nep-ene New Economics Papers
on Energy Economics
Issue of 2023‒08‒21
sixty-five papers chosen by
Roger Fouquet, National University of Singapore

  1. The IMF-World Bank Climate Policy Assessment Tool (CPAT): A Model to Help Countries Mitigate Climate Change By Mr. Simon Black; Ian W.H. Parry; Mr. Victor Mylonas; Nate Vernon; Karlygash Zhunussova
  2. The Impact of Climate Policy on Oil and Gas Investment: Evidence from Firm-Level Data By Mr. Christian Bogmans; Mr. Andrea Pescatori; Ervin Prifti
  3. Restructuring Reforms for Green Growth By Mr. Serhan Cevik; João Tovar Jalles
  4. The Many Channels of Firm’s Adjustment to Energy Shocks: Evidence from France By Lionel Fontagné; Philippe Martin; Gianluca Orefice; Lionel Gérard Fontagné
  5. Natural Gas Vehicles: Consequences to Fuel Markets and the Environment By Roberto Amaral-Santos; Ariaster Chimeli, Joao Paulo Pessoa
  6. Technology Lock-In and Costs of Delayed Climate Policy By Jonathan T. Hawkins-Pierot; Katherine R. H. Wagner
  7. Green technology policies versus carbon pricing: An intergenerational perspective By Rausch, Sebastian; Yonezawa, Hidemichi
  8. Cost-efficient pathways to decarbonizing Portland cement production By Glenk, Gunther; Kelnhofer, Anton; Meier, Rebecca; Reichelstein, Stefan
  9. Long-term optimization of the hydrogen-electricity nexus in France By Behrang Shirizadeh; Philippe Quirion
  10. Towards a Green Future for Sub-Saharan Africa: Do electricity access and public debt drive environmental progress? By Stephen K. Dimnwobi; Kingsley I. Okere; Bernard C. Azolibe; Kingsley C. Onyenwife
  11. Environmental Policy and Renewable Energy in an Imperfectly Competitive Market By Alexander Haupt
  12. Rebuilding Ukraine’s Infrastructure after the War By Iryna Kosse
  13. From extractivism to community resilience: the promise and perils of Sardinia's energy transition. By Fronteddu, Antonio
  14. Preferences for climate change policies: the role of co-benefits By Jens Abildtrup; Jette Bredahl Jacobsen; Suzanne Elizabeth Vedel; Udo Mantau; Robert Mavsar; Davide Pettenella; Irina Prokofieva; Florian Schubert; Anne Stenger; Elsa Varela; Enrico Vidale; Bo Jellesmark Thorsen
  15. Unleashing strong, digital and green growth in Viet Nam By Patrick Lenain; Ben Westmore; Quoc Huy Vu; Minh Cuong Nguyen
  16. "Empowering Sustainable Consumption: Harnessing the Potential of Smart Grid Systems and Internet of Things for Environmental Conservation" By Asuamah Yeboah, Samuel
  17. Unbalanced Investments: Accra’s Informal Settlements By Robert Stewart
  18. Evaluating Potential Land Use of Utility-Scale Photovoltaics (Solar Panels) on Farmland in Tennessee By DeLong, Karen L.; Murphy, Olivia G.; Hughes, David W.; Clark, Christopher D.; Crissy, Harry
  19. How does fuel demand respond to price changes? Quasi-experimental evidence based on high-frequency data By M. ADAM; O. BONNET; E. FIZE; T. LOISEL; M. RAULT; L. WILNER
  20. The invasion of Ukraine and the energy crisis: comparative advantages in equity valuations By Fabrizio Ferriani; Andrea Gazzani
  21. Energy Expenditures and CPI Inflation in 2022: Inflation Was Even Higher Than We Thought By Huw Dixon; Aftab Chowdhury
  22. Scopes of carbon emissions and their impact on green portfolios By Théophile Anquetin; Guillaume Coqueret; Bertrand Tavin; Lou Welgryn
  23. Do firms respond to commitments on climate change? Impact of COP21 on investment intensity By Pramendra Singh Tank; Sanjay Kumar Jain; Balagopal Gopalakrishnan
  24. On the functional form of short-term electricity demand response – insights from high-price years in Germany By Arnold, Fabian
  25. The Economic and Environmental Consequences of the Petroleum Industry Extensive Margin By Giacomo Benini; Adam Brandt; Valerio Dotti; Hassan El-Houjeiri
  26. Do investors care about carbon risk? The impact of the Paris agreement on the inflation hedging performance of commodities By Refk Selmi
  27. Prevention first vs. cap-and-trade policies in an agent-based integrated assessment model with GHG emissions permits By Lilit Popoyan; Alessandro Sapio
  28. Neue Allianzen: Plurilaterale Kooperation als Modus der internationalen Klimapolitik By Feist, Marian
  29. Propagation of carbon tax in credit portfolio through macroeconomic factors By G\'eraldine Bouveret; Jean-Fran\c{c}ois Chassagneux; Smail Ibbou; Antoine Jacquier; Lionel Sopgoui
  30. Global money supply and energy and non-energy commodity prices: A MS-TV-VAR approach By Stefano Grassi; Francesco Ravazzolo; Joaquin Vespignani; Giorgio Vocalelli
  31. The Heterogeneous Effects of Carbon Pricing: Macro and Micro Evidence By Brendan Berthold; Ambrogio Cesa-Bianchi; Federico Di Pace; Alex Haberis
  32. Air Pollution and Entrepreneurship By Guo, Liwen; Cheng, Zhiming; Tani, Massimiliano; Cook, Sarah; Zhao, Jiaqi; Chen, Xi
  33. "More bang for the buck"? Evidence on the effectiveness of an energy efficiency subsidy By Bartels, Lara; Werthschulte, Madeline
  34. How to green the European Auto ABS market? A literature survey By Latino, Carmelo; Pelizzon, Loriana; Riedel, Max
  35. International collaboration on the energy transition in Vietnam By Minh Ha-Duong
  36. Investor responses to information updates on peer behavior and public investment policy: The case of green investments By Alt, Marius; Berger, Marius; Bersch, Johannes
  37. A Regional Analysis of Electric LDV Portfolio Choices by Vehicle Manufacturers By Aditya Ramji; Hanif Tayarani
  38. Board Gender Diversity Reform and Corporate Carbon Emissions By Raul Barroso; Tinghua Duan; Siyue Guo; Oskar Kowalewski
  39. Green Finance and Inequality By Ola Mahmoud; Tschan Lea
  40. Impacts of ownership changes on emissions and industrial production: Evidence from Europe By Chlond, Bettina; Germeshausen, Robert
  41. Effect of a European Carbon Border Adjustment Mechanism on the APAC Region: A structural gravity analysis By Aline MORTHA; ARIMURA Toshi H.; TAKEDA Shiro; Tatyana CHESNOKOVA
  42. Korea's problems with electric vehicle subsidies under the Inflation Reduction Act By Chad P. Bown
  43. Proof of Concept for a U.S. Air Emissions Physical Flows Account By Matthew Chambers
  44. Carbon Pricing and Inflation Expectations: Evidence from France By Jannik Hensel; Giacomo Mangiante; Luca Moretti
  45. Is the Emphasis on Cofinancing Good for Environmental Multilateral Funds? By Matthew Kotchen; Andrew Vogt
  46. Definitions and mechanisms for managing durability and reversals in standards and procurers of carbon dioxide removal By Arcusa, Stephanie; Hagood, Emily
  47. Are the benefits of electrification realized only in the long run? Evidence from rural India By Suryadeepto Nag; David I. Stern
  48. How political tensions and geopolitical risks impact oil prices? By Valérie Mignon; Jamel Saadaoui
  49. Natural resources and conflict: The crucial role of power mismatch and geographic asymmetries By Massimo Morelli; Dominic Rohner
  50. Impact assessment of Solar Irrigation Pumps (SIPs) in Bangladesh: a baseline technical report By Buisson, Marie-Charlotte; Mitra, Archisman; Osmani, Z.; Habib, A.; Mukherji, Aditi
  51. E-bike Incentive Programs Reduce GHGs and Support Recreational Travel By Fitch-Polse, Dillon; Johnson, Nicholas; Handy, Susan
  52. New alliances: Plurilateral initiatives as a mode of cooperation in international climate politics By Feist, Marian
  53. Tapping into people's impatience for better environmental subsidies By Atayev, Atabek; Caspari, Gian; Hillenbrand, Adrian; Klein, Thilo
  54. The Fiscal and Intergenerational Burdens of Brakes and Subsidies for Energy Prices By Christian Scharrer; Johannes Huber
  55. Climate financing in Africa: strategies for the future By Kouassi Coulibaly, Nadia; Mbeya, Paulette; Bayuo, Blaise; Chan, Kenddrick
  56. Energy price shocks and inflation in the euro area By Stefano Neri; Fabio Busetti; Cristina Conflitti; Francesco Corsello; Davide Delle Monache; Alex Tagliabracci
  57. Greening or greenwashing? How consumers’ beliefs influence firms’ advertising strategies on environmental quality By Lucie Bottega; Dorothée Brécard; Philippe Delacote
  58. Exploring the recent resilience of Italy's goods exports: Competitiveness, energy intensity and supply bottlenecks By Simona Giglioli; Claire Giordano
  59. Forces et fragilités des tableaux internationaux entrées-sorties pour le calcul de l'empreinte carbone By A. BOURGEOIS; F. GERVOIS; R. LAFROGNE-JOUSSIER
  60. Germany: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Germany By International Monetary Fund
  61. Panorama des modes de financement alternatifs pour la rénovation énergétique de bâtiments résidentiels privés By Pablo Manuelli; Sandrine Meyer
  62. Do Slow Streets Encourage More Dockless Travel? Evidence from Electric Scooter Usage in Four Cities By Boarnet, Marlon G; Lee, Seula; Gross, James; Thigpen, Calvin
  63. The heterogeneous effects of entry on prices By Fischer, Kai; Martin, Simon; Schmidt-Dengler, Philipp
  64. Inflation and energy price shocks: lessons from the 1970s By Francesco Corsello; Matteo Gomellini; Dario Pellegrino
  65. Euro Area Inflation after the Pandemic and Energy Shock: Import Prices, Profits and Wages By Mr. Niels-Jakob H Hansen; Mr. Frederik G Toscani; Jing Zhou

  1. By: Mr. Simon Black; Ian W.H. Parry; Mr. Victor Mylonas; Nate Vernon; Karlygash Zhunussova
    Abstract: To stabilize the climate, global greenhouse gas emissions must be cut by 25 to 50 percent by 2030 compared to 2019. Such an unprecedented rate of decarbonization necessitates climate mitigation policies across countries, notably carbon pricing, fossil fuel subsidy reform, renewable subsidies, feebates, emission rate regulations, and public investments. To design and implement effective, efficient, and equitable policies, governments need tools to assess economic, environmental, fiscal, and social impacts. To support this effort, the IMF and World Bank are making their joint Climate Policy Assessment Tool (CPAT) available to governments. CPAT is a transparent, flexible, and user-friendly model covering over 200 countries. It allows for the rapid quantification of impacts of climate mitigation policies, including on energy demand, prices, emissions, revenues, welfare, GDP, households and industries, local air pollution and health, and many other metrics. This paper describes the CPAT model, its data sources, key assumptions, and caveats.
    Keywords: CPAT; climate mitigation; carbon pricing; instrument choice; fiscal incidence; health co-benefits; transport co-benefits; welfare effects
    Date: 2023–06–23
  2. By: Mr. Christian Bogmans; Mr. Andrea Pescatori; Ervin Prifti
    Abstract: Using a text-based firm-level measure of climate policy exposure, we show that climate policies have led to a global decline of 6.5 percent in investment among publicly traded oil and gas companies between 2015 and 2019, with European companies experiencing the most significant impact. Similarly, climate policy uncertainty has also had a negative impact. Results support the Neoclassical investment model, which predicts a pre-emptive cut in investment in reaction to downward shifts in prospective demand, in contrast with the “green paradox” that predicts an increase in current investment to shift production toward the present.
    Keywords: Fossil fuel phase out; Paris Agreement; energy transition; DiD
    Date: 2023–06–30
  3. By: Mr. Serhan Cevik; João Tovar Jalles
    Abstract: Policymakers across the world are striving to tackle the century-defining challenge of climate change without undermining potential growth. This paper examines the impact of structural reforms in the energy sector (electricity and gas) on enviromental outcomes and green growth indicators in a panel of 25 advanced economies during the period 1970-2020. We obtain striking results. First, while structural reforms so far failed in reducing greenhouse gas emissions per capita, there is some evidence for greater effectiveness in lowering emissions per unit of GDP. Second, although energy reforms are not associated with higher supply of renewable energy as a share of total energy supply, they appear to stimulate a sustained increase in environmental inventions and patents per capita over the medium term. We also find strong evidence of nonlinear effects, with market-friendly energy reforms leading to better environmental outcomes and green growth in countries with stronger environmental regulations. Looking forward, therefore, structural reforms should be designed not just for market efficiency but also for green growth.
    Keywords: Structural reforms; environment; green growth; panel data; local projection; environmental policy; energy reform; market efficiency; reform shock; EU country; EPS index; Sustainable growth; Greenhouse gas emissions; Global
    Date: 2023–06–09
  4. By: Lionel Fontagné; Philippe Martin; Gianluca Orefice; Lionel Gérard Fontagné
    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: L60 Q41 Q43
    Date: 2023
  5. By: Roberto Amaral-Santos; Ariaster Chimeli, Joao Paulo Pessoa
    Abstract: Policies to adopt cleaner fuels have become increasingly important, but their impacts on incumbent fuel prices and resulting greenhouse gas emissions are unclear. We use a panel dataset on weekly prices at the gas station level in a large Brazilian state to study how the growth of natural gas, a cheaper and less carbon-intensive alternative to traditional fuels, affected retail prices and profit margins of gasoline and ethanol. Applying an IV strategy, we estimate that prices and margins have fallen. The intensified competition in the fuel market boosted fuel demand, leading to higher emissions of GHGs and other pollutants.
    Keywords: Gasoline; Ethanol; Price Competition; Emissions; Brazil
    JEL: L11 L13 Q31 Q41 Q42 Q48 Q53 Q55 Q58
    Date: 2023–07–19
  6. By: Jonathan T. Hawkins-Pierot; Katherine R. H. Wagner
    Abstract: This paper studies the implications of current energy prices for future energy efficiency and climate policy. Using U.S. Census microdata and quasi-experimental variation in energy prices, we first show that manufacturing plants that open when electricity prices are low consume more energy throughout their lifetime, regardless of current electricity prices. We then estimate that a persistent bias of technological change toward energy can explain the long-term effects of entry-year electricity prices on energy intensity. Overall, this “technology lock-in” implies that increasing entry-year electricity prices by 10% would decrease a plant’s energy intensity of production by 3% throughout its lifetime.
    Date: 2023–07
  7. By: Rausch, Sebastian; Yonezawa, Hidemichi
    Abstract: Technology policy is the most widespread form of climate policy and is often preferred over seemingly efficient carbon pricing. We propose a new explanation for this observation: gains that predominantly accrue to households with large capital assets and that influence majority decisions in favor of technology policy. We study climate policy choices in an overlapping generations model with heterogeneous energy technologies and distortionary income taxation. Compared to carbon pricing, green technology policy leads to a pronounced capital subsidy effect that benefits most of the current generations but burdens future generations. Based on majority voting which disregards future generations, green technology policies are favored over a carbon tax. Smart 'polluter-pays' financing of green technology policies enables obtaining the support of current generations while realizing efficiency gains for future generations.
    JEL: Q54 Q48 Q58 D58 H23
    Date: 2023
  8. By: Glenk, Gunther; Kelnhofer, Anton; Meier, Rebecca; Reichelstein, Stefan
    Abstract: Accounting for nearly 8% of global annual carbon dioxide (CO2) emissions, the cement industry is considered difficult to decarbonize. While a sizeable number of abatement levers for Portland cement production are technologically ready for deployment, many are still viewed as prohibitively expensive. Here we develop a generic abatement cost framework for identifying cost-efficient pathways toward substantial emission reductions. We calibrate our model with new industry data in the context of European cement plants that must obtain emission permits under the European Emission Trading System. We find that a price of €81 per ton of CO2, as observed on average in 2022, incentivizes firms to reduce their annual direct emissions by about one-third relative to the status quo. Yet, this willingness to abate emissions increases sharply at a carbon price of €100 per ton. If cement producers were to expect such carbon price levels to persist in the future, they would have incentives to reduce emissions by almost 80% relative to current emission levels.
    Keywords: marginal abatement cost, carbon emissions, industrial decarbonization, cement production
    JEL: M1 O33 Q42 Q52 Q54 Q55 Q58
    Date: 2023
  9. By: Behrang Shirizadeh (Deloitte Economic Advisory); Philippe Quirion (CNRS, CIRED)
    Abstract: We model the optimal hydrogen and electricity production and storage mix for France by 2050. Moreover, an iterative calculation method to represent electrolyzer lifetime based on functioning hours in linear programming is developed. We provide a central scenario and study its sensitivity to the cost of electrolyzers, to hydrogen demand and to renewable energy deployment potential. The proportion of electrolysis to methane reforming with CO2 capture and storage in hydrogen production is sensitive to the cost of electrolyzers, with the former providing around 60% in the central scenario. However, the system cost as well as the hydrogen and electricity production costs are much more robust, thanks to the wide feasible near-optimal solutions spectrum. The electricity production mix is almost fully renewable in the central scenario, while nuclear power has a significant role only if the potential of wind & solar limits their deployment, or if CO2 capture and storage is not authorized. Furthermore, exclusion of reformer-based hydrogen from fossil gas with CO22 capture induces negligible additional cost to the hydrogen-electricity coupled system (below 1%). Therefore, in the current European resilience and sovereignty context, a robust low-carbon hydrogen development strategy would be prioritizing green hydrogen to other low-carbon hydrogen supply options.
    Keywords: Power system modelling, low-carbon hydrogen, , ,
    JEL: Q42
    Date: 2023–08
  10. By: Stephen K. Dimnwobi (Nnamdi Azikiwe University, Awka, Nigeria); Kingsley I. Okere (Gregory University, Uturu, Nigeria); Bernard C. Azolibe (Nnamdi Azikiwe University, Awka, Nigeria); Kingsley C. Onyenwife (Igbariam, Nigeria)
    Abstract: The combination of rising debt levels, poor electricity access, and environmental deterioration could threaten the attainment of the Sustainable Development Goals (SDGs). Hence, this inquiry examined the implications of public borrowing and access to electricity on environmental sustainability (proxied by ecological footprint (ECOL) and carbon dioxide (CO2) emissions) in Sub-Saharan Africa (SSA), largely overlooked in the literature. In addition to pre-estimation, diagnostic and robustness checks utilized in the study, the instrumental variable generalized method of moment (IV-GMM) approach is employed to examine annual data from 39 SSA economies between 2005 and 2018. The key findings indicate that public debt negatively influences environmental sustainability in the region, while access to electricity exerts a positive and significant impact on environmental sustainability. The study provides recommendations for SSA policymakers to significantly reduce pollution and protect the environment which is vital for sustainable development.
    Keywords: Environmental sustainability, SSA, Public debt, Electricity access, Ecological Footprint, Carbon Emission
    Date: 2023–01
  11. By: Alexander Haupt
    Abstract: This paper analyses an electricity market in which a monopolist that employs fossil-fuel base-load and peak-load technologies competes against a fringe of renewable energy (RE) generators. The optimal technology and electricity mix can be decentralised by levying technology-dependent capacity taxes/subsidies in addition to technology-/state-dependent emission taxes. Whenever base-load capacity is taxed (subsidised), peak-load capacity is subsidised (taxed). A decline in RE capacity costs and an increase in the share of consumers on real-time prices predominantly raises emission taxes and brings them closer to their Pigouvian level, albeit with some qualifications. Capacity taxes/subsidies disappear when all consumers are on real-time prices and RE is about to fully crowd out conventional base-load capacity.
    Keywords: intermittent renewable energy, peak-load technology, base-load technology, emission tax, capacity tax/subsidy
    JEL: Q42 Q48 Q58 H23 L13
    Date: 2023
  12. By: Iryna Kosse
    Abstract: Ukraine is a big country with a developed multimodal transport infrastructure that includes a network of roads, railways, airports and seaports, as well as pipelines. In addition, the country has significant infrastructure for electricity generation and distribution, and for gas transportation. Ukraine is an urbanised country, with 46% of its population living in an apartment. The ongoing armed aggression by the Russian Federation has had a significant impact on Ukrainian infrastructure, leading to the destruction of roads, rail tracks, power stations and housing units. Over the next few years, the infrastructure sector will require significant financing, prioritisation and coordination between the Ukrainian government and international actors, based on the principles of multimodality, flexibility, connectivity and sustainable urban mobility. Energy and housing infrastructure should rely on renewable energy sources, distributed generation and energy-efficient housing. In addition, domestic infrastructure policies should be combined with EU infrastructure initiatives.
    Keywords: Ukraine, multimodal transport infrastructure, electricity generation, electricity distribution, gas transportation, Russian Federation, infrastructure destruction, EU infrastructure initiatives
    JEL: R4 Q4 O1 O4 R1 H7
    Date: 2023–07
  13. By: Fronteddu, Antonio
    Abstract: The pursuit of global carbon neutrality makes the energy transition process no longer procrastinable. The switch towards renewable-based energy systems is paving the way for new forms of energy governance that prioritise the role of commons by demarketising access to energy. However, governments’ strategies worldwide seem to prioritise innovation in the raw materials (sun, wind, etc.) rather than in governance – favouring the continued extraction of energy from resource-rich regions. This work will analyse the case of Sardinia as an example where these two phenomena intersect contradictorily, by comparing the bottom-up nature of energy communities (ECs) vis-á-vis the top-down nature of public-private initiatives, alongside their policymaking trajectories. The key insights that will stem from this thesis elucidate a continuum with prior top-down policies of economic extractivism operated by the Italian government in Sardinia. Such top-down policies are conceptualised thanks to core and energy periphery theories and can explain the current mainstream regime of energy transition. Alternative strategies to pursue policy are conceptualised thanks to the energy democracy theory. Such theory envisions an active citizen engagement alongside the sustainable consumption of renewable energy and resources within the realm of energy communities. Therefore, the thesis will conclude that although large-scale top-down policies are being operated in the island, with special reference to the energy transition, energy communities can forge bottom-up alternative examples of policymaking, enabling an energy transition that can cross-tackle long-standing problems of Sardinian society, such as a stagnant economy, depopulation, self-determination, issues of land, landscapes, and pollution.
    Date: 2023–05–07
  14. By: Jens Abildtrup (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jette Bredahl Jacobsen (IFRO - Institute of Food and Resource Economics [Copenhagen] - Faculty of Science [Copenhagen] - UCPH - University of Copenhagen = Københavns Universitet); Suzanne Elizabeth Vedel (Tech & Environm Adm, Dept Analyt, Copenhagen); Udo Mantau (INFRO Informationssysteme Rohstoffe, Celle,); Robert Mavsar (EFI - European Forest Institute); Davide Pettenella (TeSAF - Department of Land, Environment, Agriculture and Forestry - Unipd - Università degli Studi di Padova = University of Padua); Irina Prokofieva (EFI - European Forest Institute); Florian Schubert (INTEND Geoinformat GmbH, Kassel); Anne Stenger (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Elsa Varela (Forest Sci & Technol Ctr Catalonia, Lleida); Enrico Vidale (TeSAF - Department of Land, Environment, Agriculture and Forestry - Unipd - Università degli Studi di Padova = University of Padua); Bo Jellesmark Thorsen (IFRO - Institute of Food and Resource Economics [Copenhagen] - Faculty of Science [Copenhagen] - UCPH - University of Copenhagen = Københavns Universitet)
    Abstract: Policies mitigating climate change provide a global public good but are also likely to imply local co-benefits where implemented. This may affect citizens' preferences for what policy to implement as well as where to implement it. This aspect remains understudied despite its relevance for international climate negotiations, national policies, and the development of voluntary carbon credit markets. The results of a discrete choice experiment show that citizens in five countries (Denmark, France, Germany, Italy and Spain) have quite similar mean willingness to pay for carbon emission reductions and agree on the ranking of policies targeting different sectors. Specifically, policies targeting renewable energy use, are preferred over policies targeting industrial energy efficiency or carbon sequestration and biomass production in forests. Applying follow-up questions shows that concerns over co-benefits, notably air pollution, is linked to preferences for implementation in the home country. In the absence of co-benefits, citizens are indifferent or prefer policies implemented in other countries.
    Keywords: Carbon emissions, Cobenefits, Willingness to pay, Choice experiment, Crosscountry study, Policy acceptability
    Date: 2023
  15. By: Patrick Lenain; Ben Westmore; Quoc Huy Vu; Minh Cuong Nguyen
    Abstract: Viet Nam has been quick to recover from the downturns caused by the COVID-19 pandemic, but it faces long-term economic challenges. Boosting labour productivity will be crucial to sustained high economic growth. Attracting further foreign investment and reaping the benefit of advanced technologies will require additional improvements to the business environment through simplifying administrative procedures. Levelling the playing field of competition between state-owned enterprises and private enterprises will also help to maintain Viet Nam’s attraction for international investors. The country is already among the leaders of digitalisation in Southeast Asia, with strong adoption of e-commerce, telemedicine and telework. Further investment in digital skills will be key to maintain this momentum. The authorities have committed to net zero carbon emissions by 2050 and are expanding renewable energy generation capacity. A comprehensive decarbonisation plan would facilitate the transition to greener growth.
    Keywords: business climate, carbon pricing, climate policy, digital skills, digitalisation, energy transition, foreign investment, net zero, productivity
    JEL: H23 J24 K23 O14 Q43 Q52 Q54
    Date: 2023–08–07
  16. By: Asuamah Yeboah, Samuel
    Abstract: This systematic review explores the role of smart grid systems (SGS) and the Internet of Things (IoT) in environmental conservation. Smart grid systems, incorporating advanced technologies such as sensors, data analytics, and renewable energy sources, enable efficient electricity distribution, load management, and grid stability. The IoT, through real-time monitoring and data collection of environmental parameters, facilitates proactive environmental management and resource allocation. By analysing existing research and case studies, this review provides a comprehensive analysis of the benefits and challenges associated with these technologies. The findings highlight their potential in promoting energy conservation, informed decision-making, and environmental sustainability.
    Keywords: smart grid systems, Internet of Things (IoT), environmental conservation, energy conservation, load management, grid stability, real-time monitoring, proactive environmental management, resource allocation, sustainability.
    JEL: L94 Q50 Q55
    Date: 2023–04–25
  17. By: Robert Stewart (The University of Toronto)
    Abstract: Canada, like other G7 countries, has set an ambitious greenhouse gas emissions reduction target for 2030, and a goal of net zero emissions by 2050. However, while other G7 countries’ emissions levels have declined over the last decade, Canada’s emissions have risen. Despite government policies and public financing to counter this trend, there remains a financing gap for low-carbon investments that support the 2030 target. Public financing is insufficient and private financing can be constrained by barriers such as policy uncertainties, undesirable financial risks, and high capital demand for project investments. Green Investment Banks (GIBs) are designed to finance low-carbon economic development by mobilizing private financial capital towards low-carbon investments. This paper describes and analyses GIBs as institutional tools capable of addressing the low-carbon financing gap in Canada. I identify the main characteristics of GIBs (governance structure, capitalization method, asset vehicles, and performance measurement) and show how GIBs are being used to catalyse low-carbon investments and build institutional capacity to support low-carbon economic development. GIBs focus on long-term financing instruments and innovative financing mechanisms to reduce the barriers between private capital and low-carbon investments. GIBs help scale up private investments and reduce dependence on limited and inconsistently available public financing. GIBs can also support institutional capacitybuilding by aiding low-carbon policy development and supporting environmental awareness and low-carbon transition education. This paper looks at four well-established GIBs – Australia’s Clean Energy Finance Corporation (CEFC), the UK Green Investment Bank (UKGIB), the Connecticut Green Bank (CTGB), and the New York Green Bank (NYGB) – and describes some of their achievements. The paper then discusses the potential for municipal GIBs in Canada, and highlights The Atmospheric Fund (TAF) in Toronto and the Low-Carbon Cities Canada (LC3) Network, which will establish institutions similar to TAF in six other Canadian cities: Vancouver, Calgary, Edmonton, Ottawa, Montréal, and Halifax. While TAF operates like a GIB, there is more focus on grantmaking than is typically observed in other notable GIBs. TAF operates as both a grant-making and an investing institution. TAF’s grants, however, are funded from investment returns on its endowment capital, protecting its capital from being eroded. In general, grants reduce capital recycling potential and limit capital growth. While capital growth may not be an intended part of TAF’s mandate, a more standard GIB approach would reduce grants in favour of commercial financing that can attract private investment. GIBs have been increasing in the United States, but are absent in Canada. The emerging LC3 Network could implement the GIB model across Canadian cities to leverage the catalytic financing capabilities that GIBs bring to low-carbon investments. To support this outcome, the LC3 Network should focus on building coalitions with financial institutions to identify barriers between the sources and destinations of financial capital, and develop effective mechanisms to reduce these barriers and accelerate private financing for low-carbon investment projects in Canadian cities. Through the GIB model, cities can also further leverage institutional capacity-building for low-carbon economic development.
    Keywords: green investment banks, infrasture, The Atmospheric Fund, municipalities, low-carbon investments, TAF, municipal green investment banks
    Date: 2023–08
  18. By: DeLong, Karen L.; Murphy, Olivia G.; Hughes, David W.; Clark, Christopher D.; Crissy, Harry
    Abstract: Photovoltaic (PV) cells, commonly referred to as solar panels, absorb energy from sunlight and convert it to electricity. PV energy generation has increased drastically in the United States (U.S.) in the last decade, growing from 26.5 gigawatt-hours in 2014 to over 207 gigawatt-hours in the last 12 months, or from 0.6% to 4.8% of total U.S. electricity production (U.S. Energy Information Administration, 2023a). The combination of increasing cost competitiveness of PV energy generation (U.S. Department of Energy [DOE], 2021) and efforts to decarbonize the U.S. electric grid suggest even more rapid growth. For example, the U.S. DOE (2021) projects that solar generation could grow to as much as 40% of the U.S. electricity supply by 2035, given aggressive decarbonization policies. At a more local level, the Tennessee Valley Authority (TVA) has set a goal of adding 10 gigawatts (GWs) of solar production capacity from 2022 to 2035 (Tennessee Valley Authority, 2023b). The rapid production growth coupled with aggressive targets for decarbonization and increased solar capacity has focused attention on the amount of land currently being converted to PV energy production and the amount that will ultimately be needed to accommodate future growth. This report attempts to quantify the amount of land currently used for utility-scale PV energy production in Tennessee and to project the amount likely to be used under different scenarios for future growth. More specifically, this report estimates the amount of land in Tennessee used by: (i) existing utility-scale PV production, (ii) contracted but not yet operational utility-scale PV production, and (iii) utility-scale PV production if TVA were to reach its PV electricity generation goals. Given that farmland could be a location of PV electricity production, the report considers the possible effects of growth on the amount of available farmland in Tennessee. In Tennessee, operational utility-scale PV production currently produces 344 megawatts (MWs) of energy (TVA, 2023a). Contracted, but not yet operational, utility-scale PV production in Tennessee will account for another 1, 130 MWs of energy (TVA, 2023a). Following industry and academic literature (e.g., Solar Energy Industries Association, 2023; Bolinger and Bolinger 2022), a range of 5.56 to 10 acres per MW of generated power was used to estimate PV land use. Thus, current operational and contracted utility-scale PV facilities in Tennessee would generate 1, 474 MWs of energy and require 8, 197 to 14, 743 acres of land. Tennessee has 26.4 million acres of land and 10.8 million acres of farmland (USDA, 2023). Therefore, operational and contracted utility-scale PV land use equates to 0.031 to 0.056% of Tennessee’s total landmass or 0.076 to 0.137% of Tennessee’s farmland if all these facilities were located on farmland. If by 2035 TVA reached their sustainability goal and added an additional 10 GWs of PV generation to the existing 344 MWs of PV production in Tennessee, and assuming that TVA placed all PV developments in Tennessee, 57, 514 to 103, 443 acres of land would be required for utility-scale PV installments (i.e., an amount equivalent to 0.22 to 0.39% of Tennessee land or 0.53 to 0.96% of Tennessee farmland if exclusively placed on farmland). However, not all of this additional production would be located in Tennessee, which occupies a little more than half of TVA’s 80, 000 square mile service region. To provide greater context, this report also contains information on the location of existing and contracted utility-scale PV developments, the extent of Tennessee farmland being converted to other uses, PV development considerations for agricultural communities, and the potential for collocation of PV power generation and agricultural production, or what is commonly referred to as agrivoltaics.
    Keywords: Land Economics/Use, Resource /Energy Economics and Policy
    Date: 2023–07–26
  19. By: M. ADAM (Insee); O. BONNET (Insee); E. FIZE (Conseil d’Analyse Économique); T. LOISEL (Insee, Crest); M. RAULT (onseil d’Analyse Économique.); L. WILNER (Insee, Crest)
    Abstract: This article exploits quasi-natural experiments provided by both the 2022 crude oil price surge consecutive to the Russo-Ukrainian war and fuel excise tax cuts in France to infer the price sensitivity of fuel demand. The granularity of bank account data available at the transaction level permits to shed new insights on how to properly disentangle anticipation effects from price effects. After controlling for anticipatory behavior, we obtain a price-elasticity comprised between -0.4 and -0.21. The average elasticity exhibits sizeable dispersion with respect to fuel spending, but varies little with income and location. Counterfactual simulations enable us to assess both financial and distributive impacts of the tax policy at stake as well as its effect on CO2 emissions.
    Keywords: Fuel demand; price elasticity; excise tax changes; anticipatory behavior; transaction-level data.
    JEL: C18 C51 D12 H23 H31 L71 Q31 Q35 Q41
    Date: 2023
  20. By: Fabrizio Ferriani (Bank of Italy); Andrea Gazzani (Bank of Italy)
    Abstract: We study the impact of the widening energy price differentials caused by the war in Ukraine on the returns of European and US firms. Using several measures of firms' exposure to energy consumption, we show that return differentials between EU and US firms widened significantly after the outbreak of the war in Ukraine. Our results indicate a persistent comparative disadvantage between the two regions, driven by heterogeneous energy costs, which has continued even after the partial subsiding of the energy shock by the end of 2022. These findings suggest that the impact of the war on energy prices may have lasting economic implications for Europe, potentially exacerbating its competitiveness disadvantages compared with other geographic regions that have access to more affordable energy inputs.
    Keywords: war in Ukraine, energy impacts, energy comparative advantage, financial performance
    JEL: G12 G14 G32 G33
    Date: 2023–07
  21. By: Huw Dixon; Aftab Chowdhury
    Abstract: This study finds a downward bias in the official CPI inflation figure from the second quarter to the end of 2022 due to the sudden changes in household energy expenditure. The energy price (specifically, oil price) started increasing from the last quarter of 2021 due to the rebound of economic activity and the supply-side issues after the Covid-19 pandemic, as well as the declining investment in oil and gas production after 2014. However, the sudden increase in the energy price in the second quarter of 2022 is simply derived from the Russia-Ukraine conflict that began on 24 February 2022. The sudden rise in the energy price and its inelastic nature has generated significant changes in household expenditure for energy (specifically in COICOP 04 Housing, water, electricity, gas, and other fuels and the COICOP 07 transport). These produce a significant downward bias in the official CPI inflation rate in COICOP 04 and 07, hence in the official CPI inflation rate for all items. Moreover, the input-output matrix of the national accounts helps us find the intermediate use of energy and its impact in other COICOP divisions which are not directly related to energy, such as COIOP 02 Alcoholic Beverages and Tobacco, COICOP 05 manufacture of Furniture, and COICOP 06 Health. All those together have caused the downward bias in the official CPI inflation rate in 2022.
    Keywords: CPI, inflation, energy economics
    JEL: C43 C67 D10 E01 E31 Q41
    Date: 2023–07
  22. By: Théophile Anquetin; Guillaume Coqueret (EM - emlyon business school); Bertrand Tavin (Carbon4 Finance); Lou Welgryn
    Abstract: The aim of this paper is to study the performance of carbon-based portfolios when all emissions scopes are accounted for. We formalize low-carbon portfolio strategies by integrating a carbon intensity penalty to a constrained mean-variance optimization framework. To do so, we resort to direct and indirect emissions data, split between Scopes 1-2 and Scope 3. Our empirical results show that it is possible to cut emission intensities in half at least with virtually no loss in Sharpe ratio for reasonable levels of the carbon constraint. These results are valid across various choices of risk aversions, and irrespective of emissions data provider. For a sustainability-aware investor, these low-carbon portfolios are associated to a higher level of welfare compared to their traditional counterpart. We find that the corresponding allocations are shifted towards assets with higher returns while keeping the portfolio's volatility unchanged. Overall, our results add to the literature contending that sustainable investing is not costly.
    Date: 2022–10
  23. By: Pramendra Singh Tank; Sanjay Kumar Jain; Balagopal Gopalakrishnan
    Abstract: In the Paris Climate Agreement (COP21), countries pledged to restrict global warming to 1.5-2.0 degrees Celsius by reducing greenhouse gas (GHG) emissions. We examine whether firms respond to the commitments made by countries in the period following the agreement. Using cross-country data with 68, 471 firm-year observations and a policy experiment approach, we find that manufacturing firms domiciled in countries with ex-ante higher GHG emissions per capita reduce their capital expenditure intensity after COP21. We also find that the market valuations of such firms are substantially depressed compared to those firms located in countries with low GHG emissions per capita. The findings suggest that climate policy uncertainty and transition risks have likely contributed to the heterogeneous firm response across countries. The insights from our study contribute to a relatively novel literature that assesses the impact of the global climate agreement on capital expenditure intensity and market valuation.
    Date: 2023–08–08
  24. By: Arnold, Fabian (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: Demand response is crucial for balancing supply and demand in the presence of intermittent electricity generation, particularly during scarcity situations with high prices. In 2021/2022, wholesale power prices in Germany have been dramatically higher than ever before, which offers the opportunity to investigate the demand response in high-price situations. This paper, thus, discusses the applicability of the two common functional forms of demand response under these circumstances, namely linear and log-log. Using a two-stage least squares approach, the short-term own-price elasticity of electricity demand in Germany is estimated for the period from 2015 to 2022, employing the two assumptions for the functional form of the demand function. The day-ahead forecast of wind power generation serves as an instrumental variable for the day-ahead price. The analysis shows that for low prices, the linear assumption tends to yield similar average elasticities to the constant elasticity obtained from the log-log specification. However, estimators based on linear functions exhibit significant variations depending on whether low or high prices are considered. This discrepancy arises from the observation that remaining demand at high prices tends to have limited flexibility, leading to distinct estimations. In contrast, the log-log approach provides smaller differences between estimates based on low and high prices. The exponential nature of the log-log function effectively captures the decrease in absolute demand response at high prices, resulting in more consistent estimations across the price range.
    Keywords: Electricity demand; demand function; short-term elasticity; 2SLS
    JEL: C36 D22 L94 Q21 Q41
    Date: 2023–07–25
  25. By: Giacomo Benini (Department of Business and Management Science, NHH); Adam Brandt (Department of Energy Resource Engineering, Stanford University); Valerio Dotti (Department of Economics, University Of Venice CÃ Foscari); Hassan El-Houjeiri (Technology Outlook, Strategy & Planning Dept., Saudi Aramco)
    Abstract: The recent diffusion of novel oil technologies has increased the variability of petroleum resources. Today, it is possible to mine oil sands, to extract liquids from tight rocks, and to produce high-viscosity oils. Merging accounting and environmental data, we quantify the upstream emissions of the least profitable oilfields. According to our estimates thirteen fields, responsible for the production of 0.72 million barrels per day, represent the 1% extensive margin of the industry. These formations are Heavy & Extra Heavy and Sands deposits. Their average upstream carbon intensity is 114.61 KgCO2e per barrel versus a global average of 54.35. Similar results are obtained widening the extensive margin to 2.5% and 5%. This finding suggests that a fall in the global oil demand of 1% can reduce upstream emissions by 24.95 MMtCO2e per year, the annual footprint of 5.3% of all the cars registered in the United States.
    Keywords: Oil Economics, Shadow Prices, Empirical Analysis of Firm Behavior, Panel Data, Co-integration, Endogeneity, Linear Mixed Models
    JEL: L23 D22 C23 C14
    Date: 2023
  26. By: Refk Selmi (ESC PAU - Ecole Supérieure de Commerce, Pau Business School)
    Abstract: It is growingly recognized that a transition to sustainable finance is of utmost importance to scale up the low-carbon investments required to reach the global climate goals. However, financial capital is still widely allocated into economic activities whose profits rely significantly on fossil fuels' extraction, combustion and use, and that do not align to the Paris agreement (PA) targets. This study tests whether the PA has redefined the role of commodities in the portfolio allocation of asset managers, and has unleashed the potential to use this class of assets as an inflation hedge. It assesses whether financial markets are pricing the PA by decreasing the portfolio weights of carbon-intensive commodities afterwards. A dynamic portfolio analysis has been conducted to assess the impact of the PA on the inflation hedging abilities of energy commodities, industrial metals and precious metals. We find evidence that the weight of the copper-one metal that is expected to be a cornerstone of a low-carbon future-within an optimal portfolio tends to increase after the PA. With focus on efforts to achieve a low carbon economy continuing to grow, investors started to consider copper and other industrial metals including cobalt, nickel and aluminum as appealing investment opportunities, but they remain cautious on divesting from the carbon-intensive assets. Overall, our findings suggest that investors are responding to opportunities but less to risks in a low carbon pathway.
    Keywords: Commodity markets, Inflation, Hedge, Decarbonization, The Paris agreement
    Date: 2023
  27. By: Lilit Popoyan; Alessandro Sapio
    Abstract: In this work, we ask whether tradable emissions permits, based on the cap-and-trade principle, provide better climate change and economic projections than alternative regulations for GHG emissions, such as operational permits which are commonly used to mitigate non-GHG emissions (prevention first principle). Towards this goal, we simulate climate and the economy through a new version of the Dystopian Schumpeter meeting Keynes (DSK) model, extended to include an emission trading system (ETS) and operational permit systems. We show that climatic and economic projections in an ETS scenario need not be superior to those in an operational permit scenario. Which system delivers more encouraging projections on temperature anomalies, the green transition, and economic dynamics depends on institutional details, such as the set of firms for which permits are mandatory; the regulatory requirement of corrective measures; the magnitude of penalties; the stringency of the ETS. An ETS with a declining number of permits emerges as the best-performing system in terms of macroeconomic, microeconomic, and climate outcomes. A system of operational permits mandatory only for large firms (centralised permits) ranks as the second-best system, provided that the regulator imposes corrective measures regarding R&D expenses and machinery replacement.
    Keywords: Climate change; Environmental permits; Emissions trading system; Polluter pays principle; Agent-based models; Macro-economic dynamics.
    Date: 2023–07–25
  28. By: Feist, Marian
    Abstract: In der klimapolitischen Praxis sind plurilaterale Initiativen als Ergänzung zum multilateralen Forum der Vereinten Nationen zuletzt wieder wichtiger geworden. Die Gründe dafür liegen vor allem im mangelnden Fortschritt bei der Umsetzung des Pariser Abkommens und den erschwerten Bedingungen im UN-Prozess. Das Potential der Zusammenarbeit kleinerer Gruppen von Vorreiterstaaten liegt darin, dass sie sich leichter einigen und auf diese Weise den Klimaschutz mit ambitionierteren Zielen und stringenteren Maßnahmen effektiv vorantreiben können. Das wiederum kann Strahlkraft über einzelne Initiativen hinaus entfalten, normativen Druck aufbauen und für Drittstaaten Anreize zur Kooperation schaffen. Auch plurilaterale Allianzen überwinden allerdings nicht per se die strukturellen Hemmnisse, die einer umfassenderen internationalen Klimakooperation entgegenstehen. Deshalb sollten die deutsche und die europäische Klimadiplomatie die spezifischen prozessualen Herausforderungen plurilateraler Initiativen antizipieren, unter den verschiedenen Optionen Prioritäten setzen und dabei Umfang und Ausgestaltung der einzelnen Initiativen möglichst frühzeitig präzisieren.
    Keywords: Klimapolitik, Klimaschutz, plurilaterale Initiativen, Pariser Abkommen, UN-Klimarahmenkonvention, United Nations Framework Convention on Climate Change, UNFCCC, Nationally Determined Contributions, NDCs, Common But Differentiated Responsibilities, CBDR, Global Stocktake, Loss and Damage, Just Energy Transition Partnership, JETP, Beyond Oil and Gas Alliance, Global Methane Pledge, Mission Innovation, 4 per 1000, G7-Klimaclub, Club der Energiewendestaaten, Glasgow Breakthrough Agenda
    Date: 2023
  29. By: G\'eraldine Bouveret; Jean-Fran\c{c}ois Chassagneux; Smail Ibbou; Antoine Jacquier; Lionel Sopgoui
    Abstract: We study how the introduction of carbon taxes in a closed economy propagate in a credit portfolio and precisely describe how carbon taxes dynamics affect the firm value and credit risk measures. We adapt a stochastic multisectoral model to take into account carbon taxes on both sectoral firms' production and household's consumption. Taxes are calibrated on carbon prices, provided by the NGFS scenarios, as well as on sectoral households' consumption and firms' production, together with their related greenhouse gases emissions. For each sector, this yields the sensitivity of firms' production and households' consumption to carbon taxes and the relationships between sectors. Our model allows us to analyze the short-term effects of carbon taxes as opposed to standard Integrated Assessment Models, which are not only deterministic but also only capture long-term trends of climate transition policy. Finally, we use a Discounted Cash Flows methodology to compute firms' values which we then use in the Merton model to describe how the introduction of carbon taxes impacts credit risk measures. We obtain that the introduction of carbon taxes distorts the distribution of the firm's value, increases banking fees charged to clients (computed from the expected loss), and reduces banks' profitability (calculated from the unexpected loss). In addition, the randomness introduced in our model provides extra flexibility to take into account uncertainties on productivity and on the different transition scenarios. We also compute the sensitivities of the credit risk measures with respect to changes in the carbon taxes, yielding further criteria for a more accurate assessment of climate transition risk in a credit portfolio. This work provides a preliminary methodology to calculate the evolution of risk measures of a credit portfolio, starting from a given climate transition scenario described by carbon taxes.
    Date: 2023–07
  30. By: Stefano Grassi (Department of Economics and Finance, University of Rome Tor Vergata, Italy); Francesco Ravazzolo (@ Department of Data Science and Analytics, BI Norwegian Business School, Norway; Faculty of Economics, Free University of Bozen-Bolzano, Italy); Joaquin Vespignani (Tasmanian School of Business and Economics, University of Tasmania, Australia; Centre for Applied Macroeocnomics Analysis, ANU, Australia); Giorgio Vocalelli (Department of Economics, University of Verona, Italy)
    Abstract: This paper shows that the impact of the global money supply is disproportionally high for energy than for non-energy commodities prices. An increase in the global money supply for energy commodity prices results mainly in demand-pull inflation. However, for non-energy commodity prices, an increase in global money supply leads to demand-pull and cost-push inflation, as energy is a key input for non-energy commodities. To quantify this effect, we use a Markov switching model with time-varying transition probabilities. This model considers periods of slow, moderate, and fast global money supply growth. We find that the response to global money supply shocks is almost double for energy than for non-energy commodity prices. We also find heterogeneous responses for energy and non-energy commodities under different regimes.
    Keywords: Global money supply, Energy and non-energy prices, Markov-Switching VAR.
    JEL: C54 E31 F01 Q43
    Date: 2023–08
  31. By: Brendan Berthold (University of Lausanne); Ambrogio Cesa-Bianchi (Bank of England; Centre for Economic Policy Research (CEPR); Centre for Macroeconomics (CFM)); Federico Di Pace (Bank of England); Alex Haberis (Bank of England; Centre for Macroeconomics (CFM))
    Abstract: This paper investigates the economic effects of carbon pricing policies using a panel of countries that are members of the EU Emissions Trading System. Carbon pricing shocks lead, on average across countries, to a decline in economic activity, higher inflation, and tighter financial conditions. These average responses mask a large degree of heterogeneity: the effects are larger for higher carbon-emitting countries. To sharpen identification, we exploit granular firm-level data and document that firms with higher carbon emissions are the most responsive to carbon pricing shocks. We develop a theoretical model with green and brown firms that accounts for these empirical patterns and sheds light on the transmission mechanisms at play.
    Keywords: Business Cycles, Carbon Pricing Shocks, Heterogeneity, Asset Prices
    JEL: E32 E50 E60 H23 Q54
    Date: 2023–07
  32. By: Guo, Liwen (University of New South Wales); Cheng, Zhiming (University of New South Wales); Tani, Massimiliano (University of New South Wales); Cook, Sarah (University of Nottingham); Zhao, Jiaqi (Peking University); Chen, Xi (Yale University)
    Abstract: We investigate the effect of exposure to air pollution on an individual's likelihood towards entrepreneurship using panel data in China. To address omitted variable bias and endogeneity arising from self-selection into entrepreneurship and location choice, we employ an individual fixed effects model with an instrumental variable approach. Our findings show that individuals exposed to higher levels of air pollution are less likely to become entrepreneurs or diversify their entrepreneurial activities. Specifically, a one standard deviation increase in air pollution leads to a 21 percentage points decrease in the propensity for entrepreneurship and a 34 percentage points decrease in the likelihood of entrepreneurial diversification. Our study identifies potential channels through which air pollution impacts entrepreneurship. In addition, our findings reveal that air pollution has a more significant negative impact for older individuals, people residing in less populated areas, and those with lower education levels compared to their counterparts.
    Keywords: air pollution, entrepreneurship, China
    JEL: J24 L26 Q53
    Date: 2023–07
  33. By: Bartels, Lara; Werthschulte, Madeline
    Abstract: With the aim of limiting global warming, environmental subsidies are a popular public finance instrument to reduce carbon emissions. However, there is little evidence on why subsidies are effective in increasing demand for the goods subsidized. We use a framed field experiment to disentangle and study the relative importance of the price and non-price effects implicit in a subsidy encouraging an energy-efficiency investment. In the experiment, participants decide on purchasing a low-flow showerhead and are either confronted with the introduction of a subsidy or a same-sized price decrease. We find a demand increase of about 3-percent when the price decreases and a significantly larger demand increase of about 9-percent when the subsidy is introduced. An analysis of the underlying channels rules out changes in beliefs and norm perceptions. Positive spill-over effects of the subsidy on other pro-environmental behaviors rather suggest that the non-price effect is explained by a crowding in of intrinsic motivation.
    Keywords: Behavioral public economics, subsidies, spillover, energy efficiency, field experiment
    JEL: C93 D90 H23 Q49
    Date: 2023
  34. By: Latino, Carmelo; Pelizzon, Loriana; Riedel, Max
    Abstract: This literature survey explores the potential avenues for the design of a green auto asset-backed security by focusing on the European auto securitization market. In this context, we examine the entire value chain of the securitization process to understand the incentives and interests involved at various stages of the transaction. We review recent regulatory developments, feasibility concerns, and potential designs of a sustainable securitization framework. Our study suggests that a Green Auto ABS should be based on both a green use of proceeds and a green collateral-based methodology.
    Keywords: Securitization, Car Loans, Sustainable Finance, Low-emission vehicles, Regulation
    JEL: G23 Q56
    Date: 2023
  35. 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: Many developing countries, including Vietnam, are striving to transform their energy systems into more sustainable ones. They are leveraging initiatives like the Just Energy Transition Partnership (JETP) with the G7. Although Vietnam's participation in the JETP is a vital step in its journey towards clean energy, it also faces certain implementation challenges. This address will delve into Vietnam's energy transition journey, considering five key perspectives: international cooperation, governance structures, considerations of justice and equity, technology solutions, and innovative financing methods. International partnerships are crucial to share knowledge, bear costs, and reap benefits. However, larger agreements sometimes face limitations, and more focused coalitions can assist in overcoming these. Vietnam's Power Development Plan 8 (PDP8) provides a roadmap for the future but will require adjustments and input from different stakeholders to ensure its effectiveness. A just transition demands consideration of several facets of justice, including solutions that are specific to Vietnam and take into account vulnerable communities and workers affected by the transition. Adopting a comprehensive approach that combines foundational research, new technologies, and deployable solutions can spur innovation. Likewise, legal frameworks encouraging private investment can accelerate the transition. In conclusion, while Vietnam's energy transition is progressing, there is still a long way to go. Recommendations include boosting stakeholder engagement, refining the mix of planning and market mechanisms, conducting assessments to ensure equity, investing in applicable technologies, and creating supportive legal and financial structures. Strengthened collaborations, both at multilateral and bilateral levels, can aid Vietnam in its journey towards a sustainable and prosperous energy future.
    Date: 2023–07–07
  36. By: Alt, Marius; Berger, Marius; Bersch, Johannes
    Abstract: Green startups are a major driver of eco-innovation and as such a major contributor to climate change mitigation and green growth. However, they often lack sufficient funding from investors. Our study focuses on the factors that determine venture capital investors to invest in green startups. In particular, we analyze how information about i) the investments into green startups of other investors and ii) investment provision by public institutions affect the willingness of investors to act accordingly. We combine data from an online survey with angel investors comprising a discrete choice experiment and data from the Mannheim Enterprise Panel. Our findings show that the expectation of future demand for green products and the environmental attitudes of investors can explain whether investors engage in the energy industry. Regarding the effect of information provision, we find that investors strongly respond to information on both investments in green startups by other investors and public investment in green startups. However, in both cases, investors reduce their investments in green startups after receiving the information. We show that this is due to investors largely overestimating the share of investments in green startups by others and due to a crowding out of private investment by investments of public institutions.
    Keywords: Sustainable investments, Venture capital, Belief updating, Discrete choice experiment, Panel data
    JEL: G11 Q56 M14 G02 A13 C25
    Date: 2023
  37. By: Aditya Ramji; Hanif Tayarani
    Abstract: Global light duty electric vehicle (EV) sales exceeded 10.5 million units in 2022, with a year-on-year growth of 55%, but these trends differ regionally. Despite the robust growth, upfront purchase price remains a challenge for consumers in different regions, and thus, OEMs make technology choices to respond to market needs. This paper examines the electrification portfolio choices of three major automotive manufacturers (OEMs) in different regions of the world, including Europe, Americas, Asia Pacific, and Africa/Middle-East. The analysis focuses on trends in dominant segments for Battery Electric Vehicles (BEV) and Plug-in Hybrid Electric Vehicles (PHEV), as well as battery chemistry choices. Regional differences show a trend towards SUVs for both BEVs and PHEVs. Tesla's dominance in the BEV market influences battery chemistry choices. Average battery sizes for BEVs remain similar in Europe and Americas, but lower in Asia Pacific and Africa/Middle East.
    Date: 2023–07
  38. By: Raul Barroso (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Économie Management, F-59000 Lille, France); Tinghua Duan (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Économie Management, F-59000 Lille, France); Siyue Guo (IESEG School of Management, France); Oskar Kowalewski (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Économie, F-59000 Lille, France)
    Abstract: We examine the impact of international gender diversity reforms in the board of directors on carbon emissions. Employing a difference-in-differences-in-differences analysis, we analyze the relationship between the increase in female representation on boards following these reforms and changes in firms' carbon emissions. Our results reveal a significant decline in carbon emissions with an increase in the proportion of female board members. The reduction in carbon emissions is observed to be more pronounced when gender reform is legally enforced. Additionally, our findings indicate that a combination of climate regulations and higher female representation on boards leads to a decline in both, direct and indirect carbon emissions. These findings underscore the importance of legal enforcement in promoting board gender diversity, which, in turn, plays a critical role in addressing climate change.
    Keywords: : gender diversity reforms, climate change, law, enforcement
    JEL: G34 J16 Q54 K42
    Date: 2023–07
  39. By: Ola Mahmoud (University of St. Gallen; University of California at Berkeley; Swiss Finance Institute); Tschan Lea (University of St. Gallen)
    Abstract: This paper provides empirical evidence for a significant positive association between green finance and top income inequality from a panel of 87 countries from 2004 to 2020. This relationship is strongest for countries with initially lower levels of income, low levels of financial development, and low levels of carbon emissions. We also find evidence that the effect on inequality persists for four years and thereafter abates. We argue that the association between green finance and inequality is at least partially driven by two mechanisms: technological change and investment emissions. Using a moderated mediation design, we show that technological change and investment emissions are partially mediating the relationship between green finance and top income inequality.
    Keywords: green finance, inequality, innovation
    JEL: D63 E44 O33 Q52 Q54 Q55
    Date: 2023–06
  40. By: Chlond, Bettina; Germeshausen, Robert
    Abstract: Firm ownership is a major determinant for the economic performance of firms, and emissions of pollutants are often by-products of industrial production. We investigate the impact of ownership on pollutant emissions of firms and their in- dustrial facilities in Europe jointly with their output, productivity, and other key economic outcomes. To disentangle the influence of ownership from other firm characteristics, we analyse the effects of ownership changes in an event-study approach. We find that industrial facilities and firms decrease their emissions and industrial output after a change in ownership. Emissions intensity and productivity do not change suggesting that reductions in emissions follow proportional reductions in output rather than reflecting changes in pollution abatement technology. We find some evidence for positive spillover effects on productivity and profits of other facilities and firms owned by the acquiring parent company after a change in ownership.
    Keywords: Ownership changes, pollution, productivity, event study
    JEL: D22 D23 Q53
    Date: 2023
  41. By: Aline MORTHA; ARIMURA Toshi H.; TAKEDA Shiro; Tatyana CHESNOKOVA
    Abstract: To address concerns over carbon leakage, the European Union (EU) has announced the introduction of a Carbon Border Adjustment Mechanism (CBAM). This study applies a structural gravity model to simulate the impact of CBAM on welfare, production, exports and emissions with a focus on four sectors: chemicals, iron and steel, non-ferrous metal and metal products. We also provide country-specific results for the Asian and the Pacific regions. Our results show that, while CBAM would have little effect on welfare, the policy would contribute to a reduction in exports, estimated between -0.29% (metal products) and -1.49% (iron and steel). In particular, we find that middle income economies are most affected by the policy, and that these countries tend to greatly reduce their exports to the EU. We also observe a rebound in production (and associated emissions) among the EU economies. Nevertheless, by including emissions from shipping activities, CBAM can result in a large decrease in emissions, most of which is due to export reduction.
    Date: 2023–08
  42. By: Chad P. Bown (Peterson Institute for International Economics)
    Abstract: South Korea felt "betrayed" when President Joseph R. Biden Jr. signed his administration's flagship climate legislation, the Inflation Reduction Act (IRA) of 2022, into law. This paper first shows how the Biden administration addressed Korea's concerns about the law's effect on its sales of electric vehicles (EVs) in the United States. Thanks in part to the Treasury Department's regulations written to implement the law, Korean exports of EVs to the United States grew even after the IRA went into force. Whether these actions by the Biden administration are enough to assuage the concerns of the Koreans--and other allies adversely affected by the IRA--remains to be seen. Furthermore, the US accommodation of Korean concerns came with tradeoffs by offsetting key incentives Congress may have intended in passing the IRA. The paper examines the potential impact of the law on South Korean battery companies, and it provides an initial exploration into how the Korean government responded to the IRA by adjusting its own policy mix of EV consumer tax credits and industrial policy for its EV plants and battery makers.
    Keywords: Electric vehicles, batteries, industrial policy, supply chains, climate, US, United States, South Korea
    JEL: L52 F13
    Date: 2023–07
  43. By: Matthew Chambers (Bureau of Economic Analysis)
    Abstract: Measuring the physical flows of resources and waste between the economy and environment is a central component of environmental-economic accounting as outlined in the System of Environmental-Economic Accounting (SEEA), the United Nations standard for environmental accounting. This paper presents a SEEA-consistent proof-of-concept air emissions physical flows account for the United States. Primary data on emissions come from the U.S. EPA’s Greenhouse Gas Inventory (GHGI). The proof-of-concept account covers 2012–2017 and presents tabulated emissions by industry along with examples of additional analytic indicators such as trends in industry emissions and trends in emissions per dollar value added. Primary challenges in constructing this account are (1) adjusting the GHGI data from territory- to residency-based, and (2) attributing emissions to industries and institutional sectors. In this proof-of-concept account, emissions are adjusted to a residency basis using data on the activities of U.S. resident agents abroad and are attributed to industries in proportion to related measures of activity, like fuel purchases or output.
    JEL: E01 E20 I31 L92 L93 Q5 Q53 Q54
    Date: 2023–04
  44. By: Jannik Hensel; Giacomo Mangiante; Luca Moretti
    Abstract: This paper examines the impact of carbon pricing on firms’ inflation expectations and its implications for central banks’ price stability mandate. Carbon policy shocks are identified using high-frequency identification and combined with French firm-level survey data. A change in carbon price increases firms’ inflation expectations as well as their own expected and realized price growth. The effect on price expectations is more persistent than on actual price growth, resulting in negative forecast errors in the medium-/long-run. We show that a significant portion of the increase in inflation expectations is driven by indirect effects. Firms rely on their own business conditions to form expectations about aggregate price dynamics. Therefore, the expected positive growth in their own prices significantly contributes to the observed increase in inflation expectations. Firms’ responses to the shocks vary based on their energy intensity. Low energy-intensive firms are worse forecasters of the impact that the shocks will have on the evolution of their own prices.
    Keywords: climate policies, carbon pricing, inflation expectations, monetary policy, survey data
    JEL: E31 E52 E58 Q43 Q54
    Date: 2023
  45. By: Matthew Kotchen; Andrew Vogt
    Abstract: International environment and development agencies increasingly emphasize external cofinancing when selecting projects to fund. This paper considers whether the emphasis on cofinancing helps promote institutional objectives, or creates perverse and inefficient incentives. We present a model of project selection that can apply to any funding agency, but focus on environmental multilateral funds and climate change. We show that introducing cofinancing objectives to a fund that seeks to maximize its immediate environmental impact is redundant as best, and more likely counterproductive. We test implications of our model using project-level data from two of the leading environmental multilateral funds, the Global Environment Facility (GEF) and the Green Climate Fund (GCF). While tradeoffs exist between emission reductions and cofinancing, we find that they are not strong enough to imply that current cofinancing preferences are diminishing the environmental benefits that funds can claim. However, we also find that the emphasis on cofinancing in project selection is likely to be globally inefficient, as projects with greater cofinancing ratios tend to yield smaller emission reductions per gross dollar spent. This finding should sound a note of caution given the overall scarcity of financial resources available to achieve global climate goals.
    JEL: O13 Q01 Q58
    Date: 2023–07
  46. By: Arcusa, Stephanie; Hagood, Emily
    Abstract: The study explores the definition and implementation of durable carbon storage in expanding carbon markets and Carbon Dioxide Removal (CDR) options. The study analyzes various definitions and mechanisms proposed by standard developing organizations, aiming to ensure sequestration on climate-relevant timescales while preserving collective sequestration efforts. Findings reveal diverse contractual definitions and durability mechanisms employed, but no single mechanism is suitable for all CDR methods or the goal of long-term carbon sequestration. Complications arise from including short-term sequestration and ending monitoring responsibilities that necessitate innovation and tailored combinations of existing and improved mechanisms.
    Date: 2023–07–01
  47. By: Suryadeepto Nag; David I. Stern
    Abstract: Experimental studies find smaller benefits of electrification than observational studies. Is this because the latter typically observe benefits after a longer period of time? Using three waves of data from the Human Development Profile of India and the Indian Household Development Survey of Indian rural households, we quantify the impacts of short-term (0-7 years) and long-term (7-17 years) electricity access on household well-being. We use a propensity-score-weighted-difference-in-differences design that controls for spillover effects and find that electricity access increases consumption and education in the long term, and reduces the time spent by women on fuel collection, although we do not find significant effects on agricultural income, agricultural land holding, and kerosene consumption. Per capita consumption grows by 18 percentage points more over seven years in the long-term connected group than in the control group. Short-term effects are smaller and not statistically significant for any outcome variable.
    Keywords: Electricity access, impact assessment, South Asia
    JEL: O13 Q40
    Date: 2023
  48. By: Valérie Mignon (University of Paris Nanterre and CEPII); Jamel Saadaoui (University of Strasbourg)
    Abstract: This paper assesses the effect of US-China political relationships and geopolitical risks on oil prices. To this end, we consider two quantitative measures – the Political Relationship Index (PRI) and the Geopolitical Risk Index (GPR) – and rely on structural VAR and local projections methodologies. We expand the literature on the macroeconomic consequences of geopolitical risks by considering bilateral political relationships. The bilateral GPR does not focus on the relation between the US and China; rather, it provides an overall picture of the geopolitical uncertainty for China on a multilateral basis. Our empirical investigation shows that improved US-China relationships, as well as higher geopolitical risks, drive up the price of oil. Indeed, unexpected shocks in the political relationship index are associated with optimistic expectations about economic activity, whereas unexpected shocks in the geopolitical risk index reflect fears of supply disruption. Political tensions and geopolitical risks are thus complementary causal drivers of oil prices, the former being linked to the demand side and the latter to the supply side.
    Keywords: Oil prices, political relationships, geopolitical risk, China
    JEL: F
    Date: 2023
  49. By: Massimo Morelli; Dominic Rohner
    Abstract: This handbook chapter studies how natural resource wealth can in many contexts fuel armed conflict. Starting from a simple theoretical model, we stress the role of geography and power mismatch in the so called "natural resource curse". Drawing on recent empirical evidence, the importance of resource abundance, asymmetry and capital-intensiveness is highlighted, alongside local grievances and international interventions. We propose a series of evidence-driven policy conclusions, ranging from "smart green transition" and democratic institution building over labor-market intervention to a series of specific policies requiring international coordination. Keywords: Natural Resources, Mining, Conflict, commitment problems, power mismatch JEL Classification: D74, Q34
    Date: 2023
  50. By: Buisson, Marie-Charlotte (International Water Management Institute); Mitra, Archisman (International Water Management Institute); Osmani, Z.; Habib, A.; Mukherji, Aditi (International Water Management Institute)
    Keywords: Solar powered irrigation systems; Pumps; Impact assessment; Solar energy; Energy generation; Gender equity; Social inclusion; Cropping patterns; Irrigation practices; Water extraction; Tube wells; Climate-smart agriculture; Business models; Tariffs; Costs; Tenant farmers; Training; Seasonal cropping; Cultivated land; Plot size; Food security; Public-private partnerships
    Date: 2023
  51. By: Fitch-Polse, Dillon; Johnson, Nicholas; Handy, Susan
    Abstract: Local and state electric bike (e-bike) incentive programs offering point-of-sale or post-sale monetary discounts to consumers have been implemented across the United States since 2018. As yet, however, little is known about their effectiveness in changing travel behavior. To understand the outcomes of these incentive programs, UC Davis researchers analyzed survey data from rebate recipients in Northern California two months and one year after they acquired e-bikes. The rebate programs were evaluated for effects of e-bike ownership on travel behavior, including changes in bicycling, driving, and use of transit, and on greenhouse gas emissions. The team also suggest areas for future research. View the NCST Project Webpage
    Keywords: Social and Behavioral Sciences, Electric bicycles, Incentives, Ownership, Travel behavior
    Date: 2023–08–01
  52. By: Feist, Marian
    Abstract: Plurilateral initiatives are again gaining importance in climate diplomacy as a complement to multilateral efforts - not least in view of the lack of progress in implementing the Paris Agreement and more difficult conditions in the UN process. New alliances are expected to facilitate agreement within smaller groups of countries wishing to lead by example and to effectively advance climate action with ambitious goals and more stringent measures. This, in turn, can have an impact beyond individual initiatives and provide normative pressure and incentives for additional states to cooperate. However, plurilateral alliances cannot necessarily overcome the structural challenges that hamper more effective international climate cooperation. In light of this, German and European climate diplomacy should anticipate the specific procedural challenges of individual initiatives, set prior­ities among the various options, and aim to specify the mandate and design of individual initiatives early on.
    Keywords: climate diplomacy, decarbonisation, Germany, European Union, United States, Paris Agreement, UN process, climate summit in Glasgow (COP 26), G7 summit Elmau, Nationally Determined Contributions (NDCs), Common But Differentiated Responsibilities (CBDR)
    Date: 2023
  53. By: Atayev, Atabek; Caspari, Gian; Hillenbrand, Adrian; Klein, Thilo
    Abstract: This policy brief is concerned with the efficient allocation of subsidies for eco-friendly products. Examples include subsidies for cargo or e-bikes, electric cars, and energy efficient building retrofits. Inefficiencies arise when subsidies are allocated to consumers who would have bought eco-friendly products even without subsidies (inframarginal consumers). This crowds out consumers who buy eco-friendly products only when they are subsidised (marginal consumers). We show how to exploit the relative impatience of inframarginal consumers in order to increase the share of marginal consumers receiving the subsidy - thus increasing the overall efficiency of the subsidy - by lengthening the time between consumer subsidy application and subsidy receipt. We propose a uniform wait time auction which maximizes the number of marginal consumers receiving the subsidy.
    Date: 2023
  54. By: Christian Scharrer (University of Augsburg, Department of Economics); Johannes Huber (University of Regensburg, Department of Economics)
    Abstract: We study the effects of different financing rules for untargeted energy price brakes and subsidies on intergenerational welfare in a large-scale overlapping generations model. The results indicate that, in comparison to a laissez-faire solution without any government interventions, debt-financed implementations of such measures are very detrimental for young and future generations. However, the taxation of windfall profits can significantly contribute to reduce the economic burdens of these generations, whereas the positive effects on older generations are much less pronounced.
    Keywords: Fiscal Policy, Price Brakes, Price Subsidies, Energy Crisis, Welfare
    JEL: E62 E30 H20 H30
    Date: 2023–08
  55. By: Kouassi Coulibaly, Nadia; Mbeya, Paulette; Bayuo, Blaise; Chan, Kenddrick
    Abstract: This report provides a comprehensive overview of climate policy in Africa, highlighting existing policy frameworks geared towards building climate resilience across the continent. It also examines the categories of, investors in, and capital deployment strategies present in Africa’s climate finance ecosystem. We believe this collaborative report, which contains valuable recommendations for both governments and private sector investors, will undoubtedly spur effective action and have a positive impact in Africa’s fight against climate change.
    JEL: F3 G3
    Date: 2023–05–23
  56. By: Stefano Neri (Bank of Italy); Fabio Busetti (Bank of Italy); Cristina Conflitti (Bank of Italy); Francesco Corsello (Bank of Italy); Davide Delle Monache (Bank of Italy); Alex Tagliabracci (Bank of Italy)
    Abstract: This paper evaluates the role of supply shocks in driving inflation in the euro area since mid-2021, focusing in particular on shocks to energy prices. The analysis uses different empirical models (including Vector AutoRegressive models, time-varying Phillips curves and dynamic factor models) and shows that shocks to energy prices have had both direct and indirect effects on inflation. The contribution of these shocks to headline inflation is estimated to be around 60 per cent in the fourth quarter of 2022, while that to core inflation to range from 20 to 50 per cent, depending on the model. There is also evidence of an increase in the pass-through of energy prices to core inflation following the outbreak of the pandemic.
    Keywords: inflation, energy prices, structural VAR, time-varying Phillips curve, Dynamic Factor model
    JEL: C22 C32 C38 E31
    Date: 2023–07
  57. By: Lucie Bottega (Toulouse School of Economics, LERNA); Dorothée Brécard (Université de Toulon, LEAD); Philippe Delacote (Université de Lorraine, AgroParisTech-INRAe, BETA, Climate Economics Chair)
    Abstract: When consumers have ambiguous beliefs about the green quality of products, firms may be tempted to "greenwash". The degrees of optimism and confidence of consumers then play a crucial role in firms’ advertising strategies, which can be either informative and/or persuasive. We find conditions under which advertising efforts and environmental quality are substitutes and thus lead to greenwashing.
    Keywords: ambiguity, vertical differentiation, information, advertising, greenwashing
    JEL: D11 D21 D83 L15 Q59
    Date: 2023–07
  58. By: Simona Giglioli (Bank of Italy); Claire Giordano (Bank of Italy)
    Abstract: We explore three possible explanations of the recent resilience of Italy's foreign sales in comparison with the other three main euro-area economies, namely price-competitiveness dynamics, developments in energy-intensive (EI) and non-energy-intensive (NEI) manufacturing sectors, the impact of global supply bottlenecks. Price-competitiveness trends were particularly favourable in Italy in 2022. Furthermore, the composition of Italy’s manufacturing exports was not strongly tilted towards EI sectors and the decline in EI foreign sales was relatively small, leading to a more limited negative contribution of these industries to aggregate export growth compared with Germany. Finally, according to cross-country firm survey data, manufacturing in Italy was significantly less affected by shortages of materials and equipment than in the other three countries. A standard regression analysis of goods exports trends confirms that the above factors contributed to explaining Italy's strong performance in 2022.
    Keywords: goods exports, price competitiveness, energy intensity, supply bottlenecks
    JEL: F01 F10 Q41
    Date: 2023–07
  59. By: A. BOURGEOIS (Insee); F. GERVOIS (Insee); R. LAFROGNE-JOUSSIER (Insee, CREST-Ecole Polytechnique)
    Abstract: L’empreinte carbone mesure les émissions de gaz à effet de serre (GES) induites par la demande finale d’un pays. Même s’il n’existe pas encore de méthode ni de données standardisées au niveau international pour effectuer le calcul, l’utilisation de Tableaux Internationaux d’Entrées-Sorties (TIES) est largement répandue dans la littérature. Un TIES retrace l’ensemble des flux de biens et services entre les branches d’activité des différentes régions du monde. Il permet ainsi de reconstituer le processus de production des biens et services, et donc de mesurer les GES émis à chaque étape. Dans ce document, nous comparons différentes bases TIES et d’émissions de GES ainsi que les empreintes carbone qui en découlent, afin d’évaluer la fiabilité et la robustesse de la méthode de calcul selon les sources utilisées. Nous établissons que l’empreinte carbone de la France peut varier jusqu’à 20% selon le TIES utilisé. Ces différences sont dues principalement à la méthode utilisée pour ventiler les importations par pays d’origine lors de la construction du TIES. Nous montrons que l’empreinte carbone calculée avec un TIES qui comprendrait les détails des principaux partenaires com merciaux de la France ou qui regrouperait les pays en zones économiquement homogènes suffirait à estimer convenablement l’empreinte carbone. En revanche, agréger les branches d’activités en grands secteurs d’activité peut conduire à modifier l’empreinte de 15%. En utilisant des méthodes de bootstrap, nous établissons que la variabilité des coefficients, d’un TIES à l’autre, entraîne autant de variabilité dans le calcul de l’empreinte carbone qu’un bruit gaussien sur les données source de l’ordre de 20 à 30%.
    Keywords: Modélisation input-output, empreinte carbone, environnement, robustesse
    JEL: F64 Q53
    Date: 2023
  60. By: International Monetary Fund
    Abstract: The German economy has demonstrated resilience following the shut-off of Russian gas supply last year, with highly adverse scenarios of widespread energy scarcity being avoided. This success reflects impressive efforts to conserve energy and secure future energy supplies, as well as the lack of severe winter weather. Nonetheless, adverse effects from the energy shock and tighter financial conditions have been sufficient to tilt the economy into recession in recent months. Inflation also spiked as the energy price shock added to existing pandemic-related supply bottlenecks, though inflation is now falling as these effects start to ease. Germany’s financial system remains well capitalized and liquid overall, but banking turmoil in other advanced economies earlier this year has nonetheless heightened the focus on potential financial stability risks associated with rising interest rates.
    Date: 2023–07–17
  61. By: Pablo Manuelli; Sandrine Meyer
    Keywords: Rénovation énergétique; Financement alternatif
    Date: 2023–06–30
  62. By: Boarnet, Marlon G; Lee, Seula; Gross, James; Thigpen, Calvin
    Abstract: In the early stages of the COVID-19 pandemic, many cities across the US reallocated street spaces for active transportation such as walking, bicycling, and scootering, including by electric bikes and scooters. Slow Streets, projects that limit through-traffic access for motor vehicles to provide a safer space for other travelers, were implemented at an unprecedented speed and scale. This analysis of pandemic-era Slow Street dockless electric scooter (e-scooter) use offers insights that may assist decisionmakers. A research team at the University of Southern California collaborated with Lime, an e-scooter company, to analyze Slow Streets programs in the cities of Oakland, San Francisco, Los Angeles, and Portland. Using two statistical approaches, they examined dockless e-scooter travel at four different times of day and overall weekly and monthly averages of dockless e-scooter trips. This policy brief summarizes the findings from that research and provides policy implications. View the NCST Project Webpage
    Keywords: Social and Behavioral Sciences, Before and after studies, COVID-19, Scooters, Travel behavior, Urban design
    Date: 2023–08–01
  63. By: Fischer, Kai; Martin, Simon; Schmidt-Dengler, Philipp
    Abstract: We study the effect of entry on the price distribution in the German retail gasoline market. Exploiting more than 700 entries over five years in an event study design, we find that entry causes a persistent first-order stochastic shift in the price distribution. Prices at the top of the distribution change moderately only, but prices at the left tail decrease by up to 12% of stations' gross margins. Consumers with easy access to information on prices gain the most from entry. The reduction in transaction prices is 32-44% stronger for fully informed consumers than for uninformed consumers.
    Keywords: Entry, information frictions, price distribution, (unconditional) quantile treatment effects
    JEL: D22 L11 D83 L81 R32
    Date: 2023
  64. By: Francesco Corsello (Bank of Italy); Matteo Gomellini (Bank of Italy); Dario Pellegrino (Bank of Italy)
    Abstract: The Yom Kippur war in 1973 and the Iranian revolution in 1979 triggered large oil-price increases that fuelled high and persistent inflation in advanced countries. There is a broad consensus that a weak monetary policy response, in the form of late tightening or early loosening, was one of the main causes for the failure to keep inflation under control after the 1973 shock. This failure is crucially tied to the end of the Bretton Woods era in 1971, when the fixed exchange rate regime and the currency peg to gold were abandoned, and monetary policy lost a consolidated frame of reference. A new framework – based on the commitment by independent and credible central banks to achieve clear quantitative inflation targets – would only be established in the subsequent two decades. Monetary policy conduct alone, however, does not fully explain the persistence and heterogeneity of inflation across advanced economies. Other institutional factors played a role ‒ most importantly, the lack of central bank independence, the structural features of the labour market, and fiscal policy rules which turned out to be at odds with price stability. A structural VAR-based analysis confirms and quantifies the role these factors played in shaping inflation. Nowadays, the institutional context has evolved considerably, mitigating the risk of inflation staying high for as long as they did in the 1970s. Ensuring that the current institutional context continues to support price stability remains key in limiting inflation persistence.
    Keywords: economic history, inflation, oil shocks, monetary policy, central bank independence, wage indexation, fiscal policy.
    JEL: N10 E31 E42 E58
    Date: 2023–07
  65. By: Mr. Niels-Jakob H Hansen; Mr. Frederik G Toscani; Jing Zhou
    Abstract: We document the importance of import prices and domestic profits as a counterpart to the recent increase in euro area inflation. Through a novel consumption deflator decomposition, we show that import prices account for 40 percent of the average change in the consumption deflator over 2022Q1 – 2023Q1, while domestic profits account for 45 percent. The increase in nominal profits was largest in sectors benefiting from increasing international commodity prices and those exposed to recent supply-demand mismatches. While the results show that firms have passed on more than the nominal cost shock, and have fared relatively better than workers, the limited available data does not point to a widespread increase in markups. Looking ahead, assuming nominal wage growth of around 4.5 percent over 2023-24 – slightly below the level seen in Q1 2023 – and broadly unchanged productivity, a normalization of the profit share to the average level over 2015-19 will be necessary to achieve a convergence of inflation to target over the next two years. Monetary policy will thus need to remain restrictive to anchor expectations and maintain subdued demand such that workers and firms settle on relative price setting that is consistent with disinflation.
    Keywords: Inflation; Wages; Profits; Terms of Trade
    Date: 2023–06–23

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