nep-ene New Economics Papers
on Energy Economics
Issue of 2023‒10‒30
fifty-one papers chosen by
Roger Fouquet, National University of Singapore

  1. Bitcoin and Carbon Dioxide Emissions: Evidence from Daily Production Decisions By Anna Papp; Douglas Almond; Shuang Zhang
  2. Sustainable Aviation Fuels: Policy Status Report By ITF
  3. Toward Net Zero in the midst of the energy and climate crises: the response of residential photovoltaic systems By Francesco Pietro Colelli; Enrica De Cian; Wilmer Pasut; Lucia Piazza
  4. The Hydrogen Fuel Pathway for Air Transportation By Li, Guozhen
  5. Calculation of synthetic energy carrier production costs with high temporal and geographical resolution By Langenmayr, Uwe; Ruppert, Manuel
  6. Private Actions in the Presence of Externalities: The Health Impacts of Reducing Air Pollution Peaks but not Ambient Exposure By Susanna B. Berkouwer; Joshua T. Dean
  7. Connecting the Dots: Renewable Energy, Economic Growth, Reforestation, and Greenhouse Gas Emissions in Colombia By Juan David Alonso-Sanabria; Luis Fernando Melo-Velandia; Daniel Parra-Amado
  8. The Role of Electric Vehicles in Road Transport Decarbonization: Exploring Environmental Impacts and Policy Implications through a Systematic Literature Review of System Dynamics Approaches By Debalke, Negash Mulatu
  9. LNG, climate and energy security: Towards a comprehensive approach for Europe By Heilmann, Felix; Steitz, Janek; Müller, Simon; Sigl-Glöckner, Philippa
  10. Effects of Carbon Pricing in Germany and Spain: An Assessment with EMuSe By Natascha Hinterlang
  11. The Effect of U.S. Climate Policy on Financial Markets: An Event Study of the Inflation Reduction Act By Michael D. Bauer; Eric Offner; Glenn D. Rudebusch
  12. Who is Most Vulnerable to the Transition Away from Coal? Ruda Śląska Residents’ Preferences Towards Jobs and Land Repurposing By Honorati, Maddalena; Ferré, Céline; Gajderowicz, Tomasz
  13. Climate-conscious monetary policy By Nakov, Anton; Thomas, Carlos
  14. Why "energy price brakes" encourage moral hazard, raise energy prices, and reinforce energy savings By Dertwinkel-Kalt, Markus; Wey, Christian
  15. Betting on black gold: Oil speculation and U.S. inflation (2020-2022) By Carlotta Breman; Servaas Storm
  16. What’s the Cost of †Saving the Planet†for Banks? Assessing the Indirect Impact of Climate Transition Risks on Slovak Banks’ Loan Portfolios By Jozef Kalman; Jan Klacso; Roman Vasil; Juraj Zeman
  17. The Effects of the Energy Transition on Power Sector Employment in Latin America By Lopez, David; Weiss, Mariana; Pessanha, José Francisco; Arias, Karla; Gouvea, Livia; Carvalho Metanias Hallack, Michelle
  18. Does Monetary Policy Shape the Path to Carbon Neutrality? By Döttling, Robin; Lam, Adrian
  19. Energy Prices and Household Heterogeneity: Monetary Policy in a Gas-TANK By Chan, Jenny; Diz, Sebastian; Kanngiesser, Derrick
  20. Default Risk and Transition Dynamics with Carbon Shocks By Sujan Lamichhane
  21. Climate Change Mitigation Policies: Aggregate and Distributional Effects By Cavalcanti, Tiago; Hasna, Zeina; Santos, Cezar
  22. Foreign direct investment and Renewable energy developmentin sub-Saharan Africa: Does governance quality matter? By Marcel A. T. Dossou; Emmanuelle N. Kambaye; Simplice A. Asongu; Alastaire S. Alinsato; Mesfin W. Berhe; Kouessi P. Dossou
  23. Do Consumers Acquire Information Optimally? Experimental Evidence from Energy Efficiency By Andrea La Nauze; Erica Myers
  24. Cash transfers in the context of carbon pricing reforms in Latin America and the Caribbean By Missbach, Leonard; Steckel, Jan Christoph; Vogt-Schilb, Adrien
  25. Regulatory Carbon Risk: Evidence from the 2022 Reform of the EU Emissions Trading Scheme By Müller, Lukas; Ringel, Marc; Schiereck, Dirk
  26. How Do Political Tensions and Geopolitical Risks Impact Oil Prices? By Valérie Mignon; Jamel Saadaoui
  27. Balancing the Scales: Does Public Debt and Energy Poverty Mitigate or Exacerbate Ecological Distortions in Nigeria? By Uju Regina Ezenekwe; Kingsley Ikechukwu Okere; Stephen Kelechi Dimnwobi; Chukwunonso Ekesiobi
  28. Estimating the effect of urban road congestion on air quality in Latin America By Bedoya-Maya, Felipe; Calatayud, Agustina; González Mejia, Vileydy
  29. Long-Term Strategies for Decarbonization in Latin America: Learnings from Actor-Based Insights into the Drafting Process By Calfucoy, Paulina; Torres Gunfaus, Marta; Fazekas, Andreas; Vogt-Schilb, Adrien
  30. Structural Reforms to Accelerate Growth, Ease Policy Trade-offs, and Support the Green Transition in Emerging Market and Developing Economies By Mrs. Nina Budina; Mr. Christian H Ebeke; Ms. Florence Jaumotte; Andrea Medici; Augustus J Panton; Marina M. Tavares; Bella Yao
  31. Going green through local fiscal equalisation By Julio López-Laborda; Andoni Montes-Nebreda; Jorge Onrubia
  32. Carbon footprint of the three university campuses of the UPB, 2019 and 2022: Race to Zero Annual Report By Lykke E. Andersen; Jhanira Rodriguez; Alejandra Gonzales; Ignacio Nava; Shabelle Flores
  33. Green Goods in Finland’s Manufacturing By Kuosmanen, Natalia; Pajarinen, Mika
  34. Production of Green Goods is Concentrated in High-tech Industries By Kuosmanen, Natalia; Pajarinen, Mika
  35. Jobs, Food and Greening: Exploring Implications of the Green Transition for Jobs in the Agri-food System By Nico, Gianluigi; Christiaensen, Luc
  36. Do ride-hailing services worsen freeway congestion and air quality? Evidence from Uber's entry in California By Kiran B. Krishnamurthy, Chandra; Ngo, Nicole
  37. Young Politicians and Long-Term Policy By Ricardo Dahis; Ivan de las Heras; Santiago Saavedra
  38. Global biodiversity implications from electric vehicles in the United States By Dumortier, Jerome; Elobeid, Amani; Carriquiry, Miguel
  39. Options to Support Workers through a Transition away from Coal in Eastern Wielkopolska By Honorati, Maddalena; Banaszczyk, Anna
  40. Green Bonds, Conventional Bonds and Geopolitical Risk By Sheenan, Lisa
  41. Sustainable Investing in Imperfect Markets By Thorsten Hens; Ester Trutwin
  42. Fighting Global Warming: Is Trade Policy in Latin America and the Caribbean a Help or a Hindrance? By Dolabella, Marcelo; Mesquita Moreira, Mauricio
  43. Green and resilient urban recovery (case of Ukraine) By Suésécenko, Oleksandr; Schwarze, Reimund
  44. Nickel Mine Exploitation In Indonesia, Between A Blessing And A Disaster Of Environmental Damage By naryono, endang
  45. Auswirkungen steigender Energiepreise auf Handwerksunternehmen: Berechnung ökonomischer Szenarien By Thonipara, Anita
  46. Experience of international car manufacturers in accessing sustainable products for circular economy development By Nam, Nguyen Hoang
  47. Towards the Light: Effective Light Mobility Policies in Cities By ITF
  48. Principles of International Law Relevant for Consideration in the Design and Implementation of Trade-Related Climate Measures and Policies By Van den Bossche, Peter L.H.
  49. The effect of green supply chain management practices on corporate environmental performance. Does supply chain competitive advantage matter? By John Wiredu; Qian Yang; Agyemang Kwasi Sampene; Bright Akwasi Gyamfi; Simplice A. Asongu
  50. LNG, Energiesicherheit und Klimaschutz: Wege aus dem Spannungsfeld By Heilmann, Felix; Steitz, Janek; Müller, Simon; Sigl-Glöckner, Philippa
  51. Marché de l’électricité: revenir à la raison By Argenton, Cedric

  1. By: Anna Papp; Douglas Almond; Shuang Zhang
    Abstract: Environmental externalities from cryptomining may be large, but have not been linked causally to mining incentives. We exploit daily variation in Bitcoin price as a natural experiment for an 86 megawatt coal-fired power plant with on-site cryptomining. We find that carbon emissions respond swiftly to mining incentives, with price elasticities of 0.69-0.71 in the short-run and 0.33-0.40 in the longer run. A $1 increase in Bitcoin price leads to $3.11-$6.79 in external damages from carbon emissions alone, well exceeding cryptomining’s value added (using a $190 social cost of carbon, but ignoring increased local air pollution). As cryptomining requires ever more computing power to mine a given number of blocks, our study highlights both the revitalization of US fossil assets and the potential value of financial industry accounting standards that incorporate cryptomining externalities.
    JEL: Q40 Q58
    Date: 2023–09
  2. By: ITF
    Abstract: The aviation sector has pledged to become climate neutral by 2050. Sustainable Aviation Fuels (SAFs) are the only available low-carbon fuel technology for air travel today. They are thus indispensable for the sector to reach its climate targets. This report presents recommendations to promote the production and deployment of SAFs, which can replace conventional fossil aviation fuel to reduce carbon dioxide emissions from aircraft. The insights come from discussions in the ITF’s Decarbonising Aviation Common Interest Group, an expert forum on SAF policies bringing together government and industry representatives.
    Date: 2023–07–19
  3. By: Francesco Pietro Colelli (Department of Economics, University Of Venice Cà Foscari; CMCC Foundation); Enrica De Cian (Department of Economics, University Of Venice Cà Foscari; CMCC Foundation); Wilmer Pasut (Department of Environmental Science, Informatics and Statistics, Ca’ Foscari, University of Venice); Lucia Piazza (Department of Economics, University Of Venice Cà Foscari)
    Abstract: This paper aims to provide insights on potential strategies for a sustainable energy transition amidst market fluctuations. We analyze the impact of PV adoption on electricity consumption during a volatile price time span, leveraging high-frequency consumption data of over 10, 000 households in Northern Italy during the period of the 2022 energy crisis. Our findings reveal that PV adoption reduces electricity consumption responsiveness during extreme price and temperature events, enhancing energy security and affordability. Based on estimated demand, we measure changes in consumer surplus, highlighting substantial benefits from PV adoption: the change in the annual consumer surplus due to the 2022 price increase is around 300 euros for the median consumer with no PV and 133 euros when PV is adopted by a comparable median household.
    Keywords: electricity demand; solar photovoltaics; energy prices; climate change
    JEL: Q20 Q21 Q41 Q42 Q54 Q55
    Date: 2023
  4. By: Li, Guozhen
    Abstract: This thesis is a preliminary investigation into the technical feasibility and cost effectiveness of a hydrogen-fueled aviation system. A review on hydrogen aircraft reveals that designing and manufacturing hydrogen-powered aircraft is technically feasible. Major hydrogen supply technologies are available, but their capacity is far below the need of a hydrogen aviation system. A large airport such as San Francisco International Airport (SFO) can consume over 3000 metric tons of hydrogen per day, if its air traffic is entirely fueled by hydrogen. Such an energy flow could support over 3 million typical hydrogen fuel cell cars’ normal use. Airport liquid hydrogen cost modeling provides an estimation of hydrogen fuel cost as an aviation fuel. The cost is found to be 20%-90% higher than conventional jet fuel on a per energy basis, and supplying liquid hydrogen creates major electric power and land use challenge to the airport. The economies of scale are limited when hydrogen is supplied at an airport level scale, given hydrogen production, liquefaction, delivery, and storage technologies available today. Compared to other alternative aviation fuels (e.g. biofuel and LNG), hydrogen is highly costly but offers huge GHG saving potentials.
    Keywords: Engineering, Social and Behavioral Sciences, alternative aviation fuel, hydrogen, airport, zero emission aviation
    Date: 2023–10–13
  5. By: Langenmayr, Uwe; Ruppert, Manuel
    Abstract: While the decarbonization of the electricity sector is proceeding globally with the ongoing increase of wind and solar generation, reducing the carbon footprint of other sectors such as industry, transportation, and agriculture proves more challenging. One reason is the challenge of electrifying processes in these sectors. Here, power-to-X applications can support the transformation of these sectors by replacing conventional energy carriers with synthetic energy carriers from renewable sources. In this work, an approach to determine the production cost of synthetic energy carriers with a high temporal and spatial resolution on a global scale is presented and applied to Australia, New Zealand, and Germany. Hourly weather data with a spatial resolution of 0.25ê x 0.25ê is processed into capacity factor profiles. These capacity factor profiles, covering 11 years, are clustered into profiles including the representative weeks for each cell in the covered area using k-means clustering. The production processes of green hydrogen, ammonia, methanol as well as green crude are modeled with a generalized linear program. The results show that low production costs can be achieved especially in Australia. Combined with large land availability, this enables large-scale synthetic energy carrier production and possible export opportunities. Hydrogen derivatives are more expensive in production, but transportation might play a significant role when deciding which synthetic energy carrier should be produced. Production costs of synthetic energy carriers in Germany are higher when compared to the model results for Australia, however, regions with favorable renewable potential might still be attractive for domestic demand.
    Keywords: Power-to-X, linear programming, k-means clustering, synthetic energy carriers
    Date: 2023
  6. By: Susanna B. Berkouwer; Joshua T. Dean
    Abstract: Extensive research has documented that elevated air pollution increases mortality and morbidity, with estimates reaching 8 million deaths per year. Many of the world’s one billion urban poor face both high ambient concentrations and even higher transient peaks. Should government interventions aimed at improving health prioritize reductions in ambient pollution—for example, regulating industrial emissions—or peak pollution? We conduct a field experiment studying the impacts of reducing a notorious source of peak air pollution exposure—biomass cooking—for three years in an urban environment with high ambient pollution. We collect personal, high-frequency particulate matter and carbon monoxide measurements and extensive quantitative and self-reported health measurements. Cooking increases peak PM2.5 exposure by 125 μg/m³ for the control group, but improved stove ownership reduces this by 52 μg/m³—a sizeable 42% reduction in peak cooking emissions. However, ambient pollution of 37.5 μg/m³ largely negates any impact on average air pollution exposure. The reduction in peak cooking emissions generates a 0.24 standard deviation reduction in short-term self-reported respiratory symptoms. However, we can rule out meaningful improvements in blood pressure, blood oxygen, and a wide array of self-reported diagnoses. Ambient air pollution dampens the health benefits from private technology adoption, and a government seeking to generate chronic health improvements will likely need to address negative externalities through environmental regulation. Still, despite the importance of ambient pollution, the $40 stove generates $86 in annual energy savings and reduces CO₂ emissions at $4.9 per ton when factoring in additionality rates, suggesting government subsidies would generate large societal benefits.
    JEL: I15 O12 Q53 Q56
    Date: 2023–09
  7. By: Juan David Alonso-Sanabria; Luis Fernando Melo-Velandia; Daniel Parra-Amado
    Abstract: This study aims to establish a comprehensive linkage between CO2 emissions and the composition of energy sources, economic growth, and reforestation, thereby shedding light on their intricate connections in Colombia over the period 1970-2018. First, we use different types of energy consumption including non-renewable, renewable, and hydroelectric sources. As expected, our findings reveal a noteworthy effect of non-renewable sources that lead to increased emissions, while renewable sources help mitigate those emissions. Second, the preservation of forested areas plays a crucial role in mitigating CO2 emissions. Third, the agricultural sector significantly contributes to the rise in emissions, encompassing both crops and livestock, a characteristic often observed in emerging economies. Moreover, in the long-run equilibrium, we find real GDP show the characteristic inverted U-shaped pattern commonly linked with the Environmental Kuznets Curve (EKC) hypothesis. **** RESUMEN: Este estudio tiene como objetivo establecer los vínculos y las relaciones de largo plazo entre las emisiones de CO2 y la composición de las fuentes de energía, el crecimiento económico y la reforestación para Colombia durante el período 1970-2018. Primero, usamos diferentes tipos de consumo de energía, incluyendo aquellas fuentes no renovables, renovables e hidroeléctricas. Nuestros hallazgos sugieren, como se esperaba, que hay un efecto significativo de las fuentes no renovables asociado al incremento de las emisiones, mientras que aquellas fuentes renovables ayudan a mitigar dichas emisiones. Segundo, encontramos que la reforestación juega un papel crucial en la mitigación de las emisiones de CO2. Tercero, el sector agrícola contribuye significativamente al aumento de las emisiones (cultivos y ganadería), lo cual es una característica que se observa frecuentemente en las economías emergentes. Adicionalmente, en el equilibrio a largo plazo, encontramos que el PIB real muestra el patrón característico en forma de U invertida comúnmente relacionado con la hipótesis de la curva ambiental de Kuznets (EKC).
    Keywords: CO2 emissions, Environmental Kuznets Curve, Renewable energy, Energy consumption, Emisiones de CO2, Hipótesis de la Curva de Kuznets Ambiental, Energía renovable, Consumo de energía, FMOLS
    JEL: C33 Q53 Q56 E20 Q20
    Date: 2023–10
  8. By: Debalke, Negash Mulatu
    Abstract: The systematic review examines the use of system dynamics models to decarbonize road transport with electric vehicles (EVs). The study assesses model structures, components, functions, and their environmental and policy implications across 31 selected journal articles. The review finds that many papers lack quantitative aspects and do not adequately validate their models, potentially limiting our understanding of policy impacts. It highlights that models often focus on policy variables for market penetration and decarbonization, overlooking holistic perspectives. Coordinated policies are crucial for effective EV adoption. The review calls for greater transparency in reporting and emphasizes the importance of understanding the time component of models. It stresses the need for model validation to ensure practical relevance. Additionally, the study suggests that EVs can reduce global greenhouse gas emissions but face various challenges. Policy tools like purchase subsidies can boost EV demand. The review underscores the necessity of a mix of policy instruments and regulatory requirements to promote EV adoption and carbon emissions reduction. It advocates a comprehensive approach involving investment, incentives, marketing, and regulation. Future research should consider holistic models, explore EVs' role in Africa, and investigate emissions reduction at the mode of transportation level.
    Keywords: road transport; decarbonization; electric vehicle; emission reduction; policy implication; system dynamics; systematic literature review.
    JEL: Q42 Q52 Q54 Q58 Q59
    Date: 2023–02
  9. By: Heilmann, Felix; Steitz, Janek; Müller, Simon; Sigl-Glöckner, Philippa
    Abstract: Europe, and Germany in particular, have quickly ramped up liquefied natural gas (LNG) imports to partially offset the loss of Russian pipeline gas deliveries. While many observers rightly applaud this historical achievement, there are also concerns that LNG decisions taken in the face of the crisis can lead to new, risky path dependencies incompatible with climate safeguards. This paper seeks to build bridges and inform more nuanced deliberations. It does so by exploring in detail relevant aspects along the LNG supply chain, guided by the principal assumption that both climate goals and energy security must be achieved. It has been informed by extensive stakeholder engagement, including a workshop bringing together different experts. We find that the development of new LNG export terminals that have not yet reached a final investment decision poses the biggest risk of violating climate targets. In contrast, European import terminals can act as back-up capacities for crisis times. For this, their use needs to be restricted during non-crisis periods. In terms of LNG market balancing, large new export projects currently under development are already set to enter operation before 2027, significantly easing currently tight markets. Additional export capacity beyond this cannot contribute to easing the current supply crunch at scale given long development times and risks ending up as stranded assets. Europe should therefore refrain from supporting new upstream projects, including through longterm contracts that enable such projects, and instead focus contracting efforts on the growing amount of uncontracted volumes from expiring legacy contracts, portfolio players, and from export projects that have already reached final investment decisions. Short- and medium-term contracts could decrease uncertainties resulting from excessive spot market exposure while limiting climate risks. There may be a role for governments to enable such contracts. Lastly, there are two no-regret strategies. In the short term, tackling methane emissions can deliver significant climate and energy security benefits. In the long term, only phasing out natural gas by transitioning to efficient renewable energy systems ultimately reconciles energy and climate security.
    Date: 2023
  10. By: Natascha Hinterlang (Deutsche Bundesbank and Banco de España)
    Abstract: Using the dynamic, three-region environmental multi-sector general equilibrium model EMuSe, we find that pricing carbon in Germany or Spain only leads to a permanent negative effect on output in these economies. The induced emissions reduction is not large enough to overcompensate for the increase in marginal production costs. If the rest of Europe joins the carbon pricing scheme, long-run output effects are positive. However, in this case, transition costs are even larger due to close trade relations within Europe. We find evidence for carbon leakage, which can be reduced slightly by a border adjustment mechanism. Still, it is no game changer as it mainly protects dirty domestic sectors. While Germany benefits from border adjustment, Spain actually loses throughout the transition. In the long run, the Spanish energy sector benefits most because of its relatively low emission intensity. Finally, Europe has a strong incentive to get the rest of the world on board as then the downturn is shorter and long-run benefits are larger.
    Keywords: carbon pricing, border adjustment, climate clubs, international dynamic general equilibrium model, sectoral heterogeneity, input-output matrix
    JEL: E32 E62 F42 H32 Q58
    Date: 2023–09
  11. By: Michael D. Bauer; Eric Offner; Glenn D. Rudebusch
    Abstract: The Inflation Reduction Act of 2022 (IRA) represents the largest climate policy action ever undertaken in the United States. Its legislative path was marked by two abrupt shifts as the likelihood of climate policy action fell to near zero and then rose to near certainty. We investigate equity price reactions to these two events, which represent major realizations of climate policy transition risk. Our results highlight the heterogeneous nature of climate policy risk exposure. We find sizable reactions that differ by industry as well as across firm-level measures of greenness such as environmental scores and emission intensities. While the financial market response to the IRA was economically significant, it did not lead to instability financial stress, suggesting that transition risks posed by climate policies even as ambitious as the IRA may be manageable.
    Keywords: transition risk; carbon emissions
    JEL: G14 G38 Q54 Q58
    Date: 2023–09–29
  12. By: Honorati, Maddalena; Ferré, Céline; Gajderowicz, Tomasz
    Abstract: After Germany, Poland is the EU’s second largest coal producer and consumer.1 96 percent of EU-27 hard coal production, or 54.4 million tons, is extracted in Poland (EURACOAL, 2020). In 2020, over 40 percent of the country’s total energy supply (TES) and 70 percent of its electricity generation come from coal and lignite (IEA, 2022), the highest rate in Europe. Coal in Poland also continues to employ about 88, 000 people directly in the mines, down from about 444, 000 in 1989. Europe’s commitment to stop its fossil fuel imports from Russia following Russia’s invasion of Ukraine is slowing down Poland’s coal phase-out to ensure energy security in Europe, 2 but Poland remains committed to a complete coal mine closure by 2049.
    Keywords: Just transition; jobs; coal transition; job displacements; income support; ALMPs/active labor market policies.
    Date: 2023–05–24
  13. By: Nakov, Anton; Thomas, Carlos
    Abstract: We study the implications of climate change and the associated mitigation measures for optimal monetary policy in a canonical New Keynesian model with climate externalities. Provided they are set at their socially optimal level, carbon taxes pose no trade-offs for monetary policy: it is both feasible and optimal to fully stabilize inflation and the welfare-relevant output gap. More realistically, if carbon taxes are initially suboptimal, trade-offs arise between core and climate goals. These trade-offs however are resolved overwhelmingly in favor of price stability, even in scenarios of decades-long transition to optimal carbon taxation. This reflects the untargeted, inefficient nature of (conventional) monetary policy as a climate instrument. In a model extension with financial frictions and central bank purchases of corporate bonds, we show that green tilting of purchases is optimal and accelerates the green transition. However, its effect on CO2 emissions and global temperatures is limited by the small size of eligible bonds’ spreads. JEL Classification: E31, E32, Q54, Q58
    Keywords: climate change externalities, green QE, Pigouvian carbon taxes, Ramsey optimal monetary policy
    Date: 2023–09
  14. By: Dertwinkel-Kalt, Markus; Wey, Christian
    Abstract: To help households and firms with exploding energy costs in the aftermath of the Ukraine war, a new policy called the "energy price brake" was implemented. A unique feature of this relief measure is that it provides a transfer that increases in the consumer's contractual per-unit price of energy. In a formal model, we show that this policy creates incentives for moral hazard of energy providers to raise per-unit prices. Whereas this moral hazard problem increases the policy's fiscal costs, it also reinforces energy savings. Whether the policy's main beneficiaries are consumers or firms depends on the market structure.
    Keywords: Energy Price Policies, Energy Crisis, Energy Saving, Energy Price Brake
    JEL: D04 L12 Q48 K33
    Date: 2023
  15. By: Carlotta Breman (Delft University of Technology); Servaas Storm (Delft University of Technology)
    Abstract: Sharp increases in systemically important crude oil prices have been a major cause of the recent surge in the inflation rate in the U.S. This paper investigates the extent to which the increase in oil prices can be attributed to excessive speculation in the oil futures market. Our analysis suggests that excessive speculation in the crude oil market has been responsible for 24%-48% of the increase in the WTI crude oil price during October 2020-June 2022. These estimates translate into an oil price increase of around $18-$36 per barrel and an increase in the U.S. PCE inflation rate by circa 0.75 to 1.5 percentage points during the same period. We complement the analysis with an empirical investigation of the crude oil market which shows that (speculative) long non-commercial open-interest positions in oil futures have increased considerably relative to short non-commercial positions. We further find that higher futures prices for crude oil 'Granger-cause' oil spot prices, the futures prices of corn and soybeans and the fertilizer price. These econometric results show that oil speculators have to be held accountable for not just raising oil prices, but also driving up food commodity prices. We finally discuss measures to clamp down on excessive speculation in oil in order to eliminate its systemically adverse consequences for the U.S. economy.
    Keywords: inflation; oil prices; oil majors; spot and futures prices; speculation; Granger causality; Working's T-index; speculative pressure; commercial and non-commercial traders; open interest; index investor.
    JEL: E0 E5 E6 E62 O23 I12 J08
    Date: 2023–06–06
  16. By: Jozef Kalman (National Bank of Slovakia); Jan Klacso (National Bank of Slovakia); Roman Vasil (National Bank of Slovakia); Juraj Zeman (National Bank of Slovakia)
    Abstract: The ongoing trend of global warming is damaging not only human society but also economic activity. Central banks, supervisors, and macroprudential authorities are not immune to the climate-related risks in the financial sector. This study analyses how climate transition risks indirectly affect the banking sector through the credit risk channel for both households and non-financial corporations. We integrate Network for Greening the Financial System scenarios into conventional stress testing framework. The analysis focuses on a short-term horizon to reduce the impact of high modeling uncertainty on the outcomes. We find that a relatively smooth substitution of emission-intensive sectors results in relatively low indirect costs for banks. An uneven transition can, however, generate significantly higher credit losses, occasionally exceeding adverse scenario outcomes of conventional stress testing. The results are sensitive to an increase in energy prices or to higher defaults of firms in emission-intensive sectors.
    JEL: C60 E50 G32 O44 Q40 Q54
    Date: 2023–10
  17. By: Lopez, David; Weiss, Mariana; Pessanha, José Francisco; Arias, Karla; Gouvea, Livia; Carvalho Metanias Hallack, Michelle
    Abstract: The present study analyzes the relation between energy transition and the job creation potential in Latin America. It capitalizes on companies' characteristics to infer potential hiring process drivers in forthcoming years. The analysis is based on an econometric model on cross-sectional data to explain the dependent variable "potential hiring rate" depending on the firm's size (based on the number of clients), area of activity or technology, employees' level of education, and the existence of labor policies. The data came from 338 companies interviewed, including generation, transmission, distribution, energy transition services, oil and gas, and construction companies in six Latin American Countries (Bolivia, Chile, Costa Rica, Mexico, Panama, and Uruguay). The econometric study focused on 135 companies that declared hiring new employees in the next year concerning the time they were interviewed. The results show that the smaller energy companies with a larger participation of a qualified workforce will tend to have a higher expected hiring rate in the forthcoming year, implying an inverse relationship between a firm's size and potential hiring rate. The model findings convey that as the workforce is compounded with more qualified employees, the higher the expansion of the company's labor force will be, particularly in renewable generation companies. There is an additional aspect worth considering about the factors behind the company's potential hiring rate, and it is the question of job quality. The results suggest that firms hiring more are those with a lower number of policies in place. It can be explained by the fact that more traditional companies tend to have better-established policies, such as hydrocarbon and utilities. These are not the companies with the highest increase in the workforce. This takeaway raises a discussion about whether a change in the job's quality is associated with the energy transition or if it is just associated with new entrants that will become traditional in the following years. Moreover, it also helps to explain some of the political economies of the labor market that may play a role in the energy transition process. Therefore, one of the present study's main takeaways is the need to analyze deeper and promote job quality in smaller energy companies.
    Keywords: Firm's Job creation;Energy Transition;Post-Covid Economic Recovery;Latin America;Industrial Organization;Bolivia;Chile;Costa Rica;Mexico;Panama;Uruguay
    JEL: L25 D25 M51 Q40 Q42
    Date: 2023–01
  18. By: Döttling, Robin; Lam, Adrian (University of Pittsburgh)
    Abstract: This paper empirically examines the interaction between monetary policy and carbon transition risk. Using an event study design, we find that the stock prices of firms with higher carbon emissions are more responsive to monetary policy shocks identified from high-frequency movements in Fed Funds futures around Federal Open Market Committee (FOMC) announcements. Cross-sectional tests reveal that this effect is driven by firms that are more capital intensive, with lower ESG ratings, with greater climate risk exposures, or without climate abatement plans. Using instrumental-variable local projections, we find that high-emission firms reduce emissions relative to low-emission firms, but slow down these efforts when monetary policy is restrictive. Taken together, our results indicate that monetary policy shapes the path to carbon neutrality irrespective of whether central banks embrace a climate target.
    Date: 2023–09–24
  19. By: Chan, Jenny; Diz, Sebastian; Kanngiesser, Derrick
    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 labor and an energy import good as complementary production inputs (Gas-TANK). Given such complementarities, higher energy prices reduce the labor 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 labor 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 labor 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 generalized to alternate supply shocks, as the specific nature of the supply shock affects how resources are redistributed in the economy.
    Keywords: Heterogenous agent models, business cycle fluctuations, energy, monetary policy
    JEL: E5
    Date: 2022–10
  20. By: Sujan Lamichhane
    Abstract: Climate mitigation policies are being introduced around the world to limit global warming, generating new risks to the economy. This paper develops a continuous time heterogeneous agents model to study the impact of carbon pricing policy shocks on corporate default risk and the consequent transition dynamics. We derive a closed-form solution to corporate default probability based on firms' intertemporal optimization decisions and explicitly characterize the transition speed. This allows for studying policy implications in an analytically tractable way. The model is calibrated to different US corporate sectors to quantify the heterogeneous effects of carbon price shocks. While carbon-intensive sectors face increased default risks, there are notable asymmetric effects within sectors. Higher carbon prices increase default risk but also induce faster transition towards the new post-shock steady state with a highly non-linear impact. Our results suggest that once a range of possible price shocks are accounted for, the increase in the cost of capital/risk premiums might be sharply different across sectors.
    Keywords: Default risk; climate risk; carbon price; transition dynamics; cost of capital; risk premium.; climate mitigation policy; carbon price shock; policy shock; price shock; default rate; Debt default; Greenhouse gas emissions; Manufacturing; Global
    Date: 2023–08–25
  21. By: Cavalcanti, Tiago; Hasna, Zeina; Santos, Cezar
    Abstract: We evaluate the aggregate and distributional effects of climate change mitigation policies using a multi-sector equilibrium model with intersectoral input-output linkages and worker heterogeneity calibrated to different countries. The introduction of carbon taxes leads to changes in relative prices and inputs reallocation, including labor. For the United States, reaching its original Paris Agreement pledge would imply at most a 0.8% drop in output. This impact is distributed asymmetrically across sectors and individuals. Workers with a comparative advantage in dirty energy sectors who do not reallocate suffer a welfare loss at least six times larger than workers in other sectors, but constitute less than 2% of the US labor force.
    Keywords: climate change;carbon taxes;Worker heterogeneity;Labor reallocation
    JEL: E13 H23 J24
    Date: 2022–11
  22. By: Marcel A. T. Dossou (University of Abomey-Calavi, Benin); Emmanuelle N. Kambaye (Chengdu, China); Simplice A. Asongu (Johannesburg, South Africa); Alastaire S. Alinsato (University of Abomey-Calavi, Benin); Mesfin W. Berhe (Chengdu, China); Kouessi P. Dossou (University of Abomey-Calavi, Benin)
    Abstract: Existing studies have been separated, considering the foreign direct investment (FDI) and renewable energy development (RE) nexus and the governance quality- renewable energy development relationship. However, the study regarding the moderation of governance quality on the FDI-renewable energy nexus is quite scarce. To fill the gap in the literature, the study therefore examines the moderation of governance quality on the influence of FDI on (RE) in 37 sub-Saharan African economies over the period 1996-2020. To achieve this goal, the panel corrected standard errors (PCSE) estimation technique has been adopted. The results show that FDI has a positive and significant effect on RE, meaning that an increase in foreign direct investment could lead to a 0.05 increase in RE. Moreover, the results unveil that governance quality is positively and significantly associated with RE. This means that a unit increase in control of corruption, governance effectiveness, rule of law, and voice and accountability leads to a 9.64, 9.10, 10.10 and 9.08 increase unit in the renewable energy sector, respectively. Most importantly, the results indicate that the interaction between FDI and governance quality has a positive and significant effect on RE. Policy implications are discussed based on the findings revealed by this study.
    Keywords: Gender political inclusion; democracy; environmental performance; regression quantile method of moments; Africa
    Date: 2023–01
  23. By: Andrea La Nauze; Erica Myers
    Abstract: We use an experiment to test whether consumers optimally acquire information on energy costs in appliance markets where, like many contexts, consumers are poorly informed and make mistakes despite freely-available information. We find consumers acquire information suboptimally; there is little correlation between the revealed utility gain from improved decision making due to information and willingness to pay for information. We compare two behavioral interventions to address consumer mistakes: a conventional subsidy for energy-efficient products and a non-traditional subsidy paying consumers to view information on energy costs. We show that paying for attention can target welfare improvements more effectively.
    JEL: D12 D83 D91 Q41
    Date: 2023–09
  24. By: Missbach, Leonard; Steckel, Jan Christoph; Vogt-Schilb, Adrien
    Abstract: One reason carbon prices are difficult to implement is that they might imply high additional costs on poor and vulnerable households. In response, studies often highlight that recycling revenues through cash transfers can render carbon pricing reforms progressive. This neglects that existing cash transfer programs target households from low-income groups often imperfectly and that impacts of a carbon price are heterogeneous within income groups. In this study we analyze the role of existing cash transfer schemes to alleviate distributional effects of carbon pricing in 16 Latin American and Caribbean countries. We find carbon pricing to be regressive in 11 countries, progressive in 5, and show that differences within income groups exceed differences between them. Beyond total household expenditures, car ownership and cooking fuel explain the variance in carbon pricing impacts. We show that households who are most affected by carbon pricing, some of them poor, do not necessarily have access to existing cash transfer programs. Governments aiming to compensate households may broaden coverage of existing cash transfer programs or consider complementing instruments such as in-kind transfers or removing existing distortionary taxes.
    Keywords: Carbon Pricing;Climate mitigation;Energy Poverty;social acceptability;Tax Incidence
    JEL: C67 H23 O54 Q52 Q54
    Date: 2023–01
  25. By: Müller, Lukas; Ringel, Marc; Schiereck, Dirk
    Date: 2023–10–02
  26. By: Valérie Mignon; Jamel Saadaoui
    Abstract: This paper assesses the effect of US-China political relationships and geopolitical risks on oil prices. To this end, we consider two quantitative measures, the Political Relationship Index (PRI) and the Geopolitical Risk Index (GPR), and rely on structural VAR and local projection methodologies. Our findings show that improved US-China relationships, as well as higher geopolitical risks, drive up the price of oil. In fact, unexpected shocks in the political relationship index are associated with optimistic expectations of economic activity, whereas unexpected shocks in the geopolitical risk index also reflect fears of supply disruption. Political tensions and geopolitical risks are thus complementary causal drivers of oil prices, the former being linked to consumer expectations and the latter to the prospects of aggregate markets.
    Keywords: Oil prices, political relationships, geopolitical risk, China.
    JEL: Q4 F51 C32
    Date: 2023
  27. By: Uju Regina Ezenekwe (Nnamdi Azikiwe University, Awka, Nigeria); Kingsley Ikechukwu Okere (Gregory University, Uturu, Nigeria); Stephen Kelechi Dimnwobi (Nnamdi Azikiwe University, Awka, Nigeria); Chukwunonso Ekesiobi (Igbariam, Nigeria)
    Abstract: Amid Nigeria’s economic growth and energy challenges, the escalating public debt levels and persistent energy poverty raise critical questions about their potential impacts on the environment. Given the potential conflict between economic development, energy poverty alleviation, and ecological conservation, it becomes pertinent to understand whether increased public debt and efforts to address energy poverty inadvertently contribute to or alleviate ecological imbalances within the country. Hence, this research investigates the effect of public debt and energy poverty on the load capacity factor (LCF) in Nigeria. Using the STIRPAT model and annual data from 1990 to 2021, the study explores the relationships among total public debt, energy poverty, gross domestic product per capita, urbanization, and LCF. Descriptive analysis, correlation assessments, and unit-root tests precede the data analysis conducted with the autoregressive distributed lag (ARDL) model and dynamic ARDL (DARDL) technique. Key findings reveal significant negative effects of urbanization and energy poverty on LCF. Additionally, the ARDL and DARDL procedure highlights a positive long-term relationship between public debt and LCF. Both ARDL and DARDL analyses show a negative short-term relationship between GDP growth per capita and LCF, signaling the need for sustainable economic practices. The study concludes with policy recommendations that aim to promote sustainable development and address ecological imbalances by tackling energy poverty and public debt challenges in Nigeria.
    Keywords: Public Debt, Energy Poverty, Load Capacity Factor, STIRPAT Model, Sustainability
    Date: 2023–01
  28. By: Bedoya-Maya, Felipe; Calatayud, Agustina; González Mejia, Vileydy
    Abstract: Road congestion and air pollution are key challenges for quality of life in urban settings. This research leverages highly disaggregated crowdsourced data from Latin America to study the effect of road congestion on levels of carbon monoxide, nitrogen dioxide, and particulate matter in four of the most congested cities in developing countries: Bogota, Buenos Aires, Mexico City, and Santiago. Based on a panel data econometric approach with over 4.4 billion records from Waze and hourly data from 54 air monitoring stations for 2019, our two-stage least square model shows a cumulative increase of 0.6% in response to a 1% of road congestion on the three air pollutants. Moreover, we find a nonlinear relationship between road congestion and air quality and estimate the threshold above which the effect decays. This study provides evidence that supports public policies designed to make urban mobility more sustainable by implementing measures to reduce road congestion in developing contexts.
    Keywords: Congestion;Air quality;Latin America;Pollution
    JEL: R41 O18 L91 Q01
    Date: 2022–10
  29. By: Calfucoy, Paulina; Torres Gunfaus, Marta; Fazekas, Andreas; Vogt-Schilb, Adrien
    Abstract: Long-term Strategies for Decarbonization, termed long-term low emissions and development strategies (LT-LEDS) by the UNFCCC, and sometimes referred to as LTS, can influence the transition to a resilient and decarbonized economy. LT-LEDS additionally make it possible to identify investments and regulatory changes needed to enable the deployment of new technologies and to identify measures which facilitate a just transition. This study seeks to improve the understanding of the value that LT-LEDS can bring to climate policy and action at the national level, based on the perspective of local actors who have participated in their design. The study explores the process of formulating LT-LEDS in Chile, Colombia, Costa Rica, and Peru. It combines three distinct methodologies, namely content analysis, literature review and semi- structured interviews with actors who participated in the LT-LEDS design processes. We identify common aspects among these processes, as well as weaknesses and difficulties, and provide recommendations for formulating and updating LT-LEDS. Stakeholders expressed their appreciation for many of the attributes of LT-LEDS, for instance using simulations to demonstrate how long-term goals can be achieved, and the possibility of using LT-LEDS to assess and inform Nationally Determined Contributions (NDCs). However, LT-LEDS are sometimes perceived as instruments primarily designed to fulfill external requirements but disconnected from national development priorities (and from the need to improve resilience). In addition, LT- LEDS are not yet fully equipped to mobilize the private sector. The findings of this study can be taken into consideration to improve LT-LEDS drafting processes.
    Keywords: Climate Strategies;Climate Governance;Paris Agreement
    JEL: Q54 Q56 D78 Q58
    Date: 2022–07
  30. By: Mrs. Nina Budina; Mr. Christian H Ebeke; Ms. Florence Jaumotte; Andrea Medici; Augustus J Panton; Marina M. Tavares; Bella Yao
    Abstract: In the aftermath of the COVID-19 pandemic, emerging market and developing economies are grappling with economic scarring, social tension, and reduced policy space. Policy actions are already urgently needed to boost growth in the near term and support the ongoing green transition. At the same time, high public debt and persistently high inflation have constrained policy space, posing difficult policy trade-offs. This Staff Discussion Note focuses on emerging market and developing economies and proposes a framework for prioritization, packaging, and sequencing of macrostructural reforms to accelerate growth, alleviate policy trade-offs, and support the green transition. The note shows that prioritizing the removal of the most binding constraints on economic activity, bundling reforms (governance, business deregulation, and external sector reforms), and appropriate sequencing of other reforms (such as labor market and credit sector reforms) can help front-load reform gains. In emerging market and developing economies with large initial structural gaps, the estimated output effects of such a major reform package are sizable—about 4 percent in two years and 8 percent in four years. Achieving higher growth and lower absolute carbon emissions over time requires a well-designed strategy that includes both macrostructural and green reforms.
    Keywords: policy trade-off; climate policy stringency; policy space; policy action; developing economy; Emerging and frontier financial markets; Structural reforms; Climate policy; Greenhouse gas emissions; Global; Caribbean
    Date: 2023–09–22
  31. By: Julio López-Laborda; Andoni Montes-Nebreda; Jorge Onrubia
    Abstract: Success of centrally set environmental objectives requires the engagement of subnational governments. However, they often do not have the capacities or the incentives to apply ambitious climate mitigation and adaptation policies. Indeed, stricter environmental policies can lead to a decrease in local revenue collection as a consequence of the reduced activity resulting from the correction of externalities. To address this issue, in the line of Ecological Fiscal Transfers, we propose the inclusion of incentives linked to environmental objectives in local equalisation that would compensate for the opportunity costs faced by municipalities. In particular, we suggest greening fiscal equalisation by including a multidimensional index of local environmental performance that could be complemented by a green expenditure needs component as criteria for the allocation of equalisation grants. To illustrate how this proposal would work, we examine the financial effect that environmental fiscal equalisation would have had across Basque municipalities for the 2016-2019 period. As a main result, we find that less sustainable cities could lose up to the 5% of their per capita transfers, while small and most sustainable municipalities could win up to 13% of their per capita allocations.
    Date: 2023–10
  32. By: Lykke E. Andersen (SDSN Bolivia); Jhanira Rodriguez (SDSN Bolivia); Alejandra Gonzales (SDSN Bolivia); Ignacio Nava (SDSN Bolivia); Shabelle Flores (Quorsus Consulting)
    Abstract: Race to Zero is a global campaign to rally leadership and action in the education sector in order to reduce global greenhouse gas emissions. The campaign is promoted by the United Nations Environment Programme, EAUC – The Alliance for Sustainability Leadership in Education, and Second Nature. Around 500 universities have already committed to achieving Net Zero Emissions by 2050 (see https://www. In November 2021, the UPB was the first university in Bolivia to join the campaign with the goal of achieving net zero emissions by 2030, and publishing an annual report on the direct and indirect emissions of the university and the actions that are being taken to reduce the emissions. This document is the first annual report of UPB, which establishes the 2019 emissions baseline for the three UPB campuses, located in the cities of Cochabamba, La Paz and Santa Cruz de la Sierra, and the changes in emissions in 2022. The Cochabamba campus (Julio León Prado) is the oldest campus of UPB, established in 1992, and is currently the largest campus, with 2, 003 enrolled students and 164 full-time employees in 2022. The La Paz campus (Fernando Illanes de la Riva) was inaugurated in 2007 and had 1, 866 enrolled students and 99 full-time employees in 2022. Finally, the Santa Cruz campus was inaugurated in February 2020, a few days before the entire country went into quarantine due to the pandemic. Only in 2021 did it start operating with in-person classes, and in 2022 it had 305 students enrolled and 25 employees.
    Keywords: Carbon footprints, Race to Zero, Universidad Privada Boliviana
    JEL: Q56
    Date: 2023–08
  33. By: Kuosmanen, Natalia; Pajarinen, Mika
    Abstract: Abstract This report examines the production of green goods in Finland’s manufacturing sector. Our findings reveal a notable concentration of green products to high-tech industries. While most firms maintain their green product portfolios stable over time, multi-product firms tend to expand their green product portfolios more actively. Large firms stand out with active management of their green goods portfolios, discontinuing some green products while introducing new ones. Additionally, we examine firm characteristics that associate with firms’ engagement in the production of green goods. We find a positive correlation between production of green products and factors such as labor productivity, product diversity, and multi-industry operations.
    Keywords: Environmental goods, Green products, Firm renewal, Manufacturing industries
    JEL: C23 L60 O44 Q54 Q55 Q56
    Date: 2023–10–07
  34. By: Kuosmanen, Natalia; Pajarinen, Mika
    Abstract: Abstract The production of green goods in Finland’s manufacturing is concentrated within high-tech industries, particularly in the manufacturing of computer, electronic and optical products, as well as electrical equipment. Many firms tend to maintain a consistent portfolio of green products over time. Active expansion of green product portfolios is more common among large and multi-product firms. Furthermore, there is a positive correlation between labor productivity and production of green products. Although the production of green goods constitutes a relatively modest share of Finland’s overall manufacturing output, its role is steadily increasing over time.
    Keywords: Environmental goods, Green products, Firm renewal, Manufacturing industries
    JEL: C23 L60 O44 Q54 Q55 Q56
    Date: 2023–10–07
  35. By: Nico, Gianluigi; Christiaensen, Luc
    Abstract: The agri-food system (AFS) employs about one third of the global workforce and contributes about one third of global greenhouse gas (GHG) emissions. This together with its large exposure to the effects of climate change and environmental degradation makes what happens in AFS central to the green transition and its implications for jobs and the structural transformation. Microeconomic evidence suggests that the adoption of climate smart agricultural practices will increase labor requirements, at least in the short run and at lower levels of incomes, when its mechanization is still limited. Econometric macro-model-based simulations suggest however that especially substantial investment in climate friendly agricultural R&D as well as soil and water preserving practices and market integration will more than offset the negative effects of climate change and even accelerate the structural transformation, especially in Sub Saharan Africa. Overall, the findings underscore the tremendous potential of increasing agricultural and climate friendly R&D investment for brokering an environmentally sustainable structural transformation. Repurposing of agriculture’s current US$ 638 billion support package towards supporting more climate friendly practices, including to overcome the time lag between the moment of investment and the realization of the benefits, provides an important policy entry point.
    Keywords: Agri-food system; global workforce; climate change; green transition; jobs; agricultural practices; structural transformation.
    Date: 2023–05–16
  36. By: Kiran B. Krishnamurthy, Chandra (CERE - Center for Environmental and Resource Economics (CERE), Department of Forest Economics, Swedish University of Agricultural Sciences, SLU, Umeå, Sweden); Ngo, Nicole (School of Planning, Public Policy, and Management, University of Oregon)
    Abstract: We investigate the effects of Uber’s entry on freeway traffic and pollution in California. We use a panel difference-in-differences design and exploit variation in timing and occurrence of Uber’s entry into different counties using hourly freeway traffic data and daily pollution data between 2009 and 2017. We find reductions in weekday freeway congestion and PM2.5 concentrations in the average county entered. However, this reduction occurs at off-peak times and in less populated counties. During evening rush hour and in the most populated counties, we find increases in congestion and air pollution. We estimate that Uber’s entry resulted in an overall net social cost between $1.4 and $13.9 million for counties where and time periods when congestion is greatest.
    Keywords: Air Pollution; Traffic Congestion; ride-hailing; ridesharing
    JEL: C21 C23 L91 R41
    Date: 2022–01–31
  37. By: Ricardo Dahis (Department of Economics, Monash University); Ivan de las Heras (Department of Economics, Southern Methodist University); Santiago Saavedra (Department of Economics, Universidad del Rosario)
    Abstract: Policies often entail costs today but benefits only far into the future, as in climate change mitigation. An essential aspect of how this trade-off is faced relates to how young are the politicians in power. We study closely contested elections in Brazil and show that young politicians reduce deforestation and greenhouse gas emissions with no significant effects on local income. We further show that young politicians invest in long-term policy and hire more young bureaucrats. Our results suggest a cohort effect: young politicians matter not because of their age, but because they are part of a new generation.
    Keywords: Climate change mitigation, Deforestation, Young politicians, Political selection
    JEL: P18 Q23 Q54
    Date: 2023–10
  38. By: Dumortier, Jerome; Elobeid, Amani; Carriquiry, Miguel
    Abstract: The increasing number of electric vehicles in the United States (U.S.) will alter global agriculture in the upcoming decades because approximately one-third of U.S. maize production is blended with gasoline (Dumortier et al., 2022a). More electric vehicles reduce gasoline demand since every litre of gasoline sold in the U.S. contains approximately 10% ethanol. The reduction in maize ethanol demand leads to lower commodity prices not only for maize but for all other commodities as well because global crop allocation is based on the relative profitability of crops. Previous research has shown that a reduction in total cropland use is expected from an increasing fleet of electric vehicles (Dumortier et al. 2022a, b). This reduction in cropland is leading to fewer biomass and soil carbon emissions from land use change, which can be counted as an additional lifecycle benefit of electric vehicles. This paper is an extension of Dumortier et al. (2022a) by assessing the effects on biodiversity, i.e., richness of mammals, birds, and—if applicable—amphibians. The analysis combines three models: (1) U.S. light-duty vehicle model, (2) global agricultural outlook model, and (3) global biodiversity model. The first two models have been used in previous publications such as Carriquiry et al. (2020) or Elobeid et al. (2021). The biodiversity model is a new addition and is based on data sets presented in Jenkins et al. (2013). The global data set differentiates between mammals, birds, and amphibians and not only covers the species richness, i.e., the number of species for a given area, but also areas with threatened species and with a less than median number of species. We use output provided by Dumortier et al. (2022a) which calculates future U.S. maize ethanol use under various electrification scenarios in the light-duty vehicle sector until 2050. The output is generated by combining the U.S. light-duty vehicle model with the global agricultural outlook model. The important variable for this analysis is the crop area by country/region. Changes in cropland are converted into GIS raster data using the spatial distribution of cropland. Based on overlaying the raster data of changes in crop area with the biodiversity maps, we calculate how many species-rich areas are impacted by an electrification of the U.S. LDV fleet. Since the information is also available for threatened species, the calculations are done for those as well. Preliminary results indicate that fewer species are affected under more rapid electrification. The U.S. has lower species diversity than other important maize exporters such as Brazil. The reduction in the demand for maize leads to an increase in U.S. exports at the expense of other countries that are richer in biodiversity. The increase in U.S. maize ethanol use had important impacts on global agriculture and a more rapid electrification of the U.S. vehicle fleet can have valuable impacts on biomass and soil carbon as shown in previous research but also on biodiversity as shown in this analysis. The analysis adds the component of biodiversity to the discussion around electrification in the United States.
    Keywords: Livestock Production/Industries, International Relations/Trade
    Date: 2023
  39. By: Honorati, Maddalena; Banaszczyk, Anna
    Abstract: The objective of this policy note is to provide an overview of the three draft project proposals and to recommend key design principles and implementation arrangement options for a coordinated outplacement program in the Eastern Wielkopolska region that would provide a package of services to motivate and help affected workers find suitable jobs in alignment with the TJTP. The focus of the note is on interventions supporting the social and labor transition in Eastern Wielkopolska, rather than the economic, spatial, and energy transformations which are also part of the JTM Pillar. Efforts to promote local economic development and environmental rehabilitation of affected subregions as well as to develop stakeholder engagement and public communication strategies are beyond the scope of this note.
    Keywords: Just transition; jobs; coal transition; job displacements; income support; ALMPs/active labor market policies.
    Date: 2023–05–30
  40. By: Sheenan, Lisa
    Abstract: This paper analyses linkages between green, conventional (corporate and sovereign) bond markets and geopolitical risk in high and low volatility periods between 2014 and 2022 using a Markov-switching VAR (MS-VAR) framework. The results indicate that geopolitical risk significantly affects green bonds in periods of high volatility, but does not do so to conventional bond markets. Green bond markets are significantly affected by sovereign and corporate bonds in both regimes, with stronger effects from corporate bonds evident in high volatility periods. This suggests that green bonds behave differently to conventional bonds and may be more susceptible to geopolitical risk and contagion.
    Keywords: Green bonds, Geopolitical Risk, Markov Switching
    JEL: G10 G11 C34
    Date: 2023
  41. By: Thorsten Hens (University of Zurich; Norwegian School of Economics and Business Administration (NHH); Swiss Finance Institute); Ester Trutwin (University of Zurich; Swiss Finance Institute)
    Abstract: This paper analyses sustainable investing in terms of impact and ESG investing. Using a parsimonious general equilibrium model, we integrate the different effects of sustainable investing into welfare analysis. Given that the price for polluting the environment is too low, we show that impact investing can lead to a second-best solution. If at the margin the technology is ”clean” investment should be increased while a capital reduction is appropriate if at the margin the firm’s technology is ”dirty”. However, sustainable investing requires households to anticipate the firm’s pollution activity. Therefore we show how the same solution can be implemented with ESG investing in which the burden of knowledge lies on the rating agency. Finally, we indicate that the first-best solution can be achieved by sustainable consumption.
    Keywords: Impact Investing, ESG Investing, Sustainable Consumption, Environmental Kuznets Curve
    JEL: D10 D50 D53 G41 Q50
    Date: 2023–09
  42. By: Dolabella, Marcelo; Mesquita Moreira, Mauricio
    Abstract: The dire prospects of global warming have been increasing the pressure on policymakers to use trade policy as a mitigation tool, challenging trade economists canonical “targeting principle.” Even though the justifications for this stance remain as valid as ever, it no longer seems feasible in a world that is already engaging actively in using trade policy for climate purposes. However, the search for second-best solutions remains warranted. In this paper, we focus on the climate benefits of tariff reform for a broad sample of Latin American and Caribbean countries, drawing on Shapiros (2021) insights about the environmental bias of trade policy. Using a partial equilibrium approach and GTAP 10-MRIO data for 2014, we show that even though there is evidence of a negative bias toward “dirty goods” in half of the countries studied, translating this into actionable tariff reforms is plagued by interpretation and implementation difficulties, as well as by jurisdictional and efficiency trade-offs. There are also questions about their efficacy in curbing greenhouse gas emissions.
    Keywords: International trade;Latin America and the Caribbean;Latin America andthe Caribbean
    JEL: F13 F14 F18 H23 Q56
    Date: 2022–08
  43. By: Suésécenko, Oleksandr; Schwarze, Reimund
    Date: 2023
  44. By: naryono, endang (STIE PASIM SUKABUMI)
    Abstract: Indonesia is one of the countries with the largest nickel mineral potential in the world with the greatest potential being in the heart of the island of Sulawesi and small islands in the North Maluku archipelago and Southeast Sulawesi. Based on data from the Ministry of Energy and Mineral Resources (ESDM), Indonesia has at least 72 million Nickel (Ni) reserves, including Limonit1, or 52% of the world's total nickel reserves of 139, 419, 000 Tons of Ni (Indonesian Nickel Investment Opportunities Booklet, Ministry of Energy and Mineral Resources , 2020). Therefore, most nickel mining activities are only spread across 4 provinces, which contain 90% of all nickel reserves in Indonesia. 3 provinces are in Sulawesi, namely Central Sulawesi, South Sulawesi and Southeast Sulawesi, as well as 1 province in Maluku, namely North Maluku. nickel mining, and the impact of nickel mining activities in Sulawesi. Previously, we will explain the whys and whys of policy directions related to nickel resources in Sulawesi in national and global development. This brief paper departs from experiences in Sulawesi in advocating for environmental sustainability and its impact on the lives of people in rural areas. Ambition to make Indonesia the number one battery producer in the world. To achieve such big ambitions, the Indonesian Government continues to boost the growth of the nickel mining industry, starting from upstream to downstream.
    Date: 2023–09–19
  45. By: Thonipara, Anita
    Abstract: Die vorliegende Untersuchung leistet einen Beitrag zur aktuellen politischen Diskussion der Betroffenheit kleiner und mittlerer Handwerksbetriebe durch steigende Energiepreise. Hierzu wurde ein Fokus auf sieben energieintensive Gewerke (Bäcker, Fleischer, Friseur, Kfz, metallverarbeitende Betriebe, Textilreiniger, Tischler) gelegt. Auf Basis von detaillierten Energieverbrauchsdaten von 231 Betrieben, welche von der Mittelstandsinitiative Energiewende und Klimaschutz erhoben und zur Verfügung gestellt wurden, werden Berechnungen zu Energiekostensteigerungen, absoluten Mehrkosten sowie Mehrkosten je Mitarbeiter*in für jeden Energieträger (Strom, Gas und Öl) der untersuchten Gewerke durchgeführt. Darüber hinaus wurde bei der Auswertung nach Betriebsgröße unterschieden und ein Bezug zu den Umsätzen hergestellt. Folgende Ergebnisse können aus den Berechnungen abgeleitet werden: - Selbst innerhalb der energieintensiven Handwerkszweige gibt es große Unterschiede in der tatsächlichen Belastung durch energiebezogene Mehrkosten (absolut bzw. je Mitarbeiter*in). - Vor allem Fleischereien, Bäckereien, Textilreiniger und das metallverarbeitende Gewerbe weisen sehr hohe bis extrem hohe Mehrkosten je Mitarbeiter*in mit teilweise über 2000 Euro für 2023 im Vergleich zu 2021 je Mitarbeiter*in auf. - Es zeigt sich, dass insgesamt die Stromkosten schwerer wiegen als die Gaskosten (außer bei den Textilreinigern) und sich die Ölkosten im Verhältnis zu den Gas- und Stromkosten weniger stark bemerkbar machen. - Tendenziell lässt sich sagen, dass gemessen an ihrem Umsatz kleine Betriebe stärker von steigenden Kosten betroffen sind. - Grob ist über alle Gewerke und Betriebsgrößenklassen hinweg bei gleichbleibendem Verbrauch im Vergleich zum Jahr 2021 mit einer Verdopplung der Energiekosten im Jahr 2023 zu rechnen. Die Studie beinhaltet zukunftsgerichtete Prognosen und Erwartungen. Die Ergebnisse können aufgrund der Heterogenität des Handwerks und der zwar detailreichen, jedoch kleinen Stichprobe nur eine Schätzung darstellen. Unterschiedliche Geschäftsmodelle, Betriebsgrößen, Energienutzungsverhalten und ein breites Spektrum an Energieeffizienzniveaus lassen keine allgemeine Kostenberechnung zu. Gleichzeitig können unbekannte und ungewisse Entwicklungen zu Abweichungen führen. Die Ergebnisse sollen in einem Bereich, in dem wenige Daten verfügbar sind, Einblicke in die Betroffenheit der Unternehmen bieten und Aussagen zu Tendenzen ermöglichen. Die dieser Studie zugrunde liegenden Berechnungen wurde bereits im März 2023 abgeschlossen und beinhaltet den bis dahin verfügbaren Wissensstand.
    Keywords: Energiepreis, Energiekonsum, Handwerk, Vergleich, Deutschland
    Date: 2023
  46. By: Nam, Nguyen Hoang
    Abstract: After more than 350 years since the first steam-powered vehicle was invented in 1672, much has been changed in the automotive industry towards sustainable and environmentally friendly products. Nowadays, the development of a circular economy (CE) in the automotive industry has attracted the attention of many countries. The main objective of study is to understand how to approach sustainable products in the automotive industry and adapt to social needs. Through analysis and synthesis methods, the study analyzed international car manufacturers’ experience in developing sustainable products. The results indicate that there is a trend of switching to electric vehicles in the policies of international car manufacturers, while car manufacturers also set policies and regulations in accessing sustainable products for the development of CE.
    Date: 2023–09–17
  47. By: ITF
    Abstract: This report explores how traffic systems and infrastructure can be redesigned and expanded for a broader range of vehicle types, especially “smaller-than-car” or light mobility options. It identifies the potential benefits of making vehicles lighter and diversifying the range of vehicles used for everyday mobility. It also highlights successful policies for encouraging a shift towards urban light mobility in cities. Finally, it presents strategies for implementing frameworks for such policies and highlights measures decision makers should consider as part of their light mobility strategy.
    Date: 2023–08–07
  48. By: Van den Bossche, Peter L.H.
    Abstract: We are proud to see WTI's Director of Studies, Prof Peter Van den Bossche, among the authors of the new report on “Principles of International Law Relevant for Consideration in the Design and Implementation of Trade-Related Climate Measures and Policies, ” the product of an international legal experts group convened by the Forum on Trade, Environment & the SDGs (TESS). Prof Van den Bossche worked with a diverse group of experts in international law related to climate, environment, and trade and general international law from around the world. In this report, the expert group offers governments and stakeholders independent guidance on principles of international law relevant for consideration in the design and implementation of trade-related climate measures and policies. The principles are analysed in a way that presents them as cumulative and simultaneously applicable, in a mutually supportive and coherent manner, giving full effect to all relevant parts of international law, insofar as possible. The vision driving the report is that a shared understanding on such principles could go a long way in reducing tensions and avoiding politically charged disputes at the WTO, while fostering inclusive cooperation on trade policies that support climate action and advance sustainable development.
    Date: 2023–10–06
  49. By: John Wiredu (Northwestern Polytechnical University, China); Qian Yang (Northwestern Polytechnical University, China); Agyemang Kwasi Sampene (Jiangsu University, Zhenjiang, China); Bright Akwasi Gyamfi (Sir Padampat Singhania University, India); Simplice A. Asongu (Johannesburg, South Africa)
    Abstract: This paper examines the impact of institutional pressure (IP), top management support (TMS), green supply chain management practices (GSCM), and supply chain competitive advantage (SCCA) on corporate environmental performance (EP). We also analyze the mediation effect of GSCM on the interplay between TMS and EP. Additionally, the paper also provides an analysis of the moderating role of SCCA between IP and EP. To attain the objective of this research, we assembled data from 710 business entities within the Shaanxi province of China utilizing a survey design approach. The structural equation model (SEM) was applied to test and assess the hypothetical outline. The study outcomes empirically show that TMS, GSCM, and SCCA positively and significantly impact EP. Interestingly, our study found an insignificant association between IP and EP. The study's results also demonstrate that IP directly relates to top management support. Moreover, the study's empirical findings reveal that GSCM positively mediates IP and EP. The study findings show that SCCA shapes IP and EP's connection. Accordingly, the practical implications of our study’s findings suggest that business managers, investors, and government agencies must know the importance of adopting sustainable practices within the supply chain. Business managers must take action to integrate environmental criteria into supplier selection, evaluate suppliers' environmental performance, and collaborate with eco-friendly suppliers. Hence, government agencies, stakeholders, and business managers can use this information to shape regulations and policies that encourage businesses to adopt sustainable supply chain practices. Offering incentives such as tax benefits or grants for sustainability initiatives can also promote adoption. The study recommends that a business culture that targets improving environmental performance due to institutional pressure and top management support is essential in achieving GSCM practices, thereby promising competitive advantage.
    Keywords: Institutional pressure, Top management support, Competitive advantage, Environmental performance, Green supply chain management practices
    Date: 2023–01
  50. By: Heilmann, Felix; Steitz, Janek; Müller, Simon; Sigl-Glöckner, Philippa
    Abstract: Importe von Flüssigerdgas (LNG) haben es Europa ermöglicht, den weitgehenden Ausfall russischer Gaslieferungen teilweise zu kompensieren. Dies war für die Sicherung der Energieversorgung zentral. Es besteht hierbei jedoch auch ein Risiko neuer Pfadabhängigkeiten, die der notwendigen Transformation zur Klimaneutralität entgegenstehen. Ziel dieses Hintergrundpapiers ist es, in diesem Spannungsfeld zwischen Energiesicherheit und Klimaschutz Brücken für differenzierte Lösungsansätze zu bauen. Hierfür betrachten wir relevante Aspekte entlang der gesamten LNG-Versorgungskette, unter der Prämisse, dass die Einhaltung der Klimaziele und Energiesicherheit jederzeit gewährleistet sein müssen. Das Papier basiert auf Gesprächen und einem Workshop mit Stakeholder:innen aus dem gesamten Debattenspektrum. Insgesamt birgt der Bau neuer LNG-Export-Terminals die größten Risiken für den Klimaschutz. Import-Terminals können als Reserve für Krisenzeiten dienen, wenn ihre Nutzung in Nichtkrisenzeiten eingeschränkt wird. Die globale LNG-Versorgungssituation wird sich auch ohne Investitionen in zusätzliche Exportterminals stark entspannen: Durch sich bereits jetzt im Bau befindliche Projekte wird sich das globale Angebot bis 2027 um rund ein Drittel erhöhen. Zusätzliche Exportkapazitäten können angesichts langer Entwicklungszeiten keinen relevanten Beitrag zur Entschärfung der aktuellen Versorgungskrise leisten und laufen Gefahr, als stranded assets zu enden. Europäische Entscheidungen sollten daher keine neuen Exportprojekte unterstützen. Dies gilt auch für die Ermöglichung durch langfristige Lieferverträge. Stattdessen sollten sich europäische Akteur:innen auf die wachsende Menge nicht vertraglich gebundener Volumina konzentrieren, die aus auslaufenden Altverträgen, von Portfoliounternehmen und aus bereits im Bau befindlichen neuen Exportprojekten zur Verfügung stehen. Kurz- und mittelfristige Verträge können Unsicherheiten aus einer zu starken Exposition gegenüber dem Spotmarkt reduzieren und gleichzeitig Klimarisiken begrenzen. Regierungen können zur Umsetzung solcher Verträge beitragen.
    Date: 2023
  51. By: Argenton, Cedric (Tilburg University, School of Economics and Management)
    Date: 2022

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