nep-ene New Economics Papers
on Energy Economics
Issue of 2022‒07‒11
37 papers chosen by
Roger Fouquet
London School of Economics

  1. Collaboration, Decarbonization, and Distributional Effects By Mathias Mier; Kais Siala; Kristina Govorukha; Philip Mayer
  2. Decarbonization and Electrification in the Long Run By Stephen P. Holland; Erin T. Mansur; Andrew J. Yates
  3. Technology Lock-In and Optimal Carbon Pricing By Jonathan T. Hawkins-Pierot; Katherine R. H. Wagner
  4. The impact of the Russia-Ukraine conflict on the green energy transition – A capital market perspective By Martin Nerlinger; Sebastian Utz
  5. Comparative Analysis of the Growth Impact of Pollution and Energy Use in Selected West African Nations By Ekundayo Peter Mesagan; Emeka Osuji; Hope Agbonrofo
  6. Does Public Capital Expenditure Reduce Energy Poverty? Evidence from Nigeria By Stephen K. Dimnwobi; Favour C. Onuoha; Benedict I. Uzoechina; Chukwunonso Ekesiobi; Ebele S. Nwokoye
  7. Tackling air pollution in dense urban areas: The case of Santiago, Chile By Ioannis Tikoudis; Walid Oueslati; Tobias Udsholt
  8. Do Incentives Make a Difference? Understanding Smart Charging Program Adoption for Electric Vehicles By Wong, Stephen D. PhD; Shaheen, Susan A. PhD; Martin, Elliot PhD; Uyeki, Robert
  9. The Dynamic Impact of Market Integration: Evidence from renewable energy expansion in Chile By Luis E. GONZALES; ITO Koichiro; Mar REGUANT
  10. Greening our Laws: Revising Land Acquisition Law for Coal Mining in India By Srivastav, Sugandha; Singh, Tanmay
  11. Reducing emissions from the energy sector for a more resilient and low-carbon post-pandemic recovery in Latin America and the Caribbean By Grottera, Carolina
  12. The Great Carbon Arbitrage By Kleinnijenhuis, Alissa; Adrian, Tobias; Bolton, Patrick
  13. Un imaginaire fossilisé ? Les représentations économiques de l'énergie au défi de la transition bas-carbone By Antoine Missemer
  14. Green New Deal for Carbon-neutrality and Open Trade Policy in Korea By Lee, Jukwan; Kim, Jong Duk; Moon, Jinyoung; Eom, Jun-Hyun; Kim, Ji Hyeon; Suh, Jungmin
  15. Abuse of dominance in intraday coupled electricity markets/ Impact onmarket integration of renewables By Podlesnaya Alina
  16. Connecting Ukraine to Europe's electricity grid: Technical details and hard geopolitics By Feldhaus, Lukas; Westphal, Kirsten; Zachmann, Georg
  17. Are EU firms climate-ready? Micro evidence from EIBIS By Kalantzis, Fotios; Dominguez, Sofia
  18. Nord Stream 2 - Germany's dilemma By Westphal, Kirsten
  19. Environmental Subsidies to Mitigate Transition Risk By Eric Jondeau; Gregory Levieuge; Jean-Guillaume Sahuc; Gauthier Vermandel
  20. Innovation, growth and the transition to net-zero emissions By Nicholas Stern; Anna Valero
  21. The Welfare Implications of Carbon Price Certainty By Joseph E. Aldy; Sarah C. Armitage
  22. The Biden administration's Global Posture Review: Washington seeks to expand US military presence in Indo-Pacific without neglecting Europe By Overhaus, Marco
  23. Nord Stream 2 and the energy security dilemma: Opportunities, options and obstacles for a grand bargain By Shagina, Maria; Westphal, Kirsten
  24. How to determine bottom-up model-derived marginal CO2 abatement cost curves with high temporal, sectoral, and techno-economic resolution? By Misconel, Steffi; Prina, Matteo Giacomo; Hobbie, Hannes; Möst, Dominik; Sparber, Wolfram
  25. Innovation Begets Innovation and Concentration: The Case of Upstream Oil & Gas in the North Sea By Michele Fioretti; Alessandro Iaria; Aljoscha Janssen; Cl\'ement Mazet-Sonilhac; Robert K. Perrons
  26. Targets in International Climate Policyː (Mis)understanding Two Degrees? By Otto, Felix; Held, Hermann
  27. VECM Modelling of the Price Dynamics for Fuels, Agricultural Commodities and Biofuels By Janda, Karel; Kravec, Peter
  28. Oferta de ônibus elétrico no Brasil em um cenário de recuperação econômica de baixo carbono By Barassa, Edgar; Ferreira da Cruz, Robson; Galvão Diniz Faria, Lourenço; Marques do Prado Tanure, Tarik; Bermúdez Rodríguez, Tatiana; Rigon, Vagner
  29. A novel to influence public policy? The role of New Zealand in climate migration and the occupation of Antarctica By Jeff Murray; Jessica Maufort
  30. Michel S & Vessat A. (2022) « Tarification de l'électricité dans un contexte de transition énergétique en Afrique subsaharienne » in : Gérardin H., Damette O. & Brot J (Dir) Transitions énergétiques et développement, Louvain-la-Neuve, EME Editions : 133-154 By Sandrine Michel; Alexis Vessat
  31. Wind Turbine Placement and Externalities By Mathias Mier; Patrick Hoffmann
  32. Philippines: Financial Sector Assessment Program-Technical Note on Bank Stress Test for Climate Change Risks By International Monetary Fund
  33. Toward achieving sustainable development agenda: Nexus between Agriculture, Trade Openness, and Oil rents in Nigeria By Festus F. Adedoyin; Olawumi A. Osundina; Festus V. Bekun; Simplice A. Asongu
  34. Environmental Dimensions of Biofuels By Benes, Ondrej; Janda, Karel
  35. Environmental corporate social responsibility, R&D and disclosure of “green” innovation knowledge By Bárcena-Ruiz, Juan Carlos; Garzón, Maria Begoña; Sagasta, Amagoia
  36. Foreign Ownership and Robot Adoption By Fabrizio Leone
  37. Zurück in die Zukunft? Die internationale Klimapolitik 2021. Neue Konstellationen für die europäische Klimadiplomatie By Dröge, Susanne; Schrader, Tessa-Sophie

  1. By: Mathias Mier; Kais Siala; Kristina Govorukha; Philip Mayer
    Abstract: We conduct a hybrid scenario exercise to analyze decarbonization pathways of the European power market and related distributional effects across countries as well as between consumers and producers. Our CIB analysis reveals qualitative scenarios that differ in the level of political (stringency of climate policy) and physical collaboration (transmission grid expansion). We use a CGE model to quantify those scenarios for further usage in a power market model. Consumers generally experience considerably higher electricity prices, whereas producers observe higher rents. Electricity prices are lowest in the least collaborative future. Producer rents in turn are highest in the most collaborative one. Patterns hugely differ by country, making 13 countries to profiteers of the least collaborative future and 12 countries to profiteers of the most collaborative one. Only 3 countries profit from medium collaboration. Countries that profit from the most collaborative future experience substantially higher producer rents. Countries that profit from the least collaborative one in turn experience lowest electricity prices.
    Keywords: Hybrid scenario analysis, CIB method, CGE modeling, energy system modeling, power market modeling, collaboration, decarbonization, energy transition, distributional effects
    JEL: C61 Q40 Q41 Q52
    Date: 2022
  2. By: Stephen P. Holland; Erin T. Mansur; Andrew J. Yates
    Abstract: Decarbonization and electrification will require a transformed electricity grid. Our long-run model of entry and exit of generation and storage capacity captures crucial aspects of the electricity industry such as time-varying demand for electricity, intermittency of renewables, and intertemporal optimization of storage. We derive several theoretical possibilities that differ in surprising ways from short-run intuition: A carbon tax can increase electricity consumption; cheaper storage can decrease renewable capacity; cheaper renewables can increase carbon emissions; and an increase in electricity demand (e.g., electrification) can decrease emissions. We calibrate the model using 2019 hourly data on demand and renewable availability for thirteen regions covering the contiguous U.S. A carbon price of $150 or more essentially eliminates carbon emissions. Given a modest decarbonization goal, a renewable subsidy performs better than a nuclear subsidy, but this ranking is reversed for an ambitious decarbonization goal. Transmission expansion yields large emissions reductions if renewable costs fall sufficiently, but policies promoting storage are unlikely to yield significant benefits. Electrifying 100% of car miles traveled (thereby eliminating gasoline vehicle carbon emissions) increases electricity-sector carbon emissions by 23-27% if vehicles are charged at night, but could decrease electricity-sector carbon emissions if vehicles are charged during the day.
    JEL: H23 Q4 Q53 Q54
    Date: 2022–05
  3. By: Jonathan T. Hawkins-Pierot; Katherine R. H. Wagner
    Abstract: This paper studies the implications of energy prices today for energy efficiency and climate policy in the future. If adjustment costs mediate manufacturing plants’ responses to increases in energy prices, incumbents may be limited in their ability to re-optimize energy-inefficient production technologies chosen based on past market conditions. Using U.S. Census microdata and quasi-experimental variation in energy prices, we first show that the initial electricity prices that manufacturing plants pay in their first year of operations are important determinants of long-run energy intensity. Plants that open when the prices of electricity and fossil fuel inputs into electricity are low consume more energy throughout their lifetime, regardless of current electricity prices. We then estimate that the productivity of energy inputs is persistently lower for plants that open when electricity is cheap, and these differences in relative input productivities can fully explain the effects of entry-year electricity prices on subsequent energy intensity. We discuss how this “technology lock-in” increases the emissions costs of delayed action on carbon policy.
    Date: 2022
  4. By: Martin Nerlinger (University of St. Gallen - School of Finance and Swiss Finance Institute); Sebastian Utz (University of St. Gallen - School of Finance)
    Abstract: We investigate whether the Russia-Ukraine conflict has affected investors' assessment concerning a green energy transition. Based on a global energy sector sample, we apply an event study around the invasion on February 24, 2022. We find that energy firms' CAAR are positive around the event. Renewable energy firms generated comparably low abnormal returns than coal, oil and gas, and uranium. This pattern prevails except in North America, where they show the second-highest CAAR in 41 days around the event. Therefore, the Russia-Ukraine conflict appears not to entirely change the investors' assessment of a possible acceleration of a green energy transition.
    Keywords: Russia-Ukraine conflict, energy, transition, event study, climate change
    JEL: G14 G15 Q42 Q54
    Date: 2022–06
  5. By: Ekundayo Peter Mesagan (Pan Atlantic University, Lagos, Nigeria); Emeka Osuji (Pan Atlantic University, Lagos, Nigeria); Hope Agbonrofo (Pan Atlantic University, Lagos, Nigeria)
    Abstract: We adopt the FMOLS and Granger causality technique to analyse the effect of energy use and carbon emissions on output growth in selected West African economies, which includes Nigeria, Gambia and Ghana, from 1970 to 2019. Findings confirm that energy use enhances growth in the three selected West African economies. But in terms of significance, energy consumption is significant in Nigeria and Gambia at a 1% level of significance while it is insignificant for the Gambia. CO2 emission positively and significantly propels economic growth for the three selected West African economies. For Nigeria, causality evidence shows no direct influence among the variables. For Ghana, we find a bi-causal association between output growth and carbon emissions and a unidirectional causality from pollution to energy consumption. For Gambia, economic growth causes CO2 emissions. We recommend that the West African government reinforce their stand on a sustainable growth path through energy conservation.
    Keywords: Energy Use, Pollution, Output Growth, West Africa
    JEL: O44 O55 Q40 Q53
    Date: 2022–01
  6. By: Stephen K. Dimnwobi (NnamdiAzikiwe University Awka, Nigeria); Favour C. Onuoha (Abakaliki, Nigeria); Benedict I. Uzoechina (NnamdiAzikiwe University Awka, Nigeria); Chukwunonso Ekesiobi (Igbariam, Nigeria); Ebele S. Nwokoye (NnamdiAzikiwe University Awka, Nigeria)
    Abstract: Purpose - Given the ever-growing fiscal commitments of Nigeria and her chequered history of electricity generation and distribution, the fortunes of the energy sector in the country have been affected by the prevalence of energy poverty. Government policies such as public capital expenditure (PCE) present a crucial option for reducing energy poverty in Nigeria, providing the research impetus for this study. Design/methodology/approach -To investigate the relationship between government capital spending and five distinct energy poverty proxies, this research applies the Bayer-Hanck cointegration system and the Auto-Regressive Distributed Lag (ARDL) bound test. Findings -The findings indicate that public capital spending in Nigeria worsens energy poverty by reducing access to electricity, urban electrification, renewable energy consumption, and renewable electricity generation, with a positive but insignificant influence on rural electrification. Originality/value – This inquiry presents a pioneering investigation of the nexus between PCE and energy poverty in Nigeria. Also, aside from the variables of energy poverty adopted by existing studies, this study incorporates renewable energy consumption and renewable electricity output with implications for energy poverty and sustainable development.
    Keywords: Public Capital Expenditure, Energy Poverty, Electricity, Nigeria
    Date: 2022–01
  7. By: Ioannis Tikoudis; Walid Oueslati; Tobias Udsholt
    Abstract: Reducing air pollution is a major policy challenge, especially in densely populated urban areas where human exposure to emissions is considerable. This paper develops and examines a series of scenarios for the evolution of transport-related emissions in the area of Santiago, Chile. The analysis suggests that ramping up efforts to electrify the bus fleet may eliminate 25% of the CO2 and at least 10% of the remaining air pollutant emissions in 2050. These figures increase to 45% and 30%, respectively, if rapid electrification is accompanied by tax schemes. The paper highlights the potential synergies of policies curbing climate change and tacking air pollution from the viewpoint of urban transport.
    Keywords: air pollution, bus electrification, carbon tax, road pricing, urban transport
    JEL: Q52 Q53 Q55 R13 R41 R48 H23
    Date: 2022–06–16
  8. By: Wong, Stephen D. PhD; Shaheen, Susan A. PhD; Martin, Elliot PhD; Uyeki, Robert
    Abstract: Climate change and environmental problems have spurred new strategies to reduce fossil fuel consumption in transportation. Two important strategies include a rapid transition to green energy and the replacement of internal combustion vehicles with electric vehicles (EVs). However, the increasing demand for electricity by EVs, especially from time-dependent green sources of energy (e.g., solar, wind), will likely overload the grid at peak hours. Rather than build costly infrastructure improvements for distribution and generation, smart charging programs for EVs could defer charging to off-peak times and better match demand with supply. Yet, little is currently known about people’s willingness to participate in a program and relinquish control of charging to a third party.
    Keywords: Engineering
    Date: 2022–06–01
  9. By: Luis E. GONZALES; ITO Koichiro; Mar REGUANT
    Abstract: Effective and economical expansion of renewable energy is one of the most urgent and important challenges in addressing climate change. However, many countries are facing a problem because existing network infrastructures (i.e., transmission networks) were not originally built to accommodate renewables, which creates disconnected networks between demand centers and renewable supply sources. In this paper, we study the static and dynamic impacts of market integration on renewable energy expansion. Our theory highlights that statically, market integration improves allocative efficiency through gains from trade, and dynamically, it incentivizes new entry of renewable power plants. Using two recent grid expansions in the Chilean electricity market, we empirically test our theoretical predictions and show that the commonly-used event study estimation underestimates the dynamic benefits if renewable investments occur in anticipation of market integration. We build a structural model of power plant entry and show how to correct for such bias. We find that market integration resulted in price convergence across regions, increases in renewable generation, and decreases in generation cost and emission of pollutants. Furthermore, a substantial amount of renewable entry would not have occurred in the absence of market integration. We show that ignoring this dynamic effect would substantially understate the benefits of transmission investments.
    Date: 2022–05
  10. By: Srivastav, Sugandha; Singh, Tanmay
    Abstract: Laws that govern land acquisition can lock in old paradigms. We study one such case: the Coal Bearing Areas Act of 1957 (CBAA) which unlike the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR) provides minimal social and environmental safeguards. The lack of due diligence processes in the CBAA confers an undue comparative advantage to coal development, a facet of policy that is at odds with India's current stance to phasedown coal use, reduce air pollution, and advance modern, low-carbon energy to achieve net-zero emissions. In the decades since the CBAA was written, the local context has significantly changed: the environmental and social costs of dirty energy are clearer, and low-carbon alternatives are cost competitive. We recommend updating land acquisition laws to bring coal under the general purview of LARR or, at minimum, amending CBAA to ensure adequate environmental and social safeguards are in place, both in letter and practice.
    Keywords: coal, land acquisition, net-zero, environmental protection, social impact assessment, rehabilitation and resettlement
    Date: 2022–06
  11. By: Grottera, Carolina
    Abstract: Economic crises are not new, but the way countries respond to and seek to build back from their effects is an ever-evolving process. In the present context, the strategies adopted by Latin American and Caribbean countries to recover from the dramatic impacts of the coronavirus disease (COVID-19) pandemic are marked by an urgent need to also address the climate crisis. This publication examines the synergies and linkages between post-COVID-19 crisis recovery approaches stemming from a sustainable energy transition in Latin America and the Caribbean. The study aims to identify recovery strategies for key sectors and technologies based on policies, institutions, regulations and investments that can represent a big push for more sustainable ways to produce and consume energy and the decarbonization of the economy.
    Date: 2022–04–28
  12. By: Kleinnijenhuis, Alissa; Adrian, Tobias; Bolton, Patrick
    Abstract: We measure the gains from phasing out coal as the social cost of carbon times the quantity of avoided emissions. By comparing the present value of the benefits from avoided emissions against the present value of costs of ending coal plus the costs of replacing it with renewable energy, our baseline estimate is that the world can realize a net gain of 77.89 trillion USD. This represents around 1.2% of current world GDP every year until 2100. The net benefits from ending coal are so large that renewed efforts, carbon pricing, and other financing policies we discuss, should be pursued. The IMF working paper can be found here: ssues/2022/05/31/The-Great-Carbon-Arbitr age-518464
    Date: 2022–06
  13. By: Antoine Missemer (CNRS - Centre National de la Recherche Scientifique, 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)
    Abstract: The energy transition towards a low-carbon regime is a critical challenge for the 21st century. It is not only a matter of techniques, but also of social organization and cultural representations. This article explores how the ordinary economic representations of energy have been developed since the 19th century, and how they have influenced public decision-making. Through the examples of forecasting and of the distinction renewable vs. exhaustible resources, this article suggests that path dependencies still weight upon those views. When thinking about the low-carbon transition, getting out of these dependencies seems essential.
    Abstract: La transition d'un régime énergétique fossile vers un régime bas-carbone est l'un des grands défis du XXIe siècle. Le sujet n'est pas seulement technique, mais aussi organisationnel et culturel, touchant aux représentations et aux usages de l'énergie. Cet article revient sur la façon dont se sont construites les représentations économiques conventionnelles de l'énergie depuis le XIXe siècle, influençant ici et là la décision publique. À travers les exemples de la prospective et de la distinction renouvelables vs. épuisables, cet article suggère que des dépendances au sentier pèsent toujours sur ces représentations, et qu'à l'heure de penser la transition bas-carbone, sortir de ces dépendances semble essentiel.
    Keywords: energy,history of economic thought,forecasting,energy transition,path dependency,performativity,énergie,histoire de la pensée économique,prospective,transition énergétique,dépendance au sentier,performativité
    Date: 2022
    Abstract: This study focuses on Korea’s Green New Deal policy and global response measures to climate change that affect international trade. A trade policy perspective and approach have been applied while reviewing the carbon-neutral policy pursued by the Green New Deal. We attempted through an empirical analysis to determine whether the expansion of openness helps reduce carbon emissions and simulate the impact of a carbon-neutral policy, such as the EU's carbon border adjustment, on the global economy under global production networks. In addition, the amount of financial support from Korea's Green New Deal needed to offset the negative economic effects of other countries’ independent carbon-neutral policies was derived. This study finally suggests that the effect of the Green New Deal can be expanded through the restoration of openness and global cooperation.
    Keywords: Green New Deal; Carbon-neutrality; Open Trade Policy; Korea
    Date: 2022–05–24
  15. By: Podlesnaya Alina (Department of Economics, Lomonosov Moscow State University)
    Abstract: Electricity market coupling aimed at reducing electricity price differential by optimizing cross-border capacity allocation is the main mechanism of the EU electricity market integration. The paper considers the problem of the abuse of dominance in intraday coupled electricity markets and the consequences of this abuse for the market integration of renewables. The paper found that the abuse of dominance in coupled markets could occur when the owner of essential facilities (i.e. power exchange) prohibits his competitors access to the infrastructure necessary for the intraday coupled auctions (i.e. shared order book). Since intraday coupled auctions combine two main instruments of market integration of renewables, i.e. close to real time trading and optimization of cross-border capacity allocation, distortion of competition in intraday coupled electricity markets can prevent efficient market integration of renewables and the greening of the power industry.
    Keywords: market coupling, intraday electricity market, renewables, abuse of dominance
    JEL: K21 L40 L41 Q20
    Date: 2022–04
  16. By: Feldhaus, Lukas; Westphal, Kirsten; Zachmann, Georg
    Abstract: Connecting Ukraine to the continental European power grid and the EU's electricity market is on the political agenda. However, establishing the necessary grid connections is technically complicated and also requires profound reforms to the Ukrainian electricity sector. But it is not only Ukraine that has to deliver; the EU and its member states will also have to make far-reaching and hugely significant geopolitical decisions. The project needs a politically coordinated roadmap that defines clear criteria and conditions for a common electricity grid.
    Date: 2021
  17. By: Kalantzis, Fotios; Dominguez, Sofia
    Abstract: This study uses unique firm-level data from EIBIS to identify EU firms' climate strategies and their associated factors. To do so, we initially run a clustering analysis that results in five distinct clusters in line with the literature and then investigate the role of various firms' characteristics in their adoption based on a multi-logit regression. Our findings show that almost half of the EU firms adopt either "wait-and-see" strategies or plan to invest in tackling climate change risks. More climate-friendly strategies appear to be positively associated with the awareness of climate-related risks, especially with firms that see the transition to a lowcarbon future as an opportunity. Similarly, those strategies are followed by large firms that are innovative, face fewer credit constraints and operate in an environment where there is a strong push for climate actions from various stakeholders. These findings are valuable as they can guide policymakers on supporting firms' transformation to play their part, as an integral part of our society, in the road to a clean, affordable, and secure energy future.
    Keywords: EIBIS,climate strategies,climate change risks,perception analysis,clustering analysis
    Date: 2022
  18. By: Westphal, Kirsten
    Abstract: The Nord Stream 2 project presents the German government with the dilemma of choosing between energy and foreign policy interests. Geopolitical arguments often prevail in the political discourse. Yet, a weighing of priorities requires a look at the energy policy context, too. When it comes to balancing interests, there are no easy or 'cheap' answers. With a focus on the energy context, it has to be emphasized that a cooperative approach toward energy transformation promises the greatest dividend for a balance of interests, but it presupposes a minimum consensus within the Euro­pean Union (EU), along with the United States (US), Ukraine, and Russia.
    Date: 2021
  19. By: Eric Jondeau (University of Lausanne - Faculty of Business and Economics (HEC Lausanne); Swiss Finance Institute; Swiss Finance Institute); Gregory Levieuge (Banque de France); Jean-Guillaume Sahuc (Banque de France; Université Paris Ouest - Nanterre, La Défense - EconomiX); Gauthier Vermandel (Ecole Polytechnique; Department of Economics, Paris-Dauphine)
    Abstract: We explore the role of public subsidies in mitigating the transition risk associated with a climate-neutral objective by 2060. We develop and estimate an environmental dynamic stochastic general equilibrium model for the world economy featuring an endogenous market structure for green products. We show that public subsidies, financed by a carbon tax, are an efficient instrument to promote firm entry into the abatement goods sector by fostering competition and lowering the selling price of such products. We estimate that the subsidy, optimally distributed between startups at 60% and existing companies at 40%, will save nearly $2.9 trillion in GDP each year by 2060.
    Keywords: Climate change, E-DSGE model, bayesian estimation, stochastic growth, endogenous firms, environment-related products
    JEL: E32 H23 Q50 Q55 Q58
    Date: 2022–05
  20. By: Nicholas Stern; Anna Valero
    Abstract: The climate crisis and the global economic impact of the Covid-19 crisis occur against a background of slowing growth and widening inequalities, which together imply an urgent need for a new environmentally sustainable and inclusive approach to growth. Investments in "clean" innovation and its diffusion are key to shaping this, accompanied by investments in complementary assets including sustainable infrastructure, and human, natural and social capital which will not only help achieve net-zero greenhouse gas emissions, but will also improve productivity, living standards and the prospects of individuals. In this article, we draw on the theoretical and empirical evidence on the opportunities, drivers and policies for innovation-led sustainable growth. We highlight the importance of a coordinated set of long-term policies and institutions that can enable and foster private sector investments in clean innovation and assets quickly and at scale. In doing so, we draw inspiration from Chris Freeman's work on the system-wide drivers of innovation, and his early vision of achieving environmental sustainability by reorienting growth.
    Keywords: innovation, sustainable growth, net-zero transition, clean technology
    Date: 2021–06–01
  21. By: Joseph E. Aldy; Sarah C. Armitage
    Abstract: Experiences in real-world pollution markets suggest that firms make persistent errors in forecasting allowance and credit prices that inform their investment decisions. The residual uncertainty characterizing allowance and credit trading means that pollution markets may fail to deliver cost-effective abatement. This contrasts with price-based policies under which firms make investments that equate marginal abatement cost to an emission tax. We incorporate the additional cost of forecast errors under quantity-based programs into a standard Weitzman-style prices versus quantities framework. We distinguish between individual firms’ uncertainty over competitors’ private information and systemic uncertainty over future cost shocks. We show that a welfare-maximizing regulator would favor price instruments in response to the prospect of firm-specific forecast errors under quantity instruments, ceteris paribus, and the relative benefit of price instruments increases with forecast error variance. We discuss the role of policy design, such as incorporating price collars, in mitigating cost-inefficiencies from price forecast errors.
    JEL: Q52 Q54 Q58
    Date: 2022–05
  22. By: Overhaus, Marco
    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
  23. By: Shagina, Maria; Westphal, Kirsten
    Abstract: Washington and Berlin have settled their differences over the gas pipeline through the Baltic Sea. For the time being, this has halted the spiralling energy security dilemma. While Washington is sending a clear signal that constructive relations with Berlin are important, the German government is now called upon to implement a variety of measures. Still, the project remains a political issue. Kyiv and Warsaw have already signalled their opposition. A grand bargain that is not only bilaterally agreed upon but also involves Ukraine and commits Russia has not yet been achieved.
    Date: 2021
  24. By: Misconel, Steffi; Prina, Matteo Giacomo; Hobbie, Hannes; Möst, Dominik; Sparber, Wolfram
    Abstract: Marginal CO2 abatement cost curves derived from bottom-up or top-down models are widely used by policymakers to determine the least-cost sequential order of decarbonization measures and the most effective decarbonization strategies. However, most model-based methods lack high temporal, sectoral, and techno-economic resolution. To address these limitations, this paper presents a linear optimization method with an hourly resolution for a sector-coupled power system to derive step-wise CO2 abatement cost curves. A step-wise marginal CO2 abatement cost curve is calculated based on hundreds of hourly dispatch model runs, giving a high level of detail on techno-economic, inter-temporal, and inter-sectoral interactions. Results demonstrate a dynamic relationship between technology-specific CO2 abatement costs, CO2 emission reductions, and total system cost development per installed decarbonization measure. Moreover, the results indicate how competing flexibility and decarbonization options interact and how least-cost decarbonization pathways can be reached.
    Keywords: decarbonization measure,flexibility option,linear optimization,marginal abatement cost curve,sector-coupling
    Date: 2022
  25. By: Michele Fioretti; Alessandro Iaria; Aljoscha Janssen; Cl\'ement Mazet-Sonilhac; Robert K. Perrons
    Abstract: We investigate the effect of technology adoption on competition by leveraging a unique dataset on production, costs, and asset characteristics for North Sea upstream oil & gas companies. Relying on heterogeneity in the geological suitability of fields and a landmark decision of the Norwegian Supreme Court that increased the returns of capital investment in Norway relative to the UK, we show that technology adoption increases market concentration. Firms with prior technology-specific know-how specialize more in fields suitable for the same technology but also invest more in high-risk-high-return fields (e.g., ultra-deep recovery), diversifying their technology portfolio and ultimately gaining larger shares of the North Sea market. Our analyses illustrate how technology adoption can lead to market concentration both directly through specialization and indirectly via experimentation.
    Date: 2022–05
  26. By: Otto, Felix; Held, Hermann
    Abstract: This article investigates the genesis and role of the 2° target in international climate policy. We identify a dual role played by temperature targets: (i) a social planner's option of decision making under uncertainty that draws on the precautionary principle, and (ii) a policy instrument to help the social planners' position become reality. Accordingly, the recent debate over the 2° target as found in the literature is actually a mutual misunderstanding: while the opponents mainly focus on the policy instrument function, the proponents focus on the social planner solution. By publishing this article, we hope to contribute to a more "targeted" dialogue in the future. In order to achieve this, the article analyses the concept of targets and argues that an environmental target always consists of three elements, namely (a) science or system knowledge, (b) norms and values, and (c) an operational perspective. Further, it investigates how targets were defined in international climate policy and how they have evolved over time. In 1997, emission targets were defined in the Kyoto Protocol. In 2015, the 2° target, based on the precautionary principle, was implemented in the Paris Agreement. Learning from the case of sulphur dioxide policy, another example of environmental policy, when considering how the 2° target could be made more effective, one might be tempted to underpin it with impact-related findings that are as concrete as possible - or to replace it with corresponding impact-based targets. However, many actors might contend that the totality of global warming impacts is still hard to judge. Accordingly, the 2° target should also serve as an expression of precaution, as an interim solution of sorts, until we acquired a more comprehensive grasp of climate impacts.
    Keywords: target,climate policy,Precautionary Principle,international environmental policy
    Date: 2022
  27. By: Janda, Karel; Kravec, Peter
    Abstract: This paper investigates the dynamics of price transmission among ethanol a biodiesel related prices on the Brazilian, US and EU markets. The prices of commodities related to the biofuels are examined under the Johansen co-integration test followed by the Vector Error Correction Model over the period 2003-2020. The period was further divided into 4 periods, defined on the base of the dynamics of world food prices. Together we had 858 weekly observations mostly captured on Friday. In most cases, our result indicates a co-movement, the strength of which changes over periods. The price transmission revealed by our estimations was stronger for Brazilian sugarcane-based ethanol and European biodiesel than for US corn-based ethanol and related commodities.
    Keywords: biodiesel,ethanol,price transmission,fuel,food
    JEL: Q42 Q54
    Date: 2022
  28. By: Barassa, Edgar; Ferreira da Cruz, Robson; Galvão Diniz Faria, Lourenço; Marques do Prado Tanure, Tarik; Bermúdez Rodríguez, Tatiana; Rigon, Vagner
    Abstract: Nota-se atualmente um momento ímpar de reflexão e prospecção de alternativas e aperfeiçoamento da mobilidade urbana. Acelerado principalmente nos últimos dez anos, esse processo tem tido como palco as grandes cidades, conglomerados urbanos e as capitais globais. Entendido numa perspectiva global, este processo tem ponderado tanto a diversificação das formas que as pessoas e bens podem se mover no espaço e território urbano, como o tipo de tecnología e sistema de propulsão que pode ser empregado para tal fim. A eletrificação é uma alternativa promissora para o alcance de uma mobilidade de baixo carbono do transporte público, onde a redução de emissões, com a ponderação dos impactos no meio ambiente e na saúde pública, tem se colocado como alvos e objetivos a serem alcançados. O Brasil tem grande potencial para o desenvolvimento da cadeia produtiva da eletromobilidade pública.
    Date: 2022–04–13
  29. By: Jeff Murray; Jessica Maufort
    Keywords: climate change fiction; climate migration; New Zealand public policy; Antarctica geopolitics; Pacific refugees; eco-catastrophe; social and environmental justice
    Date: 2021–06–01
  30. By: Sandrine Michel (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CNRS - Centre National de la Recherche Scientifique - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UM - Université de Montpellier - UPVD - Université de Perpignan Via Domitia - UPVM - Université Paul-Valéry - Montpellier 3); Alexis Vessat (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CNRS - Centre National de la Recherche Scientifique - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UM - Université de Montpellier - UPVD - Université de Perpignan Via Domitia - UPVM - Université Paul-Valéry - Montpellier 3)
    Abstract: L'accès universel à l'électricité à l'horizon de l'année 2030 est l'un des objectifs du 7ème Objectif de Développement Durable des Nations Unies. En 2020, un diagnostic intermédiaire confirme les progrès réalisés par tous les pays en développement dans cette direction. En Afrique subsaharienne (ASS) ces progrès sont lents et fragiles. Le taux d'électrification y atteint à peine 45 %. La pandémie de Covid 19 a effacé en quelques semaines près de la moitié des gains réalisés entre 2013 et 2019. Dans un contexte de changement climatique, les modalités de l'électrification sont cruciales. La baisse des coûts de production de l'électricité à partir des énergies renouvelables a permis le développement massif de solutions locales et portables pour zones rurales, incontestables fer de lance d'une transition énergétique pour l'ensemble du sous-continent. La généralisation du recours aux énergies renouvelables pour une production électrique massive, à l'échelle de celle des réseaux centralisés, reste cependant problématique. C'est ce que soulignent la part marginale des énergies renouvelables dans le mix électrique de l'Afrique subsaharienne aujourd'hui ainsi que les prévisions qui anticipent, sur ce point, de faibles progrès à horizon de 2040. A ce niveau, l'obstacle est moins technologique qu'économique et financier. Les énergies renouvelables supposent d'importants investissements dont la valorisation appelle une amélioration du fonctionnement des réseaux centralisés. Les progrès de l'accès à l'électricité conduisent donc à accorder une grande attention au réseau centralisé. En ASS comme ailleurs, rien ne s'oppose à ce que les surplus dégagés à partir du réseau centralisé soient alloués, via le subventionnement croisé entre ménages urbains et ruraux, à la multiplication de solutions décentralisées, aujourd'hui techniquement possibles grâce aux progrès techniques liés aux énergies renouvelables mais dont les coûts restent encore très élevés. En tout état de cause, ce mouvement suppose au préalable une croissance significative de l'efficacité de la production destinée aux urbains pour disposer d'un surplus transférable pour le financement de l'électrification rurale. Or, en ASS, aucun surplus de financement n'est dégagé en raison d'un ensemble de défaillances de l'offre centralisée. L'objet de cet article est de dégager les éléments saillants des limites de l'accès à l'électricité à partir de l'examen des tarifications pratiquées par les opérateurs nationaux des réseaux centralisés. Ces tarifications sont à l'interface entre les conditions globales de production de l'électricité, d'une part, et le consommateur final, d'autre part, tout en portant les politiques publiques d'accès à l'énergie. Cette question est traitée tout d'abord par l'analyse des tarifications résidentielles, qui représentent 95 % des clients des services publics d'électricité. Le caractère anti-redistributif des tarifications existantes est mis en avant. Ensuite, l'analyse des différentes subventions soutenant la consommation énergétique montre qu'elles constituent des entraves sérieuses à l'instrument tarifaire et aux objectifs qui lui sont attachés en termes d'accès. Des pistes de réflexions pour une contribution plus inclusive des tarifications en matière d'accès à l'électricité sont enfin évoquées.
    Keywords: Accès à l'électricité,tarification de l'électricité,ménages urbains,ménages ruraux,électrification rurale,subventions
    Date: 2022–04–11
  31. By: Mathias Mier; Patrick Hoffmann
    Abstract: We apply Open Street Map to identify available placement cells and Global Wind Atlas to determine average wind speeds on a 500 x 500m grid in Germany (1.3 million cells). Minimum distances to obstacles such a roads and buildings leave 535,000 potential placement cells. We calculate distance‐dependent noise and visibility damages for each placement cell by using property prices for each of the 401 German counties. We mini‐ mize the sum of externalities and project cost given a certain expansion target of average power output, thereby allowing to build two different turbine types. The externality share is 13% for the first 3,600 turbines and 52% with total damages of 293 billion e when installing 83,000 turbines (349 GW rated power). The externality share grows up to 311% with total damages of 1,409 billion e when not considering externalities in the placement process.
    Keywords: Wind turbine, placement, property prices, externality, noise, visibility
    JEL: C61 H23 Q52 R14
    Date: 2022
  32. By: International Monetary Fund
    Abstract: The Philippines is highly vulnerable to risks from climate change. The Philippines is categorized as one of the world’s most vulnerable countries to climate change and natural disasters, especially typhoons. Depending on where a severe typhoon hits the Philippines, it could potentially cause a systemic impact. All major cities and most of the population reside on the coastline, including the metropolitan Manila area where about 60 percent of economic activities take place. On the other hand, exposures to transition risk are concentrated in the coal-based power generation sector and the government’s licensing policy to build new power plants.
    Date: 2022–06–03
  33. By: Festus F. Adedoyin (Bournemouth University, United Kingdom); Olawumi A. Osundina (Ogun State, Nigeria); Festus V. Bekun (Istanbul Gelisim University, Istanbul, Turkey); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Over the years, agriculture has been considered as a panacea for long-term economic growth as believed by the physiocracy school of thought. Aligning this with the United Nations’ Sustainable Development Goals (specifically UN-SDG-2 which highlights zero hunger), the present study empirically complements existing studies by exploring the interactions between agriculture, trade openness and oil rents using annual time frequency series data from 1981-2017. A series of analysis is conducted. First, a battery of non-stationarity and stationarity unit root tests are performed; these range from the traditional Augmented Dickey-Fuller (ADF) and Phillips Perron (PP) techniques to the relatively recent Zivot Andrews (ZA) unit root test which accounts for a single structural break to ascertain stationarity properties in the variables under review. Subsequently, the recent Bayer and Hanck (2013) test in conjunction with the Johansen co-integration test were used for the co-integration analysis. Furthermore, to detect the direction of causality, the Toda-Yamamoto Granger Causality test alongside the impulse response function technique shows insightful outcomes. From the empirical results, co-integration is apparent and a long-run equilibrium relationship is traced between the outlined variables over the investigated period. The causality results and impulse response analysis highlight the existence of one-way causality links running from agriculture to trade and from trade to oil rents. These are revealing given the dwindling oil market prices. More insights are elucidated in the conclusion section accordingly.
    Keywords: Agriculture, sustainability; Bayer-Hanck cointegration; Nigeria
    JEL: Q10 O13 C32 C33
    Date: 2022–01
  34. By: Benes, Ondrej; Janda, Karel
    Abstract: This paper deals with non-economic problems of biofuel development. Firstly we look at a complex of issues surrounding the food-fuel debate, which is concerned mainly with the efficiency of use of land resources for the production of biofuel feedstock rather than for production of food for human consumption. Secondly we look at other environment and health related problems of extensive biofuels production. Lastly we briefly acknowledge the existence of a large block of socio-economic impacts of biofuels.
    Keywords: Biofuels,land,food,environment
    JEL: Q42 Q55 Q58
    Date: 2022
  35. By: Bárcena-Ruiz, Juan Carlos; Garzón, Maria Begoña; Sagasta, Amagoia
    Abstract: The literature on the environment has analyzed how firms carry out R&D to reduce their pollutant emissions, assuming that they maximize profits. However, empirical evidence shows that firms are increasingly concerned about Environmental Corporate Social Responsibility (ECSR). Following that evidence, we consider that the objective function of firms incorporates the environmental damage they generate as part of their social concern. We find that how firms perform environmental R&D depends crucially on the degree to which they care about ECSR. If that degree is low enough, firms agree to set up an Environmental Research Joint Venture (ERJV) under which they coordinate their R&D investments and fully share their technological knowledge. This is the result obtained when firms maximize profits. If the degree is high enough, firms enter into an ERJV in which each fully shares its technological expertise but they do not coordinate their R&D investments. Finally, if the degree is intermediate, firms neither set up an ERJV nor disclose information. Social welfare is the highest and environmental damage the lowest if firms form an ERJV and coordinate their R&D investments. Therefore, the way in which firms organize their R&D activities is not always the most socially preferable.
    Keywords: environmental corporate social responsibility; environmental tax; endogenous spillovers; R&D competition; Research Joint Ventures.
    JEL: D43 L13 L22 Q56
    Date: 2022–04
  36. By: Fabrizio Leone
    Abstract: This paper shows that multinational enterprises (MNEs) spur the adoption of industrial robots. First, I document a positive and robust correlation between multinational production and robot adoption using a new cross-country industry-level panel. Second, using detailed data about Spanish manufacturing, I combine a difference-in-differences approach with a propensity score reweighing estimator and provide evidence that firms switching from domestic to foreign ownership become about 10% more likely to employ robots. In terms of mechanism, increased foreign market access via the parental network generates incentives to scale-up production, and robot adoption is one way to achieve this goal. An empirical model of rm investment reveals that multinational-induced robot adoption raises productivity but decreases the labor share at the industry level. Theseresults provide new evidence about the efficiency versus equity trade-off that policymakers face when attracting MNEs.
    Keywords: Foreign Ownership, Industrial Robots, Total Factor Productivity, Factor-Biased Productivity, Labor Share
    Date: 2022–05
  37. By: Dröge, Susanne; Schrader, Tessa-Sophie
    Abstract: In der internationalen Klimapolitik soll 2021 vieles nachgeholt werden, was 2020 nicht gelungen ist. Durch die Pandemie haben sich Termine verschoben und Prozesse verlangsamt. Wo stehen die wichtigen Akteure in der Klimapolitik zu Beginn des Jahres und was bedeutet dies für die zu erwartende Dynamik in den internationalen Gesprächen? Von der EU, den USA und China werden in diesem Jahr die wichtigen Impulse ausgehen. Da diese drei Mächte aber auch in Konkurrenz zueinander stehen, muss es der EU und ihren Mitgliedstaaten gelingen, die multilaterale Zusammen­arbeit insgesamt mit Blick auf die Ziele des Pariser Abkommens zu stärken, klare An­sprüche zu formulieren und auf Einhaltung der Augenhöhe zu achten. Für Deutschland und die EU ist es deshalb wichtig, weiterhin entschieden auf ein gemeinsames Vorgehen in Netzwerken mit Partnerländern zu setzen und mit Blick auf die USA auf Kernthemen zu fokussieren. Naheliegende Felder der Kooperation mit Washington sind ein gemeinsamer diplomatischer Ansatz für die nächste internationale Klimakonferenz (COP26) und ein Zusammenführen von Klima- und Handelspolitik.
    Date: 2021

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