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on Energy Economics |
| By: | Kenichi Kawasaki (National Graduate Institute for Policy Studies, Tokyo, Japan) |
| Abstract: | Global greenhouse gas (GHG) emissions have continued to increase. The targets of GHG emissions reduction under the Paris Agreement have been far from achievement. Carbon pricing has been implemented but it is limited, covering less than a quarter of global GHG emissions. This paper presents an overview of recent developments in carbon dioxide (CO2) emissions and investigates quantitatively the relative significance of the impact of carbon pricing, using a Computable General Equilibrium (CGE) model. The results of model simulations suggest that the impact of carbon pricing in the European Union (EU) member states and the Organisation for Economic Co-operation and Development (OECD) countries would be limited compared with that of a global initiative. Carbon tax (once introduced in a strong enough form worldwide, in particular if it included developing countries) would be effective for substantially reducing global CO2 emissions. However, the adverse economic impact of carbon pricing would be serious and much larger than the magnitude of possible carbon tax revenue. On the other hand, the impact of a carbon border adjustment mechanism (CBAM) would be minor compared with that of a carbon tax, regardless of the coverage of countries. Trade effects of a CBAM could more or less be offset by trade liberalization. The economic and trade impact of carbon pricing would vary by region as well as by sector. Climate and trade policies would need to be well designed and based on sound quantitative analysis. |
| Keywords: | carbon tax, carbon border adjustment mechanism (CBAM), European Union (EU), Computable General Equilibrium (CGE) model |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:ngi:dpaper:22-13&r= |
| By: | Jenner, Edward |
| Abstract: | Use of nuclear energy is likely to grow in the coming decades, in part to combat climate change. Increased deployment of nuclear energy will likely include use of advanced small reactors, which can facilitate decarbonization, increase nuclear safety, supplement gaps in renewable energy production, provide energy to low-demand communities, help desalinate water, and increase energy security. But there are also risks. Nuclear power, such as that produced by advanced small reactors, put nuclear material in more locations and use higher enrichment fuel for some reactor designs, both of which are security concerns. Moreover, while China and Russia already have operating advanced small reactors and are exploring using reactors aboard floating nuclear power plants, the U.S. will likely not have an operational advanced small reactor until the late 2020s. This brief explores the benefits and risks of advanced small nuclear reactors and describes strategies to mitigate these risks. The bottom line: advanced small nuclear reactors are a beneficial tool for reducing carbon emissions. But their safe deployment and use requires increasing nuclear security expertise and assessing both nuclear fuel and advanced small reactor needs. Moreover, nuclear newcomers need support to adopt nuclear norms and develop domestic nuclear regulatory bodies to lower the potential risks of nuclear energy while maximizing the potential benefits. |
| Keywords: | Social and Behavioral Sciences, climate change, nuclear energy |
| Date: | 2022–09–08 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:globco:qt7w0890jn&r= |
| By: | Szendrei, Tibor; Eross, Andrea; Mohammed, Mustapha; Ersoy, Erkal |
| Abstract: | As climate change becomes an ever-present problem, efforts have been made to make energy generation greener. One key tool to encourage renewable energy generation are feed-in-tariff policies, which have been employed in various countries across Europe. Using quarterly data, this study investigates the impact these policies had on the greening of the economy, on carbon emissions and on macroeconomic factors in European countries for the period 2011-2021. To achieve this, an energy augmented production function is postulated and estimated using a Bayesian Global VAR framework. We find a large degree of heterogeneity in the impact of feed-in-tariffs have on renewable energy penetration across the countries. Furthermore, negative externalities of simultaneous employment of green finance is found, highlighting that some coordination might be necessary to maximise the impact of such policies in achieving the goal of a greener energy profile. |
| Keywords: | Bayesian Global VAR, Energy policy, Feed-in-tariff, GIRF, renewable energy, spillover effects |
| JEL: | Q43 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:hwuaef:299236&r= |
| By: | Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This article discusses the proposed introduction of a two-part tariff in Vietnam's electricity markets. A two-part tariff in the electricity sector refers to a billing mechanism where consumers are charged based on two distinct components: capacity and consumption. The capacity charge is determined by the maximum power capacity (in kilowatts, kW) that a consumer can draw from the system at any given moment. This is akin to paying a rental fee for accessing power up to a certain limit. The consumption charge, on the other hand, is based on the actual amount of electricity used by the consumer over a period, measured in kilowatt-hours (kWh). It examines how a two-part tariff, including capacity payments, could be applied to Vietnam's wholesale electricity market to support investment in dispatchable generation like gas power plants. These plants are needed to complement the growing share of variable renewable energy sources like wind and solar. The article will draw on international experiences, such as the recent introduction of capacity payments for coal power plants in China, to explore the potential benefits and design considerations for such a mechanism. |
| Keywords: | capacity payments, Vietnam, electricity market |
| Date: | 2024–05–20 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04607117&r= |
| By: | H. Qi (Audencia Business School); C. K. Woo; K. H. Cao; J. Zarnikau; R. Li |
| Abstract: | Accurate estimates of the price responsiveness of residential, commercial, and industrial electricity demands are essential for energy policy modelling, integrated resource planning, and determining a competitive wholesale electricity market's generation levels, prices, and capacity investments. Hence, we estimate the own-price elasticities of solar and wind capacity demands of a load serving entity (LSE) that provides retail electricity service, thereby answering two interrelated research questions: (1) does solar capacity demand far exceed wind capacity demand? and (2) are solar and wind capacity demands price-elastic? Inspired by the theory of input demand under input price uncertainty, our innovative methodology integrates (a) wholesale spot energy price forecasts by time of day; (b) pseudo data found by minimizing a LSE's annual risk-adjusted budget for procuring solar and wind capacities; and (c) econometric analysis of (b) to estimate the extent of substitutability between solar and wind capacities and the own-price elasticities of solar and wind capacity demands. Using Texas as an illustrative example, we find that when solar and wind power purchase agreements have similar energy prices, solar capacity demand is approximately four times wind capacity demand. Further, the own-price elasticity estimates are -5.34 for solar capacity demand and -5.65 for wind capacity demand. As a result, solar and wind capacity demands tend to substantially grow (shrink) in response to declining (rising) solar and wind energy prices. This lends support to proposals to raise solar and wind energy prices for mitigating the adverse effects of large-scale variable renewable energy development on an electric grid's efficient operation and system reliability. However, adopting such proposals also slows the grid's pace of decarbonization, thus underscoring the policy and regulatory challenges in the quest for a clean and sustainable electricity future. Hence, our policy recommendation of price managing solar and wind capacity demands is a topic of policy debate that deserves the attention of an electric grid's stakeholders. |
| Keywords: | Price responsiveness solar capacity demand wind capacity demand load serving entity optimal capacity procurement Texas, Price responsiveness, solar capacity demand, wind capacity demand, load serving entity, optimal capacity procurement, Texas, Price responsiveness, solar capacity demand, wind capacity demand, load serving entity, optimal capacity procurement, Texas |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04597188&r= |
| By: | NAKANISHI Tasuku |
| Abstract: | This paper provides an overview of recent trends in the South African government’s energy policy, from the perspective of the development of strategies and legal frameworks, with a focus on three topics: carbon neutrality, power, and hydrogen. Firstly, the paper describes policy frameworks with a view to achieve the net-zero GHG emission commitment under the Paris Agreement, including support from overseas donors based on the Just Energy Transition Partnership (JETP). Secondly, it describes policy efforts to improve the electricity supply, including accelerated introduction of renewable energy through government procurement and liberalization of the electricity market, which have been taken against the backdrop of the deterioration of the power supply. Thirdly, it describes various measures to promote the development of the value-chain for the hydrogen industry, including R&D support measures for hydrogen-related technologies that have been promoted since the 2000s as well as support for commercialization of the hydrogen supply chain, such as the production, export and utilization of hydrogen. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rpdpjp:24006&r= |
| By: | Adolfsen, Jakob Feveile; Heissel, Malte; Manu, Ana-Simona; Vinci, Francesca |
| Abstract: | We investigate the impact of expectations about future climate policy on investment decisions of fossil fuel firms. Our empirical analysis reveals that firms with greater exposure to climate change significantly increased their investment in response to the Paris Agreement, in contrast to firms with lower exposure. Importantly, investment was directed towards traditional activities in the fossil fuel industry. By contrast, there are no indications that firms invested to transition towards renewable energy sources nor in making production less carbon-intensive. Our findings contribute to the ongoing discussion about the potential adverse effects of delays in the implementation of climate regulation. JEL Classification: G31, G38, Q58 |
| Keywords: | climate change, fossil fuels, green paradox, investment, policy |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20242945&r= |
| By: | Gert Brunekreeft; Dierk Bauknecht; Martin Palovic; Anna Pechan; Franziska Flachsbarth; Matthias Koch |
| Abstract: | Following liberalization and especially the energy transition, energy infrastructures are developing rapidly and significantly. Electricity networks are expanded to facilitate connection of renewable energies and new load such as heat pumps and electric mobility. On the one hand, gas networks are preparing for a phase-out and, on the other hand, for a possible repurposing for transportation of hydrogen. At a communal level, the heat supply moves towards heat pumps and district heating, both in turn affecting electricity and gas infrastructure. Lastly, infrastructure for hydrogen and CO2 for CCS are being developed. These developments affect various stages within the energy sectors. These simultaneous and interactive developments require coordination between and within the different energy infrastructure. Improving the coordination of energy infrastructures has been coined Whole System Approach (WSA). In this report, we examine approaches for applying the Whole System Approach. Often applying the WSA may require an explicit policy, possibly supported by state action. In this report, we call these policies measures to apply the WSA policy options. |
| Keywords: | electricity, network, regulation, whole-system approach |
| JEL: | L51 L94 L43 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bei:00bewp:0047&r= |
| By: | Shufan Zhang; Minda Ma; Nan Zhou; Jinyue Yan |
| Abstract: | Surpassing the two large emission sectors of transportation and industry, the building sector accounted for 34% and 37% of global energy consumption and carbon emissions in 2021, respectively. The building sector, the final piece to be addressed in the transition to net-zero carbon emissions, requires a comprehensive, multisectoral strategy for reducing emissions. Until now, the absence of data on global building floorspace has impeded the measurement of building carbon intensity (carbon emissions per floorspace) and the identification of ways to achieve carbon neutrality for buildings. For this study, we develop a global building stock model (GLOBUS) to fill that data gap. Our study's primary contribution lies in providing a dataset of global building stock turnover using scenarios that incorporate various levels of building renovation. By unifying the evaluation indicators, the dataset empowers building science researchers to perform comparative analyses based on floorspace. Specifically, the building stock dataset establishes a reference for measuring carbon emission intensity and decarbonization intensity of buildings within different countries. Further, we emphasize the sufficiency of existing buildings by incorporating building renovation into the model. Renovation can minimize the need to expand the building stock, thereby bolstering decarbonization of the building sector. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.04133&r= |
| By: | Bell, William Paul; Zheng, Xuemei |
| Abstract: | This reports aims to assist the Sino-Australian bilateral relationship adapt to meet China’s new policies and to facilitate a smoother transition to a low carbon future. Southwest University of Finance and Economics (SWUFE), Chengdu, China and the University of Queensland, Brisbane, Australia held a workshop at SWUFE to develop a guide to China’s low-carbon policies and their implications for the Sino-Australian energy trade and sectors. This report results from the workshop. Chapter 3 contains the guide to China’s low emission policies and discusses market-based experiments within China’s command-and-control electricity sector. Chapter 4 discuses Australia’s poorly implemented neoliberal polices within its energy sector and provides an informative market-based case study for China on what to avoid. Chapter 2 discusses the implications of Australia and China’s low emission policies. Chapter 5 discusses barriers to the transition to a low emissions economy. Climate change is one of the world’s major challenges. Others include increasing inequality and poor economic growth, creating a decline in inclusive growth. Declining inclusive growth and climate change are interrelated wicked problems. Their solution is technically and economically viable given appropriate investment but the absence of a price on carbon in Australia is a major obstacle to directing investment consistent with a low emissions future. Australia is transitioning from a mining to a more service orientated economy. However, Australia’s uncoordinated energy and climate change policy and poorly implemented neoliberal policies in the energy sector are undermining investment confidence and hindering both inclusive growth and the transition to a lower emissions economy. Energy and climate change policies need bring together to restore investment confidence within the electricity sector. The Integrated Systems Plan has gone some way to address this problem. Similarly, Australia’s uncoordinated growth and climate change policies are hindering inclusive growth and the transition to a lower emissions economy. Growth and climate change policies need bringing together to engender confidence and direct investment compatible with a low emissions future. Notably, Infrastructure Australia has gone some way to address this issue at the national level but the lack of transparency and independence in other jurisdictions undermines Infrastructure Australia’s effectiveness. Poor policy coordination is also hindering solutions to a host of other interrelated wicked problems. These wicked problems include massive increases in retail electricity prices, private school fees and private health insurance, the inability to undertake major tax reform, such as introducing a tax on sugar or carbon or introduce road user charges to replace the declining revenue from fuel excise duty. There is ample and sound evidence-based research to solve these wicked problems but there is an inability to enact policy in the interest of the electorate. The key findings of this report are four common barriers to enacting policy to solve these wicked problems. (1) Political donations present a conflict of interest. (2) Adversarial politics and political wedging reduce the ability to address complex problems. (3) There is an absence of academic economists informing the public debate to provide impartial advice. (4) Unrealistic models of the economy and human behaviour are misinforming policy. |
| Keywords: | Australia China wicked problems climate change electricity energy renewable energy inclusive growth inequality growth tax emissions generation coal electricity prices electricity market policies political donations political wedging adversarial politics economic growth donations neoclassical economics neoliberal policies government economic transition retail fossil fuel public good efficiency efficiency generators green investment green finance climate change risk housing boom mining boom zero net emissions |
| JEL: | H1 H2 O4 Q2 Q3 Q4 Q5 |
| Date: | 2108–02–16 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:84509&r= |
| By: | Erlend Hordvei; Sebastian Emil Hummelen; Marianne Petersen; Stian Backe; Pedro Crespo del Granado |
| Abstract: | The European Commission's new definition of green hydrogen provides clear guidelines and legal certainty for producers and consumers. However, the strict criteria for electrolysis production, requiring additionality, temporal correlation, and geographical correlation, could increase hydrogen costs, affecting its competitiveness as an energy carrier. This study examines the impact of these European regulations using a stochastic capacity expansion model for the European energy market up to 2048. We analyze how these requirements influence costs and investment decisions. Our results show that green hydrogen production requirements will raise system costs by 82 Euro billion from 2024 to 2048, driven mainly by a rapid transition from fossil fuels to renewable energy. The additionality requirement, which mandates the use of new renewable energy installations for electrolysis, emerges as the most expensive to comply with but also the most effective in accelerating the transition to renewable power, particularly before 2030. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.07149&r= |
| By: | Kai Lessmann (PIK Potsdam, MCC Berlin); Friedemann Gruner (MCC Berlin, PIK Potsdam, University of Potsdam); Matthias Kalkuhl (MCC Berlin, PIK Potsdam, University of Potsdam, CEPA); Ottmar Edenhofer (PIK Potsdam, MCC Berlin, TU Berlin) |
| Abstract: | We analyze how conventional emissions trading schemes (ETS) can be modified by introducing “clean-up certificates” to allow for a phase of net-negative emissions. Clean-up certificates bundle the permission to emit CO2 with the obligation for its removal. We show that demand for such certificates is determined by cost-saving technological progress, the discount rate and the length of the compliance period. Introducing extra clean-up certificates into an existing ETS reduces near-term carbon prices and mitigation efforts. In contrast, substituting ETS allowances with clean-up certificates reduces cumulative emissions without depressing carbon prices or mitigation in the near term. We calibrate our model to the EU ETS and identify reforms where simultaneously (i) ambition levels rise, (ii) climate damages fall, (iii) revenues from carbon prices rise and (iv) carbon prices and aggregate mitigation cost fall. For reducing climate damages, roughly half of the issued clean-up certificates should replace conventional ETS allowances. In the context of the EU ETS, a European Carbon Central Bank could manage the implementation of cleanup certificates and could serve as an enforcement mechanism. |
| Keywords: | carbon removal, carbon pricing, net-negative emissions, carbon debt |
| JEL: | H23 Q48 Q54 Q58 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:pot:cepadp:79&r= |
| By: | Laurent Millischer; Mr. Chenxu Fu; Ulrich Volz; John Beirne |
| Abstract: | This study investigates the relationship between the adoption of renewable energy and the sensitivity of inflation to changes in fossil energy prices across 69 countries over a 50-year period from 1973 to 2022. In the wake of recently increased oil and gas prices leading to a surge in inflation, the notion of a “divine coincidence” suggests that higher levels of renewable energy adoption, in addition to fighting climate change, could mitigate fossil fuel price-induced inflation volatility. Confirming the divine coincidence hypothesis could be an argument in favor of greening monetary policy. However, our empirical results are inconsistent with the hypothesis as we find no evidence that increased renewable energy adoption reduces the impact of fossil fuel price changes on energy inflation rates. This counter-intuitive result may be attributed to idiosyncratic national energy policies, potential threshold effects, or trade linkage spillovers. As the world continues transitioning towards a low-carbon economy, understanding the implications of this shift on inflation dynamics is crucial. |
| Keywords: | Inflation; Renewable Energy; Energy Prices; Oil Price; Monetary Policy |
| Date: | 2024–05–31 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/111&r= |
| By: | Seulki Chung |
| Abstract: | This paper presents a comparative analysis of univariate and multivariate GARCH-family models and machine learning algorithms in modeling and forecasting the volatility of major energy commodities: crude oil, gasoline, heating oil, and natural gas. It uses a comprehensive dataset incorporating financial, macroeconomic, and environmental variables to assess predictive performance and discusses volatility persistence and transmission across these commodities. Aspects of volatility persistence and transmission, traditionally examined by GARCH-class models, are jointly explored using the SHAP (Shapley Additive exPlanations) method. The findings reveal that machine learning models demonstrate superior out-of-sample forecasting performance compared to traditional GARCH models. Machine learning models tend to underpredict, while GARCH models tend to overpredict energy market volatility, suggesting a hybrid use of both types of models. There is volatility transmission from crude oil to the gasoline and heating oil markets. The volatility transmission in the natural gas market is less prevalent. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2405.19849&r= |
| By: | Yamaura, Koichi; Xu, Siyi; Sugiyama, Masahiro; Ju, Yiyi |
| Abstract: | For Japan, which has not operated nearly all of its nuclear power plants since 2011 and is dependent on thermal power generation, the introduction of renewable energy into homes is extremely important for the future formation of a sustainable society. However, the introduction of net zero energy house (ZEH) in detached houses, which account for 55% of all dwellings in Japan, has not progressed. To promote the introduction of ZEH, this study clarified the awareness of owners of detached houses regarding ZEH. We analyzed factors that influence such perception of solar photovoltaics (PV) technology using a 1000-sample online survey questionnaire. The survey was conducted in late January 2020 and included questions examining the public perception of solar installation and factors that were found to be important in previous research. We found that Japanese respondents who live in detached houses generally lack an understanding of renewables and that the level of interest in installing solar PV for the ZEH is low. We also found that awareness of renewables, such as knowing new energy policy and searching information on solar PV, is the critical factor of installing renewables. At the same time, most socio-demographic and neighborhood variables seem not to influence installing solar PV or other technologies for ZEH. This research will contribute to the Japanese government’s goal of strengthening education on renewable energy to promote ZEH. |
| Keywords: | Japan; Net zero energy houses; public perceptions; renewables; solar photovoltaics |
| JEL: | R14 J01 |
| Date: | 2024–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123711&r= |
| By: | Schenuit, Felix; Geden, Oliver |
| Abstract: | The outgoing European Commission has published its Communication on a 2040 climate target as its last major climate policy initiative before the 2024 European elections. By recommending a net emissions reduction target of 90 per cent compared to 1990 levels, it lays the strategic foundations for the forthcoming legislative period. At the same time, the policy initiative takes the opportunity to emphasise the growing importance of the interplay between industrial and climate policy, particularly with regard to carbon management technologies. Although reforming the EU's climate policy architecture for the years 2031 to 2040 will not begin until after the upcoming European elections, the Communication offers a glimpse into the political challenges that the German government will also have to face. |
| Keywords: | European climate policy, 2040 target, emissions reduction, carbon management technologies, greenhouse gas neutrality |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:297219&r= |
| By: | Güntner, Jochen; Reif, Magnus; Wolters, Maik H. |
| Abstract: | We use a structural VAR model to study the German natural gas market and investigate the impact of the 2022 Russian supply stop on the German economy. Combining conventional and narrative sign restrictions, we find that gas supply and demand shocks have large and persistent price effects, while output effects tend to be moderate. The 2022 natural gas price spike was driven by adverse supply shocks and positive storage demand shocks, as Germany filled its inventories before the winter. Counterfactual simulations of an embargo on natural gas imports from Russia indicate similar positive price and negative output effects compared to what we observe in the data. |
| Keywords: | Energy crisis, German natural gas market, narrative sign restrictions, natural gas price, structural scenario analysis, vector-autoregression |
| JEL: | E32 F51 Q41 Q43 Q48 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:imfswp:299246&r= |
| By: | L. Dary Beltran; Manuel Alejandro Cardenete; Ferran Sancho |
| Abstract: | In response to increased awareness of climate change, environmental sustainability has become a policy objective in Europe. Despite a decrease in greenhouse gas emissions, the European Commission deems current progress insufficient. Discussions on implementing environmental policies persist, with environmental taxation emerging as one of the most controversial yet potentially effective economic instruments for reducing emissions. However, the extent of its impact on the economy remains under debate, as improvements in welfare and environmental quality hinge on various economic, political, and public preference factors. Therefore, we analyse the economic impact of introducing an environmental tax to achieve emission reduction targets in Spain, while also testing two systems for recycling tax revenues. This allows us to assess the potential for a second dividend. We select Spain as the unit of analysis due to its minimal utilisation of environmental taxes, as it ranks among the European countries that are least active in combating climate change using taxation. |
| Keywords: | Environmental taxation; Emissions mitigation; Tax recycling. |
| JEL: | D57 E16 H21 H23 |
| Date: | 2024–06–19 |
| URL: | https://d.repec.org/n?u=RePEc:aub:autbar:975.24&r= |
| By: | Guy, Jonathan; Ratan, Ishana; Calacino, Anthony |
| Abstract: | Hydropower is the predominant renewable energy source globally and will play a key role in transitioning countries away from fossil fuels. Yet hydropower production is threatened by the effects of climate change, with significant implications for both energy security and the energy transition. In this policy brief, UC Berkeley PhD candidates Johnny Guy and Ishana Ratan, together with co-author Anthony Calacino, explore preliminary evidence from Brazil, Colombia, and Nepal that shows the multifaceted challenges hydropower-dependent nations face, and divergent responses governments have taken in response. They demonstrate why, in the face of increasing uncertainty, hydropower-dependent countries—already vulnerable to the impacts of seasonal disruptions to power supply—must develop robust strategies for load balancing and project risk management. |
| Keywords: | Social and Behavioral Sciences, hydropower, climate change, energy security, energy transition |
| Date: | 2023–12–04 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:globco:qt2ht4166s&r= |
| By: | Arvidsson, Niklas (KTH Royal Institute of Technology); Harahap, Fumi (KTH Royal Institute of Technology); Urban, Frauke (KTH Royal Institute of Technology); Nurdiawati , Anissa (KTH Royal Institute of Technology) |
| Abstract: | The expansion of digital payment services like retail Central Bank Digital Currencies (rCBDCs) built on innovative ICT infrastructure, notably datacenters, raises questions regarding potential environmental consequences due to electricity consumption. The design of such systems is critical for environmental impact as it scales with multiple actors and complex protocols as well as being influenced by server location and energy sources. In addition to other critical issues related to rCBDCs, understanding its environmental impact is therefore crucial for policymakers if they are to ensure sustainability. This study analyses one potential rCBDC, the Swedish e-krona project, by focusing on design choices and electricity consumption by comparing to existing retail payment services. Findings indicate that the energy use per transaction of the e-krona is comparable to that of card payments. There are, at the same time, significant differences in energy use depending on whether the design of the infrastructure for the e-krona is centralized or decentralized, where a centralized solution tend to be less energy consuming than a decentralized solution. The study has deployed a lifecycle perspective to explore energy consumption scenarios across various ledger infrastructures enabling a comprehensive assessment. |
| Keywords: | Energy Consumption; Climate Impact; Digital Payment; E-krona; rCBDC |
| JEL: | E58 O38 P44 Q58 |
| Date: | 2024–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:rbnkwp:0437&r= |
| By: | Llavador, Humberto; Roemer, John; Stoerk, Thomas |
| Abstract: | This paper analyzes a stylized model of the global economy in which countries must agree on the carbon budget while the decision on the level of carbon emissions is decentralized, with firms treating their emissions as a production input for which a uniform price is charged. The revenue accumulates in a global fund and is returned to global citizens according to national shares that are announced ex ante. The vector of country shares for the distribution of the carbon revenue assures that countries agree by unanimity on the carbon budget. The equilibrium exhibits the following desired features: (1) the global emissions level is set by unanimous agreement; (2) the demand to emit carbon is decentralized and, hence, there is no need to determine the distribution of permits; and (3) the equilibrium is Pareto efficient. We explore the implication of the model in an application based on RICE-2010. |
| Keywords: | carbon price; climate economics; climate policy; international environmental agreement |
| JEL: | Q54 Q56 Q58 F53 |
| Date: | 2022–12–13 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123736&r= |
| By: | Janja Brendel (The Chinese University of Hong Kong (CUHK)); Cai Chen (INSEAD); Thomas Keusch (INSEAD); Zacharias Sautner (University of Zurich and Swiss Finance Institute) |
| Abstract: | We examine whether and how Nongovernmental Organizations (NGOs) create value in the ESG space. Our laboratory are allegations by NGOs about misleading or false corporate E&S claims. NGOs target predominantly large, publicly visible firms in the consumer-facing or oil and gas industries. The NGO campaigns mostly accuse firms because of statements related to their impacts on climate change, consumer health, and waste handling. Stock markets react with significantly negative announcement returns to the NGO campaigns, especially when the alleged behavior is about financially material E&S dimensions. There is a substantial increase in media reporting in response to the NGO allegations. Firms facing E-related allegations subsequently disclose less environmental information and firms criticized for misleading climate-related claims reduce future carbon emissions. |
| Keywords: | NGOs, ESG, Sustainability, E&S-Washing, GHG Emissions |
| JEL: | L31 M40 M41 M48 Q50 Q51 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2435&r= |
| By: | Miquel Oliu-Barton; Juan Mejino Lopez |
| Abstract: | Despite major progress, the cost of air pollution is still huge for the European Union |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bre:wpaper:node_10096&r= |
| By: | Tom Schmitz; Italo Colantone; Gianmarco Ottaviano |
| Keywords: | Environmental Policy, Employment, Trade, Clean Air Act |
| JEL: | E24 Q50 Q53 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp24225&r= |
| By: | Arnone, Massimo; Leogrande, Angelo |
| Abstract: | In the following article, we analyse the relationships among banking stability, the efficiency of the energy system and climate risks at a global level. We present a detailed analysis of the literature relating to the relationship between the banking system and Environmental, Social and Governance-ESG models. In our research, we try to verify whether it is possible to achieve energy efficiency, stability of the banking system and reduction of climate risk together i.e. the “Green Trilemma”. The econometric analysis is conducted through the following models: Panel Data with Random Effects, Panel Data with Fixed Effects, Pooled Ordinary Least Squared and Weighted Least Squared-WLS. To estimate the variables we used World Bank data. The analysis shows that ESG growth is negatively associated with energy efficiency and positively associated with banking stability and climate risk. It therefore follows that the Green Trilemma hypothesis is rejected. Countries can only target banking stability and climate risk through ESG models. |
| Date: | 2024–06–08 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:4758h&r= |
| By: | Mohamed Wael Ben Khaled (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur); Nadia Ouertani Abaoub (UMA - Université de la Manouba [Tunisie]) |
| Abstract: | Digital platforms are becoming more important in transforming the energy industry and altering the way we produce, distribute, and use energy. This paper explores the role of energy platforms in the transition towards renewable energy. We highlight, through real-life examples, that these platforms foster a participatory approach, convert consumers into proactive participants, democratize energy production, and encourage innovation in areas such as storage, electric mobility, and renewable project investments. Through a comprehensive review of the current literature, technological advancements, and emerging business models, we identify the possible key contributions of digital platforms to the energy sector. These platforms offer personalized user experiences, mutual benefits for users and companies, adaptability to market changes, support for peer-to-peer trade, and a reduction in bureaucracy. We then present a pioneering conceptual model by Liu et al. (2022), which integrates the energy cloud, digital platform, and transaction platform and we explore the business model of energy platforms. This business model is characterized by connectivity, innovative pricing, and revenue strategies independent of physical asset ownership. Advanced technologies like artificial intelligence and blockchain facilitate peer-to-peer energy trading, dynamic pricing, and a focus on transaction and access fees over traditional cost structures. Drawing on the business model and previous analysis we update the conceptual model for energy platforms to present a practical vision through a holistic approach. |
| Keywords: | energy platforms, platforms, energy transition, renewable energy, digitalization |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04612503&r= |
| By: | Tomasz Serafin; Rafal Weron |
| Abstract: | We study the impact of the loss function used to estimate the parameters of a regression-type model on profits and risk in day-ahead electricity trading. To provide practical insights, we consider a strategy that incorporates battery storage and includes realistic operating costs in the calculation of revenues. Using data from the German market covering both the Covid-19 pandemic and the 2022 energy crisis, we provide evidence that minimizing absolute errors is the preferred option, as forecasts based on this loss function repeatedly and in the majority of cases outperform trading decisions based on predictions from models estimated using squared, percentage, or asymmetric losses. In addition, we find that predicting price spreads between a pair of hours, instead of predicting prices for each hour separately, yields higher profits and generally higher Sharpe ratios. |
| Keywords: | Electricity price forecast; Day-ahead market; Loss function; Trading strategy; Battery storage; Sharpe ratio |
| JEL: | C22 C51 C53 Q41 Q47 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ahh:wpaper:worms2403&r= |
| By: | Benatti, Nicola; Groiss, Martin; Kelly, Petra; Lopez-Garcia, Paloma |
| Abstract: | We examine the extent to which environmental regulation affects innovation and which policy types provide the strongest incentives to innovate. Using a local projection framework, we estimate the regulatory impact on patenting activity over a five-year horizon. As a proxy for environmental policy exposure, we estimate firm-level greenhouse gas emissions using a machine learning algorithm. At the country-level, policy tightening is largely associated with no statistically significant change in environmental technology innovation. At the firm-level, however, environmental policy tightening leads to higher innovation activity in technologies mitigating climate change, while the effect on innovation in other technologies is muted. This suggests that environmental regulation does not lead to a crowding-out of non-clean innovations. The policy type matters, as increasing the stringency of technology support policies and non-market based policies leads to increases in clean technology patenting, while we do not find a statistically significant impact of market-based policies. JEL Classification: O44, Q52, Q58 |
| Keywords: | emissions, environmental regulation, euro area, innovation, Porter hypothesis |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20242946&r= |
| By: | Tom Schmitz (Queen Mary University of London and CEPR); Italo Colantone (Bocconi University, Baffi-Carefin Research Centre, CESifo and FEEM); Gianmarco Ottaviano (Bocconi University, Baffi-Carefin Research Centre, CEP, CEPR and IGIER) |
| Abstract: | This paper evaluates the aggregate impact of air pollution regulations introduced by the US Environmental Protection Agency in the early 2000s. We first provide regression evidence on the regulations’ effects across industries and local labor markets. We then use these results to calibrate a quantitative model allowing for general equilibrium spillovers through trade, migration, industry switching, input-output linkages and emission externalities. Our model implies that regulations lowered emissions by 11.1%, but also destroyed between 228’000 and 267’000 jobs. Ignoring general equilibrium spillovers and naively extrapolating from our regressions overestimates job losses in polluting industries, but underestimates job losses in clean industries. |
| Keywords: | Environmental Policy, Fine Particles, Clean Air Act, Employment, Trade |
| JEL: | E24 Q50 Q53 |
| Date: | 2024–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:qmw:qmwecw:980&r= |
| By: | Ewa Neska; Maksymilian Bielecki; Anna Kowalska-Pyzalska |
| Abstract: | Renewable energy communities (RECs) are garnering significant interest and stimulating extensive discussions. However, they remain a marginal element of power systems in most countries, confined primarily to pilot projects and small-scale deployments. In Poland, this issue is even more pronounced, as RECs have not yet gained substantial public awareness. To explore why RECs are easier to discuss than to implement, we conducted in-depth interviews with a select group of experts. Utilizing PESTEL analysis to examine macro-environmental factors and investigate their interplay. Our study provides a diagnosis of the current situation and proposes a roadmap for the effective development of RECs. |
| Keywords: | renewable energy community; in-depth interview; PESTEL analysis |
| JEL: | D91 Q20 Q33 Q42 Q55 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ahh:wpaper:worms2402&r= |
| By: | Anna Kowalska-Pyzalska; Ewa Neska; Maksymilian Bielecki |
| Abstract: | Renewable energy communities (REC) are pivotal in fostering decentralized, sustainable energy systems by empowering local stakeholders to collectively generate, share, and manage renewable energy resources, promoting community resilience and environmental stewardship. Within our study, we analyzed diversity of incentives and social barriers to participation in REC and identified actions to increase the willingness to participate in REC initiatives with particular consideration of the role of the understudied local Polish context. Hence, we present the results of the 16 in-depth interviews with Polish current and prospective prosumers and discuss the main drivers and barriers to participation in future REC. Our findings - interpreted against a broader backdrop of existing research and Bronfenbrenner's socio-ecological model - indicate that successful policies regarding REC have to consider the unprecedented growth rate of domestically installed photovoltaics and the specificity of Poland's historical, political, social, and economic conditions. We discuss the implications of the results for future policymakers and stakeholders responsible for REC implementation, along with some methodological remarks concerning the importance of accounting for heterogeneity and stronger embeddedness of research practices shaping policy design. |
| Keywords: | renewable energy community; prosumer; in-depth interview; Bronfenbrenner's socio-ecological model |
| JEL: | D91 Q20 Q33 Q42 Q55 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ahh:wpaper:worms2401&r= |
| By: | Chan, Kenddrick; West, Devorah; Teo, Marie; Brown, Harriet; Westgarth, Tom; Smith, Thomas |
| JEL: | R14 J01 |
| Date: | 2024–05–29 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123705&r= |
| By: | Cristiano Salvagnin; Aldo Glielmo; Maria Elena De Giuli; Antonietta Mira |
| Abstract: | The European carbon market plays a pivotal role in the European Union's ambitious target of achieving carbon neutrality by 2050. Understanding the intricacies of factors influencing European Union Emission Trading System (EU ETS) market prices is paramount for effective policy making and strategy implementation. We propose the use of the Information Imbalance, a recently introduced non-parametric measure quantifying the degree to which a set of variables is informative with respect to another one, to study the relationships among macroeconomic, economic, uncertainty, and energy variables concerning EU ETS prices. Our analysis shows that in Phase 3 commodity related variables such as the ERIX index are the most informative to explain the behaviour of the EU ETS market price. Transitioning to Phase 4, financial fluctuations take centre stage, with the uncertainty in the EUR/CHF exchange rate emerging as a crucial determinant. These results reflect the disruptive impacts of the COVID-19 pandemic and the energy crisis in reshaping the importance of the different variables. Beyond variable analysis, we also propose to leverage the Information Imbalance to address the problem of mixed-frequency forecasting, and we identify the weekly time scale as the most informative for predicting the EU ETS price. Finally, we show how the Information Imbalance can be effectively combined with Gaussian Process regression for efficient nowcasting and forecasting using very small sets of highly informative predictors. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.05094&r= |
| By: | Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Carsten Brockhaus; Julian Hinz; Levke Jessen-Thiesen; Hendrik Mahlkow; Patrik Svab |
| Abstract: | This report focuses on Russia's adaptation in its commodity exports during 2023, amidst ongoing international sanctions. It examines the shifts in export and maritime shipping patterns, emphasizing coal, crude oil, and liquefied natural gas, and their redirection towards alternative, non-sanctioning markets. The analysis details Russia's efforts to maintain its commodity exports by leveraging new maritime routes and — possibly — spoofing Automatic Identification System (AIS) signals to avoid detection of ship-to-ship transfers of oil. |
| Keywords: | commodity exports, maritime shipping, ship-to-ship oil transfers |
| JEL: | F14 F51 Q4 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:wii:rusmon:3&r= |
| By: | Feld, Immanuel (University of Warwick); Fetzer, Thiemo (University of Warwick, University of Bonn, ECONtribute, STICERD, CAGE, NIESR, CESifo, and CEPR.) |
| Abstract: | Climate action requires significant public- and private sector investment to achieve meaningful reductions in carbon emissions. This paper documents that large-scale austerity, coupled with barriers to flows of data and a lack of (digital) skills in (local) government, may have been a significant barrier to delivering climate action in the form of retrofitting. Decomposing heterogeneity in estimated treatment effects of a large-scale energy efficiency savings program that was rolled out through a regression discontinuity design in the early 2010s, we find that both the extent of austerity-induced local budget cuts and poor digital connectivity – may be responsible for up to 30% fewer retrofit installations that counterfactually would have taken place had it not been for austerity |
| Keywords: | state capacity ; austerity ; skills ; climate action ; public economics JEL Codes: Q54 ; Q58 ; H76 ; C21 ; O33 ; R11 ; H54 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1495&r= |
| By: | Gulliver Lux (UQAM - Université du Québec à Montréal = University of Québec in Montréal); Emmanuelle Fromont (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Thi Le Hoa Vo (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This article questions the prospects for growth or degrowth of companies as a means of preserving the Earth's ecosystem. More specifically, we propose using a carbon productivity indicator in association with the IPCC Carbon Productivity Target (based on UNFCCC work) to assess the genuine ecological impact of corporate economic activity. This indicator was applied to data from 2015 to 2019 for a sample of companies in the SFB 120 index, and results from their classification are compared to the results obtained with indicators that do not take into account the IPCC targets based on UNFCCC work (Scopes). We highlight how a company's economic growth plays a key role in the fight against global warming. We found that a significant share of the companies that usually qualified as green using the Scope 1 and 2 emissions are, in fact, not green (63% and 43% of polluting and low-polluting companies, respectively). We underscore the fact that while green growth still seems possible, the same is true of green degrowth. More specifically, our results advocate for either controlled growth or for slight degrowth in business activity. Lastly, our results open a discussion on degrowth by highlighting how companies in this situation are over-represented among those that meet IPCC objectives. |
| Keywords: | Green growth, Degrowth, IPCC, UNFCCC, Carbon productivity, GHG emissions |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04188747&r= |
| By: | Michele Azzone; Roberto Baviera; Pietro Manzoni |
| Abstract: | A growing number of contributions in the literature have identified a puzzle in the European carbon allowance (EUA) market. Specifically, a persistent cost-of-carry spread (C-spread) over the risk-free rate has been observed. We are the first to explain the anomalous C-spread with the credit spread of the corporates involved in the emission trading scheme. We obtain statistical evidence that the C-spread is cointegrated with both this credit spread and the risk-free interest rate. This finding has a relevant policy implication: the most effective solution to solve the market anomaly is including the EUA in the list of European Central Bank eligible collateral for refinancing operations. This change in the ECB monetary policy operations would greatly benefit the carbon market and the EU green transition. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.12982&r= |
| By: | Benoit Jamet (IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux); Julien Bousquet; Antoine Masse |
| Abstract: | In recent years, an increasing number of major international banks have begun to announce their exit from the coal sector, in response to the trend initiated by public actors such as governments and related public sector financial institutions. This article examines the determinants of coal exit strategies of international banks. Using a sample of 111 banks from 31 countries and a PLS-PM methodology, the results show that: 1) the announced strategies are particularly partial in nature and the financing allocated to coal firms is still high, 2) external variables (i.e., national and institutional contexts) significantly influence exit scores, notably coal dependence, progress in the energy transition and the environmental performance of the home countries, 3) with the exception of size, internal variables (e.g., exposure to the sector, risk and profitability) have no impact on coal exit scores. Banks therefore adopt a defensive strategy: the managerial decision echoes national energy and environmental policies, which underlines the crucial political and regulatory role of governments in influencing bank strategies. |
| Keywords: | Banking industry, Coal financing, Coal exit strategy, Institutional and national contexts, Energy policy |
| Date: | 2023–03 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04593185&r= |
| By: | Ramiro de Ávila Peres |
| Abstract: | The "social cost of carbon" (SCC) is a value used to price or tax emissions, so internalizing their externalities; economists disagree about it, and one of the sources of dispute is the "pure time preference rate" – which reflects how much one favors present over future well-being. Those advocating a descriptive approach, associated with William Nordhaus, propose to aggregate the time preferences empirically observed, often resulting in a low SCC. On the other hand, the normative approach, associated with Nicholas Stern, advocates temporal impartiality; but it implies transferring more resources to the next generations – at the limit, assuming exponential population growth, it can be associated with a "longtermist" stance. We discuss how a different approach could help leaving this dispute behind – by estimating carbon prices that are consistent with the goals of the Paris Agreement – thus emphasizing the role of political and international agreements. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bcb:wpaper:593&r= |
| By: | Li, Mengyu; Keyβer, Lorenz; Kikstra, Jarmo S.; Hickel, Jason; Brockway, Paul E.; Dai, Nicolas; Malik, Arunima; Lenzen, Manfred |
| Abstract: | Empirical evidence increasingly indicates that to achieve sufficiently rapid decarbonisation, high-income economies may need to adopt degrowth policies, scaling down less-necessary forms of production and demand, in addition to rapid deployment of renewables. Calls have been made for degrowth climate mitigation scenarios. However, so far these have not been modelled within the established Integrated Assessment Models (IAMs) for future scenario analysis of the energy-economy-emission nexus, partly because the architecture of these IAMs has growth ‘baked in’. In this work, we modify one of the common IAMs–MESSAGEix–to make it compatible with degrowth scenarios. We simulate scenarios featuring low and negative growth in a high-income economy (Australia). We achieve this by detaching MESSAGEix from its monotonically growing utility function, and by formulating an alternative utility function based on non-monotonic preferences. The outcomes from such modified scenarios reflect some characteristics of degrowth futures, including reduced aggregate production and declining energy and emissions. However, further work is needed to explore other key degrowth features such as sectoral differentiation, redistribution, and provisioning system transformation. |
| Keywords: | degrowth; energy-economy decoupling; Integrated Assessment Models; post-growth; Utility function |
| JEL: | N0 |
| Date: | 2023–12–08 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123739&r= |
| By: | Gravina, Antonio Francesco (University of Palermo); Lanzafame, Matteo (Asian Development Bank) |
| Abstract: | The substantial literature on the existence of an inverted U-shaped relationship between environmental degradation and economic growth—known as the Environmental Kuznets Curve (EKC)—has produced very mixed evidence. This largely depends on model and variable selection uncertainty. We address these issues relying on Bayesian Model Averaging techniques. Our results indicate that the EKC has an inverted-N shape, with almost all emerging economies analyzed on the upward segment of the curve displaying a positive association between per capita gross domestic product and carbon dioxide emissions, and most advanced economies analyzed on the second downward segment of the curve. These findings are robust to the use of different measures of environmental pollution and (non-Bayesian) Least Absolute Shrinkage and Selection Operator (LASSO) regression techniques. |
| Keywords: | Environmental Kuznets Curve; economic growth; model uncertainty |
| JEL: | C52 O13 Q56 |
| Date: | 2024–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:0731&r= |
| By: | Berkouwer, Susanna; Biscaye, Pierre; Hsu, Eric; Kim, Oliver; Lee, Kenneth; Miguel, Edward; Wolfram, Catherine |
| Abstract: | In response to the Covid-19 crisis, 186 countries implemented direct cash transfers to households, and 181 introduced in-kind programs that lowered the cost of utilities such as electricity, water, transport, and mobile money. During times of crisis, do people prefer in-kind transfers or cash, and why? In this paper, we compare electricity transfers against a benchmark of cash transfers (mobile money) among 2000 rural and urban residents of Kenya with pre-paid electricity meter connections. We offer participants an incentivized choice between electricity transfers or mobile money, totaling approximately USD 10 to 15, and then implement their choice over three months. We generate three main findings. First, participants overwhelmingly prefer cash, with three-quarters of participants opting for mobile money even when offered electricity tokens with a cash value that is 40 percent higher, possibly due to the flexibility in expenditures or credit constraints. Second, despite relatively low baseline electricity consumption, preference for cash is slightly lower in rural areas, possibly due to higher transaction costs for purchasing electricity, lower mobile money penetration, or savings constraints. Third, electricity tokens transfers generate a larger increase in electricity consumption than equivalent cash transfers, suggesting a role for mental accounting; however, we estimate no impact of either electricity or cash transfers on a broad set of socioeconomic outcomes. These patterns suggest that mobile money transfers generate larger welfare gains than electricity credit, at least in settings with high mobile money penetration. |
| Keywords: | Economics, Applied Economics, Clinical Research, Development economics, Cash transfers, Electricity subsidies, Government programs, Utility subsidies, Kenya, Electrical and Electronic Engineering, Mechanical Engineering, Energy, Banking, finance and investment, Applied economics, Econometrics |
| Date: | 2023–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:agrebk:qt77q3w4sm&r= |
| By: | Oscilowicz, Emilia; Solís, Guadalupe A.; Martinez, Laura; Németh, Jeremy; Simon, Gregory L.; Makarewicz, Carrie; Dickinson, Katherine; McKenzie, Lisa M.; Scandlyn, Jean; Erices-Ocampo, Paulina |
| Abstract: | Community air pollution science is widely viewed as a powerful public health and urban planning tool that can empower communities to push for policy change to benefit public health outcomes. A review of 131 studies highlights a bias toward the evaluation of low-cost sensor performance. We draw attention to the 10 studies (10%) that address a research-to-policy gap through distinct theories of change. Recommendations include addressing research gaps such as equitable sensor distribution, expanding focus to the Global South, and establishing engagement with policymakers early on in community science research. |
| Date: | 2024–06–10 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:mxv5k&r= |
| By: | Krebs, Tom (University of Mannheim); Weber, Isabella (University of Massachusetts Amherst) |
| Abstract: | In the wake of the global energy crisis, many European countries used energy price controls to fight inflation and to stabilize the economy. Despite its wide adoption, many economists remained skeptical. In this paper, we argue that price controls should be part of the policy toolbox to respond to shocks to systemically important sectors because not using them can have large economic and political costs. We put forward our arguments in two steps. In a first step, we analyze the impact on the German economy and society of the global energy crisis that followed Russia's attack on Ukraine in February 2022. Our analysis shows that energy shocks matter. Specifically, the one-year GDP loss of the energy crisis 2022 amounts to 4 percent and is comparable to the short-run output losses during the COVID-19 crisis 2020 and the global financial crisis 2008. In addition, during the energy crisis 2022 inflation rates rose dramatically and real wages dropped more than in any other year in post-war Germany. There are also clear signs that the crisis is causing severe long-term economic damage (hysteresis effects). At the beginning of 2024, GDP is 7 percent and real wages are 10 percent below the pre-COVID-19 trend. We argue that the German government handled the immediate response to the energy shock well, but subsequently waited too long to introduce an energy price brake in 2022. This failure to act decisively in response to heightened economic insecurity coincided with a strong rise of the approval rates of the far-right AfD in the summer of 2022. We also show that the German energy price brake was an effective price stabilization policy for households, but did not protect the industrial base appropriately making it more likely that the German economy will continue to stagnate. In a final step, we turn to the use of price controls as an optimal policy response to an energy shock within a general equilibrium framework. We develop a simple production model with an energy sector and shows that price controls are socially optimal whenever self-fulfilling expectations generate endogenous price uncertainty in the wake of an energy shock. We also link our analysis to the so-called sunspot literature that was developed in the 1980s as a response to the rational-expectations revolution in macroeconomics. Finally, we use our theoretical analysis to shed some light on the economic policy debate and the resistance of German mainstream economists to the introduction of energy price controls in 2022. |
| Keywords: | global energy crisis, German economy, endogenous uncertainty, price controls, inflation, stabilization policy |
| JEL: | D52 D84 E12 E32 E64 Q43 Q48 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17043&r= |
| By: | Ju, Heng; Tang, Yao; Zhang, Meilan |
| Abstract: | We quantify the economic costs of air pollution associated with drug expenditures. First, following a 1% increase in the annual average of PM2.5, the combined expenditures on respiratory, cardiovascular, and antitumor drugs are predicted to rise by an amount equivalent to 1.81% of the annual per capita drug expenditure. Second, we compare expenditures on Western Medicine (WM) and Chinese Herbal Medicine (CHM), noting that research on the latter is significantly limited. After a rise in PM2.5 levels, the responsiveness and increase in expenditures for CHM drugs are similar to those for WM drugs, highlighting CHM's significance in understanding the economic impacts of air pollution. Third, cities with higher socioeconomic status—indicated by greater per capita fiscal revenue, higher disposable income, and a larger proportion of college graduates—exhibit a greater response in drug expenditures to air pollution. |
| Keywords: | outdoor air pollution, drug expenditure, Chinese herbal medicine, disparities in drug expenditure |
| JEL: | I10 I14 O53 |
| Date: | 2024–05–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121154&r= |
| By: | Avila-Uribe, Antonio (London School of Economics); Roth, Sefi (London School of Economics); Shields, Brian (London School of Economics) |
| Abstract: | This paper evaluates the impact of London's Low-Emission Zone (LEZ) on test scores among elementary school students in England. Utilising administrative data for the years 2005-2015, we employ a difference-in-differences approach to assess the LEZ's effect on standardised Key Stage 2 results (age 11). Our analysis reveals a statistically and economically significant improvement of 0.09 standard deviations in test scores for students within the LEZ compared to those in other urban control areas. Importantly, we also find that the LEZ policy has larger positive effects in low-performing schools, demonstrating its potential to significantly reduce educational disparities. |
| Keywords: | air pollution, education, low emission zone |
| JEL: | Q53 I20 I24 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17020&r= |
| By: | Helen Dempster (Center for Global Development); Sam Huckstep (Center for Global Development) |
| Abstract: | The green transition is widely expected to lead to high levels of net job creation, with roles distributed across the pay and skill spectrum. To fill these roles, many countries of destination will need to use migration alongside their domestic labour supply. Yet few countries of origin have enough skilled workers to meet their own green transition targets. As a result, any green-skilled migration facilitated by countries of destination should be linked with investments in the training, recruitment, and retention of workers into ‘green’ jobs within countries of origin. This paper explores three models that link training and migration in a partnership framework—fixed-term migration; Global Skill Partnerships; and migration with parallel investments—to maximise both economic development and carbon reduction benefits. For each model, the paper outlines key considerations that should be taken into account along with a worked example. It also includes a "guide, " walking policymakers through the different models to understand which would best meet the needs of countries of origin, countries of destination, and employers. |
| Date: | 2024–06–17 |
| URL: | https://d.repec.org/n?u=RePEc:cgd:ppaper:330&r= |
| By: | Gong Cheng; Torsten Ehlers; Frank Packer; Yanzhe Xiao |
| Abstract: | In traditional bond markets, sovereign bonds provide benchmarks and serve as catalysts for the corporate bond market development. Contrary to the usual sequence of bond market development, sovereign issuers are latecomers to sustainable bond markets. Yet, our empirical study finds that sovereign green bond issuance can have quantitative and qualitative benefits for the development of private sustainable bond markets. Our results suggest that both the number and the size of corporate green bond issuance increase more in a jurisdiction after the sovereign debut. The results are more pronounced in countries with stronger climate policies. Sovereign green bond issuance also improves the quality of green verification standards in the corporate bond market more generally, consistent with the aim of fostering third-party reviews and promoting best practice in green reporting and verification. Finally, our work provides evidence that the sovereign debut increases liquidity and diminishes yield spreads of corporate green bonds in the same jurisdiction. |
| Keywords: | Green bonds; sustainable bonds; sovereign debt; taxonomies; green verification; bond market development |
| Date: | 2024–06–14 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/120&r= |
| By: | Aoife M Foley (University of Manchester [Manchester]); Raphael Heffron (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique, CAM - University of Cambridge [UK]); Dlzar Al Kez (University of Manchester [Manchester], QUB - Queen's University [Belfast]); Dylan D Furszyfer del Rio (University of Sussex); Celine Mcinerney (UCC - University College Cork); Andrew Welfle (University of Manchester [Manchester]) |
| Abstract: | The prominent growth in environmental, social and governance (ESG) investment is evident, with the number of global assets managed sustainably more than doubled over the last decade. This trend is expected to continue until 2030. This type of financial data is positive but given the United Nations stated 'climate emergency' and 'climate survival' in society today, there needs to be an even greater acceleration of growth in ESG investment. Unfortunately, significant negativity has emerged on ESG in recent years. This 'Cutting Edge' study explores the reasons why and how ESG investment has veered off the journey towards enabling society to achieve both its targets under the 2030 United Nations Sustainable Energy Agenda and the 2015 Paris Agreement. It examines the factors prompting leading multinational companies, particularly in the energy and food sectors, to shift their corporate strategies. The key message advanced is that ESG frameworks and guidelines are not problematic; rather, the issue lies in the practice of ethics in decision-making within corporations. Addressing this ethical challenge, which is at the heart of ESG practices, across different professions and disciplines can rebuild trust among stakeholders in ESG investing. This form of interdisciplinary ‘just transition ethics' can re-orient us back on the journey towards a just and sustainable world |
| Keywords: | Environmental, ESG factors, Ethics, Global finance, Just transition, Sustainable finance, social and governance UN SDGs United |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04591317&r= |
| By: | Sanctuary, Mark (KTH Royal Institute of Technology & IVL Swedish Environmental Research Institute); Lavenius, Axel (IVL Swedish Environmental Research Institute); Parlato, Giorgio (Stockholm University); Plue, Jan (Swedish University of Agricultural Sciences); Crona, Beatrice (Stockholm University) |
| Abstract: | This paper examines the extent to which the portfolios of green funds differ from conventional funds. We use non-metric multidimensional scaling to analyse 24 549 securities held by 6888 funds traded on European markets as of March 2023. Thisnumerical methodology reduces the fund compositional matrix from thousands ofdimensions to two dimensions, revealing patterns that can be studied graphically.Each fund is classified into three categories by the EU Taxonomy: dark-green, light-green, or conventional funds. With a few exceptions, the results indicate thatthe compositional differences in fund holdings across these three types of funds aresmall: green fund portfolios are largely the same as conventional fund portfolios. Anotable exception are energy sector funds where we find compositional differencesin the holdings of green and conventional funds. Our findings suggest that the EU’sregulatory effort on sustainable finance has not yet delivered on anti-greenwashingobjectives, and that ESG based investing is doin ittle to shift fund allocations. |
| Keywords: | Sustainable finance; investment funds; ESG; Non-metric multidimensional scaling; ordination |
| JEL: | D53 G11 M14 |
| Date: | 2024–06–17 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:cesisp:0499&r= |
| By: | Lu, Yue; Ma, Minghui; Gao, Longfei; Tang, Yao |
| Abstract: | In a trade model incorporating within-firm productivity differences in intermediate products, we show that specialization in the production of intermediate products enabled by decreased trade costs can reduce firm-level emissions. Using firm-level data from China (1998-2012), we provide supporting evidence in the context of domestic trade. Increased domestic trade integration, associated with the expansion of China's railway network, reduces emissions of sulfur dioxide, carbon dioxide, and other pollutants. Counterfactual analysis indicates that without the 1.88% (1, 203-kilometer) railway expansion in 2005—--the year in the middle of our sample period, as an example---national SO2 emissions would have been 0.43% higher. |
| Keywords: | emissions, market access, railway network, Chinese manufacturing firms |
| JEL: | F18 Q56 R40 |
| Date: | 2024–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121156&r= |
| By: | Fuhrmann-Riebel, Hanna (University of East Anglia); D'Exelle, Ben (University of East Anglia); López Vargas, Kristian (University of California, Santa Cruz); Tonke, Sebastian (Max Planck Institute for Research on Collective Goods); Verschoor, Arjan (University of East Anglia) |
| Abstract: | Tackling environmental pollution requires a permanent change in regular, repeated behavior of households. Bringing about change in such behavior may require interventions that are not limited to a single point in time, yet little evidence exists on how frequently we need to target households to initiate behavioral change and to form new habits in regular pro-environmental behavior. To fill this gap, we investigate the impact of mobile text reminders on households' recycling behavior in urban Peru, by randomly varying the frequency of reminders over a nine-week treatment period. We find that reminders increase both the likelihood that households start to recycle, and the frequency of recycling among households that already recycled before the intervention. The effects are stronger if reminders are repeated over a longer period. Our findings suggest that low-cost mobile text reminders can support repeated pro-environmental behavior, and that some repetition may be needed to maximize their effectiveness. |
| Keywords: | recycling, habit formation, limited attention, reminders, Peru |
| JEL: | C93 D83 D90 D91 Q53 Q58 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17013&r= |
| By: | Benoit Jamet (IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux); Julien Bousquet; Antoine Masse |
| Abstract: | The determinants of banks' voluntary environmental disclosure have been little studied in the literature. Drawing from the assumptions of institutional theory, this paper analyzes the impact of the national context, including the general legal system and the environmental policy of states, on banks' carbon disclosure. Based on three international samples, the results show a positive relationship between the strength of the legal system (degree of law enforcement), the stringency of environmental regulations, environmental performance, and the quality of banks' carbon disclosure. |
| Abstract: | Los factores determinantes de la divulgación voluntaria de información medioambiental por parte de los bancos han sido poco estudiados en la literatura. Partiendo de los supuestos de la teoría institucional, este trabajo analiza el impacto del contexto nacional, incluido el sistema jurídico general y la política medioambiental de los Estados, en la divulgación de las emisiones de carbono por parte de los bancos. Basándose en tres muestras internacionales, los resultados muestran una relación positiva entre la solidez del sistema jurídico (grado de cumplimiento de la ley), el rigor de la normativa medioambiental, los resultados medioambientales y la calidad de la divulgación de las emisiones de carbono por parte de los bancos. |
| Abstract: | Les déterminants de la divulgation volontaire d'informations environnementales par les banques ont été peu étudiés dans la littérature. S'appuyant sur les hypothèses de la théorie institutionnelle, cet article analyse l'impact du contexte national, y compris le système juridique général et la politique environnementale des États, sur la divulgation des émissions de carbone par les banques. Sur la base de trois échantillons internationaux, les résultats montrent une relation positive entre la force du système juridique (degré d'application de la loi), la rigueur des réglementations environnementales, la performance environnementale et la qualité de la divulgation d'informations sur le carbone par les banques. |
| Keywords: | Banking industry, Voluntary carbon disclosure, Institutional theory, Legitimacy theory, Sector bancario, Revelación voluntaria de información sobre el carbono, Teoría institucional, Teoría de la legitimidad, Secteur bancaire, Divulgation volontaire des émissions de carbone, Théorie institutionnelle, Théorie de la légitimité. |
| Date: | 2024–03 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04593177&r= |
| By: | Shufan Zhang; Minda Ma; Nan Zhou; Jinyue Yan; Wei Feng; Ran Yan; Kairui You; Jingjing Zhang; Jing Ke |
| Abstract: | Buildings produce one-third of carbon emissions globally, however, data absence regarding global floorspace poses challenges in advancing building carbon neutrality. We compile the measured building stocks for 14 major economies and apply our global building stock model, GLOBUS, to evaluate future trends in stock turnover. Based on a scenario not considering renovation, by 2070 the building stock in developed economies will be ~1.4 times that of 2020 (100 billion m2); in developing economies it is expected to be 2.2 times that of 2020 (313 billion m2). Based on a techno-economic potential scenario, however, stocks in developed economies will decline to approximately 0.8 times the 2020 level, while stocks in developing economies will increase to nearly twice the 2020 level due to their fewer buildings currently. Overall, GLOBUS provides a way of calculating the global building stock, helping scientists, engineers, and policymakers conduct a range of investigation across various future scenarios. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.04074&r= |
| By: | Jang, Youngook (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Kim, Yoonjung (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); lee, Cheolwon (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Oh, Taehyun (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Lee, Hyun-Jean (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Lim, You-Jin (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Kim, Cho-Rong (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Jun, Hae-Won (Korea National Diplomatic Academy) |
| Abstract: | 본 보고서에서는 EU가 내세운 ‘개방형 전략적 자율성’ 기조가 러시아-우크라이나 전쟁 전후 공급망, 에너지 전환, 인적 교류, 안보 통합의 영역에서 어떻게 구현되는지 고찰하였다. 미중 전략경쟁, 코로나19 팬데믹, 전쟁 등 최근의 통상환경 변화에 대한 EU의 정책 대응을 현지조사, 문헌조사, 통계분석 등을 통해 폭넓게 분석하였으며, 이를 통해 한국 정부와 기업이 활용할 수 있는 기회요인과 맞대응해야 할 도전요인, 그리고 한-EU 협력 유망 영역을 제시하였다. This report examines how EU’s ‘open strategic autonomy’ has been developed and realized facing recent changes in the global trade landscape, especially in areas such as supply chain, energy transition, immigration, and security integration. In response to the fragmentation and blocization of the global economy, which manifested in the US-China strategic competition, the COVID-19 pandemic, and the Russia-Ukraine war, the EU has sought to strengthen the competitiveness of its own high-tech and strategic industries and reduce its dependence on foreign countries (strategic autonomy). At the same time, it seeks to continue cooperation with like-minded countries with shared values and interests to address challenges that require global effort (openness). Chapter 2 defines open strategic autonomy in more detail and investigates how it has been implemented in the supply chain sector. The industrial and trade policies that have been published since the inauguration of the current EU Presidency in 2019 embody the concept of open strategic autonomy, which is defined as “strengthening competitiveness Executive Summary in the region to defend EU interests without relying on other countries, while continuing to cooperate with partners who share the values and interests.” After the Russia-Ukraine War, the EU continued its efforts to identify areas of weakness in the EU’s competitiveness and to localize and diversify its supply chains. This strategic shift was reflected in a series of supply chain legislation such as the European Chips Act, Critical Raw Materials Act, Net-Zero Industrial Act, and Corporate Sustainability Due Diligence Directive. The EU sets targets for the share of home-produced goods and provides various support measures such as subsidies, tax benefits, R&D investment, and workforce training. In addition, the legislation emphasizes bilateral and multilateral strategic partnerships, reflecting the open strategic autonomy of the region to continue cooperation with like-minded countries. (the rest omitted) |
| Keywords: | Russian-Ukraine War; EU; Open Strategic Autonomy; energy transition; refugee influx; security integration |
| Date: | 2023–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kieppa:2023_008&r= |
| By: | Milan Výškrabka; Erza Aruqaj |
| Abstract: | After a decade-long period of surpluses, soaring energy prices sent the euro area current account into a deficit in 2022. This occurred against the backdrop of a lingering COVID-19 impact, and in parallel with gradual recovery of the tourism sector. After its strong fall, the euro area current account balance has been on an improving path this year, as energy prices have fallen from their 2022 highs, and assisted somewhat by a small but visible reduction in the volume of net energy imports. However, energy prices are expected to remain above their pre-pandemic levels exerting a continuous downward pressure on energy balances in the medium term. The asymmetric nature of these shocks caused current account balances to widen across the globe over the past three years, undoing the narrowing that had previously been underway. The fading of these shocks will affect the normalisation of current accounts worldwide and in the euro area and may result in a changed landscape going forward. This paper reviews recent developments in the euro area external position, discusses the main drivers and provides some insights into the likely determinants of the external position in the near term. |
| JEL: | F45 F62 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:202&r= |
| By: | Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Lisa Scheckenhofer; Camille Semelet; Feodora Teti |
| Abstract: | Nearly two years after the start of the war in Ukraine, the report gives an overview of the current state of the Russian economy, with a focus on the fiscal situation, external balances, and the effects of Western sanctions on Russia’s trade with the EU and selected third countries. Increased scrutiny of companies from third countries violating the energy sanctions led to a renewed widening of the price discount on Russian oil during the last few months of 2023. However, despite this and heavy military spending, last year’s fiscal deficit was kept under control and primarily covered from the sovereign National Welfare Fund. EU exports to Russia of sanctioned economically critical (EC) goods and common high-priority (CHP) items have virtually stalled, indicating that the sanctions are effectively preventing direct exports. However, third countries, notably China, Hong Kong, Türkiye and the CIS countries, have increased their market shares and become Russia’s most important suppliers of missing EC goods and CHP items. Our findings suggest a particularly high likelihood of sanctions evasion via such CIS countries as Armenia, Kazakhstan, Uzbekistan and Kyrgyzstan, and to a lesser extent via Türkiye and China. |
| Keywords: | sovereign fund, energy sanctions, economically critically goods, common high priority items, trade sanctions, sanctions evasion |
| JEL: | F14 F51 H6 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:wii:rusmon:4&r= |
| By: | Schulze, Meike |
| Abstract: | The recent political consensus on the European Critical Raw Materials Act (CRMA) marks a significant step towards a common raw materials policy within the European Union (EU). Against the backdrop of increasing geopolitical tensions, the EU aims to bolster its "strategic autonomy" within its raw material supply chains. To achieve this goal, it is essential for the EU and its member states to enhance collaboration with mineralrich third countries. The current geopolitical environment will require a concerted effort on the part of the EU with respect to its raw material diplomacy, as only through such effective engagement will the EU be able to diplomatically and programmatically implement raw material partnerships that appeal to third countries. |
| Keywords: | geo-economic fragmentation, EU's raw materials policy, Critical Raw Materials Act (CRMA), Carbon Border Adjustment Mechanism (CBAM), supply chains |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:297220&r= |
| By: | Pilar L’Hotellerie-Fallois (BANCO DE ESPAÑA); Marta Manrique (BANCO DE ESPAÑA); Danilo Bianco (BANCO DE ESPAÑA) |
| Abstract: | La transición climática en la Unión Europea (UE) ha sido un eje central de actuación de la Comisión Europea durante la legislatura 2019-2024. Este documento detalla la evolución de las políticas climáticas de la UE en ese período, a través de las distintas iniciativas adoptadas, empezando por el Pacto Verde Europeo, por el que la UE ha incorporado en su legislación la ambición de ser climáticamente sostenible en 2050. Este objetivo ha sido también parte integrante de los planes de recuperación y resiliencia, adoptados bajo NextGenerationEU, del plan REPowerEU y del Plan Industrial del Pacto Verde. |
| Keywords: | transición climática en la UE, transición energética en la UE, Pacto Verde Europeo (EGD), NextGenerationEU, REPowerEU, Plan Industrial del Pacto Verde (GDIP) |
| JEL: | E61 F53 Q42 Q43 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bde:opaper:2424&r= |