nep-ene New Economics Papers
on Energy Economics
Issue of 2021‒05‒31
thirty-six papers chosen by
Roger Fouquet
London School of Economics

  1. Model-based evaluation of decentralised electricity markets at different phases of the German energy transition By Ritter, David; Heinemann, Christoph; Bauknecht, Dierk; Winger, Christian; Flachsbarth, Franziska
  2. Solarization of electric tube-wells for agriculture in Balochistan: Economic and environmental viability By Rana, Abdul Wajid; Davies, Stephen; Moeen, Muhammad Saad; Shikoh, Sania Haider; Rizwan, Noormah
  3. Short-Term Impact of the COVID-19 Lockdown on the Energy and Economic Performance of Photovoltaics in the Spanish Electricity Sector By Micheli, Leonardo; Solas, Álvaro F.; Soria-Moya, Alberto; Almonacid, Florencia; Fernandez, Eduardo F.
  4. Optimal system design for energy communities in multi-family buildings: the case of the German Tenant Electricity Law By Fritz Braeuer; Max Kleinebrahm; Elias Naber; Fabian Scheller; Russell McKenna
  5. Under the wire: splintered time and ongoing temporariness in Accra’s electropolis By Dawson, Katherine
  6. Phasing out coal - An impact analysis comparing five large-scale electricity market models By Pöstges, Arne; Bucksteeg, Michael; Ruhnau, Oliver; Böttger, Diana; Haller, Markus; Künle, Eglantine; Ritter, David; Schmitz, Richard; Wiedmann, Michael
  7. Oil Price Shocks and Economic Growth in Oil-Exporting Countries By Ahmadi, Maryam; Manera, Matteo
  8. COVID-19 and Daily Oil Price Pass-Through By Hakan Yilmazkuday
  9. Oil discoveries and protectionism: role of news effects By Fidel Sebastian-Perez; Ohad Raveh; Rick van der Ploeg
  10. Oil Prices, Gasoline Prices and Inflation Expectations: A New Model and New Facts By Kilian, Lutz; Zhou, Xiaoqing
  11. Transport policy for a post-Covid UK By Newbery, David M G
  12. Environmental Kuznets Curve & Effectiveness of International Policies: Evidence from Cross Country Carbon Emission Analysis By Elvan Ece Satici; Bayram Cakir
  13. Does Geopolitics Have an Impact on Energy Trade? Empirical Research on Emerging Countries By Fen Li; Cunyi Yang; Zhenghui Li; Pierre Failler
  14. Resource Rent, Environment and Ethics in Norwegian Petroleum Policy By Hunnes, John A.; Honningdal Grytten, Ola
  15. Co2 Emissions and Economic Development in Africa: Evidence from A Dynamic Spatial Panel Model By Espoir, Delphin Kamanda; Sunge, Regret
  16. An Adaptation-Mitigation Game: Does Adaptation Promote Participation in International Environmental Agreements? By Borrero, Miguel Borrero; Rubio, Santiago J.
  17. Governance and renewable energy consumption in sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  18. Complementarities in Infrastructure: Evidence from Rural India By Oliver Vanden Eynde; Liam Wren-Lewis
  19. Growth with Deadly Spillovers By Pietro F. Peretto; Simone Valente
  20. Emission targets and coalition options for a small, ambitious country. An analysis of welfare costs and distributional impacts for Norway By Taran Fæhn; Hidemichi Yonezawa
  21. Re-examining the Environmental Kuznets Curve Hypothesis in India: The Role of Coal Consumption, Financial Development and Trade Openness By Sanu, Md Sahnewaz
  22. On current and future carbon prices in a risky world By Stan Olijslagers; Rick van der Ploeg; Sweder van Wijnbergen
  23. Who emits CO2 ? Landscape of ecological inequalities in France from a critical perspective By Pottier, Antonin; Combet, Emmanuel; Cayla, Jean-Michel; de Lauretis, Simona; Nadaud, Franck
  24. Tackling Transport-Induced Pollution in Cities: A case Study in Paris By Marion Leroutier; Philippe Quirion
  25. Some Do Energy Efficiency Improvements Reduce Energy Use? Empirical Evidence on the Economy-Wide Rebound Effect in Europe and the United States By Anne Berner; Stephan Bruns; Alessio Moneta; David I. Stern
  26. Green Energy Indexes & Financial Markets: An In-Depth Look By Capucine Nobletz
  27. The risk-adjusted carbon price By Rick van der Ploeg; Ton van den Bremer
  28. Does energy efficiency affect ambient PM2.5? The moderating role of energy investment By Cunyi Yang; Tinghui Li; Khaldoon Albitar
  29. The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target: The Role of Firm Creation and Technology Adoption By Shapiro Finkelstein, Alan; Metcalf, Gilbert E.
  30. Killing Prescriptions Softly: Low Emission Zones and Child Health from Birth to School By Klauber, Hannah; Holub, Felix; Koch, Nicolas; Pestel, Nico; Ritter, Nolan; Rohlf, Alexander
  31. Life-cycle Characteristics and Energy Practices in Developing Countries: the Case of Mexico By Rossella Bardazzi; Maria Grazia Pazienza; Maria Eugenia Sanin
  32. The relationship between economic growth and environment. Testing the EKC hypothesis for Latin American countries By C. Seri; A. de Juan Fernandez
  33. What about the land fuel pricing policy? Is it efficient? What's the prospect? By Nathan Kabongo Kashala
  34. Disbursing Emergency Relief through Utilities: Evidence from Ghana By Susanna B. Berkouwer; Pierre E. Biscaye; Steven L. Puller; Catherine Wolfram
  35. The potential role of hydrogen towards a low-carbon residential heating in Italy By Sergio Tavella; Michel Noussan
  36. Policies and Instruments for Self-Enforcing Treaties By Harstad, Bård; Lancia, Francesco; Russo, Alessia

  1. By: Ritter, David; Heinemann, Christoph; Bauknecht, Dierk; Winger, Christian; Flachsbarth, Franziska
    Abstract: This paper investigates decentralised markets in the German electricity system, defined as markets in specific regions in which regional electricity demand is met primarily by regional generation and the remaining demand is met on a system-wide level in a second step. The research question is: What impact do the size of decentralised markets and the type of authorised participants have in different levels of the energy transition? The results show that the greatest effects from decentralised markets are caused by an increased usage of gas-fired power plants, as they are the major dispatchable generators in the future electricity system, resulting in significantly higher CO2 emissions and electricity generation costs, but also higher local self-supply rates. With very high RES-E shares the results hardly differ between the reference case and decentralised market models. The size of decentralised markets has a lower impact than limited access for certain fuel types or generation capacity size. Although decentralised markets can reduce the load on the grid, the need for grid expansion does not decrease. Overall, we conclude that from a system perspective decentralised markets can lead to negative effects if they are not regulated appropriately, especially during the transformation phase of the electricity system.
    Keywords: decentralised markets,local energy markets,electricity market modelling,renewable integration,energy transition
    JEL: C61 D47 O21
    Date: 2021
  2. By: Rana, Abdul Wajid; Davies, Stephen; Moeen, Muhammad Saad; Shikoh, Sania Haider; Rizwan, Noormah
    Abstract: Balochistan’s agriculture and related economic development during the last four decades has been driven by an enhancement in canal command areas and widespread use of tubewells. While it enabled yield increases and the growth of high value horticulture, it led to excessive mining of ground water. It is not only threatening sustainable agriculture and livelihoods but also creating severe environmental repercussions. It is generally believed that this unchecked groundwater extraction has been a result of policy regime, such as promoting installation of tubewells through various incentive schemes and tubewells subsidy which allows farmers to pay only 5-10% of the actual cost, and as a result the Federal and provincial governments have been paying PKR 23 billion per year.
    Keywords: PAKISTAN, SOUTH ASIA, ASIA, water, groundwater, water availability, irrigation, crops, costs, stakeholders, policies, agriculture, environment, energy, economic viability, tubewell, water pricing, environmental viability,
    Date: 2020
  3. By: Micheli, Leonardo; Solas, Álvaro F.; Soria-Moya, Alberto; Almonacid, Florencia; Fernandez, Eduardo F.
    Abstract: In response to the COVID-19 outbreak, the Spanish government declared a State of Alarm that lasted from the 14th of March 2020 to the 21st of June 2020. The main measure put in place was a lockdown that suspended most of the activities and the movements in the entire country. The present work investigates the effects of this anti COVID-19 measure on the national electrical energy sector. The lockdown is found to have caused an average decrease in electricity demand of 11%, followed by a more severe drop in electricity prices of 0.09 €/MWh per each GWh of missed daily demand. These led to an average turnover reduction of 6.1 million € per day for the electricity sector. The losses are found to be unevenly distributed across the different power technologies of the energy mix. In particular, the performance of photovoltaics, the fastest growing technology in the country, is investigated in-depth. During the lockdown, for the first time, photovoltaics provided more than 9% of the national electricity, more than double than the previous annual maximum. However, despite the expectations related to the improved air quality, the average capacity factor of photovoltaic systems is found to be lower than in the previous years. The reasons behind this are investigated through the analysis of the behaviors of the environmental factors affecting this technology’s performance.
    Keywords: power generation mix; photovoltaics; lockdown; COVID-19; Spain; irradiation
    JEL: Q42
    Date: 2021–04–16
  4. By: Fritz Braeuer; Max Kleinebrahm; Elias Naber; Fabian Scheller; Russell McKenna
    Abstract: Involving residential actors in the energy transition is crucial for its success. Local energy generation, consumption and trading are identified as desirable forms of involvement, especially in energy communities. The potentials for energy communities in the residential building stock are high but are largely untapped in multi-family buildings. In many countries, rapidly evolving legal frameworks aim at overcoming related barriers, e.g. ownership structures, principal-agent problems and system complexity. But academic literature is scarce regarding the techno-economic and environmental implications of such complex frameworks. This paper develops a mixed-integer linear program (MILP) optimisation model for assessing the implementation of multi-energy systems in an energy community in multi-family buildings with a special distinction between investor and user. The model is applied to the German Tenant Electricity Law. Based on hourly demands from appliances, heating and electric vehicles, the optimal energy system layout and dispatch are determined. The results contain a rich set of performance indicators that demonstrate how the legal framework affects the technologies' interdependencies and economic viability of multi-energy system energy communities. Certain economic technology combinations may fail to support national emissions mitigation goals and lead to lock-ins in Europe's largest residential building stock. The subsidies do not lead to the utilisation of a battery storage. Despite this, self-sufficiency ratios of more than 90% are observable for systems with combined heat and power plants and heat pumps. Public CO2 mitigation costs range between 147.5-272.8 EUR/tCO2. Finally, the results show the strong influence of the heat demand on the system layout.
    Date: 2021–05
  5. By: Dawson, Katherine
    Abstract: This paper discusses the occupation of an electricity transmission line right-of-way (ROW) at a busy interchange to the western edge of Accra, Ghana. In planning documents, ROWs are depicted as open spaces and obtaining permits to develop the land is prohibited. However, across the city, people continue to live and work under the wire, describing their occupancy as one of ongoing temporariness. Drawing from fourteen months of ethnographic research in Accra, I unpack the production of this urban temporality and argue that this ongoing temporariness is not linear, but should rather be understood as a condition punctured by events which both threaten and re-establish temporary occupation. I contend that it is only by attending closely to a splintered temporality, that we may grapple with the ways in which ongoing temporariness takes hold in cities marked by uneven access to land, income and capital.
    Keywords: temporariness; infrastructure; urban temporality; Accra; T&F prepayment account from UKRI block grant
    JEL: R14 J01
    Date: 2021
  6. By: Pöstges, Arne; Bucksteeg, Michael; Ruhnau, Oliver; Böttger, Diana; Haller, Markus; Künle, Eglantine; Ritter, David; Schmitz, Richard; Wiedmann, Michael
    Abstract: Climate target achievement has a crucial influence on the modelling and the decision processes in the energy sector. It induced the development of several policy instruments to mitigate greenhouse gas emissions, including administrative and market-based mechanisms for phasing out coal-fired generation technologies. In order to analyse such instruments, electricity market and energy system models are widely used. However, results and corresponding recommendations largely depend on the formulation of the respective model. This motivates a systematic comparison of five large-scale electricity market models which are applied to European scenarios considering the period until 2030. An evolved diff-in-diff approach is proposed to analyse the effects of two coal phase-out strategies. This contribution expands on that of earlier studies and provides some more general takeaways for both modellers and decision-makers. For instance, the evolved diff-in-diff analysis shows the influence of the reference scenario when evaluating a policy instrument. Furthermore, the importance of technical aspects such as constraints for combined heat and power plants are discussed and implications regarding three dimensions (economic, environmental, and security of supply) are presented.
    Keywords: model comparison,coal phase-out,electricity market model,energy policy
    JEL: P11 P28 Q4 Q48 Q51
    Date: 2021
  7. By: Ahmadi, Maryam; Manera, Matteo
    Abstract: The aim of this paper is to investigate how major net oil exporter economies react to oil price shocks. We contribute to the literature by considering, at the same time, the possible nonlinearity and asymmetry of this relationship with respect to sign, size and causes of the oil price shocks, as well as the state of the economy in which the shocks occur. We apply a Threshold Structural VAR approach, characterized by a separation of the observations into different regimes based on a threshold variable, to model time series non-linearities. We use the economic activity as the threshold variable, as it divides economic development in two regimes under which we expect the effects of oil price shocks to differ. First, We find that the effects of oil price shocks on oil exporting economies greatly depend on the underlying cause of the shocks as well as the state of the economy. Second, we find little evidence of asymmetric response of output to the sign of oil price shocks. Our main findings warn decision makers in the area of macroeconomic planning that, when making decisions based on the oil price, the underlying causes of its variations as well as the state of the economy in which the oil price shocks occur have to be considered.
    Keywords: Resource /Energy Economics and Policy
    Date: 2021–05–24
  8. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: This paper investigates the (crude) oil price pass-through into gasoline spot and gasoline retail prices in the U.S. due to the e¤ects of coronavirus disease 2019 (COVID-19). The investigation is achieved by using daily data in a structural vector autoregression framework. The oil price pass-through is measured as the cumulative impulse response of gasoline spot or gasoline retail prices divided by the cumulative impulse response of oil prices, both following a percentage change in total number of the U.S. COVID-19 cases. The results suggest evidence for complete pass-through of oil prices into gasoline spot prices, whereas the corresponding pass-through into gasoline retail prices is about 29 percent in the long run.
    Keywords: Pass-Through, Oil Prices, Gasoline Prices, Retail Prices, Spot Prices, Daily Data
    JEL: Q41 Q43
    Date: 2021–05
  9. By: Fidel Sebastian-Perez (University of Allicante); Ohad Raveh (Hebrew University of Jerusalem); Rick van der Ploeg (University of Oxford)
    Abstract: Can oil discovery shocks affect the demand for protectionism? An intertemporal model of Dutch disease indicates that if the tradable sector is politically dominant then an oil discovery can induce protectionism. If the economy is also credit constrained, this effect is intensified upon discovery, but partially reversed when oil revenues start to flow. We test these predictions using 16.2 million, HS-6 level, bilateral tariff rates that cover 5,718 products in 155 countries over the period 1988-2012, and data on worldwide discoveries of giant oil and gas fields. Our identification strategy rests on the exogeneity of the timing of discoveries. Our empirical results indicate that an oil discovery increases tariffs during pre-production years and decreases tariffs in the years to follow yet to a lesser extent, most notably in capital scarce economies with a relatively dominant tradable sector. Our baseline estimates indicate that a giant oil field discovery induces a rise of approximately 13% in the average tariff over the course of 10 years; this increase is approximately 2.5 times larger during the pre-production period when the oil discovery represents a pure news shock.
    Keywords: Oil discoveries, protectionism, capital scarcity, Dutch disease, political economy, trade policy, news shocks
    JEL: Q32 F13 O24
    Date: 2021–05–24
  10. By: Kilian, Lutz; Zhou, Xiaoqing
    Abstract: The conventional wisdom that inflation expectations respond to the level of the price of oil (or the price of gasoline) is based on testing the null hypothesis of a zero slope coefficient in a static single-equation regression model fit to aggregate data. Given that the regressor in this model is not stationary, the null distribution of the t-test statistic is nonstandard, invalidating the use of the normal approximation. Once the critical values are adjusted, these regressions provide no support for the conventional wisdom. Using a new structural vector regression model, however, we demonstrate that gasoline price shocks may indeed drive one-year household inflation expectations. The model shows that there have been several such episodes since 1990. In particular, the rise in household inflation expectations between 2009 and 2013 is almost entirely explained by a large increase in gasoline prices. However, on average, gasoline price shocks account for only 39% of the variation in household inflation expectations since 1981.
    Keywords: anchor; Expectations; gasoline price; Household survey; inflation; missing disinflation; oil price
    JEL: E31 E52 Q43
    Date: 2020–08
  11. By: Newbery, David M G
    Abstract: Transport policy needs reform. Future Government investment and fiscal policy needs re-orienting to stimulate the economy after the Covid-19 lock-down. Prices used in project appraisal must include all external effects, committing to proper social cost-benefit analysis. In consequence, fuel duty rates need to be more than doubled as a prelude to proper road pricing. Transport investment needs to be increased even with proper road pricing and more allocated to walking and cycling, guided by benefit-cost ratios, following Eddington's recommendations. The paper gives five reasons for raising fuel duty rates, more on diesel than petrol, and estimates the desired levels.
    Keywords: fuel taxes; infrastructure investment; Road pricing; transport policy
    JEL: D62 H23 R41 R48
    Date: 2020–08
  12. By: Elvan Ece Satici; Bayram Cakir
    Abstract: In this article, we are presenting the relationship between environmental pollution and the income level of the selected twenty-four countries. We implemented a data-based research analysis where, for each country, we analyzed the related data for fifty-six years, from 1960 to 2016, to assess the relationship between the carbon emission and income level. After performing the related data analysis for each country, we concluded whether the results for that country were in line with the Environmental Kuznets Curve (EKC) hypothesis. The EKC hypothesis suggests that the carbon emission per capita starts a declining trend when the country-specific high level of income is reached. The results of our data analyses show that the EKC hypothesis is valid for high-income countries and the declining trends of carbon emission are clearly observed when the income level reaches a specific high enough level. On the other hand, for the non-high income countries, our analysis results show that it is too early to make an assessment at this growth stage of their economies because they have not reached their related high-enough income per capita levels yet. Furthermore, we performed two more additional analyses on high-income countries. First, we analyzed the related starting years of their carbon emission declining trends. The big variance in the starting years of the carbon emission declining trends shows that the international policies are clearly ineffective in initiating the declining trend in carbon emission. In addition, for the high-income countries, we explained the differences in their carbon emission per capita levels in 2014 with their SGI indices and their dependence on high-carbon emission energy production.
    Date: 2021–05
  13. By: Fen Li; Cunyi Yang; Zhenghui Li; Pierre Failler
    Abstract: The energy trade is an important pillar of each country's development, making up for the imbalance in the production and consumption of fossil fuels. Geopolitical risks affect the energy trade of various countries to a certain extent, but the causes of geopolitical risks are complex, and energy trade also involves many aspects, so the impact of geopolitics on energy trade is also complex. Based on the monthly data from 2000 to 2020 of 17 emerging economies, this paper employs the fixed-effect model and the regression-discontinuity (RD) model to verify the negative impact of geopolitics on energy trade first and then analyze the mechanism and heterogeneity of the impact. The following conclusions are drawn: First, geopolitics has a significant negative impact on the import and export of the energy trade, and the inhibition on the export is greater than that on the import. Second, the impact mechanism of geopolitics on the energy trade is reflected in the lagging effect and mediating effect on the imports and exports; that is, the negative impact of geopolitics on energy trade continued to be significant 10 months later. Coal and crude oil prices, as mediating variables, decreased to reduce the imports and exports, whereas natural gas prices showed an increase. Third, the impact of geopolitics on energy trade is heterogeneous in terms of national attribute characteristics and geo-event types.
    Date: 2021–05
  14. By: Hunnes, John A. (University of Agder); Honningdal Grytten, Ola (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: This paper contributes to the understanding of how the environment, ethics, values, and historical contingencies shape public policy. Specifically, it explains the accomplishment of petroleum resource management in Norway. The main argument is that the success of this policy is an understanding of the ethics behind the environmental harvesting of the resource rent of this non-renewable natural resource. The paper firstly describes a model of Ricardian resource rent. Secondly, it investigates the set of values that were in place before the petroleum production started in the 1970s, as described in the influential white paper, “The role of petroleum activities in the Norwegian Society,” published in 1974. In the white paper, the government discussed the future opportunities, challenges, and responsibilities associated with the oil industry and how this would transform society. An important part of the white paper revealed the main ethical vision of the government was to build a “qualitatively better society” for the benefit of the people. Thirdly, the paper traces the historical roots of these values. Finally, the paper concludes that the focus on the natural environment and resource rent management can be attributed to popular values built on historical traditions. According to these, the state and the trust between the state and its citizens played key roles for the formation of the policy.
    Keywords: environment; resource rent; ethics; petroleum; oil; public policy.
    JEL: L52 N14 N50 Q32 Q38 Q58
    Date: 2021–05–14
  15. By: Espoir, Delphin Kamanda; Sunge, Regret
    Abstract: We examine the impact of economic development on Co2 emissions using a sample of 48 African countries for the period 1996-2012. This study is born out of the realisation that despite lower contribution to Green House Gas (GHG) emissions and global warming, Africa suffers the most from climate change. We make two contributions. First, we re-examine the Environmental Kuznets Curve (EKC) hypothesis using pooled OLS, Fixed and Random effects, and GMM. Unlike existing studies that impose country homogeneity on the relationship, we perform a linear quadratic regression to account for factors heterogeneity. Second, we provide evidence-based spatial econometric considerations, something that existing studies have overlooked. We employ a Maximum Likelihood Estimator (MLE) within the Fixed and Random effects framework on the dynamic Spatial Durbin Model (SDM). The results are as follow: (1) we find evidence for the EKC hypothesis for the entire sample of 48 countries, even though the relationship is weak, (2) when we control for factor heterogeneity, we find that the impact of economic development on Co2 emissions is heterogeneous across countries. In some countries, the EKC hypothesis holds while it breaks in others. (3) there exist significant direct and spillover effects in the Co2-growth nexus across countries. Considering the heterogeneity of the EKC, we recommend that African countries’ nationally determined contributions (NDCs) should be harmonised in the interest of the Paris Agreement on climate. Also, multilateral organisations and private investors should increase their investments in renewable energy development projects to ensure compatibility between growth and environmental sustainability.
    Keywords: Economic development,Environmental pollution,EKC hypothesis,Spatial Durbin model,Africa
    JEL: Q53 Q54 Q56
    Date: 2021
  16. By: Borrero, Miguel Borrero; Rubio, Santiago J.
    Abstract: This paper studies how the investment in adaptation can influence the participation in an international environmental agreement (IEA) when countries decide in adaptation before they choose their levels of emissions. Two types of agreements are studied, a complete agreement for which countries coordinate their decisions on adaptation and emissions, and an adaptation agreement for which there is only coordination when countries decide their levels of adaptation. In both cases, we assume that the degree of effectiveness of adaptation is bounded from above, in order words, adaptation can alleviate the environmental problem, but it cannot solve it by itself leading the vulnerability of the country to almost zero. Our results show that the grand coalition could be stable for both types of agreement, but for extremely high degrees of effectiveness of adaptation. If this condition is not satisfied, the model predicts low levels of membership. The standard result of three countries for the complete agreement. For the adaptation agreement participation can be higher than three, but not higher than six countries. In any case, we can conclude that under reasonable values for the degree of effectiveness of adaptation, in our model adaptation does not promote participation in an IEA.
    Keywords: Environmental Economics and Policy
    Date: 2021–05–24
  17. 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
  18. By: Oliver Vanden Eynde (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Liam Wren-Lewis (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    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,complementarities,agriculture
    Date: 2021–05
  19. By: Pietro F. Peretto (Duke University); Simone Valente (University of East Anglia)
    Abstract: Pollution is one of the world's primary causes of premature death, but macroeconomic analysis largely neglects the existence of such negative externality. We build a tractable multi-sector growth model where innovations raise productivity, a polluting primary sector exploits natural resources, emissions increase mortality, and fertility is endogenous. The response of the mortality rate to changes in population size is generally ambiguous and often non-monotonic, and reflects a precise equilibrium relationship that combines emission intensity, dilution e¤ects and labor reallocation e¤ects caused by technology. Deadly spillovers a¤ect welfare through multiple channels - including market-size e¤ects - and create additional steady states, including mortality traps that undermine development in less populated resource-rich countries even for low emission elasticities. Emission taxes yield double dividends in terms of income and population capacity, whereas subsidies to primary production reduce potential population and may trigger population implosion especially if combined with new discoveries of polluting primary resources.
    Keywords: Endogenous Growth, Environmental Externalities, Mortality
    JEL: O12 O44 Q56
    Date: 2021–05–28
  20. By: Taran Fæhn; Hidemichi Yonezawa (Statistics Norway)
    Abstract: We theoretically and numerically analyse the impacts for a small, open country with carbon abatement ambitions of joining a coalition with allowance trading. Besides welfare impacts for both the coalition and the small, open economy joining the coalition, we scrutinise how the studied policy options differ with respect to their distributional impacts across domestic income groups. Our example is the EU 2030 policies and Norway’s linking to it. In spite of theoretical ambiguity, the findings suggest that the tighter the links with the EU, the lower the abatement costs for Norway. The distributional profile of the welfare costs tends to be progressive, i.e., the relative (and absolute) incidence of the carbon policy falls more heavily on wealthy households than poor households, regardless of the choice of linking options. However, the less progressive, the lower the overall welfare cost. This indicates a trade-off between efficiency and distribution concerns. A national capand-trade system without linking to the EU is the least cost-effective option for Norway but also the most progressive as the higher income deciles face lower capital return and wages.
    Keywords: Carbon policies; Distributional impact; Emission Trading System; Effort Sharing Regulation; Computable General Equilibrium model
    JEL: Q43 Q48 Q54 Q58
    Date: 2021–05
  21. By: Sanu, Md Sahnewaz
    Abstract: The objective of this study is to evaluate the effect of GDP growth, coal consumption, financial advancement, and trade openness on CO2 discharges in India for the time span 1971-2017. The present research employs the ARDL bounds test to inspect the long-run cointegrating linkage followed by Granger causality test structured on vector error correction modelling (VECM) techniques to analyse the causal relationship between the variables. The results obtained from the bounds F-statistics confirm the presence of a long-run stable relationship between the variables. The results further demonstrate that GDP growth and coal consumption raise carbon emissions substantially while the financial development and trade openness boost the environmental quality in India. Besides, the findings confirm an inverse quadratic link between economic growth and CO2 discharges, supporting the validity of EKC hypothesis for India. The Granger causality analysis shows bidirectional causality between coal consumption and economic growth, economic growth and CO2 emissions and between coal consumption and CO2 emissions.
    Keywords: CO2 emissions, GDP, coal consumption, financial development; trade openness; Environmental Kuznets curve; ARDL; VECM; India.
    JEL: C32 Q43 Q53 Q56
    Date: 2019–08
  22. By: Stan Olijslagers (University of Amsterdam); Rick van der Ploeg (University of Amsterdam); Sweder van Wijnbergen (University of Amsterdam)
    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, 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: 2021–05–24
  23. By: Pottier, Antonin; Combet, Emmanuel; Cayla, Jean-Michel; de Lauretis, Simona; Nadaud, Franck
    Abstract: This article provides a panorama of greenhouse gas (GHG) emission inequalities between French households. It presents in a detailed and critical manner the methodological conventions that are used to compute “household emissions”, including the related assumptions. The most common responsibility principle, the “consumer responsibility”, assigns to households the emissions of the products that they consume, resulting in the carbon footprint. It focuses attention on the contributions of individuals, on their choices, and it may obscure the role of non-individual actors and also the collective component of GHG emissions, and it neglects the dimensions of responsibility that are not related to consumption choices. We estimate the distribution of household carbon footprints based on data from the 2011 French Household Budget Survey. Household emissions tend to increase with income, but they also show a strong variability linked to geographical and technical factors that force the consumer to use fossil fuels. Based on sectoral surveys (ENTD 2008; PHEBUS 2013), we also reconstruct household CO2 emissions linked to housing and transport energy. For transport, emissions are proportional to the distance travelled due to the predominant use of private cars. Urban settlement patterns constrain both the length of daily commuting and access to less carbon-intensive modes of transport. For housing, while the size of the dwelling increases with income and distance from urban centres, the first factor to account for variability of emissions is the heating system: this has little to do with income but more to do with settlement patterns, which constrain access to the various energy carriers. Finally, we discuss the difficulties, both technical and conceptual, that are involved in estimating emissions from the super-rich (the top 1 percent).
    Keywords: Environmental Economics and Policy
    Date: 2021–05–24
  24. By: Marion Leroutier (Paris School of Economics, Universite Paris I/Ecole des Ponts ParisTech (CIRED)); Philippe Quirion (CIRED, CNRS)
    Abstract: Urban road transport is an important source of local pollution and CO2 emissions. To tackle these externalities, it is crucial to understand who contributes to emissions today and what are the alternatives to high-emission trips. We estimate individual contributions to transport-induced emissions, by bringing together data from a travel demand survey in the Paris area and emission factor data for local pollutants and CO2. We document high inequalities in emissions, with the top 20% of emitters contributing 75-85% of emissions on a representative weekday, depending on the pollutant. Top emissions result from a combination of high distances travelled, a high reliance on car and, mainly for local pollutants, a higher emission intensity of cars. We estimate with counterfactual travel times that 53% of current car drives could be shifted to electric bikes or public transport with a limited time increase. This would reduce the emissions from daily mobility by 19-21%, with corresponding annual health and climate benefits of around €245m.
    Keywords: environmental inequalities, externalities, empirical analysis,
    JEL: R40 Q52 Q53
    Date: 2021–05
  25. By: Anne Berner; Stephan Bruns; Alessio Moneta; David I. Stern
    Abstract: Improving energy efficiency is often considered to be one of the keys to reducing greenhouse gas emissions. However, efficiency gains also reduce the cost of energy services and may even reduce the price of energy, resulting in energy use rebounding and potential energy use savings being eaten up. There is only limited empirical research quantifying the economy-wide rebound effect that takes the dynamic economic responses to energy efficiency improvements into account. We use a Structural Factor-Augmented Vector Autoregressive model (S-FAVAR) that allows us to track how energy use changes in response to an energy efficiency improvement while accounting for a vast range of potential confounders. Our findings point to economy-wide rebound effects of 78% to 101% after two years in France, Germany, Italy, the U.K., and the U.S. These findings imply that energy efficiency innovations alone may be of limited help in reducing future energy use and emphasize the importance of tackling carbon emissions directly.
    Keywords: Energy efficiency; economy-wide rebound effect; climate change; climate policy; Structural FAVAR; Independent Component Analysis.
    Date: 2021–05–27
  26. By: Capucine Nobletz
    Abstract: This paper aims to provide better transparency around green energy indexes. After selecting green energy indexes that meet the established criteria, we build a database listing the companies in these indexes and compare them with a financial benchmark. Our study allows investors to adjust their hedging horizons with green concerns, to pave the way for further academic analyses, or issue a new call to public authorities on the need to redirect financial flows towards greener activities.
    Keywords: Financial markets, Green energy indexes
    JEL: G15 Q42
    Date: 2021
  27. By: Rick van der Ploeg (University of Oxford); Ton van den Bremer (University of Oxford)
    Abstract: The social cost of carbon is the expected present value of damages from emitting one ton of carbon today. We use perturbation theory to derive an approximate tractable expression for this cost adjusted for climatic and economic risk. We allow for different aversion to risk and intertemporal fluctuations, skewness and dynamics in the risk distributions of climate sensitivity and the damage ratio, and correlated shocks. We identify prudence, insurance, and exposure effects, reproduce earlier analytical results, and offer analytical insights into numerical results on the effects of economic and damage ratio uncertainty and convex damages on the optimal carbon price.
    Keywords: precaution, insurance, exposure, economic and climatic and damage uncertainties, skewness, mean reversion, correlated risks, risk aversion, intergenerational inequality aversion, convex damages
    JEL: H21 Q51 Q54
    Date: 2021–05–24
  28. By: Cunyi Yang; Tinghui Li; Khaldoon Albitar
    Abstract: The difficulty of balance between environment and energy consumption makes countries and enterprises face a dilemma, and improving energy efficiency has become one of the ways to solve this dilemma. Based on data of 158 countries from 1980 to 2018, the dynamic TFP of different countries is calculated by means of the Super-SBM-GML model. The TFP is decomposed into indexes of EC (Technical Efficiency Change), TC (Technological Change) and EC has been extended to PEC (Pure Efficiency Change) and SEC (Scale Efficiency Change). Then the fixed effect model and fixed effect panel quantile model are used to analyze the moderating effect and exogenous effect of energy efficiency on PM2.5 concentration on the basis of verifying that energy efficiency can reduce PM2.5 concentration. We conclude, first, the global energy efficiency has been continuously improved during the sample period, and both of technological progress and technical efficiency have been improved. Second, the impact of energy efficiency on PM2.5 is heterogeneous which is reflected in the various elements of energy efficiency decomposition. The increase of energy efficiency can inhibit PM2.5 concentration and the inhibition effect mainly comes from TC and PEC but SEC promotes PM2.5 emission. Third, energy investment plays a moderating role in the environmental protection effect of energy efficiency. Fourth, the impact of energy efficiency on PM2.5 concentration is heterogeneous in terms of national attribute, which is embodied in the differences of national development, science & technology development level, new energy utilization ratio and the role of international energy trade.
    Date: 2021–05
  29. By: Shapiro Finkelstein, Alan; Metcalf, Gilbert E.
    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: firm creation and 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.
    Keywords: Environmental Economics and Policy
    Date: 2021–05–26
  30. By: Klauber, Hannah (Mercator Research Institute on Global Commons and Climate Change (MCC)); Holub, Felix (University of Mannheim); Koch, Nicolas (Mercator Research Institute on Global Commons and Climate Change (MCC)); Pestel, Nico (IZA); Ritter, Nolan (Mercator Research Institute on Global Commons and Climate Change (MCC)); Rohlf, Alexander (Mercator Research Institute on Global Commons and Climate Change (MCC))
    Abstract: We examine the persistence of the impact of early-life exposure to air pollution on children's health from birth to school enrollment using administrative public health insurance records covering one third of all children in Germany. For identification, we exploit air quality improvements caused by the implementation of Low Emission Zones, a policy imposing driving restrictions on high-emission vehicles. Our results indicate that children exposed to cleaner air around birth require less medication for at least five years. The initially latent health response materializes only gradually in lower medication usage, leaving important but subtle health benefits undetected in common measures of infant health.
    Keywords: policy evaluation, cohort study, air pollution, health, children, Low Emission Zone
    JEL: I18 Q51 Q53 Q58
    Date: 2021–05
  31. By: Rossella Bardazzi; Maria Grazia Pazienza; Maria Eugenia Sanin
    Abstract: Developing countries are characterized by slightly higher GDP growth rates that developed ones, are advancing towards universal energy access and many of them are yet to finish their demographic transition, which implies their fertility rate is higher than average and their population is still young. The previous socio-demographic and economic changes could make energy consumption patterns quite different from the ones observed in developed countries. Herein we use Mexico as a case study to estimate determinants of energy consumption as well as the importance that change in generational preferences has on such consumption. We find that results are in line with the few studies performed for developed countries but that the magnitudes are four times stronger. This means that younger generations in Mexico increase their consumption at a much faster rate as they grow older than households in developed countries, which may become a concern for policymakers deciding on investments to meet future energy demand, particularly in the context of the energy transition.
    Keywords: energy consumption, electricity, residential, life-cycle, generation, Mexico
    JEL: C3 D12 Q4
    Date: 2021
  32. By: C. Seri; A. de Juan Fernandez
    Abstract: We employ an ARDL bounds testing approach to cointegration and Unrestricted Error Correction Models (UECMs) to estimate the relationship between income and CO2 emissions per capita in 21 Latin American Countries (LACs) over 1960-2017. Using time series we estimate six different specifications of the model to take into account the independent effect on CO2 emissions per capita of different factors considered as drivers of different dynamics of CO2 emissions along the development path. This approach allows to address two concerns. First, the estimation of the model controlling for different variables serves to assess if the EKC hypothesis is supported by evidence in any of the LACs considered and to evaluate if this evidence is robust to different model specifications. Second, the inclusion of control variables accounting for the effect on CO2 emissions is directed at increasing our understanding of CO2 emissions drivers in different countries. The EKC hypothesis effectively describes the long term income-emissions relationship only in a minority of LACs and, in many cases, the effect on CO2 emissions of different factors depends on the individual country experience and on the type and quantity of environmental policies adopted. Overall, these results call for increased environmental action in the region.
    Date: 2021–05
  33. By: Nathan Kabongo Kashala (Université protestante au Congo - Université protestante au Congo)
    Abstract: Ce document de travail analyse l'asymétrie dans la vitesse d'ajustement entre le prix du brut et celui de l'essence en République Démocratique du Congo de 2008 à 2018. Etant donné qu'en économie, le coût marginal du produit augmente à cause du prix de l'input, le producteur devra répercuter cette hausse dans ces prix. Aucune attention particulière n'est portée sur la vitesse de cet ajustement supposé " instantané ". Cependant, nos résultats démontrent qu'il y a une rigidité du prix de l'essence à la baisse de celui prix du brut contrairement à l'effet inverse. Ce qui prouve à suffisance l'inefficacité dans l'administration du prix du carburant terrestre.
    Date: 2021–05–04
  34. By: Susanna B. Berkouwer; Pierre E. Biscaye; Steven L. Puller; Catherine Wolfram
    Abstract: Government transfer programs to distribute food, water, or electricity at low or no cost have been widespread during the COVID-19 global health crisis. How does program design affect the efficiency and distributional implications of these policies? And what design features determine their political popularity? We study these questions in the context of a program to distribute relief through the electric utility in Accra, Ghana, using data from 1,200 households surveyed during the COVID-19 crisis. We find that distributing relief through electricity transfers has significant advantages. It enables an immediate government response to the crisis because it leverages the existing financial infrastructure between the government utility and households. Moreover, theoretical efficiency concerns about in-kind transfers are mitigated because the transfers are inframarginal for most households and electricity credit can be stored, with many even preferring electricity transfers over cash. These advantages do not preclude delays in transfer receipt and the exclusion of some eligible households, and the program is regressive in both design and implementation. The households least likely to receive relief are those who use less electricity, pay a landlord or other intermediary for electricity, or share an electricity meter with other users – all common among low-income electricity consumers in urban settings. Finally, transfer receipt increases support for the governing party, but support for the program drops significantly if even a fraction of its costs are to be recovered through future electricity tariff increases. Concerns around disbursing relief through utility transfers in this context thus arise not from efficiency loss, but from regressivity, distributional challenges, and politicization.
    JEL: H50 H84 O12
    Date: 2021–05
  35. By: Sergio Tavella (Robert Bosch SPA Società Unipersonale); Michel Noussan (Fondazione Eni Enrico Mattei)
    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: Heating, Residential Buildings, Hydrogen, Heat Pumps, Scenarios
    JEL: Q4 Q42 Q55
    Date: 2021–05
  36. By: Harstad, Bård; Lancia, Francesco; Russo, Alessia
    Abstract: We characterize the optimal policy and policy instruments for self-enforcing treaties when countries invest in green technology before they pollute. If the discount factor is too small to support the first best, then both emissions and investments will be larger than in the first best, when technology is expensive. When technology is inexpensive, countries must instead limit or tax green investment in order to make future punishment credible. We also uncover a novel advantage of price regulation over quantity regulation, namely that when regulation is sufficiently flexible to permit firms to react to non-compliance in another country, the temptation to defect is reduced. The model is tractable and allows for multiple extensions.
    Keywords: climate change; compliance; environmental agreements; green technology; policy instruments; repeated games; self-enforcing treaties
    JEL: D86 F53 H87 Q54
    Date: 2020–07

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