nep-ene New Economics Papers
on Energy Economics
Issue of 2023‒07‒17
ninety-one papers chosen by
Roger Fouquet
National University of Singapore

  1. Socio-economic and environmental impact of Intended decarbonization policies in the East Asia region By Yuventus Effendi; Budy P. Resosudarmo
  2. How Do Airlines Cut Fuel Usage, Reducing Their Carbon Emissions? By Brueckner, Jan K.; Kahn, Matthew E.; Nickelsburg, Jerry
  3. Testing for causality between climate policies and carbon emissions reduction By Bertrand Candelon; Jean-Baptiste Hasse
  4. Connectedness and risk spillovers between crude oil and clean energy stock markets By Çevik, Emre; Çevik, Emrah İsmail; Dibooglu, Sel; Cergibozan, Raif; Bugan, Mehmet Fatih; Destek, Mehmet Akif
  5. The role of carbon pricing in transforming pathways to reach net zero emissions: Insights from current experiences and potential application to food systems By Sofie Errendal; Jane Ellis; Sirini Jeudy-Hugo
  6. Directing innovation towards a low-carbon future By Joëlle Noailly
  7. The Green Industrial Revolution – Investment Pathways to Decarbonize the Industrial Sector in Europe By Markus Zimmer; Patrick Hoffmann
  8. De-Fueling Externalities: How Tax Salience and Fuel Substitution Mediate Climate and Health Benefits By Pier Basaglia; Sophie M. Behr; Moritz A. Drupp
  9. This study analyzes the short-run effects on the German economy of the fossil energy crisis in 2022 and discusses some implications for the design of a resilient, renewable energy system. The study shows that the energy crisis led to a short-run output loss comparable to the output losses associated with the Covid-19 crisis in 2020 and the financial crisis in 2008. In addition, real wage losses during the energy crisis far exceed the corresponding losses during the Covid-19 crisis and the financial crisis. Finally, the economic costs of the energy crisis would have been much larger in a worst-case scenario that could be avoided through a combination of government decisions and luck. Thus, large negative shocks to the supply of energy have high economic costs, and the design of a future energy system that is resilient to such shocks should have the highest priority. The study discusses two requirements for a resilient energy system based on renewable energy and two policy instruments that can help meet these requirements. First, there is the need to deal with the risk that the production of renewable energy from wind and solar power is extraordinarily low for several weeks or months due to adverse weather conditions. For Germany, this requires the build-up of sufficient reserve capacity using (hydrogen-ready) gas-based power plants. Second, there is the need to provide sufficient capacity to generate electricity “in normal times†using variable renewable energy sources. Public insurance against long-run price risk for the producers of renewable energy can spur the necessary investment in wind and solar power. To ensure efficient use of public finances, these insurance contracts should be fair in the sense that from an ex-ante perspective the government neither gains nor loses money. By Tom Krebs
  10. Confronting the carbon pricing gap: Second best climate policy By Katheline Schubert; Aude Pommeret; Francesco Ricci
  11. "Carbon Management": Opportunities and risks for ambitious climate policy By Schenuit, Felix; Böttcher, Miranda; Geden, Oliver
  12. The effects of the 2021 energy crisis on medium-sized and large industrial firms: evidence from Italy By Matteo Alpino; Luca Citino; Annalisa Frigo
  13. SolarEV City Concept for Paris: A promising idea? By Paul Deroubaix; Takuro Kobashi; L\'ena Gurriaran; Fouzi Benkhelifa; Philippe Ciais; Katsumasa Tanaka
  14. China’s role in scaling up energy storage investments By Bian, Lei
  15. Is energy solidarity a remedy for energy access difficulties of French households or a symptom of a troubled management of these difficulties ? By Adèle Sébert
  16. Did COVID-19 accelerate the green transition?: An international assessment of fiscal spending measures to support low-carbon technologies By Frida Aulie; Antoine Dechezleprêtre; Fernando Galindo-Rueda; Clara Kögel; Inès Pitavy; Alzbeta Vitkova
  17. Environmental policy instruments for investments in backstop technologies under present bias - an application to the building sector By Arnold, Fabian; Ashour Novirdoust, Amir; Theile, Philip
  18. How resilient is public support for carbon pricing? Longitudinal evidence from Germany By Stephan Sommer; Théo Konc; Stefan Drews
  19. Militarization of NATO Countries Sparks Climate Change? Investigating the Moderating Role of Technological Progress and Financial Development By Pata, Ugur Korkut; Destek, Mehmet Akif; Manga, Muge; Cengiz, Orhan
  20. A market-design response to the European energy crisis By Filip Tokarski; Mohammad Akbarpour; Scott Duke Kominers; Piotr Dworczak
  21. What Do Economists Think About the Green Transition? Exploring the Impact of Environmental Awareness By Simona Malovana; Dominika Ehrenbergerova; Zuzana Gric
  22. Carbon border adjustments, climate clubs, and subsidy races when climate policies vary By Kimberly A. Clausing; Catherine Wolfram
  23. Multivariate Simulation-based Forecasting for Intraday Power Markets: Modelling Cross-Product Price Effects By Simon Hirsch; Florian Ziel
  24. Omani hydrogen for Germany and the EU: Not just a matter of energy policy By Ansari, Dawud
  25. Impacts of Onshore Oil and Natural Gas Drilling and Extraction on U.S. Farm Loan Delinquencies During the Shale Boom By Wu, Haotian; Klaiber, Allen; Katchova, Ani
  26. Why should the carbon tax be floating ? By Nicolas Piluso
  27. The Economic Determinants of Heat Pump Adoption By Lucas W. Davis
  28. Vietnam's Power Development Plan 8 (PDP8): A bold step towards a net-zero future By Minh Ha-Duong
  29. What drives battery electric vehicle adoption? Willingness to pay to reduce emissions through vehicle choice By Gore, Christina C.; Carrel, Andre; Irwin, Elena G.
  30. Energy transition: Financial participation and preferred design elements of German citizens By Breitschopf, Barbara; Burghard, Uta
  31. The Effect of Air Pollution on Fertility Outcomes in Europe By Stump Árpád; Herczeg Bálint; Szabó-Morvai Ágnes
  32. When Cryptomining Comes to Town: High Electricity-use Spillovers to the Local Economy By Matteo Benetton; Giovanni Compiani; Adair Morse
  33. Does Environmental Attention by Governments Promote Carbon Reductions By Yichuan Tian
  34. Climate Crisis Attitudes among Financial Professionals and Climate Experts By Elisabeth Gsottbauer; Michael Kirchler; Christian König-Kersting
  35. 중국 탄소가격정책이 한중 경제관계 변화에 미치는 영향 및 시사점(Effects and Implications of China’s Carbon Pricing Policy on Changes in Korea-China Economic Relations_ By Jung, Jihyun; Sung, Hankyoung; Kim, Hongwon; Lee, Hanna; Kim, Joo Hye; Park, Hea Ji
  36. The Impacts of State Policies on Renewable Energy Generation Capacity: A County-Level Spatial Panel Analysis By Thomas, Pinky; Khurana, Ritika; Etienne, Xiaoli L.; Collins, Alan R.
  37. Consumer Valuation for Low-Carbon Emission Butter By Asioli, Daniele; Zhou, Xiao; Halmemies-Beauchet-Filleau, Anni; Vanhatalo, Aila; Givens, Ian; Rondoni, Agnese; Turpeinen, Anu
  38. Developing a Vehicle Cost Calculator to Promote Electric Vehicle Adoption Among TNC Drivers By Sanguinetti, Angela; Favetti, Matthew; Hirschfelt, Kate; Kong, Nathaniel; Chakraborty, Debapriya; Alston-Stepnitz, Eli; Ma, Howard
  39. Knowledge politics in the context of international climate negotiations: The IPCC Synthesis Report will shape COP28 and the global stocktake By Hansen, Gerrit; Geden, Oliver
  40. Cars and the Green Transition: Challenges and Opportunities for European Workers By Oya Celasun; Galen Sher; Petia Topalova; Jing Zhou
  41. Carbon Pricing, Carbon Dividends and Cooperation: Experimental Evidence By Sebastian Bachler; Sarah Lynn Flecke; Jürgen Huber; Michael Kirchler; Rene Schwaiger
  42. Deconstructing Urea Fertilizer Price Spikes: The Role of Supply-Demand, Speculation, and Energy Prices By Hu, Zhepeng; Huang, Joshua; Yan, Lei; Yuan, Jinghong
  43. International Attitudes Toward Global Policies By Adrien Fabre; Thomas Douenne; Linus Mattauch
  44. Is biomass co-firing a means to end or extend coal-based electricity production in the US? Evidence from a choice experiment By Santhosh, Harikrishnan; Colson, Greg; Mullen, Jeffrey D.
  45. Policies, Projections, and the Social Cost of Carbon: Results from the DICE-2023 Model By Lint Barrage; William Nordhaus
  46. Electricity Demand by the Irrigated Sector in Response to Climatic Shocks By Hrozencik, Robert A.; Rouhi Rad, Mani; Uz, Dilek
  47. Allocating remaining carbon budgets and mitigation costs By Duro Moreno, Juan Antonio; Giménez-Gómez, José Manuel; Sánchez-Soriano, Joaquín; Vilella Bach, Misericòrdia
  48. Quantity versus price dynamics: the role of energy and bottlenecks in the Italian industrial sector By Francesco Corsello; Marco Flaccadoro; Stefania Villa
  49. Subways and Urban Air Pollution. By Gendron-Carrier, Nicolas; Gonzalez-Navarro, Marco; Polloni, Stefano; Turner, Matthew A
  50. Invention and Diffusion in the Solar Power Sector By Grafström, Jonas; Poudineh, Rahmat
  51. The Optimal Antitrust Policies for Vertical Price Restraints in a Non-Green Supply Chain By Saglam, Ismail
  52. Energy, Inflation and Market Power: Excess Pass-Through in France By Axelle Arquié; Malte Thie
  53. Modeling Large Spot Price Deviations in Electricity Markets By Christian Laudag\'e; Florian Aichinger; Sascha Desmettre
  54. Caja de herramientas para diseno de políticas públicas para una transición justa By García Helena; Fedesarrollo; Alexander González; Marlon, Salazar
  55. Natural gas‐fueled multigeneration for reducing environmental effects of brine and increasing product diversity: Thermodynamic and economic analyses By M. Ehyaei; M. Kasaeian; Stéphane Abanades; Armin Razmjoo; Hamed Afshari; Marc Rosen; Biplab Das
  56. How does carbon emission information affect future food choices? The effect of content, format, and presentation order By Liu, Hongxing; Li, Liqing; Long, Dede
  57. Brief: Tolling Lessons Learned for Road Usage Charge By Chakraborty, Debapriya; Jenn, Alan
  58. Doing green things: skills, reallocation, and the green transition By Stefanos Tyros; Dan Andrews; Alain de Serres
  59. Outward Foreign Direct Investment and Green Innovation in Chinese Multinational Companies By Xing Shi; Yujie Zeng; Yanrui Wu; Shuai Wang
  60. A Theory of Price Caps on Non-Renewable Resources By Simon Johnson; Lukasz Rachel; Catherine Wolfram
  61. Mirror, mirror on the wall, who is transitioning amongst them all? By Hinsche, Isabelle Cathérine; Klump, Rainer
  62. Forecasting the Conditional Distribution of Realized Volatility of Oil Price Returns: The Role of Skewness over 1859 to 2023 By Rangan Gupta; Qiang Ji; Christian Pierdzioch; Vasilios Plakandaras
  63. The Potential of E-fuels to Decarbonise Ships and Aircraft By ITF
  64. Do Green Users Become Green Voters? By Diego A. Comin; Johannes Rode
  65. How Large is the Sovereign Greenium? By Sakai Ando; Chenxu Fu; Francisco Roch; Ursula Wiriadinata
  66. Increasing resilience of electricity networks: Auctioning of priority supply to minimize outage costs By Anna Pechan; Gert Brunekreeft; Martin Palovic
  67. Categorical Economic Policy Uncertainties and Tail Risk in Energy Markets: A Connectedness Analysis By Etienne, Xiaoli L.; Durongkadej, Isarin; Scarcioffolo, Alexandre
  68. Why Green deals may fail – evidence from biogas, bio-ethanol and “fossil free” steel By Sandström, Christian; Alm, Carl
  69. Climate Damages in Convergence-Consistent Growth Projections By Tony Harding; Juan Moreno-Cruz; Martin Quaas; Wilfried Rickels; Sjak Smulders
  70. Towards a climate just financial system By Yannis Dafermos
  71. An empirical analysis of the economic impact of air pollution By Edward Mateosian
  72. Can Colombia cope with a Global Low Carbon transition? By Antoine GODIN; Devrim YILMAZ; Jhan ANDRADE; Santiago BARBOSA; Diego GUEVARA; Gustavo HERNANDEZ; Leonardo ROJAS
  73. Why we need a green land value tax and how to design it By John Muellbauer
  74. Delivering sustainable apartment housing: New build and retrofit By Easthope, Hazel; Palmer, Jasmine; Sharam, Andrea; Nethercote, Megan; Pignatta, Gloria; Crommelin, Laura
  75. Capital Flow and Environmental Quality at Crossroads: Designing a Sustainable Policy Framework for the Newly Industrialized Countries By Destek, Mehmet Akif; Sinha, Avik; Özsoy, Ferda Nakıpoglu; Zafar, Muhammad Wasif
  76. The multi-level fiscal governance of ecological transition By Sean Dougherty; Andoni Montes Nebreda
  77. Smart-Green Industrial Complexes: Policy Analysis and Implications By Choi, Junseok; Lee, Juneyoung
  78. Pro-Environmental Behavior and Actions: Review of the literature and agenda for future research By Zehui, Zhao
  79. The Battle Over Batteries: Chinese Ascendancy and Challenges for Korea By Cho, Eun Kyo; Shim, Woojung
  80. Green Total Factor Productivity for India: Some Recent Estimates and Policy Directions By Joshi, Shruti; Nath, Siddhartha; Ranjan, Abhishek
  81. The effect of weather on the willingness to pay for residential energy-efficiency By Sejas Portillo, Rodolfo
  82. Circular economy of expanded polystyrene container production: Environmental benefits of household waste recycling considering renewable energies By J. Hidalgo-Crespo; C.M. Moreira; F.X. Jervis; M. Soto; J.L. Amaya; L. Banguera
  83. Results of the Second Market Functioning Survey concerning Climate Change - Progress in the Improvement of Market Functioning and Challenges for the Future - By Financial Markets Department
  84. The Cost of Carbon Farming to Decarbonize the Economy By Majeed, Fahd; Khanna, Madhu; Miao, Ruiqing; Kaiyu, Guan; Kent, Jeffery
  85. How Latin America is finding path to economic prosperity again: A just transition as target By Maihold, Günther
  86. La question énergétique au centre du modèle économique sud-africain By Maëlan Le Goff; Paul Vertier
  87. Taxing Multinationals: Exploring a New Approach By Michael J. Keen
  88. Sustainability criterion implied externality pricing for resource extraction By Daniel Grainger
  89. Green Tilts By Lubos Pastor; Robert F. Stambaugh; Lucian A. Taylor
  90. How Have Renewable Portfolio Standards Affected Bioelectricity Generation? Evidence from Diff-in-Diff Analysis By Yao, Shiyue; Larson, Justin; Baker, Justin S.; Ohrel, Sara B.; Steller, John; Bean De Hernandez, Alison
  91. The Distributional and Fiscal Implications of Public Utility Pricing By Mr. David Coady; Samir Jahan; Fabiana Machado; Mengfei Gu

  1. By: Yuventus Effendi; Budy P. Resosudarmo
    Abstract: Given the rising levels of carbon emissions, governments in the East Asia region are exploring effective decarbonization policies. This study examines the socio-economic and environmental implications of these policies using a closed-loop multi-country computable general equilibrium model that captures key linkages between the economy and climate change. Our findings suggest that the intended decarbonization policy, aimed at accelerating technology transfer, may not always reduce carbon emissions. However, incorporating Carbon Capture and Storage (CCS) technology into existing coal power plants and implementing a carbon tax could significantly reduce carbon emissions in all countries in the region. The paper suggests implementing carbon tax policy to reduce carbon emissions, retrofitting CCS technology in coal-based electricity power plants, and developing renewable electricity at the same time as controlling emissions from non-renewable energy. These policies, however, need some supplement policy strategies to compensate for the potential output contraction due to the tax.
    Keywords: decarburization, climate change, East Asia, Computable General Equilibrium
    JEL: D58 H23 Q54
    Date: 2023
  2. By: Brueckner, Jan K. (University of California, Irvine); Kahn, Matthew E. (University of Southern California); Nickelsburg, Jerry (UCLA)
    Abstract: Airline fuel consumption is costly for the firms and for society as well due to a climate-change externality. We study how fuel price changes affect cost-minimizing choices by airlines that have implications for the extent of this externality. The airline industry's capital stock can be easily inventoried as a set of long-lived, durable aircraft. This portfolio approach allows us to study the utilization and composition of the capital stock at a highly disaggregated level. Changes in airline operations directed toward conserving fuel can be an important path toward lower emissions.
    Keywords: airline fuel consumption, energy conservation, carbon dioxide emissions
    JEL: R4 Q54
    Date: 2023–05
  3. By: Bertrand Candelon (UCL - Université Catholique de Louvain = Catholic University of Louvain, Maastricht University [Maastricht, Pays-Bas]); Jean-Baptiste Hasse (UCL - Université Catholique de Louvain = Catholic University of Louvain, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In this paper, we evaluate the causal effects of climate policies on carbon emissions reduction. Specifically, we investigate the properties of the Granger causality test in the frequency domain, assuming that the dependent variables include a binary variable and a continuous variable (resp. treatment and outcome variables). Monte Carlo simulations confirm that: (i) this test is valid under this assumption; and (ii) it has more power than its time-domain counterpart. Then, using Sweden as a case study, we evaluate the impact of the Kyoto Protocol, the Swedish carbon tax, and the European Union Emissions Trading System (EU ETS) on carbon emissions reduction over the period 1964-2021. Our empirical results indicate that only the carbon tax Granger causes carbon emissions reduction in the long run. Our methodological framework offers policymakers a useful toolbox for climate policy evaluation as well as new insights into the outcomes of international treaties and carbon pricing policies.
    Keywords: Granger causality, Spectral analysis, Climate policy, Carbon pricing
    Date: 2023–05
  4. By: Çevik, Emre; Çevik, Emrah İsmail; Dibooglu, Sel; Cergibozan, Raif; Bugan, Mehmet Fatih; Destek, Mehmet Akif
    Abstract: This research investigates the relationship between clean energy stock and oil market returns utilizing Granger predictability in distribution and quantile impulse response analysis. We find that clean energy stock returns Granger predict oil price returns during "normal times" based on the distribution's center, but not vice versa. During bullish market episodes, there is bidirectional Granger predictability between the returns of clean energy stocks and oil market returns. Nonetheless, we find that clean energy stock returns Granger predict oil returns in bearish markets without any evidence of the contrary. This indicates that oil returns cannot be used to hedge the downside risk associated with renewable energy company purchases. Quantile impulse responses for the relationship between clean energy stocks and the crude oil market reveal bidirectional and significant responses, where a negative shock during an extremely down market reveals a negative response in the other market and a positive shock during an extremely up market reveals a significant positive response. This shows that neither market can be utilized to offset risks in the other market.
    Keywords: Clean energy returns; oil returns; risk spillovers; the hedging
    JEL: G1
    Date: 2022–09–25
  5. By: Sofie Errendal; Jane Ellis; Sirini Jeudy-Hugo
    Abstract: This paper investigates the potential role and contribution of carbon pricing in transforming emission pathways towards net zero GHG emissions. It reviews carbon pricing’s impacts, overall and in the electricity sector in selected jurisdictions to date. The paper also analyses the current and potential application of emissions pricing (e.g. emissions trading schemes or carbon taxes) in food systems. The analysis finds that carbon pricing could contribute to net zero pathways alongside other policies, yet price levels and coverage to date have been too low to reduce emissions in line with the Paris Agreement’s goals. Carbon pricing’s contribution to net zero pathways could be further strengthened, including by incentivising demand-side shifts, sequencing policies and enhancing international carbon pricing collaboration. Applying emissions pricing in food systems faces significant short-term technical, methodological, and political barriers and could have just transition implications but reducing emissions from food systems could also lead to many co-benefits.
    Keywords: agriculture, carbon pricing, carbon tax, climate change, climate mitigation, demand-side, emissions trading system, ETS, food systems, greenhouse gas emissions, just transition, net zero, policy packages, revenue recycling, supply-side, transformative change
    JEL: H23 Q52 Q54 Q56 Q58
    Date: 2023–06–29
  6. By: Joëlle Noailly
    Abstract: Achieving the ambition of limiting global warming to 1.5°C to 2°C by the end of the century as enacted in the Paris Climate Agreement will require massive investments in environmental technologies and a forceful change of path away from high-carbon technologies. This report presents novel descriptive evidence on global trends in patenting in low-carbon technologies, with a particular focus on the energy and road transport sector. The analysis discusses the role of public policies in driving the rate and the direction of innovation for a low-carbon future.
    Keywords: Climate change, Innovation, Clean technologies, Patents, Energy, Electric vehicles, Environmental policy, Technology Policy
    JEL: Q55 O31 Q42 L62
    Date: 2022–04
  7. By: Markus Zimmer; Patrick Hoffmann
    Abstract: The industrial sector is responsible for roughly one quarter of global greenhouse-gas (GHG) emissions. To align sector pathway developments with overarching net-zero transition goals in different industries, governments are required to understand sectoral reduction potentials to efficiently promote industry decarbonization using the instruments at their disposal (e.g. subsidies, carbon taxes). In our analysis we examine the state of various industries and employ different modelling frameworks to study investment pathways consistent with a net zero industry transformation. We find that a mix of measures, including energy efficiency improvements, using hydrogen and biomass as feedstock or fuel, producing heat through electric means and the adopting carbon-capture technologies can reduce a sector’s carbon dioxide emissions to almost zero. Global investment efforts needed for a green transition of the analyzed sectors1 amount to EUR2.7trn until 2050 of which 8% or EUR210bn is invested in the EU. The largest single sector investments for the EU countries are required in the pulp & paper industry with EUR 78.4bn until 2050 - followed by iron & steel (EUR55.4bn) and cement (EUR37.6bn). The achievable emission reduction for the European industrial sector is estimated at 265 MtCO2 (-92%), which yields an average abatement investment of EUR790 per tCO2.
    Keywords: decarbonization, industry sectors, industry investment, net zero
    JEL: Q32 E22 Q55 O31 L61 L62 L66
    Date: 2023
  8. By: Pier Basaglia; Sophie M. Behr; Moritz A. Drupp
    Abstract: This paper is the first to investigate the effectiveness of fuel taxation to jointly deliver climate and health benefits in a quasi-experimental setting. Using the synthetic control method, we compare carbon and air pollutant emissions of the actual and synthetic German transport sector following the 1999-2003 German eco tax reform. We demonstrate sizable average reductions in CO2 (12%), PM2.5 (10%) and NOX (6%) emissions between 1999 and 2009 across a range of specifications. Using official cost estimates, we find that the eco-tax saved more than 40 billion euros of external damages. More than half of the reductions in external damages are health benefits, highlighting the importance of accounting for co-pollution impacts of carbon pricing. Our fuel and emission specific tax elasticity estimates suggest much stronger demand responses to eco tax increases than to market price movements, primarily due to increases in tax salience, which we measure using textual analysis of newspapers. We further show that gasoline-to-diesel substitution substantially mediates the trade-off between climate and health benefits. Our results highlight the key roles of tax salience and fuel-substitution in mediating the effectiveness of fuel taxes to reduce climate and health externalities.
    Keywords: environmental policy, carbon tax, eco tax, tax elasticity, tax salience, fuel consumption, fuel substitution, externalities, climate, pollution, health
    JEL: Q51 Q58 Q41 H23
    Date: 2023
  9. This study analyzes the short-run effects on the German economy of the fossil energy crisis in 2022 and discusses some implications for the design of a resilient, renewable energy system. The study shows that the energy crisis led to a short-run output loss comparable to the output losses associated with the Covid-19 crisis in 2020 and the financial crisis in 2008. In addition, real wage losses during the energy crisis far exceed the corresponding losses during the Covid-19 crisis and the financial crisis. Finally, the economic costs of the energy crisis would have been much larger in a worst-case scenario that could be avoided through a combination of government decisions and luck. Thus, large negative shocks to the supply of energy have high economic costs, and the design of a future energy system that is resilient to such shocks should have the highest priority. The study discusses two requirements for a resilient energy system based on renewable energy and two policy instruments that can help meet these requirements. First, there is the need to deal with the risk that the production of renewable energy from wind and solar power is extraordinarily low for several weeks or months due to adverse weather conditions. For Germany, this requires the build-up of sufficient reserve capacity using (hydrogen-ready) gas-based power plants. Second, there is the need to provide sufficient capacity to generate electricity “in normal times†using variable renewable energy sources. Public insurance against long-run price risk for the producers of renewable energy can spur the necessary investment in wind and solar power. To ensure efficient use of public finances, these insurance contracts should be fair in the sense that from an ex-ante perspective the government neither gains nor loses money.
    By: Tom Krebs (University of Mannheim)
    Keywords: Energy crisis, cost of crisis, supply shocks, resilience, renewable energy, public insurance
    JEL: E30 E32 E37 H12 Q40 Q43 Q48
    Date: 2023–02
  10. By: Katheline Schubert (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Aude Pommeret (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Francesco Ricci (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier, UM - Université de Montpellier)
    Abstract: Confronted with political opposition to the implementation of efficient carbon pricing, climate policy relies on alternative policy interventions, at a cost in terms of welfare and public finance. In order to evaluate this cost, this paper studies, in the context of the energy transition, second best climate policies constrained to keeping a constant level of the carbon tax and combining it with subsidies to carbon-free electricity generation. This subsidies can take the form of a feed-in premium paid to electricity produced from carbon-free sources, or of subsidies to investment in green capacity. Within a stylized dynamic model where energy may be produced with fossil or carbon-free sources and climate policy aims at satisfying a carbon budget, we define and characterize the carbon pricing gap. We show that if the constant carbon tax is small and therefore the carbon pricing gap large, the subsidy to carbon-free sources should be so large to foster rapid build up of green capacity that it would imply large investment costs and huge financial burden on the public budget, and a large welfare loss. We calibrate the model to the European energy market to obtain orders of magnitude of the effects.
    Keywords: Energy transition, Carbon tax, Subsidies, FIP, Carbon-free energy, Policy acceptability
    Date: 2023–04
  11. By: Schenuit, Felix; Böttcher, Miranda; Geden, Oliver
    Abstract: Climate policy in the European Union (EU) and Germany changed significantly with the adoption of net-zero emissions targets. A key new development is the growing importance of carbon management. The umbrella term includes not only the capture and storage of CO2 (carbon capture and storage, CCS), but also CO2 capture and utilisation (carbon capture and utilisation, CCU) as well as the removal of CO2 from the atmosphere (carbon dioxide removal, CDR). It is important to provide clarity when differentiating between these approaches and identifying their relation to so-called residual emissions and hard-to-abate emissions. This is particularly important because it will determine the overall ambition of climate policy as well as shape future policy designs and their distributional impacts. Current policy and legislative processes should ensure that carbon management does not delay the phase-out of fossil fuels. New policy initiatives present an opportunity to actively shape the interface between ambitious climate and industrial policy.
    Keywords: Carbon Management, Carbon Capture and Storage, CCS, Carbon Capture and Utilization, CCU, Carbon Dioxide Removal, CDR, BECCS, DACCS, residual emissions, hard-to-abate emmission, Net Zero Industry Act, Carbon Dioxide Removal, climate policy, climate protection, net-zero target, net-negative emissions
    Date: 2023
  12. By: Matteo Alpino (Bank of Italy); Luca Citino (Bank of Italy); Annalisa Frigo (Bank of Italy)
    Abstract: Using survey data from Italy, we study the effects of the 2021 energy crisis on the energy input choices of medium and large-sized industrial firms. Our instrumental variable (IV) strategy, based on the availability of fixed-price contracts subscribed before the crisis, reveals an average infra-annual price elasticity of demand very close to zero for both electricity and natural gas. Large energy consumers subject to the European Emission Trading System (EU ETS) have significantly larger natural gas elasticities and were able to partially substitute gas with other fossil fuels. Surprisingly however, their elasticity to electricity prices is similar to that of other firms. We finally show that in 2021 energy-intensive and EU ETS firms increased their final prices more than other firms, but this differential effect was mitigated by the presence of fixed-price contracts. Our evidence is valid for 2021 but does not necessarily extend to 2022.
    Keywords: energy crisis, price-elasticity of energy demand
    JEL: Q41
    Date: 2023–06
  13. By: Paul Deroubaix; Takuro Kobashi; L\'ena Gurriaran; Fouzi Benkhelifa; Philippe Ciais; Katsumasa Tanaka
    Abstract: Urban decarbonization is one of the pillars for strategies to achieve carbon neutrality around the world. However, the current speed of urban decarbonization is insufficient to keep pace with efforts to achieve this goal. Rooftop PVs integrated with electric vehicles (EVs) as battery is a promising technology capable to supply CO2-free, affordable, and dispatchable electricity in urban environments (SolarEV City Concept). Here, we evaluated Paris, France for the decarbonization potentials of rooftop PV + EV in comparison to the surrounding suburban area Ile-de-France and Kyoto, Japan. We assessed various scenarios by calculating the energy sufficiency, self-consumption, self-sufficiency, cost savings, and CO2 emission reduction of the PV + EV system or PV only system. The combination of EVs with PVs by V2H or V2B systems at the city or region level was found to be more effective in Ile-de-France than in Paris suggesting that SolarEV City is more effective for geographically larger area including Paris. If implemented at a significant scale, they can add substantial values to rooftop PV economics and keep a high self-consumption and self-sufficiency, which also allows bypassing the classical battery storage that is too expensive to be profitable. Furthermore, the systems potentially allow rapid CO2 emissions reduction; however, with already low-carbon electricity of France by nuclear power, CO2 abatement (0.020 kgCO2kWh-1 reduction from 0.063 kgCO2kWh-1) by PV + EV system can be limited, in comparison to that (0.270 kgCO2kWh-1 reduction from 0.352 kgCO2kWh-1) of Kyoto, also because of the Paris low insolation and high demands in higher latitude winter. While the SolarEV City Concept can help Paris to move one step closer to the carbon neutrality goal, there are also implementation challenges for installing PVs in Paris.
    Date: 2023–05
  14. By: Bian, Lei
    Keywords: energy storage policy; belt and road initiative; green finance; development finance institutions
    JEL: E6
    Date: 2023–06
  15. By: Adèle Sébert (CLERSÉ - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019 - Université de Lille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The energy concerns of the last few months, marked by the concomitant rise in global energy demand (following
    Keywords: energy solidarity -fuel poverty -energy donation -collective action -energy justice
    Date: 2023–06–28
  16. By: Frida Aulie; Antoine Dechezleprêtre; Fernando Galindo-Rueda; Clara Kögel; Inès Pitavy; Alzbeta Vitkova
    Abstract: Fiscal spending policies adopted in the wake of the COVID-19 pandemic have been presented as a unique opportunity to “build back better” and re-ignite the economy while accelerating the transition to a low-carbon economy. This paper analyses 1 166 funding measures announced by 51 countries and the European Union in 2020-21 to support development and diffusion of low-carbon technologies. These measures – amounting to USD 1.29 trillion – can make an important contribution to filling the climate investment gap, particularly in emerging technologies such as carbon capture, usage and storage and green hydrogen. A modelling analysis suggests that they could have large impacts on greenhouse gas emissions and bring about significant co-benefits in terms of clean sectors’ output growth and reductions in fossil fuel imports.
    JEL: L52 O38 Q54 Q55 Q58
    Date: 2023–06–27
  17. By: Arnold, Fabian (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Ashour Novirdoust, Amir (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Theile, Philip (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: Governments worldwide have set targets to reduce greenhouse gas emissions from the residential sector to zero. Policy instruments, such as carbon pricing or subsidies, are being discussed and implemented to achieve these targets. If individuals exhibit present bias, Heutel (2015) has shown that optimal policies targeting investments in the efficiency state of externality-producing durable goods and their usage consist of two components, one aimed at the externality and one aimed at the present bias. We generalize Heutel’s theoretical model by defining a larger technology set. This allows us to represent the dependence of fuel prices and emission intensities on technologies used in the building sector and to include a zero emission backstop technology. We first examine the effect of this model generalization on Heutel’s main propositions, assuming still that the backstop technology is not optimal. Second, we extend this examination to the case when the backstop technology is optimal. In a stylized case study for a representative building in Germany, we numerically estimate magnitudes of the present bias effect on investment and heating decisions, emissions, policies, and deadweight loss. We show that as long as social costs of carbon and the corresponding CO 2 price are not high enough to make the backstop technology optimal, Heutel’s proposition holds that optimal policies must consist of two components. Contrary to Heutel’s proposition, if the social costs of carbon and the CO2 price are high enough, a single instrument can address present bias. While the level of this single instrument, i.e., a tax or subsidy, depends on the level of present bias, we find that there exists a tax-subsidy combination that is optimal regardless of the level of present bias.
    Keywords: Present bias; policy; heating investments; durable goods; climate neutrality
    JEL: D15 D62 D91 H23 Q48 Q58
    Date: 2023–06–22
  18. By: Stephan Sommer; Théo Konc; Stefan Drews
    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: 2023–06–20
  19. By: Pata, Ugur Korkut; Destek, Mehmet Akif; Manga, Muge; Cengiz, Orhan
    Abstract: This study evaluates the effects of military expenditures (MEX) on environmental pollution, as well as the moderating role of factors such as financial development and technological progress for 15 NATO member countries under the environmental Kuznets curve (EKC) hypothesis. Using the CS-ARDL estimator, the study analyzes the effects of MEX, income, energy consumption, financial development, and technical progress on carbon emissions spanning the period from 1991 to 2018. Additionally, interaction terms are employed to regularize the moderating effects of financial development and technical advancement. The results show that income, energy consumption, and MEX all contribute to a rise in emissions. It is also found that the financial sector does not eradicate the detrimental ramifications of MEX on the environment, but that technological progress has a moderating effect. A 1% increase in the interaction of technological progress with the military sector reduces environmental degradation by 0.36, but a 1% augment in the interaction of the financial sector with the military sector increases carbon emissions by 0.41%. For this reason, it is imperative to evaluate and revise the financing of MEX of NATO countries from an environmental perspective for sustainable development. Furthermore, as long-run income elasticity in NATO countries is lower than the short-run one, the EKC hypothesis is valid. Based on the overall findings, the study suggests that NATO allies should incorporate the benefits of income growth and technological development into their environmental policies to offset the negative effects of MEX.
    Keywords: Military expenditures; EKC; environment; energy consumption; technological progress, financial development
    JEL: H5 Q5
    Date: 2022–09–30
  20. By: Filip Tokarski (Stanford University; Group for Research in Applied Economics (GRAPE)); Mohammad Akbarpour (Stanford University); Scott Duke Kominers (Harvard University); Piotr Dworczak (Northwestern University; Group for Research in Applied Economics (GRAPE))
    Abstract: Due to surges in gas and electricity prices in Europe, many households will struggle to heat their homes this winter. This paper provides high-level guidance on designing a relief policy in a way that optimally trades off equity and efficiency. We argue that, contrary to conventional economic intuitions, an optimal policy may involve directly controlling prices. Because governments do not have perfect information about households' needs, price controls could improve the targeting of relief through screening out the most vulnerable by offering them discounts for reducing consumption. This could be achieved by “threshold price caps" that lower the price of all energy units below some consumption threshold and price units above the threshold at a higher rate.
    Keywords: equity-efficiency trade-off, market design, price control, energy pricing
    JEL: C78 D47 D61 D63 D82
    Date: 2028
  21. By: Simona Malovana; Dominika Ehrenbergerova; Zuzana Gric
    Abstract: We surveyed economics and finance professionals on the transition to a low-carbon economy, assessing risks, opportunities, and stakeholder responsibilities. Findings reveal that respondents view the transition as an opportunity for the financial sector, with modest increase in banking risks. Most respondents agreed that governments hold primary responsibility for climate mitigation policies, with carbon tax as the favored solution. Additionally, respondents perceived the COVID-19 to have a neutral or positive impact on the transition, while the Ukraine war a strong negative impact. Notably, opinions differ based on environmental awareness and professional roles, with environmentally conscious individuals expressing more optimism.
    Keywords: Carbon footprint, climate finance, climate policy, environmental awareness, expert survey
    JEL: G12 G14 Q54
    Date: 2023–05
  22. By: Kimberly A. Clausing (Peterson Institute for International Economics); Catherine Wolfram (University of California, Berkeley)
    Abstract: Jurisdictions adopt heterogeneous climate policies that vary in terms of both ambition and policy approach, with some jurisdictions pricing carbon and others subsidizing clean production. We distinguish two types of policy spillovers associated with diverse policy approaches to climate change. First, when countries have different levels of climate ambition, free riders will benefit at the expense of more committed countries. Second, when countries pursue different approaches, carbon-intensive producers within cost-imposing jurisdictions will be at a relative competitive disadvantage compared with producers in subsidizing jurisdictions. Carbon border adjustments and climate clubs are attempts to respond to these policy spillovers, but when countries have divergent policy approaches, one policy alone will not be able to address both types of spillovers. The authors also consider the policy dynamics that result from carbon border adjustments and climate clubs; both have the potential to encourage upward harmonization of climate policy, but they come with risks. Further, the pressures of international competition in the presence of divergent climate policy approaches may result in subsidy races, which come with their own potential risks and benefits.
    Keywords: carbon border adjustments, climate clubs, Pigovian taxes and subsidies, international competitiveness, trade and environment
    JEL: F18 H23 Q54 Q58
    Date: 2023–05
  23. By: Simon Hirsch; Florian Ziel
    Abstract: Intraday electricity markets play an increasingly important role in balancing the intermittent generation of renewable energy resources, which creates a need for accurate probabilistic price forecasts. However, research to date has focused on univariate approaches, while in many European intraday electricity markets all delivery periods are traded in parallel. Thus, the dependency structure between different traded products and the corresponding cross-product effects cannot be ignored. We aim to fill this gap in the literature by using copulas to model the high-dimensional intraday price return vector. We model the marginal distribution as a zero-inflated Johnson's $S_U$ distribution with location, scale and shape parameters that depend on market and fundamental data. The dependence structure is modelled using latent beta regression to account for the particular market structure of the intraday electricity market, such as overlapping but independent trading sessions for different delivery days. We allow the dependence parameter to be time-varying. We validate our approach in a simulation study for the German intraday electricity market and find that modelling the dependence structure improves the forecasting performance. Additionally, we shed light on the impact of the single intraday coupling (SIDC) on the trading activity and price distribution and interpret our results in light of the market efficiency hypothesis. The approach is directly applicable to other European electricity markets.
    Date: 2023–06
  24. By: Ansari, Dawud
    Abstract: Germany and the EU plan to import hydrogen and its derivatives from the Arab Gulf states. Although Germany has signed a joint declaration of intent with the Sultanate of Oman to this end, its efforts focus primarily on Oman's larger neighbours. However, it would be a mistake to overlook Oman's potential role within German and European energy policy, geostrategy, and climate diplomacy. Oman's ambitious hydrogen plans can provide Germany and the EU with affordable clean energy; and enhanced (trade) relations with the Sultanate align with a value-based approach to trade, support global climate action, and stabilise regional power balances - thus preventing the potential of dangerous conflict.
    Keywords: Germany, EU, hydrogen imports, Oman, United Arab Emirates (UAE), Yemen, Saudi Arabia, Qatar, Kuwait, liquefied natural gas (LNG)
    Date: 2023
  25. By: Wu, Haotian; Klaiber, Allen; Katchova, Ani
    Keywords: Agricultural Finance, Resource/Energy Economics and Policy, Community/Rural/Urban Development
    Date: 2023
  26. By: Nicolas Piluso (CERTOP - Centre d'Etude et de Recherche Travail Organisation Pouvoir - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The carbon market reform is controversial because the modalities of carbon pricing foreseen risk reducing the performance of companies and negatively affecting the economy. The objective of this paper is to show that the carbon tax can be floating and adapt to the economic situation while maintaining its ecological efficiency. Herein, Tobin's Q model, which has become a standard in the literature for explaining the investment decision, is applied to the green investment decision. A carbon tax is introduced into the firm's maximization program to see how carbon pricing changes the outcome of the traditional model. The model shows that green investment depends on the sum of the stock price and the carbon price, which suggests the possibility of modulating this amount according to the upward or downward trend of the stock price to avoid permanently penalizing the competitiveness of firms. The study also demonstrates how the financial market is likely to value green investments and that such investments will likely generate shareholder value through several channels. Indeed, green investments impact the firm's turnover and the minimum income required by the shareholder. Such a modulation of the carbon tax according to the economic cycle would make reconciling ecological and economic efficiency possible.
    Keywords: stock market price, greenhouse gas emissions, green investment, Tobin’s Q, carbon tax
    Date: 2023–02–21
  27. By: Lucas W. Davis
    Abstract: One concern with subsidies for low-carbon technologies is that they tend to go predominantly to high-income households. Previous research has shown, for example, that the top income quintile receives 60% of subsidies for rooftop solar and 90% of subsidies for electric vehicles. This paper finds that heat pumps are an important exception. Using newly available U.S. nationally representative data, the paper finds that there is remarkably little correlation between heat pump adoption and household income. Nationwide, 15% of U.S. households have a heat pump as their primary heating equipment, and adoption levels are essentially identical for all income levels ranging from the bottom of the income distribution (
    JEL: H23 L51 Q41 Q42 Q48 Q54
    Date: 2023–06
  28. By: Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique)
    Abstract: After years of anticipation, Vietnam's Prime Minister Pham Minh Chinh recently approved Power Development Plan 8 (PDP8, Decision 500/QĐ-TTg). This plan determines how to invest $13.5 billion per year and put the country's electricity system on the way to a net-zero future. The decision comes as Vietnam, which made a head start on other Mekong countries in the clean energy race in 2019-2021, was running out of steam. Releasing the PDP8 was critical to give a new dynamic and unlock investment in the electricity sector.
    Date: 2023–05–29
  29. By: Gore, Christina C.; Carrel, Andre; Irwin, Elena G.
    Keywords: Environmental Economics and Policy, Resource/Energy Economics and Policy, Institutional and Behavioral Economics
    Date: 2023
  30. By: Breitschopf, Barbara; Burghard, Uta
    Abstract: This paper investigates the relation between financial participation and preferences for design elements as well as attitudes towards the energy transition. The design elements are used to characterise dimensions of the energy transition. Based on a survey of more than 1000 German citizens, we find significant differences in attitudes and preferences for design elements of the energy transition between respondents who financially participate and those that do not. We further learn that energy justice is important, but is less supported in case that subsidies of disadvantaged consumers lead to higher burdens for the remaining society.
    Keywords: Energy transition, Financial participation, Preferences, Design elements, Dimensions, Socio-demographic factors
    Date: 2023
  31. By: Stump Árpád (Budapesti Corvinus Egyetem); Herczeg Bálint (HÉTFA Kutatóintézet); Szabó-Morvai Ágnes (Centre for Economic and Regional Studies, Debreceni Egyetem)
    Abstract: This paper studies the effect of ambient air pollution on the number of births in the European Union. We collect air pollution data with web scraping technique and utilize variations in wind, temperature, number of heating, and cooling days as instrumental variables. There are 657 NUTS 3 regions included in the regressions, each with 2 to 6 years of observations between 2015 and 2020. Our results show that an increase in the levels of PM2.5 - PM10 pollution concentration by 1 μg/m3 (appr. 5-10%) would result in a 9% drop in the number of births next year. CO pollution levels also have a significant although smaller effect. If CO pollution concentration increases by 1 mg/m3 (appr. 15%) the number of births next year will fall by about 1%. In the heterogeneity analysis, we find that air pollution is more harmful to fertility in countries with already high pollution levels and lower GDP. This latter suggests that healthcare spending and the general level of living standard could be factors that moderate the negative consequences of ambient air pollution. To our knowledge, this is the first article to study the fertility effects of air pollution using an extended number of countries and years and at the same time including more than one air pollutant. As a result, our results have strong external validity. A remarkable novelty of our study compared to the previous literature is that after taking into account the effect of PM2.5 - PM10 and CO, the rest of the pollutants have much less role in shaping fertility outcomes compared to the findings of the previous literature. This difference is a result of the new method of this study, which examines the pollutants simultaneously instead of examining only one or a few at a time. This result can be important for environmental policies, where the limited resources should target pollution types that have the most detrimental effect on human fertility and health.
    Keywords: ambient air pollution, fertility, instrumental variables
    JEL: Q53 J13 I14
    Date: 2023–05
  32. By: Matteo Benetton; Giovanni Compiani; Adair Morse
    Abstract: Cryptomining, the clearing of cryptocurrency transactions, uses large quantities of electricity. We document that cryptominers' use of local electricity implies higher electricity prices for existing small businesses and households. Studying the electricity market in Upstate NY and using the Bitcoin price as an exogenous shifter of the part of the supply curve faced by the community, we estimate the electricity demand functions for small businesses and households. Based on our estimates, we calculate counterfactual electricity bills, finding that small businesses and households paid an extra $92 million and $204 million annually in Upstate NY because of increased electricity consumption from cryptominers. Local governments in Upstate NY realize more business taxes, but this only offsets a small portion of the costs from higher community electricity bills. Using data on China, where electricity prices are fixed, we find that rationing of electricity in cities with cryptomining entrants deteriorates wages and investments, consistent with crowding-out effects on the local economy. Our results point to a yet-unstudied negative spillover from technology processing to local communities, which would need to be considered against welfare benefits.
    JEL: G10 G23 G5 Q4 Q52 R1 R23
    Date: 2023–06
  33. By: Yichuan Tian
    Abstract: The carbon-reducing effect of attention is scarcer than that of material resources, and when the government focuses its attention on the environment, resources will be allocated in a direction that is conducive to reducing carbon. Using panel data from 30 Chinese provinces from 2007 to 2019, this study revealed the impact of governments' environmental attention on carbon emissions and the synergistic mechanism between governments' environmental attention and informatization level. The findings suggested that (1)the environmental attention index of local governments in China showed an overall fluctuating upward trend; (2)governments' environmental atten-tion had the effect of reducing carbon emissions; (3)the emission-reducing effect of governments' environmental attention is more significant in the western region but not in the central and eastern regions; (4)informatization level plays a positive moderating role in the relationship between governments' environmental attention and carbon emissions; (5)there is a significant threshold effect on the carbon reduction effect of governments' environmental attention. Based on the findings, this study proposed policy implications from the perspectives of promoting the sustainable enhancement of environmental attention, bringing institutional functions into play, emphasizing the ecological benefits and strengthening the disclosure of information.
    Date: 2023–06
  34. By: Elisabeth Gsottbauer; Michael Kirchler; Christian König-Kersting
    Abstract: Climate change constitutes one of the major challenges to humankind in the 21st century. To address this crisis, it is necessary to transform the economy and reduce greenhouse gas emissions. The finance industry has the potential to play a central role in this transformation by implementing sustainable investment and financing policies.We document climate mitigation preferences and attitudes toward the climate crisis of finance professionals — the key protagonists on financial markets — and climate experts — the key protagonists providing scientific findings. We use an incentivized choice experiment to measure the willingness to forgo individual payout to curb greenhouse gas emissions and survey participants to elicit their attitudes and beliefs toward the climate crisis. To learn how well both groups understand each other, we also ask participants what they believe the other stakeholder group believes. Our results provide suggestive evidence that finance professionals have a lower willingness to curb greenhouse gas emissions, measured through incentivized indifference valuations of carbon offsets, and are also less concerned about climate change compared to climate experts. Additionally, we find that the motivations and priorities of the two groups in addressing the climate crisis differ, with finance professionals being more driven by economic and reputational considerations and climate experts prioritizing the ecological and social consequences of the crisis. Finally, we find that finance professionals are less supportive of a carbon tax. Our findings have implications for policy and communication efforts, highlighting the importance of financial incentives and reputational concerns in motivating finance professionals to address the climate crisis.
    Keywords: Climate Crisis, Financial Professionals, Climate Experts, Greenhouse Gas Emissions, Carbon Tax
    Date: 2023–06
    Abstract: 본 보고서는 ‘2060년 탄소중립 달성’을 선언한 중국의 탄소저감전략과 탄소가격정책의 특징을 살펴보고, 중국의 탄소가격정책이 중국 산업과 한중 경제관계에 미치는 영향을 정량적으로 분석하였다. 이를 통해 중국의 탄소가격정책으로 인한 산업 생산 및 비용의 변화, 한국의 수출경쟁력 및 대중국 수입·투자의 변화 등을 파악하였으며, 중국 탄소저감정책 관련 수입 공급망 리스크 대응 및 중국과의 협력 분야 모색 등에 대한 시사점을 도출하였다. China’s “carbon neutral clock” has been speeding up since pivoting from its original skepticism regarding developing countries’ obligations to reduce emissions, internationally declaring in 2020 its vision of bringing carbon emissions to a peak in 2030 and achieving carbon neutrality by 2060. As a developing economy that emits the largest amount of carbon in the world, China’s declaration of carbon neutrality ahead of Korea, the United States, and Japan was praised as a “historic event” adding momentum to the vision of carbon neutrality proposed by the EU, as well as certain doubts over the plausibility of this declaration. However, South Korea, which is highly dependent on China’s economy, experienced an unintended supply chain shock during the so-called “urea water crisis, ” and has come to realize the potential ripple effects caused by China’s accelerated “carbon neutral clock.” This study began with the question of and concern over how China’s carbon neutrality policy will affect not only China but also Korea. Leaving for the future a quantitative impact analysis on the entire carbon neutrality policy accompanied by economic and social transformation, this study chose to analyze the impact of China’s carbon price policy, as the first among developing countries to start a national emissions trading system (ETS). In Chapter 2, following a review of China’s carbon reduction strategy, the development process and characteristics of carbon price policy were analyzed. Aiming to meet its mid- to long-term growth target for 2035 (first stage goal of socialist modernization, doubling GDP from 2020), China has designated the target period for carbon emission peaking and achieving carbon neutrality. It plans to reduce carbon emission intensity (emission to GDP) rather than total carbon emission by 2030, the target year for carbon emission peaking, and its strategy is to reduce total carbon emission quickly by 2060 after reaching the mid- to long-term growth target in 2035. Accordingly, in the short term, it plans to control production in high-emission (i.e. high-pollution) industries to quickly reduce emissions.(the rest omitted)
    Keywords: Chinas carbon neutrality; carbon pricing policy; supply chain; low-carbon/eco-friendly; Korea-China economic relations
    Date: 2022–12–30
  36. By: Thomas, Pinky; Khurana, Ritika; Etienne, Xiaoli L.; Collins, Alan R.
    Keywords: Resource/Energy Economics and Policy, Environmental Economics and Policy, Community/Rural/Urban Development
    Date: 2023
  37. By: Asioli, Daniele; Zhou, Xiao; Halmemies-Beauchet-Filleau, Anni; Vanhatalo, Aila; Givens, Ian; Rondoni, Agnese; Turpeinen, Anu
    Keywords: Agribusiness, Marketing, Food Consumption/Nutrition/Food Safety
    Date: 2023
  38. By: Sanguinetti, Angela; Favetti, Matthew; Hirschfelt, Kate; Kong, Nathaniel; Chakraborty, Debapriya; Alston-Stepnitz, Eli; Ma, Howard
    Abstract: This research developed EV Explorer 2.0, an online vehicle cost calculator (VCC) to meet the requirements of transportation network company (TNC) drivers considering acquiring an electric vehicle (EV). The tool was built to also support the needs of other users considering an EV, including other types of gig economy drivers as well as the general population of non-professional drivers. EV Explorer 2.0 includes several important features and functionalities to support the TNC driver use case that are not found in any other available tool: (1) It allows users to estimate TCO for used vehicles as well as new (others only estimate TCO for new vehicles); (2) Outputs include ridehail-driving income estimates, accounting for EV trip bonuses offered by Uber, net driving costs; (3) Estimates of total cost of driving (TCD) include charging network membership fees and charging session fees (in addition to electricity prices). It also includes key features found in other leading tools, such as presenting and tailoring EV purchase/lease incentive estimates (based on a database we developed), and innovative features to benefit all users, such asanimations conveying the social and environmental impacts of vehicle choice. Design features were informed and validated inuser testing with TNC drivers who had expressed interest in EV adoption. View the NCST Project Webpage
    Keywords: Social and Behavioral Sciences, Vehicle cost calculator, electric vehicle adoption, transportation network company, ride-hailing, rideshare
    Date: 2023–06–01
  39. By: Hansen, Gerrit; Geden, Oliver
    Abstract: With the publication of its Synthesis Report in March 2023, the Intergovernmental Panel on Climate Change (IPCC) has completed its work programme for the sixth assessment cycle. The IPCC reports, and in particular the respective Summary for Policy Makers (SPM), provide a scientific basis for negotiations under the United Nations Framework Convention on Climate Change (UNFCCC). They are a key reference in the global climate debate. The most recent Synthesis Report (SYR) is considered one of the most important sources of information for the first Global Stocktake under the Paris Agreement, which is to be concluded at the UNFCCC Conference of the Parties (COP28) in Dubai in December 2023. The knowledge politics surfacing in controversies that were visible during the report's adoption reflect the conflicting interests that will shape the upcoming round of new emission reduction and financing pledges.
    Keywords: international climate negotiations, global warming, IPCC Synthesis Report, COP28, Intergovernmental Panel on Climate Change (IPCC), Nationally Determined Contributions (NDCs), United Nations Framework Convention on Climate Change (UNFCCC), Paris Agreement, carbon capture and storage (CCS)
    Date: 2023
  40. By: Oya Celasun; Galen Sher; Petia Topalova; Jing Zhou
    Abstract: Reducing transport sector emissions is an important pillar of the green transition. However, the transition to electric vehicles (EV) portends major changes in vehicle manufacturing activity, on which many livelihoods in Europe depend. Using the heterogeneity across European countries in the speed of transition to EV production and variation in sectoral and regional exposure to the automotive sector, this paper offers early evidence of the labor market implications of the EV transition. Our results suggest that the transformation of the auto sector is already having an adverse impact on employment in the affected sectors and regions, which can be expected to grow at least in the near term. Many of the affected workers will be able to retire and our analysis suggests that those who will have to transition to new “greener” jobs have a fair chance to do so when compared to other workers in the manufacturing sector. Furthermore, we find evidence that active labor market policies, specifically training, can help to reduce the adjustment costs for the affected workers.
    Keywords: Electric vehicle; employment; green transition; labor market policy
    Date: 2023–06–02
  41. By: Sebastian Bachler; Sarah Lynn Flecke; Jürgen Huber; Michael Kirchler; Rene Schwaiger
    Abstract: Anthropogenic climate change is one of the most pressing global issues today and finding means of mitigation is of utmost importance. To this end, we investigate whether carbon taxes on their own and coupled with revenue recycling schemes (symmetric or asymmetric carbon dividends) improve cooperative behavior in a modified threshold public goods game of loss avoidance. We implement a randomized controlled trial on a large sample of the U.S. population and measure the portion of groups who successfully remain below a critical consumption threshold. We find that a carbon tax with symmetric dividends reduces harmful consumption levels, but coupling the tax with asymmetric dividends not only enhances consumption reduction but also significantly improves group cooperation in avoiding simulated climate change. Our results show that the application of a carbon tax and asymmetric carbon dividends reduces the failure rate to about one-fourth (6%), compared to the 22% observed in a baseline condition. We find that environmental attitudes, conservatism, education, and gender are significantly associated with success rates in staying below the threshold.
    Keywords: climate change, carbon pricing, carbon tax, carbon dividend, revenue recycling, cooperation
    JEL: C92 H23 H30 H41 Q54
    Date: 2023–07
  42. By: Hu, Zhepeng; Huang, Joshua; Yan, Lei; Yuan, Jinghong
    Keywords: Marketing, Agribusiness, Risk and Uncertainty
    Date: 2023
  43. By: Adrien Fabre; Thomas Douenne; Linus Mattauch
    Abstract: We document majority support for policies entailing global redistribution and climate mitigation. Recent surveys on 40, 680 respondents in 20 countries covering 72% of global carbon emissions show strong support for an effective and progressive way to combat climate change and poverty: a global carbon price funding a global basic income, called the “Global Climate Scheme” (GCS). Using complementary surveys on 8, 000 respondents in the U.S., France, Germany, Spain, and the UK, we test several hypotheses that could reconcile strong stated support with a lack of salience in policy circles. A list experiment shows no evidence of social desirability bias, majorities are willing to sign a real-stake petition, and global redistribution ranks high in the prioritization of policies. Conjoint analyses reveal that a platform is more likely to be preferred if it contains the GCS or a global tax on millionaires. Universalistic attitudes are confirmed by an incentivized donation. In sum, our findings indicate that global policies are genuinely supported by a majority of the population. Public opinion is therefore not the reason that they do not prominently enter political debates.
    Keywords: Climate change, global policies, cap-and-trade, attitudes, survey
    JEL: P48 Q58 H23 Q54
    Date: 2023–06–20
  44. By: Santhosh, Harikrishnan; Colson, Greg; Mullen, Jeffrey D.
    Keywords: Environmental Economics and Policy, Resource/Energy Economics and Policy, Institutional and Behavioral Economics
    Date: 2023
  45. By: Lint Barrage (ETH Zurich); William Nordhaus (Cowles Foundation, Yale University)
    Abstract: The present study examines the assumptions, modeling structure, and preliminary results of DICE-2023, the revised Dynamic Integrated Model of Climate and the Economy (DICE), updated to 2023. The revision contains major changes in the carbon and climate modules, the treatment of non-industrial greenhouse gases, discount rates, as well as updates on all the major components. The major changes are a significant reduction in the target for the optimal (cost-beneficial) temperature path, a lower cost of reaching the 2 ¡C target, an analysis of the impact of the Paris Accord, and a major increase in the estimated social cost of carbon.
    Date: 2023–02
  46. By: Hrozencik, Robert A.; Rouhi Rad, Mani; Uz, Dilek
    Keywords: Resource/Energy Economics and Policy, Production Economics, Environmental Economics and Policy
    Date: 2023
  47. By: Duro Moreno, Juan Antonio; Giménez-Gómez, José Manuel; Sánchez-Soriano, Joaquín; Vilella Bach, Misericòrdia
    Abstract: The concept of carbon budgets has become a key and effective tool in terms of communicating the existing environmental challenge and monitoring environmental policy, in the context of the Paris agreement. In this sense, the literature has addressed different mechanisms to distribute them by countries/groups according to reasonable distribution principles, among which fairness and efficiency play an essential role. Given the problem of agreeing on indicators by countries, the paper proposes the use of claims models as a basis for this distribution, which avoid using indicators and only have to agree on elements defining the distribution rules. In this sense and based on a reference of the available global Carbon Budget (Mercator) for 2018-2050, and the CO2 forecasts taken from the intermediate scenario SSP2-45 (Middle of the road) considered by the IPCC (2021), different distribution rules are addressed proposed by the literature (equality, proportional, and α-min) and are evaluated for the available groups of countries. Two relevant exercises are proposed beyond the initial distribution based on the previous theoretical rules: first, evaluate the cost of these distributions in terms of the welfare of each group (in particular, in terms of GDP); and two, use the GDP costs themselves to propose new distribution rules that are cost-efficient. The results imply having not only a global cost-efficient distribution proposal but also an annual path. We understand that the work is useful not only in terms of its methodological proposal but also as an alternative guide that structures future distribution policies. Keywords: allocation methods; claims; carbon budgets; climate change mitigation; equity JEL classification: D7; H4; H8; Q58; Q54
    Keywords: Anhídrid carbònic, Canvis climàtics--Mitigació, 502 - Natura. Estudi, conservació i protecció de la natura,
    Date: 2022
  48. By: Francesco Corsello (Bank of Italy); Marco Flaccadoro (Bank of Italy); Stefania Villa (Bank of Italy)
    Abstract: We assess the impact on the Italian industrial sector of the abrupt increase in energy prices and of shortages in the supply of inputs since the early months of 2021, focusing on production and producer prices and conducting a disaggregated analysis. Producer prices in energy- and non-energy-intensive industries had already exhibited different dynamics at the beginning of 2021. The same pattern characterized industrial production only after the spring of 2022. These developments are consistent with the result of firms' responses to bottlenecks and energy supply shocks, as shown by the Bank of Italy’s Business Outlook Survey of Industrial and Service Firms in the second-half of 2022. The majority of firms, which have been affected by higher energy costs or supply bottlenecks, reported having increased their selling prices. Some firms also reduced profit margins and implemented energy-saving measures. Only a small share of firms reported having reduced or discontinued production.
    Keywords: energy prices, producer prices, bottlenecks, industrial production
    JEL: E23 E31 E32
    Date: 2023–06
  49. By: Gendron-Carrier, Nicolas; Gonzalez-Navarro, Marco; Polloni, Stefano; Turner, Matthew A
    Abstract: We investigate the effect of subway system openings on urban air pollution. On average, particulate concentrations are unchanged by subway openings. For cities with higher initial pollution levels, subway openings reduce particulates by 4 percent in the area surrounding a city center. The effect decays with distance to city center and persists over the longest time horizon that we can measure with our data, about four years. For highly polluted cities, we estimate that a new subway system provides an external mortality benefit of about $1 billion per year. For less polluted cities, the effect is indistinguishable from zero. Back of the envelope cost estimates suggest that reduced mortality due to lower air pollution offsets a substantial share of the construction costs of subways.
    Keywords: Climate-Related Exposures and Conditions, Sustainable Cities and Communities, Applied Economics
    Date: 2022–01–01
  50. By: Grafström, Jonas (The Ratio Institute); Poudineh, Rahmat (The Oxford Institute for Energy Studies)
    Abstract: There is an increasing interest in policies that promote invention and diffusion in solar energy technologies. In this paper the question of how does support policies affect inventions and diffusion of solar PV technology and is the effect heterogeneous and counteracting is investigated. The policies investigated are Feed-in-tariffs, Public R&D stock and flow, Environmental tax, and Environmental Policy Stringency Index. A Schumpeterian technological development approach is utilized on a panel dataset covering 23 European countries between 2000 and 2019. Two econometric approaches are employed, a negative binomial regression model is used to assess inventions and a panel data fixed effect regression is used for the diffusion model. The empirical findings suggest that FITs, Public R&D stock and flow, Environmental tax and Environmental Policy Stringency Index have no statistically significant negative effect on either inventions or diffusion. In most cases for invention the policies had a statistically significant positive effect. Policy crowding out does not seem to have been present.
    Keywords: solceller PV; uppfinning; diffusion; Schumpeter; policy
    JEL: Q42 Q48 Q55 Q58
    Date: 2023–06–01
  51. By: Saglam, Ismail
    Abstract: This paper studies the optimal antitrust policies for vertical price restraints in an infinitely-lived non-green supply chain channel that emits air pollution during production. The channel involves a supplier and a retailer that can either engage in sequential (Stackelberg) price competition where the supplier moves first or engage in vertical price coordination where they choose the retail price to maximize their joint profits and choose the wholesale price using the generalized Nash bargaining. We first consider the absence of an antitrust authority and characterize a necessary and sufficient condition for the stability of coordination, which we call internal stability. Then, we characterize the socially optimal antitrust policies. The policies we consider involve the costly auditing of the channel to detect coordination at a fixed probability in each period and a penalty fee charged to the channel members in case coordination is detected. When coordination is internally unstable, it is socially optimal to prevent its formation if the relative abatement cost of collusive emissions is sufficiently large or if the minimum cost of auditing is sufficiently small. In the case where coordination is internally stable, destabilization is also an option for the antitrust authority. In this case, our necessary and sufficient conditions characterizing the optimal antitrust decisions imply that it is socially optimal to destabilize (allow) the vertical price coordination of the channel if both the minimum cost of auditing and the relative abatement cost of collusive emissions are sufficiently small (large) and to prevent it otherwise.
    Keywords: Supply chain; vertical price coordination; vertical price restraints; antitrust policy.
    JEL: D43 L11 L22 L42 Q52
    Date: 2023–05
  52. By: Axelle Arquié; Malte Thie
    Abstract: We explore how, in the French manufacturing sector, producer prices vary with market power during a severe episode of energy price hikes (between January 2020 and February 2023). Our work provides some empirical evidence in favor of a role for firms' market power in explaining inflation, and in favor of the "sellers' inflation" hypothesis (Weber and Wasner 2023): in less competitive sectors, firms could use the energy price hike to increase their prices more than warranted by actual changes in costs. Using a rich dataset on French manufacturing firms' balance sheets, we first estimate markups at the firm-level, and aggregate them at the sectoral level. We then study the response of the producer price index (PPI) to a change in spot energy prices, depending on average market power within sectors. We show that, in sectors with higher markups, prices increase relatively more: in the least competitive sector, firms pass through up to 110% of the energy shock, implying an excess pass-through of 10 percentage points. In addition, we find that the association between markup and pass-through is even higher when markup dispersion is low, consistent with the argument that firms engage in price hikes when they expect their competitors to do the same.
    Keywords: Inflation ;Markups
    JEL: E31 F4 L11
    Date: 2023–06
  53. By: Christian Laudag\'e; Florian Aichinger; Sascha Desmettre
    Abstract: Increased insecurities on the energy markets have caused massive fluctuations of the electricity spot price within the past two years. In this work, we investigate the fit of a classical 3-factor model with a Gaussian base signal as well as one positive and one negative jump signal in this new market environment. We also study the influence of adding a second Gaussian base signal to the model. For the calibration of our model we use a Markov Chain Monte Carlo algorithm based on the so-called Gibbs sampling. The resulting 4-factor model is than compared to the 3-factor model in different time periods of particular interest and evaluated using posterior predictive checking. Additionally, we derive closed-form solutions for the price of futures contracts in our 4-factor spot price model. We find that the 4-factor model outperforms the 3-factor model in times of non-crises. In times of crises, the second Gaussian base signal does not lead to a better the fit of the model. To the best of our knowledge, this is the first study regarding stochastic electricity spot price models in this new market environment. Hence, it serves as a solid base for future research.
    Date: 2023–06
  54. By: García Helena; Fedesarrollo; Alexander González; Marlon, Salazar
    Abstract: El estudio presenta qué es una transición climática justa, los retos que enfrenta Colombia en esta transición, y brinda recomendaciones sobre cómo disenar políticas públicas que ayuden a esta transición.****** Abstract: The study presents what a just climate transition is, the challenges that Colombia faces in this transition, and provides recommendations on how to design public policies that can support it.
    Keywords: Cambio Climático, Transición Justa, Transición Energética, Diseño de Políticas Públicas, Climate Change, Just TransitionEnergy Transition, Public Policy Design
    JEL: Q54 Q58
    Date: 2023–05–31
  55. By: M. Ehyaei; M. Kasaeian (Islamic Azad University, Tehran); Stéphane Abanades (PROMES - Procédés, Matériaux et Energie Solaire - UPVD - Université de Perpignan Via Domitia - CNRS - Centre National de la Recherche Scientifique); Armin Razmjoo (Universitat Politècnica de Catalunya [Barcelona]); Hamed Afshari; Marc Rosen (UOIT - University of Ontario Institute of Technology); Biplab Das (National Institute of Technology [Silchar])
    Abstract: Water scarcity threatens human life and it is likely to be a main concern in the next century. In this work, a novel multigeneration system (MGS) is introduced and assessed with energy, exergy, and economic analyses. This multigeneration system includes a gas cycle, multieffect distillation, an absorption refrigeration cycle, a heat recovery steam generator, and electrodialysis. Electrodialysis is integrated into this configuration to produce sodium hydroxide and hydrogen chloride from brine to prevent its release to the environment with harmful impacts. The other products are electricity, cooling, and demineralized water. For the evaluation of the proposed system, one computer code is provided in engineering equation solver software. For physical properties calculation, the library of this software is used. The MGS produces 614.7 GWh of electrical energy, 87.44 GWh of cooling, 12.47 million m 3 of demineralized water, and 0.092 and 0.084 billion kilograms of sodium hydroxide and hydrogen chloride over a year. Energy and exergy evaluations demonstrate that the MGS energy and exergy efficiencies are 31.3% and 18.7%, respectively. The highest and lowest value of exergy destruction rate is associated with the combustion chamber and pump, respectively. The economic evaluation indicates that the net present value of this proposed system is 3.8 billion US$, while the internal rate of return and payback period respectively are 0.49 and 2.1 years.
    Keywords: Exergy, water shortage, Multigeneration system, Gas cycle, Economic analysis
    Date: 2023–03
  56. By: Liu, Hongxing; Li, Liqing; Long, Dede
    Keywords: Research Methods/Statistical Methods, Marketing, Environmental Economics and Policy
    Date: 2023
  57. By: Chakraborty, Debapriya; Jenn, Alan
    Abstract: Even though plug-in electric vehicles can reduce the problem of greenhouse gas emissions from the transportation sector, externalities like congestion and road damage will exist. Therefore, state transportation agencies will need pricing mechanisms like a per-mile road user charge (RUC) to deal with these externalities while accounting for the transition to an EV-dominated fleet. Focusing on electronic toll collection (ETC) methods, this project aimed to conduct a thorough review of lessons learned from established tolling systems across U.S. states and the tolling system in Singapore and London. Post literature review and expert interviews, a multi-criteria performance framework of different tolling mechanisms was formulated based on criteria such as accuracy of data collection, complexity for regulators and users, compatibility across policy objectives (primarily RUC), and equity.
    Keywords: Business, Law, Social and Behavioral Sciences, Tolling, Road User Charge, Expert Interview, Multi-criteria Analysis
    Date: 2023–06–01
  58. By: Stefanos Tyros; Dan Andrews; Alain de Serres
    Abstract: The need to rapidly decarbonise economies raises questions about whether countries’ workforces possess the requisite skills to achieve the net zero transition as well as the capacity to redeploy workers from “brown” to “green” jobs. This paper applies a task-based framework to granular data from the Occupational Information Network (O*NET) and country-specific employment sources to generate new indicators of the green skills structure of labour markets for a large number of OECD countries and non-OECD EU countries. Significant cross-country differences emerge in the underlying supply of green skill and the potential of economies to reallocate brown job workers to green jobs within their broad occupation categories. In a majority of detailed brown occupations, workers have in principle the necessary skills to transition to green jobs, with the exception of those in production occupations, who may require more extensive re-skilling. In contrast, workers from most highly automatable occupations are generally not found to have the sufficient skills to transition to green jobs, suggesting more limited scope for the net-zero transition to reinstate labour displaced by automation.
    Keywords: green skills, green transition, reallocation
    JEL: J24 J62 J68 J82
    Date: 2023–07–04
  59. By: Xing Shi (School of Economics, Hefei University of Technology); Yujie Zeng (School of Economics, Hefei University of Technology); Yanrui Wu (Business School, The University of Western Australia); Shuai Wang (School of Economics, Hefei University of Technology)
    Abstract: This paper investigates the reverse green innovation spillovers of outward foreign direct investment (OFDI) in Chinese multinational companies and how environmental regulation stringency in host countries moderates the relationship between OFDI and green innovation. The empirical analysis is based on an integrated dataset of publicly listed firms from 2008 to 2018. The findings demonstrate a significantly positive relationship between OFDI and the green innovation performance of multinational companies. It is also shown that environmental regulation stringency in host countries positively moderates the relationship between OFDI and green innovation. Further analysis reveals the variation of the findings across multinational companies in host countries at different development stages, with different ownership and in industries with different pollution intensities. The observations in this paper imply that the institutional environment of investment destinations matters for reverse technology spillovers, particularly reverse green technology spillovers from OFDI.
    Keywords: Outward foreign direct investment, Green innovation, Environmental regulation stringency, Chinese multinational companies
    JEL: F21 O30 Q55
    Date: 2023
  60. By: Simon Johnson; Lukasz Rachel; Catherine Wolfram
    Abstract: In December 2022, following Russia’s invasion of Ukraine, a G7-led coalition of countries imposed a $60 per barrel price cap on the sales of Russian oil that use western services. This paper provides a theoretical and quantitative analysis of this new tool. We build a tractable equilibrium model in which the financially constrained exporter of a non-renewable resource optimally exerts market power, and the price of the resource varies stochastically. An important insight from this framework is that the supply curve is inelastic and can even be downward sloping, rationalizing the patterns we observe in the data. Contrary to the fears that an introduction of the price cap will cause a damaging oil supply shock, the exporter may have strong incentives to increase extraction following the introduction of a binding price cap. In fact, when the producer is large and has market power, a price cap that applies to all or most sales significantly limits the degree to which market power is used in equilibrium and stabilizes world oil prices. But if the cap is poorly enforced, or if the sanctioned state has access to a non-compliant “shadow” fleet, the cap is less effective at stabilizing world prices.
    JEL: F51 L13 L71 Q41
    Date: 2023–06
  61. By: Hinsche, Isabelle Cathérine; Klump, Rainer
    Abstract: In order to reach climate neutrality by 2050, the European Union is taking action in the form of extensive sustainability regulations with the aim to push the private sector towards sustainable economic activities. In this context, a new instrument to finance a company's sustainability transition has been developed: the sustainability-linked bond (SLB). This paper analyzes the SLB market's efficiency in attracting those companies that are most crucial for a successful sustainability transition, namely carbon-intensive companies and companies that are lagging behind in their sustainability transition, defined as ESG laggards. By developing a conceptual framework for the SLB market and running a probit and logit regression estimation, this paper shows that the SLB market efficiently attracts carbon-intensive companies, but fails to attract ESG laggards. Moreover, the paper identifies four success factors for the SLB market to improve its future accessibility and credibility.
    Keywords: Sustainable Finance, Sustainability-Linked Bonds, Transition Financing, Sustainable Investing, ESG, Market Efficiency
    JEL: C25 G10 G14 G18 G38 Q01 Q58
    Date: 2023
  62. By: Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Qiang Ji (Institutes of Science and Development, Chinese Academy of Sciences, Beijing, China; School of Public Policy and Management, University of Chinese Academy of Sciences, Beijing, China); Christian Pierdzioch (Department of Economics, Helmut Schmidt University, Holstenhofweg 85, P.O.B. 700822, 22008 Hamburg, Germany); Vasilios Plakandaras (Department of Economics, Democritus University of Thrace, Komotini, 69100, Greece)
    Abstract: We examine the predictive value of expected skewness of oil returns for the corresponding realized volatility using monthly data for the entire modern history of the oil industry, covering 1859:11 to 2023:04. We utilize a quantile predictive regression model, which is able to accommodate nonlinearity and structural breaks. In-sample results show that the predictive impact of expected skewness on realized volatility can be both positive and negative, with these signs contingent on the quantiles of realized volatility. Moreover, we detected statistically significant forecasting gains that arise at the extreme ends and around the median of the conditional distribution of realized volatility, at 1-, 3-, 6- and, particularly, 12-month-ahead horizons. Our results have important implications for academics, investors and policymakers.
    Keywords: Oil Returns, Expected Skewness, Realized Volatility, Quantile Regression, Forecasting
    JEL: C22 C53 Q02
    Date: 2023–06
  63. By: ITF
    Abstract: This publication examines the potential of novel fuels to decarbonise aviation and maritime shipping. Fuels like hydrogen, ammonia and synthetic hydrocarbons can be produced from renewable sources. They could also be easier to deploy than other emerging low- and zero-carbon technologies. Yet many uncertainties exist around scaling up their use. These include cost, infrastructure needs, operational requirements and health impacts. The publication reviews the latest understanding of the production and use of novel fuels in the shipping and aviation sectors and highlights the policy requirements needed to accelerate their adoption.
    Date: 2023–01–24
  64. By: Diego A. Comin; Johannes Rode
    Abstract: We estimate the causal effect of the diffusion of solar photovoltaic (PV) systems on the fraction of Green Party votes in federal and state elections in Baden-Württemberg, Germany. Our estimates are based on instruments that induce exogenous variation in roof appropriateness to PV installation. We find that PV adoption had a strong positive effect on Green Party votes. The effect is connected to the direct engagement of households with the PV system and does not reflect reciprocity to economic gains from PV. Our estimates likely reveal changing attitudes towards environmentally friendly values after adopting PV produced by cognitive dissonance.
    JEL: O14 O33 Q48 Q58
    Date: 2023–06
  65. By: Sakai Ando (IMF); Chenxu Fu (University of Tokyo); Francisco Roch (IMF/UTDT); Ursula Wiriadinata (IMF)
    Abstract: This paper assembles a comprehensive sovereign green bond database and estimates the sovereign greenium. The development of green bond markets has been one of the most important financial breakthroughs in the domain of sustainable finance during the last 15 years. A central benefit associated with green bonds has been that they exhibit a positive green premium (greenium), i.e., a lower yield relative to a similar conventional bond. Yet, issuances at the sovereign level have been relatively recent and not well documented in the literature. We find that green bonds are issued at a relatively small premium (4 basis pointson average) in Advanced Economies. Yet, importantly, the greenium is growing over time and is considerably larger (11 basis points on average) for Emerging Market Economies.
    Keywords: Green bonds, Sustainable finance, Financial innovation, Sovereign debt, Greenium, Climate change.
    JEL: F34 G15 H63 Q01 Q58
    Date: 2023–06
  66. By: Anna Pechan; Gert Brunekreeft; Martin Palovic
    Abstract: This article presents an approach to minimize the outage costs during power supply disruptions and, thus, to incentivize efficient resilience investment by network users. The central problem to be solved is the information asymmetry between network operators and network users on outage and backup costs. We present an auction of priority positions among network users based on the Vickrey-Clarke-Groves mechanism, using a numerical example, to solve the problem. Under the mechanism, each winning bidder pays for the externality exerted on the other bidders by holding a certain position, excluding her own bid, which induces truthful bidding. Minimizing the damage from power supply interruptions, the mechanism improves the resilience of the power system not only in the short term but also in the long term.
    Keywords: resilience, electricity, network, regulation, auction
    JEL: D44 K23 L94
  67. By: Etienne, Xiaoli L.; Durongkadej, Isarin; Scarcioffolo, Alexandre
    Keywords: Risk and Uncertainty, Resource/Energy Economics and Policy, International Development
    Date: 2023
  68. By: Sandström, Christian (The Ratio Institute); Alm, Carl (The Ratio Institute)
    Abstract: Environmental policy is no longer about imposing regulations on industry but is increasingly regarded as industrial policy. Both the EU and national governments are taking more active roles in initiating “green deals” and various technologies aimed to result in sustainable development. In this chapter we describe and discuss some recent experiences of green innovation policies. Historical examples concerning efforts in both biogas and ethanol are combined with a more contemporary description of “fossil free” steel, i.e. steel made by using hydrogen instead of coal. We argue that the presence of large public funds from different funding bodies such as the EU, various government agencies and municipalities has distorted incentives, making it rational for firms to pursue technologies without long term potential. The result has been an absence of sustainable development, mounting debt and financial problems for those actors that have been involved. We explain these results and draw policy conclusions concerning the risks related to green deals. Relatedly, we argue that the EU’s current efforts into hydrogen gas face similar challenges.
    Keywords: Green deal; biogas; policy failure; entreprenörsstat; riktning
    JEL: O25 O31 O38 O44 Q42 Q55
    Date: 2023–06–13
  69. By: Tony Harding; Juan Moreno-Cruz; Martin Quaas; Wilfried Rickels; Sjak Smulders
    Abstract: Projections of climate change damages based on climate-econometric estimates suggest that, without mitigation, global warming could reduce average global incomes by over 20% towards the end of the century (Burke et al., 2015). This figure significantly surpasses climate damages in Integrated Assessment Models (IAMs). For example, global climate damages obtained with the seminal DICE model are just a 7% reduction in output (Nordhaus, 2018). Here, we show that the discrepancy between the projections can be resolved by accounting for growth convergence in a climate-econometric approach that is consistent with the macroeconomic models underlying most IAMs. By re-estimating the global non-linear relationship between temperature and country-level economic growth, our convergence-consistent projections reveal that under an unmitigated warming scenario, global climate damages amount to 6%.
    Keywords: climate change, economics growth, convergence, integrated assessment models
    JEL: O40 O44 Q54 Q55 Q56
    Date: 2023
  70. By: Yannis Dafermos (Department of Economics, SOAS University of London)
    Abstract: In recent years, private and public financial institutions have increasingly focused on addressing the implications of the climate crisis. However, existing efforts to align the financial system with climate change suffer from a significant limitation: they exacerbate global climate injustice. In this paper, I identify several climate finance injustice channels and explain how these can be addressed via the development of a 'climate just financial system'. I define the latter as a system whereby climate justice criteria are incorporated into the policies governing public and private financial institutions, and the financing of private and public climate spending is in line with the principle of common but differentiated responsibilities and respective capabilities. A climate just financial system has three key elements: (i) differentiated climate responsibilities for global North and global South financial institutions, with the latter primarily focusing on climate adaptation and the former prioritising climate mitigation; (ii) climate justice stabilising mechanisms that establish a permanent commitment by global North countries to provide climate financing support to global South countries without making the latter more financially vulnerable; and (iii) the incorporation of climate justice criteria in the design and use of climate mitigation tools by global North financial institutions. Creating a climate just financial system requires significant transformations in multilateral financial mechanisms, public banking, central banking, financial regulation and private financial institutions. Although these transformations would face political and technical challenges, they can potentially be overcome if climate justice gets centre stage in the climate policy agenda.
    Keywords: climate justice, climate-aligned development, central banking, public banking, climate finance, global financial architecture
    JEL: D63 E50 Q01 Q54
    Date: 2023–06
  71. By: Edward Mateosian
    Abstract: We attempt to record the imprint of air pollution on economic growth and vice versa, the tendency of economic growth on air pollution. The variables examined in our study are the Particulate Matter Lower than 2.5 micro, GDP per capita, GDP per working hour, Unemployment, Part of the budget for the health sector, Expenditures for medical care, Average annual temperature and Average annual precipitation. The databases used are OECD and World Bank and the data consist of OECD countries. After specification tests, the methodology consists of three specifications to produce robust results and to compare them consistently: panel data with fixed, random and pooled OLS, Difference and System GMM estimators, and the augmented mean value (AMG) estimator. The result is ambiguous as in some cases pollution seems to have a positive relationship with economic growth and in other cases their relationship is negative. On the contrary, the economic product always has a positive effect on air pollution.
    Keywords: Air pollution, economic growth, augmented mean value estimator, panel data.
    JEL: F43 Q52 Q53
    Date: 2023–06–03
  72. By: Antoine GODIN; Devrim YILMAZ; Jhan ANDRADE; Santiago BARBOSA; Diego GUEVARA; Gustavo HERNANDEZ; Leonardo ROJAS
    Abstract: This paper aims to understand the long-term consequences for the Colombian economy of a global low-carbon transition. The paper proposes an empirical Stock-Flow Consistent model for Colombia, encompassing relevant dynamics for the economy: details regarding the trade balance such as fossil fuel exports or propensities to import out of consumption, intermediate goods or capital goods, dependency to international financial flows to cover a trade balance deficit, and more generally financial feedback loops for all institutional sectors. We envisage different scenarios regarding fossil fuel exports and show the dramatic impacts that Colombia could face in the case of a rapid decline in such exports. We then consider policy responses consisting in industrial policies to diversify the export base and show they can help mitigate the Colombian vulnerabilities but only after a certain period of time indicating the urgency of implementing such policies in Colombia.
    Keywords: Colombie
    JEL: Q
    Date: 2023–06–09
  73. By: John Muellbauer
    Abstract: A green land value tax can resolve conflicts between meeting climate goals, and equity and housing affordability, reducing intergenerational injustice. Land prices, reflected in house prices, relative to incomes are near all-time records, pricing younger citizens out of home-ownership and affordable rents. The OECD confirms that annual property taxes linked to recent market values improve macroeconomic stability and long run rates of growth. The green LVT – effectively a split-rate property tax- would consist of a charge on the land plus a charge on the building minus a discount depending on its energy usage. Regular revaluations discourage speculation and avoid cliff-edge changes. To protect cash-poor but land-rich households, everyone would have the right to defer the tax. To avoid complex interest charges, the tax authority would register a proportionate claim at the Land Registry equal to the unpaid tax for each year deferred, settled on the property’s transfer or sale.
  74. By: Easthope, Hazel; Palmer, Jasmine; Sharam, Andrea; Nethercote, Megan; Pignatta, Gloria; Crommelin, Laura
    Abstract: This research investigates how Australia can supply new and retrofit older apartments so that they are sustainable, that is they are comfortable; deliver cost reductions for householders while minimising consumption and waste; and maximise energy efficiencies and energy management, both in their construction and throughout their lifecycle (including through the adoption of renewable energy technologies). There is demand from residents for more sustainable apartments but speculative strata titled development means what gets built is not necessarily what consumers want. One key problem is that there are different stakeholders between the development and use phases of the building lifecycle. Design and construction decisions, impacting sustainability, are made by the speculative developer whose priorities for short-term project success differ from those of long-term residents, often perceiving sustainability features as value-add items rather than essential attributes of apartment buildings. There are also issues for owners considering retrofitting building for sustainability, including that they often only prioritise immediate issues (such as repairs and maintenance) and do not have the capacity to allocate time to forward planning, including planning for sustainability retrofits. Successful sustainable retrofits in strata buildings need to be driven either by an individual owner champion or a sustainability sub-committee made up of interested owners. The research identified six key shifts that are needed in order to produce more sustainable apartments: development teams embed sustainability in project feasibility; the design and construction of delivered apartment buildings reflects what was designed and approved; property valuation reflects building performance; the potential benefits of physical inter-dependence and shared services are realised; consumers have access to adequate information about building performance; and sustainability initiatives influence all joint decision-making.
    Date: 2023–06–07
  75. By: Destek, Mehmet Akif; Sinha, Avik; Özsoy, Ferda Nakıpoglu; Zafar, Muhammad Wasif
    Abstract: It is extremely difficult for emerging economies to achieve the Sustainable Development Goals (SDGs), and in order to close this policy gap, a comprehensive policy framework is needed. The purpose of this research is to determine the proportional impacts of domestic and foreign capital to environmental degradation in newly industrialized nations (NICs). For this reason, panel data methodology is used to evaluate, for the years 1991 to 2018, how the ecological footprint is affected by stock market capitalization, foreign direct investment, economic growth, urbanization, and energy intensity. Using the squared terms of stock market capitalization and foreign direct investment, respectively, it is also looked at whether domestic and foreign capital may have non-linear effects on the environment. According to the empirical findings, whereas local capital growth worsens the environment, increasing international capital prevents environmental degradation. There is an inverted U-shaped link between domestic capital and environmental degradation in the event of non-linearity, but foreign capital has a monotonically declining effect on environmental degradation. Additionally, it has been discovered that while using more non-renewable energy causes more environmental deterioration, using more renewable energy improves the quality of the environment. The study outcomes are utilized to design a policy framework to address the objectives of SDG 7, SDG 11, and SDG 13.
    Keywords: Foreign Direct Investment, Stock Market, Ecological Footprint, Environmental Degradation
    JEL: Q5
    Date: 2023–02–06
  76. By: Sean Dougherty; Andoni Montes Nebreda
    Abstract: This paper investigates the role of fiscal federalism in driving ecological transition, a key challenge in the United Nations’Sustainable Development Goals agenda. The ecological transition seeks a sustainable society that prioritises naturalresource preservation and reduces environmental impacts. The study investigates the link between fiscal federalism institutionsand ecological transition policies, focusing on regional and local governments’ role in implementing environmental goals. Despitesubnational governments’ commitment to green objectives, comprehensive plan implementation has been limited due tolocal governments’ incentive schemes and capacity constraints. The paper examines the potential of fiscal federalism institutions, such as fiscal rules, transfers and capacity-building programs, to support ecological transition policies. The research emphasises engaging regional and local governments in the green agenda and highlights the need for tailored approaches in multi-level fiscal governance to effectively achieve environmental goals. By investigating fiscal federalism’s potential contribution to ecological transition, the paper offers valuable insights for policymakers addressing environmental challenges through a multi-level governance approach.
    Keywords: ecological transition, environmental goals, fiscal federal institutions, fiscal federalism, green agendas
    JEL: H23 H77 Q57
    Date: 2023–06–26
  77. By: Choi, Junseok (Korea Institute for Industrial Economics and Trade); Lee, Juneyoung (Korea Institute for Industrial Economics and Trade)
    Abstract: In response to the rapidly changing industrial landscape amid the Fourth Industrial Revolution (4IR), net-zero race, and aging industrial infrastructure, the Korean government has designated 15 outdated industrial complexes as Smart-Green Industrial Complexes (SGICs) since 2019. Despite the Yoon Suk-yeol government has declared its commitment to SGIC policy continuation, a dearth of research has produced only scant evidence of the policy’s continued implementation. As three years have passed since the introduction of the SGIC policy, it is now time to analyze its effects and establish a strategy to enhance SGICs nationwide. This study analyzes the necessity of the SGIC policy from microeconomic and environmental-economic perspectives. Smartization, in theory, helps firms maximize productivity and profits by enabling them to produce more goods and services at the same cost (or less), contributing to the Pareto-optimization of the economy as a whole. Furthermore, SGICs provide tenant firms with energy-saving infrastructure, contributing to emissions reductions and allowing firms to share in the benefits of agglomeration. Firms at designated SGICs experienced a 6.13 percent increase in output, a 6.88 percent increase in exports, and an 8.91 percent increase in labor productivity from the first quarter of 2019 (Q1 2019) to Q2 2022. Our propensity score matching (PSM) and difference-in-difference (DID) analysis also confirms (at a significance level of one percent), that small and medium-size (SMEs) tenant firms subject to independent auditing generated roughly 2.5 percentage points more in average annual revenue and one percentage point more in operating margin (that is, the operating income-to-revenue ratio) than comparable enterprises not located in SGICs. Based on these findings, we propose a network structure for the efficient operation of SGICs, including not only the 10 leading industries the Korean government actively encourages joining SGICs but also other SGIC-related projects at public agencies. Our menu of necessary policy support measures presents a roadmap for the evolution of SGICs along with key performance indicators (KPIs) for effective performance management at these complexes. Finally, we recommend that the Korean government match the investments made by cluster unions from the Industrial Complex Environment Improvement Fund to encourage private sector investment.
    Keywords: industrial complexes; industrial clusters; industrial agglomeration; agglomeration effects; Industry 4.0; smart industrial complexes; smart-green industrial complexes; productivity; Pareto-optimization; network effects; industrial complex policy; Korea
    JEL: D22 D23 D24 D25 L52 L53 L59 O31 O38
    Date: 2023–01–31
  78. By: Zehui, Zhao
    Abstract: This article critically examines the existing literature on pro-environmental behavior, focusing on essential theories, empirical evidence, and cross-disciplinary implications. The study delves into the influence of individualistic, societal, and circumstantial factors in shaping pro-environmental behaviors, drawing insights from prominent theoretical models. Moreover, it thoroughly examines the effectiveness of economic incentives and non-market approaches in stimulating pro-environmental activities, emphasizing the need for integrating behavioral economics and social psychology within the field of environmental studies. The paper concludes by identifying potential areas for future research, including the role of digital technologies, climate change communication, and social networks in fostering sustainable societies. The primary objective of this study is to equip researchers and practitioners with the necessary knowledge to develop effective strategies for promoting sustainability.
    Date: 2023–06–14
  79. By: Cho, Eun Kyo (Korea Institute for Industrial Economics and Trade); Shim, Woojung (Korea Institute for Industrial Economics and Trade)
    Abstract: In 2022 the US Congress passed the Inflation Reduction Act (IRA). This law aims to reduce American dependency on Chinese batteries and reorder the global supply chain in America’s favor by excluding electric vehicles containing any minerals, materials, or parts sourced from China from federal new car subsidies. In response, China has launched a strategy to strengthen its secondary battery supply chain, leveraging its superiority in all aspects of the chain, including raw materials procurement and cell manufacturing. China’s strategy rests on three core pillars: 1) Internalizing or localizing advanced technologies, 2) globalizing China’s supply chain and increasing investment abroad, and 3) reinforcing the security of its supply chains of raw materials, particularly the supply chains for core minerals. For now, the intensifying US-China rivalry and growing divide in the global supply chain of secondary battery industries presents new opportunities for the Korean battery industry. However, China is determined to bolster its battery technologies and continue to invest abroad; this poses substantial challenges to the Korean battery industry. The Korean secondary battery industry now stands at a crossroads of risks and opportunities, brought about by the widening gaps in the global supply chain and China’s strategy to supercharge its battery industry. Korean policymakers must work to maintain Korea’s technologically superior position by investing in advanced battery research and by establishing a technological alliance with Japan, Germany, and the United States. Korea must also diversify its core minerals supply chains through using the Indo-Pacific Economic Framework, and increase its shares in European, Southeast Asian, and other markets worldwide. It should also look to cooperate with China where possible in order to secure an edge over competitors in emerging markets.
    Keywords: batteries; secondary batteries; energy storage solutions; US-China rivalry; technology hegemony; economic security; supply chains; technology localization; raw materials; industrial competition; technology competition; US; China; Korea
    JEL: F51 F52 F62 L60 L65 L72 L78 Q02 Q34
    Date: 2023–01–31
  80. By: Joshi, Shruti; Nath, Siddhartha; Ranjan, Abhishek
    Abstract: The conventional estimate of technological progress and aggregate productivity growth, the total factor productivity, or TFP, can be upwardly biased if environmental externalities generated during the production processes are not accounted for. In this paper, we revisit TFP growth rates across 146 countries in the world between 1990 and 2019 after accounting for their CO2 emissions. The Global Malmquist-Luenberger Productivity Index suggests that although India’s conventional TFP growth stands out to be one of the highest globally, especially since 2000, India’s average annual Green TFP growth is lowest, at almost zero per cent since 2000. Our estimates suggest that mostly the OECD countries may have maintained substantial progress in terms of green TFP, whereas the emerging economies in East and Southeast Asia may also be significantly lagging. While the policy tools in India are converging towards the advanced economies, our estimates suggest that India’s relative position has improved in terms of Green TFP growth in recent years.
    Keywords: Green Total Factor Productivity; Directional Distance Function; Global Malmquist–Luenberger Index
    JEL: C43 D24 Q54
    Date: 2023–01–01
  81. By: Sejas Portillo, Rodolfo
    Abstract: I study the effects of weather conditions on the economic valuation of energy-efficiency (EE) in the UK housing market. The benefits of EE features depend directly on the expected weather over the ownership time frame (e.g. insulation for maintaining heat during cold periods). However, due to its notorious unpredictability, current weather conditions provide little to no additional information about future weather conditions (beyond common knowledge such as seasonal temperatures). Using transaction-level data of over 5 million residential property sales in England and Wales, I find that weather conditions on the month the buying decision is made can disproportionately influence the EE valuation of properties: During rough weather (i.e. cold and rainy) the EE rating of a property has a stronger influence on its sale price than during favourable weather (i.e. warm and dry). I show that these results are unlikely to be driven by energy-cost optimisation or self-selection behaviour. The consistency of the results with intuitive predictions (in the UK the benefits of EE are much higher during rough weather) highlights their importance: People understand the benefits of EE yet make biased intertemporal valuations. I model and discuss psychological biases as the most likely mechanisms and find that salience appears to have the stronger effect. I also present a novel extension to the regression-kink design (RDK) for identifying and estimating the treatment effect when the running variable also moderates the effect of another variable (via interaction). I conclude with policy recommendation.
    JEL: D91 R31 Q41
    Date: 2023–06–01
  82. By: J. Hidalgo-Crespo (UG - Universidad de Guayaquil); C.M. Moreira (ESPOL - Escuela Superior Politécnica del Litoral [Guayaquil]); F.X. Jervis (ESPOL - Escuela Superior Politécnica del Litoral [Guayaquil]); M. Soto (UDC - University of A Coruña); J.L. Amaya (ESPOL - Escuela Superior Politécnica del Litoral [Guayaquil]); L. Banguera (UG - Universidad de Guayaquil)
    Abstract: Plastic industry is ubiquitous worldwide, and the generation of "plastic waste" has been steadily increasing to the point of being considered a high impact pollutant. The expanded polystyrene (EPS) plastic industry aware of the issue is interested on trying recycling post-consumer material. Through a recent study made in an alliance between the private sector and the academy, the feasibility of the EPS "mechanical" recycling was proven; therefore, a possible solution through a circular economy model. The aim of the present paper was to investigate the potential environmental impacts avoided by the circular economy scenario previously developed, through a life cycle assessment (LCA) performed for the city of Guayaquil, where 64% of all the plastic manufacturing industries in the country are located. The entire life cycle of 1.00 kg of 5 × 5 inch. food containers were assessed from the production stage until its end-of-life stage: focusing on three different valorization paths, circular economy closed-loop (container-to-container) proposal with electricity share of 2019 and another with the 2027 future one, and traditional linear economy (container-to-landfill). Results showed that the scenario C that considers the recycling of post-consumer EPS waste and the electricity share proposed for 2027 have lower impacts in 14 out of 16 categories, in specific for the Land use (−31%), Ozone Depletion (−28%), Acidification (−24%) and Terrestrial and Marine Eutrophication (−21%). These results strongly suggest that the recycling of these kind of plastic waste could benefit the environment greatly.
    Keywords: Recycling, Single-use plastics, Expanded polystyrene (EPS) waste, Circular economy, Life cycle assessment (LCA), Renewables
    Date: 2022
  83. By: Financial Markets Department (Bank of Japan)
    Abstract: There is an increasing recognition that financial markets should play a greater role in terms of financial intermediation to expedite efforts in tackling climate change. Specifically, financial markets are expected to support industries' efforts to address climate change by pricing risks and opportunities arising from climate change (climate-related risks and opportunities) into financial instruments such as stocks and corporate bonds. This integration, combined with providing a more favorable environment for the issuance of climate change-related ESG bonds, would facilitate funding and investments in this area. Last year, the Bank of Japan launched the Market Functioning Survey concerning Climate Change. The objective of this survey was to evaluate the functioning of Japanese financial markets in relation to climate change and gain insights into challenges that need to be addressed for further improvement. This year, the Bank conducted the second round of the survey, involving more entities. The questionnaire for the second survey was distributed to 816 entities including issuers, investors, financial institutions, and rating agencies. This marks an increase from the first survey, which reached 663 entities. Of the distributed questionnaires, 380 entities provided responses, indicating a response rate of 47 percent. In comparison, the first survey received responses from 290 entities, resulting in a response rate of 44 percent. Similar to the findings of the first survey, respondents in the second survey viewed that climate-related risks and opportunities were priced into both the stock and corporate bond markets in Japan to a certain degree. At the same time, there was still perceived potential for further incorporation of these factors in the markets. To enhance the incorporation of climate-related risks and opportunities into market prices, many respondents raised issues regarding the availability of information and the assessment methodologies for evaluating these factors. The former included "enhancing and/or standardizing information disclosure" and "bridging data gaps on climate-related data, " while the latter included "improving transparency in ESG evaluation" and "further developing analysis methodologies." Additionally, "increasing investors and/or issuers that place a high value on climate-related risks and opportunities" was reiterated, echoing issues raised in the first survey. That being said, the results of the second survey implied positive changes in certain areas. For instance, continuous respondents, who participated in both the first and second surveys, reported that climate-related risks and opportunities were better priced in corporate bonds compared to the time of the first survey. Additionally, although the proportion of respondents raising issues about the availability of information such as "enhancing and/or standardizing information disclosure" remained high, it decreased slightly compared to the first survey. These findings align with the responses to an open-ended question, where many respondents highlighted changes that took place in the past 12 months. These changes included advancements in the development of climate-related disclosure standards, the introduction of mandatory disclosure requirements for certain items, and progress in discussions surrounding transition finance. Market stakeholders have demonstrated their commitment to addressing the issues highlighted in the survey and have been actively working towards the development of the market. In line with this, the Bank will continue conducting the survey, improving its contents, and providing information on the state of market functioning related to climate change, as well as highlighting future challenges. Furthermore, the Bank aims to contribute to the advancement of financial markets by not only monitoring developments outside of Japan but also conducting additional research and analyses on the functioning of financial markets in relation to climate change. Additionally, the Bank will engage in communication and coordination with relevant stakeholders to foster the development of market infrastructure in this domain.
    Date: 2023–06–30
  84. By: Majeed, Fahd; Khanna, Madhu; Miao, Ruiqing; Kaiyu, Guan; Kent, Jeffery
    Keywords: Agricultural and Food Policy, Resource/Energy Economics and Policy, Risk and Uncertainty
    Date: 2023
  85. By: Maihold, Günther
    Abstract: The traditional image of Latin America as a troubled region seems to continue even after the Covid-19 crisis, this time in the wake of the war in Ukraine and the sanctions imposed by the West. Inflationary pressures, budget deficits and the danger that broad sections of the population will slip into poverty are fuelling negative scenarios. There are initial indications that some countries are already experiencing payment difficulties. Demands from Latin American governments for debt relief or the renegotiation of foreign debt are being put on the agenda as part of a reorientation of the development model towards sustainability and climate protection criteria. This requires a far-reaching structural change, away from the traditional commodity-based economies and towards an environmentally and socially compatible development path. Germany and Europe must also shift course by contributing to the conservation of natural resources and not just to their exploitation.
    Keywords: Latin America, economic development model, sustainability, climate protection, Just Transition, inflationary pressures, budget deficits
    Date: 2023
  86. By: Maëlan Le Goff; Paul Vertier
    Abstract: Afin de renouer avec une croissance robuste et inclusive, l’Afrique du Sud devra parvenir à mettre en oeuvre une politique de transition énergétique juste ambitieuse.Les performances économiques sud-africaines, mitigées depuis une quinzaine d’années, se sont sensiblement dégradées depuis fin 2022. En dépit de ses fondamentaux démocratiques solides, de son système financier robuste et de son économie diversifiée, l’Afrique du Sud a connu depuis la fin des années 2000 une croissance atone, des taux d’investissement peu élevés, une hausse de l’endettement public, et une stagnation du niveau vie de la population. Si ce faible dynamisme de l’économie sud-africaine reflète une accumulation de contraintes structurelles d’autres facteurs ont récemment aggravé la situation. D’une part, les conséquences économiques de la pandémie de Covid-19 ont été particulièrement sévères dans le pays, d'autre part, ce dernier fait face depuis plusieurs mois à une aggravation de la contrainte énergétique.
    Keywords: Afrique du Sud
    JEL: E
    Date: 2023–06–20
  87. By: Michael J. Keen (International Monetary Fund (IMF), 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: The international tax treatment of multinationals has fallen into disrepute. Over the last few years, the 140 or so members of the G20/OECD-led Inclusive Framework have put considerable effort into finding ways to fix it. In a recent paper, my co-authors and I explore alternative arrangements — 'Residual Profit Allocation' — that have been proposed to bring the system back to some coherence. And (while we do not claim causality) those arrangements have strong similarities with those that have now secured wide political agreement.
    Abstract: Le traitement fiscal international des multinationales est tombé en discrédit. Au cours des dernières années, les quelque 140 membres du cadre inclusif dirigé par le G20 et l'OCDE ont déployé des efforts considérables pour trouver des moyens d'y remédier. Dans un article récent, mes coauteurs et moi-même explorons des arrangements alternatifs - "l'allocation des bénéfices résiduels" - qui ont été proposés pour ramener le système à une certaine cohérence. Et (bien que nous ne prétendions pas qu'il y ait un lien de cause à effet), ces arrangements présentent de grandes similitudes avec ceux qui ont aujourd'hui obtenu un large accord politique.
    Keywords: International taxation, Multinationals, Tax coordination, Taxation internationale, Multinationales, Coordination fiscale
    Date: 2023–03–27
  88. By: Daniel Grainger
    Abstract: A dynamic model is constructed that generalises the Hartwick and Van Long (2020) endogenous discounting setup by introducing externalities and asks what implications this has for optimal natural resource extraction with constant consumption. It is shown that a modified form of the Hotelling and Hartwick rule holds in which the externality component of price is a specific function of the instantaneous user costs and cross price elasticities. It is demonstrated that the externality adjusted marginal user cost of remaining natural reserves is equal to the marginal user cost of extracted resources invested in human-made reproducible capital. This lends itself to a discrete form with a readily intuitive economic interpretation that illuminates the stepwise impact of externality pricing on optimal extraction schedules.
    Date: 2023–06
  89. By: Lubos Pastor; Robert F. Stambaugh; Lucian A. Taylor
    Abstract: We estimate financial institutions' portfolio tilts that relate to stocks' environmental, social, and governance (ESG) characteristics. We find ESG-related tilts totaling 6% of the investment industry's assets under management in 2021. ESG tilts are significant at both the extensive margin (which stocks are held) and the intensive margin (weights on stocks held). The latter tilts are larger. Institutions divest from brown stocks more by reducing positions than by eliminating them. The industry tilts increasingly toward green stocks, due to only the largest institutions. Other institutions and households tilt increasingly toward brown stocks. UNPRI signatories tilt greener; banks tilt browner.
    JEL: G11 G23
    Date: 2023–06
  90. By: Yao, Shiyue; Larson, Justin; Baker, Justin S.; Ohrel, Sara B.; Steller, John; Bean De Hernandez, Alison
    Keywords: Environmental Economics and Policy, Resource/Energy Economics and Policy, Research Methods/Statistical Methods
    Date: 2023
  91. By: Mr. David Coady; Samir Jahan; Fabiana Machado; Mengfei Gu
    Abstract: The setting of public utility prices involves balancing various competing government policy objectives, from equity concerns to ensuring the financial sustainability of providers and balancing public finances. In practice, public utility pricing often departs significantly from government objectives and tends to be characterized by unnecessarily complex price schedules, below cost-recovery tariff rates, and sectoral inefficiencies that contribute to large fiscal costs. Countries commonly embark on utility pricing reform in response to these heavy fiscal pressures. The paper discusses various reform options available to governments, with a focus on residential pricing schedules, highlighting their fiscal, financial, redistributive, and efficiency implications.
    Keywords: Public utility pricing; efficiency; equity; fiscal sustainability; subsidy reform
    Date: 2023–06–02

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