|
on Energy Economics |
| By: | Luis E. Gonzales; Koichiro Ito; Mar Reguant |
| Abstract: | Electricity reliability is a central challenge for the energy transition, as growing energy demand, renewable energy integration, and natural disasters increase the risk of large-scale black- outs. However, the economic impacts of large-scale blackouts remain largely unknown. Combining electricity market data with high-frequency economic transaction data from Chile, we find that economic activity declined by 35 percent on the nationwide blackout day, but half of this loss was recovered on subsequent days, highlighting the importance of intertemporal substitution. Exploiting spatial variation in blackout severity, we show that accounting for endogenous recovery is critical when estimating the marginal value of lost load. |
| JEL: | Q4 Q40 Q43 Q5 Q50 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35066 |
| By: | Parisa Pakrooh (University of Milano-Bicocca); Matteo Manera (University of Milano-Bicocca and Fondazione Eni Enrico Mattei) |
| Abstract: | Despite the strong commitment of European countries to achieve net-zero emissions by 2050, the extent to which key policies and drivers jointly shape emissions dynamics remains insufficiently investigated. To fill this gap, the study investigates the combined effects of the circular economy, energy transition, emissions trading systems, carbon tax, and digitalization on carbon reduction in the EU member states. Using annual data from 2000 to 2023, the analysis integrates causal discovery, time-varying dependence modeling, and machine learning methods to unravel system-level causal structure, dynamic connectedness, and future emission trajectories. The Directed Acyclic Graph method, especially the Fast Adjacency Skewness algorithm, identifies both contemporaneous and lagged causal relationships, in which resource productivity acts as a transmission channel within the system. Lagged disequilibrium shocks propagate from upstream circular economy factor (material footprint) and digitalization to midstream efficiency (resource productivity), and ultimately are transmitted to emissions. Time-varying copula models confirm significant heterogeneity and evolving dependence among key factors, highlighting the nature of the dynamic relationships. Forecasting results, based on a Support Vector Regression model under the European Union’s 2030 climate policy target, indicate a persistently declining emission trajectory, however at an insufficient speed to meet the EU’s 2030 target. Sensitivity analysis indicates that this gap does not reflect a policy failure but the need for accelerated policy adjustments. |
| Keywords: | Carbon Emissions, Energy Transition, Emissions Trading System, Circular Economy, Digitalization, EU Climate Policy |
| JEL: | Q54 Q43 Q58 C55 C32 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2026.14 |
| By: | Cathrine Hagem (Statistics Norway); Snorre Kverndokk; Knut Einar Rosendahl |
| Abstract: | The EU Emissions Trading System (EU ETS) leads to higher electricity prices and thus higher costs for electricity-intensive industries in the EU, reducing their competitiveness compared to those in non EU countries. This disparity may result in carbon leakage, where production shifts abroad, potentially increasing global emissions. To mitigate this, the EU introduced a compensation scheme in 2012, allowing member states to compensate affected industries for the higher electricity prices. This paper explores analytically and numerically the effects of this compensation scheme on production, electricity efficiency, and emissions. We find that while the EU ETS price signal reduces production and increases electricity efficiency, the compensation scheme can counteract these effects by boosting production and potentially reducing electricity efficiency. Additionally, conditional decarbonization or energy efficiency efforts may lead to socially inefficient investments and could have undesired impacts on electricity efficiency. These findings highlight the complex trade-offs in designing effective climate policies that balance environmental goals with industrial competitiveness. |
| Keywords: | Climate policy; EU-ETS; CO2 compensation; electricity efficiency |
| JEL: | D21 H23 Q52 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ssb:dispap:1036 |
| By: | Halvor Briseid Storrøsten (Statistics Norway) |
| Abstract: | Feed-in tariffs (FiTs) have been instrumental in expanding renewable electricity generation but can distort investment by insulating producers from market price volatility. This paper develops a two stage model of electricity markets with stochastic demand and supply shocks, showing that a higher share of intermittent renewable generation increases electricity price volatility and lowers the market value of intermittent output. FiTs create a volatility externality, because investors are insulated from the negative covariance between intermittent generation and market prices. The resulting misallocation of investment, both across intermittent technologies and in total intermittent capacity, leads to an inefficient electricity mix causing excessively volatile electricity prices and welfare losses. The model’s predictions are tested using hourly and quarter-hourly data from the German electricity market (Jan.~2015--Dec.~2025). ARX and ARIMAX--GARCH estimates indicate that a one–percentage point increase in renewable market share raises short-run realized price volatility by about 2% for wind and 6% for solar, while significantly lowering unit revenues. A proxy for the volatility externality suggests marginal investment costs roughly 10--25\% above the socially optimal level under the German FiT. |
| Keywords: | Feed-in tariffs; intermittent renewables; investment; externalities; energy policy; electricity markets |
| JEL: | Q42 Q48 C32 H23 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ssb:dispap:1035 |
| By: | Zhangying Li (Economics and Management School, Wuhan University); O-Chia Chuang (School of Digital Economics, Hubei University of Economics); Rangan Gupta (Department of Economics, University of Pretoria) |
| Abstract: | The onset of the Russia-Ukraine war in 2022 caused significant fluctuations in global energy markets, particularly in natural gas prices, highlighting the growing importance of natural gas for financial market stability. Using a structural econometric framework, we analyze the dynamic effects of natural gas supply shocks compared to three distinct oil shocks popularly used in the energy economics literature using constant and time-varying parameter local projections model, and associated historical decomposition. Our findings reveal that supply shocks of natural gas has replaced oil as the primary driver of stock market volatility, particularly during the 2022 energy crisis. Additionally, natural gas supply shocks are found to perform better in an out-of-sample forecasting exercise compared to oil supply shocks. These results suggest the need for policymakers and investors to incorporate natural gas price dynamics into financial risk management frameworks for Europe. |
| Keywords: | Natural Gas Price Supply Shocks, Oil price Supply Shocks, Stock Price Volatility, Local Projection, Forecasting |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:pre:wpaper:202609 |
| By: | Fadinger, Harald; Gerster, Andreas; Sauré, Philip; Wanner, Joschka |
| Abstract: | Emissionsverlagerung (Leakage) ist real, aber begrenzt: Studien zeigen, dass etwa 10-30 % der durch EU-Klimapolitik eingesparten Emissionen ins Ausland verlagert werden. Der Großteil der Emissionsreduktionen bleibt jedoch global wirksam, sodass die Politik insgesamt effektiv ist. • Kaum Evidenz für ein "Grünes Paradoxon": Die Befürchtung, dass Klimapolitik zu einem vorgezogenen Anstieg von Emissionen führt, wird empirisch nicht bestätigt. Stattdessen reagieren Unternehmen oft mit geringeren Investitionen in fossile Energien, was Emissionen eher senkt. • EU setzt Instrumente gegen Wettbewerbsnachteile ein: Dazu gehören kostenlose Emissionszertifikate sowie der CO₂-Grenzausgleich (CBAM), der Importe entsprechend ihrer Emissionen bepreist. Ziel ist es, Leakage zu reduzieren und gleiche Wettbewerbsbedingungen zu schaffen. • Wirksamkeit der Instrumente hängt stark vom Design ab: Der aktuelle CBAM erfasst nur wenige Sektoren und hat daher begrenzte Wirkung auf globale Emissionen. Eine Ausweitung auf mehr Sektoren könnte die Emissionsreduktion deutlich erhöhen. • Klimapolitik bringt zusätzliche Vorteile: Neben Emissionsreduktionen fördert sie Innovationen, verbessert die Luftqualität und stärkt Energie- sowie geopolitische Unabhängigkeit. Diese positiven Nebeneffekte erhöhen den Gesamtnutzen der Maßnahmen. |
| Abstract: | Carbon leakage exists but is limited: Studies show that around 10-30% of emissions reduced by EU climate policy are shifted abroad. However, the majority of emission reductions remain effective globally, meaning the policy is overall still effective. • Little evidence for a "green paradox": The concern that climate policy may trigger a short-term increase in emissions is not supported by empirical evidence. Instead, firms often reduce investments in fossil fuels, which tends to lower emissions. • EU uses instruments to address competitiveness concerns: These include free allocation of emission allowances and the Carbon Border Adjustment Mechanism (CBAM), which prices imports based on their emissions. The goal is to reduce leakage and ensure a level playing field. • Effectiveness depends on policy design: The current CBAM covers only a limited number of sectors and therefore has a relatively small impact on global emissions. Expanding it to more sectors could significantly increase emission reductions. • Climate policy generates additional benefits: Beyond reducing emissions, it fosters innovation, improves air quality, and strengthens energy security and geopolitical independence. These co-benefits increase the overall value of such policies. |
| Keywords: | Klimapolitik, Leakage, Grünes Paradoxon, EU ETS, CBAM, Climate policy, carbon leakage, the green paradox |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkpb:340033 |
| By: | Bălașa, M.; Pollitt, M. G. |
| Abstract: | There is limited research investigating the impact of zonal electricity prices on industrial location decisions. This paper analyses the consequences of the Swedish 2011 electricity market reform which divided the country into four bidding zones. Such changes are often expected to lead to industrial relocations towards the cheaper electricity zones. We examine the macro and micro levels of this reconfiguration, using country - and firm-level data. Both levels of analysis show an initially limited impact of t he reform on industrial location choices, with only one relocation to the northern part of the country. However, we find that the electricity intensities of the existing and emerging industries are different. By distinguishing between these two types of industries, we identify that many up-and-coming ones such as low-carbon steel, green ammonia, green hydrogen, e-methanol as well as data centres are increasingly locating in the bidding zones with lower electricity prices. For these, the share of electricity costs in the total cost of production is much higher compared to the traditional, fossil -based heavy industries. However, even if they are energy -intensive, these industries are not job-intensive at all, such that the location choices of the new firms do not significantly impact the labour market, which also suffers from significant shortages in the northern region. These location decisions may, in time, reduce the electricity surplus in the north of the country, and thus exert upward pressure on the price in the long-term. The findings have implications for understanding industrial (re-)locations, electricity market reconfigurations, and industrial decarbonisation. |
| Keywords: | Electricity Market Reform, Industrial Decarbonisation, Industrial Policy, Industrial Relocation, Zonal Electricity Prices |
| JEL: | O14 R11 Q41 L94 |
| Date: | 2026–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2615 |
| By: | Niemann, Rainer; Rohlfing-Bastian, Anna |
| Abstract: | This paper analyzes how ESG-linked executive compensation interacts with carbon taxation in a multitask principal-agent framework. A risk-neutral principal with financial and environmental preferences incentivizes a risk-averse manager to exert productive and abatement effort while facing an exogenous carbon tax on emissions. We show that, in the absence of ESG incentives, carbon taxes reduce emissions mainly by lowering production. In contrast, ESG-linked compensation shifts emission reductions toward increased abatement, allowing the principal to raise expected payoff while simultaneously reducing emissions, both with and without carbon taxation. However, carbon taxes narrow the range of feasible ESG preferences and, at high levels, may induce excessive abatement, potentially leading to negative net emissions. Our results highlight the importance of aligning internal incentive design with external climate regulation. The interplay of ESG compensation and carbon taxes should also be considered from a regulatory perspective. |
| Keywords: | ESG-linked executive compensation, Carbon taxation, Environmental regulation, Climate policy, Managerial incentives |
| JEL: | D82 M52 Q58 Q54 H25 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:340001 |
| By: | Shiva Madadkhani; Nils Sturma; Mathias Drton; Svetlana Ikonnikova |
| Abstract: | Electricity markets are changing, driven by large-scale renewable integration and rising demand from electrification and digitalisation. This raises fundamental questions about how electricity prices form as the relationships among key price determinants evolve. Here we apply causal discovery to characterise these dynamics across major supply- and demand-side drivers of wholesale electricity prices in Texas, where rapid renewable growth intersects with surging demand. We show that wind generation has become the dominant causal driver of day-ahead electricity prices with effects more than 3 times larger than those of natural gas prices, overturning the view of the Texas market as gas-price-driven. Wind reduces prices locally but redistributes congestion costs across regions in seasonally varying patterns. Natural gas prices remain causally relevant, though their influence is modest and the dominant gas benchmark changes over time. Electricity demand also shows region- and period-specific causal effects. These findings highlight the need for causal models that capture time-varying relationships across both supply and demand to guide system planners and market participants navigating the ongoing transition. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.14257 |
| By: | Glenk, Gunther; Gschwind, Katrin; Reichelstein, Stefan |
| Abstract: | Companies across industries seek to assess the costs of complying with environmental regulations and meeting voluntary emission targets. This paper develops a carbon abatement cost model for firms operating a portfolio of assets with differing cost or load profiles. The resulting abatement cost curves serve as a decision tool for configuring individual assets to achieve firm-wide emission reductions at least cost. We apply our model to urban bus fleets regulated under the California Cap-and-Trade Program. We find that a carbon price of $35 per ton of CO2e (2024 average) incentivizes firms to configure their fleets such that batteryelectric drivetrains constitute 70% of usable installed capacity and 92% of annual demand, while diesel drivetrains serve peak loads. Since the resulting emissions are fairly inelastic to the carbon price, we conclude that the life-cycle cost per mile would increase substantially if deep decarbonization were to be induced entirely by higher carbon prices. |
| Keywords: | life-cycle costing, capacity investments, abatement cost curves, carbon emissions, transport decarbonization |
| JEL: | M41 M48 Q54 Q56 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:340016 |
| By: | Guillermo Verduzco-Bustos; Francesco Zanetti |
| Abstract: | We develop a novel instrumental variable to identify geopolitical oil price shocks arising around significant geopolitical tensions and examine their transmission to the global oil market, key U.S. macroeconomic aggregates, and cross-border spillover effects on other commodity markets, output, and inflation. Geopolitical oil price shocks resemble severe oil supply shocks, leading to production declines and a much sharper increase in oil prices than conventional shocks. They are coupled with heightened uncertainty and induce a distinct inventory response: an initial short-term decline followed by long-term accumulation, reflecting market participants' concerns about future economic and oil market conditions. The cross-border spillover effects are significant for oil-intensive commodities, and are stronger for output and inflation in oil-importing economies and for countries with low energy inventories and high energy dependency on foreign supply. |
| Keywords: | geopolitical risk, oil price shocks, VAR model, identification, spillovers, commodity markets |
| JEL: | C32 E22 E31 E32 Q43 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-24 |
| By: | Pollitt, M. G.; Duma, A.; Covatariu, A.; Nillesen, P. |
| Abstract: | Electricity and gas distribution system operators (DSOs) are expected to play a crucial role in the energy transition. Hence, incentivizing innovation in this sector, which displays natural monopoly features, is becoming increasingly relevant. Measuring in novation is notoriously difficult, as both the inputs (funding innovative activities) and outputs (patents, publications or new adopted technologies and processes) are imprecisely measured and challenging to compare across countries. To address this, we take a text analysis approach to measuring innovation in DSOs, based on occurrences of innovation signaling words. Starting from a sample of 194 electricity DSOs and 73 gas DSOs, this paper measures innovation intensity based on DSO corporate reporting. The results are compared across different DSO characteristics like size, performance, structure, ownership and geographic location. |
| Keywords: | Distribution System Operators, Energy Transition, Innovation |
| JEL: | L94 |
| Date: | 2026–03–11 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2616 |
| By: | Simshauser, P.; Gilmore, J. |
| Abstract: | Electricity prices across Europe, North America and Asia -Pacific surged following the outbreak of the Russia-Ukraine war, driven by severe spikes in LNG and coal prices. In Australia, average household electricity tariffs in the National Electricity Market were ~23c/kWh in 2021. By 2025 tariffs had increased by 33% to ~30c/kWh, and provides an interesting case study of predictable policy aftershocks. Australians were told renewables would be cheaper, yet electricity bills had risen sharply. Are renewables cheaper? In this article, we focus on the wholesale market component of retail electricity tariffs in Australia and examine a counterfactual policy scenario – a world where market entrants over the past two decades were constrained to coal- and gas-fired generation, rather than renewables. We compare these results to the NEM’s transitioning plant stock, with ever -rising levels of wind, utility-scale and rooftop solar, along with the emergent firming fleet, viz. batteries, pumped hydro and new entrant gas turbines. Our counterfactual policy scenario would result in wholesale market costs and prices ~30-50% higher. Coal and gas were once unambiguously the NEM’s lowest cost entrants. That period has ended. Structurally high coal plant costs and export -parity gas prices means renewables and firming assets represent the dominant new entrants to meet demand growth, and supply gaps created by aging coal plant exits. |
| Keywords: | Renewables, Coal, Natural Gas, Dispatchable Plant Capacity |
| JEL: | D52 D53 G12 L94 Q40 |
| Date: | 2025–11–30 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2626 |
| By: | Ciani, Matilde |
| Abstract: | The Global Race for AI is on, and Europe is trying to play its part. However, there is a serious mismatch between data center capacity planning and energy supply planning in the EU. • Despite ambitious plans, the EU risks falling further behind: China is on track to triple its data center capacity by 2030, and the United States to double, leaving Europe with significantly lower shares of global capacity • EU data centers' electricity demand is forecast to double over the next five years, from ∼80 and 168 TWh; the upper end of this range is equivalent to the entire electricity demand of a country such as Polandin2024. The share of total EU electricity demand absorbed by data centers will thus rise rapidly from around 2% in 2023 to around 5% in 2030. • Covering the additional demand by data centers is only possible if the rest of the economy remains largely static. This is, however, unlikely, as the electricity demand in other sectors will increase as well, in particular in the housing market (heat pumps) and in the transportation sector (electric vehicles). • The uncovered additional electricity demand of data centers by 2030 is substantial and equivalent to the 2024 net electricity consumption of countries like Belgium or Finland. Poor planning may thus leave the European Union in a dangerous trilemma: giving up on growth, net-zero goals, or on the AI race. |
| Keywords: | Artificial Intelligence, Digitalisation, Energy, Künstliche Intelligenz, Digitalisierung, Elektrizität |
| JEL: | O33 Q43 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkpb:340031 |
| By: | Corrado, L.; Grassi, S.; Paolillo, A.; Ravazzolo, F. |
| Abstract: | We study how the COVID-19 pandemic and Russia’s invasion of Ukraine reshaped energy prices and macroeconomic conditions in the Euro area. We develop and estimate a two-sector model in which oil, coal, and gas are combined to produce refined energy used by households and firms. The model allows for complementarities between energy and non-energy inputs, so shocks to individual energy markets propagate broadly through production, consumption, and inflation. Focusing on shocks specific to oil, coal, and gas from the onset of the pandemic to 2022:Q3, we find that they raised energy inflation by about 36 percentage points and headline inflation by 1.8 percentage points. Complementarities, wage indexation, and monetary policy amplify these effects, while subsidies offset them only partially. |
| Keywords: | Fossil Energy, Supply Shocks, Inflation, Complementarities, Monetary Policy, Fiscal Policy |
| JEL: | E31 E32 E52 E62 Q43 |
| Date: | 2026–04–15 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2629 |
| By: | R. Li; C. K. Woo; K. H. Cao; H. Qi (Audencia Business School) |
| Abstract: | We calculate an industry-specific index based on a newly developed formula to assess the affordability of deep decarbonization for seven industries in Australia. At effective carbon rates of up to AU$100 per tonne, the index's range based on cutting 80% of Australia's carbon emissions is 0.003 for construction to 0.270 for basic metals. Hence, a politically feasible net zero policy may require mitigation for the two most carbon-intensive industries. |
| Keywords: | Sustainable development, environmental economics, energy, deep decarbonization, industrial affordability |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05578399 |
| By: | Chenxi Jiang; Maximiliano Lauletta; Ro’ee Levy; Joseph S. Shapiro; Dmitry Taubinsky |
| Abstract: | Many governments use environmental standards rather than more cost-effective market-based instruments like pollution taxes or cap-and-trade markets. Using a nationally representative survey experiment, we study whether and why limited understanding of economic principles helps explain this practice. Holding environmental impacts constant, respondents prefer standards over market-based instruments, and prefer producer taxes and cap-and-trade over consumer taxes. These preferences reflect consumers’ beliefs about how these policies will affect electricity bills. Respondents also prefer the weakest environmental targets for consumer taxes and the strongest targets for standards, which suggests that policymakers face a tradeoff between policy stringency and cost effectiveness. A separate survey of environmental economists shows that they have strikingly different beliefs about the effects of environmental policies than the respondents in our representative survey. For example, typical respondents—in contrast to environmental economists—believe that environmental standards increase consumer energy bills less than market-based instruments do. Educational videos on pass-through and cost-effectiveness of policies affect policy support and close some of the gap between nationally representative respondents and experts, which suggests that economic literacy is a factor in voters’ preferences. |
| JEL: | C83 D83 D9 H23 Q48 Q50 Q58 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35073 |
| By: | Izak, Atiyas |
| Abstract: | The world is significantly behind in meeting the Paris agreement targets. Emissions continue to increase, and investments in climate transition are falling short, as evidenced by a shrinking carbon budget. Developing economies are currently receiving a small share of climate investments, despite their future prominence as major emitters. This paper delves into why current strategies have not met expectations, explores barriers to private investment, and highlights the vital role governments must play in driving large-scale decarbonization. |
| Keywords: | Climate finance, Aid, Development |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpm:notfdl:2512 |
| By: | Thomas H\"ubner |
| Abstract: | Electricity is typically traded in day-ahead auctions because many power system decisions, such as unit commitment, must be made in advance. However, when wind and solar generators sell power one day ahead, they face uncertainty about their actual production. In current day-ahead auctions, this uncertainty cannot be directly communicated, leading to inefficient use of renewable energy and suboptimal system decisions. We show how this problem can be addressed using the concept of equilibrium under uncertainty from microeconomic theory. In particular, we demonstrate that electricity contracts should be conditioned not only on the time and location of delivery, but also on the state of the world (e.g., whether it will be windy or calm). This requires a precise definition of the state of the world. Since there are infinitely many possible definitions, criteria are needed to select among them. We develop such criteria and show that the resulting states correspond to solutions of an optimal partitioning problem. Finally, we illustrate how these states can be computed and interpreted using a case study of offshore wind farms in the European North Sea. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.13603 |
| By: | Ciani, Matilde |
| Abstract: | Das globale Rennen um die KI-Führerschaft hat begonnen, und Europa versucht, vorne mitzuspielen. Es besteht jedoch eine deutliche Diskrepanz zwischen der Planung von Rechenzentrumskapazitäten und der Stromversorgungsplanung in der EU. • Trotz ambitionierter Pläne droht die EU im globalen KI-Rennen weiter zurückzufallen: China will seine Rechenzentrumskapazität bis 2030 verdreifachen, die Vereinigten Staaten sind dabei, sie zu verdoppeln, wodurch Europa mit deutlich geringeren Anteilen an der globalen Kapazität zurückbleibt. • Der Strombedarf der EU-Rechenzentren wird sich in den nächsten fünf Jahren voraussichtlich verdoppeln, von etwa 80 auf 168 TWh. Die obere Grenze dieses Bereichs entspricht dem gesamten Elektrizitätsbedarf einer europäischen Industrienation, beispielsweise dem Bedarf von Polen im Jahr 2024. Der Anteil des gesamten EU-Strombedarfs, der auf Rechenzentren entfällt, wird daher rasch von rund 2% im Jahr 2023 auf rund 5% im Jahr 2030 ansteigen. • Die Deckung des zusätzlichen Strombedarfs, der durch Rechenzentren entstehen wird, ist nur möglich, wenn der Verbrauch der übrigen Wirtschaftsbereiche weit gehend konstant bleibt. Dies ist jedoch unwahrscheinlich, da der Bedarf auch in anderen Sektoren steigen wird, insbesondere im Wohnungsmarkt (Wärmepumpen) und im Verkehrssektor (Elektrofahrzeuge). • Bis 2030 entsteht dadurch eine erhebliche Lücke zwischen Strombedarf und verfügbarer Elektrizität, die dem Netto-Stromverbrauch von Ländern wie Belgien oder Finnland im Jahr 2024 entspricht. Ohne vorausschauende Planung droht der Europäischen Union ein gefährliches Trilemma: Sie müsste zwischen Wachstum, Klimaneutralität und einer führenden Rolle im KI-Rennen abwägen. |
| Abstract: | The Global Race for AI is on, and Europe is trying to play its part. However, there is a serious mismatch between data center capacity planning and energy supply planning in the EU. • Despite ambitious plans, the EU risks falling further behind: China is on track to triple its data center capacity by 2030, and the United States to double, leaving Europe with significantly lower shares of global capacity • EU data centers' electricity demand is forecast to double over the next five years, from ∼80 and 168 TWh; the upper end of this range is equivalent to the entire electricity demand of a country such as Polandin2024. The share of total EU electricity demand absorbed by data centers will thus rise rapidly from around 2% in 2023 to around 5% in 2030. • Covering the additional demand by data centers is only possible if the rest of the economy remains largely static. This is, however, unlikely, as the electricity demand in other sectors will increase as well, in particular in the housing market (heat pumps) and in the transportation sector (electric vehicles). • The uncovered additional electricity demand of data centers by 2030 is substantial and equivalent to the 2024 net electricity consumption of countries like Belgium or Finland. Poor planning may thus leave the European Union in a dangerous trilemma: giving up on growth, net-zero goals, or on the AI race. |
| Keywords: | Künstliche Intelligenz, Digitalisierung, Elektrizität, Artificial Intelligence, Digitalisation, Energy |
| JEL: | O33 Q43 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkpb:340030 |
| By: | Simshauser, P. |
| Abstract: | During 2016-2018, Australia’s National Electricity Market (NEM) experienced the adverse effects of two sequential and sudden coal plant closures, viz. sharply rising wholesale spot prices, structural hedge shortages and deteriorating system strength. More recently, a slowing rate of renewable project entry has led governments to intervene by delaying scheduled coal plant closures. An intervention to delay a scheduled coal plant closure helps maintain short term reliability but inadvertently undermines investor confidence in new entry through a transient depression in near-term forward prices. Above all, interventions risk reinforcing a cycle of stalled renewable entry and further delays to scheduled coal plant closures. This article analyses a transient strategic reserve, a deliberately temporary, out of market "waiting room" for dispatchable capacity to break the circularity. By assembling and temporarily underwriting a targeted reserve of dispatchable plant prior to coal closure dates, policymakers can maintain price stability and resource adequacy while substantially preserving the integrity of the energy only market design. Using a dynamic, security constrained electricity market model, outcomes across scenarios show the transient reserve produces a more orderly transition path, materially reduces the risk of price volatility and reliability breaches at relatively low cost, while improving investment incentives for intermittent renewables and dispatchable plant capacity. Findings suggest "the waiting room" is a tractable, low intrusion mechanism capable of supporting scheduled coal closures without institutionalising a capacity market. |
| Keywords: | Strategic Reserve, Energy-Only Markets, Resource Adequacy |
| JEL: | D52 D53 G12 L94 Q40 |
| Date: | 2026–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2627 |
| By: | Raimi, Daniel (Resources for the Future); Joiner, Emily (Resources for the Future); Hubbell, Bryan (Resources for the Future); Lohawala, Nafisa (Resources for the Future); Robertson, Molly (Resources for the Future) |
| Abstract: | The events of 2025 have shaken the global order. Due largely to changes in rhetoric and policy from the United States, key pillars of international economic and security systems have been called into question. The reports we examine here were prepared well before the United States undertook military activities in Venezuela and Iran. They will undoubtably influence modeling and projections in 2026 but are not reflected here. Global expectations around energy and climate, in turn, have been disrupted. A decade after the 2015 Paris Agreement articulated the “stretch goal” of limiting global temperature rise to 1.5°C above preindustrial levels, it has become clear that achieving this goal is no longer plausible. Global leaders have increasingly focused on energy security and affordability, relegating climate change to a second-tier priority (or lower) in many cases. Still, preventing the worst outcomes of global climate change remains critical, highlighting the importance of continued effort to reduce emissions while ensuring reliable and affordable energy supplies.One way to consider the future of energy and climate is through annual long-term energy outlooks that articulate different trajectories based on varying assumptions about future policies, technologies, costs, and other factors. Outlooks published in 2025 envision a wide range of possible futures but do not chart a plausible path to achieving the 1.5°C target. Specifically, two of the 1.5°C scenarios published in 2025 (BNEF and Equinor) are reproductions of scenarios prepared in previous years, and the 1.5°C scenario of the International Energy Agency (IEA) exceeds 1.6°C before returning to 1.5°C by 2100. Therefore, we generally exclude these scenarios, focusing instead on scenarios that reflect the realities of the current moment.The outlooks we include offer useful insight into the future of energy, but they are not easily comparable because of differences in units, assumptions, geographic groupings, and more. Here we harmonize 15 scenarios across eight organizations to produce as close to apples-to-apples estimates as possible. These outlooks and scenarios are shown in Table 1 and discussed in more detail in Section 4.A brief description of our methodology is provided in Section 4, Data and Methods, with select indicators in Section 5, Statistics. For the full methodology and interactive graphing tools, visit www.rff.org/geo.To enhance interpretability, we use consistent symbology in this report’s figures and the online data tool. We group scenarios into three categories based on their underlying assumptions or, in some cases, their trajectory of carbon dioxide (CO2) emissions (Table 2):For reference scenarios, which assume no new policies are enacted by governments or follow similar global emissions trajectories, we use a long-dashed line. This set comprises scenarios from Equinor (Plazas), ExxonMobil, IEA (CPS), IEEJ, OPEC, and Total (Trends).For evolving policies scenarios, which assume that policies and technologies develop according to recent trends or the expert views of the team producing the outlook, we use solid lines. This set comprises bp Current Trajectory, BNEF ETS, and IEA STEPS. We also include Equinor Walls, IEEJ Advanced Technologies, and Total Momentum because they follow similar emissions trajectories.Ambitious climate scenarios are not designed around policies but instead are structured to achieve specific climate targets. For these scenarios (bp Below 2°C, Total Rupture), we use a dotted line. We exclude 1.5°C scenarios. |
| Date: | 2026–04–07 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-26-06 |
| By: | Beck, Anne; Pedraza, Alvaro |
| Abstract: | This paper examines how suppliers adjust their decarbonization choices when major customers obtain validated emission-reduction targets. Using global supplier-customer links matched to firm-level emissions and project-level data from voluntary carbon registries, the analysis shows that downstream climate pressure elicits both real and symbolic responses, but in systematically different ways across suppliers. On average, treated suppliers become more likely to adopt climate targets of their own. High-emission suppliers subsequently reduce their emission intensity relative to comparable firms, indicating meaningful operational adjustments. Low-emission suppliers, by contrast, do not further reduce emissions; instead, they expand their use of carbon credits, sharply increasing offset intensity as a lower-cost alternative to additional physical abatement. These offsets disproportionately originate from lower-rated projects, suggesting that increased demand does not translate into pressure for higher-quality credits. Overall, downstream climate commitments induce a sorting in decarbonization strategies: high-emission suppliers undertake substantive reductions, while low-emission suppliers rely more heavily on market-based mechanisms to meet customer expectations. |
| Date: | 2026–02–09 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11306 |
| By: | Ufuk Can (Central Bank of the Republic of Turkiye, Adana, Turkiye; Centre for Applied Macroeconomic Analysis, Australian National University, Canberra, Australia; Economic Research Forum, Cairo, Egypt); Oguzhan Cepni (Ostim Technical University, Ankara, Turkiye; University of Edinburgh Business School, Centre for Business, Climate Change, and Sustainability; Department of Economics, Copenhagen Business School, Denmark); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Onur Polat (Institute of Informatics, Hacettepe University, Beytepe Campus, 06800 Cankaya, Ankara, Turkiye) |
| Abstract: | This study examines how a newspapers-based index of energy transportation uncertainty (ETU) has historically influenced extreme fluctuations in West Texas Intermediate oil prices from November 1982 to May 2025. We apply the Multi-Scale Log-Periodic Power Law Singularity model to identify both positive and negative bubbles across short-, medium-, and long-term periods. We then isolate structural ETU shocks with a Structural Vector Autoregression model and trace their dynamic impacts on six bubble indicators using Local Projections. The results reveal that the impact of energy transportation uncertainty is asymmetric and horizon dependent. While short- and medium-term responses are predominantly noisy or initially suppressive, ETU triggers a highly significant, delayed surge in long-term positive bubbles, eventually followed by an increased probability of downside corrections. This demonstrates that physical transportation disruptions operate largely through an expectations channel, gradually transforming fundamental scarcity concerns into self-reinforcing speculative boom-bust cycles. These findings underscore the need for policymakers and market participants to treat transportation uncertainty as a distinct channel, requiring horizon-specific hedging and resilient infrastructure to mitigate expectation-driven market fragility. |
| Keywords: | Multi-Scale Positive and Negative Bubbles, Oil Market, Energy Transportation Uncertainty, Local Projections |
| JEL: | C22 E50 Q41 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:pre:wpaper:202608 |
| By: | Guschanski, Alexander; Wildauer, Rafael |
| Abstract: | We analyse the potential of wealth taxes to reduce CO2 emissions through two transmission channels: the inequality channel, which links reductions in wealth inequality to lower emissions, and the consumption channel, which analyses how wealth taxes affect consumption by top wealth holders. We simulate the effects of various wealth tax designs over one- and ten-year horizons using harmonised microdata from 22 European countries. Our analysis accounts for survey non-response bias, heterogeneous rates of returns across households, and behavioural responses to taxation. We find that, through the inequality channel, an annual progressive wealth tax could reduce annual CO2 emissions by 7.5%–14.7% after ten years relative to a no-tax scenario, depending on tax progressivity. Through the consumption channel, the average reduction is between 1.5%–3.6%. These findings highlight the potential of wealth taxes to serve a dual purpose: curbing wealth concentration and contributing meaningfully to climate mitigation and justice, by focusing on high-net worth households who account for a disproportionate share of emissions. |
| Keywords: | wealth tax; wealth distribution; environmental effect; CO2 emissions |
| Date: | 2025–10–08 |
| URL: | https://d.repec.org/n?u=RePEc:gpe:wpaper:51227 |
| By: | Nada Fadl (University of Cologne, Chair of Energy Economics) |
| Abstract: | Significant discrepancies in electricity pricing are observed across countries, particularly between industrial and household rates. Although the literature studies the relationship between electricity prices and economic performance, little empirical evidence exists on how electricity price differentiation between households and industry affects industrial development across countries. This paper addresses this gap by examining the dynamic relationship between industrial development and cross-subsidy electricity price structures. Using panel vector autoregression (VAR) for 17 OECD countries over a period of 25 years, the study assesses the impact of the electricity price ratio (households to industry) on industrial development. To capture the relative price structure between sectors, the analysis incorporates a cross-subsidy electricity price ratio, which reflects differences in electricity pricing across consumer groups. This ratio captures the joint effect of lower industrial production costs and higher household price incentives, thereby reflecting an industry-friendly economic or regulatory environment that supports industrial activity. The analysis is conducted for the full sample as well as various sub-samples. Orthogonalized impulse-response functions are estimated to disentangle the basic factors, such as capital and labor, from the effects of electricity prices on industrial development. The analysis distinguishes between the direct effect of industrial electricity prices on industrial development and an indirect effect operating through the relative electricity price structure. Consistent with existing literature, the results confirm the negative effect of industrial electricity price levels on industrial development. In addition, the results reveal a previously unexplored ratio effect, providing evidence that lower electricity prices for industry relative to households positively affect industrial development in OECD countries. Thus, the results indicate pricing structures that favor production firms and manufacturers. The findings further emphasize the importance of electricity price differentiation between the industry and households, particularly in the context of trade openness. |
| Keywords: | Electricity price ratio; industrial development; panel vector autoregression |
| JEL: | C33 Q43 L94 L60 |
| Date: | 2026–04–08 |
| URL: | https://d.repec.org/n?u=RePEc:ris:ewikln:022434 |
| By: | Alloysius Joko Purwanto (Economic Research Institute for ASEAN and East Asia (ERIA)); Yasushi Ueki |
| Abstract: | ASEAN’s automotive industry is entering a critical transition phase as electrification, digitalisation, and decarbonisation reshape global vehicle markets. While electric vehicle (EV) adoption is accelerating across ASEAN, the region faces structural challenges: policy uncertainty, prolonged market stagnation, and fragmented industrial competitiveness. At the same time, ASEAN remains a vital production base in the global automotive value chain, particularly for internal combustion engine (ICE) and hybrid electric vehicles (HEVs). This policy brief draws on ERIA’s ongoing work under the ASEAN–Japan Co-Creation Initiative and the proposed ASEAN–Japan Next-Generation Vehicle Industry Masterplan. It argues that ASEAN’s transition should follow varied, differentiated pathways rather than a single, linear electrification trajectory. A phased and diversified approach – combining ICE, HEV, x EV, sustainable fuels, and mobility services – is essential to preserve industrial competitiveness while advancing climate objectives. The brief outlines a strategic framework built around three pillars: (i) technology and market transition pathways; (ii) industrial transformation through decarbonisation, digitalisation, and servitisation; and (iii) strengthened regional and ASEAN–Japan collaboration. It concludes with policy recommendations to enhance policy predictability, mobilise investment, and position ASEAN as a resilient and competitive hub in the global next-generation vehicle ecosystem. Latest Articles |
| Date: | 2026–03–24 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:pb-2025-22 |
| By: | David Benatia; R\'emy Molini\'e; Pierre-Olivier Pineau |
| Abstract: | What drives cross-state differences in U.S. energy consumption? We combine LMDI decomposition, stochastic frontier analysis, and variable-importance methods on a panel of 50 states plus DC over the 2006--2022 period. The observed 12.8% decline in per capita energy use is driven almost entirely by intensity improvements. A variance decomposition attributes 63% of cross-state variation in log energy use to the demand frontier, 34\% to inefficiency above it, and 3% to noise. Within the frontier, energy prices account for roughly 26% of cross-state variation and state efficiency policies for about 13%, while GDP and climate together explain only around 10\%. Efficiency policies also operate through a second channel by reducing inefficiency, adding a further 6 percentage points to their total contribution. The results suggest that pricing and regulation are the primary drivers of cross-state energy use differences. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.12112 |
| By: | Alessandro Falezza |
| Abstract: | Battery energy storage systems (BESS) participating in multi-market electricity trading require price forecasts to optimize dispatch decisions. A widely held assumption is that forecast accuracy, measured by standard metrics such as mean absolute error (MAE), drives trading performance. We challenge this assumption using a hierarchical three-layer optimization system trading simultaneously on frequency containment reserve (FCR), automatic frequency restoration reserve (aFRR), day-ahead, and continuous intraday (XBID) markets in Germany and Switzerland over 2020-2025, with real market data from Regelleistung.net and Swissgrid. We find that rank correlation (Kendall tau), rather than MAE, is the primary predictor of intraday dispatch value: forecasts above an empirical threshold of tau approximately 0.85-0.95 capture up to 97-100% of perfect-foresight revenue, while persistence forecasts with near-zero tau capture only 33%. This threshold is stable across market regimes and volatility levels, and reflects the ordinal structure of the dispatch problem. Furthermore, under reserve market constraints, FCR capacity revenue exceeds XBID by 6.5x per MW, making capacity allocation -- not forecast accuracy -- the primary driver of total revenue. In the Swiss market, hydrological surplus anomalies are significantly associated with balancing market revenue (p = 0.0005), a mechanism absent from existing German-focused literature. These findings reframe forecast evaluation for BESS operators: the relevant question is not what the MAE is, but whether the forecast achieves tau-sufficiency. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.12082 |
| By: | Shin-ichi Fukuda (The University of Tokyo); Akio Ino (Graduate School of International Social Sciences, Yokohama National University) |
| Abstract: | With growing concern about global warming, Green Transformation (GX) is becoming one of the world's biggest policy issues. This paper explores the feasibility of GX from a public finance perspective. Japan is the first country to issue the government-sponsored transition bonds, the GX Economy Transition Bonds. The bonds are designed to subsidize large-scale GX investments, with the future carbon pricing (CP) serving as the source of repayment. We investigate sustainability of the GX Economy Transition Bonds using the two-sector endogenous growth model that consists of dirty and clean sectors. Our simulation result shows that the optimal policy, which creates a virtuous cycle of economic and environmental progress, is unsustainable from a public finance perspective. Increasing the carbon tax rate would not improve the fiscal condition because of the Laffer curve. Decreasing the subsidy rate would improve the fiscal condition only if it sacrifices global warming. This implies that the government is facing a trilemma unless it finances the subsidies through other fiscal sources. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:tky:fseres:2026cf1268 |
| By: | Noé Viguié |
| Abstract: | This paper revisits the Natural Resource Curse (NRC) in the case of Critical Raw Materials (CRM), a strategic input for the energy transition. Using USGS production data for 1970–2019, we distinguish between dependence (CRM production as a share of GDP) and abundance (CRM production per capita). We argue that dependence is endogenous and a misleading proxy of resource endowment. Our cross-sectional model averaging shows no robust impact of CRM on growth, while primary export dependence has only a fragile, time-sensitive negative effect. Panel estimations for 44 countries, using advanced static and dynamic estimators, point to the same conclusion: weak and inconsistent results, with the apparent negative effect of CRM dependence largely driven by endogeneity. Overall, our findings reject the idea of a universal CRM curse. Instead, they highlight how measurement choices and endogeneity critically shape the NRC debate. While appropriate policies should address potential negative externalities and encourage diversification as well as the capture of greater value added along the CRM supply chain, our findings suggest that, to ensure long-term growth, traditional factors–such as human capital accumulation, infrastructure, andinstitutional quality and stability–should remain central. |
| Keywords: | natural resources curse; critical raw materials; natural resources abundance; natural resources dependence |
| JEL: | O13 Q32 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2026-8 |
| By: | Wade, Brendan; Carthy, Philip; Farrell, Niall |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:esr:wpaper:wp824 |
| By: | Onur Polat (Institute of Informatics, Hacettepe University, Beytepe Campus, 06800 Cankaya, Ankara, Turkiye); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Dhanashree Somani (Department of Statistics, University of Florida, 230 Newell Drive, Gainesville, FL, 32601, USA); Sayar Karmakar (Department of Statistics, University of Florida, 230 Newell Drive, Gainesville, FL, 32601, USA) |
| Abstract: | This study examines the predictive power of multi-scale positive and negative speculative bubbles in equity and energy markets for S&P 500 realized variance across horizons from 1 to 24 months. Using a hierarchical modeling framework and machine learning estimators, the analysis evaluates whether stock and oil bubbles provide incremental information beyond macroeconomic variables and financial uncertainty. Applying Clark and West's (2007) tests for nested model comparisons, the results reveal a hierarchy in predictive content that varies by forecast horizon. At the 1-month horizon, neither stock nor oil bubbles improves forecast accuracy. At the 3-month horizon, oil bubbles emerge as the dominant predictor; the Bayesian Regularized Neural Network (BRNN) estimator achieves a statistically significant improvement when oil bubbles are included with stock bubbles, resulting in a 30.7 percent reduction in mean squared error (MSE). At the 6-month horizon, stock bubbles become more important, with both the Gradient Boosting Machine (GBM) and BRNN estimators showing significant improvements. For longer horizons, oil bubbles remain relevant, but their predictive value depends on the estimator: BRNN captures oil bubble effects at 12 months, while GBM does so at 24 months. These findings highlight the importance of horizonspecific model selection and indicate a complex transmission of speculative shocks across asset classes. |
| Keywords: | Stock Market Realized Variance, Stock and Oil Bubbles, Machine Learning, Forecasting |
| JEL: | C22 C53 G10 Q51 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:pre:wpaper:202611 |
| By: | Stephen W. Salant; Diego S. Cardoso; Julien Xavier Daubanes |
| Abstract: | To reduce Russia's ability to fund its war in Ukraine, Western governments imposed a price ceiling on Russian seaborne oil exports. Policy-makers sought a ceiling level to lower Russia's oil profits without raising excessively the world price buyers pay for oil. Previous analyses have explored this problem using simulations and, with a single exception, have treated the non-Russian supply response as exogenous. We pose the problem theoretically as a constrained minimization problem of the policy maker and solve it, treating Russia as either a monopolist or an oligopolist facing heterogeneous rivals with endogenous supply. |
| Keywords: | price cap, oil price, strategic supply |
| JEL: | L13 Q41 D78 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12608 |
| By: | Hilde C. Bjornland; Nicolas Hardy; Dimitris Korobilis |
| Abstract: | We develop a Quantile Bayesian Vector Autoregression (QBVAR) to forecast real oil prices across different quantiles of the conditional distribution. The model allows predictor effects to vary across quantiles, capturing asymmetries that standard mean-focused approaches miss. Using monthly data from 1975 to 2025, we document three findings. First, the QBVAR improves median forecasts by 2-5\% relative to Bayesian VARs, demonstrating that quantile-specific dynamics matter even for point prediction. Second, uncertainty and financial condition variables strongly predict downside risk, with left-tail forecast improvements of 10-25\% that intensify during crisis episodes. Third, right-tail forecasting remains difficult; stochastic volatility models dominate for upside risk, though forecast combinations that include the QBVAR recover these losses. The results show that modeling the conditional distribution yields substantial gains for tail risk assessment, particularly during major oil market disruptions. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.12927 |
| By: | Wambui, Reuben; Cheruiyot, Josea |
| Abstract: | In the face of escalating climate challenges, mobilizing private capital for climate finance has never been more critical. This new paper delves into the significant yet underutilized role of guarantees as a blended finance instrument. |
| Keywords: | Guarantees, Climate Finance, De-risking Instruments, Blended Finance |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpm:notfdl:2509 |
| By: | Bourguignon, Francois |
| Abstract: | The note identifies key flaws in climate finance management, including unclear fund allocation between mitigation and adaptation efforts, confusion over definitions, and potential crowding out of Official Development Assistance (ODA). With developing nations needing far more than $100 billion to meet climate goals, this paper advocates for reforms to optimize the effectiveness and efficiency of climate finance, ensuring that resources meet actual needs and maximize their impact. |
| Keywords: | Climate finance, Aid, Development |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpm:notfdl:2507 |
| By: | Emre Akusta |
| Abstract: | This study analyses the impacts of economic complexity on environmental performance in BRICS-T countries. Annual data for the period 1999-2021, Durbin-Hausman cointegration test and Augmented Mean Group (AMG) estimator are used in the analysis. The robustness of the Panel AMG results is tested with CCEMG and CS-ARDL methods. The results indicate that economic complexity has a positive impact on environmental performance. An increase of 1% in the economic complexity index increases environmental performance in BRICS-T countries between 0.020% and 1.243%. However, economic growth, energy intensity and population density were found to have a negative impact on environmental performance. Renewable energy use, in contrast, contributes positively to environmental performance. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.13150 |
| By: | Federico Carril-Caccia (Department of International and Spanish Economics, University of Granada); Ana Cuadros (University of Jaume I); Juliette Milgram Baleix (Department of International and Spanish Economics, University of Granada) |
| Abstract: | This paper investigates the impact of environmental regulation (ER) on foreign direct investment (FDI) location decisions, using a gravity model covering the period 2003–2018. We examine how ER in both origin and destination countries influences bilateral FDI flows, distinguishing between greenfield (GF) investments and cross-border mergers and acquisitions (M&As). To our knowledge, this is the first study of FDI location decisions to jointly analyse the responses of bilateral M&A and GF projects to ER across a large sample of developed and developing countries and manufacturing industries. Overall, we find no consistent evidence supporting either the pollution haven hypothesis (PHH) or the green haven hypothesis (GHH) for total FDI. However, results differ by mode of investment: stricter ER in the origin country encourages outward M&As, but has no significant effect on GF projects. Conversely, ER in host countries appears to exert limited pull effects. Further analysis by sector (clean versus dirty industries) and by country income level reveals important heterogeneity in these effects. For pollution-intensive sectors, tighter regulation in high-income countries is associated with greater outward M&A activity and GF investment directed toward low- and middle-income hosts-an allocation consistent with the PHH. In contrast, in clean industries, GF investment is positively associated with stricter ER in the origin country, lending support to the GHH. Taken together, these results suggest that stricter ER need not deter investment, especially in clean industries or via GF projects; however, in pollution-intensive activities, reallocation through cross-border M&As toward low- and middle-income countries remains a concern. |
| Keywords: | Environmental regulation; Foreign Direct Investment; Pollution Haven Hypothesis; Green Haven Hypothesis; Mergers and Acquisitions; Greenfield investments; Gravity model |
| JEL: | F21 F64 Q58 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202608 |
| By: | Martin, Lucie; Timmons, Shane; Lunn, Pete |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:esr:wpaper:wp823 |
| By: | Nuriye Melisa Bilgin; Gianmarco Ottaviano |
| Abstract: | We study how digital infrastructure relaxes constraints on the diffusion and economic impact of artificial intelligence (AI). Using administrative data and a nationally representative enterprise survey from Turkey (2021-2024), we document significant disparities in AI adoption. Adoption is concentrated among large firms and in regions with high-speed broadband and proximity to data centers, particularly for software-intensive and cloud-based applications. To identify causal effects, we exploit the staggered expansion of Turkey's national natural gas pipeline network, which serves as a conduit for fiber-optic deployment. Because pipeline routing is determined by energy distribution priorities rather than digital demand, it provides plausibly exogenous variation in connectivity. Difference-in-differences estimates show that improved connectivity significantly increases AI adoption, particularly for software-intensive technologies and among small and medium-sized enterprises. Instrumental-variable estimates indicate that infrastructure-driven AI adoption raises labor productivity and export intensity while shifting labor composition toward ICT-related roles. These findings highlight digital infrastructure as a primary determinant of both the pace of AI diffusion and its resulting economic returns. |
| Keywords: | artificial intelligence, digital infrastructure, broadband, technology diffusion, firm productivity, cloud computing |
| Date: | 2026–04–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2172 |
| By: | Tetsuji OKAZAKI |
| Abstract: | Immediately after World War II, under the occupation by the United States, the Japanese government implemented various policies aimed at initiating economic recovery through restoring production and suppressing inflation. Reflecting the policy of the U.S. government, Japanese policy regimes evolved through three phases: First, naïve economic controls were implemented that prioritized increasing production but disregarded productivity, second, economic controls aiming at increasing productivity, and finally a transition to a market economy. In this paper, we explored implications of this sequence of policy regime change, focusing on the coal mining industry. Analyzing mine-level panel data, we found that naive economic controls prioritizing increasing production, and particularly price control policies, distorted coal mining firms’ incentives for increasing productivity. Specifically, the firms whose productivity was higher in the initial year lacked incentives to increase productivity, and consequently, productivity of those firms stagnated. Additionally, despite policy changes aiming at productivity increase implemented in 1948, the changes had no significant effect on productivity growth. In contrast, the transition to a market economy had a positive impact on productivity growth; however, this impact was heterogeneous, and only firms whose initial productivity was higher and whose incentives had been distorted under the system of economic control saw positive effects. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26030 |
| By: | Morgane Gonon (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); Hugo Mosneron Dupin (La République des savoirs : Lettres, Sciences, Philosophie - CdF (institution) - Collège de France - CNRS - Centre National de la Recherche Scientifique - Département de Philosophie - ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres, 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) |
| Abstract: | Since the 1970s, ecological economics has promoted the materialisation of economic analysis through the lens of matter and energy flows, hybridising economic concepts with biophysical knowledge. This perspective has progressively diffused into mainstream environmental economics — a development that, at first glance, appears to constitute an ontological and epistemological victory for the embedded economy tradition. Yet re-embedding and the mobilisation of material knowledge are insufficient to strengthen economics' capacity to orient the ecological transformations that are now required. By concentrating on the economy–biosphere interface and deploying a utilitarian rationality aimed at demonstrating the economic case for preservation, materialised economics tends to render invisible the socio-economic conflicts, institutional conditions of action, and structural obstacles to reducing anthropogenic pressures. Biophysical analyses contribute primarily three types of inputs — information, prices, or optimal quantities — whose transformative reach remains limited. These limitations delineate an impossibility triangle for the discipline: simultaneously representing biophysical dynamics, socio-economic systems, and operational levers for transformation. Re-embedding renders things visible, but does not supply the conditions for implementing transformative policies. The article proposes a distinction between ecological objectives (EOs) — defined by compliance with biophysical constraints — and normative ecological objectives (NEOs), which explicitly formulate policies, regulations, or economic actors' courses of action. Material knowledge must be translated into NEOs, while economic analysis focuses on examining their socio-economic, distributional, institutional, and financial consequences. The proposed framework organises a six-step research programme oriented towards analysing the conditions of possibility for ecological transformations, rather than demonstrating their economic rationality. This reorientation refocuses economics on its proper objects — production, distribution, institutions, and conflict — while preserving the biophysical constraint, and enables the articulation of material knowledge, political decision-making, and economic analysis within a consequentialist perspective. |
| Abstract: | Depuis les années 1970, l'économie écologique a promu la matérialisation de l'analyse économique fondée sur les flux de matière et d'énergie, en hybridant les concepts économiques et les savoirs biophysiques. Cette perspective s'est progressivement diffusée jusqu'à l'économie de l'environnement dominante, ce qui constitue à première vue une victoire ontologique et épistémologique de l'économie encastrée. Cependant, le réencastement et la mobilisation de savoirs matériels ne suffisent pas à renforcer la capacité de la discipline économique à orienter les transformations écologiques nécessaires. En se concentrant sur l'interface économie-biosphère et en mobilisant une rationalité utilitaire visant à démontrer l'intérêt économique de la préservation, l'économie matérialisée tend à invisibiliser les conflictualités socio-économiques, les conditions institutionnelles de l'action et les obstacles à la réduction des pressions anthropiques. Les analyses biophysiques apportent principalement trois types de contributions — information, prix ou quantité optimale — dont la portée transformative demeure limitée. Ces limites dessinent un « triangle d'impossibilité » pour la discipline économique : représenter simultanément les dynamiques biophysiques, les systèmes socio-économiques et des leviers de transformation opérationnels. L'encastrement permet essentiellement de rendre visible, sans fournir les conditions de mise en œuvre de politiques transformatrices. L'article propose une distinction entre objectifs écologiques (OE) — définis par le respect de contraintes biophysiques — et objectifs écologiques normatifs (OEN), qui formulent explicitement des politiques, réglementations ou actions d'acteurs économiques. Les savoirs matériels doivent être traduits en OEN, tandis que l'analyse économique se concentre sur l'étude de leurs conséquences socio-économiques, distributives, institutionnelles et financières. Le formalisme proposé organise ainsi un programme de recherche en six étapes visant à analyser les conditions de possibilité des transformations écologiques plutôt qu'à en démontrer la rationalité économique. Ce déplacement recentre la science économique sur ses objets propres — production, distribution, institutions et conflits — tout en maintenant la contrainte biophysique, et permet d'articuler savoirs matériels, décision politique et analyse économique dans une perspective conséquentialiste. |
| Keywords: | Environmental economics, Ecological economics, Political ecology, Political economy |
| Date: | 2026–03–24 |
| URL: | https://d.repec.org/n?u=RePEc:hal:ciredw:hal-05567895 |
| By: | Sumaya Islam (Paderborn University) |
| Abstract: | .Green start-ups are frequently portrayed as major drivers of the sustainable revolution, yet little is known about their true risk of insolvency. Using a population-wide register dataset of 30, 523 German startups, the failure rates of green and non-green startups are compared. While there is a theoretical argument that a commitment to sustainability provides legitimacy and access to patient capital, the empirical evidence is still scarce and dependent on the context and ecosystem. The results are striking. Using survival analysis, it is shown that green startups are significantly more likely to fail than non-green startups both in the short and long term. These time patterns are consistent: green startups are more likely to go into insolvency than non-green startups not only during the first years of life but also at later stages of firm development. This evidence challenges the existence of a green survival premium and suggests a liability of newness and greenness; that is, engaging in sustainability makes startups more unstable throughout their life cycle. Overall, these findings provide a more refined comprehension of sustainable entrepreneurship by highlighting the structural and persistent nature of the risks of failure of green startups. They also invite governments and investors to reconsider their policies of support and to develop long-term instruments that better match the specific risk profiles and capital needs of sustainability-oriented startups. |
| Keywords: | ... (keywords) |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:pdn:dispap:167 |
| By: | Carthy, Philip; Farrell, Niall; Harold, Jason; Timmons, Shane |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:esr:wpaper:wp820 |
| By: | Francesco Crespi; Nicolò Geri; Dario Guarascio; Enrico Marvasi |
| Abstract: | This paperinvestigatestherelationshipbetweentechnologicalcapabilities, importdependency, and environmentalpolicies, focusingonthelithium-ionbatterysupplychain(LBSC)–acriticalsectorforthe net-zero transition.Wecontributetothegrowingliteratureonthedriversandbarrierstoacceleratingthe transitioninthefollowingways.First, wedevelopanoriginalanalyticalframeworkthatintegratestwo recent streamsofliterature(i.e.theoneonaccelerationofthegreentransitionandtheoneonstructural dependencies andtechnologicalsovereignty), inordertodiscusstheexistenceofpotentialtrade-offsbe- tweenthetwoobjectives.Second, wedevelopastrategicintelligenceanalysisoftheLBSCbyproposinga novelmethodologicalapproachtoidentifyimportdependenciesandtechnologicalcapacitygaps, which allowstosingleoutcriticalproductsandstageswherepolicyactionisneededtoavoidtheemergenceof bottleneckstothegreentransition.Third, weexaminehowtechnologicalcapabilitiesinfluenceimport dependency, showingunderwhatconditionstechnologicalupgradingimprovescountries’competitive positions andmitigatesdependencyissues.Finally, weanalysehowenvironmentalpolicystringencyre- lates toimportdependencyinordertodiscussinwhichcontextenvironmentalgoalsmayconflictwith thoserelatedtotechnologicalsovereigntyandstrategicautonomy.Ourfindingssuggestthattechno- logical upgradingcanreducedependencieswithoutcompromisingenvironmentalgoalssothatthepre- sumed trade-offbetweenthenet-zerotransitionandstructuraldependenciesdoesnotnecessarilyhold. In contrast, awell-designedpolicymix, aligningenvironmentalobjectiveswithtargetedinnovationand industrialpolicies, canenhancebothresilienceandtheaccelerati ontowardsthenet-zerotransition. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:rtr:wpaper:0291 |