nep-ene New Economics Papers
on Energy Economics
Issue of 2023‒07‒24
fifty-six papers chosen by
Roger Fouquet
National University of Singapore

  1. Does pricing carbon mitigate climate change? Firm-level evidence from the European Union emissions trading scheme By Mirabelle Muûls; Jonathan Colmer; Ralf Martin; Ulrich J. Wagner
  2. Optimal Solar Subsidies By Mark Colas; Emmett Saulnier
  3. Comparative Investment Analysis of Wind and Nuclear Energy: Assessing the Impact of Changes in the Electricity Mix and Required Government Support for Investment Parity By Qu, Chunzi; Bang, Rasmus Noss
  4. De-Fueling Externalities: How Tax Salience and Fuel Substitution Mediate Climate and Health Benefits By Pier Basaglia; Sophie Behr; Moritz A. Drupp
  5. Aviation Fuels – Exploring Low Carbon Options Under Current Policy By Witcover, Julie PhD; Murphy, Colin PhD
  6. Energy price increases and mitigation policies: Redistributive effects on Italian households By Andrea Bonfatti; Elena Giarda
  7. Prices vs. Taxes: Evidence from household fuel consumption in India By Mitra, Sanjukta; Agarwal, Sandip K.
  8. Price elasticity of electricity demand: Using instrumental variable regressions to address endogeneity and autocorrelation of high-frequency time series By Silvana Tiedemann; Raffaele Sgarlato; Lion Hirth
  9. Food Commodity Price Movements: Disentangling the Role of Energy Prices and Supply-Demand Fundamentals By Baffes, John; Etienne, Xiaoli L.
  10. A New Deal in Rural Electrification: A National Plan By Norcross, T. W.
  11. Energy poverty - New insights and analysis for improved measurement and policy By MENYHERT Balint
  12. Energy poverty – New insights for measurement and policy By MENYHERT Balint
  13. Peer Effects in Climate Change Beliefs By Zhao, Xialing; Fan, Linlin; Xu, Yilan
  14. Germans’ Concerns about Climate Protection By Armin Falk; Mark Fallak; Lasse Stötzer
  15. Germans’ Willingness to Act Against Climate Change By Armin Falk; Mark Fallak; Lasse Stötzer
  16. The Role of Social Norms in the Fight Against Climate Change By Armin Falk; Mark Fallak; Lasse Stötzer
  17. Climate Change Skepticism and Excuses By Armin Falk; Mark Fallak; Lasse Stötzer
  18. Greenwashing the Talents: attracting human capital through environmental pledges By Wassim Le Lann; Gauthier Delozière; Yann Le Lann
  19. Beyond the Stocktake (Part II): Clean Energy Technologies By Amrita Goldar; Diya Dasgupta
  20. Beyond the Stocktake (Part I): Strategies for Leveraging Clean Energy Technology Finance By Amrita Goldar; Sajal Jain; Poulomi Bhattacharya
  21. Key predictors for climate policy support and political mobilization: The role of beliefs and preferences By Simon Montfort
  22. The Historical Impact of Coal on Cities By Karen Clay; Joshua A. Lewis; Edson R. Severnini
  23. The connectedness of Energy Transition Metals By Bastianin, Andrea; Casoli, Chiara; Galeotti, Marzio
  24. In search of lost time: An ensemble of policies to restore fiscal progressivity and address the climate challenge By Demetrio Guzzardi; Elisa Palagi; Tommaso Faccio; Andrea Roventini
  25. Women and Trade: Exploring Carbon Capture, Utilisation and Storage in the Indian Context By Amrita Goldar; Diya Dasgupta
  26. How large are the costs of local pollution emitted by freight vehicles? Insights from the COVID-19 lockdown in Paris By Lucie Letrouit; Martin Koning
  27. Aspects of electric vehicle battery production in Hungary By Andrea Éltető
  28. The role and challenges of Rare Earths in the Energy Transition By Lisa Depraiter; Stéphane Goutte
  29. Uniform taxation of electricity: incentives for flexibility and cost redistribution among household categories By Philipp Andreas Gunkel; Febin Kachirayil; Claire-Marie Bergaentzl\'e; Russell McKenna; Dogan Keles; Henrik Klinge Jacobsen
  30. Prosumers: Grid Storage vs Small Fuel-Cell By Sai Bravo; Carole Haritchabalet
  31. The Impact of the Regional Greenhouse Gas Initiative in Maryland: An Application of the Synthetic Control Method By Johnson, Trevor D.; McCallister, Donna
  32. Just transition processes: From theory to practice. By Ana Pueyo; Catherine Leining
  33. Toward a Hydrogen Economy in Kazakhstan By Zholdayakova, Saule; Abuov, Yerdaulet; Zhakupov, Dualet; Suleimenova, Botakoz; Kim, Alisa
  34. Wind Power and the Cost of Local Compensation Schemes: A Swedish Revenue Sharing Policy Simulation By Lundin, Erik
  35. Environmental Impact of 2011 Germany's Nuclear Shutdown: A Synthetic Control Study By Li, Jing; Renuart, Bryanna
  36. Pollution Abatement and Lobbying in a Cournot Game. An Agent-Based Modelling approach By Marco Catola; Silvia Leoni
  37. International Agreements and Global Initiatives for Low-Carbon Cooling By Kim, Jeong Won; Kim, Sungjin
  38. The Many Channels of Firm’s Adjustment to Energy Shocks: Evidence from France By Lionel Fontagné; Philippe Martin; Gianluca Orefice
  39. Occasional Bulletin of Economic Notes 2301 Mind second round effects The effects of food and energy inflation on core inflation in South Africa By Witness Simbanegavi; Andrea Leonard Palazzi
  40. Funding Transportation in Georgia: Vehicle Miles Travel Tax By David L. Sjoquist
  41. Identifying money and inflation expectation shocks on real oil prices By Benk, Szilárd; Gillman, Max
  42. The EU can manage without Russian liquified natural gas By Ben McWilliams; Giovanni Sgaravatti; Simone Tagliapietra; Georg Zachmann
  43. The Future of EU Cohesion: Effects of the Twin Transition on Disparities across European Regions By Maucorps, Ambre; Römisch, Roman; Schwab, Thomas; Vujanovic, Nina
  44. Incentives for flexible consumption and production on end-user level - Evidence from a German case study and outlook for 2030 - By Andreas Dietrich
  45. How Do Airlines Cut Fuel Usage, Reducing Their Carbon Emissions? By Jan K. Brueckner; Matthew E. Kahn; Jerry Nickelsburg
  46. Climate Fintech: the Italian market in an international perspective By Diego Scalise
  47. VAT Pass-Through and Competition: Evidence from the Greek Islands By Lydia Dimitrakopoulou; Christos Genakos; Themistoklis Kampouris; Stella Papadokonstantaki
  48. Managerial and financial barriers to the green transition By Ralph De Haas; Ralf Martin; Mirabelle Muûls; Helena Schweiger
  49. Transmission Impossible? Prospects for Decarbonizing the US Grid By Lucas W. Davis; Catherine Hausman; Nancy L. Rose
  50. A Modern Excess Profit Tax By Manon François; Carlos Oliveira; Bluebery Planterose; Gabriel Zucman
  51. Premature Deindustrialization and Environmental Degradation By Destek, Mehmet Akif; Hossain, Mohammad Razib; Khan, Zeeshan
  52. Carbon taxes on animal products in the United States – Emissions, revenue, and welfare By Robson, Beatrice; Zhen, Chen
  53. An Overview of Climate Change, the Environment, and Innovative Finance in Emerging and Developing Economies By Shirai, Sayuri
  54. Energy as a limiting factor of economic growth: the profit rate channel By Alban Pellegris
  55. Confronting the carbon pricing gap: Second best climate policy By Katheline Schubert; Aude Pommeret; Francesco Ricci
  56. A New Global Dataset of Agricultural Energy Consumption by Country, Fuel, and End-Use By Casper, Kelly; Smith, Steven J.; Zhang, Ying

  1. By: Mirabelle Muûls (Research and Economics Department, NBB and Imperial College London); Jonathan Colmer (University of Virginia); Ralf Martin (Imperial College London); Ulrich J. Wagner (University of Mannheim)
    Abstract: In theory, market-based regulatory instruments correct market failures at least cost. However, evidence on their efficacy remains scarce. Using administrative data, we estimate that, on average, the EU ETS – the world’s first and largest market-based climate policy – induced regulated manufacturing firms to reduce carbon dioxide emissions by 14-16% with no detectable contractions in economic activity. We find no evidence of outsourcing to unregulated firms or markets; instead firms made targeted investments, reducing the emissions intensity of production. These results indicate that the EU ETS induced global emissions reductions, a necessary and sufficient condition for mitigating climate change. We show that the absence of any negative economic effects can be rationalized in a model where inattentive firms underinvest in energy-saving capital prior to regulation. Guided by the predictions of this model, we classify firms with low initial productivity or high energy intensity as potentially inattentive. We estimate larger reductions in emissions and increases in economic activity for those firms, consistent with regulation-induced cost savings or efficiency increases.
    Keywords: cap-and-trade, carbon leakage, investment, climate policy
    JEL: Q54 Q58 H23 L50 F18
    Date: 2023–06
  2. By: Mark Colas; Emmett Saulnier
    Abstract: We study the spatial misallocation resulting from subsidies for residential solar panels in the US and quantify the associated environmental costs. We build a structural model of solar panel demand and electricity production across the country and estimate the model by combining 1) remotely sensed data on residential solar panels, 2) power-plant-level data on hourly production and emissions, and 3) a state-of-the-art air pollution model. The current subsidies lead to severe spatial misallocation. The optimal cost-neutral reform generates environmental benefits equal to those of a 6-11% increase in the productivity of residential solar panels nationally.
    Keywords: rooftop solar, optimal taxation, renewable energy
    JEL: H21 H23 Q42 Q48
    Date: 2023
  3. By: Qu, Chunzi (Dept. of Business and Management Science, Norwegian School of Economics); Bang, Rasmus Noss (Centre for Applied Research at NHH)
    Abstract: Nuclear energy is once again in the spotlight in Europe, due to recent technological advancements and geopolitical challenges. Our study presents an investment analysis framework that compares the prospects of onshore and offshore wind projects, as well as traditional and modular nuclear projects. We evaluate the investment potential of each option, both with and without government financial support, similar to the system in place in France. Our study also includes an investment parity analysis, which determines the level of government financial support required to make modular nuclear power plants as attractive as wind projects under various circumstances. Our results show that, without government support, onshore wind projects are the most attractive investment option, followed by offshore wind projects. However, in certain circumstances and based on specific metrics, modular nuclear projects can be more appealing. Interestingly, our findings indicate that with French government support, offshore wind projects offer better investment prospects than onshore wind projects. To achieve investment parity with the most attractive wind project, modular nuclear power plants, which have a relevant advantage in terms of shorter construction times than wind projects, would require a feed-in premium similar to that offered to offshore wind projects.
    Keywords: Investment analysis; Wind energy; Nuclear energy; Electricity mix; Energy policy; Government financial support
    JEL: Q40 Q50
    Date: 2023–06–28
  4. By: Pier Basaglia; Sophie 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
  5. By: Witcover, Julie PhD; Murphy, Colin PhD
    Abstract: This paper reviews literature on technological, market, and policy factors affecting the growth of alternative aviation fuels. At present, they represent a minimal fraction of global aviation fuel used but are a critical tool for lowering GHG emissions from aviation. Even with electric and hydrogen power, substantial volumes of low-carbon liquid fuels are likely needed; these will draw heavily on biomass. Beyond hydroprocessed esters and fatty acid (HEFA) fuels, technologies, including lower carbon e-fuels, remain pre-commercial. More jurisdictions are providing incentives for alternative aviation fuel, and some on-road biofuels may be redirected towards aviation in a favorable market, because production processes for these fuels overlap. Biomass feedstocks at different demand levels need to be sourced and evaluated for unintended impacts. Research suggests alternative aviation fuels improve air quality impacts compared to conventional jet fuel. Key uncertainties in scaling alternative jet fuel remain, including ongoing concerns about land use change from biofuels, how to right-size incentives with no technology clearly dominant, what the long-term carbon budget is for aviation, and how to build fuel delivery infrastructure.
    Keywords: Engineering, Alternate fuels, aviation fuels, greenhouse gases, sustainable transportation, policy analysis, incentives
    Date: 2023–07–01
  6. By: Andrea Bonfatti; Elena Giarda
    Abstract: Since the second half of 2021, there has been a sharp increase in the prices of energy goods (electricity, heating gas, fuels) as well as of food, leading to inflation rates never experienced in Italy in the last forty years. Such high inflation rates prompted the Italian government to take measures to curb the prices of energy products, to increase social bonuses on electricity and gas bills, and to provide one-off allowances to households. The crucial question is what impact the price increases have had on households and whether the measures taken have protected the household sector from these increases. Therefore, we perform a microsimulation exercise on the period July 2021-March 2023 to quantify the effects of the price increases and of the measures on household expenditure and income. Our results indicate that the regressive impact of price increases was mitigated by the price containment measures due to their progressive nature and that the contribution of one-off allowances and social bonuses was very relevant. In 2022, the year in which households benefitted from the measures for twelve months, the fiscal policy interventions also succeeded in reducing inequality, the at-risk-of-poverty rate and energy poverty.
    Keywords: microsimulation; redistribution; energy prices mitigation policies; energy consumption; energy poverty
    JEL: D10 D30 H31 I32 Q48
    Date: 2023–06
  7. By: Mitra, Sanjukta; Agarwal, Sandip K.
    Keywords: Institutional and Behavioral Economics, Environmental Economics and Policy, Resource/Energy Economics and Policy
    Date: 2023
  8. By: Silvana Tiedemann (Hertie School, Centre for Sustainability, Germany); Raffaele Sgarlato (Hertie School, Centre for Sustainability, Germany); Lion Hirth (Hertie School, Centre for Sustainability, Germany; Neon Neue Energie\"okonomik GmbH, Germany)
    Abstract: This paper examines empirical methods for estimating the response of aggregated electricity demand to high-frequency price signals, the short-term elasticity of electricity demand. We investigate how the endogeneity of prices and the autocorrelation of the time series, which are particularly pronounced at hourly granularity, affect and distort common estimators. After developing a controlled test environment with synthetic data that replicate key statistical properties of electricity demand, we show that not only the ordinary least square (OLS) estimator is inconsistent (due to simultaneity), but so is a regular instrumental variable (IV) regression (due to autocorrelation). Using wind as an instrument, as it is commonly done, may result in an estimate of the demand elasticity that is inflated by an order of magnitude. We visualize the reason for the Thams bias using causal graphs and show that its magnitude depends on the autocorrelation of both the instrument, and the dependent variable. We further incorporate and adapt two extensions of the IV estimation, conditional IV and nuisance IV, which have recently been proposed by Thams et al. (2022). We show that these extensions can identify the true short-term elasticity in a synthetic setting and are thus particularly promising for future empirical research in this field.
    Date: 2023–06
  9. By: Baffes, John; Etienne, Xiaoli L.
    Keywords: Agricultural and Food Policy, Risk and Uncertainty, International Development
    Date: 2023
  10. By: Norcross, T. W.
    Abstract: Excerpts from the report Summary: A New Deal in Rural Electrification is proposed in this report. It calls for large scale operations, providing the consigner with power and appliances at low cost in order to induce greatest use and protection of the interests of all affected by the project. Carrying out the Plan will involve many problems—financial, promotional, technical and organizational. The Federal Government, whenever it is necessary, should lend money on attractive terms to utilities, power districts, State or Federal agencies for new transmission, distribution and service lines and, where advisable, for the construction of isolated plants. It should also aid contractors, manufacturers or consumers in their several financial needs in carrying out the program of rural electrification. To expedite this program the Government should foster measures which will keep construction costs at a minimum, make utilization equipment available at considerably less than present retail prices, and substantially lower energy rates. Obviously central control and direction are essential to assure satisfactory and adequate electrification of rural area. For this purpose the Plan proposes a National Rural Electrification Authority with broad powers. This Authority, utilizing the help of existing Federal agencies now engaged in various phases of rural electrification or competent to aid, would carry out the program with dispatch and efficiency.
    Keywords: Community/Rural/Urban Development, Crop Production/Industries, Livestock Production/Industries, Production Economics, Public Economics, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy
  11. By: MENYHERT Balint (European Commission - JRC)
    Abstract: The analysis of unique merged SILC-HBS microdata from Hungary allows for the joint assessment of different forms of energy poverty at the micro level, and yields a series of novel and policy-relevant insights. This Report finds that existing measures of energy poverty based on subjective valuations and expenditure ratios identify wholly different population segments as energy poor, with less than one in three such households suffering from multiple forms of energy-related deprivation. Different measures also diverge greatly in terms of incidence level, seasonal fluctuations, cross-country comparability, persistence over time, as well as the socio-demographic background, living conditions and AROPE status of those identified as energy poor. These novel findings suggest that energy poverty is very hard to delineate accurately with existing measures. The Report calls for simultaneous improvements in the existing measurement framework and the exploration of new alternative methods, techniques and data for effective social monitoring and sound evidence-based energy policies.
    Keywords: energy poverty, poverty measurement, European household survey data, merged HBS-SILC microdata
    Date: 2023–06
  12. By: MENYHERT Balint (European Commission - JRC)
    Abstract: The analysis of unique merged SILC-HBS microdata from Hungary allows for the joint assessment of different forms of energy poverty at the micro level, and yields a series of novel and policy-relevant insights. This JRC Policy Brief finds that existing measures of energy poverty based on subjective valuations and expenditure ratios identify wholly different population segments as energy poor, with less than one in three such households suffering from multiple forms of energy-related deprivation. Different measures also diverge greatly in terms of incidence level, seasonal fluctuations, cross-country comparability, persistence over time, as well as the socio-demographic background, living conditions and AROPE status of those identified as energy poor. These novel findings suggest that energy poverty is very hard to delineate accurately with existing measures. The Brief calls for simultaneous improvements in the existing measurement framework and the exploration of new alternative methods, techniques and data for effective social monitoring and sound evidence-based energy policies.
    Keywords: energy poverty, poverty measurement, European household survey data, merged HBS-SILC microdata
    Date: 2023–06
  13. By: Zhao, Xialing; Fan, Linlin; Xu, Yilan
    Keywords: Environmental Economics and Policy, Institutional and Behavioral Economics, Agricultural and Food Policy
    Date: 2023
  14. By: Armin Falk (University of Bonn, briq Institute); Mark Fallak (Institute of Labor Economics); Lasse Stötzer (briq Institute)
    Abstract: In a representative survey of around 2, 000 people in Germany, almost two-thirds thought the German govern-ment was doing too little to combat climate change. This dissatisfaction is also widespread among voters of the governing parties. About 89 percent of respondents believe that the government should step up support for solar and wind energy. Almost 74 percent support a much faster expansion of wind turbines, even if this would mean short-er approval procedures and lower distances to dwellings. Strict emission limits for gas and coal-fired power plants, and an increase in the CO2 tax received less support among respondents, at around 60 percent each. More than 80 percent are in favor of discontinuing domestic flights on the condition that the rail network is expanded. Two-thirds support a speed limit of 130 km/h on freeways. Both proposals would command a majority across all electorates – with the exception of the speed limit, which is rejected by more than half of AfD voters. Most incentives to change consumer behavior are also supported by a vast majority. These include stan-dardized labeling of CO2 emissions for food and consumer goods and higher subsidies for climate-friendly behavior. By contrast, only 48 percent would approve of making climate-damaging meat and dairy products more expensive. Two-thirds would support a climate solidarity tax to help lower-income households finance additional spending on climate protection. The high willingness to accept costs or restrictions is in line with people being strongly concerned about the consequences of climate change. A large majority of 78 percent said they were concerned - one-third are even “very concerned”. Almost 84 percent of Germans believe in an obligation to protect the environment for future generations. 56 percent go even further and call on the German government to give greater weight to the needs of young people and future generations than to the needs of older people when making climate-re-lated policy decisions.
    Date: 2023–06
  15. By: Armin Falk (University of Bonn, briq Institute); Mark Fallak (Institute of Labor Economics); Lasse Stötzer (briq Institute)
    Abstract: We elicit individual willingness to fight climate change using an incentivized donation decision. More specifical-ly, we asked the 2, 002 respondents to divide 198 euros between themselves and a charitable organization that fights global warming. The amount of 198 euros was chosen because, by donating all of it, respondents could offset the annual CO2 emissions of an average German citizen. We incentivize the decision by implementing the choices of a random subset of participants. Almost 90 percent of respondents donate at least part of the money to offset CO2 emissions. On average, respondents gave slightly less than half, around 96 euros. Altruistic individuals donated significantly more. Voters of the right-wing party AfD donated just under 57 euros, while supporters of the other parties gave an average of 102 euros. Willingness to fight climate change increased with rising income. However, even in the lowest income group with less than 1, 300 euros per month, an average donation of 88 euros indicates a high willingness to forego a financial advantage for the sake of climate protection. Parents contributed on average about 10 percent more. People who deny climate change or see it as a mainly natural phenomenon donated on average 40 percent less than the rest of the population. That Germans seem to be conscious of climate issues is also reflected in their consumption behavior and transportation choices. A large majority of those surveyed stated that they try to save water and energy, and buy more regional, seasonal and vegetarian foods. Two-thirds regularly use bicycles, public transportation, or other environmentally friendly alternatives to driving by car. Germans are also willing to become politically active against climate change, albeit to a somewhat lesser extent. Almost one-fourth of respondents said they had taken part in demonstrations, signed petitions, or ac-tively supported climate protection organizations in the last twelve months. About one in eight have bought climate protection certificates to offset CO2 emissions.
    Date: 2023–09
  16. By: Armin Falk (University of Bonn, briq Institute); Mark Fallak (Institute of Labor Economics); Lasse Stötzer (briq Institute)
    Abstract: Of the 2, 002 respondents, 71 percent stated that they take personal action against climate change. The re-spondents‘ perceptions about peoples‘ behavior differed: The share of the German population committed to climate protection was estimated at an average of 59 percent. The actual willingness to act against climate change is therefore significantly underestimated (by nearly 70 percent of respondents). When asked if people in Germany should take action against climate change, 85 percent of respondents agreed. However, four out of five respondents underestimate the percentage of people who share their view – the average estimate was 67 percent. The phenomenon that both the willingness of others to act against climate change and the prevailing social norms are systematically underestimated is a form of pluralistic ignorance. The problematic conse-quences of such a misperception can be seen in its negative influence on donations to a climate protection organization in our survey. Many people are conditionally cooperative, i.e., they make their own behavior dependent on the behavior of others. Correcting the misperceptions of others’ cooperation could therefore improve individual willingness to act against climate change. This idea has been tested by briq researchers in a survey experiment in the United States. Correcting the ex-isting misperceptions causally raised the individual willingness to act against climate change and the support for climate policies. The strongest effects are found among individuals who are skeptical about the existence and threat of global warming.
    Date: 2023–09
  17. By: Armin Falk (University of Bonn, briq Institute); Mark Fallak (Institute of Labor Economics); Lasse Stötzer (briq Institute)
    Abstract: According to a representative survey of over 2, 000 German adults, a vast majority believes in climate change. Only 6 percent deny that climate change exists. There is less agreement when it comes to the causes of climate change: About three-fourths of Germans agree with the scientific consensus that climate change is mainly due to human activities. Just under 22 percent of respondents are “climate change skeptical” in the sense that they believe that climate change either does not occur at all or is primarily a natural phenomenon. Ignorance about the state of research and a lack of trust in science contribute to the relatively low public consensus. Only 61 percent of respondents consider human-made climate change to be a scientific consensus. Those who hold climate skeptical views are also more likely to believe that there are many different scientific opinions about climate change. In addition, 12 percent of respondents said that they trust scientists “not at all” or “not much” and 34 percent have only a moderate level of trust. Trust in science tends to be greater among male respondents, as well as among more educated people and those who score higher on altruism and patience. Only 14 percent of AfD voters and just slightly more than half of the FDP and CDU/CSU voters say they trust climate research. Around 83 percent of respondents believe that Germany should do anything in its power to combat climate change now. Common excuses, such as waiting for an international solution or progress in climate protection technology, are rejected by a large majority of Germans. Also, 87 percent believe that each individual can do something about climate change. Only 57 percent consider that it is feasible to combat climate change without social hardship. Strikingly, sup-porters of parties that are less in favor of redistribution are more pessimistic about the issue of social justice.
    Date: 2023–06
  18. By: Wassim Le Lann (UO - Université d'Orléans, LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne); Gauthier Delozière (CMB - Centre Marc Bloch - MEAE - Ministère de l'Europe et des Affaires étrangères - Bundesministerium für Bildung und Forschung - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche - CNRS - Centre National de la Recherche Scientifique, EdD - École de Droit de Sciences Po (Sciences Po) - Sciences Po - Sciences Po); Yann Le Lann (Université de Lille, CERIES)
    Abstract: In times of global ecological crisis, the responsibility of large corporations in environmental degradation is increasingly pointed out. As a result, there has been a surge in private organizations' pledges to reduce their environmental impact in recent years. In this paper, we demonstrate that companies with poor environmental responsibility have incentives to take such pledges to maintain their ability to attract high-skilled human capital. Through a case study on a French climate movement which was initiated by elite students who threatened to boycott job offers from polluting employers, we find that environmental pledges can significantly attenuate this selection effect. Using a unique and large survey database on the climate movement participants (n=2307) and machine learning classifiers, we find that individuals who initially intended to refuse a job offer from a polluting employer were, on average, three times less likely to hold such intentions after being exposed to a corporate environmental pledge. This result can be explained by the fact that intentions to refuse to work for polluting companies, and reactions to environmental pledges are driven by different factors. Furthermore, we find substantial heterogeneity in the response to environmental pledges, which is primarily explained by career perspectives, beliefs about the ecological crisis and support for radical political action in the name of ecology.
    Keywords: Climate movement, Greenwashing, Human capital, Organizational behavior, Labor market, Machine Learning
    Date: 2023–06–24
  19. By: Amrita Goldar (Indian Council for Research on International Economic Relations (ICRIER)); Diya Dasgupta (Indian Council for Research on International Economic Relations (ICRIER))
    Abstract: Ever since its inception, the G20 Energy Transitions Working Group (ETWG) has covered a wide range of priority areas broadly spanning across clean energy, energy access and energy security. Specifically, with respect to clean energy technologies, while there exist some legacy topics such as energy efficiency, renewable energy, nuclear energy, phasing out inefficient fossil fuel subsidies etc. that are included year after year, every successive presidency has attempted to introduce new elements. This policy brief aims to chart out the future course of action Beyond the Stocktake, highlighting aspects that can be carried forward by the presidencies that follow India. It delves into the progress made at the G20 with respect to select clean technologies with the idea of gauging how much has been covered and what remains to be done for accelerating energy transitions. In particular, the paper tables a few promising ideas for guiding the engagement structure of G20 ETWG negotiations and attempts to build a case for adopting strategies tailor made for technologies in different stages of development.
    Keywords: Clean energy, Energy transition, G20
    Date: 2023–04
  20. By: Amrita Goldar (Indian Council for Research on International Economic Relations (ICRIER)); Sajal Jain (Indian Council for Research on International Economic Relations (ICRIER)); Poulomi Bhattacharya (Indian Council for Research on International Economic Relations (ICRIER))
    Abstract: Clean energy development for almost all G20 countries, be it developing or developed, stands at restricted levels for green hydrogen produced from biomass for heat and electricity. Therefore, a greater emphasis must be placed on deploying renewable energy sources and helping clean technologies businesses gain the wherewithal to avoid the valley of death, the series of challenges that high-tech start-ups often face in the early stage of development culminating into failures. Developed countries are in a better position than developing countries to raise clean finance, i.e., for clean energy development. Challenges faced by G20 developing economies in raising clean finance include a lack of green taxonomies, a lack of an implementation mechanism for climate risk assessments, and the absence of proper effective initiatives towards a carbon pricing structure. A big-push is required to make early-stage clean energy technologies enter the market and get embraced by business developers, which needs commensurate supportive financial flows. Aside from a greater emphasis on international collaboration/cooperation to help the process, the issues that need resolution include a) matching the finance requirement with demand, b) accounting for differences in costs of capital, and c) establishing green state investment banks. There is a crucial need for the international community to step in and facilitate public financing of climate-related finance needs of developing economies. It has been observed that private investments in the broader climate technology are often set to fall, with the fear that the previous bust of investments in clean technology may repeat. While a significant scope of expansion of private investments exists, its risk-averse nature and the lack of initial support hinder the tapping of the opportunity.
    Keywords: Clean finance, Clean technologies, Climate, G20
    Date: 2023–04
  21. By: Simon Montfort
    Abstract: Public support and political mobilization are two crucial factors for the adoption of ambitious climate policies in line with the international greenhouse gas reduction targets of the Paris Agreement. Despite their compound importance, they are mainly studied separately. Using a random forest machine-learning model, this article investigates the relative predictive power of key established explanations for public support and mobilization for climate policies. Predictive models may shape future research priorities and contribute to theoretical advancement by showing which predictors are the most and least important. The analysis is based on a pre-election conjoint survey experiment on the Swiss CO2 Act in 2021. Results indicate that beliefs (such as the perceived effectiveness of policies) and policy design preferences (such as for subsidies or tax-related policies) are the most important predictors while other established explanations, such as socio-demographics, issue salience (the relative importance of issues) or political variables (such as the party affiliation) have relatively weak predictive power. Thus, beliefs are an essential factor to consider in addition to explanations that emphasize issue salience and preferences driven by voters' cost-benefit considerations.
    Date: 2023–06
  22. By: Karen Clay; Joshua A. Lewis; Edson R. Severnini
    Abstract: Historically coal has offered both benefits and costs to urban areas. Benefits include coal’s role in fueling industry and thus employment. The primary costs are air pollution and its impact on human health. This paper starts by using a Rosen-Roback style model to examine how differences in local coal availability affect equilibrium city employment. Drawing on the model, the paper surveys papers that examine the net effects of coal on the growth in city population and air pollution on health. The paper then turns to papers that explicitly consider the trade-offs between production benefits and pollution disamenities across space and over time. The paper ends with a discussion of opportunities for future work on coal and cities in historical settings.
    JEL: N52 N72 O13 Q53 Q56
    Date: 2023–06
  23. By: Bastianin, Andrea; Casoli, Chiara; Galeotti, Marzio
    Abstract: We assess the degree of connectedness among 16 metals that are critical for the production of clean energy technologies. These commodities are the constituents of the Energy Transition Metals (ETMs) price index maintained by the International Monetary Fund and comprise base, precious, and minor metals. We rely on Vector Autoregressive models and generalized forecast error variance decomposition to quantify spillovers among ETMs returns and volatilities. By calculating both static and dynamic measures of connectedness, we gain insight into the patterns of shock transmission between ETMs. Our static analysis reveals that base and precious metals are net shock transmitters, while minor and most battery metals are net receivers. By splitting the analysis into three groups, we find that almost half of the connectedness originates within each group, whereas the other half is due to cross-group spillovers. Moreover, we find that the system-wide connectedness of returns is positively correlated with proxies of economic activity, whereas volatility connectedness seems to be more related to global economic policy uncertainty.
    Keywords: Research Methods/ Statistical Methods, Resource /Energy Economics and Policy
    Date: 2023–06–26
  24. By: Demetrio Guzzardi; Elisa Palagi; Tommaso Faccio; Andrea Roventini
    Abstract: The European Union needs to raise significant resources to finance a just green transition. At the same time, there is a widespread fiscal regressivity in many EU countries. Indeed, recent empirical evidence shows that the tax systems of many EU members are characterized by low degrees of progressivity, with high-income groups paying lower effective tax rates vis-a-vis middle- and low-income classes. In order to jointly tackle such issues, we propose an ensemble of tax policies at the EU level grounded on the recent proposals advanced in the literature. This fiscal reform includes a wealth tax targeting the top 1% of wealth holders, a tax on unrealized capital gains, and an increase of the minimum corporate tax. Our first estimates suggest that these measures can generate substantial yearly revenues in the order of 1.9%-2.9% of EU GDP. Such resources can contribute to the funding of the additional climate mitigation and adaptation policies required to tackle the climate emergency, while reducing inequality, thus contributing to put EU economies on sustainable and inclusive growth pathways.
    Keywords: Taxation; Inequality; Wealth tax; Capital gains tax; Corporate tax; Climate change.
    Date: 2023–07–10
  25. By: Amrita Goldar (Indian Council for Research on International Economic Relations (ICRIER)); Diya Dasgupta (Indian Council for Research on International Economic Relations (ICRIER))
    Abstract: A circular carbon economy (CCE) model aims to manage the carbon in the system as opposed to solely working towards its elimination. This policy brief focuses on the carbon capture, utilisation and storage (CCUS) component of such a model in the context of India. It highlights the relevance of this technology and discusses the global status of the same. This paper attempts to understand CCUS policies in some of the leading G20 countries that have been working in this field and draws possible lessons for India. It discusses India’s involvement so far in pursuing this mitigation pathway and also details out the policy framework and programmes adopted in the United Kingdom and China to accelerate the deployment of these technologies. Some of the potential barriers to CCUS have been identified along with possible avenues for G20 engagement and next steps.
    Keywords: Carbon Capture, Utilisation and Storage (CCUS), Circular Carbon Economy (CCE), Mitigation
    Date: 2022–01
  26. By: Lucie Letrouit (AME-SPLOTT - Systèmes Productifs, Logistique, Organisation des Transports et Travail - Université Gustave Eiffel); Martin Koning (AME-SPLOTT - Systèmes Productifs, Logistique, Organisation des Transports et Travail - Université Gustave Eiffel)
    Abstract: Building on the exogenous shock linked with the first COVID-19 lockdown in France (March-May 2020), we propose an original approach relying on econometric modelling to estimate the impacts of road freight transport on the concentration of NO2, NOx and PM10 in Paris. We argue that this shock led to a significant change in the composition of road traffic, with an increase in the relative share of freight vehicles with respect to passenger cars, due to the combined exodus of numerous inhabitants, the prohibition of non-mandatory trips and the promotion of home-deliveries. As light-duty vehicles and trucks pollute more than passenger cars, we hypothesize that it led to a rise in the average emissions of pollutants per kilometer traveled in Paris. We confirm this assumption by applying a simple econometric analysis to a rich dataset containing hourly pollutant concentrations and hourly traffic flows recorded in various locations of the French capital city. Relying on the econometric results and on additional back-of-theenvelope computations, we propose tentative estimates of the health impacts of road freight transport. As compared to a counterfactual in which freight traffic in Paris would have declined in the same proportion as cars during the sanitary crisis, hence resulting in a larger decrease in pollutants concentrations, we conclude that around 7 lives have been lost. Crossing this estimate with the official value of statistical life in France, our central scenario approximates at 0.20 euro/km the excess external cost of the local pollution emitted by freight vehicles as compared to cars.
    Keywords: Road freight traffic, Air pollution, Covid-19 lockdown, Health, External cost
    Date: 2023–05–25
  27. By: Andrea Éltető (Institute of World Economics, Centre for Economic and Regional Studies, Eötvös Loránd Research Centre)
    Abstract: The significant expansion of Hungarian domestic electric vehicle battery manufacturing capacity by early 2023 has become a major topic of public debate in the country. South Korean battery factories have been operating in Hungary since 2019 with Asian-owned suppliers and further Asian plants have been established since then. This paper presents the various aspects of scaling up battery production, drawing on official documents, press information, studies, statistics, and video and audio material. It shows how the functioning plants operate in Hungary, how industrial safety and environmental regulations are breached, and what the attitude of local authorities and civil groups is. The study evaluates the location factors like availability of workforce, energy and water, pointing out their scarcity. There is also a painful lack of responsible cost-benefit analysis, a credible and flexible government strategy and fact-based information
    Keywords: EV batteries, industrial policy, FDI, Hungary
    JEL: L62 L98 F23 O14
    Date: 2023–06
  28. By: Lisa Depraiter (Université Paris-Saclay); Stéphane Goutte (Université Paris-Saclay)
    Abstract: The energy transition from fossil fuel energy to low-carbon energy is mineral intensive. Among the required minerals rare earth elements (REEs) are core components of clean energy technologies such as wind turbines and electric vehicles. This article focuses on the relationship between rare earth elements and the energy transition, while discussing demand and supply of these critical minerals in the energy transition process. We investigate the challenges regarding current and future supply of REEs for low-carbon technologies. The stakes and challenges are numerous between the Chinese quasi-monopoly, the absence of equivalent substitutes, the low recycling rates or even the environmental damage linked to the extraction and the production process. In the face of these issues, we propose concrete recommendations and policies in order to meet the ecological challenge of the energy transition and to ensure a reliable future supply.
    Keywords: Rare Earths, Energy Transition, Supply, Renewable, Wind turbine, Electric Vehicle, China, Environment
    Date: 2023–06–13
  29. By: Philipp Andreas Gunkel (Section for Energy Economics and Modelling, DTU Management, Technical University of Denmark, 2800 Kongens Lyngby, Denmark); Febin Kachirayil (Chair of Energy Systems Analysis, Institute of Energy and Process Engineering, ETH Zuerich, 8092 Zuerich, Switzerland); Claire-Marie Bergaentzl\'e (Section for Energy Economics and Modelling, DTU Management, Technical University of Denmark, 2800 Kongens Lyngby, Denmark); Russell McKenna (Chair of Energy Systems Analysis, Institute of Energy and Process Engineering, ETH Zuerich, 8092 Zuerich, Switzerland; Paul Scherrer Institute, Laboratory for Energy Systems Analysis, Forschungsstrasse 111, 5232 Villigen PSI, Switzerland); Dogan Keles (Section for Energy Economics and Modelling, DTU Management, Technical University of Denmark, 2800 Kongens Lyngby, Denmark); Henrik Klinge Jacobsen (Section for Energy Economics and Modelling, DTU Management, Technical University of Denmark, 2800 Kongens Lyngby, Denmark)
    Abstract: Recent years have shown a rapid adoption of residential solar PV with increased self-consumption and self-sufficiency levels in Europe. A major driver for their economic viability is the electricity tax exemption for the consumption of self-produced electricity. This leads to large residential PV capacities and partially overburdened distribution grids. Furthermore, the tax exemption that benefits wealthy households that can afford capital-intense investments in solar panels in particular has sparked discussions about energy equity and the appropriate taxation level for self-consumption. This study investigates the implementation of uniform electricity taxes on all consumption, irrespective of the origin of the production, by means of a case study of 155, 000 hypothetical Danish prosumers. The results show that the new taxation policy redistributes costs progressively across household sizes. As more consumption is taxed, the tax level can be reduced by 38%, leading to 61% of all households seeing net savings of up to 23% off their yearly tax bill. High-occupancy houses save an average of 116 Euro per year at the expense of single households living in large dwellings who pay 55 Euro per year more. Implementing a uniform electricity tax in combination with a reduced overall tax level can (a) maintain overall tax revenues and (b) increase the interaction of batteries with the grid at the expense of behind-the-meter operations. In the end, the implicit cross-subsidy is removed by taxing self-consumption uniformly, leading to a cost redistribution supporting occupant-dense households and encouraging the flexible behavior of prosumers. This policy measure improves economic efficiency and greater use of technology with positive system-wide impacts.
    Date: 2023–06
  30. By: Sai Bravo (ENAC - Ecole Nationale de l'Aviation Civile); Carole Haritchabalet (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The number of prosumers-consumers equipped with decentralized production-is expected to increase following the revised Renewable Energy Directive (2018/2001) and the rising energy prices. The economic literature suggests there is room for demand-side storage that can take two forms: decentralized or centralized. The schemes promoting investments in solar capacity physically allow for only one type of demand-side storage. One may wonder about the conditions under which consumers invest in different technologies. We build a stylized microeconomic model of the energy market and perform a numerical evaluation, using publicly available data from France, to compare two regulations-price and quantity-from our representative consumer's and the Distributed System Operator's points of view. The two energy regulations lead to three types of profiles: consumers, prosumers, and storers. These profiles are in line with previous studies focusing on price regulation. With quantity regulation, a grid tariff such that consumers invest in storage depends on endogenous parameters. The results suggest that with the current price regulation in France, only a smaller feed-in-tariff would encourage investments in decentralized hydrogen-based storage. A grid tariff such that consumers inject energy into the grid would not reflect the cost of centralized hydrogen-based storage. However, a quantity regulation would be less costly to support.
    Keywords: Renewable Energy, Storage, Decentralized Production, Hydrogen
    Date: 2023–06–06
  31. By: Johnson, Trevor D.; McCallister, Donna
    Keywords: Research Methods/Statistical Methods, Environmental Economics and Policy, Resource/Energy Economics and Policy
    Date: 2023
  32. By: Ana Pueyo (Motu Economic and Public Policy Research); Catherine Leining (Motu Economic and Public Policy Research)
    Abstract: Aotearoa New Zealand needs large-scale and rapid transformations across all sectors to meet sustainability goals. Past experiences have shown that rapid economic transition is possible, but it can become deeply political, producing trade-offs, winners and losers. It can lead to conflict as politically influential and well-resourced incumbents resist change, while those less able to adjust face the brunt of the costs. As Aotearoa shifts toward a low-emissions, climate-resilient, and more sustainable economy, we have opportunities to find processes and pathways that support a just transition with socially progressive outcomes by design. This paper explores how to move just transitions from theory to practice, through a literature review. It starts with a conceptual framework, defining what we mean by transitions, specifically sustainable and just transitions. It then reviews some of the theories that explain how transitions happen and how they are governed. It provides some further insights on governance, asking if transitions can be engineered and planned from above (top-down), or if they must instead emerge organically from below (bottom-up), concluding that a combination of both is needed. Historical examples and recent toolkits offer some insights about how to plan localised just transitions. Finally, a brief compilation of indigenous approaches to sustainability transitions is presented with a recommendation for further extension to reflect the diversity of indigenous views. The paper is useful for policymakers in Aotearoa and beyond, seeking to understand what just transitions are; who and what drives them or blocks them; how to plan, implement and govern them; and how indigenous knowledge can contribute to the process.
    Keywords: Just transition, Aotearoa New Zealand, climate change, sustainable development, social justice
    JEL: Q01 Q54 Q58 Z18
    Date: 2023–07
  33. By: Zholdayakova, Saule (Asian Development Bank Institute); Abuov, Yerdaulet (Asian Development Bank Institute); Zhakupov, Dualet (Asian Development Bank Institute); Suleimenova, Botakoz (Asian Development Bank Institute); Kim, Alisa (Asian Development Bank Institute)
    Abstract: Hydrogen technologies are one of the central topics in the energy transition. Different nations have different stances on it. Some governments see hydrogen as a decarbonization tool or part of their energy security strategy, while some others see it as a potential export commodity. While identifying priorities for the future, Kazakhstan should clearly define the role of hydrogen in the country’s long-term energy and decarbonization strategy. We present the first country-scale assessment of hydrogen technologies in Kazakhstan by focusing on policy, technology and economy aspects. A preliminary analysis has shown that Kazakhstan should approach hydrogen mainly as a part of its long-term decarbonization strategy. While coping with the financial risks of launching a hydrogen economy, the country can benefit from the export potential of low-carbon hydrogen in the near term. The export potential of low-carbon hydrogen in Kazakhstan is justified by its proximity to the largest hydrogen markets, huge resource base, and potentially low cost of production (in the case of blue hydrogen). We discuss technology options for hydrogen transportation and storage for Kazakhstan. We also also identify target hydrogen utilization areas in emission sectors regulated by Kazakhstan’s Emissions Trading System.
    Keywords: hydrogen roadmap; hydrogen strategy; blue hydrogen; green hydrogen; hydrogen export; metal hydrides
    JEL: L52 L71 Q42
    Date: 2022–10
  34. By: Lundin, Erik (Research Institute of Industrial Economics (IFN))
    Abstract: Local resistance towards wind power is a central challenge for the energy transition, implying that legally imposed compensation schemes for nearby residents may become more prevalent in the near future. In this study, I use GIS-coded data on detached residential buildings in Sweden to simulate a variety of revenue sharing schemes applied to every present and planned commercial scale wind power project, with a focus on documenting the impact on investor costs. I compare models that entitle compensation for distance between six and ten times the tip height of the closest turbine, imposing schemes that are both constant within the eligible distance, as well as declining with distance from the turbine. An important conclusion is that costs vary considerably depending on the model chosen. When compensations are awarded for residents as far away as ten times the turbine height, foregone revenues exceed two percent for a large share of the projects, potentially necessitating the inclusion of a regulated cap on compensation costs.
    Keywords: Wind power; Negative externalities; Local acceptance; Energy transition; NIMBYism
    JEL: D40 D62 H23 P18 P48
    Date: 2023–06–07
  35. By: Li, Jing; Renuart, Bryanna
    Keywords: Environmental Economics and Policy, Resource/Energy Economics and Policy, International Development
    Date: 2023
  36. By: Marco Catola; Silvia Leoni
    Abstract: The application of Agent-Based Modelling to Game Theory allows us to benefit from the strengths of both approaches, and to enrich the study of games when solutions are difficult to elicit analytically. Using an agent-based approach to sequential games, however, poses some issues that result in a few applications of this type. We contribute to this aspect by applying the agent-based approach to a lobbying game involving environmental regulation and firms’ choice of abatement. We simulate this game and test the robustness of its game-theoretical prediction against the results obtained. We find that while theoretical predictions are generally consistent with the simulated results, this novel approach highlights a few differences. First, the market converges to a green state for a larger number of cases with respect to theoretical predictions. Second, simulations show that it is possible for this market to converge to a polluting state in the very long run. This result is not envisaged by theoretical predictions. Sensitivity experiments on the main model parameters confirm the robustness of our findings.
    Keywords: Agent-Based-Modelling, Environmental Regulation, Industrial Organisation, Lobbying
    JEL: C63 D72 L13 L51
    Date: 2023–06–01
  37. By: Kim, Jeong Won (Asian Development Bank Institute); Kim, Sungjin (Asian Development Bank Institute)
    Abstract: Since the mid-1980s, the international community has controlled refrigerants that may damage the ozone layer and cause climate change based on several international agreements. In particular, the Montreal Protocol contributed to not only solving the ozone layer depletion problem but also limiting global warming. Given that the global demand for cooling would triple by 2050 and this rise would increase global greenhouse gas emissions significantly, the Montreal Protocol has expanded its regulatory scope to decarbonize the cooling sector through the adoption of the Kigali Amendment. Also, increasing interest in low-carbon cooling has driven the launch of various global initiatives to complement the international agreements and accelerate low-carbon cooling in developing countries. The experience of implementing the Montreal Protocol and its amendments suggests some lessons and insights for making the Kigali Amendment work well. First, each country should develop and enforce national policies aligned with international agreements. Second, financial and technical support mechanisms should be strengthened to facilitate developing countries’ compliance with the Kigali Amendment. Third, along with the improving energy efficiency of cooling, the substances that neither harm the ozone layer nor exacerbate climate change should be used as substitutes for hydrofluorocarbons. Last, the monitoring, reporting, and verification of controlled substances need to be strengthened.
    Keywords: global warming potential; international environmental agreement; Kigali Amendment; low-carbon cooling; Montreal Protocol
    JEL: F53 Q01 Q53 Q54
    Date: 2022–10
  38. By: Lionel Fontagné (Banque de France, CEPII and Paris School of Economics); Philippe Martin (Sciences Po and CEPR); Gianluca Orefice (University Paris-Dauphine, PSL, CESifo and IUF)
    Abstract: Based on firm level data in the French manufacturing sector, we find that firms adapt quickly, strongly and through multiple channels to energy shocks, even though electricity and gas bills represent a very small share of their total costs. Over the period 1996-2019, faced with an idiosyncratic energy price increase, firms reduce their energy demand, improve their energy efficiency, increase intermediate inputs imports and optimize energy use across plants. Firms are also able to pass-through the cost shock fully on their export prices. Their production, exports and employment fall. A consequence of these multiple adjustment mechanisms is that the fall in profits is either non-significant, small or specific to only the most energy intensive firms. We also find that the impact of electricity shocks has weakened over time, suggesting that only firms able to adapt their production process to energy cost shocks have survived. Importantly, when faced with large electricity and gas price increases, firms are less able to reduce their consumption. These results shed light on the mechanisms of resilience of the European manufacturing sector in the context of the present energy crisis.
    Keywords: Energy crisis, Employment, Production, Competitiveness, Electricity, Gas.
    JEL: L6 Q41 Q43
    Date: 2023–07
  39. By: Witness Simbanegavi; Andrea Leonard Palazzi
    Abstract: Occasional Bulletin of Economic Notes 2301 Mind second round effects! The effects of food and energy inflation on core inflation in South Africa
    Date: 2023–06–29
  40. By: David L. Sjoquist (Center for State and Local Finance, Andrew Young School of Policy Studies, Georgia State University)
    Abstract: In this report, we explore the mileage tax (i.e., a vehicle miles traveled (VMT) tax) to provide a basic understanding of what a milage tax is, to describe the options for how it might be implemented, and to explore many of the issues associated with switching from a motor fuel tax to a mileage tax. Such a switch would likely be implemented over time, with some vehicles continuing to pay the motor fuel tax for a protracted period and with an increasing number of other vehicles paying a tax based on miles driven. A tax based on miles driven is alternatively referred to as a vehicle-miles traveled (VMT) tax or fee, a mileage-based user fee (MBUF), or a road user charge (RUC).
    Date: 2023–07
  41. By: Benk, Szilárd; Gillman, Max
    Abstract: The paper adds money supply and inflation expectations shocks to a well-known three-variable structural model that identifies oil price shocks through fundamentals affecting the oil market. Impulse responses show the significance of our two additional monetary shocks in impacting real oil prices. By subtracting from the money supply the temporary Federal Reserve swaps that were used to increase liquidity during the 2008 and 2020 bank crises, shocks upwards in both the adjusted M1 money supply and to inflation expectations significantly increase real oil prices; with the unadjusted M1 aggregate there is no signiÖcant effect of money supply shocks on real oil prices. Decomposition of historical oil price shocks shows a significant role played by inflation expectations and the money supply shocks during major oil shock episodes. These shocks partially replace roles previously attributed to the precautionary oil demand shock and the aggregate demand shock during the three major oil shock periods of the 1970s-1980s, post-2008 and during the 2020-2021 pandemic. The results show that both real oil price shocks and expected inflation shocks cause real GDP to fall.
    Keywords: Real Oil Price Shocks, SVAR, Money Supply, Inflation Expectations
    JEL: Q41 Q43 E31 E52
    Date: 2023
  42. By: Ben McWilliams; Giovanni Sgaravatti; Simone Tagliapietra; Georg Zachmann
    Abstract: How can the European Union achieve its target of eliminating all Russian fossil-fuel imports by 2027?
    Date: 2023–06
  43. By: Maucorps, Ambre; Römisch, Roman; Schwab, Thomas; Vujanovic, Nina
    Abstract: Closing the prosperity gap between regions has always been a key political aspiration of the European Union – and cohesion policy is the primary means to achieve that goal. Europe is currently undergoing a digital and green transition that is drastically changing the way its economy works. How well prepared are regions to capitalise on the twin transition? And what impact will it have on regional cohesion in Europe? Our study finds that greening and digitalising the economy will likely widen the gap between rich and poor regions in Europe.
    Keywords: Europe; European Union; Cohesion; Regional Development
    JEL: H54 O18 R11
    Date: 2022–10–12
  44. By: Andreas Dietrich (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen)
    Abstract: The flexibilization of electricity demand and production becomes increasingly important in energy systems with rising shares of fluctuating renewable electricity production. Power-to-heat and cogeneration units, combined with thermal storages, are considered as promising technologies for the provision of flexibility since they allow for a decoupling of thermal loads, electricity consumption and production. Based on a real-world case study, this paper explores the economic potentials of flexible, spot market-oriented operation for small residential heat pumps, electric storage heaters and medium-sized cogeneration systems from an end-users´ view in Germany. Using numerous models for the determination of heat demands, future spot market prices and unit dispatch, financial incentives in terms of expected cost savings (consumption) and profit increases (production) are derived for the years 2015-2017 as well as for three scenarios in 2030. Results suggest that only those consumers with high electricity demand and sufficient thermal storage capacities may substantially benefit from load shifting. Furthermore, existing remuneration schemes for feed-in and high retail prices for electricity consumption hamper a market-oriented production; maximization of electricity self-consumption is the most profitable operation strategy instead. To unlock flexibility potentials on end-user level, increased market price volatility is needed and policy makers should work towards a design of regulated price components that induces less dilution of market price signals.
    Keywords: power system flexibilization; demand side management; virtual power plant; CHP, heat pump
    Date: 2023–02
  45. By: Jan K. Brueckner; Matthew E. Kahn; Jerry Nickelsburg
    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: airlines, fuel, climate change, carbon emissions
    JEL: Q52 L93
    Date: 2023
  46. By: Diego Scalise (Bank of Italy)
    Abstract: This paper analyses the segment of the financial industry that comprises the set of digital applications designed to support the process of decarbonization and transition to environmental sustainability, which is known as Climate Fintech. Italy's special focus is on green equity crowdfunding and digital green lending solutions; however, automated applications for measuring environmental profiles are used to a lesser extent than in the rest of the sample.
    Keywords: Climate Fintech, green transition
    JEL: Q4 O16
    Date: 2023–06
  47. By: Lydia Dimitrakopoulou; Christos Genakos; Themistoklis Kampouris; Stella Papadokonstantaki
    Abstract: We examine how competition affects VAT pass-through in isolated oligopolistic markets as defined by the Greek islands. Using daily gasoline prices and a difference-in-differences methodology, we investigate how changes in VAT rates are passed through to consumers in islands with different market structure. We show that pass-through increases with competition, going from 50% in monopoly to around 80% in more competitive markets, but remains incomplete. We also discover a rapid rate of adjustment for VAT changes, as well as a positive relationship between competition and the rate of price adjustment. Finally, we document higher pass-through for products with more inelastic demand.
    Keywords: Pass-through, tax incidence, gasoline, Value added tax (VAT), market structure, competition, Greek islands
    JEL: H22 L1
    Date: 2023
  48. By: Ralph De Haas (European Bank for Reconstruction and Development, CEPR and KU Leuven); Ralf Martin (Imperial College London); Mirabelle Muûls (Research and Economics Department, NBB and Imperial College London); Helena Schweiger (European Bank for Reconstruction and Development)
    Abstract: Using data on 10, 769 firms across 22 emerging markets, we show that both credit constraints and weak green management hold back corporate investment in green technologies embodied in new machinery, equipment and vehicles. In contrast, investment in measures to explicitly reduce emissions and other pollution, is mainly determined by the quality of a firm’s green management and less so by binding credit constraints. In addition, data from the European Pollutant Release and Transfer Register reveal the climate impact of these organizational constraints. In areas where more firms are credit constrained and weakly managed, industrial facilities systematically emit more CO2 and other greenhouse gases. A counterfactual analysis shows that credit constraints and weak management have respectively kept CO2 emissions 4.8% and 2.2% above the levels that would have prevailed without such constraints. This is further corroborated by our finding that in localities where banks had to deleverage more due to the Global Financial Crisis, carbon emissions by industrial facilities remained 5.7% higher a decade later.
    Keywords: Green management, credit constraints, CO2 emissions, energy efficiency
    JEL: D22 L23 G32 L20 Q52 Q53
    Date: 2023–06
  49. By: Lucas W. Davis; Catherine Hausman; Nancy L. Rose
    Abstract: Encouraged by the declining cost of grid-scale renewables, recent analyses conclude that the United States could reach net zero carbon dioxide emissions by 2050 at relatively low cost using currently available technologies. While the cost of renewable generation has declined dramatically, integrating these renewables would require a large expansion in transmission to deliver that power. Already there is growing evidence that the United States has insufficient transmission capacity, and current levels of annual investment are well below what would be required for a renewables-dominated system. We describe a variety of challenges that make it difficult to build new transmission and potential policy responses to mitigate them, as well as possible substitutes for some new transmission capacity.
    JEL: L51 L94 Q41 Q48
    Date: 2023–06
  50. By: Manon François (EU Tax - EU Tax Observatory, 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); Carlos Oliveira (EU Tax - EU Tax Observatory, NOVA SBE - NOVA - School of Business and Economics - NOVA - Universidade Nova de Lisboa = NOVA University Lisbon); Bluebery Planterose (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, EU Tax - EU Tax Observatory); Gabriel Zucman (EU Tax - EU Tax Observatory, UC Berkeley - University of California [Berkeley] - UC - University of California)
    Abstract: This paper presents a new way to tax excess profits. We propose to tax the rise in the stock market capitalization of companies that benefit from extraordinary circumstances, such as energy firms following the invasion of Ukraine in February 2022. Targeting the rise in stock market capitalization (which is easily observable) makes the tax much harder to avoid than standard excess profit taxes, and allows to capture rents irrespective of where multinational companies book their profits. We apply this proposal to energy companies that are headquartered or have sales in the European Union. We estimate that taxing the January 2022 to September 2022 valuation gains of energy firms at a rate of 33% would generate around €80 billion in revenue (0.4% of GDP) for the European Union. We discuss implementation practicalities and compare our proposals to other plans made to tax excess profits.
    Date: 2022–09
  51. By: Destek, Mehmet Akif; Hossain, Mohammad Razib; Khan, Zeeshan
    Abstract: It is well recognized that countries' economic growth processes structurally shift from the agricultural sector to the industrial sector and, accordingly, the service sector. Premature deindustrialization, on the other hand, refers to the situation in which the transition from the industrial sector to the service sector occurs earlier than the transformation of the developing countries in the structural transformation process that these countries underwent in the 20th and 21st centuries. Although the shift from the industrial to the service sectors is typically seen as a positive thing for the environment, it is still unclear how the transformation that took place prior to the industrialization process's maturity period, or the loss of technological advancements obtained from the industrial sector, will affect the environment. Based on this, the purpose of this study is to explore at the environmental impacts of deindustrialization in both industrialized developed countries and developing countries which are accepted as risky countries in terms of premature deindustrialization. In order to do this, the recently developed panel non-linear ARDL approach is used, and the potential asymmetry between the industrialization process and environmental deterioration is thus investigated. The results show that both country groups experience an increase in environmental deterioration as a result of the industrialization process (positive shocks of industrialization). Conversely, the deindustrialization process (negative shocks of industrialization) slows down environmental deterioration in developed nations while speeding it up over time in developing nations. Therefore, the results show that premature deindustrialization has long-term negative effects on environmental quality.
    Keywords: Premature Deindustrialization; Structural Transformation; Carbon Emissions, Environmental Degradation; NARDL
    JEL: O2 Q5 Q57
    Date: 2023–06–08
  52. By: Robson, Beatrice; Zhen, Chen
    Keywords: Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety, Marketing
    Date: 2023
  53. By: Shirai, Sayuri (Asian Development Bank Institute)
    Abstract: The global economy has been facing a series of adverse shocks in recent years including the COVID-19 pandemic, climate crisis, the Russian invasion of Ukraine, high inflation, and interest rate shocks driven by global monetary policy normalization. The high cost of fossil fuels since 2021, moreover, has reminded the world that investment for clean energy projects has been severely inadequate due to limited implementation of climate policies and limited capital inflows to financing decarbonization efforts. While overdependence on fossil fuels might be inevitable currently, the world needs to accelerate transition to carbon neutrality and also begin to cope with nature capital stock and biodiversity losses, which are happening at an alarming pace. In particular, more financial support should be provided to emerging and developing economies (EMDEs) to help achieve climate and environmental goals and other sustainable development goals (SDGs). We give an overview of some innovative finance schemes applicable to EMDEs, including blended finance to mobilize more private capital to climate and environmental projects and debt-for-climate swaps (or debt-for-nature swaps), to provide de facto grants to small high-debt economies in exchange for climate projects (or nature protection). We also provide some suggestions for further actions through better coordination among donor and recipient nations led by G7 and G20 nations.
    Keywords: public–private partnership; blended finance; debt-for-nature swaps; performance-based grants
    JEL: F34 F35 F64 G23
    Date: 2022–12
  54. By: Alban Pellegris (UR2 UFRSS - Université de Rennes 2 - UFR Sciences sociales - UR2 - Université de Rennes 2)
    Abstract: Within ecological economics, there is a diversity of traditions highlighting the fundamental role of energy in the growth process. Faced with the limitations of neo-thermodynamic (Ayres, Warr...) and neo-physiocratic (Court, Hall...) approaches, our work proposes to consider another paradigm: Marxist political economy. The latter allows us to theoretically identify a profit rate channel through which relative energy prices affect the macroeconomic profit rate. Econometric work carried out over the period 1995-2019 on a panel of 16 countries confirms its existence. These results are discussed in the light of recent literature on the burden of the energy bill.
    Keywords: energy bill, economic growth, marxist political economy, energy consumption
    Date: 2023–01–07
  55. 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
  56. By: Casper, Kelly; Smith, Steven J.; Zhang, Ying
    Keywords: International Development, Resource/Energy Economics and Policy, Agricultural Finance
    Date: 2023

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