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

  1. Gender diversity in bank boardrooms and green lending: evidence from euro area credit register data By Leonardo Gambacorta; Alessio Reghezza; Martina Spaggiari; Livia Pancotto
  2. Climate Change, Gender Equality, and Firm-Level Innovation : Cross-Country Evidence By Abdulla, Eman; Lim, King Yoong; Morris, Diego; Saliba, Faten
  3. Economics of Distributed Photovoltaics : An Illustration from Bangladesh By Timilsina,Govinda R.
  4. Impact of the Rapid Expansion of Renewable Energy on Electricity Market Price: Using machine learning and shapley additive explanation By LI Chao; MANAGI Shunsuke
  5. Was the trade war justified? Solar PV innovation in Europe and the impact of the ‘China shock’ By Andres, Pia
  6. Impact of the Rapid Expansion of Renewable Energy on Electricity Market Price: Using machine learning and shapley additive explanation By SHIMOMURA Mizue; KEELEY Alexander Ryota; MATSUMOTO Ken'ichi; TANAKA Kenta; MANAGI Shunsuke
  7. The Global Diffusion of Electric Vehicles : Lessons from the First Decade By Li,Shanjun; Wang,Binglin; Yang,Muxi; Zhang,Fan
  8. A Household-Level Model of Demand for Electricity Services and Welfare Analysis of Electricity Prices in Rajasthan By Sinha Roy,Sutirtha; Wolak,Frank Anthony
  9. Roads, Electricity, and Jobs: Evidence of Infrastructure Complementarity in Sub-Saharan Africa By Abbasi ,Mansoureh; Lebrand,Mathilde Sylvie Maria; Mongoue,Arcady Bluette; Pongou,Roland; Zhang,Fan
  10. Welfare and Environmental Benefits of Electric Vehicle Tax Policies in DevelopingCountries : Evidence from Colombia By Callejas, Jerónimo; Linn,Joshua Abraham; Steinbuks,Jevgenijs
  11. How Much Does Latin America Gain from Enhanced Cross-Border Electricity Trade in the Short Run ? By Timilsina,Govinda R.; Deluque Curiel,Ilka Fabiana; Chattopadhyay,Debabrata
  12. The effects of changes in the regulation of the Colombian wholesale electricity market in a structural model of complex auctions By Jorge Balat; Juan Esteban Carranza; Juan David Martin; Alvaro Riascos
  13. Measuring the Economic Impact of COVID-19 with Real-Time Electricity Indicators By Vagliasindi,Maria
  14. What Have We Learned about the Effectiveness of Infrastructure Investment as a FiscalStimulus ? A Literature Review By Vagliasindi,Maria; Gorgulu,Nisan
  15. Infrastructure and Structural Change in the Horn of Africa By Herrera Dappe,Matias; Lebrand,Mathilde Sylvie Maria
  16. Infrastructure and Structural Change in the Lake Chad Region By Lebrand,Mathilde Sylvie Maria
  17. Understanding Public Spending Trends for Infrastructure in Developing Countries By Foster,Vivien; Rana,Anshul; Gorgulu,Nisan
  18. State-Owned Enterprises as Countercyclical Instruments : Experimental Evidence from the Infrastructure Sector By Herrera Dappe,Matias; Musacchio,Aldo; Pan,Carolina; Semikolenova,Yadviga Viktorivna; Turkgulu,Burak; Barboza,Jonathan
  19. Pass-through of Temporary Fuel Tax Reductions: Evidence from Europe By Chiara Drolsbach; Maximilian Maurice Gail; Phil-Adrian Klotz
  20. Impacts of Energy Efficiency Projects in Developing Countries : Evidence from a SpatialDifference-in-Differences Analysis in Malawi By Naeher,Dominik; Narayanan,Raghavan; Ziulu,Virginia
  21. Commodity Price Shocks : Order within Chaos ? By Baffes,John,Kabundi,Alain Ntumba
  23. Atteindre la prospérité sans carbone: comment les gouvernements peuvent mettre en oeuvre 15 transformations essentielles By Andreas Fazekas; Chris Bataille; Adrien Vogt-Schilb
  24. Green finance research around the world: a review of literature By Ozili, Peterson Kitakogelu
  25. Désinvestissement des combustibles fossiles: quelles conséquences pour la gestion de portefeuille ? By Delâtre, Chloë
  26. What Are the Benefits of Government Assistance with Household Energy Bills ? Evidence from Ukraine By Alberini,Anna; Umapathi,Nithin
  27. Bracing for the Winter By Vasily Astrov; Alexandra Bykova; Rumen Dobrinsky; Selena Duraković; Richard Grieveson; Doris Hanzl-Weiss; Marcus How; Gabor Hunya; Branimir Jovanović; Niko Korpar; Sebastian Leitner; Isilda Mara; Bernhard Moshammer; Beate Muck; Olga Pindyuk; Sandor Richter; Bernd Christoph Ströhm; Maryna Tverdostup; Nina Vujanović; Zuzana Zavarská; Adam Żurawski
  28. The environmental cost of the international job market for economists By Olivier Chanel; Alberto Prati; Morgan Raux
  29. Dynamic dependence between clean investments and economic policy uncertainty By Urom, C.; Mzoughi, Hela; Ndubuisi, Gideon; Guesmi, K.
  30. "Energy Firms in Emerging Markets: Systemic Risk and Diversification Opportunities". By Helena Chuliá; Jorge A. Muñoz-Mendoza; Jorge M. Uribe
  31. Putting the Green Back in Greenbacks : Opportunities for a Truly Green Stimulus By Taheripour,Farzad; Chepeliev,Maksym; Damania,Richard; Farole,Thomas; Lozano Gracia,Nancy; Russ,Jason Daniel
  32. Optimal Retail Tariff Design with Prosumers: Pursuing Equity at the Expenses of Economic Efficiencies? By Yihsu Chen; Andrew L. Liu; Makoto Tanaka; Ryuta Takashima
  33. O Orçamento Verde By Amilcar Sousa; Ana Pinheiro; Francisco Ruano
  34. Environmental Policy and Investment Location: The Risk of Carbon Leakage in the EU ETS By Filippo Maria D'Arcangelo; Marzio Galeotti
  35. Greening capital requirements By Dafermos, Yannis; van Lerven, Frank; Nikolaidi, Maria
  36. Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan By Burns,Andrew,Jooste,Charl,Schwerhoff,Gregor
  37. Estimating Pass-Through Rates for the 2022 Tax Reduction on Fuel Prices in Germany By Jonas Dovern; Johannes Frank; Alexander Glas; Lena Müller; Daniel Perico
  38. The Political Consequences of Green Policies: Evidence from Italy By Colantone, Italo; Di Lonardo, Livio; Margalit, Yotan; Percoco, Marco
  39. Tracking Economic Fluctuations in Bangladesh with Electricity Consumption By Arshad,Selvia; Beyer,Robert Carl Michael
  40. Industrial excess heat and residential heating: Potentials and costs based on different heat transport technologies By Fritz, Markus; Werner, Dorian
  41. Pollution in Ugandan Cities : Do Managers Avoid It or Adapt in Place ? By Bassi,Vittorio; Kahn,Matthew Edwin; Lozano Gracia,Nancy; Porzio,Tommaso; Sorin,Jeanne
  42. Air Pollution and Poverty : PM2.5 Exposure in 211 Countries and Territories By Maruyama Rentschler,Jun Erik; Leonova,Nadia
  43. How Much Does Physical Infrastructure Contribute to Economic Growth ? An Empirical Analysis By Timilsina,Govinda R.; Stern,David S.; Das,Debasish Kumar
  44. Do Investments in Clean Technologies Reduce Production Costs ? Insights from the Literature By Timilsina,Govinda R.; Malla,Sunil
  45. Evaluating Climate Policies by the Pareto Principle: Efficiency When Future Identities Are Unobservable By Geir B. Asheim; Kohei Kamaga; Stéphane Zuber
  46. Sectoral Value Added — Electricity Elasticities across Countries By Hovhannisyan,Shoghik; Stamm,Kersten Kevin
  47. Searching for Customers, Finding Pollution By Vittorio Bassi; Matthew E. Kahn; Nancy Lozano Gracia; Tommaso Porzio; Jeanne Sorin
  48. Rising Incomes, Transport Demand, and Sector Decarbonization By Lebrand,Mathilde Sylvie Maria; Theophile,Ewane
  49. Case studies towards Green Transition in EU regions: Smart Specialisation for transformative innovation By Claire Nauwelaers; Richard Harding; Inmaculada Perianez-Forte; Karel Haegeman; Eskarne Arregui
  50. The Intergenerational Effects of Economic Sanctions By Moeeni,Safoura
  51. The Global Political Economy of a Green Transition By Giorgos Galanis; Giorgio Ricchiuti; Ben Tippet
  52. Illicit Schemes : Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling By Maruyama Rentschler,Jun Erik; Hosoe,Nobuhiro
  53. Carbon Tax in an Economy with Informality : A Computable General Equilibrium Analysis for Cote d’Ivoire By Timilsina,Govinda R.; Dissou,Yazid; Toman, Mike; Heine,Dirk
  54. Understanding Drivers of Decoupling of Global Transport CO2 Emissions from Economic Growth :Evidence from 145 Countries By Foster,Vivien; Dim,Jennifer Uju; Vollmer,Sebastian; Zhang,Fan
  55. Power in the Pipeline By Quentin Gallea; Massimo Morelli; Dominic Rohner
  56. Climate-Related and Environmental Risks for the Banking Sector in Latin America and the Caribbean : A Preliminary Assessment By Calice,Pietro; Miguel Liriano,Faruk
  57. Overview of the EROI, a tool to measure energy availability through the energy transition By Kevin Pahud; Greg de Temmerman
  58. Urban CO2 Emissions : A Global Analysis with New Satellite Data By Dasgupta,Susmita; Lall,Somik V.; Wheeler,David R.
  59. Monitoring localised decarbonisation goals: lessons learnt from Madrid’s Roadmap to 2050 By CIAMBRA Andrea; STAMOS Iraklis; BERTOZZI Cecilia; SIRAGUSA Alice
  60. The Dilemmas of Relevance: Exploring the role of Natural resources and the Carbon Kuznets Curve hypothesis in managing climate crisis in Africa By Olatunji A. Shobande; Simplice A. Asongu
  61. The climate dimension of fiscal policy sustainability: best practices in Green Budgeting and lessons for Portugal By Carlos Marinheiro; Amilcar Sousa; Ana Pinheiro
  62. Knowledge spillovers from clean and emerging technologies in the UK By Ralf Martin; Dennis Verhoeven
  63. Does the Squeaky Wheel Get More Grease? The Direct and Indirect Effects of Citizen Participation on Environmental Governance in China By Mark Buntaine; Michael Greenstone; Guojun He; Mengdi Liu; Shaoda Wang; Bing Zhang
  64. Incentivizing Carbon Taxation in Low-Income Countries : Tax Rebating versus Carbon Crediting By Strand,Jon
  65. Quantifying the role of interest rates, the Dollar and Covid in oil prices By Emanuel Kohlscheen
  66. InterMob: a 24-month randomised controlled trial comparing the effectiveness of an intervention including behavioural change techniques and free transport versus an intervention including air pollution awareness-raising on car use reduction among regular car users living in Grenoble, France By Claudia Teran-Escobar; Sarah Duché; Hélène Bouscasse; Sandrine Isoard-Gautheur; Patrick Juen; Lilas Lacoste; Sarah Lyon-Caen; Sandrine Mathy; Estelle Ployon; Anna Risch; Philippe Sarrazin; Rémy Slama; Kamila Tabaka; Carole Treibich; Sonia Chardonnel; Aïna Chalabaev
  67. Economic incentives for capacity reductions on interconnectors in the day-ahead market By E. Ruben van Beesten; Daan Hulshof
  68. Education Quality, Green Technology, and the Economic Impact of Carbon Pricing By Macdonald,Kevin Alan David; Patrinos,Harry Anthony
  69. Informationally Efficient Climate Policy: Designing Markets to Measure and Price Externalities By Derek Lemoine

  1. By: Leonardo Gambacorta; Alessio Reghezza; Martina Spaggiari; Livia Pancotto
    Abstract: Do female directors on banks' boards influence lending decisions toward less polluting firms? By using granular credit register data matched with information on firm-level greenhouse gas (GHG) emission intensities, we isolate credit supply shifts and find that banks with more gender-diverse boards provide less credit to browner companies. This evidence is robust when we differentiate among types of GHG emissions and control for endogeneity concerns. In addition, we also show that female director-specific characteristics matter for lending behavior to polluting firms as better-educated directors grant lower credit volumes to more polluting firms. Finally, we document that the "greening" effect of the female members in banks' boardrooms is stronger in countries with more female climate-oriented politicians.
    Keywords: GHG emissions, gender, board diversity, credit registry, bank lending.
    JEL: G01 G21 G30 Q50
    Date: 2022–10
  2. By: Abdulla, Eman (Department of Economics, University of Warwick); Lim, King Yoong (International Business School Suzhou, Xian Jiaotong-Liverpool University); Morris, Diego (Nottingham Business School, Nottingham Trent University); Saliba, Faten (International Monetary Fund)
    Abstract: This paper examines the nexus between gender equality, climate change, and innovation at the firm level. Based on three hypotheses derived from a novel theoretical framework linking climate change and gender equality to within-firm innovation activities, we use a cross-section dataset of 87, 996 firms across 36 industries in 103 countries, surveyed across different waves during the 2010-2020 periods to implement an instrumental variable strategy and show that environmental policies unambiguously induce firm-level process and product innovation, through its influence on the endogenous bargaining power of women in society and firms. We document that female productivity has both a direct effect on innovation (0.1-1.3% increase in the likelihood of innovation) and an indirect effect (serving as the intermediation for the environment-innovation nexus). Contrarily, greenhouse gas emissions by themselves have an ambiguous effect on innovation. The type of greenhouse gas emissions and the measure of innovation both contribute to this ambiguity. Overall, our results show that it is not the physics of climate change that induces innovation but rather the countervailing human responses to policies that mitigate climate change that stimulate innovation.
    Keywords: Climate change ; firm-level analysis ; gender equality ; innovation. JEL Codes: D24 ; J16 ; L25 ; O32 ; Q58
    Date: 2022
  3. By: Timilsina,Govinda R.
    Abstract: Distributed photovoltaics are a growing technology for grid electricity consumers in low- and middle-income countries due to declining costs and government support. In Bangladesh, distributed photovoltaics iare part of broader solar and consumer programs. This study analyzes the economics of stylized grid-connected residential, commercial, and industrial distributed photovoltaics in Bangladesh, considering a year of hourly patterns of solar irradiation and electricity exchanges between the distributed photovoltaics owners and the electricity utilities. The economics vary between different stakeholders—distributed photovoltaics owners, electricity utilities, and society. From the consumers’ perspective, the study finds that the economics of distributed photovoltaics depends on the difference in electricity production costs between the distributed photovoltaics and the electricity utility, transmission and distribution loss, and feed-in arrangements. The study also reveals that a distributed photovoltaics do not necessarily cause loss to the national electricity utility if they replaces expensive oil-fired generation. From a national or societal perspective, distributed photovoltaics are beneficial even if their positive environmental effects are not taken into account. The environmental benefits further improve the economics of distributed photovoltaics.
    Keywords: Energy Policies&Economics,Energy and Environment,Energy Demand,Energy and Mining,Solar Energy,Rural and Renewable Energy,Renewable Energy,Science of Climate Change,Climate Change and Environment,Climate Change and Health
    Date: 2021–06–15
  4. By: LI Chao; MANAGI Shunsuke
    Abstract: The positive effects of greenness in living environments on human well-being are known. As a widely used proxy, the nighttime light (NTL) indicates the regional socio-economic status and development level. Higher development levels and economic status are related to more opportunity and higher income, ultimately leading to greater human well-being. However, whether simple increases in greenness and NTL always produce positive results remains inconclusive. Here, we demonstrate the complex relationships between human well-being and greenness and NTL by employing the random forest method. The accuracy of this model is 81.83%, exceeding most previous studies. According to the analysis results, the recommended ranges of greenness and NTL in living environments are 10.91% - 32.99% and 0 – 17.92 nW/cm 2 ・sr , respectively. Moreover, the current average monetary values of greenness and NTL are 3351.96 USD/% and 658.11 USD/(nW/cm 2 ・sr) , respectively. The residential areas are far away from the abundant natural resources, which makes the main population desire more greenness in their living environments. Furthermore, high urban development density, represented by NTL, has caused adverse effects on human well-being in metropolitan areas. Therefore, retaining a moderate development intensity is an effective way to achieve a sustainable society and improve human well-being.
    Date: 2022–09
  5. By: Andres, Pia
    Abstract: Low cost solar energy is key to enabling the transition away from fossil fuels. Despite this, the European Union followed the United States’ example in imposing anti-dumping tariffs on solar panel imports from China in 2012, arguing that Chinese panels were unfairly subsidised and harmed its domestic industry. This paper examines the effects of Chinese import competition on firm-level innovation in solar photovoltaic technology by European firms using a sample of 4,632 firms in 14 EU countries over the period 1999- 2018. I show that firms which were exposed to higher import competition innovated more. Further, I find that during the years following the trade war, firms with a higher existing stock of innovation became less innovative. The results imply that competition from China constituted a positive push for more innovation among European solar innovators, calling into question the rationale behind the trade war.
    Keywords: China; EU; green inovation; international trade; renewable energy; solar PV
    JEL: L81
    Date: 2022–10–06
  6. By: SHIMOMURA Mizue; KEELEY Alexander Ryota; MATSUMOTO Ken'ichi; TANAKA Kenta; MANAGI Shunsuke
    Abstract: The increase in variable renewable energy (VRE) has brought significant changes in the power system, including a decrease in the average electricity market price owing to the merit order effect (MOE). In this study, we use machine learning and Shapley additive explanation (SHAP) to comprehensively examine the drivers of market price volatility, including the interaction between VRE and demand, fuel prices, and operation capacity in the Japanese electricity market which solar power installation is expanding rapidly. The results of SHAP reveal that there is a large decline effect for market price in solar power during daytime; however, the effect varies depending on the time of day, season, and demand. In addition, the results suggest that the market price increases when demand is high and solar generation is low, such as during summer evenings, which may be because of natural gas generation with higher marginal costs. The study reveals that impact of expanded VRE will not only have the MOE which decreasing average market prices, but may also prompt structural changes in electricity supply, causing market instability and price spikes in the transition process.
    Date: 2022–09
  7. By: Li,Shanjun; Wang,Binglin; Yang,Muxi; Zhang,Fan
    Abstract: Electrifying the transportation sector is key to reaching the goal of carbon neutrality.This paper provides a comprehensive analysis of the diffusion of passenger electric vehicles based on detaileddata on model-level electrical vehicle sales across the world from 2013 to 2020. The analysis shows that the highlyuneven electrical vehicle penetration across countries is partly driven by cross-country variation in incentives andespecially in the availability of charging infrastructure. Investment in charging infrastructure would have been muchmore cost-effective than consumer purchase subsidies in promoting electrical vehicle adoption. This findinghighlights the importance of expanding charging infrastructure in the next phase of deeper electricalvehicle diffusion.
    Keywords: Ports & Waterways,Transport Services,Macro-Fiscal Policy,Taxation & Subsidies,Tax Administration,Public Sector Economics,Public Finance Decentralization and Poverty Reduction,Economic Adjustment and Lending,Tax Law,Public Sector Administrative & Civil Service Reform,Public Sector Administrative and Civil Service Reform,Democratic Government,De Facto Governments
    Date: 2021–12–14
  8. By: Sinha Roy,Sutirtha; Wolak,Frank Anthony
    Abstract: This paper estimates a model of household-level demand for electricity services and electricity demand in the Indian state of Rajasthan using a combination of household-level survey and administrative data. The model incorporates customer-level demographic characteristics, billing cycle-level weather variables, and the fact that households face increasing block prices of electricity. The model allows estimating consumer response to price changes by four categories of energy services demand, namely, heating and cooling, lighting, and for domestic and business end-uses. The knowledge of demand response across different end-use helps in differentiating the impact of price changes along the income distribution. The model finds that the demand for heating and cooling energy is the most price inelastic and income elastic service, whereas the demand for domestic end-use is the most price elastic and income inelastic service of all four categories. The structural demand model also helps in comparing the welfare implications of current energy tariffs to those based on normative principles of efficient retail electricity pricing. For this analysis, first, the social marginal cost of electricity is calculated using publicly available data on generation, transmission, and distribution losses and emissions. The social marginal cost estimate, in combination with observable household characteristics, is then used to examine alternative tariff structures that are more affordable, equitable, and revenue sufficient for the utility than current price structure. An alternative tariff design, comprising of an energy price set to the social marginal cost of electricity and a fixed cost component determined by proxy indicators of household willingness to pay, performs better on the above parameters than the current schedule. Other sources of technical losses, related to transmission or distribution, are not studied in this paper.
    Keywords: Energy Policies&Economics,Energy Demand,Energy and Mining,Energy and Environment,Hydrology,Inequality
    Date: 2021–06–28
  9. By: Abbasi ,Mansoureh; Lebrand,Mathilde Sylvie Maria; Mongoue,Arcady Bluette; Pongou,Roland; Zhang,Fan
    Abstract: Evidence for road expansion and electrification as drivers of job creation is limited andmixed, with most studies having considered either one or the other, and only in isolation. This paper estimates theaverage and heterogeneous impacts of road and electricity investments and the interaction of the two on job creationover the past two decades in 27 countries of sub-Saharan Africa. Exploiting the exogenous location of ancestralethnic homelands, a new instrumental variable is created for road accessibility, inspired by post-independenceleaders' agenda of building roads to extend authority over the entire expanse of their country, and to promotenation building. Topography and lightning strikes—a key source of damage to electric lines and disruption ofservice—are used to instrument electricity supply. The paper finds positive and significant effects on employment fromenhancing proximity to roads and to electric grids. Moreover, the interaction of the two enhances the effects,making them complementary investments. The impacts of both individual and bundled investments are positive, but withdifferences between men and women, workers of various ages, and countries at different stages of development. In urbanareas, better access to roads and electricity promotes all types of employment. In rural areas, greater access inducesa transition from low- to high-skilled occupations. These differential effects suggest that the structuraltransformation brought about by road and electricity expansion is primarily a rural phenomenon.
    Date: 2022–03–21
  10. By: Callejas, Jerónimo; Linn,Joshua Abraham; Steinbuks,Jevgenijs
    Abstract: Developing countries face a major challenge of decarbonizing their light-duty vehicle fleetand transitioning to the broad use of electric vehicles. However, there is little evidence on which policies can mosteffectively facilitate that transition in these countries, distinguished by relatively low-income consumers and highlyconcentrated markets that distort vehicle markups. This paper analyzes existing and proposed policies aiming toreduce emissions from new passenger vehicles in Colombia, which has used preferential sales taxes and import tariffsto stimulate hybrid and electric cars sales. Using highly detailed data on vehicle purchases and attributes, the paperestimates an equilibrium model of Colombia’s market that includes a random-coefficients logit demand structure andendogenizes firms’ markups. Using the model to simulate policies, the analysis finds that Colombia’s sales tax andimport tariffs have increased hybrid and electric vehicle market shares by 0.9 to 2.7 percentage points at welfarecosts of $40-$48 per ton of carbon dioxide reduction. Potentially taxing carbon dioxide emissions rates of newvehicles would have roughly similar welfare costs. The high welfare costs of these policies arise from preexistingdistortions caused by market power, which yields large private welfare costs of shifting from gasoline to hybridand electric vehicles.
    Date: 2022–04–06
  11. By: Timilsina,Govinda R.; Deluque Curiel,Ilka Fabiana; Chattopadhyay,Debabrata
    Abstract: Regional or cross-border trade of electricity would be beneficial for all trading partners for multiple reasons. However, cross-border electricity trade in Latin America is limited, and the potential benefits have been forfeited. This study estimates the potential savings on electricity supply costs if 20 Latin American countries allowed unrestricted trade of electricity between the borders without expanding their current electricity generation capacity. Two hypothetical electricity trade scenarios—unconstrained trade of electricity between the countries within the Andean, Central, and Mercosur subregions and full regional trade involving all 20 countries are simulated using a power system model. The study shows that the volume of cross-border electricity trade would increase by 13 and 29 percent under the subregional and regional scenarios, respectively. The region would gain US$1.5 billion annually under the subregional scenario and almost US$2 billion under the full regional scenario. More than half of this gain would be realized by the Andean subregion under both scenarios. These are short-term benefits without expanding the current electricity generation capacities. In the future, when countries add more generation capacity to meet their increasing demand, the potential benefits of electricity trade would be higher. A further study is needed to measure the increased benefits in the long run.
    Keywords: International Trade and Trade Rules,Energy Policies&Economics,Energy and Environment,Energy Demand,Energy and Mining,Oil Refining&Gas Industry,Power&Energy Conversion
    Date: 2021–06–08
  12. By: Jorge Balat; Juan Esteban Carranza; Juan David Martin; Alvaro Riascos
    Abstract: We investigate the effects of a change in the regulation of the spot market for electricity in Colombia that took place in 2009. Specifically, the regulation switched from an auction mechanism with simple bids to one with complex bids to allow generators to separately bid on variable and quasi-fixed components. This greater exibility was introduced to reduce production inefficiencies that arise from non-convexities in the cost structures of thermal generators. In this paper, we estimate and compute a structural model to quantify the effects of this change on allocation efficiency along with the effects on the wholesale price of electricity in Colombia. Consistently with previous reduced form evidence, we show that the production efficiency increased under the new dispatch mechanism, but prices increased. ****RESUMEN: En este documento investigamos los efectos de un cambio en la regulación del mercado spot de electricidad en Colombia, que tuvo lugar en 2009. Específicamente, la regulación cambió de un esquema de subastas simples a uno de subastas complejas para permitir a los generadores hacer ofertas separadas de los componentes fijos y variables de sus costos. El aumento en la flexibilidad tuvo como objeto la reducción de las ineficiencias que resultan de las no-convexidades en las estructuras de costos de los generadores térmicos. Estimamos y computamos un modelos estructural que cuantifica los efectos de este cambio en la eficiencia del despacho de energía y en los precios mayoristas. De forma consistente con resultados descriptivos previos, encontramos que bajo el nuevo mecanismo de despacho se incrementó la eficiencia, pero los precios se incrementaron.
    Keywords: Auctions, structural estimation, electricity markets, subastas, estimación estructural, mercados de electricidad
    JEL: C57 Q4 L94
    Date: 2022–10
  13. By: Vagliasindi,Maria
    Abstract: The COVID-19 pandemic is posing unprecedented challenges, making it difficult for policymakers to design appropriate policies. In this context, real-time information can play a most valuable role forpolicy makers in developing countries, particularly since official economic indicators, such as the evolution of GDPand unemployment, not only are released with considerable delays, but also are not always fully reliable. This paperfollows the literature by using the dependent variable electricity consumption per capita as a proxy measure ofeconomic activity in the short run. Based on this method, it examines the short-run economic impact of the pandemicitself, as well as the public health restrictions that were adopted to control the outbreak and the macro-economicmeasures applied to revive the economy. The analysis confirms the significant cost of lockdown measures in termsof reduction in economic activity but finds that the spread of the disease itself had an economic impact distinct fromthat of the lockdown measures. The analysis shows that the use of expansionary fiscal and monetary policies also playeda key role in mitigating such an impact, driving some initial recovery. Finally, the evidence points to a completestructural break in economic activity at the onset of the lockdown period.
    Keywords: Energy Policies & Economics,Health Care Services Industry,Public Health Promotion,Consumption,Fiscal & Monetary Policy
    Date: 2021–10–14
  14. By: Vagliasindi,Maria; Gorgulu,Nisan
    Abstract: Since the Great Depression of the 1930s, and through the more recent Asian Crisis of 1997 andGreat Recession of 2008/09, governments have experimented with Keynesian style fiscal stimulus to support employmentand accelerate economic recovery. The effectiveness of these policies depends on the size of fiscal multipliers. A largebody of economic literature has estimated such multipliers, with gradually increasing precision, due to econometricimprovements and better ways to identify fiscal impulses. Overall, the largest multipliers are found to be associatedwith public investment, as opposed to other types of spending. Such public investment multipliers are typicallybelow one in the short run, but studies with multi-year horizons suggest that values higher than unity can beattained over time. The size of multipliers is sensitive to economic conditions. During recessions, and periods of highunemployment, transfer payments appear sometimes to offer higher multipliers than public investment. An importantexception is when fiscal and monetary policies are closely coordinated and interest rates approach zero, conditionsthat provide the strongest evidence for the efficacy of public investment multipliers. Other institutional factorsalso play a crucial role in determining the size of the public investment multiplier, in particular the country’s absorptive capacity, and the selection of high-qualityshovel ready projects. However, there is limited empirical evidence available on the magnitude of fiscal multipliers indeveloping country settings, or for infrastructure sectors or subsectors specifically. The few studies availablesuggest that certain types of green infrastructure (energy efficiency, solar energy, and so forth) may bring employmentbenefits in the short run, while innovative digital infrastructure may yield longer-run benefits for economicgrowth. The relevance of these findings to the current COVID-19 crisis is explored.
    Keywords: Labor Markets,Energy Demand,Energy and Mining,Energy and Environment,Transport Services,Fiscal & Monetary Policy,Public Finance Decentralization and Poverty Reduction,Public Sector Economics,Economic Adjustment and Lending,Macroeconomics and Economic Growth,Economic Policy, Institutions and Governance,Macro-Fiscal Policy
    Date: 2021–10–06
  15. By: Herrera Dappe,Matias; Lebrand,Mathilde Sylvie Maria
    Abstract: Access to infrastructure supports economic development through both capital accumulation andstructural transformation. This paper investigates the links between investments in electricity, Internet, and roadinfrastructure, in isolation and bundled, and economic development in the Horn of Africa, a region that includescountries with different levels of infrastructure and economic development. Using data on the expansion of theroad, electricity, and Internet networks over the past two decades, it provides reduced-form estimates of the impactsof infrastructure investments on the sectoral composition of employment. Bundled infrastructure investments causedifferent patterns of structural transformation than isolated infrastructure investments. The impact of bundledroad and electricity investments on reducing the sectoral employment share in agriculture is found to be 2.5 timeslarger than the impact of roads alone. The paper then uses a spatial general equilibrium model to quantify the impacts offuture regional transport investments, bundled with electricity and trade facilitation measures, on economicdevelopment in countries in the Horn of Africa.
    Keywords: Energy Policies & Economics,Transport Services,International Trade and Trade Rules,Construction Industry,Common Carriers Industry,Food & Beverage Industry,General Manufacturing,Plastics & Rubber Industry,Pulp & Paper Industry,Business Cycles and Stabilization Policies,Textiles, Apparel & Leather Industry,Food Security
    Date: 2021–11–30
  16. By: Lebrand,Mathilde Sylvie Maria
    Abstract: Access to infrastructure supports economic development through structural transformation. Thispaper investigates the links between investments in electricity, Internet, and transport infrastructure, inisolation and bundled, and economic development in the Lake Chad Region. Using data on the expansion of the paved road,electricity, and Internet networks over the past two decades and two instruments, it provides reduced-form estimates ofthe impacts of infrastructure investments on the sectoral composition of employment. Bundled infrastructureinvestments cause different patterns of structural transformation than isolated infrastructure investments.Bundled paved road and electricity investments is found to have reduced the agricultural employment share by 22percentage points and increased the share of employment mostly in services. The paper then uses a spatial generalequilibrium model to quantify the impacts of future regional transport investments, bundled with a large ruralelectrification program and trade facilitation measures to reduce border delays, on economic development in Nigeria,Cameroon, and Chad.
    Keywords: Transport Services,Energy Policies & Economics,Construction Industry,Common Carriers Industry,Food & Beverage Industry,Business Cycles and Stabilization Policies,General Manufacturing,Plastics & Rubber Industry,Pulp & Paper Industry,Textiles, Apparel & Leather Industry,International Trade and Trade Rules,Electric Power
    Date: 2022–01–13
  17. By: Foster,Vivien; Rana,Anshul; Gorgulu,Nisan
    Abstract: Evidence of public expenditure on infrastructure is extremely sparse. Little is known aboutthe trends and patterns of infrastructure expenditure, and there is no real basis for assessing the adequacy andefficiency of infrastructure spending. Drawing on the World Bank’s novel BOOST database, this paper provides a firstrelatively disaggregated picture of infrastructure spending trends and patterns for a large sample of more than 70developing countries covering 2010–18, drilling down into expenditure by sector for roads as well as electricity, anddistinguishing operating from capital expenditure. Complementary sources of data are tapped to allow comparisonbetween expenditure patterns on and off budget. The study finds that on-budget expenditure on infrastructure has beenlow both in absolute terms (1 percent of gross domestic product) and relative terms (5 percent of total publicspending), as well as declining over time. Overall, infrastructure spending declined by about one-third over2010–18 (with the road sector bearing the brunt of the decrease), and now lies well below estimates of the requiredlevels, except in a handful of cases. There is evidence that low-income countries, despite lower spending envelopes,attach greater priority to public investment and infrastructure spending than their middle-incomecounterparts. Econometric analysis suggests that infrastructure spending in low- and middle-income countrieshas been historically procyclical, although to a lesser degree than total expenditure. In the transport sector, roadfunds are shown to play a substantial role in funding road maintenance, appearing to improve the adequacy of funding,while attenuating pronounced capital biases in road sector spending, but there is little evidence of efficiencyimprovements over time.
    Keywords: Transport Economics Policy & Planning,Roads & Highways,Financial Sector Policy,Energy Policies & Economics,Transport Services
    Date: 2022–01–14
  18. By: Herrera Dappe,Matias; Musacchio,Aldo; Pan,Carolina; Semikolenova,Yadviga Viktorivna; Turkgulu,Burak; Barboza,Jonathan
    Abstract: This paper examines the effects of a negative macroeconomic shock on the financial performance ofstate-owned enterprises (SOEs) in infrastructure. It exploits the differential effects of a drastic fall in oilprices (in 2014–15) on SOEs in energy-rich countriesrelative to SOEs in non-energy-rich countries, matching firms based on their fuel expense ratio. The results—basedon a balanced sample using coarsened exact matching and a differences-in-differences estimation—indicate that fullyowned SOEs (FSOEs) that suffered a negative macroeconomic shock performed worse than those that did not. FSOEs thatsuffered a shock also received large fiscal transfers from the government to cope with the shock for three years afterthe shock. Despite the transfers, they reduced their capital expenditures as a consequence of the shock.
    Date: 2022–03–21
  19. By: Chiara Drolsbach (Justus Liebig University Giessen); Maximilian Maurice Gail (Justus Liebig University Giessen); Phil-Adrian Klotz (Justus Liebig University Giessen)
    Abstract: Several European countries have implemented temporarily fuel tax reductions in 2022 to relieve the financial burden on their citizens. This paper provides estimates of the pass-through rates as well as the effect on retail margins for France, Germany and Italy. Using a unique data set containing daily consumer prices for gasoline and diesel in five European countries, we employ a staggered Difference-in-Differences design. Our results show a very heterogeneous pass-through of the fuel tax reductions depending on the country and on the type of fuel. These findings also have important implications for the effective design of unconventional fiscal policy as well as for competition policy in the fuel market.
    Keywords: pass-through, fuel taxes, staggered DiD
    Date: 2022
  20. By: Naeher,Dominik; Narayanan,Raghavan; Ziulu,Virginia
    Abstract: Spatial difference-in-differences analysis is used to study the impacts of a large-scaledevelopment intervention aimed at improving energy efficiency in Malawi. The estimation strategy takesadvantage of the geographical variation in the implementation of different project components and is basedon a combination of remote-sensing (satellite) data and national household survey data. The results suggest that acombination of demand-side and supply-side interventions was associated with a statistically significant increase inelectricity access, a decrease in the frequency of blackouts, and a switch from traditional fuels toelectricity as the main source of energy for lighting (but not for cooking). At the same time, there is no evidencethat the intervention caused households to pay more for electricity. The results are consistent with an emergingview in the literature that there are synergies between energy efficiency and energy access, especially in placeswhere the bottleneck to wider electricity access is limited electricity generation capacity rather than the cost ofconnecting more clients to the grid.
    Keywords: Energy and Environment,Energy Demand,Energy and Mining,Energy Policies & Economics,Electric Power,Energy Conservation & Efficiency,Energy Consumption,Environment and Energy Efficiency
    Date: 2021–11–05
  21. By: Baffes,John,Kabundi,Alain Ntumba
    Abstract: The prices of 27 internationally traded commodities are decomposed into transitory and permanent shocks by applying an ideal band-pass filter to monthly data from 1970–2020. The two types of shocks contributed roughly equally to price variations, but with wide heterogeneity. Permanent shocks ac-counted for two-thirds of the variability in agricultural prices but less than 30 percent in energy prices. The transitory shock component revealed three medium-term cycles. The first (from the early 1970s to the mid-1980s) and third (from the early 2000s to 2020 onward) exhibit similar duration and involve almost all commodities, while the second (spanning the 1990s) is mostly applicable to metals, with the notable absence of energy. The permanent shock components differ across commodities, with an up-ward trend for most industrial commodities and downward trend for agriculture. Moreover, the permanent component of commodity prices where investment is irreversible, including energy, metals, and tree crops, exhibits a high degree of nonlinearities, which also coincide with the two post–World War II supercycles. By contrast, the permanent component of annual agricultural prices is linear, reflecting greater flexibility in investment allocation and input use of these commodities. Prices of commodities subjected to widespread policy interventions, such as international commodity agreements, exhibit persistent deviations from linear trends.
    Keywords: Energy Demand,Energy and Mining,Energy and Environment,Commodity Risk Management,Food Security,International Trade and Trade Rules,Trade and Multilateral Issues
    Date: 2021–10–04
  22. By: Roberto Esposti (Department of Economics and Social Sciences, Marche Polytechnic University)
    Abstract: This paper investigates the interdependence among commodity prices. Commodities belonging to three different groups (energy commodities, metals, agricultural commodities) are considered. The analysis is performed via a battery of time-varying Granger causality tests. They allow assessing whether price interdependence occurs and to identify the candidate first movers. These tests also allow observing how long and in which sub-periods these causality relationships occur. The approach is applied to the monthly prices of eleven commodities over the 1980-2021 period. Results suggest that interdependence is weak for energy and agricultural commodities and often concerns limited time periods, while it seems stronger and longer lasting among metals. Moreover, if an overall price driver has to be identified, agricultural commodities more than oil seem to be the best candidates.
    Keywords: Commodity Prices, Time Varying Granger Causality, Price Interdependence.
    JEL: Q11 C32
    Date: 2022–10
  23. By: Andreas Fazekas; Chris Bataille (School of Resource and Environmental Management - - Simon Fraser University); Adrien Vogt-Schilb
    Abstract: Il est nécessaire de réduire les émissions nettes à zéro pour limiter le réchauffement de la planète bien en dessous de 2C et vers 1,5C, qui sont les objectifs de température de l'Accord de Paris. Plus de 50 pays dans le monde ont fixé des objectifs pour parvenir à zéro émission nette, généralement d'ici 2050, et la plupart des autres pays travaillent sur des objectifs similaires. La réalisation de ces objectifs nécessite des transformations dans les secteurs de l'électricité, des transports, de l'agriculture, de l'utilisation des sols, des bâtiments, de l'industrie et de la gestion des déchets. Bien qu'il existe des solutions pour passer à une économie neutre en carbone, notamment des changements technologiques et comportementaux, et qu'ils s'accompagnent souvent d'avantages économiques, sociaux ou développementaux, de nombreux obstacles empêchent leur mise en œuvre. Nous réunissons des conclusions issues de la littérature académique et grise pour identifier 15 transformations sectorielles qui permettront de réduire à zéro les émissions nettes de gaz à effet de serre. Nous énumérons ensuite les obstacles qui empêchent leur adoption, tels que les obstacles liés aux infrastructures, aux réglementations, aux finances publiques et privées, à l'information et aux questions d'économie politique. Enfin, nous fournissons plus de 50 exemples d'interventions gouvernementales au niveau sectoriel qui peuvent lever ces obstacles, comme la construction d'infrastructures, la réforme des réglementations et des subventions, la fourniture d'informations et le renforcement des capacités, et la gestion des impacts distributifs. Les gouvernements peuvent utiliser ces informations pour guider la conception de stratégies climatiques globales qui traduisent l'objectif à long terme de zéro émission nette en une feuille de route des transformations requises dans chaque secteur. Ils peuvent ensuite travailler à l'identification et à la mise en œuvre d'interventions gouvernementales aux niveaux national, régional ou local pour les rendre possibles.
    Keywords: atténuation du changement climatique,décarbonation,neutralité carbone,mise en oeuvre,réforme politique,investissement,politique sectorielle
    Date: 2022–07–14
  24. By: Ozili, Peterson Kitakogelu
    Abstract: This paper reviews the existing research on green finance. It identifies the important themes in the green finance literature, particularly, the strategies to increase green financing; efforts to make green investment profitable; promoting green financing using technology and policy, the role of regulators and financial institutions in the green finance agenda, and the challenges of green financing. Several cross-country observations about the challenges of green finance and solutions to green finance issues are documented. The findings show that green finance has the potential to make a significant difference in the environment, society and for climate change mitigation, but many challenges abound such as the lack of awareness about green finance, inconsistent definitions of green finance, lack of policy coordination for green financing, inconsistent policies, and lack of profitable incentives to investors and financial institutions who are willing to invest in climate change mitigation.
    Keywords: literature review, green finance, green investment, climate change, sustainable finance, green bonds, green banks, sustainable development goals, climate finance, environment, green loan, climate change mitigation. Paris Agreement, COP26.
    JEL: G21 G23 Q52 Q56
    Date: 2022
  25. By: Delâtre, Chloë
    Abstract: Individual investors and financial institutions are increasingly seeking to divest from fossil fuel producers. This article investigates the financial implications of such a move by comparing two types of stock indices: (1) a traditional stock index that includes companies producing fossil fuels and (2) a stock index where companies producing fossil fuels are completely excluded, but not necessarily extended by clean energy companies. Using a series of measures, we find that fossil fuel-divested indices do not have significantly different risk-adjusted returns from their parent indices. We also find that combining fossil fuel divestment with negative and positive screening methodologies yields significantly higher risk-adjusted returns.
    Keywords: Désinvestir des combustibles fossiles, changement climatique, performance financière, indices boursiers
    JEL: G0 G1 G2
    Date: 2022
  26. By: Alberini,Anna; Umapathi,Nithin
    Abstract: In April 2015, the Government of Ukraine abruptly raised the tariffs of natural gas to residential customers, which were previously well below the cost of acquiring gas and delivering it to households. The tariff increase—700 percent—caused considerable distress to the population and led the government to scale up its existing energy assistance program, the housing and utilities subsidy program. This paper examines the welfare effect of the program and potential redesigns of the program. Using several waves of Ukraine’s Household Budget Survey, the analysis finds that electricity, gas, and fuels account for a considerable share of household income. After the tariff hike, the average household that did not receive the housing and utilities subsidy spends 11 percent of its income on electricity, gas, and fuels, implying that it meets the definition of “fuel poor.” The average share for households that do receive the subsidy is 6–8 percent. The housing and utilities subsidy cuts the rate of fuel poverty in half. It also brings considerable consumer surplus gains of 6–7 percent of income. This comes at a high price tag for the government, as the budget for the housing and utilities subsidy is 1–2.5 percent of gross domestic product. Considerable savings would be achieved with only a small loss of consumer surplus if the housing and utilities subsidy was cut in half. Linking the subsidy solely to income would also attain considerable savings, but at a high loss of welfare. The housing and utilities subsidy could also be paired with social tariffs, or an energy efficiency subsidy, with major savings for the government.
    Keywords: Oil Refining&Gas Industry,Energy Demand,Energy and Mining,Energy and Environment,Inequality,Energy Policies&Economics,Municipal Management and Reform,Urban Governance and Management,Urban Housing,Urban Housing and Land Settlements
    Date: 2021–05–21
  27. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Alexandra Bykova (The Vienna Institute for International Economic Studies, wiiw); Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Selena Duraković (The Vienna Institute for International Economic Studies, wiiw); Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Marcus How; Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Branimir Jovanović (The Vienna Institute for International Economic Studies, wiiw); Niko Korpar (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw); Bernhard Moshammer (The Vienna Institute for International Economic Studies, wiiw); Beate Muck (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Sandor Richter (The Vienna Institute for International Economic Studies, wiiw); Bernd Christoph Ströhm; Maryna Tverdostup (The Vienna Institute for International Economic Studies, wiiw); Nina Vujanović (The Vienna Institute for International Economic Studies, wiiw); Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw); Adam Żurawski
    Abstract: Economic growth in CESEE in the first half of 2022 was better than expected, and our growth forecasts for this year have been mostly revised upwards. However, global economic conditions are increasingly gloomy, and the worst is yet to come. Inflation is eroding real incomes, consumer confidence is evaporating, business sentiment is deteriorating, interest rates are soaring, and the fiscal space is shrinking. The war in Ukraine will most probably continue at least through 2023, with virtually no scope for a peace agreement. And on top of all that, there is the energy crunch. The CESEE region will probably grow only by 0.3% next year, close to the 0.2% growth that we assume for the euro area.
    Keywords: CESEE Central and Eastern Europe, economic forecast, Western Balkans, CIS, Ukraine, Russia, Turkey, EU, euro area, convergence, business cycle, coronavirus, COVID, labour markets, unemployment, Russia-Ukraine war, Russia sanctions, commodity prices, inflation, price controls, trade disruptions, Ukrainian refugees, energy crisis, gas, electricity, monetary policy, fiscal policy, impact on Austria
    JEL: E20 E21 E22 E24 E32 E5 E62 F21 F31 H60 I18 J20 J30 O47 O52 O57 P24 P27 P33 P52
    Date: 2022–10
  28. By: Olivier Chanel (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Alberto Prati (The University of Mississippi [Oxford], LSE - London School of Economics and Political Science); Morgan Raux (University of Luxembourg [Luxembourg])
    Abstract: We provide an estimate of the environmental impact of the recruitment system in the economics profession, known as the "international job market for economists". Each year, most graduating PhDs seeking jobs in academia, government, or companies participate in this job market. The market follows a standardized process, where candidates are pre-screened in a short interview which takes place at an annual meeting in Europe or in the United States. Most interviews are arranged via a non-profit online platform,, which kindly agreed to share its anonymized data with us. Using this dataset, we estimate the individual environmental impact of 1057 candidates and one hundred recruitment committees who attended the EEA and AEA meetings in December 2019 and January 2020. We calculate that this pre-screening system generated the equivalent of about 4800 tons of avoidable CO2-eq and a comprehensive economic cost over €4.4 million. We contrast this overall assessment against three counterfactual scenarios: an alternative in-person system, a hybrid system (where videoconference is used for some candidates) and a fully online system (as it happened in 2020–21 due to the COVID-19 pandemic). Overall, the study can offer useful information to shape future recruitment standards in a more sustainable way.
    Keywords: Job market for economists,International job market,Carbon footprint,Environmental impact,Comprehensive economic cost
    Date: 2022–11
  29. By: Urom, C.; Mzoughi, Hela; Ndubuisi, Gideon (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn); Guesmi, K.
    Abstract: This paper examines how clean investments across different sectors respond to economic policy uncertainty (EPU) using the NASDAQ OMX Green Economy sectoral Indexes. We rely on Wavelets and the Cross-quantilogram techniques to examine the dependence and directional predictability from EPU to each sector's clean energy stock prices. Our results highlight evidence in support of strong heterogeneous dependence and directional predictability of sectoral clean energy returns from EPU across different market conditions and investment horizons. Second, we employ the Time-Varying Parameter-VAR (TVP-VAR) model with stochastic volatility to characterize the level of integration between clean energy sectors and EPU under different investment horizons. We find that the level of connectedness is weak in the short-term but becomes stronger in the medium- and long-term. Nonetheless, we distill some important heterogeneities in the predictive power of EPU for the different sectors across different investment horizons. Taken together, our results demonstrate that the direction and magnitude of the response of clean energy stock prices to EPU vary across sectors and depend on market conditions and horizons. This offers diversification benefits to investors and portfolio managers that may be interested in clean energy stocks across sectors, market conditions, and horizons.
    JEL: G10 Q42 R11
    Date: 2022–08–15
  30. By: Helena Chuliá (RISKcenter, Institut de Recerca en Economia Aplicada (IREA). Departament d’Econometria, Estadística i Economia Aplicada, Universitat de Barcelona (UB).); Jorge A. Muñoz-Mendoza (Department of Business Management, University of Concepcion, Chile. School of Economics, University of Barcelona, Spain.); Jorge M. Uribe (Faculty of Economics and Business, Universitat Oberta de Catalunya, Spain.)
    Abstract: Previous studies in energy stock markets have analyzed market connectedness using aggregate indexes and focusing on developed markets. We depart from the extant literature and we focus our attention on companies listed on emerging stock markets and examine connectedness from the firm’s perspective. Using a two-step approach, we remove the common global factors from energy stock returns and estimate the network of global energy stocks in emerging markets. We show that idiosyncratic components are highly relevant for our understanding of risk transmission in energy markets. Moreover, we offer precise diversification alternatives and identify the most systemically important firms and countries.
    Keywords: Energy firms, Spillovers, Connectedness, Network. JEL classification: G15, Q43, Q48.
    Date: 2022–10
  31. By: Taheripour,Farzad; Chepeliev,Maksym; Damania,Richard; Farole,Thomas; Lozano Gracia,Nancy; Russ,Jason Daniel
    Abstract: Can countries reorient their productive capacity to become more environmentally friendly and inclusive? To investigate this question, this paper uses a standard input-output modeling framework and data from 141 countries and regions to construct a new global data set of employment, value-added, greenhouse gas emissions (disaggregated into carbon dioxide and non-carbon dioxide elements), and air pollution (including nine categories of air pollutants such as fine particulate matter multipliers from supply-side investments. The analysis finds that many of the traditional sectors in agriculture and industry have large employment multipliers, but also generate male dominant, lower skill employment, and tend to have higher emissions multipliers. It is in economies dominated by these sectors that trade-offs to a “greener” transition will emerge most sharply. However, the analysis finds substantial heterogeneity in outcomes, so even in these economies, there exist other sectors with high employment multipliers and low emissions, including sectors that are more conducive to female employment. In addition, the analysis finds a high correlation between industries that generate greenhouse gas emissions, which cause long-term climate impacts, and those that generate air pollution, which have immediate harmful impacts on human health, suggesting that policies could be designed to confer longer climate benefits simultaneously with immediate health improvements. The results confirm some of the findings from recent research and shed new light on opportunities for greening economies.
    Keywords: Transport Services,International Trade and Trade Rules,Health Care Services Industry,Energy and Environment,Energy Demand,Energy and Mining,Livestock and Animal Husbandry
    Date: 2021–07–29
  32. By: Yihsu Chen; Andrew L. Liu; Makoto Tanaka; Ryuta Takashima
    Abstract: Distributed renewable resources owned by prosumers can be an effective way of fortifying grid resilience and enhancing sustainability. However, prosumers serve their own interests and their objectives are unlikely to align with that of society. This paper develops a bilevel model to study the optimal design of retail electricity tariffs considering the balance between economic efficiency and energy equity. The retail tariff entails a fixed charge and a volumetric charge tied to electricity usage to recover utilities' fixed costs. We analyze solution properties of the bilevel problem and prove an optimal rate design, which is to use fixed charges to recover fixed costs and to balance energy equity among different income groups. This suggests that programs similar to CARE (California Alternative Rate of Energy), which offer lower retail rates to low-income households, are unlikely to be efficient, even if they are politically appealing.
    Date: 2022–09
  33. By: Amilcar Sousa; Ana Pinheiro; Francisco Ruano
    Abstract: Os efeitos nocivos resultantes das alterações climáticas levaram a uma maior consciencialização ambiental e ao estabelecimento de diversos compromissos internacionais. É neste contexto que o Orçamento Verde, uma prática relativamente recente adotada por um número crescente de governos, tem vindo a ganhar importância. Ao possibilitar uma maior perceção dos contributos ambientais de cada rubrica orçamental, o Orçamento Verde permite alinhar a política orçamental com os objetivos climáticos e ambientais, podendo ainda abrir o caminho para a emissão de obrigações verdes. Uma efetiva implementação do Orçamento Verde implica a adoção de instrumentos adequados (como a classificação da despesa e da receita em termos dos seus impactos climáticos e ambientais, conhecida por Green Budget Tagging), o estabelecimento de um enquadramento institucional apropriado e o tempestivo reporte de informação. Os países com experiências mais consolidadas nesta matéria são França e Itália. Portugal já deu alguns passos para a implementação de um Orçamento Verde, mas ainda tem um amplo caminho a percorrer, nomeadamente, quanto à adoção de um conjunto de instrumentos ainda em falta, quanto ao estabelecimento de um enquadramento institucional onde este tipo de prática esteja contemplado na Lei de Enquadramento Orçamental e quanto à criação de um sistema de reporte de informação que promova a transparência de todo o processo orçamental verde.
    Keywords: Orçamento Verde; Green Tagging; Orçamento do Estado; Obrigações Verdes
    JEL: H50 H61 Q51 Q58
    Date: 2022–09
  34. By: Filippo Maria D'Arcangelo (OECD, Economics Department); Marzio Galeotti (Department of Environmental Science and Policy, University of Milan and Fondazione Eni Enrico Mattei)
    Abstract: This paper empirically investigates the effect of the European Emission Trading Scheme (EU ETS) on cross-country investments. To avoid carbon leakage, the scheme allocates a number of free allowances to firms at risk of relocating investments in areas outside the EU ETS. To study this problem, we employ a model of the firm’s investment decision in conjunction with novel firm-level data. In contrast with most previous literature, we stress the importance of firms’ heterogeneity in the analysis and leverage it. We derive conditions for the firm’s optimal emissions to construct a measure of investment sensitivity to carbon pricing from observed pollution data. This allows to identify the effect of the EU ETS on international investments by comparing the expected profits from investing in several different countries. We find that investments react to carbon pricing and that the effect is stronger for more polluting investments. However, the aggregate amount of diverted investments is small. We moreover show that the lost investments do not justify, alone, the generous compensations scheme aimed at retaining investments.
    Keywords: Emission trading, carbon leakage, investment location, EU ETS
    JEL: D22 F18 Q52 Q54
    Date: 2022–10
  35. By: Dafermos, Yannis; van Lerven, Frank; Nikolaidi, Maria
    Abstract: Capital requirements play a central role in financial regulation and have significant implications for financial stability and credit allocation. However, in their existing form, they fail to capture environment-related financial risks and act as a barrier to the transition to an environmentally sustainable economy. This paper considers how capital requirements can become green and explores how green differentiated capital requirements (GDCRs) can be incorporated into financial regulation frameworks.
    JEL: F3 G3
    Date: 2022–10–07
  36. By: Burns,Andrew,Jooste,Charl,Schwerhoff,Gregor
    Abstract: As the effects of climate change become increasingly evident, the design and implementation of climate-aware policies have assumed a more central role in the macroeconomic policy debate. With this has come an increasing recognition of the importance of introducing climate into the economic policy making tools used by central economic policy making agencies (such as ministries of finance and ministries of planning). This paper integrates climate outcomes into a macro-structural model for Pakistan, the kind of model that is suitable for use on a regular basis by ministry staff. The model includes the standard set of variables and economic logic that are necessary for the kinds of forecasting, economic policy, and budgetary planning analysis typically conducted by central ministries. In addition to standard outputs (unemployment, inflation, gross domestic product growth, and fiscal and current accounts), the model generates climate outcomes (tons of carbon emitted and economic and health damages due to higher temperatures and pollution). These outcomes are generated when specific climate policies such as mitigation are analyzed, but also when other policies are analyzed that might have unanticipated climate impacts. The paper describes the changes made to the World Bank’s standard macro structural model, MFMod, in integrated climate outcomes, climate policies, and the economic impacts of climate on Pakistan’s economy. Notably, carbon-tax scenarios show that a $20 carbon tax can reduce emissions in Pakistan by 36 percent by 2050. Gross domestic product impacts could also be positive, if the revenues from the carbon tax were used to reduce reliance on heavily distorting taxes. The model also quantifies associated co-benefits from reduced local air pollution and better health and productivity outcomes. In the absence of action to restrain climate change, the model suggests that increased temperatures and rain variability could reduce output by as much as 10 percent compared with a scenario where global temperature rises were minimized.
    Keywords: Climate Change and Environment,Climate Change and Health,Science of Climate Change,Adaptation to Climate Change,Energy and Environment,Energy Demand,Energy and Mining,Natural Disasters,Climate Change Mitigation and Green House Gases
    Date: 2021–09–23
  37. By: Jonas Dovern; Johannes Frank; Alexander Glas; Lena Müller; Daniel Perico
    Abstract: We analyze the effectiveness of the German tax reduction on fuel prices (‘Tankrabatt’) that was introduced for three months, starting on 1 June 2022. Using the synthetic control method to compare actual prices of gasoline and diesel to those in a counterfactual situation without the tax reduction, we find that the tax reduction has been completely passed on to consumers for most of the three months. In early June, it took approximately two weeks for the full pass-through to take effect. Moreover, pass-through rates started to decline in August while the tax reduction was still in place. We observe an upward price jump smaller than the size of the expiring tax reduction at the start of September. Our results are robust to different approaches of constructing the synthetic control group.
    Keywords: fuel, gasoline, diesel, taxes, synthetic control group
    JEL: C22 E31 E65 H22 Q41
    Date: 2022
  38. By: Colantone, Italo; Di Lonardo, Livio; Margalit, Yotan; Percoco, Marco
    Abstract: For many governments, enacting green policies is a priority, but such policies often impose on citizens substantial and uneven costs. How does the introduction of green policies a˙ect voting? We study this question in the context of a major ban on polluting cars introduced in Milan, which was strongly opposed by the populist right party Lega. Using several inferential strategies, we show that owners of banned vehicles — who incurred a median loss of €3,750 — were significantly more likely to vote for Lega in the subsequent elections. Our analysis indicates that this electoral change did not stem from a broader shift against environmentalism, but rather from disaffection with the policy’s uneven pocketbook implications. In line with this pattern, recipients of compensation from the local government were not more likely to switch to Lega. The findings highlight the central importance of distributive consequences in shaping the political ramifications of green policies.
    Keywords: Environmental Economics and Policy
    Date: 2022–10–21
  39. By: Arshad,Selvia; Beyer,Robert Carl Michael
    Abstract: This paper investigates whether electricity consumption is a useful indicator for trackingeconomic fluctuations in Bangladesh. It presents monthly data on national electricity consumption since 1993 anddaily consumption data since February 2010 for the country’s eight divisions. National electricity consumption isstrongly correlated with other high-frequency indicators of economic activity, and it has declined during naturaldisasters and the COVID-19 lockdowns. The paper estimates an electricity consumption model that explains over 90 percentof the variation in daily consumption based on the trend, seasonality, within-week variation, holidays, Ramadan, andtemperature. Deviations from the model prediction can act as in indicator of economic fluctuations. For example, duringthe first COVID-19 lockdown in April 2020, electricity consumption in Dhaka fell over 40 percent compared withnormal and remained below the normal level until early 2021. The later lockdowns, in contrast, had only small additionalimpacts, in line with less stringent containment measures and more effective adaptation.
    Date: 2022–04–07
  40. By: Fritz, Markus; Werner, Dorian
    Abstract: Using industrial excess heat for residential heating can increase energy efficiency and thus be part of the solution to achieving the EU's climate targets. However, industrial plants are often located in industrial areas and thus away from residential areas. Therefore, the excess heat has to be transported to the end-using households. In this paper, we determine the economic excess heat potential for residential heating in Germany, considering different transport technologies. For this purpose, we develop a bottom-up optimisation model, which identifies the technology with the lowest transport cost for over 6,000 excess heat sources. In addition, an optimisation is carried out to maximise the amount of used excess heat, taking into account cost thresholds. Our results show that about 12-17 TWh of excess heat can be utilised up to the cost threshold of 0.1 €/kWh. We see that district heating is the most selected technology for cost optimisation. When optimising the amount of excess heat used, however, it becomes apparent that the technologies sewer networks and sorption cycles are also used. The technologies for using industrial excess heat are available, but the next step must be market penetration and up-scaling.
    Date: 2022
  41. By: Bassi,Vittorio; Kahn,Matthew Edwin; Lozano Gracia,Nancy; Porzio,Tommaso; Sorin,Jeanne
    Abstract: Developing countries suffer from rising urban pollution levels, with associated negative effects on health and worker productivity. This paper studies how managers in developing country cities cope with the polluted environment. High-resolution pollution measurements were collected in Ugandan cities and matched with a novel firm survey. The analysis finds that firms locate in close proximity to major polluted roads, which bundle a bad (exposure to pollution) with a good (market demand). Higher ability managers do not avoid polluted areas; instead, they adapt to the pollution by protecting their workers through the provision of equipment and flexibility in work schedule.
    Keywords: Adaptation to Climate Change,Health Care Services Industry,Climate Change Mitigation and Green House Gases,Skills Development and Labor Force Training,Brown Issues and Health,Pollution Management&Control,Air Quality&Clean Air
    Date: 2021–07–29
  42. By: Maruyama Rentschler,Jun Erik; Leonova,Nadia
    Abstract: Air pollution is one of the leading causes of death worldwide, especially affecting poorerpeople who tend to be more exposed and vulnerable. This study contributes (i) updated global exposure estimates forthe World Health Organizations's 2021 revised fine particulate matter (PM2.5) thresholds, and (ii) estimates ofthe number of poor people exposed to unsafe PM2.5 concentrations. It shows that 7.28 billion people, or 94percent of the world population, are directly exposed to unsafe average annual PM2.5 concentrations. Low- andmiddle-income countries account for 80 percent of people exposed to unsafe PM2.5 levels. Moreover, 716 million poorpeople (living on less than $1.90 per day) live in areas with unsafe air pollution. Around half of them are locatedin just three countries: India, Nigeria, and the Democratic Republic of Congo. Air pollution levels are particularlyhigh in lower-middle-income countries, where economies tend to rely more heavily on polluting industries andtechnologies. The findings are based on high-resolution air pollution and population maps with global coverage, as wellas subnational poverty estimates based on harmonized household surveys.
    Date: 2022–04–18
  43. By: Timilsina,Govinda R.; Stern,David S.; Das,Debasish Kumar
    Abstract: Existing literature on the relationship between infrastructure and economic growth isinconclusive. This study evaluates the contributions to economic growth of three main categories ofinfrastructure—transport, electricity, and telecommunications—using data from 87 countries over1992–2017. Compared with existing studies, this study uses more recent data, includes new types of infrastructure suchas mobile phones, and provides separate estimates for developing and developed countries. The pooled mean groupestimator, which tests for the weak exogeneity of the infrastructure variables, is employed. The key finding ofthe study is that an increase in infrastructure, especially electricity generation capacity and telecommunications, hassignificant positive effects on gross domestic product. Infrastructure has a larger effect in more recent years(1992–2017) than in earlier years (1970–1991), and the effects of infrastructure are higher in developing economiesthan in industrialized economies.
    Keywords: Economic Growth,Industrial Economics,Economic Theory & Research,Energy Policies & Economics,Telecommunications Infrastructure,Railways Transport
    Date: 2021–12–17
  44. By: Timilsina,Govinda R.; Malla,Sunil
    Abstract: In response to growing environmental concerns, particularly climate change, governments have encouraged innovation and adoption of clean technologies through various policy measures. At present more than half a trillion US dollars is being invested annually in clean technologies. Based on the existing literature, this study analyzes whether investments in clean technologies increase productivity. The findings are mixed. Employing firm-level data, the majority of ex-post studies show a positive relationship between clean investments and firms’ productivity, especially in the energy-intensive manufacturing sector. Most studies for the transport, building and power sector use an ex-ante, technology or sectoral level analysis instead of ex-post analysis to examine the economics of clean technologies. In the transport sector, transportation services with electricity or hydrogen are still more expensive than that with gasoline and diesel vehicles. Some studies, however, project that cleaner vehicles will be economically attractive within a decade. Many studies report that clean technologies reduce energy consumption and save energy bills in the building sector, although some studies do not agree. Most studies for the power sector indicate that renewable technologies have not yet reduced the average costs of grid electricity because of their intermittency and a smaller share in the total electricity supply.
    Keywords: Energy and Mining,Energy Demand,Energy and Environment,Private Sector Economics,Energy Policies&Economics,Renewable Energy,Rural and Renewable Energy
    Date: 2021–06–24
  45. By: Geir B. Asheim (Department of Economics [Oslo] - Faculty of Social Sciences [Oslo] - UiO - University of Oslo); Kohei Kamaga (Sophia University [Tokyo]); Stéphane Zuber (PSE - Paris School of Economics - 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, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Keywords: climate change,efficiency,intergenerational equity,population ethics,infinite streams
    Date: 2022
  46. By: Hovhannisyan,Shoghik; Stamm,Kersten Kevin
    Abstract: Many developing countries face severe electricity constraints, which are reflected in lowelectrification rates, frequent and prolonged outages, and high electricity tariffs, all of which result in lowelectricity consumption that impedes economic development. This study estimates the impact of electricity consumptionon value added through reduced form equations for three sectors: agriculture, manufacturing, and services. It usespanel data on 126 countries for 1996–2014 from the International Energy Agency and World Development Indicatorsdatabases. To control for endogeneity and reverse causality bias in the ordinary least squares estimators, the studyapplies two-step difference and system panel generalized method of moments estimation techniques, which improve theordinary least squares estimates by applying lags of the explanatory variables as instruments that are not correlatedwith the error term and account for countries’ fixed effects generating bias in the coefficients. The estimation resultsindicate that electricity consumption has a significant and positive impact on the manufacturing sector’s value added innon-high-income countries (with an elasticity of 0.022). By contrast, the electricity consumption elasticities areinsignificant in agriculture and services in non-high-income countries, as the production technologies of theseindustries vary substantially across income groups compared with those in manufacturing. Finally, using all thecountries in the sample produce positive and significant results for all sectors, with the highest elasticity of0.036 in manufacturing.
    Keywords: Energy Policies & Economics,Food Security,Plastics & Rubber Industry,Pulp & Paper Industry,Textiles, Apparel & Leather Industry,General Manufacturing,Food & Beverage Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,Energy and Mining,Energy Demand,Energy and Environment,Economic Theory & Research,Industrial Economics,Economic Growth
    Date: 2021–10–21
  47. By: Vittorio Bassi; Matthew E. Kahn; Nancy Lozano Gracia; Tommaso Porzio; Jeanne Sorin
    Abstract: In developing countries, most manufacturing firms are small and located in high-density urban areas, often near congested streets. To study the determinants and implications of this location choice, we collect a novel firm survey and detailed air pollution measurements within Ugandan cities. We find that firms locate on the busiest roads searching for customer visibility, but in doing so they expose their workers to substantial pollution. This sorting pattern increases profits, but with severe health costs: if firms were randomly located across space, annual profits would decrease by $195 for the average firm, but its workers' life expectancy would increase by two months.
    JEL: Q4 Q53
    Date: 2022–10
  48. By: Lebrand,Mathilde Sylvie Maria; Theophile,Ewane
    Abstract: As income increases, people become more mobile and spend more on carbon-intensive transportgoods and services. This paper estimates income elasticities of transport consumption using household survey data for 18countries, which are then used to simulate transport carbon footprint and carbon inequality by 2035. It first shows thatin low- and middle-income countries (i) many households mostly walk and do not use transport services, (ii) incomeelasticity of private transport expenditure is high, and (iii) many households do not own a car. Both results suggesta future steep growth of emissions as incomes expand. Using estimates of income elasticities of vehicle ownership andvehicle use, the paper shows that carbon footprint will increase on average by 52 percent for these countries asincomes reach their 2035 levels. Finally, it decomposes carbon dioxide emissions along the within-country incomedistribution. Car ownership and carbon dioxide emissions are highly concentrated at the top. By 2035, carbon inequalitywill increase in some countries but decrease in others. Such results can be used for modeling future distributionalimplications of climate and energy policies.
    Date: 2022–04–19
  49. By: Claire Nauwelaers; Richard Harding; Inmaculada Perianez-Forte (European Commission - JRC); Karel Haegeman (European Commission - JRC); Eskarne Arregui
    Abstract: This report analyses five case study reports in-depth across five EU countries as part of a broader analytical and critical exercise. This analytical work seeks to contribute to the development of new models for regional and local authorities aiming to boost support for Green Transition of their economies through smarter innovation policies, using the smart specialisation (S3) approach. The work covered five regions from across the European Union representing a diversity of approaches to using S3 for Green Transition: the Basque Country in Spain, the Centro region in Portugal, the region of East and North Finland, the region of Western Macedonia in Greece and the region of West Netherlands. The case studies included in this report consists of three sections on (i) Profile of the region and key development challenges; (ii) Innovation strategies and policies for green transition: incorporating societal challenges; (iii) Understanding and monitoring innovation-led green transition. Drawing together the different elements presented, the conclusion provides a summary overview of the case and the authors’ opinion on it.
    Keywords: Green Transition, EU regions, Smart Specialisation, Transformative innovation
    Date: 2022–10
  50. By: Moeeni,Safoura
    Abstract: While economic sanctions are successful in achieving political goals, can hurt thecivilian population. These negative effects could be even more detrimental and long-lasting for future generations.This study estimates the effects of economic sanctions on children’s education by exploiting the United Nationssanctions imposed on Iran in 2006. Using the variation in the strength of sanctions across industries anddifference-in-differences with synthetic control analyses, this study finds that the sanctions decreased children’stotal years of schooling by 0.1 years and the probability of attending college by 4.8 percentage points. Moreover,households reduced education spending by 58 percent— particularly on school tuition. These effects are larger forchildren who were exposed longer to the sanctions. The results imply that sanctions have a larger effect on theincome of children than their parents. Therefore, ignoring the effects of sanctions on future generations significantlyunderstates their total economic costs.
    Keywords: Educational Sciences,Oil & Gas,International Trade and Trade Rules,Energy Demand,Energy and Mining,Energy and Environment
    Date: 2021–11–04
  51. By: Giorgos Galanis; Giorgio Ricchiuti; Ben Tippet
    Abstract: By building a simple discrete choice model, we study possible paths regarding country participation in international environmental agreements (IEAs) on climate change. Preferences for action are influenced by (i) the growth rate of emissions, (ii) participation of others in IEAs, and (iii) heterogeneous costs and preferences for action. We find a variety of outcomes depending on the relative strength of effects, where sustained high level of cooperation is just one possibility. More specifically, we find that a short run increase in climate action may be followed by a decline later, while non trivial dynamics that make the evolution less predictable are another possibility. Our results indicate that a reduction in global inequalities related to low carbon transition costs are a necessary condition for sustained high levels of cooperation.
    Keywords: Green Transition, Discrete Choice Model, Political Economy
    JEL: E7 F5 Q5 C62
    Date: 2022
  52. By: Maruyama Rentschler,Jun Erik; Hosoe,Nobuhiro
    Abstract: This study develops a computable general equilibrium model for Nigeria, which accounts forinformality, tax evasion, and fuel smuggling. By studying the impact of fuel subsidy reform on consumption, taxincidence, and fiscal efficiency, it shows that the presence of illicit activities substantially strengthens the argumentin favour of subsidy reform: First, fuel subsidy reform can shift the tax base to energy goods, which are less prone totax evasion losses than for instance labour. Second, by reducing price differentials with neighbouring countries,subsidy reform reduces incentives for fuel smuggling. Overall, the results show that considering illicitactivities reduces the welfare losses of fuel subsidy reform by at least 40 percent. In addition, fuel subsidy reductions(and by extension energy tax increases) have a strong progressive distributional impact. The findings hold underdifferent revenue redistribution mechanisms, in particular uniform cash transfers and the reduction of pre-existinglabour taxes.
    Keywords: Social Conflict and Violence,Tax Law,Economic Assistance,Access of Poor to Social Services,Disability,Services & Transfers to Poor,Energy and Environment,Energy and Mining,Energy Demand,Energy Policies & Economics
    Date: 2022–01–20
  53. By: Timilsina,Govinda R.; Dissou,Yazid; Toman, Mike; Heine,Dirk
    Abstract: In an economy with substantial informality, a carbon tax can produce fiscal co-benefits that improve economic performance in addition to reducing carbon dioxide emissions. If the carbon tax revenues are used to cut production or labor taxes on formal firms, particularly those not in the energy sector, the cost of imposing the carbon tax is reduced, and there may even be net economic benefits. These tax cuts can also provide an incentive for informal firms to move to formal parts of the economy. This study confirms these hypotheses using a computable general equilibrium model for Côte d’Ivoire. However, the scale and even the sign of overall economic impacts and formal-informal sectoral interactions are sensitive to the scheme and scale of revenue recycling. The largest fiscal co-benefits, in terms of gross domestic product and economic welfare gains, would occur when the entire carbon tax revenue, after keeping the government revenue neutral, is used to cut existing labor or production taxes for non-energy formal firms. Reducing the existing value-added tax also increases gross domestic product and economic welfare, but without reducing the informality. The study also shows that energy producers should be exempted from using the carbon tax revenues to cut their production or labor taxes; otherwise, carbon dioxide reduction decreases due to a rebound effect. Although a carbon tax with lump-sum transfers of revenues is progressive, it would be economically inefficient because of gross domestic product and welfare reduction and lack of incentives to encourage informal activities to move to the formal parts of the economy.
    Keywords: Climate Change Mitigation and Green House Gases,Energy and Environment,Energy and Mining,Energy Demand,Labor Markets,Rural Labor Markets
    Date: 2021–06–23
  54. By: Foster,Vivien; Dim,Jennifer Uju; Vollmer,Sebastian; Zhang,Fan
    Abstract: This paper examines the extent to which countries have succeeded in decoupling transportemissions from economic growth, and how changes in emissions intensity, economic growth, and population growth havecontributed to changes in transportation-related emissions. The paper employs a modified version of the Tapio decouplingmodel, and demonstrates that over the 1990–2018 study period only 12 of 145 countries achieved “absolute decoupling,”defined as reducing emissions while growing gross domestic product. The majority of the top emitters remain in a“relative decoupling” state, with emissions growing more slowly than gross domestic product. Many of the middle- andlow-income countries have not achieved decoupling; their emissions are growing as fast as or faster than grossdomestic product. To understand the driving factors of transport-related carbon emissions, the paper conductsindex-decomposition and an econometric analysis. The results reveal that while transportation emission intensity hasdeclined in most countries, economic growth and population growth have offset these declines. If these patternscontinue, achieving the goals of the Paris Agreement with improvements in efficiency alone seems unrealistic. Thepaper also shows evidence that higher energy prices are associated with strong emissions reduction.
    Keywords: Transport Services,Energy Demand,Energy and Mining,Energy and Environment,Industrial Economics,Economic Growth,Economic Theory & Research
    Date: 2021–10–18
  55. By: Quentin Gallea; Massimo Morelli; Dominic Rohner
    Abstract: This paper provides the first comprehensive empirical analysis of the role of natural gas for the domestic and international distribution of power. The crucial role of pipelines for the trade of natural gas determines a set of network effects that are absent for other natural resources such as oil and minerals. Gas rents are not limited to producers but also accrue to key players occupying central nodes in the gas network. Drawing on our new gas pipeline data, this paper shows that gas betweenness-centrality of a country increases substantially the ruler's grip on power as measured by leader turnover. A main mechanism at work is the reluctance of connected gas trade partners to impose sanctions, meaning that bad behavior of gas-central leaders is tolerated for longer before being sanctioned. Overall, this reinforces the notion that fossil fuels are not just poison for the environment but also for political pluralism and healthy regime turnover.
    Date: 2022–10
  56. By: Calice,Pietro; Miguel Liriano,Faruk
    Abstract: There is increasing recognition that climate-related and environmental risks are a source of financial risks. Using publicly available data, this paper attempts a preliminary estimation of the physical and transition risks for the banking sector in a sample of economies in Latin America and the Caribbean. The results show that exposure to floods, compounded by high loan concentration in and around countries’ capital cities, represents the most important source of credit risk for the banking sector. After large-scale natural disasters, banks’ nonperforming loans increase by up to 1.4 percentage points in affected provinces. The results also show that banks in the region are exposed to transition risks, especially in Argentina, Bolivia, Paraguay, and Uruguay, due to their high lending to the agriculture sector, which is the largest emitter of greenhouse gases in the countries. Firms operating in transition-sensitive sectors already present signs of financial stress, especially those in the fossil fuel and agriculture sectors. Overall, the results demonstrate the importance for financial authorities in the region to advance in the integration of climate-related and environmental risks in their work.
    Keywords: Financial Sector Policy,Natural Disasters
    Date: 2021–06–10
  57. By: Kevin Pahud (EPFL - Ecole Polytechnique Fédérale de Lausanne); Greg de Temmerman (IHEIE - Institut des Hautes Etudes pour l’Innovation et l’Entrepreneuriat (IHEIE) - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres, Zenon Research)
    Abstract: The importance of energy consumption to allow societies to thrive is well established and prospects of energy needs is well derived through the scientific literature. Yet, lesser discussions persist on the future availability of energy for current industrial economies, a crucial indicator for development. It is defined as net-energy analysis, where one must appropriate more energy than required to get it. The most common indicators are the energy payback time and the EROI (Energy Return of Investment). These indicators are used throughout literature either for energy vectors, energy systems or for broader societal applications. Following growing concerns about climate change, and with the increasing difficulty of extraction of fossil fuels, EROIs became tools to study the global energy transition with a focus on a possible minimum EROI required to maintain a complex society. However, the indicator is used with a large variety of methods, definitions, and boundaries. This led to a lack of consensus on whether a transition to renewable-based energy systems could still provide sufficient net energy for societies to thrive. The concepts of EROI were studied by compiling its various definitions, boundaries, and limits, allowing a clear view of the indicator to understand where and how it could be used. This led to finding three main classes of indicators: the physical EROI, an indicator based on energy consumption, a price-based societal EROI, an indicator using monetary expenditures to look at energy-related expenditures, and finally a socioeconomic EROI which looks at energy expenditures within a nation's economy. A detailed review of those use cases led to understanding that the EROI is often badly calculated through wrong boundaries, goals, or with old data and that no norm exists for its calculation. These inconsistencies tend to negatively bias renewable technologies as a solution to the energy transition. Furthermore, most calculations of minimal EROIs are based on fossil fuel infrastructure, with current energy systems being highly inefficient. The previously calculated minimal EROIs through literature, penalizing renewable technologies, are challenged. The study discusses the possibility of transitioning away from fossil fuels' dependence based on updated data and literature to finally conclude that renewable can offer sufficient energy through the energy transition. This sufficiency however comes with short-term limits followed by a possible drop in net-energy due to the transitory nature of the global shift to mitigate climate change.
    Keywords: Net-energy,EROI,Energy transition
    Date: 2022–07–06
  58. By: Dasgupta,Susmita; Lall,Somik V.; Wheeler,David R.
    Abstract: This paper estimates an urban carbon dioxide emissions model using satellite-measured carbondioxide concentrations from 2014 to 2020, for 1,236 cities in 138 countries. The model incorporates the global trend incarbon dioxide concentration, seasonal fluctuations by hemisphere, and a large set of georeferenced variables thatincorporate carbon dioxide–intensive industry structure, emissions from agricultural and forest fires in neighboringareas, demography, the component of income that is uncorrelated with industry structure, and relevantgeographic conditions. The income results provide the first test of an Environmental Kuznets Curve relationship forcarbon dioxide based on actual observations. They suggest an environmental Kuznets curve that reaches a peak near orabove $40,000 per capita, which is at the 90th percentile internationally. The research also finds that economicdevelopment has a significant effect on the direction of the relationship between population density and carbon dioxideemissions. The relationship is positive at very low incomesbut becomes negative at higher incomes. The paper also uses cities’ mean regression residuals to index their carbondioxide emissions performance within and across regions, decomposes model carbon dioxide predictions into broadsource categories for each city, and uses the regression residuals to explore the impact of subway systems. Thefindings show significantly lower carbon dioxide emissions for subway cities.
    Keywords: Railways Transport,Transport Services,Energy and Environment,Energy and Mining,Energy Demand,Transport in Urban Areas,Urban Transport
    Date: 2021–11–10
  59. By: CIAMBRA Andrea; STAMOS Iraklis (European Commission - JRC); BERTOZZI Cecilia (European Commission - JRC); SIRAGUSA Alice (European Commission - JRC)
    Abstract: Over the past few years, Voluntary Local Reviews (VLRs) have become a common tool for local and regional governments (LRGs) to monitor local achievements and implementation of the Sustainable Development Goals (SDGs). Many LRGs rely on policy analysis and quantitative data to assess initiatives and regulations in several SDG-related policy fields. While working on its own VLR, the City of Madrid published in March 2021 its Roadmap to Climate Neutrality by 2050. The Roadmap was a valuable policy document because it gave insight on a fully local long-term policy strategy on a sensitive policy issue such as decarbonisation and climate change. This report studies the process that led to the Roadmap, highlighting the links between the document and Madrid's longstanding tradition of regulation on greenhouse gas emissions, climate change mitigation, and other decarbonisation measures. It also studies how the Roadmap - a planning document on a specific sustainability issue - compares to existing VLRs from Europe and elsewhere in terms of selected indicators, collected data, and policy lines of action. This information can help define a 'localised' concept of climate neutrality and assess whether a genuinely local approach to decarbonisation currently exists, and how this fits with the targets identified by the SDGs and the 2030 Agenda at the global level.
    Keywords: decarbonisation, climate neutrality, madrid, roadmap, SDGs
    Date: 2022–09
  60. By: Olatunji A. Shobande (University of Aberdeen, UK); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: The study examines the role of natural resources and the carbon emission Kuznets curve (CKC) in managing the climate crisis in Africa, using annual series data from the World Bank from 1980 to 2019. The empirical strategy is based on the second-generation panel techniques that account for cross-sectional dependency in the series. Specifically, the empirical evidence is based on the Westerlund (2017) panel cointegration test, panel augmented mean group (AMG), common correlated effects mean group (CCEMG) and the vector autoregressive-vector error correction (VAR) approach. Evidence from the panel analysis confirmed the existence of CKC U-shaped nexus in Africa, but the country-level results are mixed. Furthermore, results using the vector autoregressive-vector correction model indicate possible convergence among the variables across the African countries. Also, natural resource unidirectionally Granger-causes carbon emissions. We suggest the consideration of environmental factors in the utilisation of natural resources. Similarly, energy efficiency is crucial to decouple carbon from energy usage. Our results highlight the importance of the effective and efficient management of natural resources, and energy efficiency in mitigating the aftermath of carbon emissions and preventing a climate crisis in Africa.
    Keywords: Carbon Kuznets Curve; carbon emission; Natural resource; climate crisis; Time series analysis; Africa
    Date: 2022–01
  61. By: Carlos Marinheiro; Amilcar Sousa; Ana Pinheiro
    Abstract: The Green Budgeting technique is being adopted by an increasing number of countries and has the potential to align fiscal policy objectives with climate and environmental goals. Given that the (financial) sustainability of public finances and environmental sustainability are intrinsically interconnected with each other, this paper argues that the traditional public debt sustainability analysis should be expanded to encompass climate and environmental sustainability considerations. Other key elements of a proper budgetary framework, such as fiscal transparency should also be broadened to include the disclosure of the environmental and climate impacts of fiscal policy. Green Budgeting is a growing technique that can be used to expand the scope of such usual fiscal concepts. One of the main tools for its adoption is Green Budget Tagging, which enables citizens to assess the environmental and climate impacts of fiscal policy, on both the tax and spending sides of the state budget. It enables to capture both the positive and negative impacts of fiscal policy. Additionally, it provides more visibility to the amount of resources countries allocate to climate and environment goals and to mitigation and adaptation policies, while allowing the assessment of whether such goals are attained. A proper working fiscal framework, including the adoption of accrual accounting and performance programme budgeting, seems to be instrumental in this domain along with strong political commitment. Portugal already took a few steps, such as recently enacted Climate Law, but still has a long way to go in terms of Green Budgeting. This paper proposes a roadmap for its adoption. To start with, both the completion of the public accounts reform and the full adoption of programme budgeting foreseen in the 2015 Budgetary Framework Law should be attained. The meeting of such two pre-conditions will then lay the foundations for the implementation of Green Budgeting and to disclose the climate and environmental impacts of policy measures, following the international best practices. The adoption of Green Budgeting might also pave the way to the emission of Green Bonds to finance specific environmental and climate related projects. Such bonds might be a cost-effective way to finance the substantial green investment needs in a highly indebted country while contributing to the decrease of global risk.
    Keywords: green budgeting; sustainability; green tagging; green financing; budgeting; Portugal
    JEL: H5 H61 H63 Q58 Q51
    Date: 2022–09
  62. By: Ralf Martin; Dennis Verhoeven
    Abstract: The UK government has committed to increase R&D support for clean technologies in an effort to meet its net-zero target by 2050. The opportunity cost of such programs crucially depends on the value of knowledge spillovers that accrue from clean relative to other (emerging) technologies. Using patent information to measure the value of direct and indirect knowledge spillovers, we derive estimates for the expected economic returns of subsidising a particular technology field. Our method allows comparing fields by the returns a hypothetical additional subsidy would have generated within the UK or globally. Clean technologies are top-ranked in terms of within-UK returns, with Tidal and Offshore Wind showing particularly high returns. In terms of global returns, emerging technologies such as Wireless, as well as Electrical Engineering outperform Clean by a small margin. We also find that cross-border knowledge spillovers are important for all technology fields, with global return rates over ten times larger than within-UK ones. In sum, our results suggest that the opportunity cost of R&D support programs for clean innovation in the UK is low at worst.
    Keywords: innovation, knowledge spillovers, clean technology, innovation policy, patent data
    Date: 2022–03–02
  63. By: Mark Buntaine; Michael Greenstone; Guojun He; Mengdi Liu; Shaoda Wang; Bing Zhang
    Abstract: We conducted a nationwide field experiment in China to evaluate the direct and indirect impacts of assigning firms to public or private citizen appeals treatments when they violate pollution standards. There are three main findings. First, public appeals to the regulator through social media substantially reduce violations and pollution emissions, while private appeals cause more modest environmental improvements. Second, experimentally adding “likes” and “shares” to social media appeals increases regulatory effort, suggesting visibility as an important mechanism. Third, treatment pollution reductions are not offset by control firm increases, based on randomly varying the proportion of treatment firms at the prefecture-level.
    JEL: K32 P28 Q52
    Date: 2022–10
  64. By: Strand,Jon
    Abstract: Border carbon adjustments imply that high-income countries set taxes on energy-intensive imports that are proportional to the carbon content of these imports, to match their own carbon taxes. This paper considers the impacts of such a policy on exporter countries, many of which have no or very low carbon taxes today. The paper first studies a policy whereby the importer allows the exporter’s border tax to be reduced by its own comprehensive carbon tax (“tax rebating”). The analysis finds that the exporter is then incentivized to set its own comprehensive carbon tax at the same rate as the border tax, up to a maximal rate. When the border tax is higher, the exporter instead reduces its carbon tax. Border tax revenues of the high-income country can be returned to incentivize higher carbon taxes in the exporting countries (“carbon crediting”). When tax rebating is not allowed but tax revenues are fully returned, even higher exporter carbon taxes can then be incentivized, possibly exceeding $60 per ton of carbon dioxide in the numerical examples. Border taxation can give rise to export diversion away from border tax-setting countries, which reduces the scope for incentivizing the exporter’s carbon tax. The paper also studies how taxes on oil extraction by oil exporters can be incentivized by oil importing countries, by increasing their oil import prices above world market rates, or more efficiently through support to investments in exporters’ renewable energy capacity.
    Keywords: Climate Change Mitigation and Green House Gases,Public Sector Economics,Public Finance Decentralization and Poverty Reduction,Economic Adjustment and Lending,Taxation&Subsidies,Macro-Fiscal Policy,Energy and Environment,Energy and Mining,Energy Demand,Oil&Gas
    Date: 2021–06–14
  65. By: Emanuel Kohlscheen
    Abstract: This study analyses oil price movements through the lens of an agnostic random forest model, which is based on 1,000 regression trees. It shows that this highly disciplined, yet flexible computational model reduces in-sample root mean square errors (RMSEs) by 65% relative to a standard linear least square model that uses the same set of 11 explanatory factors. In forecasting exercises the RMSE reduction ranges between 51% and 68%, highlighting the relevance of non-linearities in oil markets. The results underscore the importance of incorporating financial factors into oil models: US interest rates, the dollar and the VIX together account for 39% of the models' RMSE reduction in the post-2010 sample, rising to 48% in the post-2020 sample. If Covid-19 is also considered as a risk factor, these shares become even larger.
    Keywords: dollar, forecasting, machine learning, oil, risk.
    JEL: C40 F30 Q40 Q41 Q47
    Date: 2022–09
  66. By: Claudia Teran-Escobar (SENS - Sport et Environnement Social - UGA - Université Grenoble Alpes, PACTE - Pacte, Laboratoire de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); Sarah Duché (PACTE - Pacte, Laboratoire de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); Hélène Bouscasse (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Sandrine Isoard-Gautheur (SENS - Sport et Environnement Social - UGA - Université Grenoble Alpes); Patrick Juen (PACTE - Pacte, Laboratoire de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); Lilas Lacoste (SENS - Sport et Environnement Social - UGA - Université Grenoble Alpes, PACTE - Pacte, Laboratoire de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); Sarah Lyon-Caen (IAB - Institute for Advanced Biosciences / Institut pour l'Avancée des Biosciences (Grenoble) - CHU - Centre Hospitalier Universitaire [Grenoble] - INSERM - Institut National de la Santé et de la Recherche Médicale - EFS - Etablissement français du sang - Auvergne-Rhône-Alpes - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Sandrine Mathy (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Estelle Ployon (PACTE - Pacte, Laboratoire de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); Anna Risch (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Philippe Sarrazin (SENS - Sport et Environnement Social - UGA - Université Grenoble Alpes); Rémy Slama (IAB - Institute for Advanced Biosciences / Institut pour l'Avancée des Biosciences (Grenoble) - CHU - Centre Hospitalier Universitaire [Grenoble] - INSERM - Institut National de la Santé et de la Recherche Médicale - EFS - Etablissement français du sang - Auvergne-Rhône-Alpes - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Kamila Tabaka (PACTE - Pacte, Laboratoire de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); Carole Treibich (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Sonia Chardonnel (PACTE - Pacte, Laboratoire de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); Aïna Chalabaev (SENS - Sport et Environnement Social - UGA - Université Grenoble Alpes)
    Abstract: Background: Frequent car use contributes to health and environmental issues such as air pollution, climate change and obesity. Active and sustainable mobility (bike, walk, public transport, car sharing) may address these issues. Different strategies have been implemented in past research, involving hard levers, aimed at modifying the economical or geographical context (e.g., free public transport), and soft levers, aimed at modifying psychological processes (e.g., personalised transport advice). However, few studies have combined both hard and soft levers. In addition, few have used robust methodologies (e.g., randomised controlled trials), followed behavioural changes in the longterm, and been anchored in behaviour change theories. InterMob aims to address these limits by implementing a 24-month randomised controlled trial including hard and soft levers. The objectives of InterMob are to a) evaluate the effectiveness of an experimental arm versus an active controlled arm, and b) identify the processes of mobility change. Methods: Regular car users living in Grenoble (N = 300) will be recruited and randomised to one of the two arms. The experimental arm consists in a six-month intervention combining hard levers (free access to transport/bikes), and soft levers (e.g., personalised transport advice). The control arm consists in a six-month intervention aimed at raising awareness on air pollution and its health effects. Both arms will include eight evaluation weeks (spread out over 24 months) based on a GPS, an accelerometer, and a pollution sensor. Moreover, participants will complete mobility logbooks and surveys measuring psychological constructs, socio-economical, and socio-spatial characteristics. Discussion: InterMob will assess the effectiveness of two interventions aimed at reducing car use within regular car users in the short-, mid- and long-term. Moreover, InterMob will allow to better understand the psychological processes of behaviour change, and the socio-economical and geographical conditions under which the intervention is efficient in reducing car use. Finally, the benefits of mobility change in terms of physical activity, quality of life, and exposure to pollution will be quantified. Trial registration: Clini calTr ials. gov: NCT05096000 on 27/10/2021 (retrospectively registered).
    Keywords: Daily mobility,Spatial organisation,Psychology,Car use,Active mobility,Sustainable mobility,Behaviour change,Health,Air pollution,RCT
    Date: 2022–09–16
  67. By: E. Ruben van Beesten; Daan Hulshof
    Abstract: We consider a zonal international power market and investigate potential economic incentives for short-term reductions of transmission capacities on existing interconnectors by the responsible transmission system operators (TSOs). We show that if a TSO aims to maximize domestic total welfare, it often has an incentive to reduce the capacity on the interconnectors to neighboring countries. In contrast with the (limited) literature on this subject, which focuses on incentives through the avoidance of future balancing costs, we show that incentives can exist even if one ignores balancing and focuses solely on welfare gains in the day-ahead market itself. Our analysis consists of two parts. In the first part, we develop an analytical framework that explains why these incentives exist. In particular, we distinguish two mechanisms: one based on price differences with neighboring countries and one based on the domestic electricity price. In the second part, we perform numerical experiments using a model of the Northern-European power system, focusing on the Danish TSO. In 97% of the historical hours tested, we indeed observe economic incentives for capacity reductions, leading to significant welfare gains for Denmark and welfare losses for the system as a whole. We show that the potential for welfare gains greatly depends on the ability of the TSO to adapt interconnector capacities to short-term market conditions. Finally, we explore the extent to which the recently introduced European "70%-rule" can mitigate the incentives for capacity reductions and their welfare effects.
    Date: 2022–10
  68. By: Macdonald,Kevin Alan David; Patrinos,Harry Anthony
    Abstract: Carbon pricing is increasingly used by governments to reduce emissions. The effect of carbonpricing on economic outcomes as well as mitigating factors has been studied extensively since the early 1990s. Onemitigating factor that has received less attention is education quality. If technological change that reduces thereliance of production on emissions is skill-biased, then carbon pricing may increase the skill premium of earningsand subsequent wage inequality; however, a more elastic skill supply through better education quality may mitigateadverse economic outcomes, including wage inequality, and enhance the effect of carbon pricing on technological changeand subsequently emissions. A general equilibrium, overlapping-generations model is proposed, with endogenousskill investment in which the average skill level of the workforce can affect the need for emissions in an aggregateproduction function. This study uses data on industrial emissions linked to the Organisation for EconomicCo-operation and Development’s Programme for International Assessment of Adult Competencies dataset for European Unioncountries. The findings show that, within countries, cognitive skills are positively associated with employmentin industries that rely less on emissionsfor production and in industries that, over time, have been able to reducetheir reliance on emissions for production. In the estimated general equilibrium model, higher cognitive skills reduce aneconomy’s reliance on emissions for production. Having higher quality education—defined as the level of cognitiveskills attained by workers per unit of cost—increases the elasticity of skill supply and, as a result, mitigates acarbon tax’s economic costs including output loss and wage inequity, and enhances its effect on emissions reduction.The implication is that investments in education quality are needed for better enabling green technological innovationand adaptation and reducing inequality that results from carbon pricing.
    Keywords: Educational Sciences,Climate Change Mitigation and Green House Gases,Education for Development (superceded),Educational Populations,Education For All
    Date: 2021–10–14
  69. By: Derek Lemoine
    Abstract: I study how policymakers can access and act on the information about climate change damages that is dispersed throughout the economy. I analyze a new dynamic deposit-refund instrument (called “carbon shares”) that I show can: i) efficiently price emissions conditional on information, ii) efficiently incentivize removal of past emissions conditional on information, and iii) efficiently aggregate dispersed information about the social cost of emissions. Conventional emission taxes generally succeed at only the first of these objectives. Rather than projecting damages in all future periods and all possible states of the world in order to calculate the optimal tax, the regulator here estimates damages as they are realized and empowers markets to perform price discovery about future damages.
    JEL: D82 G14 H23 Q54 Q58
    Date: 2022–10

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