nep-ene New Economics Papers
on Energy Economics
Issue of 2023‒06‒26
72 papers chosen by
Roger Fouquet
National University of Singapore

  1. ENERGY TRANSITION: PROSPECT AND CHALLENGES AT ASEAN PLUS THREE COUNTRIES By Arnita Rishanty; Maxensius Tri Sambodo; Donni Fajar Anugrah; Fathia Retno Puspita K. Wicaksono
  2. European Energy Policies By Alexandru Petrea
  3. Public finance resilience in the transition towards carbon neutrality: Modelling policy instruments in a global net-zero emissions By Jean Fouré; Rob Dellink; Elisa Lanzi; Filippo Pavanello
  4. Reforming the EU internal electricity market in the middle of a huge energy crisis: an absolute short-term emergency or preparation for the future? By Jean-Michel Glachant
  5. Macro and oil price shocks on Chinese renewable energy transition By Yao, Guimin
  6. Behavioral economics in companies: Nudging green behavior. Evidence of the effectiveness of green nudges in companies By Enste, Dominik; Potthoff, Jennifer
  7. Pricing climate transition risk: Evidence from European corporate CDS By Vozian, Katia; Costola, Michele
  8. Localizing Environmental Regulation: The Case of Boutique Fuels By Auffhammer, Maximilian
  10. Green hydrogen – How grey can it be? By Johannes Brauer; Manuel Villavicencio; Johannes Trüby
  11. Incorporating grid expansion in an energy system optimisation model - A case study for Indonesia By Yuwono, Bintang; Yowargana, Ping; Kranzl, Lukas; Haas, Reinhard; Dewi, Retno Gumilang; Siagian, Ucok Welo Risma; Kraxner, Florian
  12. How Resilient is Public Support for Carbon Pricing? Longitudinal Evidence from Germany By Sommer, Stephan; Konc, Théo; Drews, Stefan
  13. Wind Power Approval, Decentralization, and NIMBYism: Evidence from the Swedish Greens By Lundin, Erik
  14. Estimating the carbon footprint of the GRAND project, a multi-decade astrophysics experiment By Clarisse Aujoux; Kumiko Kotera; Odile Blanchard
  15. Does the risk of carbon leakage justify the CBAM? By Håkan Nordström
  16. Equity, Commodity, and Distillate Risk for Oil Upstream Producers and Downstream Consumers By Scott Alan Carson; Scott A. Carson
  17. Probabilistic Forecast-based Portfolio Optimization of Electricity Demand at Low Aggregation Levels By Jungyeon Park; Est\^ev\~ao Alvarenga; Jooyoung Jeon; Ran Li; Fotios Petropoulos; Hokyun Kim; Kwangwon Ahn
  18. Low-Carbon Fuels for Aviation and Maritime Transport: Insights from Two Mirroring Workshops Held in the US and Europe By Cazzola, Pierpaolo; Murphy, Colin
  19. Environmental Responsibility of the Banking Sector in UAE: Practices to Confront Climate Change Risks By Shaymaa Al-Said Salem; Dina Elkhattat
  20. Theories for New Energy Sources Based on Celestial Vortex Modeling By Bushong, James; Bushong, Henry
  21. Net-zero transition and divestments of carbon-intensive assets By Gözlügöl, Alperen Afðsin; Ringe, Wolf-Georg
  22. Policy Complementarities in the Promotion of Electric Vehicles By Burra, Lavan T., Sommer, Stephan; Vance, Colin
  23. THE ANALYSIS OF SOCIO-TECHNICAL TRANSITION USING MULTI-LEVEL PERSPECTIVE (MLP) THEORETICAL LENS By Donni Fajar Anugrah; Arnita Rishanty; Benny Tjahjono; Fathia Nisa; Dian Rahmawati
  24. Water risks for hydroelectricity generation By Senni, Chiara Colesanti; von Jagow, Adrian
  25. Estimating the Effects of Regulation When Treated and Control Firms Compete: A New Method with Application to the EU ETS By Geoffrey Barrows; Raphael Calel; Martin Jégard; Hélène Ollivier
  26. Measuring Transition Risk in Investment Funds By Ricardo Crisóstomo
  27. Spanish securities issuers and their relstionship with climate change By Ramiro Losada, Albert Martínez Pastor
  28. Pricing and Electric Vehicle Charging Equilibria By Dokka, Trivikram; Bruno, Jorge; SenGupta, Sonali; Anwar, Sakib
  29. Trends in the Field of Energy Security By Doina Muresan; Alexandru Petrea
  30. Believe me when I say green! Heterogeneous expectations and climate policy uncertainty By Campiglio, Emanuele; Lamperti, Francesco; Terranova, Roberta
  31. Believe me when I say green! Heterogeneous expectations and climate policy uncertainty By Campiglio, Emanuele; Lamperti, Francesco; Terranova, Roberta
  32. Did the policy response to the energy crisis cause crime? Evidence from England By Fetzer, Thiemo
  33. Public EV charging infrastructure - why charging behaviours matter for placement, ownership and operations? By Dokka, Trivikram; SenGupta, Sonali; Bhardwaj, Aaditya
  34. CLIMATE VULNERABILITY PROMOTE MORE GREEN INVESTMENT? By Sen Zhang; Chun-Ping Chang; Donny Fajar Anugrah; Yoga Affandi
  35. Automotive industry transformation and industrial policy in the EU and Germany: A critical perspective By Nettekoven, Zeynep Mualla
  36. Load Asymptotics and Dynamic Speed Optimization for the Greenest Path Problem: A Comprehensive Analysis By Poulad Moradi; Joachim Arts; Josu\'e Vel\'azquez-Mart\'inez
  37. The Future of the EU Bioenergy Sector: Economic, Environmental, Social, and Legislative Challenges By Fabio Santeramo; Monica Delsignore; Enrica Imbert
  38. The impact of the Ukraine conflict on world grains prices By Gilbert, Christopher L.
  39. The role of financial inclusion in moderating the incidence of entrepreneurship on energy poverty in Ghana By Simplice A. Asongu; Nicholas M. Odhiambo
  40. Corporate Green Bonds: The Role of External Reviews for Investment Greenness and Disclosure Quality By Tami Dinh; Florian Eugster; Anna Husmann
  41. The role of financial inclusion in moderating the incidence of entrepreneurship on energy poverty in Ghana By Asongu, Simplice A; Odhiambo, Nicholas M
  42. Resilience regulation: An incentive scheme for regulated electricity network operators to improve resilience By Gert Brunekreeft; Marius Buchmann; Martin Palovic; Anna Pechan
  43. The Impact of Sustainable Innovation Finance on Achieving Global Climate Goals By Schreiner, Lena; Madlener, Reinhard
  44. Asia’s Low-Carbon Transition: Opportunities and Challenges for Trade By Kang, Sung Jin; Park, Donghyun
  45. An Investigation into the Effects of Border Carbon Adjustments on the Canadian Economy By Y.-H. Henry Chen; Hossein Hosseini Jebeli; Craig Johnston; Sergey Paltsev; Marie-Christine Tremblay
  46. Contingent valuation machine learning (CVML): A novel method for estimating citizens’ willingness- to- pay for safer and cleaner environment By Khuc, Quy Van; Tran, Duc-Trung
  47. Causal inference with (partially) independent shocks and structural signals on the global crude oil market By Hafner, Christian M.; Herwartz, Helmut; Wang, Shu
  48. Climate-related disclosure commitment of the lenders, credit rationing, and borrower environmental performance By Hasan, Iftekhar; Lee, Haekwon; Qiu, Buhui; Saunders, Anthony
  49. How Political Tensions and Geopolitical Risks Impact Oil Prices? By Valérie Mignon; Jamel Saadaoui
  50. Climate equivalence and international trade By Emily Lydgate
  51. Machine Learning and Deep Learning Forecasts of Electricity Imbalance Prices By Sinan Deng; John Inekwe; Vladimir Smirnov; Andrew Wait; Chao Wang
  52. Employee stock ownership and voluntary carbon disclosure By Joseph Abdelnour; Nicolas Aubert; Walid Ben-Amar
  53. Risks and incentives for gaming in electricity redispatch markets By Anna Pechan; Christine Brandstätt; Gert Brunekreeft; Martin Palovic
  54. Behavioral Insights fostering Pay for Sustainability Remuneration Schemes By Julia M. Puaschunder
  55. Alternative Finanzierung der erneuerbaren Energien: Experimentelle Evidenz für Deutschland By Frondel, Manuel; Eßer, Jana; Sommer, Stephan
  56. Impacts of climate litigation on firm value By Sato, Misato; Gostlow, Glen; Higham, Catherine; Setzer, Joana; Venmans, Frank
  57. What explains firms’ net zero adoption, strategy and response? By Berger-Schmitz, Zola; George, Douglas; Hindal, Cameron; Perkins, Richard; Travaille, Maria
  58. Demand-side flexibility in distribution grids: voluntary versus mandatory contracting By Athir Nouicer; Leonardo Meeus; Erik Delarue
  59. The International Air Cargo Cartel By Zhiqi Chen
  60. Regional Eco-Innovation Trajectories By Hendrik Hansmeier; Sebastian Losacker;
  61. Market Equilibria in Cross-Border Balancing Platforms By Cartuyvels, Jacques; Bertrand, Gilles; Papavasiliou, Anthony
  62. Investment Treaty Reform when Regulatory Chill Causes Global Warming By Henrik Horn
  64. The (European) Derisking State By Gabor, Daniela
  65. Exploring the Impact of the Federal Tax Credit on the Decision to Lease or Purchasea PEV in California By Hoogland, Kelly; Hardman, Scott; Chakraborty, Debapriya; Bunch, David
  67. Coordination of power network operators as a game-theoretical problem By Martin Palovic
  68. Analyzing Climate Change Policy Narratives with the Character-Role Narrative Framework By Kai Gehring; Matteo Grigoletto
  69. All You Need to Know About Climate Change By Di Liberto, Yuri
  70. UN ESSAI POUR UNE ECONOMIE DE LA POLLUTION By Anjara Lalaina Jocelyn Rakotoarisoa
  71. Die Energieabhängigkeit der Bankkredite: Eine empirische Untersuchung By Demary, Markus; Taft, Niklas Florian
  72. L’ANTHROPOCENE COMME RUPTURE DE L’HISTOIRE DE L’ECONOMIE By Sylvie Ferrari; Félix Garnier; Alain Alcouffe; Cécile Batisse

  1. By: Arnita Rishanty (Bank Indonesia); Maxensius Tri Sambodo (Indonesian Institute of Sciences); Donni Fajar Anugrah (Bank Indonesia); Fathia Retno Puspita K. Wicaksono (Bank Indonesia)
    Abstract: The energy transition is an important process to tackle the climate crisis due to the rapid increase of carbon emissions. This study aims to measure to what extent the transition of energy- related CO2 emissions from several dimensions, namely the country’s energy mix, energy self-sufficiency, energy security, sustainability, and affordability. This study contributes to the conduct of quadrant analysis of transition matrix for ASEAN plus three countries to map the dynamics of the transition in those countries. This study makes a comparison, not only in Indonesia, but also between ASEAN plus three countries (Japan, China, and South Korea). We find that economic activity has the greatest influence on the increase in CO2 emissions and that the efficiency and diversity categories may run asymmetrically. Based on the discussion with experts, Indonesia has a huge potential of renewable energy, yet the utilization is considerably low. It is also indicated that transition risks are associated with financing problems, fossil subsidies, geography, huma n capacity, excess fossil energy capacity, and financial resilience of state enterprises.
    Keywords: Energy Transition, ASEAN, renewable energy, transition matrix
    JEL: Q4 Q2 O1
    Date: 2022
  2. By: Alexandru Petrea (Alexandru cel Bun Military Academy, Chisinau)
    Abstract: An energy revolution based on renewable sources and energy efficiency is needed not only to accelerate progress and economic development, but also to reduce the emissions that are rapidly warming and transforming our planet. The energy transition is not a one-size-fits-all process. It involves a combination of objectives, tools, policies, technologies, financing and resources. While the destination is common the path to the final goal depends on economic, social, ecological or security circumstances. However, the process must be fair, comprehensive and systemic so that no one is left behind, and international and regional policies and cooperation are essential to facilitate the exchange of experiences and best practices. The energy transition can no longer be limited to small transformative steps. It is time for it to become a transformational, system-overhaul effort based on the rapid expansion and deployment of all available technologies. This is the right time to reassess long-held assumptions and adopt the most appropriate policies and strategies at European Union level. European policies cover a wide range of areas, from trade and competition, to the environment and climate change, transport, energy, education and more. European energy policy aims to ensure the EU's energy security, promote a transition to a low-carbon economy and encourage the use of sustainable energy resources. This involves making decisions about the energy market, energy efficiency, the diversification of energy sources and the promotion of renewable energies.
    Keywords: energy security, green energy, energy trends, energy transformations
    Date: 2023–04
  3. By: Jean Fouré; Rob Dellink; Elisa Lanzi; Filippo Pavanello
    Abstract: This paper presents a detailed economic modelling analysis of public finance in the transition towards carbon neutrality. It outlines results from a Net-Zero Emission Ambition scenario, which reflects the ambition to achieve net-zero carbon dioxide emissions globally by mid-century, using a broad and region-specific policy package that combines various policy instruments: carbon pricing, removal of fossil fuel support, regulations in the power sector, and other policies that stimulate investments by firms and households to reduce and decarbonise energy use. The analysis relies on the OECD global computable general equilibrium ENV-Linkages model. Results show that transitioning towards carbon neutrality is feasible when considering economic and fiscal consequences. The scenario achieves carbon neutrality while maintaining continued economic growth, despite a limited negative impact on global GDP and on public revenues. The fiscal effects reflect a trade-off between instruments that increase public revenues (carbon pricing) or reduce public expenditures (fossil fuel subsidies removal), on the one hand, and more costly instruments (subsidies) and indirect effects (tax base erosion and changes in fiscal and economic structure) on the other hand.
    Keywords: climate mitigation, computable general equilibrium models, net-zero, public budget
    JEL: H20 H23 H61 L68 Q43 Q54 C68
    Date: 2023–06–02
  4. By: Jean-Michel Glachant
    Abstract: Having identified the basic characteristics of the current energy crisis and its particular shape in the European Union, three questions immediately arise. 1) If gas is at the ‘core’ of the EU mixof energy crises, why hastily reform the internal electricity market? Is the electricity market badly affecting the gas crisis, amplifying it or worsening its consequences? Are we short of sufficientlygood emergency tools to immediately intervene against the detrimental effects of the EU gas crisis on the EU electricity market and vice versa? 2) If one assumes that most of the detrimental priceeffects of the gas crisis can be addressed with regular EU emergency tools, should we nevertheless revisit the EU electricity market to make it stronger vis-à-vis such a major energy shock? Wouldstrengthening our internal EU electricity market against future energy shocks reinforce or weaken our well-established policy of securing an EU decarbonisation path to 2030 or 2050? 3) If strengthening and reforming our EU electricity market can help our EU electrification strategy and our general path to decarbonisation, can we already foresee other conditions and constraints which could slow down or block this securitisation of our energy future?
    Date: 2023–01
  5. By: Yao, Guimin
    Abstract: Provided the key effects of oil price shocks on the business cycle, it raises great interests whether renewable energy promotion leads to a more sustainable economic growth for China, one of most important developing economies in the world. To answer this question, this paper examines key macroeconomic and oil indicators on the transition of renewable energy sector in China. We model these shocks as predetermined using a structural vector autoregressive model of Chinese economy and then examine the cumulative impacts on the transition process of renewable energy consumption and investment. Our results present significantly positive yet asymmetric impacts, with the effects cumulating to 2-5% in contraction and stable periods. It also presents first evidence of transition probability and duration for investment and consumption in renewable energy in China. All the evidence is important to the promotion of renewable energy sector in China.
    Keywords: Resource /Energy Economics and Policy, International Development
    Date: 2023–03
  6. By: Enste, Dominik; Potthoff, Jennifer
    Abstract: Climate protection is one of the greatest challenges society and economy are currently facing. In addition to policy (Macro level) and individual consumers (Micro level) also companies (Meso level) are confronted with increasing pressure to act more ecologically sustainable. Besides ecological improvement in the production processes and value chains, corporate transformation to more ecological sustainability also demands a development towards the office model of the future, the "Green Office" which is realized by the triade of "green IT", "green building" and "green behavior". This requires employees who are willing to change and structures who enable change. In view of the fact that employees in offices are not yet financially incentivized to act ecologically sustainable in the work context the question arises as to whether behavioral-economic insights can be used to motivate employees towards more ecological choices in their work life. By an intelligent and effective use of green nudges employees can be supported by adopting climate-friendly choices with regard to the following fields of action: energy efficiency, sustainable mobility and resource use. Exemplary nudges are gamification elements such as team bicycle or energy-saving competitions, feedback on electricity or fuel consumption, carpool simplifications and default changes such as double-sided printing. If properly designed, green nudges can combine corporate climate protection, fun, team spirit and freedom of choice and can, for instance, achieve significant savings of 6.5 percent in electricity consumption. If all offices used in the top 7 cities (Cologne, Düsseldorf, Stuttgart, Frankfurt, Hamburg, Munich, Berlin) would save an average of 6.5 percent electricity through green nudges, assuming an annual electricity consumption of 70kWh per m2 office area, 419, 676 MWh, more than 176, 000 tons of CO2 and 167.87 million euros in electricity costs could be yearly saved in Germany.
    Keywords: environmental awareness, sustainability, nudging, company, Germany
    JEL: D22 D91 Q51
    Date: 2023
  7. By: Vozian, Katia; Costola, Michele
    Abstract: The European low-carbon transition began in the last few decades and is accelerating to achieve net-zero emissions by 2050. This paper examines how climate-related transition indicators of a large European corporate firm relate to its CDS-implied credit risk across various time horizons. Findings show that firms with higher GHG emissions have higher CDS spreads at all tenors, including the 30-year horizon, particularly after the 2015 Paris Agreement, and in prominent industries such as Electricity, Gas, and Mining. Results suggest that the European CDS market is currently pricing, to some extent, albeit small, the exposure to transition risk for a firm across different time horizons. However, it fails to account for a company's efforts to manage transition risks and its exposure to the EU Emissions Trading Scheme. CDS market participants seem to find challenging to risk-differentiate ETS-participating firms from other firms.
    Keywords: climate change, transition risk, credit risk, credit default swap, emissionstrading system (ETS), financial markets
    JEL: G1 E58 G32 Q51 D53
    Date: 2023
  8. By: Auffhammer, Maximilian
    Abstract: The Clean Air Act has authorized an array of fuel regulations to reduce the precursors to ambient ozone pollution, among other pollutants. With the emergence of stringent fuel regulations for the most pollution-intensive cities, and the opportunity for states to adopt fuel content regulations, the U.S. gasoline market has evolved over the past three decades to address local pollution. We have evaluated the pollutant concentration, emissions, and price impacts of Federal RFG, RVP, California RFG, and other boutique fuel rules. We find that California RFG continues to deliver large improvements in air quality, while the benefits from RFG, RVP and boutique fuels are either small or statistically insignificant. We note, that ex post impacts of reformulated fuels are smaller than those predicted by ex ante analyses.
    Date: 2023–05–10
    Abstract: To understand any discussion on the issues of climatic change one much first be conversant with some of the key components of climatic change. These components are deforestation, desertification, droughts, freshwater usage, water pollution, greenhouse gas emission (carbon dioxide, methane, nitrous oxide and fluorinated gases), air pollution, water and refuse waste disposal, land use (e.g. agriculture, mining and bush burning), energy use (oil and industrial processes), and electricity production (see, World Bank, 2008). Out of all these components, the concentration of greenhouse gases (carbon dioxide, methane, nitrous oxide and fluorinated gases) is the main cause of climate change. For instance, in 2005, carbon dioxide, methane, nitrous oxide and fluorinated gases contributed 77 per cent, 14 per cent, 8 per cent, and 1 per cent emissions respectively in the world (World Resources Institute, cited in World Bank, 2008). And in 2004, 79.2 per cent of carbon dioxide emissions in sub-Saharan Africa were from solid fuel consumption, while South Asia and Europe had 32.7 and 27.5 per cents respectively. In Nigeria, the greenhouse gas emission was 0.3 per cent (World Bank, 2008). In the realisation of this and the need to address the issue of climate change, several climates and environmental conventions/conferences were held. Prominent among them were the Rio Earth Summit in 1992, the United Nations Framework Convention on Climate Change (UNFCCC) in 1992, the United Nations Convention to Combat Desertification (UNCCD) in 1994, the Kyoto Protocol in 1997, the Copenhagen Climate Change Conference in 2009, the Paris Agreement (COP21) in 2015, the Kigali Amendment in 2016, the Katowice Climate Change Conference (COP24) in 2018, and the United Nations Climate Change Conference (COP25) in 2019. A follow-up to these conventions/conferences were several initiatives such as the Great Green Wall in 2007, the African Climate Policy Centre in 2010, the Africa Climate Change Fund (ACCF) in 2014 and the Africa Adaptive Initiative in 2015 (see, CFR, nd; UPSC, nd; United Nations, 2015).
    Date: 2023–05–22
  10. By: Johannes Brauer; Manuel Villavicencio; Johannes Trüby
    Abstract: Low-carbon hydrogen is expected to play a key role in the European energy transition. The production of hydrogen using electricity in an electrolysis process is a promising route. However, depending on the origin of the electricity, hydrogen production is associated with different carbon emissions and costs. While a strict coupling of renewable energies to electrolysers ensures the ‘greenness’ of the product, it likely leads to higher production costs. On the contrary, procuring electricity freely at power markets unleashes the flexibility of electrolysers, allowing them to benefit from price signals and possibly reducing production costs. However, the carbon intensity in both the power system and the resulting hydrogen product might rise. Consequently, there is a tradeoff between environmental integrity and economic viability which affects social welfare and the decarbonisation process. By applying an electricity market model, we assess the impact of various regulatory options for the operation of electrolyser systems on social welfare and carbon emissions. These options are based on the three dimensions proposed in the ongoing regulatory discussions: (1) the origin of the sourced electricity, (2) the temporal correlation of the production of hydrogen and renewable electricity and (3) their spatial correlation. For the case of Germany in 2030, we find that the most environmentally friendly regulation reduces CO2 emissions by 4.7 Mt and the best economic outcome results in 0.9 Billion EUR of welfare gains. While too stringent regulation on the spatial dimension is not recommended, the various advantages of relatively strict requirements in the temporal dimension (e.g., decline in CO2 emissions, financial exoneration of consumers, reduction in natural gas demand) exceed their comparably moderate economic disadvantages. Moreover, we find that with a progressing energy transition, the need for such regulation diminishes, as electricity from renewable energies represents both the best economic and the best environmental option, so that the observed trade-off disappears.
    Keywords: Electrolytic hydrogen, Regulation, Electricity market, Welfare
    Date: 2022–09
  11. By: Yuwono, Bintang; Yowargana, Ping; Kranzl, Lukas; Haas, Reinhard; Dewi, Retno Gumilang; Siagian, Ucok Welo Risma; Kraxner, Florian
    Abstract: Energy system optimisation models (ESOMs) are widely used for policy analyses particularly on topics related to climate change mitigation and renewable energy transition. Using ESOM to investigate regions that potentially require significant expansion of grid infrastructure requires incorporation of grid expansion problem within the optimisation. This study presents the development of SELARU, a Mixed-Integer Linear Programming (MILP) model for spatially explicit long-term energy infrastructure planning. The model is used to investigate the case study of Indonesia using various spatial treatments to demonstrate the impact of detailed spatial depiction of grid expansion. Results reveal significant difference in renewable energy deployment trajectory (up to 315% increase in generation capacity) between high-resolution spatial depiction of grid expansion vis-à-vis non spatially explicit energy system optimisation. SELARU’s high-resolution energy system optimization modelling also provides detailed information on the geographical extent of grid expansion requirement, which provides more realistic insights on governance challenges of renewable energy transition. Careful consideration of spatial representation is crucial when ESOM is used to evaluate scenarios that concern technology selection such as renewable energy deployment or climate change mitigation.
    Date: 2023–05–16
  12. By: Sommer, Stephan; Konc, Théo; Drews, Stefan
    Abstract: The success of climate policies depends crucially on the dynamics of public support. Using unique longitudinal data from three surveys conducted between 2019 and 2022, we study the variations of public support for carbon pricing in Germany. The period includes two relevant events: the introduction and ramping up of carbon pricing in Germany and the exogenous increase in energy prices following the Russian invasion of Ukraine. Using panel methods, we show that support is very persistent over time and might have increased slightly more recently. However, people who experience high energy costs display a lower support. Regarding revenue use, we detect that social cushioning has become more popular after the introduction of carbon pricing. Our findings suggest that it is crucial to gather enough support before implementing climate policies.
    Keywords: Climate change mitigation, political economy, panel methods
    JEL: D12 H23 Q58
    Date: 2023
  13. By: Lundin, Erik (Research Institute of Industrial Economics (IFN))
    Abstract: Green parties are commonly seen as strong proponents of wind power. This paper presents an alternative view, examining data from the highly decentralized institutional setup in Sweden where approval of wind power applications is delegated to local governments. I demonstrate that the approval rate of land based wind power drops by 11 percentage points (from 49 % to 38 %) in municipalities where the Greens are in the ruling coalition, conditional on the share of Green seats in the local council. The association is identified using a twoway fixed-effects logit model with panel data on electoral outcomes from six election terms (2000-2020) in 290 municipalities, combined with detailed data on every application for wind power in Sweden. No statistically significant effect is found for any other of the main parties. A likely mechanism is that even if the Greens have relatively stronger preferences for climate policy than other parties, they are also relatively more concerned about local environmental disamenities caused by wind power. Since decision making is decentralized, local environmental concerns dominate preferences for climate policy, which should be especially pertinent in small municipalities. In line with this argument, I also show that the effect is inversely correlated with municipality population size.
    Keywords: Wind power; Decentralization; Negative externalities; Electricity market; Energy transition; Climate policy; Elections; Nimbyism; Green Party
    JEL: D62 D72 H73 P18 Q48
    Date: 2023–05–29
  14. By: Clarisse Aujoux (IAP - Institut d'Astrophysique de Paris - INSU - CNRS - Institut national des sciences de l'Univers - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique); Kumiko Kotera (VUB - Vrije Universiteit Brussel, IAP - Institut d'Astrophysique de Paris - INSU - CNRS - Institut national des sciences de l'Univers - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique); Odile Blanchard (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes)
    Abstract: We present a pioneering estimate of the global yearly greenhouse gas emissions of a large-scale Astrophysics experiment over several decades: the Giant Array for Neutrino Detection (GRAND). The project aims at detecting ultra-high energy neutrinos with a 200, 000 radio antenna array over 200, 000 km as of the 2030s. With a fully transparent methodology based on open source data, we calculate the emissions related to three unavoidable sources: travel, digital technologies and hardware equipment. We find that these emission sources have a different impact depending on the stages of the experiment. Digital technologies and travel prevail for the small-scale prototyping phase (GRANDProto300), whereas hardware equipment (material production and transportation) and data transfer/storage largely outweigh the other emission sources in the large-scale phase (GRAND200k). In the mid-scale phase (GRAND10k), the three sources contribute equally. This study highlights the considerable carbon footprint of a large-scale astrophysics experiment, but also shows that there is room for improvement. We discuss various lines of actions that could be implemented. The GRAND project being still in its prototyping stage, our results provide guidance to the future collaborative practices and instrumental design in order to reduce its carbon footprint.
    Keywords: Greenhouse gas emission, Carbon footprint, Climate change, Large-scale astrophysics experiment, Radio-detection
    Date: 2021–09
  15. By: Håkan Nordström
    Abstract: The Paris Agreement calls on developed countries to take the lead in global efforts to stop climate change. The drawback with differentiated commitments is carbon leakage, that is, that emission- intensive industries migrate to countries with lower carbon prices. This risk has prompted the EU to introduce a Carbon Border Adjustment Mechanism as part of the “fit-for-55” agenda with the goal of reducing emissions by 55 percent by 2030. In practical terms, the CBAM will equalize the carbon price paid by domestic and foreign producers in the internal market. Other OECD countries are considering similar measures, which will primarily affect developing countries. The issue thus has a north-south dimension that may increase tensions in global trade and climate negotiations. This paper reviews the empirical evidence of carbon leakage from 1995 to 2018, finding that it has played a marginal role for global emissions. Yet, the perceived risk must be managed to allow the EU and other leading parties to lead the way to decarbonize the global economy without risking their own industrial base. The practical solution would be to negotiate new rules on trade-related climate measures that balance the interests of all parties, as proposed by the Secretary-General of the OECD.
    Keywords: Climate change, the European Union, carbon border adjustments, WTO, the Paris agreement, traderelated climate-measures
    Date: 2023–02
  16. By: Scott Alan Carson; Scott A. Carson
    Abstract: The oil and gas industry’s role in economic activity is hard to overstate. This study considers upstream, midstream, and downstream oil producer returns and risk compared to downstream oil consumers in airlines, ground-freight, railroads, and tire manufacturing. Between 2000 and 2020, the oil and gas industry had the lowest expected returns, greater risk, and only Integrated producer returns approached downstream oil and gas consumer risk-return profiles. Railroad companies were the least risky with the highest returns, followed by tire manufacturers, airlines, and freight companies. Equity, commodity, and distillate markets positively price risk into oil and gas producer returns, and upstream producers had greater project and equity market risk than downstream consumers. Most downstream oil consumer equity returns are positively related to equity and commodity market risk, while a few downstream commercial consumers have negative equity and commodity return variation, indicating that crude oil is an input to downstream consumers.
    Keywords: oil and gas, air transportation, ground freight, railroads, tire manufacturing
    JEL: L62 L72 L93 L91 L92
    Date: 2023
  17. By: Jungyeon Park; Est\^ev\~ao Alvarenga; Jooyoung Jeon; Ran Li; Fotios Petropoulos; Hokyun Kim; Kwangwon Ahn
    Abstract: In the effort to achieve carbon neutrality through a decentralized electricity market, accurate short-term load forecasting at low aggregation levels has become increasingly crucial for various market participants' strategies. Accurate probabilistic forecasts at low aggregation levels can improve peer-to-peer energy sharing, demand response, and the operation of reliable distribution networks. However, these applications require not only probabilistic demand forecasts, which involve quantification of the forecast uncertainty, but also determining which consumers to include in the aggregation to meet electricity supply at the forecast lead time. While research papers have been proposed on the supply side, no similar research has been conducted on the demand side. This paper presents a method for creating a portfolio that optimally aggregates demand for a given energy demand, minimizing forecast inaccuracy of overall low-level aggregation. Using probabilistic load forecasts produced by either ARMA-GARCH models or kernel density estimation (KDE), we propose three approaches to creating a portfolio of residential households' demand: Forecast Validated, Seasonal Residual, and Seasonal Similarity. An evaluation of probabilistic load forecasts demonstrates that all three approaches enhance the accuracy of forecasts produced by random portfolios, with the Seasonal Residual approach for Korea and Ireland outperforming the others in terms of both accuracy and computational efficiency.
    Date: 2023–04
  18. By: Cazzola, Pierpaolo; Murphy, Colin
    Keywords: Engineering, Social and Behavioral Sciences, low-carbon fuels, sustainable aviation fuel, maritime transportation, aviation
    Date: 2023–05–01
  19. By: Shaymaa Al-Said Salem (Helwan University, Egypt); Dina Elkhattat (Ain Shams University, Egypt)
    Abstract: With the climate change challenges and risks they impose on the environment, corporate organizations' interest in environmental and sustainable development issues is no longer a strategic choice but rather an imperative. In this context, UAE paid great attention to environmental sustainability issues and reflected it in the "UAE Vision 2030." Moreover, the national banking sector in the UAE was keen to adopt environmental responsibility practices to support the state's efforts by reducing the negative risks of climate change. This qualitative study aimed to shed light on the concept of environmental responsibility, in line with appropriate theoretical approaches, such as Stakeholder Theory and the Environmental Responsibility Model, by applying a case study of Emirates NBD. The results showed that Emirates NBD's interest in applying the concept of sustainable environmental management as a strategic priority and integrating various stakeholders into environmental responsibility initiatives to rationalize energy consumption and reduce carbon emissions resulting from bank operations to face climate change challenges. In this regard, several initiatives have been implemented, in addition to the bank's partnerships with other local and international institutions. This study suggests that governments should encourage the banking sector to finance major environmental projects as part of their environmental responsibility practices.
    Keywords: Corporate Environmental Responsibility, Corporate Sustainability, Green Banks, Climate change
    Date: 2023–03
  20. By: Bushong, James; Bushong, Henry
    Abstract: Recent observations of astrophysical plasma jets emanating from the galactic-core of Galaxy M87 underscore the importance and intensity of magnetic fields in powerful celestial vortices. Based on standard electromagnetic theory, this naturally indicates the presence of potent electric field within these vortices. Any new method of generating powerful electromagnetic field is worthy of consideration for humanities’ power and energy needs. As astrophysical plasma jets are also known to be among the most potent forms of energy in the observed Universe, it seems well-worthy of consideration as to how humanity may be able to simulate them in a scaled-down version that could serve as an alternative green energy source. This paper explores how these energetic processes might be simulated and scaled to humanities’ needs based on (1) postulates around the physics / energy sources of celestial vortices; (2) approximate characteristics of the electric field charge-distribution, convective currents, and spatial orientation within celestial vortices; (3) characteristics of the magnetic field spawned by the electric field; and (4) estimates of density and rotational velocity of celestial vortices based on proposed stellar-formation vortex theory and computational modeling.
    Date: 2023–05–25
  21. By: Gözlügöl, Alperen Afðsin; Ringe, Wolf-Georg
    Abstract: An unfamiliar term in the not-too-distant past, "net zero" has become a headline-maker in the business and financial world with the growing importance of climate change. Succumbing to increasing pressure, companies and financial institutions around the world have come to adopt net-zero transition plans and targets, pledging to hit certain emission-reduction targets in a long-term period. Moreover, regulators around the world have started to require the disclosure or adoption of net-zero transition plans and targets. However, an unintended consequence of net-zero transition commitments has been the increased popularity of divestments. That is, many firms seeking to fulfill a net-zero plan are passing on carbon-intensive assets (i.e., oil, gas, and coal assets) to other firms that are likely to be non-committal to environmental goals or that operate under less pressure from investors, stakeholders, and regulators. Such divestments, technically mergers and acquisitions (M&A) transactions, present an ideal opportunity to improve a divesting firm's environmental record and reach ambitious net-zero goals, creating the impression that an emission reduction has occurred. However, the key is how acquiring firms handle these assets. If they continue operating as before, there will not be an overall improvement for the global climate. Worse, such assets can be operated by new owners in a way that causes more emissions. In any case, such divestments undermine the credibility and value of net-zero ambitions by allowing firms to reach targets by simply divesting assets. This article explores the reasons and motivations for divestments or, more broadly M&As of carbon-intensive assets and explains why the increased role of net-zero commitments can be undermined by those transactions. We provide some evidence to illustrate the landscape of such transactions and the concerns they give rise to. Lastly, we explore several policy options to address the problem.
    Keywords: Net-zero transition, climate change, divestments, mergers and acquisitions, net-zero plans and targets, regulatory arbitrage, net-zero arbitrage
    JEL: G18 K22 K32
    Date: 2023
  22. By: Burra, Lavan T., Sommer, Stephan; Vance, Colin
    Abstract: To accelerate the electrification of the transport sector, many countries subsidize both the construction of public charging infrastructure and the purchase of electric vehicles (EVs). Possible complementarities between these measures raise the question of their optimal calibration. Drawing on county-level panel data from Germany spanning 2014–2021, this paper explores this question with an econometric model of EV uptake. Employing fixed effects- and instrumental variable estimators, we find that charging infrastructure has a positive and significant effect on the uptake, one whose magnitude increases with the subsidy level for car purchases. Simulations using the model estimates show how the predicted number of EVs for a given charging capacity level increase with higher consumer subsidies, allowing for a back-of-the-envelop calculation of the optimal expenditure of the two measures.
    Keywords: Electric vehicles, charging capacity, consumer subsidy, calibration
    JEL: H23 L91 Q58
    Date: 2023
  23. By: Donni Fajar Anugrah (Bank Indonesia); Arnita Rishanty (Bank Indonesia); Benny Tjahjono (Coventry University); Fathia Nisa (Bank Indonesia); Dian Rahmawati (Bank Indonesia)
    Abstract: The adoption of electric vehicles (EVs) has been suggested as a possible way to reduce excessive carbon emissions and conquering environmental major issues in Indonesia. Despite the advantages of being eco-friendly and providing environmental benefits, there are several barriers and reasons for why the adoption of EVs is still considerably limited in Indonesia. The transition process from existing ICE vehicle to EVs is often not easy to understand, as it involves complex technical, social, and economic facets. Yet, a further investigation on how EV transitions in Indonesia needs to be done. A multidimensional and multi-actor analysis of the EV landscape can help us better understand the dynamics of transition to EVs. In this paper, a multilevel perspective (MLP) framework is used to examine the current state of EV adoption in Indonesia and to interpret the prospects of a possible transition path to EVs. The study shows that a potential transition to EVs in Indonesia presents many socio-technical challenges to overcome including current policies, institutions, technological infrastructure, and social limitations. The insights from this review can be used for settings where policies and institutions are not developed enough to achieve a transition to EVs.
    Keywords: Electric Vehicle, Transition Path, Multi-Level Perspective, Indonesia
    Date: 2022
  24. By: Senni, Chiara Colesanti; von Jagow, Adrian
    Abstract: This paper studies how reduced water availability affects hydroelectricity generation in Europe and the US. We build a novel dataset for the period 2015-2021 that matches information on hydropower plants with geospecific precipitation and water risk (a compound measure reflecting different aspects of water availability). The paper develops two complementary research designs. First, it uses a cross-sectional design that considers changes in hydroelectricity generation in 2021 - a low rainfall year - compared to its historical average. We find that plants located in riskier basins produced less electricity vis-a-vis the historical average compared to their counterparts located in less risky basins. Second, we use a panel design where we exploit changes in precipitation over time. Consistent with our cross-sectional results, we find a that an increase in precipitation is associated with higher levels of electricity generation. The empirical strategies adopted in this paper offer a framework that can be replicated for other sectors and environmental risks. The findings inform the design of the low-carbon transition and the management of environmental financial risks.
    Keywords: hydroelectricity generation; water-related risks; energy security; geospatial data
    JEL: C21 C23 Q20 Q25 Q42 Q51
    Date: 2023–02–23
  25. By: Geoffrey Barrows; Raphael Calel; Martin Jégard; Hélène Ollivier
    Abstract: This paper presents a method for estimating treatment effects of regulations when treated and control firms compete on the output market. We develop a GMM estimator that recovers reduced-form parameters consistent with a model of differentiated product markets with multi-plant firms, and use these estimates to evaluate counterfactual revenues and emissions. Our procedure recovers unbiased estimates of treatment effects in Monte Carlo experiments, while difference-in-differences estimators and other popular methods do not. In an application, we find that the European carbon market reduced emissions at regulated plants without undermining revenues of regulated firms, relative to an unregulated counterfactual.
    Keywords: regulation, spillovers, environment, energy, firms
    JEL: Q48 L10 L50
    Date: 2023
  26. By: Ricardo Crisóstomo
    Abstract: We develop a comprehensive framework to measure the impact of the climate transition on investments portfolios. Our analysis is enriched by including geographical, sectorial, company an ISIN-level data o assess transition risk. We find that investment funds suffer a moderate 5.7% loss upon materialization of a high transition risk scenario. However, the risk distribution is significantly left-skewed, with the worst 1% funds excperiencing an average loss of 21.3%. Imnterms of asst classes, equities are the worst performers (12.7%), followed by corporate bonds (5.6%) and government bonds (-4.8%). We discriminate among financial instruments by considering the carbon footprint of specific counterparties and the credit rating, duration, convexity and volatility of individual exposures. We find that sustainable funds are less exposed to transitions risk and perform better than the overall fund sector in the low-carbon transition, validating their choice as green investments
    Keywords: Climate change, Low-carbon transition, Asset allocation, Investment funds, NGFS scenarios
    JEL: G11 G12 G32 G17 Q54
    Date: 2023
  27. By: Ramiro Losada, Albert Martínez Pastor
    Abstract: The main objective of this work is to carry out a first estimation on the amount of the greenhouse gas emissions of Spanish issuers of securities. It also carries out an initial exercise on the degree of alignment of their emission reduction goals with the objectives set out in the Paris Agreement and in the European Union. In addition we assess the extent to which the challenges deriving from climate change have been incorporated into business management, particularly in the area of corporate governance, the risks and opportunities identified and specific emission reduction goals set. This document forms part of the work carried out to fulfil the mandate established in Law 7/2021, of May 20, on climate change and ecological transition ( the "Clima Change Law"). Article 33 establishes that every two years the Bank of Spain, the CNMV and the General Directorate of Insurance must prepare a coordinated report within the AMCESFI (Spanish acronym for "Spain's Macroprudential Authority Financial Stability Council") on the degree of alignment with the climate goals of the Paris Agreement and with the regulations of the European Union and an assessment of the risk to the financial system deriving from climate change.
    Keywords: Climate change, securities issuers, Low-carbon transition, CHG emissions
    JEL: G11 G12 G32 G32 Q51
    Date: 2023
  28. By: Dokka, Trivikram; Bruno, Jorge; SenGupta, Sonali; Anwar, Sakib
    Abstract: We study equilibria in an Electric Vehicle (EV) charging game, a cost minimization game inherent to decentralized charging control strategy for EV power demand management. In our model, each user optimizes its total cost which is sum of direct power cost and the indirect dissatisfaction cost. We show that, taking player specific price independent dissatisfaction cost into account, contrary to popular belief, herding only happens at lower EV uptake. Moreover, this is true for both linear and logistic dissatisfaction functions. We study the question of existence of price profiles to induce a desired equilibrium. We define two types of equilibria, distributed and non-distributed equilibria, and show that under logistic dissatisfaction, only non-distributed equilibria are possible by feasibly setting prices. In linear case, both type of equilibria are possible but price discrimination is necessary to induce distributed equilibria. Finally, we show that in the case of symmetric EV users, mediation cannot improve upon Nash equilibria.
    Keywords: Electric Vehicles, Pricing, Nash equilibrium, Coarse correlated equilibrium, Mediation, Herding, Dissatisfaction cost
    JEL: C61 C72 D4 D11 D82
    Date: 2022
  29. By: Doina Muresan (Dimitrie Cantemir Christian University of Bucharest); Alexandru Petrea (Military Academy of the Armed Forces Alexandru Cel Bun, Republic of Moldova)
    Abstract: The predicted impact of climate change is becoming increasingly visible. Environmental and climate-related risks, including extreme weather events, water scarcity and failure to adapt to and mitigate climate change, are among the main risks facing the world. Policymakers, researchers and the public increasingly recognize the need to address climate-related security risks through cooperation and dialogue. Thus, the global energy sector is going through a deep and rapid transformation and failure to recognize megatrends would be harmful to the development of energy security strategies.
    Keywords: trends in energy, geo-economics, energy, security strategies
    Date: 2023–03
  30. By: Campiglio, Emanuele; Lamperti, Francesco; Terranova, Roberta
    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
    JEL: C63 D84 Q54 Q58
    Date: 2023–03–06
  31. By: Campiglio, Emanuele; Lamperti, Francesco; Terranova, Roberta
    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
    JEL: C63 D84 Q54 Q58
    Date: 2023–03–06
  32. By: Fetzer, Thiemo (University of Warwick, CAGE, NIESR and CEPR)
    Abstract: The invasion of Ukraine has led to an unprecedented increase in energy prices in much of Western Europe with policy makers actively intervening in energy markets to cushion the shock. The UK’s policy response stands out: the energy price guarantee (EPG) was entirely untargeted and is, in real terms, much less generous to those living in properties with low energy efficiency. Using granular data and following a documented research approach this paper documents that areas more exposed to the energy price shock saw a notable increase in burglaries and anti-social behaviour: the energy price shock is responsible for a 6 to 10 percent increase in burglaries and a 9 to 24 percent increase in police reported anti-social behaviour between October 2022 to March 2023 inclusive. A quantification of policy alternatives suggests that a more targeted energy support package and/or a more energy efficient housing stock could have resulted in a drastically less pronounced uptick in crime.
    Keywords: crime ; welfare ; instability ; climate crisis ; cost-of-living JEL codes: Q40 ; Q48 ; K42
    Date: 2023
  33. By: Dokka, Trivikram; SenGupta, Sonali; Bhardwaj, Aaditya
    Abstract: Sustainable uptake of electric vehicles will require efficient provision of public electric vehicle charging infrastructure for which it is essential to understand plug-in behaviors of electric vehicle users. Using plug-in data from 19 public charging stations and amenities in Durham, clustering, coupled with quantile regression analysis was used. Instead of focusing on the conditional average, we explain the effects of various factors, including availability of other amenities, on the entire distribution of the plug-in duration. Results show that both demand for charging and other amenities surrounding the charging station play an important role. More specifically, these effects are different at different quantiles of plug-in distribution.
    Date: 2022
  34. By: Sen Zhang; Chun-Ping Chang (Shih Chien University); Donny Fajar Anugrah (Bank Indonesia); Yoga Affandi (Bank Indonesia)
    Abstract: We find that climate vulnerability reduces green investment in both climate change mitigation and climate change adaptation technologies. This finding holds up under a series of robustness tests and after taking into consideration the time lag effect, cross-sectional dependence, and endogenous problems. We further present that it is socioeconomic-related climate vulnerability that hinders green investment, whereas physical vulnerability does the opposite. Analyses of moderating channels show that the negative impact of climate vulnerability on green investment is more pronounced in countries with lower levels of adaptation readiness, economic development, and technical innovation.
    Keywords: climate vulnerability, green investment, green technologies, physical vulnerability
    JEL: Q54 Q55 Q56
    Date: 2022
  35. By: Nettekoven, Zeynep Mualla
    Abstract: The automotive industry in the European Union (EU) and Germany faces major challenges including decarbonisation, digitalisation and global competition. While the automotive industry has a significant economic role in terms of income and employment, it has immense ecological damages. The green and digital transition make certain occupations redundant, causing job losses, while it generates new occupations in new economic activities. These put the industry in the center of socioecological transformation debate in Germany and the EU. The vertical industrial policy with a focus on energy and technology-intensive areas has become important in the EU and Germany due to these challenges. The industrial policy in the EU and Germany follows an ecological modernisation approach with a "sustainable competitiveness" motto, whereby electromobility transformation is perceived as the ultimate route on the way to decarbonisation, digitalisation and global competitiveness. Alternative approaches see this differently. The democratic conversion approach and the degrowth approach, while having differences, both perceive electromobility as only one part of a comprehensive mobility system transformation needed; they view a decline in private automobility and a more democratic transformation with labour and environmental stakeholders as essential in the face of climate crisis.
    Keywords: Automotive industry, electromobility, climate crisis, industrial policy, Germany, European Union
    JEL: L50 L62 Q50
    Date: 2023
  36. By: Poulad Moradi; Joachim Arts; Josu\'e Vel\'azquez-Mart\'inez
    Abstract: We study the effect of using high-resolution elevation data on the selection of the most fuel-efficient (greenest) path for different trucks in various urban environments. We adapt a variant of the Comprehensive Modal Emission Model (CMEM) to show that the optimal speed and the greenest path are slope dependent (dynamic). When there are no elevation changes in a road network, the most fuel-efficient path is the shortest path with a constant (static) optimal speed throughout. However, if the network is not flat, then the shortest path is not necessarily the greenest path, and the optimal driving speed is dynamic. We prove that the greenest path converges to an asymptotic greenest path as the payload approaches infinity and that this limiting path is attained for a finite load. In a set of extensive numerical experiments, we benchmark the CO2 emissions reduction of our dynamic speed and the greenest path policies against policies that ignore elevation data. We use the geo-spatial data of 25 major cities across 6 continents, such as Los Angeles, Mexico City, Johannesburg, Athens, Ankara, and Canberra. Our results show that, on average, traversing the greenest path with a dynamic optimal speed policy can reduce the CO2 emissions by 1.19% to 10.15% depending on the city and truck type for a moderate payload. They also demonstrate that the average CO2 reduction of the optimal dynamic speed policy is between 2% to 4% for most of the cities, regardless of the truck type. We confirm that disregarding elevation data yields sub-optimal paths that are significantly less CO2 efficient than the greenest paths.
    Date: 2023–06
  37. By: Fabio Santeramo; Monica Delsignore; Enrica Imbert
    Abstract: The bioenergy sector is becoming of increasing interest: the European Union is not an exception. Indeed, it is in need of solutions to face one of the worst energy crises of the last century. The sector’s growth faces numerous challenges. The main use of energy crops, as feedstock, generates stiff competition on the use of land for food and energy purposes. The production of bioenergy has relevant environmental implications in terms of greenhouse gas emissions. The social aspects related to the bioenergy sector are also potential obstacles to its development. These pressing issues for policymakers call for a better understanding on how national and international laws should regulate the growth of the bioenergy sector. Flying over the economic, environmental, social, and legislative aspects faced by the bioenergy sector, we conclude on threads, opportunities, and priorities that should be considered for its development and propose directions for future studies.
    Keywords: Bioenergy, European Union, impact, land use, law, sustainability
    JEL: K32 Q18 Q42
    Date: 2023–03
  38. By: Gilbert, Christopher L.
    Abstract: The war in Ukraine, which started in February 2022, has disrupted the important Black Sea grain trade. At the same time, and partly as a consequence of the war and of Western sanctions, both energy and fertilizer prices have soared. Many commentators have attributed rises in food prices on world marketsto the Ukraine conflict. The paper reports an analysis of the impact of the war on wheat and corn prices in the world market. The estimates are obtained from an empirical implementation of the competitive storage model. The model links the prices of hard wheat and corn to grain availability, grain stocks and crude oil and fertilizer prices taking into account the Black Sea Grains Initiative (BSGI). Three counterfactuals are analyzed – “no war”, “no BSGI” and “no sanctions”.
    Keywords: International Relations/Trade, Demand and Price Analysis
    Date: 2023–03
  39. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This paper assesses the role of financial inclusion in moderating the incidence of entrepreneurship on energy poverty in Ghana. The assessment is made by using pooled data and two stage least squares. The exposition builds from the 7th (GLSS7) and 6th (GLSS6) rounds focusing on the Ghana Living Standards Survey (GSS, 2014, 2019) that is collected by the Ghana Statistical Service (GSS) from ten principal regions in the country. The findings show that entrepreneurship has an unconditional positive incidence on energy poverty while the interactive incidence between entrepreneurship and financial inclusion on energy poverty is negative. The corresponding financial inclusion policy thresholds that should be exceeded in order for financial inclusion to effectively moderate entrepreneurship for negative outcomes in energy poverty: (i) are between 0.154 and 0.280 index for the full sample; (ii) is between 0.187 index for the rural sub-sample; (iii) are between 0.200 and 0.333 index for the male sample. (iv) Thresholds are not computed for the rural and female sub-samples because at least one estimated coefficient that is needed for the computation of such thresholds is not significant. Policy implications are discussed. This study has complemented the existing literature by assessing how financial inclusion can be employed to influence the nexus between entrepreneurship and poverty in Ghana.
    Keywords: Energy poverty; Financial inclusion; Consumption poverty; Education; Household income
    JEL: D03 D12 D14 I32 Q41
    Date: 2023–01
  40. By: Tami Dinh (University of St. Gallen); Florian Eugster (University of St. Gallen and Swiss Finance Institute); Anna Husmann (University of St. Gallen)
    Abstract: Based on signaling theory, we examine the role of external reviews during the life-cycle of corporate green bonds. We focus on (1) whether investment greenness is related to external review upon issuing a green bond and (2) whether disclosure quality is positively associated with the assurance of green bond reports. Our results indicate that although companies with worse environmental performance are more likely to obtain at-issuance external reviews for their green bonds, their certified investments are more likely to be greener than those companies that did not obtain a review at issuance. This suggests that a more regulated form of external review may serve as a credible signal for green proceeds invested. In addition, we develop a disclosure index for green bond reports and show that post-issuance report assurance is associated with increased transparency. Our findings provide evidence that external reviews in the green bond issuance process are important governance factors to rule out potential greenwashing through the use of corporate green bonds.
    Keywords: Green Bonds, External Review, Assurance, Sustainable Investments, Disclosure Quality
    JEL: G23 M14 M41 M42
    Date: 2023–05
  41. By: Asongu, Simplice A; Odhiambo, Nicholas M
    Abstract: This paper assesses the role of financial inclusion in moderating the incidence of entrepreneurship on energy poverty in Ghana. The assessment is made by using pooled data and two stage least squares. The exposition builds from the 7th (GLSS7) and 6th (GLSS6) rounds focusing on the Ghana Living Standards Survey (GSS, 2014, 2019) that is collected by the Ghana Statistical Service (GSS) from ten principal regions in the country. The findings show that entrepreneurship has an unconditional positive incidence on energy poverty while the interactive incidence between entrepreneurship and financial inclusion on energy poverty is negative. The corresponding financial inclusion policy thresholds that should be exceeded in order for financial inclusion to effectively moderate entrepreneurship for negative outcomes in energy poverty: (i) are between 0.154 and 0.280 index for the full sample; (ii) is between 0.187 index for the rural sub-sample; (iii) are between 0.200 and 0.333 index for the male sample. (iv) Thresholds are not computed for the rural and female sub-samples because at least one estimated coefficient that is needed for the computation of such thresholds is not significant. Policy implications are discussed. This study has complemented the existing literature by assessing how financial inclusion can be employed to influence the nexus between entrepreneurship and poverty in Ghana.
    Keywords: Energy poverty; Financial inclusion; Consumption poverty; Education; Household income
    Date: 2023–06
  42. By: Gert Brunekreeft; Marius Buchmann; Martin Palovic; Anna Pechan
    Abstract: This paper presents an approach for resilience incentives in the regulation of electricity network operators. Resilience is the ability of the power system to deal quickly and efficiently with large-scale and long-lasting power interruptions. It comprises two related aspects: minimizing the damage caused by an outage and increasing the robustness of the system. The resilience regulation proposed in this paper contains two complementary parts. First, a resilience incentive mechanism, which aims at internalizing external effects of resilience improvement. This part relies on so-called duration-dependent consumer damage functions (CDFs). Second, a forward-looking budget approach with a sharing factor to strengthen incentives for resilience expenses within regulatory constraints.
    Keywords: resilience, electricity, network, regulation
    JEL: K23 L5 L94
  43. By: Schreiner, Lena (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This paper investigates the impact of financial frictions on sustainable economic growth in the global economy. We present a model of endogenous directed technical change including a public and private financial sector, allowing for an endogenous financing decision in terms of internal and different external financing of technical change. Capturing the dynamics between the ‘global North’, i.e., the developed economies, and the ‘global South’, i.e., the developing economies, we allow for technological development to occur through innovation or imitation and, hence, capturing technology diffusion processes in the global economy. Our findings substantiate the way in which the presence of financing costs and frictions in the financial markets—which are elevated with regards to sustainable innovation and in the developing world—cause the global economy to converge towards a non-sustainable growth path in the absence of policy intervention. This development can be addressed partially, but not fully, by sustainable public investment. However, to steer the economy to a fully sustainable growth path, an additional regulation or incentivization of private investors is necessary. Alternatively, a sufficiently high carbon price can be set. However, other than in the current reality, this carbon price would have to cover a large share of global emissions.
    Keywords: Sustainable innovation; sustainable finance; innovation finance; green growth; financing frictions; directed technical change; endogenous innovation
    JEL: N70 O11 O16 O19 O31 O33 O44 Q43
    Date: 2023–04–01
  44. By: Kang, Sung Jin (Department of Economics, Korea University); Park, Donghyun (Asian Development Bank)
    Abstract: The central objective of our paper is to assess the opportunities and challenges for trade for Asian economies during the low-carbon transition. To do so, we examine the green trade patterns of Asian Development Bank member economies in the Asia and Pacific region between 1990 and 2019 based on three widely used green industry classifications, namely US BLS GGS, OECD ENV-TECH, and OECD CLEG classifications. Our analysis yields three key findings. First, the share of green goods in the exports of Asian economies has consistently increased since the early 2010s. Second, the share of Asian economies in global green exports has grown rapidly in recent years. Third, manufacturing products, especially machinery and electric equipment, account for the largest share of green trade. In fact, since the early 2010s, the shares of Asian economies in world manufacturing green exports and imports have increased. However, the green imports share showed faster growth than the exports share. Finally, the pattern of green trade differs depending on green industry definition, pointing to a need for international consensus on defining green trade in order to measure and analyze green trade patterns more accurately.
    Keywords: low-carbon transition; green; trade; environment; Asia
    JEL: F18
    Date: 2023–06–07
  45. By: Y.-H. Henry Chen; Hossein Hosseini Jebeli; Craig Johnston; Sergey Paltsev; Marie-Christine Tremblay
    Abstract: This paper examines how border carbon adjustments (BCAs) may address the unintended consequences of uncoordinated global climate action, focusing on the economic implications for Canada. We investigate these implications under different BCA design features and by considering a coalition of countries and regions that adopt BCAs. We find that BCAs, in the form of import tariffs, reduce Canada’s carbon leakage to the rest of the world and improve its domestic and foreign competitiveness when Canada is part of a coalition of countries and regions that implement BCAs that includes the United States. We show that these results may change if Canada imposes BCAs on a different set of sectors than the rest of the coalition or includes export rebates and free emissions allowances to firms. When the United States is not part of the coalition, we show that Canada’s carbon leakage increases, domestic competitiveness dampens and foreign competitiveness improves. Compared with a case where no countries have BCAs, welfare improves in Canada if revenues from BCAs, in the form of import tariffs, are transferred to households. This finding holds regardless of the United States’ participation in the coalition.
    Keywords: Climate change; International topics; Trade integration
    JEL: C68 F1 H2 Q5 Q37
    Date: 2023–05
  46. By: Khuc, Quy Van; Tran, Duc-Trung
    Abstract: This paper introduces an advanced method that integrates contingent valuation and machine learning (CVML) to estimate residents’ demand for mitigating environmental pollutions and climate change. To be precise, CVML is an innovative hybrid machine-learning model, and it can leverage a limited amount of survey data for prediction and data enrichment purposes. The model comprises of two interconnected modules: Module I, an unsupervised learning algorithm, and Module II, a supervised learning algorithm. Module I is responsible for clustering the data (x^sur) into groups based on common characteristics, thereby grouping the corresponding dependent variable (y^sur) values as well. Take a survey on the topic of air pollution in Hanoi in 2019 as an example, we find that CVML can predict households’ willingness– to– pay for polluted air mitigation at a high degree of accuracy (i.e., over 90%). This finding suggests that CVML is a powerful and practical method that would be potentially widely applied in fields of environmental economics and sustainability science in years to come.
    Date: 2023–05–17
  47. By: Hafner, Christian M. (Université catholique de Louvain, LIDAM/ISBA, Belgium); Herwartz, Helmut; Wang, Shu
    Abstract: Independent component analysis has recently become a promising data-based approach to detect structural relations in multivariate dynamic systems in cases when apriori knowledge about causal patterns are scant. This paper suggests a kernel-based ML estimation that is largely agnostic with regard to the distributional features of the structural origins of data variation and enables causal analysis under the assumption of having only a subset of independent shocks. In an empirical application to the global oil market model of Kilian (2009) we illustrate the benefits of allowing for an unmodelled higher-order dependence among the oil supply and speculative oil demand shocks.
    Keywords: Structural VAR ; structural MGARCH ; Independent component analysis
    JEL: C14 C32 Q43
    Date: 2023–01–25
  48. By: Hasan, Iftekhar; Lee, Haekwon; Qiu, Buhui; Saunders, Anthony
    Abstract: Using lenders becoming members of the Task Force on Climate-Related Financial Disclosures (TCFD) as a plausible exogeneous shock, we examine whether and how lenders' commitment to transparent climate-related disclosures affects borrower firms' environmental performance. We find that client firms of TCFD-member lenders, relative to control firms, significantly improve their environmental performance after the TCFD launch. The effects are stronger for polluting firms. Moreover, TCFD-member lenders influence their borrowers' environmental performance via charging higher loan spread and reducing the number and amount of new loans issued to polluting firms. Finally, polluting clients of TCFD-member lenders experience tightened financial constraints subsequently.
    Keywords: Climate-related Disclosure Commitment, Credit Rationing, Borrower Environmental Performance
    JEL: G21 G30 Q54
    Date: 2023
  49. By: Valérie Mignon; Jamel Saadaoui
    Abstract: This paper assesses the effect of US-China political relationships and geopolitical risks on oil prices. To this end, we consider two quantitative measures — the Political Relationship Index and the Geopolitical Risk Index — and rely on structural VAR and local projections methodologies. Our findings show that improved US-China relationships, as well as higher geopolitical risks, drive up the price of oil. Positive shocks on the political relationship index are associated with optimistic expectations regarding economic activity, whereas positive shocks on the geopolitical risk index reflect fears of supply disruption. Political tensions and geopolitical risks are thus complementary factors, the former being linked to the demand side and the latter to the supply side.
    Keywords: Oil prices, political relationships, geopolitical risk, China.
    JEL: Q4 F51 C32
    Date: 2023
  50. By: Emily Lydgate
    Abstract: This article examines a significant question in navigating trade and climate tension: how to recognise another country as having equivalent climate regulation. Such equivalence forms the foundation of many proposed models of so-called climate clubs. Establishing equivalence between distinct national climate regulation regimes poses a unique challenge that draws upon both trade and environmental international cooperation. Drawing on existing proposals, I examine prospects for country-based cooperation through three models: ETS-linking, benchmarking of shared methods and minimum standards, and benchmarking of outcome duties. The analysis concludes that all models necessitate some trade-offs between the goals of rigorous oversight of climate objectives, inclusivity, and WTO-compliance. Benchmarking of shared methods and minimum standards seems most feasible, and would provide a deeper level of integration between trade and climate cooperation, but necessitates a shift in how countries, particularly the EU, oversee regulatory compliance.
    Keywords: Climate Equivalence, Climate Clubs, Border Carbon Adjustment
    Date: 2022–10
  51. By: Sinan Deng; John Inekwe; Vladimir Smirnov; Andrew Wait; Chao Wang
    Abstract: In this paper, we propose a seasonal attention mechanism, the effectiveness of which is evaluated via the Bidirectional Long Short-Term Memory (BiLSTM) model. We compare its performance with alternative deep learning and machine learning models in forecasting the balancing settlement prices in the electricity market of Great Britain. Critically, the Seasonal Attention-Based BiLSTM framework provides a superior forecast of extreme prices with an out-of-sample gain in the predictability of 25-37% compared with models in the literature. Our forecasting techniques could aid both market participants, to better manage their risk and assign their assets, and policy makers, to operate the system at lower cost.
    Keywords: forecasting; electricity; balance settlement prices; Long Short-Term Memory; machine learning.
    Date: 2023–06
  52. By: Joseph Abdelnour (ESSCA School of Management, France, CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Nicolas Aubert (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon, INSEEC - Institut des hautes études économiques et commerciales | School of Business and Economics); Walid Ben-Amar (University of Ottawa [Ottawa])
    Abstract: This paper investigates the relationship between Employee Stock Ownership (ESO) and voluntary carbon disclosures. Given that previous research has shown the beneficial effects of ESO on work attitudes and corporate performance, we link ESO and board representation with the attributes of voluntary climate-related disclosures. We use three proxies to capture these attributes: corporate decisions to respond to the Carbon Disclosure Project (CDP) annual questionnaire; corporate decisions to make responses publicly available, and the quality of a firm's disclosures on climate-change-related risks and strategies to mitigate them. Our results show a positive association between ESO and decisions to both answer the CDP questionnaire, and make responses publicly available. In contrast, ESO does not seem to impact carbon disclosure quality. The findings contribute to the ongoing debate on the determinants of voluntary climate change disclosures, highlighting the importance of ESO to enhance the transparency of voluntary disclosures of climate change business impacts.
    Keywords: employee stock ownership, carbon disclosure, climate change, sustainability, carbon disclosure project
    Date: 2023–03
  53. By: Anna Pechan; Christine Brandstätt; Gert Brunekreeft; Martin Palovic
    Abstract: Market design for electricity often ignores network congestion initially and addresses it in a second, so-called 'redispatch' stage. For market participants, any two-stage design offers an opportunity to strategically optimize between the different market stages. The current debate is how to design a market-based redispatch to integrate new actors, in particular consumers, given increasing levels of congestion. Strategic bidding may occur if market players anticipate congestion in their region and manipulate bidding to exploit this congestion. In this paper, we pick up the current debate and study the precise incentives for gaming with respect to competitive conditions on the market with a formal model. We propose that depending on competitive conditions, the expected profits of gaming can be negative and link the range of negative expected gaming profits to a so-called reference bidder, reflecting competitive conditions in the market. We also discuss how several potential remedies can increase the risk of the gaming strategy and can thereby reduce the practical potential for gaming. With this paper, we provide the theoretical framework for authorities and empirical works to assess the potential of market-based as opposed to administrative redispatch.
    Keywords: Electricity market, Market-based redispatch, Strategic behaviour, Inc-Dec gaming, congestion management
    JEL: D21 D22 D43 L13 L94
  54. By: Julia M. Puaschunder (Columbia University, Graduate School of Arts and Sciences, USA)
    Abstract: In the aftermath of the 2008/09 World Financial Recession as well as after the COVID-19 external economic shock fallout, the stakeholder interest in integrating social considerations in corporate and finance market endeavors has risen steadily. The looming climate change crisis has exacerbated the call for sustainability in economics, finance and professional governance and leadership. In the USA and Europe, Green New Deals are governmental projects to imbue sustainability practices in corporate and financial sector activities. In the area of capital market supervision in the USA, the Securities and Exchange Commission has proposed mandatory disclosures regarding climate change risks in the wake of attention to Environmental, Social and Governance. In Europe, the European Sustainable Finance Taxonomy classifies industry’s CO2 emission levels in order to use transparency to curb environmentally-harmful activities for the sake of sustainability. Financial Social Responsibility continues to grow in qualitative and quantitative terms, foremost in Socially Responsible Investment. The corporate sector has responded to all these sustainability trends with the concept of ‘Pay for Sustainability’ as an executive compensation form that either lowers variable pay if sustainability is not implemented or provides executive bonuses for pro-active sustainability integration into corporate activities. This paper addresses contributions of behavioral economics for improving the acceptance and efficiency of ‘Pay for Sustainability’ remuneration schemes in three features: 1. Socio-psychological aspects of remuneration that heighten social status and social belonging imbuing meaning and purpose to work; 2. Temporal bundling strategies that help decision makers envision now and the future at the same time, which helps aligning short-term with long-term goals of corporations; 3. Prospect Theory’s insights that losses emotionally loom larger than gains, which provides valuable communication nudges for outlining the intangible emotional value of sustainability care. Overall, this article discusses the current state of ‘Pay for Sustainability’ remuneration and highlights positive affirmation and communication nudges to work with social status-enhancing behavioral communication features that boost the positive acceptance of and reaction to ‘Pay for Sustainability.’
    Keywords: Corporate Social Responsibility, Behavioral Economics, Behavioral Insights, Board decision making, Economics, Environmental financialization, European Green Deal
    Date: 2023–03
  55. By: Frondel, Manuel; Eßer, Jana; Sommer, Stephan
    Abstract: Die jüngste Verschärfung der nationalen Klimaschutzziele erfordert die Ergreifung zusätzlicher umweltund klimapolitischer Maßnahmen sowie eventuelle Nachbesserungen bei den bestehenden Maßnahmen, etwa einen beschleunigten Ausbau der erneuerbaren Energien. Dies führt unweigerlich zu höheren Lasten für die Bürgerinnen und Bürger. Damit einher gehen zahlreiche Fragen, etwa zu deren Präferenzen und Gerechtigkeitsvorstellungen bezüglich dieser Maßnahmen. Zur Beantwortung dieser Fragen wurde im Juni 2021 eine Erhebung unter rund 8.000 Mitgliedern des forsa-Haushaltspanels durchgeführt. Die Erhebung beinhaltete ein randomisiertes Kontrollexperiment, um herauszufinden, welche von zwei Finanzierungsalternativen die Befragten beim Ausbau der erneuerbaren Energien bevorzugen: die Finanzierung über die Stromrechnung, wie es über zwei Jahrzehnte der Fall war, oder durch den Staat. Das zentrale Ergebnis bezüglich der beiden zur Wahl gestellten Finanzierungsalternativen lautet: Die große Mehrheit der Befragten votiert dafür, dass der Ausbau der erneuerbaren Energien aus Steuermitteln des Staates finanziert wird. So halten 69, 7% der Befragten der Kontrollgruppe eine Finanzierung durch den Staat für die gerechtere Alternative. Mit der Abschaffung der EEG-Umlage zum 1. Juli 2022 und der gänzlichen Finanzierung der Kosten der Förderung der Erneuerbaren aus Steuermitteln hat die Politik den Präferenzen der Mehrheit der Befragten entsprochen. Allerdings konterkarieren die gerade sehr stark gestiegenen Stromerzeugungskosten die dämpfenden Effekte der Abschaffung der EEG-Umlage. Dadurch steigen die Strompreise für die Verbraucher aktuell massiv an, um 50 % und mehr gegenüber dem Jahr 2021. Deshalb sollte die Politik weitere Maßnahmen ergreifen, um die privaten Haushalte beim Strompreis substanziell zu entlasten, nicht zuletzt durch die Senkung der Stromsteuer auf den EU-Mindestsatz. Andernfalls könnten die stark gestiegenen Strompreise in Kombination mit den mit der Zeit wachsenden Belastungen durch die neu eingeführte CO2-Bepreisung fossiler Brenn- und Kraftstoffe eine hohe soziale Sprengkraft entfalten.
    Keywords: Randomisiertes Kontrollexperiment, Panelerhebung
    JEL: D12 C25
    Date: 2022
  56. By: Sato, Misato; Gostlow, Glen; Higham, Catherine; Setzer, Joana; Venmans, Frank
    Abstract: Communities and individuals are increasingly turning to courts to hold governments and high emitting corporations to account for the adverse consequences of climate change and are starting to find success. For defending corporations, rising climate litigation risk may exacerbate well-known physical and transition risks associated with climate change. Yet, little is known about the impacts of climate litigation against corporations. Here we provide the first robust evidence. We construct a comprehensive database of filings and decisions relating to 108 climate change lawsuits worldwide against US and European-listed corporations between 2005–2021. Our causal analysis estimates that a filing or an unfavourable court decision in a climate case reduced firm value by -0.41% on average, relative to expected values. The largest stock market responses were found for cases filed against Carbon Majors, reducing firm value by -0.57% following case filings and by -1.50% following unfavourable judgements. Larger market reactions are observed in “novel” cases involving a new form of legal argument or in a new jurisdiction. No statistically significant effect on firm value was found in filings against non-Carbon Majors. We conclude that lenders, financial regulators, and governments should consider climate litigation risk as a relevant financial risk in a warmer future.
    Keywords: regulation; spillovers; environment; energy; firms
    JEL: J1 R14 J01
    Date: 2023–05–23
  57. By: Berger-Schmitz, Zola; George, Douglas; Hindal, Cameron; Perkins, Richard; Travaille, Maria
    Abstract: The past few years have witnessed a proliferation of corporate net zero emission targets. Despite their growing prominence, little is known about firms’ motives for, strategies toward, and response pathways of, net zero. This paper seeks to narrow the current gap in understanding through an analysis of 30 interview responses. We find evidence that net zero targets have been propelled by a combination of institutional and competitive pressures. Yet firms’ response to these pressures, in terms of the substantivity of their commitments, and strategic positioning in relation to net zero, has varied significantly. While identifying a role for firm-specific factors, we also draw attention to the importance of sectors in understanding variations in corporate responses. A further contribution of the paper is to map out different temporal trajectories of strategic positioning and offer insights into the factors which lead firms to remain static or change their position toward net zero over time. We conclude by discussing the implications of these findings, both for future scholarship, as well as the contribution of net zero commitments to public climate goals.
    Keywords: climate mitigation; greenwashing; net zero; sector; strategy; time; Wiley deal
    JEL: L81
    Date: 2023–05–22
  58. By: Athir Nouicer; Leonardo Meeus; Erik Delarue
    Abstract: In this paper, we investigate two main schemes for contracting demand-side flexibility by the Distribution System Operator (DSO) at the planning stage: a voluntary demand-side connection agreement where consumers offer their flexibility, i.e., load reduction, to the DSO and a mandatory demand-side connection agreement where the DSO sets the flexibility levels, i.e., load curtailment, to be contracted from residential consumers. A different bilevel equilibrium model is used for each demand connection agreement scheme. In both models, the DSO, in the Upper Level, decides on the flexibility price and network tariffs. Residential consumers react to those signals in the Lower Level. They can be prosumers that invest in solar PV and batteries or passive consumers. The paperanswers two regulatory issues. The first is which option to choose for regulators between mandatory and voluntary demand connection agreements. We find that mandatory demand-side connection agreements result in higher welfare gains compared to voluntary ones and a lower price for flexibility. However, such agreements may entail some implementation issues for regulators and different curtailment levels among consumers. This connects with the second issue investigated in this paper on how to implement mandatory demand connection agreements from equity and feasibility perspectives. When introducing a pro-rata constrained mandatory scheme, curtailing consumers equally, we find that welfare levels are still higher than under the voluntary scheme but lower thanin the unconstrained mandatory scheme. The difference in welfare and flexibility levels between the two mandatory schemes could represent a potential for a secondary flexibility mechanism, where consumers trade flexibility between themselves.
    Date: 2022–07
  59. By: Zhiqi Chen (Department of Economics, Carleton University)
    Abstract: This case study reviews the history and operation of the international air cargo cartel, in which over 20 airlines around the world colluded on the setting and implementation of fuel and other surcharges for international air cargo services from late 1999 to 2006. To an economist, this cartel has several interesting features, including the choice of a simple variable to collude on, the use of a fuel price index as a facilitating device, and the reliance on a complex web of contacts among the executives of different airlines to enforce the cartel. Most interesting of all is that the airlines colluded on the surcharges without coordinating on the freight rates. On the surface, this cartel seemed to be poorly designed because higher surcharges achieved through collusion could have simply been offset by lower freight rates as the airlines competed for customers. But the theoretical analyses by Chen (2017 and 2022) demonstrate that colluding on surcharges without coordination on base prices could be an effective way of raising the full price of a product.
    Keywords: cartels, collusion, surcharges
    JEL: L41
    Date: 2023–05–31
  60. By: Hendrik Hansmeier; Sebastian Losacker;
    Abstract: Given that eco-innovations and the associated renewal of economic structures are pivotal in addressing environmental problems, economic geography research is increasingly focusing on their spatio-temporal dynamics. While green technological and industrial path developments in specific regions have received considerable attention, little effort has been made to derive general patterns of environmental inventive activities across regions. Drawing on unique data capturing both green incumbent and green start-up activities in the 401 German NUTS-3 regions over the period 1997-2018, this article aims to trace and compare the long-term green regional development. For this purpose, we introduce social sequence analysis methods to economic geography that allow us to understand the constitution of regional eco-innovation trajectories. The findings suggest that regions mainly display distinct trajectories. Yet, structural similarities emerge in the sense that regions of the same type occur in spatial proximity to each other and show persistent specialization patterns. These range from the simultaneous presence or absence of green incumbents and green start-ups to the dominance of just one of the two groups of actors. Only some regions manage to establish an above-average eco-innovation specialization over time. Since this greening originates from either green incumbent or green start-up specialization, green regional trajectories can be assumed to unfold mainly in a path dependent and less radical manner. In summary, this study provides important empirical and methodological impulses for further in-depth analyses to disentangle spatio-temporal phenomena in economic geography.
    Keywords: eco-innovation, green regional development, path dependency, regional transitions, social sequence analysis
    Date: 2023–06
  61. By: Cartuyvels, Jacques (Université catholique de Louvain, LIDAM/CORE, Belgium); Bertrand, Gilles; Papavasiliou, Anthony (Université catholique de Louvain, LIDAM/CORE, Belgium)
    Abstract: The next phase of electricity markets integration in Europe will see the introduction of pan-European balancing platforms, MARI and PICASSO, for the trading of manual and automatic frequency restoration reserve. This paper provides an analytical framework for the study of pricing asymmetries between European member states in this context. The pricing asymmetries are due to balancing incentive components and consist of the unilateral introduction by a member state of either (i) an adder on the imbalance price and balancing price, (ii) an adder on the imbalance price solely, or (iii) the introduction of a real-time price for the trading of real-time balancing capacity. Our analytical framework allows us to characterize the optimal bidding strategy of flexible assets under the different designs and to derive the resulting equilibria. Our analysis demonstrates that adders without the trading of balancing capacity create inefficiencies by distorting the merit order and tend to be detrimental to the member state that introduces it.
    Keywords: Balancing market ; cross-border balancing ; frequency restoration reserve ; real-time market for reserve
    Date: 2023–03–01
  62. By: Henrik Horn
    Abstract: State-to-state investment protection treaties, and the Energy Charter Treaty in particular, are alleged to dissuade host countries from regulating foreign-owned investment with adverse climate impact. This paper examines implications of treaty reforms that have been proposed as remedies for such regulatory chill. It finds that an increased carve-out, and reduced compensation in case of regulation, can address the stranded investment problem, but might not be accepted by both parties to the agreement. Disallowing investor-state dispute settlement (ISDS) solves the chill less effectively, but is more acceptable to both parties. Shortening of a sunset period applicable to unilateral withdrawal will tend to worsen the problem
    Keywords: Financial support from Torsten Söderberg Foundation is gratefully acknowledged
    Date: 2023–02
  63. By: Ferry Syarifuddin (Bank Indonesia)
    Abstract: This study investigates the preferences of various Islamic Financing Instruments to promote green economy ransformation adopting ANPBOCR (Benefit, Opportunity, Cost, Risk) approach, with two groups of experts as the respondents, namely academicians and practitioners. The first finding shows, that ‘Benefit’ aspect is the most preferred, urgency to conduct green economy transformation. Among criteria in the benefit aspect, natural resource damage prevention and reduction are the primary issues which is in line with maqasid al-Syari’ah (objectives of Islamic law). Using standard formula, the second finding shows that Islamic Asset Management is the most preferred Islamic financial instrument to perform green economy transition. Meanwhile, the third finding shows that in the short-term, Islamic Asset Management is more preferred financial instrument. Whereas, Islamic corporate and investment banking is the most preferred and crucial for long-term when transforming economy to green.
    Keywords: Green Economy Transformation, Islamic Green Financing, ANP, BOCR
    JEL: Q56 Q58 G20
    Date: 2022
  64. By: Gabor, Daniela
    Abstract: The emerging green capitalist state in the Global North is a derisking state. The derisking state enlists private capital into achieving public policy priorities by tinkering with risk/returns on private investments in sovereign bonds, currency, social infrastructure (schools, roads, hospitals and houses, care homes and prisons, water plants and natural parks) and most recently, green industries. The concern with the production of investibility forges a state-capital relationship where capital dominates. Yet the specific architecture of regulatory, fiscal and monetary derisking interventions varies across polities, is activated at different speeds and with different degrees of coordination, contingent on specific macrofinancial constraints and vulnerable to political strains. Both in the EU and the US, derisking has emerged as the method to organise green industrial upgrading in the Green Deal Industrial Plan and the US Inflation Reduction Act, successfully generating elite support for taboo-breaking autonomous strategic visions, in contrast with the state-directed approach in the CHIPS Act that disciplines private capital into national security priorities for semiconductor manufacturing. In the EU, 'whatever it takes' derisking does not easily translate from monetary to fiscal and industrial policy, because it requires Member States to agree on relaxing the distinctly European macrofinancial constraints around the provision of state-aid. The institutional response to these constraints, the European Sovereignty Fund, reinforces the derisking imperative. Furthermore, the limited scope for disciplining (carbon) capital raises serious doubts about the overall suitability of derisking for governing decarbonisation.
    Date: 2023–05–17
  65. By: Hoogland, Kelly; Hardman, Scott; Chakraborty, Debapriya; Bunch, David
    Abstract: Using a sample of approximately 7, 000 California PEV drivers recruited from California Clean Vehicle Rebate Program applicants, two logistic regression models are specified to analyze responses by PEV lessees and purchasers to the question of what theywould do in the absence of the federal tax credit. Possible responses include: Purchase/lease the same PEV, switch to a different PEV, switch to a conventional or hybrid (non-plug in) vehicle, or do not acquire a vehicle at all. Several key insights are found;higher discounts from the tax credit increase the probability of lessees indicating they would not lease a PEV at all. For purchasers, in addition to not purchasing any vehicle at all, the probability of purchasing a conventional vehicle, or another PEV also increase. These findings could have implications for California’s ability to reach its ZEV milestones and are important to consider due to recent changes to the US federal tax credit. Our findings indicate that many PEV adopters would likely not adopttheir PEV without the tax credit, potentially more so for leased compared to purchased vehicles. There are also unique results forlessees related to the impact of home ownership; renters are more likely than homeowners to lease a conventional vehicle than a PEV in the absence of the tax credit. This finding contributes to the literature which finds homeowners to be more likely toadopt a PEV than renters, emphasizing the importance of access to at-home charging for PEV adoption. These results show how incentives may be more influential for adoption decisions in the PEV lease market is, and the factors which are associated with consumers’ PEV adoption behavior in the absence of the federal tax credit. View the NCST Project Webpage
    Keywords: Social and Behavioral Sciences, Choice model, Electric vehicle adoption, incentives, leasing
    Date: 2023–05–01
  66. By: Arnita Rishanty (Bank Indonesia); Maxensius Tri Sambodo (Badan Riset dan Inovasi Nasional); Retno Puspita K. Wicaksono (Bank Indonesia)
    Abstract: Transition risks include market and reputational risks, if materialized, can result in loss of markets. This study pictures the dynamics of potential export market movement and transition as the consumer preference for green products grows globally. We find that the export market for Indonesia’s superior commodities increased due to past global growth and past increase in global demand for particular products, while still lacking in real product competitiveness. Under the scenario that illustrates the green agenda only arise mostly from developed countries and still limited from developing countries, it is estimated that the export market transition towards the new balance would find an equilibrium. Subsequently, this study exploratively discusses undergoing efforts in the exporting industry to make a green transition. We elaborate opportunities and challenges to circular economy adoption for the exporting industry. It is suggested for Indonesia' s trade diplomacy to not only maintaining market position in traditional markets, but also in seizing non-traditional markets, including markets that reject Indonesian products by improving the competitiveness of Indonesia's export products via circular economy adoption.
    Keywords: Circular economy, Markov Model, competitiveness, green taxonomy
    JEL: C5 O1
    Date: 2022
  67. By: Martin Palovic
    Abstract: We analyse incentive problems in coordination of network operators that purchase services for electricity networks from distributed resources. Such services are often associated with externalities that make the social optimum costly against the individual one. However, a costly reaction of other operators occurs when the social optimum is missed. Regular network situations result in game-theoretical problems like prisoner’s dilemma or chicken that are played in a random order in an infinitely repeated game. The outcome of this complex game-theoretical setting, i.e. adopted strategies, is difficult to predict. Adjustments to network regulation aiming to internalize external effects are discussed as a remedy.
    Keywords: network operator coordination, game theory, network regulation
    JEL: D42 K23 L51
    Date: 2022–10
  68. By: Kai Gehring; Matteo Grigoletto
    Abstract: Understanding behavioral aspects of collective decision-making is an important challenge for eco-nomics, and narratives are a crucial group-based mechanism that influences human decision-making. This paper introduces the Character-Role Narrative Framework as a tool to systematically analyze narratives, and applies it to study US climate change policy on Twitter over the 2010-2021 period. We build on the idea of the so-called drama triangle that suggests, within the context of a topic, the essence of a narrative is captured by its characters in one of three essential roles: hero, villain, and victim. We show how this intuitive framework can be easily integrated into an empirical pipeline and scaled up to large text corpora using supervised machine learning. In our application to US climate change policy narratives, we find strong changes in the frequency of simple and complex character-role narratives over time. Using contagiousness, popularity, and sparking conversation as three distinct dimensions of virality, we show that narratives that are simple, feature human characters and emphasize villains tend to be more viral. Focusing on Donald Trump as an example of a populist leader, we demonstrate that populism is linked to a higher share of such simple, human, and villain-focused narratives.
    Keywords: narrative economics, text-as-data, machine learning, large language models, climate change, virality, populism
    JEL: C80 D72 H10 P16 Q54
    Date: 2023
  69. By: Di Liberto, Yuri
    Abstract: What if I told you that they knew everything? And that they have known it for a very long time? On January 13 of this year, 2023, in the journal Science, perhaps the most important article to date on climate change was published. In political, social, and ethical terms, this article represents the equivalent of a nuclear bomb, despite the fact that (as is sadly obvious to expect) no one in mainstream news channels (and very few in academia) has mentioned it.
    Keywords: capital as power, climate, ExxonMobil, differential accumulation, sabotage
    JEL: P1 P18 Q4 Q5 Q54
    Date: 2023
  70. By: Anjara Lalaina Jocelyn Rakotoarisoa (ACRODMaths)
    Abstract: La question d'environnement et d'économie est un sujet qui, actuellement, figure parmi les centres des discussions les plus posées de notre ère. Dans les visions économiques du jadis, allant des mercantilistes jusqu'aux économistes modernes, la question environnementale n'avait pas encore eu cette place prépondérante. Toutefois, cette dimension a prôné sa place suite à la prise de conscience concernant les enjeux environnementaux. Le présent article tente de trouver un terrain conceptuel qui permettrait de mettre en évidence et d'une manière dynamique la relation entre la production et l'émission polluante qui, pragmatiquement, nuit au système environnemental. Les notions de fiscalité verte et de subventionnement vert, probablement des concepts nouveaux, sont au centre de cet exposé pour apporter des pistes de réflexion et des solutions pour l'arbitrage entre la production et la pollution.
    Date: 2023–04
  71. By: Demary, Markus; Taft, Niklas Florian
    Abstract: Der Angriffskrieg Russlands gegen die Ukraine hat die Vulnerabilität der Bundesrepublik Deutschland gegenüber russischen Energieimporten, insbesondere beim Erdgas, aufgezeigt. Durch eine drohende Gasmangellage ist der Gaspreis massiv gestiegen, was vor allem die energieintensiven Unternehmen, die Erdgas für die Stromerzeugung, aber auch für die Erzeugung von Prozesswärme nutzen, vor große Herausforderungen gestellt hat. Wenn Kreditnehmer von stark steigenden Energiekosten betroffen sind, so stellt sich die Frage, inwieweit Risiken für Banken aus der Energiekrise entstehen. Für diese Analyse definieren wir das Maß der Energiekreditlast. Diese Kennzahl verknüpft die Energieintensität einer Branche mit dem Kreditvolumen, das eine Bank oder Bankengruppe in ebendiese Branchen vergeben hat. Anschließend ist es möglich, die Energiekreditlast über die verschiedenen Branchen aufzusummieren. Auf diese Art und Weise erhalten wir eine Kennzahl, welche beschreibt, wie viel Energie hinter dem von einer Bank oder Bankengruppe finanzierten Kreditvolumen steht. Banken oder Bankengruppen mit einer höheren Energiekreditlast tragen damit im Falle einer Energiekrise ein höheres Kreditausfallrisiko in ihren Portfolios verglichen mit einer Bank oder Bankengruppe mit einer niedrigen Energiekreditlast. Die Analyse der Energiekreditlast hat gezeigt, dass die Kreditportfolios der Banken durch ihre Energieabhängigkeit durchaus anfällig für den Energiepreisschock sind. Daraus resultiert aber nicht notwendigerweise eine Warnung für die Finanzmarktstabilität.
    Keywords: Energieversorgung, Kreditgeschäft, Kreditrisiko, Deutschland
    JEL: E44 G21 Q43
    Date: 2023
  72. By: Sylvie Ferrari (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Félix Garnier (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Alain Alcouffe (LIRHE - Laboratoire Interdisciplinaire de recherche sur les Ressources Humaines et l'Emploi - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique); Cécile Batisse (UCA - Université Clermont Auvergne, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: Si le passage à l'Anthropocène révèle la capacité de l'homme à transformer l'ensemble du système terrestre, les théories économiques ont de tout temps, minimisé ce changement d'époque géologique, préférant focaliser leur attention sur la dynamique du système capitaliste ou la sacro-sainte croissance économique. Si des limites à la croissance sont bien mentionnées, elles restent cantonnées à des contraintes socio-techniques (pénurie de main d'œuvre, coût élevé du capital, prix des matières premières, faiblesse des investissements, absence de prise de risques des entrepreneurs…). Tout laisse à penser que les sociétés, par essence économiques, se seraient libérées des limites biophysiques. L'Anthropocène montre au contraire que ces limites imposent un réencastrement de l'économie dans l'environnement et dans le social. La question du temps, souvent réduite au court terme et à des questions de statique ou de dynamique dans la théorie économique, impose de penser l'avenir, sans pour autant reposer sur une extrapolation du passé. Dès lors, les théories économiques doivent proposer un corpus d'hypothèses et de concepts susceptibles de forger de nouveaux paradigmes, plus à même de se représenter les futurs possibles
    Keywords: Anthropocène, Capitalisme, Croissance, Décroissance, Dynamique des systèmes, Limites, Futurs
    Date: 2023–05

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