nep-ene New Economics Papers
on Energy Economics
Issue of 2023‒10‒23
53 papers chosen by
Roger Fouquet, National University of Singapore

  1. Electricity Market Crisis in Europe and Cross Border Price Effects: A Quantile Return Connectedness Analysis By Hung Xuan Do; Rabindra Nepal; Son Duy Pham; Tooraj Jamasb
  2. Paris-consistent climate change mitigation scenarios: A framework for emissions pathway classification in line with global mitigation objectives By Coline Pouille; Marcia Rocha; Jolien Noels; Raphaël Jachnik
  3. Reaching (Beyond) the Frontier: Energy Efficiency in Europe By Mr. Serhan Cevik; Kelly Gao
  4. Climate-Related Trade Measures: Assessing Impacts for Bolivia, Colombia, Ecuador, and Peru By Cosbey, Aaron; Vogt-Schilb, Adrien
  5. Climate Policies, Labor Markets, and Macroeconomic Outcomes in Emerging Economies By Finkelstein-Shapiro, Alan; Nuguer, Victoria
  6. International sanctions and the dollar: Evidence from trade invoicing By Naef Alain
  7. Cryptocarbon: How Much Is the Corrective Tax? By Mr. Shafik Hebous; Nate Vernon
  8. The Impossible Love of Fossil Fuel Companies for Carbon Taxes By Thomas Allen; Mathieu Boullot; Stéphane Dées*; Annabelle de Gaye; Noëmie Lisack; Camille Thubin; Oriane Wegner
  9. Techno-Economic Analysis of Synthetic Fuel Production from Existing Nuclear Power Plants across the United States By Marisol Garrouste; Michael T. Craig; Daniel Wendt; Maria Herrera Diaz; William Jenson; Qian Zhang; Brendan Kochunas
  10. Distributional and climate implications of policy responses to energy price shocks By Fetzer, Thiemo; Gazze, Ludovica; Bishop, Menna
  11. Management Practices and Climate Policy in China By Soo Keong Young; Ulrich J. Wagner; Peiyao Shen; Laure de Preux; Mirabelle Muȗls; Ralf Martin; Jing Cao
  12. Enerji Ithalat Fiyatlarinin Son Donem Seyri ve Belirleyicileri By Mert Gokcu
  13. Climate change mitigation scenarios for financial sector target setting and alignment assessment: A stocktake and analysis of their Paris-consistency, practicality and assumptions By Jolien Noels; Coline Pouille; Raphaël Jachnik; Marcia Rocha
  14. The Effect of Offshoring on Firm Emissions By Yen Nhi Nguyen
  15. Cross-Border Risks of a Global Economy in Mid-Transition By Etienne Espagne; William Oman; Jean-François Mercure; Romain Svartzman; Ulrich Volz; Hector Pollitt; Gregor Semieniuk; Emanuele Campiglio
  16. Enumerating the climate impact of disequilibrium in critical mineral supply By Lucas Woodley; Chung Yi See; Peter Cook; Megan Yeo; Daniel S. Palmer; Laurena Huh; Seaver Wang; Ashley Nunes
  17. Economic Impacts of a Supporting Scheme on Domestic Energy Consumption in Bolivia: A Quasi-experimental Approach By Nogales, Ricardo; Alcaraz, Andrea; Lopez, David; Ravillard, Pauline; Ballón, Sergio; Carvalho Metanias Hallack, Michelle
  18. Residential Electricity Consumption and Adaptation to Climate Change by Colombian Households By McRae, Shaun D.
  19. Environmental Policies and Innovation in Renewable Energy By Luca Bettarelli; Davide Furceri; Pietro Pizzuto; Nadia Shakoor
  20. Optimal Sizing and Assessment of Standalone Photovoltaic Systems for Community Health Centers in Mali By Abid Ali; Maïté Volatier; Maxime Darnon
  21. Monetary and moral incentives of behavioral interventions: Field experimental evidence from hotel guest energy efficiency programs By Toshi H. Arimura; Yukihiko Funaki; Hajime Katayama; Atsushi Morimoto; Hiroko Okajima; Shigeharu Okajima
  22. A Critical Evaluation of the 2022 Greenhouse Gas Mitigation Quota in Germany from an Environmental Economics and Policy Perspective By Liepold, Constanze; Fabianek, Paul; Madlener, Reinhard
  23. Public support for more ambitious climate policies By Sebastian Goerg; Andreas Pondorfer; Valentina Stöhr
  24. Not all oil types are alike By Jochen Güntner; Michael Irlacher; Peter Öhlinger
  25. Energy prices and household heterogeneity: monetary policy in a Gas-TANK By Chan, Jenny; Diz, Sebastian; Kanngiesser, Derrick
  26. Energy Support for Firms in Europe: Best Practice Considerations and Recent Experience By Mr. Anil Ari; Philipp Engler; Gloria Li; Manasa Patnam; Ms. Laura Valderrama
  27. Family Firms and Carbon Emissions By Marcin Borsuk; Nicolas Eugster; Paul-Olivier Klein; Oskar Kowalewski
  28. An Introduction to Complex Networks in Climate Finance By Alexander P. Kartun-Giles; Nadia Ameli
  29. Delays in Climate Transition Can Increase Financial Tail Risks: A Global Lesson from a Study in Mexico By Mr. Dimitrios Laliotis; Sujan Lamichhane
  30. Climate Coalitions and their Persistent Ineffectiveness By Effrosyni Diamantoudi; Eftichios S. Sartzetakis; Stefania Strantza
  31. The impact of green investors on stock prices By Gong Cheng; Eric Jondeau; Benoit Mojon; Dimitri Vayanos
  32. Does environment pay for politicians? By Mohamed Boly; Jean-Louis Combes; Pascale Combes Motel
  33. Transboundary Pollution Control with Both Production and Consumption Emissions By Shoji Haruna; Rajeev K. Goel
  34. Does Reliable Electricity Mean Lesser Agricultural Labor Wages? Evidence from Indian Villages By Suryadeepto Nag
  35. Towards a Digital Due Diligence (or How to Integrate the Issue of the Environmental Footprint of Digital Economy in the Governance of Companies) By Caroline Devaux; Jean-Philippe Nicolaï
  36. Electricity price forecasting on the day-ahead market using machine learning By Léonard Tschora; Erwan Pierre; Marc Plantevit; Céline Robardet
  37. Environmental Productivity Assessment: an Illustration with the Ecuadorian Oil Industry By Arnaud Abad; Michell Arias; Paola Ravelojaona
  38. A Modern Excess Profit Tax By Manon François; Carlos Oliveira; Bluebery Planterose; Gabriel Zucman
  39. The CO2 content of the TLTRO III scheme and its greening By Chiara Colesanti Senni; Maria Sole Pagliari; Jens van ‘t Klooster
  40. Intergenerational Equity in Models of Climate Change Mitigation: Stochastic Interest Rates introduce Adverse Effects, but (Non-linear) Funding Costs can Improve Intergenerational Equity By Christian Fries; Lennart Quante
  41. Results report on a stakeholder workshop reflecting on a theory of change for low-emission food system transformation in Nandi county, Kenya: A contribution to the establishment of A Living Lab 4 People on Food System Innovations for Climate Change Mitigation under the CGIAR Research Initiative on Low-Emission Food Systems (MITIGATE+) By Falk, Thomas; Walter, Kibet
  42. Thêm vài báo cáo nữa thì sẽ thế nào? By Độ, Bách
  43. Predicting Multi-Scale Positive and Negative Stock Market Bubbles in a Panel of G7 Countries: The Role of Oil Price Uncertainty By Renee van Eyden; Rangan Gupta; Xin Sheng; Joshua Nielsen
  44. Investing in the Batteries and Vehicles of the Future: A View Through the Stock Market By Michael D. Plante
  46. Asia’s Transition to Net Zero: Opportunities and Challenges in Agriculture By Panda, Architesh; Yamano, Takashi
  47. CO2-Preis steigert Kosten für die Industrie By Bardt, Hubertus; Schaefer, Thilo
  48. Social Norms in Individual Pro-environmental Practices in the Workplace By Mari Sakudo; Toshi H. Arimura; Hajime Katayama
  49. Beneath the Veneer of Calm By Vasily Astrov; Alexandra Bykova; Rumen Dobrinsky; Selena Duraković; Meryem Gökten; Richard Grieveson; Doris Hanzl-Weiss; Marcus How; Gabor Hunya; Branimir Jovanović; Niko Korpar; Sebastian Leitner; Isilda Mara; Olga Pindyuk; Sandor Richter; Bernd Christoph Ströhm; Maryna Tverdostup; Zuzana Zavarská; Adam Żurawski
  50. Why companies might under‐communicate their efforts for sustainable development and what can be done? By Alice Falchi; Gilles Grolleau; Naoufel Mzoughi
  51. Greening the greenwashers – How to push greenwashers towards more sustainable trajectories By Dejan Glavas; Gilles Grolleau; Naoufel Mzoughi
  52. Main Approaches to the Use of Time-Varying Parameter Models in Macroeconomic Modeling By Kazakova, Maria (Казакова, Мария)
  53. Polluting for (Higher) Profits: Does an Economic Gain Influence Moral Judgment of Environmental Wrongdoings? By Gilles Grolleau; Luc Meunier; Naoufel Mzoughi

  1. By: Hung Xuan Do; Rabindra Nepal; Son Duy Pham; Tooraj Jamasb
    Abstract: Despite the massive impacts of the COVID-19 pandemic and the Russia-Ukraine war on the European energy market, little is known about their effects on the transmission of risks between member states’ electricity markets and key electricity sources. In this paper, we first employ the quantile connectedness approach to quantify the return connectedness between eleven European electricity markets, natural gas, and carbon market, then examine the impacts of the two crises on the interconnectedness. We find a significant return interconnectedness of the system, mainly driven by the spillover effects among European electricity markets. An investigation of the connectedness across quantiles shows that the spillover effects are much stronger at the tails of conditional distribution and the natural gas and carbon markets are net recipients of return shocks across quantiles. More importantly, our results reveal opposite effects of the two crises on interconnectedness. While the COVID-19 pandemic reduces the interconnectedness, the Russia-Ukraine war intensifies the return shock transmission.
    Keywords: Natural gas, European Emission Allowance, Electricity markets, COVID-19, Russia-Ukraine war, Quantile connectedness
    JEL: D4 L94 Q43
    Date: 2023–09
  2. By: Coline Pouille; Marcia Rocha; Jolien Noels; Raphaël Jachnik
    Abstract: Since the adoption of the Paris Agreement, governments and economic actors have increasingly been setting greenhouse gas emissions reduction or net zero targets. Amidst risks of delayed action and greenwashing, there is need to understand whether climate related targets and transition plans are consistent with the Paris Agreement. Climate change mitigation scenarios can be used as inputs to design such targets and plans, and as benchmarks to assess progress towards them. In this context, this paper proposes criteria for selecting global climate change mitigation scenarios that can be considered consistent with the Paris Agreement temperature goal and emissions objectives, based on state-of-the-art literature on climate science and mitigation scenarios.
    Keywords: 1.5°C temperature goal, Climate change mitigation scenarios, greenhouse gas emissions pathways, net zero targets, Paris Agreement alignment, temperature overshoot
    JEL: Q54 Q56 C68
    Date: 2023–09–28
  3. By: Mr. Serhan Cevik; Kelly Gao
    Abstract: The world is not decarbonizing fast enough, with global warming on track to reach as much as 4°C over the next century absent a global green transition. Policymakers in Europe—and beyond—still have an opportunity both to achieve net zero emissions by 2050 and to strengthen economic prospects by increasing energy efficiency, along with changing the energy mix from fossil fuels to renewables. In this paper, we assess energy efficiency (or intensity) in a panel of 38 European countries over the period 1980–2021 by using the stochastic frontier analysis and obtain statistically significant and intuitive results. We have two key findings. First, price signals, including through the introduction of a carbon tax and the removal of fossil fuel subsidies, are critical for energy efficiency, as consumers respond to changes in energy prices. Second, stronger environmental policies and institutions generate unambiguous improvements in energy efficiency by inducing investment in energy efficient equipment and buildings and nudging consumers for energy conservation. These results—robust to alternative specifications and methods—have important policy implications for green growth with higher energy efficiency.
    Keywords: Energy consumption; energy efficiency; stochastis frontier analysis; Europe
    Date: 2023–09–22
  4. By: Cosbey, Aaron; Vogt-Schilb, Adrien
    Abstract: There is a growing wave of concern for the embodied carbon in traded goods. One manifestation of that concern is large economies such as the USA and the European Union enacting climate-related trade measures, including border carbon adjustment. This paper reviews more than ten climate-related trade measures that are currently enacted or under discussion globally and five initiatives from large companies to source low-carbon inputs. It then assesses Bolivia, Colombia, Ecuador, and Perus vulnerability to trade restrictions, based on estimated greenhouse gas intensity of their exported goods (using an input-output analysis) relative to other global producers, and an exposure analysis that assesses the likelihood that current importers of these products might implement climate-related trade measures. Finally, it reviews existing scenarios of global oil, natural gas and coal demand, and asks what they mean for fossil fuel exports from these countries. Agricultural goods stand out as vulnerable, as they are the main driver of deforestation and associated emissions. The most serious threat is the vulnerability of fossil fuel exports, primarily crude oil and gas, which dominate the four countries current exports. The paper exposes recommendations in terms of diversifying the economy away from fossil fuels and preparing exporters to comply with emerging climate-related trade restrictions.
    Keywords: Trade Policy; Climate Policy; Input-Output Analysis
    JEL: F18 Q56 Q54 O13
    Date: 2023–08
  5. By: Finkelstein-Shapiro, Alan; Nuguer, Victoria
    Abstract: We study the labor market and macroeconomic effects of introducing a carbon tax in the energy sector in emerging economies (EMEs) by building a framework with equilibrium unemployment and firm entry that incorporates key elements of the distinct employment and firm structure of EMEs. Our model endogenizes the adoption of green energy-production technologies--a core element of policy discussions regarding the transition to a low-carbon economy. Calibrating the model to EME data, we show that a carbon tax fosters greater green technology adoption and increases the share of green energy produced. However, the tax leads to higher energy prices, which reduce salaried firm creation and formal employment and increase self-employment, labor participation, and unemployment. As a result, the tax generates output and welfare losses. Green technology adoption plays a key role in limiting the quantitative magnitude of these losses, while the response of self-employment is crucial to explaining the adverse labor market and macroeconomic effects of the policy. Given this finding, we show that a carbon tax coupled with a plausible reduction in the cost of becoming a formal firm can offset the adverse effects of the tax and generate a transition to a lower-carbon economy with minimal economic costs. Finally, we show that lowering green-technology adoption costs or the cost of green-energy production inputs--two alternative climate policies--reduces emissions while limiting the output and welfare costs compared to a carbon tax.
    Keywords: Environmental and fiscal policy;carbon taxes;Endogenous firm creation;Green technology adoption;Search frictions;Unemployment;Labor force par ticipation;Informality and self-employment;Emerging economies
    JEL: E20 E24 E61 H23 J46 J64 O44 Q52 Q55
    Date: 2023–04
  6. By: Naef Alain
    Abstract: Economists agree that carbon taxes are the most effective solution for climate change mitigation. But where do fossil fuel companies stand on carbon taxes? I analyse how the 100 largest oil and gas companies communicate on carbon taxes. Surprisingly, I find that 54% of companies that have a policy view on carbon taxes support them (78% for the 50 largest). This is puzzling as an effective carbon tax should reduce revenues and reserve value of fossil fuel companies. I present a conceptual trilemma model showing that fossil fuel companies’ existence is threatened by a carbon tax. To understand this paradox, I offer non-mutually exclusive reasons why fossil fuel companies might support carbon taxes. Oil and gas companies could use a carbon tax to get rid of the competition from coal, create a level playing field and remove regulatory uncertainty. Or they think that these taxes will not affect them because demand for oil and gas is inelastic or that international coordination will fail and lead to leakages. Finally, it could be that this is simply a communication exercise and that a carbon tax helps them shift the responsibility for climate change from fossil fuel companies to customers, voters and elected officials.
    Keywords: Carbon Tax, Fossil Fuel Companies, Emission Mitigation, Carbon Taxation
    JEL: L71 Q38 Q48 Q54
    Date: 2023
  7. By: Mr. Shafik Hebous; Nate Vernon
    Abstract: With increasing awareness of past environmental damage from crypto mining, questions arise as to how persistent the problem will be in the future and how taxation can help in addressing this negative externality. We estimate that the global demand for electricity by crypto miners reached that of Australia or Spain, resulting in 0.33% of global CO2 emissions in 2022. Projections suggest sustained future electricity demand and indicate further increases in CO2 emissions if crypto prices significantly increase and the energy efficiency of mining hardware is low. To address global warming, we estimate the corrective excise on the electricity used by crypto miners to be USD 0.045 per kWh, on average. Considering also air pollution costs raises the tax to USD 0.087 per kWh. Country-specific estimates vary depending on their electricity sources.
    Keywords: Corrective Taxes; Carbon Tax; Mitigation Policy; Crypto Assets; Crypto Mining; Bitcoin
    Date: 2023–09–15
  8. By: Thomas Allen; Mathieu Boullot; Stéphane Dées*; Annabelle de Gaye; Noëmie Lisack; Camille Thubin; Oriane Wegner
    Abstract: This paper proposes a set of short-term scenarios that reflect the diversity of climate transition shocks -- increase in carbon and energy prices, increase in public or private investment in the low-carbon transition, increase in the cost of capital due to uncertainty, deterioration of confidence, accelerated obsolescence of part of the installed capital, etc. Using a suite-of-model approach, we assess the implications of these scenarios for the dynamics of activity and inflation. By considering multiple scenarios, we therefore account for the uncertainty around future political decisions regarding climate change mitigation. The results show that the magnitude and duration of the macroeconomic effects of the transition to carbon neutrality will depend on the transition strategy chosen. While a number of short-term scenarios being inflationary or even stagflationary, there are also factors that could curb inflation and boost economic growth.
    Keywords: Climate Transition, Scenario Analysis, Macroeconomic Modelling
    JEL: C60 E44 E50 G32 Q40 Q54
    Date: 2023
  9. By: Marisol Garrouste; Michael T. Craig; Daniel Wendt; Maria Herrera Diaz; William Jenson; Qian Zhang; Brendan Kochunas
    Abstract: Low carbon synfuel can displace transport fossil fuels such as diesel and jet fuel and help achieve the decarbonization of the transportation sector at a global scale, but large-scale cost-effective production facilities are needed. Meanwhile, nuclear power plants are closing due to economic difficulties: electricity prices are too low and variable to cover their operational costs. Using existing nuclear power plants to produce synfuels might prevent loss of these low-carbon assets while producing synfuels at scale, but no technoeconomic analysis of this Integrated Energy System exist. We quantify the technoeconomic potential of coupling a synthetic fuel production process with five example nuclear power plants across the U.S. to explore the influence of different electricity markets, access to carbon dioxide sources, and fuel markets. Coupling synfuel production increases nuclear plant profitability by up to 792 million USD(2020) in addition to a 10 percent rate of return on investment over a 20 year period. Our analysis identifies drivers for the economic profitability of the synfuel IES. The hydrogen production tax credit from the 2022 Inflation Reduction Act is essential to its overall profitability representing on average three quarters of its revenues. The carbon feedstock transportation is the highest cost - more than a third on average - closely followed by the synfuel production process capital costs. Those results show the key role of incentive policies for the decarbonization of the transportation sector and the economic importance of the geographic location of Integrated Energy Systems.
    Date: 2023–09
  10. By: Fetzer, Thiemo (University of Warwick); Gazze, Ludovica (University of Warwick); Bishop, Menna (University of Warwick)
    Abstract: Which households are most affected by energy price shocks? What can we learn about the distributional implications of carbon taxes? How do interventions in energy markets affect these patterns? This paper introduces a measurement framework that leverages granular property-level data representing more than 50% of the English and Welsh housing stock. We use this ex-ante measurement framework to investigate these questions and set out an empirical evaluation framework to study the causal effects of the energy crisis more broadly. We find that the energy price shock has a more pronounced effect on relatively more affluent areas highlighting the likely progressive impact of carbon taxation. We document that commonly used untargeted interventions in energy markets significantly weaken market price signals for able-to-pay households. Alternative, more targeted policies are cheaper, easily implementable, and could better align energy saving incentives.
    Keywords: Energy crisis, Carbon taxation, Climate change, Energy efficiency gap JEL Classification: Q48, C55
    Date: 2023
  11. By: Soo Keong Young; Ulrich J. Wagner; Peiyao Shen; Laure de Preux; Mirabelle Muȗls; Ralf Martin; Jing Cao
    Abstract: We investigate how management quality moderates the impact of carbon pricing on Chinese firms. Based on interviews with managers and lead engineers at manufacturing firms in Hubei and Beijing, we construct a novel index on climate-change related management practices and link it to firm data from various sources. We document higher average productivity and more green innovation among firms that are well managed according to this index. In an event study of the introduction of regional cap-and-trade schemes for CO2, we analyze how these management practices interact with treatment. While treated firms reduced coal consumption more than control firms, this effect is statistically significant only for well-managed firms. The reduction could have been 25% greater if badly managed firms had been well managed. Our study highlights that good management practices, in particular energy monitoring, enhance the effectiveness of market-based climate policies by enabling firm to rationally comply with them.
    Keywords: climate policy; firm behavior; management practices; emissions trading scheme; policy evaluation
    JEL: D22 O31 Q48 Q54
    Date: 2023–09
  12. By: Mert Gokcu
    Abstract: [TR] Kuresel enerji fiyatlarinin seyri son donemde Turkiye'de manset cari aciktaki artisi belirleyen en onemli etkenlerden biri olmustur. Bu calismada, enerji piyasasinin gorunumu fiyat hareketleri ile arz ve depolama kosullari acisindan analiz edilmekte ve COViD-19 pandemisinden bu yana Turkiye'deki enerji ithalat fiyatlari ile kuresel enerji emtia fiyatlari arasindaki iliski incelenmektedir. Veriler, 2022 yilinda ithalat hacminde sinirli oranda artis gerceklesmis olmasina ragmen cari islemler dengesinin onemli olcude bozulmus olmasinin kuresel enerji fiyatlarindaki yukselisten kaynaklandigina isaret etmektedir. Sonuclarimiz, petrol ithalat fiyatlarinin seyrinin tarihsel olarak spot Brent petrol fiyatlari ile 1’e yakin korelasyona sahip oldugunu gostermektedir. Dogal gaz ithalat fiyatlarinin ise spot fiyatlara duyarliligi 2021 yilinin son ceyreginden itibaren onemli olcude artmistir. Son donemde yasanan soklar, enerji arzinin cesitlendirilmesinin onemini ortaya koyarken, Turkiye gerek farkli tedarikci ulkeler ile yaptigi uzun vadeli anlasmalar gerekse Karadeniz’de yerel dogal gaz kaynaklarinin kesfi nedeniyle dogal gaz arzi acisindan olumlu bir gorunum sunmaktadir. [EN] Global energy prices have been one of the most prominent factors driving the recent increase in the headline current account deficit in Turkiye. Against this background, this study analyses the outlook for the energy market in terms of price movements, supply, and storage conditions and examines the relationship between energy import prices in Turkiye and global energy commodity prices since the COViD-19 pandemic. The data indicate that the surge in global energy prices in 2022 caused the current account balance to deteriorate significantly, despite the subdued increase in the volume of imports. Our results show that the course of the oil import prices has historically been fairly similar to spot Brent oil prices, with a nearly perfect correlation. On the natural gas front, the sensitivity of natural gas import prices to spot prices has increased considerably since the last quarter of 2021. While recent shocks highlight the importance of the diversification of energy supply, Turkiye stands in a favorable position in terms of natural gas supply with respect to not only its long-term agreements with a number of different supplier countries but also the discovery of local resources in the Black Sea.
    Date: 2023
  13. By: Jolien Noels; Coline Pouille; Raphaël Jachnik; Marcia Rocha
    Abstract: Climate change mitigation scenarios are a key forward-looking input for a range of financial sector analyses and assessments. The inaccurate use of mitigation scenarios can, however, contribute to unintended incentives, environmental integrity concerns, and greenwashing risks. This paper aims to inform climate change mitigation scenario providers, financial sector participants and stakeholders, and climate policymakers on how they may contribute to improved use of scenarios for the purposes of target setting and alignment assessments in the financial sector. To do so, the paper analyses climate change mitigation scenarios currently used for these purposes, based on the following analytical dimensions: consistency with the Paris Agreement, practicality, and underlying assumptions.
    Keywords: climate alignment assessments, Climate change mitigation scenarios, finance, greenhouse gas emissions, investment, net zero target setting
    JEL: G23 G24 Q54 Q56
    Date: 2023–09–28
  14. By: Yen Nhi Nguyen (Johannes Gutenberg University Mainz)
    Abstract: This paper analyses the effect of unilateral environmental policies on global emissions under trade in intermediate inputs. I develop a model of heterogeneous firms with two countries (North-South) in which North firms can invest in abatement activities but also offshore the pollution-intensive part of the production in South. The model suggests that a unilateral increase in North emission tax promotes more abatement activities of the least productive firms while the most productive firms stop investing in abatement and offshore polluting production steps. Marginal increases in North emission tax decrease global emissions when the relative emission tax is low but increase global emissions when it is high. Tests using German firm-level data support the central prediction of the model: offshoring activities reduce firms’ domestic emission intensity, particularly when firms offshore in countries with lax environmental regulations.
    JEL: F10 F14 F18 F23 Q52 Q54 Q56
    Date: 2023–10–04
  15. By: Etienne Espagne; William Oman; Jean-François Mercure; Romain Svartzman; Ulrich Volz; Hector Pollitt; Gregor Semieniuk; Emanuele Campiglio
    Abstract: This paper analyzes the cross-border risks that could result from a decarbonization of the world economy. We develop a typology of cross-border risks and their respective channels. Our qualitative and quantitative scenario analysis suggests that the mid-transition – a period during which fossil-fuel and low-carbon energy systems co-exist and transform at a rapid pace – could have profound stability and resilience implications for global trade and the international financial system.
    Keywords: Climate change; transition risks; cross-border risks; trade; international money and finance.
    Date: 2023–09–08
  16. By: Lucas Woodley; Chung Yi See; Peter Cook; Megan Yeo; Daniel S. Palmer; Laurena Huh; Seaver Wang; Ashley Nunes
    Abstract: Recently proposed tailpipe emissions standards aim to significant increases in electric vehicle (EV) sales in the United States. Our work examines whether this increase is achievable given potential constraints in EV mineral supply chains. We estimate a model that reflects international sourcing rules, heterogeneity in the mineral intensity of predominant battery chemistries, and long-run grid decarbonization efforts. Our efforts yield five key findings. First, compliance with the proposed standard necessitates replacing at least 10.21 million new ICEVs with EVs between 2027 and 2032. Second, based on economically viable and geologically available mineral reserves, manufacturing sufficient EVs is plausible across most battery chemistries and could, subject to the chemistry leveraged, reduce up to 457.3 million total tons of CO2e. Third, mineral production capacities of the US and its allies constrain battery production to a total of 5.09 million EV batteries between 2027 and 2032, well short of deployment requirements to meet EPA standards even if battery manufacturing is optimized to exclusively manufacture materials efficient NMC 811 batteries. Fourth, disequilibrium between mineral supply and demand results in at least 59.54 million tons of CO2e in total lost lifecycle emissions benefits. Fifth, limited present-day production of battery-grade graphite and to a lesser extent, cobalt, constrain US electric vehicle battery pack manufacturing under strict sourcing rules. We demonstrate that should mineral supply bottlenecks persist, hybrid electric vehicles may offer equivalent lifecycle emissions benefits as EVs while relaxing mineral production demands, though this represents a tradeoff of long-term momentum in electric vehicle deployment in favor of near-term carbon dioxide emissions reductions.
    Date: 2023–09
  17. By: Nogales, Ricardo; Alcaraz, Andrea; Lopez, David; Ravillard, Pauline; Ballón, Sergio; Carvalho Metanias Hallack, Michelle
    Abstract: The Bolivian government fostered an electricity cost supporting scheme to attenuate the effect of the nationwide full lockdown on domestic consumption during the COVID-19 pandemic. This paper evaluates its effect on the levels of energy consumption during lockdown, and the monetary savings it implied for beneficiaries. It finds that the absolute gains of the scheme are concentrated among better-off households as measured by income or years of schooling. However, the relative gains of the supporting scheme are clearly concentrated in the worse-off part of the population.
    Keywords: Electricity subsidy;Household consumption and behaviour;Redistributive Effects
    JEL: H23 H31 H53 I38 Q41 D12
    Date: 2023–05
  18. By: McRae, Shaun D.
    Abstract: This paper provides the first empirical estimates of the relationship between temperatures and household electricity consumption in Colombia, using electricity billing and weather data from 2010 to 2019. I find that higher temperatures (or higher values of the heat index) increase electricity consumption, with the largest effects observed for high-income households in regions with hot climates. However, I show that there has been partial convergence between low- and high-income households, with the effect of temperature on electricity consumption in lower-income neighborhoods more than doubling between 2011 and 2019. These results align with survey evidence of increased air conditioning adoption. Nevertheless, further growth in air conditioning adoption and use is required to alleviate the health effects of more frequent and severe heatwaves due to climate change.
    JEL: L94 O13 Q41 Q54
    Date: 2023–07
  19. By: Luca Bettarelli; Davide Furceri; Pietro Pizzuto; Nadia Shakoor
    Abstract: This paper investigates the effect of Climate Change Policies (CCPs) on green innovation, for a sample of 40 advanced and emerging market economies and 5 economic sectors, during the period 2000-2021. Our results suggest that CCPs increase green patents, with the effect increasing gradually over time. The effect is larger for non-market-based policies—such as R&D subsidies—and technology-support instruments, in countries with greater competitiveness and during periods of stronger economic activity—that is, higher GDP growth, lower uncertainty and financial stress. The results based on a difference-in-differences approach suggest that the positive effect of stricter CCPs on green innovation is stronger in sectors with limited financial constraints.
    Keywords: green patents; climate change policy; diff-in-diff approach; innovation
    Date: 2023–09–01
  20. By: Abid Ali (3IT - Institut Interdisciplinaire d'Innovation Technologique [Sherbrooke] - UdeS - Université de Sherbrooke, LN2 - Laboratoire Nanotechnologies et Nanosystèmes [Sherbrooke] - UdeS - Université de Sherbrooke - ECL - École Centrale de Lyon - Université de Lyon - CPE - École Supérieure de Chimie Physique Électronique de Lyon - INSA Lyon - Institut National des Sciences Appliquées de Lyon - Université de Lyon - INSA - Institut National des Sciences Appliquées - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Maïté Volatier (3IT - Institut Interdisciplinaire d'Innovation Technologique [Sherbrooke] - UdeS - Université de Sherbrooke, LN2 - Laboratoire Nanotechnologies et Nanosystèmes [Sherbrooke] - UdeS - Université de Sherbrooke - ECL - École Centrale de Lyon - Université de Lyon - CPE - École Supérieure de Chimie Physique Électronique de Lyon - INSA Lyon - Institut National des Sciences Appliquées de Lyon - Université de Lyon - INSA - Institut National des Sciences Appliquées - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Maxime Darnon (3IT - Institut Interdisciplinaire d'Innovation Technologique [Sherbrooke] - UdeS - Université de Sherbrooke, LN2 - Laboratoire Nanotechnologies et Nanosystèmes [Sherbrooke] - UdeS - Université de Sherbrooke - ECL - École Centrale de Lyon - Université de Lyon - CPE - École Supérieure de Chimie Physique Électronique de Lyon - INSA Lyon - Institut National des Sciences Appliquées de Lyon - Université de Lyon - INSA - Institut National des Sciences Appliquées - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes)
    Abstract: Despite abundant solar resources, Mali has remained one of the least electrified countries in the world. Besides daily life activities and the economy, the shortage of electricity has severely affected the quality of healthcare services in the country. In the absence of electrical grids, standalone photovoltaic (PV) systems could be an alternative option in Mali for the electrification of isolated community health centers. However, because standalone PV systems are highly weather-dependent, they must be properly sized according to the local weather conditions. This paper presents the optimal sizing of standalone PV systems for the electrification of community health centers in Mali. The optimization for PV systems was performed for five different locations through simulation and modeling using PVsyst, considering the autonomy of 1 to 3 days and the probability of loss of load for 1 to 5%. Furthermore, for the economic analysis, the levelized cost of electricity (LCOE), payback period and return on investment for the standalone PV systems were calculated. Through the optimization, it was found that the standalone PV systems with PV array sizes ranging from 1650 to 2400 watts, along with 606 Ah battery storage, would be suitable to supply the daily energy demand for community health centers anywhere in the country. Moreover, by only replacing the 606 Ah battery storage with 1212 Ah and 1818 Ah sizes, the PV systems would be able to help and keep the energy reserves for 2 and 3 autonomous days, respectively. Furthermore, the results show that in comparison to a LCOE of 0.94–0.98 USD/kWh for a diesel generator, the LCOE for the standalone PV system would range from 0.23 to 0.46 USD/kWh without discounted rates and from 0.33 to 0.60 USD/kWh if discounted at 6%. In addition to a lower LCOE, the saving of 46–76 tons of CO2 during the project's lifespan, the short payback periods and high return of investment (ROI) values make standalone PV systems a suitable electrification option for Mali. Considering the total expenses, LCOE, payback period, and ROI, standalone PV systems for community health centers were found to be economically viable in all cases for Mali.
    Keywords: standalone photovoltaic systems, optimal sizing, PVsyst, loss of load probability, levelized cost of energy, community health centers, Mali
    Date: 2023–09
  21. By: Toshi H. Arimura (Waseda University.); Yukihiko Funaki (Waseda University.); Hajime Katayama (Waseda University.); Atsushi Morimoto (North Asia University.); Hiroko Okajima (Nagoya University.); Shigeharu Okajima (Osaka University of Economics.)
    Abstract: The purpose of this study is to measure the pure conservation effect of moral incentives and investigate their potential to reduce energy conservation in non-household sectors. Focusing on the overlap between moral and economic incentives, we employ a field experiment at a hotel to separate moral incentives from economic incentives. We find that although the pure conservation effect of moral incentives was insignificant, moral incentives did reduce hotel guests’ electricity use by 10.3% when saved money in conservation was donated to an environmental protection organization. The result indicates that when we use moral incentives in non-household sectors, it is beneficial to spend saved money for environmental protection to gain people’s support for conservation requests.
    Keywords: Energy conservation, Moral incentive, Field experiment
    JEL: Q41 Q48 D12 D91 L94
    Date: 2023–07
  22. By: Liepold, Constanze (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Fabianek, Paul (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This study aims at identifying the strengths and weaknesses of GHG Quota Trading as an alternative to allowance trading and carbon taxes. Information was gathered from the websites and publications of the responsible authorities and relevant legal texts. Moreover, literature on comparable environmental policy instruments was analyzed based on predefined criteria. Assumptions were made to create models in order to assess cost effectiveness, Pareto-efficiency, and dynamic incentive effects. The results show that the GHG Quota Trading only partially meets the basic criteria of environmental effectiveness, cost effectiveness, and Pareto-efficiency, and has further weaknesses regarding legitimacy and practical feasibility. In order to reduce GHG emissions from fossil fuels as efficiently as possible, a key policy priority should therefore be to adapt the GHG Quota Trading and to combine it systematically with other environmental economics policies such as a carbon tax.
    Keywords: GHG Quota; environmental policy instruments; fuel market; Germany
    JEL: F64 G28
    Date: 2023–08–01
  23. By: Sebastian Goerg (TUMCS for Biotechnology and Sustainability, TUM School of Management, Technical University of Munich); Andreas Pondorfer (TUMCS for Biotechnology and Sustainability, TUM School of Management, Technical University of Munich); Valentina Stöhr (TUMCS for Biotechnology and Sustainability, Technical University of Munich)
    Abstract: To reach the goals of the Paris agreement more ambitious climate policies will need to beimplemented. In an experimental survey that is representative for the population at thesub-national level in Germany (N=15, 000), we investigate how a change from existing climate policies to more ambitious policies drives public support. Using different descriptions of policies, we demonstrate that in general, more ambitious policies reduce public support.This effect is stronger if the focus is on an increase of carbon prices compared to a focuson a policy mix to reduce the emission of greenhouse gases. Economic preferences (i.e., reciprocity, trust, risk and patience) and other individual characteristics (e.g., experience of recent hazards, belief in climate change) as well as regional characteristics (i.e., Eastern Germany, macro-economic indicators, cohesion policies, and climate change) are substantially correlated with public support. This demonstrates challenges for the communication of tighter climate policies and underlines the need to address an audience with heterogeneous preferences and diverse regional backgrounds.
    JEL: Q01 Q54 Q58 C99
    Date: 2023–10
  24. By: Jochen Güntner; Michael Irlacher; Peter Öhlinger
    Abstract: Motivated by the European Union's debate on sanctioning crude oil imports from Russia, we estimate the elasticity of substitution between different crude oil types. Using European data on country-level crude oil imports by field of origin, we argue that crude oil is not a homogenous good and that the relevant substitutability for analyzing the impact of trade sanctions must account for the quality of different oil types in terms of their API gravity and sulfur content. Our results suggest that, by neglecting these differences in quality, standard estimates significantly underestimate the production disruptions in crude oil refining resulting from sanctions.
    Keywords: Crude Oil Trade, Elasticity of Substitution, Refinery Economics, Sanctions
    JEL: F14 F51 L71 Q37 Q41
    Date: 2023–08
  25. By: Chan, Jenny (Bank of England); Diz, Sebastian (Central Bank of Paraguay); Kanngiesser, Derrick (Bank of England)
    Abstract: How does household heterogeneity affect the transmission of an energy price shock? What are the implications for monetary policy? We develop a small, open-economy TANK model that features labour and an energy import good as complementary production inputs (Gas-TANK). Given such complementarities, higher energy prices reduce the labour share of total income. Due to borrowing constraints, this translates into a drop in aggregate demand. Higher price flexibility insures firm profits from adverse energy price shocks, further depressing labour income and demand. We illustrate how the transmission of shocks in a RANK versus a TANK depends on the degree of complementarity between energy and labour in production and the degree of price rigidities. Optimal monetary policy is less contractionary in a TANK and can even be expansionary when credit constraints are severe. Finally, the contractionary effect of an energy price shock on demand cannot be generalised to alternate supply shocks, as the specific nature of the supply shock affects how resources are redistributed in the economy.
    Keywords: Energy prices; inflation; household heterogeneity; monetary policy
    JEL: E21 E23 E31 E52 F41
    Date: 2023–09–22
  26. By: Mr. Anil Ari; Philipp Engler; Gloria Li; Manasa Patnam; Ms. Laura Valderrama
    Abstract: The surge in energy prices due to Russia’s February 2022 invasion of Ukraine significantly increased costs for European firms, prompting governments to introduce a range of support schemes. Although energy prices had eased by early 2023, uncertainty around prices remains unusually large. Against this backdrop, this paper examines the case for government intervention and identifies best practices with a view to improving the design of existing energy support schemes, facilitating exit from those schemes, and preparing policymakers for a downside scenario in which energy prices flare up again. The paper argues that support should be limited in size, strictly temporary in nature, narrowly targeted, and accompanied by strong safeguards and conditionality, while preserving price signals as much as possible to encourage energy conservation. Finally, the paper reviews recent support schemes introduced by European governments in light of the identified best practice considerations.
    Keywords: Energy prices; energy subsidies; financial support; price caps; energy crisis; Russia’s invasion of Ukraine
    Date: 2023–09–22
  27. By: Marcin Borsuk (Narodowy Bank Polski, Poland; Institute of Economics, Polish Academy of Sciences, Poland; University of Cape Town, South Africa.); Nicolas Eugster (University of Queensland, Australia.); Paul-Olivier Klein (University of Lyon.); Oskar Kowalewski (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 – LEM – Lille Économie, France.)
    Abstract: This study examines the relationship between family firms and carbon emissions using a large cross-country dataset comprising 6, 610 non-financial companies over the period 2010-2019. We document that family firms display lower carbon emissions, both direct and indirect, when compared to non-family firms, suggesting a higher commitment to environmental protection by family owners. We show that this differential effect started following the 2015 Paris Agreement. Differences in governance structure, familial values, and higher R&D expenditures partly explain our results. Paradoxically, we find that family-owned firms and family CEOs commit less publicly to a reduction in their carbon emissions and have lower ESG scores, although polluting less. This suggests a lower participation in the public display of such an outcome and a lower tendency to greenwashing.
    Keywords: carbon emission, ESG, governance, family firms, greenwashing, climate change.
    JEL: G3 G38 M14
    Date: 2023
  28. By: Alexander P. Kartun-Giles; Nadia Ameli
    Abstract: In this perspective, we introduce recent research into the structure and function of complex investor networks supporting sustainability efforts. Using the case of solar, wind and hydro energy technologies, this perspective explores the complexity in low-carbon finance markets, defined as markets that direct capital flows towards low-carbon technologies, using network approaches to study their structure and dynamics. Investors are modeled as nodes which form a network or higher-order network connected by edges representing projects in which joint funding or security-related insurance was provided or other investment-related interaction occurred. We review the literature on investor networks generally, particularly in the case of complex networks, and address areas where these ideas were applied in this emerging field. The complex investor dynamics which emerge from the extant funding scenarios are not well understood. These dynamics have the potential to result in interesting non-linear behaviour, growth, and decline, which can be studied, explained and controlled using the tools of network science.
    Date: 2023–09
  29. By: Mr. Dimitrios Laliotis; Sujan Lamichhane
    Abstract: This paper explores a novel forward-looking approach to study the financial stability implications of climate-related transition risks. We develop an integrated micro-macro framework with a new class of scenario called delayed-uncertain pathways. An additional stochastic financial modeling layer via a jump-diffusion process is considered to capture continuously changing risks, as well as the potential of large/sudden shocks in the financial markets. We applied this approach to study transition risks in the Mexican financial sector. But the implications are global in scope, and the framework is easily adaptable to other countries. We quantify the projections of future distributions of various risk metrics and, hence, the evolving tail risks due to compounding effects from delays in transitioning to a low-carbon economy and the consequent uncertainty of the future policy path. We find that the longer the delays in transition, the larger the future tail financial risks, which could be material to the overall system.
    Keywords: Climate change; transition risk; greenhouse gas emissions; financial stability; stress testing; default risk; jump-diffusion; mapping CGE model sector; tail risk; NAICS sector classification; probabilities of default; vulnerability indicator; Credit risk; Global
    Date: 2023–08–25
  30. By: Effrosyni Diamantoudi (Concordia University Montreal); Eftichios S. Sartzetakis (Department of Economics, University of Macedonia); Stefania Strantza (Thompson Rivers University)
    Abstract: The paper provides a fresh look at the literature on the formation of international environmental agreements by introducing into the classic model emissions and abatement as countries’ separate choice variables. The model’s structure is kept unchanged, assuming a two-stage game in which the internal and external stability conditions define coalition’s stability. We illustrate the way in which each of the three components of countries welfare, benefits from own emissions, damages from aggregate emissions and own abatement costs, interact in determining nonsignatories’ equilibrium choices, which in turn, determine the stable coalition’s size. We show that, ceteris paribus, as abatement becomes cheaper, nonsignatories become more responsive to signatories’ choices, strengthening the signatories’ leadership position, allowing thus, largest stable coalitions to be formed. However, when abatement costs are low the same choices are individually rational, that is, forming a coalition does not add much over the Nash. Furthermore, large stable coalitions are possible under high abatement costs, only if damages are high relative to benefits, but such coalitions require negative net emissions. Finally, in the absence of leadership, only very small coalitions are stable. Therefore, even if the coalition has leadership power in setting abatement and emission targets, the reduction of free-riding incentives is significant, yielding larger stable coalitions, only when it is welfare irrelevant, i.e., when the same targets are individually rational.
    Keywords: Coalition Formation, International Environmental Agreements, Size of Stable Coalitions
    JEL: D6 Q5 C7
    Date: 2023–04
  31. By: Gong Cheng; Eric Jondeau; Benoit Mojon; Dimitri Vayanos
    Abstract: We study the impact of green investors on stock prices in a dynamic equilibrium asset pricing model where investors are green, passive or active. Green investors track an index that excludes progressively the firms with the highest greenhouse gas emissions. Active investors maximize expected returns and can buy stocks of brown firms whereas passive investors hold an index of the entire market. Contrary to the literature, we find a large fall in the stock prices of the high-emitting firms that are excluded and in turn an increase in stock prices of greener firms when the exclusion strategy is announced and during the transition process. The immediate and large effects at the announcement date yield a first-mover advantage to green investors that adopt the decarbonization strategy early. This large price impact comes from the imperfect substitution of stocks among investor populations. A smaller size of active investors relative to green investors amplifies the price impact of green investment.
    Keywords: asset pricing, green investing, passive investing, portfolio rebalancing
    JEL: G12 G23 Q54
    Date: 2023–09
  32. By: Mohamed Boly (World Bank Group); Jean-Louis Combes (LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne, UCA - Université Clermont Auvergne); Pascale Combes Motel (LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne, UCA - Université Clermont Auvergne)
    Abstract: We econometrically assess how elections affect environmental performance, namely climate policy, using a sample of 76 democratic countries from 1990 to 2014. Three key results emerge from our system-GMM estimations. First, CO2 emissions increase in election years, suggesting that incumbents engage in fiscal manipulation through the composition of public spending rather than its level. Second, the effect has weakened over recent years and is present only in established democracies. Third, higher freedom of the press and high income that can proxy high environmental preferences from citizens reduce the size of this trade-off between pork-barrel spending and the public good, namely environmental quality. Deteriorating environmental quality can bring electoral benefits to politicians.
    Keywords: CO2 emissions, Electoral cycles, Environmental policy, Panel data, 2 emissions Electoral cycles Environmental policy Panel data JEL Codes D72 E62 O13 Q54, 2 emissions, Panel data JEL Codes D72, E62, O13, Q54
    Date: 2023–09
  33. By: Shoji Haruna; Rajeev K. Goel
    Abstract: This paper adds to the literature on transboundary pollution by considering pollution related to both production and consumption activities. In particular, we consider a symmetric strategic two firm-two country game model with bilateral trade and transboundary pollution to analyze the effects of trade liberalization on economic performance under two types of pollution. Our game-theoretic results with two trading countries find significant differences compared to the case where only production pollution is considered. When trade liberalization policy is mutually implemented, consumer surplus and social environmental damage in the Home and Foreign countries are both increased under production pollution, while they are both decreased under consumption pollution. Furthermore, when the two countries face either production or consumption pollution composed of transboundary pollution and local pollution, consumer surplus, producer surplus, and social environmental damage are larger in the presence of consumption pollution than in the presence of production pollution; and, under certain conditions, social welfare can be larger or smaller in the presence of production pollution than in the presence of consumption pollution. It is uniquely shown that in the three-stage game model trade policy may lose its effectiveness as a policy under consumption pollution. Policy implications are discussed.
    Keywords: environment, transboundary pollution, consumption pollution, production pollution, trade liberalization, environment tax, oligopoly, tariff
    JEL: D43 F13 L13 Q56
    Date: 2023
  34. By: Suryadeepto Nag
    Abstract: Using a panel of 1, 171 villages in rural India that were surveyed in the India Human Development Surveys, I perform a difference-in-differences analysis to find that improvements in electricity reliability have a negative effect on the increase in casual agricultural labor wage rates. Changes in men's wage rates are found to be affected more adversely than women's, resulting in a smaller widening of the gender wage gap. I find that better electricity reliability reduces the time spent by women in fuel collection substantially which could potentially increase labor supply. The demand for labor remains unaffected by reliability, which could lead the surplus in labor supply to cause wage rates to stunt. However, I show that electrical appliances such as groundwater pumps considerably increase labor demand indicating that governments could target increasing the adoption of electric pumps along with bettering the quality of electricity to absorb the surplus labor into agriculture.
    Date: 2023–09
  35. By: Caroline Devaux (CDMO - Centre de droit maritime et océanique - Nantes Univ - UFR DSP - Nantes Université - UFR Droit et Sciences Politiques - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université); Jean-Philippe Nicolaï (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes)
    Abstract: The article focuses on digital pollution, a phenomenon that includes all environmental pollution generated by digital activities. This is currently responsible for 2.5% of greenhouse gas emissions in France, an environmental impact that continues to grow with the digital transformation of our society. This article aims to explore possible regulatory solutions to lead companies to consider the environmental impact of digital technology and modify their practices. More specifically, it is proposed to integrate the risks of digital pollution in the governance of companies. In this respect, the duty of due diligence appears as a regulatory tool to be mobilized to reduce digital pollution. The article proposes a reflection on what could be a duty of vigilance for companies.
    Abstract: L'article s'intéresse à la pollution numérique, un phénomène qui comprend toutes les pollutions environnementales générées par l'activité numérique. Ce phénomène est actuellement à l'origine de 2, 5 % des émissions de gaz à effet de serre en France, un impact environnemental qui ne cesse de croître au fil de la transformation numérique de notre société. Cet article vise à explorer les solutions de régulation possibles pour conduire les entreprises à prendre en compte l'impact environnemental du numérique et modifier leurs pratiques. Plus spécifiquement, il est proposé d'intégrer les risques de pollution numérique dans la gouvernance des entreprises. À ce titre, le devoir de vigilance des sociétés mères et entreprises donneuses d'ordre est un outil de régulation à mobiliser pour engager une réduction de la pollution numérique. L'article propose ainsi une réflexion sur ce que pourrait être un devoir de vigilance numérique des entreprises.
    Keywords: Environment, Digital Pollution, Due Diligence Duty, Corporate Social Responsibility, Digital sobriety, Environnement, Pollution numérique, Devoir de vigilance, RSE, Sobriété numérique
    Date: 2022–11–03
  36. By: Léonard Tschora (LIRIS - Laboratoire d'InfoRmatique en Image et Systèmes d'information - UL2 - Université Lumière - Lyon 2 - ECL - École Centrale de Lyon - Université de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - INSA Lyon - Institut National des Sciences Appliquées de Lyon - Université de Lyon - INSA - Institut National des Sciences Appliquées - CNRS - Centre National de la Recherche Scientifique, DM2L - Data Mining and Machine Learning - LIRIS - Laboratoire d'InfoRmatique en Image et Systèmes d'information - UL2 - Université Lumière - Lyon 2 - ECL - École Centrale de Lyon - Université de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - INSA Lyon - Institut National des Sciences Appliquées de Lyon - Université de Lyon - INSA - Institut National des Sciences Appliquées - CNRS - Centre National de la Recherche Scientifique); Erwan Pierre; Marc Plantevit; Céline Robardet (LIRIS - Laboratoire d'InfoRmatique en Image et Systèmes d'information - UL2 - Université Lumière - Lyon 2 - ECL - École Centrale de Lyon - Université de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - INSA Lyon - Institut National des Sciences Appliquées de Lyon - Université de Lyon - INSA - Institut National des Sciences Appliquées - CNRS - Centre National de la Recherche Scientifique, DM2L - Data Mining and Machine Learning - LIRIS - Laboratoire d'InfoRmatique en Image et Systèmes d'information - UL2 - Université Lumière - Lyon 2 - ECL - École Centrale de Lyon - Université de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - INSA Lyon - Institut National des Sciences Appliquées de Lyon - Université de Lyon - INSA - Institut National des Sciences Appliquées - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The price of electricity on the European market is very volatile. This is due both to its mode of production by different sources, each with its own constraints (volume of production, dependence on the weather, or production inertia), and by the difficulty of its storage. Being able to predict the prices of the next day is an important issue, to allow the development of intelligent uses of electricity. In this article, we investigate the capabilities of different machine learning techniques to accurately predict electricity prices. Specifically, we extend current state-of-the-art approaches by considering previously unused predictive features such as price histories of neighboring countries. We show that these features significantly improve the quality of forecasts, even in the current period when sudden changes are occurring. We also develop an analysis of the contribution of the different features in model prediction using Shap values, in order to shed light on how models make their prediction and to build user confidence in models.
    Date: 2022–05
  37. By: Arnaud Abad (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); Michell Arias (UPVD - Université de Perpignan Via Domitia); Paola Ravelojaona (ICN Business School, CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)
    Abstract: In this paper, environmental productivity change is analysed through the production theoretic approach to index numbers. Specifically, pollution-adjusted Malmquist and Hicks-Moorsteen productivity indices are considered. These productivity indices are defined as combination of multiplicative distance functions. Non convex pollution-generating technology is assumed to estimate the pollution-adjusted Malmquist and Hicks-Moorsteen productivity measures. Moreover, the main sources of the environmental productivity change are displayed. An empirical illustration is provided by considering a sample of 20 Ecuadorian oil companies over the period 2014-2018. The results are estimated through a non parametric analytic framework.
    Keywords: Data Envelopment Analysis (DEA), Ecuadorian Oil industry, Environmental Efficiency, Productivity Indices, Non Convexity, Pollution-generating Technology
    Date: 2023–07–31
  38. By: Manon François (EU Tax - EU Tax Observatory); Carlos Oliveira; Bluebery Planterose (EU Tax - EU Tax Observatory); Gabriel Zucman (EU Tax - EU Tax Observatory, UC Berkeley - University of California [Berkeley] - UC - University of California)
    Abstract: This note presents a new way to tax excess profits. We propose to tax the rise in the stock market capitalization of companies that benefit from extraordinary circumstances, such as energy firms following the invasion of Ukraine in February 2022. Targeting the rise in stock market capitalization (which is easily observable) makes the tax much harder to avoid than standard excess profit taxes, and allows to capture rents irrespective of where multinational companies book their profits. We apply this proposal to energy companies that are headquartered or have sales in the European Union. We estimate that taxing the January 2022 to September 2022 valuation gains of energy firms at a rate of 33% would generate around €65 billion in revenue (0.3% of GDP) for the European Union. We discuss implementation practicalities and compare our proposals to other plans made to tax excess profits.
    Date: 2022–11
  39. By: Chiara Colesanti Senni; Maria Sole Pagliari; Jens van ‘t Klooster
    Abstract: This paper investigates the climate impact of central bank refinancing operations, with a focus the ECB’s TLTRO III program. Notably, we construct a novel database that combines i) confidential data on loans granted by EU banks to non-financial corporations; ii) confidential data on TLTRO III participation and iii) data on sectoral emissions. We find that the emissions content of bank loans granted over the TLTRO III reference period amount to 8% of overall Euro Area 2019 emissions and that more than 80% of total cumulated loans issued in the reference period was directed towards polluting companies. We then investigate the effectiveness of a green credit easing scheme via a general equilibrium model. Our findings are twofold: first, the central bank policy can increase the costs for lending to polluting companies, thus re-directing loans to less-polluting firms; second, the financial stability implications of such a policy should be carefully considered. Finally, we address legal and operational challenges to such a policy by outlining three alternative ways of implementing a “green†TLTRO programme.
    Keywords: TLTRO, CO2 emissions; transition risk; monetary policy; financial stability
    JEL: E40 E50 Q50 Q54
    Date: 2023–10
  40. By: Christian Fries; Lennart Quante
    Abstract: Assessing the costs of climate change is essential to find efficient pathways for the transition to a net-zero emissions economy, which is necessary to stabilise global temperatures at any level. Evaluating benefits and costs of climate change mitigation the discount rate converting future damages and costs into net-present values influences timing of mitigation. Here, we amend the DICE model with a stochastic interest rate model to consider uncertainty of discount rates in the future. Since the optimal abatement paths depends on interest rates, we assume a stochastic abatement model. We show that the optimal stochastic abatement path can increase the intergenerational inequality with respect to cost and risk. If we consider additionally that abatement costs may be funded via loans for which interest has to be paid, it is optimal to achieve net-zero earlier. Here we show, that introducing funding of abatement cost reduces the variation of future cash-flows, which occur at different times, but are off-setting in their net-present value. This effect can be interpreted as an improvement of intergenerational effort sharing, which might be neglected in the classical optimisation. This mechanism is amplified including a dependence of the interest rate risk on the amount of debt to be financed, \ie considering the limited capacity of funding sources. As an alternative policy optimisation method, we propose limiting the total cost of damages and abatement below a fixed level relative to GDP - this modification induces equality between generations compared to their respective economic welfare, inducing early and fast mitigation of climate change to keep the total cost of climate change below 3\% of global GDP. Overall, we analyse how different approaches for the valuation of cost under interest rate risk influence optimal mitigation pathways of climate change.
    Date: 2023–09
  41. By: Falk, Thomas; Walter, Kibet
    Abstract: The workshop was organized by the CGIAR Research Initiative on Low-Emission Food Systems (MITIGATE+), which is implemented by a large consortium of partners. The Initiative aims to reduce annual global food systems emissions by working closely with key actors in target countries to co-create knowledge that enables them to make evidence-based decisions and address challenges in food systems discourse, policy development, and implementation to reduce greenhouse gas emissions. The Initiative’s partners support the establishment of a multistakeholder platform and a “living lab for people†(LL4P) that will support bottom-up innovation cases to help transform food systems in Nandi county, Kenya, while also reducing greenhouse gas emissions. The workshop was part of a series of stakeholder workshops that aims to help clarify development opportunities, the role of different actors in Nandi county, and their interests. The intention was to bring actors together, invite them to think about a joint vision for food systems in the county, and share perspectives on entry points for initiating system change.
    Keywords: KENYA; EAST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; agriculture; climate change mitigation; emissions from agriculture; food systems; greenhouse gas emissions; policy innovation
    Date: 2023
  42. By: Độ, Bách
    Abstract: Cuối tháng 8-2023, Exxon Mobil, một trong những hãng kinh doanh dầu mỏ lớn nhất thế giới, tổ hợp lớn nhất của nhóm tách ra từ đế chế dầu mỏ Standard Oil của John D. Rockefeller đã công bố một báo cáo buồn về mục tiêu cứu Trái Đất trước hiểm họa biến đổi khí hậu. Báo cáo này đưa ra 2 kết luận tối quan trọng: a) Dầu mỏ và khí đốt vẫn chiếm tới 54% tổng nguồn cung năng lượng của thế giới vào năm 2050; b) Phát thải CO2 vẫn cao gấp 2 lần kịch bản cần thiết mà IPCC đặt ra. Điều này cũng đồng nghĩa với việc thế giới sẽ thất bại trước mục tiêu kìm giữ nhiệt độ tăng thấp hơn 2⁰C. Đánh giá này dựa trên ước lượng thế giới sẽ sản sinh ra 25 tỷ tấn CO2 vào 2050.
    Date: 2023–09–02
  43. By: Renee van Eyden (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Xin Sheng (Lord Ashcroft International Business School, Anglia Ruskin University, Chelmsford, United Kingdom); Joshua Nielsen (Boulder Investment Technologies, LLC, 1942 Broadway Suite 314C, Boulder, CO, 80302, USA)
    Abstract: In this paper, as a first step, we use the Multi-Scale Log-Periodic Power Law Singularity Confidence Indicator (MS-LPPLS-CI) approach to detect both positive and negative bubbles in the short-, medium- and long-term in the stock markets of the G7 countries. While detecting major crashes and booms in the seven stock markets over the monthly period of 1973:02 to 2020:05, we also observe similar timing of strong (positive and negative) LPPLS-CIs across the G7, suggesting synchronized boom-bust cycles. Given this, in the second step, we apply dynamic heterogeneous coefficients panel databased regressions to analyze the predictive impact of a model-free robust metric of oil price uncertainty on the bubbles indicators. After controlling for the impacts of output growth, inflation, and monetary policy, we find that oil price uncertainty predicts a decrease in all the time scales and countries of the positive bubbles and increases strongly the medium term for five countries (and weakly the short-term) negative LPPLS-CIs. The aggregate findings continue to hold with the inclusion of investor sentiment indicators. Our results have important implications for both investors and policymakers, as the higher (lower) oil price uncertainty can lead to a crash (recovery) in a bullish (bearish) market.
    Keywords: Multi-Scale Bubbles, Oil Price Uncertainty, Panel Data Regressions, G7 Stock Markets
    JEL: C22 C32 C33 G15 Q02
    Date: 2023–10
  44. By: Michael D. Plante
    Abstract: A large number of companies operating in the EV and battery supply chain have listed on a major U.S. stock exchange in recent years. This paper investigates 1) how these companies’ stock returns are related to systematic risk factors that can explain movements in the stock market and 2) how these companies’ idiosyncratic returns are related to one another. To do so, I compile a unique data set of intradaily stock returns that spans the supply chain, including companies focused on the mining of battery and EV-related critical minerals, advanced battery technology, lithium-ion battery production, EV original equipment manufacturers (EV OEMs) and EV charging companies. The returns are decomposed into a systematic and idiosyncratic component, with the systematic component given by latent factors extracted from a large panel of stock returns using high-frequency principal components. A key feature of the returns of interest is that they can be explained not only by a market factor but also by a second factor that loads on tech and consumer discretionary stocks. There is evidence for cross-sectional dependence in the idiosyncratic returns but correlations are generally low, except for some specific groups, e.g., lithium mining companies. The first principal component of the idiosyncratic returns, which can be viewed as an “EV” factor, explains only about 13 percent of their variation.
    Keywords: stock returns; principal components; electric vehicles; batteries; high-frequency data
    JEL: G10 Q40 C55
    Date: 2023–09–26
  45. By: Yasmine Allouat (LUMEN - Lille University Management Lab - ULR 4999 - Université de Lille); Ilana Bouhafs (LUMEN - Lille University Management Lab - ULR 4999 - Université de Lille); Nil Ozcaglar-Toulouse (LUMEN - Lille University Management Lab - ULR 4999 - Université de Lille)
    Abstract: This research aims to identify the determinants that may encourage the salesperson to direct consumers towards energy efficient equipment, particularly by taking into account the energy label. On the basis of an ethnographic study, conducted online and in stores with general and specialized retailers, our findings highlight the determinants such as consumer demand, the strategy of the retailer, the type of products and the level of knowledge of the salesperson, in the ability of the salesperson to guide the consumer towards energy efficient products. The study of online stores revealed the absence of sales support systems that could encourage the purchase of an efficient product.
    Abstract: Cette recherche vise à identifier les déterminants susceptibles d'encourager le vendeur à orienter les consommateurs vers des équipements performants en énergie, notamment par la prise en compte de l'étiquette énergie. Sur la base d'une enquête ethnographique de type mystère conduite en ligne et en magasin auprès de distributeurs généralistes et spécialisés, nous avons pu mettre en évidence les déterminants tels que la demande des consommateurs, la stratégie de l'enseigne, le type de produits et le niveau de connaissance des vendeurs, dans l'aptitude du vendeur à orienter le consommateur vers des produits performants. L'étude des magasins en ligne a, quant à elle, révélé l'absence de dispositifs d'appuis à la vente à même de favoriser l'achat d'un produit performant.
    Keywords: Performance énergétique, vendeur, étiquette énergie, décision d'achat, déterminants Energy performance, salesperson, energy label, purchase decision, determinants
    Date: 2021–10–13
  46. By: Panda, Architesh (United Nations University.); Yamano, Takashi (Asian Development Bank)
    Abstract: Asia is home to 60% of the world's population, 52% of global agricultural production, and 43% of agriculture-related greenhouse gas (GHG) emissions. While a large portion of the Asian population depends on agriculture for their livelihood and food security, the agriculture sector is one of the main sources of GHG emissions in the region. In some Asian economies, it accounts for more than 40% of total emissions. This report identifies the major sources of GHG emissions from the agriculture sector and reviews a variety of tools and technologies to change emission pathways. It also discusses the institutional, political, and economic challenges for achieving progress toward a cost-effective, inclusive, and resilient transition to net-zero agriculture.
    Keywords: climate change; net-zero agriculture; Asia and the Pacific; non-carbon dioxide equivalent; non-CO2e
    JEL: Q01 Q10 Q54
    Date: 2023–09–29
  47. By: Bardt, Hubertus; Schaefer, Thilo
    Abstract: Die deutlich gestiegenen Preise im europäischen Emissionshandel für Treibhausgase führen zu spürbaren Zusatzkosten für die Industrie. Beim schrittweisen Wegfall der bisher freien Zuteilung von Emissionsrechten drohen zudem weitere Kostenbelastungen in Milliardenhöhe.
    Date: 2023
  48. By: Mari Sakudo; Toshi H. Arimura; Hajime Katayama
    Abstract: While a number of researchers analyze pro-environmental behavior in households, the study on individuals¡Ç energy and resource conservation practices in the workplace is still in the early stage. Paying a particular attention to social norms in the workplace, this paper estimates a structural model of the social interactions in individuals¡Ç decisions to engage in environmentally friendly practices in the workplace using data from a Japanese survey. Accounting for endogeneity that stems from simultaneity, common shocks and nonrandom group selection, we find some influence of social norms on individuals¡Ç pro-environmental behavior in the workplace.
    Date: 2023–09
  49. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Alexandra Bykova (The Vienna Institute for International Economic Studies, wiiw); Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Selena Duraković (The Vienna Institute for International Economic Studies, wiiw); Meryem Gökten (The Vienna Institute for International Economic Studies, wiiw); Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Marcus How; Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Branimir Jovanović (The Vienna Institute for International Economic Studies, wiiw); Niko Korpar (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Sandor Richter (The Vienna Institute for International Economic Studies, wiiw); Bernd Christoph Ströhm (The Vienna Institute for International Economic Studies, wiiw); Maryna Tverdostup (The Vienna Institute for International Economic Studies, wiiw); Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw); Adam Żurawski
    Abstract: The economy of the CESEE region continues to outperform the EU average, but there are notable differences between the various sub-regions. The EU-CEE countries performed worse than expected, due to the recession in Germany, while the Western Balkan countries performed better than expected, thanks to tourism, remittances and FDI. And the CIS countries and Ukraine also did better than anticipated, as they adapted to the new reality. Inflation is proving far more persistent than previously imagined; it is driven not just by global energy prices, but also by company profits, price rises in other sectors and, most recently, higher wages. The price increases are having a serious adverse effect on people’s living standards and poverty, and some indicators have worsened dramatically. Growth in 2024 and 2025 will be lower than previously expected, on account of the global slowdown, the weak EU economy, the more persistent inflation, the tighter monetary conditions and less-supportive fiscal policy. Inflation will also be higher and will not return to 2% any time soon, as its dynamics have become far more complex and are no longer driven just by higher global energy.
    Keywords: CESEE, Central and Eastern Europe, economic forecast, Western Balkans, Visegrád group, CIS, Ukraine, Russia, Turkey, euro area, EU, convergence, Russia-Ukraine war, Russia sanctions, commodity prices, inflation, energy crisis, gas, renewable energy, electricity, monetary and fiscal policy, EU funds, purchasing power, poverty, real wages, remittances, FDI, imports, external debt, interest rates, banking sector, credit, impact on Austria, macroeconomic forecasting
    JEL: E20 E21 E22 E24 E32 E5 E62 F21 F31 H60 I18 J20 J30 O47 O52 O57 P24 P27 P33 P52
    Date: 2023–10
  50. By: Alice Falchi (ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers); Gilles Grolleau (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Naoufel Mzoughi (ECODEVELOPPEMENT - Unité de recherche d'Écodéveloppement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: In contrast with the increasing green demands from various stakeholders, corporations might prefer green blushing, that is, deliberately avoiding communicating their efforts for sustainable development. Surprisingly, these companies make substantial green achievements, but decide not to communicate their greenness. Using a broad literature review on green blushing and a conceptual reasoning backed up by anecdotal evidence, we expose the likely consequences of under-communicating green achievements and develop several rationales that explain this apparent puzzle. We also propose that silent or timid corporations can make the best of two worlds, by taking advantage from communicating their greenness while avoiding its main pitfalls. We suggest practical ways to do it.
    Keywords: green blushing, green communication, greenhushing, stakeholders, sustainable innovations
    Date: 2022
  51. By: Dejan Glavas (ESSCA Research Lab - ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers); Gilles Grolleau (ESSCA Research Lab - ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers); Naoufel Mzoughi (ECODEVELOPPEMENT - Unité de recherche d'Écodéveloppement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: While the literature has notably focused on the meanings, conceptualizations, causes, consequences and solutions to greenwashing, we propose a counterintuitive perspective to fill a gap by considering whether and how greenwashing can be leveraged to transform greenwashers into green(er) performers. To address this issue, we overview the literature and use conceptual reasoning to develop four mechanisms by which greenwashers may be pushed toward more environmentally friendly trajectories that would not otherwise have been considered: (1) greenwashing raises awareness and normalizes greenness; (2) a greenwashing faux pas is instrumentalized to hold companies accountable by triggering an irreversible "ratchet effect" (enforcing consistency between discourse and actions without allowing a step backward); (3) greenwashing as an aspirational green talk that can constitute an important resource to inspire and drive change; and (4) the management of greenwashing by regulators allows them to advance their sustainability agenda, notably because of enforcement spillovers. A better understanding of these mechanisms can transform the way greenwashing is managed and help addressing environmental challenges.
    Keywords: Enforcement spillover , Greenness normalization , Greenwashing , Ratchet effect , Sustainable development
    Date: 2023–01
  52. By: Kazakova, Maria (Казакова, Мария) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The evaluation of models with time-varying parameters has been widely used in macroeconomic studies carried out over the past 20 years. Following the fundamental works in this field, various authors began to apply such models to analyze the time -varying macroeconomic parameters such as volatility, long-term economic growth, trend inflation, inertia of inflation and oil prices, as well as the dependence of the main macroeconomic variables on oil prices oil. This review provides a methodological basis for using models with time-varying parameters as one of the important tools of macroeconomic modeling and forecasting, which allows taking into account temporary changes in the dependencies between different variables.
    Date: 2021–12–14
  53. By: Gilles Grolleau (ESSCA School of Management, France); Luc Meunier (ESSCA Research Lab - ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers); Naoufel Mzoughi (ECODEVELOPPEMENT - Unité de recherche d'Écodéveloppement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Pollution is frequently "rationalized" by involved firms as a necessary bad to reach economic or social goals. Unfortunately, little is known about how external observers form moral judgment when confronted to such a dual output, precisely an economic or social gain (e.g., profits, job preservation) and an environmental harm. Using two experimental surveys, we fill this gap by inviting participants to judge the morality of two companies engaging in the same environmental wrongdoings (river pollution and deforestation) while varying the generated monetary gain. In the preliminary study, individuals perceive environmental degradations generating higher profits for the firm as more morally acceptable. In the main study, we used a multiple-item measure of behavioral intentions towards the firm and we analyzed potential moderating effects. The results are threefold: (i) the attitude towards the firm improves as the profit obtained by the firm increases, up to a tipping point; (ii) when the profit gained by the firm increases, environmentally-unconcerned (resp. concerned) individuals display more positive (resp. negative) attitude towards the firm; (iii) respondents thinking that the firm main objective should be only about profit and not social well-being express a more lenient judgment. We draw several policy and managerial implications.
    Keywords: deforestation, water pollution, outcome bias, moral judgment
    Date: 2023–11

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