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on Energy Economics |
| By: | Jaden Kim; Augustus J Panton; Gregor Schwerhoff |
| Abstract: | The current energy crisis has raised important policy questions on how to strengthen short-term energy security while remaining firmly committed to the green transition, a challenge amplified by the recent consensus at COP28 to transition away from fossil fuels. This paper examines the historical determinants of the security of energy supply and analyzes the green transition implications for energy security. Looking back, we find that the diversification of energy trade partners, or the lack thereof, was the main factor that underpinned energy security dynamics within and across countries over the last two decades. Looking ahead, the green transition is expected to have a net positive effect on energy security provided investments are aligned to address new challenges posed by the increased reliance on renewables. |
| Keywords: | Energy security; energy independence; green transition; climate mitigation; geo-political risks |
| Date: | 2024–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/006&r=ene |
| By: | Bryan Bollinger; Naim R. Darghouth; Kenneth T. Gillingham; Andres Gonzalez-Lira; Kenneth Gillingham |
| Abstract: | Product complementarities can shape market patterns, influencing the demand for related products and their accessories. This study examines complementarities in the demand for rooftop solar and an accessory, battery energy storage. Using nationwide administrative data, we estimate a dynamic nested-logit model of solar and storage adoption. We quantify the demand complementarity between solar and storage, and find that if storage was not available, 20% of households who coadopt solar and storage would not adopt anything. We find that the demand for solar and storage bundles increases with power outages, with a larger effect in California. |
| Keywords: | product complementarity, electricity resilience, demand estimation, new technology |
| JEL: | C51 L94 Q48 Q58 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10871&r=ene |
| By: | Aline Mortha; Toshi H. Arimura |
| Abstract: | As the manufacturing industry is one of the largest contributors to global emissions, decarbonization of the production line is a key aspect in the fight against climate change. In this study, we examine the level of substitutability between fossil fuel and electricity. Using data on Japanese plants from 2004 to 2020, we estimate the elasticity of substitution between the two inputs, and find that a 1% increase in electricity prices results in a 6.55% increase in fossil fuel consumption. This is a unilateral form of substitution, as an increase in fossil fuel price does not translate in any significant changes in electricity consumption in the short-run. Our paper also contributes to explaining mechanisms behind inter-fuel substitution, with a special focus on electricity and fossil fuel through cogeneration. We find that substitutability is highly sector-dependent, and identify the pulp & paper, iron & steel, chemicals and cement to be sectors with substitution capacity. These sectors see an increase in their electricity generation, the magnitude of which is estimated between 0.004% (cement) to 0.23% (iron & steel). Iron & steel and cement also increase their consumption of coal to power generators by 0.06% and 0.005%, respectively. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e199&r=ene |
| By: | Pollitt, M. G.; Dolphin, G. G. |
| Abstract: | This paper considers the current proposal to extend the EU ETS to cover CO2 emissions from the combustion of heating and road transport fuels. We argue that increased coverage of the EU ETS, together with a binding cap consistent with a net zero trajectory, would be a powerful dynamic incentive to efficient emissions reduction. In addition, it would complement standards-based policies currently enacted in these sectors in several ways. Distributional implications remain a serious challenge to such an extension but several mechanisms are available to alleviate them. |
| Keywords: | climate policy, emissions trading, EU, net zero |
| JEL: | Q52 Q54 Q58 |
| Date: | 2024–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2152&r=ene |
| By: | Stephen P. Holland; Erin T. Mansur; Valentin Verdier; Andrew J. Yates |
| Abstract: | Environmental policy is increasingly concerned with measuring emissions resulting from local changes to electricity consumption. These marginal emissions are challenging to measure because electricity grids encompass multiple locations and the information available to identify the effect of each location’s consumption on grid-wide emissions is limited. We formalize this as a high-dimensional aggregation problem: The effect of electricity consumption on emissions can be estimated precisely for each electricity generating unit (generator), but not precisely enough to obtain reliable estimates of marginal emissions by summing these effects across all generators in a grid. We study how two economic constraints can address this problem: electricity supply equals demand and an assumption of monotonicity. We show that these constraints can be used to formulate a ‘naturally regularized’ estimator, which implements an implicit penalization that does not need to be directly tuned. Under an additional assumption of sparsity, we show that our new estimator solves the high-dimensional aggregation problem, i.e., it is consistent for marginal emissions where the usual regression estimator would not be. We also develop an asymptotically valid method for inference to accompany our estimator. When applied to the U.S. electricity grid with 13 separate consumption regions, our method yields plausible patterns of marginal generation across fuel types and geographic location. Our estimates of region-level marginal emissions are precise, account for imports/exports between regions, and allow for all fuel types to potentially be on the margin. |
| JEL: | C23 Q42 Q48 Q53 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32065&r=ene |
| By: | Moustafa, Khaled (Founder & Editor of ArabiXiv) |
| Abstract: | Evergreen trees have continuous photosynthetic and physiological reactions that generate a permanent flow of electrons. If we can harness such electric charges, we can produce renewable electricity from green trees. To make this a reality, I propose the development of highly sensitive electronic sensors capable of capturing electric charges and movement inside plant stems and leaves. The captured charges can then be collected and converted into usable electricity stored in batteries, and used as a new renewable energy to power low-wattage devices such as lamps, street lights, and small electronics. If successfully achieved, such an approach has the potential to fulfill basic electricity needs in small cities and remote rural areas where conventional electric sources are not always available. In forests and highly dense plant populations, where thousands of trees grow, the total amount of potentially generable electricity could be significant to meet the energy needs of surrounding communities. |
| Date: | 2024–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:f8g5n&r=ene |
| By: | Anna Burova (Bank of Russia, Russian Federation); Elena Deryugina (Bank of Russia, Russian Federation); Nadezhda Ivanova (Bank of Russia, Russian Federation); Maxim Morozov (Bank of Russia, Russian Federation); Natalia Turdyeva (Bank of Russia, Russian Federation) |
| Abstract: | Energy transition and climate policies associated with it may become one of the major challenges for the Russian economy. We present an approach to assessing consequences of climate policy for Russia and evaluating related transition risks for the country’s financial system. This approach relies on a CGE model for the Russian economy and a financial model based on firm-level data. We show that both international and domestic climate policies affect the financial stability of the Russian Federation. The effects of international climate actions summarised in the NGFS Net Zero 2050 scenario are bigger than the effects of the introduction of a domestic emission trading system with a reduction goal of the Intensive scenario of the Russian state strategy of low-carbon development. |
| Keywords: | Russia, climate policy, energy transition, transition risk, financial stability, CGE |
| JEL: | C68 E51 E62 G10 G21 Q52 Q54 Q58 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:bkr:wpaper:wps109&r=ene |
| By: | Nepal, Rabindra (School of Business, Faculty of Business and Law, University of Wollongong, Australia); Liu, Yang (School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China); Dong, Kangyin (School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China); Jamasb, Tooraj (Department of Economics, Copenhagen Business School) |
| Abstract: | The electricity sector in many developing nations faces the difficulty of insufficient financing throughout the low-carbon transition, highlighting the importance of green financing in alleviating financial constraints. The advancement of digital technology can provide green finance in the power industry inside the digital economy, but this statement lacks empirical evidence. The primary objective of this research is to investigate the impact of green financing on low-carbon power transformation in developing nations. Additionally, we investigate the moderating role of digital economy between the two. Our findings validate the favorable impact of green financing on low-carbon electricity transformation, and this impact is particularly evident for wind and solar power. We show that this beneficial effect is greater for low-income countries or regions with low levels of electricity transition. We also provide evidence of the positive moderation effect of digital economy and find that this effect has three dimensions: digital infrastructure, digital social impact, and digital social support. This research helps to broaden green financing channels for the power sector in developing countries, especially from the perspective of digital economy. |
| Keywords: | Green financing; Low-carbon transformation of electricity; Digital economy; Moderation effect; Global case |
| JEL: | C23 G23 O33 Q42 |
| Date: | 2024–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2024_006&r=ene |
| By: | Llorca, Manuel (Department of Economics, Copenhagen Business School); Soroush, Golnoush (Department of Economics, Copenhagen Business School); Giovannetti, Emanuele (Faculty of Business and Law, Anglia Ruskin University, UK); Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Davi-Arderius, Daniel (Càtedra de Sostenibilitat Energètica, Institut d'Economia de Barcelona, Universitat de Barcelona, Spain) |
| Abstract: | The green transition relies on electricity generation from intermittent renewable energy sources and the electrification of end-consumption such as heating, cooling, or mobility. At the same time, an increasing number of previously passive consumers are becoming active actors in the energy system, while the quantity of electric devices connected to the grid increases. These trends pose new operational, economic, and regulatory questions as the traditional roles of certain agents are mutating and multiplying. Digitalisation offers the possibility of implementing innovative solutions to the new challenges faced by grid operators, especially at the distribution grid level. In the EU Grid Action Plan, investments in grid digitalisation and real-time monitoring are deemed as crucial to achieve an efficient and fast energy transition. In this paper we present potential digital solutions to overcome the operational challenges posed by the ‘future-proof’ energy systems currently being devised and we address their economic implications. We also address some key aspects related to the digitalisation of the energy sector (efficiency and innovation, interoperability and standardisation, centralised vs decentralised solutions) from an economic perspective. Finally, a successful digitalisation of the sector requires adjustments in the regulatory frameworks. In the conclusion, we detail some recommendations needed for regulatory improvements. |
| Keywords: | Energy transition; Digitalisation; Standardisation and interoperability; Economic principles; Innovation; Regulation |
| JEL: | L10 L50 L90 Q40 |
| Date: | 2024–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2024_005&r=ene |
| By: | Catherine Hausman |
| Abstract: | Economists, energy experts, and policymakers have called for accelerating investment in the U.S. electricity transmission network. Additional transmission lines could better integrate markets, reducing the total cost of electricity generation. They could also allow for the better integration of renewable energy sources such as wind and solar, located in areas that traditionally did not have much generation capacity and that are far away from centers of demand. In this paper, I document the magnitude of static allocative inefficiencies induced by transmission congestion in two major U.S. electricity markets. I show that the allocative inefficiencies are rising over time, totaling more than $2 billion in 2022. Moreover, I document an important political economy dimension not yet explored in the literature: the magnitudes of gains and losses from this market integration at some individual firms is surprisingly large: four firms would have experienced a collective $1.6 billion drop in operating profits in 2022 had the market been integrated. I then tie some of these firms to reports of transmission hold-up in these markets. I argue that understanding firm-level gains and losses is just as important as understanding overall inefficiencies, particularly in an environment where incumbents may have the power to block new lines. |
| JEL: | L94 P18 Q41 Q42 Q48 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32091&r=ene |
| By: | Moustafa, Khaled (Founder & Editor of ArabiXiv) |
| Abstract: | Climate change is a multi-hazard challenge for life on earth in all its aspects. Wildfires, pollution, drought and heatwaves are just a few examples of exacerbated environmental crises propelled by climate change effects. To mitigate such effects, urgent actions are required to cutoff greenhouse gas emissions by all the means across all the sectors. Every additional kilogram of greenhouse gases produced unnecessarily should be avoided. One source of greenhouse gas emissions that may not be top of mind for the public and policymakers - and which can be taken into account in preventive environmental policies- is the industry of administrative and identification documents (papers) with short validity dates that involves intensive production (mass printing) and frequent renewals (mass reprinting) while the carbon footprint is too high. The validity of, for example, identity cards, passports, banking cards, driving licenses, etc., is often short ranging from ~ 3 to 10 years, depending on each type of document and issuing country. Short validity dates, however, should raise critical questions regarding the environmental sustainability, societal and carbon impact, and depletion of natural resources used in their production and frequent renewals. Identification documents are not food products that spoil over time or medications that lose their functional activities, so their validity should be unlimited by time in order to avoid the high environmental costs of mass printing/reprinting and high rates of greenhouse gas emissions associated with their production. The production of plasticized ID-type cards can emit up to 100 grams of carbon dioxide equivalent per card. Manufacturing one administrative document per person and renewing it five times could produce up to 4 million tons of carbon dioxide globally. If individuals have five administrative documents that need renewing five times, which is often the case, gas emissions would be five times higher, or approximately 20 million tons of CO2 equivalent. To save such important amounts of gas emissions, a modernization and flexibilization of administrative documents industry is required toward removing validity by date. This simple change could save substantial amounts of energy and natural resources, such as trees and water, while also reducing greenhouse gas emissions by million tons, especially in the pressing context of climate change. It should be time to initiate a paradigm shift in the administrative document industry. Eliminating validity periods is a straightforward yet effective solution that would significantly reduce greenhouse gas emissions and promote sustainable environmental practices. |
| Date: | 2023–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:uan9g&r=ene |
| By: | Thomas Heggarty (RTE - Réseau de Transport d'Electricité [Paris], PERSEE - Centre Procédés, Énergies Renouvelables, Systèmes Énergétiques - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Jean-Yves Bourmaud (RTE - Réseau de Transport d'Electricité [Paris]); Robin Girard (PERSEE - Centre Procédés, Énergies Renouvelables, Systèmes Énergétiques - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Georges Kariniotakis (PERSEE - Centre Procédés, Énergies Renouvelables, Systèmes Énergétiques - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Capacity expansion models provide the basis on which to decide where, when, how much and what technology type to deploy. In systems with large shares of variable renewable energy, the low temporal detail of these models has been shown to introduce biases, prompting much recent work to reduce them. This paper shows that this issue is fairly secondary compared to the impact of maximum investment rates. Through this parameter, typically not discussed in capacity expansion studies, many notions can collectively be expressed, such as the rate at which capacity is financed, institutions approve development, manufacturers roll-out equipment, civil engineers build infrastructure, network operators connect plants etc. This paper shows that considering even ambitious development rates significantly increases total system costs, and drastically changes the structure of an optimal generation mix. The presented sensitivity analysis is based on a multi-region representation of the European power system, modelled using the open-source tool OSeMOSYS, to which a novel power transmission module has been added. Results stress the extent to which hopes of meeting climate targets hinge on society's collective ability to deploy new low-carbon infrastructure fast enough. Energy policy can enhance this ability by providing long-term visibility and stability, reducing investment risk. |
| Keywords: | Capacity expansion planning, maximum investment rate, optimal investment pathways, brownfield study, climate targets, energy transition, Prospective studies, Renewable energies |
| Date: | 2024–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04383397&r=ene |
| By: | Inessa BENCHORA; Aurélien LEROY; Louis RAFFESTIN |
| Abstract: | This article examines the impact of monetary policy (MP) on firms’ stock prices across CO2 emissions. We provide a theoretical model in which green firms are less sensitive to MP shocks than brown firms, because they are less exposed to transition risk and provide non-pecuniary utility to investors. We test this prediction by using a panel event-study regression approach on 857 US firms between 2010 and 2019. We find robust evidence that firms with high carbon intensity are significantly more affected by policy rate surprises. The sensitivity premium of brown firms remains significant when controlling for classic sources of MP heterogeneity, is persistent, and increases with climate awareness. Our results suggest that the market neutrality principle guiding the implementation of monetary policy could induce a bias toward brown firms. |
| Keywords: | Climate change, Transition risk, Carbon emissions, Monetary policy shocks, Risk premia. |
| JEL: | E44 O13 Q49 Q54 G12 G15 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:grt:bdxewp:2023-08&r=ene |
| By: | Sorroche-del-Rey, Yolanda; Piedra-Muñoz, Laura; Galdeano-Gómez, Emilio |
| Abstract: | In recent years, a great deal of research has analyzed the impact of trade openness on the environment, with the aim of determining whether internationalization contributes to the improvement of environmental performance or, on the contrary, hinders the achievement of sustainable development. The objective of the present work is to conduct a systematic literature review on the interrelationship between international trade and environmental performance (EP) at the micro and macroeconomic levels, analyzing the existent theoretical approaches and the EP indicators utilized in practice. The most prominent theories found are firm heterogeneity, at a microeconomic level, and the pollution haven/halo hypotheses, at a macroeconomic level. Also, the EP indicators have been classified according to five dimensions: energy consumption, resource consumption, emissions, risk potential and toxic potential, of which pollutant gas emissions and energy consumption are the most used. The results obtained show evidence of the interrelationship mentioned from the perspective of the different theories. In addition, this analysis helps to identify several gaps in this line of study. |
| Keywords: | international trade, environmental performance, sustainable development, indicators, theoretical framework, systematic literature review. |
| JEL: | D21 F13 F18 F41 Q01 Q56 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119918&r=ene |
| By: | González-Martínez, Jesús Jonatan; Venegas-Martínez, Francisco; Martínez-Palacios, María Teresa Verónica |
| Abstract: | Este trabajo tiene como objetivo investigar si las industrias de petróleo, gas natural y los mercados accionarios de los países que conforman América del Norte impactan el crecimiento económico de de la región. Para ello se especifican diversos modelos econométricos, VAR para efectos de corto plazo, test de cointegración para efectos de largo plazo, causalidad de granger y análisis de impulso respuesta. Los hallazgos empíricos muestran evidencia de que las industrias de petróleo y gas, así como los mercados bursátiles impactan positiva y significativamente la tasa de crecimiento de los todos los países que conforman el Tratado de libre comercio de América del Norte. // This work aims to investigate whether the oil, natural gas industries, and stock markets of the countries that make up North America impact the economic growth of the region. For this, various econometric models are specified, VAR for short-term effects, cointegration test for long-term effects, Granger causality and impulse response analysis. Empirical findings show evidence that the oil and gas industries, as well as stock markets, positively and significantly impact the growth rate of all countries that make up the North American Free Trade Agreement. |
| Keywords: | crecimiento económico, petróleo, gas natural, mercado accionario, sector energético, América del Norte // economic growth, oil, natural gas, stock market, energy sector, North America. |
| JEL: | F43 |
| Date: | 2024–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120129&r=ene |
| By: | Jonah J. Allen (Department of Economics and Business, Colorado School of Mines) |
| Abstract: | This study examines the efficacy and implications of state-level anti-Environmental, Social, and Governance (ESG) policies by investigating the impact of Texas's anti-ESG policy on oil and gas (O&G) drilling activity through a difference-in-regression-discontinuity design comparing the Texas and New Mexico Permian. I find that the policy had no statistically significant effect on new drilling activity in the eight months after implementation; this is consistent across several robustness checks. Results are also not economically significant, other than in a few robustness checks. This suggests that banks did not respond to the policy by adapting short-term lending behavior, which is one pathway through which to signal to the regulator that the institution is not boycotting energy companies. Short-term lending has been subject to industry-wide changes in recent years and is particularly relevant to regulators seeking to protect O&G investment within state borders. This paper contributes to the nascent literature on anti-ESG policies in the United States. |
| Keywords: | ESG policies, anti-ESG, Oil and Gas, Permian Basin, Reserve-based lending |
| JEL: | L71 Q38 G18 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:mns:wpaper:wp202401&r=ene |
| By: | Osama A. Marzouk |
| Abstract: | Since the start of its national renaissance in 1970, the Sultanate of Oman (Oman) has gone over a major development in several areas, such as education, infrastructure, and urbanization. This has been powered by the revenues from exporting crude oil and natural gas, which together form the skeleton of the country's economy. In the second half of 2014, the oil prices declined strongly to about 50% of its price. This was followed by another moderate decline in the second half of 2015 and the beginning of 2016, leaving the barrel price at a low level below 30 US$ in January 2016 (as compared to above 110 US$ in June 2014). This drop had direct impacts on the economy of Oman, manifested in a large budget deficit, reduced governmental expenditure, reduced or cancelled subsidy of fuels and electricity, increase in the water tariff, and decline in deposits in banks. The country is coping with this through its 9th five-year plan (2016-2020), which adopts a strategy of diversifying the income and relying less on the traditional oil and gas sector. The country has also taken measures to facilitate private businesses. This article sheds light on these topics as well as miscellaneous data about Oman. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.13688&r=ene |
| By: | Fischer, Lion; Rapp, Marc Steffen; Zahner, Johannes |
| Abstract: | In December 2017, during the One Planet Summit in Paris, a group of eight central banks and supervisory authorities launched the "Network for Greening the Financial Sector" (NGFS) to address challenges and risks posed by climate change to the global financial system. Until 06/2023 an additional 69 central banks from all around the world have joined the network. We find that the propensity to join the network can be described as a function in the country's economic development (e.g., GDP per capita), national institutions (e.g., central bank independence), and performance of the central bank on its mandates (e.g., price stability and output gap). Using an event study design to examine consequences of network expansions in capital markets, we document that a difference portfolio that is long in clean energy stocks and short in fossil fuel stocks benefits from an enlargement of the NGFS. Overall, our results suggest that an increasing number of central banks and supervisory authorities are concerned about climate change and willing to go beyond their traditional objectives, and that the capital market believes they will do so. |
| Keywords: | Climate finance, green central bank policy, stock market reaction, sustainable finance |
| JEL: | E58 E61 G1 Q54 Q58 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:imfswp:281998&r=ene |
| By: | Prabhat Barnwal (Michigan State University); Nicholas Ryan (Yale University) |
| Abstract: | We study the fiscal health of state electricity distribution companies (discoms) in India and its bearing on the supply of electricity. India has, in a policy landmark, lately achieved near-universal household electrification, in large part through Central funding of infrastructure totaling Rs. 5 lakh crores as well as state bailouts totaling Rs. 35 lakh crores since 2001 (both figures in 2022 INR, totaling roughly USD 500 billion). Central and state transfers enable state distribution companies to run ongoing losses, which, in turn, threaten the supply of energy to agriculture and rural households. We find that: (i) the fiscal health of state distribution companies remains concerning, with declared losses of only 2% in 2021-22, far lower than recent trends, rising to 22% when excluding central and state government subsidies; (ii) the proportional losses of the distribution companies, excluding subsidies from the central and state governments, have declined 6 percentage points (on a base of 28%) in the last decade, but their aggregate yearly loss has increased by Rs. 77, 000 Cr (43%) due to growth in subsidized consumption; (iii) most gains in reported discom finances are due to the increasing formalization of states bringing electricity subsidies onto their budgets; (iv) states that drew funds under the most recent Central bailout program (the UDAY scheme) have seen smaller gains in efficiency and reductions in losses in recent years than states that did not participate in the bailout. We conclude by discussing the promise of delivering subsidies via Direct Benefit Transfers for Electricity (DBTE) to give discoms incentives for both fiscal independence and more reliable supply and service. |
| Keywords: | Public sector reform, Electricity, Government bailouts, Direct Benefit Transfer. |
| JEL: | L94 Q48 H83 |
| Date: | 2024–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:nca:ncaerw:150&r=ene |
| By: | Erwan Pierre; Lorenz Schneider (EM - emlyon business school) |
| Abstract: | Auctions of transmission rights between neighbouring countries are becoming increasingly active. In a parallel development, the introduction of market coupling frequently leads to smaller price differences between such countries. Indeed, if two countries are completely coupled, the price of a given hour of electricity will be identical in each country, resulting in a price spread of zero. Clearly, it is important to take this market coupling into account when evaluating transmission rights, as neglecting it would lead to a significant overvaluation of these rights. In order to address this issue, we introduce a general regime-switching mechanism that can be applied to many models in the literature. In particular, we focus on extending the model proposed by Cartea and González-Pedraz (2012). We describe the model estimation procedure in detail, and compare model and market prices of European spread options. We observe a dramatic paradigm shift in our data set at the end of the summer of 2021, and show that this shift has a strong effect on the model parameters. We also see that the reliable pricing and trading of spread options becomes problematic in such a volatile and uncertain market environment. |
| Keywords: | Electricity markets, Interconnectors, Market coupling, Spread options, Regime switching |
| Date: | 2024–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04411166&r=ene |
| By: | Bats, Joost Victor; Bua, Giovanna; Kapp, Daniel |
| Abstract: | The European Union plays a prominent role in climate regulations initiatives, this commitment likely implies that climate risk premiums look different in Europe compared to the rest of the world. This paper examines the pricing implications of climate risks in euro area corporate bond markets, focusing on physical and transition risk. Using climate news as a gauge for systematic climate risk, we find a significant pricing effect of physical risk in long-term bonds, with investors demanding higher returns on bonds exposed to physical risk shocks. The estimated physical risk premium is 34 basis points, indicating increased awareness and hedging demand after the Paris Agreement. Transition risk premiums are smaller and less significant, reflecting the ongoing transition to a low-carbon economy. Our findings contribute to understanding climate risk pricing in the European bond markets, highlighting the importance of physical risk and the evolving nature of investor demand for climate-resilient assets. JEL Classification: G12, G14, G28, Q51, Q54 |
| Keywords: | climate physical risk, climate transition risk, corporate bonds, intertemporal hedging demand, news index |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20242899&r=ene |
| By: | Dimitrakopoulou, Lydia; Genakos, Christos; Kampouris, Themistoklis; Papadokonstantaki, Stella |
| Abstract: | We examine how competition affects VAT pass-through in isolated oligopolistic markets as defined by the Greek islands. Using daily gasoline prices and a difference-in-differences methodology, we investigate how changes in VAT rates are passed through to consumers in islands with different market structure. We show that pass-through increases with competition, going from 50% in monopoly to around 80% in more competitive markets, but remains incomplete. We also discover a rapid rate of adjustment for VAT changes, as well as a positive relationship between competition and the rate of price adjustment. Finally, we document higher pass-through for products with more inelastic demand. |
| Keywords: | pass-through; tax incidence; gasoline; value added tax (VAT); market structure; competition; Greek islands |
| JEL: | H22 L1 |
| Date: | 2023–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:121321&r=ene |
| By: | Elleby, Christian; Dominguez, Ignacio Pérez; Genovese, Giampiero; Thompson, Wyatt; Adenäuer, Marcel; Gay, Hubertus |
| Keywords: | Agribusiness, Agricultural Finance, International Relations/Trade |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iats22:339449&r=ene |
| By: | Blagica Petreski; Marjan Petreski |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:ftm:policy:2023-10/48&r=ene |
| By: | Ben Gilbert (Department of Economics and Business, Colorado School of Mines); Hannah Gagarin (Department of Economics and Business, Colorado School of Mines); Ben Hoen (Lawrence Berkeley National Laboratory) |
| Abstract: | The goals of this paper are twofold: we first aim to quantify the impact of US wind development on local communities in terms of earnings and employment for workers and establishments. Second, we examine and then illustrate how the use of data aggregated to arbitrary spatial units (i.e., counties) can lead to biased economic impact estimates. We accomplish these goals using disaggregated, geocoded data on the universe of workers and establishments from 23 states who participated in their state’s unemployment insurance program. We compare estimates of regional economic spillovers from aggregating this data in two ways. First, we aggregate to increasing 20-mile rings around the location of wind projects (and matched control locations) and estimate impacts in a difference-in-differences framework. Second, we aggregate to the county level and then use county centroids to further aggregate county-level data to increasing 20-mile rings before re-estimating the same specifications. We find that the average wind project causes employment at establishments within 20 miles to increase by between 3.5 to 4.5 percent, whereas we find no discernible average effect on employment at greater distances, or for earnings at any distance. We find that the employment effect persists for as many as four years after the project arrives. Using worker data, we find employment and earnings effects of similar aggregate magnitude, but spread across further distances from the wind project. This is consistent with wind development spurring economic activity at nearby establishments, which improves employment prospects for workers who may commute to those establishments. Results using county-aggregated data are much smaller and mostly statistically insignificant. This has implications not just for policymakers, but for researchers who aim to continue to understand how burgeoning energy sectors such as wind impact local areas. |
| Keywords: | wind power, employment, income, geographic spillovers |
| JEL: | J2 J3 Q4 R12 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:mns:wpaper:wp202301&r=ene |
| By: | Anayi, Lena; Bloom, Nicholas; Bunn, Philip; Mizen, Paul; Thwaites, Gregory Douglas; Yotzov, Ivan |
| Abstract: | We use data from a large panel survey of UK firms to analyze the economic drivers of price setting since the start of the Covid pandemic. Inflation responded asymmetrically to movements in demand. This helps to explain why inflation did not fall much during the negative initial pandemic demand shock. Energy prices and shortages of labor and materials account for most of the rise during the rebound. Inflation rates across firms have become more dispersed and skewed since the start of the pandemic. We find that average price inflation is positively correlated with the dispersion and skewness of the distribution. Finally, we also introduce a novel measure of subjective inflation uncertainty within firms and show how this has increased during the pandemic, continuing to rise in 2022 even as sales uncertainty dropped back. |
| Keywords: | price setting; energy prices; labour shortages; Covid-19; coronavirus |
| JEL: | N0 |
| Date: | 2023–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:121323&r=ene |
| By: | Jonathan M. Colmer; Suvy Qin; John L. Voorheis; Reed Walker |
| Abstract: | This paper uses administrative tax records linked to Census demographic data and high-resolution measures of fine small particulate (PM2.5) exposure to study the evolution of the Black-White pollution exposure gap over the past 40 years. In doing so, we focus on the various ways in which income may have contributed to these changes using a statistical decomposition. We decompose the overall change in the Black-White PM2.5 exposure gap into (1) components that stem from rank-preserving compression in the overall pollution distribution and (2) changes that stem from a reordering of Black and White households within the pollution distribution. We find a significant narrowing of the Black-White PM2.5 exposure gap over this time period that is overwhelmingly driven by rank-preserving changes rather than positional changes. However, the relative positions of Black and White households at the upper end of the pollution distribution have meaningfully shifted in the most recent years. |
| JEL: | H0 H4 Q5 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32060&r=ene |
| By: | Ankinée KIRAKOZIAN; Raphaël CHIAPPINI; Nabila ARFAOUI |
| Abstract: | The central issue of this paper is to understand how policy makers can design instruments to create incentives towards green mobility. With this in mind, we ran a field experiment in 89 French firms (both public and private organizations) over 54 weeks to investigate how nudges and financial incentives can decrease the use of polluting vehicles by employees during their commute to work each week. Based on data including 845 employees, our study highlights several results related to three important attributes of policy design: the type of instrument, the timing and the targeting. We find that individuals exposed to the nudges “Moral Appeal”, “Risk of Loss”, and a combination of these two, significantly decrease their use of polluting vehicles in their daily commute to work. We find no treatment effect, either for the other nudges or for the impact of financial incentives. Our findings also reveal a persistent effect in time of the three successful nudges on the transport behavior of employees. Using a causal forest method to evaluate the heterogeneous treatment effects of these three nudges, we demonstrate that distance from work and pro-environmental behavior are the strongest predictors of treatment effects. We find that the further the employees reside from their workplace, the lower the treatment effect estimates. It suggests that selective targeting can improve the efficiency of the nudging policy. |
| Keywords: | Nudge, field experiment, green mobility, transport mode. |
| JEL: | C93 D91 Q5 R4 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:grt:bdxewp:2023-09&r=ene |
| By: | Herv\'e Bercegol; Paul E. Brockway |
| Abstract: | The Ward et al. (2016) Plos-One paper is an important, heavily-cited paper in the decoupling literature. The authors present evidence of 1990-2015 growth in material and energy consumption and GDP at a world level, and for selected countries. They find only relative decoupling has occurred, leading to their central claim that future absolute decoupling is implausible. However, the authors have made two key errors in their collected data: GDP data is in current prices which includes inflation, and their global material use data is the total mass of fossil energy materials. Strictly, GDP data should be in constant prices to allow for its comparison over time, and material inputs to an economy should be the sum of mineral raw materials. Amending for these errors, we find much smaller levels of energy-GDP relative decoupling, and no materials-GDP decoupling at all at a global level. We check these new results by adding data for 1900-1990 to provide a longer time series, and find consistently low (and even no) levels of global relative decoupling of material use. The central claim for materials over the implausibility of future absolute decoupling therefore not only remains valid but is reinforced by the corrected datasets. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.12100&r=ene |
| By: | Domingo, Sonny N.; Manejar, Arvie Joy A. |
| Abstract: | The 28th United Nations Conference of Parties (COP 28) in November 2023 started with the manifestation of concrete commitments from developed countries and ended with a progressive promise to complete the establishment of a climate change loss and damage fund, sustain and administer country contributions, and continue to work toward fossil fuel reduction and disaster risk reduction and management. The move contributes toward an equitable burden distribution between the highest GHG emitters in the global community and the most affected nations by climate-related disasters. This is important as pieces of evidence show that developing countries like the Philippines are disproportionately more affected by climate change-related disaster events. This study assessed the particulars of the climate and disaster-related loss and damage accounting in the Philippines and looked into ways to better the country’s position to tap the newly established Loss and Damage Fund. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph. |
| Keywords: | climate change impact;loss and damage accounting;disaster risk reduction and management;DRRM |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2023-47&r=ene |
| By: | Nicoletta Corrocher; Simone Maria Grabner; Andrea Morrison |
| Abstract: | To promote a more environmentally sustainable economy, countries need to broaden their innovation activities to include green technologies. In this process, the increasing global interconnectedness and internationalisation of innovative activities underlines the growing importance of external knowledge linkages. This paper examines how different categories of countries - technological leaders, catching-up countries and follower countries - diversify into green technologies by exploiting different types of external linkages through co-inventions with international partners. The dataset covers 49 countries over a period of 40 years. The results show that it is complementary linkages, rather than external linkages alone, that facilitate related diversification in the green sector. Moreover, while complementary linkages have a significant impact on the ability of catching-up countries and followers to diversify into less complex and widely diffused green technologies, the diversification pattern of leaders is more oriented towards complex technologies in their early stages. Therefore, green technology development policies should actively promote international cooperation as it has the potential to catalyse green catching-up and foster sustainable growth. |
| Keywords: | technological diversification, green technologies, co-inventor linkages, relatedness, catching-up |
| JEL: | O33 Q55 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2404&r=ene |
| By: | Chakraborty, Lekha (National Institute of Public Finance and Policy); Kaur, Amandeep (National Institute of Public Finance and Policy); Mohanty, Ranjan Kumar (National Institute of Public Finance and Policy); Rangan, Divy (National Institute of Public Finance and Policy) |
| Abstract: | Against the backdrop of COP28, this paper investigates the impact of intergovernmental fiscal transfers (IGFT) on climate change commitments in India. Within the analytical framework of environmental federalism, we tested the evidence for Environmental Kuznets Curve (EKC) using a panel model covering 27 Indian States from 2003 to 2020. The results suggest a positive and significant relationship between IGFT and the net forest cover (NFC) across Indian States. The analysis also suggests an inverse-U relationship between Gross State Domestic Product (GSDP) and the environmental quality, indicating a potential Environmental Kuznets Curve (EKC) for India. The findings substantiate the fiscal policy impacts for climate change commitments within the fiscal federal frameworks of India, and the significance of IGFT in increasing the forest cover in India. This has policy implications for the sixteenth Finance Commission of India in integrating a climate change related criterion in the tax transfer formula in a sustainable manner. |
| Keywords: | Environmental Federalism ; Environmental Kuznets Curve ; Intergovernmental Fiscal Transfers ; Government Expenditures |
| JEL: | E6 H5 H7 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:npf:wpaper:24/406&r=ene |
| By: | Florian Heeb (Massachusetts Institute of Technology (MIT) - Sloan School of Management); Julian F Kölbel (University of St. Gallen - School of Finance; MIT Sloan; Swiss Finance Institute) |
| Abstract: | We report results from a pre-registered field experiment about the impact of index provider engagement on corporate climate policy. A randomly chosen group of 300 out of 1227 international companies received a letter from an index provider, encouraging the company to commit to setting a science-based climate target to remain included in its climate transition benchmark indices. After one year, we observed a significant effect: 21.0% of treated companies have committed, vs. 15.7% in the control group. This suggests that engagement by financial institutions can affect corporate policies when a feasible request is combined with a credible threat of exit. |
| Keywords: | Shareholder Engagement, Field Experiment, Climate, ESG, Activism |
| JEL: | D22 D62 G23 G34 M14 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2404&r=ene |
| By: | Martin Stuermer (International Monetary Fund, Research Department); Maxwell Fleming (Department of Economics and Business, Colorado School of Mines); Ian Lange (Department of Economics and Business, Colorado School of Mines); Sayeh Shojaeinia (Department of Economics and Business, Colorado School of Mines) |
| Abstract: | Growth models with resources and environmental externalities typically assume that planet Earth is a closed economy. However, private firms like Blue Origin and SpaceX have reduced the cost of rocket launches by a factor of 20 over the last decade. What if these costs continue to decline, making mining from asteroids or the moon feasible? What would be the implications for economic growth and the environment? This paper provides stylized facts about cost trends, geology and the environmental impact of mining on Earth and potentially in space. We extend a neoclassical growth model to investigate the transition from mining on Earth to space. We find that such a transition could potentially allow for continued growth of metal use, while limiting environmental and social costs on Earth. Acknowledging the high uncertainty around the topic, our paper provides a starting point for research on how space mining could contribute to sustainable growth on Earth. |
| Keywords: | space economics, metals, mining, growth, sustainability |
| JEL: | Q32 E22 Q02 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:mns:wpaper:wp202302&r=ene |
| By: | Blanc, Corin |
| Abstract: | Based on the International Social Survey Programme (ISSP) of 2020, we are analyzing the relationship between political positioning, trust, and attitudes towards environmental policies. Our study reveals that voters of far-right parties in France, Europe, and the United States are less concerned about environmental issues compared to others. Their environmental concerns also differ in nature: they focus on local issues whose consequences directly affect their daily lives. Furthermore, these voters are generally opposed to any binding environmental policy, regardless of its nature. They also prefer punitive environmental policies over positive incentives for behavioral change, unlike centrist voters. We also confirm a previously known result: far-right voters express lower trust than others towards the rest of society and institutions in general. However, this distrust appears to hinder their adherence to environmentally friendly policies and attitudes. |
| Keywords: | Environnement, Vote, Wellbeing, far-right |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:notobe:2315b&r=ene |
| By: | Hannes Wallimann |
| Abstract: | Measures to reduce transport-related greenhouse gas emissions are of great importance to policy-makers. A recent example is the nationwide KlimaTicket in Austria, a country with a relatively high share of transport-related emissions. The cheap yearly season ticket introduced in October 2021 allows unlimited access to Austria's public transport network. Using the synthetic control and synthetic difference-in-differences methods, I assess the causal effect of this policy on public transport demand by constructing a data-driven counterfactual out of European railway companies to mimic the number of passengers of the Austrian Federal Railways without the KlimaTicket. The results indicate public transport demand grew slightly faster in Austria, i.e., 3.3 or 6.8 percentage points, depending on the method, than it would have in the absence of the KlimaTicket. However, the growth effect after the COVID-19 pandemic appears only statistically significant when applying the synthetic control method, and the positive effect on public transport demand growth disappears in 2022. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.06835&r=ene |
| By: | Enisse Kharroubi; Enisse Kharroubi and Frank Smets |
| Abstract: | Following evidence on the role of firm profits in the current inflation surge, we develop a New Keynesian model where profit-driven inflation stems from the presence of reservation profits on the supply side. We use this framework to investigate the positive and normative implications of cost push shocks, focusing on energy price shocks. We first show that these shocks lead to inefficiently large supply contractions and thereby inefficiently large (profit-driven) inflation, as firms which retrench do not internalise the social costs of doing so. Second, we show that optimal monetary policy follows a pecking order. It first aims at shielding the supply side from the fallout of the shock, thereby undoing the negative retrenchment externality. It then splits the burden of the shock between supply and demand, when insulating the supply side is too costly. Finally, when the energy price shock is very large, monetary policy loses traction. Budget-neutral fiscal interventions, e.g. redistribution from high- to low-income households and/or from high- to low-profit firms, can then restore monetary policy effectiveness. |
| Keywords: | energy price shocks, price stickiness, reservation profits, optimal monetary policy, corporate tax |
| JEL: | D21 E23 E31 E32 E52 E62 H24 H25 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1167&r=ene |
| By: | Jozef Barunik; Lukas Vacha |
| Abstract: | Time variation and persistence are crucial properties of volatility that are often studied separately in oil-based volatility forecasting models. Here, we propose a novel approach that allows shocks with heterogeneous persistence to vary smoothly over time, and thus model the two together. We argue that this is important because such dynamics arise naturally from the dynamic nature of shocks in oil-based commodities. We identify such dynamics from the data using localised regressions and build a model that significantly improves volatility forecasts. Such forecasting models, based on a rich persistence structure that varies smoothly over time, outperform state-of-the-art benchmark models and are particularly useful for forecasting over longer horizons. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.01354&r=ene |
| By: | Erturk-Mintcheva Aygun (Plovdiv University "Paisii Hilendarski"); Tchipev Plamen (Plovdiv University "Paisii Hilendarski", Economic Research Institute at BAS) |
| Abstract: | ПОЛИТИКИ НА „ПОБУТВАНЕ" – РЕШЕНИЯ ОТ ПОВЕДЕН-ЧЕСКИЯ ИКОНОМИКС В УСЛОВИЯ НА НАСЛАГВАЩИ СЕ КРИЗИ / "NUDGE" POLICIES - SOLUTIONS OF BEHAVIORAL ECONOMICS IN CONDITIONS OF OVERLAPPING CRISES Развиващите се негативни икономически и социални процеси - климатични промени, енергийна криза, висока инфлация, влошена демография, кризи в образованието, здравеопазването и пр. изискват адекватни решения от икономическата теория. Доминантната нео-класическа парадигма се фокусира основно върху решения за икономическата политика, но те биха могли да бъдат допълвани успешно с друг тип решения от алтернативните/хетеродоксални школи. Поведенческият икономикс, развива идеята за „политики на побутване" – като насърчаване на „зелено поведение", поощряване на енергийна ефективност и рециклиране, насърчаване на спестяване чрез даване на автоматични опции по подразбиране и системи на предварителна ангажираност, използване на социалното влияние в образователната среда. Настоящият доклад си поставя за задача да разгледа възможността за приложение на един потенциален набор от такива политики в условията на наслагващи се кризи в България. Ключови думи: |
| Abstract: | The growing negative economic and social processes - climate change, energy crisis, high inflation, worsening demographics, crises in education, health care, etc. require adequate solutions from economic theory. The dominant neo-classical paradigm focuses mainly on economic policy decisions, but these could be successfully complemented by other types of decisions from alternative/heterodox schools. Behavioral economics develops the idea of "nudge" policies – such as encouraging „green" behavior, stimulating energy efficiency and recycling, promoting savings by giving automatic defaults and pre-commitment systems, and using social influence in the educational environment. This paper aims to examine the possibility of applying a potential set of such policies in the conditions of overlapping crises in Bulgaria. Keywords: JEL: D23, D91, E71, G41, H39, F12 |
| Keywords: | Nudge, Behavior economics |
| Date: | 2022–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04383724&r=ene |
| By: | Santeramo, Fabio; Ferrari, Emanuele; Toreti, Andrea |
| Keywords: | Agribusiness, Agricultural Finance, Environmental Economics and Policy |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iats22:339436&r=ene |