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on Energy Economics |
| By: | John A. List; Ioannis C. Pragidis; Michael K. Price |
| Abstract: | Prosumers are becoming increasingly important in global energy consumption and production. We partner with an energy service provider in Sweden to explore the economics facing such agents by conducting a natural field experiment over a 32-month period. As a policy instrument, we explore how simple nudges affect choices on both the consumption and production sides. Importantly, with the added flexibility to influence both sides of the market, and with a rich data set that permits an analysis of intraday, intraweek, and seasonal variation, we can detail effects on overall conservation efforts, intertemporal substitution, load shifting, and net purchases from the grid. The overarching theme is that nudges have the potential to have an even greater impact on the energy market with prosumers compared to their portmanteau components. |
| JEL: | C93 D9 Q4 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32837 |
| By: | Megan R. Bailey; David P. Brown; Erica Myers; Blake C. Shaffer; Frank A. Wolak |
| Abstract: | The growth of electric vehicles (EVs) raises new challenges for electricity systems. We implement a field experiment to assess the effect of time-of-use (TOU) pricing and managed charging on EV charging behavior. We find that while TOU pricing is effective at shifting EV charging into off-peak hours, it unintentionally induces new and larger “shadow peaks” of simultaneous charging. These shadow peaks lead to greater exceedance of local capacity constraints and advance the need for distribution network upgrades. In contrast, centrally managed charging solves the coordination problem, reducing transformer capacity requirements, and is well-tolerated by consumers in our setting. |
| JEL: | L94 Q41 R40 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32886 |
| By: | Wassim Daher (Gulf University for Science and Technology, Kuwait); Jihad Elnaboulsi (Université de Franche-Comté, CRESE, UR3190, F-25000 Besançon, France); Mahelet G. Fikru (Missouri University of Science and Technology, USA); Luis Gautier (Universidad de Málaga, Spain) |
| Abstract: | We study the incentives to merge for energy producers in the presence of distributed renewable energy producers. Utilizing a Cournot model, we explore how uncertainty surrounding the cost of grid integration influences the profitability of mergers, where uncertainty comes in the form of an industry-wide shock (or common) and firm-specific errors (private shock). We find that the effect of these uncertainties on merger profitability depends on average energy grid integration costs, the size of the merger, and quality of private information. Overall, results suggest that mergers are more likely to be profitable when firms can effectively absorb private shocks due to the scale of the merger, unless average grid integration costs become too high. The incentives to merge are less clear-cut in the presence of an industry-wide shock, unless the quality of private information is high enough. |
| Keywords: | - |
| JEL: | Q4 G34 Q2 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:crb:wpaper:2024-14 |
| By: | Geßner, Daniel |
| Abstract: | A lot of countries have recently published updated hydrogen strategies, often including more ambitious targets for hydrogen production. In parallel, accompanying ramp-up mechanisms are increasingly coming into focus with the first ones already being released. However, these proposals usually translate mechanisms from renewable energy (RE) policy without considering the specific uncertainties, spillovers, and externalities of integrating hydrogen electrolysis into electricity grids. This article details how different aspects of a policy can address the specific issues, namely funding, risk-mitigation, and the complex relation with electricity markets. It shows that, compared to RE policy, subsidies need to emphasize the input side more strongly as price risks and intermittency from electricity markets are more prominent than from hydrogen markets. Also, it proposes a targeted mechanism to capture the positive externality of mitigating excess electricity in the grid while keeping investment security high. Economic policy should consider such approaches before massively scaling support and avoid the design shortcomings experienced with early RE policy. |
| Keywords: | hydrogen policy, renewable energy policy, support mechanisms, contracts for difference |
| JEL: | O25 O38 Q42 Q48 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wuewep:301868 |
| By: | Brown, David P. (University of Alberta, Department of Economics); Cajueiro, Daniel O. (University of Brasilia); Eckert, Andrew (University of Alberta, Department of Economics); Silveira, Douglas (University of Alberta, Department of Economics) |
| Abstract: | Real-time information has the potential to improve market outcomes in wholesale electricity markets. However, transparency can also facilitate coordination between firms, raising questions over the appropriate extent of information disclosure. Despite this ongoing debate, there is a lack of understanding of the information employed by firms when bidding in wholesale electricity markets. We use data from Alberta’s wholesale market and leverage machine learning techniques to evaluate the real-time information firms use when forming their bidding decisions. We find that aggregate market-level variables emerge as important predictors, while detailed firm-specific information does not lead to a material improvement in predicting firms’ bidding decisions. These results suggest that firm-specific information, which has raised concerns because of its potential use in facilitating coordinated behavior, may not be required to promote efficient market outcomes. |
| Keywords: | Machine Learning; Electricity; Price Forecasting; Competition Policy |
| JEL: | D43 L13 L50 L94 Q40 |
| Date: | 2024–08–18 |
| URL: | https://d.repec.org/n?u=RePEc:ris:albaec:2024_002 |
| By: | Uddin , Gazi Salah (Linköping University, Sweden); Hasan, Md. Bokhtiar (Islamic University, Bangladesh); Park, Donghyun (Asian Development Bank); Ali, Md. Sumon (University of Texas at El Paso); Wadström, Christoffer (Linköping University, Sweden) |
| Abstract: | Amid a shifting global energy landscape driven by concerns about climate change and fossil fuel depletion, there is a heightened need to move toward sustainable energy sources. Although there has been a significant increase in investments in renewable energy (RE) globally, there is still a considerable shortfall in achieving sustainability goals. This study is the first to explore the determinants of RE investments, considering a range of important economic and noneconomic variables. The research employs a balanced annual panel dataset covering 36 countries from 2000 to 2020. The findings indicate that, in developed economies, industrial growth, environmental taxes, social globalization, and climate vulnerability positively influence RE investments, while inflation and political instability have negative impacts. In developing economies, environmental taxes, social globalization, environmental technologies, and climate vulnerability are beneficial, while industrial growth and oil prices have adverse effects. These factors are significant for policy, providing governments and policymakers with valuable information to create specific strategies to meet global sustainability goals. |
| Keywords: | renewable energy investments; economic and noneconomic factors; developed and developing economies; panel data estimates |
| JEL: | C33 F64 Q42 Q50 |
| Date: | 2024–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:0740 |
| By: | Di Foggia, Giacomo (University of Milano-Bicocca); Beccarello, Massimo |
| Abstract: | This paper investigates the challenge of decarbonizing the steel industry, a pillar of the global economy but also a major carbon emitter. Analyzing current decarbonization strategies, their effectiveness, and the role of corporate commitment and risk management offers insights needed to identify development paths in the current environment characterized by pressure driven by stringent environmental standards and fierce competition. An empirical approach, including a survey model and simulation, is used to answer prominent research questions. Aspects such as the influence of environmental and governance criteria, specific initiatives that can be undertaken, the importance of corporate commitment, and the integration of risk management into strategic planning are examined. Simulations suggest that the probability of meeting the 2030 goals range from 65.08 to 75.98 percent and the delta between low and high commitment ranges from 4.917 to 4.133 percent according to the share of renewables in the energy mix decarbonization. The influence of the energy mix is also included in the analysis. The research highlights the need for greater coordination and commitment across the industry to improve decarbonization efforts. It emphasizes the critical role of government policies and market dynamics in shaping industry actions toward achieving decarbonization goals. The findings contribute to understanding decarbonization processes, offering insights and guidance for the steel sector's transition to a low-carbon economy |
| Date: | 2024–08–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:4csq3 |
| By: | Beccarello, Massimo; Di Foggia, Giacomo (University of Milano-Bicocca) |
| Abstract: | The European plan for a green transition includes the Fit for 55 package, designed to pave the way for climate neutrality. Despite its significant implications for cleaner technologies, it potentially correlates with high in vestment requirements, necessitating the pursuit of cost-effective environmental policies. Starting from the reference scenario previously envisaged in the Energy and Climate Plan, socioeconomic and environmental impacts are assessed using mixed methods. It is estimated that €1120 bn in investments are needed to meet decarbonization targets, while the total impact on public finance revenues to 2030 is projected at €529 bn. Additionally, the avoided costs of emissions amount to €36 bn, while those from energy savings are expected to reach €30 bn. This paper adds value by contributing to the literature on European climate policies, offering an in depth appraisal of implications that integrates technoeconomic and environmental perspectives. Furthermore, it informs policymakers' public spending decisions for decarbonization. |
| Date: | 2023–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:etu9g |
| By: | Pakrooh, Parisa; Manera, Matteo |
| Abstract: | The EU carbon market serves as an innovative financial instrument with the primary objective of contributing to mitigate the impacts of climate change. This market demonstrates significant interconnectedness with fossil energy, precious metal, and financial markets, although limited research has focused on the causality, dependency, intensity and direction of time-varying spillover effects. This study aims to investigate the causality direction, degree of dependency structure, and volatility transmission from Brent Oil, UK Natural Gas, Rotterdam Coal, Gold, Silver, Copper, and EuroStoxx600 future prices to EU Allowances during different periods of EU market. To achieve these objectives, this paper proposes a novel methodological approach that combines the most recent econometrics methods, such as Directed Acyclic Graph analysis, C-Vine Copula models, and Time-Varying parameter Vector Auto Regressive models with Stochastic Volatility with the use of a comprehensive sample of daily data from 26 April 2005 to 31 December 2022. The major findings of this study demonstrate that causality predominantly runs from energy, metal, and financial markets to the EU carbon market. The dependency structure, although varying across different sub-periods, shows a strong relationship observed between oil, coal, silver, copper, EuroStoxx600, and CO2 market. Additionally, the oil and copper futures prices exhibit the highest dependence on EUA prices. Furthermore, the study establishes that the EU carbon market is a net receiver of shocks from all other markets, with the energy, metal, and financial markets significantly influencing volatility in EUA prices. The time-varying spillover effect is most pronounced with a one-day lag, and the duration of the spillover effects ranges from 2 to 15 days, gradually diminishing over time. These results have the potential to increase the understanding of the EU carbon market and offer practical guidance for policymakers, investors, and companies involved in this domain. |
| Keywords: | Climate Change, Production Economics, Public Economics |
| Date: | 2024–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:344790 |
| By: | Berthold, Brendan (University of Lausanne); Cesa-Bianchi, Ambrogio (Bank of England); Di Pace, Federico (Bank of England); Haberis, Alex (Bank of England) |
| Abstract: | This paper investigates the economic effects of carbon pricing policies using a panel of countries that are members of the EU Emissions Trading System. Carbon pricing shocks lead, on average across countries, to a decline in economic activity, higher inflation, and tighter financial conditions. These average responses mask a large degree of heterogeneity: the effects are larger for higher carbon-emitting countries. To sharpen identification, we exploit granular firm-level data and document that firms with higher carbon emissions are the most responsive to carbon pricing shocks. We develop a theoretical model with green and brown firms that accounts for these empirical patterns and sheds light on the transmission mechanisms at play. |
| Keywords: | Business cycles; carbon pricing shocks; heterogeneity; asset prices |
| JEL: | E32 E50 E60 H23 Q54 |
| Date: | 2024–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1076 |
| By: | Foster, Vivien; Trotter, Philipp A.; Werner, Sven; Niedermayer, Melin; Mulugetta, Yacob; Achakulwisut, Ploy; Brophy, Aoife; Dubash, Navroz K.; Fankhauser, Sam; Hawkes, Adam; Hirmer, Stephanie; Jenkins, Stuart; Loni, Sam; Mcgivern, Alexis; Nanthavong, Khamphone; Probst, Benedict; Pye, Steve; Russo, Vladimir; Semieniuk, Gregor; Shenga, Carlos; Sridharan, Vignesh; Srivastav, Sugandha; Sokona, Youba; Croxatto, Lucas Somavilla; Yang, Pu |
| Abstract: | The production and use of fossil fuels need to decline rapidly to limit global warming. Although global net-zero scenarios abound, the associated development ramifications for fossil fuel-producing low and lower–middle income countries (LLMICs), as well as adequate international responses, have been underexplored. Here we conceptualize that, depending on country context, three types of development transition follow from declining fossil fuel production and use for LLMIC producers, namely an energy transition, an economic transition and an equitable fossil fuel production transition. We propose a classification of these transitions, arguing that heterogeneity in LLMICs’ fossil fuel production and usage substantially impacts their pathways towards low-carbon development. We illustrate this by discussing different cases of fossil fuel-producing LLMICs, focusing on Mozambique, India, Lao PDR and Angola. We conclude by detailing context-specific international support portfolios to foster low-carbon development in fossil fuel-producing LLMICs, and call for a re-orientation of international support along principles of global solidarity. |
| JEL: | Q50 |
| Date: | 2024–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:122094 |
| By: | Nicola Borri; Yukun Liu; Aleh Tsyvinski; Xi Wu |
| Abstract: | In economic theory, a cap-and-trade system is a market-based system mechanism that internalizes the environmental impact of economic activity and reduces pollution with minimal costs. Given that carbon trading is a financial market, we evaluate its efficiency using finance and asset-pricing tools. Our analysis of the universe of transactions in the European Union Emission Trading System in 2005-2020 demonstrates that this prominent cap-and-trade system for carbon emissions is dramatically inefficient because of a number of unintended consequences that significantly undermine its purposes. First, about 40% of firms never trade in a given year. Second, many firms only trade in the surrendering months, when compliance is immediate. We also show that these are the months where the price of emission allowances is predictably high. This surrendering trading pattern alone leads to a total estimated loss of about Euro 5 billion for the regulated firms, or about 2% of the traded volume of the regulated firms in the sample period. Third, a number of operators engage in speculative trading and profit by exploiting the market with private information. We estimate that these operators in total make about Euro 8 billion, or about 3.5% of the traded volume of the regulated firms in the sample period. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.06497 |
| By: | Sanctuary, Mark (KTH Royal Institute of Technology, & IVL Swedish Environmental Research Institute); Fagerström, Anton (IVL Swedish Environmental Research Institute); Feiz, Roozbeh (Linköping University); Lönnqvist, Tomas (IVL Swedish Environmental Research Institute); Lindfors, Axel (Linköping University) |
| Abstract: | Swedish transportation has a high reliance on biofuels, accounting for approximately 20% of total energy demand in 2019 for transportation, excluding electricity. This makes Sweden an exceptional opportunity to study the interaction between climate policy and fuel security objectives in a small open economy with no domestic oil production. Despite this high reliance, we estimate Sweden’s fuel security premium to be upwards of 0.065 EUR per liter diesel equivalence (or 12.6 USD/barrel) of imported oil, which is comparable although lower than similar estimates for the USA. We then discuss fuel security policy related to specific fuels including HVO/FAME, biomethane, and electricity. We conclude that electricity, and to some extent biomethane, are the most promising in terms of their potential to support fuel security objectives and reduce greenhouse gas emission. |
| Keywords: | Fuel security premium; renewable fuel; climate policy; biofuels; electricity |
| JEL: | Q42 Q43 Q58 |
| Date: | 2024–08–26 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:cesisp:0501 |
| By: | James B. Bushnell; Aaron Smith |
| Abstract: | In recent years the analysis of US climate policy on the electricity sector has predominantly deployed electricity planning or capacity expansion models that use deterministic or equilibrium optimization methods. While uncertainty in key input assumptions is considered, it is usually restricted to scenario analysis. In this study we combine time-series econometric forecasting methods with an equilibrium electricity system-expansion model. The goal is to produce statistically rigorous distributions of outcomes, rather than rely upon individually selected scenarios. We apply these techniques to the case of the US Inflation Reduction Act (IRA) in the context of the western US electricity grid. The most significant power sector financial incentives are tax credits applied to eligible zero-carbon and storage resources. Our results indicate that the impact of the IRA, in terms of additional investment in low-carbon resources, depends heavily on the realization of key exogenous variables. However, the net effect of the IRA is to sharply narrow the range of future carbon emissions, largely by eliminating states of the world where investment in natural gas resources would otherwise be optimal. |
| JEL: | Q4 Q47 Q58 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32830 |
| By: | Bianchetti, Luca; Catelén, Ana Laura; Lacaze, María Victoria |
| Abstract: | Comprender la trayectoria de la transición energética en Argentina resulta crucial dada la prominencia del sector energético como principal generador de gases de efecto invernadero en el país. Este estudio emplea un enfoque metodológico adaptado al sur global para analizar la evolución de la sostenibilidad ambiental como una de las dimensiones fundamentales de la transición energética argentina entre 1960 y 2021. A pesar de los indicadores desfavorables en etapas iniciales, se destacan mejoras significativas durante la última década. |
| Keywords: | Transición Energética; Sostenibilidad; Medio Ambiente; Argentina; |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:nmp:nuland:4159 |
| By: | Eichenberg, Jannis; Hobbie, Hannes; Schug, Tizian |
| Abstract: | Increasing renewable electricity generation and the electrification of industry, mobility, and heating through sector coupling pose significant challenges to grid operators in maintaining secure and reliable system operations. Demand-side sector coupling applications increase electricity demands and stress electricity grids, but they also offer transmission system operators increased flexibility for congestion management. Due to the complexity of directly controlling decentralized demand-side technologies, incentive mechanisms present a promising solution for harnessing demand-side flexibility. This study investigates various incentive schemes to promote grid-supportive demand-side behavior by developing a bi-level programming framework. The framework models the decision-making processes of key stakeholders, including a TSO, an aggregator, and a market clearing agent, considering model-endogenous wholesale market equilibrium formation and congestion management optimization. The economic efficiency of different design options for grid congestion management is evaluated using an extended IEEE test system applied to a case study of the German electricity transmission system. The findings highlight the critical importance of time-dynamic premium design concepts due to the variability of renewable generation. While incentive-based market interventions increase electricity market costs and thereby shifting consumer rents to producers, the reduced transmission system operation cost leads to overall gains in total system welfare. |
| Keywords: | OR in energy, Flexibility premium, Bi-level optimisation, Congestion management, Transmission grid |
| JEL: | Q41 C61 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:302046 |
| By: | Lipman, Timothy PhD; Busch, Pablo; Collins, Stephanie; Horvath, Arpad PhD; Kendall, Alissa PhD; Coffee, Daniel; Kong, David |
| Abstract: | There is growing interest in the use of hydrogen as a transportation fuel but the environmental benefits of using hydrogen depend critically on how it is produced and distributed. Leading alternatives to using fossil natural gas to make hydrogen through the conventional method of steam methane reforming include using electrolyzers to split water into hydrogen and oxygen, and the use of biogas as an alternative feedstock to fossil natural gas. This report examines the latest carbon intensity (CI) estimates for these and various other hydrogen production processes, adding important nuances to the general “colors of hydrogen” scheme that has been used in recent years. CI values for hydrogen production can vary widely both within and across hydrogen production pathways. The lowest CI pathways use biomass or biogas as a feedstock, and solar or wind power. The report also analyses jobs creation from new hydrogen production facilities and shows that these benefits can be significant for large-scale facilities based on either future biomass/biogas-to-hydrogen or solar-hydrogen production technologies. Recommendations include setting stricter goals for the state’s Low Carbon Fuel Standard (LCFS) program to continue to reduce the carbon footprint of California’s transportation fuels. |
| Keywords: | Engineering, Hydrogen fuels, hydrogen production, hydrogen storage, greenhouse gases, jobs |
| Date: | 2024–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt0310t8kx |
| By: | Jeguirim, Khaled; Ben Salem, Leila |
| Abstract: | We follow a non-linear dynamic correlation approach using a combination of a DCC-GARCH model and a copula model to capture the dependence between oil price changes and inflation in Tunisia. The case of Tunisia is particularly instructive since, after having been an exporter and a major producer, it became a net oil importer in the 2000s. The study, based on monthly data spanning decades, selects a Gumbel copula and shows that beyond weak average dependencies, there is a strong correlation between extreme values, suggesting that inflation in Tunisia is more sensitive to extreme (positive) variations in oil prices than to average variations. The implications of these empirical results for economic policy are crucial for the Tunisian economy. |
| Keywords: | oil price, inflation, copula, dynamic conditional correlation, Tunisia |
| JEL: | E31 Q41 Q43 |
| Date: | 2024–07–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121616 |
| By: | Fix, Blair |
| Abstract: | When it comes to rising house prices, nearly everyone has a theory about the cause. There’s ‘too much foreign money’. There are ‘too many immigrants’. There’s ‘too little construction’. And so on. What unites these explanations is that they appeal, in some way, to the idea that rising prices are caused by a mismatch between supply and demand. And surely that’s true, right? Yes, it is true … in the same way that death is caused by dying. But of course, that’s circular logic. And so it goes with ‘supply and demand’. Since prices are always caused by the interplay between what we want and what we can get, evoking ‘supply and demand’ leads us pretty much nowhere. Worse, it often puts the focus on short-term patterns, when the real scientific payoff lies in studying price trends over the long term. Speaking of the long term, many people assume that rising house prices are a recent problem. But in the United States, the pattern dates to the early 1970s. For almost a century before that, US house prices had been dropping against income. And so Americans treated their house like a ‘commodity’ — a thing they bought to live in. But from 1972 onward, house prices began to slowly appreciate against income. And so Americans started to treat their house like an ‘asset’. It’s this transformation — from commodity-like depreciation to asset-like appreciation — that is the real story of house prices. And the truth is that this story can’t be understood using popular scapegoats. To see why US house prices headed south and then north, we need to forget about supply and demand and instead, peer into the belly of industrialism. We need to ground house prices in the use of energy. Now, if going from prices to energy sounds like a non sequitur, I’ll show you why it makes sense. And I’ll show you how, when we bring debt into the energy fold, we can explain almost all of the historical variation in US house prices. The lesson here is simple yet disturbing. When it comes to rising house prices, the trend has less to do with a ‘supply crisis’, and more to do with basic physical limits to industrial supply chains. |
| Keywords: | assets, commodities, debt, distribution, housing, energy, price, United States |
| JEL: | P1 O18 R3 E3 E31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:301792 |
| By: | Kohnert, Dirk |
| Abstract: | Since Russia's war in Ukraine, many European countries have been scrambling to find alternative energy sources. One of the answers was to increase imports of liquefied natural gas (LNG). By bypassing the use of pipelines from the East by building LNG terminals, the EU opened up a wider variety of potential suppliers. The Europe-Africa Energy and Climate Partnership provides a framework for a win-win alliance. African countries will be key players in the future, including sub-Saharan countries such as Nigeria, Senegal, Mozambique and Angola. According to the REPowerEU plan, hydrogen partnerships in Africa will enable the import of 10 million tons of hydrogen by 2030, replacing about 18 billion cubic meters of imported Russian gas. Algeria, Niger and Nigeria recently agreed to build a 4, 128-kilometer trans-Saharan gas pipeline that would run through the three countries to Europe. Once completed, the pipeline will transport 30 billion cubic meters of gas per year. The African Coalition for Trade and Investment (ACTING) estimates potential sub-Saharan LNG export capacity at 134 million tonnes of LNG (approximately 175 billion m3) by 2030. Sub-Saharan Africa is also expected to become the main producer of green hydrogen by 2050. However, this market remains to be developed and requires significant expansion of renewable production and water availability. However, the EU countries and companies involved would be well advised to take note of the adoption of much stricter EU greenhouse gas reduction targets for 2030 and the publication of the European Commission's methane strategy. That being said, the EU could risk having more than half of Europe's LNG infrastructure idle by 2030, as European LNG capacity in 2030 exceeds total forecast gas demand, including LNG and pipeline gas. Regardless, it should not be forgotten that African countries want and need to develop their domestic gas markets as a priority, and that export potential depends on this domestic development. In the long term, a global energy mix would be needed to accelerate change driven by new resources, new technologies and climate commitments. These changes in the use and availability of energy resources would also affect the use of fossil fuels. Regardless of this, in addition to the LNG supply, the EU must also take care of increasing its own storage capacities to be able to guarantee a cost-efficient response to a natural gas supply bottleneck. However, LNG alone is not enough. |
| Abstract: | Seit Russlands Krieg in der Ukraine bemühen sich viele europäische Länder darum, alternative Energiequellen zu finden. Eine der Antworten bestand darin, den Import von Flüssigerdgas (LNG) zu steigern. Durch die Umgehung der Nutzung von Pipelines aus dem Osten mittels des Baus von LNG-Terminals erschloss sich die EU eine größere Vielfalt potenzieller Lieferanten. Die Europa-Afrika-Energie- und Klimapartnerschaft bietet einen Rahmen für eine Win-Win-Allianz. Afrikanische Länder werden in Zukunft zentrale Akteure sein, darunter auch Länder südlich der Sahara wie Nigeria, Senegal, Mosambik und Angola. Dem REPowerEU-Plan zufolge sollen Wasserstoffpartnerschaften in Afrika bis 2030 den Import von 10 Millionen Tonnen Wasserstoff ermöglichen und damit etwa 18 Milliarden Kubikmeter importiertes russisches Gas ersetzen. Algerien, Niger und Nigeria haben sich kürzlich auf den Bau einer 4.128 Kilometer langen Transsahara-Gaspipeline geeinigt, die durch die drei Länder nach Europa führen soll. Nach ihrer Fertigstellung wird die Pipeline 30 Milliarden Kubikmeter Gas pro Jahr transportieren. Die African Coalition for Trade and Investment (ACTING) schätzt die potenzielle LNG-Exportkapazität südlich der Sahara bis 2030 auf 134 Millionen Tonnen LNG (ca. 175 Milliarden m3). Es wird erwartet, dass Afrika südlich der Sahara bis 2050 auch zum Hauptproduzenten von grünem Wasserstoff wird Dieser Markt muss jedoch noch erschlossen werden und erfordert einen erheblichen Ausbau der erneuerbaren Produktion und der Wasserverfügbarkeit. Allerdings wären die beteiligten EU-Länder und Unternehmen gut beraten, die Verabschiedung deutlich strengerer EU-Treibhausgas-Reduktionsziele für 2030 und die Veröffentlichung der Methanstrategie der Europäischen Kommission zur Kenntnis zu nehmen. Außerdem könnte die EU riskieren, dass bis 2030 mehr als die Hälfte der europäischen LNG-Infrastruktur stillgelegt wird, da die europäische LNG-Kapazität im Jahr 2030 den gesamten prognostizierten Gasbedarf, einschließlich LNG und Pipelinegas, übersteigt. Ungeachtet dessen darf nicht vergessen werden, dass die afrikanischen Länder ihre inländischen Gasmärkte vorrangig weiterentwickeln wollen und müssen und dass das Exportpotenzial von dieser inländischen Entwicklung abhängt. Langfristig wäre ein globaler Energiemix erforderlich, um den durch neue Ressourcen, neue Technologien und Klimaverpflichtungen vorangetriebenen Wandel zu beschleunigen. Diese Veränderungen in der Nutzung und Verfügbarkeit von Energieressourcen würden sich auch auf die Nutzung fossiler Brennstoffe auswirken. Unabhängig davon muss sich die EU neben der LNG-Versorgung auch um den Ausbau ihrer eigenen Speicherkapazitäten kümmern, um eine kosteneffiziente Reaktion auf einen Erdgasversorgungsengpass gewährleisten zu können. Allerdings reicht LNG allein nicht aus, um die Widerstandsfähigkeit des Systems im Falle eines Versorgungsausfalls zu gewährleisten. Alternative Energiequellen und Energieeinsparungen bleiben von entscheidender Bedeutung. |
| Keywords: | LNG, Hydrogen economy, e-fuels, natural gas, energy security, Sub-Saharan Africa |
| JEL: | E22 E23 F13 F35 F54 L71 L95 N57 Q13 Q35 |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:300909 |
| By: | Pilar L’Hotellerie-Fallois (BANCO DE ESPAÑA); Marta Manrique (BANCO DE ESPAÑA); Danilo Bianco |
| Abstract: | Climate transition in the European Union has been a central sphere of action of the European Commission during the 2019-2024 legislature. This paper details how EU climate policies have evolved in that period through various instruments, starting with the European Green Deal which led to the inclusion in EU Law of the ambition to be climate-neutral by 2050. This aim is also an integral part of the recovery and resilience plans adopted under NextGenerationEU, the REPowerEU plan and the Green Deal Industrial Plan. |
| Keywords: | climate transition in the EU, energy transition in the EU, European Green Deal (EGD), NextGenerationEU, REPowerEU, Green Deal Industrial Plan (GDIP) |
| JEL: | E61 F53 Q42 Q43 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:bde:opaper:2424e |
| By: | Philipp Heimberger (The Vienna Institute for International Economic Studies, wiiw); Andreas Lichtenberger (The Vienna Institute for International Economic Studies, wiiw); Anna R. Matzner; Bernhard Schütz (The Vienna Institute for International Economic Studies, wiiw); Lea Steininger (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Chart of the Month COVID-19 pandemic has left its mark on public debt in the euro area by Philipp Heimberger Opinion Corner Reform of EU fiscal rules a short-sighted compromise by Philipp Heimberger EU finance ministers have reached an agreement on reforming EU fiscal rules. The key change will be to make the assessment of fiscal policy more long term and country specific, with debt sustainability analysis used as an anchor. However, countries with high public debt ratios will find it exceptionally hard to meet the rules, so that many will undershoot on public investment. Investment needs for a green European transition by Andreas Lichtenberger, Bernhard Schütz and Philipp Heimberger Climate change has long called for a green shift in our economies. To meet the climate targets over the coming decades, research suggests that additional public investment equivalent to at least 1% of EU economic output per year will have to be financed. In 2023, the gross public investment rate in the EU stood at 3.3%, which implies that this figure will have to rise to a minimum of 4.3%. We argue that – because of national fiscal policy constraints – a permanent EU investment fund to tackle climate and energy goals would provide substantial relief for national budgets, allowing governments to take an important step in the green transition, while making it a more realistic proposition to comply with EU fiscal rules. The corporate-sector effect of carbon pricing investment and employment by Anna R. Matzner and Lea Steininger We study the impact of carbon pricing on firm-level investment in Europe. Using balance-sheet data from 1.2 million European businesses, we find that following a carbon price increase, companies in carbon-intensive sectors reduce their investment more than other companies that are otherwise similar. However, increased carbon prices also affect non-targeted firms. We document no discernible effect of carbon pricing on employment, profitability or market share. Monthly and quarterly statistics for Central, East and Southeast Europe |
| Keywords: | COVID-19 pandemic, public debt, fiscal rules, green transition, investment, greenhouse gas emissions, carbon pricing, employment |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:wii:mpaper:mr:2024-02 |
| By: | Alan Finkelstein Shapiro; Victoria Nuguer |
| Abstract: | We study the labour market and macroeconomic effects of a carbon tax in the energy sector in emerging economies. We build a search and matching macro model with pollution externalities from energy production, endogenous green-technology adoption, and salaried-firm entry that incorporates two key elements of the employment and firm structure of these economies: salaried labor and firm informality and self-employment. Calibrating the model to emerging-economy data, we show that a carbon tax increases green-technology adoption and the share of green energy, but also leads to higher energy prices. As a result, the tax reduces salaried firm creation, the number of formal firms, and formal employment, and leads to an increase in self-employment, labor participation, and unemployment - a response that generates long run output and welfare losses. Green-technology adoption limits while self-employment exacerbates the quantitative magnitude of these losses. A joint policy that combines a carbon tax with a reduction in the cost of firm formality can offset the adverse effects of the tax and generate a transition to a lower-carbon economy with minimal economic costs. |
| Keywords: | environmental and fiscal policy, carbon tax, endogenous firm creation, green technology adoption, search frictions, unemployment and labour force participation, informality and self-employment, emerging economies |
| JEL: | E20 E24 E61 H23 J46 J64 O44 Q52 Q55 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1204 |
| By: | Bickenbach, Frank; Dohse, Dirk; Langhammer, Rolf J.; Liu, Wan-Hsin |
| Abstract: | China uses subsidies extensively to take a leading role in the global markets of green-tech products such as battery electric vehicles and wind turbines. Against the background of the current EU investigations into Chinese subsidies in these sectors, this article takes a careful look at the Chinese subsidy system and provides new data on direct government subsidies to leading Chinese producers of electric cars and wind turbines. Extensive government support has allowed Chinese companies to scale up rapidly, to dominate the Chinese market and to expand into foreign markets. The article concludes that the EU should use its strong bargaining power due to the single market to induce the Chinese government to abandon the most harmful subsidies. |
| Keywords: | China, industrial subsidies, battery electric vehicles, wind turbines, railway rolling stock, EU, anti-subsidy proceeding |
| JEL: | F13 O25 O53 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:301402 |
| By: | Schito, Marco; Klimavičiūtė, Luka; Pál, Rozália |
| Abstract: | Does increasing inflation affect firms' investment decisions? This article employs the European Investment Bank Investment Survey (EIBIS) dataset to explore the association between the increased inflation that the EU countries have experienced since 2021, and firms' investment decisions. We find evidence that very high rates of inflation (over 20%) are associated with higher probabilities of investment, likely driven by measures to improve energy efficiency (particularly for SMEs) and a desire to avoid the devaluation of cash reserves (for large firms). We further find a positive association between SMEs' ability to pass costs onto consumers (the so-called pass-through rate) and investment decision, suggesting a higher degree of reliance on the generation of continuous revenues for investment purposes compared with large firms. Inflation's by-products (increased interest rates, difficulties in accessing external financing, increasing uncertainty) are found to be important negative factors in investment decisions. (146 words) |
| Keywords: | EIBIS, inflation, investment, cost pass-through rate, financial tightening, SMEs |
| JEL: | D22 D25 E31 E43 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:eibwps:301874 |
| By: | Hafstead, Marc (Resources for the Future); Williams III, Roberton C. (Resources for the Future); Goulder, Lawrence H. (Resources for the Future) |
| Abstract: | Economists often regard a broad-based price on carbon (whether in the form of a carbon tax or cap and trade) as the most efficient policy to reduce carbon dioxide emissions. Relative to a narrower policy that omits some emissions sources, a broader policy is often favored because it can exploit more low-cost emissions reduction opportunities and cause less emissions leakage to uncovered sources. Yet narrower approaches have gained considerable political support, in part because they avoid price increases for outputs (such as gasoline) regarded as especially critical to household budgets.Some analysts might lament any shift away from broad carbon pricing, citing potential efficiency costs. However, this paper offers theory and numerical simulations that reveal that such a shift need not involve an efficiency sacrifice.This result stems from differences across sectors in distortions from preexisting taxes and in the elasticity of a sector’s emissions to the carbon price. Our analytical model reveals that a narrow carbon price policy that exploits these differences can be more cost-effective than a policy with a broad, economy-wide tax base.Our numerical model of the US economy then compares quantitatively the effects of an economy-wide carbon price with those of a range of narrower policies, including a policy that applies only to the power sector, one that exempts gasoline, and one that exempts energy-intensive trade-exposed industries. We make these comparisons under a range of specifications for policy stringency and find that the ratio of the broader policy’s cost to the narrower one’s declines with the ambitiousness of the emissions reduction target and that a broader policy always becomes more cost-effective at sufficiently high stringency. |
| Date: | 2024–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:rff:dpaper:dp-24-13 |
| By: | Marco Pinchetti (Bank of England; Centre for Macroeconomics (CFM)) |
| Abstract: | Episodes characterized by heightened geopolitical tensions are often associated with adverse developments in energy markets, and particularly in oil markets. This paper investigates the consequences of different classes of geopolitical risk shocks for inflation and economic activity, focusing on the role of energy markets. By exploiting the comovement of the Caldara and Iacoviello (2022) GPR index and oil prices around selected episodes via high-frequency sign restrictions a la Jarocinski and Karadi (2020) and narrative sign restrictions a la Antolin-Diaz and Rubio-Ramirez (2018), the paper disentangles the impact of geopolitical shocks associated with disruptions on energy markets from geopolitical shocks associated with economic contractions unrelated to energy markets. These two classes of shocks are associated with distinct macro consequences. A positive surprise in the GPR index associated with geopolitical macro shocks is on average contractionary and deflationary. On the other hand, a positive surprise in the GPR index associated with geopolitical energy shocks is on average contractionary and inflationary. The identification strategy is validated at sector-level by exploiting the heterogeneity in the response of 57 sectors of the US economy to different classes of geopolitical shocks. Sectors characterized by higher energy intensity are subject to larger output losses and price increases in response to geopolitical energy shocks, while the same does not hold in response to geopolitical macro shocks. |
| Keywords: | Geopolitical Risk, Business Cycles, Energy, High-Frequency Sign Restrictions, High-Frequency Identification, Narrative Sign Restrictions |
| JEL: | E31 E32 F31 Q35 Q38 Q43 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cfm:wpaper:2431 |
| By: | Andres Alonso-Robisco (BANCO DE ESPAÑA); Jose Manuel Carbo (BANCO DE ESPAÑA); Emily Kormanyos (DEUTSCHE BUNDESBANK); Elena Triebskorn (DEUTSCHE BUNDESBANK) |
| Abstract: | Central banks and international supervisors have identified the difficulty of obtaining climate information as one of the key obstacles to the development of green financial products and markets. To bridge this data gap, the use of satellite information from Earth Observation (EO) systems may be necessary. To better understand this process, we analyse the potential of applying satellite data to green finance. First, we summarise the policy debate from a central banking perspective. We then briefly describe the main challenges for economists in dealing with the EO data format and quantitative methodologies for measuring its economic materiality. Finally, using topic modelling, we perform a systematic literature review of recent academic studies to identify the research areas in which satellite data are currently being used in green finance. We find the following topics: physical risk materialisation (including both acute and chronic risk), deforestation, energy and emissions, agricultural risk and land use and land cover. We conclude with a comprehensive analysis on the financial materiality of this alternative data source, a mapping of these application domains to new green financial instruments and markets under development, such as thematic bonds or carbon credits, and some key considerations for policy discussion. |
| Keywords: | satellite data, sensors, green finance, central banking |
| JEL: | C8 C55 Q56 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:bde:opaper:2428e |
| By: | Alfath, Muhammad Hafizh; Wandebori, Harimukti; Prawiraatmadja, Widhyawan |
| Abstract: | Since the Paris Agreement in 2015, climate change has become an important global issue, prompting companies to adopt sustainable practices. PT United Tractors Tbk (UT), which relies heavily on coal, faces challenges due to the declining coal market and increasing emphasis on Environmental, Social and Governance (ESG) principles. This research explores UT's strategic transition to diversify into the minerals and renewable energy sectors and assesses the potential of Sustainability Linked Loans (SLL) to support this transition. The research aims to evaluate UT's readiness to implement SLL by examining its business strategy, ESG initiatives, and financial performance. A qualitative approach was used, involving semi-structured interviews with UT management and analysis of annual reports. Findings show that UT is committed to achieving a 50-50 revenue balance between coal and non-coal businesses by 2030. SLL offers a viable funding solution, providing financial flexibility and incentivizing ESG improvements through interest rate discounts. The study concludes that UT's strong commitment to sustainability and proactive management puts it in a good position to obtain SLL, enhancing its ability to balance its portfolio and achieve long-term sustainability. Recommendations include improving ESG measurement systems, securing SLL agreements, and continuously monitoring ESG achievements to maximize benefits. |
| Date: | 2024–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:6nkr8 |
| By: | John R. Scott; Ricardo Massa; Ana Cecilia Parada |
| Abstract: | Carbon pricing is one of the most effective tools available worldwide for the regulation of greenhouse gas (GHG) emissions. There is extensive theoretical and empirical research on optimal pricing instruments, such as environmental taxes —carbon and energy taxes, in particular— and emissions trading systems. In Mexico, as in most countries globally, energy taxation, particularly through taxes on fuels, serves as the primary carbon pricing instrument. This study quantifies the size and the distributive effects of green taxes (and anti-green subsidies) in Mexico, principally focusing on excise taxes (IEPS, from its initials in Spanish) levied on coal and fuels, as well as subsidies for residential electricity consumption. We analyse the distributive effect of fuel taxes within Mexico's broader fiscal system, including the main tax and public expenditure instruments, spanning the 2014-2022 period. In terms of the effect on extreme poverty, consumable income (disposable income net of subsidies and indirect taxes) shifts from a reduction of 2.3 ppt (with respect to household market income) to an increase of 0.5 ppt between 2014 and 2020. In other words, the increase in indirect taxes implies that their impoverishing effect completely eliminates the poverty-reducing effect of all direct transfers for the extremely poor. As in many other countries, energy subsidies in Mexico or their equivalent in energy tax exemptions, have been motivated by considerations of equity. However, given Mexico’s high income inequality, broad energy subsidies are proven to be inefficient redistributive instruments, especially compared to targeted or even universal transfers. |
| Keywords: | Mexique |
| JEL: | Q |
| Date: | 2024–07–18 |
| URL: | https://d.repec.org/n?u=RePEc:avg:wpaper:en17000 |
| By: | Nina R. Brooks; Debashish Biswas; Sameer Maithel; Grant Miller; Aprajit Mahajan; M. Rofi Uddin; Shoeb Ahmed; Moogdho Mahzab; Mahbubur Rahman; Stephen P. Luby |
| Abstract: | We present results from a randomized controlled trial in Bangladesh that introduced operational practices to improve energy efficiency and reduce emissions in 276 “zigzag” brick kilns. 65% of intervention kilns adopted the improved practices. Treatment assignment reduced energy use by 10.3% (p-value |
| JEL: | D22 L6 O1 O14 Q56 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32794 |
| By: | Christopher Jahns (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen) |
| Abstract: | In European intraday electricity markets, a systematic zigzag pattern can be observed, characterized by alternating maxima and minima at the shift of hourly products. This price formation contradicts the fundamental understanding, that prices to are a monotonously increasing function of residual demand and correspondingly would evolve smoothly across hours. This study investigates the phenomenon of restricted participation as the primary cause of the zigzag pattern. Restricted participation occurs when market participants maintain constant output through subhourly products. A notable instance is the lack of sub-hourly cross-border trading where foreign market participants are restricted from engaging in trading sub-hourly products. This is closely linked to is the differing time granularities observed in electricity trading across European countries. Three research questions guide this investigation: (1) Is restricted participation the main cause of non-smooth intraday prices? (2) How do technical restrictions on cross-border trading contribute? (3) What role do ramping and start-up costs play? Utilizing regression models and openly available data from Germany, the research confirms that restricted participation is the primary cause of the zigzag pattern. Furthermore, an analytical model of restricted participation in cross-border trading is developed, along with empirical parameterization. Based on this model it is estimated that lifting all technical restrictions on trading sub-hourly products would reduce systematic non-smoothness in intraday prices by only about 27%. These findings are unexpected, suggesting that despite economic incentives, a significant number of domestic power plants do not adjust their output based on intraday price signals. Ramping and start-up costs appear to have little influence. |
| Keywords: | Intraday electricity market; Econometric modeling; Market coupling |
| JEL: | C10 C54 Q41 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:dui:wpaper:2406 |
| By: | Andersson, Ylva; Timmons, Shane; Lee, Maria; Lunn, Pete |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:esr:wpaper:wp785 |
| By: | Bichler, Shimshon; Nitzan, Jonathan |
| Abstract: | Our recent article on ‘The Road to Gaza’ examined the history of the three supreme-God churches and the growing role of their militias in armed conflicts and wars around the world. The present paper situates these militia wars in the broader vista of the capitalist mode of power. Focusing specifically on the Middle East, we show the impact these militia wars have on relative oil prices and differential oil profits and explain how the wars themselves, those who stir them and the subjects that fight them all get discounted into capitalized power. |
| Keywords: | capitalization, church, corporation, differential accumulation, dominant capital, energy conflicts, Gaza, Middl East, militias, oil, OPEC, religion, war, Weapondollar-Petrodollar Coalition |
| JEL: | P00 P1 P12 P18 H56 N4 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:capwps:301398 |
| By: | Sim, Armand (Monash University); Gultom, Sarah (Monash University); Widita, Alyas (Monash University); Lee, Wang-Sheng (Monash University); Khalil, Umair (Deakin University) |
| Abstract: | Promoting awareness and encouraging pro-sustainability behaviors to mitigate climate and environmental issues can be challenging due to their polarizing nature. We conduct a large-scale online experiment in Jakarta, the world's fastest sinking city, to examine the impact of messenger identity and narrative style on awareness and behavior regarding land subsidence, a human-induced climate change phenomenon. We vary the messenger identity (an actor portraying either a religious leader or a scientist) and the narrative style of the message (religious vs. scientific). Our results show that exposure to an environmental video message, as opposed to a placebo, increases beliefs, trust in institutions, and pro-sustainability behaviors. The largest impacts arise when a scientist delivers a message embedded with a religious narrative. The effects are more pronounced among individuals with low prior knowledge, high trust in authorities, and those less reliant on groundwater. However, we find limited evidence of heterogeneous treatment effects on actions. Our findings highlight the importance of carefully considering both the message and the messenger in communication strategies in a diverse population. |
| Keywords: | land subsidence, environmental awareness, religion, science, Indonesia |
| JEL: | Q54 Q58 Z12 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17184 |
| By: | Vladimir Smirnyagin; Aleh Tsyvinski; Xi Wu |
| Abstract: | Analyzing the universe of federal environmental regulations in the U.S., we construct a measure of regulations—direct taxes on pollution. Analyzing the universe of firms’ investor disclosures, we construct a measure of material environmental concerns—indirect taxes on pollution. These two empirical measures are new to the environmental regulations literature. Thirdly, we document an important new fact that the cross-sectional distribution of pollution changes is lumpy. We build a dynamic heterogeneous firm model with non-convex adjustment costs that fits the cross-sectional pollution evidence. The model explains half of the pollution decline in U.S. manufacturing over the last two decades due to direct and indirect taxes. We show that the dynamics of direct taxes (environmental regulations) and indirect taxes (environmental concerns), non-convex adjustment costs, and idiosyncratic productivity shocks are key determinants of pollution dynamics in U.S. manufacturing. |
| JEL: | E0 H0 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32852 |
| By: | Kuosmanen, Natalia; Kiema, Ilkka; Maczulskij, Terhi |
| Abstract: | Abstract This report discusses the shortcomings of conventional productivity measures that overlook the environmental efforts of firms aiming to reduce greenhouse gas emissions. It highlights the importance of utilizing green productivity metrics, such as carbon productivity and green total factor productivity, for a more comprehensive assessment of productivity within the context of sustainable development. Key findings from recent empirical research conducted in Finland reveal a positive correlation between carbon and labor productivity, demonstrating that environmentally friendly practices can enhance both sustainability and efficiency in energy-intensive sectors. Energy efficiency also positively affects firm productivity, emphasizing the potential advantages of environmental regulations in driving economic growth, while simultaneously maintaining ecological well-being. Furthermore, carbon productivity exhibits a procyclical pattern, with financially stronger firms seeking more environmentally conscious workers (i.e., offering green jobs) during periods of economic growth. The report also recognizes the challenge of overcoming technological path dependence and suggests strategies such as public funding for clean technology R&D and leveraging EU-level green investment programs, particularly for smaller nations like Finland. |
| Keywords: | Carbon productivity, Green jobs, Green total factor productivity, Green transition, Energy efficiency |
| JEL: | D24 O44 Q55 Q56 |
| Date: | 2024–08–26 |
| URL: | https://d.repec.org/n?u=RePEc:rif:report:151 |
| By: | Fajardo Baquero, Nicolás (Universidad de los Andes) |
| Abstract: | International Environmental Agreements (IEAs) have been proposed as means to encourage green technological transfers between advanced and emerging economies, thereby promoting a global energy transition. This paper presents an endogenous growth model featuring two economies: a North representing a technological leader, and a South being its follower with the possibility of copying the Northern technologies. In addition to the standard technological flows, North and South can engage in cooperative negotiations to ease green technological transfers. I find that technological transfers are able to revert the path dependency in the South. Further, unconditional agreements reducing Northern technologies’ costs can immediately induce a global energy transition if (i) the North follows a clean growth path, and if (ii) Northern technologies are advanced enough. Otherwise, to ensure a global energy transition, the agreement must be coupled with additional policies encouraging clean innovations. |
| Keywords: | Climate change; Energy transition; International technology transfer; International agreements; Directed technical change |
| JEL: | F18 O31 O41 Q54 Q55 |
| Date: | 2024–08–23 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:021187 |
| By: | Galina Hale; Brigid Meisenbacher; Fernanda Nechio |
| Abstract: | In the past two decades, a number of banks joined global initiatives aimed to mitigate climate change by “greening” their asset portfolios. We study whether banks that made such commitments have a different emission exposure of their portfolios of syndicated loans than banks that did not. We rely on loan-level information with global coverage combined with country-industry information on emissions. We find that all banks have reduced their loan-emission exposures over the last 8 years. However, we do not find differences between banks that did and those that did not signal their sustainability goals, with the exception of early signers of Principles of Responsible Investments (PRI), who already had lower exposure to emissions through their syndicated lending. In addition, banks that signed PRI shortened the maturity of the loans extended to highly-emitting industries but only temporarily. Thus, we conclude that banks reduced their exposure to climate transition risks on average, but voluntary climate commitments did not contribute to syndicated loan reallocation away from highly-emitting sectors. |
| JEL: | F21 G21 Q54 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32874 |
| By: | Ibadoghlu, Gubad |
| Abstract: | This article examines the challenges Azerbaijan faced on the Eve of COP29. Assessing the situation in Azerbaijan regarding energy, ecology, and climate finance issues, the author systematizes the critical problems to be solved in this field and draws attention to Azerbaijan's policy on the Eve of COP29. |
| Keywords: | COP29, Azerbaijan, oil, gas, energy, ecology, climate change, climate finance, green growth, environmental security |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:301995 |
| By: | Ibadoghlu, Gubad |
| Abstract: | This paper is a deep dive into the reasons behind Russian President Putin's state visit to Azerbaijan, with a specific focus on Russia's energy interests in the region. The research includes an analysis of key players such as Gazprom and Lukoil in Azerbaijan, and their future plans for energy cooperation with Russia. The article also evaluates the potential impact of Russia's energy interests in Azerbaijan on Europe's energy security, and the feasibility of Azerbaijan meeting its gas supply commitments to Europe. |
| Keywords: | Russia, Azerbaijan, energy, oil, gaz, Gasprom, Lukoil, SOCAR, ACG, Shahdeniz, SGC, BTC |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:302055 |
| By: | Кулкаева Алтын // Altyn Kulkaeva (National Bank of Kazakhstan); Тайбекова Аида // Taibekova Aida (National Bank of Kazakhstan); Орлов Константин // Orlov Konstantin (National Bank of Kazakhstan) |
| Abstract: | В данной работе предложено несколько эконометрических моделей по прогнозированию цены на нефть. В результате разработанные модели показали разные прогнозные качества в зависимости от горизонта. На краткосрочном периоде прогнозирования хорошие прогностические свойства показала модель авторегрессии и скользящего среднего и векторной авторегрессии с 5 лагами, а на среднесрочном – модель векторной авторегрессии с 13 лагами. Комбинирование вышеуказанных моделей продемонстрировало превосходство индивидуальных моделей на коротком отрезке времени (от 8 до 13 месяцев). В целом, рекомендовано использовать данные модели в качестве дополнительного инструмента в рамках выработки сценариев по мировой цене на нефть. // Several econometric models for forecasting oil prices are proposed in this paper. As a result, the developed models showed different forecast characteristics depending on the horizon. In the short-term forecasting period, good forecast properties were shown by autoregressive and moving average and vector autoregressive models with 5 lags, and in the medium term – by a vector autoregressive model with 13 lags. Combining the above models demonstrated the superiority of individual models in the short term (from 8 to 13 months). In general, it is recommended to use these models as an additional tool in designing the world oil price scenarios. |
| Keywords: | нефть, прогнозирование, комбинирование, центральный банк, oil, forecasting, combining, central bank |
| JEL: | E32 E37 E59 Q43 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:aob:wpaper:55 |
| By: | Giorgio Calcagnini; Germana Giombini; Edgar J. Sanchez Carrera |
| Abstract: | We consider a green monetary policy framework implemented by the central bank. Under this framework, firms and commercial banks decide whether or not to apply a green (environmentally friendly) or brown (conventional) investment and policy, respectively. We develop an evolutionary game to study the conditions under which a stable or unstable equilibrium is reached. If the green firms' revenues minus their bank loans and their transition costs are strictly greater than the brown firms' revenues and their pollution costs, together with (primary or subsidized) green interest rates such that the default risk is lower for green firms compared to brown ones, then the economy evolves to a asymptotically stable green state. In the green state all banks give green loans and all firms invest in green investment. If the condition is reversed the economy converges to a brown state. If the banks and the firms are indifferent towards the green and brown policy and investment respectively, the economy fluctuates from green to brown state. There may be multiple equilibria. Through a transcritical bifurcation we show how stability (instability) of the equilibria changes with the parameters. |
| Keywords: | Climate Change; Evolutionary Dynamics; Green monetary policies; Firms Pollution |
| JEL: | C70 C72 D21 K42 L21 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2024_16.rdf |
| By: | Frattini, Federico Fabio; Vona, Francesco; Bontadini, Filippo |
| Abstract: | What are the consequences of green industrialization on the labour market and industry dynamics? This paper tackles and quantifies this question by employing observable and reliable data on green manufacturing production for an extensive set of EU countries and 4-digit manufacturing industries for over a decade. First, at a descriptive level, this paper documents that potentially green industries outperform the others in terms of employment, average wages, value added and productivity, net of controlling for other drivers of the labour market and industry dynamics. Second, employing a shiftshare instrument to purge the analysis from possible endogeneity within green potential industries, this paper finds that an expansion of green production implies an increase in employment and value added. In contrast, average wages and labour productivity remain unchanged. These results hold in the short and long term, are heterogeneous depending on the countries considered, and are amplified by existing industry specialization and by accounting for input-output linkages. |
| Keywords: | Climate Change, Environmental Economics and Policy, Political Economy, Sustainability |
| Date: | 2024–08–27 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:344791 |