)
    Abstract: We study the effects of a temporary Green QE, defined as a policy that temporarily tilts the central bank's balance sheet toward green bonds, i.e. bonds issued by firms in non-polluting sectors. To this purpose, we merge a standard DSGE framework with an environmental model, in which detrimental emissions increase the stock of pollution. Imperfect substitutability between green and brown bonds is a necessary condition for the effectiveness of Green QE. While a temporary Green QE is an effective tool in mitigating detrimental emissions, it has limited effects in reducing the stock of pollution, if pollutants, such as CO2, stay in the atmosphere for a long time. The welfare gains of Green QE are positive but small. Welfare gains are larger if the flow of emissions negatively affects the utility of households.
    Keywords: central bank, monetary policy, quantitative easing, climate change
    JEL: E52 E58 Q54
    Date: 2021–02
  23. By: John Jairo Garcia Rendon; Alejandro Gutiérrez Gómez
    JEL: D47 L11 L51 L78
    Date: 2021–01–19
  24. By: Jorge Martinez-Vazquez (International Center for Public Policy, Georgia State University, USA)
    Abstract: There are still many countries around the world that have not effectively engaged their subnational governments in their climate change strategies and policy frameworks. Where subnational levels are involved, generally they still play a relatively small role. This paper examines how the principles of fiscal decentralization design (in expenditure and revenue assignments, transfers, and borrowing) can be adapted for successfully engaging subnational governments in fighting climate change. In addition, the paper critically reviews already ongoing promising and unhelpful international practices engaging those subnational governments in climate-change mitigation. Shared responsibility for policy and program design and implementation, fee- or charge-funded adaptation activities, objective-targeted intergovernmental transfers, and the use of green bonds are some of the most promising approaches analyzed. Clearly, there is ample space ahead for the further involvement of subnational governments across the world in combating climate change.
    Date: 2021–02
  25. By: Duho, King Carl Tornam; Senan Charlie Carine, Bonou
    Abstract: Climate change continues to be a critical issue of concern across the globe. In Africa, the vulnerability and exposure to climate risk are very high although African countries do not contribute to emissions as compared with developing countries in other continents. We argued that to effectively achieve the low carbon and climate-resilient development, Africa must use appropriate diversified financial instruments, have a long-term plan, implement a systemic approach and provide support based on each country’s needs. We also explore some critical issues on climate finance, carbon pricing and other related issues within a lens of an Africa which is making strides towards a continent-wide free trade area.
    Date: 2021–02–10
  26. By: Nomaler, Önder (UNU-MERIT); Verspagen, Bart (UNU-MERIT, Maastricht University)
    Abstract: We present a number of green technology patent landscaping exercises, based on a method that we developed earlier to identify the main technological trends in a very large (i.e., universal) patent citation network comprising all patented technologies. This method extracts a so-called network of main paths, where we interpret each path as a technological trajectory in the sense of Dosi (1982). We use co-occurrence on the technological trajectories as the main metric to build a network of technological relations, with green/non-green, the technology class (4-digit IPC classes) and geographical location (countries) as the main dimensions along which we observe green technology. The technology landscaping exercise visualises these networks. In this way, we draw a detailed map of green technologies (along with the particular non-green technologies that contribute thereto or benefit therefrom), in which we find both very broad and general areas (such as ICT or medical and health), and specific green technologies, such as batteries, wind power and electric vehicles. In the geography- based map, we find specific European and non-European areas. In all our landscaping maps, non-green technologies play a large role, indicating that sectoral and geographical progress in greentech cannot be fully understood independently of developments in particular fields of non-greentech technologies.
    Keywords: green technology, technological trajectories, patent citations, patent landscaping
    JEL: O31 O33 Q55
    Date: 2021–02–08
  27. By: Holmberg, Pär (Research Institute of Industrial Economics (IFN)); Tangerås, Thomas (Research Institute of Industrial Economics (IFN))
    Abstract: Sweden faces a major challenge in the next decades because of a projected increase in electricity demand, aging supply infrastructure and the transition to an energy system with a substantial share of weather-dependent production. This paper discusses the incentives to invest in production capacity in the Swedish electricity market, the energy policies that drive the development and proposes changes in market design to cope with this energy investment challenge.
    Keywords: Energy policy; Energy transition; Market design; Reliability; Resource efficiency
    JEL: D25 D47 Q40 Q48
    Date: 2021–02–24
  28. By: Rickels, Wilfried; Peterson, Sonja
    Abstract: Most states have implemented quite strict measures designed to slow down the spread of the coronavirus among their populations. For most sectors, these measures have resulted in a significant reduction of economic activity, output, and hence also output-related emissions. Commitment to these measures, apparently regardless of the economic costs involved, is considered by some people to be a blueprint for the commitment required to mitigate climate change and to achieve the Paris climate targets. However, when it comes to devising an efficient climate policy, the differences between the two crises—cororonavirus and climate change—need to be taken more seriously than the similarities. Alarming have been the various calls to put a quick end to corona prevention measures and the restrictions they place on public and economic activity, indicative as they are of the priority accorded to high discount rates and the absence of precautionary thinking among policy-makers. Both the differences between the two crises themselves and the similarities in the reluctance to focus on achieving (more) long-term benefits emphasize once again the need for long-term commitment to climate policies in line with agreed targets.
    Keywords: climate policy,carbon prices,economic recovery,corona virus,lock-down
    Date: 2020
  29. By: Anna Kowalska-Pyzalska; Rafał Michalski; Marek Kott; Anna Skowrońska-Szmer; Joanna Kott
    Abstract: Alternative fuel vehicles (AFVs) are an important element of sustainable development and electromobility. Within our complex, two stages survey (CATI and CAWI) we used the conjoint method to compare and balance the important factors responsible for consumers' preferences towards AFV, in one study, allowing a relative assessment to be made. As a result, we got 6 separate conjoints (depending on the type of purchase: direct purchase or leasing) and the type of vehicle (HEV, PHEV and BEV). Although each conjoint contains different sets of factors, the methodological regime is followed. Our results indicate that surprisingly safety is the most important feature of a good AFV car. Then, the price, range and type of the car also matter. These findings recommend car manufactures and policy makers what they should focus on while designing and promoting AFV.
    Keywords: Consumer preferences; Electric vehicles; Plug-in electric vehicles; Hybrid electric vehicles; Conjoint analysis; On-line survey; Sustainable transport
    Date: 2021–02–09
  30. By: Timothy Fitzgerald (Texas Tech University - Rawls College of Business); Kevin Hassett (The Lindsey Group; The Hoover Institution); Cody Kallen (University of Wisconsin-Madison - Wisconsin School of Business); Casey B. Mulligan (University of Chicago - Department of Economics; The Committee to Unleash Prosperity; NBER)
    Abstract: We estimate possible effects of Joe Biden’s tax and regulatory agenda. We find that transportation and electricity will require more inputs to produce the same outputs due to ambitious plans to further cut the nation’s carbon emissions, resulting in one or two percent less total factor productivity nationally. Second, we find that proposed changes to regulation as well as to the ACA increase labor wedges. Third, Biden’s agenda increases average marginal tax rates on capital income. Assuming that the supply of capital is elastic in the long run to its after-tax return and that the substitution effect of wages on labor supply is nontrivial, we conclude that, in the long run, Biden’s full agenda reduces full-time equivalent employment per person by about 3 percent, the capital stock per person by about 15 percent, real GDP per capita by more than 8 percent, and real consumption per household by about 7 percent.
    Date: 2020
  31. By: Tamma Carleton (University of California, Santa Barbara - Bren School of Environmental Science & Management); Michael Greenstone (University of Chicago - Department of Economics; NBER)
    Abstract: This paper outlines a two-step process to return the United States government’s Social Cost of Carbon (SCC) to the frontier of economics and climate science. The first step is to implement the original 2009-2010 Inter-agency Working Group (IWG) framework using a discount rate of 2%. This can be done immediately and will result in an SCC for 2020 of $125. The second step is to reconvene a new IWG tasked with comprehensively updating the SCC over the course of several months that would involve the integration of multiple recent advances in economics and science. We detail these advances here and provide recommendations on their integration into a new SCC estimation framework.
    Date: 2020
  32. By: Paulo de Sa; Jane Korinek
    Abstract: A more resource efficient and circular economy will help to decouple global economic growth from natural resource use, decrease environmental degradation and improve energy efficiency. Existing circular economy policies have been largely focused at the national level. However, trade policies can promote greater resource efficiency and circularity by enabling economies of scale in recycling; by ensuring regulatory coherence between different frameworks for recyclable material; and by helping to address the problem of exports to countries without adequate recycling facilities.The vast majority of trade in end-of-life material ‒ waste and scrap ‒ is in metallic material. Recycling metallic waste and scrap means less mining of non-renewable resources, and producing the most commonly used metals from recycled material uses 60-97% less energy than producing them from mined material. Moreover, demand for some minor metals and minerals, such as lithium, cobalt and rare earth elements (REE) used in energy storage, wind turbines and other environmental goods is projected to increase sharply as the global economy strives to become more carbon-neutral. Recycling these low-volume minerals will become urgent. Trade in these recovered materials will be particularly important in order to allow economies of scale for recycling operations as technologies evolve.
    Keywords: Energy storage, Export restrictions, Rare earth elements, Raw materials, Recycling, Waste and scrap
    JEL: Q1 Q2 Q37 Q38 Q56
    Date: 2021–03–01
  33. By: Tarufelli, Brittany L.
    Abstract: U.S. electricity markets vary by region and imperfectly overlap with regional climate policies. Although emissions leakage across emissions-regulated and -unregulated areas may depend on regional market design, and the extent of trading between market designs, previous studies of leakage from regional climate policies have focused on market power and market efficiency within only a centralized region following market rules. I develop a theoretical model which considers a second-best problem where a climate policy to correct for a negative externality from carbon emissions can be distorted by another market failure from the market design itself. My model allows for several types of non-overlapping climate policies and electricity market designs, and generates leakage predictions for these combinations.
    Date: 2021–02–15
  34. By: Chamberlain, Trevor W.; Kalaitzi, Athanasia S.
    JEL: O10 O50 F41 R11
    Date: 2020–02–20

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