nep-ene New Economics Papers
on Energy Economics
Issue of 2023‒10‒02
forty-six papers chosen by
Roger Fouquet, National University of Singapore

  1. How to Boost Countries’ Climate Ambitions: Turning Gains from Emissions Trading into Gains for Climate By Christoph Böhringer; Carsten Helm; Laura Schürer
  2. Climate Change, Directed Innovation, and Energy Transition: The Long-run Consequences of the Shale Gas Revolution By Daron Acemoglu; Philippe Aghion; Lint Barrage; David Hémous
  3. The energy efficiency issue in the European Union: perspectives, objectives and challenges By ANDREI, Dalina-Maria
  4. Would you like to supersize your car? The effect of environmental subsidies on emissions By Tsanko, Ilona
  5. Imported Fossil Fuel Dependent Energy Market of Bangladesh: How Global Energy Crisis Triggered Domestic Inflation? By Khondaker Golam Moazzem; Abeer Khandker
  6. G7 Summit in 2023 - Call for Global Initiatives for Ending Support for Fossil Fuels and Accelerate the Transition to Renewable Energy in Developing Countries By Khondaker Golam Moazzem; Rafat Alam; Helen Mashiyat Preoty; Mashfiq Ahasan Hridoy
  7. Renewable Energy Policy (Draft) 2022: A Comprehensive Assessment By Khondaker Golam Moazzem; Mashfiq Ahasan Hridoy
  8. Heterogeneous Assessment of Urbanisation, Energy Consumption and Environmental Pollution in Africa: the Role of Regulatory Quality By Bruno N. Ibekilo; Chukwunonso Ekesiobi; Precious M. Emmanuel
  9. Energy Consumption and Human Development in South Africa: Empirical Evidence from Disaggregated Data By MT Musakwa; N.M. Odhiambo
  10. Timing the climate transition in Sweden: A company’s green innovation journey towards negative emissions Teaching case study By Kugelberg, Susanna; Borrás, Susana
  11. 러시아-우크라이나 전쟁 이후 유럽 주요국의 에너지 위기 대응 정책 분석(Europe’s Energy Crisis, National Policies and Industrial Production: Insights for South Korea) By Kim , Yoonjung; Lim, You Jin
  12. Toward Net-zero: Assessing Regional Carbon Policy Capacity in Korea By Yoo, Yiseon
  13. Heterogeneity in Expert Recommendations for Designing Carbon Pricing Policies across the Globe By Frikk Nesje; Robert C. Schmidt; Moritz A. Drupp
  14. Clean Growth By Costas Arkolakis; Conor Walsh
  15. Military Expenditure, Governance, and Environmental Degradation in Sub-Saharan Africa By Simplice A. Asongu; Cheikh T. Ndour
  16. Quantifying Climate Change Loss and Damage Consistent with a Social Cost of Greenhouse Gases By Marshall Burke; Mustafa Zahid; Noah Diffenbaugh; Solomon M. Hsiang
  17. Local power: understanding the adoption and design of county wind energy regulation By Lerner, Michael
  18. Risk management in solar-based power plants with storage: a comparative study By Oliveira, Fernando S.; Ruiz Mora, Carlos
  19. Energising Environmental Sustainability in Sub-Saharan Africa: the role of Governance Quality in Mitigating the Environmental Impact of Energy Poverty By Stephen K. Dimnwobi; Kingsley I. Okere; Favour C. Onuoha; Benedict I. Uzoechina; Chukwunonso Ekesiobi; Ebele S. Nwokoye
  20. Scenario Analysis for Net Zero: The Applicability of Climate Neutrality Studies for Transitioning Firms in the German Building Sector and Energy-Intensive Industry By Fernanda Ballesteros; Franziska Schütze; Catherine Marchewitz; Alexandra Hüttel
  21. Causal Effects of Renewable Portfolio Standards on Renewable Investments and Generation: The Role of Heterogeneity and Dynamics By Olivier Deschenes; Christopher Malloy; Gavin G. MacDonald
  22. The Power and Energy Sector in the National Budget for FY2022–23 By Khondaker Golam Moazzem; Helen Mashiyat Preoty; Chowdhury Fariha
  23. Modeling the Demand for Electric Vehicles and the Supply of Charging Stations in the United States: Working Paper 2023-06 By David Austin
  24. Climate Transition Risks of Banks By Felix Martini; Zacharias Sautner; Sascha Steffen; Carola Theunisz
  25. Criza gazelor naturale din Europa. Cauze ale aparitiei si evolutia acesteia By Bulearca, Marius; Muscalu, Mihai-Sabin
  26. Energy shocks as Keynesian supply shocks: implications for fiscal policy By Enisse Kharroubi; Frank Smets
  27. Green risk in Europe By Nuno Cassola; Claudio Morana; Elisa Ossola
  28. Uncertain Remedies to Fight Uncertain Consequences: The Case of Solar Geoengineering By Traeger, Christian P.; Meier, Felix D.
  29. Creating a low carbon economy through green supply chain management: investigation of willingness-to-pay for green products from a consumer’s perspective By Xia, Senmao; Ling, Yantao; de Main, Leanne; Lim, Ming K.; Li, Gendao; Zhang, Peter; Cao, Mengqiu
  30. Unpacking the green box: Determinants of Environmental Policy Stringency in European countries By Francisco Serranito; Donatella Gatti; Gaye-Del Lo
  31. Distributional Equity in the Employment and Wage Impacts of Energy Transitions By Ben Gilbert; Hannah Gagarin; Ben Hoen
  32. Combining predictive distributions of electricity prices: Does minimizing the CRPS lead to optimal decisions in day-ahead bidding? By Weronika Nitka; Rafa{\l} Weron
  33. Volatile Global LNG Market and Its Impact on Public Spending in Social Sectors: Case of Bangladesh By Khondaker Golam Moazzem; Moumita A. Mallick
  34. International Climate Agreements under The Threat of Solar Geoengineering By McEvoy, David; McGinty, Matthew; Cherry, Todd; Kroll, Stephan
  35. Modelling Natural Gas Markets: Could We Learn from our Mistakes in the Past? - A Reality Check for MAGELAN By Seeliger, Andreas
  36. Sustainability assessment of Low Earth Orbit (LEO) satellite broadband mega-constellations By Ogutu B. Osoro; Edward J. Oughton; Andrew R. Wilson; Akhil Rao
  37. ICT Task Force study: Final Report By ALFIERI Felice; SPILIOTOPOULOS Christoforos
  38. Macroeconomic Impact of the War in Ukraine and of High Commodity Prices across Countries By Markus Haacker
  39. Yellow Vests, Pessimistic Beliefs, and Carbon Tax Aversion (2022): A Comment By Rivers, Nicholas; Woerman, Matt; Yassin, Kareman
  40. Decoupling from Russia By Di-Comite, Francesco; Pasimeni, Paolo
  41. The Gold of Industry and the Core of the Military: China's Rare Earths Strategy and its Implications for Korea By Park, Sohee
  42. Strategy for Promoting Interdisciplinary Solar Geoengineering Research in India By Bala, Govindasamy; Sushma, B.S.; Murthy, Indu K.; Ravindranath, N.H.
  43. ESG Shareholder Engagement and Downside Risk By Andreas G. F. Hoepner; Ioannis Oikonomou; Zacharias Sautner; Laura T. Starks; Xiaoyan Zhou
  44. "Unlocking Sustainable Futures: How FDI-Driven Entrepreneurial Ecosystems Power the SDGs" By Asuamah Yeboah, Samuel
  45. Policy Design from a Network Perspective: Targeting a Sector, Cascade of Links, Network Resilience By Temel, Tugrul; Phumpiu, Paul
  46. Technological Sovereignty and Strategic Dependencies: The case of the Photovoltaic Supply Chain By Serenella Caravella; Francesco Crespi; Giacomo Cucignatto; Dario Guarascio

  1. By: Christoph Böhringer; Carsten Helm; Laura Schürer
    Abstract: The Nationally Determined Contributions (NDCs) under the Paris Agreement fall short of the abatement needed to reach the 2°C target. Emissions trading could be a “costless” means to reduce the ambition gap if countries used their gains from trade for additional abatement. However, this requires cooperative behavior. We show that with emissions trading, countries’ non-cooperative choices of emissions reduction contributions can lead to even more abatement, provided that these contributions may not be lower than initial NDCs. Intuitively, countries with high climate damages raise their contributions if they can meet them partly through abatement in countries with low abatement costs.
    Keywords: Paris Agreement, emissions trading, NDCs, game theory
    JEL: H23 Q54 Q56 Q58 C72
    Date: 2023
  2. By: Daron Acemoglu; Philippe Aghion; Lint Barrage; David Hémous
    Abstract: We investigate the short- and long-term effects of a natural gas boom in an economy where energy can be produced with coal, natural gas, or clean sources and the direction of technology is endogenous. In the short run, a natural gas boom reduces carbon emissions by inducing substitution away from coal. Yet, the natural gas boom discourages innovation directed at clean energy, which delays and can even permanently prevent the energy transition to zero carbon. We formalize and quantitatively evaluate these forces using a benchmark model of directed technical change for the energy sector. Quantitatively, the technology response to the shale gas boom results in a significant increase in emissions as the US economy is pushed into a “fossil-fuel trap” where long-run innovations shift away from renewables. Overall, the shale gas boom reduces our measure of social welfare under laissez-faire, whereas, combined with carbon taxes and more generous green subsidies, it could have increased welfare substantially.
    JEL: O30 O41 O44 Q33 Q43 Q54 Q55
    Date: 2023–09
  3. By: ANDREI, Dalina-Maria
    Abstract: This paper discusses the energy issue in the European Union and the EU’s progress on energy efficiency since the Energy Efficiency related Directive of 2012 (EED): (i) The energy consumption dynamic (primary and final energy consumption), (ii) Directives and other regulations adopted by the EU’s institutions between 2012-2022, for energy consumption and efficiency targets established for both the Union, on aggregate, and for its individual member states, (iii) The National Energy and Climate Plans (NECPs) face to corresponding 2020 accomplishments and to 2030 projections, (iv) The same 2030 forecasts in the long-term context of climate neutrality to be ensured up to 2050. All these will be approached below in our argumentation. Effective energy consumption data are retrieved from Eurostat and International Energy Agency (IEA). Optimism comes up for the 2030 perspective, since the 2020 specific performances was done, partly despite the recent COVID-19 pandemic related circumstances of 2020. A list of possible responses to some questions will conclude this paper: ‘How receptive will the member states be in the future for transposing the EU's energy efficiency ambitions into their own strategies?’ and ‘Will the European policies be rigorous enough, but also flexible to achieve long-term objectives?’.
    Keywords: energy efficiency, primary energy consumption, final energy consumption, energy targets, Green Deal.
    JEL: Q40 Q43 Q48
    Date: 2023–05–29
  4. By: Tsanko, Ilona
    Abstract: I study the impact of subsidies for Plug-in hybrid vehicles (PHEV) on carbon emissions. I show that subsidizing innovations without considering consumer behavior can harm the environment. I provide descriptive evidence on charging instances of PHEV and combine it with a structural model of demand for new passenger vehicles to evaluate the market outcomes had subsidies for PHEV not been in place. I show that PHEV subsidies were used by consumers to purchase larger and heavier vehicles and that consumers of PHEV seldom charge their vehicle. Taking into account the observed consumer behavior, I find that the elimination of subsidies for PHEV would have led to a yearly reduction of 167, 139 tons of carbon emissions which are equivalent to the yearly carbon emissions 52, 916 households emit due to energy consumption.
    Keywords: Environmental regulation, Substitution, Carbon emissions, Automobiles, Demand estimation
    JEL: D12 H23 H71 Q48 Q58
    Date: 2023
  5. By: Khondaker Golam Moazzem; Abeer Khandker
    Abstract: With the depletion of domestic natural gas reserves, Bangladesh’s energy market has become increasingly dependent on imported energy – mainly petroleum, LNG and coal. Hence, the volatility in the global energy market is gradually impacting the energy sector as well as the economy as a whole. The Ukraine war has further accentuated the global energy market crisis both in terms of energy supply and energy prices which have multi-dimensional adverse impacts on developing countries. There is no comprehensive study found on the war-led global energy crisis and its impact on inflation where the level of adversity has been measured. Most of the studies are indicative in terms of causal relationships between energy crisis and its impact on macroeconomic aggregates including inflation. Hence a quantitative analysis is required to show how the global energy market crisis led to domestic inflation, particularly in developing countries. In this backdrop, this study will seek to estimate the level of inflationary impact on Bangladesh economy due to global energy price volatility.
    Keywords: Fossil Fuel, Global Energy Crisis, Domestic Inflation, Energy sector, Bangladesh economy
    Date: 2022–11
  6. By: Khondaker Golam Moazzem; Rafat Alam; Helen Mashiyat Preoty; Mashfiq Ahasan Hridoy
    Abstract: The existing geopolitical challenges have made the 49th G7 Summit -slated to be held in Japan – a major event for developing countries like Bangladesh. Besides, international civil societies demand ‘to develop a roadmap to operationalise the G7 leaders’ commitment to end government support for all fossil fuels through transition to renewable energy. Moreover, in the ‘22 summit, the G7 addressed climate change as a global challenge that requires urgent actions. And in 2023, G7 ministers agreed to speed up clean energy transition and set new targets for solar and wind capacity as a part of the goal to reach net-zero GHG emissions by 2050.
    Keywords: G7 Summit, Power and Energy Sector, Renewable Energy, Fossil Fuel, climate change, Clean energy, GHG emissions, Bangladesh Economy
    Date: 2023–05
  7. By: Khondaker Golam Moazzem; Mashfiq Ahasan Hridoy
    Abstract: The vision of the draft policy is to develop an efficient, sustainable, secure, affordable, competitive, and environment-friendly power system across the country. The Government of Bangladesh (GoB) initially introduced the Bangladesh Renewable Energy Policy 2008 to promote the development and utilisation of renewable energy sources in the country. The policy was designed to support the country’s energy security, reduce its dependence on imported fossil fuels, and promote sustainable development. Recently, the Sustainable and Renewable Energy Development Authority (SREDA) under the Power Division of the Ministry of Power, Energy and Mineral Resources (MoPEMR) has initiated to revise the RE Policy 2008. As part of the initiative, a policy report has been developed with the title ‘Renewable Energy Policy (Draft) 2022’.
    Keywords: Power and Energy Sector, Renewable Energy, Energy sustainability, Clean energy
    Date: 2023–03
  8. By: Bruno N. Ibekilo (Chukwuemeka Odumegwu Ojukwu University, Nigeria); Chukwunonso Ekesiobi (Chukwuemeka Odumegwu Ojukwu University, Nigeria); Precious M. Emmanuel (University of Ibadan, Oyo State, Nigeria)
    Abstract: The pace of urbanisation, the intensity of energy consumption, and the quality of environmental regulation level pose a severe threat to environmental sustainability in Africa. Hence, we examine the role of regulatory quality on environmental pollution through urbanisation and energy consumption channel in 33 African nations between 1996 and 2020. Our study considers cross-sectional dependence in Africa; as a result, we employ the Augmented Mean Group (AMG) method and Common Correlated Effect Mean Group (CCEMG) for a robustness check to analyse the panel series. The study finds that (i) urbanisation increases environmental pollution, (ii) energy consumption accelerates environmental degradation, (iii) regulatory quality can partially mediate pollution in Africa via urbanisation and energy consumption channels, and (iv) The interaction of regulatory quality with urbanisation and energy consumption, respectively reduce environmental pollution establishing a moderation effect. The study suggests that African countries tighten environmental regulatory policies to lessen carbon emissions and drive environmental sustainability towards achieving carbon neutrality by 2050.
    Keywords: Heterogeneous, Urbanisation, Energy consumption, Environmental pollution, Regulation, Africa
    JEL: C20 R00 Q40 Q52 L52 N57
    Date: 2023–01
  9. By: MT Musakwa (University of South Africa); N.M. Odhiambo (University of South Africa)
    Abstract: This study investigated the impact of energy consumption on human development in South Africa, using annual data from 1990 to 2019. The study used disaggregated data on energy measures namely: oil products consumption; electricity consumption; renewable energy consumption; natural gas; coal and lignite; and total energy consumption at an aggregate level. Human Development Index (HDI) was used as a measure of human development. By employing autoregressive distributed lag bounds test to cointegration and error correction model, the study found the impact of energy consumption on human development to be positive in the short run when renewable energy was used as a proxy, but insignificant in the long run. When oil products, natural gas and total energy were used as proxies for energy, a negative impact was confirmed in the short run, while an insignificant impact was confirmed in the long run. When electricity, coal and lignite were used as proxies for energy, an insignificant impact was confirmed, irrespective of the time frame considered. The results revealed that the positive impact of renewable energy on human development is not big enough to offset the negative impact of other energy sources. This suggests that South Africa has to continue to expand renewable energy if a positive impact of energy on human development is to be realised.
    Date: 2021–10
  10. By: Kugelberg, Susanna (Copenhagen Business School); Borrás, Susana (Copenhagen Business School)
    Abstract: This paper is a teaching case study written for educational purposes. The case brings forward a real-life situation of an organization that is engaged in the exciting but also risky journey of implementing a green innovation at a large scale. The case is written in a way that allows students to reflect and think about the organizational and leadership challenges and opportunities involved. The teacher can activate these reflections in the context of various possible theoretical and analytical frameworks, in a number of possible different courses. The case is about Exergi, the main utility company producing district heating in Stockholm. After successfully transitioning from coal to bio-energy sources, since 2020 Exergi has embarked on a new and far more ambitious venture: Bioenergy Carbon Capture and Storage (BECCS). This technology captures CO2 emissions from biomass combustion and stores them, potentially resulting in negative emissions. BECCS plays a central role in IPCC mitigation pathways and Exergi has recognized an opportunity, but venturing into this uncharted territory presents numerous challenges. BECCS is a new and untested technology at an industrial scale, requiring substantial investments, and a market for selling carbon removal certificates (CRC) that does not exist yet. Though promising for reaching net zero targets in time, the viability of BECCS for Exergi depends on a supportive regulatory framework, cross-border cooperation, and the creation of a CRC market. To navigate these challenges, Exergi relies on creating an innovative organizational culture as well as mobilizing external stakeholders. Hence, CEO Anders Egelrud has hired individuals with entrepreneurial mindsets, and sought external expertise as well as creating strong networks and communication approach. Yet, some internal tensions have also come to the fore, due to the rapid internal dynamics. Overall, Exergi's transition from coal to BECCS reflects the commitment to sustainable practices by an incumbent, and its willingness to size new opportunities. The company's success driving this transformation forward hinges on many events coming together, both external and internal to the firm.
    Keywords: climate mitigation; green transitions; eco-innovation; sustainability; capacity; dynamic capabilities; utilities; energy; incumbent; district heating; Sweden; Stockholm; carbon capture; bioenergy; biomass; leadership; net zero; climate neutrality; transformative innovation
    JEL: O31 O33 O38 O44 Q01 Q16 Q55 Q58
    Date: 2023–09–11
    Abstract: 본 연구에서는 러시아-우크라이나 전쟁 이후 유럽의 에너지 위기 대응 정책을 살펴보고, 산업 생산과 에너지 위기 대응 정책의 관련성을 분석하였다. 러시아-우크라이나 전쟁 이후 유럽 내 에너지 위기의 배경, 에너지 가격 상승과 인플레이션의 연관성을 살펴보고, 유럽 주요국 정부가 에너지 위기의 충격을 완화하고자 집행한 다양한 정책들을 통해 정책적 함의를 도출하였다. 또한 유럽 주요국의 에너지 위기 대응 정책 도입 시점에 대한 정보를 이용하여 이러한 정책들과 산업 생산에 유의미한 관계가 있었는지 분석하였다. 지금까지 우리나라의 에너지 가격 상승은 유럽의 에너지 위기 상황에 비할 수 없지만, 취약계층을 더 면밀하게 파악하고 재정적 지원을 보다 효과적으로 실행할 수 있는 시스템을 구축하여 재정 집행의 비효율을 최소화할 수 있도록 대비해야 한다. 또한 가격 신호를 최대한 이용하면서 장기적으로는 에너지 효율화 및 수급 안정성 강화를 위해 노력해나가야 한다.(This study analyzes Europe’s policy responses after the energy crisis after the Russian-Ukrainian war and examines the impact of policy measures on industrial production. Although the mild winter of 2022 resulted in lower-than-expected energy demand, and energy prices have stabilized since the end of 2022, there is uncertainty about the severity of the winter in 2023 and the war is showing signs of prolongation. While Europe is using the energy crisis as an opportunity for the green transition, Europe is also accepting that it will continue to use fossil fuels, including liquefied natural gas (LNG), for at least the next decade and possibly even longer. The fact that Europe can no longer rely on fossil fuel supplies from Russia has significant implications for Korea, which is a net energy importer, as it may be affected by the increasing demand from Europe in the international energy market. Analyzing Europe’s policy measures on energy crisis provides important policy recommendations for potential energy price surge in South Korea due to the additional international energy demand. Chapter 2 explores the background of the energy crisis in Europe after the Russian-Ukrainian war, and explores the link between rising energy prices and inflation. We analyze the various policies implemented by the national governments of three European countries to mitigate the impact of the energy crisis, namely Germany, France, and the United Kingdom. The study demonstrates a significant increase in energy prices, providing justification for the implementation of national policy measures. We show heterogeneity across countries, including dependence on Russian energy, available fuel types, and the different institutional contexts, and further investigated the policy packages in each country. the rest omitted)
    Keywords: Energy crisis; Energy use; Energy subsidy; Europe; Industry production
    Date: 2023–09–04
  12. By: Yoo, Yiseon (Korea Institute for Industrial Economics and Trade)
    Abstract: In Korea, the push to achieve carbon neutrality and reach net-zero carbon emissions by 2050 constitutes a monumental paradigm shift, and efforts to facilitate this momentous change are poised to exert a significant impact on the economy, industry, and society as a whole. Realizing Korea’s national carbon neutrality vision requires wholesale changes to the economy, industry, and even the daily lives of everyday people. And in the pursuit of net-zero, these changes will not be limited to specific sectors or technologies, and are likely to develop and evolve in diverse ways. Converting the existing carbon-intensive industrial structure to a low-carbon or zero-carbon economy will necessitate major innovations across multiple sectors, given the role, scope, and influence of energy — the principal source of carbon emissions — in production and consumption. Korea’s 2050 national carbon neutral strategy designates the “region” as the primary geographic and administrative unit in which carbon neutrality measures are to be implemented and net-zero ultimately realized. The Korean government has emphasized the importance of regional areas in promoting carbon neutrality, stating that “regions are spaces where economic, social, and life changes take place, and local governments are the actual implementers of carbon neutral policies by sector.” To aid in evaluating the ability of any given region to competently implement net-zero policies, for this study we design and build a new indicator, the Carbon-neutral Policy Capacity Index (CPCI). This tool is designed to be used in evaluating regional carbon neutrality policy implementation capacity.
    Keywords: net-zero; carbon neutrality; Carbon Neutral Capacity Index; CPCI; environmental economics; environmental policy; carbon policy; carbon policy capacity; carbon policy implementation; local government policy implementation; carbon emissions; greenhouse gases; GHGs; mitigation; adaptation; Korea
    JEL: O20 O25 Q28 Q38 Q48 Q50 Q52 Q53 Q54 Q56 Q58
    Date: 2023–08–30
  13. By: Frikk Nesje; Robert C. Schmidt; Moritz A. Drupp
    Abstract: Pricing the emissions of greenhouse gases is widely considered as key to tackling climate change. While carbon pricing schemes are proliferating, the vast majority of emissions is not yet covered. Designing carbon pricing policies requires navigating crucial design choices, such as addressing distributional and competitiveness concerns. Here, we present recommendations from a global survey of more than 400 experts to inform key design issues for carbon pricing policies. We find that almost twice as many experts favor a carbon tax over a cap-and-trade scheme for unilateral carbon pricing, and three-quarters strongly recommend using border carbon adjustment to address competitiveness concerns. Recommendations on the usage of revenues from carbon pricing exhibit a substantial degree of heterogeneity. While transfers to particularly affected households and equal lump sum transfers are among the options most favored, these account for only around 40 percent of recommendations. In terms of country and observable expert characteristics, we find that experts from countries with a higher GDP per capita recommend equal lump sum transfers to households more often, and that the clear preference for carbon taxes only exists in richer countries. While economists recommend lump-sum transfers to households and reducing distortionary taxes more often, non-economic experts rather recommend using revenue for governmental spending, such as on environmental public goods or renewable energy subsidies. Overall, our results provide insights for science and policy to improve the design of unilateral carbon pricing policies.
    Keywords: Q540, H230
    Date: 2023
  14. By: Costas Arkolakis; Conor Walsh
    Abstract: We provide a spatial theory of clean growth to assess the global impact of the rise of renewable energy. We model the details of the combined production and transmission network of electricity (“the grid”) that determine the supply and losses of energy in space. The local rate of clean energy adoption depends on learning-by-doing, the global electricity and trade network, and regional comparative advantage in renewable resources. We use the model to measure the aggregate and spatial implications of clean growth. We find that the world’s power system is likely to be dominated by renewables by 2040 in a range of scenarios, with substantial welfare gains, even in the absence of policy. Incorporating policy, we find that the US Inflation Reduction Act significantly accelerates renewable uptake, and generates substantial economic benefits. In addition, planned grid improvements lower prices substantially in many areas of the US, justifying their cost of construction.
    JEL: F11 Q40 Q41 Q42 Q43 R13
    Date: 2023–08
  15. By: Simplice A. Asongu (Johannesburg, South Africa); Cheikh T. Ndour (University Cheikh Anta Diop, Dakar, Senegal)
    Abstract: This article examines how good governance counteracts the effects of military expenditure on carbon emissions in forty African countries. The Generalized Method of Moments (GMM) is used to analyze time series data from 2010-2020. Military expenditure per capita is used to measure military expenditure per penetration, while CO2 emissions per capita are used as an indicator of environmental degradation. The following findings are established. First, from the non-interactive regressions, we find suggestive evidence that arms expenditure increases CO2 emissions. All indicators of good governance contribute to the increase of CO2 emissions. Second, with interactive regressions, we find that improved governance has a negative effect on CO2 emissions per capita. Third, the results are robust to a sensitivity check, considering the synergy effects of governance. This paper provides policy recommendations on low-carbon economies, military expenditure and governance that could help to ensure environmental sustainability by reducing CO2 emissions. In addition, the study findings can provide guidance to other developing countries seeking to implement effective approaches to environmental sustainability while strengthening climate change mitigation and adaptation measures.
    Keywords: climate change; Emission reduction; Environmental degradation; Sustainability; Econometric analysis
    Date: 2023–01
  16. By: Marshall Burke; Mustafa Zahid; Noah Diffenbaugh; Solomon M. Hsiang
    Abstract: Climate change is generating demonstrable harm around the world. Political and legal efforts have sought to associate climate impacts with specific emissions, including in recent international policy discussion of Loss and Damage (L&D). However, no quantitative definition of L&D exists, nor does there exist a framework for linking specific emissions to specific damages. Here we develop such a framework, linking it explicitly to recent efforts to calculate the social cost of carbon dioxide (SC-CO2), and demonstrate its use in a variety of applications. We calculate that future damages from past emissions, one component of L&D, are at least an order of magnitude larger than historical damages from the same emissions, a more commonly discussed component of L&D: 1 ton of CO2 emitted in 1990 causes $4 in global cumulative discounted damages by 2020 and an additional $327 in discounted damages through 2100 (2% discount rate). These estimates of past and future damages from marginal emissions can be used to calculate L&D for a range of specific emitting activities: for instance, an individual taking one long-haul flight every year for the past decade will generate ~$5500 in damages through 2100, the emissions associated with multiple oil majors between 1988-2015 have already caused $50-200B of cumulative global economic damage by 2020, and CO2 emissions in the US since 1990 have caused ~$2T in global damage through 2020, with India ($293B) and Brazil ($167B) being harmed the most. Carbon removal offers an alternative to transfer payments for settling L&D, but we show that it becomes increasingly ineffective in limiting damages as the delay between emission and recapture increases.
    JEL: Q54 Q56
    Date: 2023–09
  17. By: Lerner, Michael
    Abstract: The majority of U.S. states have set targets for renewable energy, but the prospects for meeting most of these goals hinge on the willingness of local governments to allow large-scale renewable energy projects in their communities. In this paper, I investigate how exposure to lobbying by wind developers and the actions of neighboring jurisdictions inform the adoption and design of rules for siting commercial wind farms. Using data collected from 1603 counties in 23 states, I find local policymakers are more likely to enact wind ordinances when they have more time to interact with wind developers and when neighboring counties have adopted wind ordinances or approved the construction of wind farms. I also observe that counties tend to adopt more stringent rules when more wind farms have been built in neighboring counties. This evidence suggests that efforts to scale up renewable energy generation may encounter increasing resistance from local governments.
    Keywords: climate change; comparative governance; developed countries; economic development; energy; innovation
    JEL: N0
    Date: 2022–03–01
  18. By: Oliveira, Fernando S.; Ruiz Mora, Carlos
    Abstract: Investment in solar generation is essential to achieve EU climate neutrality by 2050. Using stochastic programming, we study the management of solar power plants considering trading in the spot and future markets, weather derivatives based on solar radiation, storage, and risk management. We provide a comparative study of two technologies: a concentrated solar power plant with thermal storage and a photovoltaic power plant with electrical batteries. The significant managerial contributions can be classified into four levels. First, regarding trading and generation decisions, we proved that: a) plants sell energy in the spot market during the night and store energy in the morning; b) storage happens at the same time as electricity is purchased in the spot market; c) in the Summer the plants sell more in the futures market; d) storage, in both types of technology, increases trading in futures and spot markets and creates value for generators. Second, regarding the use of options on solar radiation, we show that a) the value of put and call options depends on the expected solar radiation; b) the radiation option prices are correlated with generation and storage levels and with the anticipated trading in spot and futures markets; c) the optimal strategy is to sell calls and buy put options; d) generators with a storage system sell significantly more call options. Third, regarding risk aversion, we proved that: a) the higher the risk aversion, the more the generator sells in the futures market and the higher the number of purchased put contracts; b) the risk-adjusted profit from options trading is zero. Finally, in comparing both technologies, even though the operation and financial management patterns are similar, the photovoltaic power plant is more profitable, and the batteries create more value.
    Keywords: Decision Analysis; Risk; Natural Resources; Energy; Production-Scheduling; Applications
    Date: 2023–09–18
  19. By: Stephen K. Dimnwobi (Nnamdi Azikiwe University, Awka, Nigeria); Kingsley I. Okere (Gregory University, Uturu, Nigeria); Favour C. Onuoha (Evangel University Akaeze, Nigeria); Benedict I. Uzoechina (Nnamdi Azikiwe University, Awka, Nigeria); Chukwunonso Ekesiobi (Chukwuemeka Odumegwu Ojukwu University, Nigeria); Ebele S. Nwokoye (Nnamdi Azikiwe University, Awka, Nigeria)
    Abstract: The Sub-Saharan Africa region is disproportionately affected by energy poverty and is considered highly vulnerable to the impacts of climate change. Therefore, addressing the pressing challenges of energy poverty and promoting environmental sustainability in this region is of paramount importance. Consequently, this study appraises the relationship between energy poverty and ecological preservation in Sub-Saharan Africa from 2005 to 2020, using government effectiveness and regulatory quality as moderating variables. A combination of energy poverty indicators and an index of energy poverty computed via the principal component analysis method were applied to identify the link between energy poverty and ecological sustainability. The instrumental variable generalized method of moment technique was applied to address the likelihood of endogeneity issues, and the Driscoll-Kraay approach was employed to check the consistency of the instrumental variable generalized method of moment method. Key findings indicate that energy poverty expands the ecological footprint in Sub-Saharan Africa, leading to ecological deterioration, while the interaction with government effectiveness and regulatory quality further deteriorates the environment. Subsequently, the study provides several recommendations to mitigate the influence of energy poverty on the environment.
    Keywords: Energy Poverty, Environmental Sustainability, Government Effectiveness, Regulatory Quality, Sub-Saharan Africa
    Date: 2023–01
  20. By: Fernanda Ballesteros; Franziska Schütze; Catherine Marchewitz; Alexandra Hüttel
    Abstract: Various stakeholders are increasingly encouraging companies from the real economy to adopt measures facilitating their transition towards carbon neutrality. In this context, companies are expected to implement forward-looking strategies and climate-related reporting practices using scenario analysis aligned with scientific evidence and credible pathways to net zero carbon emissions. This paper examines the potential of scenario analysis as element for transitioning to net zero. We review and compare eight existing economy and sector level climate neutrality studies for Germany that were published between 2019 and 2021, analysing their respective applicability as a science-based reference scenario for companies to strengthen strategy development and forward-looking reporting practices. Using the logical framework approach, we assess relevant transition indicators like technologies, energy and resource efficiency, carbon pricing, and other steering instruments for the building and energy-intensive industry sectors. These indicators serve to measure progress towards climate neutrality and could be included as a crucial component in transition plans. We find that, although modelling approaches for the studies differ, they often converge on similar results that can partially be translated to indicators at the firm level and, thereby, may serve as reference scenario for their transition planning.
    Keywords: Climate change, scenarios analysis, decarbonization, sustainability reporting, transition plans, sectoral pathways, building sector, energy-intensive industry sector
    JEL: G32 M41 M48 L52 L61 L85 Q51 Q58
    Date: 2023
  21. By: Olivier Deschenes; Christopher Malloy; Gavin G. MacDonald
    Abstract: Despite a 30-year long history, Renewable Portfolio Standards (RPS) remain controversial and debates continue to surround their efficacy in leading the low-carbon transition in the electricity sector. Contributing to the ongoing debates is the lack of definitive causal evidence on their impact on investments in renewable capacity and generation. This paper provides the most detailed analysis to date of the impact of RPSs on renewable electricity capacity investments and on generation. We use state-level data from 1990-2019 and recent econometric methods designed to address dynamic and heterogeneous treatment effects in a staggered adoption panel data design. We find that, on average, RPS policies increase wind generation capacity by 600-1200 MW, a 44% increase, but have no significant effect on investments in solar capacity. Additionally, we demonstrate that RPSs have slow dynamic effects: most of the capacity additions occur 5 years after RPS implementation. Estimates for wind and solar electricity generation mimic those for capacity investments. We also find similar results using an alternate treatment definition that allows states to meet their RPS requirements with pre-existing renewable generation and renewable generation from nearby states.
    JEL: Q20 Q42 Q50
    Date: 2023–08
  22. By: Khondaker Golam Moazzem; Helen Mashiyat Preoty; Chowdhury Fariha
    Abstract: The National Budget for FY2022–23 was placed in the Parliament during June 2022. It was approved at a time when Bangladesh’s economy had been confronting a number of domestic and external challenges. The economy has yet to come out from the post-covid challenges. Owing to the Ukraine-Russia War, the disruption in the global supply chains, particularly related to the energy supply chains, has made a significant adverse impact on the domestic economy. The ongoing war has posed short to medium-term threats to the global energy market in terms of energy supply, energy price, energy sustainability and future clean energy targets. Hence, the National Budget needs to take into account the energy and power sector-related concerns in terms of fiscal measures and budgetary allocations.
    Keywords: Power and Energy Sector, National Budget, FY2022–23, Ukraine-Russia War, Global energy market, Energy sustainability, Clean energy, Bangladesh Economy
    Date: 2023–03
  23. By: David Austin
    Abstract: This paper presents a simulation model of the markets for light-duty electric vehicles (EVs) and the associated public charging infrastructure, as well as the network interactions between them. It illustrates the model’s attributes by simulating the effects of federal subsidies for public electric vehicle chargers and of an extension of tax credits for electric vehicles. I project that by the early 2030s the charger subsidies, which were signed into law in 2021 as part of the Infrastructure Investment and Jobs Act, will have increased the size of the charger network enough
    JEL: H23 H54 L98
    Date: 2023–09–07
  24. By: Felix Martini (Frankfurt School of Finance & Management); Zacharias Sautner (University of Zurich; Swiss Finance Institute); Sascha Steffen (Frankfurt School of Finance & Management); Carola Theunisz (Frankfurt School of Finance & Management)
    Abstract: We develop a bottom-up measure of U.S. banks' exposures to climate transition risks from the carbon footprint of their syndicated loan portfolios. The measure reveals significant variation in risk exposures across banks and over time. Bank exposures declined over time, especially since the Paris Agreement. This effect stems from a re-balancing of bank loan portfolios, with more lending to low-emission borrowers (not less lending to high-emission borrowers). Banks with higher risk exposures exhibit more climate-related disclosures in their earnings calls, but not in their Form 10-Ks. Risk exposures correlate with bank-level climate betas, which reflect the sensitivity of bank returns to the returns of a stranded asset index.
    Keywords: Climate transition risks, banking sector, syndicated loans
    JEL: G21
    Date: 2023–08
  25. By: Bulearca, Marius (Centrul de Economia Industriei si Serviciilor, Institutul National de Cercetari Economice al Academiei Romane); Muscalu, Mihai-Sabin (Centrul de Economia Industriei si Serviciilor, Institutul National de Cercetari Economice al Academiei Romane)
    Abstract: Although the war in Ukraine is far from over, currently the natural gas market in Europe is in a state of "apparent calm" as a result, mainly, of the (rather) quick and (somewhat) determined reaction of the Brussels authorities, which aimed to mitigate the consequences of the sudden and uncontrolled increase in natural gas prices. Starting from these considerations, the article aims to carry out an analysis of the causes that led to the emergence of the natural gas crisis, as well as the evolution of their prices at the European level. Thus, the paper extensively studies how natural gas prices have evolved and the effects on the market induced by these developments, on the one hand, as well as how the European Union, as a whole, and the Member States, at the national level, reacted to protect the population, first of all, in the face of the wave of price increases registered as a result of the rapid and economically unjustified increase in the prices of natural gas and, implicitly, of energy. As it is clear that high gas and energy prices are harming EU consumers, whether they are families or businesses, urgent and necessary coordinated measures at the EU level were needed to protect consumers from increased costs; and these aspects were presented in detail in the paper.
    Keywords: natural gas price, price cap, European Union, TTF Amsterdam hub, CEGH Vienna hub
    JEL: D18 I38 L71 Q34
    Date: 2023–09
  26. By: Enisse Kharroubi; Frank Smets
    Abstract: This paper analyses the economic impact of and the optimal policy response to energy supply shocks in a flexible price model with heterogeneous households. We introduce energy as a consumption good on the demand side and as an input to production on the supply side. A distinguishing feature is that, in line with empirical evidence, we allow households' energy demand to be non-homothetic. The model provides three main insights. First, (negative) energy supply shocks act as a (negative) demand shock, or Keynesian supply shock, when three conditions are met: (i) household income heterogeneity is intermediate, neither too high nor too low; (ii) the fraction of poor and credit-constrained households is high and (iii) competition between firms is strong enough. Second, implementing the first-best allocation requires subsidising the poor and taxing the rich, and more so when the economy faces a negative energy shock. Last, issuing public debt can be part of the optimal policy response to a negative energy shock, if the shock is large and the economy's overall energy intensity is low.
    Keywords: energy shocks, non-homothetic demand, heterogeneous households, fiscal policy, public debt
    JEL: D31 E21 E32 E62 H3
    Date: 2023–09
  27. By: Nuno Cassola; Claudio Morana; Elisa Ossola
    Abstract: Climate change poses serious economic, financial, and social challenges to humanity, and green transition policies are now actively implemented in many industrialized countries. Whether financial markets price climate risks is critical to ensuring that the necessary funding flows into environmentally sound projects and that stranded assets risk is adequately managed. In this paper, we assess climate risks for the European stock market within the context of Alessi et al. (2023) greenness and transparency factor. We show that measures of returns spreads of green vs. brown investment might reflect climate risks and assets' exposition to systematic macro-financial risk factors. These latter factors should be filtered out to measure climate risks accurately. We show that climate risks are priced in the European stock market by focusing on aggregate, industry, and company-level data. We propose a market-based green rating procedure, which might be of particular interest to evaluate non-transparent and non-disclosing companies for which ESG information is unavailable. We illustrate its implementation using a sample of over 800 non-transparent firms.
    Keywords: Climate risk, environmental disclosure, macro-finance interface, unconditional factor models, asset pricing, European Union.
    JEL: G01 G11 G12 Q54
    Date: 2023–09
  28. By: Traeger, Christian P.; Meier, Felix D.
    Abstract: Solar geoengineering can cool our planet and counteract the warming caused by greenhouse gas emissions. Given current emission trajectories, solar geoengineering has the potential to save lives, reduce severe impacts on economic production, and save ecosystems and island states. Deterministic integrated assessment models tend to show major benefits from solar geoengineering, but are highly sensitive to the assumed and highly uncertain damages from solar geoengineering as well as the effectiveness of cooling the planet. We analyze how uncertainties and the anticipation of learning change the case for solar geoengineering in a world with an uncertain temperature response to carbon dioxide emissions.
    Date: 2023–09–05
  29. By: Xia, Senmao; Ling, Yantao; de Main, Leanne; Lim, Ming K.; Li, Gendao; Zhang, Peter; Cao, Mengqiu
    Abstract: This study investigates how consumers’ willingness-to-pay (WTP) for green products affects the decisions made by the green supply chain players. Through the application of game theory and uncertainty theory, our findings show that a higher consumer WTP for green products usually leads to a higher retail price and market share of green products, which motivates retailers and manufacturers to invest more in green technology. We also find that an increased WTP for green products can spur retailers to reduce the optimal green cost-sharing rate due to the pressure of increasing costs. In addition, we find that retailers are willing to lower the cost sharing rate when the confidence level increases. Regarding the contributions made by this study, it is one of the first to explore the transmission mechanisms involved in the management of the green supply chain by linking consumers’ WTP for green products to strategic decisions made by green supply chain players under conditions of uncertainty. Furthermore, our study could help green supply chain players to optimise the cost sharing mechanisms they use to generate more revenue, due to the increase in WTP for green products, which will in turn help to facilitate a low carbon economy.
    Keywords: cost sharing; game theory; Green supply chain management; low carbon economy; uncertainty theory; willingness-to-pay
    JEL: Q50 D10
    Date: 2022
  30. By: Francisco Serranito; Donatella Gatti; Gaye-Del Lo
    Abstract: This paper identifies the determinants of OECD Environmental Policy Stringency (EPS) index using a panel of 21 European countries for the period 2009-2019. If there is a large literature on the macroeconomic, political, and social determinants of EPS, the people’s attitudes or preferences toward environmental policies is still burgeoning. Thus, the main goal of this paper is to estimate the effects of people’s awareness regarding environmental issues on the EPS indicator. Due to the endogeneity of preferences, we have applied an instrumental variable framework to estimate ourempirical model. Our most important result is to show that individual environmental preferences have a positive and significant effect on the level of EPS indicator : on average, a rise in individual preferences of 10% in a country will increase its EPS indicator by 2.30%. Our results have important policy implications.
    Keywords: Environmental policy stringency; Environmental attitudes/concerns, inequality; environmental Kuznets curve; EU
    JEL: Q0 Q1 Q3 Q50 Q54 Q56
    Date: 2023
  31. By: Ben Gilbert; Hannah Gagarin; Ben Hoen
    Abstract: We use restricted-access, geocoded data on the near-universe of workers in 23 U.S. states in order to quantify the impact of wind energy development on local earnings and employment, by race, ethnicity, sex, and educational attainment. We find the largest relative impacts for workers without a high school education, or workers with a college education, in addition to other systematic differences across sub-populations. We compare these results to estimates using county aggregates of the worker-level data, such as can be obtained using publicly available data. We find that (a) county-level estimates are dramatically dampened relative to geocoded worker-level estimates, and (b) the degree of bias differs by sub-population such that qualitative comparisons of impacts are not consistent using restricted-access data versus county-level data for most sub-populations. We discuss implications for achieving equity goals within energy transition policies.
    JEL: Q4 Q42 Q43 R11 R12
    Date: 2023–08
  32. By: Weronika Nitka; Rafa{\l} Weron
    Abstract: Probabilistic price forecasting has recently gained attention in power trading because decisions based on such predictions can yield significantly higher profits than those made with point forecasts alone. At the same time, methods are being developed to combine predictive distributions, since no model is perfect and averaging generally improves forecasting performance. In this article we address the question of whether using CRPS learning, a novel weighting technique minimizing the continuous ranked probability score (CRPS), leads to optimal decisions in day-ahead bidding. To this end, we conduct an empirical study using hourly day-ahead electricity prices from the German EPEX market. We find that increasing the diversity of an ensemble can have a positive impact on accuracy. At the same time, the higher computational cost of using CRPS learning compared to an equal-weighted aggregation of distributions is not offset by higher profits, despite significantly more accurate predictions.
    Date: 2023–08
  33. By: Khondaker Golam Moazzem; Moumita A. Mallick
    Abstract: Natural gas supplied from domestic sources has historically dominated the energy landscape in Bangladesh. With the decreasing supply of domestic natural gas and increasing demand for gas and other energies in major economic activities, including power, Bangladesh had no choice but to use imported Liquefied Natural Gas (LNG) to meet the prevailing demand. Over the years, imported natural gas has been creating a fiscal burden on the economy. The government’s fiscal pressure owing to imported LNG has reached its new height because of the Russia-Ukraine war. Due to the government’s financial stress, the additional need for subsidies to cover LNG costs would have several negative effects on the government’s ability to apportion the budget funds. Against this backdrop, it is important to learn about how Bangladesh’s demand for LNG imports has grown over the past five years and how much has the cost and subsidy increased in this sector. What will the market for LNG import look like in the next five years? What are the potential effects of an increase in LNG subsidies on Bangladesh’s financial situation, pressure on the budget, and subsidies in the food and agriculture sector? The objectives of this study are threefold- (a) to estimate the amount of subsidy needed for the import of LNG over the next three years; (b) to highlight any prospective adverse effects of utilising extra subsidies for imports of LNG at higher import prices, especially with consideration to the social sectors, and (c) to present a set of suggestions for a medium to long-term perspective to address the concerns of the social sectors.
    Keywords: Liquefied Natural Gas, LNG Market, LNG Import, Bangladesh
    Date: 2022–12
  34. By: McEvoy, David; McGinty, Matthew; Cherry, Todd; Kroll, Stephan
    Abstract: The possibility of overshooting global emissions targets has triggered a public debate about the role solar geoengineering (SGE) - using technologies to reflect solar radiation away from Earth - may play in managing climate change. One major concern is that SGE technologies are relatively cheap, and could potentially be deployed by a single nation (the “free driver”) that could effectively control the global climate. Another concern is that SGE opportunities may alter countries’ incentives to cooperate on abatement. Here we develop a game-theoretic model to analyze how opportunities to deploy SGE impact global abatement and the effectiveness of international environmental agreements (IEAs) on climate change. We show that non-cooperative abatement levels may increase or decrease under the threat of SGE, depending on how damaging the free-driver’s level of deployment is on others. We also show the stability of IEAs that govern abatement is challenged by two competing strategic incentives. One is a familiar free-rider incentive, which is the benefit a country earns by leaving an agreement and lowering its abatement. The other incentive is the benefit a country earns by joining an agreement and increasing abatement in order to motivate the free-driver to reduce its level of deployment. We introduce the term anti-driver to describe this second incentive. Ultimately, we find that if the anti-driver incentives are high enough, the threat of SGE can expand both the depth (i.e., abatement level) and breadth (i.e., participation level) of stable IEAs compared to a world without SGE.
    Date: 2023–09–05
  35. By: Seeliger, Andreas
    Abstract: MAGALAN is a global gas market model developed in 2005 that provided forecasts until 2030 for gas production, international trade and other relevant parameters. As investors, policy makers and also researchers have a need of reliable model results, models should be faced with reality from time to time. This paper presents a reality check for some results from MAGELAN for the year 2020. Some forecasts show a very high accordance with actual figures (such as aggregated global gas production or total LNG trades), some other are far from recent developments in the real world (e.g. gas production of individual countries or realised capacities of specific pipeline projects). The paper finish with a brief discussion about reasons for the divergence between model and reality. Beside some improvements are likely with some updates to the model, major exogenous shocks will always be crucial for gas market modelling (respectively modelling in general). In that specific case, the “shale gas revolution” in the USA was such a major shock, that disturbed a wide range of gas market parameters.
    Keywords: Long term gas market modelling, Linear optimisation, Gas demand and supply, LNG
    JEL: Q31 Q41 Q47
    Date: 2023
  36. By: Ogutu B. Osoro; Edward J. Oughton; Andrew R. Wilson; Akhil Rao
    Abstract: The growth of mega-constellations is rapidly increasing the number of rocket launches required to place new satellites in space. While Low Earth Orbit (LEO) broadband satellites help to connect unconnected communities and achieve the Sustainable Development Goals, there are also a range of negative environmental externalities, from the burning of rocket fuels and resulting environmental emissions. We present sustainability analytics for phase 1 of the three main LEO constellations including Amazon Kuiper (3, 236 satellites), OneWeb (648 satellites), and SpaceX Starlink (4, 425 satellites). In baseline scenarios over five years, we find a per subscriber carbon dioxide equivalent (CO$_2$eq) of 0.70$\pm$0.34 tonnes for Kuiper, 1.41$\pm$0.71 tonnes for OneWeb and 0.47$\pm$0.15 tonnes CO$_2$eq/subscriber for Starlink. However, in the worst-case emissions scenario these values increase to 3.02$\pm$1.48 tonnes for Kuiper, 1.7$\pm$0.71 tonnes for OneWeb and 1.04$\pm$0.33 tonnes CO$_2$eq/subscriber for Starlink, more than 31-91 times higher than equivalent terrestrial mobile broadband. Importantly, phase 2 constellations propose to increase the number of satellites by an order-of-magnitude higher, highlighting the pressing need to mitigate negative environmental impacts. Strategic choices in rocket design and fuel options can help to substantially mitigate negative sustainability impacts.
    Date: 2023–09
  37. By: ALFIERI Felice; SPILIOTOPOULOS Christoforos (European Commission - JRC)
    Abstract: Information and Communication Technologies (ICT) play an increasingly important role in society. ICT can be analysed from a dual perspective: as crucial in supporting sustainability strategies, and as responsible for environmental impacts related to energy and material use in their lifecycle. In order to facilitate policy-making, direct and indirect environmental impacts need to be assessed not just from a device perspective, but the overall system composed by interactions between users, devices and services. Making a reliable estimation of the energy and material savings potential is particularly challenging due to the uncertainty about future market developments, increased connectivity and multifunctionality, and behavioural changes. In 2016, the Commission announced, in the context of the Ecodesign Working Plan, a separate strand of work on ICT products in order to determine the best policy approach for improving their energy efficiency and wider circular economy aspects. This JRC Science-for-Policy report is the result of a study, undertaken for the European Commission's Directorate General for Energy, to support this work by providing a comprehensive and dynamic analysis of the ICT sector. Based on material and energy efficiency improvement potentials identified, and considering user behaviour and lifecycle costing aspects, this JRC report provides policy recommendations on the inclusion of ecodesign provisions, but also accounting for the suitability of complementary policy tools.
    Date: 2023–06
  38. By: Markus Haacker (Center for Global Development)
    Abstract: The war in Ukraine was associated with large changes in the prices of key food and fuel commodities (wheat, maize, coal, gas, and oil) in 2022 which produced macroeconomic gains for exporters and losses as import costs increased. Across 49 countries benefitting, these gains averaged about 8 percent of GDP and reach up to 36 percent of GDP. In contrast, 125 countries suffered direct losses between 0 percent of GDP and 5 percent of GDP, and 10 countries losses between 5 percent of GDP and 10 percent of GDP. Economic performance was significantly worse among countries experiencing losses from the commodity price shock. An increase in the costs of imports of 1 percent of GDP was associated with lower GDP growth (minus 0.1 percent) and a weakening fiscal balance. Most significantly, GDP in countries experiencing losses in the form of higher import costs bought less when measured against the consumer price index (a loss of 0.75 percent for each percent of GDP in increased import costs). This price effect wiped out all gains from real GDP growth for high-income countries experiencing a negative commodity price shock and resulted in declining living standards for low-income countries relying on imports.
    Date: 2023–08–29
  39. By: Rivers, Nicholas; Woerman, Matt; Yassin, Kareman
    Abstract: Douenne and Fabre (2022) implement a representative survey following the Yellow Vests movement in France that started in opposition to the carbon tax in 2018. They find that a majority of French citizens would oppose a carbon tax and dividend program with proceeds paid equally to each adult. The authors further find that respondents have pessimistic beliefs about several aspects of the policy. They then show how informational treatments cause respondents to update these beliefs, and they finally estimate the causal effect of these beliefs on support for the policy. In this note, we focus on the second section of this paper: the causal effects of feedback on beliefs. Based on elicited household characteristics, Douenne and Fabre (2022) estimate whether each household "wins" or "loses" from the carbon tax and dividend reform. They provide this binary (win vs. lose) information to households and subsequently ask households to evaluate whether they believe they would financially benefit from the policy. By exploiting the discontinuity in win vs. lose feedback, they assess the degree to which feedback affects subjective beliefs, finding that a household that is told it will "win" as a result of the reform increases its subjective belief that it will not lose by about 25 percentage points. The subset of households that is part of the Yellow Vests movement, however, revises its subjective belief of not losing upwards by only 10 percentage points after being told that it will "win" from the carbon tax reform. Conversely, households who initially support the tax increase this belief by 41 percentage points when told they will "win." In this note we replicate this second section of the paper-the causal effects of feedback on beliefs- using the processed data provided by the authors. We successfully replicate the average treatment effect, but we find that the heterogeneous treatment effects may be biased due to model misspecification. While our results support the conclusion that these estimated effects depend on a household's attitudes toward the policy, we find that the source of heterogeneity differs. Further, we note two changes to the analysis that we believe are appropriate (which do not affect the conclusions drawn): first, some (1.8%) of observations in the dataset appear to be misclassified-wrongly coded as if a household would "lose" when in fact they would "win"-and second, the main causal analysis is based on a regression discontinuity design, but does not include standard components of such a design (e.g., a RD plot, optimal selection of bandwidth, density analysis, placebo tests). We update the design to address both of these points. We find results that generally support the main conclusions of Douenne and Fabre (2022), but we urge caution when interpreting the heterogeneous treatment effects.
    Date: 2023
  40. By: Di-Comite, Francesco (European Commission, DG for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW)); Pasimeni, Paolo (European Commission, DG for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW))
    Abstract: This paper analyses the economic implications for the European Union (EU) of the Russian invasion of Ukraine, and of the following developments. It illustrates the challenges faced by the European economy at the moment of the invasion and the massive, on-going adjustment since then. The paper starts with a comprehensive description of the structural exposures and dependencies of the EU, first at macroeconomic and then at product level. It then uses high-frequency customs data to track how such exposures and dependencies developed in recent months and how the economy is trying to adjust. At the moment of the invasion, the EU was highly exposed to the import of Russian commodities, notably fossil fuels and critical raw materials, but it has gradually managed to reduce this exposure in the course of 2022. We document a sizeable reduction of EU exports to Russia, due to export restrictions, but at the same time, since imports of energy fossil fuels and critical raw materials were less elastic to prices, and prices for these goods have increased, the value of EU imports from Russia has increased. This has led to the EU accumulating an additional bilateral trade deficit vis-à- vis Russia of roughly €67bn in 2022, compared with the same period in 2021. Such additional trade surplus for Russia corresponds to roughly 3.7% of its GDP and is likely to be one of the driving factors of the strengthening of its currency, the rouble. Nevertheless, in the most recent months, the EU has managed to stop the accumulation of this trade deficit, by reducing imports. The EU was dependent on Russia for a number of critical commodities, including energy products. For the majority of these key industrial inputs, imports from Russia have been falling significantly in the course of the year, signalling a reconfiguration of supply chains in favour of alternative sources.
    Date: 2022–12
  41. By: Park, Sohee (Korea Institute for Industrial Economics and Trade)
    Abstract: The rare earth elements (REE) refer to 17 metallic elements, including 15 lanthanides and two non-lanthanides. REEs are classified into two broad categories based atomic weight: light rare earth elements (LREEs) and heavy rare earth elements (HREEs). There are seven LREEs, with low atomic numbers and small masses, and 10 HREEs, with high atomic numbers and large masses. Rare earths are strategic materials (core minerals) directly related to resource security, defense, and industrial security. They are used in various industries, including defense, aerospace, information and communications technologies (ICT), artificial intelligence (AI), medical care, new energy, energy conservation, and environmental protection. Deposits of rare earths are concentrated in a handful of countries and regions, and this arrangement has made securing a stable supply of rare earths a key component of national economic competitiveness in the era of economic security. Currently, China is the only country on Earth in which all 17 REEs can be found. Not only does it have the largest proven deposits of rare earths in the world, it is also the largest miner and consumer of rare earths globally. Over the past 60 years, the Chinese government has been pushing the development of the rare earths industry. Two sayings illustrate the importance the government assigns to rare earths: they are “gold of industry” and the “core of the military” (HREEs are used in high-tech weapons manufacturing). China has designated rare earths as national strategic resources and has emphasized the importance of rare earths security. At the same, China has leveraged its rare earths in dealings with major export destinations such as Japan and the United States. In this context, this study aims to understand the development status of the rare earths industry in China. It focuses on the Chinese government’s major rare earths policies, and the implications these measures carry for Korean policy.
    Keywords: rare earths; rare earths policy; rare earths industry; strategic resources; economic security; national security; resource security; weapons manufacturing; export controls; trade policy; economic nationalism; China; US; Korea
    JEL: F13 F51 F52 L72 L78 O13 Q34 Q37 Q38 Q56
    Date: 2023–08–30
  42. By: Bala, Govindasamy; Sushma, B.S.; Murthy, Indu K.; Ravindranath, N.H.
    Abstract: According to the latest IPCC Working Group I report (2021), changes in the climate in recent decades are widespread, rapid, intensifying, and unprecedented in at least the last 2, 000 years. The global mitigation efforts under the Paris Agreement have been inadequate to reach the target of stabilizing warming below 1.5°C. Thus, it is likely that interest in solar geoengineering (SG) as an additional option to address climate change may increase in coming years. The latest IPCC Working Group II report (2022) concludes that SG could offset some of the effects of increasing greenhouse gases (GHGs) on global and regional climate but also notes large uncertainties and risks involved in large-scale deployment of SG. In this context, we assess the need for promoting SG research in India. We conducted an expert opinion survey of mainly researchers and a few individuals from government departments and civil society members who have some level of expertise in climate change and knowledge of SG. A literature review, examination of funded research projects, and survey results indicate very limited research in India on SG, and even more limited social science research. SG research in India is largely focused on modeling the climate hazards, and government support for research (currently only from the Department of Science and Technology) is very limited.The survey indicates that a majority of experts in India believe that SG research should be a priority area, with overall support for a national policy focusing on modeling, risk and im-pact assessments, and policy analysis. A majority also indicate that the government departments should be the dominant funding agencies for research and international collaborations should be encouraged. The survey highlighted the need for transparency, public consultation, disclosure of all SG research, and monitoring by a government interministerial committee. Finally, respondents indicated a need for a governance protocol and international collaborations due to the risks involved and transboundary nature of impacts.
    Date: 2023–09–05
  43. By: Andreas G. F. Hoepner (University College Dublin); Ioannis Oikonomou (University of Reading); Zacharias Sautner (University of Zurich; Swiss Finance Institute; ECGI); Laura T. Starks (University of Texas at Austin); Xiaoyan Zhou (University of Oxford)
    Abstract: We show that engagement on environmental, social, and governance issues can benefit shareholders by reducing firms’ downside risks. We find that the risk reductions (measured using value at risk and lower partial moments) vary across engagement types and success rates. Engagement is most effective in lowering downside risk when addressing environmental topics (primarily climate change). Further, targets with large downside risk reductions exhibit a decrease in environmental incidents after the engagement. We estimate that the value at risk of engagement targets decreases by 9% of the standard deviation after successful engagements, relative to control firms.
    Keywords: ESG, Shareholder Activism, Downside Risk, Corporate Governance, Climate Change
    JEL: G32 M14
    Date: 2023–09
  44. By: Asuamah Yeboah, Samuel
    Abstract: This systematic review explores the dynamic relationship between Foreign Direct Investment (FDI)-driven entrepreneurial ecosystems and the United Nations' Sustainable Development Goals (SDGs). FDI is recognized as a potent catalyst for global development, and its alignment with specific SDGs can create a transformative impact across various domains. By strategically harnessing FDI, countries can accelerate their progress towards achieving the SDGs and building a more inclusive and equitable future. The study identifies several key SDGs where FDI-driven entrepreneurial ecosystems play a pivotal role: SDG 1: No Poverty: FDI fosters economic growth, generates employment opportunities, and enhances labour productivity, consequently alleviating poverty. It contributes to improving wages, human capital development, and overall well-being. SDG 8: Decent Work and Economic Growth: FDI-supported ecosystems promote inclusive economic growth by creating jobs and enhancing working conditions. They boost local productivity, induce employment, and stimulate consumption. SDG 9: Industry, Innovation, and Infrastructure: FDI brings technological innovation, knowledge transfer, and advanced infrastructure, fostering innovation and enhancing local business competitiveness. SDG 10: Reduced Inequality: FDI empowers marginalized communities, enabling them to access resources, markets, and global networks, thus reducing inequality. SDG 17: Partnerships for the Goals: FDI-driven partnerships between foreign corporations and local startups leverage expertise, resources, and networks to collectively achieve various SDGs. Such collaborations aim to align with the principles and objectives of SDG 17. SDG 4: Quality Education: Multinational corporations' involvement in FDI can lead to educational initiatives, skill development programs, and technology transfers that enhance educational quality. SDG 13: Climate Action: FDI-driven innovation results in sustainable technologies, cleaner production processes, and environmental solutions contributing to climate action. SDG 16: Peace, Justice, and Strong Institutions: FDI promotes transparency, accountability, and ethical business practices, strengthening institutions and contributing to a stable business environment. SDG 5: Gender Equality: FDI-supported startups empower women entrepreneurs, enhance gender diversity in the workforce, and create opportunities for women's economic participation. SDG 11: Sustainable Cities and Communities: FDI-driven entrepreneurial ecosystems contribute to urban development through smart technologies, sustainable infrastructure, and innovative solutions. SDG 7: Affordable and Clean Energy: FDI plays a critical role in the adoption of clean energy technologies, supporting the transition to renewable energy sources.
    Keywords: Poverty Alleviation, Economic Growth, Innovation, Inequality Reduction, Partnerships, Quality Education, Climate Action, Strong Institutions, Gender Equality, Sustainable Urban Development, Clean Energy Adoption.
    JEL: F21 F23 O31 O32 O33 O38 O40 O41 O43 O44 O57
    Date: 2023–07–20
  45. By: Temel, Tugrul; Phumpiu, Paul
    Abstract: Drawing on input-output data, a computational methodology is proposed to: (i) characterize the upstream and/or downstream network of a targeted (or prioritized) sector i, (ii) uncover the cascade of layers of links in the network constructed, and (iii) measure the degree of network resilience using edge betweenness centrality measure of edges between communities. These objectives are accomplished through three complementary algorithms. The implementation of the algorithms is illustrated using Turkiye’s 2018 input-output production network. Ways to design policies are discussed from a network perspective. The key findings are three-fold. First, in network-based policy design, it is highly critical to consider the interdependencies of regulated and seemingly competitive sectors. Efficiencies gained in liberalized markets via pro-competitive PMR can easily be wasted before final consumers benefit from them as regulated industries may exercise their market power to confiscate part of the efficiency gain created in competitive markets. Improved competition in a single market may not generate the desired outcome even if competition policies perfectly support that market because benefits from competition may not spread over the rest of the network due to disruptions in the cascade of interdependencies concerned. Second, a network-based policy design should start with the identification of the “dominant” source and the “subordinate” sink sector(s), and those in between. The source−sink structure of Turkiye’s manufacturing network illustrates that the manufacturing sector is the most dominant, whereas telecommunications and transport, energy and construction sectors are the potential sinks where large chunk of input flow ends up. Agriculture, finance and oil extraction-mining seem to be interactive sectors. Third, the cascade of three layers of links are identified, and the upstream network of the manufacturing sector is found to have a mediocre level of resilience against the complete disruption of the intermediate layer of the network.
    Keywords: graph theory; input-output production network; network resilience; systemic risk; policy plan- ning; technological change;
    JEL: C45 C67 D24 O21 O33
    Date: 2023–08–26
  46. By: Serenella Caravella; Francesco Crespi; Giacomo Cucignatto; Dario Guarascio
    Abstract: This work sheds new light on the Photovoltaic Supply Chain (PVSC), providing fresh evidence on structural dependencies (SDs) and (asymmetrically distributed) technological capabilities. Bridging the perspectives of 'technological sovereignty' and 'strategic autonomy', a number of contributions are provided. First, we carry out a fine-grained mapping of the PVSC, combining trade and patent data. Second, we assess the long-term evolution of trade and technological hierarchies, documenting processes of polarization and growing SDs. Third, we zoom-in on critical PV areas (i.e. products and related technologies), providing a 'strategic intelligence' activity which may prove useful for tailoring trade, industrial and innovation policies. Fourth, we explore the relationship between technological specialization and productive capabilities showing that, in the upstream segment, reinforcing the former may help mitigating SDs.
    Keywords: Technological sovereignty; Strategic dependency; Photovoltaic industry; Trade; Patents.
    Date: 2023–09–14

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