nep-ene New Economics Papers
on Energy Economics
Issue of 2021‒11‒22
39 papers chosen by
Roger Fouquet
London School of Economics

  1. The impact of variable renewable energy penetration on wholesale electricity prices in Japan By Sakaguchi, Makishi; Fujii, Hidemichi
  2. Scaling up Climate Mitigation Policy in Germany By Ms. Aiko Mineshima; Ms. Ruo Chen; Victor Mylonas; Dinar Prihardini; Mr. Simon Black; Ian W.H. Parry
  3. Still Not Getting Energy Prices Right: A Global and Country Update of Fossil Fuel Subsidies By Nate Vernon; Ian Parry; Mr. Simon Black
  4. A Comprehensive Greenhouse Gas Mitigation Strategy for The Netherlands By Nicoletta Batini; Ms. Oana Luca; Ian Parry; Mr. Simon Black
  5. The transport sector has always had high energy demand and is a significant contributor to greenhouse gas (GHG) emissions and climate change. To improve energy efficiency and reduce GHG emissions, Riyadh is introducing an integrated public transport system. Per capita energy consumption is much lower for public transport than for private vehicles, such as cars and taxis. This study investigates the potential impact of Riyadh’s proposed public transport system on car and taxi trips. By Abu Toasin Oakil; Abdelrahman Muhsen
  6. How Can Energy Storage Catalyze the Electricity Policies of Gulf Cooperation Council Members? Issues and Options By Rolando Fuentes; Shahid Hasan; Frank Felder
  7. Power Sector in the 8th Five Year Plan: Reflection on Its Strategy and Initiatives By Khondaker Golam Moazzem; ASM Shamim Alam Shibly
  8. Projecting Saudi Sectoral Electricity Demand in 2030 Using a Computable General Equilibrium Model By Salaheddine Soummane; Frederic Ghersi
  9. The lowest hanging fruit on the coconut tree: India's climate transition through the price system in the power sector By Akshay Jaitly; Ajay Shah
  10. According to the World Health Organization, India has the world’s worst air quality. Among other factors, vehicular pollution from the increasing stock of passenger vehicles has contributed to India’s deteriorating air quality. This increasing stock is also a factor in India becoming the third-highest oil-consuming and greenhouse gas (GHG)-emitting country worldwide. By Rubal Dua; Scott Hardman; Yagyavalk Bhatt; Dimpy Suneja
  11. Proposed Power and Energy System Master Plan (PESMP): Perspective on Analytical Frame, Methodology and Influencing Factors on Demand Forecasting By Khondaker Golam Moazzem; Helen Mashiyat Preoty
  12. Upscaling energy efficiency via energy communities By Jan Pojar; Jakub Kvasnica
  13. Real Options Valuation of Wind Energy Based on the Empirical Production Uncertainty By Didier Nibbering; Coos van Buuren; Wei Wei
  14. Border Carbon Adjustments: Rationale, Design and Impact By Mr. James Roaf; Ian Parry; Mr. Michael Keen
  15. Clean Energy Technologies: Dynamics of Cost and Price By Glenk, Gunther; Meier, Rebecca; Reichelstein, Stefan
  16. Côte d’Ivoire’s Electricity Challenge in 2050: Reconciling Economic Development and Climate Commitments By Edi Assoumou,; Florent Mc Isaac
  17. The Economics of Natural Gas Venting, Flaring and Leaking in U.S. Shale: An Agenda for Research and Policy By Mark Agerton; Ben Gilbert; Gregory B. Upton Jr.
  18. Towards net zero carbon emissions: carbon pricing strategies and the role of innovative technologies By Ojo, Marianne; Dierker, Theodore
  19. Gathering Support for Green Tax Reform: Evidence from German Household Surveys By Rick van der Ploeg; Armon Rezai; Miguel Tovar
  20. Governance and renewable energy consumption in sub-Saharan Africa By Asongu, Simplice; Odhiambo, Nicholas
  21. Increasing Global Climate Ambition and Implications for Korea By Moon, Jinyoung; Oh, Soo Hyun; Park, Youngseok; Lee, Sunghee; Kim, Eunmi
  22. The Mobile Phone in Governance for Environmental Sustainability in Sub-Saharan Africa By Asongu, Simplice; Nting, Rexon
  23. Assessment of Fuel Wood Energy Utilization By Urban Farm Households in Obio/Akpor Local Government Area of Rivers State, Nigeria By Henri-Ukoha, Adanna; Nlebedim, C.; Aroyehun, R.A
  24. Gender inequalities and household fuel choice in India By Choudhuri, Pallavi; Desai, Sonalde
  25. Natural resources, child mortality and governance quality in African countries By Tadadjeu, Sosson; Njangang, Henri; Asongu, Simplice; Kamguia, Brice
  26. Essays in economic growth and climate policy By Baccianti, Claudio
  27. Assessing Labour Market Slack for Monetary Policy By Erik Ens; Laurence Savoie-Chabot; Kurt See; Shu Lin Wee
  28. Modeling ex-ante risk premia in the oil market By Remzi Uctum; Georges Prat
  29. Climate Change in South Asia: Further Need for Mitigation and Adaptation By Mr. Eugenio M Cerutti; Patrick Blagrave; Ruchir Agarwal; Vybhavi Balasundharam; Ragnar Gudmundsson; Racha Mousa
  30. Corporate Carbon Reduction Pledges: An Effective Tool to Mitigate Climate Change? By Comello, Stephen; Reichelstein, Julia; Reichelstein, Stefan
  31. External and internal exchange rates and the Dutch disease: Evidence from a panel of oil-exporting African countries By Edouard Mien
  32. The Nonlinear Effects of Oil Rent Dependence on Malaysian Manufacturing: Implications from Structural Change using a Markov-Regime Switching Model By Ramez Abubakr Badeeb; Jeremy Clark; Abey P. Philip
  33. Do Banks Price Environmental Transition Risks? Evidence from a Quasi-Natural Experiment in a Chinese Province By Maria Teresa Punzi; Bihong Huang; Yu Wu
  34. Decomposing Productivity Change in the Presence of Environmental Variables By Rossi, Martin
  35. Does Universal Electrification Shield Firms from Productivity Loss? By Kehinde Abiodun; Ben Gilbert
  36. The Performance of Privatized Utilities: Evidence from Latin America By Rossi, Martin
  37. This study reviews the comprehensive strategic partnership between Saudi Arabia and China and the interconnection between China’s Belt and Road Initiative (BRI) and Saudi Vision 2030. These connections have significantly improved cooperation in trade, investment, energy and new technology development over the last seven years. Saudi Arabia can further its cooperation with China on the circular carbon economy (CCE) through both bilateral and multilateral frameworks. By Dongmei Chen
  38. Industrie, Klimaschutz und Handel: Ausgleich unterschiedlicher Kosten und Preise für industriellen Klimaschutz By Bardt, Hubertus
  39. Impacts of Transportation Network Companies on Vehicle Miles Traveled, Greenhouse Gas Emissions, and Travel Behavior Analysis from the Washington D.C., Los Angeles, and San Francisco Markets By Martin, Elliot PhD; Shaheen, Susan PhD; Stocker, Adam

  1. By: Sakaguchi, Makishi; Fujii, Hidemichi
    Abstract: The merit order effect (MOE), which renewable energy sources can decrease wholesale electricity prices, plays an important role in establishing low-carbon societies. After the liberalization of the electricity market, the trade volume of the Japan Electric Power Exchange (JEPX) day-ahead spot market drastically increased between 2016 and 2019; however, price spikes still occur often. Ordinary least squares and quantile regression analyses were applied in this study to investigate how wind and solar photovoltaics (PV) energy generation affect the JEPX day-ahead spot price by time, price range, and area, and we concluded that the MOE of wind increased between 2016 and 2019 while that of PV decreased during this time. In regard to the high price ranges, although wind generation is not significant in terms of reducing price spikes, PV had this effect in 2016 and 2017 but not during the other years covered. The study area was divided into four regions, and each area followed trends that were different from those of the national analysis. Overall, the key finding of our study is that wind power has more potential to reduce electricity prices than PV.
    Keywords: merit order effect; wholesale electricity market; renewable energy
    JEL: Q42 Q43 Q54
    Date: 2021–11
  2. By: Ms. Aiko Mineshima; Ms. Ruo Chen; Victor Mylonas; Dinar Prihardini; Mr. Simon Black; Ian W.H. Parry
    Abstract: Germany has set national greenhouse emissions targets of a 65 percent reduction below 1990 levels by 2030 and net zero emissions by 2045, along with various sectoral emissions goals. To achieve these targets, the government has introduced multi-pronged policy measures, including a national emissions trading system (ETS), which complements the ETS at the EU level. This paper shows the substantial variation in the price responsiveness of emissions across sectors and thus prices implied by sectoral targets. It proposes the following measures to help Germany meet emissions targets with greater certainty and cost effectiveness: (i) further strengthening carbon pricing, for example through automatically rising price floors for the national ETS after 2026; (ii) harmonizing carbon pricing to reduce cross-sector differences in marginal abatement costs; and (iii) introducing feebates (revenue neutral taxsubsidy schemes) to reinforce incentives at the sectoral level. The paper also studies the distributional impact of higher carbon pricing and suggests that reducing social security contributions can mitigate the regressive direct impact of higher carbon pricing on lowerincome households. Concerns with carbon leakages and firms’ competitiveness are best addressed through agreeing on an international carbon price floor.
    Keywords: Climate mitigation, emissions trading system, emissions surcharge, price floor, feebate, renewables, electric vehicles, forest carbon storage.
    Date: 2021–09–27
  3. By: Nate Vernon; Ian Parry; Mr. Simon Black
    Abstract: This paper provides a comprehensive global, regional, and country-level update of: (i) efficient fossil fuel prices to reflect their full private and social costs; and (ii) subsidies implied by mispricing fuels. The methodology improves over previous IMF analyses through more sophisticated estimation of costs and impacts of reform. Globally, fossil fuel subsidies were $5.9 trillion in 2020 or about 6.8 percent of GDP, and are expected to rise to 7.4 percent of GDP in 2025. Just 8 percent of the 2020 subsidy reflects undercharging for supply costs (explicit subsidies) and 92 percent for undercharging for environmental costs and foregone consumption taxes (implicit subsidies). Efficient fuel pricing in 2025 would reduce global carbon dioxide emissions 36 percent below baseline levels, which is in line with keeping global warming to 1.5 degrees, while raising revenues worth 3.8 percent of global GDP and preventing 0.9 million local air pollution deaths. Accompanying spreadsheets provide detailed results for 191 countries.
    Keywords: fossil fuel subsidies; efficient fuel prices; supply costs; climate change; local air pollution mortality; revenue gains; spreadsheet tools.
    Date: 2021–09–24
  4. By: Nicoletta Batini; Ms. Oana Luca; Ian Parry; Mr. Simon Black
    Abstract: The Netherlands has ambitious greenhouse gas emission reduction targets for the future - to cut them by 49 percent below 1990 levels by 2030 and 95 percent by 2050. These targets and the likely new EU-wide targets under the recent EU Green Deal entail a rapid acceleration in decarbonization. This paper discusses the government’s mitigation strategy and advances several recommendations to complement and reinforce that strategy and to achieve better alignement of the effective carbon prices across sectors. The paper discusses alternatives to make the recently-introduced industry carbon levy more effcient and recomends the use of revenue-neutral feebate schemes in industry, transportation, buildings, and agriculture. For power generation, it recommends eliminating taxes on residential and industrial electricity, supplementing the coal phaseout plan with an increase in the CO2 emissions floor price. The impacts of these reforms on consumption would be low and relatively evenly split across the income distribution.
    Keywords: government's mitigation strategy; reduction target; climate mitigation; emission rate; natural gas; Greenhouse gas emissions; Carbon tax; Agricultural sector; Global
    Date: 2021–08–20
  5. By: Abu Toasin Oakil; Abdelrahman Muhsen (King Abdullah Petroleum Studies and Research Center)
    Keywords: Alternative fuels, Carbon market, Clean technology, Climate change
    Date: 2021–10–13
  6. By: Rolando Fuentes; Shahid Hasan; Frank Felder (King Abdullah Petroleum Studies and Research Center)
    Abstract: Saudi Arabia and other Gulf Cooperation Council (GCC) members are working in parallel to reform their electricity markets and achieve ambitious renewable energy deployment goals. The motivation for this agenda is multifaceted, and increasing economic efficiency is one of several reasons for these efforts. By introducing markets in the power sector (i.e., liberalizing this sector), these countries aim to reduce the sector’s reliance on the public budget.
    Keywords: Battery storage, Electricity, Electricity markets, Energy transitions
    Date: 2021–09–27
  7. By: Khondaker Golam Moazzem; ASM Shamim Alam Shibly
    Abstract: The 8th Five Year Plan (8FYP) is one of the important policy documents during the period between FY2020– 21 and FY2024–25. Like earlier Five Year Plans, the power sector has got special attention in the new Plan with a view to ensuring access to electricity, supporting economic activities and promoting industrialisation. In the backdrop of persistent weaknesses and challenges in the power sector during the immediate-past FYP period (7FYP) as well as economic slowdown caused by the COVID-19 pandemic, the study examines how the 8FYP addresses on the challenges in the power sector and whether the long-term targets set in the Plan is consistent with the future outlook of the power sector including development of the clean power sector. The study observed positive changes in the power sector during the 7FYP period which include higher public and private investment, better access to electricity to consumers and gradual reduction of transmission and distribution losses. However, the 7FYP period ended with a number of challenges including: (i) over-generation capacity, (ii) under-utilisation of power plants, (iii) poor efficiency of power plants, (iv) increasing public debt of the Bangladesh Power Development Board (BPDB), (v) fiscal-financial pressure on importing fossil-fuel, and (vi) little attention on the renewable energy development. These challenges have received little attention in setting targets for the 8th plan period. In case of primary energy, the 8FYP has little shift from the earlier policy stance. There is no comprehensive outlook on renewable energy in power generation—8FYP focuses mainly on hydro-power. Without appropriate measures and initiatives, the problems would further exaggerate during the coming years. In this backdrop, the study suggests to emphasise in the 8FYP period on undertaking proper measures such as demand rationalisation and demand-side management, enhancing efficiency of power plants, cost reduction, abandoning coal-fired power plants, abandoning old, expensive fuel-based and quick rental and rental power plants, gradual shifting towards cleaner energy-mix by enhancing use of non-conventional renewable energy mix for power generation.
    Keywords: Power Sector, Power and Energy, Renewable Energy, Clean Energy, Rental Power, COVID-19, FY2020-21, 8th Five Year Plan, 8FYP, Bangladesh Budget, Economc risk, Bangladesh, Corona Pandemic, Bangladesh economy, stimulus package, budget deficit
    Date: 2021–08
  8. By: Salaheddine Soummane; Frederic Ghersi (King Abdullah Petroleum Studies and Research Center)
    Abstract: Projecting future demand for electricity is central to power sector planning, as these projections inform capacity investment requirements and related infrastructure expansions. Electricity is not currently economically storable in large volumes. Thus, the underlying drivers of electricity demand and potential market shifts must be carefully considered to minimize power system costs.
    Keywords: Electricity, Electricity demand growth, electricity markets, Energy efficiency
    Date: 2021–09–09
  9. By: Akshay Jaitly (xKDR Forum); Ajay Shah (xKDR Forum)
    Abstract: The heavy lifting in the climate transition is done in the electricity sector. Decarbonisation of the economy requires a large-scale rearrangement of technology and business models, in supply and demand, in the electricity sector. The Indian electricity sector is ill-suited to perform this role and this constitutes the major roadblock for the climate transition in India. The solution lies in electricity reform, that addresses the long-standing fundamental problems of the electricity sector, that places this sector on the foundation of the price system. Once electricity works through the price system, an escalating schedule of a carbon tax will deliver the cost-minimising climate transition through myriad actions of self-interested actors spread all over the country, without requiring central planning. Many elements are coming together, through which this reform is feasible today while it was not in the past 30 years.
    JEL: H11 H23 H31 H32 H73 H77 H87 G31 P31 Q42 Q48 Q54 Q56 Q58
    Date: 2021–10
  10. By: Rubal Dua; Scott Hardman; Yagyavalk Bhatt; Dimpy Suneja (King Abdullah Petroleum Studies and Research Center)
    Keywords: Alternative fuels, Carbon market, Clean technology, Climate change
    Date: 2021–10–05
  11. By: Khondaker Golam Moazzem; Helen Mashiyat Preoty
    Abstract: The new Power and Energy System Master Plan (PESMP) is on the process of drafting by the Ministry of Power Energy and Mineral Resources (MoPEMR). The new PSEMP aims to promote a low or zero-carbon transformation of the total energy supply and demand system. The successive PSMPs (2005, 2010 and 2016) have been criticised to have an inappropriate demand projection which led to different types of challenges. The paper reviews the successive PSMPs (PSMP 2005, 2010 and 2016) to find out the methodological weaknesses and suggests the alternative methodology for demand-side analysis of the power sector for the new plan. Based on the literature of developing countries and the findings of the key informant interviews (KIIs) the paper finds that Bangladesh needs to consider a sound methodology for proper forecasting of electricity demand. A number of methods which are methodologically well-recognised and applied to different countries such as bottom-up approach which could be more appropriate in the context of Bangladesh to forecast the power demand in the PESMP 2021. This paper concludes with a number of recommendations for the next PESMP.
    Keywords: PESMP, Power Sector, Power and Energy, Renewable Energy, Clean Energy, Rental Power, COVID-19,
    Date: 2021–08
  12. By: Jan Pojar (Czech Technical University in Prague, Faculty of Civil Engineering); Jakub Kvasnica (Czech Technical University in Prague, Faculty of Civil Engineering)
    Abstract: The European Union promotes the concept of energy communities as a tool for achieving ambitious goals in decarbonisation of the European economy. Potentially, energy communities can bring multiple benefits; they are seen as a way for more efficient power sharing and decentralization and decarbonisation of energy generation as well as increasing locally produced renewable energy.The aim of the article is to examine establishing and operation of energy communities in the context of the Czech Republic. The article explores current and upcoming legislation on energy communities, the first of its kind that would set the regulatory framework for energy communities for a foreseeable future.The article describes case studies of energy communities with regard to their implementation in the conditions of the Czech Republic. Case studies focus on technical solutions for modern and renewable energy sources suitable for operation in energy communities.The article concludes with a summary of barriers, e.g. in the field of property rights and their possible solutions, and benefits of energy communities implementation, such as better distribution of investment costs and the possibility of implementing larger projects, subsequent savings in energy costs, facilitation of renewable energy sources and decentralization of energy production.The article also discusses the necessary steps for removing the barriers, which would subsequently accelerate the implementation of energy communities.
    Keywords: Energy community; Energy production; Energy generation; Energy Decentralization; Decarbonisation
    JEL: D00 Q42 Q43
    Date: 2021–10
  13. By: Didier Nibbering; Coos van Buuren; Wei Wei
    Abstract: Using a real options approach, we analyze the valuation of wind energy projects and associated investment decisions while accounting for both price and production uncertainty. We propose a new approach to explicitly incorporate production uncertainty into the valuation. Specifically, we account for the production risk using a stochastic process for wind speed, a cubic spline model for the conversion of wind speed to wind electricity, and a Bayesian procedure for estimating and forecasting the wind electricity processes. In a case-study on a comprehensive dataset of a Dutch offshore wind farm, we evaluate the financial consequences of ignoring production risk for different levelized costs of energy values. We find that fixing the production at a capacity factor value leads to substantial underestimation of the real options value, and relying on theoretical instead of empirical power curves leads to overestimation.
    Keywords: OR in energy, wind electricity, production uncertainty, real options, hierarchical Bayesian model
    JEL: Q42 G11 C11
    Date: 2021
  14. By: Mr. James Roaf; Ian Parry; Mr. Michael Keen
    Abstract: This paper assesses the rationale, design, and impacts of border carbon adjustments (BCAs). Large disparities in carbon pricing between countries raise concerns about competitiveness and emissions leakage. BCAs are potentially the most effective domestic instrument for addressing these challenges—but design details are critical. For example, limiting coverage of the BCA to energy-intensive, trade-exposed industries facilitates administration, and initially benchmarking BCAs on domestic emissions intensities would ease the transition for trading partners with emission-intensive production. It is also important to consider how to apply BCAs across countries with different approaches to emissions mitigation. BCAs alone do not solve the free-rider problem in carbon pricing, but might be a step to an effective international carbon price floor.
    Keywords: border carbon adjustment; climate mitigation; carbon pricing; competitiveness, emissions leakage; allowance allocation, design issues, World Trade Organization rules.
    Date: 2021–09–27
  15. By: Glenk, Gunther (University of Mannheim); Meier, Rebecca (University of Mannheim); Reichelstein, Stefan (University of Mannheim and Stanford University)
    Abstract: The rapid transition to a decarbonized energy economy is widely believed to hinge on the rate of cost improvements for certain clean energy technologies, in particular renewable power and energy storage. This paper adopts the classical learning-by-doing framework of Wright (1936), which predicts cost (price) to fall as a function of the cumulative volume of past deployments. We examine the learning rates for key clean energy system components (e.g., solar photovoltaic modules) and the life-cycle cost of generating clean energy (e.g., wind energy and hydrogen obtained through electrolysis). Our calculations point to significant and sustained learning rates, which, in some contexts, are much faster than the traditional 20% learning rate observed in other industries. Finally, we argue that the observed learning rates for individual technologies reinforce each other in advancing the transition to a decarbonized energy economy.
    Date: 2021–04
  16. By: Edi Assoumou,; Florent Mc Isaac
    Abstract: In closing its economic gap with emerging markets, Côte d’Ivoire will face a substantial increase in electricity demand over the next three decades. Côte d’Ivoire has signed the Paris Agreement that aims to achieve a balance between anthropogenic emissions by sources, including electricity, and absorption by sinks of green-house gases in the second half of the century. This paper develops a forward-looking tool to explore electricity technology investment paths compatible with both rapidly increasing electricity demand and the Paris Agreement. We build a TIMES model for Côte d’Ivoire and run scenarios with two sets of reasonable assumptions that represent two competing and probable visions of the future costs of coal and photovoltaic technologies.
    Keywords: Côte d'Ivoire
    JEL: Q
    Date: 2021–11–15
  17. By: Mark Agerton (Department of Agricultural and Resource Economics, University of California Davis and Non-Resident Fellow at Baker Institute for Public Policy, Rice University); Ben Gilbert (Department of Economics and Business, Colorado School of Mines); Gregory B. Upton Jr. (Center for Energy Studies, Louisiana State University)
    Abstract: Natural gas venting, flaring and leaking (VF&L) are closely intertwined environmental policy issues for U.S. shale oil and gas operations. In this paper, we lay out an agenda for researchers and policymakers. We describe why VF&L are closely related, both physically and in terms of policy. We perform an interdisciplinary literature review on measurement of VF&L. We marshal granular industry data to identify constraints in the natural gas system correlated with upstream VF&L. Motivated by this descriptive analysis, we discuss the economic reasons for VF&L and the market distortions that could exacerbate VF&L. We then discuss the external cost of VF&L. We calculate that reported 2015 and 2019 flaring and venting imposed climate damages of $0.9 to $1.8 billion and $1.7 to $3.4 billion. We calculate that climate damages of 2015 upstream U.S. methane emissions estimated by Alvarez et al. (2018) were $16.8 billion. Finally, we discuss both existing policy and economic insights relevant to future policy.
    Keywords: methane, venting, flaring, natural gas, shale, environmental policy
    JEL: Q35 Q48 Q53 Q54
    Date: 2021–09
  18. By: Ojo, Marianne; Dierker, Theodore
    Abstract: The 2021 COP 26 Summit held in Glasgow, has resulted, not only in groundbreaking agreements, but also the involvement of private sector investment, the participation of formidable alliances such as the Global Energy Alliance – and for the first time, the engagement of indigenous communities. Whilst ongoing negotiations and outcomes from the Summit appear promising, there are still concerns in relation to the lack of enforceability of agreements. This paper, not only aims to highlight the rationales underlying such concerns, but also consider the merits and applicability of innovative techniques and technologies – as well as notable progress and developments made during the ongoing Summit. The engagement of several economies in the asset purchasing programs and uncertainty in decision making by some in respect of when, how or whether to commence winding up activities, also bears several monetary policy implications. This could in turn, impact outcomes – both intended and unintended, in relation to carbon, and more specifically, oil pricing strategies – which are ideally targeted at mitigating carbon emissions, whilst fostering climate goals and objectives. Given the demands and pressures of governments and economies in deploying funds to households, businesses; central bank engagements in deciding how and when to wind down asset purchase programs, and the need by governments to focus on more urgent and pressing matters such as those related to health, education, in the light of ongoing global developments, how ready and willing are governments able to commit to environmental issues? Herein lies a role for the private sector and private sector investment.
    Keywords: COP 26; double counting; fossil fuels; renewable energy; oil pricing; monetary policy; inflation; innovative techniques; Article 6 of the Paris Agreement; transparency; disclosure; emissions gap; NDCs
    JEL: D8 F6 F64 G3 K2
    Date: 2021–11
  19. By: Rick van der Ploeg; Armon Rezai; Miguel Tovar
    Abstract: Green tax reform is unpopular because, typically, the poor are hurt most by the higher prices of carbon-intensive commodities. If revenues from a carbon tax are recycled, it may be feasible to gain popular support for green tax reform. To investigate this, we estimate an EASI demand system from German household data and a labour supply schedule, using wage data, and the German income tax schedule and let emission intensities decline in the carbon tax. If the revenue from a carbon tax is recycled via a lump-sum transfer to all households, this gives more equitable albeit less efficient outcomes, yet 70% of households are worse off. If the revenue is recycled via lower income taxes, there is more efficiency at the expense of more inequality, and about half of households benefit. With a recycling mix of lump-sum transfers and lower income taxes, popular support can be mustered without hurting equity too much. We also investigate the effects of Germany meeting its legal target for curbing emissions by 55% in 2030 relative to 1990 levels. We find that most of emission reductions are due to producers responding by lowering emission intensities rather than by consumers to less carbon-intensive consumption categories.
    Keywords: popular support, carbon tax, revenue recycling, equity, EASI demand system, labour supply
    JEL: D12 D31 D62 D63 H23 J22 Q50
    Date: 2021
  20. By: Asongu, Simplice; Odhiambo, Nicholas
    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 O11 O55 Q20 Q30
    Date: 2021–01
    Abstract: Since the adoption of the Paris Agreement, wider and decisive actions to tackle climate change and reduce greenhouse gas (GHG) emissions have been called for in the international community. Many countries are seeking a sustainable economic recovery plan that reflects climate change and environmental considerations. The private sector has also been trying to expand environmentally sustainable investments and disclose relevant information on climate change. In particular, major GHG emitters such as China, the United States (U.S.), European Union (EU), Japan and Korea have pledged to move forward carbon neutrality. For this goal, the EU has established action plans for the European Green Deal, including a plan for introducing a Carbon Border Adjustment Mechanism (CBAM). In this context, this study aims to propose policy recommendations for Korea by analyzing measures to strengthen reduction targets and the economic impact of the EU's CBAM. The following implications can be derived. First, it is necessary to support low-carbon transition efforts in industries. Second, it is also important to support low-carbon technological innovation. Third, monitoring and response measures for the CBAM should also be prepared. Fourth, the private sector should expand voluntary efforts to reduce emissions and environmentally sustainable investment. Lastly, it is necessary to actively engage in international cooperation, not only in terms of reducing GHG emissions but also responding to climate change.
    Keywords: Climate Ambition; greenhouse gas; EU; CBAM
    Date: 2021–05–25
  22. By: Asongu, Simplice; Nting, Rexon
    Abstract: In this study, we assess how the mobile phone can be leveraged upon to improve the role of governance in environmental sustainability in 44 Sub-Saharan African countries. The Generalised Method of Moments is used to establish policy thresholds. A threshold is a critical mass or level of mobile phone penetration at which the net effect of governance on Carbon dioxide (CO2) emissions changes from positive to negative. Mobile phone penetration thresholds associated with negative conditional effects are: 36 (per 100 people) for political stability/no violence; 130 (per 100 people) for regulation quality; 146.66 (per 100 people) for government effectiveness; 65 (per 100 people) for corruption-control and 130 (per 100 people) for the rule of law. Practical and theoretical implications are discussed. The study provides thresholds of mobile phone penetration that are critical in complementing governance dynamics to reduce CO2 emissions.
    Keywords: CO2 emissions; ICT; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2021–01
  23. By: Henri-Ukoha, Adanna; Nlebedim, C.; Aroyehun, R.A
    Keywords: Resource /Energy Economics and Policy, Farm Management
    Date: 2021–08
  24. By: Choudhuri, Pallavi; Desai, Sonalde
    Abstract: The use of solid cooking fuels—wood, straw, crop residue, and cow-dung cakes—is associated with higher levels of environmental pollution and health burden. However, even in an era when incomes have grown and poverty has declined, the proportion of Indian households using clean cooking fuels such as kerosene or Liquefied Petroleum Gas (LPG) has increased only slightly. Even among the wealthiest quintile, only about 40 percent of the households rely solely on clean fuel. Since the chores of cooking and collection of fuel remain primarily the domain of women, we argue that intra-household gender inequalities play an important role in shaping the household decision to invest in clean fuel. Analyses using data from the India Human Development Survey (IHDS), a panel survey of over 41,000 households conducted in two waves in 2004-05 and 2011–12, respectively, show that women’s access to salaried work and control over household expenditure decisions is associated with the use of clean fuel.
    Keywords: LPG, clean fuel, gender inequality, resource dependence, intra-household, India
    JEL: J1 Q4
    Date: 2020–04–20
  25. By: Tadadjeu, Sosson; Njangang, Henri; Asongu, Simplice; Kamguia, Brice
    Abstract: This paper contributes to the literature by investigating the effect of natural resources on under-five mortality in a sample of 50 African countries over the period 1996 to 2018. We also examine the extent to which governance shapes the relationship between natural resources and under-five mortality. Our results show that natural resources have increased under-five mortality. Resource rents also have detrimental effects on child mortality by age, gender, and the three major causes of infant mortality from infectious diseases. However, an extended analysis of different types of natural resources suggests that point resources (such as oil, natural gas and mineral rents) increase under-five mortality, in contrast to the diffuse resources (such as forest rent). We also find that governance mitigates the positive effect of natural resources on child mortality. Corresponding governance policy thresholds that should be attained in order to reverse the positive effects of natural resources on child mortality are provided. We thus suggest an increase in the funds allocated to the health sector from resource rents and encourage efforts to improve governance standards in sampled countries.
    Keywords: Natural resources; Child mortality; Governance; Africa
    JEL: J13 O55 Q33 Q34 Q38
    Date: 2021–01
  26. By: Baccianti, Claudio (Tilburg University, School of Economics and Management)
    Date: 2021
  27. By: Erik Ens; Laurence Savoie-Chabot; Kurt See; Shu Lin Wee
    Abstract: We assess how rising exports of US liquefied natural gas (LNG) affect the convergence of natural gas prices worldwide. Using standard principal component analysis and cointegrating techniques, we show that the degree of co-movement between global benchmark prices for natural gas has strengthened since the United States began the large-scale export of LNG in 2016. At the same time, we find that global natural gas prices do not yet adhere to the relative law of one price. Our results also suggest that issues related to storage access in Alberta between 2017 and 2019 have limited price co-movements between major benchmarks for natural gas in the United States and Canada. In addition, we use vector error correction models to show that natural gas prices in Europe and Asia respond negatively to increased exports of US LNG. These results may have implications for the development of future LNG export capacity in Canada.
    Keywords: Business fluctuations and cycles; Coronavirus disease (COVID-19); Econometric and statistical methods; Labour markets, Monetary policy
    JEL: E24 J21 J6
    Date: 2021–10
  28. By: Remzi Uctum; Georges Prat
    Abstract: Using Consensus Economics survey-based data we show that oil price expectations are not rational, implying that the ex-ante premium is a more relevant concept than the widely popular ex-post premium. We propose for the 3- and 12-month horizons a portfolio choice model with risky oil assets and a risk-free asset. At the maximized expected utility the risk premium is defined as the product of the risk price by the expected oil return volatility. We show that the representative investor can be risk averse or risk seeking depending on the state of nature, implying that the price of risk is positive or negative, respectively. The price of risk and expected volatility being unobservable magnitudes, a state-space model, where the risk prices are represented as stochastic unobservable components and where expected volatilities depend on historical squared returns, is estimated using Kalman filtering. We find evidence of significant disparities of risk prices according to horizons: higher amplitudes and risk seeking behaviour are associated with short horizons and lower fluctuations and risk aversion attitude characterize longer horizons. We show that macroeconomic, financial and oil market-related factors drive risk prices whose signs are consistent with the predictions of prospect theory. An upward sloped term structure of oil risk premia prevails in average over the period.
    Keywords: oil market, oil price expectations, ex-ante risk premium
    JEL: D81 G11 Q43
    Date: 2021
  29. By: Mr. Eugenio M Cerutti; Patrick Blagrave; Ruchir Agarwal; Vybhavi Balasundharam; Ragnar Gudmundsson; Racha Mousa
    Abstract: The South Asia region is both a large contributor to climate change and also one of the regions most vulnerable to climate change. This paper provides an overview of the region’s vulnerabilities, national committments to mitigate emissions, and national policies to adapt to a changing climate. The paper also discusses policy measures that may be needed to make further progress on both mitigation and adapatation. Our analysis suggests that while substantial progress is being made, there remains scope to adopt a more cohesive strategy to achieve the region’s goals—including by improving the monitoring and tracking of adaptation spending, and by laying the groundwork to equitably increase the effective price of carbon while protecting low-income and vulnerable households in the region.
    Keywords: South Asia region; mitigation policy; policy measure; climate change in South Asia; power generation; Climate change; Climate finance; Natural disasters; Greenhouse gas emissions; South Asia; Global; Asia and Pacific
    Date: 2021–08–20
  30. By: Comello, Stephen (Stanford University); Reichelstein, Julia (Piva Capital); Reichelstein, Stefan (Mannheim Institute for Sustainable Energy, University of Mannheim and Stanford University)
    Abstract: In this article we first summarize the specific plans articulated by seven major corporations for reducing their Corporate Carbon Footprints (abbreviated as CCF from hereon). Our sample is not intended to be representative of the broader population of firms that have become active in this regard. Instead, our selection aims to cover a range of industries, including energy companies, manufacturers, and distributors of consumer products as well as internet technology firms. We then compare and discuss key features of the decarbonization plans put forth by these seven firms to highlight substantial differences regarding the specificity and measurement of the articulated goals. Our discussion points to considerable variation in the use of so-called carbon offsets. We also discuss what might make CCF disclosures more transparent and credible in the future, including the possibility of such disclosures becoming mandatory rather than voluntary.
    Date: 2021–04
  31. By: Edouard Mien (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA [2017-2020] - Université Clermont Auvergne [2017-2020])
    Date: 2021–10
  32. By: Ramez Abubakr Badeeb; Jeremy Clark (University of Canterbury); Abey P. Philip
    Abstract: Previous “oil curse” studies primarily estimate a single, linear effect of oil rents on income using time-invariant parameters over entire sample periods. This means the true effects of oil dependence cannot be captured if structural changes are taking place, or effects are nonlinear. We introduce a two regime Markov-switching model into the resource effects literature to assess the time-varying effects of oil rent dependence on the Malaysian manufacturing sector. We also allow for non-linear threshold effects. We find the impact of oil rents is regimedependent. Under a rarer “first regime” structure there is no significant effect. Under a predominant “second regime” there is an inverted U-shaped effect, with oil rents’ share of GDP up to 8% positively associated with manufacturing, and negatively associated beyond this. We find connections between regime changes and the 1997 Asian financial crisis and 2008 global financial crisis. Implications for effective diversification policies are discussed.
    Keywords: Oil curse, Oil rent, Markov Switching Model, Manufacturing sector, Malaysia
    JEL: C22 O11 O13 Q33
    Date: 2021–11–01
  33. By: Maria Teresa Punzi; Bihong Huang; Yu Wu
    Abstract: This paper assesses the financial risks arising from transition toward a low-emission economy. The environmental DSGE model shows tightening environmental regulation impairs firms’ balance sheets, and consequently threatens financial stability in the short term. The empirical analysis indicates that following the implmentation of Clean Air Action Plan, the default rates of high-polluting firms in a Chinese province rose by around 80 percent. Joint equity commercial banks with higher level of independence were able to appropriately price in their exposure to transition risks, while the Big Five commercial banks failed to factor in such risks.
    Keywords: E-DSGE Model, Financial stability, Clean Air Action Plan
    Date: 2021–09–03
  34. By: Rossi, Martin
    Abstract: This paper provides a decomposition of labor productivity growth into contributions associated with technical change, efficiency change, returns to scale, and environmental variables. The decomposition is based on parametric estimation of labor requirement functions. This approach is applied to a panel of Latin American distribution utilities between 1994 and 2001. The main results are a positive labor productivity growth averaging 7.5% per year, and that this is mainly due to a shift in the frontier.
    Keywords: Productivity, Electricity Distribution, Labor Requirement Function, Efficiency
    JEL: L94
    Date: 2021–11–07
  35. By: Kehinde Abiodun (Department of Economics and Business, Colorado School of Mines); Ben Gilbert (Department of Economics and Business, Colorado School of Mines)
    Abstract: Universal electrification is a necessary but not sufficient condition for reliable electricity supply. We examine the effect of power outages on firm performance in four middle-income countries with universal electrification. Using data from the World Bank Enterprise Survey on over 8,000 firms from 39 regions across Egypt, Morocco, Tunisia, and Indonesia, we find no discernable average effect on firm performance. There is considerable cross-country heterogeneity, however. Firms in Tunisia and Egypt --- the two countries in our sample with the greatest frequency of outages --- suffer statistically and economically significant losses from outages, while firms in Indonesia and Morocco show no effect. The losses are high in both Tunisia and Egypt, where outages reduce total annual sales by 15 and 25 percent, respectively. These findings suggest that while universal electrification is an important development goal, it should be considered together with investments in reliability.
    Keywords: universal electrification, power outages, reliability, middle-income countries
    JEL: D24 H54 O13 O14
    Date: 2021–09
  36. By: Rossi, Martin
    Abstract: This article analyzes the relative performance of recently privatized Latin American electricity distribution utilities. Empirical results show that privatized firms are more efficient in their use of labor and have higher labor productivity growth rates than public or cooperative companies. There is also evidence of increasing returns to scale.
    Keywords: Ownership, Efficiency, Technical Change, Input Requirement Function
    JEL: L94 O30
    Date: 2021–11–07
  37. By: Dongmei Chen (King Abdullah Petroleum Studies and Research Center)
    Keywords: Economic growth, Sustainability
    Date: 2021–10–24
  38. By: Bardt, Hubertus
    Abstract: Auf zusammenhängenden Märkten für austauschbare Güter gibt es - abgesehen von Transaktionskosten - nur einen einheitlichen Preis. Im Gegensatz dazu ist der internationale Klimaschutz durch sehr unterschiedliche Preise für die Emission von Treibhausgasen geprägt. Europa hat mit dem Emissionshandel einen recht großen Anteil der globalen Emissionen relativ hoch bepreist. Weltweit sind die meisten Emissionen hingegen deutlich preiswerter oder gar kostenfrei. Dies ist ein Zeichen von Ineffizienzen im globalen Klimaschutz. Auf der einen Seite müssen teure Aktivitäten vorgenommen werden, während an anderer Stelle günstigere Maßnahmen unterbleiben. Wenn es darum geht, mit den vorhandenen Mitteln den bestmöglichen Klimaschutz zu erreichen, müssten die Preise international angeglichen werden. Aus den Preisdifferenzen resultieren aber darüber hinaus auch erhebliche Kostenvor- und -nachteile für produzierende Unternehmen im internationalen Wettbewerb. Um industrielle Produktion zu klimafreundlichen Konditionen zu ermöglichen, muss ein Ausgleichmechanismus gefunden werden. Es geht darum, Investitionen in klimafreundliche Produktionsweisen an den Standorten zu ermöglichen, die durch anspruchsvollen Klimaschutz und daher hohe Preise für Emissionen charakterisiert sind. Eine Verschiebung der Investitionsschwerpunkte in Länder mit geringeren Emissionskosten würde die Klimaschutzländer wirtschaftlich schwächen, ohne einen signifikanten Klimaschutzbeitrag zu leisten. Zudem würde die Möglichkeiten reduziert, Technologien für die weltweiten Emissionsvermeidung zu entwickeln. Unterschiedliche Instrumente stehen zur Verfügung, die die Mehrkosten verringern, die durch die unterschiedliche Bepreisung entstehen. Die öffentliche Förderung von Klimaschutzinvestitionen, für die es aufgrund der politisch gesetzten Preisunterschiede derzeit keine Amortisation am Markt geben kann, gehört ebenso zu den Instrumenten wie die zeitlich begrenzte, aufgrund der langen Investitionslaufzeit der Klimaschutzmaßnahmen jedoch auf einen langen Zeitraum angelegte Förderung von laufenden Mehrkosten. Hierfür müssen Modelle entwickelt werden, die die Preissteuerung an Märkten so wenig wie möglich schwächen. Auch internationale, möglicherweise sektorale Klima-Klubs wären ein erfolgversprechendes Instrument. Wenn für einzelne Produkte an den wichtigsten Produktionsstandorten vergleichbare Preise vereinbart werden kann, wäre das ein wichtiger Schritt für internationalen Klimaschutz ohne Wettbewerbsverzerrungen zu Lasten der klimafreundlichsten Volkswirtschaften.
    Keywords: Klimaschutz,Investitionen,Handelspolitik
    JEL: Q54 F18 F21
    Date: 2021
  39. By: Martin, Elliot PhD; Shaheen, Susan PhD; Stocker, Adam
    Abstract: Transportation Network Companies (TNCs) like Lyft, Uber, and their global counterparts have expanded around the world over the past decade and have changed the way that people travel around cities and regions. The individual mobility benefits provided by TNCs have been clear. Passengers can summon a vehicle quickly via smartphone from almost anywhere to take them almost anywhere, with advance communication on estimated wait time, travel time, and cost. TNCs may also provide users with added mobility benefits, especially for those living in areas where public transit service is infrequent or non-existent. However, the growing popularity of TNCs has forced important questions about their impacts on the overall transportation network. While past research has focused on many different aspects of TNC impacts, including their effects on travel behavior, modal shift, congestion, and other topics, there are still many important questions. This report advances the understanding of TNC effects on vehicle miles traveled (VMT), greenhouse gas (GHG) emissions, and personal vehicle ownership. The research also explores key questions regarding the impact of pooled TNC services, Lyft Shared rides and uberPOOL, and further investigates how TNCs alter the use of other transportation modes, including public transit.
    Keywords: Engineering
    Date: 2021–11–01

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