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on Energy Economics |
| By: | Akbaripour, Navid (Stockholm School of Economics); Bos, Marieke (Mistra Center for Sustainable Markets (Misum)); Mahdikhani, Ehsan (Stockholm School of Economics); Olafsson, Arna (Stockholm School of Economics) |
| Abstract: | Financial markets are increasingly seen as pivotal in mitigating climate change by influencing consumer choices. This paper studies the introduction of a green loan program in Iceland that offers an interest rate rebate for electric vehicle (EV) purchases, and analyzes who selects these loans and how adopting an electric car affects household finances. Using transaction-level data from a large Icelandic bank, we compare green car loan takers to regular car loan takers. We find that green loan adopters tend to be more affluent, have larger families, live in areas with strong Green Party support, and are more financially literate and more likely to have previously invested in green bonds, indicating both pro-environment and financial-awareness channels in selection. They also exhibit different pre-purchase consumption patterns (e.g., lower spending on gasoline and higher spending on other carbon-intensive goods) even before switching to an EV. After the purchase, green loan households dramatically reduce gasoline expenditures (about 30% on average) while increasing electricity costs modestly (around 13%), resulting in a net decline in monthly car-related outlays of roughly 10, 000 ISK (≈$77). This corresponds to a 0.8 percentage point drop in the household’s energy-expenditure-to-income ratio and implies sizable reductions in fuel-related CO2 emissions. We further show that exogenous liquidity windfalls significantly increase the likelihood of choosing a green car loan: lottery winners who subsequently buy a car are 12-13 percentage points more likely to opt for an EV. However, because current green loan take-up is heavily skewed toward wealthier, already green consumers, the aggregate carbon reductions remain limited. Our findings suggest that green loan programs can both cut carbon emissions and save consumers money, but only if complemented by policies to broaden access beyond the environmentally motivated and financially well-off. |
| Keywords: | Sustainable Finance; Green Loans; Household Finance |
| JEL: | G00 |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:hamisu:2025_003 |
| By: | Abuzayed, A. |
| Abstract: | This study investigates the future market values of photovoltaics and wind energy in Germany to assess their economic profitability without financial interventions. Using an open-source optimization model benchmarked against 2019–2024 data, we model the wholesale electricity market under the official expansion scenarios with projected carbon and gas price trajectories. Results show that despite higher wholesale electricity prices compared to pre-crisis levels, low capture prices, particularly for photovoltaics, may deter its future profitability. Contrary to that, onshore wind achieves higher capture prices, suggesting greater potential for self-financing under higher carbon and gas prices. However, market dynamics still pose risks, including price cannibalization and infra-marginal effects during generation oversupply periods. Policy interventions, including market design reforms and long-term instruments are critical to ensure stable revenues and align market conditions with renewable energy expansion goals. |
| Keywords: | Market Value of Renewables, Subsidy-Free Electricity Markets, Renewable Energy Policy, Energy-Only Markets, Electricity Market Design |
| JEL: | Q41 D47 Q42 H23 Q47 |
| Date: | 2025–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2558 |
| By: | von Graevenitz, Kathrine; Krug, Joscha; Rottner, Elisa |
| Abstract: | Governments around the world are under pressure to reduce industrial energy use and emissions without losing out to international competition. For this reason, climate policies often come with exemptions or additional support for large energyintensive firms, increasing the heterogeneity in energy prices. We document such a rising dispersion in industrial energy prices in the German manufacturing sector that coincides with rising average energy prices. Surprisingly, we observe an increase in industrial energy intensity, while at the same time, manufacturing firms have shifted toward producing less energy intensive products. We develop a model of multi-product firms with heterogeneous energy prices and heterogeneous products that can partially explain this puzzle via a 'reshuffling' among producers: If energy prices rise only for a share of firms, those firms will drop energy-intensive products. But the remaining low energy price firms will increase their market share of these products and produce them in a less energy-efficient way. Empirical analyses based on German administrative firm data suggest that such a 'reshuffling' is indeed taking place. We show in a simple quantification that reshuffling can have sizable effects on aggregate energy intensity. |
| Keywords: | Product choice, Energy intensity, Carbon emissions, Manufacturing |
| JEL: | Q41 D21 D22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:328244 |
| By: | Nelson, David (The Institute for New Economic Thinking at the Oxford Martin School, University of Oxford); Kinczyk, Ada; Villanueva, Carlos Perez |
| Abstract: | Investors in energy infrastructure during these times of a rapid energy transition face two types of uncertainty. The first is whether a slower than required pace of transition will affect markets in ways that undermine investment cases. These risks can be identified and managed by understanding how the infrastructure, its cost, prices, revenues, and market size, might fit within the existing landscape. A more difficult and speculative risk has surrounded the question of whether an investment case might be undermined if the transition goals are met, but the transition path and direction differ substantially from original expectations. This paper uses scenario analysis of a wide range of different plausible, but less likely, transition paths to develop a fact base on which to assess these transition path risks. The 8 scenarios cover transitions where technology breakthroughs and policy accelerate the development of alternatives including nuclear power, carbon capture and sequestration, hydrogen, distributed renewable energy, and energy efficiency to levels at the edge of what forecasters deem as plausible. Two of the scenarios also look at the impact of accelerated development of renewable energy and hydrogen on a global scale, with opportunities to import technology and energy into Europe, where the economics of imports of electricity or hydrogen make sense. For each of these scenarios, we have developed forecasts of demand, prices, costs, utilization rates, price volatility, and investment, for the relevant energy markets and their technologies. |
| Keywords: | energy pathways, policy risk, risk management, scenarios, uncertainty |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:amz:wpaper:2025-19 |
| By: | Lautaro Chittaro; Monika Piazzesi; Marcelo J. Sena; Martin Schneider |
| Abstract: | In frictionless financial markets, a carbon tax on energy users provides the same incentives as a replicating asset price schedule that depends on emissions. In particular, the replicating rate of return on a firm increases linearly in scope 1 emissions relative to enterprise value. We use this result to interpret pollution premia measured by recent empirical studies and conclude that markets currently provide only modest incentives. Replicating a serious carbon tax requires high returns in the right tail of the emission intensity distribution. With heterogeneous investors, such returns are not sustainable unless essentially everyone perceives large nonpecuniary costs from holding dirty capital. Substantial emission reductions can be achieved, however, when even a small share of investors perceive nonpecuniary benefits from owning clean electricity capital. |
| JEL: | E0 G0 Q0 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34342 |
| By: | Frank Milne (Queen's University) |
| Abstract: | For the past 20 years, Australia has introduced policies encouraging and subsidizing renewable electricity generation. Since the election of the Australian Labor Party government in 2022, these policies have been accelerated. We show that international evidence of the heavy cost of renewable energy projects has been ignored. Cost-benefit studies show that these projects cannot be justified with any reasonable price for carbon dioxide emissions. Consequently, the Australian economy has suffered greatly increased prices for electricity provided by the grid. In turn, this has increased the rate of deindustrialization in key industries, contributed to a cost-of-living crisis for consumers and made the country more strategically vulnerable. |
| Keywords: | Renewable Energy, Cost-Benefit, Net Zero |
| JEL: | Q2 Q3 Q4 H54 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:qed:wpaper:1540 |
| By: | Adam Feher (University of Lausanne); Emilia Garcia-Appendini (Norges Bank; University of St. Gallen - School of Finance; Swiss Finance Institute); Roxana Mihet (Swiss Finance Institute - HEC Lausanne) |
| Abstract: | We leverage a comprehensive dataset on U.S. data center energy loads, utility electricity prices, and establishment-level revenues, employment, and carbon emissions from 2010 to 2023 to examine whether rising data center demand affects local retail energy prices or other spillovers. For identification, we employ an instrumental variables continuous difference-indifferences design, exploiting exogenous variation in data center location attractiveness. We find no detectable local spillover effects from data center energy growth. A regional model calibrated to these null results suggests that shocks larger than those observed through 2023 could still result in noticeable increases in household utility bills if not offset by regulation or external supply. |
| Keywords: | AI, energy prices, spillovers, data centers, energy, electricity |
| JEL: | Q55 Q58 D24 O33 O44 L94 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2573 |
| By: | Ruben Aag; Hilde C. Bjornland; Peder Eliassen |
| Abstract: | This paper compares forecasting approaches for oil and natural gas prices within a unified pseudo-real-time framework. While oil price forecasting is well established, natural gas markets remain less explored and are characterized by more regionalized and less globally integrated pricing. By adapting established oil forecasting models to natural gas, we systematically assess how differences in market structure shape model transferability and predictive accuracy. Forecast combinations consistently outperform individual models for both commodities, underscoring the value of model averaging. However, the forecast gains are considerably larger for natural gas, reflecting greater potential for improvement in a more localized market. Optimal weighting schemes also differ: equal weights dominate for oil, while performance-based weights yield superior accuracy for gas. Overall, the results demonstrate that forecasting performance is both commodity- and market-structure-dependent, offering new insights into reliable energy price prediction across global and regional markets. |
| Keywords: | oil and natural gas prices, forecasting, model combinations |
| JEL: | C32 F41 O47 Q3 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2025-54 |
| By: | Michael Lindner; Julian Geis; Toni Seibold; Tom Brown |
| Abstract: | Germany has set an ambitious target of reaching net zero greenhouse gas emissions by 2045. We explore how integrated cross-sectoral planning can reduce costs compared to existing national plans. Our new linear optimization model PyPSA-DE simulates the electricity and hydrogen transmission networks, as well as supply, demand, and storage in all sectors of the energy system in Germany and its neighboring countries with high spatial and temporal resolution. While our new model shows strong electricity transmission grid development, total expansion is one third lower than in the national grid development plan, lowering costs by 92 billion EUR$_{2020}$ to 191 billion EUR$_{2020}$ and average grid tariffs by 7.5 EUR$_{2020}$ / MWh. These savings are mainly due to integrated planning and operation, a market design with regional prices, and a system-optimal usage of offshore wind. PyPSA-DE is open-source and can readily be adapted to study related issues around the energy transition. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.09414 |
| By: | Tiantian Yang; Richard S. J. Tol |
| Abstract: | To address the dual environmental challenges of pollution and climate change, China has established multiple environmental markets, including pollution emissions trading, carbon emissions trading, energy-use rights trading, and green electricity trading. Previous empirical studies suffer from known biases arising from time-varying treatment and multiple treatments. To address these limitations, this study adopts a dynamic control group design and combines Difference-in-Difference (DiD) and Artificial Counterfactual (ArCo) empirical strategies. Using panel data on A-share listed companies from 2000 to 2024, this study investigates the marginal effects and interactive impacts of multiple environmental markets implemented in staggered and overlapping phases. Existing pollution emissions trading mitigates the negative effects of carbon emission trading. Carbon trading suppresses (improves) financial performance (if implemented alongside energy-use rights trading). The addition of energy-use rights or green electricity trading in regions already covered by carbon or pollution markets has no significant effects. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.26403 |
| By: | Christian Keuschnigg (University of St. Gallen – Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); Swiss Finance Institute); Giedrius Kazimieras Stalenis (University of St. Gallen) |
| Abstract: | We study a small open economy that must implement an emissions reduction plan and eventually phase out fossil fuel. R&D leads to the design of energy saving new machines. Endogenous scrapping eliminates old inefficient machines. We identify two distortions that delay the adoption and diffusion of energy saving technology: scrapping of old equipment and investment in new machines are both too low. The optimal policy to manage the energy transition thus combines a carbon tax with a profit tax to speed up exit, and an investment subsidy to speed up investment in new equipment. The optimal policy increases capital turnover, the diffusion of energy saving technology, and thereby mitigates the costs of the energy transition. Compared to a policy that exclusively relies on carbon taxes, the optimal policy could reduce the GDP loss of moving to net zero from 7.8 to 6.1% of GDP. |
| Keywords: | Energy saving innovation, vintage capital, emissions reduction |
| JEL: | D21 D62 H23 O33 Q41 Q43 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2583 |
| By: | Masashige Hamano (Waseda University, School of Political Science and Economics); Yuki Murakami (Waseda University, Graduate School of Economics) |
| Abstract: | This paper highlights the potential for decoupling economic growth from CO2 emissions under strong policy, while providing a tractable framework for analyzing the long-run global green transition. We develop a dynamic stochastic general equilibrium model with heterogeneous firms: green firms abate emissions at higher costs, while brown firms do not. Emissions reduce aggregate productivity but are not internalized in competitive equilibrium. Using global data from 1981 to 2022, we calibrate the model to match observed trends in GDP and emissions. The analysis delivers three main findings. First, while emissions continue to rise, the share of green firms grows over time. Second, faster technological progress amplifies the growth–emissions trade-off, whereas slower progress attenuates it. Third, welfare analysis shows that the optimal emission tax must be substantially higher than current levels, though its role is moderated when combined with abatement innovation. Together, these results underscore the importance of policy in sustaining growth while mitigating environmental externalities. |
| Keywords: | Climate change, Green transition, Heterogeneous firms, Economic growth, DSGE models |
| JEL: | Q54 Q58 E32 F44 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2522 |
| By: | Milios Leonidas (European Commission - JRC); Garcia-gutierrez Pelayo; Walker Anna (European Commission - JRC); Albizzati Paola Federica (European Commission - JRC); Pinero Mira Pablo (European Commission - JRC); Besler Malte; Pedauga Luis (European Commission - JRC); Tonini Davide (European Commission - JRC) |
| Abstract: | "- Climate Change Mitigation: Circular Economy strategies in the plastics sector can annually save 75-84 Mt CO₂ eq. emissions by 2050, compared to relying solely on decarbonisation strategies- Reduced Resource Dependency: The EU’s fossil resource use is reduced by 3.3%, equivalent to 930 PJ or 23 Mt oil eq.- Lower Energy Demand: Alongside the use of fossil energy carriers, the electricity demand in the EU plastics industry decreases by 34%- Higher Economic Security: The EU’s trade balance can be boosted by EUR 18 billion due to a decrease in imports." |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc143443 |
| By: | Albizzati Paola Federica (European Commission - JRC); Walker Anna (European Commission - JRC); Milios Leonidas (European Commission - JRC); Besler Malte; Pinero Mira Pablo (European Commission - JRC); Pedauga Luis (European Commission - JRC); Donati Franco; Christis Maarten; Baldassarre Brian; Tonini Davide (European Commission - JRC) |
| Abstract: | "- Climate Change Mitigation: By 2050, Circular Economy strategies can save 12-14 Mt CO2-eq. emissions annually in the aluminium sector, compared to relying solely on decarbonisation strategies- Reduced Resource Dependency: They can reduce the direct input of bauxite for the EU aluminium industry by 27%- Lower Energy Demand: These strategies can also decrease the EU aluminium industry’s demand for fossil energy carriers by 9% and electricity by 22%- Higher Economic Security: The EU’s trade balance can be improved by EUR 3.6 billion through reduced imports" |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc143441 |
| By: | Wagner Aymara; Walker Anna (European Commission - JRC); Albizzati Paola Federica (European Commission - JRC); Milios Leonidas (European Commission - JRC); Besler Malte; Pedauga Luis (European Commission - JRC); Rostek Leon; Keramidas Kimon (European Commission - JRC); Pinero Mira Pablo (European Commission - JRC); Christis Maarten; Fonteyn Pieter; Petsinaris Foivos; Zibell Laurent; Tonini Davide (European Commission - JRC) |
| Abstract: | "- Climate Change Mitigation: By 2050, implementing Circular Economy strategies can save 64-81 Mt CO2-eq. emissions annually in the steel sector, compared to relying solely on decarbonisation strategies- Reduced Resource Dependency: These strategies can reduce the direct input of metal ore for the EU steel industry by 27% - Lower Energy Demand: They can significantly decrease the EU steel industry’s demand for fossil energy carriers by 28% and electricity by 36%- Higher Economic Security: The EU’s trade balance can be boosted by EUR 7 billion through reduced imports" |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc143444 |
| By: | Vogl, Jonathan; Kleinebrahm, Max; Raab, Moritz; McKenna, Russell; Fichtner, Wolf |
| Abstract: | Electrified heating and mobility, the uptake of air conditioning and distributed energy resources are reshaping residential electricity demand and will require substantial investment. Yet the dependencies that drive present and future residential demand across sociodemographic characteristics, occupant activities, energy service demands, local technologies, and interactions with the overarching energy system remain poorly understood. Activity-based, bottom-up models make these dependencies explicit, better informing flexible operation and investment in low-carbon technologies. We review 45 activity-based residential models and assess coverage of appliances, domestic hot water, space heating and cooling, and mobility (electric vehicle charging), which are rarely considered jointly in one integrated model. We identify methodological gaps for consistently modeling behavior: To our knowledge, this is the first review to include activity-based mobility modeling, thereby identifying methodological gaps in consistent behavior modeling across residential energy services: First, most studies simulate single occupants in isolation rather than entire households, thereby overlooking interdependencies among occupants. Second, predominant use of Markov models or independent univariate sampling limits temporal consistency. Based on these findings, future studies should combine complementary behavioral datasets with sophisticated models (e.g., deep neural networks) capable of capturing complex dependencies to generate high-quality synthetic behavioral data as a basis for future bottom-up residential energy demand modeling. Further progress requires open datasets and reproducible validation frameworks to benchmark and compare activity-based models and to ensure consistent progress in the field. Currently, there is no model available in the literature that derives energy demand for thermal comfort, hot water, mobility, and other services consistently from one fundamental representation of household behavior. |
| Keywords: | household energy demand, activity schedules, occupancy behavior, activity modeling, sector coupling, mobility behavior, bottom-up demand modeling |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kitiip:328261 |
| By: | Walker Anna (European Commission - JRC); Albizzati Paola Federica (European Commission - JRC); Milios Leonidas (European Commission - JRC); Pinero Mira Pablo (European Commission - JRC); Christis Maarten; Besler Malte; Pedauga Luis (European Commission - JRC); Tonini Davide (European Commission - JRC) |
| Abstract: | "- Climate Change Mitigation: Circular Economy strategies in the cement and concrete sector can save 38-52 Mt CO₂-eq. emissions annually by 2050, compared to relying solely on decarbonisation strategies- Efficient material use: Over 75% of this reduction potential stems from using less materials, more efficiently- Lower Energy Demand: The EU cement and concrete sector can reduce demand for fossil energy carriers (-23%), biomass for energy (-41%) and electricity (-37%)- Higher Economic Security: The EU trade balance can increase by EUR 6.1 billion due to a decrease in imports, thus strengthening economic security" |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc143440 |
| By: | Flörchinger, Daniela; Perino, Grischa; Frondel, Manuel; Jarke, Johannes Stephan |
| Abstract: | Decommissioning of coal-fired power plants is a widely known emission abatement option, but one with a limited effect due to the EU Emissions Trading System (ETS). In contrast, tightening the cap in the EU ETS is a highly effective, but less known mitigation option. This article empirically analyzes whether informing individuals about the effectiveness of these abatement options increases support for more effective climate policies. The analysis is based on an online survey experiment involving actual cancellation of emission allowances and curbing the output of a coal-fired power plant. We find that preferences over abatement options are driven by their perceived effectiveness. Moreover, we provide causal evidence that voters update their preference rankings when exposed to relevant information. |
| Abstract: | Die Stilllegung von Kohlekraftwerken ist eine weithin bekannte Option zur Emissionsminderung, deren Wirkung jedoch aufgrund des EU-Emissionshandelssystems (EU-EHS) begrenzt ist. Im Gegensatz dazu ist die Verschärfung der Obergrenze im EU-EHS eine hochwirksame, aber weniger bekannte Minderungsoption. In diesem Artikel wird empirisch analysiert, ob die Aufklärung der Bevölkerung über die Wirksamkeit dieser Minderungsoptionen die Unterstützung für wirksamere Klimaschutzmaßnahmen erhöht. Die Analyse basiert auf einem Online-Umfrageexperiment, bei dem Emissionszertifikate tatsächlich gestrichen und die Leistung eines Kohlekraftwerks gedrosselt wurden. Wir stellen fest, dass die Präferenzen hinsichtlich der Emissionsminderungsmaßnahmen von ihrer wahrgenommenen Wirksamkeit abhängen. Darüber hinaus liefern wir kausale Belege dafür, dass Wähler ihre Präferenzrangfolge aktualisieren, wenn sie relevante Informationen erhalten. |
| Keywords: | coal phase-out, information provision, motivated reasoning, policy mix |
| JEL: | C93 D02 D83 D91 Q54 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:328240 |
| By: | Luis van Sandbergen |
| Abstract: | The provision of renewable electricity is the foundation for a sustainable future. To achieve the goal of sustainable renewable energy, Battery Energy Storage Systems (BESS) could play a key role to counteract the intermittency of solar and wind generation power. In order to aid the system, the BESS can simply charge at low wholesale prices and discharge during high prices, which is also called energy arbitrage. However, the real-time execution of energy arbitrage is not straightforward for many companies due to the fundamentally different behavior of storages compared to conventional power plants. In this work, the optimized operation of standalone BESS in the cross-market energy arbitrage business is addressed by describing a generic framework for trading integrated BESS operation, the development of a suitable backtest engine and a specific optimization-based strategy formulation for cross-market optimized BESS operation. In addition, this strategy is tested in a case study with a sensitivity analysis to investigate the influence of forecast uncertainty. The results show that the proposed strategy allows an increment in revenues by taking advantage of the increasing market volatility. Furthermore, the sensitivity analysis shows the robustness of the proposed strategy, as only a moderate portion of revenues will be lost if real forecasts are adopted. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.21337 |
| By: | Adeline Gu\'eret; Carlos Gaete-Morales; Wolf-Peter Schill |
| Abstract: | While battery electric vehicles (BEVs) play a key role for decarbonizing the transport sector, their impact on the power sector heavily depends on their charging strategies. Here we systematically analyze various combinations between inflexible, smart and bidirectional (or vehicle-to-grid, V2G) charging of 15 million electric cars in Germany. Using a capacity expansion model, we find that even a moderate share of bidirectional charging below 30% leads to lower system costs than a fully smartly charging BEV fleet. At a V2G share of 50%, costs are even lower than in a system without any BEVs. This means that the flexibility effect of half of the BEV fleet charging bidirectionally outweighs the demand effect of the whole BEV fleet. We show how costs savings are driven by the ability of V2G to serve demand, especially during hours with high residual load. We also explore the distributional effects of respective electricity price changes. While V2G car owners internalize a substantial share of overall cost savings, the benefits increasingly spill over to other electricity consumers as the share of bidirectional charging grows. We conclude that policymakers should focus on enabling a moderate fleet share of V2G rather than on enabling every car to charge smartly. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.15284 |
| By: | Juan J. Cortina (World Bank); Claudio Raddatz (Central Bank of Chile, School of Economics and Business, Universidad de Chile); Sergio L. Schmukler (World Bank Research Department); Tomas Williams (George Washington University) |
| Abstract: | This paper investigates how firms use green versus conventional debt and the associated firm- and aggregate-level environmental consequences. Employing a dataset of 127, 711 global bond and syndicated loan issuances by non-financial firms across 85 countries during 2012-23, the paper documents a sharp rise in green debt issuances relative to conventional issuances since 2018. This increase is particularly pronounced among large firms with high carbon dioxide emissions. Local projections difference-in-differences estimates show that, compared to conventional debt, green bond and loan issuances are systematically followed by sustained reductions in carbon intensity (emissions over income) of up to 50 percent. These reductions correspond to as much as 15 percent of global annual emissions. Green bonds contribute to reducing emissions by providing financing to large, high-emitting firms, whose improvements in carbon intensity have significant aggregate consequences. Syndicated loans do so by channeling a larger volume of financing to a wider set of firms. |
| Keywords: | carbon emissions, corporate bonds, firm growth, green debt, green transition, sustainability, syndicated loans |
| JEL: | F33 G00 G01 G15 G21 G23 G31 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:anc:wmofir:193 |
| By: | Till Fladung; Julia Hoffmann; Mathias Mier; Mustafa Ispa |
| Abstract: | The European energy market is comprised of a diverse range of actors, each with distinct roles and objectives. This paper proposes a taxonomy that categorizes these actors into five groups: governance, grid and transport, supply, demand, and investors. Utilizing extant literature, we identify salient characteristics and distinctions within these groups through analyzing their interconnections and interactions. By systematically mapping energy flows and investment patterns, we present a structured overview of the market’s evolving landscape and its implications for the energy transition, particularly concerning the debate on the necessity of capacity mechanisms. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ifowps:_417 |
| By: | Walker Anna (European Commission - JRC); Albizzati Paola Federica (European Commission - JRC); Milios Leonidas (European Commission - JRC); Pinero Mira Pablo (European Commission - JRC); Besler Malte; Pedauga Luis (European Commission - JRC); Eder Peter (European Commission - JRC); Tonini Davide (European Commission - JRC) |
| Abstract: | "HIGHLIGHTS- Climate Change Mitigation: Circular Economy strategies in four key industries can double the greenhouse gas emission reduction by 2050, compared to relying solely on decarbonisation efforts, saving 189-231 Mt CO2-eq. per year- Reduced Fossil Energy Demand: EU fossil energy carrier demand can reduce by 6%- Higher Economic Security: The EU’s trade balance can be improved by up to EUR 35 billion annually, through reduced imports.- Significant Decoupling Effect: Greenhouse gas emissions can decrease 9 to 26 times more than the reduction in the gross value added of the energy-intensive sectors" |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc143439 |
| By: | Madhushree Ayalasomayajula (University of Lausanne - Faculty of Business and Economics (HEC Lausanne)); Eric Jondeau (University of Lausanne - Faculty of Business and Economics (HEC Lausanne); Swiss Finance Institute) |
| Abstract: | This paper develops a theoretical asset-pricing model to examine how sustainable investors can combine exclusion and engagement strategies to accelerate corporate transition. Firms are classified as green, brown, or reformable, with the latter being polluting firms that can reduce emissions under shareholder pressure. Sustainable investors exclude brown firms but may engage with reformable ones when majority ownership enables them to enforce a transition. Engagement is modeled as a costly but effective mechanism that lowers emissions and generates non-pecuniary benefits for investors. Our main result is that only a moderate share of sustainable investors (around 22.5% of market wealth) is sufficient to trigger reformable firms' transition, provided they derive a modest non-pecuniary benefit (about 2.3%) from sustainability improvements. In this equilibrium, sustainable investors are willing to concentrate their portfolios in reformable assets, enabling these firms to adopt cleaner technologies and reduce their environmental footprint. The model shows that a relatively small but motivated coalition of investors can induce meaningful environmental change through targeted engagement. |
| Keywords: | Sustainable Investing, Exclusion and Engagement, Equilibrium Asset Pricing, Shareholder Activism, Green Transition |
| JEL: | G11 G12 Q51 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2574 |
| By: | Marie Bruguet (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, CEC - Chaire Economie du Climat - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres); Arthur Thomas (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, CEC - Chaire Economie du Climat - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres); Ronan Le Saout (ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique) |
| Abstract: | This paper addresses the challenge of adjusting energy consumption data for weather variations by introducing a novel General Weather Indicator (GWI). The GWI combines multiple weather variables, including temperature, wind, sunlight, rain, and cloudiness, using a novel econometric approach that applies K-means for threshold identification and LASSO for variable selection. Through an empirical analysis of sectoral electricity and natural gas consumption in France, we demonstrate that the GWI outperforms the standard HDD approach by addressing three main concerns: the lack of statistical criteria for defining the base temperature, the reliance solely on temperature as the weather variable, and the assumption of a constant base temperature over time and space. Based on these results, we propose an analysis of the sectoral functional form and an estimation of weather elasticities for energy demand in France at both the monthly and daily levels. |
| Keywords: | seasonal adjustment, weather, heating degree days, K-means clustering, penalization, sectoral energy consumption |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05288088 |
| By: | Raphaël Semet (UEVE - Université d'Évry-Val-d'Essonne) |
| Abstract: | This study uses data from the 2017 French Household Budget Survey ( enquête Budget de famille) and an input‑output model to examine the carbon footprint distribution of French households. Using multivariate nested models and quantile regression techniques, it explores disparities in households carbon footprints stemming from socioeconomic characteristics (e.g., size, age, education), income, or household decisions (e.g., home energy source, dwelling type, car ownership). The findings show that the three dimensions are crucial for understanding carbon footprint differences. Other characteristics being equal, education, age and household size, influence carbon emissions. Household decisions also have great explanatory power, especially at the bottom of the distribution, while the type of urban unit (urban/peri‑urban/rural) has no significant influence on carbon emissions |
| Abstract: | À partir des données de l'enquête Budget de famille 2017 et d'un modèle entrées/ sorties, cet article estime la distribution de l'empreinte carbone des ménages français. À l'aide de modèles multivariés et de régressions quantiles, il explore les disparités d'empreintes carbone des ménages selon leurs caractéristiques socioéconomiques (taille du ménage, âge et niveau d'études de la personne de référence), leurs revenus et leurs décisions (par exemple la source d'énergie domestique, le type de logement, l'équipement en véhicules, etc.). Les trois dimensions comptent pour bien comprendre les disparités d'empreintes carbone. Toutes caractéristiques égales par ailleurs, niveau d'études, âge de la personne de référence et taille du ménage influencent les émissions de carbone. Les décisions prises par le ménage ont également un grand pouvoir explicatif, en particulier sur le bas de la distribution des émissions, tandis que le type d'unité urbaine (urbaine/péri-urbaine/rurale) n'a pas d'influence significative. |
| Keywords: | mitigation, quantile regression, carbon footprint, empreinte carbone, régression quantile, ménages |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05163695 |
| By: | Thibault Deletombe (TECH ECO (ex-ITESE) - Institut Technico-Economie - CEA-DES (ex-DEN) - CEA-Direction des Energies (ex-Direction de l'Energie Nucléaire) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives - Université Paris-Saclay); Hyun-Jin Julie Yu (TECH ECO (ex-ITESE) - Institut Technico-Economie - CEA-DES (ex-DEN) - CEA-Direction des Energies (ex-Direction de l'Energie Nucléaire) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives - Université Paris-Saclay); Patrice Geoffron (Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres) |
| Date: | 2024–09–23 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:cea-05293368 |
| By: | Thibault Deletombe (TECH ECO (ex-ITESE) - Institut Technico-Economie - CEA-DES (ex-DEN) - CEA-Direction des Energies (ex-Direction de l'Energie Nucléaire) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives - Université Paris-Saclay); Hyun Jin Julie Yu (TECH ECO (ex-ITESE) - Institut Technico-Economie - CEA-DES (ex-DEN) - CEA-Direction des Energies (ex-Direction de l'Energie Nucléaire) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives - Université Paris-Saclay); Patrice Geoffron (Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres) |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:cea-05293379 |
| By: | Felix Kubler (University of Zurich); Simon Scheidegger (University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); London School of Economics, Grantham Research Institute on Climate Change and the Environment); Oliver Surbek (University of Lausanne - Department of Economics (DEEP)) |
| Abstract: | We develop a computational framework for deriving Pareto-improving and constrained optimal carbon tax rules in a stochastic overlapping generations (OLG) model with climate change. By integrating Deep Equilibrium Networks for fast policy evaluation and Gaussian process surrogate modeling with Bayesian active learning, the framework systematically locates optimal carbon tax schedules for heterogeneous agents exposed to climate risk. We apply our method to a 12-period OLG model in which exogenous shocks affect the carbon intensity of energy production, as well as the damage function. Constrained optimal carbon taxes consist of tax rates that are simple functions of observables and revenue-sharing rules that guarantee that the introduction of the taxes is Pareto improving. This reveals that a straightforward policy is highly effective: a Pareto-improving linear tax on cumulative emissions alone yields a 0.42% aggregate welfare gain in consumption-equivalent terms while adding further complexity to the tax provides only a marginal increase to 0.45%. The application demonstrates that the proposed approach produces scalable tools for macro-policy design in complex stochastic settings. Beyond climate economics, the framework offers a template for systematically analyzing welfare-improving policies in various heterogeneous-agent problems. |
| Keywords: | Climate Policy, Optimal Policy, Ramsey Taxation, Pareto Frontier, Deep Learning, Gaussian Processes |
| JEL: | C61 C63 D58 H23 Q54 Q58 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2582 |
| By: | Gazze, Ludovica (University of Warwick); Gupta, Tanu (University of Southampton); Huang, Allen (Weiyi) (University of Oxford); Londono, Valentina (Universidad del Rosario); Saavedra, Santiago (Universidad del Rosario); Toma, Mattie (University of Warwick) |
| Abstract: | There is limited evidence on the non-health impacts of air pollution, including productivity in the workplace and behavior. We examine the effect of air pollution on participation, collaboration, and feedback provision in a workplace setting. Our experiment randomly assigns air purifiers to rooms at three large academic conferences to investigate the causal impact of air pollution on participants' engagement behavior. We construct a participant engagement index based on 12 presentation-level behavioral outcomes directly measured by conference observers through an online form and weigh each behavioral outcome using weights elicited from an expert survey. Conference rooms treated with air purifiers exhibit 48% less PM2.5 concentration compared to control rooms. However, we do not find a statistically significant change in engagement. Communication in the workplace might not be a large driver of the empirical relationship between air quality and productivity, albeit more research is needed across workplaces and measures of communication. |
| Keywords: | field experiment, workplace, engagement, indoor air quality |
| JEL: | Q53 J24 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18154 |
| By: | Moritz Lubczyk; Maria Waldinger |
| Abstract: | What are the long-run effects of sustained exposure to air pollution? A unique natural experiment allows us to examine this question. In 1982, a sudden cut in Soviet oil forced Socialist East Germany to switch to highly polluting lignite coal. While the shock sharply increased air pollution near mining regions, authoritarian restrictions on mobility, housing, and jobs prevented sorting responses. We document persistent labor market impacts over three decades. Exposed individuals work less, earn lower wages, and retire earlier. Health is a key mechanism: infant mortality rises by 9\% and the long-run incidence of asthma and cardiopathy increases significantly. |
| Keywords: | air pollution, labour supply |
| JEL: | I15 J24 J60 N54 Q53 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12197 |
| By: | Milios Leonidas (European Commission - JRC); Garcia-gutierrez Pelayo; Walker Anna (European Commission - JRC); Albizzati Paola Federica (European Commission - JRC); Pinero Mira Pablo (European Commission - JRC); Besler Malte; Pedauga Luis (European Commission - JRC); Tonini Davide (European Commission - JRC) |
| Abstract: | "The implementation of Circular Economy measures in the EU plastics sector has the potential to reduce greenhouse gas emissions by 75-84 Mt CO2-eq. annually by 2050. CE measures can also significantly decrease EU demand for fossil resources and energy demand, leading to a €18 billion annual increase in the EU net trade balance with significant imports reduction from the US, China, UK, and Russia. However, this may come with trade-offs such as reduced employment and gross value added, which need to be further studied to produce more accurate assessment and potential mitigation measures. The study's findings are policy-relevant, highlighting the need for a holistic approach and policy mix over the lifecycle of materials and products to materialise the CE potential, while informing EU policymakers on feasible strategies to support the plastics sector's sustainability transition." |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc143075 |
| By: | Hugo Morão |
| Abstract: | Thisstudyexaminesthemacroeconomicimpactofpolicyuncertaintyinclimatedecisionmaking. It employs data mining to 23 Portuguese news sources to construct a novel monthly Climate Policy Uncertainty (CPU) series, which is then used in a Structural Vector Autoregression (SVAR) model to analysis its macroeconomic effects. These responses collectively reveal significant economic restructuring in response to climate policy uncertainty. The combination of reduced industrial production and increased unemployment suggests substantial supply-side adjustment costs during the transition. However, the positive stock market response indicates that financial markets view these changes as ultimately beneficial for certain sectors, particularly those aligned with environmental sustainability. |
| Keywords: | Climate policy; Textual analysis; Policy uncertainty; Portugal; SVAR. |
| JEL: | C32 E32 E61 F18 G18 Q54 L66 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03942025 |
| By: | Thomas K. Kloster |
| Abstract: | This paper considers the often overlooked fact that electricity spot prices in individual European generation zones evolve as a high dimensional panel structure. A general continuous time framework is developed by formulating the panel as an ambit field indexed by a cylinder surface, where the cross sectional dimension is represented by a circle. This requires a treatment of ambit fields on manifolds, but the departure from Euclidean space allows for embedding intrinsic dependence structures into the index set in a flexible and parameter-free way, where the daily delivery periods have a canonical mapping onto the circle. The model is a natural space-time extension of volatility modulated L\'evy-driven Volterra processes, which have previously been studied in the context of energy markets, and the pricing of electricity derivatives turns out to be essentially as analytically tractable as in the null-spatial setting. The space-time framework extends the scope of possible derivatives to products written on individual delivery periods, where spreads between these constitute an interesting example. We establish useful formulas for the pricing of various derivatives along with a simulation scheme, and study specifications of the dependence structure in detail. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.17236 |
| By: | Ahmed S. Alahmed; Audun Botterud; Saurabh Amin; Ali T. Al-Awami |
| Abstract: | We develop a mathematical framework to jointly schedule water and electricity in a profit-maximizing renewable colocated water desalination plant that integrates both thermal and membrane based technologies. The price-taking desalination plant sells desalinated water to a water utility at a given price and engages in bidirectional electricity transactions with the grid, purchasing or selling power based on its net electricity demand. We show that the optimal scheduling policy depends on the plant's internal renewable generation and follows a simple threshold structure. Under the optimal policy, thermal based water output decreases monotonically with renewable output, while membrane based water output increases monotonically. We characterize the structure and intuition behind the threshold policy and examine key special properties. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.19243 |
| By: | Matthias Burgert; Giulio Cornelli; Burcu Erik; Benoit Mojon; Daniel Rees; Matthias Rottner |
| Abstract: | This paper introduces the BIS Multisector Model (BIS-MS), a dynamic stochastic general equilibrium (DSGE) model for analyzing macroeconomic dynamics in a multi-sector production network. The model can be calibrated to match the input-output data of more than 80 economies, enabling a detailed exploration of sectoral interdependencies and cross-industry shock transmission. By incorporating nominal rigidities at the sectoral level, the model can also be used to evaluate alternative monetary policy strategies. The paper demonstrates the model's capabilities by analyzing temporary and permanent energy price shocks under different monetary policy frameworks. In doing so, it illustrates the critical role of the country-specific production networks in shaping macroeconomic outcomes. The accompanying model toolbox equips policymakers and researchers with an easy-to-access platform for flexible scenario analysis. |
| Keywords: | multisector model, DSGE model, monetary policy, production network, climate change |
| JEL: | C54 E52 H23 Q43 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1297 |
| By: | Zacharias Sautner (University of Zurich - Department of Finance; Swiss Finance Institute; European Corporate Governance Institute (ECGI)) |
| Abstract: | Institutional investors can use engagement strategies to affect corporate responses to climate and nature risks. Engagement improves climate-related disclosure and sometimes reduces emissions. However, persistently high emissions among major polluters and carbon leakage through divestitures or outsourcing raise doubts about investors' ultimate effect on economywide decarbonization. Collective investor initiatives may enhance engagement, yet evidence remains limited on their effectiveness. Recent extensions of engagement efforts to nature topics reflect the interconnectedness of nature and climate risks. Open research questions point to a rich agenda for understanding better how, why, and with what effects institutional investors engage on climate and nature risks. |
| Keywords: | Institutional Investors, Climate Risks, Nature Risks, Engagement, Active Ownership |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2576 |
| By: | Wagner Aymara; Walker Anna (European Commission - JRC); Albizzati Paola Federica (European Commission - JRC); Milios Leonidas (European Commission - JRC); Besler Malte; Pedauga Luis (European Commission - JRC); Rostek Leon; Keramidas Kimon (European Commission - JRC); Pinero Mira Pablo (European Commission - JRC); Christis Maarten; Fonteyn Pieter; Petsinaris Foivos; Zibell Laurent; Tonini Davide (European Commission - JRC) |
| Abstract: | "The EU steel sector can reduce greenhouse gas emissions by 64-81 Mt CO2-eq. annually by 2050 through circular economy (CE) measures. CE can also significantly decrease EU demand for ores and energy demand, leading to a €7 billion annual increase in the EU net trade balance with significant imports reduction from China, US, UK, and Russia. However, this may come with trade-offs such as reduced employment and gross value added, which need to be further studied. The study's findings are policy-relevant, highlighting the need for a holistic approach and policy mix to materialise CE potential and informing EU policy-makers on strategies to support the steel sector's sustainable transition." |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc142957 |
| By: | Hilde C. Bjørnland; Jamie L. Cross; Jonas Hölz |
| Abstract: | This paper examines how central banks respond to supply-side shocks and investigates the trade-offs they face in stabilizing inflation and output. To do so we develop a dual external instrument proxy structural vector autoregressive (SVAR) model to disentangle the macroeconomic effects of oil supply news and monetary policy shocks. Our identification strategy, which combines multiple external instruments with sign restrictions, enables a sharp distinction between structural shocks, allowing us to analyze their dynamic effects and construct policy counterfactuals for different central bank objectives. We find that both oil supply and monetary policy shocks significantly influence U.S. output and inflation. Moreover, while monetary policy can mitigate some of the output losses caused by oil price shocks, it cannot fully offset their inflationary effects. Finally, we estimate that the Federal Reserve’s historical response aligns. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:bny:wpaper:0139 |
| By: | Onil Boussim |
| Abstract: | In difference-in-differences (DiD) settings with categorical outcomes, treatment effects often operate on both total quantities (e.g., voter turnout) and category shares (e.g., vote distribution across parties). In this context, linear DiD models can be problematic: they suffer from scale dependence, may produce negative counterfactual quantities, and are inconsistent with discrete choice theory. We propose compositional DiD (CoDiD), a new method that identifies counterfactual categorical quantities, and thus total levels and shares, under a parallel growths assumption. The assumption states that, absent treatment, each category's size grows or shrinks at the same proportional rate in treated and control groups. In a random utility framework, we show that this implies parallel evolution of relative preferences between any pair of categories. Analytically, we show that it also means the shares are reallocated in the same way in both groups in the absence of treatment. Finally, geometrically, it corresponds to parallel trajectories (or movements) of probability mass functions of the two groups in the probability simplex under Aitchison geometry. We extend CoDiD to i) derive bounds under relaxed assumptions, ii) handle staggered adoption, and iii) propose a synthetic DiD analog. We illustrate the method's empirical relevance through two applications: first, we examine how early voting reforms affect voter choice in U.S. presidential elections; second, we analyze how the Regional Greenhouse Gas Initiative (RGGI) affected the composition of electricity generation across sources such as coal, natural gas, nuclear, and renewables. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.11659 |
| By: | Walker Anna (European Commission - JRC); Albizzati Paola Federica (European Commission - JRC); Milios Leonidas (European Commission - JRC); Pinero Mira Pablo (European Commission - JRC); Besler Malte; Pedauga Luis (European Commission - JRC); Eder Peter (European Commission - JRC); Tonini Davide (European Commission - JRC) |
| Abstract: | "In a changing political landscape, the implementation of Circular Economy (CE) strategies presents significant potential for reducing greenhouse gas (GHG) emissions, decreasing fossil fuel use, and altering trade dynamics. CE strategies related to material reduction, reuse and recovery complement industrial decarbonisation measures and have the potential to double GHG savings by 2050. Through a multi-method analysis, this study shows that an ambitious CE scenario can yield substantial annual GHG savings across selected energy-intensive sectors, with annual emission reductions of 64-81 Mt CO2-eq. in steel, 12-14 Mt CO2-eq. in aluminium, 38-52 Mt CO2-eq. in cement and concrete, and 75-84 Mt CO2-eq. in plastics by 2050. Moreover, the implemented CE strategies mainly decrease EU imports, reducing trade dependency and increasing the trade balance by over EUR 30 billion compared to the decarbonised baseline. The study underscores the importance of creating conducive framework conditions to support CE integration in hard-to-abate industries in the form of a policy mix. Policy recommendations include promoting recycling technologies to improve recyclate quality, reducing material input through more efficient design, and mandating Green Public Procurement to create market demand for more circular material use. These strategies align with EU goals to enhance sustainability and competitiveness, while mitigating macroeconomic risks from global dependencies." |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc142938 |
| By: | Thomas Lapi (LIED (UMR_8236) - Laboratoire Interdisciplinaire des Energies de Demain - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité) |
| Date: | 2024–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04968151 |
| By: | Marion Davin (Aix Marseille Univ, CNRS, AMSE, Marseille, France); Mouez Fodha (Paris School of Economics, University Paris 1 Pantheon-Sorbonne); Thomas Seegmuller (Aix Marseille Univ, CNRS, AMSE, Marseille, France) |
| Abstract: | This paper considers the dynamics of pollution and sustainable growth in a context where the detrimental effects of pollution on total factor productivity can push the economy to a point of collapse. With environmental policy constrained by tax revenues, we investigate how the proximity to collapse -distance to the end -influences the balance between mitigation and adaptation spending. We show that adaptation policies are recommended when pollution intensity is high, whereas mitigation policies may be more effective when pollution intensity is low. Financing these policies by a carbon tax is more effective than an income tax. Examining the welfare of present and future generations, we reveal that the trade-off between mitigation and adaptation does not align across generations: while current generations may prefer adaptation, future generations tend to benefit more from mitigation. |
| Keywords: | Environmental damage, Environmental policy, fiscal policy, sustainability |
| JEL: | E60 Q54 Q58 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2519 |
| By: | Paul Bardon (IFPEN - IFP Energies nouvelles, IFP School); Arthur Thomas (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, CEC - Chaire Economie du Climat - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres); Olivier Massol (LGI - Laboratoire Génie Industriel - CentraleSupélec - Université Paris-Saclay, City University of London) |
| Date: | 2025–10–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05308083 |
| By: | Mohammad Hassan Shakil; Arne Johan Pollestad; Khine Kyaw; Ziaul Haque Munim |
| Abstract: | With the European Union introducing gender quotas on corporate boards, this study investigates the impact of board gender diversity (BGD) on firms' carbon emission performance (CEP). Using panel regressions and advanced machine learning algorithms on data from European firms between 2016 and 2022, the analyses reveal a significant non-linear relationship. Specifically, CEP improves with BGD up to an optimal level of approximately 35 percent, beyond which further increases in BGD yield no additional improvement in CEP. A minimum threshold of 22 percent BGD is necessary for meaningful improvements in CEP. To assess the legitimacy of CEP outcomes, this study examines whether ESG controversies affect the relationship between BGD and CEP. The results show no significant effect, suggesting that the effect of BGD is driven by governance mechanisms rather than symbolic actions. Additionally, structural equation modelling (SEM) indicates that while environmental innovation contributes to CEP, it is not the mediating channel through which BGD promotes CEP. The results have implications for academics, businesses, and regulators. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.00244 |
| By: | Ignacio Barranquero (CONICET–Universidad de Buenos Aires. IIEP‑CEHEAL. UNSAM.); Matías Kulfas (Universidad Nacional de San Martín (UNSAM). Escuela de Economía y Negocios. San Martín, Argentina.); Marcelo Rougier (Universidad de Buenos Aires. FCE. IIEP‑CEHEAL. Buenos Aires, Argentina.); Andrés Salles (Universidad de Buenos Aires. FCE. IIEP. CONICET–UBA. Buenos Aires, Argentina.) |
| Abstract: | Vaivenes de la política energética argentina y su relación con la restricción externa; análisis histórico, evidencia empírica y estimaciones de elasticidades de importación. |
| Keywords: | Restricción externa; Política energética; Hidrocarburos; Argentina |
| JEL: | O25 F63 O14 B15 C1 E02 H41 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ake:iiepdt:2025-105 |
| By: | Walker Anna (European Commission - JRC); Albizzati Paola Federica (European Commission - JRC); Milios Leonidas (European Commission - JRC); Pinero Mira Pablo (European Commission - JRC); Christis Maarten; Besler Malte; Pedauga Luis (European Commission - JRC); Tonini Davide (European Commission - JRC) |
| Abstract: | "In the face of accelerating climate change and a shifting geopolitical landscape, the circular economy (CE) paradigm is emerging as a critical strategy in EU policy-making. This is of particu-lar importance for the cement and concrete sector, which accounts for about 4% of EU greenhouse gas (GHG) emissions. This study demonstrates that implementing CE levers related to reduction, reuse and recovery could significantly reduce GHG emissions by up to 52 Mt CO2-eq. annually and enhance the EU's trade balance by approximately €6.1 billion by 2050. Decreased imports are the main reason for this trade balance improvement. However, potential trade-offs from CE levers related reduction and reuse, such as lower employment and economic growth, necessitate further research into socioeconomic impacts in service sectors. Key CE levers include substituting clinker with alternative binders, reducing the use of concrete by design as well as advancing cement fines recycling technologies. The findings underscore the necessity for a com-prehensive policy mix to harness CE's full potential, with a focus on the production and use phase, given the large material flows in the construction versus the demolition phase. Therefore, economic incentives related to financial support of novel clinker and cement recycling technolo-gies, as well as the inclusion of novel cements in green public procurement award criteria are proposed, in addition to updating cement, concrete and building standards towards performance-based standards. In the light of the forthcoming Circular Economy Act in 2026, this research provides detailed insights for policymakers to implement CE measures that go beyond waste legislation to ensure a resilient and competitive EU industrial sector." |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc143126 |
| By: | Francisco González (Universidad de Oviedo); Md Rajib Kamal (NTNU Business School, The Norwegian University of Science and Technology); Steven Ongena (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)); Shams Pathan (University of Newcastle - Newcastle University Business School) |
| Abstract: | We examine how climate transition risks affect bank liquidity creation using the 2004 U.S. NOx Budget Trading Program (NBP)—a cap and-trade regulation affecting 11 states—as a quasi-natural experiment. Banks in NBP-affected states curtailed liquidity creation, primarily through balance sheet adjustments: reduced lending and risky asset holdings, and increased off-balance sheet exposures. Beyond this mechanism, banks adopted strategic responses to earnings pressure, including slower net interest income growth, greater noninterest income, and expanded derivative use. The effect is stronger for large, riskprone, profitable, and diversified banks, as well those in competitive markets and Democratic-leaning states. Governance matters: banks with higher common ownership are more resilient, while both shortand long-term investor horizons are associated with reduced liquidity creation—especially under shortterm ownership. Results are robust to matching, placebo tests, spillover adjustments, and event-study designs. Overall, climate regulation reshapes bank intermediation through portfolio rebalancing and strategic adaptation, with critical implications for financial stability and climate policy. |
| Keywords: | Climate transition risk, Bank liquidity creation, Nitrogen Oxides (NOx) Budget Trading Program (NBP), Climate regulation, Ownership structure, Bank competition |
| JEL: | G21 G28 G32 G38 Q58 L51 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2575 |
| By: | Quinten De Wettinck; Karolien De Bruyne; Wouter Bam; C\'esar A. Hidalgo |
| Abstract: | Economic complexity has been linked to sustainability outcomes, such as income inequality and greenhouse gas emissions. Yet, it is unclear whether the pursuit of complex and/or related activities naturally aligns with these outcomes, or whether meeting sustainability goals requires policy interventions that pursue unrelated diversification. Here, we exploit multidimensional social and environmental sustainability indicators to quantify the alignment between a country's closest diversification opportunities and sustainability goals. We find that high- and upper-middle-income countries face significantly better environmentally aligned diversification opportunities than poorer economies. This means that, while richer countries enjoy diversification opportunities that align complexity, relatedness and environmental performance, this alignment is weaker for developing economies. These findings underscore the value of evaluating future diversification trajectories through a multidimensional sustainability framework, and emphasise the strategic relevance of unrelated diversification for less developed economies to foster sustainable development. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.17919 |
| By: | Ban, Cornel; Liu, Imogen T. |
| Abstract: | Why did Sweden’s Northvolt—Europe’s most celebrated green industrial startup—collapse, while France managed to stabilise its local aspiring champions in the same cleantech sector? This paper uses these contrasting trajectories to interrogate the EU’s more assertive industrial policy turn. Drawing on the developmental network state (DNS) framework, we argue that while the EU has shifted from market neutrality to vertical industrial policy activism in a global context marked by geopolitical competition, its capacity to sustain strategic firms through crises remains underdeveloped. However, domestic capabilities and strategies mediated EU resourcing, brokering, facilitation, and protection, the main functions of the DNS. Where Sweden lacked credible financial, fiscal and institutional mechanisms of internal protection for the beleaguered Northvolt, France deployed a more robust economic statecraft toolkit, combining strategic finance, firm-level coordination, and public investment. Northvolt’s collapse illustrates the limits of Europe’s institutional orchestration of ambitious industrial policies: a regime that can incubate innovation but cannot stabilise it commercially. We conclude that without repurposed macro-financial institutions, Europe’s role as a competitive supplier of decarbonisation technologies will remain vulnerable. |
| Date: | 2025–10–08 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:ax56z_v1 |
| By: | Nguemgaing, Hélène; Kannan, Sangita; Spiller, Beia (Resources for the Future); Toman, Michael A. (Resources for the Future) |
| Abstract: | In April 2025, China imposed export controls on seven rare earth elements (REEs) and related embedded products to all countries (Jackson et al. 2025), intensifying an already critical debate over the security and resilience of global supply chains. The Chinese announced that exporters must apply for licenses to sell these materials overseas, a move widely seen as a strategic maneuver. The restriction, though not an outright ban, introduces review mechanisms that complicate export logistics and international procurement. The elements subject to the restrictions include scandium, yttrium, samarium, gadolinium, terbium, dysprosium, and lutetium. These materials are classified as medium and heavy rare earths, known for their magnetic, optical, and catalytic properties. Each plays a specific and often irreplaceable role in a range of high-tech and strategic sectors. These restrictions came at a time when trade tensions were escalating between the United States and China and sent ripple effects through industries that rely on rare earths for advanced manufacturing, defense, clean energy, and digital infrastructure. In June 2025, a framework for a trade deal was agreed upon between the United States and China, which was expected to ease export restrictions of rare earth products (Miao and Feng 2025). Despite the trade deal, it is important to note that the licensing system to obtain approvals from China still holds good for rare earth and related product exports. Though it is too early to state the effects of the trade deal on exports of rare earth products for all sectors, it is being reported that exports to the United States surged in June 2025 compared to May (Reuters 2025), though approvals for western companies are taking longer and there is increased scrutiny (Emont et al. 2025). China dominates the entire rare earths value chain. With China mining over 60 percent and processing over 80 percent of the world’s rare earths (REIA, 2025; Baskaran, 2024), and producing around 90 percent of the world’s high-performance rare earth magnets (Bradsher 2025), significant global dependence on a single country for these materials creates both economic vulnerabilities and strategic concerns. This article explores the implications of the current restrictions, the industrial relevance of the targeted elements, and how the situation can be understood through the lens of game theory. Specifically, our lens on this issue provides an understanding of why China reversed course in terms of restricting exports of rare earth products. |
| Date: | 2025–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-25-12 |
| By: | Javier Aliaga Lordemann (Investigador senior asociado de INESAD); Ronaldo Terrazas (Investigador Junior de INESAD) |
| Abstract: | Este estudio evalúa los impactos macroeconómicos de corto plazo derivados de la eliminación de los subsidios a los hidrocarburos en Bolivia, contrastando dos modalidades de implementación, un ajuste abrupto (shock) y una eliminación gradual. La estrategia empírica combina dos enfoques complementarios, un modelo Autorregresivo de Rezagos Distribuidos (ARDL), fundamentado en la Teoría Cuantitativa del Dinero, que permite capturar relaciones no lineales entre la reducción de subsidios y la inflación, así como realizar ejercicios contrafactuales; y un Modelo Vectorial Autorregresivo Estructural (SVAR) con identificación contemporánea tipo A, que estima la respuesta conjunta y dinámica de inflación, tipo de cambio sombra y producto real ante el retiro de subsidios. El ejercicio contrafactual sugiere que una eliminación anticipada habría reducido significativamente las distorsiones macroeconómicas y la inflación estructural, en línea con la relación convexa estimada entre magnitud del ajuste y respuesta inflacionaria. Los resultados muestran que, bajo un ajuste abrupto, la inflación interanual alcanza un pico superior al 32%, acompañado de una depreciación acelerada del tipo de cambio sombra y un repunte temporal del producto, atribuible a adelanto de consumo e inversión (front-running), que se revierte en trimestres posteriores. En contraste, la gradualidad modera levemente el impacto inicial, pero prolonga la persistencia inflacionaria y la depreciación cambiaria, lo que incrementa los costos acumulados de la reforma. El análisis no modela explícitamente expectativas; su incorporación podría matizar la dinámica estimada. En conjunto, los hallazgos evidencian que postergar la reforma incrementa sus costos macroeconómicos y que la coordinación de política monetaria y cambiaria es esencial para mitigar el traspaso a precios internos y contener efectos de segunda vuelta. Se concluye que un ajuste rápido, acompañado de medidas compensatorias focalizadas y una transición hacia un régimen cambiario más flexible, puede reducir el riesgo de espirales inflacionarias autoalimentadas y contribuir a fortalecer la estabilidad macroeconómica en el mediano plazo. |
| Keywords: | Eliminación del subsidio, Tipo de cambio sombra, Modelo SVAR, Modelo ARDL, Teoría cuantitativa del dinero. |
| JEL: | C32 E31 E63 F41 Q48 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:adv:wpaper:202506 |
| By: | Römer, Daniel; Rode, Johannes |
| Abstract: | Stärkere Klimaschutzmaßnahmen verlieren derzeit in vielen Ländern an Popularität. Umso erfreulicher ist es, dass die Zustimmung zur Energiewende in Deutschland nach einem deutlichen Rückgang im vergangenen Jahr wieder leicht angestiegen ist. 83 % der deutschen Haushalte gaben im haushaltsrepräsentativen KfW-Energiewendebarometer an, dass die Energiewende wichtig oder sehr wichtig ist. Im Vorjahr waren es 82 %. Allerdings sind weniger Haushalte bereit, die Energiewende auch durch eigene Aktivität voranzutreiben. Insgesamt nutzen 13, 5 Millionen und damit 33 % der deutschen Haushalte mindestens eine Energiewendetechnologie. Das ist ein Anstieg um 800.000 Haushalte oder zwei Prozentpunkte zum Vorjahr. Zu den Energiewendetechnologien zählen beispielsweise Wärmepumpen, Photovoltaikanlagen, und Elektroautos. Die Wirtschaftlichkeit der Maßnahmen ist zentral für die Nutzung – und somit auch die Höhe der künftigen CO2-Bepreisung. |
| Date: | 2025–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:157507 |
| By: | Briglauer, Wolfgang; Katz, Raúl L.; Jung, Juan |
| Abstract: | This paper provides a comprehensive empirical analysis of the economic impact of submarine cable (SMC) infrastructure, which is critical for global digital connectivity and carries almost all intercontinental data traffic. Despite their fundamental role in the digital economy, robust evidence on the economic returns of SMC investments is very scarce. To address this, we use a panel dataset of developed countries and causal identification strategies, such as two-way fixed effects models and instrumental variables exploiting exogenous variation from factors like a country's coastline length and legacy market competition. First, our analysis establishes that increased international bandwidth (IBW) capacity resulting from submarine cable deployment significantly improves broadband quality by increasing speeds and reducing latency. We then quantify the impact on broadband demand, finding distinct yet robust demand elasticities for mobile and fixed services. We find that a 1% increase in IBW capacity drives mobile broadband demand up between 0.044% and 0.088%, while the increase for fixed broadband demand is slightly lower at between 0.041% and 0.062%. Finally, we translate these estimates into a simple cost-benefit framework using an illustrative transatlantic cable project connecting Ireland and the United States. This analysis shows that the substantial GDP spillovers - quantified at between US$121.05 billion and US$163.09 billion for the Irish landing site alone - overwhelmingly exceed the total private deployment costs of $180-$260 million. Our findings affirm that SMC deployments generate significant positive externalities and high social returns. While it has been argued that these effects are critical to developing nations lacking infrastructure, our findings indicate this to also be applicable to advanced economies. Consequently, we argue that policymakers in coastal nations have a strong economic incentive to facilitate private investment by reducing regulatory barriers and transaction costs associated with, for example, cable permits and landing stations. |
| Abstract: | Dieses Papier bietet eine umfassende empirische Analyse der wirtschaftlichen Auswirkungen von Unterseekabel-Infrastruktur (SMC), die für die globale digitale Konnektivität von entscheidender Bedeutung ist und nahezu den gesamten interkontinentalen Datenverkehr trägt. Trotz ihrer fundamentalen Rolle in der digitalen Wirtschaft gibt es bislang nur sehr wenige belastbare Belege über die wirtschaftlichen Erträge von Investitionen in Unterseekabel. Um diese Lücke zu schließen, verwenden wir ein Panel-Datenset entwickelter Länder sowie kausale Identifikationsstrategien wie Zwei-Wege-Fixed-Effects-Modelle und Instrumentvariablen, die exogene Variationen aus Faktoren wie der Küstenlänge eines Landes und dem historischen Wettbewerbsniveau auf dem Markt nutzen. |
| Keywords: | Submarine cables, economic impact, costs and benefits, panel econometrics |
| JEL: | L50 L52 L86 L96 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ecoarp:328265 |
| By: | François Pinta (UPR BioWooEB - BioWooEB - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UM - Université de Montpellier); Antoine Ducastel (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier - UMPV - Université de Montpellier Paul-Valéry); Patrice Dumas (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris); Marie Hrabanski (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier - UMPV - Université de Montpellier Paul-Valéry); Grâce Floriane Chidikofan (UNSTIM - Université Nationale des Sciences, Technologies, Ingénierie et Mathématiques) |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05293551 |