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on Energy Economics |
| By: | Francesco Ravazzolo; Luca Rossini; Andrea Viselli |
| Abstract: | This paper introduces a novel Bayesian reverse unrestricted mixed-frequency model applied to a panel of nine European electricity markets. Our model analyzes the impact of daily fossil fuel prices and hourly renewable energy generation on hourly electricity prices, employing a hierarchical structure to capture cross-country interdependencies and idiosyncratic factors. The inclusion of random effects demonstrates that electricity market integration both mitigates and amplifies shocks. Our results highlight that while renewable energy sources consistently reduce electricity prices across all countries, gas prices remain a dominant driver of cross-country electricity price disparities and instability. This finding underscores the critical importance of energy diversification, above all on renewable energy sources, and coordinated fossil fuel supply strategies for bolstering European energy security. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.23289 |
| By: | Natalia Fabra; Clément Leblanc; Mateus Souza |
| Abstract: | The 2021-2023 European energy crisis, triggered by the war in Ukraine, led to broad policy interventions in energy markets. In contrast to the retail-side measures and public transfers implemented elsewhere, Spain and Portugal targeted the wholesale electricity market through the so-called Iberian solution. We quantify the distributional implications of the crisis and this market intervention on Spanish electricity firms and across consumer groups. We find that the crisis shifted substantial wealth from consumers to generators, with regressive impacts among consumers. Conversely, the policy’s relief was progressive, delivering larger gains to lower-income groups. |
| Keywords: | energy crisis, electricity markets, distributional implications, machine learning |
| JEL: | L94 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12093 |
| By: | Anas Abuzayed; Michael G Pollitt; Mario Liebensteiner; Simone Hochgreb |
| Keywords: | Deep decarbonisation, low-carbon fuels, fuel-blending, combined-cycle gas turbines (CCGT) |
| JEL: | Q42 Q48 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2520 |
| By: | Michael G Pollitt; Daniel Duma; Andrei Covatariu; Paul Nillesen |
| Keywords: | Distribution System Operators, gas, electricity, energy transition |
| JEL: | L94 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2519 |
| By: | Lohawala, Nafisa (Resources for the Future); Wen, Zhiqing (Phoebe) |
| Abstract: | Aviation, crucial for global connectivity, significantly contributes to climate change, accounting for 2.5 percent of human-induced CO2 emissions and 3.5 percent of overall human-made changes to the energy balance in the Earth’s atmosphere. The sector’s CO2 emissions have doubled since the mid-1980s, with projections indicating a potential tripling of demand by 2050, underscoring the urgency of greener solutions to balance economic benefits with environmental impacts. However, challenges abound, such as the high costs and sustainability concerns of sustainable aviation fuel, the limited capabilities of alternative technologies, such as hydrogen and electric aircraft, and the need for extensive infrastructure and international collaboration. The report offers an overview of different alternatives for greener aviation and the associated challenges, discusses policy approaches, and highlights areas for future research to effectively reduce the sector’s environmental footprint. |
| Date: | 2024–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-07 |
| By: | Krupnick, Alan (Resources for the Future); Robertson, Molly (Resources for the Future); Look, Wesley (Resources for the Future); Bautista, Eddie; Ko, Eunice |
| Abstract: | New York State is currently planning for and implementing the New York Climate Leadership and Community Protection Act (CLCPA), which was passed in 2019 to promote renewable energy and battery storage, transportation electrification, building decarbonization, and climate resiliency and adaptation. The CLCPA directs the state to reduce statewide greenhouse gas (GHG) emissions by 40 percent by 2030 and 85 percent by 2050 (relative to 1990 levels)—and to achieve net-zero GHG emissions economy-wide. In meeting these targets, the state must prevent disproportionate burdens on disadvantaged communities (DACs) and prioritize GHG and copollutant reductions in DACs as defined by the Climate Justice Working Group. Additionally, Section 0117 of Article 75 of the Environmental Conservation Law, an environmental justice (EJ) provision of the CLCPA, requires that DACs receive at least 35 to 40 percent of climate investments and benefits.The CLCPA established the Climate Action Council to develop a framework for how the state could meet the CLCPA goals and commitments. In January 2023, the Council released its final Scoping Plan, which outlined strategies to achieve the GHG and net-zero emissions targets and increase renewable energy usage. A cap-trade-and-invest program was among the strategies identified as a tool that could help the state hit its emissions targets and generate revenue for climate action and investments. The New York State cap-trade-and-invest program is intended to encourage decarbonization by capping carbon emissions, requiring emitters to purchase allowances to emit, and subsidizing (the “invest” side) the adoption of low-carbon technologies such as heat pumps.Since early 2023, the governor and state have announced and focused on a cap-trade-and-invest program (“NYCI”) as a priority measure to reduce GHG emissions economy-wide. The state has named it the New York Cap-and-Invest or NYCI, however, regulatory agencies have expressed that there will be a form of trading so we refer to it as cap-trade-and invest to be clear about the program. Draft cap-trade-and-invest regulations are expected to be released by the Department of Environmental Conservation (DEC) and New York State Energy Research and Development Authority (NYSERDA) in mid-2024, with a public hearing and comment period to follow. As currently described by state agencies, cap-trade-and-invest will establish an auction for emissions allowances and allow entities to freely trade allowances in a secondary market, as in the economy-wide carbon cap-and-trade systems of California, Washington State, and the European Union (NYSERDA and DEC 2023). However, New York State’s cap-trade-and-invest must additionally meet the CLCPA’s explicit requirement to not disproportionately burden DACs and to prioritize emissions reductions in them. The preproposal released by NYSERDA and DEC in December 2023 offered some ideas about how the program might ensure benefits for DACs and highlighted its willingness to consider implementing facility-specific caps outside the cap-trade-and-invest program. The preproposal indicates that the caps would be administered separately under DEC and that the state is seeking additional guidance on how these caps might be implemented (NYSERDA and DEC 2023).Our research analyzes the emissions effects of different cap-trade-and-invest policy designs at the statewide and community level Communities are defined by census tracts in this analysis. in New York. The first policy design is a traditional cap-and-trade program with full trading allowed between sectors and with no facility-specific restrictions (the full trading case, or FTC). Because of modeling constraints, we were unable to model a case with carbon allowances that can’t be traded in a secondary market, Our modeling reflects a system with a free market for allowances because obligated entities will only pay up to their marginal cost of carbon abatement for a carbon allowance. In a system without a secondary market, entities may behave differently, or some allowances may end up stranded with obligated entities that cannot use them or sell them. We cannot capture these behaviors in our models. so the second case restricts trading through facility- and sector-specific caps designed to prioritize emissions reductions in DACs and limit their pollution burden (the restricted trading case, or RTC). Both the FTC and RTC obligate the power sector and are designed with caps that assume achievement of the 40 by ‘30 target mentioned above. We do not model all sectors, so we establish an emissions budget for the modeled sectors estimated to reflect economywide reductions under the 40 by ‘30 target (40 percent below 1990 levels by 2030). See Appendix E for more detail. The preproposal analysis released by the state signaled that the electricity sector may not be obligated to purchase allowances in New York state cap-trade-and-invest program but would be covered by the Regional Greenhouse Gas Initiative. We discuss how that policy may impact the interpretation of our results in the conclusion. Our analysis assesses the two policy designs and compares them with a business-as-usual (BAU) policy case where no economy-wide carbon pricing or trading policy is implemented.In this report, we provide GHG and copollutant emissions (fine particulate matter, PM2.5; nitrogen oxides, NOX; and sulfur dioxide, SO2) results, along with a variety of economic metrics. Air quality results, along with an additional policy case, will be forthcoming in a separate issue brief. In that analysis, we leverage a model that considers how direct emissions covered in this report combine, migrate, and settle into PM2.5 concentrations at the census tract level. The initial emissions analysis presented in this first report provides key insights on direct pollutants, particularly in the power sector, where our model provides detailed data at the latitude-longitude level about the proximity of copollutant emissions to DACs.Our analysis has revealed several insights:A cap-trade-and-invest program reduces carbon emissions in all modeled sectors beyond the baseline policies included in the BAU. Implementing either modeled cap-trade-and-invest system (FTC or RTC) yields an approximately 22 percent reduction in emissions from the BAU statewide in 2030.At facilities within one mile of a DAC, facility-specific caps (RTC) increase the average facility direct PM2.5 emissions reductions (from 2016) by nine percentage points, from 80 to 89 percent, compared with a scenario with a cap-trade-and-invest program that doesn’t include facility-specific caps. SO2 and NOX emissions behave similarly.The facility-specific caps included in the RTC reduce New York direct PM2.5 emissions within a mile from DACs on net by over 44, 000 pounds in 2030 (with significant reductions in SO2 and NOX emissions). The caps have virtually no impact on retail electricity prices.Sector-specific caps (RTC) that force greater emissions reductions in specific sectors reduce GHG emissions by 4 percent more in the residential sector (or 0.76 MMT CO2e) relative to a cap-trade-and-invest program with full trading across sectors (FTC).Sector-specific caps (RTC) that require fewer GHG emissions reductions in the transportation and power sectors lead to lower gasoline and residential electricity prices relative to a cap-trade-and-invest program with no sector-specific caps (FTC). Prices are lower by 10 cents per gallon and 30 cents per MWh respectively. The increase in average household heating costs is outweighed by the reduction in average household transportation costs.Our research demonstrates that cap-trade-and-invest policy design choices can affect the distribution and cost of GHG emissions reductions. Including facility-specific caps can ensure a minimum level of reductions for each facility without driving costs significantly higher, compared with not having facility-specific caps. Additionally, sector-specific caps with no trading between sectors can help ensure a minimum level of reductions in each sector while mitigating some important household costs. Our cost findings reflect the assumption that New York State will make generous investments in electrification subsidies for households. The details of a cap-trade-and-invest program, such as those we model, will determine whether New York State simultaneously achieves its GHG emissions goals, prevents disproportionate burdens in DACs from conventional pollution emissions and concentrations, and produces revenue that can sustain and drive climate action and investments by the state. For EJ stakeholders, this research is essential because they will not support a cap-trade-and-invest system that may further harm the health and quality of life for low-income communities and communities of color, which could violate Section 7(3) of the CLCPA. |
| Date: | 2024–03–18 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-05 |
| By: | Burtraw, Dallas (Resources for the Future); Hafstead, Marc (Resources for the Future); Rennert, Kevin (Resources for the Future) |
| Abstract: | Climate change is the defining environmental problem of our time. Recent assessment reports from the Intergovernmental Panel on Climate Change and the US government have highlighted the urgency of reducing greenhouse gas (GHG) emissions to net zero (and beyond) in the next few decades to avoid the most catastrophic effects of climate change.Eliminating GHG emissions throughout the global economy will entail comprehensive actions to reshape society’s approach to producing and using energy. Shifting to complete reliance on low- and zero-emissions sources of energy will require substantial investments in technology and infrastructure. Such investments could simultaneously drive economic growth and deliver environmental benefits in disproportionately impacted communities. We use the term disproportionately impacted communities throughout this report to refer to both overburdened and underserved communities, as defined by Maryland’s Climate Solutions Now Act (CSNA). Accomplishing a rapid energy transition—and doing so in a way that seizes the economic opportunity of that transition—will require a supportive policy framework.The state of Maryland has already taken significant policy steps to guide its own transition. Reductions in emissions from the power sector are guided by Maryland’s membership in the Regional Greenhouse Gas Initiative (RGGI) and further supported by the state’s renewable portfolio standard (RPS). Efforts to address transportation emissions include the forthcoming Advanced Clean Cars II rule, under which the share of zero-emissions vehicles will reach 100 percent of new-vehicle sales by 2035, and the Advanced Clean Truck rule (effective in 2027). Building energy performance standards will require a 20 percent reduction in direct GHG emissions from existing large buildings by 2030, relative to 2025.Maryland’s efforts to reduce emissions also benefit from existing sector-specific federal mitigation policies: for the power sector, tax credits for solar, wind, and other low-carbon generation; for the transportation sector, electric vehicle and sustainable fuel credits, electric vehicle infrastructure investments, and GHG emissions standards for light-, medium-, and heavy-duty vehicles; for the residential sector, energy efficiency home tax credits and other consumer tax credits; and for the industrial sector, incentives for clean hydrogen and carbon capture and storage.As required by the Climate Solutions Now Act (CSNA), the Maryland Department of the Environment (MDE) released its Climate Pollution Reduction Plan in December 2023, outlining policy actions to reach the state’s ambitious climate goals: reducing GHG emissions by 60 percent from 2006 levels by 2031, achieving 100 percent clean energy by 2035, and reaching net-zero emissions by 2045. Highlights of the plan include the following:completing the transition away from coal-fired power plants;scaling up renewable infrastructure, including solar, wind, and battery power;providing more incentives for consumers to choose electric when they replace vehicles and expanding charging infrastructure;advancing energy-efficient retrofitting of 9, 000 existing buildings and helping consumers electrify their homes by switching to heat pumps, electric water heaters, and electric appliances; andelectrifying school buses, transit buses, and government fleet vehicles.As part of the plan, MDE has committed to explore an economy-wide cap-and-invest program “to complement targeted investments and sectoral standards, while providing a sustainable revenue source for state-funded community investments.” The program would aim to drive investments in energy infrastructure that enable reductions in climate pollution, to place a declining cap on such pollution, and to auction emissions allowances to raise proceeds to support program-related goals. The program could prioritize investments in disproportionately impacted communities. Further, it could provide resources to make the transition affordable for businesses and households.This report outlines options for the design of such an economy-wide cap-and-invest program. We draw on both policy science literature and experience in existing emissions markets. Market-based mechanisms that place a price on emissions are an effective tool to incentivize cost-effective emissions reductions because they give private parties the flexibility to reduce emissions where it is least expensive to do so. An emissions cap boosts confidence that the climate plan goals, and the overall emissions reduction target, will be achieved. Adding the investment framework can provide incentives to leverage federal and private funds to achieve the goals and place equity for small businesses and low- and moderate-income households at the front of the energy transformation. However, in designing this emissions cap-and-invest program, policymakers face many decisions that will influence its fairness, effectiveness, and enforceability. |
| Date: | 2024–06–27 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-10 |
| By: | Slaria, Srishti; Robertson, Molly (Resources for the Future); Palmer, Karen (Resources for the Future) |
| Abstract: | Achieving the ambitious decarbonization goals established by the Biden administration, 100 percent clean electricity by 2035 and a net-zero emissions economy by 2050, requires substantially increasing the share of clean and renewable energy resources in the electricity generation mix. To reach these decarbonization targets cost-effectively, renewable power will need to grow to multiples of current levels. The transmission system is not equipped to handle the anticipated substantial increase in power flows; its lack of capacity and availability leads to grid congestion, which causes higher energy prices and curtails renewables. Moreover, with the anticipated electrification of the economy leading to large increases in future demand, the burden on the power grid is ever increasing. A report from the REPEAT project estimates that to take full advantage of the subsidies offered in the Inflation Reduction Act (IRA), transmission capacity must grow by about 2.3 percent per year, more than double the rate of the past 10 years (Jenkins et al. 2022).Nevertheless, getting new projects built can take over a decade due to the complexities involved in their planning, siting, and permitting. State and federal policymakers have acknowledged this challenge and taken steps to support the buildout of new transmission. The Infrastructure Investment and Jobs Act (IIJA) and IRA carved out support for transmission expansion, allocating $12.5 billion and $5 billion, respectively. Furthermore, the Biden administration recently announced plans to streamline the federal permitting process for transmission lines through the Department of Energy (DOE) to facilitate buildout. Nonetheless, experts are still skeptical that we can build enough new transmission in time to support the shifting generation mix and increasing electrification to meet climate targets.However, building new lines is not the only way to bolster resilience, reliability, and affordability. Several different types of investments can deliver similar outcomes. Grid-enhancing technologies can increase the capacity of existing lines, distributed energy resources can spread out generation resources so they are closer to load centers, and microgrids can use on-site power generation to support pockets of load and insulate campuses or communities from issues on the broader grid. These solutions can deliver benefits, but each is best suited to a specific set of circumstances and faces its own technical and regulatory barriers to implementation.This report surveys the literature on different types of grid solutions. We discuss how the technologies work, in what circumstances they may act as substitutes for transmission expansion, evidence of their impact, and challenges (both technical and regulatory) in implementing them. New lines will undoubtedly be an important piece of the energy transition, but exploring these additional types of investments can help us understand where and when lower-cost and more rapidly deployed alternatives can provide solutions to some of our transmission woes. |
| Date: | 2023–09–21 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-23-13 |
| By: | MacInnis, Bo; Krosnick, Jon A. (Resources for the Future) |
| Abstract: | In Climate Insights 2024: American Understanding of Climate Change, we showed that huge majorities of Americans believe that the earth has been warming, that the warming has been caused by human activity, that warming poses a significant threat to the nation and the world—especially to future generations—and that governments, businesses, and individuals should be taking steps to address it.In this report, we turn to specific federal government opportunities to reduce future greenhouse gas emissions, often referred to as climate change mitigation. Policies to accomplish this goal fall into several categories, including:Consumer incentives that reward people for taking steps that reduce their use of fossil fuels and, by extension, reduce their carbon footprintCarbon pricing policies that require emitters to pay for their carbon emissions, such as a carbon tax (which would require carbon emitters to pay a tax for each ton of carbon they emit), or a cap-and-trade program (which would require businesses to have a permit for each ton of carbon they emit)Regulations that require manufacturers to increase energy efficiency of their productsTax incentives that encourage manufacturers to increase the energy efficiency of their productsThis 2024 survey asked Americans about their opinions on a wide array of such policies, which allows us not only to assess current opinions, but to track changes in those opinions over the past two decades through comparisons with responses to comparable questions asked in earlier national surveys. |
| Date: | 2024–08–27 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-15 |
| By: | Prest, Brian C. (Resources for the Future); Wingenroth, Jordan (Resources for the Future) |
| Abstract: | This report analyzes the differences between risk profiles posed by fossil assets, such as natural gas power generation and gas-powered vehicles, and those of “green” alternatives, such as wind power and electric vehicles. Fossil assets tend to be exposed primarily to uncertainty in operational expenditures (OPEX) such as fuel prices, whereas green assets tend to be exposed primarily to uncertainty in capital expenditures (CAPEX). This report builds a quantitative dynamic economic model of investment under uncertainty that accounts for these different kinds of risk. The results show the relative value of such CAPEX-exposed green assets over OPEX-exposed fossil assets for reducing exposure to future cost uncertainty. The model’s key conclusions are that (1) correlated OPEX risk across assets implies that an all-green portfolio has lower uncertainty than an all-fossil one even when the assets themselves have similar total cost uncertainty, (2) adding a green asset option to an otherwise all-fossil investment strategy typically reduces cost uncertainty by more than adding a fossil option to an all-green strategy does, and (3) actually owning such a green asset almost uniformly reduces cost uncertainty by shielding society (investors and consumers) from OPEX risk. The primary mechanisms driving these results are threefold: first, an investment in CAPEX-exposed assets immediately resolves substantial cost uncertainty, second, spikes in fuel prices increase OPEX for all existing fossil assets whereas spikes in green CAPEX costs only affect new investments, and third, the availability of multiple options for future asset replacement decisions avoids locking in exposure to CAPEX risk. |
| Date: | 2024–03–13 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-04 |
| By: | Lo Prete, Chiara; Palmer, Karen (Resources for the Future); Robertson, Molly (Resources for the Future) |
| Abstract: | Existing wholesale electricity market designs are poorly suited to address challenges associated with the evolving resource mix. For example, recent scarcity events in the United States show that reliability challenges in renewable- and gas-dominated electric power systems arise not from the lack of generation capacity to serve peak customer demand, but from the lack of available capacity to provide the requisite energy at times of need. We review 11 proposed electricity market designs for the clean energy transition and compare them based on 10 criteria. Enhancing reliability in electric power systems with a significant amount of variable renewable energy requires incentivizing resource flexibility, both in investment and in operation. Electricity market structures should allow resources needed for reliability to earn adequate revenues to recover their variable and fixed costs. Good market designs also enable low-cost financing to support investments in capital-intensive resources that are instrumental in meeting decarbonization objectives. An additional property of well-designed markets is promoting short-run efficiency by reducing incentives to exercise market power and supporting efficient renewable curtailment outcomes. Besides achieving reliability, long-run efficiency, and short-run efficiency, some proposals in our review seek to achieve energy affordability objectives and integration with clean energy goals. Our evaluation highlights several open questions and directions for future research: the determination of mandatory purchase obligations of load-serving entities and associated enforcement mechanisms; the interplay between long-term hedging requirements and incentives for demand participation in real time; and the compatibility between long-term contract design and efficient operations in short-term energy markets. |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-09 |
| By: | Kine Josefine Aurland-Bredesen; Rolf Golombek; Mads Greaker |
| Abstract: | Whereas hydrogen is currently a marginal energy carrier, the aim of the EU is to trigger low-carbon hydrogen production that covers around 10 percent of EU’s energy needs by 2050. If this comes true, it will be an energy revolution. We study competition between green and blue hydrogen by proposing a Salop model that encompasses the value chains for hydrogen and CCS. For blue hydrogen, we distinguish between central production—natural gas is transformed to hydrogen close to the extraction site and hydrogen is then transported over a long distance via terminals to the hydrogen consumers—and local production—natural gas is transformed to hydrogen at terminals located near the hydrogen consumers. We find that mark-ups are highest under central blue hydrogen production, which implies that total production of hydrogen, supply of blue hydrogen, and share of plants investing in carbon capture facilities are lower under central production than under local production of blue hydrogen. We provide numerical simulations of the alternative market outcomes and also the corresponding social outcomes, and calculate the magnitude of policy instruments that should be used in order to obtain the social outcomes under central and local blue hydrogen production. |
| Keywords: | blue hydrogen, green hydrogen, carbon capture and storage, Salop circle, carbon tax, market imperfections, network externalities |
| JEL: | H23 L13 Q35 Q38 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12130 |
| By: | Verdolini, Elena; Look, Wesley (Resources for the Future); Belpietro, Chiara; Persico, Giulia |
| Abstract: | The European Union (EU) is strongly committed to steering its economy away from high-carbon and pollution-intensive production and toward climate-neutral technologies and business models by 2050. If this transition is not accompanied by adjustment assistance, however, making deep reductions in greenhouse gas (GHG) emissions could disproportionately burden certain segments of society that are dependent on producing or using carbon-intensive energy resources as a primary employer or mainstay of the economy (Vona 2021). Many regional economies in Europe rely on fossil fuel extraction (oil, coal, or gas) or energy- and carbon-intensive production (e.g., steel production and electricity generation). As European Commission president Ursula von der Leyen has frequently stated, the large-scale deployment of low-carbon energy can succeed only if conducted in a fair and inclusive way for all European citizens (European Commission 2019k), what many refer to as just transition.The aim of this report is to distill important lessons learned from the EU experience in promoting just transition to help US policymakers identify key components of a comprehensive and effective energy transition policy package. The report examines EU-level programs implemented over the period 2014–20 and summarizes the policy changes proposed in the European Green Deal for 2020–25.The just transition concept originated in the US labor movement during the 1970s to describe the need for a support system for workers unemployed because of environmental protection policies (Henry et al. 2020). In the EU, the quality of work and life of its citizens has been a policy goal since its founding. One of the guiding principles of European policymaking is a commitment to reduce social, economic, and territorial development disparities among EU regions to promote integration and the economic growth of all member states. This is referred to as cohesion policy, which is enshrined in the Treaty on the Functioning of the European Union (Art. 174) and plays a crucial role in setting political priorities at the EU level (European Commission 2022g). Cohesion policy is the term used in the EU context to refer to regional policy. In the EU, socioeconomic development is promoted as an expression of solidarity between the EU member states and their regions. Programs and funding targeting socioeconomic development aim to remove economic, social, and territorial disparities across the EU, supporting the restructuring of declining industrial areas and diversification of declining rural areas. The rationale for cohesion policy is to mitigate the negative side effects from the creation of a single market and ensure that all EU citizens can reap the benefits (Samecki 2009). These policies and programs have been used as building blocks to shape EU just transition policy over time, including in the European Green Deal. For discussion of the evolving interpretation of just transition, see ILO (2015); Stevis and Felli (2015); Verdolini (2023).It is important to note that most of the EU programs we discuss are ultimately implemented and used by the member states, which have a fair degree of autonomy in selecting the projects to be funded within the broader design principles set up at the EU level. Other reports in this series have reviewed some of the ways these EU-level programs have been implemented in specific countries. Reports on just transition measures related to reductions in the coal sector in Germany, Poland, and the UK can be found on the RFF website at https://www.rff.org/publications/all-publications/?offset=12&topic=10098. The report on “Just Transition in Poland” examines the topic in the broader context of economic restructuring and increased regional integration of the country.Within the EU, the concept of just transition indicates the need to support and help territories and regions most affected by the transition to a climate-neutral economy, prioritizing those that have less capacity to deal with the costs of transition (European Commission 2019b). The EU currently distinguishes between regions dependent on extraction of coal and fossil fuels and those dependent on carbon-intensive industries (Alves Dias et al. 2021).This report does not present an exhaustive list of all programs and investments at the EU level that have been used to support workers and communities; rather, it identifies the key relevant EU policies and programs, describes their main features, and gives several examples of specific funded projects and activities. Many of these policies and programs have been motivated by other energy and economic issues, such as improving energy efficiency for energy security and enhanced productivity, but they include tools that are also applicable to just transition in the context of decarbonization.Sections 2 and 3 of this report focus on the policies and programs during the full EU long-term budget cycle from 2014 to 2020. Section 4 then discusses more recent EU policy priorities and programs, some of which are still being shaped under the European Green Deal. The report thus provides a broad picture of how the debate around just transition is reshaping and adjusting EU policies and programs. Section 5 concludes by summarizing the relevant lessons learned from the EU experience.The review of EU just transition policies provides several relevant insights for policymakers seeking to address equity and fairness issues in the United States’ energy transition. See Look et al. (2021) for a review of key issues for the US energy transition. We briefly summarize the key points here, with discussion of them in Section 5.The multiannual and investment-focused EU budget provides long-term, stable funding, which supports addressing many of the challenges associated with just transition.The EU Just Transition Mechanism aims to mobilize substantial public and private investment between 2021 and 2027 to support just transition efforts in Europe.The Just Transition Mechanism includes a Just Transition Platform to serve as a single access point for related EU-wide resources and a centralized source for technical assistance. The Biden administration has established a similar resource.The EU just transition policy framework requires EU member states to develop Territorial Just Transition Plans before accessing funds. The Biden administration has established a mechanism for rapid response teams to support local transition planning.One of the three pillars of EU just transition policy in the Green Deal is access to the Public Sector Loan Facility to support the implementation of just transition projects. The United States does not have a financing program explicitly dedicated to supporting transition in energy communities, although the creation of the Greenhouse Gas Reduction Fund in the Inflation Reduction Act may lead to a green bank that could support just transition efforts.EU R&D policy supports not only technology development but also innovation in the creation of stronger social institutions as a tool for responding to just transition challenges. The US federal government could do more to support research and pilot implementation of innovative approaches for addressing just transition. |
| Date: | 2024–02–08 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-02 |
| By: | Luca Bettarelli; Davide Furceri; Prakash Loungani; Jonathan Ostry; Loredana Pisano |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:bre:wpaper:node_11221 |
| By: | Timoth\'ee Hornek; Sergio Potenciano Menci; Ivan Pavi\'c |
| Abstract: | The increasing penetration of variable renewable energy and flexible demand technologies, such as electric vehicles and heat pumps, introduces significant uncertainty in power systems, resulting in greater imbalance; defined as the deviation between scheduled and actual supply or demand. Short-term power markets, such as the European continuous intraday market, play a critical role in mitigating these imbalances by enabling traders to adjust forecasts close to real time. Due to the high volatility of the continuous intraday market, traders increasingly rely on electricity price forecasting to guide trading decisions and mitigate price risk. However most electricity price forecasting approaches in the literature simplify the forecasting task. They focus on single benchmark prices, neglecting intra-product price dynamics and price signals from the limit order book. They also underuse high-frequency and cross-product price data. In turn, we propose a novel directional electricity price forecasting method for hourly products in the European continuous intraday market. Our method incorporates short-term features from both hourly and quarter-hourly products and is evaluated using German European Power Exchange data from 2024-2025. The results indicate that features derived from the limit order book are the most influential exogenous variables. In addition, features from neighboring products; especially those with delivery start times that overlap with the trading period of the target product; improve forecast accuracy. Finally, our evaluation of the value captured by our electricity price forecasting suggests that the proposed electricity price forecasting method has the potential to generate profit when applied in trading strategies. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.04452 |
| By: | Raimi, Daniel (Resources for the Future); Dalbey, Matthew |
| Abstract: | The federal Interagency Working Group (IWG) on Coal and Power Plant Communities and Economic Revitalization (informally, the IWG on Energy Communities) was established in 2021 to improve economic conditions in US communities that rely—or have relied—heavily on the coal, oil, and natural gas industries. This report describes the origins of the IWG and its evolution, noting challenges and offering lessons. We describe how, at the local level, changes in the energy system can have profound local economic consequences. Although a raft of new federal programs seek to transform the US energy sector and provide more equitable economic outcomes, numerous barriers make it difficult for fossil fuel–dependent communities to access new federal resources. To bridge this divide, the IWG has sought to address the needs of affected communities, but this work requires significant time and effort to build relationships and work toward solutions. We find that expanding the IWG and providing it with additional resources would improve its ability to enhance economic outcomes in fossil fuel–dependent communities. |
| Date: | 2024–11–04 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-22 |
| By: | Stefano Carattini; Hanwei Huang; Frank Pisch; Tejendra Pratap Singh |
| Abstract: | Although the environmental impact of trade has been a long-standing concern, there is still only scant evidence on the channels through which international market access affects pollution. In this paper, we exploit the unique episode of China’s world market integration in the early 2000s to provide direct empirical evidence on three such mechanisms. We combine granular satellite data on air pollution with detailed information on manufacturing firms and coal power plants, and leverage exogenous foreign demand shocks for identification. Three main findings emerge: exporting firms reduce local pollution (scope-1); pollution levels around coal power plants rise due to regional export shocks (scope-2); and upstream suppliers reduce pollution in the face of export demand shocks to downstream firms (scope-3). Our findings point to China’s reliance on coal power plants to fuel its export-driven growth as one of the main drivers of the rise in pollution. |
| Keywords: | trade, pollution, satellite, supply chain, coal power plants, electricity |
| JEL: | D22 F18 F64 Q53 Q56 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12119 |
| By: | Hugo Morão |
| Abstract: | This study looks at how the the climate policy uncertainty (CPU) shocks affect Portugal’s energy sector, specifically examining their effects on turnover, output prices, and labor market dynamics. The structural vector autoregression (SVAR) analysis shows that CPU shocks lead to a significant increase in domestic turnover. Output prices rise both at home and abroad, but foreign prices are more sensitive. The labor market shows a more nuanced reaction, hours worked marginally increase and wages remain unchanged. Furthermore, the study finds that CPU has been a key driver of historical variations in the energy sector, particularly during global policy events like COP26 and domestic policy changes like carbon or car tax changes. These findings establish CPU as significant driver in energy prices and underscore the importance of judicious climate policymaking. |
| Keywords: | climate policy; climate policy uncertainty; SVAR; energy crisis; Portugal. |
| JEL: | C32 E62 F18 H23 Q48 L94 G18 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03932025 |
| By: | Peer Lasse Hinrichsen; Katrin Rehdanz; Richard S. J. Tol |
| Abstract: | This paper contributes to the limited literature on the temperature sensitivity of residential energy demand on a global scale. Using a Bayesian Partial Pooling model, we estimate country-specific intercepts and slopes, focusing on non-linear temperature response functions. The results, based on data for up to 126 countries spanning from 1978 to 2023, indicate a higher demand for residential electricity and natural gas at temperatures below -5 degrees Celsius and a higher demand for electricity at temperatures above 30 degrees Celsius. For temperatures above 23.5 degrees Celsius, the relationship between power demand and temperature steepens. Demand in developed countries is more sensitive to high temperatures than in less developed countries, possibly due to an inability to meet cooling demands in the latter. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.22768 |
| By: | Krupnick, Alan (Resources for the Future); Robertson, Molly (Resources for the Future); Look, Wesley (Resources for the Future); Bautista, Eddie; Sanders, Victoria; Ko, Eunice; Shawhan, Daniel (Resources for the Future); Linn, Joshua (Resources for the Future); Jaller, Miguel; Rao, Narasimha; Poblete Cazenave, Miguel; Zhang, Yang; Chen, Kai; Wang, Pin |
| Abstract: | Our country and New York State (NYS) in particular are striving to meet the interrelated challenges of decarbonization and environmental justice. Historically unjust systems and policies have led to a disproportional air pollution burden on low-income communities and communities of color. As a result, the federal and NYS governments have resolved to meet their climate goals while improving air quality conditions in disadvantaged communities.Bringing together leading environmental justice advocates, economic researchers, public health scientists, and air quality modelers, Resources for the Future (RFF) and the New York City Environmental Justice Alliance (NYC-EJA) along with researchers at Yale, UC Davis, and Northeastern University have partnered to investigate local air quality impacts on disadvantaged communities from implementation of the NY Climate Leadership and Community Protection Act (CLCPA). Specifically, we compare two sets of policies, both in line with the statutory requirements of the law but differing in their ambition and the degree to which they focus on aiding disadvantaged communities, with a business-as-usual (control) case in 2030. One policy case (inspired by recommendations of the Climate Action Council, CAC) models what the New York State government may implement, which includes policies discussed in other jurisdictions and proposed by New York policymakers. The other case (representing what many stakeholders recommend) was crafted by a team led by NYC-EJA and included many environmental and climate justice advocates in New York, who prioritized community protection and directing benefits to marginalized communities. We modeled the impact of policies on the electric power, on-road transportation, ports, and residential building sectors; the effects these policies have on emissions of direct fine particulate matter (PM2.5) and its precursors nitrogen oxides, sulfur dioxide, and volatile organic compounds (NOx, SO2, and VOCs); and the resulting PM2.5 concentrations experienced by disadvantaged communities and nondisadvantaged communities alike. For a full list of policies modeled, see Table 1 in our full report. |
| Date: | 2023–09–13 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-23-12 |
| By: | Rasmus Kehlet Skjødt Berg; Peter Birch Sørensen |
| Abstract: | To study the economic and welfare consequences of alternative time paths towards net zero CO2e emissions, we develop a multi-sector dynamic computable general equilibrium model of an open economy with heterogeneity in abatement costs across sectors and firms and with adjustment costs in the adoption of abatement technologies and other types of investment. We measure the welfare costs of following the simple rules for emissions reduction observed in practice rather than the optimal national policy rule prescribed by economic theory. In an undistorted economy subject to a carbon budget, the theoretically optimal climate policy is a "Hotelling rule" where the carbon tax rate increases year by year at the real rate of interest. However, when some consumers are credit-constrained, it is optimal to deviate from the Hotelling rule and use carbon taxation to redistribute income towards poor hand-to-mouth consumers. Nevertheless, in aggregate terms very little welfare is lost by following a Hotelling rule or a linear emissions reduction path rather than the optimal time path for carbon taxes when climate policy is subject to a carbon budget. The optimal carbon tax path towards a simple end-point target for net zero emissions implies a much higher welfare cost per ton of accumulated GHG emissions than a policy constrained by a carbon budget. |
| Keywords: | alternative climate policy rules, hotelling rule for optimal climate policy, computable general equilibrium, abatement costs |
| JEL: | C67 C68 H21 H23 Q01 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12101 |
| By: | Stefan Wöhrmüller |
| Abstract: | How does uninsurable idiosyncratic risk shape the optimal design of carbon taxation? To answer this question, I augment a heterogeneous-agent incomplete-markets model with a climate externality on total factor productivity and dirty energy demand of households and firms. A government sets a carbon tax on energy and redistributes its revenue via lump-sum transfers. When labor tax instruments are held fixed, I find that the optimal carbon tax rises with the level of uninsurable idiosyncratic risk. In contrast, when labor taxes can adjust, the carbon tax remains relatively stable across different economic environments. Overall, welfare gains are primarily driven by improved insurance provision. |
| Keywords: | heterogeneous agents; precautionary savings; carbon taxation |
| JEL: | D31 D52 E21 H21 Q50 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:dnb:dnbwpp:841 |
| By: | Phillippe K. Phanivong; Duncan S. Callaway |
| Abstract: | Regulators and utilities have been exploring hourly retail electricity pricing, with several existing programs providing day-ahead hourly pricing schedules. At the same time, customers are deploying distributed energy resources and smart energy management systems that have significant flexibility and can optimally follow price signals. In aggregate, these optimally controlled loads can create congestion management issues for distribution system operators (DSOs). In this paper, we describe a new linear pricing mechanism for day-ahead retail electricity pricing that provides a signal for customers to follow to mitigate over-consumption while still consuming energy at hours that are preferential for system performance. We show that by broadcasting a linear price designed for price-signal control of cost-optimizing loads, we can shape customer load profiles to provide congestion management without the need for bi-directional communication or customer bidding programs. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.08166 |
| By: | Bartlett, Jay (Resources for the Future) |
| Abstract: | Within the Inflation Reduction Act (IRA), corporate tax credits are the largest source of clean energy funding, so understanding how these credits function is important to market participants and policymakers. In this report, I focus on the IRA’s authorization for both utility-scale solar and wind projects to choose between the investment tax credit (ITC) and production tax credit (PTC). After reviewing the history of the ITC and PTC, including the changes made by the IRA, I consider how the three primary owners of utility-scale solar and wind projects—project sponsors, tax equity investors, and regulated utilities—will decide between incentives. I find that the PTC, in most cases, will be strongly preferred by regulated utilities and project sponsors, but the latter’s preference must be weighed against the interests of tax equity investors, which may favor the ITC. Next, I assess how the ITC and PTC may distort project decisions, with the ITC leading to higher-cost electricity and the PTC leading to lower-value electricity. Because the PTC is likely to be the incentive chosen by most utility-scale solar and onshore wind projects, I discuss technology and policy options to raise the value of electricity from PTC projects. |
| Date: | 2023–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-23-20 |
| By: | Nehrkorn, Katarina (Resources for the Future); Spiller, Beia (Resources for the Future); Krupnick, Alan (Resources for the Future) |
| Abstract: | Clean hydrogen (H2) fuel can play a role in decarbonizing the heavy-duty transportation sector. Transportation is the biggest source of anthropogenic CO2 emissions within the United States, and medium- and heavy-duty vehicles make up 23 percent of transportation emissions. The heavy-duty transportation sector is defined as commercial vehicles with gross vehicle weight ratings more than 26, 001 pounds and generally includes drayage trucks, short and regional day cabs, and long-haul Class 8 trucks. This sector is particularly difficult to decarbonize, as these trucks often require long ranges and carry heavy payloads. This report provides an overview of H2 truck technology, its current status in the United States, comparisons to diesel and battery electric trucks, challenges to deployment, and policy issues. |
| Date: | 2024–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-11 |
| By: | Manuel Hidalgo Pérez (Universidad Pablo de Olavide); Natalia Collado (Universidad de Comillas); Ángel Martínez Jorge (AFI) |
| Abstract: | The outbreak of the COVID-19 pandemic and Russia’s invasion of Ukraine in early 2022 severely disrupted energy markets, triggering a spike in global oil prices. To mitigate the impact on consumers, Spain introduced a fuel discount of 20 cents per liter, effective until the end of 2022. This study assesses the pass-through of the discount to retail prices using a combination of regression discontinuity (RD), difference-in-differences (DiD), and quantile regression approaches with daily data from over 11, 000 Spanish petrol stations. We analyze how different types of operators—vertically integrated, branded, and independent—responded to the policy and examine its impact on the retail price distribution. The results reveal a negative relationship between a station’s initial price and the pass-through of the discount, with lower-priced stations raising prices more in response to the policy. This pattern is particularly pronounced for diesel and among independent and retailer-managed branded stations, which captured a larger share of the subsidy. The quantile regressions further highlight that price increases were concentrated in the lower end of the price distribution, amplifying differences across station types. However, our DiD analysis shows that these effects were temporary, with price differentials gradually converging after approximately 36 to 43 days. Overall, the findings highlight how generalized public discounts can temporarily distort market dynamics and affect competitive conditions in the market. The study offers insights for the design of future subsidy programs, particularly regarding the role of market structure and financial constraints in shaping pass-through. |
| Keywords: | pass-through, discount, retail fuel prices, market structure, regression discontinuity, DiD, quantile regression. |
| JEL: | D12 Q41 Q48 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pab:wpaper:25.01 |
| By: | Spiller, Beia (Resources for the Future); Kannan, Sangita; Toman, Michael A. (Resources for the Future) |
| Abstract: | Transition by the United States to a decarbonized economy by the middle of the century must include transportation, which today accounts for a little less than 30 percent of US greenhouse gas (GHG) emissions and over one-third of total CO2 emissions (EPA 2023; EIA 2023). Among the options for decarbonizing ground transportation, current policy emphasizes increased electric vehicle use along with decarbonizing the power grid and further advances in electric vehicle (EV) technology, especially for EV batteries.Current EV battery designs use significant quantities of so-called critical minerals, specifically lithium, cobalt, manganese, nickel, and graphite. Radically increasing global production and purchases of EVs with these battery designs will lead to order-of-magnitude increases in demand for these minerals (IEA 2022). However, as discussed in Section 2, critical minerals tend to be found mainly in a handful of countries outside the United States. Moreover, the capacity for processing extracted minerals into forms suitable for use in manufacturing EV batteries is highly concentrated in one country, China.Thus, there are substantial concerns about perceived risks to future affordability and reliability of the supplies of these minerals because of the geographic concentration of the supply chains and the economic and political power that dominant mineral suppliers could wield. Another concern is about mineral price volatility, including large price shocks of uncertain duration, which would complicate planning and management for both battery and vehicle manufacturers. Moreover, critical mineral supplies can be increased and diversified only after lengthy periods for exploration and development of new mineral reserves, as well as construction of new processing facilities. In short, the response of critical mineral supplies to higher prices generally is highly inelastic, at least until enough time has elapsed for mineral extraction and processing capacity to expand. As noted in Section 3.4, in the United States that interval often is many years.This paper explores these challenges in greater detail and highlights implications for US policy toward critical minerals. Section 2 reviews key geographic characteristics of critical minerals and uncertainties regarding expanding their supplies within the United States. Section 3 examines critical mineral policies in the United States and their limitations. The final section identifies some priorities for developing critical mineral policy and filling knowledge gaps. |
| Date: | 2023–12–07 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-23-19 |
| By: | Look, Wesley (Resources for the Future); Propp, Daniel |
| Abstract: | The United States is undergoing an energy transition. The share of electricity sourced from fossil fuels has steadily declined over the past decade, a consequence of both growing concern over climate change and the availability of low-cost renewable energy. Coal has faced a particularly steep decline—once the source of over half of the country’s electricity, it now supplies less than one-fifth (EIA 2022).This shift away from traditional energy sources puts at risk those workers and communities for whom fossil fuel production or industrial use is a key driver of prosperity. Thus, effective stewardship of the energy transition demands that policymakers prioritize fairness and opportunity for these groups. This concept of fairness for economically dislocated workers and communities is widely known as “just transition.”Facilitating a just transition is no easy task, as the challenges facing communities in transition are diverse and deeply rooted. But as the shift away from fossil fuels accelerates, the need for effective methods of intervention—including thoughtful public policy—to address these challenges becomes acute.The experiences of individual communities that have dealt with the loss of fossil fuel–related economic activity can serve as a valuable guide for how to pursue a just transition. This report examines the experience of one such community, Tonawanda, New York, and its process of dealing with the closure in 2016 of the C. R. Huntley Generating Station, a coal-fired electricity plant. For the purposes of this case study, Tonawanda refers to the town of 72, 000 in western New York (US Census Bureau 2021a), not to be confused with the city of Tonawanda, a smaller municipality directly to the north of it, nor with North Tonawanda, a city farther north in Niagara County. Tonawanda includes the village of Kenmore, a semiautonomous suburb of 15, 000 people (US Census Bureau 2019) that has its own mayor and board of trustees but is still subject to Tonawanda’s taxing jurisdiction. Kenmore and Tonawanda share a public school district called the Kenmore-Tonawanda Union Free School District, which includes nine schools that collectively serve almost 7, 000 students (KTUFSD 2020). To understand the impact of the closure and how the community responded, we analyzed tax documents, pollutant reports, municipal budgets, and news coverage. We also conducted a series of telephone interviews in 2020 with the following individuals: Joseph Emminger, Tonawanda’s town supervisor; Richard Lipsitz, president of the Western New York Area Labor Federation, AFL-CIO; Dave Wasiura, assistant director of the local chapter of United Steel Workers; Cindy Winland, director of strategic priorities at Delta Institute; and staff in the Office of Senator Chuck Schumer.The Tonawanda experience provides illustrative examples of how a single facility’s closure can create challenges for local government budgeting and disrupt a variety of industrial operations in the local economy—some of which may be unexpected. Tonawanda also offers insights into how a diversity of stakeholders—including labor unions, environmental advocates, and local government—can work together effectively to facilitate transition, along with how federal and state government programs can provide important financial support. Given the diversified economy of the broader Buffalo metro area, however, the Tonawanda experience may have limited applicability to communities embedded in larger regions undergoing energy transition, such as Central Appalachia, where coal mining has precipitously declined in recent years. In these areas, communities may face larger economic and fiscal challenges, have more complex stakeholder dynamics, and enjoy less support from state government. That said, insights from the Tonawanda case can be helpful for communities undergoing transition of any kind, taken in context. These insights include the following:Start planning early. A proactive approach to transition is essential for securing funding, coordinating stakeholders, and planning redevelopment. Communities and organizations facing a transition should begin planning as soon as it becomes clear that a facility will shut down, and energy companies should endeavor to provide early warning.Formalize the transition. Without dedicated personnel and funding, transition planning can lack focus and lose momentum. To the extent possible, communities should seek to formalize the transition process, such as by establishing a committee or task force charged with creating an open forum for community deliberation, developing policy solutions, and potentially conducting advocacy and implementation.Engage a diversity of stakeholders. Within the sort of civic forum just described, it is important to engage diverse stakeholders early to ensure representation of the variety of community interests that will ultimately have a say in transition and development decisions.Identify a common objective. Clearly defining a common objective at the outset can provide the platform needed for effective cooperation among stakeholder groups.Expect and plan for indirect consequences. Proactive engagement with a diverse array of stakeholders can also help planners anticipate potential indirect consequences of a facility’s closure. For example, the Huntley closure jeopardized the availability of water for industrial uses in Erie County, which historically depended on pumping facilities at the Huntley plant. Energy transition programs should have sufficient flexibility to address local variations.Procure transition funding from state and federal agencies. The retirement of a coal facility can eliminate local government tax revenue, making it difficult to locally fund transition efforts. Dedicated state and federal transition funding can help local governments mitigate the immediate fiscal impact of the shutdown and provide them with a window in which to plan for an economic transition. |
| Date: | 2023–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-23-15 |
| By: | Burtraw, Dallas (Resources for the Future); Löfgren, Åsa (Resources for the Future); Zetterberg, Lars; Elkerbout, Milan (Resources for the Future) |
| Abstract: | With the Inflation Reduction Act in the United States and the carbon border adjustment mechanism established by the European Union, ambitious yet contentious climate policies have been passed on both sides of the Atlantic in recent years. Each of these policies has spurred the other to consider not only the impact of these policies themselves, but whether the policies can serve as inspiration for further policy innovation. As new administrations are set to enter office on both sides of the Atlantic, and as the geopolitical landscape is getting more complicated, we examine the implications of the recent landmark policies in the United States and European Union for the evolution of climate policy over the next decade. We also reexamine the received wisdom on effective design for effective climate policy mix that targets net-zero emissions goals. |
| Date: | 2024–09–27 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-19 |
| By: | Boyd, James (Resources for the Future); Joiner, Emily (Resources for the Future); Krupnick, Alan (Resources for the Future); Toman, Michael A. (Resources for the Future) |
| Abstract: | Many analysts have concluded that large amounts of atmospheric carbon dioxide (CO2) must be captured and permanently stored in the coming decades to meet international goals for arresting climate change, even with aggressive measures to limit greenhouse gas (GHG) emissions. The amount of carbon dioxide removal (CDR) needed to achieve net-zero GHG emissions poses a technological challenge, requiring significant advances in CDR capability and deployment. CDR at the needed scale will be expensive, particularly in the near term. It also can pose social and environmental challenges through spillover effects on communities, changes in land use, and major increases in electricity consumption. This report discusses the challenges for the United States in scaling up CDR, recommends immediate policy actions to improve and scale up CDR, and discusses longer-run policy frameworks through which CDR can play its necessary role for achieving net-zero GHG emissions in the United States by midcentury. In particular, we recommend—with important caveats—that CDR incentives be integrated with incentive-based mechanisms for GHG mitigation in the longer term.The “removal gap” is the amount of CDR needed to achieve policy targets for limiting temperature increase, given trajectories for GHG emissions and policies for their mitigation. As the size of the removal gap becomes clearer, so does the gap in removal policies. As observed in Smith et al. (2023), no countries have yet set removal goals. Current US policies encourage some CDR via subsidies for increased forest carbon storage, carbon capture and storage (CCS) with bioenergy, and direct air capture. A variety of recent policy measures, including financial incentives in the 2022 Inflation Reduction Act, are providing increased CDR stimulus. However, the size of the removal gap and the policy focus on near-term initial investments versus longer-term technological development and scaling up indicate a need to fortify current policies and consider longer-term policies to induce the required amounts of CDR capacity.Notably, the nature and design of policies to motivate and finance the necessary levels of CDR have received little attention, an oversight that is increasingly recognized (Honegger 2023; Meyer-Ohlendorf and Spasova 2022; Schenuit et al. 2021). An exception focused on BECCS deployment is Zetterberg et al. (2021). Recent studies on the need for CDR make these observations:“There is an urgent need for comprehensive policy support to spur growth in CDR” (Smith et al. 2023, 39).“CDR at anywhere approaching the scales projected here would require strong policy incentives … and public investment …” (Fuhrman et al. 2023, 9).Substantially scaling up global CDR by midcentury will be a technological challenge. It will also be a challenge for climate policy. Core policy questions include the following:How can policies create the incentives needed for private provision of CDR at a large scale over the long term?If private sector investment in CDR remains limited by high cost or other constraints, what might the government do to scale up CDR?What policies would improve CDR technologies and lower their cost over time?How do CDR and GHG emissions reduction policies interact, and what are the implications for CDR policy design?This report also addresses complementary policies to deal with a range of other issues that arise in scaling up different CDR approaches:What measures can address the environmental and social consequences of CDR and thus ameliorate the negative community reactions that otherwise may result?Beyond technological and economic barriers, what other barriers to CDR deployment need to be addressed? Two examples: health and safety measures, and the siting and regulation of industrial capture facilities, GHG storage facilities, and CO2 pipelines.Our focus is US policy, though important aspects of our analysis are also relevant for other countries. In addition, US policy will trigger international questions, such as whether CDR projects abroad can be used by US emitters to offset their emissions. The United States should play a leading role in CDR deployment and policy development because it is the second-largest global GHG emitter, with a correspondingly large need to counteract residual emissions. In addition, the United States is in a strong competitive position to produce CDR, given its wealth, robust institutions, capacity for technological innovation, and large land mass suitable for nature-based removal and storage infrastructure. The United States also has an existing, though limited, suite of removal incentives on which to build.The report is organized as follows. Section 2 explains the urgent necessity for carbon dioxide removal as a complement to emissions reductions. Section 3 looks at the various technologies that can deliver CDR, their development status, and their costs. Section 4 lays out the criteria by which we analyze current and recommended CDR policies. Section 5 reviews today’s US CDR policies and highlights policy gaps, weaknesses, and other barriers to CDR deployment.Section 6 makes recommendations for new policies and modifications of existing policies to accelerate CDR technology development and larger-scale CDR investments. It also makes recommendations for addressing CDR’s environmental and other community effects, and it suggests complementary policies related to, for example, permitting CO2 pipelines and storage facilities. The recommendations in Section 6 can be thought of as a policy “on-ramp” that can facilitate the transition to a policy architecture consistent with net-zero ambitions. However, the policy steps discussed in Section 6 will not drive sufficient CDR investment to meet net-zero goal.Section 7 explores the more ambitious midcentury CDR policy architecture needed to continue the transition to net zero and compares the options in terms of cost-effectiveness, equitability, and feasibility. Section 8 concludes with some final observations. |
| Date: | 2024–02–21 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-03 |
| By: | Santiago Barbosa Naranjo; Gustavo Adolfo Hernandez Diaz (National University of Colombia); Sara Baena; Juan David Robayo |
| Abstract: | Building on the analyses in chapters 3 and 4, this section focuses on quantifying other external vulnerabilities that the Colombian economy is facing, i.e., its exposure to other global economic dynamics. In a context where fiscal pressures have been aggravated by uncertainties related to the pandemic, inflation, and supply chain disruptions, this chapter addresses through various empirical scenarios how a credit rating downgrade (change in country risk perception) and the Evergrande bankruptcy could further impact Colombia's ability to finance its energy transition by raising borrowing costs and dampening investment and consumption. The simulation results indicate that a 120 basis point increase in the EMBI could lead to a decrease in GDP growth (lowering it from an expected 3% to 2%). Additionally, investment could fall by 0.5 percentage points and inflation could slightly increase from 3.0% to 3.05%. The country's international reserves are also expected to decrease by 1.5% long-term, reflecting the deterioration in Colombia's external accounts as a result of the need to finance the increase in the fiscal deficit. The simulation results therefore emphasise the necessity of sustainable financing mechanisms to support the energy transition. Policy options, including carbon taxes and green bonds, are discussed as viable strategies to mobilise resources for green infrastructure, enhancing fiscal stability and attracting foreign investment. Ultimately, the chapter shows that securing fiscal stability is vital for instilling confidence in international markets, mitigating risks, and fostering economic resilience. |
| Abstract: | Partiendo de los análisis de los capítulos 3 y 4, en los que –entre otros– se examinaron los impactos macroeconómicos de la disminución de las exportaciones colombianas de hidrocarburos en el contexto de una transición global hacia una economía baja en carbono, esta sección se centra en cuantificar otras vulnerabilidades externas a las que se enfrenta la economía del país, es decir, su exposición a otras dinámicas económicas globales. En un contexto en el que las presiones fiscales se han visto agravadas por las incertidumbres relacionadas con la pandemia, la inflación y las interrupciones de la cadena de suministro, el capítulo aborda a través de varios escenarios empíricos cómo una rebaja de la calificación crediticia (cambio en la percepción del riesgo país) y la quiebra de Evergrande podrían afectar aún más a la capacidad de Colombia para financiar su transición energética al aumentar los costes de endeudamiento y frenar la inversión y el consumo. Los resultados de la simulación muestran que un aumento de 120 puntos básicos en el EMBI podría provocar una disminución del crecimiento del PIB (reduciéndolo del 3% al 2%). Además, la inversión podría disminuir en 0, 5 puntos porcentuales y la inflación podría incrementarse ligeramente del 3, 0% al 3, 05%. También se prevé que las reservas internacionales del país disminuyan un 1, 5% a largo plazo, lo cual refleja el deterioro de la cuentas exteriores de Colombia como resultado de la necesida de financiar el aumento del déficit fiscal. El capítulo explora, por lo tanto, los resultados de las simulaciones que enfatizan la necesidad de mecanismos de financiación sostenibles para apoyar la transición energética. Se discuten opciones políticas, incluidos los impuestos sobre el carbono y los bonos verdes, como estrategias viables para movilizar recursos para infraestructuras verdes, mejorando la estabilidad fiscal y atrayendo inversiones extranjeras. En última instancia, el capítulo muestra que garantizar la estabilidad fiscal es vital para infundir confianza en los mercados internacionales, mitigar los riesgos y fomentar la resiliencia económica. |
| Abstract: | S'appuyant sur les analyses des chapitres 3 et 4, qui – entre autres – ont examiné les impacts macroéconomiques du déclin des exportations colombiennes d'hydrocarbures dans le contexte d'une transition bas carbone mondiale, cette section se concentre sur la quantification d'autres vulnérabilités externes auxquelles l'économie colombienne est confrontée, c'est à dire son exposition à d'autres dynamiques économiques mondiales. Dans un contexte où les pressions budgétaires ont été aggravées par les incertitudes liées à la pandémie, à l'inflation et aux perturbations de la chaîne d'approvisionnement, le chapitre examine, à l'aide de divers scénarios empiriques, comment un abaissement de la note de crédit (changement dans la perception du risque pays) et la faillite d'Evergrande pourraient avoir un impact supplémentaire sur la capacité de la Colombie à financer sa transition énergétique, en augmentant les coûts d'emprunt et en freinant l'investissement et la consommation. Les résultats de la simulation montrent qu'une augmentation de 120 points de base de l'indice EMBI pourrait entraîner une diminution de la croissance du PIB (passant des 3 % attendus à 2 %). En outre, l'investissement pourrait diminuer de 0, 5 point de pourcentage et l'inflation pourrait augmenter légèrement de 3, 0 % à 3, 05 %. Les réserves internationales du pays devraient également diminuer de 1, 5 % à long terme, reflétant la détérioration des comptes extérieurs de la Colombie en raison de la nécessité de financer le déficit budgétaire croissant. Les résultats des simulations soulignent ainsi, la nécessité de mécanismes de financement durables pour soutenir la transition énergétique. Des options de politiques publiques, notamment les taxes sur le carbone et les obligations vertes, sont présentées comme des stratégies viables pour mobiliser des ressources pour les infrastructures vertes, renforcer la stabilité fiscale et attirer les investissements étrangers. Le chapitre insiste particulièrement sur l'importance de garantir la stabilité fiscale pour inspirer la confiance sur les marchés internationaux, atténuer les risques et favoriser la résilience économique. |
| Keywords: | Energy transition, Social inclusion, Colombia, Climate finance, Climate resilience, Carbon neutrality, Sustainable development, Colombie, Transition énergétique, Inclusion sociale, Financement climatique, Résilience climatique, Développement durable, Neutralité carbone |
| Date: | 2024–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05208217 |
| By: | Elkerbout, Milan (Resources for the Future); Nehrkorn, Katarina (Resources for the Future); Wolfram, Catherine (Resources for the Future); Clausing, Kimberly |
| Abstract: | The introduction of the European Union carbon border adjustment mechanism (CBAM) creates an important incentive for other countries to adopt carbon pricing. The authors examine this policy spillover effect, finding that countries throughout the world have increased their use of carbon pricing regimes as well as their interest in both carbon pricing and decarbonization, especially in the period since the EU focused on this policy tool. If more countries, including the United States, consider border adjustment regimes, this can strengthen such policy spillover effects. However, care should be taken to address the needs of lower-income economies and to avoid disguised protectionism. |
| Date: | 2024–10–10 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-20 |
| By: | Flannery, Brian (Resources for the Future); Mares, Jan (Resources for the Future) |
| Abstract: | We began our work on border adjustments nearly a decade ago, because we did not expect that the approach taken in the American Clean Energy and Security Act to provide protection for domestic producers against imports from countries without greenhouse gas (GHG) control policies would be acceptable to the World Trade Organization (WTO). In 2018, together with Georgetown University Law School professors Jennifer A. Hillman and Mathew C. Porterfield, we developed a WTO-compatible Framework Flannery, Brian P., Jennifer A. Hillman, Jan W. Mares, and Matthew C. Porterfield, 2020. Framework Proposal for a US Upstream GHG Tax with WTO-Compliant Border Adjustments: 2020 Update. Washington, DC: Resources for the Future. for border adjustments in the context of a US domestic carbon tax. As a central concept of the Framework, we proposed a Greenhouse Gas Index (GGI) to account for the carbon dioxide equivalent emissions (CO2e) required to manufacture covered GHG-intensive products. For a given manufacturing facility or operation, e.g., to produce steel or petrochemicals, GGI accounts for GHG emissions occurring both from production operations, as well as the emissions required to produce GHG-intensive products purchased from suppliers of electricity, fuels used to generate thermal energy and raw materials. For many years, US facilities that emit more than 25, 000 tonnes CO2e annually have determined and reported their GHG emissions to EPA. Key innovations in the Framework include the treatment of emissions from products acquired through the manufacturer’s supply chain (in a fashion similar to value-added taxes) and the design of straightforward procedures to allocate emissions from a facility to the GHG-intensive products it manufactures. Our approach, GGI, is consistent with standards developed by the International Organization for Standardization (ISO). In a consistent, comprehensive fashion, GGI applies to GHG-intensive products in all sectors of the economy, including those that produce aluminum, iron, and steel. The appendix to this report contains a list with links to our blogs and reports on border adjustments and the GHG intensity of products.Over the past several years, we have interacted with experts from academia, national governments, international organizations, and importantly, with over a dozen sectoral trade associations. Based on these interactions, discussions, and our own relevant experience, we believe that our approach is feasible for industry and relevant to various applications that involve GHG-intensive products, including, for example, border adjustments, procurement policies, and corporate reporting. In particular, GGI could apply to products of US and foreign manufacturers in the aluminum, iron, and steel sectors.This report updates, expands upon, and should be considered as a replacement for the testimony and submissions we provided the US International Trade Commission related to its hearing on December 7, 2023. It additionally serves as a modification and expansion of the modules for Iron, Steel, and Ferroalloys and for Alumina and Primary and Secondary Unwrought Aluminum in our 2022 report: The Greenhouse Gas Index for Products in 39 Industrial Sectors.We are currently developing and will publish the estimated range of GGIs for many products in the modules for 39 industrial sectors in our 2022 report because of the US ITC hearing and anticipating further government interest in this subject.The tables below provide estimated, illustrative low and high GGI values for representative basic products in the aluminum and steel sectors. Results are illustrative because manufacturers in the United States and around the globe utilize an enormous variety of processes, sources of energy, and raw materials in facilities with differing efficiencies to create similar products. |
| Date: | 2024–08–22 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-13 |
| By: | Noemi Walczak; Kenan Huremovi\'c; Armando Rungi |
| Abstract: | This paper examines the economic and environmental impacts of the European Carbon Border Adjustment Mechanism (CBAM). We develop a multi-country, multi-sector general equilibrium model with input-output linkages and characterise the general equilibrium response of trade flows, welfare and emissions. As far as we know, this is the first quantitative trade model that jointly endogenises the Emission Trading Scheme (ETS) allowances and CBAM prices. We find that the CBAM increases by 0.005\% the EU Gross National Expenditure (GNE), while trade shifts towards domestic cleaner production. Notably, emissions embodied in EU imports fall by 3\%, which is the result of a direct effect (-4.8\%) and a supply chain's upstream substitution effect (+1.8\%). The latter is a dampening effect that we can detect only by explicitly incorporating the production network. In contrast, extra-EU countries experience a slight decline in GNE (0.009\%) and emissions (0.11\%). |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.23341 |
| By: | Anthoulla Phella; Vasco J. Gabriel; Luis F. Martins |
| Abstract: | In this paper, using the Bayesian VAR framework suggested by Chan et al. (2025), we produce conditional temperature forecasts up until 2050, by exploiting both equality and inequality constraints on climate drivers like carbon dioxide or methane emissions. Engaging in a counterfactual scenario analysis by imposing a Shared Socioeconomic Pathways (SSPs) scenario of "business as-usual", with no mitigation and high emissions, we observe that conditional and unconditional forecasts would follow a similar path. Instead, if a high mitigation with low emissions scenario were to be followed, the conditional temperature paths would remain below the unconditional trajectory after 2040, i.e. temperatures increases can potentially slow down in a meaningful way, but the lags for changes in emissions to have an effect are quite substantial. The latter should be taken into account greatly when designing response policies to climate change. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.09384 |
| By: | Mukherjee, Srutakirti; Raimi, Daniel (Resources for the Future) |
| Abstract: | Place-based policies designed to support fossil fuel–dependent communities are emerging in the United States and abroad. However, there has been little analysis to understand which, if any, existing place-based economic development policies can serve as models in the energy transition. In this analysis, we review the empirical evidence on the effectiveness of three major federally funded place-based economic development programs, then assess their relevance to the energy transition. We find that existing policies, depending on their design details, can be effective in directing investment and improving local economic outcomes in targeted locations. However, these programs can contribute to neighborhood gentrification, and economic benefits may flow primarily to residents living outside the targeted community. Adapting any of these policies to an energy transition context would require changes in eligibility criteria, geographic targeting, selection mechanisms, and more. We offer several conceptual models for how such policies could be structured but caution that much additional research and community engagement will be needed to determine which mix of interventions is likely to be most effective in ensuring an equitable transition toward a clean energy future. |
| Date: | 2023–11–15 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-23-16 |
| By: | Rennert, Kevin (Resources for the Future); Palmer, Karen (Resources for the Future); Robertson, Molly (Resources for the Future) |
| Abstract: | The United States has a pressing need to rapidly enhance its energy infrastructure to address domestic and global priorities. The infrastructure needs are broad and varied, including clean electricity generation, pipelines, and electricity transmission. One of the clear drivers for the policy conversation is to meet decarbonization goals on a timescale of decades. Pathways to meet the decarbonization goals for the power sector suggest that US deployment of renewables would need to be well over the peak historical build rate immediately, and that deployment rate would need to be sustained or increased every year for the foreseeable future (Denholm et al. 2022). Success in building a single project, however, requires navigating a complex and interconnected series of hurdles. Bringing a single generation project online, for example, requires navigating not only the supply chain to source materials and finance the project but also processes related to siting, permitting, and interconnection. Any new transmission needed to support the project will require additional process steps. Along the way, the project may interact with government agencies at local, state, and federal levels; is likely to need to work with communities to build support; and may face potential litigation. Increasing the build rates of energy infrastructure to reach the necessary pace and scale to meet policy goals will require making all these contributors to construction timelines as efficient as possible. In light of these challenges and needs, a broad and bipartisan concern about obstacles to energy infrastructure deployment has emerged, along with a general agreement that processes should be improved and coordinated. Dozens of legislative proposals from both parties have been put forward to address different aspects of this problem, but consensus on which obstacles are most important overall, or on the effectiveness of potential policy interventions to address them, has been elusive. It is noteworthy that of the dozens of legislative proposals intended to reform the permitting process or address other obstacles to specific energy infrastructure, few have been supported by any type of analysis. In many cases, even basic questions about the obstacles are unanswered. This stands in contrast to recently enacted energy legislation such as the Inflation Reduction Act or Investment in Infrastructure and Jobs Act, which include many provisions based on analysis using energy system models and a broad academic literature.The relative absence of analysis of policies intended to address obstacles to energy infrastructure is due to multiple factors. In some cases, the obstacles are not well quantified, challenging efforts to design policy interventions. Even when obstacles are quantified, the effects of policy interventions on the obstacles may not be well understood or may be complicated through interactions with other factors not addressed by the intervention. For example, the interconnection queue is an oft-cited obstacle to generation investment that can be affected by inadequate transmission or long permitting timelines, which are obstacles in their own right. And finally, energy system models and other analytic tools are not well equipped to quantify the effects of many policy interventions.The result is bipartisan agreement on the need for more efficient processes to build energy infrastructure, leading the congressional and executive branches to focus on finding a solution. The policy conversation, however, is poorly informed, lacking both basic information and appropriate tools for analyzing policy solutions. The current debate about the relative effects on emissions of the proposed Energy Permitting Reform Act of 2024 exemplifies this issue, with estimates of the effects of specific provisions ranging by an order of magnitude, and in some cases there is even uncertainty about their overall sign. This situation represents a critical opportunity for the research community to inform policymakers’ efforts by working at each of these levels to improve the characterization of obstacles, understanding of the effects of policy proposals, and representation within models. For this purpose, RFF has initiated a project to identify and fill information gaps. The goals of the project are to expand data and analysis on key obstacles to energy infrastructure, develop an improved understanding of current legislative proposals, and improve modeling capabilities to evaluate the impacts of legislative proposals. In the first phase of the project, RFF convened experts on various aspects of deployment of energy infrastructure, including energy system modeling and permitting, for a series of three workshops on obstacles related to energy infrastructure deployment. The objectives of the workshops were to identify the most relevant barriers to deployment of energy infrastructure, determine the best metrics for understanding the impact of those obstacles, and inform the development of a coherent research strategy. The first workshop positioned the project within the current policy context through a discussion with key congressional and administration staff and was intended to refine key research questions and identify the topics for subsequent workshops. The second centered on obstacles to building transmission, improving its representation in models, and identifying analytic approaches to answer key policy questions. The third was on the obstacles to building new generation resources and how to represent them in energy models. Ancillary conversations focused on the challenges associated with analyzing obstacles to industrial decarbonization in models. This report summarizes the key takeaways from the discussions in the RFF workshop series. Insights from policymakers, subject matter experts, and energy modelers are discussed in each section and inform a research agenda to guide a series of commissioned research papers to be completed in 2025. The report is structured as follows: Section 2 provides a summary of existing research. Section 3 assesses challenges representing obstacles in energy models. Section 4 discusses recent policy developments and legislative activity, and Section 5 looks at the role of energy modeling. Section 6 considers takeaways and research priorities, and Section 7 is a concluding discussion of the near-term research agenda. |
| Date: | 2024–09–05 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-16 |
| By: | Burke, Josh; Taschini, Luca; Doda, Baran; Ortiz, Victor; Steinlein, Anastasia |
| Abstract: | Carbon pricing is increasingly seen as a crucial tool in the global effort to combat climate change. In this evolving policy landscape, Taiwan is actively advancing the development of its national carbon fee, which was launched in 2024, with an initial focus on the electricity and manufacturing industries. Within this framework, it is exploring the adoption of measures aimed at safeguarding its industries from potential adverse consequences. Opposition to carbon pricing instruments is likely to arise from both the industrial sectors and population groups that will be impacted the most. This report focuses on resistance from the industrial sector and examines the relevant measures that have been adopted by major carbon pricing jurisdictions, including in the European Union, Singapore and UK, to provide insights for addressing potential industry resistance and the development of tailored recommendations for Taiwan. |
| JEL: | R14 J01 N0 |
| Date: | 2024–03–19 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129324 |
| By: | Quentin Hoarau; Jean-Pierre Ponssard |
| Abstract: | This paper studies the adoption of clean technology in an oligopolistic setting, focusing on carbon capture and storage (CCS) in the cement sector. Firms can choose between two technologies: a carbon-intensive ("dirty") technology and a low-carbon ("clean") one. Initially, all firms operate with the dirty technology, whose variable cost increases over time with the social cost of carbon, following Hotelling’s rule. Clean technology has a constant marginal cost but requires a sunk investment cost. Firms engage in short-term Cournot competition, and the adoption decision is modeled as a dynamic game in continuous time. We show that imperfect competition leads to inefficiently delayed adoption due to preemption incentives, with firms eventually coordinating on a late joint adoption equilibrium. We propose two corrective public policies: a fixed-cost subsidy and a time-dependent subsidy on profit flows. Calibrating our model to the cement industry, assuming five competitors, we find that without policy intervention, CCS adoption would occur in 2042 rather than the socially optimal date of 2030. Obtaining optimal timing requires either a 70% fixed-cost subsidy or a time-dependent subsidy equivalent to 20% of that amount, although it requires more information for implementation. |
| Keywords: | imperfect competition, innovation, cement, carbon capture and storage |
| JEL: | L13 O31 Q5 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12127 |
| By: | Esther Arenas-Arroyo; Jacob Fabian; Friederike Mengel; Bernhard Schmidpeter; Michel Serafinelli |
| Abstract: | How does firms' skill demand change as the business landscape evolves? We present evidence from the green transition by analyzing how hurricanes impact demand for green skills. These disasters signal the risks of not acting on environmental issues. Using data from U.S. online job postings (2010--2019) and hurricane paths, we create a new measure of green job postings. Firms in areas affected by hurricanes are 6.4% more likely to post jobs that require green skills after the event, particularly those serving local markets. |
| Keywords: | green skills, green transition, online job postings, hurricanes |
| JEL: | J23 Q54 L20 J24 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12110 |
| By: | Silvester van Koten |
| Abstract: | The central instruments of a cap-and-trade program are its abatement schedule and a system of guardrails designed to prevent permit prices from becoming excessively high or low. I argue that these instruments are currently poorly aligned in the EU’s cap-and-trade flagship climate policy, the EU ETS. I argue that the abatement schedule risks being overly ambitious and that the ETS’ existing guardrails, the Market Stability Reserve (MSR), do not offer sufficient protection against extreme prices. This misalignment may result in substantial economic costs and could ultimately undermine public support for the ETS. This paper recommends consideration of more effective guardrails, such as the well-established the price collar as implemented in California’s cap-and-trade program. |
| Keywords: | EU Emissions Trading System (EU ETS), Market Stability Reserve (MSR), net zero, abatement path, price collar |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cer:papers:wp799 |
| By: | Elkerbout, Milan (Resources for the Future); Kopp, Raymond J. (Resources for the Future); Rennert, Kevin (Resources for the Future) |
| Abstract: | In a two recent publications, Carbon Border Adjustments: Design Elements, Options, and Policy Decisions and Foreign Pollution Fee Act: Design Elements, Options, and Policy Decisions, we provided an overview and comparison of current border adjustment mechanisms (BAMs). In the first publication we focused on the European Union’s Carbon Border Adjustment Mechanism (EU CBAM); the Fair, Affordable, Innovative, and Resilient Transition and Competition Act (FAIR Act), sponsored by Senator Chris Coons (D-DE); and the Clean Competition Act (CCA), by Senator Sheldon Whitehouse (D-RI). In the second publication we reviewed a new piece of proposed US Senate legislation, the Foreign Pollution Fee Act (FPFA), introduced by Senator Bill Cassidy (R-LA), Senator Lindsey Graham (R-SC), and Senator Roger Wicker (R-MS). In this report we provide more detail on the EU CBAM and compare it to the FPFA and the CCA, which was reintroduced on December 6, 2023. A great deal of the FPFA description used in this report is reproduced from our publication Foreign Pollution Fee Act: Design Elements, Options, and Policy Decisions. This report uses the design elements introduced in the previous publications to describe the policies reflected in each BAM. We have made every effort to be concise with respect to our descriptions of the design elements, but that has required us to abstract from a great deal of detail in each BAM. We hope this report will provide a roadmap that informs understanding of these mechanisms, but it should not be interpreted as a complete and comprehensive description and review. |
| Date: | 2023–12–06 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-23-18 |
| By: | Bernhard Wortmann; Detlef Stolten; Heidi Heinrichs |
| Abstract: | Proton exchange membrane electrolysis (PEMEL) is a key technology for producing green hydrogen, but its scalability is limited by the use of scarce materials, particularly iridium. Iridium oxide, the preferred anode catalyst in PEMEL, offers exceptional stability but is produced only as a by-product of platinum mining, with annual output around 7.5 tons. This study estimates future iridium demand for PEMEL under various deployment scenarios and technological advances. Results show that meeting net zero targets will require both significant improvements in catalyst efficiency and access to roughly 30\% of global iridium production annually. Supply shortages could arise as early as 2030, earlier than previously anticipated. The analysis also reveals that long-term iridium needs beyond 2040 are significantly underestimated. These findings underscore the urgent need for innovation in material efficiency and recycling, and the importance of integrating resource constraints into energy policy and technology planning to ensure a sustainable hydrogen transition. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.05357 |
| By: | Raimi, Daniel (Resources for the Future); Zhu, Yuqi (Resources for the Future); Newell, Richard G. (Resources for the Future); Prest, Brian C. (Resources for the Future) |
| Abstract: | The future of the global energy system is deeply uncertain, and the choices that are made in the coming years will have enormous consequences for the future of the climate and, indeed, human civilization. To understand how our energy system is changing, each year a variety of organizations produce long-term projections that imagine a wide range of futures based on divergent visions about policies, technologies, prices, and geopolitics.Because these projections vary widely and depend heavily on their varied assumptions and methodologies, they are difficult to compare on an apples-to-apples basis. In this report, we apply a detailed harmonization process to compare 16 scenarios across eight energy outlooks published in 2023, as well as two historical data sources. Taken together, these scenarios offer a broad scope of potential changes to the energy system as envisioned by some of its most knowledgeable organizations. Table 1 lists the historical datasets, outlooks, and scenarios examined here, and additional detail is provided in Section 4. |
| Date: | 2024–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-06 |
| By: | Mar Reguant; Mayra Wagner |
| Abstract: | As shortages of resources like water and electricity due to extreme weather events become more frequent, high prices alone may fail to curb demand, making shortages more common. We examine a power limit policy for residential electricity households that rations electricity consumption rather than setting it to zero, as in a traditional rolling blackout. We find that power limits can provide equivalent savings to large blackouts, even when generous. Additionally, due to selection, power limits reduce the number of households affected by a shortage event. We conclude by discussing the welfare consequences of power limits and their heterogeneous impact across households. |
| JEL: | D45 L94 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34196 |
| By: | David Cuberes (Maynooth University); Aitor Lacuesta (Bank of Spain); Carlos Moreno-Pérez (Bank of Spain); Daniel Oto-Peralías (Universidad Pablo de Olavide) |
| Abstract: | This paper examines the relationship between land ownership concentration and the likelihood of hosting large green energy facilities, specifically mega-photovoltaic (PV) plants, defined as those exceeding 50 hectares. Focusing on Spain, we find that municipalities with a higher proportion of agricultural land concentrated in large farms are significantly more likely to accommodate mega PV plants. This effect remains robust after accounting for key factors influencing PV deployment, including terrain ruggedness, solar potential, and proximity to transmission lines and urban centers. To further neutralize unobserved factors that jointly influence land concentration and PV plant location, we leverage cadastral (parcel) data to conduct an intra-municipal analysis at the 0.5×0.5 km grid-cell level. Our findings reveal that grid cells with larger cadastral parcels have a substantially higher probability of being part of a mega PV facility. A simple theoretical model explains this pattern by highlighting the coordination challenges faced by small landowners. Unlike large ones, fragmented landholders struggle to meet developers’ land requirements, which are necessary to cover fixed project costs. Consistent with this mechanism, we also show that areas with irrigated agriculture are less likely to host mega PV plants and exhibit more unequal distributions of plant locations by land size. Finally, we provide external validity by confirming a similar positive association between mega PV plants and land concentration across U.S. counties. These findings underscore the implications of land inequality for the spatial distribution of renewable energy projects, shedding light on the limited local benefits of such investments and the growing opposition from rural communities. |
| Keywords: | solar plants; photovoltaic plants; land concentration. . |
| JEL: | O13 Q40 Q15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pab:wpaper:25.03 |
| By: | Roy, Nicholas (Resources for the Future); Domeshek, Maya (Resources for the Future); Burtraw, Dallas (Resources for the Future) |
| Abstract: | California is looking to extend its greenhouse gas cap-and-trade program forward in time and to make adjustments to the trajectory of the annual emissions cap. This report looks at the possible reforms suggested by the California Air Resources Board (CARB) using RFF’s Haiku Emissions Market Model. We analyze the allowance price, emissions, revenue, and banking impacts of cap reduction options proposed by CARB given uncertainty about technology, the effectiveness of regulatory programs, investment strategies, economic activity, and banking behavior. We consider the three methods of implementing the “48 percent target cap” adjustment proposed in the Standard Regulatory Impact Assessment (SRIA) that intend to reduce cumulative allowance supply by 265 million tons by 2030:Option A, nominal cap reduction;Option B, partial nominal cap reduction and partial allowance price containment reserve (APCR) reduction; andOption C, APCR reduction.The nominal cap describes the introduction of new emissions allowances in a given year. The emissions outcome will differ from the cap because of the availability of banked allowances and offsets.Additionally, we examine the full set of options included in CARB’s October 5, 2023, workshop (the 40, 48, and 55 percent “budget” and “target” cap reductions) that would achieve cumulative reductions in allowance supply ranging from 115 - 390 million tons by 2030. We also consider the impact of additional potential program design features, including an emissions containment reserve (ECR); facility-specific caps, as suggested by the California Cap-and-Trade Environmental Justice Advisory Committee (EJAC); and modifications to free allocation.Key Findings focusing on the Options A, B, and C for the 48 percent target scenario as identified in the SRIA:Future emissions and allowance price pathways vary across scenarios. In sensitivity analysis investigating uncertain technology and energy demand, we find greater variation in allowance demand, emissions, and prices.Removing allowances from the nominal emissions cap will lead to a higher allowance price. However, removing APCR allowances increases price variability.Although Options A, B, and C appear to have the same cumulative allowance supply, the tighter nominal cap (A) yields lower emissions than B and C, especially if, as CARB’s SRIA assumes and this report reaffirms, APCRs are never triggered.Tightening the cap in any of the ways CARB proposes will increase allowance value above baseline even as allowances decrease, but the choice of where to remove allowances (from auctioned supply or freely allocated allowances, or from the APCR) will have distributional impacts by changing the share of allowance value accruing to the Greenhouse Gas Reduction Fund (GGRF) relative to that accruing to recipients of free allocation.Assuming the program continues beyond 2030, tightening cumulative allowance supply leads to roughly 40 percent reduction in the size of the bank by 2030, after which the bank continues to be drawn down slowly through 2045. Increased cap stringency will raise the value of banked allowances.Adding an ECR would support allowance prices and revenue in low-demand scenarios and reduce uncertainty about prices, revenues, and emissions.Adding facility-specific caps would have very little impact on the market (less than a 2.8 percent increase in allowance prices) but could reduce uncertainty around health outcomes for disadvantaged communities.Looking beyond the 48 percent target scenario options, we consider 40, 48, and 55 percent budget and target cap reductions. We find the qualitative impact of tighter caps on prices, missions, revenue, and banking remains consistent. However, the range of outcomes varies widely, with prices at the floor in the less stringent cases and rising to the price ceiling in the more stringent cases. An ECR, or facility-specific caps, can be added to any of these cap adjustments with the same effects as for the 48 percent target A, B, and C options. |
| Date: | 2024–05–30 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-08 |
| By: | Kopp, Raymond J. (Resources for the Future); Pizer, William (Resources for the Future); Rennert, Kevin (Resources for the Future) |
| Abstract: | Carbon border adjustments (CBAs) are fees imposed on the imports of commodities and products based on the quantity of greenhouse gases (GHGs) emitted during their production. The purpose of a CBA is to allow the producers of such commodities in countries with highly ambitious climate goals to remain competitive in their domestic markets against imports from less regulated jurisdictions. CBAs are not part of the current climate and international trade policy mix, but that will change in October when the European Union’s Carbon Border Adjustment Mechanism (CBAM) goes into effect. Moreover, multiple bills in the US Senate propose CBAs. The purpose of this report is to identify some of the important CBA design elements and discuss options available to policymakers, particularly in the European Union and the United States. |
| Date: | 2023–10–10 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-23-14 |
| By: | Subash Bhandari; Hyeongwoo Kim |
| Abstract: | This paper investigates the transmission of structural global oil market shocks to U.S. inflation using an instrumental variable structural vector autoregression (IV-SVAR) applied to highly disaggregated Consumer Price Index (CPI) components. We consider two types of shocks: oil supply shocks, arising from OPEC production disruptions, and oil supply news shocks, reflecting expectations of future production changes. The inflationary effects are concentrated in energy-related goods, significantly driving headline CPI, while non-necessity components exhibit muted or even negative responses. Moreover, news shocks generate short-lived, front-loaded effects, whereas supply shocks produce more persistent impacts. |
| Keywords: | Oil Supply Shock; OPEC News Shock; Disaggregated CPI Components; Instrumental Variable Structural Vector Autoregression |
| JEL: | E3 F4 Q4 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:abn:wpaper:auwp2025-06 |
| By: | Jérôme Pivard; Vincent Martinet |
| Abstract: | We explore the interplay between two key individual drivers of green consumption: intrinsic moral concerns for the environment and reputational concerns for social image. Our microeconomic behavioral model characterizes choices among lifestyles differing in environmental impacts (brown/green) and conspicuousness (positional/discreet), depending on how strongly one values each of these motives. We show that image concerns can substitute for environmental concerns in driving green consumption across a limited but central range of preferences, in particular through the purchase of green positional goods. Such conspicuous conservation can green individual consumption (reconciling Eco and Ego), especially among image-sensitive consumers, but it yields environmental benefits only under specific economic conditions. Indeed, the environmental impact of a lifestyle depends critically on its relative impact intensity, i.e., the pollution per dollar spent on this lifestyle, more than on the pollution per unit of the representative good of the lifestyle, driving volume effects and behavioral rebound effects, which both reduce the environmental benefits of green lifestyles. Knowing the collective distribution of preferences may help design targeted policies, as those preferences strongly determine policy effectiveness. Our findings are especially relevant for policies that aim to foster greener consumption choices in different economic contexts (e.g., green nudging, environmental taxes with higher rates on positional goods...). |
| Keywords: | green consumption, conspicuous conservation, moral consistency, environmental concern, image concern |
| JEL: | D01 D11 D62 D91 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12129 |
| By: | Matilda Gettins; Lorenz Meister |
| Abstract: | Populist parties increasingly deploy narratives of social injustice to portray climate policy as elitist and unfair. This paper investigates how such narratives affect public attitudes toward populism and democratic institutions. We conduct a survey experiment with approximately 1, 600 respondents in Germany, exposing participants to three common narratives about the distributional costs of climate policy. Our findings show that the narrative emphasizing disproportionate burdens on low-income households significantly increases climate-populist attitudes and reduces satisfaction with democracy. These effects are particularly pronounced among low-income, East German, and conservative voters. By contrast, the narrative that companies can circumvent the cost of climate action fosters climate populism among left-leaning individuals. The results suggest that the framing of how the costs of climate policy are distributed strongly shapes its political acceptance and vulnerability to populist mobilization. |
| Keywords: | Climate policy, populism, narratives, distribution |
| JEL: | Q54 D72 Q58 H23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2139 |
| By: | Fabian Alex |
| Abstract: | We build a signaling game model of a firm’s decision to acquire a costly green label which enables it to emit a green bond. A greenium may compensate it for the incurred cost. That cost is higher for non-green firms. With an investor that prefers a clean environment and dislikes being fooled into believing in a fabricated green label, there are equilibria featuring green bonds by either both firm types, only the green firm or neither. Allowing side payments undermines stability of all equilibria where a green label is acquired. A neutral rather than a green investor considerably decreases the number of conceivable equilibria, as does uncertainty about the investor type. The equilibria of the baseline model are preserved if we allow two investors, a green and a neutral one, to decide on their respective purchase of the bond sequentially. Lastly, if investors hold all market power, no green labels will be observed at all. |
| Keywords: | Environment, Environmental Economics, Green Economics, Game Theoretic, Game Theory, Two Player, Strategic Game, Signaling Game |
| JEL: | C72 D21 Q5 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:bav:wpaper:242_alex.rdf |
| By: | Evžen Kočenda; Peter Albrecht; Daniel Pastorek |
| Abstract: | We investigate the impact and propagation of geopolitical risk among oil-based energy commodities. First, we endogenously identify key geopolitical events affecting the connectedness among the oil-based commodities and then evaluate their transitory and persistent impacts. We identify four major shocks that resulted in persistent shifts in connectedness: the 9/11 attacks, the Crimea crisis, the political shift in Nigeria, and the Russian invasion of Ukraine. Using a quantile-based framework, we demonstrate that volatility transmissions due to geopolitical risk are not uniform but significantly depend on market conditions. Notably, heating oil and crude oil are identified as primary transmitters of risk, especially during economic turmoil. We quantify the negative economic and financial impacts of geopolitical risks through a multivariate dynamic portfolio analysis and through an impact on the profitability of ten global banks with high exposure to oil commodities. Our findings enhance the understanding of how geopolitical shocks influence connectedness and informed portfolio decisions, highlighting the need for adaptive strategies in finance. |
| Keywords: | geopolitical risk, extreme market conditions, oil-based energy commodities, volatility connectedness, transitory and persistent effects, portfolio composition and hedging, global banks with high exposure to oil |
| JEL: | C32 C58 G15 Q02 Q35 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12133 |
| By: | Smolenska, Agnieszka; Després, Morgan; Rozumek, David |
| Abstract: | The unfolding climate crisis is triggering the emergence of new regulatory tools to support banks in the management of risks related to policy, technological and customer behaviour change in the transition to a sustainable low-carbon economy. These, especially transition plans, seek to improve the ability of banks and supervisors to identify, mitigate and manage the short-, medium- and long-term risks associated with climate and environmental risks at the individual institution level and the financial system as a whole. This report draws on the parallels between recovery and transition planning to identify lessons relevant for policymakers and regulators working on bank transition plans, focusing on internal bank governance, supervisory processes and cross-border coordination in the European Union. |
| JEL: | F3 G3 N0 |
| Date: | 2024–05–08 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129414 |
| By: | Lavy, Victor (University of Warwick, Hebrew University, and NBER); Rachkovski, Genia (Tel Aviv University); Yoresh, Omry (London School of Economics) |
| Abstract: | Literature has shown that air pollution can have short- and long-term adverse effects on physiological and cognitive performance. In this study, we estimate the effect of increased pollution levels on the likelihood of accidents in construction sites, a significant factor related to productivity losses in the labor market. Using data from all construction sites and pollution monitoring stations in Israel, we find a strong and significant causal effect of nitrogen dioxide (NO2), one of the primary air pollutants, on construction site accidents. We find that a 10-ppb increase in NO2 levels increases the likelihood of an accident by as much as 25 percent. Importantly, our findings suggest that these effects are non-linear. While moderate pollution levels, according to EPA standards, compared to clean air levels, increase the likelihood of accidents by 138 percent, unhealthy levels increase it by 377 percent. We present a mechanism where the effect of pollution is exacerbated in conditions with high cogitive strain or reduced awareness. Finally, we perform a cost-benefit analysis, supported by a nonparametric estimation calculating the implied number of accidents due to NO2 exposure, and examining a potential welfare-improving policy to subsidize the closure of construction sites on highly polluted days. |
| Keywords: | Workplace Accidents ; Labor Productivity ; Air Pollution, Government Policy |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1575 |
| By: | Daryna Grechyna; Pamela Efua Ofori |
| Abstract: | This study examines the impact of Conference of the Parties (COP) summits on innovation using an event study framework. Innovation is measured by patent grants, distinguishing between the total number of patents and the number of patents in environmental technologies, based on the World Intellectual Property Organization classification. We find that hosting a COP summit leads to a significant and lasting increase in the total number of patent grants, with an average rise of about 35 percent per year from the seventh to the thirteenth year after the summit, but has only a limited effect on the number of patent grants in environmental technologies. We further examine potential heterogeneity in the effects of COP summits by analyzing the impact of hosting a summit on patents in environmental technology compared to other technologies separately for each host country. The results suggest that while hosting a COP summit generally promotes environmental patenting, the effect is negative in some countries. We discuss possible reasons, including diminishing returns in green innovation and the influence of large industrial emitters. The findings are robust across alternative estimators, the inclusion of control variables, and different measures of patenting activity. |
| Keywords: | COP summits, environmental technologies, patents, innovation, event study |
| JEL: | O34 O44 Q54 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12120 |
| By: | Smoleńska, Agnieszka; Weber, Anne-Marie; Opoka, Marcin |
| Abstract: | This article discusses the idea of a judicial accountability gap in the obligations of EU central banks in relation to climate change policy. With the interest in incorporating climate change considerations into monetary policy on the rise, legal scholarship has focussed largely on the toolbox at the disposal and the political accountability of central bankers with respect to the sustainability transition. The judicial route has so far remained largely unexplored, the general global trend of climate litigation notwithstanding. In light of this omission, we develop a framework to address the judicial accountability gap in three steps. First, we explain the implications of the special status of climate change mitigation objectives in the EU constitutional order on members of the European System of Central Banks (ESCB). Then, we explain how these treaty obligations apply not only to the Eurosystem, which has been well explored in the literature, but also to non-euro area Member States. This point is particularly underexplored, despite its significant implications for the success of the EU’s sustainable finance agenda, which is contingent on a supportive macrofinancial regime. Finally, we discuss different judicial accountability routes to ensuring that central banks adequately incorporate the secondary mandate objectives in their policies. We examine whether establishing a “minimum standard” for meeting treaty obligations on incorporating climate change considerations into central bank policies could lead to the conceptualisation of a standard of judicial review across the EU, thereby enhancing the democratic legitimacy of central banks within the EU’s economic constitution. |
| Keywords: | accountability; central banks; climate change; economic and monetary policy; EU law; European Central Bank; European system of central banks; sustainability |
| JEL: | F3 G3 |
| Date: | 2024–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125471 |
| By: | Rodrigo Fracalossi de Moraes (IPC) |
| Keywords: | Climate; Climate change; Climate injustice; Climate debt |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:ipc:idpben:003 |
| By: | MacInnis, Bo; Krosnick, Jon A. (Resources for the Future) |
| Abstract: | In Climate Insights 2024: Americans Understanding of Climate Change, we showed that huge majorities of Americans believe that the earth has been warming; that this warming is due to human activity; and that governments, businesses, and individuals should take steps to address it. In Climate Insights 2024: American Climate Policy Opinions, we described how large majorities of Americans favor various policies for mitigating future global warming. Yet, these mitigation policies cannot be achieved without many Democrats, Independents, and Republicans agreeing.In this report, we assess the degree to which Democrats, Independents, and Republicans agree on various aspects of climate change and climate change policy in 2024. We then use data from prior surveys in our series to track changes in the partisan gap over the past two decades.In recent years, American partisans have been contemptuous of their opponents. According to a national survey conducted by Gallup in 2023, many more Democrats than Republicans held an unfavorable view of the Republican Party (93 percent vs. 13 percent). Likewise, many more Republicans than Democrats viewed the Democratic Party unfavorably (95 percent vs. 7 percent) (Saad 2023). |
| Date: | 2024–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-21 |
| By: | King, Andy; Jameson, Daisy |
| Abstract: | This report proposes changes to the UK’s fiscal framework to help unlock the additional investment required to meet the UK’s net zero targets and adapt to climate change. |
| JEL: | N0 F3 G3 |
| Date: | 2024–07–11 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129410 |
| By: | Elena Cottini (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Lorena Popescu; Luca Salmasi (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Gilberto Turati (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore) |
| Abstract: | This study examines the causal impact of PM2.5 air pollution exposure on premature mortality in Southern European cities from 2010 to 2018. To address endogeneity, we leverage local variations in rainfall as a source of random variation in PM2.5 exposure. Using the Two-Sample Two-Stage Least Squares (TS2SLS) estimator to reconcile monitoring station-level and city-level data, our findings reveal a statistically significant increase in premature mortality caused by PM2.5. According to our preferred specification, a 1% increase in PM2.5 causes a 1.13% rise in the under-65 mortality rate and a 1.41% rise in the infant mortality rate. The results are robust to alternative specifications. The most affected populations are those residing in urban areas (relative to suburban areas) and individuals living in cities located in richer regions (as opposed to poorer ones). |
| Keywords: | air pollution, PM2.5, cities, premature mortality, TS2SLS. |
| JEL: | I18 Q53 Q58 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:ctc:serie1:def143 |
| By: | Yeganloo, A.; Moran, C.; Jafri, J. |
| Abstract: | We present comprehensive experimental evidence that expanding the number of charitable options enhances both donation outcomes and donor experience, suggesting choice deprivation rather than choice overload. In a pre-registered online experiment with over 2, 248 participants donating real money to UK charities (average donation of £1.59 out of £2.50), we find that increasing the number of available charities raises total donations robustly by approximately £0.04. Furthermore, allowing participants to donate to multiple charities, rather than restricting them to one, boosts donations by £0.23 on average, without increasing regret or diminishing satisfaction. Other mediators, difficulty, deliberation, and familiarity, do not explain the impact of treatments on giving behaviour. Our design rules out alternative explanations, including self-interest, ease of donation, or perceived importance of giving, and highlights that more choices encourage thoughtful engagement with the donation decision. The results are highly relevant to the design of consumer-facing interventions in pro-environmental domains, importantly for energy and climate policy. In areas such as carbon offsetting and climate-focused giving, individuals are required to make voluntary contributions or adopt sustainable products. Our evidence suggests that providing diverse and flexible choices can increase contributions in these domains. |
| Keywords: | Charitable Giving, Donation, Public Goods, Choice Overload, Choice Deprivation, Satisfaction, Regret |
| JEL: | C91 D64 D91 H00 |
| Date: | 2025–07–15 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2554 |
| By: | Mariz Abdou; Hasan Dudu; Mrs. Kerstin Gerling; Dalia Kadissi |
| Abstract: | Taking the European Union’s Carbon Border Adjustment Mechanism (CBAM) as given, our paper evaluates the impact of this terms-of-trade shock on the Middle East and Central Asia (ME&CA). Using a novel methodology and fresh data applied to the latest CBAM legislation, we both quantify and decompose the financial burden countries face as their exports to the EU become subject to a greenhouse gas-based fee starting in January 2026. Our analysis reveals that while the average effects of CBAM in ME&CA are modest, the region will shoulder one of the highest burdens worldwide, totaling US$1.7 billion annually (equivalent to 0.03 percent of GDP and a 14 percent surcharge on CBAM exports to the EU). The Middle East, North Africa, Afghanistan, and Pakistan (MENAP) subregion will bear a greater share of this burden than the Caucasus and Central Asia (CCA) due to stronger trade ties with the EU and higher emission intensity. Substantial country- and sector-level differences in CBAM exposure emphasize the need for tailored policy responses to mitigate the broader macroeconomic effects. |
| Keywords: | Carbon Border Adjustment Measures; Carbon Leakage; Trade Policy; Middle East; Central Asia and Caucasus |
| Date: | 2025–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/182 |
| By: | Leopoldo Gómez Ramírez |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:col:000383:021541 |
| By: | Smolenska, Agnieszka; Chan, Tiffanie; Poensgen, Ira; Higham, Catherine |
| Abstract: | Over the past decade, climate-related litigation targeted at both public and private actors has mushroomed. This includes some high-profile cases brought directly against banks. Such litigation trends pose material financial risks to banks. In addition, credit institutions need to manage risks related to the rapidly evolving landscape of climate litigation against corporate clients. How banks identify, manage and mitigate these novel legal risks is of strong relevance from the perspective of prudential policy and the effectiveness of transition policies more broadly. To respond to this challenge, this report investigates how credit institutions engage with climate- and environment-related legal risks. It explains how insights from bank current practice, such as gaps in their legal risk management approaches, should be addressed with targeted prudential policy interventions. |
| JEL: | F3 G3 |
| Date: | 2024–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129325 |
| By: | Bioret, Lucie (Resources for the Future); Zhu, Yuqi (Resources for the Future); Krupnick, Alan (Resources for the Future); Bergman, Aaron (Resources for the Future) |
| Abstract: | With implementation of the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), the US Department of Energy (DOE) will play a central role in driving the technological innovations needed to reach the Biden administration’s net-zero greenhouse gas emissions goal. However, it needs additional capacity in several areas, including how best to pick winners for the demonstration projects it will be funding. We held a workshop on this topic and developed a follow-on white paper (Bergman et al. 2023). Another area, the topic of this paper, is establishing the capacity to operationalize and institutionalize impact evaluations, which includes developing approaches for tracking data to support evidence-building and help evaluate DOE’s research, development, and demonstration (RD&D) programs. Strengthening evaluation capacity is important for two reasons: it permits DOE and other interested parties to evaluate the success of programs in advancing and, ultimately, commercializing technologies; and it provides input to the agency for adaptive learning to improve its guidance to applicants (in the Funding Opportunity Announcements [FOAs]), decision protocols, and data collection.These two key pieces of legislation are not the only motivation for developing better program evaluations within DOE. The Evidence Act of 2018 US Congress, The Foundations for Evidence-Based Policymaking Act of 2018, HR 4174, Pul L 115-435, 115th Congress, signed into law in January 2019. aims to modernize federal government data collection and management processes to better inform policy decisions. It requires agencies to assess their evaluation practices and create a plan to develop evidence-building activities. The Office of Management and Budget (OMB) is charged with improving these activities and evaluation by providing guidance and resources to agencies and engaging with evaluation officers; at DOE, each individual office is responsible for both functions (DOE 2022), with program managers in charge of conducting evaluations while following program evaluation standards (OMB 2020).This paper builds on a workshop held by Resources for the Future (RFF), informed by government publications and the academic literature, on evaluation and provides recommendations for building evaluation systems for DOE programs. Evaluation systems cover all the operational, organizational, and institutional elements that are needed, including human resources, organizational capacities, and evaluation practices. The report covers three topics: the state of program evaluation at DOE and in other relevant agencies, institutionalization of program evaluation within DOE, and characteristics of robust evaluation methods and their associated metrics and data needs. It closes with a series of recommendations. |
| Date: | 2023–11–16 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-23-17 |
| By: | Tsz Chun Kwok; Daniel Spiro; Arthur A. van Benthem |
| Abstract: | We provide a theoretical micro foundation for how much pollution (negative externalities) a firm will internalize based on the ownership distribution of its shareholders. Small shareholders, compared to large ones, want the firm to spend more on avoiding pollution since they suffer less profit loss for the same environmental benefit. In particular, if a shareholder holds a share of 1/N, where N is the population in society, that shareholder's preferences align with a social planner's. Three theoretical predictions arise. First, small shareholders will systematically vote for a greener corporate profile. Second, firms with a smaller weighted median shareholder will pollute less. Third, countries with concentrated corporate wealth holdings and/or more individualized firm ownership pollute more. This implies that standard models of externalities in environmental economics and macroeconomics containing representative agents are either internally inconsistent or not fully specified. |
| JEL: | G32 Q50 Q52 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34203 |
| By: | Risius, Paula; Quispe Villalobos, Valeria; Malin, Lydia; Arndt, Franziska; Mertens, Armin; Engler, Jan |
| Abstract: | Für die Energiewende werden in unterschiedlichen Berufen Fachkräfte dringend gesucht: Allein in den 31 für die vorliegende Studie betrachteten energierelevanten Berufen konnten im Jahr 2024 knapp 119.000 der insgesamt knapp 185.000 offenen Stellen nicht besetzt werden. Damit liegt die Stellenüberhangsquote der rechnerisch nicht besetzbaren Stellen bei 64 Prozent. Das bedeutet, dass für knapp zwei von drei offenen Stellen in diesen energierelevanten Kernberufen keine entsprechend qualifizierten Fachkräfte verfügbar sind. Unter den diskutierten Lösungsvorschlägen zur Fachkräftesicherung gewinnt die Debatte um Berufswechsel und die damit verbundenen Potenziale angesichts der derzeit wieder steigenden Arbeitslosenzahlen zunehmend an Relevanz. Etwa 62, 5 Prozent der im Jahr 2023 neu begonnenen sozialversicherungspflichtigen Tätigkeiten in den untersuchten Berufen entfielen auf Berufswechsler, die vorher eine andere Tätigkeit ausgeübt hatten. Dies verdeutlich das bereits realisierte Ausmaß der vorhandenen Berufswechselpotenzialen für die Fachkräftesicherung und die damit verbundene Flexibilität von Unternehmen und Beschäftigten bei Rekrutierung, Bewerbung und Stellenbesetzung. Die vorliegende Studie widmet sich der Fragestellung, inwieweit die anhand von Kompetenzüberschneidungen gemessene Ähnlichkeit von Berufen mit einer höheren Zahl an Berufswechseln einhergeht und diese begünstigt. Zur Messung der beruflichen Ähnlichkeit wurde mithilfe von Big-Data-Methoden und unter Einsatz von Künstlicher Intelligenz (KI) eine eigene Maßzahl entwickelt, die die berufliche Ähnlichkeit anhand von Überschneidungen der Kompetenzanforderungen zwischen Berufspaaren quantifiziert. Darüber hinaus werden ergänzend berufsspezifische Kenngrößen aus der Arbeitsmarktstatistik berücksichtigt, um weitere relevante Einflussfaktoren auf die Wechselentscheidung von Arbeitgebern und -nehmern zu modellieren. Die Ergebnisse zeigen, dass eine hohe inhaltliche berufliche Ähnlichkeit Berufswechsel positiv beeinflusst: Aus Herkunftsberufen, deren Kompetenzprofile einem der betrachteten Einmündungsberufe stärker ähneln, wechseln - anteilig gemessen an der Zahl zur Verfügung stehenden Beschäftigten mit einer entsprechenden Tätigkeit im Herkunftsberuf - mehr Personen in den jeweiligen Einmündungsberuf. Regressionsanalysen zeigen darüber hinaus, dass auch die formale Ähnlichkeit von Berufen definiert durch die Klassifikation der Berufe relevant ist: Es finden mehr Wechsel zwischen Berufen statt, die dort näher beieinander liegen. Dies trifft für die ausgewählten akademisch geprägte Berufe weniger stark zu als für die Ausbildungsberufe im gewählten Berufe-Set. Die Generalisierbarkeit der Ergebnisse ist durch die Fokussierung auf die ausgewählten energierelevanten Einmündungsberufe begrenzt und nicht ohne Weiteres auf andere Berufe übertragbar. Für Politik und Unternehmen lassen sich aus den Ergebnissen spezifische Handlungsempfehlungen ableiten. Grundsätzlich konnte gezeigt werden, dass Unternehmen offen für Berufswechsler sind. Die Vermutung liegt nahe, dass dies für Berufe mit Fachkräfteengpässen und steigendem Fachkräftebedarf stärker ausgeprägt sein dürfte als für andere. Um die Potenziale geeigneter Berufswechsler noch stärker zu heben, können Unternehmen in Stellenanzeigen darauf hinweisen, dass auch Bewerbungen von Personen erwünscht sind, die nur einen Teil der Kompetenzanforderungen für die Stelle erfüllen und aus anderen Tätigkeitsfeldern kommen. Diese Bemühungen können Akteure wie die Bundesagentur für Arbeit unterstützen, indem sie Kompetenzüberschneidungen zum ausgeschriebenen Stellenprofil besser sichtbar machen. Zur Überbrückung fehlender Kompetenzen sollten außerdem Qualifizierungsbausteine wie Teilqualifikationen weiter gestärkt werden. Es ist daher zu begrüßen, dass im Koalitionsvertrag der Bundesregierung angekündigt wird, die Jobcenter für die Eingliederung mit ausreichenden Mitteln auszustatten, und die Vermittlung in Arbeit zu stärken. |
| Abstract: | Germany urgently needs skilled workers in various professions for the energy transition: in the 31 energyrelated professions considered in this study, almost 119, 000 of the total 185, 000 vacancies could not be filled in 2024. This means that the surplus quota of positions that mathematically cannot be filled is 64 percent. In other words, there are no suitably qualified skilled workers available for almost two out of three vacancies in these relevant occupations for the expansion of renewable energies. In view of the current rise in unemployment figures, the debate on occupational changes and their potential is becoming increasingly relevant for securing skilled workers. In 2023, around 62.5 percent of new social insurance-contributing jobs in the examined occupations were taken up by people who had previously been employed in other occupations. This illustrates the relevance of occupational change. This study examines the extent to which the similarity of occupations measured on overlapping competencies is associated with and promotes occupational changes. To measure occupational similarity, a metric was developed using big data methods. It quantifies occupational similarity based on overlaps in skill requirements between pairs of occupations. In addition, occupation-specific parameters from labor market statistics are considered to model other relevant factors influencing the occupational changes. The results show that a high degree of occupational similarity positively affects occupational change: more people switch to a new occupation if the skill profiles of their original and new occupation are more similar. Regression analyses also show that the formal similarity of occupations as defined by the classification of occupations is also relevant: there are more changes between occupations that are closer to each other in the classification. This applies less to the academic professions than to the vocational training occupations in the set of selected occupations. The generalization of the results is limited due to the focus on relevant occupations for the expansion of renewable energies. Specific recommendations for policy makers and companies can be derived from the results. It has been shown that companies are generally open to occupational changers. To further increase the potential of suitable occupational changes, companies can indicate in job advertisements that they also welcome applicants who only meet some of the competence requirements for the position or come from similar fields. These efforts can be supported by the Federal Employment Agency by making overlaps in competences with the advertised job profile more visible. To bridge skills gaps, qualification modules such as partial qualifications should also be further strengthened. |
| Keywords: | Erneuerbare Energie, Berufswahl, Berufswechsel, Erwerbsverlauf, Deutschland |
| JEL: | J62 J24 Q43 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwkrep:325499 |
| By: | Dorosh, Paul; Pradesha, Angga |
| Abstract: | The large inflow of foreign capital to fund PNG investments in natural gas pipeline and processing infrastructure resulted in a surge in inflation beginning in 2011. Costs of production of tradable goods such as coffee and palm oil rose more (in kina terms) than their output prices, reducing the profitability of these sectors. These price distortions have continued to the present day, as restrictions on access to foreign exchange (mainly through delays in the release of funds) as demand for foreign exchange exceeds supply made available to the public. This policy note reviews PNG’s exchange rate policies and uses an economy-wide simulation model1 to quantify the impacts of these distortions. We conclude with a discussion of policy implications, highlighting the effects of a possible devaluation / depreciation of the kina. |
| Keywords: | capital; exchange rate; policies; prices; valuation; Papua New Guinea; Oceania |
| Date: | 2025–08–26 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:prnote:176217 |