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on Energy Economics |
| By: | Aline Mortha; Toshi H. Arimura |
| Abstract: | To foster domestic electricity production, Japan introduced a Feed-in-Tariff policy in 2012, financed by a renewable levy. This paper examines the impact of this tax on industrial, energy intensive (EI) sectors using plant data from 2005 to 2018. We explore whether the introduction of the levy encouraged plants to substitute electricity purchased from the market with electricity generated on site and whether changes in energy consumption patterns triggered by the levy resulted in additional CO2 emissions from the plants. Our results show that a 1% increase in the levy rate results in a decrease in energy consumption, estimated to be around 3, 800 tCO2e per plant on average. However, we also showed that the tax increase also leads to a rise in 0.03pp in the share of electricity generated on site, reflecting a marginal level of substitution between the two energy sources. We identify plants from the chemical sector as those with substitution capacity, and that the substitution leads to increased coal and gas consumption. Our results shed light on the effects of electricity taxes, and highlight the need for carbon pricing. Our paper also contributes to explaining mechanisms behind inter-fuel substitution in the EI sector, with a special focus on electricity and fossil fuel through cogeneration. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e181&r=ene |
| By: | Walter Cont; Diego Barril; Agustín Carbó |
| Keywords: | Electricity prices, price convergence, SIEPAC, Regional Electricity Market |
| JEL: | Q40 Q48 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:aep:anales:4455&r=ene |
| By: | Czock, Berit Hanna (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Sitzmann, Amelie (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Zinke, Jonas (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | Increasing shares of wind and solar generation serve to decarbonize electricity generation; however, their temporal and spatial variability poses challenges in grid operation. While grid expansion is restricted in the medium term, storage technologies can potentially increase the power systems’ efficiency by temporally aligning generation and demand and increasing network utilization. This paper uses a theoretical and a numerical model to evaluate the optimal allocation of battery storage. In a case study for Germany, we find that batteries can reduce system costs when placed behind the north-south grid bottleneck and near solar power. The supply costs in a setting with uniform prices and a random battery distribution are 9.3% higher than in the theoretical first-best benchmark with nodal prices. An optimal allocation of batteries can reduce this efficiency gap by 0.7 percentage points to 8.6%. This corresponds to almost a doubling of the supply cost savings per euro spent on battery installation. Due to a lack of spatially differentiated investment incentives under the German uniform pricing scheme, batteries have to be allocated by additional policies. Simple allocation rules such as tying battery siting to solar capacity or explicitly identifying a limited number of suitable sites and auctioning capacity can approximate an optimal allocation. |
| Keywords: | Market Design; Electricity Markets; Nodal Pricing; Energy System Modeling; Renewable Energies; Storage; Flexibility; Batteries |
| JEL: | C61 D47 D61 Q40 |
| Date: | 2023–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2023_001&r=ene |
| By: | Anna Valero |
| Abstract: | The UK has been particularly exposed to the global energy crisis - partly due to the country's dependence on gas for heating and electricity generation, and partly its poorly insulated housing stock. After predictions that annual utility bills would more than triple by October 2022 compared with the previous winter, the government announced a support package for households and businesses. Anna Valero says there is now a need to double down on efforts to build resilience and meet net-zero targets. |
| Keywords: | UK Economy, Green Growth, Cost of living, Policy |
| Date: | 2023–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:646&r=ene |
| By: | Ives, Matthew; Cesaro, Zac; Bramstoft, Rasmus; Bañares-Alcántara, René |
| Abstract: | Green hydrogen and ammonia are forecasted to have key roles in deep decarbonization, although national energy system models have yet to capture their full integration potential with sector coupling in future scenarios. In this study, the Power-to-X sector coupling potential of green hydrogen and ammonia is explored via a case study on the national-scale electricity grid of India in which the projected electricity demands for hydrogen and ammonia production account for nearly 25% of the total Indian electricity demand in 2050. Here we show that connecting the required fleets of electrolyzers to the grid and leveraging low-cost storage of ammonia with coupled sectors, such as shipping, steel, and agriculture, would provide valuable short-duration and long-duration load-shifting services. We find that this system design uses seasonal ammonia production patterns to reduce the levelized cost of hydrogen and ammonia, reduce curtailment, provide system resilience to interannual weather variations, and reduce the requirement for long duration energy storage or firm generating capacity while reducing total system cost. |
| Keywords: | sector coupling, Power-to-X, ammonia, hydrogen, India |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:amz:wpaper:2023-04&r=ene |
| By: | David Franzmann; Heidi Heinrichs; Felix Lippkau; Thushara Addanki; Christoph Winkler; Patrick Buchenberg; Thomas Hamacher; Markus Blesl; Jochen Lin{\ss}en; Detlef Stolten |
| Abstract: | Green hydrogen is expected to be traded globally in future greenhouse gas neutral energy systems. However, there is still a lack of temporally- and spatially-explicit cost-potentials for green hydrogen considering the full process chain, which are necessary for creating effective global strategies. Therefore, this study provides such detailed cost-potential-curves for 28 selected countries worldwide until 2050, using an optimizing energy systems approach based on open-field PV and onshore wind. The results reveal huge hydrogen potentials (>1, 500 PWh/a) and 86 PWh/a at costs below 2 EUR/kg in 2050, dominated by solar-rich countries in Africa and the Middle East. Decentralized PV-based hydrogen production, even in wind-rich countries, is always preferred. Supplying sustainable water for hydrogen production is needed while having minor impact on hydrogen cost. Additional costs for imports from democratic regions only total 7%. Hence, such regions could boost the geostrategic security of supply for greenhouse gas neutral energy systems. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.00314&r=ene |
| By: | Joëlle Noailly ; Laura Nowzohour; Matthias van den Heuvel |
| Abstract: | We use machine learning algorithms to construct a novel news-based index of US environmental and climate policy uncertainty (EnvPU) available on a monthly basis over the 1990-2019 period. We find that our EnvPU index spikes during the environmental spending disputes of the 1995-1996 government shutdown, in the early 2010s due the failure of the national cap-and-trade climate bill and during the Trump presidency. We examine how elevated levels of environmental policy uncertainty relate to investments in the low-carbon economy. In firm-level estimations, we find that a rise in the EnvPU index is associated with a reduced probability for cleantech startups to receive venture capital (VC) funding. In financial markets, a rise in our EnvPU index is associated with higher stock volatility for firms with above-average green revenue shares. At the macro level, shocks in our index lead to declines in the number of cleantech VC deals and higher volatility of the main benchmark clean energy exchange-traded fund. Overall, our results are consistent with the notion that policy uncertainty has adverse effects on investments for the low-carbon economy. |
| Date: | 2022–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:gii:ciesrp:cies_rp_74&r=ene |
| By: | Walter Cont; Diego Barril; Agustín Carbó |
| Keywords: | Electricity trade, South America, gravity |
| JEL: | Q48 F14 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:aep:anales:4456&r=ene |
| By: | Thiemo Fetzer; Thiemo René Fetzer |
| Abstract: | Preserving heritage is an important part of maintaining collective identity for future generations. Yet, culturally defined notions of “heritage” or “character”, in the context of the climate crisis, may be a barrier to individual and collective climate action to tackle a much more existential threat to those future generations. Studying data for more than half of the English housing stock, I show that conservation area status – a rather fluffy area-based designation that intends to protect the unique character of a neighborhood – not to be confused with preservation of historic buildings – in England may be responsible for up to 3.2 million tons of avoidable CO2 emissions annually. Using a suite of micro-econometric methods and alternative identification strategies ranging from saturated specifications, border discontinuity, matching estimation and an instrumental variables approach leveraging World War II wartime destruction in London – I show that properties in conservation areas have a notable worse energy efficiency; experience lower investment in retrofitting and consume notably higher levels of energy owing to poor energy efficiency. Effect sizes are very consistent comparing engineering based energy consumption estimates with actual consumption data. Effects can be directly attributed to planning requirements for otherwise permitted development that only apply to properties by virtue of them being located inside a conservation area. |
| Keywords: | climate crisis, collective action, zoning, climate adaptation |
| JEL: | Q54 Q55 R14 R48 N74 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10309&r=ene |
| By: | Ralf Martin |
| Abstract: | Public investment in developing energy sources that don't cause climate change is a strategy for economic growth that could also contribute to the UK's levelling up agenda, says Ralf Martin. His analysis indicates that subsidies for research and development in 'clean' technologies can bring returns more than 40% higher than average. |
| Keywords: | innovation, knowledge spillovers, clean technology, innovation policy, patent data, Green Growth |
| Date: | 2022–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:636&r=ene |
| By: | Provenzano, Sandro (London School of Economics); Roth, Sefi (London School of Economics); Sager, Lutz (London School of Economics) |
| Abstract: | Recent research suggests that short-term exposure to air pollution is associated with an elevated prevalence of respiratory infectious disease. We examine the relationship between the air quality index (AQI) and weekly cases of influenza-like illnesses (ILI) and COVID-19 in the United States. We address potential bias from omitted variables and measurement error with an instrumental variable approach using atmospheric temperature inversions. Unlike other recent studies, we find no relationship between air quality and either ILI or COVID-19 cases. |
| Keywords: | air pollution, respiratory disease, COVID-19 |
| JEL: | I18 Q51 Q53 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15947&r=ene |
| By: | Quemin, Simon; Trotignon, Raphaël |
| Abstract: | We develop an emission permits trading model where covered firms can (1) utilize rolling planning horizons to deal with uncertainty and (2) exhibit bounded responsiveness to supply-side control policies. We calibrate the model to reproduce annual market outcomes in the EU ETS over 2008–2018 and show that a rolling finite horizon reconciles the banking dynamics with discount rates implied by futures contracts’ yield curves. It also replicates the price dynamics well compared to a standard infinite horizon, including the new price regime induced by the 2018 market reform. We then use our calibrated model to decompose the impacts of the 2018 reform's design elements, quantify how they hinge on the firms’ horizon and responsiveness, and highlight important implications for policy design. For instance, when firms utilize rolling horizons, the Market Stability Reserve can improve effectiveness by frontloading abatement efforts and induce lower cumulative emissions compared to an infinite horizon. |
| Keywords: | bounded rationality; emissions trading; EU ETS; rolling horizon; supply-side policies; Grantham Foundation for the Protection of the Environment; the UK Economic 70More generally; since there is no economic rationale for regulating the firms’ intertemporal use of permits (i.e. is permit use frontloaded or backloaded compared to MSR thresholds?); it would be worth studying how the MSR behaves relative to optimal supply adjustment mechanisms; e.g. à la Laffont & Tirole (1996). 40 and Social Research Council (ESRC) through the Centre for Climate Change Economics and Policy |
| JEL: | D81 E63 H32 Q58 |
| Date: | 2021–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:113518&r=ene |
| By: | Louis-Gaëtan Giraudet (ENPC - École des Ponts ParisTech, CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique); Antoine Missemer (CNRS - Centre National de la Recherche Scientifique, CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Taking a long-run historical perspective, we analyze how debates about energy efficiency have evolved in the economic literature since the mid-19th century. We distinguish three periods: the classical age, focused on the rebound effect, from Jevons in the 1860s to American institutionalism in the mid-20th century; the modern age, marked by the rise of the energy efficiency gap concept, from the 1970s to the 1990s; the contemporary age, from the early 2000s onwards, focused on the concept of energy performance gap. We find that reflections on energy efficiency have embraced more general developments in the economics discipline: emergence of institutionalism in the classical age, primarily concerned with policy; public economics in the modern age, emphasizing the concept of market failure; behavioral economics and the so-called credibility revolution in empirical economics in the contemporary age, which made energy efficiency a much-favored context for conducting experiments, questioning rationality and implementing nudges. The transitions between phases closely paralleled changes in societal concerns, from resource depletion in the classical age to energy security in the modern age to climate change in the contemporary age. Throughout this long history, we have detected a change in focus from macro- to micro-perspectives. Despite increasing sophistication and constant reinterpretation, energy efficiency remains a subject of controversy, such that no consensus has yet been reached on its potential and effective benefits. In closing, we propose to update Jaffe, Newell and Stavins' landmark energy efficiency gap framework to account for the most recent developments and trace avenues for future research. |
| Keywords: | energy efficiency, energy conservation, rebound effect, market barriers and failures, nudge, empirical turn, history of economic thought |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02301636&r=ene |
| By: | Lu, Hongyu; Rodgers, Michael O; Guensler, Randall |
| Abstract: | This white paper summarizes the development of MOVES-Matrix 3.0 based on EPA’s latest MOVES model known as MOVES3 (version 3.0.4). The research team updated the programs to account for changes in data structures and source sub-types and applied the same conceptual design used in MOVES-Matrix 2.0. The review of the MOVES3 and MOVES 2014b databases indicated a finer definition of the regions in terms of the unique combinations of fuel supply regions vs. Inspection/Maintenance (I/M) programs, with 40 fuel scenarios and 87 I/M scenarios in MOVES3 and 22 fuel scenarios and 84 I/M scenarios in MOVES 2014b. The increased number of fuel scenarios is due to the increased number of formulation regions and the one-to-many corresponding relationship between counties vs. fuel formulation regions by year. A total of 122 regions are defined in MOVES3 compared with 109 regions in MOVES 2014b, and the team anticipates at least 10% more running time to generate matrices for MOVES3, given the larger number of regions and the more complicated source type VSP/STP variables. View the NCST Project Webpage |
| Keywords: | Engineering, Motor Vehicle Emission Rate Modeling, Motor Vehicle Energy Use Modeling, MOVES2014, MOVES3, MOVES-Matrix |
| Date: | 2023–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt7qd6w47w&r=ene |
| By: | Grégory Levieuge; Jean-Guillaume Sahuc; Gauthier Vermandel |
| Abstract: | We explore the role of public subsidies in mitigating the transition costs associated with achieving a climate-neutral objective by 2060. To this end, we develop and estimate a quantitative macro-climate model for the world economy featuring an endogenous market structure for carbon abatement products. Public subsidies, fully financed by a carbon tax, are found to be an efficient instrument to promote firm entry into the abatement good sector by fostering competition and lowering the selling price of such products. We estimate that the subsidy, optimally distributed between startups at 60% and existing companies at 40%, would save nearly $2.9 trillion in world GDP each year by 2060. Finally, delaying the net-zero transition would require giving an even larger share to startups. |
| Keywords: | : Climate Change, Macro-Climate Model, Environmental Goods and Services Sector, Endogenous Market Structure, Stochastic Growth, Bayesian Estimation |
| JEL: | E32 H23 Q50 Q55 Q58 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:910&r=ene |
| By: | Böttcher, Miranda; Geden, Oliver; Schenuit, Felix |
| Abstract: | Since net zero targets have become a keystone of climate policy, more thought is being given to actively removing carbon dioxide from the atmosphere while continuing to drastically reduce emissions. The ocean plays a major role in regulating the global climate by absorbing a large proportion of anthropogenic carbon dioxide emissions. As the challenges of land-based carbon dioxide removal (CDR) approaches are increasingly recognised, the ocean may become the new 'blue' frontier for carbon removal and storage strategies in the EU and beyond. However, the ocean is not an 'open frontier'; rather, it is a domain of overlapping and sometimes conflicting rights and obligations. There is a tension between the sovereign right of states to use ocean resources within their exclusive economic zones and the international obligation to protect the ocean as a global commons. The EU and its Member States need to clarify the balance between the protection and use paradigms in ocean governance when considering treating the ocean as an enhanced carbon sink or storage site. Facilitating linkages between the ongoing review of the Marine Strategy Framework Directive and the establishment of the Carbon Removal Certification Framework could help pave the way for debate about trade-offs and synergies in marine ecosystem protection and use. |
| Keywords: | climate policy, net zero targets, removing carbon dioxide from the atmosphere, reduce emissions, carbon dioxide removal (CDR), ocean governance, Marine Strategy Framework Directive, UN Ocean Conference, Intergovernmental Panel on Climate Change (IPCC), United Nations Framework Convention on Climate Change (UNFCCC) |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:swpcom:122023&r=ene |
| By: | Olivier Chanel; Alberto Prati; Morgan Raux |
| Abstract: | Each year, the international job market for economists involves more than 1, 000 candidates and several hundred recruiters from around the world meeting for short pre-screening interviews at annual congresses in Europe and the United States. Alberto Prati, Olivier Chanel and Morgan Raux argue that it's time to reassess this unsustainable system and estimate the carbon footprint of alternatives. |
| Keywords: | job market for economists, international job market, carbon footprint, environmental impact, comprehensive economic cost |
| Date: | 2022–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:637&r=ene |
| By: | Lim, Teng; Massey, Ray; McCann, Laura; Canter, Timothy; Omura, Seabrook; Willett, Cammy; Roach, Alice; Key, Nigel; Dodson, Laura |
| Abstract: | Animal manure provides crop nutrients and improves soil quality. However, manure’s nutrient variability and low phosphorus and nitrogen content per unit weight reduce its market value relative to chemical fertilizers. While manure remains an important source of fertilizer in many farming systems, alternative uses are becoming important. Manure can be used to generate renewable energy in the forms of heat, gas, and electricity with further processing, but innovation is required to compete against other renewable and nonrenewable energy sources. Entrepreneurs are also developing markets for fiber found in manure. Environmental policies related to animal farms, meant to protect air and water quality, can both raise manure management costs and increase manure’s value as an energy precursor. This study uses data from the USDA Agricultural Resource Management Survey (ARMS) to describe current manure production, handling, storage, and use. An extensive literature review of manure-related research describes existing and emerging technologies that have the potential to increase the value of manure or reduce manure management costs. The study identifies potential government programs and policies for promoting the adoption of technologies that enhance manure value for farmers. |
| Keywords: | Agribusiness, Community/Rural/Urban Development, Crop Production/Industries, Environmental Economics and Policy, Farm Management, Industrial Organization, Land Economics/Use, Livestock Production/Industries, Resource /Energy Economics and Policy |
| Date: | 2023–03–14 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usdami:333552&r=ene |
| By: | Faten Saliba; Giorgio Maarraoui; Walid Marrouch; Ada Wossink |
| Abstract: | This paper uses life satisfaction data to help the design of climate mitigation policies in the United Kingdom. We assess the effects of the exposure to ambient pollutants on long-term life satisfaction and short-term mental health in the UK. We estimate augmented Cobb-Douglas utility functions using pooled and random effects ordinal logit models. Results show that increases in NO2, PM10 and PM2.5 significantly decrease the odds of longterm happiness and short-term mental health in the UK. The willingness to pay for clean air is also significant and increases with level of education. These measurements derived can be used as benchmarks for pollution abatement subsidies or pollution taxes and can help in projecting a more comprehensive assessment of costs and benefits. |
| Keywords: | Air Pollution; Happiness; Policy Valuation; Climate Change; Environmental Policies; Pollution Taxes; Pollution Abatement Subsidies; life satisfaction data; dataset description; air pollutant; pollutants' correlation; household data; ordinal Logit; Income; Europe; Global |
| Date: | 2023–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/035&r=ene |
| By: | Mats Petter Kahl (Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre) |
| Abstract: | In this article, I analyze whether German gasoline stations passed on the gasoline tax reduction to consumers. I use a difference-in-differences approach with France as the control group, as well as data for all countries in the European Union. The German fuel discount was in effect from June to August 2022. It was intensely debated in the general public whether German gasoline stations had increased prices before the tax reduction. Such a price increase would have made it easier for gasoline stations to disguise a price increase. Further questions follow: How long did it take for the full tax reduction to be passed on to consumers? Did gasoline stations reduce the pass-on after a few weeks? As I am the first to use complete French and German high-frequency data for the entire treatment period, I can examine how the pass-through of the tax cut evolved over time. I find substantial variance in pass-through rates over time. The average pass-through is very high but remains incomplete for all fuel types. |
| Keywords: | pass-through, gasoline market, tax reduction, fuel taxes, petrol prices |
| JEL: | H22 L13 L41 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:419&r=ene |
| By: | Meinerding, Christoph; Schüler, Yves; Zhang, Philipp |
| Abstract: | We propose and implement a method to identify shocks to transition risk, addressing key challenges regarding its definition and measurement. Our shocks are instances where significant new information about the economic relevance of climate change increases the valuation of green firms over brown firms. To illustrate our method, we identify shocks to transition risk in the United States. These shocks have important aggregate effects, also inducing financial instability. They are associated with events that increase the likelihood of an orderly transition, and they specifically affect parts of the economy related to fossil fuels and energy. We show that these main results carry over to Germany and the United Kingdom. Still, we find an important role for country specificities. |
| Keywords: | Transition risk, climate change, financial stability, portfolio sort, tex-tual analysis |
| JEL: | C30 E44 G12 Q43 Q54 Q58 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:042023&r=ene |
| By: | Konstantin Sommer (University of Amsterdam); Henri L.F. de Groot (Vrije Universiteit Amsterdam); Franc Klaassen (University of Amsterdam) |
| Abstract: | We study the effects of market integration on manufacturing emission intensities of CO2, SOx, and NOx. For this, we analyze the 2004 and 2007 EU enlargements in a sectoral panel with data on almost all EU member states from 1995 to 2015. We pay close attention to relevant channels of trade, regulation, and efficiency. Overall, the enlargements have resulted in a reduction of emission intensities in new member states: new regulations, which accession countries needed to adopt, have lowered pollution intensities strongly; induced improvements in productivity have further reduced them; and trade integration into the EU has had insignificant effects on emission intensities. We also do not find evidence of within-EU pollution haven effects and thus of leakage from old to new member states. For old members, trade integration, if anything, increased emission intensities, but productivity improvements have also contributed to cleaner manufacturing sectors here. |
| Keywords: | Market Integration, EU Enlargement, Carbon Leakage, Pollution Havens, Emission Intensity |
| JEL: | F15 F64 Q56 |
| Date: | 2022–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20220039&r=ene |
| By: | Alexandre Sollaci; Salma Khalid; Hibah Khan; Giacomo Magistretti; Ms. Era Dabla-Norris; Mr. Thomas Helbling; Mr. Krishna Srinivasan |
| Abstract: | Building public support for climate mitigation is a key prerequisite to making meaningful strides toward implementing climate mitigation policies and achieving decarbonization. Using nationally representative individual-level surveys for 28 countries, this note sheds light on the individual characteristics and beliefs associated with climate risk perceptions and preferences for climate policies. |
| Keywords: | Climate change; climate policies; carbon tax; perceptions; survey |
| Date: | 2023–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfsdn:2023/002&r=ene |
| By: | Hutter, Christian; Weber, Enzo |
| Abstract: | We provide first causal evidence of effects of the energy crisis on Germany, representing a major European economy. Combining cost structure data, national accounts and administrative labour market data, we identify effects in a sectoral panel setting using sector-specific energy intensity as “bite” variable. The results show that via the channel of energy intensity, monthly production and real turnover decreased by 4.1 and 2.6 percent, respectively, after the onset of the Russian war against Ukraine. Instead of layoffs, firms safeguarded employment via short-time work with 24.1 percent additional applications. Vacancy posting was reduced by 10.2 percent. |
| Keywords: | Russia-Ukraine war; energy; production; labour market; Germany |
| JEL: | E23 H56 J63 Q43 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116620&r=ene |
| By: | Nicoli, Francesco; Burgoon, Brian; van der Duin, David |
| Abstract: | The Russian invasion of Ukraine caught the European Union (EU) off-balance. Many European member-states were, on the onset of the war, heavily reliant on energy supplies provided by Russia. Against this background, some have proposed a unified approach for the creation of EU-wide strategic energy reserves, which would ensure a buffer against future energy shocks, but also provide temporary relief to the participating countries should some of them experience temporary issues with their energy supply. However, the political feasibility of such programmes remain disputed, as any EU-wide approach to energy will entail both additional financial costs and a share of responsibilities and sovereignty on the matter. Furthermore, any such policy design is inherently multidimensional, differing over scope, governance, source of financing among other dimensions. To determine public support for energy security cooperation, we conduct the first conjoint experiment ever fielded on public support for alternative energy union design. We field a pre-registered, randomized conjoint experiment on a highly representative sample of the French, German, Italian, Dutch and Spanish population in November 2022. This multidimensional conjoint experiment allows us to determine the causal link between policy features of potential energy solidarity pacts, and public support or opposition to such policy. Our results show that policy packages meeting the most support require higher levels of ambition, joint EU-level governance, joint purchases and procurement, and progressive taxation as a form of financing. All in all, our results not only show that there is considerable cross-border support for energy solidarity, but also that citizens in different western European countries have generally converging preferences regarding the actual design of such policy, indicating that a compromise policy is feasible and publicly supported. Furthermore, our results support ongoing research on the nature of European solidarity at times of crisis, suggesting that European citizens are willing to support the creation of joint institutions and policies to face issues of common concern, and therefore indicating that major crises open important windows of opportunity to re-shape EU-level policies and institutions. |
| Date: | 2023–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:q4nxm&r=ene |
| By: | Feist, Marian; Geden, Oliver |
| Abstract: | The 27th Conference of the Parties (COP 27) to the United Nations Framework Convention on Climate Change (UNFCCC) in Sharm el-Sheikh, Egypt, was marked by multiple crises and the shaken confidence of developing countries in the multilateral process. Nonetheless, an agreement was reached on the critical issue of loss and damage, even though many key aspects still need to be fleshed out. With regard to emission reductions, there is a credibility crisis that threatens to worsen, not only because political priorities have shifted following Russia's attack on Ukraine. In order to strengthen international climate cooperation in the coming years, it will be crucial to honour existing commitments, adhere to agreed processes, and show diplomatic tact in dealing with partner countries. |
| Keywords: | Klimapolitik, Klimawandel, UN-Klimarahmenkonvention (UNFCCC), 27. Vertragsstaatenkonferenz (COP 27) in Scharm El-Scheich, Schäden und Verluste, Loss and Damage, Klimaschutz, Mitigation, Klimafolgenanpassung, Adaptation, Global Shield, climate policy, climate change, United Nations Framework Convention on Climate Change, UNFCCC, COP 27, Sharm el-Sheik, loss and damage, mitigation, climate change adaptation, Global Shield, Vulnerable 20, Nationally Determined Contributions, NDCs, Green Climate Fund, GCF |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:swpcom:102023&r=ene |
| By: | Emanuele Campiglio; Francesco Lamperti; Roberta Terranova |
| Abstract: | We develop a dynamic model where heterogeneous firms take investment decisions depending on their beliefs on future carbon prices. A policy-maker announces a forward-looking carbon price schedule but can decide to default on its plans if perceived transition risks are high. We show that weak policy commitment, especially when combined with ambitious mitigation announcements, can trap the economy into a vicious circle of credibility loss, carbon-intensive investments and increasing risk perceptions, ultimately leading to a failure of the transition. The presence of behavioural frictions and heterogeneity - both in capital investment choices and in the assessment of the policy-maker's credibility - has strong non-linear effects on the transition dynamics and the emergence of "high-carbon traps". We identify analytical conditions leading to a successful transition and provide a numerical application for the EU economy. |
| Keywords: | Beliefs; behavioural macroeconomics; credibility; investment decision-making; heterogeneous expectations; low-carbon transition; policy uncertainty |
| Date: | 2023–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2023/12&r=ene |
| By: | Agnese, Pablo (UIC Barcelona); Rios, Francisco (UIC Barcelona) |
| Abstract: | This paper examines the impact of spillover effects of energy transition metals on the Chilean economy. With the increasing demand for metals like copper and lithium due to the growth in renewable energies and electromobility, metal abundant countries like Chile must ready themselves to remain active players in the international arena. The study aims at identifying the causal relationships among these energy transition metals and other major assets like gold and bitcoin, and how they have given shape to Chile's economy, especially during the uncertain times of the covid pandemic. Our Structural Vector Autoregressive models suggest that Chile has been more prone to US-led shocks than Chinese shocks, even though its economy depends heavily on China. In addition, bitcoin shocks seem to have also contributed to Chile's transition to a metals-based economy, likely as a result of bitcoin's extensive use of energy and the uncertainty and volatility that characterize post-covid times. |
| Keywords: | copper, lithium, COVID-19, SVAR |
| JEL: | F62 G15 L61 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15999&r=ene |
| By: | Leo Reutter (University of Kassel); Georg von Wangenheim (University of Kassel) |
| Abstract: | In the rental residential building stock, the landlord-tenant-dilemma is a well-known barrier to investments in energy efficiency and exacerbated where rent control limits the possibility to raise rents to finance landlords’ investments. Some jurisdictions, like Germany, allow landlords to extraordinarily increase rents in proportion to a modernization’s costs. In addition, the government grants subsidies to home-owners investing in energy efficiency. However, landlords must deduct these subsidies from modernization costs that may be levied on tenants. In this paper we model the interaction of these two policies. We find that the modernization surcharge itself is inefficient regarding landlords’ and tenants’ welfare. Non-deductible subsidies help incentivizing otherwise unprofitable modernizations, thereby improving the modernization width at the cost of tenants’ welfare, but at low levels they do not enlarge otherwise profitable modernizations. Deductible subsidies prove to be beneficial for landlords and achieve increases in landlords’ optimal modernization extent, improving modernization depth. Deductible subsidies can still incentivize investment where none is profitable without, albeit less effectively. When large enough to overcome the inefficient incentives of the modernization surcharge, deductible subsidies can also guarantee both landlords and tenants to gain welfare as well as increasing overall Social Welfare. |
| Keywords: | energy efficiency, landlord-tenant-dilemma, residential building sector, subsidies, tenancy law |
| JEL: | H23 K25 Q48 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202302&r=ene |
| By: | Phillips, Willard; Nicholson, George; Alleyne, Antonio; Alfonso, Maurys |
| Abstract: | As the Caribbean subregion seeks to implement strategies for meeting its obligations under the Paris Agreement, the sustainable development of its land transportation subsector has emerged as a significant challenge. This relates to both the need to reduce green house gas emissions, for which the subsector is a major emitter, as well as the necessity for reducing its overall dependence on imported fossil energy. While several policy initiatives have sought to address these issues, the evidence of growing land transportation problems now motivates a closer examination of challenges in the subsector. Among the main issues are increasing motor vehicle concentrations in small island spaces and growing traffic congestion arising from increased private motor vehicle ownership. All of these factors operate to produce economic, social and environmental burdens such as growing imports of vehicles, fuel and spare parts; increased motor vehicle accidents and mortality; and socially deviant behaviors such as road rage. Given the pivotal role of transportation in the advancement of economies and society, this paper suggests policy options for improving land transportation efficiency and sustainability in the Caribbean. This study also seeks to add to the very limited literature related to the issue of land transportation in Small Island Developing States. |
| Keywords: | TRANSPORTE, TRANSPORTE SOSTENIBLE, TRANSPORTE POR CARRETERA, POLITICA DE TRANSPORTE, DESARROLLO SOSTENIBLE, PEQUEÑOS ESTADOS INSULARES EN DESARROLLO, TRANSPORT, SUSTAINABLE TRANSPORT, ROAD TRANSPORT, TRANSPORT POLICY, SUSTAINABLE DEVELOPMENT, SMALL ISLAND DEVELOPING STATES |
| Date: | 2023–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col033:48725&r=ene |
| By: | Angrist, Noam (University of Oxford); Winseck, Kevin (University of California at San Diego); Patrinos, Harry A. (World Bank); Graff Zivin, Joshua (University of California, San Diego) |
| Abstract: | Addressing climate change requires individual behavior change and voter support for pro-climate policies, yet surprisingly little is known about how to achieve these outcomes. In this paper, we estimate causal effects of additional education on pro-climate outcomes using new compulsory schooling law data across 16 European countries. We analyze effects on pro-climate beliefs, behaviors, policy preferences, and novel data on voting for green parties – a particularly consequential outcome to combat climate change. Results show a year of education increases pro-climate beliefs, behaviors, most policy preferences, and green voting, with voting gains equivalent to a substantial 35% increase. |
| Keywords: | human capital, education, climate change, compulsory schooling laws, voting |
| JEL: | D72 H41 I20 I28 P16 Q01 Q5 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15991&r=ene |
| By: | Bannor, Frank; Magambo, Isaiah; Mubenga-Tshitaka, Jean Luc; Mduduzi, Biyase; Osei-Acheampong, Bismark |
| Abstract: | This study explores the relationship between natural resources, governance, political stability, and economic growth in African countries. The study employs a robust econometric approach, the pooled mean group (PMG), to account for slope heterogeneity and cross-sectional dependency in the dataset. The study finds evidence that supports the resource curse hypothesis, which suggests that an abundance of natural resources can stifle economic growth. However, the study also finds that effective governance and political stability can mediate the negative impact of natural resource rents on economic growth. The findings suggest that investment in political stability, and effective governance, manifested through institutional quality, can directly boost economic growth in Africa. However, their indirect contribution can be maximized by linking them to natural resource utilization. The study recommends that policymakers prioritize the indirect contribution of effective governance, and political stability for transforming natural resource abundance into prosperity for resource-endowed African economies. This requires building credible and sustainable governance systems, particularly for natural resource revenue management and utilization. Additionally, political reforms should focus on building systems that prevent autocratic or corrupt political elites from solely benefiting from the physical control of natural resource rents. |
| Keywords: | Natural resource rents, resource curse hypothesis, governance, political stability, economic growth, Africa. |
| JEL: | O1 O13 O17 |
| Date: | 2023–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116651&r=ene |
| By: | McLean, Sheldon |
| Abstract: | The study analyzes the process for the awarding of blocks among select countries within the western hemisphere, namely Brazil, Guyana, Mexico, Suriname and Trinidad and Tobago. The findings allow for the determination of key elements of what can be considered an optimal hydrocarbon fiscal regime for Caribbean economies that would allow governments to get their fair share of hydrocarbon rents, while ensuring sufficient exploration and production activity. The study therefore suggests that for the Caribbean, the optimal fiscal regime should include a reservation price, royalties, and a windfall tax. Mindful of the sunk costs which may be incurred by the multinationals in exploration and production activities, invariably, fiscal incentives would be necessary. The study, however, argues in favor of collusion among oil and gas endowed regional countries in pursuit of hydrocarbon sector FDI. This would simultaneously avoid the proverbial race-to-the-bottom and go a long way in optimizing each country’s hydrocarbon rents. |
| Keywords: | HIDROCARBUROS, RECURSOS NATURALES, PRODUCCION INDUSTRIAL, TRIBUTACION, POLITICA FISCAL, INVERSION EXTRANJERA DIRECTA, HYDROCARBONS, NATURAL RESOURCES, INDUSTRIAL PRODUCTION, TAXATION, FISCAL POLICY, FOREIGN DIRECT INVESTMENT |
| Date: | 2023–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col033:48720&r=ene |
| By: | Colner, Jonathan P.; Cohen D’Agostino, Mollie |
| Abstract: | Congestion pricing is a vehicle tolling system that imposes fees to drive within a congested area, typically a downtown district. Cities that already have congestion pricing policies in place have been studied extensively. Notable examples are Singapore, London, Stockholm, Milan, and Gothenburg. These cities have appreciated a range of benefits from congestion pricing, including reductions in peak traffic, vehicle miles traveled, and emissions, as well as increased revenues for transportation investments. |
| Keywords: | Engineering |
| Date: | 2023–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt4q87j713&r=ene |
| By: | Jonathan Berrisch; Florian Ziel |
| Abstract: | This paper presents a new method for combining (or aggregating or ensembling) multivariate probabilistic forecasts, taking into account dependencies between quantiles and covariates through a smoothing procedure that allows for online learning. Two smoothing methods are discussed: dimensionality reduction using Basis matrices and penalized smoothing. The new online learning algorithm generalizes the standard CRPS learning framework into multivariate dimensions. It is based on Bernstein Online Aggregation (BOA) and yields optimal asymptotic learning properties. We provide an in-depth discussion on possible extensions of the algorithm and several nested cases related to the existing literature on online forecast combination. The methodology is applied to forecasting day-ahead electricity prices, which are 24-dimensional distributional forecasts. The proposed method yields significant improvements over uniform combination in terms of continuous ranked probability score (CRPS). We discuss the temporal evolution of the weights and hyperparameters and present the results of reduced versions of the preferred model. A fast C++ implementation of all discussed methods is provided in the R-Package profoc. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.10019&r=ene |
| By: | Peter Lindner; Kay Chung |
| Abstract: | This paper aims to provide guidance to issuers of sovereign ESG bonds, with a focus on Emerging Market and Developing Economies (EMDEs). An overview of the ESG financing options available to sovereign issuers is followed by an analysis of the operational requirements and costs that the issuance of sovereign ESG bonds entails. While green bonds are the instruments used to describe the issuance process, the paper also covers alternative instruments, including social and sustainability-linked bonds to provide issuers and other stakeholders with a comprehensive view of the ESG bond marketplace. |
| Keywords: | Bond issuance; Climate finance; ESG bonds; Green bonds; Public Financial Management; Social bonds; Sovereign debt management; Sustainable finance; Sustainability-linked bonds |
| Date: | 2023–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/058&r=ene |
| By: | Soares, Rodrigo R. (Insper, São Paulo); Souza, Danilo (University of Sao Paolo) |
| Abstract: | We document that oil-producing areas of Brazil experienced increases in crime during the period of increased economic growth driven by the 2000s oil boom. This challenges the understanding that the impact of income shocks on crime is driven primarily by the legal status of the market in question. Offshore oil production, refining, and distribution in Brazil are concentrated in large firms, without scope for income contestability. We show that various equilibrium effects of the shock – such as increased inequality, urbanization, illegal goods presence, and deterioration in public goods provision – are likely to have contributed to the increase in crime. |
| Keywords: | crime, oil, income, Brazil |
| JEL: | H75 K42 Q34 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16002&r=ene |
| By: | Leonardo Becchetti; Gianluigi Conzo; Francesco Salustri |
| Abstract: | Climate challenge can be modelled as a multiplayer prisoner’s dilemma where ecological action – e.g., purchasing an electric car or adopting sustainable life-styles – is costly in terms of economic resources, time, and effort. Even though social benefit is maximised with everyone taking ecological actions, no actions from all players is a Nash equilibrium assuming players are self-interested. In this paper we analyse how this ecological dilemma is affected by people’s perception. Using the European Social Survey, we study how urgent the climate threat is perceived by respondents and their beliefs about other countries’ actions. Theoretical predictions suggest that the former increases, while the latter does not affect individual willingness to act ecologically. Our empirical findings however show that both factors positively affect willingness to act. We interpret the positive effect of country action on responsibility to act as conditional cooperation and show that the effect is weaker as social capital increases. |
| Keywords: | climate change, perception, ecological actions, social dilemma, conditional cooperation |
| JEL: | H41 Q54 Q58 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:rtr:wpaper:0274&r=ene |
| By: | Tommaso Rughi; Jacopo Staccioli; Maria Enrica Virgillito |
| Abstract: | This paper provides a direct understanding of the twin transition from the innovative activity domain. It starts with a technological mapping of the technological innovations characterised by both climate change mitigation/adaptation (green) and labour-saving attributes. To accomplish the task, we draw on the universe of patent grants in the USPTO since 1976 to 2021 reporting the Y02-Y04S tagging scheme and we identify those patents embedding an explicit labour-saving heuristic via a dependency parsing algorithm. We characterise their technological, sectoral and time evolution. Finally, after constructing an index of sectoral penetration of LS and non-LS green patents, we explore its impact on employment share growth at state level in the US. Our evidence shows that employment shares in sectors characterised by a higher exposure to LS (non-LS) technologies present an overall negative (positive) growth dynamics. |
| Keywords: | Climate change mitigation technologies; Labour-saving technologies; Search heuristics; Natural Language Processing; Labour markets. |
| Date: | 2023–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2023/11&r=ene |
| By: | Quang-Loc, Nguyen |
| Abstract: | The analysis shows that higher-income firms are likelier to have higher stock prices. Still, the association is negatively moderated by the firm’s participation in emission trading (see Figure 1). |
| Date: | 2023–03–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:fx938&r=ene |
| By: | Harper, Gavin D.J.; Kendrick, Emma; Anderson, Paul A.; Mrozik, Wojciech; Christensen, Paul; Lambert, Simon; Greenwood, David; Das, Prodip K.; Ahmeid, Mohamed; Milojevic, Zoran; Du, Wenjia; Brett, Dan J.L.; Shearing, Paul R.; Rastegarpanah, Alireza; Stolkin, Rustam; Sommerville, Roberto; Zorin, Anton; Durham, Jessica L.; Abbott, Andrew P.; Thompson, Dana; Browning, Nigel D.; Mehdi, B. Layla; Bahri, Mounib; Schanider-Tontini, Felipe; Nicholls, D.; Stallmeister, Christin; Friedrich, Bernd; Sommerfeld, Marcus; Driscoll, Laura L.; Jarvis, Abbey; Giles, Emily C.; Slater, Peter R.; Echavarri-Bravo, Virginia; Maddalena, Giovanni; Horsfall, Louise E.; Gaines, Linda; Dai, Qiang; Jethwa, Shiva J.; Lipson, Albert L.; Leeke, Gary A.; Cowell, Thomas; Farthing, Joseph Gresle; Mariani, Greta; Smith, Amy; Iqbal, Zubera; Golmohammadzadeh, Rabeeh; Sweeney, Luke; Goodship, Vannessa; Li, Zheng; Edge, Jacqueline; Lander, Laura; Nguyen, Viet Tien; Elliot, Robert J.R.; Heidrich, Oliver; Slattery, Margaret; Reed, Daniel; Ahuja, Jyoti; Cavoski, Aleksandra; Lee, Robert; Driscoll, Elizabeth; Baker, Jen; Littlewood, Peter; Styles, Iain; Mahanty, Sampriti; Boons, Frank |
| Abstract: | The market dynamics, and their impact on a future circular economy for lithium-ion batteries (LIB), are presented in this roadmap, with safety as an integral consideration throughout the life cycle. At the point of end-of-life (EOL), there is a range of potential options—remanufacturing, reuse and recycling. Diagnostics play a significant role in evaluating the state-of-health and condition of batteries, and improvements to diagnostic techniques are evaluated. At present, manual disassembly dominates EOL disposal, however, given the volumes of future batteries that are to be anticipated, automated approaches to the dismantling of EOL battery packs will be key. The first stage in recycling after the removal of the cells is the initial cell-breaking or opening step. Approaches to this are reviewed, contrasting shredding and cell disassembly as two alternative approaches. Design for recycling is one approach that could assist in easier disassembly of cells, and new approaches to cell design that could enable the circular economy of LIBs are reviewed. After disassembly, subsequent separation of the black mass is performed before further concentration of components. There are a plethora of alternative approaches for recovering materials; this roadmap sets out the future directions for a range of approaches including pyrometallurgy, hydrometallurgy, short-loop, direct, and the biological recovery of LIB materials. Furthermore, anode, lithium, electrolyte, binder and plastics recovery are considered in order to maximise the proportion of materials recovered, minimise waste and point the way towards zero-waste recycling. The life-cycle implications of a circular economy are discussed considering the overall system of LIB recycling, and also directly investigating the different recycling methods. The legal and regulatory perspectives are also considered. Finally, with a view to the future, approaches for next-generation battery chemistries and recycling are evaluated, identifying gaps for research. This review takes the form of a series of short reviews, with each section written independently by a diverse international authorship of experts on the topic. Collectively, these reviews form a comprehensive picture of the current state of the art in LIB recycling, and how these technologies are expected to develop in the future. |
| Keywords: | batteries; circular economy; legislation; lithium-ion; recycling; sustainability |
| JEL: | J1 |
| Date: | 2023–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:118420&r=ene |
| By: | Brueckner, Marcus (Research School of Economics, Australian National University, Australia); Hong, Haidi (Independent Competition and Regulatory Commission, Australia); Vespignani, Joaquin (Tasmanian School of Business & Economics, University of Tasmania) |
| Abstract: | This paper presents estimates of the effects that government regulation of diesel and petrol prices has on GDP growth. Theory suggests that when supply curves are convex, a decrease in the regulatory price has a larger effect on output than a tantamount increase in the regulatory price. Motivated by this theoretical insight, we specify VAR models with asymmetric effects of positive and negative changes in the regulatory prices of diesel and petrol. We estimate the VAR models on quarterly data from China’s national accounts statistics during the period Q1 1998 to Q4 2018. Our main findings are that: (i) negative growth rates of regulatory diesel and petrol prices significantly reduce GDP growth; (ii) positive growth rates of regulatory diesel and petrol prices have a positive, but quantitatively small and statistically insignificant effect on GDP growth. |
| Keywords: | GDP growth, energy price regulation |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:tas:wpaper:47700&r=ene |
| By: | Kräussl, Roman; Oladiran, Tobi; Stefanova, Denitsa |
| Abstract: | This study examines the recent literature on the expectations, beliefs and perceptions of investors who incorporate Environmental, Social, Governance (ESG) considerations in investment decisions with the aim to generate superior performance and also make a societal impact. Through the lens of equilibrium models of agents with heterogeneous tastes for ESG investments, green assets are expected to generate lower returns in the long run than their non- ESG counterparts. However, at the short run, ESG investment can outperform non-ESG investment through various channels. Empirically, results of ESG outperformance are mixed. We find consensus in the literature that some investors have ESG preference and that their actions can generate positive social impact. The shift towards more sustainable policies in firms is motivated by the increased market values and the lower cost of capital of green firms driven by investors' choices. |
| Keywords: | Environmental, Social, Governance, ESG, Performance, Sustainability, Social Impact, Greenwashing |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:694&r=ene |
| By: | Kren, Janez; Lawless, Martina |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp742&r=ene |