nep-ene New Economics Papers
on Energy Economics
Issue of 2023‒02‒27
forty-six papers chosen by
Roger Fouquet
London School of Economics

  1. Analysing the rising oil price shock driven by Russia-Ukrainian tensions - effect on inflationary pressure in South Africa By Dr Jan Roan Neethling
  2. The Impact of Environmental Regulations on the Manufacturing Sector: The Role of Electricity Prices By Lee, Sul-Ki
  3. Is climate transition risk priced into corporate credit risk? Evidence from credit default swaps By Andrea Ugolini; Juan C. Reboredo; Javier Ojea-Ferreiro
  4. OPEC and the Oil Market By Mr. Andrea Pescatori; Yousef F. Nazer
  5. Oil Prices Uncertainty, Endogenous Regime Switching, and Inflation Anchoring By Yoosoon Chang; Ana Maria Herrera; Elena Pesavento
  6. Understanding the Global Drivers of Inflation: How Important are Oil Prices? By Jongrim Ha; M. Ayhan Kose; Franziska Ohnsorge; Hakan Yilmazkuday
  7. Global Oil Price Swings and Shipping Disruptions: Do They Matter for Malta? By Germano Ruisi
  8. Internal Migration and Energy Poverty By Leonard Le Roux; Johanna Choumert-Nkolo
  9. A Greek Green Deal: building energy democracy and fighting energy poverty By Yannis Maniatis; Haris Doukas; Emmanuel Karagiannis
  10. A Study on the Revitalization of Renewable Energy Industry in the Low-Carbon Era: Focusing on Offshore Wind Power and Hydrogen By Hur, Sun Kyung
  11. Estudio sobre políticas energéticas para la promoción de las energías renovables en apoyo a la electromovilidad By Eirin, María Silvina; Messina, Diego; Contreras Lisperguer, Rubén; Salgado, René
  12. Limit Pricing and Entry Game of Renewable Energy Firms into the Energy Sector By Semmler Willi; Di Bartolomeo Giovanni; Fard Behnaz Minooei; Braga Joao Paulo
  13. Nuclear Decommissioning Profile Switzerland By Bärenbold, Rebekka
  14. Nuclear Decommissioning Profile Sweden By Bärenbold, Rebekka
  15. Drag coefficient estimation in FSI for PWR fuel assembly bowing By L. Longo; K. Cruz; E. Sarrouy; G. Ricciardi; Christophe Eloy
  16. Nuclear Decommissioning Profile USA By Bah, Muhammad Maladoh
  17. Mirroring in production? Early evidence from the scale-up of Battery Electric Vehicles (BEVs) By Marc Alochet; John Paul Macduffie; Christophe Midler
  18. The stumbling block in ‘the race of our lives’: transition-critical materials, financial risks and the NGFS climate scenarios By Miller, Hugh; Dikau, Simon; Svartzman, Romain; Dees, Stéphane
  19. Mining for Peace By Roland Hodler; Paul Schaudt; Alberto Vesperoni
  20. L’Initiative pour la Transparence dans les Industries Extractives (ITIE) : une mine d’informations à exploiter ? By Yannick Bouterige; Neerbewendé Rachid Pafadnam
  21. Energy transition minerals and the SDGs. A systematic review By Etienne ESPAGNE; Hugo LAPEYRONIE
  22. Key Points and Implications of the EU Carbon Border Adjustment Mechanism Legislative Proposal By Lim, Soyoung; Yang, Jooyoung
  23. The Biden Administration’s Climate Crisis Policy as Seen at the Leaders Summit on Climate By Lim, Soyoung; Kim, Kye Hwan
  24. Assessing the accuracy and adequacy of India's national energy balances: Implications for tracking sustainable development and climate goals By Manisha Jain
  25. Aspects du droit de la transition énergétique dans les bâtiments en France By Paulin Ibanda Kabaka
  26. Economic Growth and Pollutant Emissions: New Panel Evidence from the Union for the Mediterranean Countries By Mouna Ben Abdeljelil; Christophe Rault; Fateh Belaïd
  27. Exploring the cost-effectiveness of energy efficiency implementation measures in the residential sector By Fateh Belaïd; Zeinab Ranjbar; Camille Massié
  28. Green product innovation in industrial networks: a theoretical model By Dugoua, Eugenie; Dumas, Marion
  29. Explaining the energy performance gap in buildings with a latent profile analysis By Dorothée Charlier
  30. Dynamical analysis of evolutionary transition toward sustainable technologies By Fausto Cavalli; Ahmad Naimzada; Enrico Moretto
  31. Estadísticas del subsector eléctrico de los países del Sistema de la Integración Centroamericana (SICA), 2021 By Rojas, Manuel Eugenio
  32. Climate and carbon risk of tourism in Europe By Robert Steiger; O. Cenk Demiroglu; Marc Pons; Emmanuel Salim
  33. Crise de l'énergie, guerre en Ukraine et la question du réchauffement climatique By Jacques Fontanel
  34. Dirty Dance: Tourism and Environment By Mr. Serhan Cevik
  35. Agent-based Integrated Assessment Models: Alternative Foundations to the Environment-Energy-Economics Nexus By Karl Naumann-Woleske
  36. Carbon default swap – disentangling the exposure to carbon risk through CDS By Blasberg, Alexander; Kiesel, Rüdiger; Taschini, Luca
  37. An Insurance Paradigm for Improving Power System Resilience via Distributed Investment By Farhad Billimoria; Filiberto Fele; Iacopo Savelli; Thomas Morstyn; Malcolm McCulloch
  38. El efecto de cambios en la regulación del mercado mayorista de electricidad en Colombia en un modelo estructural de subastas complejas By Balat, Jorge; Carranza, Juan Esteban; Martin, Juan David; Riascos, Alvaro J
  39. Foreign Demand, Developing Country Exports, and CO2 Emissions: Firm-Level Evidence from India By Hélène Ollivier; Geoffrey Barrows
  40. Decentralised Cross-Border Interconnection By Claude Crampes; Nils-Henrik M. von Der Fehr
  41. Pursuing Carbon Neutrality in the Automotive Sector: Trends, Proposals, and Challenges By Kim, Kyoung You; Cho, Cheul
  42. Waiting for Godot? The Case for Climate Change Adaptation and Mitigation in Small Island States By Mr. Serhan Cevik
  43. The Redistributive Impact of Consumption Taxation in the EU: Lessons from the post-financial crisis decade By MAIER ESSINGER Sofia; RICCI Mattia
  44. Energy Tax Exemptions and Industrial Production By Andreas Gerster; Stefan Lamp
  45. The Role of Individual Preferences in Explaining the Energy Performance Gap By Salomé Bakaloglou; Dorothée Charlier
  46. Assessing the pass-through of energy prices to inflation in the euro area By Francesco Corsello; Alex Tagliabracci

  1. By: Dr Jan Roan Neethling (Faculty of Economic and Management Sciences, Northwest University, South Africa Author-2-Name: Abigail Stiglingh-Van Wyk Author-2-Workplace-Name: Faculty of Economic and Management Sciences, Northwest University, South Africa Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - The aim of this paper is to examine the relationship between the CPI, the brent crude oil price, and the PPI for final manufactured goods as well as the Rand/Dollar exchange rate during the past year. The study used South Africa as a proxy for developed countries. The objective is, therefore, to evaluate the effects of the increase in commodity prices on inflation and other macroeconomic variables. Methodology - The study utilised a quantitative methodological approach through the assessment of an econometric model that employed monthly data from January 2017 to May 2022. The paper utilized variables such as CPI, brent crude oil prices, PPI for final manufactured goods as well as the Rand/Dollar exchange rate. Findings - Short- and long-run relationships were established between the variables using the vector error correction model (VECM) and the Johansen co-integration equation methods. The long-run conclusions showed that high brent crude oil prices, high sunflower oil, a depreciating exchange rate and increasingly high PPI levels will lead to an increase in the CPI (Inflation). The results also indicated that oil prices still influence the basic prices of goods and services since all things need to be transported. Novelty - The results of the study showed that a perpetual international and national macro-economic environment is crucial to prevent inflationary pressures and price shocks, while volatile exchange rates unsteady PPI's and significantly high oil and commodity prices causes cost-push inflation. Policy certainty and political stability is important to keep inflation stable and economic growth positive, which could lead to a more self-sufficient economy which are is reliant on political instability as an obstacle for positive future economic growth. Type of Paper - Empirical"
    Keywords: Russian-Ukrainian conflict, economic growth, Brent crude oil prices, PPI, CPI, exchange rates, sunflower oil.
    JEL: E31 E37 E60 E63
    Date: 2022–12–31
  2. By: Lee, Sul-Ki (Korea Institute for Industrial Economics and Trade)
    Abstract: The role of policy (among various other factors) in determining the stability of the power supply and electricity rates is becoming more important. Policy-based pressure on rising electricity prices is expected to intensify as countries prepare stronger environmental regulations in an international effort to cope with climate change. Under the Paris Agreement, countries submit Nationally Determined Contributions (NDC) that comprise plans to reduce greenhouse gas emissions by 2030. South Korea has declared a goal of reducing greenhouse gas emissions in 2030 by 24.4 percent compared to 2017 levels. In addition, at the end of 2020, countries submitted plans of a long-term low-carbon vision by 2050. Recently, major countries including the United States, European nations and South Korea have been pushing for a Green New Deal, and more and more countries are targeting net-zero emissions. This trend has only intensified in the post-COVID-19 era, as countries build consensus around the establishment of an eco-friendly and low-carbon society. GHG reductions and environmentally-friendly trends are likely to lead to higher electricity prices. It is self-evident that if the shares of renewable energy and natural gas of the power mix increase and the amount of power generated from fuels that were previously responsible for baseloads (such as nuclear and coal power) decreases, upward pressure on electricity prices will continue to build. The purpose of this study is to reveal the future impact of power sector-related regulations on the manufacturing sector and to provide insight for firms in establishing strategies to deal with such policies.
    Keywords: climate change; emissions; energy policy; green new deal; net-zero; carbon neutrality; manufacturing; electricity prices
    JEL: L50 Q41 Q43 Q48
    Date: 2021–04–01
  3. By: Andrea Ugolini; Juan C. Reboredo; Javier Ojea-Ferreiro
    Abstract: We study whether climate transition risk is reflected in the credit default swap (CDS) spreads of firms. Using information on the vulnerability of a firm’s value to the transition to a low carbon economy, we construct a climate transition risk (CTR) factor, and document how this factor shifts the term structure of the CDS spreads of more vulnerable firms but not of less vulnerable firms. Considering the impact of different climate transition policies on the CTR factor, we find that they have asymmetric and significant economic impacts on the credit risk of more vulnerable firms, and negligible effects on the remaining firms.
    Keywords: Climate transition risk, CDS spreads, credit risk.
    JEL: C24 G12 G32 Q54
    Date: 2023–01
  4. By: Mr. Andrea Pescatori; Yousef F. Nazer
    Abstract: This paper studies the historical importance of OPEC for oil price fluctuations. An event-study approach is used to identify the effects of OPEC announcements on oil price fluctuations. Results show that price volatility is higher than typical around OPEC meetings. Also, members' compliance, a proxy for credibility, has strongly fluctuated over time. An ordered multinomial logit framework identifies the main factors that explain OPEC's decisions to cut, maintain, or boost members' oil production and is able to successfully predict OPEC meeting outcomes 66 percent of the time, between 1989 and 2019. Cyclical oil price fluctuations (as opposed to persistent shifts in levels) drive OPEC’s decisions, suggesting that OPEC's objective is to stabilize the oil price rather than countering fundamental shifts in demand and supply. Low OPEC’s market share reduces the probability of a production cut. Finally, the transparency of OPEC's statements has modestly improved between 2002 and 2019.
    Keywords: OPEC Meetings; Credibility; Oil Price; Text Analysis; OPEC+; OPEC meeting; OPECS decision; OPEC announcement; OPECS objective; OPECS statement; Oil prices; Oil; Oil consumption; Commodity price fluctuations; Oil production; Global
    Date: 2022–09–16
  5. By: Yoosoon Chang (Indiana University); Ana Maria Herrera (University of Kentucky); Elena Pesavento (Emory University)
    Abstract: Using a novel approach to model regime switching with dynamic feedback and interactions, we extract latent mean and volatility factors in oil price changes. We illustrate how the volatility factor constitutes a useful measure of oil market risk (or oil price uncertainty) for policy makers and analysts as it captures uncertainty not reflected in other economic/financial uncertainty measures. Then, in the context of a VAR, we investigate the role of oil price uncertainty in driving inflation expectations and inflation anchoring. We show that shocks to the mean factor lead to higher expected inflation and inflation disagreement among professional forecasters and households. In contrast, shocks to the volatility factor act as aggregate demand shocks in that they result in lower expected inflation, yet they do increase disagreement about future inflation among professional forecasters and, especially, among households. We also provide econometric evidence suggesting the proposed endogenous volatility switching model can outperform other regime switching models.
    Keywords: oil price volatility, endogenous regime switching, expected inflation, inflation anchoring
    Date: 2023–02
  6. By: Jongrim Ha (World Bank, Prospects Group); M. Ayhan Kose (World Bank, Prospects Group; Brookings Institution; CEPR; CAMA); Franziska Ohnsorge (World Bank, Prospects Group; CEPR; CAMA); Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: This paper examines the global drivers of inflation in 55 countries over the 1970–2022 period. We estimate a Factor-Augmented Vector Autoregression model for each country and assess the importance of several global (demand, supply, and oil price) and domestic shocks. We report three main results. First, global shocks have explained about 26 percent of inflation variation in a typical economy. Oil price shocks accounted for only about 4 percent of inflation variation, but they had a statistically significant impact on inflation in three quarters of countries. Second, global shocks have become more important in driving inflation variation over time. The share of inflation variance caused by oil price shocks increased from 4 percent prior to 2000 to roughly 9 percent over the 2001–2022 period. They also accounted for some of the steep runup in inflation between mid-2021 and mid-2022. Finally, oil price shocks tended to contribute significantly more to inflation variation in advanced economies; countries with stronger global trade and financial linkages; commodity importers; net energy importers; countries without inflation-targeting regimes; and countries with pegged exchange rate regimes. Our headline results are robust to a wide range of exercises — including alternative measures of global factors and oil prices — and aggregation of countries.
    Keywords: inflation, oil prices, global shock, domestic shock, FAVAR, exchange rates
    JEL: E31 E32 Q43
    Date: 2023–02
  7. By: Germano Ruisi
    Abstract: Recent years have been characterised by the COVID-19 outbreak, a sharp contraction in global economic activity in 2020 and a remarkable rebound in 2021, though with continued supply disruptions. Energy and commodity prices were further fuelled by the war in Ukraine. As a result of these factors, oil prices and shipping costs experienced large swings, which in turn led to high inflationary pressures not seen since the early 1980s. Against this background, this study compares the developments in inflation between Malta and the euro area as well as its member countries. It also aims at assessing the effect that oil price swings and disruptions in the shipping industry at the global level exert on the Maltese economy, with emphasis on HICP inflation and its main sub-indices. As of September 2022, the Maltese headline inflation (7.4%) is the second lowest in the euro area right after France (6.2%) and far from the peak value of 24.1% reached in Estonia. Moreover, oil price swings and, to a lesser extent, disruptions in the shipping industry appear to produce recessionary effects while raising several inflation sub-indices. Finally, the energy subsidies implemented by the Maltese government since July 2021 helped reducing the negative effects of the two disturbances.
    JEL: C32 F41 Q43
  8. By: Leonard Le Roux (Sciences Po Department of Economics); Johanna Choumert-Nkolo (EDI Global)
    Abstract: This paper presents a first analysis of the relationship between rural-urban migration and energy poverty in South Africa, and to the authors' knowledge in Africa, using a nationally representative panel dataset. Using a dynamic difference in differences approach, energy poverty changes for both migrants and non-migrants are tracked over a ten-year period from 2008 to 2017. On average, moving to urban areas results in reductions in energy poverty for migrants themselves, with especially dramatic reductions in the use of traditional cooking fuels. Roughly one in five new urban arrivals move into informal shack dwellings where initial gains in energy access are negligible, but even for these migrants, the gains from migration grow over time. Effects on households, differences between male and female migrants, and other amenitities are also explored.
    Keywords: Energy Poverty, Migration, Urbanization, Panel data
    JEL: Q41 N50 D10 O15
    Date: 2023–02
  9. By: Yannis Maniatis; Haris Doukas; Emmanuel Karagiannis
    Abstract: While implementing the New Green Deal, the European Union is faced with major energy challenges and dilemmas. Energy poverty is an issue of critical importance affecting many Europeans. Since Greece has experienced a prolonged period of crises, the strengthening of energy democracy and the fight against energy poverty must be among the top national priorities. Collective energy actions can pave the way towards the uptake of renewable energy, enabling and incentivizing consumers to become prosumers. This study first outlines the main theoretical perspectives on the politics of energy and proposes a new approach to understand renewable energy. Then it describes the EU energy policy and the transition to a climate-neutral economy. It briefly explains the concept of energy communities before focusing on the case of Greece. The study examines the rise of the country’s energy communities, including the Agrinio and Minoan communities. It also explains the measures taken in Greece during the last decade to tackle energy poverty by offering incentives for energy savings. Moreover, the study describes the national energy and climate plan by examining the case of Tilos. Finally, the study summarises the main findings and offer some policy recommendations.
    Keywords: Greece, energy poverty, energy saving, prosumers, energy democracy, renewable energy
    Date: 2023–02
  10. By: Hur, Sun Kyung (Korea Institute for Industrial Economics and Trade)
    Abstract: Since the onset of the COVID-19, the seriousness of the climate problem has attracted more attention, and international cooperation to prevent climate change and climate disaster is continuing. More than 100 countries, including the EU, China, and Japan, have declared or are pursuing carbon neutrality, and the Biden administration in the United States has also pledged carbon neutrality. In addition, major countries in the EU as well as the U.S. are considering introducing a carbon border tax, strengthening regulations related to emissions in the transport sector and establishing a plastic tax. Korea has also set active greenhouse gas targets under the new climate system and submitted them to the international community. Through its 2030 National Determined Contribution (NDC) revised in December 2020, Korea proposed a goal of reducing total national greenhouse gas emissions by 24.4 percent by 2030. The Long-Term Low Greenhouse gas Mission Development Strategy (LEDS) submitted to the United Nations Climate Change Convention (UNCC) at the same time contains a vision for 2050 carbon neutrality. This paper focuses on analyzing offshore wind power and hydrogen, which are becoming increasingly important among renewable energy sources.
    Keywords: hydrogen; offshore wind; renewable energy; climate change; hydrogen power; carbon neutrality
    JEL: Q42 Q48 Q54 Q58
    Date: 2021–06–01
  11. By: Eirin, María Silvina; Messina, Diego; Contreras Lisperguer, Rubén; Salgado, René
    Abstract: Este documento identifica políticas y mecanismos para aumentar la participación de las energías renovables en la red eléctrica atendiendo a la información entregada por organismos especializados y publicaciones académicas, entre otras fuentes de información. El objetivo central es identificar las condiciones que potencien la configuración de un sector eléctrico capaz de responder con fuentes renovables a la eventual demanda energética que surgirá tras el esperado incremento de la flota de vehículos eléctricos (VE). En este sentido y según las estimaciones de la compañía financiera estadounidense Bloomberg, se espera un aumento del 70% de las ventas totales de los EV para el año 2040 (Bloomberg, 2021) generando una evidente exigencia a los sistemas eléctricos del mundo entero.
    Date: 2022–12–05
  12. By: Semmler Willi; Di Bartolomeo Giovanni; Fard Behnaz Minooei; Braga Joao Paulo
    Abstract: Governments attempt to incentivize the energy sector to replace old technologies with new ones based on renewable energy as the most effective way to combat climate change. Yet, in the energy sector prevail fossil fuel incumbents, which inhibit renewable energy entrants. Our paper provides a game-theoretic stylization of competition between those two types of firms. Incumbents set prices, and entrants respond with quantity adjustments. In the context of a dynamic limit pricing model, we study the entry dynamics in a market in which the dominant firms (fossil fuel energy suppliers) face the entry of a group of competitive fringe firms (renewable energy suppliers) when the dominant firms have easier access to financial markets. Still, the fringe firms finance their expansion with internal finance. We also investigate the effect of the public support of renewable energy firms through subsidies. Our model is built on Judd and Peterson (1986, JET), but our solutions are obtained through a non-linear model predictive control algorithm. By this technique, we can predict the outcome of the competition between incumbents and entrants and the impact of financial and fiscal policies considering moving-horizon strategies.
    Date: 2022–01
  13. By: Bärenbold, Rebekka (University of Basel)
    Abstract: This report provides an overview of the legal framework and regulation for the decommissioning of NPPs in Switzerland, as well as give an indication on current cost estimates and their accuracy. Additionally, it shows the current progress of the decommissioning process.
    Keywords: nuclear decommissioning, review, Switzerland
    JEL: L94 Q48
    Date: 2023–01–12
  14. By: Bärenbold, Rebekka (University of Basel)
    Abstract: This report provides an overview of the legal framework and regulation for the decommissioning of NPPs in Sweden, as well as give an indication on current cost estimates and their accuracy. Additionally, it shows the current progress of the decommissioning process.
    Keywords: nuclear decommissioning, review, Sweden
    JEL: L94 Q48
    Date: 2023–01–12
  15. By: L. Longo (STCP - Service de Technologie des Composants et des Procédés - DTN - Département Technologie Nucléaire - CEA-DES (ex-DEN) - CEA-Direction des Energies (ex-Direction de l'Energie Nucléaire) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives, LMA - Laboratoire de Mécanique et d'Acoustique [Marseille] - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); K. Cruz (STCP - Service de Technologie des Composants et des Procédés - DTN - Département Technologie Nucléaire - CEA-DES (ex-DEN) - CEA-Direction des Energies (ex-Direction de l'Energie Nucléaire) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives); E. Sarrouy (LMA - Laboratoire de Mécanique et d'Acoustique [Marseille] - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); G. Ricciardi (STCP - Service de Technologie des Composants et des Procédés - DTN - Département Technologie Nucléaire - CEA-DES (ex-DEN) - CEA-Direction des Energies (ex-Direction de l'Energie Nucléaire) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives); Christophe Eloy (IRPHE - Institut de Recherche sur les Phénomènes Hors Equilibre - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Assembly bowing in a PWR core can be a serious problem for managing the power during normal operation or for periodical maintenance. One of the causes of this phenomenon is the transverse flow in the core, generated by the non-uniformity of the axial flow. Modelling the mechanical behaviour of a PWR core is made difficult by the complex geometry and the numerous friction points that lead to non-linearities. A simple but efficient way to deal with these issues is the porous medium model proposed by Ricciardi et al. (2009). In this model, the equations used at the fluid–structure interface require empirical parameters such as the added mass, or axial and normal drag coefficients. Using a new experimental setup at CEA, Eudore, which hosts 3 half-scale fuel assemblies in a line, the forces acting on the assembly by a non-uniform flow profile were measured. An analytical model to retrieve the normal drag coefficient was then proposed. This coefficient is then used in FSCORE, a numerical software based on the porous medium approach. The experimental and numerical results are presented and show good agreement.
    Date: 2022–12
  16. By: Bah, Muhammad Maladoh (University of Basel)
    Abstract: This report provides an overview of the legal framework and regulation for the decommissioning of NPPs in the U.S., as well as give an indication on current cost estimates and their accuracy. Additionally, it shows the current progress of the decommissioning process.
    Keywords: nuclear decommissioning, review, USA
    JEL: L94 Q48
    Date: 2023–01–12
  17. By: Marc Alochet (i3-CRG - Centre de recherche en gestion i3 - X - École polytechnique - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique); John Paul Macduffie (Department of Management [University of Pennsylvania]); Christophe Midler (i3-CRG - Centre de recherche en gestion i3 - X - École polytechnique - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The mirroring hypothesis is central to modularity theory, positing isomorphism between technical interdependencies of a product and organizational arrangements. When a product's design becomes more modular, a full mirroring response would change both its manufacturing and its supply chain. We evaluate this prediction for Battery Electric Vehicles (BEVs), observing whether automakers have mirrored the modular BEV architecture in either internal production processes, external sourcing arrangements, or both. Our data from 19 automakers show that, to date, BEVs are manufactured in their assembly plants alongside conventional internal combustion engine vehicles (ICEVs). New automakers with fully BEV plants utilize essentially the same production process. Furthermore, automakers make—or ally to make—key Electric Vehicle (EV) systems, rather than outsourcing them. We discuss the implications of this partial mirroring for modularity theory and ask whether these arrangements will persist once BEV sales surpass ICEVs.
    Keywords: modularity mirroring design production technological change electric vehicles, modularity, mirroring, design, production, technological change, electric vehicles
    Date: 2023
  18. By: Miller, Hugh; Dikau, Simon; Svartzman, Romain; Dees, Stéphane
    Abstract: Several ‘critical’ raw materials, including metals, minerals and Rare Earth Elements (REEs), play a central role in the low-carbon transition and are needed to expand the deployment of low-carbon technologies. The reliable and affordable supply of these resources is subject to supply-side risks and demand-induced pressures. This paper empirically estimates the material demand requirements for ‘Transition-Critical Materials’ (TCMs) implied under two NGFS Climate Scenarios, namely the ‘Net Zero by 2050’ and ‘Delayed Transition’ scenarios. We apply material intensity estimates to the underlying assumptions on the deployment of low-carbon technologies to determine the implied material demand between 2021 and 2040 for nine TCMs. We find several materials to be subject to significant demand-induced pressures under both scenarios. Subsequently, the paper examines the possible emergence of material bottlenecks for three materials, namely copper, lithium and nickel. The results indicate possible substantial mismatches between supply and demand, which would be further exacerbated if the transition is delayed rather than realised immediately. We discuss these findings in the context of different possible transmission channels through which these bottlenecks could affect financial and price stability, and propose avenues for future research.
    Keywords: low-carbon transition; commodities; critical raw materials; scenario analysis; financial risk; price stability; geopolitics of the energy transition
    JEL: Q01 Q50 Q42 L72 G10 E44 E31 F50
    Date: 2023–01–30
  19. By: Roland Hodler; Paul Schaudt; Alberto Vesperoni
    Abstract: The energy transition increases the demand for minerals from ethnically diverse, conflict-prone developing countries. We study whether and where mining is possible in such countries without raising the risk of civil conflict. We proceed in three steps: First, we propose a theoretical model to predict the occurrence and location of conflict events on the territory of a country based on the spatial distribution of ethnic groups and resource rents. Second, we verify the predictive power of this model using granular spatial data from Sierra Leone and confirm its broader applicability using less granular data from a sample of eight West African countries. Third, we employ our framework to simulate the potential impact of new (planned and unplanned) mining projects in Sierra Leone. A crucial insight is that new mining projects do not necessarily translate into more conflict but may pacify the country under the right conditions and the right policies.
    Keywords: civil conflict, ethnic conflict, natural resources, mining
    JEL: D74 D82 L72 O13 Q34
    Date: 2023
  20. By: Yannick Bouterige (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Neerbewendé Rachid Pafadnam (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne, UCA - Université Clermont Auvergne)
    Abstract: Alors que les deux tiers des pays africains peuvent être considérés comme riches en ressources naturelles, la taxation du secteur extractif représente un défi pour les pays concernés, qui ont de surcroît besoin de ressources pour financer leur développement. Mener une analyse approfondie du partage de la rente minière et pétrolière est alors indispensable, mais celle-ci se heurte aux difficultés d'accès aux données économiques et fiscales nécessaires. La richesse des nombreuses informations publiées par l'Initiative pour la Transparence dans les Industries Extractives (ITIE) est assurément une réponse à ce besoin en données. Mais malgré leur intérêt évident, les données de l'ITIE voient leur utilisation fortement limitée par leur manque de centralisation et leur faible niveau de comparabilité entre les pays et même d'une année à l'autre. Face à ce constat, la construction d'une véritable base de données ITIE, transnationale et pluriannuelle, qui soit harmonisée et facilement exploitable, apparaît comme de plus en plus incontournable pour permettre à toutes les parties prenantes de disposer des informations nécessaires à la compréhension et l'analyse du secteur extractif africain.
    Date: 2023–01–12
  21. By: Etienne ESPAGNE; Hugo LAPEYRONIE
    Abstract: In order to meet the climate objectives set by the Paris Agreement, all countries will have to operate a dramatic structural change by replacing most fossil energy sources with renewable ones that are expected to be highly mineral intensive. This material intensity of the low-carbon transition may notably threaten different dimensions of the 2030 Agenda.In this paper, we provide a systematic review of the links between the mining territories that are essential for the energy transition and the sustainable development goals defined in 2015 by the United Nations. Since much of this demand for minerals will be directed to developing countries, the geographical scope of this review is limited to these countries.
    JEL: Q
    Date: 2023–01–26
  22. By: Lim, Soyoung (Korea Institute for Industrial Economics and Trade); Yang, Jooyoung (Korea Institute for Industrial Economics and Trade)
    Abstract: On July 14, 2021, the European Commission announced its Fit for 55 package to reach the EU’s climate target of cutting emissions by 55 percent by 2030. A Carbon Border Adjustment Mechanism (CBAM) legislative proposal was introduced as part of this package. The proposal describes the mechanism and scope of CBAM, emissions calculation methods, and exclusions. It follows the method by which Emissions Trading Schemes (ETS) operate for EU importers. During a transitional phase, imports must be accompanied by a mandatory reporting of carbon data. Starting in 2026, following the conclusion of a transitional period, importers will be required to buy certificates with carbon prices determined by the EU ETS. Through an examination of Korea’s domestic ETS and an identification of the country’s strengths, this analytical brief explores ways to minimize the potentially negative impacts of ETS on Korean industries.
    Keywords: CBAM; carbon border adjustment mechanism; carbon tax; carbon pricing; emissions trading scheme; ETS; climate change; greenhouse gas; GHG; environmental policy; carbon policy; EU; Korea; industrial policy
    JEL: F02 F13 F18 F23 F51 F53 F64 H12 H87 K32 L52 Q01 Q27 Q28 Q37 Q38 Q52 Q54
    Date: 2021–07–23
  23. By: Lim, Soyoung (Korea Institute for Industrial Economics and Trade); Kim, Kye Hwan (Korea Institute for Industrial Economics and Trade)
    Abstract: Starting from his election campaign, U.S. President Joseph Biden has shown a proactive stance on responding to climate change and pledged to establish American leadership on the issue through the hosting of a Leaders Summit on Climate. During the summit, heads of state affirmed their commitments to responding to climate change and shared ideas on cooperative action, including setting higher targets for greenhouse gas reductions and expanding the emissions trading system. At the summit the U.S. indicated its firm commitment to assuming leadership in response toward climate change, while alluding to changes to its relationship with China vis-à-vis the issue. Korea too must transform its economic and industrial structure to actively respond to climate change while pursuing a full-scale green recovery from the COVID-19 pandemic. This analytical brief summarizes the events of the Leaders Summit on Climate and the climate-related policies and pledges of summit attendees and other major countries. It also proposes a set of recommendations for the Korean response to the climate crisis.
    Keywords: COVID-19; Korea; US; United States; Leaders Summit on Climate; emissions; climate change; climate policy; green transition; sustainability; clean energy; green energy; environmental policy; sustainability policy; emissions policy
    JEL: Q34 Q38 Q40 Q42 Q52 Q54 Q56 Q58
    Date: 2021–04–30
  24. By: Manisha Jain (Indira Gandhi Institute of Development Research; Institute of Economic Growth)
    Abstract: National energy balances are essential for estimating various socioeconomic and environmental development indicators, including carbon-dioxide emissions. The Ministry of Statistics and Programme Implementation (MOSPI) annually publishes India's energy balance. However, the widely used source of India's energy balance is International Energy Agency (IEA). In this paper, I compare the data from the two sources and find that MOSPI's energy balance estimates are different from IEA's. The estimates of per capita energy consumption and energy intensity from MOSPI are 26 higher than IEA for 2019-20. Another issue in MOSPI's data is the incomplete disaggregation of final energy consumption by end-use sectors. Energy consumption from oil products reported in the non-specified category in MOSPI tables is 40 of the total consumption. Due to this, the agriculture energy intensity is 33 lower, and the transport energy intensity is 43 lower than IEA. India's carbon dioxide emissions from MOSPI's energy balance estimate are 31 higher than IEA.
    Keywords: Sustainable development, indicators, carbon dioxide emissions, energy balance table, national energy statistics
    JEL: Q4 K3 O13
    Date: 2022–11
  25. By: Paulin Ibanda Kabaka (Université Pédagogique Nationale, UNIK - Université du Kwango)
    Abstract: Comme le secteur des bâtiments constitue l'un des principaux secteurs qui consomment énormément des ressources naturelles et dont l'impact est négatif sur l'environnement, une Loi destinée à limiter et à améliorer la consommation de l'énergie par les bâtiments a été mise en place en France. Il s'agit de la Loi sur la Transition énergétique , LTE en sigle, dont l'objectif est l'amélioration de l'efficacité énergétique.
    Keywords: Droit de l'énergie, transition énergétique, environnement, bâtiment, transition, écologique, loi, efficacité, réchauffement climatique, France, économie d'énergie, ADEME, BPI
    Date: 2023–01–10
  26. By: Mouna Ben Abdeljelil; Christophe Rault; Fateh Belaïd
    Abstract: This paper investigates the existence of an environmental Kuznets curve (EKC) and its robustness for 28 countries of the Union for the Mediterranean (UfM) over the recent period. Our methodology relies on four recent estimation methods for non-stationary panel data and includes four pollutants (two global and two local). Two main results emerge from our analysis. First, the EKC does not hold for most pollutants, and its validity crucially depends on the estimation techniques considered. Second, the Pooled-Mean Group method is the most favourable one and confirms the existence of an inverted U-shaped relationship for CO2 and SO2. Our results provide beneficial information for decision-makers. They suggest implementing proactive instruments based on both flexible regulations and tax incentives to stimulate ecological transition.
    Keywords: environmental Kuznets curve, pollution, regional integration, The Union for the Mediterranean
    JEL: O44 Q53 R58
    Date: 2023
  27. By: Fateh Belaïd (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Zeinab Ranjbar; Camille Massié (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This research investigates the cost-effectiveness of energy performance measures in French residential buildings. We develop an empirical approach based on a multivariate statistical approach and Cost-Benefit analysis. The strength of this research relies on the designing of a large cross-sectional database collected in 2013 including rich technical information of about 1, 400 dwellings representative of the French residential sector as well as individual recommendations relative to the energy renovations to be implemented, their investment costs, and energy savings potential. We provide valuable information on the cost-effectiveness of energy renovation measures for the entire housing stock. Results show that low-temperature and condensing boilers, as well as floor insulation, are the most cost-effective energy efficiency measures, which could be inconsistent with actual subsidy policies. We demonstrate that the cost-effectiveness of energy renovation measures is widely dependent on dwelling initial characteristics and the value of the inputs used in the economic indicators such as energy-savings amount, energy price, and the discount rate. Moreover, we provide a classification of French dwellings, which may help policymakers, better identify their target. Finally, we show that the renovation of the entire French residential dwelling stock can lead to a great amount of energy–and CO2–reductions but requires significant financial capacity.
    Keywords: Energy efficiency, Cost-benefit analysis, Energy demand, Multiple correspondence analysis, Monte Carlo simulation, Energy policy
    Date: 2021–03
  28. By: Dugoua, Eugenie; Dumas, Marion
    Abstract: Previous studies have modeled green technological change as innovations in the process of production (e.g., abatement technologies or energy sources). But greening the economy also requires changing products. The automotive industry, for example, needs to massively deploy alternative-fuel vehicles. Product manufacturing occurs within supply-chain networks, and developing new products typically requires complementary investments by suppliers. We study the incentives for green product innovation in industrial networks and how policies can affect them. We follow the industrial organization theory of product differentiation, and model green product innovations as upgrades in product quality where inputs from suppliers are essential for upgrading quality. We show that suppliers can be innovation bottlenecks and render policy instruments less effective. We provide an explicit mechanism for the role of institutions that help actors coordinate on the long-term direction of innovation. We discuss how our results help organize several findings from case studies in the automotive industry.
    Keywords: green products; innovation; production networks; buyer-supplier relationships; supply chains
    JEL: Q55 Q58 L52 O31
    Date: 2021–05–01
  29. By: Dorothée Charlier (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: The aim of this research is to identify energy consumption profiles that explain the difference between actual and theoretical energy consumption (the energy performance gap) in the residential sector using latent profile analysis (LPA). The resulting profiles inform behavioral and socio-demographic differences in consumption patterns among households and help explain inconsistencies in prior research on the energy performance gap. This research demonstrates that under-consumption of energy compared with the theoretical measure is partially explained by behavior related to poverty and deprivation. To address this, preventive measures should be put in place that focus on renovation or social housing to enable the poorest households to heat their dwellings adequately. Particular attention could also be paid to households that consume the most to avoid bias in energy forecasting models.
    Keywords: Residential, Energy performance gap, Latent profile analysis, Deprivation, Poverty
    Date: 2021–09
  30. By: Fausto Cavalli; Ahmad Naimzada; Enrico Moretto
    Abstract: We propose a model for exploring the feasibility of the green transition between dirty and clean technologies. It relies on an evolutionary framework for the technology selection interacting with the environmental domain, which describes the evolution of pollution. A regulator charges an ambient tax to the producers, and the agents can choose between the less profitable clean technology and the more profitable dirty one, which however is taxed to a greater extent with respect to the clean one. The environmental tax depends endogenously on the level of pollution, which rises because of the producers’ emissions. The pollution stock also naturally decays, and can be abated by involving the resources collected from the taxation. We analytically study the resulting two-dimensional model from both the static and the dynamical points of view, to understand under what conditions the green transition can take place and results in an improvement for the environmental quality. We show that excessive over-taxation of the dirty technology may be not always beneficial, as steady state pollution level can increase above a certain taxation threshold and multiple steady states can emerge. Moreover, dynamics can result in persistent endogenous oscillations that systematically lead to a significant increase in pollution levels. Finally, we discuss the economic rationale for the results also in the light of possible policy suggestions.
    Date: 2023–01
  31. By: Rojas, Manuel Eugenio
    Abstract: En el presente documento se presenta información relevante del sector eléctrico de los ocho países que conforman el Sistema de la Integración Centroamericana (SICA): Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panamá, Belice y la República Dominicana. Los seis primeros países integran el Mercado Eléctrico Regional (MER) de América Central y se incluyen en el Sistema de Interconexión Eléctrica de los Países de América Central (SIEPAC). Se presentan cuadros regionales y nacionales con datos estadísticos de la industria eléctrica, la mayor parte actualizados a 2021, que muestran los resultados de los segmentos de producción y distribución de electricidad en los dos mercados relevantes: i) mercados mayoristas y ii) mercados regulados, y de las transacciones regionales (para los países del SIEPAC) y binacionales (para las transacciones de electricidad México-Belice y México-Guatemala).
    Date: 2022–12–19
  32. By: Robert Steiger (Leopold Franzens Universität Innsbruck - University of Innsbruck); O. Cenk Demiroglu (Umeå University); Marc Pons (UPC - Universitat Politècnica de Catalunya [Barcelona]); Emmanuel Salim (EDYTEM - Environnements, Dynamiques et Territoires de la Montagne - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Europe accounts for 51% of international tourist arrivals and the tourism industry provides about 10% of workplaces in Europe. Tourism will be impacted by climate change in a diverse number of ways. At the same time, tourism is also a significant contributor of greenhouse gas emissions. The aim of this article is, therefore, to provide an assessment of climate and carbon risks for the European tourism industry based on a systematic literature review. Climate risk is the dominant category with 313 papers (74%), while 110 papers (26%) were on carbon risks. The following gaps were identified: geographical gaps, especially in countries of the former Soviet Union and former Yugoslavia; a lack of coherent studies on national tourism's and its sub-sectors' emissions; research addressing how climate policies might affect tourism demand; assessments of the integrated carbon and climate risks; lack of evidence on the link between tourism climate indicators and tourism demand; lack of climate change and tourism studies addressing policy and institutional tools for adaptation and implementation of adaptation measures in destinations; and research on rising sea levels and coastal erosion and its impacts on tourism destinations and demand.
    Keywords: Climate risk, carbon risk, tourism, Europe, systematic review, adaptation, mitigation
    Date: 2023
  33. By: Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes)
    Abstract: The necessary renewal of energy sources, the war in Ukraine and global warming are causing an economic, social and human crisis that endangers both the current living conditions of humanity and those of future generations. Industrial activity, consumption patterns and the waste of natural resources are inevitably leading, without profound changes in the dominant economic structures, to a deadly global warming, the appearance of new scarcity in the products essential to life and the development of violent social conflicts and international tensions producing wars.
    Abstract: Le renouvellement nécessaire des sources d'énergies, la guerre en Ukraine et le réchauffement climatique provoquent une crise économique, sociale et humaine qui met à la fois en danger les conditions de vie actuelles de l'humanité mais aussi en péril celles des générations futures. L'activité industrielle, les modes de consommation et le gaspillage des ressources naturelles conduisent inéluctablement, sans de profondes modifications des structures économiques dominantes, vers un réchauffement climatique mortifère, l'apparition de nouvelles raretés dans les produits essentiels à la vie et le développement de violents conflits sociaux et de tensions internationales productrices de guerres.
    Keywords: Wars, Economic war, Scarcity, Global warming, Energy, Nuclear, Consumption patterns, European Union, Ukraine, Guerres, Guerre économique, Rareté, Réchauffement climatique, Energies, Nucléaire, Mode de consommation, Union européenne, Cour de justice
    Date: 2022–12–13
  34. By: Mr. Serhan Cevik
    Abstract: Tourism was one of the fastest-growing sectors before the COVID-19 pandemic, accounting for about 10 percent of global GDP. But it has also created a number of challenges including environmental degradation, especially in small island countries where the carbon footprint of tourism constitute substantial share of carbon dioxide (CO2) emissions. This study empirically investigates the impact of tourism on CO2 emissions in a relatively homogenous panel of 15 Caribbean countries over the period 1960–2019. The results show that international tourist arrivals have a statistically and economically significant effect on CO2 emissions, after controlling for other economic, institutional and social factors. Therefore, managing tourism sustainably requires a comprehensive set of policies and reforms aimed at reducing its impact on environmental quality and curbing excessive dependency on fossil fuel-based energy consumption.
    Keywords: Tourism; climate change; CO2 emissions; energy intensity; mitigation; adaptation; tourism constitute; impact of tourism; share of carbon dioxide; climate change mitigation; climate change vulnerability; Greenhouse gas emissions; Caribbean; Global
    Date: 2022–09–09
  35. By: Karl Naumann-Woleske
    Abstract: Climate change is a major global challenge today. To assess how policies may lead to mitigation, economists have developed Integrated Assessment Models, however, most of the equilibrium based models have faced heavy critiques. Agent-based models have recently come to the fore as an alternative macroeconomic modeling framework. In this paper, four Agent-based Integrated Assessment Models linking environment, energy and economy are reviewed. These models have several advantages over existing models in terms of their heterogeneous agents, the allocation of damages amongst the individual agents, representation of the financial system, and policy mixes. While Agent-based Integrated Assessment Models have made strong advances, there are several avenues into which research should be continued, including incorporation of natural resources and spatial dynamics, closer analysis of distributional effects and feedbacks, and multi-sectoral firm network structures.
    Date: 2023–01
  36. By: Blasberg, Alexander; Kiesel, Rüdiger; Taschini, Luca
    Abstract: Using Credit Default Swap spreads, we construct a forward-looking, market-implied carbon risk factor and show that carbon risk affects firms’ credit spread. The effect is larger for European than North American firms and varies substantially across industries, suggesting the market recognizes where and which sectors are better positioned for a transition to a low-carbon economy. Moreover, lenders demand more credit protection for those borrowers perceived to be more exposed to carbon risk when market-wide concern about climate change risk is elevated. Lenders expect that adjustments in carbon regulations in Europe will cause relatively larger policy-related costs in the near future.
    Keywords: climate change; carbon risk; credit risk; credit default; swap spreads
    JEL: C21 C23 G12 G32 Q54
    Date: 2023–01–27
  37. By: Farhad Billimoria; Filiberto Fele; Iacopo Savelli; Thomas Morstyn; Malcolm McCulloch
    Abstract: Extreme events, exacerbated by climate change, pose significant risks to the energy system and its consumers. However there are natural limits to the degree of protection that can be delivered from a centralised market architecture. Distributed energy resources provide resilience to the energy system, but their value remains inadequately recognized by regulatory frameworks. We propose an insurance framework to align residual outage risk exposure with locational incentives for distributed investment. We demonstrate that leveraging this framework in large-scale electricity systems could improve consumer welfare outcomes in the face of growing risks from extreme events via investment in distributed energy.
    Date: 2023–02
  38. By: Balat, Jorge; Carranza, Juan Esteban; Martin, Juan David; Riascos, Alvaro J
    Abstract: 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 reducci´on 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: Subastas; Estimación estructural; Mercados de electricidad
    JEL: C57 Q4 L94
    Date: 2023–02
  39. By: Hélène Ollivier (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, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Geoffrey Barrows (CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz], X - École polytechnique)
    Abstract: With asymmetric climate policies, regulation in one country can be undercut by missions growth in another. Previous research finds evidence that regulation erodes the competitiveness of domestic firms and leads to higher imports, but increased imports need not imply increased emissions if domestic sales are jointly determined with export sales or if emission intensity of manufacturing adjusts endogenously to foreign demand. In this paper, we estimate for the first time how production and emissions of manufacturing firms in one country respond to foreign demand shocks in trading partner markets. Using a panel of large Indian manufacturers and an instrumental variable strategy, we find that foreign demand growth leads to higher exports, domestic sales, production, and CO2 emissions, and slightly lower emission intensity. The results imply that a representative exporter facing the average observed foreign demand growth over the period 1995-2011 would have increased CO2 emissions by 1.39% annually as a result of foreign demand growth, which translates into 6.69% total increase in CO2 emissions from Indian manufacturing over the period. Breaking down emission intensity reduction into component channels, we find some evidence of product-mix effects, but fail to reject the null of no change in technology. Back of the envelope calculations indicate that environmental regulation that doubles energy prices world-wide (except in India) would only increase CO2 emissions from India by 1.5%. Thus, while leakage fears are legitimate, the magnitude appears fairly small in the context of India.
    Keywords: Globalization, Trade and environment, Product mix, Technological change
    Date: 2021–03
  40. By: Claude Crampes (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Nils-Henrik M. von Der Fehr (UiO - University of Oslo)
    Abstract: Reaping the full benefits from cross-border interconnection typically requires reinforcement of national networks. When the relevant parts of the networks are complements, a lack of coordination between national transmission system operators typically results in investment below optimal levels in both interconnectors and national infrastructure. A subsidy to financially sustain interconnector building is not sufficient to restore optimality; indeed, even when possible, such subsidisation may have to be restrained so as not to encourage cross-border capacities that will not be fully utilised due to lack of investment in national systems.
    Keywords: Electrical grid, Interconnector, Externality, Regulation, Regional, Cooperation
    Date: 2023
  41. By: Kim, Kyoung You (Korea Institute for Industrial Economics and Trade); Cho, Cheul (Korea Institute for Industrial Economics and Trade)
    Abstract: Due to the large proportion of emissions which the transportation sector accounts for and the comparative ease with which emissions from this sector can be managed, key countries are tightening emissions regulations in the transportation sector. To this end, various proclamations have been made and many policies have been proposed. Korea has announced robust measures to achieve a carbon-neutral automotive sector by 2050. But carbon neutrality regulations put in place during the transition from ICE vehicles to electric-powered vehicles must consider Korea’s industrial competitiveness and the global market strategies of Korean companies. As Korea’s automotive sector relies heavily on foreign markets, carbon neutral strategies must track international trends. At the same time, the country needs to develop and pursue appropriate strategies that will minimize negative impacts to its domestic industries. This paper explores measures to accelerate growth in the industrial ecosystem of the electric-powered vehicle sector while also supporting a smooth transition to carbon neutrality.
    Keywords: automotive industry; auto industry; exports; vehicle exports; carbon neutrality; climate change; emissions; electric vehicles; industrial structure; net zero; environmental policy; industrial policy; industrial strategy; export policy; export strategy; innovation; innovation policy
    JEL: E22 E23 E61 F02 F13 F23 F64 L16 L22 L52 L53 L62 O33 O38 Q52 Q55 Q58
    Date: 2021–09–15
  42. By: Mr. Serhan Cevik
    Abstract: Global warming is the most significant threat to ecosystems and people’s health and living standards, especially in small island states in the Caribbean and elsewhere. This paper contributes to the debate by analyzing different options to scale up climate change mitigation and adaptation. In particular, the empirical analysis indicates that increasing energy efficiency and reducing the use of fossil fuel in electricity generation could lead to a significant reduction in carbon emissions, while investing in physical and financial resilience would yield long-run benefits. From a risk-reward perspective, the advantages of reducing the risks associated with climate change and the health benefits from higher environmental quality clearly outweigh the potential cost of climate change mitigation and adaptation in the short run. The additional revenue generated by environmental taxes could be used to compensate the most vulnerable households, building a multilayered safety net, and strengthening structural resilience.
    Keywords: Climate change; decarbanization; energy efficiency; mitigation; adaptation; carbon tax; green financing; climate change mitigation; risk-reward perspective; Island state; adaptation strategy; climate change adaptation; Greenhouse gas emissions; Natural disasters; Caribbean; Global
    Date: 2022–09–09
  43. By: MAIER ESSINGER Sofia (European Commission - JRC); RICCI Mattia (European Commission - JRC)
    Abstract: During the 2010-2019 decade, consumption taxes have risen in the vast majority of the EU Member States as a result of austerity measures, tax shifts as well as taxing transport and housing-related energy consumption. The redistributive impact of these policy changes remains mostly unexplored. In this paper, we provide new empirical evidence on the redistributive effect of changes in VAT and excises over this period, along with other developments in the broader tax-benefit system including tax shift reforms. Our results indicate that the consumption tax systems in the EU have become more unequalizing in most countries as a result of an increase in the tax burden and of its regressivity. While the taxation of transport is the component that has increased the most, the highest inequality impact was driven by the taxation of housing-related energy consumption. Only in a few countries these policy changes were accompanied by an increase in social transfers sufficient to compensate the poorest households.
    Keywords: Consumption taxation, Tax shift, Austerity, Inequality, Microsimulation
    Date: 2022–12
  44. By: Andreas Gerster; Stefan Lamp
    Abstract: Environmental policies are often accompanied by exemptions for energy-intensive and trade-exposed industrial firms to avoid leakage from regulated to unregulated jurisdictions. This paper investigates the impact of a large electricity tax exemption on production levels, employment, and input choices in the German manufacturing industry. For two different policy designs, we show that exempted plants significantly increase their electricity use. This effect is considerably larger under a notched exemption policy, where passing an eligibility threshold yields infra-marginal benefits, compared to a revised policy where these benefits have been largely removed. We de-tect no significant impact of the exemptions on production levels, export shares, and employment. Using counterfactual simulations, we document substantial distortive effects of notched exemption policies when financial stakes are high and compliance cost for firms are low.
    Keywords: environmental policy, leakage, energy taxes, manufacturing industry
    JEL: D22 H23 L60 Q41
    Date: 2023
  45. By: Salomé Bakaloglou; Dorothée Charlier (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: The aim of this research is to understand the role of socioeconomic characteristics and individual preferences in explaining the energy performance gap in the residential sector. This gap reflects the difference between the theoretical energy consumption of homes assessed by engineering models and real energy consumption. Using the ratio of the two consumption amounts to measure the gap, we perform a quantile regression to tease out the effects of preferences on the entire distribution of the energy performance gap spectrum instead of focusing on the conditional average. As a result, this research provides an original contribution: depending on the direction of the gap, our findings suggest that significant drivers include individual preferences for comfort over economy, which explain up to 12% of the gap variability, and poverty. This context should serve as a reminder to public authorities regarding the issues of rebound effect and household welfare.
    Keywords: Residential energy consumption, Household preferences, Energy performance gap, Quantile regression, Quantile treatment effect
    Date: 2021–12
  46. By: Francesco Corsello (Bank of Italy); Alex Tagliabracci (Bank of Italy)
    Abstract: This paper focuses on the developments of energy prices since mid-2021 and assesses their impact on euro-area headline inflation, also considering the indirect transmission through the core and food components. We find that, while the contribution of energy inflation to core and food inflation is generally low in normal times, it has been significant in the recent period, as a consequence of the exceptional increase in energy prices. In the first nine months of 2022, energy inflation accounted for more than 60 per cent, on average, of headline inflation in the euro area, either directly or indirectly. The same result holds qualitatively true for the four largest countries in the euro area, although with some quantitative differences. These findings provide relevant indications for setting the normalization path of monetary policy in the euro area. Given the prevailing role of energy prices – an exogenous supply factor that can hardly be affected directly by policy rate increases – in driving inflation, the appropriate speed of adjustment largely depends on the assessment of the risks of second-round effects and of a de-anchoring of long-term inflation expectations.
    Keywords: energy price shocks, inflation dynamics, pass-through
    JEL: C11 E31 E32 E52
    Date: 2023–02

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