nep-ene New Economics Papers
on Energy Economics
Issue of 2021‒05‒24
43 papers chosen by
Roger Fouquet
London School of Economics

  1. The zonal and seasonal CO2 marginal emissions factors for the Italian power market By Filippo Beltrami; Fulvio Fontini; Monica Giulietti; Luigi Grossi
  2. Recycling carbon tax revenues in Spain. Environmental and economic assessment of selected green reforms By Ángel Estrada; Daniel Santabárbara
  3. How flexible electricity demand stabilizes wind and solar market values: the case of hydrogen electrolyzers By Ruhnau, Oliver
  4. The Economic Performance of Hydropower Dams Supported by the World Bank Group, 1975-2015. By Saule Baurzhan; Glenn P. Jenkins; Godwin O. Olasehinde-Williams
  5. The potential role of hydrogen towards a low-carbon residential heating in Italy By Tavella, Sergio; Noussan, Michel
  6. A Stakeholder Analysis of Investments in Wind Power Electricity Generation in Ontario By Pejman Bahramian; Glenn P. Jenkins; Frank Milne
  7. Do Electricity Prices Affect Electric Vehicle Adoption? By Bushnell, James; Muehlegger, Eric; Rapson, David
  8. The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target: The Role of Firm Creation and Technology Adoption By Alan Finkelstein Shapiro; Gilbert E. Metcalf
  9. The long-term implications of the Covid-19 pandemic and recovery measures on environmental pressures: A quantitative exploration By Rob Dellink; Christine Arriola; Ruben Bibas; Elisa Lanzi; Frank van Tongeren
  10. Implications of Cheap Oil for Emerging Markets By Kabundi, Alain; Ohnsorge, Franziska
  11. What is the effect of weather on household electricity consumption? Empirical evidence from Ireland By Kang, J.; Reiner, D.
  12. On Current and Future Carbon Prices in a Risky World By Stan W.J. Olijslagers; Rick van der Ploeg; Sweder van Wijnbergen
  13. Trade club for climate: A climate approach to revive multilateralism By Bardt, Hubertus; Kolev, Galina V.
  14. Do banks fuel climate change? By Reghezza, Alessio; Altunbas, Yener; Marqués-Ibáñez, David; Rodriguez d’Acri, Costanza; Spaggiari, Martina
  15. The effects of technology intensity in manufacturing on CO2 emissions: Evidence from developing countries By Elvis Avenyo; Fiona Tregenna
  16. Storing Power: Market Structure Matters By Andrés-Cerezo, David; Fabra, Natalia
  17. Global carbon price asymmetry By Ritz, R.
  18. Climate Change Mitigation Policies: Aggregate and Distributional Effects By Cavalcanti, Tiago; Hasna, Zeina; Santos, Cezar
  19. Managerial and financial barriers to the net-zero transition By De Haas, Ralph; Martin, Ralf; Muûls, Mirabelle; Schweiger, Helena
  20. Globalization and the Environment By Brian R. Copeland; Joseph S. Shapiro; M. Scott Taylor
  21. Green Energy Pricing for Digital Europe By Crampes, Claude; Lefouili, Yassine
  22. Estimates of the social cost of carbon have not changed over time By Richard S.J. Tol
  23. Governance and renewable energy consumption in sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  24. Relationship between education and households’ electricity-saving behaviour in South Africa: A multilevel logistic analysis By Kabeya Clement Mulamba
  25. Impact of technological progress on carbon emissions in different country income groups By Chris Belmert Milindi; Roula Inglesi-Lotz
  26. Understanding the Estimation of Oil Demand and Oil Supply Elasticities By Kilian, Lutz
  27. Identifying residential consumption patterns using data-mining techniques: A large-scale study of smart meter data in Chengdu, China By Kang, J.; Reiner, D.
  28. Improvements to Modern Portfolio Theory based models applied to electricity systems By Gabriel Malta Castro; Claude Kl\"ockl; Peter Regner; Johannes Schmidt; Amaro Olimpio Pereira Jr
  29. Using four different online media sources to forecast the crude oil price By M. Elshendy; A. Fronzetti Colladon; E. Battistoni; P. A. Gloor
  30. Examining the determinants of electricity demand by South African households per income level By J.A Bohlmann; R. Inglesi-Lotz
  31. Exploring trade-offs between landscape impact, land use and resource quality for onshore variable renewable energy: an application to Great Britain By R. McKenna; I. Mulalic; I. Soutar; J. M. Weinand; J. Price; S. Petrovic; K. Mainzer
  32. Effects of Exhaustible Resources and Declining Population on Economic Growth with Hotelling's Rule By Sasaki, Hiroaki; Mino, Kazuo
  33. Measuring energy poverty in South Africa based on householdrequired energy consumption By Yuxiang Yeú; Steven F. Koch
  34. The time-varying elasticity of South African electricity demand: 1980–2018 By Kabelo Masike; Cobus Vermeulen
  35. Is Environmentalism the Right Strategy to Decarbonize the World? By Marini, Marco; Tarola, Ornella; Thisse, Jacques-François
  36. Market power and long-term gas contracts: the case of Gazprom in Central and Eastern European Gas Markets By Chyong, C K.; Reiner, D; Aggarwal, D.
  37. The carbon footprint of the Target Instant Payment Settlement (TIPS) system: a comparative analysis with Bitcoin and other infrastructures By Pietro Tiberi
  38. Air Pollution and Adult Cognition: Evidence from Brain Training By La Nauze, Andrea; Severnini, Edson R.
  39. Is Public Equity Deadly? Evidence from Workplace Safety and Productivity Tradeoffs in the Coal Industry By Erik P. Gilje; Michael D. Wittry
  40. Time is of the Essence: Climate Adaptation Induced by Existing Institutions By Bento, Antonio M.; Miller, Noah; Mookerjee, Mehreen; Severnini, Edson R.
  41. Complementarities in Infrastructure: Evidence from Rural India By Vanden Eynde, Oliver; Wren-Lewis, Liam
  42. Schriftliche Stellungnahme zur Neufassung des Klimaschutzgesetzes Nordrhein-Westfalen: Anhörung von Sachverständigen des Ausschusses für Wirtschaft, Energie und Landesplanung By Schaefer, Thilo
  43. Machine Learning on residential electricity consumption: Which households are more responsive to weather? By Kang, J.; Reiner, D.

  1. By: Filippo Beltrami (Department of Economics (University of Verona)); Fulvio Fontini (University of Padua); Monica Giulietti (Loughborough University); Luigi Grossi (Department of Economics (University of Verona))
    Abstract: This paper estimates the seasonal and zonal CO2 marginal emissions factors (MEFs) from electricity production in the Italian electricity system. The inclusion of the zonal configuration of the Italian wholesale power market leads to a complete measurement of marginal emission factors which takes into account the heterogeneous distribution of RES power plants, their penetration rate and their variability within the zonal power generation mix. This article relies on the fractional cointegration methodology to incorporate the typical features of long memory processes into the estimation of MEFs. We find high variability in annual MEFs estimated at the zonal level. Sardinia reports the highest MEF (0.7189 tCO2/MWh), followed by the Center South (0.7022 tCO2/MWh), the Center North (0.4236 tCO2/MWh), the North (0.2018 tCO2/MWh) and Sicily (0.146 tCO2/MWh). The seasonal analysis also shows a large variability of MEFs in each zone across time. The heterogeneity of results leads us to recommend that policymakers consider the zonal configuration of the power market and the large seasonal variability related to carbon emissions and electricity generation when designing incentives for Renewable Energy Sources (RES) expansion and for achieving emission reduction targets.
    Keywords: Decarbonization, Electricity Price, Fractional Cointegration, Marginal Emission Factor (MEF), Renewable Energy Sources (RES)
    JEL: P18 Q41 Q42 Q51 C22 C32
    Date: 2021–01
  2. By: Ángel Estrada (Banco de España); Daniel Santabárbara (Banco de España)
    Abstract: The design of the key elements of a public budget-neutral environmental fiscal reform could have very different implications in terms of its environmental and macroeconomic impact. Our proposals rely on a carbon tax on fossil fuels covering all economic sectors. It would be a powerful and efficient instrument for reducing emissions, as it gives economic agents an incentive to find ways to save energy and switch to greener energy sources while generating significant tax revenues whose judicious use may have positive macroeconomic effects. In addition, a carbon tax is easy to administer since it can be integrated into existing fuel excise duties. We build a novel model to assess the environmental and economic impact of a set of environmental fiscal reforms in Spain which are defined by different levels of the carbon tax, the possibility of a border carbon adjustment and alternative uses of the tax revenues generated. In this framework, we incorporate technological innovation, which will allow firms to produce with non-polluting inputs and, specifically, the electricity sector, to increase the role of renewables in its generation mix. The results indicate that carbon tax designs with border carbon adjustment tend to be more effective in lowering emissions in Spain. They also suggest that an appropriately designed environmental fiscal reform may even boost economic activity in the medium term if the revenues are used to reduce other, more distorting taxes.
    Keywords: carbon tax, environmental policy, modelling, green tax reform
    JEL: C6 H2 Q5
    Date: 2021–05
  3. By: Ruhnau, Oliver
    Abstract: Wind and solar energy are often expected to fall victim to their own success: the higher their share in electricity production, the more their revenue on electricity markets (their “market value”) declines. While in conventional power systems, the market value may converge to zero, this study demonstrates that “green” hydrogen production, through adding electricity demand in low-price hours, can effectively and permanently halt the decline. With an analytical derivation, a Monte Carlo simulation, and a numerical electricity market model, I find that – due to flexible hydrogen production alone – market values across Europe likely converge above €19 ± 9 per MWh for solar energy and above €27 ± 8 per MWh for wind energy in 2050 (annual mean estimate ± standard deviation). This lower boundary is in the range of the projected levelized costs of renewables and has profound implications. Market-based renewables may hence be within reach.
    Keywords: Renewable energy,Hydrogen electrolysis,Electricity market,Electricity economics,Integrated energy systems,Flexible electricity demand
    JEL: Q4 Q40 Q41 Q42
    Date: 2021
  4. By: Saule Baurzhan (Department of Economics, Eastern Mediterranean University, Famagusta, 99450, TRNC via Mersin 10, Turkey); Glenn P. Jenkins (Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada); Godwin O. Olasehinde-Williams (School of Economics and Management, Nanchang University, Nanchang, 330031, China)
    Abstract: This paper assesses the economic benefits of 57 World Bank Group-sponsored hydropower dam plant investments. Hydropower dams are among the main sources for producing electricity and the largest renewable source for power generation throughout the world. Hydropower dams are often a lower-cost option for power generation in Clean Energy Transition for addressing global climate change. Despite its conspicuous aspects, constructing hydropower dams has been controversial. Considering the World Bank’s long history as the largest hydropower development financier, this study investigates its performance in supporting hydropower dams. The outcomes of this study apply to the wider hydropower development community. Of the projects in this study, 70% experienced a cost overrun, and more than 80% of projects experienced time overruns, incurring potential additional costs as a result. Despite the high cost and time overruns, this hydropower portfolio of dams produced a present value of net economic benefits by 2016 of over half a trillion USD. Based on our findings, the evaluated hydropower portfolio helped avoid over a billion tones of CO2 for an estimated global environmental benefit valued at nearly USD 350 billion. The projects’ additional environmental benefits raise the real rate of return from 15.4% to 17.3%. The implication for hydropower developers is that the projects’ assessment should consider cost and time overrun and factor them into the project-planning contingency scenarios. There is a considerable benefit for developing countries to exploit their hydropower resources if they can be developed according to industry practices and international standards. The case for developing hydropower may be stronger when considering its climate benefits. The net economic benefits of hydropower can be even higher if there is a greater effort to manage cost and time overruns.
    Keywords: investment appraisal; carbon emissions; cost overrun; hydropower; dams; World Bank
    JEL: D2 O10
    Date: 2021–05–11
  5. By: Tavella, Sergio; Noussan, Michel
    Abstract: Buildings’ heating represents an important share of the total energy consumption in Italy, and to reach the challenging decarbonization targets set by the EU by 2050, a combination of measures and technologies will be required. This working paper presents an analysis of different scenarios comparing the penetration of buildings’ heating technologies for the residential sector in Italy. The objective of the research is to evaluate the potential contribution of different technologies, with a particular focus of the role that hydrogen may have to play, compared to other solutions, including heat pumps and renewable natural gas. The analysis compares the potential role of these technologies in reaching a decarbonized residential heating by 2050, by also discussing the main barriers and opportunities that lie ahead. The scenarios are defined starting from historical data of heating systems stock and sales, integrated with the know-how of experts of the sector to compare different pathways based on electrification or renewable gases. The results show that a combination of technologies will be in any case required in the heating sector, but also that other external factors will be of paramount importance, including the electricity decarbonization and energy efficiency measures on the building stock.
    Keywords: Research and Development/Tech Change/Emerging Technologies
    Date: 2021–05–19
  6. By: Pejman Bahramian (Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada); Glenn P. Jenkins (Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada); Frank Milne (Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada)
    Abstract: This study uses an ex-post evaluation of the grid-connected wind projects in Ontario, Canada, to quantify the stakeholder impacts of such renewable energy projects. Our study includes a financial, economic and stakeholder analysis of a sample of three wind farms. The analysis sheds light on the distributional impacts that arise when there is a significant gap between the incentives created by the financial price paid for electricity generation and the economic value of the electricity generated. The analysis shows that the negotiated power purchase agreements (PPAs) have resulted in a negative outcome for the economy in all circumstances. It is found that the present value of the economic costs is at least three times the present value of the economic benefits, including the global benefits from the reduced CO2 emissions. This loss is borne by all the stakeholders of the electricity system, except the private owners of the wind farms. The losers are primarily the electricity consumers followed by the governments. The Ontario Electricity Rebate (OER) programme, which is financed by increased government borrowing, has the effect of transferring a large share of the costs incurred to promote investments in wind power to future generations of taxpayers in Ontario.
    Keywords: Economic analysis, electricity, Ontario, wind power
    JEL: O55 D61 Q42
    Date: 2021–05–11
  7. By: Bushnell, James; Muehlegger, Eric; Rapson, David
    Abstract: The operational costs of electric vehicles are lower than those of gas-powered vehicles. This advantage is often cited by manufacturers, advocates, and policy-makers as a significant benefit of driving electric vehicles. Yet, the question of how consumers value operational costs when purchasing an electric vehicle is largely unexplored. While prior research has suggested that gasoline prices are an important factor for conventional vehicle buyers, consumers may not have the same awareness of electricity prices as they do for salient gasoline prices. The question of whether consumers accurately assess the costs and benefits of using electricity as a transportation fuel has important implications for electric vehicle adoption and for achieving deep decarbonization of the transportation sector through electrification.
    Keywords: Social and Behavioral Sciences
    Date: 2021–05–01
  8. By: Alan Finkelstein Shapiro; Gilbert E. Metcalf
    Abstract: We analyze the quantitative labor market and aggregate effects of a carbon tax in a framework with pollution externalities and equilibrium unemployment. Our model incorporates endogenous labor force participation and two margins of adjustment influenced by carbon taxes: (1) firm creation and (2) green production-technology adoption. A carbon-tax policy that reduces carbon emissions by 35 percent – roughly the emissions reductions that will be required under the Biden Administration's new commitment under the Paris Agreement – and transfers the tax revenue to households generates mild positive long-run effects on consumption and output; a marginal increase in the unemployment and labor force participation rates; and an expansion in the number and fraction of firms that use green technologies. In the short term, the adjustment to higher carbon taxes is accompanied by gradual gains in output and consumption and a negligible expansion in unemployment. Critically, abstracting from endogenous firm entry and green-technology adoption implies that the same policy has substantial adverse short- and long-term effects on labor income, consumption, and output. Our findings highlight the importance of these margins for a comprehensive assessment of the labor market and aggregate effects of carbon taxes.
    JEL: E20 E24 E62 H23 O33 Q52 Q54 Q55 Q58
    Date: 2021–05
  9. By: Rob Dellink (OECD); Christine Arriola (OECD); Ruben Bibas (OECD); Elisa Lanzi (OECD); Frank van Tongeren (OECD)
    Abstract: This paper analyses the long-term effects of the COVID-19 pandemic and associated government responses on the environment. It uses large-scale modelling to investigate the impact of sectoral and regional shocks to the economy until 2040. These detailed economic impacts are linked to a range of environmental pressures, including greenhouse gas emissions, emissions of air pollutants, the use of raw materials and land use change. The short-term reductions in environmental pressures are significant: in 2020, energy-related greenhouse gas and air pollutant emissions dropped by around 7%. Environmental pressures related to agriculture observed a smaller drop in 2020. The reduction in the use of non-metallic minerals, including construction materials, reached double digits. From 2021, emissions are projected to increase again, gradually getting closer to the pre-COVID baseline projection levels as growth rates recover fully. But there is a long-term – potentially permanent – downward impact on the levels of environmental pressures of 1‑3%.
    Keywords: air pollution, climate change, COVID-19, general equilibrium, land use change, materials use
    JEL: D58 O44 Q53 Q54
    Date: 2021–05–21
  10. By: Kabundi, Alain; Ohnsorge, Franziska
    Abstract: The COVID-19-triggered collapse in oil prices in March and April 2020 was the seventh, and by far the most severe, in a series of such collapses since 1970. This paper, first, compares this most recent collapse and its drivers with previous ones in an event study. It finds that it was associated with an exceptionally severe plunge in oil demand. Second, in a local projections model, this paper estimates the implications of demand- and supply-driven oil price collapses for growth in emerging markets and developing economies (EMDEs). The paper finds that steep oil price collapses were associated with significant and lasting output losses in energy-exporting EMDEs but no meaningful output gains in energy-importing EMDEs. These results are robust to multiple robustness checks.
    Keywords: Covid-19 pandemic; demand factors; local projections model; macroeconomic implications; oil price decline; supply factors
    JEL: E32 F40 Q40 Q41 Q43
    Date: 2020–09
  11. By: Kang, J.; Reiner, D.
    Abstract: We explore the links between weather variables and residential electricity consumption using high-resolution smart metering data. While weather factors have been used for grid-level electricity demand estimations, the impact of different weather conditions on individual households has not been fully addressed. The deployment of smart meters enables us to analyse weather effects in different periods of the day using hourly panel datasets, which would previously have been impossible. To conduct the analysis, fixed-effects models are employed on half-hourly electricity consumption data from 3827 Irish household meters. We demonstrate that temperature has robust and relatively flat effects on electricity demand across all periods, whereas rain and sunshine duration show greater potential to affect individual behaviour and daily routines. The models show that the most sensitive periods differ for each weather variable. We also test the responses to weather factors for weekends and workdays. Weather sensitivities vary with the day of the week, which might be caused by different household patterns over the course of the week. The methodology employed in this study could be instructive for improving understanding behavioural response in household energy consumption. By using only weather indicators, this approach can be quicker and simpler than traditional methods —such as surveys or questionnaires — in identifying the periods when households are more responsive.
    Keywords: Weather effects, residential electricity consumption, fixed-effects models, smart metering data
    JEL: C55 D12 R22 Q41
    Date: 2021–05–12
  12. By: Stan W.J. Olijslagers; Rick van der Ploeg; Sweder van Wijnbergen
    Abstract: We analyse optimal abatement and carbon pricing strategies under a variety of economic, temperature and damage risks. Economic growth, convex damages and temperature-dependent risks of climatic tipping points lead to higher growth rates of carbon prices, but gradual resolution of uncertainty lowers them. For temperature-dependent economic damage tipping points, carbon prices are higher, but when the tipping point occurs, the price jumps downward. With only a temperature cap the carbon price rises at the risk-adjusted interest rate. Adding damages leads to a higher carbon price that grows more slowly. But as temperature and cumulative emissions get closer to their caps, the carbon price is ramped up ever more. Policy makers should commit to a rising path of carbon prices.
    Keywords: CO2 prices, growth uncertainty, tipping points, damages, gradual resolution of damage uncertainty, temperature caps
    JEL: H23 Q51 Q54
    Date: 2021
  13. By: Bardt, Hubertus; Kolev, Galina V.
    Abstract: The adoption of the Paris Agreement in December 2015 calls for concerted efforts by the international community to restrain the increase in global average temperature to well below 2êC. Trade policy has the potential to contribute substantially to curbing climate change. However, the global trade system is suffering the deepest crisis in the history of the World Trade Organization (WTO). To revive multilateralism, it is crucial to pursue a positive approach based on the commitment to a common target like climate protection and reinforced by the urgency of that target. A Trade Club for Climate (TCC) or a Sector/Industry Climate Club (SICC) are alternative ways to address both the climate crisis and the crisis of the global trading system at the same time. They should be exclusive, appealing and based on the experience of the GATT and WTO negotiations. Starting the negotiations with a smaller number of countries to achieve a large progress is more feasible than involving all current WTO member states right from the beginning. The TCC could draw on the potential of trade policy to contribute to climate protection and should be an attempt to liberalise trade with environmental and climate goods and services. A SICC could focus on the main producing countries of specific industries, which would make negotiations about minimum levels of carbon prices more feasible. The discussion on the trade-climate nexus shows that there are several measures that can be taken to make trade policy work for climate. Eliminating tariffs and reducing non-tariff barriers on goods for climate protection, product labelling, green procurement and carbon border adjustment are only a few of them. The change of political power in the USA, the recent trade policy review in the EU and the increasing commitment of many other countries worldwide show that there cannot be a better time to initiate a TCC or SICCs for specific industries and launch negotiations.
    JEL: F13 F18 Q54
    Date: 2021
  14. By: Reghezza, Alessio; Altunbas, Yener; Marqués-Ibáñez, David; Rodriguez d’Acri, Costanza; Spaggiari, Martina
    Abstract: Do climate-oriented regulatory policies affect the flow of credit towards polluting corporations? We match loan-level data to firm-level greenhouse gas emissions to assess the impact of the Paris Agreement. We find that, following this agreement, European banks reallocated credit away from polluting firms. In the aftermath of President Trump’s 2017 announcement that the United States was withdrawing from the Paris Agreement, lending by European banks to polluting firms in the United States decreased even further in relative terms. It follows that green regulatory initiatives in banking can have a significant impact combating climate change. JEL Classification: E51, G28, H23
    Keywords: climate change, difference-in-differences, loan-level data, Paris Agreement, Trump
    Date: 2021–05
  15. By: Elvis Avenyo; Fiona Tregenna
    Abstract: Industrialisation is recognised as important for developing countries’ growth and ‘catching up’ with advanced economies, but is also associated with harmful carbon dioxide (CO2) emissions and hence with climate change. This poses a challenge to sustainable development, particularly for late industrialisers: how to industrialise while also mitigating CO2 emissions. This paper investigates the effect of technology intensity in manufacturing on CO2 emissions: is high-technology manufacturing less emitting than medium-technology and, in turn, low-technology manufacturing? We analyse this for a panel of 56 developing economies over the period 1991 to 2014, estimated using generalised method of moments (GMM). Methodologically, we adapt and synthesise the environmental Kuznets curve (EKC) and the stochastic effect by regression on population, affluence and technology (STIRPAT) approaches. We utilise two alternative measures of emissions: absolute and per capita volumes. Our results show that medium- and high-technology manufacturing are associated with higher emissions than low-technology manufacturing. In relation to the technology intensity of manufacturing exports, we find high-technology manufacturing to be associated with lower emissions than medium-technology manufacturing, and in turn low-technology manufacturing. These findings have important policy implications, suggesting that a shift towards more technology-intensive manufacturing may be a more environmentally sustainable industrialisation path for developing countries.
    Keywords: carbon dioxide (CO2) emissions, industrialisation, manufacturing, Technology, developing countries
    JEL: F18 O13 O14 O33 Q01 Q54 Q56
    Date: 2021–01
  16. By: Andrés-Cerezo, David; Fabra, Natalia
    Abstract: We assess how firms' incentives to operate and invest in energy storage depend on the market structure. For this purpose, we characterize equilibrium market outcomes allowing for market power in storage and/or production, as well as for vertical integration between storage and production. Market power reduces overall efficiency through two channels: it induces an inefficient use of the storage facilities, and it distorts investment incentives. The worst outcome for consumers and total welfare occurs under vertical integration. We illustrate our theoretical results by simulating the Spanish wholesale electricity market for different levels of storage capacity. The results are key to understanding how to regulate energy storage, an issue which is critical for the deployment of renewables.
    Keywords: electricity; investment; market structure; Storage
    JEL: L22 L94
    Date: 2020–11
  17. By: Ritz, R.
    Abstract: This paper studies a social planner who chooses countries' carbon prices so as to maximize global welfare. Product markets are characterized by firm heterogeneity, market power, and international trade. Because of the market-power distortion, the planner's optimal policy is second-best. The main insight is that optimal carbon prices may be highly asymmetric: zero in some countries and above the social cost of carbon in countries with relatively dirty production. This result obtains even though a uniform global carbon price is always successful at reducing countries' emissions. Competition policy that mitigates market power may enable stronger and more balanced climate action.
    Keywords: Carbon leakage, carbon pricing, imperfect competition, international trade, second best
    JEL: H23 L11 Q54
    Date: 2021–05–17
  18. By: Cavalcanti, Tiago; Hasna, Zeina; Santos, Cezar
    Abstract: We evaluate the aggregate and distributional effects of climate change mitigation policies using a multi-sector equilibrium model with intersectoral input-output linkages and worker heterogeneity calibrated to different countries. The introduction of carbon taxes leads to changes in relative prices and inputs reallocation, including labor. For the United States, reaching its Paris Agreement pledge would imply at most a 0.6% drop in output. This impact is distributed asymmetrically across sectors and individuals. Workers with a comparative advantage in dirty energy sectors who do not reallocate bear relatively more of the cost but constitute a small fraction of the labor force.
    Date: 2020–11
  19. By: De Haas, Ralph; Martin, Ralf; Muûls, Mirabelle; Schweiger, Helena
    Abstract: We use data on 11,233 firms across 22 emerging markets to analyze how credit constraints and low-quality firm management inhibit corporate investment in green technologies. For identification we exploit quasi-exogenous variation in local credit conditions and in exposure to weather shocks. Our results suggest that both financial frictions and managerial constraints slow down firm investment in more energy efficient and less polluting technologies. Complementary analysis of data from the European Pollutant Release and Transfer Register (E-PRTR) corroborates some of this evidence by revealing that in areas where banks deleveraged more after the global financial crisis, industrial facilities reduced their carbon emissions by less. On aggregate this kept local emissions 15% above the level they would have been in the absence of financial frictions.
    JEL: D22 L23 G32 L20 Q52 Q53
    Date: 2021–05–17
  20. By: Brian R. Copeland; Joseph S. Shapiro; M. Scott Taylor
    Abstract: How should international economic policy address climate change? Does trade cause deforestation and endangered species depletion? How does globalization affect air and water pollution? Do trade and investment create a race to the bottom in environmental policy? How important are environmental impacts of transporting goods? We review theory and empirical work linking international trade and the environment with a focus on recent work and methods. We discuss the literature linking trade to local and global pollutants, the impact of emissions from transportation, the effect of trade on the sustainability of renewable resources, and the interaction between trade and climate policy. To shape our review, we present nine new stylized facts that, together with our review of past work, highlight questions for future research.
    JEL: F18 H23 Q27
    Date: 2021–05
  21. By: Crampes, Claude; Lefouili, Yassine
    Abstract: This paper investigates the trade-offs associated with the digitalization of the energy sector. Arguing that digitalization has both bright and dark sides, we study the extent to which it can help make energy systems efficient and sustainable. We first discuss how digitalization affects the responsiveness of demand, and explore its implications for spot pricing, load shedding, and priority service. In particular, we highlight the conditions under which digital technologies that allow demand to be more responsive to supply are likely to be used. We then turn to the way digitalization can contribute to the decarbonization of the energy sector, and discuss the promises and limitations of artificial intelligence in this area. Finally, we contend that policymakers should pay special attention to the privacy concerns raised by the digitalization of the energy sector and the cyberattacks that it enables.
    Keywords: Electricity; dynamic pricing; digitalisation; artificial Intelligence
    Date: 2021–05
  22. By: Richard S.J. Tol (Department of Economics, University of Sussex, Falmer, United Kingdom)
    Abstract: Some claim that as knowledge about climate change accumulates, the social cost of carbon increases. A meta-analysis of published estimates shows that this is not the case. Correcting for inflation and emission year and controlling for the discount rate, kernel density decomposition reveals a stationary distribution. Actual carbon prices are almost everywhere below the estimated social cost of carbon.
    JEL: Q54
    Date: 2021–05
  23. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: The purpose of this study is to assess the nexus between governance and renewable energy consumption in sub-Saharan Africa. The focus is on 44 countries in Sub-Saharan Africa with data from 1996 to 2016. The empirical evidence is based on Tobit regressions. It is apparent from the findings that political and institutional governance are negatively related to the consumption of renewable energy in the sampled countries. The unexpected findings are clarified and policy implications are discussed in the light of sustainable development goals. This study extends the extant literature by assessing how political governance (consisting of political stability and “voice & accountability†) and institutional governance (entailing the rule of law and corruption-control) affect the consumption of renewable energy in sub-Saharan Africa.
    Keywords: Renewable energy; Governance; Sub-Saharan Africa; Sustainable development
    JEL: H10 Q20 Q30 O11 O55
    Date: 2021–01
  24. By: Kabeya Clement Mulamba
    Abstract: This paper investigates the relationship between the education level of household heads and households’ energy-saving practices at the micro-level in South Africa. It uses the community survey of 2016 as data source. Multilevel logistic models are estimated to account for heterogeneity that characterises the sample data due to the fact that households are nested within municipalities. The findings point to a significant and positive relationship between education level of household heads and households’ energy-saving practices. Based on these results, one can infer that a household whose head is educated is more likely to have light bulbs, switch off lights in the house when not in use, and switch off appliances at the wall (not with remotes) when not in use than household whose heads have no education. Therefore, education offers a tool to incentivise households to save electricity, which will also contribute indirectly to the effort of addressing the challenges of climate change, amongst others.
    Keywords: Households, electricity-saving, Education, municipal, South Africa
    JEL: C31 D21 R21 Q4
    Date: 2021–01
  25. By: Chris Belmert Milindi; Roula Inglesi-Lotz
    Abstract: This study examines the complex relationship between carbon emissions and technological progress in a sample of 60 countries, divided into four categories based on their per capita income between the periods of 1989-2018. For robustness purposes and due to the broad definition of technology, we use six different proxies to represent technology; namely: Information and telecommunication technology (ICT); patents; public R&D expenditure; total factor of productivity (TFP); and a number of science and technology publications. After applying the fixed-effect method with Driscoll and Kraay standard errors, for the full sample, the results show that the ICT variables are a good instrument for carbon abatement, while R&D expenditure and patents do not have a clear impact on carbon emissions, TFP increases carbon emissions, and science and technology publications are negatively related to carbon emissions. The impact of the indicators on the various income levels groups of countries vary which has significant policy implications.
    Keywords: Technological progress, Income groups, Rebound Effect, fixed effect methodology with Driscoll, and Kraay standards errors
    JEL: O30 O32 C23 Q56
    Date: 2021–03
  26. By: Kilian, Lutz
    Abstract: This paper examines the advantages and drawbacks of alternative methods of estimating oil supply and oil demand elasticities and of incorporating this information into structural VAR models. I not only summarize the state of the literature, but also draw attention to a number of econometric problems that have been overlooked in this literature. Once these problems are recognized, seemingly conflicting conclusions in the recent literature can be resolved. My analysis reaffirms the conclusion that the one-month oil supply elasticity is close to zero, which implies that oil demand shocks are the dominant driver of the real price of oil. The focus of this paper is not only on correcting some misunderstandings in the recent literature, but on the substantive and methodological insights generated by this exchange, which are of broader interest to applied researchers.
    Keywords: Bayesian inference; gasoline price; IV estimation; Oil demand elasticity; oil price; oil supply elasticity; structural VAR
    JEL: C36 C52 Q41 Q43
    Date: 2020–09
  27. By: Kang, J.; Reiner, D.
    Abstract: The fine-grained electricity consumption data created by advanced metering technologies offers an opportunity to understand residential demand from new angles. Although there exists a large body of research on demand response in short- and long-term forecasting, a comprehensive analysis to identify household consumption behaviour in different scenarios has not been conducted. The study’s novelty lies in its use of unsupervised machine learning tools to explore residential customers’ demand patterns and response without the assistance of traditional survey tools. We investigate behavioural response in three different contexts: 1) seasonal (using weekly consumption profiles); 2) holidays/festivals; and 3) extreme weather situations. The analysis is based on the smart metering data of 2,000 households in Chengdu, China over three years from 2014 to 2016. Workday/weekend profiles indicate that there are two distinct groups of households that appear to be white-collar or relatively affluent families. Demand patterns at the major festivals in China, especially the Spring Festival, reveal various types of lifestyle and households. In terms of extreme weather response, the most striking finding was that in summer, at night-time, over 72% of households doubled (or more) their electricity usage, while consumption changes in winter do not seem to be significant. Our research offers more detailed insight into Chinese residential consumption and provides a practical framework to understand households’ behaviour patterns in different settings.
    Keywords: Residential electricity, household consumption behaviour, China, machine learning
    JEL: C55 D12 R22 Q41
    Date: 2021–05–12
  28. By: Gabriel Malta Castro; Claude Kl\"ockl; Peter Regner; Johannes Schmidt; Amaro Olimpio Pereira Jr
    Abstract: With the increase of variable renewable energy sources (VRES) share in electricity systems, manystudies were developed in order to determine their optimal technological and spatial mix. Modern PortfolioTheory (MPT) has been frequently applied in this context. However, some crucial aspects, important inenergy planning, are not addressed by these analyses. We, therefore, propose several improvements andevaluate how each change in formulation impacts results. More specifically, we address generation costs, system demand, and firm energy output, present a formal model and apply it to the case of Brazil. Wefound that, after including our proposed modifications, the resulting efficient frontier differs strongly fromthe one obtained in the original formulation. Portfolios with high output standard deviation are not ableto provide a firm output level at competitive costs. Furthermore, we show that diversification plays animportant role in smoothing output from VRES portfolios
    Date: 2021–05
  29. By: M. Elshendy; A. Fronzetti Colladon; E. Battistoni; P. A. Gloor
    Abstract: This study looks for signals of economic awareness on online social media and tests their significance in economic predictions. The study analyses, over a period of two years, the relationship between the West Texas Intermediate daily crude oil price and multiple predictors extracted from Twitter, Google Trends, Wikipedia, and the Global Data on Events, Language, and Tone database (GDELT). Semantic analysis is applied to study the sentiment, emotionality and complexity of the language used. Autoregressive Integrated Moving Average with Explanatory Variable (ARIMAX) models are used to make predictions and to confirm the value of the study variables. Results show that the combined analysis of the four media platforms carries valuable information in making financial forecasting. Twitter language complexity, GDELT number of articles and Wikipedia page reads have the highest predictive power. This study also allows a comparison of the different fore-sighting abilities of each platform, in terms of how many days ahead a platform can predict a price movement before it happens. In comparison with previous work, more media sources and more dimensions of the interaction and of the language used are combined in a joint analysis.
    Date: 2021–05
  30. By: J.A Bohlmann; R. Inglesi-Lotz
    Abstract: For the period 1975 - 2016, this paper examines the determinants of the residential demand for electricity in South Africa including disposable income, electricity prices, food prices as well as the impact of the 2007/08 load-shedding wave and the 2008 electricity price restructuring. Given the high income inequality levels in South Africa, this relationship was investigated at aggregated and disaggregated income levels. Based on an Autoregressive Distributed Lag (ARDL) model, the empirical results indicate long-run cointegration between residential electricity consumption, gross national disposable income, electricity prices and food prices. Disposable income elasticities have a positive sign for the aggregate and all income groups, indicating that as income increases, South African households consume more electricity (normal good). As expected, price elasticities are negative and significant -- for both the aggregated and disaggregated models - indicating that electricity prices do influence electricity demand for all South African households. The paper also examines the complementarity or substitutability of food and electricity. At both the aggregated and disaggregated income levels, the results showed that food and electricity are substitute goods for all South African households. However, as expected, the magnitude of this relationship is marginally different for each income group.
    Keywords: Residential Sector, price elasticity, income elasticity, ARDL, South Africa
    JEL: C13 C22 Q41
    Date: 2020–09
  31. By: R. McKenna; I. Mulalic; I. Soutar; J. M. Weinand; J. Price; S. Petrovic; K. Mainzer
    Abstract: The ambitious Net Zero aspirations of Great Britain (GB) require massive and rapid developments of Variable Renewable Energy (VRE) technologies. GB possesses substantial resources for these technologies, but questions remain about which VRE should be exploited where. This study explores the trade-offs between landscape impact, land use competition and resource quality for onshore wind as well as ground- and roof-mounted photovoltaic (PV) systems for GB. These trade-offs constrain the technical and economic potentials for these technologies at the Local Authority level. Our approach combines techno-economic and geospatial analyses with crowd-sourced scenicness data to quantify landscape aesthetics. Despite strong correlations between scenicness and planning application outcomes for onshore wind, no such relationship exists for ground-mounted PV. The innovative method for rooftop-PV assessment combines bottom-up analysis of four cities with a top-down approach at the national level. The results show large technical potentials that are strongly constrained by both landscape and land use aspects. This equates to about 1324 TWh of onshore wind, 153 TWh of rooftop PV and 1200-7093 TWh ground-mounted PV, depending on scenario. We conclude with five recommendations that focus around aligning energy and planning policies for VRE technologies across multiple scales and governance arenas.
    Date: 2021–05
  32. By: Sasaki, Hiroaki; Mino, Kazuo
    Abstract: This study introduces declining population and exhaustible resources into a semi-endogenous growth model that explicitly incorporates firms' optimization behavior and investigates the relationship between the population growth rate and the growth rate of the per capita output. The main results are as follows. First, irrespective of whether the population growth rate is positive or negative, the long-run growth rate of per capita output can be positive, depending on the conditions. Second, when the population growth rate is positive, the long-run growth rate of per capita output depends positively on the saving rate, although the model belongs to the class of semi-endogenous growth without scale effects.
    Keywords: exhaustible resources; declining population; endogenous growth: Hotelling's rule
    JEL: O13 O44 Q32 Q43
    Date: 2021–05–17
  33. By: Yuxiang Yeú; Steven F. Koch
    Abstract: Energy poverty is a major concern in most of developing countries while its measurement has not been fully addressed due to the complexity of energy basic needs estimation. This study contributes to the literature by measuring energy poverty with focus on household required energy consumption using widely available household budget survey data. We apply the Foster-Greer-Thorbecke (FGT) poverty measures in a developing but somewhat energy advanced context, South Africa. Our energy poverty line is based on household dependent required energy consumption, and we use data from a recent South African Living Conditions Survey. We ï¬ nd that headcount energy poverty is extensive, as is the gap and the severity of energy poverty. Decomposition results suggest that energy poverty rates decrease with income, and lower income groups contribute more to total poverty than higher income groups across all the three poverty indexes. Our results are consistent with those from previous research, which suggests that our measure of required energy may be a reasonable option for understanding energy poverty.
    Keywords: Energy poverty, Required energy consumption, FGT poverty measures
    Date: 2020–12
  34. By: Kabelo Masike; Cobus Vermeulen
    Abstract: This study estimates the price and income elasticity coefficients of domestic South African electricity demand for the period 1980 to 2018, considering both the aggregate economy as well as the mining sector in isolation. South African electricity prices were falling in real terms between 1983–2005. It then increased sharply in response to substantial tariff increases between 2008–2011. A time-varying parameter model with the Kalman filter is applied to estimate the evolution of the elasticities over time. This allows the analysis to distinguish between the two regimes of decreasing and increasing real electricity prices, and evaluate the evolution of demand elasticities accordingly. The main result, consistent with existing South African literature, is that electricity consumption was unresponsive to price changes in the period of falling real electricity prices up to 2005. However, when real prices started increasing, the price elasticity coefficient increased markedly in absolute terms. This indicates that aggregate price sensitivity is notably higher when real prices are increasing. A secondary result is that electricity consumption in the mining sector, due to the inertial nature of mining operations, is much less responsive to price changes.
    Keywords: price elasticity, income elasticity, electricity demand, Kalman Filter
    JEL: L94 Q41 Q48
    Date: 2020–11
  35. By: Marini, Marco; Tarola, Ornella; Thisse, Jacques-François
    Abstract: We study how the supply of environmentalism, which is defined by psychic benefits (costs) associated with the purchase of high-environmental (low-environmental) qualities, affects the way firms choose their products and the ensuing consequences for the global level of pollution. Contrary to general belief, a high supply of environmentalism does not give rise to a better environmental outcome because it endows firms with more market power which they use to maximize profits. By contrast, standard policy instruments such as a minimum quality standard or the use of greener technologies leads to a better ecological footprint.
    Keywords: Environmental policy; Environmentalism; Psychic Costs and Benefits; Vertical Product Differentiation
    JEL: D11 L13 Q50
    Date: 2020–10
  36. By: Chyong, C K.; Reiner, D; Aggarwal, D.
    Abstract: We explore a major European competition decision, the 2012-18 Gazprom case, using a global gas market simulation model. We find that access to LNG markets alone is insufficient to counterbalance Gazprom’s strategic behaviour; central and eastern Europe (CEE) needs to be well interconnected with bidirectional flow capability. ‘Swap deals’ created by the decision facilitate CEE market integration, while limiting Gazprom’s potential market power. Such deals may increase the diversity of contracted gas and number of market players, but do not improve physical supply diversity. In the next five years, swap deals could marginally impact negatively the utilization of strategic assets in CEE, but since Gazprom’s commitments expire by mid-2026, utilization of these strategic assets may fall considerably, especially if Gazprom withholds supplies. As an unintended consequence, CEE markets may disintegrate from the rest of Europe. Avoiding such outcomes will require further gas market reforms, particularly, market design for gas transportation.
    Keywords: Gazprom, European Commission, Market Power, Natural Gas, Security of Supply, Competition, Long-term contracts, Swap deals
    JEL: L95 L42 D47 D42 C63 P28
    Date: 2021–05–12
  37. By: Pietro Tiberi (Bank of Italy)
    Abstract: Reducing the environmental impact of human activities has become a strategic objective of governments, institutions, companies and individuals. In this paper, we estimate the CO2 equivalent emissions of the TARGET Instant Payment Settlement (TIPS) system and compare it with that of Bitcoin and other infrastructures. The TIPS carbon footprint in 2019 was almost 40,000 times smaller than that of Bitcoin; the difference is only partially accounted for by the lower overall volume of TIPS transactions, as the marginal increase in emissions per additional transaction is very small: the difference would therefore persist even if TIPS worked at full steam. The huge discrepancy in the carbon footprints of TIPS and Bitcoin stems from the fact that the latter uses a large amount of energy to generate trust and consensus among Bitcoin network participants, whereas in the case of TIPS this trust is provided by the Eurosystem. The comparison is then extended, using publicly available data, to other infrastructures. The over-performance of TIPS, while less marked than in the case of Bitcoin, remains nevertheless considerable.
    Keywords: TIPS, Carbon footprint, Bitcoin
    Date: 2021–05
  38. By: La Nauze, Andrea (University of Queensland); Severnini, Edson R. (Carnegie Mellon University)
    Abstract: We exploit novel data from brain-training games to examine the impacts of air pollution on a comprehensive set of cognitive skills of adults. We find that exposure to particulate matter (PM2.5) impairs adult cognitive function, and that these effects are largest for those in prime working age. These results confirm a hypothesized mechanism for the impacts of air pollution on productivity. We also find that the cognitive effects are largest for new tasks and for those with low ability, suggesting that air pollution increases inequality in workforce productivity.
    Keywords: air pollution, particulate matter, cognition, cognitive skills
    JEL: Q53 J24 I14 I24
    Date: 2021–05
  39. By: Erik P. Gilje; Michael D. Wittry
    Abstract: We study how ownership structure, in particular public listing status, affects workplace safety and productivity tradeoffs. Theory offers competing hypotheses on how listing related frictions affect these tradeoffs. We exploit detailed asset-level data in the U.S. coal industry and find that workplace safety deteriorates dramatically under public firm ownership, primarily in mines that experience the largest productivity increases. We find evidence consistent with information asymmetry between managers and shareholders of public firms, and ties of private firm ownership with local communities being first-order drivers of workplace safety and productivity tradeoffs.
    JEL: G30 G32 G34 J24 J38
    Date: 2021–05
  40. By: Bento, Antonio M. (University of Southern California); Miller, Noah (University of Southern California); Mookerjee, Mehreen (Zayed University); Severnini, Edson R. (Carnegie Mellon University)
    Abstract: In the absence of first-best climate policy, we demonstrate that existing government institutions and policy established for reasons unrelated to climate change may induce climate adaptation. We examine the impact of temperature on ambient ozone concentration in the United States from 1980-2013, and the role of institution-induced adaptation. Ozone is formed under warm temperatures, and regulated by the Clean Air Act institution. Adaptation in counties out of attainment with air quality standards is 107 percent larger than under attainment, implying substantial institution-induced adaptation. Furthermore, local beliefs about climate change appear to reinforce adaptive behavior, suggesting a nontrivial role in second-best climate policy.
    Keywords: climate change, government institutions and policy, Clean Air Act, institution-induced adaptation, ambient ozone concentration, climate change beliefs
    JEL: Q53 Q54 Q58 H23 K32 P48 D02
    Date: 2021–05
  41. By: Vanden Eynde, Oliver; Wren-Lewis, Liam
    Abstract: Complementarities between infrastructure projects have been understudied. Our paper examines interactions in the impacts of large-scale road construction, electrification, and mobile phone coverage programs in rural India. We find strong evidence of complementary impacts between roads and electricity on agricultural production: dry season cropping increases significantly when villages receive both, but not when they receive one without the other. These complementarities are associated with a shift of cropping patterns towards market crops and with improved economic conditions. In contrast, we find no consistent evidence of complementarities for the mobile coverage program.
    Keywords: Infrastructure, India, Complementarities, Roads, Mobile phone
    Date: 2021–05
  42. By: Schaefer, Thilo
    Abstract: [Vorbemerkung] Mit ihrem Klimaschutzgesetz hat sich die nordrhein-westfälische Landesregierung 2013 bereits frühzeitig zu eigenen Klimaschutzmaßnahmen verpflichtet und den darin verankerten Zielen durch den Gesetzescharakter eine hohe Verbindlichkeit gegeben. Der Zielrahmen, der durch nationale und internationale Vereinbarungen und Gesetzgebung vorgegeben wird, hat sich seit 2013 deutlich verändert, so dass eine entsprechende Anpassung des NRW-Klimaschutzgesetzes notwendig wird. Angesichts der jüngsten Rechtsprechung des Bundesverfassungsgerichts tut der nordrhein-westfälische Gesetzgeber zudem gut daran, den Zeithorizont 2050 und das Ziel der Klimaneutralität in den Blick zu nehmen. Dennoch stellt sich aus Anlass der Neufassung des Gesetzes die Frage, inwieweit eine regionale Klimagesetzgebung im Hinblick auf die globale Herausforderung der Minderung von Treibhausgasemissionen überhaupt sinnvoll und wenn ja in welchen Bereichen zweckmäßig sein kann. Schließlich weist der Gesetzgeber in der Begründung selbst darauf hin, dass die "maßgeblichen Gesetzgebungskompetenzen zugunsten des Klimaschutzes […] auf europäischer und Bundesebene [liegen]." Zurecht sieht die Landesregierung ihre Aufgabe deshalb darin, mit ihrer Gesetzgebung in diesem Bereich übergeordnete Regelungen zu flankieren und vor Ort die Rahmenbedingungen so zu setzen, dass Unternehmen und Haushalte in NRW ihre Treibhausgasemissionen reduzieren können. Dass Klimaschutz im Gesetz als Innovationstreiber bezeichnet wird, steht nicht nur im Einklang mit der Ausrichtung des europäischen Green Deals, der als grüne Wachstumsstrategie angelegt ist, sondern impliziert auch notwendige Freiheitsgrade, die ein Klimaschutzgesetz für die Entwicklung innovativer Verfahren und den konstruktiven Wettbewerb um kosteneffiziente Technologien und Produkte, mit deren Hilfe Treibhausgasemissionen vermieden werden können, einräumen muss. Dazu kann die Landesverwaltung nicht nur durch ihre eigene Klimaschutzstrategie vorbildlich beitragen, sondern darüber hinaus im Rahmen einer an Klimaschutzkriterien ausgerichteten öffentlichen Beschaffung die Nachfrage nach klimafreundlichen Produkten stärken.
    Date: 2021
  43. By: Kang, J.; Reiner, D.
    Abstract: The introduction of smart meters has created opportunities for both utilities and policymakers to understand residential electricity consumption in greater depth. Machine learning techniques have distinct advantages over traditional approaches in dealing with extremely large volumes of high-resolution usage data. We introduce a novel clustering method to detect household behaviour using different types of weather data as proxies. Based on this approach, we combine Irish smart meter and weather data to identify and characterize clear differences in the daily patterns between workdays and weekends in both summer and winter and investigate how households respond to changing weather patterns. We also examine the relationships between response groups and household demographic features using different statistical tests. We find the magnitude of the effect of occupancy-related variables in the clustering of weather sensitivity to be larger than incomerelated factors. This proposed new approach could be the basis of a classification model to identify households that are more responsive to different types of weather. Tariff design could benefit from such a model and enable specific schemes to be developed that would target weather-sensitive households and result in improved load management.
    Keywords: Weather sensitivity, smart metering data, unsupervised learning, clusters, residential electricity, consumption patterns, Ireland
    JEL: C55 D12 R22 Q41
    Date: 2021–05–12

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