nep-ene New Economics Papers
on Energy Economics
Issue of 2022‒06‒27
forty papers chosen by
Roger Fouquet
London School of Economics

  1. Global trends in the invention and diffusion of climate change mitigation technologies By Probst, Benedict; Touboul, Simon; Glachant, Matthieu; Dechezleprêtre, Antoine
  2. Strategic sovereignty in energy affairs: Reflections on Germany and the EU's ability to act By Westphal, Kirsten
  3. A portfolio management of a small RES utility with a Structural Vector Autoregressive model of German electricity markets By Katarzyna Maciejowska
  4. Probabilistic forecasting of German electricity imbalance prices By Micha{\l} Narajewski
  5. Assessing reliability of electricity grid services from space: the case of Uttar Pradesh, India By Dugoua, Eugenie; Kennedy, Ryan; Shiran, Myriam; Urpelainen, Johannes
  6. The 4Ps of Marketing Mix and the Decision of Using Electrical Vehicles for Thai Consumer in Bangkok, Thailand By Sauwaluck Koojaroenprasit; Sumaree Pumpinyo
  7. Russia in the global hydrogen race: Advancing German-Russian hydrogen cooperation in a strained political climate By Zabanova, Yana; Westphal, Kirsten
  8. The Social Cost of Carbon with Intragenerational Inequality under Economic Uncertainty By Rick van der Ploeg; Johannes Emmerling; Ben Groom
  9. Climate Stabilization Taxation-and-Bonds Strategy Adjusted for Consumption By Julia M. Puaschunder
  10. How do environmental policies affect green innovation and trade? Evidence from the WTO Environmental Database (EDB) By Bellelli, Francesco S.; Xu, Ankai
  11. Community Carbon Footprints and the Climate Transition: An Initial Assessment for Treherbert By Jones, Calvin
  12. Back to the future? International climate policy in 2021. New constellations for the EU's climate diplomacy By Dröge, Susanne; Schrader, Tessa-Sophie
  13. Climate change concerns and actions – Can provision of information motivate people to fight climate change? By Tzamourani, Panagiota
  14. Decarbonising EU-Turkey energy cooperation: Challenges and prospects By Tastan, Kadri
  15. The multi-level economic impacts of deep decarbonization strategies for the energy system By Gaëlle Le Treut; Julien Lefevre; Francisco Lallana; Gonzalo Bravo
  16. From a “half full or half empty glass†to “definitely a success†. Explorative comparison of impacts of climate assemblies in Ireland, France, Germany and Scotland By Stack, Shauna; Griessler, Erich
  17. Rethinking strategic sovereignty: Narratives and priorities for Europe after Russia's attack on Ukraine By von Ondarza, Nicolai; Overhaus, Marco
  18. On the Short-term Impact of Pollution: The Effect of PM 2.5 on Emergency Room Visits By Evangelina Dardati; Ramiro de Elejalde; Eugenio Giolito
  19. Air Pollution and Student Performance in the U.S. By Michael Gilraine; Angela Zheng
  20. Long-term Contracts for Network-supportive Flexibility in Local Flexibility Markets By Erik Heilmann; Nikolai Klempp; Kai Hufendiek; Heike Wetzel
  21. Why and when coalitions split? An alternative analytical approach with an application to environmental agreements By Raouf Boucekkine; Carmen Camacho; Weihua Ruan; Benteng Zou
  22. Evaluating Pilot Approaches to Increase Rural Mobility By Rodier, Caroline; Harold, Brian; Zhang, Yunwan
  23. Green versus sustainable loans: The impact on firms’ ESG performance By Özlem Dursun-de Neef; Steven Ongena; Gergana Tsonkova
  24. The Eastern Mediterranean as a focus for the EU's energy transition: Deep-rooted enmities and new opportunities for cooperation between Greece, Turkey and Cyprus By Rau, Moritz; Seufert, Günter; Westphal, Kirsten
  25. Case studies’ evidence of greenium in green bond sovereign issuances during the pandemic selloff of March 2020. By Ramos Murillo, Erick
  26. A policy toolkit to increase research and innovation in the European Union By Andreas Teichgraeber; John Van Reenen
  27. Motivating Sustainable Resource Consumption Through the Design of Goal Setting in Smart Meter User Interfaces By Wendt, Charlotte; Benlian, Alexander
  28. How to Mitigate Transportation Emissions in Saudi Arabia? The Role of Energy Price Governance By Sa'd Shannak; Jeyhun Mikayilov; Rubal Dua
  29. Greenhouse Gas Emissions and its Main Drivers: a Panel Assessment for EU-27 Member States By I. Jianu; S. M. Jeloaica; M. D. Tudorache
  30. Stellungnahme zur Anhörung des Ausschusses für Klimaschutz und Energie im Deutschen Bundestag: CO2-Grenzausgleichsmechanismus By Fremerey, Melinda; Gerards Iglesias, Simon; Hüther, Michael
  31. A Two-Stage Mechanism for Demand Response Markets By Bharadwaj Satchidanandan; Mardavij Roozbehani; Munther A. Dahleh
  32. Stranded Assets in the Coal Export Industry? The Case of the Australian Galilee Basin By Christian Hauenstein; Franziska Holz; Lennart Rathje; Thomas Mitterecker
  33. Rational but Not Prescient: Borrowing during the Fracking Boom By Daniel Berkowitz; Andrew J. Boslett; Jason Brown; Jeremy G. Weber
  34. A new hydrogen world: Geotechnological, economic, and political implications for Europe By Grinschgl, Julian; Pepe, Jacopo Maria; Westphal, Kirsten
  35. Energy Consumption and Human Development in South Africa: Empirical Evidence from Disaggregated Data By Mercy T. Musakwa; Nicholas M. Odhiambo
  36. An optimal strategy to control mining and recycling of non-renewable resources By Silvia Bertarelli; Chiara Lodi; Stefania Ragni
  37. Does Hotter Temperature Increase Poverty? Global Evidence from Subnational Data Analysis By Dang, Hai-Anh; Trinh, Trong-Anh
  38. Next COP ahead: Europe has work to do By Dröge, Susanne; Geden, Oliver
  39. More Money or Better Procedures? Evidence from an Energy Efficiency Assistance Program By Bettina Chlond; Timo Goeschl; Martin Kesternich
  40. Climate change and the economy: an introduction By António R. Antunes; Bernardino Adão; João Valle e Azevedo; Nuno Lourenço; Miguel Gouveia

  1. By: Probst, Benedict; Touboul, Simon; Glachant, Matthieu; Dechezleprêtre, Antoine
    Abstract: Increasing the development and diffusion of climate change mitigation technologies on a global scale is critical to reaching net-zero emissions. We have analysed over a quarter of a million high-value inventions in all major climate change mitigation technologies patented from 1995 to 2017 by inventors located in 170 countries. Our analysis shows an annual growth rate of 10% from 1995 to 2012 in these high-value inventions. Yet, from 2013 to 2017, the growth rate of these inventions fell by around 6% annually, likely driven by declining fossil fuel prices, low carbon prices and increasing technological maturity for some technologies, such as solar photovoltaics. Invention has remained highly concentrated geographically over the past decade, with inventors in Germany, Japan and the United States accounting for more than half of global inventions, and the top ten countries for almost 90%. Except for inventors in China, most middle-income economies have not caught up and remain less specialized in low-carbon technologies than high-income economies.
    Keywords: ES/R009708/1
    JEL: R14 J01
    Date: 2021–11
  2. By: Westphal, Kirsten
    Abstract: Germany's energy sovereignty is undermined by US sanctions on the Nord Stream 2 gas pipeline. As a result, questions surrounding states' strategic capability in energy affairs have recently become a matter of discussion, particularly in Germany, where little attention was previously paid to the notion of energy sovereignty. In view of today's fundamental upheavals in international politics, especially with regard to the geostrategic US-China rivalry, debates about a state's ability to formulate its strategic interests, prioritise its actions and shape its options for energy policy are becoming increasingly important. China's industrial and connectivity policies, the role of the US in energy markets and the energy transformation at large are rapidly changing the global energy landscape and tipping balances of power. The Covid-19 pandemic further accelerates and reinforces these trends. Therefore, it is necessary to integrate energy sovereignty into political debates on the future of sustainable and resilient energy supplies, particularly at the EU level. In order for this to occur, strengthening EU cohesion remains a prerequisite, if not a conditio sine qua non.
    Date: 2021
  3. By: Katarzyna Maciejowska
    Abstract: The changes in electricity markets expose RES producers and electricity traders to various risks, among which the price and the volume risk play a very important role. In this research, a portfolio building strategies are presented, which allow to dynamically choose a proportion of electricity traded in different electricity markets (day-ahead and intraday) and hence to optimize the behavior of an utility. Two types of approaches are considered: simple, assuming that the proportions are fixed, and data driven, which allows for thier fluctuation. In order to explore the market information, Structural Vector Autoregressive (SVAR) model is applied, which allows to estimate the relationship between variables of interest and to simulate their future distribution. The presented methods are evaluated with data coming from German electricity market. The results indicate that data driven trading strategies allow to increase the utility revenue and at the same time reduce the trading risk, measured by the predictability of the next day income and the revenue Value at Risk. It turns out that the approach based on Sharp Ratio provides the most robust results.
    Date: 2022–04
  4. By: Micha{\l} Narajewski
    Abstract: The exponential growth of renewable energy capacity has brought much uncertainty to electricity prices and to electricity generation. To address this challenge, the energy exchanges have been developing further trading possibilities, especially the intraday and balancing markets. For an energy trader participating in both markets, the forecasting of imbalance prices is of particular interest. Therefore, in this manuscript we conduct a very short-term probabilistic forecasting of imbalance prices, contributing to the scarce literature in this novel subject. The forecasting is performed 30 minutes before the delivery, so that the trader might still choose the trading place. The distribution of the imbalance prices is modelled and forecasted using methods well-known in the electricity price forecasting literature: lasso with bootstrap, gamlss, and probabilistic neural networks. The methods are compared with a naive benchmark in a meaningful rolling window study. The results provide evidence of the efficiency between the intraday and balancing markets as the sophisticated methods do not substantially overperform the intraday continuous price index. On the other hand, they significantly improve the empirical coverage. The analysis was conducted on the German market, however it could be easily applied to any other market of similar structure.
    Date: 2022–05
  5. By: Dugoua, Eugenie; Kennedy, Ryan; Shiran, Myriam; Urpelainen, Johannes
    Abstract: While most households around the world have access to electricity, the number of hours per day when the grid supplies them with adequate voltage can be low. Improving the reliability of electricity is crucial to make progress on energy poverty but measuring and monitoring it is difficult, especially in lower-income countries where official data is sparse. We develop a transparent method using only easily accessible data to track the reliability of electricity. We train a decision tree model to predict the number of hours with normal electricity in Uttar Pradesh, India, using monthly nighttime luminosity, village characteristics, and voltage data from monitors installed in households. The approach successfully predicts reliability across time and space, and we document that, in Uttar Pradesh, the average number of hours per day with normal electricity has increased by 0.6 h between 2014 and 2019. The predicted number of hours with normal/reliable electricity supply for 2019 remains as low as 8.1 h.
    Keywords: electricity; reliability; India; nightlights; remote sensing; Elsevier deal
    JEL: R14 J01
    Date: 2022–06–01
  6. By: Sauwaluck Koojaroenprasit (Kasetsart University, Bangkok, Thailand); Sumaree Pumpinyo (Kasetsart University, Bangkok, Thailand)
    Abstract: This research aimed to analyze the 4Ps (Product, Price, Place and Promotion) of marketing mix influencing decision to use electric vehicles (EV). The paper compares those who use electric vehicles with those who tend to use them soon. Primary data was obtained from questionnaire. The sample size was 415 comprising 224 of those who use EV and 191 of those who tend to use EV soon. The methodology employed the t statistics for hypotheses testing between these two groups. For Product, the result showed that two sample groups emphasized not significantly different in long-life electric motor, the effectiveness of electric motor power, safety system, design and modernity, multiple charging support, and driving mileage longer than fuel cars. For Price, the result showed that two sample groups emphasized not significantly different in reasonable price with high quality, maintenance cost, price of accessories, and lifetime battery. For Place, the result showed that two sample groups emphasized not significantly different in one-stop service center, many services center branches, and reserve new EV via online. For Promotion, the result showed that two sample groups emphasized not significantly different in car insurance, wall box, and quality assurance for the battery. According to the results, both sample groups were most concerned about price with high quality, and both emphasized not significantly different in reasonable price with high quality. The government should implement the reduction in import tax of EV.
    Keywords: marketing mix, EV
    Date: 2021–12
  7. By: Zabanova, Yana; Westphal, Kirsten
    Abstract: In October 2020, Russia adopted a roadmap for hydrogen development, and a full-length Hydrogen Development Concept is expected soon. Even though Russia remains somewhat sceptical about hydrogen's much-vaunted transformative potential, it is interested in using its natural gas wealth to become a leading exporter of this new energy carrier and views Germany as a key partner in this effort. In the absence of a serious national decarbonisation agenda in Russia, stimulating hydrogen production primarily for exports and without significant domestic demand will be a challenge. Still, amid Russia's steadily worsening political relations with the West, clean energy (and hydrogen in particular) is one of the few promising areas of cooperation between Germany and Russia, with the potential to become a major steppingstone for the development of hydrogen value chains in both countries.
    Date: 2021
  8. By: Rick van der Ploeg; Johannes Emmerling; Ben Groom
    Abstract: A formula is derived for the social cost of carbon (SCC) that takes account of intragenerational income inequality and its evolution with economic growth. The social discount rate (SDR) should be adjusted to account for intragenerational and intergenerational inequality aversion and for risk aversion. If growth increases (reduces) intra-generational inequality, the SDR is lower (higher) and the SCC higher (lower) than along an inequality-neutral growth path, especially if intra-generational and intergenerational inequality aversion are higher. The same qualitative result is shown for two welfare specifications, one with a representative agent with equally distributed equivalent (EDE) income and the other considers individuals separately across the income distribution. The latter specification causes an additional impact of income inequality on the SDR and SCC because individuals are compared both within and between time periods. Our preferred EDE calibration to a scenario in which global intragenerational inequality declines over time, leads to a SCC in 2020 of $70/tCO2 compared to a value of $85/tCO2 without the effect of inequality.
    Keywords: social discount rate, social cost of carbon, intra- and intergenerational inequality aversion, risk aversion, inequality, growth, uncertainty
    JEL: C61 D31 D62 D81 G12 H23 Q54
    Date: 2022
  9. By: Julia M. Puaschunder (The New School, New York, USA)
    Abstract: Current climate change mitigation and adaptation financing efforts are calling for innovative green investment strategies. An emerging literature and awareness on the economic gains and losses of a warming globe being distributed unequally between countries can serve as novel basis of redistribution schemes. A taxation-and-bonds strategy over the entire world could fund climate change alleviation. A financial asset transfer could be enacted in form of tax-debt mechanisms. Proposed taxation and bonds strategy could aid in broad-based and long-term market incentivization of a transition to a clean energy economy. Strategies could feature some countries’ financing green bonds via carbon taxation, while other countries are climate bonds premium recipients. The bonds recipients would be funded by the climate taxation countries. The bonds could be tradable and issued controlled by global governance institutions, such as the International Monetary Fund, the World Bank, the United Nations or the World Trade Organization. In most redistribution schemes with market incentives, such as – for example – the cap-and-trade emissions trading system, the CO2 emissions levels are addressed. This article advocates for attention to potential economic gains from a warming globe as a source of assets for redistribution. These gains could be redistributed to areas and industries of the world that are clearly losing from climate change immediately. Contrary to most economic redistribution models concerning climate change that primarily weight in relative CO2 emissions for production, this paper argues for attention to CO2 emissions consumption levels. The trade-adjusted consumption-based CO2 emissions levels appear fairer in the judgment what countries have a higher responsibility to fund the burden of climate change. Market-mechanisms – such as consumption taxation and price mark-ups for consumers – are discussed as additional market strategies to redistribute costs, risks and losses implied by climate change.
    Keywords: Climate Change, Climate Stabilization, Economics, Economics of the Environment, Environmental Justice, Environmental Governance, Equality, Monetary policy, Redistribution, Social Justice, Sustainability
    Date: 2021–12
  10. By: Bellelli, Francesco S.; Xu, Ankai
    Abstract: This study investigates how environmental policies impact trade and innovation in environmental goods. We make two major contributions to the economic debate. First, we extract a set of information from the WTO Environmental Database (EDB) through natural language processing techniques that could be useful for future research and policy analysis. Second, we use this data to test a set of economic hypotheses on how environmental measures impact environmental innovation and trade. Our findings show that environmental measures can be an effective tool for stimulating green innovation and trade in green goods. However, policy design matters. Green innovation is most sensitive to R&D expenditure and measures on intellectual property protection and enforcement, whereas trade in green goods increases with environmental subsidies and support measures. Conversely, we find that non-tariff barriers - such as quarantine requirements, import quotas, regulation affecting movement or transit - reduce both imports and exports of environmental goods. Our findings also highlight strong path dependency in innovation. Hence, the earlier the intervention, the greater the accumulated benefits from green innovation. Conversely, delays in intervention increase the cost of transition by further "locking-in" the economy on dirtier exports and technologies. Finally, our result highlight that there is a clear linkage between innovation and trade. Past patents are a strong predictor of future exports, and nations tend to innovate more in technologies related to their exports. We also find evidence of strong technological spillovers across countries and sectors integrated in Global Value Chains (GVC). Hence, integration in environmental goods' GVCs could provide further channels of green technology diffusion and development.
    Keywords: trade and environment,environmental policies,innovation
    JEL: F14 F18 O38 Q55 Q58
    Date: 2022
  11. By: Jones, Calvin
    Abstract: We estimate the consumption carbon footprint for Treherbert, a small community in South Wales. Our results suggest an annual household footprint of around 47,000 tonnes with a further 11,000 tonnes attributable to industry located within the Ward. The emissions are fairly equally distributed across the range of sources and uses, suggesting there is no single, dominant action to progress to net-zero: wide ranging and I integrated actions are required. Less important in the overall footprint for this community is commuting, and land-based carbon sequestration opportunities will be limited, even though Treherbert is surrounded by extensive treescapes. Actions to move to net-zero must include deep and meaningful engagement, if no co-creation with, communities that have hitherto been largely ignored in the development of public policy
    Date: 2022–05–19
  12. By: Dröge, Susanne; Schrader, Tessa-Sophie
    Abstract: In 2021 the international climate policy agenda will need to catch up on much that was not accomplished in 2020. Because of the pandemic, deadlines were postponed and processes slowed down. What is the position of major climate policy powers in early 2021, and what momentum can we expect for international negotiations? The most important impetus this year will come from the EU, the US and China. However, since these three powers are also competitors, the EU and its member states will have to strengthen multilateral cooperation overall so as to push for reaching the Paris Agreement targets, formulate clear expectations, and ensure that all actors remain on equal terms. For Germany and the EU it will therefore be crucial to continue to focus decisively on joint action with partner countries within networks, and to concentrate on core issues with the US. Obvious areas for cooperation with Washington are a joint diplomatic approach for the next international climate conference (COP26), and reconciling climate and trade policy.
    Date: 2021
  13. By: Tzamourani, Panagiota
    Abstract: Are individuals concerned enough about climate change to change their behavior and bear additional costs as a consequence? How can they be motivated to fight climate change? A Bundesbank survey conducted between April 2020 and December 2021 shows that people are more concerned about climate change than about the state of the economy. During most of the ongoing pandemic, only the coronavirus was of a higher concern. While people who rate climate change as a serious issue are also more willing to take on additional costs to help fight climate change, providing information on ways to reduce carbon emissions further increases their willingness to do so.
    Date: 2022
  14. By: Tastan, Kadri
    Abstract: Russia's attack on Ukraine has once again highlighted Europe's heavy dependence on Russian natural gas and thus, among other things, underlined the significance of energy cooperation between the European Union (EU) and Turkey. Traditionally, Turkish-European energy relations have prioritised the diversification of energy resources in the face of Europe's dependence on Russia. The new emerging political, geopolitical, and energy context will have repercussions on Turkish-European energy relation. However, it is the ambitious process of decarbonisation of the economy and energy launched by the EU that will decisively shape the nature and future of Turkey-EU energy relations. Indeed, both European and Turkish interests related to energy security, energy affordability, and climate change mitigation require EU-Turkey cooperation in the decarbonisation process, which is expected to be very challenging. Energy transition is the key to medium- and long-term energy security for both sides.
    Date: 2022
  15. By: Gaëlle Le Treut (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique, ENPC - École des Ponts ParisTech); Julien Lefevre (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique); Francisco Lallana; Gonzalo Bravo
    Abstract: To cap global warming below 2 • C, countries are urged to upscale their climate commitments and develop national deep decarbonization (DD) strategies for the energy system. But, fast and deep transformations will have wide-ranging economic implications at the macroeconomic level, in energy industries, and also in other sectors. Such impacts need to be understood by policy-makers. This paper develops an original integrated approach based on loading consolidated energy pathways into a multi-sector economy-wide model to assess within a consistent framework the multi-level economic impacts of the DD strategies. The method is applied to Argentina and gives representative insights into the global challenge to move towards a low-carbon economy. Our results show key multi-level impacts of shifting from a 'reference' to a DD pathway by 2050. In energy industries, value-added and employment shift from fossil fuel to low-carbon power industries. Aggregated GDP and welfare impacts are limited but incremental investments are significant at the macroeconomic level, with indirect and induced impacts across the economy. It includes net job creations in upstream industries that supply low-carbon infrastructures, but also risks of job losses in exposed sectors. Eventually, our approach highlights enabling conditions and possible block points to lift to trigger the transition.
    Date: 2021–07–01
  16. By: Stack, Shauna (IHS, Vienna); Griessler, Erich (IHS, Vienna)
    Abstract: In recent years many countries, including Austria, have commissioned citizen assemblies in response to the complex issue of climate change. Based on an explorative qualitative study, this paper examines the impact of climate assemblies on policy making and looks at elements that further or impede their impact. In addition, the paper identifies several other impacts of climate assemblies such as those on deliberative democracy and quality of discourse around contentious topics. The paper compares climate assemblies in France, Germany, Ireland and Scotland.
    Keywords: climate assembly, citizen assembly, deliberative democracy, cross-country analysis, impact of participation
    Date: 2022–03
  17. By: von Ondarza, Nicolai; Overhaus, Marco
    Abstract: The Russian war of aggression against Ukraine is forcing Europeans into a confrontational security order. This also makes European strategic sovereignty - n defence policy, but also in economics, technology, energy policy, and institutional framework - a more significant goal for the European Union (EU). Until now, however, a central narrative has been that the EU must be able to act autonomously without the United States (US). In the new security environment, the primary aim of strategic sovereignty should be protecting EU member states and asserting common European interests. For the foreseeable future, however, the Union remains confronted with a fundamental dilemma that can only be attenuated but not fully resolved: In Europe's new confrontational security order, its strategic dependence on the US is likely to grow, while America's long-term alliance commitments remain fraught with question marks. Strategic sovereignty must therefore include the pursuit of Europe's collective defence capability in close cooperation and coordination with the EU and the North Atlantic Treaty Organization (NATO).
    Date: 2022
  18. By: Evangelina Dardati; Ramiro de Elejalde; Eugenio Giolito
    Abstract: In this paper, we study the short-term effect of fine particulate matter (PM2.5) exposure on respiratory Emergency Room (ER) visits in Chile, a middle-income country with high levels of air pollution. To instrument for PM 2.5 we use wind speed at different altitudes (pressure levels). Unlike previous papers, our data allow us to study the impact of increasing air pollution at high levels of pollution. We find that a1microgram per cubic meter (μg/m3) increase in PM 2.5 exposure for one day increases ER visits for respiratory illness by 0.36 percent. The effect is positive for all age groups, including the middle-age population, a novel finding in the literature.
    Keywords: Air Pollution, PM 2.5, Emergency Room Visits.
    JEL: I12 I18 Q51 Q53
    Date: 2022–05
  19. By: Michael Gilraine; Angela Zheng
    Abstract: We combine satellite-based pollution data and test scores from over 10,000 U.S. school districts to estimate the relationship between air pollution and test scores. To deal with potential endogeneity we instrument for air quality using (i) year-to-year coal production variation and (ii) a shift-share instrument that interacts fuel shares used for nearby power production with national growth rates. We find that each one-unit increase in particulate pollution reduces test scores by 0.02 standard deviations. Our findings indicate that declines in particulate pollution exposure raised test scores and reduced the black-white test score gap by 0.06 and 0.01 standard deviations, respectively.
    JEL: I14 I24 Q53
    Date: 2022–05
  20. By: Erik Heilmann (University of Kassel); Nikolai Klempp (University of Stuttgart); Kai Hufendiek (University of Stuttgart); Heike Wetzel (University of Kassel)
    Abstract: With an ongoing energy transition, the electric network is increasingly challenged. Handling congestion is a major responsibility of network operators. In recent years, market-based approaches to utilize network-supportive flexibility, especially local flexibility markets (LFMs), have been discussed as possible future development of congestion management processes. LFMs are a promising opportunity for the effcient, transparent and non-discriminatory integration of new flexibility options, in particular demand-side flexibility. Despite a wide body of supporting literature and several pilot implementations, there is still no common commitment to the concept of LFMs in the European Union. Here we address decision makers in the European energy economy, especially network operators, and discuss a possible flexibility product design using a methodological approach with four steps. First, we review the theoretical background of LFMs, considering both network operators' views and the possibility of demand response as a flexibility provider. Based on this review, we formulate an interim conclusion regarding requirements for flexibility product design in general. Second, using an existing framework, we propose a concrete, capacity-based, long-term flexibility product specification. Third, we discuss compliance between the defined requirements and the proposed product design to highlight the relevance of key design parameters and identify further research needs. Finally, we derive policy implications for network operators' decision makers regarding the implementation of LFMs.
    Keywords: demand side flexibility, local flexibility market, congestion management, flexibility product design
    JEL: D47 L94 Q41
    Date: 2022
  21. By: Raouf Boucekkine (ESC Rennes School of Business - ESC Rennes School of Business); Carmen Camacho (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - 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-PSL - 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); Weihua Ruan (Purdue University Northwest); Benteng Zou (University of Luxembourg [Luxembourg])
    Abstract: We use a parsimonious two-stage differential game setting where the duration of the first stage, the coalition stage, depends on the will of a particular player to leave the coalition through an explicit timing variable. By specializing in a standard linear-quadratic environmental model augmented with a minimal constitutional setting for the coalition (payoff share parameter), we are able to analytically extract several nontrivial findings. Three key aspects drive the results: the technological gap as an indicator of heterogeneity across players, the constitution of the coalition and the intensity of the public bad (here, the pollution damage). We provide with a full analytical solution to the two-stage differential game. In particular, we characterize the intermediate parametric cases leading to optimal finite time splitting. A key characteristic of these finite-time-lived coalitions is the requirement of the payoff share accruing to the splitting country to be large enough. Incidentally, our two-stage differential game setting reaches the conclusion that splitting countries are precisely those which use to benefit the most from the coalition. Constraining the payoff share to be low by Constitution may lead to optimal everlasting coalitions only provided initial pollution is high enough, which may cover the emergency cases we are witnessing nowadays.
    Keywords: Differential games,Multistage optimal control Coalition splitting,environmental agreements,constitutional vs technological heterogeneity,Coalition splitting
    Date: 2022–05
  22. By: Rodier, Caroline; Harold, Brian; Zhang, Yunwan
    Abstract: People who live in rural areas in California face unique transportation challenges due to long travel distances, infrequent transit service, the cost of car ownership, and limited access to app-based rideshare services that are common in more populated urban centers. Over the past eight years, UC Davis has partnered with the eight San Joaquin Valley Metropolitan Planning Organizations to identify and support development of three innovative mobility pilot concepts for the region. Researchers at the University of California, Davis evaluated these three pilot programs using survey and service usage data collected from their launch dates in 2019 and 2020 through November 2021 to understand the participant characteristics and outcomes of each pilot. This policy brief summarizes the key findings from that research. View the NCST Project Webpage
    Keywords: Business, Social and Behavioral Sciences, Demand responsive transportation, Mode choice, Ridesharing, Rural areas, Shared mobility, Transportation disadvantaged persons, Travel behavior, Vehicle sharing
    Date: 2022–05–01
  23. By: Özlem Dursun-de Neef (Goethe University Frankfurt); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)); Gergana Tsonkova (Goethe University Frankfurt)
    Abstract: This paper studies the development of a firm’s Environmental, Social, and Governance (ESG) performance following the issuance of “green loans” earmarked for green projects versus “sustainable loans” to firms bench-marked by ESG criteria. Firms issuing green loans appear to be effective in shrinking their environmental emissions; however, they weaken in social performance indicated by a decrease in their human rights, community, and product responsibility scores. This implies that they prioritize their environmental goals, yet neglect their commitment towards their clients and society. Sustainable loans, on the other hand, we find to incentivize firms to improve their ESG performance by increasing their environmental and governance scores. Thus, the issuance of a sustainable loan surely precedes (and may consequentially signal) subsequent improvements in a firm’s overall ESG performance.
    Keywords: Green Loans; Sustainability Linked Loans; Environmental, Social, and Governance (ESG) Performance; Sustainable Finance
    JEL: G21 G32 M14
    Date: 2022–05
  24. By: Rau, Moritz; Seufert, Günter; Westphal, Kirsten
    Abstract: The EU and Germany have set themselves ambitious climate and energy policy targets. Taking into account the need to reduce emissions from all sectors of the economy, they now have a different perspective on the energy situation in the Eastern Mediterranean than a few years ago.
    Date: 2022
  25. By: Ramos Murillo, Erick
    Abstract: Achieving the SDG goals will require enormous financing efforts from governments and the private sector. Green bonds have been emerging as a useful tool to help finance the gap for SDGs and have been expected to deliver some financial advantages. Nevertheless, there has not been strong evidence of this. This research finds initial evidence of a possible financial advantage for issuers. That is, green bonds’ issuances yields spiked lower during the Covid19 selloff versus their non-green comparables. There are several potential explanations for this and not enough data to point at one but this paper explores investor composition as a potential factor and finds some evidence of different investor behavior.
    Keywords: Greenium, green bonds, investor base, investor composition, MDBs, multilateral development banks, green issuances, yields, thematic bonds, financial advantages, financial markets, fixed income securities, sovereign issuances, sovereign bonds.
    JEL: F47 G01 G11 G12 G15 Q56
    Date: 2022–05–21
  26. By: Andreas Teichgraeber; John Van Reenen
    Abstract: What research and innovation (R&I) policies should Europe adopt? The world faces a challenge to rebuild after the pandemic, but also faces the same structural slowdown of productivity growth that occurred in the decades before the COVID crisis. We need to have a plan around innovation policy to address the challenge. We show that Europe is less innovative on many dimensions compared to other advanced regions, such as the US and parts of Asia. We review the econometric evidence on R&I policies and argue that there is good evidence for the efficacy of many of them. A mix of R&D subsidies, reinvigorated competition and a big push on expanding the quantity and quality of human capital is needed. These could be bound together around the need for green innovation in order to achieve the mission to radically reduce carbon emissions.
    Keywords: innovation, R&D, human capital, Europe
    Date: 2022–12
  27. By: Wendt, Charlotte; Benlian, Alexander
    Date: 2022
  28. By: Sa'd Shannak; Jeyhun Mikayilov; Rubal Dua (King Abdullah Petroleum Studies and Research Center)
    Abstract: In light of Saudi Arabia’s recent energy-pricing reform strategy, this paper investigates the main drivers of fuel carbon dioxide (CO2) emissions in the transport sector. We employed a battery of econometric techniques to analyze the long-run relationships between income, fuel prices, energy share, population, and total carbon emissions in the transportation sector.
    Keywords: Agent Based modeling, Analytics, Applied Research, Autometrics
    Date: 2022–05–22
  29. By: I. Jianu; S. M. Jeloaica; M. D. Tudorache
    Abstract: This paper assesses the effects of greenhouse gas emissions drivers in EU-27 over the period 2010-2019, using a Panel EGLS model with period fixed effects. In particular, we focused our research on studying the effects of GDP, renewable energy, households energy consumption and waste on the greenhouse gas emissions. In this regard, we found a positive relationship between three independent variables (real GDP per capita, households final consumption per capita and waste generation per capita) and greenhouse gas emissions per capita, while the effect of the share of renewable energy in gross final energy consumption on the dependent variable proved to be negative, but quite low. In addition, we demonstrate that the main challenge that affects greenhouse gas emissions is related to the structure of households energy consumption, which is generally composed by environmentally harmful fuels. This suggests the need to make greater efforts to support the shift to a green economy based on a higher energy efficiency.
    Date: 2022–04
  30. By: Fremerey, Melinda; Gerards Iglesias, Simon; Hüther, Michael
    Abstract: Die verschärften Klimaziele der Europäischen Union für 2050 und 2030 ("Fit for 55") erfordern neue klimapolitische Maßnahmen, um neben der Erreichung jener Ziele auch die Wettbewerbsfähigkeit der europäischen Industrie zu wahren. Dazu soll die in Europa bislang kostenlose Zuteilung der EU-EHS Zertifikate an energieintensive Unternehmen schrittweise auslaufen und gleichzeitig ein Mechanismus geschaffen werden, der europäische Produzenten vor Wettbewerbsverlusten gegenüber im Ausland produzierenden Unternehmen schützen soll. Mit dem CO2-Grenzausgleichsmechanismus, CBAM, hat die Europäische Kommission ein Instrument geschaffen, das die europäische CO2-Bepreisung auf eine transnationale Ebene hebt. Ziel dieses Mechanismus ist es, auch die im Ausland produzierten Emissionen einzupreisen. Neben der unklaren WTOKonformität dieses Mechanismus, weist der derzeitige Vorschlag einige entscheidende wirtschaftspolitischen Lücken auf. Insbesondere für die exportorientierten Industriebranchen reichen die bisherigen Regelungen dieses Mechanismus nicht aus, um Wettbewerbsnachteile auszugleichen. Bei der Implementierung des CBAM müssen daher einige bislang unberücksichtigte Aspekte beachtet werden: Durch den geplanten Wegfall der kostenlosen Zuteilung von EU-EHS Zertifikaten an emissionsreiche Industrien muss eine Exportrabattierung gewährleistet werden. Außerdem sollten nicht nur Grundstoffproduzenten, sondern auch nachgelagerte Industrien dem CBAM unterliegen, die durch die Weitergabe der erhöhten Zertifikatskosten aus der Grundstoffindustrie ebenfalls höheren CO2-Kosten ausgesetzt sind. Ferner ist weiterhin dafür zu sorgen, dass eine internationale verbindliche und gleichwertige Bepreisung von CO2 stattfinden. Hierbei bildet die Einrichtung von "Klimaclubs" eine effektive Lösung.
    Date: 2022
  31. By: Bharadwaj Satchidanandan; Mardavij Roozbehani; Munther A. Dahleh
    Abstract: We present a two-stage mechanism for creating markets for demand response. Demand response involves system operators using incentives to modulate electricity consumption around peak hours or when faced with an incidental supply shortage. However, system operators typically have imperfect information about their customers' counterfactual consumption, that is, their consumption had the incentive been absent. The standard approach to estimate the reduction in a customer's electricity consumption then is to estimate their counterfactual baseline. However, this approach is not robust to estimation errors or strategic exploitation by the consumers and can potentially lead to overpayments to customers who do not reduce their consumption and underpayments to those who do. In addition, the incentive payments are often designed based on models of consumer behavior or other ad-hoc rules that are only partially accurate at best. The two-stage mechanism proposed in this paper circumvents the aforementioned issues. In the day-ahead market, the participating loads submit the probability distribution of their next-day consumption. In real-time, if and when called upon for demand response, the loads report the realization of their baseline demand and receive credit for reductions below their reported baseline. The mechanism guarantees ex post incentive compatibility of truthful reporting of the probability distribution in the day-ahead market and truthful reporting of the realized baseline demand in real-time. The mechanism can be viewed as an extension of the celebrated Vickrey-Clarke-Groves mechanism augmented with a carefully crafted second-stage penalty for deviations from the day-ahead bids.
    Date: 2022–05
  32. By: Christian Hauenstein; Franziska Holz; Lennart Rathje; Thomas Mitterecker
    Abstract: Steam coal exporters face increasing uncertainty about future coal demand and risks of asset stranding. Nevertheless, new export-oriented coal mine projects are still brought forward. In this study, we use the coal sector model COALMOD-World to assess the economic prospects of investments in the export-oriented steam coal sector, and in particular of coal mines in the Galilee Basin, Australia. We parameterize coal mining in the Galilee Basin based on the Carmichael coal mine and export project specifics. We construct three coal demand scenarios with varying climate policy ambitions based on bottom-up coal sector data of the major coal consuming countries in Asia. We find that, even under most optimistic assumptions, new coal mines in the Galilee Basin are not economically viable in the longrun and prone to become stranded assets. In other Australian basins only very limited investments are required in the most conservative demand scenarios and only to replace exhausted coal mining capacities. Australian steam coal production decreases significantly in all scenarios due to down-phasing domestic demand and shrinking export opportunities. Investments in other world regions are only viable in the most conservative demand scenario. Any new investments in steam coal supply in Australia and globally, and particularly in export-oriented coal supply, are at risk of becoming stranded assets.
    Keywords: Coal, international coal trade, stranded assets, numerical modeling, scenarios, Galilee Basin, Australia, Asia
    JEL: Q31 Q37 Q47 L72 C61
    Date: 2022
  33. By: Daniel Berkowitz; Andrew J. Boslett; Jason Brown; Jeremy G. Weber
    Abstract: To study how income expectations affect borrowing, we use leased natural gas rights in Texas in the mid-2000s, which created potential for future leaseholder income without loosening credit constraints. In matching 11,000 leaseholders with non-leaseholders selected from a screened pool of 5.2 million, we find that the average leaseholder borrowed $13,000 more over the 2003–08 leasing boom. A consumption-smoothing model indicates that leaseholders’ income expectations aligned with forecasts of persistently high natural gas prices. Yet, the unforeseeable success of fracking was associated with reduced prices and increased bankruptcies during 2009–19 for non-prime leaseholders as well as fracking firms.
    Keywords: Income shocks; Consumer debt; Bankruptcy; Resource booms
    JEL: D12 G51 Q33
    Date: 2022–05–23
  34. By: Grinschgl, Julian; Pepe, Jacopo Maria; Westphal, Kirsten
    Abstract: The global implications of a switch to hydrogen (H2) are far-reaching, as hydrogen will, at least in part, gradually replace the oil and gas trade, and new international trade flows will emerge. In addition, hydrogen will transform the industry, and its use will have disruptive effects that reshape the economic geography. Policymakers are being called upon to make far-reaching, fundamental decisions that will decisively shape the contours of the hydrogen world. Germany and the European Union (EU) should consider the geo-economic and political consequences when setting the course.
    Date: 2021
  35. By: Mercy T. Musakwa; Nicholas M. Odhiambo
    Abstract: This study investigated the impact of energy consumption on human development in South Africa, using annual data from 1990 to 2019. The study used disaggregated data on energy measures namely: oil products consumption; electricity consumption; renewable energy consumption; natural gas; coal and lignite; and total energy consumption at an aggregate level. Human Development Index (HDI) was used as a measure of human development. By employing autoregressive distributed lag bounds test to cointegration and error correction model, the study found the impact of energy consumption on human development to be positive in the short run when renewable energy was used as a proxy, but insignificant in the long run. When oil products, natural gas and total energy were used as proxies for energy, a negative impact was confirmed in the short run, while an insignificant impact was confirmed in the long run. When electricity, coal and lignite were used as proxies for energy, an insignificant impact was confirmed, irrespective of the time frame considered. The results revealed that the positive impact of renewable energy on human development is not big enough to offset the negative impact of other energy sources. This suggests that South Africa has to continue to expand renewable energy if a positive impact of energy on human development is to be realised.
  36. By: Silvia Bertarelli (Department of Economics and Management, Università di Ferrara); Chiara Lodi (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); Stefania Ragni (Department of Economics and Management, Università di Ferrara)
    Abstract: The current debate on non-renewable resources has been increasingly recognizing their critical role over time, since natural reserves are dramatically decreasing. We aim at studying non-renewable resource management when extraction from natural reserves and recycling are considered, as well as the impact of technological progress on consumption and welfare in the short-run term. Mathematical modelling may provide significant help to policymakers in devising suitable strategies for social welfare optimization and environmental conservation. In this direction, we introduce an optimal control model for allocating labor between mining and recycling over a finite time horizon; specifically, we aim at optimally manage virgin resource depletion and waste accumulation. Actually, a suitable scrap value function is involved in the optimization process, in order to account for the issue of reducing waste accumulation and preserving natural stock in the forthcoming future. We analyze the problem and provide the necessary optimality conditions.
    Keywords: Non-renewable resource; Recycling; Optimal control; Waste disposal
    Date: 2022
  37. By: Dang, Hai-Anh (World Bank); Trinh, Trong-Anh (University of Melbourne)
    Abstract: Despite a vast literature documenting the negative effects of climate change on various socio-economic outcomes, little, if any, evidence exists on the global impacts of hotter temperature on poverty. Analyzing a new global dataset of subnational poverty in 166 countries, we find higher temperature to increase poverty. This finding is robust to various model specifications, data samples, and measures of temperature. Our preferred specification shows that a 1˚C increase leads to a 2.1 percent increase in the headcount poverty rate, using the US$ 1.90 daily poverty threshold. Regional heterogeneity exists, with Sub-Saharan African countries being most vulnerable to higher temperature. We find suggestive evidence that reduction in crop yields could be a key channel that explains the effects of rising temperature. Further simulation indicate that global warming can significantly increase poverty, with more pronounced effects occurring in poorer regions and under scenarios of higher greenhouse gas emissions without mitigation policies.
    Keywords: climate change, global warming, poverty, agriculture
    JEL: Q54 I32 O1
    Date: 2022–05
  38. By: Dröge, Susanne; Geden, Oliver
    Abstract: International climate negotiations at the 26th Conference of the Parties (COP26) in Glasgow were surprisingly productive. The Glasgow Climate Pact adds new tasks to the already full climate agendas of the European Union and its member states. Euro­pean policy makers will need to focus even more on limiting the long-term temperature increase to 1.5 degrees Celsius and to secure adequate commitments and action by the biggest global greenhouse gas emitters - all before the next COP in Egypt (COP27) at the end of 2022. Climate financing also needs to be secured in a manner that generates trust on the part of the developing countries. Germany's G7 presidency in 2022 will be crucial for accelerating international climate cooperation. The German government must also work to involve the G20 states and push to speed up adoption of the European Union's Fit for 55 package.
    Date: 2022
  39. By: Bettina Chlond (University of Heidelberg); Timo Goeschl (University of Heidelberg); Martin Kesternich (University of Kassel)
    Abstract: We contribute to the literature on how program design affects program performance among vulnerable groups by studying the effects of varying the subsidy level and program procedures in an energy effciency assistance program targeting low-income households in Germany. Eligible households receive, upon enrolment, a voucher to subsidize refrigerator replacement. The voucher is redeemed against cash following replacement. Observing the decisions of 77,305 eligible households, our RDD design exploits two quasi-exogenous temporal discontinuities in voucher value and program procedures. We find that a switch from automatic to elective enrolment and more rigid voucher terms reduces the number of vouchers in circulation, but raises the replacement rate among eligible households, the key performance metric, by 4 to 10 percentage points, consistent with psychological theories of goal setting and time management. A subsidy increase of €50 raises replacement rates by 9 to 16 percentage points. The effect of procedural changes is equivalent to an additional €34 in subsidy. Back-of-the-envelope calculations highlight that low-cost changes in procedures that target the behavioral responses of low-income households represent plausible areas of unexploited economies in program design and merit systematic investigation.
    Keywords: Public behavioral economics, energy efficiency, low-income households, durable replacement, energy poverty, technology adoption.
    JEL: C25 D15 H23 O33 Q20
    Date: 2022
  40. By: António R. Antunes; Bernardino Adão; João Valle e Azevedo; Nuno Lourenço; Miguel Gouveia
    Abstract: This work presents in an accessible way the functioning of the natural climate system and the mechanisms through which global warming occurs. The warming of the Earth’s surface and the evolution of precipitation throughout the 20th century are documented, including for the Portuguese case. The channels of transmission of climate change to the economy are also analysed. The likely impact on the level of global GDP is negative, with a range of estimates very sensitive to the occurrence of phenomena that are difficult to predict. It also discusses economic policy proposals addressing the problem of fossil carbon emissions. Significant carbon taxation will likely have to coexist with the existing carbon emission permit system. The role of central banks in mitigating the effects of excessive CO2 emissions is analysed, highlighting regulatory reporting with a focus on environmental issues and the assumption of concerns related to sustainability and corporate responsibility. Finally, modelbased estimates of economic costs associated to climate change are presented. In this example, we conclude that the adoption of an optimal global policy would save Portugal about 0.5ºC of warming.
    JEL: E21 E60 F40
    Date: 2022

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