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on Energy Economics |
| By: | Prest, Brian C. (Resources for the Future); Fell, Harrison; Gordon, Deborah; Conway, TJ |
| Abstract: | Supply-side interventions that retire highly emitting fossil fuel assets have received increased attention from policymakers and private actors alike. Yet concerns about market leakage—wherein reduced supply from one source is partially offset by increased production from other sources—have raised questions about how much emissions reductions they can achieve. In this paper, we estimate the effects of these supply-side interventions on global emissions, accounting for both market leakage as well as the relative greenhouse gas (GHG) intensity of different sources of supply. We account for uncertainty in market leakage rates and the emissions intensities of the curtailed and substitute sources of supply through a Monte Carlo analysis, drawing on supply and demand elasticities from the economics literature and emissions intensity data from the state-of-the-art Oil Climate Index plus Gas (OCI+) dataset on 586 oil and gas fields around the world. We find that the life-cycle emissions reductions from supply-side interventions are on the order of 40–50 percent of the gross life-cycle emissions of each barrel curtailed, depending on the relative emissions intensity of the curtailed and substitute sources of supply. Further, targeting the most emissions-intensive sources of oil supply could achieve yet further emissions reductions. How one compares methane and CO2 emissions also has important consequences for which sources to target. |
| Date: | 2023–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-23-11&r=ene |
| By: | Jann Michael Weinand; Ganga Vandenberg; Stanley Risch; Johannes Behrens; Noah Pflugradt; Jochen Lin{\ss}en; Detlef Stolten |
| Abstract: | Lithium is a critical material for the energy transition, but conventional procurement methods have significant environmental impacts. In this study, we utilize regional energy system optimizations to investigate the techno-economic potential of the low-carbon alternative of direct lithium extraction in deep geothermal plants. We show that geothermal plants will become cost-competitive in conjunction with lithium extraction, even under unfavorable conditions and partially displace photovoltaics, wind power, and storage from energy systems. Our analysis indicates that if 10% of municipalities in the Upper Rhine Graben area in Germany constructed deep geothermal plants, they could provide enough lithium to produce about 1.2 million electric vehicle battery packs per year, equivalent to 70% of today`s annual electric vehicle registrations in the European Union. This approach could offer significant environmental benefits and has high potential for mass application also in other countries, such as the United States, United Kingdom, France, and Italy, highlighting the importance of further research and development of this technology. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.07019&r=ene |
| By: | Bergman, Aaron (Resources for the Future); Krupnick, Alan (Resources for the Future) |
| Abstract: | Clean hydrogen can be a key component to decarbonization, particularly in the industrial sector. Beyond its current use in chemicals and refining, hydrogen has potential new and expanded uses in, for instance, process heat, iron and steel, electricity generation and transportation. However, current hydrogen production technologies yield significant carbon emissions, and little economic incentive has existed to expand the use of hydrogen to new areas. But that has begun to change, with the US Congress recently placing large bets on a future hydrogen economy. Last year’s Infrastructure, Investment and Jobs Act (IIJA) contains $9.5 billion funding for hydrogen, including $8 billion for hydrogen hubs. And this year’s Inflation Reduction Act (IRA) contains two provisions that will subsidize clean hydrogen production. The first is a new tax credit (section 45V of the tax code) where the value of the credit is based on life cycle emissions. The second is a substantial increase in the value of the existing tax credit for carbon sequestration (section 45Q of the tax code), which is used to make “blue†hydrogen.Each of these tax credits can reduce the price difference between clean hydrogen and more carbon-intensive alternatives. To better understand the cost-effectiveness of these policies, this price difference can be converted into an implicit carbon price. As we will see, the values so obtained are significantly higher than many estimates of the social cost of carbon and may thus appear uneconomic. However, the goal of these tax credits is not solely to correct for the lack of a price on carbon but also to aid the deployment of nascent hydrogen technologies. Such deployment can have spillover effects, disseminating knowledge and potentially lowering costs in the future, an additional externality that, although difficult to quantify, may justify the higher implicit carbon prices.These tax credits have different impacts depending on the form of hydrogen production. Fossil-fuel based production generally uses natural gas (although it can use other fuels as we discuss later). This process produces greenhouse gas emissions from the carbon dioxide released as the hydrogen is extracted from the natural gas (or other hydrocarbon). To be clean hydrogen, these emissions must be captured. On the other hand, electrolysis, the production of hydrogen from water using electricity, produces no direct greenhouse gas emissions. However, electrolysis consumes large amounts of electricity that can lead to both high costs and high lifecycle emissions if the electricity is purchased on the wholesale market. Costs could be lowered, however, by using lower cost electricity, either through a direct connection to a generator or by only producing hydrogen when the price of electricity is low.Both forms of hydrogen production are potentially eligible for the 45V tax credit, but they must demonstrate low life cycle emissions to do so, with the magnitude of the credit depending on the level of emissions. In the case of fossil-fuel based production, beyond the direct emissions, the largest component of the life cycle emissions is upstream methane leakage; for electrolysis, it is the emissions associated with electricity production. The Treasury Department will have to issue a regulation on how to calculate these life cycle emissions, which will have a major impact on the subsidies available to hydrogen producers and the competitiveness of various forms of hydrogen production.In contrast to the 45V tax credit, only hydrogen producers using carbon capture, utilization and storage (CCUS) are eligible for the 45Q tax credit. This tax credit is available irrespective of the life cycle emissions and, as we will see, can be more valuable than the 45V tax credit. Producers are not allowed to take both tax credits.We will analyze the impacts of these tax credits on the costs of hydrogen production using a set of hydrogen production models from the National Renewable Energy Laboratory (NREL). We will see that the 45Q tax credit is sufficient to make some forms of fossil fuel–based hydrogen production competitive with current high-emission production on a levelized cost basis. The high cost of grid electricity and the associated emissions, on the other hand, make it hard for electrolysis to compete. However, electrolyzers that source cleaner and cheaper electricity can qualify for high levels of the 45V tax credit and compete with fossil-fuel based hydrogen production. In the long run, costs for electrolyzers are expected to decrease, and the grid should be less carbon intensive, making electrolyzers competitive more broadly.In this report, we will review various forms of hydrogen production and the changes to the tax law made by the Inflation Reduction Act. We will calculate the implicit carbon prices and discuss the calculation of life cycle emissions. Next, using the NREL models, we will discuss the impacts of the tax credits on the levelized and marginal costs of hydrogen production and see how they depend on upstream methane leakage rates and the carbon intensity of electricity production. We will also examine in detail how the relative competitiveness of the various forms of production depends on natural gas and electricity prices. We conclude with a discussion of the broader hydrogen economy. |
| Date: | 2022–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-22-13&r=ene |
| By: | Dikshya Singh (South Asia Watch on Trade, Economics and Environment) |
| Abstract: | This paper highlights the crucial role of energy in economic growth and the potential benefits of increased access to clean and affordable energy. The brief also emphasizes the importance of sustainable development given Nepal's social and ecological vulnerabilities. It presents pathways to green structural transformation and discusses the co-benefits of replacing petroleum products with cleaner energy sources. Overall, this brief aims to provide insights on how Nepal can achieve rapid and equitable economic growth while promoting sustainable development through a transition to clean energy. |
| Keywords: | Nepal , Clean energy , Economic growth , Sustainable development , Green structural transformation , Petroleum products , Renewable energy , Energy efficiency , Net-zero emissions , Climate change , Industrialization , Environmental costs , Fossil fuels , Policy overhaul , Economic readjustments |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:saw:ibrief:ib/22/01&r=ene |
| By: | Linn, Joshua (Resources for the Future); McConnell, Virginia (Resources for the Future); Pesek, Sophie (Resources for the Future); Raimi, Daniel (Resources for the Future) |
| Abstract: | Federal and state tax policies designed to fund the construction and maintenance of transportation infrastructure rely almost exclusively on excise taxes levied on petroleum products. But as the United States and the world seek to reduce greenhouse gas emissions, boosting fuel economy and electric vehicle (EV) sales will reduce the demand for petroleum and associated public revenues. In this analysis, we use an economic model of the US household vehicle market to estimate the effects of three alternative revenue policies: one that adjusts tax rates for internal combustion engine (ICE) vehicles and adds a new per-mile fee for EVs to maintain the performance of US roadways, a second that levies a per-mile fee on all vehicles in lieu of the gasoline tax, and a third that charges all motorists for the external costs of driving, including greenhouse gas emissions, “local†air pollution, traffic accidents, and congestion. We also examine the effects of extending fuel economy standards beyond their current levels. We find that current tax policies are insufficient by tens of billions of dollars per year to fund roadways and that either higher taxes on gasoline or a per-mile fee of $0.03 levied on all passenger vehicles could achieve the target revenue. Tightening fuel economy standards lowers the cost of operating ICE vehicles and reduces tax revenues. Imposing a per-mile fee on EV owners has virtually no effect on EV adoption because of interactions with other policies but does slightly reduce EV miles driven. We produce an updated estimate of the external costs of driving, averaging $0.16 per mile for gasoline vehicles ($3.85 per gallon) and $0.06 per mile for EVs, with large differences between urban and rural counties. Applying fees at this rate dramatically accelerates EV adoption, increases driving costs (especially for ICE vehicles), slightly reduces overall driving, and raises tax revenues well beyond the level needed to maintain roadway performance. |
| Date: | 2023–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-23-09&r=ene |
| By: | Christopher J. Smith; Alaa Al Khourdajie; Pu Yang; Doris Folini |
| Abstract: | Emissions pathways used in climate policy analysis are often derived from integrated assessment models (IAMs). However, such emissions pathways do not typically include climate feedbacks on socioeconomic systems and by extension do not consider climate uncertainty in their construction. Here we show that climate uncertainty alone significantly changes the cost-benefit optimal CO$_2$ emissions, varying from -14 to +12 GtCO$_2$ yr$^{-1}$ in 2050 (5-95% range) for an ensemble of scenarios that limit warming to 1.5{\deg}C with low overshoot. Climate uncertainty is also responsible for a factor of five range in the social cost of carbon (SCC) in this scenario ensemble. Equilibrium climate sensitivity (ECS) and the strength of present-day aerosol radiative forcing are strong determinants of SCC and optimal mid-century CO$_2$ emissions. This confirms that reducing climate uncertainty can refine cost-optimal emissions projections, and points to a missing feedback between climate and emissions in scenario construction. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.08957&r=ene |
| By: | Axel Gautier (HEC Liège); Julien Jacqmin (NEOMA - Neoma Business School); Jean-Christophe Poudou (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier) |
| Abstract: | Renewable energy communities involve various agents who decide to jointly invest in renewable production units and storage. This paper examines how these communities interact with the energy system and can decrease its overall cost. First, we show that a renewable energy community can contribute positively to welfare if the electricity produced by the investment is consumed close to its place of production, i.e. if the community has a high degree of self-consumption. Second, our analysis identifies the condition on prices and grid tariffs to align the community's interest with welfare maximization. We also show that some of these grid tariffs do not have a negative impact on non-members of the community and could therefore limit potential distributional issues. Third, we argue that various internal organization of the renewable energy communities are feasible. The internal organization impacts the distribution of benefits among members but not the global efficiency of the community. |
| Keywords: | energy communities, decentralized production unites, energy transition, grid regulation |
| Date: | 2023–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-04032253&r=ene |
| By: | Kim, Changmo; Butt, Ali Azhar; Harvey, John; Ostovar, Maryam; Saboori, Arash |
| Abstract: | The objective of this study was to develop a framework for determining the fuel use and environmental impacts caused by construction work zones (CWZs) on a range of vehicles and to produce initial calculations of these impacts by modeling traffic closure conditions for highway maintenance and rehabilitation (M&R) activities. The framework was developed and demonstrated in several scenarios. The study included three common highway categories—freeways, multi-lane highways, and two-lane highways—and common California vehicle types. The framework uses realistic drive cycle values and CWZ operation scenarios as inputs to the simulation software MOtor Vehicle Emission Simulator (MOVES) to estimate total fuel consumption and air pollutant emissions. In this study, the framework was demonstrated using three CWZ operations under different traffic congestion levels: light, medium, and heavy. Fuel consumption and pollutant emissions results obtained for the CWZ operation scenario with and without congestion were compared with those for a no-CWZ, no-congestion scenario. In the simulation results for a freeway with a CWZ and heavy congestion, fuel consumption increased by 85% and the CO2 equivalent (CO2-e) emissions increased by 86%, NOx by 62%, SOx by 85%, and PM2.5 by 128%. In the multi-lane highway scenarios, fuel consumption increased by 85%, and CO2-e emissions increased by 88%, NOx by 75%, SOx by 87%, and PM2.5 emissions by 129% for a CWZ with heavy congestion. Lessening traffic congestion in a CWZ from heavy (average speed 5 mph) to medium (average speed 25 mph for a freeway section and 15 mph for a multi-lane road section) reduced fuel consumption by 40% on a freeway and 33% on multi-lane highway. This study also included use of a pilot car in a CWZ on a two-lane road. This approach was undertaken to estimate the possible benefits of different CWZ lane closure strategies and traffic management plans. The pilot-car operation scenario results indicate that a one-lane closure with pilot-car operation on a two-lane road might consume 13% more fuel because of idling time and the slow movement of vehicles following the pilot car. This scenario generated emissions increases of 10% for CO2-e, 14% for NOx, 13% for SOx, and 65% for PM2.5. The results of these scenarios indicate that the impacts from heavy vehicles far exceed those from smaller vehicles in CWZs. Phase 2 of the study will develop methods for pavement management, conceptual evaluation, and project design that consider construction closures by implementing this life cycle assessment framework. These methods will also be used in studies to evaluate pavement design lives (20 years versus 40 years) and pavement selection for truck lanes and in-place recycling and to evaluate lane closure schedules and tactics to minimize CWZ impacts on highways by using project-specific traffic congestion levels. |
| Keywords: | Engineering, fuel consumption, greenhouse gas, life cycle assessment, air pollutant |
| Date: | 2022–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt02m0x1t7&r=ene |
| By: | Brown, David B.; Muehlenbachs, Lucija (Resources for the Future) |
| Abstract: | To avoid electric-infrastructure-induced wildfires, millions of Californians have had their power cut for hours to days at a time. We show that rooftop solar-plus-battery-storage systems increased in zip codes with the longest power outages. Rooftop solar panels alone will not help a household avert outages, but a solar-plus-battery-storage system will. Using this fact, we obtain a revealed-preference estimate of the willingness to pay for electricity reliability, the Value of Lost Load, a key parameter for electricity market design. Our estimate, of around $4, 300/MWh, suggests California's wildfires-prevention outages resulted in losses from foregone consumption of $322 million to residential electricity consumers. |
| Date: | 2023–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-23-10&r=ene |
| By: | Olayinka Oyekola (Department of Economics, University of Exeter); Lotanna E. Emediegwu (Department of Economics, Policy and International Business, Manchester Metropolitan University); Jubril Olayinka Animashaun (Department of Economics, University of Manchester) |
| Abstract: | There are considerable differences in greenhouse gas emissions across countries, with little consensus on the extent to which political regimes affect environmental outcomes. This paper shows that the incentives that resource endowments and prices generate are key to understanding the influence of political regimes on emission outcomes. We analyze the relationship between commodity windfalls and CO2 emissions in a model of stratified political regimes, identifying the limits of democracies for environmental quality. To study the impact of international commodity prices on CO2 emissions, we use a panel of 179 countries covering the period 1970 to 2018. We then explore democracies and autocracies as channels for the heterogeneous effects of commodity windfalls on environmental quality. Our panel fixed effects estimation strategies account for the rich dynamics of contemporaneous emissions. Our baseline results show that commodity windfalls increase CO2 emissions in the long run. Similarly, countries with above threshold scores by measures of democratic institutions, such as executive recruitment, executive constraints, and political competition, have a significantly higher levels of CO2 emissions than those with lower scores. These results are robust to several sensitivity checks. |
| Keywords: | commodity windfalls, democracy, environmental quality, carbon emissions |
| JEL: | Q56 Q33 O13 H87 H11 |
| Date: | 2023–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:2306&r=ene |
| By: | Foroogh Nazzari Chamaki (Department of Banking and Finance, Eastern Mediterranean University); Glenn Jenkins (Queen's University); Majid Hashemipour (Faculty of Engineering, Cyprus International University, North Cyprus) |
| Abstract: | One of the most effective strategies to mitigate water shortages worldwide is to reuse the treated wastewater for freshwater production employing reverse osmosis (RO) technology. This strategy is appropriate in urban areas of arid or semi-arid regions as it can provide a sustainable and reliable water source close to the consumers. One of the drawbacks of RO is the high variability of production costs due to the electricity intensity. In addition, depending on the electricity source, it can also result in substantial environmental costs.This study showed that upgrading pumping and RO membrane systems of a wastewater reuse plant in Cyprus can significantly alleviate these drawbacks in terms cost, water recovery rate, and air pollution. The water recovery rate of the upgraded RO plant increased from 43.2 to 75 percent which results in a substantial net financial benefit due to less quantity of wastewater to be purchased and more potable water to be produced. The upgraded system also reduced the electricity requirement from 3.63 kWh/m3 to 1.92 kWh/m3. Pollution emissions decreased substantially because of the reduction in electricity requirements. The beneficiaries of these lower emissions costs are the residents of Cyprus and global society. Overall, the benefit of upgrading the plant is highly attractive with more than 65 percent of annual real internal rates of re-turn in financial and economic terms. Positive net present values are realized for all the scenarios considered. |
| Keywords: | circular economy, reused wastewater, reverse osmosis, levelized cost, economic cost, membrane technologies, emission cost, environmental externalities, distributive analysis, energy saving |
| JEL: | I38 L95 H43 Q25 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1503&r=ene |
| By: | Cavalli, Laura; Boeri, Chiara |
| Abstract: | Climate change is one of the most important challenges for the present generation, which is living in decades characterized by a drastic increase in greenhouse gas emissions, especially in the most developed countries: not only the production realities – for which policies already largely provide for mitigation measures – contribute to emissions; but also, individual citizens to whom only a small part of the envisaged measures are addressed. Among the policies in which the demand side is little addressed are the Nationally Determined Contributions, which embody the efforts of each country to reduce national emissions and adapt to the impacts of climate change, as stated in the Paris Agreement signed in 2015 between the Member States of the United Nations Framework Convention on Climate Change (UNFCCC). Integrating advice on carbon neutral lifestyles in NDCs and long-term strategies could have positive implications in both social, economic, and environmental terms, paving the way for more holistic and inclusive policies, fundamental elements to pursue a development that is sustainable in the short and above all in the medium-long term. Taking this into account, the present work, which forms an integral part of the studies of WP 7 within the Horizon 2020 Project CAMPAIGNers- Citizens Acting on Mitigation Pathways through Active Implementation of a Goal-setting Network1, aims to understand what the consequences deriving from the inclusion of carbon neutral lifestyle advice in the Nationally Determined Contributions and national climate strategies would be, and to operationally implement practical examples and ways to include behavioural aspects of the carbon neutral lifestyle in the sectors studied, based on national data and statistics from the countries participating in the Project2. The innovative aspect of the Project lies in integrating the quantitative aspects deriving from the scientific evidence of official statistics with qualitative aspects generated by the collaboration between partners and stakeholders, in the form of surveys and focus groups: in this way it is possible to effectively overlap the spheres of economic and environmental analysis with that of policy making, providing a tool capable of directing strategies and international agendas. |
| Keywords: | International Development, Public Economics, Resource /Energy Economics and Policy |
| Date: | 2023–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemwp:334237&r=ene |
| By: | Laura Cavalli (Fondazione Eni Enrico Mattei); Chiara Boeri (Fondazione Eni Enrico Mattei) |
| Abstract: | Climate change is one of the most important challenges for the present generation, which is living in decades characterized by a drastic increase in greenhouse gas emissions, especially in the most developed countries: not only the production realities – for which policies already largely provide for mitigation measures – contribute to emissions; but also, individual citizens to whom only a small part of the envisaged measures are addressed. Among the policies in which the demand side is little addressed are the Nationally Determined Contributions, which embody the efforts of each country to reduce national emissions and adapt to the impacts of climate change, as stated in the Paris Agreement signed in 2015 between the Member States of the United Nations Framework Convention on Climate Change (UNFCCC). Integrating advice on carbon neutral lifestyles in NDCs and long-term strategies could have positive implications in both social, economic, and environmental terms, paving the way for more holistic and inclusive policies, fundamental elements to pursue a development that is sustainable in the short and above all in the medium-long term. Taking this into account, the present work, which forms an integral part of the studies of WP 7 within the Horizon 2020 Project CAMPAIGNers- Citizens Acting on Mitigation Pathways through Active Implementation of a Goal-setting Network1, aims to understand what the consequences deriving from the inclusion of carbon neutral lifestyle advice in the Nationally Determined Contributions and national climate strategies would be, and to operationally implement practical examples and ways to include behavioural aspects of the carbon neutral lifestyle in the sectors studied, based on national data and statistics from the countries participating in the Project2. The innovative aspect of the Project lies in integrating the quantitative aspects deriving from the scientific evidence of official statistics with qualitative aspects generated by the collaboration between partners and stakeholders, in the form of surveys and focus groups: in this way it is possible to effectively overlap the spheres of economic and environmental analysis with that of policy making, providing a tool capable of directing strategies and international agendas. |
| Keywords: | Public Economics, Government, Environmental, Regional Household Behavior |
| JEL: | D1 H7 R2 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2023.07&r=ene |
| By: | Tom Krebs (University of Mannheim) |
| Abstract: | Traditional climate policy is based on the market-liberal paradigm that relies on carbon pricing, a belief in self-regulating markets, and transfer payments for the so-called “losers†of the transfor- mation process. The market-liberal approach to climate policy is certain to fail because it is based on a two-fold theory of society that is far removed from reality: it neglects adjustment costs in the trans- formation process and also economic power relations in the labor market. In contrast, modern climate policy takes into account these features of real societies and delivers green and inclusive economic growth. This policy is built on the idea of a forward-looking government that creates “pro-worker green institutions†and uses a “pro-worker green industrial policy†to support people and companies in the transformation process. The US Inflation Reduction Act (IRA) is an example of a modern climate policy in the sense that it includes several elements of a pro-worker green industrial policy. However, the US currently lacks the institutional structure to successfully implement a pro-worker climate agenda. European countries should embrace the general US approach to climate policy and develop their own, improved version based on their individual and institutional strengths. |
| Keywords: | Climate Policy, Pro-Worker Green Industrial Policy, Pro-Worker Green Institutions, New Paradigm |
| JEL: | D52 J50 J64 L32 L50 O43 O44 Q43 Q50 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:agz:wpaper:2301&r=ene |
| By: | Prest, Brian C. (Resources for the Future); Rennert, Kevin (Resources for the Future); Wingenroth, Jordan (Resources for the Future) |
| Abstract: | The Paris Agreement’s first Global Stocktake (GST) is set to conclude at the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) in late 2023. The GST is the means by which parties to the Paris Agreement monitor progress towards its goals, including Article 2’s goal of limiting warming to between 1.5 °C and 2 °C above preindustrial levels and Article 4’s goal of peaking greenhouse gas emissions as soon as possible. However, as the UN Environment Programme stresses in the latest Emissions Gap Report, the window to achieving these goals is closing rapidly.In the vast majority of literature assessing future socioeconomic, energy, and climate systems, projections for emissions scenarios are based on current policies, nationally determined contributions, or hypothetical socioeconomic “pathways†—or are designed to target specific degrees of temperature rise. While these scenarios are informative for policymakers, they do not provide information on their relative likelihoods, which limits their value for assessing the probability of meeting Paris goals. |
| Date: | 2023–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-23-01&r=ene |
| By: | Martin Bruns (School of Economics, University of East Anglia); Helmut Luetkepohl (DIW Berlin and Freie Universitaet Berlin) |
| Abstract: | Studies of the crude oil market based on structural vector autoregressive (VAR) models typically assume a time-invariant model and transmission of shocks or they consider a time-varying model and shock transmission. We assume a heteroskedastic reduced form VAR model with time invariant slope coefficients and test for time varying impulse responses in a model for the global crude oil market that includes key macroeconomic variables. We find evidence for changes in the transmission of shocks to oil price expectations during the last decades which can be attributed to heteroskedasticity. |
| Keywords: | Structural vector autoregression, heteroskedastic VAR, proxy VAR, crude oil market |
| JEL: | C32 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2023-03&r=ene |
| By: | Bangsund, Dean; Hodur, Nancy |
| Keywords: | Demand and Price Analysis, Environmental Economics and Policy, Financial Economics, Production Economics |
| Date: | 2023–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nddaae:334313&r=ene |
| By: | Fulton, Lewis; Jenn, Alan; Yang, Christopher; Burke, Andrew; Acharya, Tri Dev; Li, Xinwei; Ogden, Joan; Miller, Marshall; Ira, Josh; Bourne, Beth |
| Keywords: | Engineering, Social and Behavioral Sciences, hydrogen, low-carbon fuels, California |
| Date: | 2023–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt27m7g841&r=ene |
| By: | Wilhelmsson, Mats (Department of Real Estate and Construction Management, Royal Institute of Technology) |
| Abstract: | Our study aims to analyse whether the capitalisation of a property's energy performance is affected by how it is presented. Since 2002, an EU directive has been in place mandating the introduction of an energy performance certificate (EPC) when selling detached houses. This directive was implemented in Sweden in 2009. We analyse how EPC capitalised on housing prices during 2012-2018 for detached houses in Stockholm. This has been done before, but our contribution is to analyse both the effect of energy rating or labelling (A-G) and energy consumption (kWh/m²). How energy performance is communicated or displayed to potential buyers conveys that the format, style, and content of energy performance information may influence how buyers perceive its value and impact on the property's market price. We have information on energy rating, consumption, or both for selected properties. This allows us to test the hypothesis that how energy performance is presented affects pricing. We have also tested whether information affects different age cohorts differently. The results indicate that how energy performance is presented and visualised is important and that information about rating and consumption might be considered as a substitute for each other. It is also clear that the capitalisation effect differs depending on the age of the building. |
| Keywords: | energy rating; energy performance; labelling; capitalisation; housing prices |
| JEL: | M31 Q48 R30 |
| Date: | 2023–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:kthrec:2023_002&r=ene |
| By: | Ottmar Edenhofer; Max Franks; Matthias Kalkuhl; Artur Runge-Metzger |
| Abstract: | This paper highlights the importance of carbon dioxide removal (CDR) technologies for climate policy. We first describe their role in iconic transformation pathways and discuss removal costs and storage duration of different technologies. Based on economic principles, we characterize optimal removal flows and reservoirs for non-permanent removals. Furthermore, we discuss different pricing regimes that achieve an optimal allocation under different information and liability conditions. Notably, seemingly cheap removal technologies in the land sector can indeed be very expensive when increasing opportunity costs and and impermanence are appropriately accounted for. The use of non-permanent removal – though to a certain extent economically optimal – creates high liability to firms and regulators that warrants a careful and deliberative risk management. Based on these insights, we discuss how policy makers can embed the CDR option in the EU’s policy architecture. There are four key tasks for regulating bodies to ensure an optimal governance: the management of the net carbon emission cap; support for research, development and diffusion of CDR technologies; certification of the quality of removals; management of the liability implied by non-permanent CDR. We propose that three new institutions, a European Carbon Central Bank, a Carbon Removal Certification Authority and a Green Leap Innovation Authority, are established to carry out these tasks. |
| Keywords: | carbon dioxide removal, EU-ETS, social cost of carbon, climate policy, impermanence |
| JEL: | D61 H23 Q54 Q58 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10370&r=ene |
| By: | - |
| Abstract: | En este documento se analiza la caracterización de la pobreza energética en el Uruguay, un problema multidimensional —social, económico y cultural— y estructural que afecta directamente a los hogares y su entorno. Se ha definido, más específicamente, como la imposibilidad de garantizar el derecho de las personas a satisfacer sus necesidades energéticas mediante servicios seguros, asequibles y de calidad. En los últimos años, el país ha presentado indicadores positivos de acceso y abastecimiento, así como una elevada eficiencia del sector energético. Además, registra altos rendimientos macro- y microeconómicos respecto de la distribución del ingreso y el acceso al financiamiento. Pese a ello, el Estado uruguayo ha establecido que, dependiendo de la metodología y las variables de medición utilizadas, entre el 28% y el 38% de los hogares (principalmente pobres, monoparentales, con jefas de hogar, de tramos etarios jóvenes y afrodescendientes) están bajo la línea de pobreza energética, especialmente respecto del acceso a fuentes energéticas seguras, artefactos modernos y calidad de la vivienda. Un segundo objetivo de este trabajo, por lo tanto, es identificar políticas públicas que promuevan el bienestar de los hogares mediante el acceso equitativo a servicios energéticos de calidad. |
| Keywords: | RECURSOS ENERGETICOS, POLITICA ENERGETICA, PLANIFICACION DE LA ENERGIA, SERVICIOS ENERGETICOS, ENERGIA ELECTRICA, ABASTECIMIENTO DE AGUA, VIVIENDA, ESTADISTICAS DE ENERGIA, ENERGY RESOURCES, ENERGY POLICY, ENERGY PLANNING, ENERGY SERVICES, ELECTRIC POWER, WATER SUPPLY, HOUSING, ENERGY STATISTICS |
| Date: | 2023–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col022:48767&r=ene |
| By: | Ralph Winkler |
| Abstract: | Many poor countries are ill-adapted to the current leave alone a changing future climate, because they lack the necessary financial means to invest in efficient and cost-effective safeguarding measures. International endeavours to fund institutions, such as the Green Climate Fund, to provide financial assistance in this respect have not been as successful has hoped for. In this paper, I set up a simple two-player two-stage model, in which a rich country (North) can invest into adaptation measures in a poor country (South). I show that a necessary condition for North to invest into adaptation investments in South is that this results in decreasing equilibrium emissions of South. I find that this can only happen if the funded adaptation measures also have a flavor of mitigation, i.e., apart from safeguarding South from climate damages they have to reduce South’s marginal abatement costs. My results have important policy implications for the selection of adaptation and mitigation projects by international adaptation funding organizations, such as the Green Climate Fund. |
| Keywords: | climate change, adaptation versus mitigation, cross-country adaptation investments, non-cooperative climate policy, strategic complementarity |
| JEL: | C72 D62 H41 Q54 Q58 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10371&r=ene |
| By: | Ximena Cadena; Helena García; María Claudia García; María José Mejía; Alexander González; Santiago Muñoz; Luisa Fernanda Vargas |
| Abstract: | El cambio climático y los problemas ambientales presentan desafíos multidisciplinarios que requieren acciones efectivas y holísticas. Es necesario que los ministerios de finanzas tomen un papel más activo en la acción climática, ya que se requiere una gran redistribución de recursos financieros y una acción transversal en áreas como la energía, el transporte, el agua y la agricultura. Los ministerios de finanzas deben disenar estrategias de mitigación a corto, mediano y largo plazo y coordinar acciones entre el sector público y privado. El informe se centra en la capacidad de los ministerios de finanzas para abordar el cambio climático en América Latina y el Caribe, a través de entrevistas a distintos Ministerios de la región y el análisis de los avances realizados hasta el momento.****** Abstract: Climate change and environmental problems present multidisciplinary challenges that require effective and holistic actions. Finance ministries need to take a more active role in climate action, as a major redistribution of financial resources and cross-cutting action is required in areas such as energy, transportation, water and agriculture. Finance ministries should design short-, medium- and long-term mitigation strategies and coordinate actions between the public and private sectors. The report focuses on the capacity of finance ministries to address climate change in Latin America and the Caribbean, through interviews with different ministries in the region and analysis of the progress made so far. |
| Keywords: | Cambio Climático, Medio Ambiente, Política Pública, Ministerios de Finanzas, Economía Verde, Impuestos Verdes, Políticas de Crecimiento Verde, Climate Change, Environment, Public Policy, Finance Ministries, Green Economy, Green Taxes, Green Growth Potential Assessment |
| JEL: | F18 G15 H25 Q2 Q3 Q4 Q5 |
| Date: | 2023–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:020743&r=ene |
| By: | Vincent BERTRAND (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE], Réseau EDEN.i - Réseau EDEN.i - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]) |
| Abstract: | Les prix de gaz et du charbon s'envolent alors que le prix du carbone bat des records. Du jamais vu ! Face à cette situation, il convient d'examiner plus en détails le switch gaz/charbon, qui représente le principal gisement de réduction des émissions à court terme pour le marché européen du carbone. Un prix du carbone élevé renforce mécaniquement la compétitivité des centrales gaz par rapport au charbon : les exploitants et les fabricants de centrales gaz voient ainsi la profitabilité de leurs actifs augmenter. Mais le coût du switch est d'autant plus sensible au prix du gaz que l'effort de switch est élevé : l'augmentation du prix du gaz pourrait donc non seulement augmenter le coût de l'abattement (et le prix des quotas d'émission), mais de manière plus que proportionnelle. Au-delà, si le prix du gaz devient trop élevé (comme cet automne, où il a dépassé les 100 euros par MWh), le switch gaz/charbon peut se révéler non compétitif, alors même que le prix du carbone est très élevé et que l'Europe a besoin de réduire ses émissions. Dans ces conditions, pourrait-on arriver à une situation où l'hydrogène (via la co-combustion avec le gaz naturel dans les centrales gaz) pourrait permettre de rendre compétitif des configurations de switch gaz/charbon qui ne le seraient pas sans ? C'est la question que pose cet article et qui a de quoi alimenter les réflexion sur l'hydrogène dans la Région Bourgogne Franche-Comté. |
| Keywords: | Switching gaz/charbon, Carbon market, Switching gas/coal, Energy prices, Hydrogen, Marché du carbone, Prix des énergies, Hydrogène |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04052669&r=ene |
| By: | Ibrahim A. Adekunle (Babcock University, Nigeria); Olukayode E. Maku (Olabisi Onabanjo University, Nigeria); Tolulope O. Williams (Olabisi Onabanjo University, Nigeria); Judith Gbagidi (Africa PPP Advisory Services); Emmanuel O. Ajike (Babcock University, Nigeria) |
| Abstract: | Purpose With heterogeneous findings dominating the growth and natural resources relations, there is a need to explain the variances in Africa’s growth process as induced by robust measures of factor endowments. This study used a comprehensive set of data from the updated database of the World Bank to capture the heterogeneous dimensions of natural resource endowments on growth with a particular focus on establishing complementary evidence on the resource curse hypothesis in energy and environmental economics literature in Africa. These comprehensive data on oil rent, coal rent, and forest rent could provide new and insightful evidence on obscure relations on the subject matter. Design/methodology/approach This paper considers the panel vector error correction (PVECM) procedure to explain changes in economic growth outcomes as induced by oil rent, coal rent and forest rent. The consideration of the (PVECM) was premised on the panel unit root process that returns series that were cointegrated at the first-order differentials. Findings The paper found positive relations between oil rent, coal rent and economic development in Africa. Forest rent, on the other hand, is inversely related to economic growth in Africa. Trade and human capital are positively related to economic growth in Africa, while population growth is negatively associated with economic growth in Africa. Research limitations/implications Short-run policies should be tailored toward the stability of fiscal expenditure such that the objective of fiscal policy, which is to maintain the condition of full employment, economic stability, and stabilise the rate of growth, can be optimised and sustained. By this, the resource curse will be averted, and productive capacity will increase, leading to sustainable growth and development in Africa, where conditions for growth and development remains inadequately met. Originality/value The originality of this paper can be viewed from the strength of its arguments and methods adopted to address the questions raised in this paper. This study further illuminated age-long obscure relations in the literature of natural resource endowment and economic growth by taking a disaggregated approach to the component-by-component analysis of natural resources factors (the oil rent, coal rent and forest rent) and their corresponding influence on economic growth in Africa. This pattern remains underexplored mainly in previous literature on the subject. Many African countries are blessed with an abundance of these different natural resources in varying proportions. The misuse and mismanagement of these resources along various dimensions have been the core of the inclination toward the resource curse hypothesis in Africa. Knowing how growth conditions respond to changes in the depth of forest resources, oil resources and coal resources could be a useful pointer in Africa's overall use and management. This study contributed to the literature on natural resource-induced growth dynamics by offering a generalisable conclusion as to why natural resource-abundance economies are prone to poor economic performance. This study further asks if mineral deposits are a source or reflection of illgrowth and underdevelopment in African countries. |
| Keywords: | Natural Resource Endowment; Economic Growth; Resource Curse Hypothesis; PVECM; Africa |
| JEL: | C33 O44 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:23/015&r=ene |
| By: | Markus Brueckner; Haidi Hong; Joaquin Vespignani |
| 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. 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 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 |
| JEL: | E60 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2023-690&r=ene |
| By: | Alvin Ulido Lumbanraja (Northwestern University – Kellogg School of Management); Teuku Riefky (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)) |
| Abstract: | To tackle climate change, countries need to channel more capital to green projects. Additionally, typical green projects tend to have a lower return and/or higher fixed costs relative to brown investment projects. This, along with the higher cost of capital and limited fiscal spaces, means that the state budget of developing countries will not be enough to fulfil the financing needs of climate-related projects. Furthermore, shallow domestic financial markets also limit the available domestic funds for green projects in developing countries. This policy brief proposes an actionable framework to promote the flow of private capital from developed countries into green projects in developing countries. |
| Keywords: | international finance — t20 — financing gap — private capital — developing countries — developed countries |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:lpe:t20ina:202203&r=ene |
| By: | Costantiello, Alberto; Leogrande, Angelo |
| Abstract: | We estimate the determinants of CO2 Emissions-COE in the context of Environmental, Social and Governance-ESG model at world level. We use data of the World Bank for 193 countries in the period 2011-2020. We found that the level of COE is positively associated, among others to “Methane Emissions”, “Research and Development Expenditures”, and negatively associated among others to “Renewable Energy Consumption” and “Mean Drought Index”. Furthermore, we have applied a cluster analysis with the k-Means algorithm optimized with the Elbow Method and we find the presence of four cluster. Finally, we apply eight machine-learning algorithms for the prediction of the future value of COE and we find that the Artificial Neural Network-ANN algorithm is the best predictor. The ANN predicts a reduction in the level of COE equal to 5.69% on average for the analysed countries. |
| Keywords: | Analysis of Collective Decision-Making, General, Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behaviour, Bureaucracy, Administrative Processes in Public Organizations, Corruption, Positive Analysis of Policy Formulation, Implementation. |
| JEL: | D7 D70 D72 D73 D78 |
| Date: | 2023–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:117110&r=ene |
| By: | Fitch-Polse, Dillon T; Mohiuddin, Hossain; Fukushige, Tatsuya; Darr, Justin; Agarwal, Swati |
| Abstract: | This report presents preliminary findings from the American Micromobility Panel, the largest study of shared micromobility services in the United States incorporating riders from multiple major operators. Micromobility services (bike-share and scooter-share) have recently emerged in many U.S. cities. Given that the substitution of bicycling, scooting, and other small vehicle travel for car travel will help cities reach numerous planning goals (e.g., accessibility, emissions, climate, health, equity, etc.), there is a need for understanding the effects of these mobility services. The purpose of this study was to examine the impact of micromobility services on travel behavior and outcomes such as mode shift, car ownership, access, equity, safety, and physical activity. The authors surveyed shared micromobility service users in 48 U.S. cities with two different surveys in Summer 2022: a 21-day smartphone-based travel diary (2206 participants with 183, 483 trips), and an online follow-up survey of travel diary participants (657 valid responses). Car substitution rates, including private car and ride-hailing, show strong variation by city size and micromobility vehicle type. Through self-report, micromobility seems to have had at least a partial influence on the decision to purchase a car, perhaps as a part of a long-term car use reduction effort/plan. Participants showed positive attitudes toward using public transit, but a small portion of trips to access or egress from transit facilities were made by the participants. Instead, the participants more generally showed a transit substitution effect when using micromobility services. Results also suggest that bike-share and scooter-share use may be influenced in opposing ways by participant income. Half of participants had at least once experienced that they could not find an available vehicle nearby, suggesting a sizeable supply constraint on demand for the services to satisfy existing micromobility user needs. The effect of micromobility services on increasing physical activity was slight given the physical activity it often replaced. Additionally, concerning safety, participants tended to agree that bike-share is safer than scooter-share, and participants tended to agree with the view that using micromobility improved their mental health. View the NCST Project Webpage |
| Keywords: | Social and Behavioral Sciences, Micromobility, shared mobility, travel survey, GPS data, bicycles, e-scooters, e-bikes |
| Date: | 2023–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt8bs198sz&r=ene |
| By: | Kato, Kazuhiko |
| Abstract: | This study theoretically examines whether a uniform relative emission standard improves a professional sports team's competitive balance and social welfare in a professional league. Our study shows that there are cases where tightening (resp. relaxing) such standards can improve competitive balance when the differences between the abatement cost conditions of different clubs are sufficiently small (resp. large). Social welfare improves when the standard is slightly tougher than an unregulated emission level standard. Furthermore, social welfare also improves when the standard set to a zero-emission level is slightly relaxed. |
| Keywords: | Competitive balance; emission standard; professional team sports league; welfare analysis |
| JEL: | Q50 Z00 |
| Date: | 2023–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:117009&r=ene |
| By: | Takwanisa Machemedze (DataFirst, University of Cape Town); Mercy Shoko (School of Public Health, University of the Witwatersrand; Demographic & Population Statistics, and Health & Vital Statistics, Statistics South Africa); Mark Collinson (Population and Public Health, School of Public Health, University of the Witwatersrand; MRC/Wits University Rural Public Health and Health Transitions Research Unit (Agincourt); South African Population Research Infrastructure Network (SAPRIN), Department of Science and Technology and South African Medical Research Council); Martin Wittenberg (School of Economics, and DataFirst, University of Cape Town) |
| Abstract: | Progress on achieving the Sustainable Development Goals requires high quality measurement. Too few attempts are made to assess the accuracy of existing measurements and how it changes over time. We compare household counts and electrification rates for the Agincourt Health and Demographic Surveillance Site (HDSS), as measured in the 1996, 2001 and 2011 national censuses and in the database of the HDSS. The household measurements in the two systems agree within a few percentage points in 2001 and 2011 but show much bigger divergences in 1996. The population counts also show impressive agreement, with perhaps some over-enumeration of older males in the national census. Overall, survey and census information seem to provide accurate measures of population access to electricity. |
| Keywords: | Electricity access, rural households, HDSS data |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ldr:wpaper:290&r=ene |
| By: | Astrid Martínez; José David Gómez |
| Abstract: | El documento incluye la proyección de los precios internacionales del carbón térmico, con un horizonte de veinte anos, a partir del análisis de la oferta y la demanda internacional. Así mismo, presenta un modelo integral que incluye aspectos técnicos, jurídicos, financieros y proyecciones para simular diferentes escenarios de contraprestaciones económicas y otras obligaciones de los posibles adjudicatarios de las AEM para Carbón. Concluye con algunas recomendaciones para la definición de las variables económicas en el proceso de selección de un adjudicatario de las AEM para el Carbón basadas en el análisis del modelo integral. |
| Keywords: | Carbón, Consumo del CarbónMercado del Carbón, Minería del Carbón, Precios Internacionales del Carbón, Política Pública, Coal Consumption, Coal Mining, International Coal Price, Public Policy |
| JEL: | L71 L72 L11 L16 |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:020717&r=ene |
| By: | Hertwich, Edgar (Norwegian University of Science and Technology) |
| Abstract: | Using a general formulation of the hypothetical extraction method in input-output analysis, the relationship between linkage analysis following the approach of Cella and the supply chain impact method by Cabernard and colleagues is investigated. It is shown that forward linkage is the same as the demand of other sectors for inputs from target sectors in the supply chain impact method. It is acknowledged that Cabernard and colleagues also analysed the use of materials by other sectors. |
| Date: | 2023–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:6pjxg&r=ene |
| By: | Awokuse, Titus; Chan, Nathan W.; González-Ramírez, Jimena; Gulati, Sumeet; Interis, Matthew G.; Jacobson, Sarah; Manning, Dale T.; Stolper, Samuel; Ando, Amy (Resources for the Future) |
| Abstract: | This paper highlights some ways in which scholarly work in environmental and natural resource (ENRE) economics may be affected by and unintentionally further racial inequity. We discuss four channels through which these effects may occur: (1) prioritization of efficiency over distribution, (2) inattention to procedural justice, (3) abstraction from crucial historical or social contexts, and (4) a narrow focus on problems perceived as tractable. We offer specific examples of how racial inequity may be furthered by work in the field through welfare and valuation methods, policy modeling choices, and treatment of the commons. We document opportunities to improve the field by better considering how racial inequity may affect and be affected by ENRE analysis. ENRE scholars have tools that can mitigate systemic racism in access to natural resources and a clean environment, but work must be done to realize that potential. |
| Date: | 2023–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-23-06&r=ene |
| By: | Isaac K. Ofori (University of Insubria, Varese, Italy); Francesco Figari (University of Eastern Piedmont, Novara, Italy.); Nathanael Ojong (York University, Toronto, Canada) |
| Abstract: | This study contributes to the environmental and socioeconomic sustainability literature by examining three important issues. First, the study examines the effects of foreign direct investment (FDI) and economic freedom on inclusive green growth (IGG) in sub-Saharan Africa (SSA). Second, we investigate whether economic freedom interacts with FDI to promote IGG. Third, we identify minimum the thresholds required for economic freedom to cause FDI to foster IGG. The findings are based on macro data for 20 SSA countries. Evidence, based on instrumental variable regression, show that, unconditionally, FDI is not statistically significant for promoting IGG. Second, the study finds that SSA’s ‘Mostly unfree’ economic architecture conditions FDI to reduce IGG. Third, results from our threshold regression reveal that the minimum threshold required for economic freedom to cause FDI to foster IGG is 66.2% (Moderately free). The study sheds new light on investments necessary for SSA’s economic architecture to form relevant synergies with FDI to promote IGG. |
| Keywords: | Economic Freedom; FDI; Government Integrity; Inclusive Green Growth; Sustainable Development; sub-Saharan Africa |
| JEL: | F21 F6 H1 P1 O55 Q01 Q56 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:23/023&r=ene |
| By: | Newell, Richard G. (Resources for the Future); Prest, Brian C. (Resources for the Future); Pizer, William (Resources for the Future) |
| Abstract: | Government analysts have long used discount rates based on investment rates of return to approximate the effect of capital displacement. However, we show how this approach is deeply flawed and produces highly biased results, particularly in the context of decisions involving long-lived impacts such as climate change. We demonstrate how analysts can use the superior shadow price of capital (SPC) approach in a straightforward manner to account for concerns about capital displacement in federal regulatory analysis. We derive a formula for the SPC as a function of four key parameters and propose a central SPC value of 1.1, with a reasonable range of 1.1 to 1.2. We then illustrate how the SPC approach could be easily implemented in practice using the example of the 2015 Clean Power Plan Regulatory Impact Analysis, showing that estimated net benefits are far less sensitive to capital displacement concerns under the analytically correct SPC approach as compared to the incorrect approach of using a 7 percent investment rate or return. Our work is particularly important given the ongoing efforts to revise federal guidance for benefit-cost analysis and discounting. |
| Date: | 2023–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-23-07&r=ene |