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on Energy Economics |
| By: | Yassine Kirat (ULH - Université Le Havre Normandie - NU - Normandie Université, EDEHN - Equipe d'Economie Le Havre Normandie - ULH - Université Le Havre Normandie - NU - Normandie Université); Tina Prodromou (University of Wollongong [Australia]); Sandy Suardi (University of Wollongong [Australia]) |
| Abstract: | This study delves into the complex interplay of climate change, natural disasters, energy consumption, and carbon emissions across 111 countries from 1990 to 2019. A structural shift in 2004 signifies altered global dynamics in CO2 emissions, closely linked to the escalation of meteorological and hydrological disasters driven by climate change. Globally, we illuminate the significant impact of climate-induced natural disasters, especially storms and extreme temperatures, on energy consumption and carbon emissions, albeit with variations. Regionally, we establish a notable positive association between extreme temperature-related disasters and both energy consumption and carbon emissions in Europe. Examining the aftermath of catastrophic events reveals an intensified influence of these disasters on carbon emissions and energy consumption in Africa, Latin America, and Europe. Developed economies experience significant impacts on carbon emissions and energy consumption from storms and extreme temperatures, while flood severity predominantly affects carbon emissions in developing countries. Additionally, we explore the potential of green patents in mitigating energy consumption and emissions triggered by disasters. While not conclusively proven, the statistically significant impact of green patents on energy conservation holds profound policy implications for advancing climate understanding, transforming energy landscapes, and addressing future sustainability concerns. |
| Keywords: | Natural disasters Climate change Energy consumption Carbon emissions Green patents |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05623681 |
| By: | Paloma Péligry; Grégoire Sempé |
| Abstract: | Mitigating CO2 emissions in housing through retrofits has emerged as a crucial political issue. In this paper, we assess the macroeconomic and distributional impacts of key climate policies in the residential housing market. We build a quantitative heterogeneous agent model featuring high (green) and low (brown) energy efficient houses. Brown houses are associated with an additional cost of energy and can be retrofitted to a green house. We compare the effects of three policies: a tax on energy, a tax on brown rental income and a retrofit subsidy. The taxes widen the green to brown price ratio by penalizing brown houses, whereas the subsidy reduces it by lowering the substitution cost. The energy tax raises the user cost of brown housing, tightening affordability and increasing the renter share. The tax on brown rental income generates a "brown reallocation": by decreasing brown house prices while leaving the user cost unchanged, it induces lowincome renters to transition into brown homeownership. Finally, the subsidy improves affordability, enabling low-income households to enter green homeownership. |
| JEL: | E20 E60 H23 Q58 R31 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:fae:wpaper:2026.01 |
| By: | Abitbol, Mathias; Aghion, Philippe; Antonin, Céline; Barrage, Lint; Lengereau, Benjamin |
| Abstract: | This paper studies the environmental effects of the large-scale deployment of AI-driven monitoring systems across French wastewater treatment plants operated by a global leader in water supply services. Exploiting quasi-experimental variation in both the timing of adoption and outages thanks to high-frequency data, we estimate the causal impact of AI on energy use and carbon emissions. We find that AI has allowed treated plants to reduce their electricity consumption and carbon emissions by 5.4% and 6% respectively, and electricity costs by 8.2%, resulting in negative abatement costs, and still improved water effluent quality. The additional electricity demand generated by AI servers represents less than 1% of these savings. Beyond average effects, AI-equipped plants exhibit greater resilience to high operational stress, including extreme meteorological events and chemical pollutant peaks. They also improve load management by reallocating consumption from peak toward off-peak hours. Finally, we assess the aggregate implications of our findings for global climate and welfare using the DICE model. We find large estimated global welfare gains associated with our estimate of AI-induced CO2 reductions. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21576 |
| By: | Pascal Heid; Kevin Remmy; Mathias Reynaert |
| Abstract: | Electric vehicles shift passenger transport from oil to electricity, linking vehicle adoption to hourly power-market conditions. We develop and estimate a joint equilib rium model of German vehicle demand and electricity supply in which driver-specific charging decisions map travel profiles and electricity prices into EV operating costs and load. A 10% EV stock raises wholesale prices by 3.3%, creating sizable cost spillovers on non-EV electricity users, but reduces EV adoption by less than 1%. Time-varying tariffs lower charging costs and shift load to cheaper hours; in equilibrium, EV adop tion offsets much of the system-cost relief while redirecting generator profits toward renewables. |
| Keywords: | electric vehicles, electricity markets, charging, complementary markets |
| JEL: | L5 L6 L9 Q4 Q5 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_615v2 |
| By: | Panle Jia Barwick; Jack Collison; Pinelopi Koujianou Goldberg; Shanjun Li; Yucheng Wang; Pinelopi Goldberg |
| Abstract: | We study the optimal design of trade and industrial policy when governments pursue environmental objectives alongside traditional welfare goals. Motivated by the global transition to electric vehicles (EVs) and growing concerns about competitiveness, energy security, and climate change, we develop a framework in which policymakers choose tariffs and domestic production subsidies to maximize welfare, defined as the sum of consumer surplus, domestic profits, environmental benefits, and tariff revenue. We combine a theoretical model of differentiated-product oligopoly with a structural demand model estimated using vehicle-level data from 13 countries that together account for the vast majority of global EV sales. Our central finding is that the optimal policy combines a moderate tariff on imported EVs with a subsidy to domestic EV production financed through tariff revenue. This policy substantially outperforms both outright protectionism and laissez-faire. Relative to current policies, it preserves consumer access to affordable EVs, accelerates fleet electrification, supports domestic producers, and remains budget-neutral. For the United States, the optimal policy more than doubles EV market share, generates over $45 billion in annual welfare gains, and avoids approximately 95 million tons of lifetime CO2 emissions. A key mechanism underlying these results is the pass-through of tariffs and subsidies to prices, which depends critically on demand curvature, product substitution, and market structure. More broadly, our results suggest that effective industrial policy requires careful attention to market structure and country-specific conditions, balancing consumer, producer, fiscal, and environmental objectives rather than adhering to ideological prescriptions. |
| Keywords: | industrial policy, trade policy, tariffs, subsidies, energy transition, electric vehicles |
| JEL: | F13 F14 H23 L52 Q58 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12735 |
| By: | Roy Sarkis |
| Abstract: | This paper studies the macroeconomic dynamics of climate policy in a multi-sector dynamic general equilibrium model with renewable and non-renewable energy, sector-specific capital adjustment frictions, household energy demand, and endogenous fossil resource dynamics. The central mechanism is that decarbonization requires reallocating energy use and installed capital: fossil energy demand can contract immediately, while renewable capacity and abatement adjust only gradually. The analysis delivers four results. First, gradual policy implementation sharply reduces transition costs: relative to immediate implementation, gradual emissions caps improve welfare by 2.26 percentage points under comprehensive regulation and by 5.06 percentage points under firm-only regulation. Second, renewable energy subsidies and non-renewable energy taxes support renewable capital accumulation and reduce, but do not eliminate, the welfare cost of front-loaded tightening. Third, sectoral coverage changes the welfare ranking across implementation speeds. Firm-only regulation performs better under gradual implementation because it shields utility-relevant household energy services, but becomes nearly as costly as the carbon-price-only transition under immediate implementation. Fourth, endogenous fossil exploration and stock-dependent extraction costs transmit climate policy into lower extraction, fewer discoveries, and a declining shadow value of reserves, providing a structural mechanism for stranded fossil assets. The results show that deep decarbonization can be achieved at substantially lower macroeconomic cost when policy manages the speed and incidence of energy-capital reallocation. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.18994 |
| 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:safewp:341429 |
| By: | Till Köveker; Robin Sogalla |
| Abstract: | Carbon pricing policies are usually combined with compensation for exposed firms to prevent adverse competitiveness effects. In cap-and-trade systems, this carbon cost compen sation mostly occurs through free allocation of emission permits. Using an administrative panel of German manufacturing firms, this paper investigates how free allocation in the European Union Emissions Trading System affects firms’ emission reductions and competi tiveness. Leveraging a reform of free allocation rules in a continuous difference-in-differences design, we find that a reduction of freely allocated emission permits decreased firms’ emis sions and emission intensity. For firms deemed to be at risk of carbon leakage, our results suggest that this decrease is driven by energy efficiency improvements instead of outsourcing of emission-intensive production. On the other hand, we do not find statistically significant effects on firms’ employment, sales, value added, capital and exports-indicating that the reduction in free permits did not negatively affect firms’ competitiveness. |
| Keywords: | Cap and Trade, Permit Allocation, Industry Compensation, Greenhouse Gas Emissions, Competitiveness, Manufacturing Firms |
| JEL: | Q54 Q58 H23 D22 F18 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_756 |
| By: | Jan Mutke; Jonas Finke; Katharina Esser; Heidi Heinrichs |
| Abstract: | Decarbonising energy systems reduces emissions and fossil fuel dependency, but expanding renewables increases demands for critical raw materials. Most energy system models, however, neglect material demands, putting the material feasibility of energy scenarios at question. We combine a systematic review of 59 highly decarbonised European energy system modelling studies with a quantitative ex-post assessment of material demands for 5 key technologies and 19 materials. We find that material demands exceed Europe's population-based shares of current global reserves for seven materials (Ga, In, Ir, Te; less pronounced for Ag, Se, V), in particular if multiple sectors of the energy system are considered. Competing non-energy demand further amplifies the scarcity, while technological innovation can either alleviate or intensify it. We conclude that energy efficiency, recycling, expanding reserves and technological innovation may only partly address the identified shortages and call for energy sufficiency measures to achieve sustainability in the energy-material nexus. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.12201 |
| By: | Antoine Pesenti; Aidan O'Sullivan |
| Abstract: | Electricity markets are inherently complex systems characterised by strong nonlinearities, high-dimensional interactions, and increasing interdependence across regions. While deep neural networks (DNNs) have demonstrated strong predictive capabilities for electricity prices, their lack of interpretability limits their usefulness for understanding the underlying drivers of price formation. This paper addresses this gap by combining DNN models with explainable artificial intelligence (XAI) techniques to analyse the determinants of electricity prices across 39 European bidding zones. We employ SHAP (SHapley Additive exPlanations) to quantify feature contributions and apply and extend SSHAP, an aggregation framework to improve interpretability in high-dimensional settings. The analysis identifies that renewable energy sources, particularly solar, play a disproportionately important role in price formation despite their lower share in total power generation. Gas prices remain a dominant and consistent driver across electricity markets, while interconnections significantly shape price dynamics, highlighting the strong interdependence of European electricity systems. In addition, a synthetic EU-wide electricity market is constructed to explore the counterfactual scenario of a fully integrated market with a single price. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.19118 |
| By: | Jasmin Lukasz (School of Accounting, Finance and Economics (SoAFE) and Centre of Political Economy, Governance, Finance and Accountability (PEGFA), University of Greenwich, UK); Maria Nikolaidi (School of Accounting, Finance and Economics (SoAFE) and Centre of Political Economy, Governance, Finance and Accountability (PEGFA), University of Greenwich, UK); Özlem Onaran (School of Accounting, Finance and Economics (SoAFE) and Centre of Political Economy, Governance, Finance and Accountability (PEGFA), University of Greenwich, UK) |
| Abstract: | This paper presents a conceptual framework for an integrated global, sectoral and gendered analysis of the macroeconomic and social dimensions of the green transition with a focus on three critical aspects. The first concerns the uneven global effects of the green transition. Due to differentiated sectoral structures and positions in the global financial architecture, the transition has highly uneven effects across countries: interconnected global production and financial networks can result in the green transition in the Global North having important adverse macrofinancial effects on Global South countries, particularly those reliant on fossil fuel exports, raising climate justice concerns. The second refers to the environmental footprint of green structural change that extends well beyond direct emissions: resource-intensive green activities, such as electric vehicle production, drive ecological degradation through supply chains in Global South producer countries and reinforce green extractivism, making adaptation and the protection of water, land, and biodiversity central for a just green transition. The third is related to the gendered effects of the transition, which can either intensify or reduce existing inequalities through the impact of the green transition on women’s paid and unpaid work. These effects diverge between North and South due to differences in labour informality, exposure to environmental degradation, and the gender composition of ‘green’, ‘fossil’, and ‘purple’ sectors. Drawing on post-Keynesian, ecological, and feminist macroeconomics, as well as the physical and monetary input-output approaches, the paper develops a framework that emphasises international and sectoral spillover effects, macrofinancial channels and the local-specific gendered effects of green policies through paid and unpaid work. Based on this framework, the paper outlines how the combined use of green and purple policies can reduce global, sectoral and gender inequalities. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2606 |
| By: | Timilsina, Govinda R.; Tran, Chau; Hochman.Gal |
| Abstract: | Viet Nam is committed to reducing its greenhouse gas emissions by 15.8% by 2030 and meeting its net-zero emission target by 2050. The industrial sector, including the power sector, is the primary emitter and its active participation is necessary to achieve the targets. This study uses a stated-preference survey Vietnamese firms to understand their preferences in reducing greenhouse gas emissions. The study finds that Vietnamese firms prefer to reduce their greenhouse gas emissions through improving energy efficiency, substituting fossil fuels with non-fossil fuels and changing production processes. The ranking of preferences differs across the size, type, ownership and geographical location of firms. Their willingness to reduce emissions is driven by anticipated future regulations, social image, and global trends. They consider the lack of finance to be the main barrier to investing in climate change mitigation measures. The study also finds that if a carbon tax were imposed at 100, 000 local currency (around US$5) per ton of carbon dioxide, over 60% of firms would be willing to invest less than 5% of their annual revenue in greenhouse gas mitigation; only less than 10% of the firms are willing to allocate more than 10% their revenue for greenhouse gas mitigation. The findings also show that larger firms and state-owned firms have a higher willingness to pay for emission mitigation measures. Given the small sample size and static preference approach, the findings should be interpreted as indicative rather than conclusive. |
| Date: | 2026–06–02 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11406 |
| By: | Amrita Goldar (Indian Council for Research on International Economic Relations (ICRIER)); Somit Dasgupta; Sajal Jain; Diya Dasgupta |
| Abstract: | This paper evaluates the regional effects of moving towards non-fossil fuel-based capacity at the state level. It specifically examines the creation of relevant clean energy employment and the corresponding need for skilling to achieve India’s targets of reducing emissions intensity by 2030. While prior literature on energy employment has focussed more on the actual estimates of employment generated, the present study answers the question of "geographically where" employment will be generated. |
| Keywords: | Employment, energy-efficiency, renewable energy, skilling |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:wpaper:431 |
| By: | Princewill Okwoche (Namibia University of Science and Technology, Windhoek, Namibia; School of Economics, University of Cape Town; Environment Centre, Charles University, Prague, Czech Republic); Milan Scasny (Environment Centre, Charles University, Prague, Czech Republic) |
| Abstract: | Improving energy efficiency is a cornerstone of the EU Fit-for-55, competitiveness, and energy-security strategy, yet performance across the new member states remains uneven despite price convergence and common regulatory frameworks. This study examines how energy prices, energy price uncertainty, and regulatory quality jointly shape sectoral energy efficiency in transition economies. We estimate a Shephard energy distance frontier model for seven new EU member states across ten industrial sectors over 1995–2015, modelling energy inefficiency directly as a function of these determinants and discrete reform episodes. Methodologically, we employ a consistent true fixed effects stochastic frontier estimated via the pairwise-difference estimator of Belotti and Ilardi (2018), which resolves the incidental parameters problem and disentangles inefficiency from unobserved heterogeneity. To our knowledge, this is the first joint one-step frontier estimation of price, price uncertainty, and governance as direct drivers of inefficiency, closing a gap between energy-pricing theory and applied frontier econometrics. Average efficiency is relatively high, with scope for roughly 21% energy savings from eliminating existing inefficiencies. Higher real energy prices significantly reduce inefficiency, confirming the price-discipline hypothesis. Energy price uncertainty robustly raises inefficiency, with a markedly stronger effect during the pre-accession adjustment phase and a weaker effect in high energy-intensive sectors. Regulatory quality is, counterintuitively, associated with higher transient inefficiency, plausibly reflecting adjustment costs. Results are robust to a balanced sub-sample and to Brent-based prices extending coverage to 2022 and eight countries. The findings imply that stabilising and credibly anchoring price signals matter more than raising average prices alone. |
| Keywords: | Energy prices, energy price uncertainty, stochastic energy distance frontier, regulatory governance, energy efficiency |
| JEL: | C23 O52 Q41 Q43 Q48 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2026_15 |
| By: | Sanjeev Gupta (Indian Council for Research on International Economic Relations (ICRIER)); Pratik Tiwary |
| Abstract: | The paper shows that India's policy of shielding consumers from higher fuel prices through tax reductions, subsidies, and constrained price pass-through has provided short-term relief but entails significant fiscal costs, estimated at about 0.6 per cent of GDP annually.1 These measures also weaken price signals, encourage inefficient energy use, and disproportionately benefit higher-income households. At the same time, declining petroleum tax revenues and limited adjustment for inflation have eroded the tax base and reduced the alignment of fuel prices with their social and environmental costs. |
| Keywords: | Petroleum subsidies, Fuel pricing policy, Fiscal cost, Energy security, India, Oil price shock, icrier |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:68 |
| By: | Saon Ray (Indian Council for Research on International Economic Relations (ICRIER)); Kuntala Bandyopadhyay |
| Abstract: | The policy brief argues that while PAT has delivered incremental efficiency gains, it is insufficient to align industry with India's net-zero pathway or to mitigate CBAM-related trade exposure. Drawing on sectoral emissions data, international experience with carbon markets, and recent industrial decarbonization roadmaps, it highlights the potential of a well-designed CTS – robust monitoring, reporting, and verification (MRV), credible price signals, and alignment with technological transformation are needed to drive decarbonization in hard-to-abate sectors. The analysis underscores the importance of coupling carbon pricing with targeted incentives for low-carbon technologies and ensuring institutional coordination across climate, energy, and industrial policy domains. |
| Keywords: | Carbon Border Adjustment Mechanism (CBAM), Perform, Achieve, and Trade (PAT) scheme, Carbon Trading Scheme (CTS), Trade competitiveness, Industrial decarbonization, Monitoring, Reporting and Verification (MRV), icrier |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:64 |
| By: | Rajesh Aggarwal (Indian Council for Research on International Economic Relations (ICRIER)); Shekhar Aiyar; Arpita Mukherjee; Nisha Taneja |
| Abstract: | The paper shows that India's policy of shielding consumers from higher fuel prices through tax reductions, subsidies, and constrained price pass-through has provided short-term relief but entails significant fiscal costs, estimated at about 0.6 per cent of GDP annually.1 These measures also weaken price signals, encourage inefficient energy use, and disproportionately benefit higher-income households. At the same time, declining petroleum tax revenues and limited adjustment for inflation have eroded the tax base and reduced the alignment of fuel prices with their social and environmental costs. |
| Keywords: | Petroleum subsidies, Fuel pricing policy, Fiscal cost, Energy security, Oil price shock, icrier |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:69 |
| By: | Balado-Naves, Roberto (University of Oviedo, Department of Economics); Llorca, Manuel (Department of Economics, Copenhagen Business School); Jamasb, Tooraj (Department of Economics, Copenhagen Business School) |
| Abstract: | This paper examines whether populist prime ministers hinder the green transition in the EU and increase greenhouse gas (GHG) emissions. Using a panel of 230 NUTS2 regions over 1995–2022, we find evidence of environmental consequences of populist rule. We employ static and dynamic difference-in-differences (DiD) estimators, inverse probability weighting (IPW) adjustments and a heterogeneity-robust estimator. Our baseline static estimates find that populist prime ministers are associated with a 2.2–4.3% increase in regional GHG emissions, a result that withstands robustness checks. Dynamic event-study specifications show no evidence of pre-existing trends, while post-treatment effects emerge immediately after the populist transition and persist over multiple years. Once treatment-effect heterogeneity and switching treatments are fully accounted for, each additional year of populist rule raises regional emissions by around 9% over a period of 6.4 years. Heterogeneity analysis shows that this is driven entirely by right-wing populist prime ministers, while left- and center-wing populist leaders do not have statistically significant environmental impact. Analysis of mediating channels suggests that the emission-increasing effect operates primarily through short-run institutional deterioration and a temporary boost in regional GDP per capita, rather than through direct changes in the energy mix or energy intensity. |
| Keywords: | Populism; Greenhouse gas emissions; Difference-in-differences |
| JEL: | C23 D72 Q54 Q58 |
| Date: | 2026–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:cbsnow:2026_010 |
| By: | Halkos, George; Zisiadou, Argyro |
| Abstract: | This paper examines the “Petroleum Paradox", wherein legacy hydrocarbon reliance has shifted from an engine of industrial growth into a primary vector of macroeconomic instability and geopolitical exposure for importing nations. As contemporary conflicts collapse traditional paradigms of "complex interdependence", this study evaluates two distinct energy shocks: the fixed-infrastructure pipeline crisis of the Russo-Ukrainian War and the elastic maritime chokepoint crisis of the US-Israel-Iran conflict. To combat the resulting "fossilflation", price volatility taxes and severe balance of payments strains, global capital is executing a strategy of Dependency Inversion, re-engineering national energy architectures to convert uncontrollable foreign operational risks into secure, domestic capital assets. Ultimately, this paper demonstrates that modern hybrid warfare, rather than ecological mandates alone, acts as the primary structural accelerator of the energy transition. This pathway bifurcates into a highly strategic, dual-pronged domestic regime: decentralized, variable renewable networks acting as an agile security shield, and high-capacity nuclear infrastructure (incorporating gigawatt-scale and small modular reactors) serving as a weather-independent base load anchor to permanently secure national sovereignty and macroeconomic stability. |
| Keywords: | Energy security; energy crisis; petroleum paradox; geopolitical risk premium. |
| JEL: | E32 F51 Q34 Q42 Q43 Q48 |
| Date: | 2026–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129631 |
| By: | Marc Ringel (Nuertingen-Geislingen University - Partenaires INRAE, LIEPP - Laboratoire interdisciplinaire d'évaluation des politiques publiques (Sciences Po) - Sciences Po - Sciences Po, SDCT - European Chair for Sustainable Development and Climate Transition (Sciences Po) - Sciences Po - Sciences Po); Sarah Thompson (Sciences Po - Sciences Po, SDCT - European Chair for Sustainable Development and Climate Transition (Sciences Po) - Sciences Po - Sciences Po) |
| Abstract: | Energy efficiency is the cornerstone of European energy policies. The 2023 recast of the Energy Efficiency Directive (EED) raises the ambition of EU energy efficiency policies at a time of energy insecurity, high import costs and decarbonisation pressure. This brief asks whether the revised Directive is fit to deliver on these aspects. Drawing on expert stakeholder assessments, it argues that the Directive in its present revision comes closer to fit for purpose but fails to address crucial elements. Stakeholders are cautiously optimistic about energy savings and expect the strongest effects in the public sector and buildings. Likewise, they expect co-benefits for supply security, energy poverty and energy bills. On the other hand, stakeholders are less convinced that the EED will sufficiently reduce fossil fuel use or address the transport and agriculture sectors, which are closely locked into fossil fuel use. Also, implementation barriers persist. Stakeholders put a priority on implementing the 2023 framework consistently before reopening the legislative cycle. A future redesign of the EED should target fossil-fuel savings, especially in transport, in a more explicit manner. |
| Keywords: | energy efficiency, energy policy |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05654055 |
| By: | Marlene Bröcker (University of Cologne, Chair of Economics, Energy and Sustainability); Diana Krainer (AIT); Stefan Strömer (AIT); Oliver Ruhnau (Institure of Energy Economics at the University of Cologne) |
| Abstract: | While extensive research has examined how capacity markets address the missing-money problem in electricity markets, less attention has been devoted to how the costs of capacity markets are distributed to consumers. Here, we analyze the design options and implications of demand charges for refinancing electricity capacity markets, using both a conceptual framework and a numerical equilibrium model. We compare a flat demand charge with time-of-use and dynamic charges, which more accurately reflect the costs of building capacity to cover demand during periods of scarcity. We show that more cost-reflective demand charges induce e!cient substitution of demand response for capacity procured in the capacity market compared to a flat charge. Furthermore, demand increases when capacity is abundant, as no distortive charges are applied. As a result, more cost-reflective charges increase consumer surplus and drive the investment mix towards renewable energy sources. We discuss the implications of our results for the practical implementation of capacity market charges. |
| Keywords: | Capacity Markets; Electricity Market Design; Energy Economics; Demand Response |
| JEL: | D47 D61 L94 Q41 Q48 |
| Date: | 2026–06–22 |
| URL: | https://d.repec.org/n?u=RePEc:ris:ewikln:022965 |
| By: | Vincent Yinjun-Wang; Madeleine Udell |
| Abstract: | Grid-scale batteries increasingly influence outcomes in wholesale electricity markets, but their observed bid patterns remain difficult to interpret. In particular, bids that appear to reflect strategic withholding may instead arise from rational operations under price uncertainty and risk management. We develop an asset-level model of a price-taking battery that submits stepwise buy and sell bid curves in the day-ahead market under a finite set of price scenarios. The battery chooses quantity--price pairs to maximize a mean--CVaR objective subject to physical and market constraints. A direct formulation is a mixed-integer linear program, but we show that its integer decisions can be removed, yielding an exact linear programming reformulation suitable for empirical analysis. Our empirical results deliver three insights. First, withholding behavior can arise even without market power, because scarce stored energy and uncertain future prices increase the value of holding energy. Second, the effect of uncertainty depends on the state of charge: when stored energy is scarce, greater uncertainty raises sell bid prices, whereas when stored energy is abundant it can lower them. Third, risk management reshapes bid curves into layered structures that secure profitable execution across a broad set of scenarios while preserving some exposure to rare but valuable price spikes. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.14050 |
| By: | Christoph Böhringer; Isha Dube; Carolyn Fischer; Thomas F. Rutherford |
| Abstract: | To address concerns about competitiveness and carbon leakage, countries with ambitious climate policies are increasingly looking to combine unilateral carbon pricing with border carbon adjustments (BCA). BCA aim to create a level playing field between domestically regulated energy-intensive and trade-exposed industries and their competitors abroad by imposing charges on the (unpriced) carbon embodied in imports and (potentially) rebating carbon costs on exports. At the same time, BCA are seen as measures that may have protectionist motivation and shift the burden of climate policy onto poorer developing economies that bear less historical responsibility for climate change, have limited financial and technological capacity for decarbonization, and may depend on CO₂-intensive exports. For an informed policy debate, understanding how BCA alter the economic burden of unilateral emissions pricing across all countries is essential. However, quantitative impact estimates derived from ex-ante simulation analyses vary considerably in the applied economic literature due to divergent assumptions on key drivers whose relative importance is difficult to distinguish from the outset. Based on controlled simulations with a large-scale computable general equilibrium model of global trade and carbon use, this paper provides a systematic sensitivity analysis of three fundamental dimensions that determine the impacts of BCA: (i) the policy design of BCA; (ii) the price responsiveness of supply and demand; and (iii) the input-output data characterizing initial heterogeneities of production, consumption, and trade patterns across countries. |
| Keywords: | border carbon adjustments, multi-region input-output analysis, computable general equilibrium analysis |
| JEL: | Q58 D57 D58 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12751 |
| By: | Blagica Petreski; Marija Basheska |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:ftm:policy:2026-06/60 |
| By: | Andrea Rangel (Institut de Recherche en Gestion et Economie (IREGE) and OFCE, University Savoie-Mont Blanc. 4 Chemin de Bellevue, 74940, Annecy, France.); Julie Metta (Research Group Sustainable Development, Faculty of Economics, KU Leuven, Parkstraat 47 bus 5300, 3000, Leuven, Belgium.); Aude Pommeret (Institut de Recherche en Gestion et Economie (IREGE) and OFCE, University Savoie-Mont Blanc. 4 Chemin de Bellevue, 74940, Annecy, France.) |
| Abstract: | The energy transition implies significant changes for the transport sector. In particular, the mobility of households will be largely impacted by public policies aiming at mitigating climate change. However, such policies may have adverse distributional effects that enhance the mobility cost for low-income people or even prevent them from being mobile. Therefore, we build a geographical distribution index based on availability and costs of transportation Ð a Mobility Gini. This index encompasses household heterogeneity towards transportation choices, household value of travel time and comfort, and transportation offers in the different regions. In addition, we develop the Emissions Mobility Gini to account for lack of access to clean transport. To understand the decision-making process of households, we develop a theoretical model of transport choice versus consumption of other goods. With this model, we test the effects of policies for the Just and Clean transition of the transport sector on household choices and their effects on our proposed inequality measures. Thanks to the methods proposed here, we quantify the potential inequality effects of climate policies for the transport transition. |
| Keywords: | value of travel time, transportation cost, redistribution, , household utility choice model, transportation cost, redistribution, household heterogeneity |
| JEL: | R38 R41 D63 R22 Q52 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:fae:wpaper:2026.06 |
| By: | Casey, Gregory; Meng, Kyle C.; Rudik, Ivan (Cornell University) |
| Abstract: | Carbon import tariffs, traditionally considered a complement to domestic climate policy, are increasingly proposed as standalone policies. We build a quantitative trade model to compare U.S. carbon tariffs with and without a domestic carbon tax, each applied to a set of carbon-intensive, trade-exposed sectors. We find three main results. First, a U.S. carbon tariff increases U.S. emissions, lowers foreign emissions, and on net achieves half the global emissions reductions of the combined policy, which lowers both U.S. and foreign emissions. Second, both approaches increase U.S. GDP and welfare, but the combined policy has a larger effect due to terms of trade improvements. Third, global emissions reductions from multilateral tariff-only agreements are modest and do not increase monotonically with greater membership, whereas under combined policies they scale considerably with membership. |
| Date: | 2026–06–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:3aw8s_v1 |
| By: | Darina Vorobeva (EM - EMLyon Business School); Ian J. Scott (Universidade Nova de Lisboa (Portugal, Lisbon) - NOVA); Tiago Oliveira (Universidade Nova de Lisboa (Portugal, Lisbon) - NOVA); Miguel Neto (Universidade Nova de Lisboa (Portugal, Lisbon) - NOVA) |
| Abstract: | Understanding how specific energy initiatives influence broader pro-environmental behavior is essential for advancing the sustainable energy transition. This study examines how individual-level factors shape the adoption of tools designed for Demand Response (DRT) and their spillover effects on participation in Energy Communities (EC). Specifically, it investigates the role of situational motivation, tech-confidence, and personal ecological norms in driving behavioral intention, DRT use, and subsequent EC participation. Drawing on survey data from 1807 energy consumers across three EU countries and applying partial least squares structural equation modeling (PLS-SEM), the results show that intrinsic motivation, identified regulation, and external regulation significantly influence behavioral intention, while amotivation has no significant effect. Perceived trust positively affects both behavioral intention and DRT use, whereas perceived security influences DRT use only. Behavioral intention strongly predicts both DRT use and EC participation, with DRT use further acting as a key driver of EC engagement. Personal ecological norms moderate all core relationships, strengthening the link between behavioral intention and EC participation; notably, among individuals with lower ecological norms, DRT use utilizes a stronger influence on EC participation, indicating a behavioral spillover from sustainable consumer-facing DRT use to collective engagement. Overall, this study contributes to the literature by integrating motivational theory with technology adoption and pro-environmental behavior in the context of DR and EC. The findings offer practical guidance for policymakers and practitioners seeking to design inclusive, effective, and socially grounded energy initiatives that support the energy transition. |
| Keywords: | demand response, ecological norm, energy community, motivation |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05617990 |
| By: | Pimpertz, Jochen |
| Abstract: | Despite the unprecedented scale of the unfolding energy crisis, the Gulf states are unlikely to accrue the kind of windfall profits they captured in 1973 and 1979 - this may worsen the impact of the energy crisis on Germany, which historically profited from Gulf exporters' "recycling" their profits into German industry. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwkkur:341373 |
| By: | Eßer, Jana |
| Abstract: | Carbon pricing is a key policy tool for mitigating climate change by increasing prices and thereby reducing demand for carbon-intensive products and activities. However, be- havioral effects - such as crowding-in or -out of intrinsic motivation, moral licensing, or defiant behavior - can either amplify or weaken its standalone price effect. This study examines the behavioral effects of carbon pricing on the demand for fuel using a multiple price list approach in an incentivized online survey experiment, which was conducted in 2024 in Germany in a general population sample of 2, 600 participants. The findings sug- gest that carbon price salience crowds in intrinsic motivation on average compared to a situation in which carbon pricing is in place but less salient, reinforcing the price effect. In contrast, in certain subgroups this salience weakens the price effect and tends to even increase demand for fuel due to crowding-out of intrinsic motivation and moral licensing. |
| Abstract: | Die CO2-Bepreisung ist ein zentrales politisches Instrument zur Eindämmung des Klimawandels. Sie erhöht die Preise und senkt dadurch die Nachfrage nach CO2-intensiven Produkten und Aktivitäten. Verhaltensauswirkungen wie das Verdrängen oder Hervorrufen intrinsischer Motivation, moralische Lizenzierung oder Trotzreaktionen können jedoch den reinen Preiseffekt entweder verstärken oder abschwächen. In dieser Studie werden die Verhaltensauswirkungen der CO2-Bepreisung auf den Kraftstoffverbrauch untersucht. Dazu wurde ein Multiple-Price-List-Ansatz in einem incentivierten Online-Befragungsexperiment verwendet, das 2024 in Deutschland mit einer Stichprobe von 2.600 Teilnehmenden aus der Allgemeinbevölkerung durchgeführt wurde. Die Ergebnisse deuten darauf hin, dass die Sichtbarkeit des CO2-Preises im Durchschnitt die intrinsische Motivation verstärkt im Vergleich zu einer Situation, in der die CO2-Bepreisung zwar vorhanden, aber weniger sichtbar ist. Dies verstärkt den Preiseffekt. In bestimmten Untergruppen schwächt diese Sichtbarkeit jedoch den Preiseffekt und führt aufgrund der Verdrängung der intrinsischen Motivation und moralischer Lizenzierung tendenziell sogar zu einem Anstieg der Nachfrage nach Kraftstoff. |
| Keywords: | carbon pricing, willingness to pay, demand for fuel, motivation crowding, moral licensing |
| JEL: | C93 D01 D12 D91 Q41 Q58 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:341634 |
| By: | Francesco Crespi; Nicolò Geri; Dario Guarascio; Enrico Marvasi |
| Abstract: | This paper investigates the relationship between technological capabilities, import dependency, and environmental policies, focusing on the lithium-ion battery supply chain, a critical sector for the net-zero transition. First, we develop an original analytical framework that integrates two recent streams of literature, one focusing on the acceleration of the green transition and the other on structural dependencies and technological sovereignty, to examine potential trade-offs between these objectives. Second, we develop a strategic intelligence analysis of the lithium-ion battery supply chain, allowing us to quantify import dependencies and technological capacity gaps at a highly granular product and technology level. Third, we examine how technological capabilities influence import dependency, showing under what conditions technological upgrading strengthens competitive positions and mitigates dependency. Finally, we analyse how environmental policy stringency relates to import dependency. Our findings suggest that technological upgrading can reduce dependencies without compromising environmental goals, so that the presumed trade-off between the net-zero transition and structural dependencies does not necessarily hold. In contrast, a well-designed policy mix, aligning environmental objectives with targeted innovation and industrial policies, can enhance both resilience and the acceleration towards the net-zero transition. |
| Keywords: | strategic dependencies, net-zero transition, lithium-ion batteries, import dependency, technological capabilities, environmental policy stringency |
| JEL: | F14 F18 O13 O33 Q55 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ter:wpaper:00199 |
| By: | Muamba, Malick |
| Abstract: | The article shows how post-rainfall aquatic waste from the Kalamu and Lukunga rivers can be transformed into green energy. Based on the blue economy and the Transformation Management Model, this approach reduces flooding, recovers waste and involves communities in sustainable sanitation. |
| Keywords: | blue economy, aquatic waste, green energy, Transformation Management Model (TMM), urban sanitation, energy recovery, urban flooding |
| JEL: | O13 Q25 Q42 Q53 Q56 Q57 |
| Date: | 2026–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128639 |
| By: | Felix Bierbrauer (University of Cologne); Mattias Polborn (Vanderbilt University); Marten Ritterrath (VATT Institute for Economic Research & University of Cologne); Georg Weizsäcker (Humboldt-Universität zu Berlin) |
| Abstract: | We study the political economy of carbon taxes when neoclassical consumers take all other agents' emissions as given and socially responsible consumers internalize damages in a group-rule-utilitarian way, taking neoclassical consumers' behavior as given. We characterize political equilibrium taxes with a focus on deviations from first-best Pigouvian taxation. Welfare falls further if arguments on moral obligations to reduce carbon footprints polarize the debate in society. Finally, we present survey evidence that supports our theory: social responsibility correlates with lower consumption of brown goods, higher preferred carbon taxes, and support for moral arguments. |
| Keywords: | Political economy of taxation, carbon taxes, ethical behavior, moral dissent |
| JEL: | C9 D11 D72 H23 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:419 |
| By: | Swati Dhingra; Stephen Machin |
| Abstract: | Reducing landfill use cuts greenhouse gas emissions and costs less |
| Keywords: | india, rct, waste, urban planning, urban pollution, recycling, climate change, climate change mitigration, emissions, |
| Date: | 2026–06–19 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:737 |
| By: | Betancourt, Alejandro (Universidad Pontificia Comillas); Romero, José C. (Universidad Pontificia Comillas); Budría, Santiago (Universidad Nebrija) |
| Abstract: | While a growing body of research has analysed the determinants of energy poverty, less is known about its dynamic nature and about whether current support schemes adequately reach households experiencing multidimensional vulnerability. Using the 2020-2023 longitudinal data from the Spanish component of the EU-SILC, the paper estimates the extent of energy poverty persistence in Spain and assesses the protective role of the Bono Social -Spain’s main public support scheme for vulnerable energy consumers. The paper also simulates the potential impact of alternative cash-equivalent energy support. The results show strong inertia effects: households experiencing energy poverty in the previous period are 1.9 to 6.4 percentage points more likely to experience it again. We also document important limitations in the coverage and take-up of the Bono Social. Counterfactual simulations indicate that a modest annual energy support transfer of € 500 per household can substantially reduce energy poverty, with reductions ranging from 1.8 to 17.3 percentage points. These findings highlight the need for more differentiated and better-targeted policy interventions. |
| Keywords: | energy poverty, persistence, dynamic panel models, Bono Social, policy counterfactuals |
| JEL: | Q48 I32 I38 C33 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18700 |
| By: | Raouf Boucekkine (Aix Marseille Univ, CNRS, AMSE, Marseille, France); Weihua Ruan (Purdue University [West Lafayette]); Benteng Zou (Université du Luxembourg = University of Luxembourg = Universität Luxemburg) |
| Abstract: | We study an n-country pollution linear-quadratic differential game in which countries differ in their sensitivity to environmental damages while contributing to a common pollution stock. Such heterogeneity implies that countries value environmental quality differently and disagree on the desirable long-run environmental outcome. Consistently with the rising literature on carbon dioxide removal (CDR), we also allow for (optimal) negative emissions. We characterize the unique linear Markov-perfect (MPE) equilibrium and compare it to a centralized benchmark that maximizes aggregate welfare. We show that the inefficient steady-state pollution level at the MPE depends systematically on the distribution of damage sensitivities: intriguingly, holding average damages constant, more evenly distributed damages lead to more long-run pollution. Optimal negative emissions arise when the distribution of damage sensitives is asymmetric enough. We next show, among others, that while polarized damages reduce equilibrium pollution, they do generate distributional tensions. We therefore suggest a mechanism combining Pigouvian taxation with lump-sum transfers that can found an International Environment Agreement redistributing gains and implementing the first-best allocation despite divergent incentives. |
| Keywords: | Differential games; Asymmetric players; International Envionmental agreements; Transboundary pollution |
| JEL: | C62 C71 F53 H23 Q53 |
| Date: | 2026–06–09 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2615 |
| By: | Michael Keller; Christopher R. Knittel; Benjamin Krebs; Simon Luechinger |
| Abstract: | We estimate the effect of PM₂.₅ pollution on migration between commuting zones in the United States from 2005-2019. To account for the correlation between origin and destination commuting zones’ pollution levels and potential endogeneity, we estimate a dyadic migration model and isolate permanent changes in origin and destination pollution emanating from distant coal-fired power plants. Annual panel and long-difference estimates indicate that air pollution plays a key role in relocation decisions. For the typical commuting zone, an isolated average 2005-2019 PM₂.₅ concentration decrease of 3.85 μg/m³ would avert out-migration and increase in-migration, totaling 2 percent of the population annually. |
| JEL: | Q53 R23 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35317 |
| By: | Silvian M. Radke; Philipp C. Verpoort; Falko Ueckerdt; Felix M\"usgens |
| Abstract: | Despite growing concerns over energy security, infrastructure planning and modelling for emerging green fuel supply chains often neglect risks from supply disruptions. Using a stochastic optimisation model of EU hydrogen imports, we show that 'naive' infrastructure planning results in welfare losses of 12 % (24 billion EUR) compared to risk-aware planning that anticipates supply disruptions. Despite requiring higher upfront investments, anticipatory planning achieves welfare levels close to those of an idealised system without disruptions, but entails a markedly different infrastructure configuration. Two complementary resilience strategies emerge: diversification across import corridors and strategic over-investment. This leads to increased intra-European transport capacity, a broader set of import pipelines, and investments in costly shipping terminals for hydrogen carriers. Our results show that incorporating supply risk considerations into infrastructure planning helps prevent the structural vulnerabilities seen in fossil fuel systems when designing future hydrogen supply chains. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.09190 |
| By: | Oleksandr Talavera (University of Birmingham); Haonan Tian (University of Birmingham); Liyun Zhang (University of Birmingham) |
| Abstract: | We examine whether ambient temperature affects Energy Performance Certificate (EPC) scores assigned by government-accredited assessors. Using over 17 million EPCs from England and Wales (2008–2025) linked with high-frequency weather and pollution data, we find that inspection-day temperature changes reported energy-efficiency scores. The effect is nonlinear and asymmetric: sub-zero days raise scores, with the largest increase below −5C, when scores are 1.36 points higher than on 10–15C days; warmer conditions generate smaller downward adjustments. The pattern is concentrated in assessments relying on less directly verified inputs and in settings where outdoor verification is more costly, pointing to a verification-effort mechanism. Temperature-related score movements also cluster near EPC rating thresholds, where small changes can alter assigned labels and imply £5, 220–7, 250 property-value shifts. Temporary environmental conditions can therefore enter durable certification records and affect green-label reliability in housing markets. |
| Keywords: | Temperature; Energy Performance Certificates; Green labels; Assessor discretion; Behavioural bias; Housing regulation |
| JEL: | D01 D91 K32 Q48 Q54 R31 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bir:birmec:26-01 |
| By: | Bertolotti, Fabio; Lanteri, Andrea; Yoon, Hyeonsik |
| Abstract: | We analyze optimal subsidies for the replacement of durable assets in a model with heterogeneous producers, endogenous capital-embodied innovation, and environmental externalities that depend on capital vintages. We characterize the constrained-efficient allocation assuming a planner chooses capital replacement subject to the equilibrium evolution of innovation. Optimal subsidies equal the sum of two terms: (i) the difference in present discounted value of damages associated with old vs. new capital and (ii) the social value of innovation induced by capital replacement, net of the associated markup distortion. We generalize this formula to the case of new technologies, such as electric vehicles. We calibrate the model using empirical evidence on several types of capital, including aircraft and vehicles, and simulate the optimal transition. Initially, optimal subsidies are steeply increasing in the age of the replaced asset. In the long run, they are determined by the trade-off between innovation and markups. |
| Keywords: | Optimal policy; Environmental externalities; Innovation |
| JEL: | O44 O33 Q55 E22 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21578 |
| By: | Behnaz Minooei Fard; Giovanni Di Bartolomeo; Willi Semmler |
| Abstract: | This study analyzes the dynamics of the global rare earth element (REE) market, with a focus on China's dominant role as the primary supplier, which is crucial for the energy transition and digitalization. Using a game-theoretic approach, the research examines a potential duopoly market structure that may emerge over time, as well as potential shifts in supply from China to other countries in this scenario. It considers China's low marginal costs and factors like resource extraction and discoveries. Additionally, the study examines the strategic market interactions, the role of technological advancements, and policy support in shaping market outcomes. The methodology incorporates the assumption that agents have limited foresight and use a learned value function to strategically assess outcomes based on their own and others' actions while accounting for environmental constraints. |
| Keywords: | Rare earth elements, Game theory, Duopoly, Known reserves dynamics, Policy support, Relative scarcity, NMPC, Reinforcement learning |
| JEL: | C61 C7 Q3 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ter:wpaper:00184 |
| By: | Hirose, Kosuke; Matsumura, Toshihiro |
| Abstract: | Motivated by the global trend toward carbon neutrality, this study investigates the relationship between emissions tax rates that achieve net-zero emissions and market competition. Specifically, we examine how the number of firms, the degree of payoff interdependence among firms, the mode of competition, and the level of product differentiation affect the carbon-neutral emissions tax. We find that, in a standard model formulation, the carbon-neutral emissions tax decreases as the number of firms increases (Proposition 1), whereas it increases as the degree of payoff interdependence weakens (Proposition 2). Proposition 1 (2) suggests that the carbon-neutral tax rate is lower (higher) when industry competition is more intense. However, upon further analysis, we conclude that stronger competition leads to higher carbon-neutral emissions tax rates. Specifically, when industry cost efficiency is independent of the number of firms, the carbon-neutral emissions tax increases with the number of firms (Proposition 3). This finding indicates that the number of firms might not always be a reliable measure of market competitiveness without appropriate adjustments. Additionally, we compare two competition modes, Bertrand and Cournot competition, and investigate the effect of product differentiation. We obtain similar results. Our findings suggest that carbon neutrality can be achieved with a lower emissions tax than that estimated under perfect competition, because most heavy-emissions industries are characterized by imperfect competition. |
| Keywords: | net-zero-emissions industries; overlapping ownership; emissions tax; competition measures; convex costs; heterogeneous emissions intensities; Cournot-Bertrand comparison |
| JEL: | L13 L51 Q52 |
| Date: | 2025–09–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129346 |
| By: | Dorothée Brécard (Université de Toulon, LEAD); Mireille Chiroleu-Assouline (Paris School of Economics, University of Paris 1 Panthéon-Sorbonne) |
| Abstract: | How do environmental information and awareness interact to improve environmental quality by changing consumer behavior and firm strategies? This article provides theoretical insights using an original differentiation model within a general framework whose specific cases have been studied previously. On the demand side, only informed consumers differentiate brown from green product quality, while uninformed consumers consider these perfect substitutes. Moreover, all informed consumers value the green product and devalue the brown product as a result of an aversion effect but are heterogeneous in their environmental awareness. On the supply side, two firms offer different environmental qualities and compete on price. We consider two types of environmental campaigns: one that increases the number of informed consumers and one that increases the environmental awareness of informed consumers. We show that these campaigns crucially determine three market configurations: segmented; fragmented, with a brown product that appeals to both uninformed consumers and a fraction of informed consumers; and covered. Assuming that the greenest consumer behavior is abstention, we find that both campaigns do not always lead to better environmental quality; that is, a situation in which all consumers are informed and some highly environmentally aware is not necessarily the greenest situation. Depending on the aversion effect, the budget of the campaign organizer, and the relative cost-effectiveness, information and awareness raising campaigns must be carefully combined to achieve the best possible environmental quality. |
| Keywords: | Information campaign, NGO campaign, Environmental awareness, Environmental quality, Vertical product differentiation |
| JEL: | D11 D62 D83 L15 Q58 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:fae:wpaper:2025.05 |
| By: | Stefano Carattini; Pamela Giustinelli; Marcella Veronesi; Pamela Giustinelli |
| Abstract: | Knowledge gaps and biased beliefs concerning both climate change and climate policy represent major obstacles to the decarbonization process. Climate education may offer a scalable solution to address such obstacles. In the context of a national reform of the school curriculum in Italy, we implemented a nationwide field experiment, training thousands of secondary school teachers across thousands of schools using a staggered design. Our intervention, a comprehensive course on climate change and climate policy, goes beyond the light-touch interventions typical in the literature. Using extensive survey data, we examine how training affects teachers' knowledge, beliefs, attitudes, behaviors, and policy preferences and, in turn, those of students. Our study highlights important initial knowledge gaps and biased beliefs about climate change among teachers and students, and provides evidence that climate education can address them at scale. Following our intervention, teachers and students also reconsider their support for climate policies. |
| Keywords: | climate change and policy, field experiment, biased beliefs, public support, climate education, secondary schools |
| JEL: | C93 D72 D83 Q54 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12720 |
| By: | Muamba Tshibangu, Malick |
| Abstract: | The article proposes an entrepreneurial model for collecting, sorting and converting plastics from the Congo River into energy. Adapted to local realities, it reduces pollution, protects ecosystems and creates economic opportunities for riparian communities within a circular economy approach. |
| Keywords: | Plastic waste, energy recovery, circular economy |
| JEL: | L26 O13 Q25 Q42 Q53 Q56 |
| Date: | 2026–01–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129692 |
| By: | Hilbrich, Sören; Berensmann, Kathrin |
| Abstract: | Financial markets still provide financing on a large scale for investments in environmentally harmful activities, while projects conducive to the green transformation are often not funded. Sustainable finance policies, such as new reporting requirements and standards for sustainable financial instruments, have so far mostly focused on creating transparency. However, transparency alone is insufficient to turn the financial sector from a driver of environmental crises into a lever for the green transformation. Many countries of the Global South face special challenges, including high interest rates, currency depreciation and limited opportunities to shape global policies (e.g. banking regulations and standards for sus-tainable financial instruments) in their interests. Aligning financial markets with sustainability objectives requires a comprehensive policy mix comprising policies that change incen-tives. These policies can include credit guidance instruments such as credit targets, green refinancing schemes and differentiated capital requirements, and tax policies such as differentiated capital gains taxes for green and non-green assets. International forums, such as the Network for Greening the Financial System (NGFS) and the Sustainable Banking and Finance Network (SBFN), remain valuable for mutual learning and for addressing cross-border effects of financial regulations. Policies to mobilise private resources should not be considered as a substitute for public investments or public steering, which are both crucial for the green transformation. |
| Keywords: | Green Finance, Sustainable Finance, Transparency, Credit Guidance, Central Banks, Financial Regulations |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:idospb:341382 |
| By: | Jean-Pierre Ponssard (CREST, Ecole Polytechnique); Quentin Hoarau (EconomiX, Université Paris-Nanterre) |
| Abstract: | This paper analyzes the adoption of Carbon Capture and Storage (CCS) in the cement industry, a hard-to-abate sector, by modeling firms' strategic choices of adoption timing as a continuous-time game under Cournot competition. The model considers a polluting technology whose cost increases over time due to the social cost of carbon, and a clean CCS technology involving a fixed sunk cost. We find that imperfect competition in the cement sector delays CCS adoption, with a Pareto-dominant Nash equilibrium corresponding to simultaneous adoption. We examine two types of public policies to correct this inefficiency: a subsidy on the fixed cost of CCS and a time-dependent subsidy on profit flows. While both instruments can lead to socially optimal adoption, the fixed-cost subsidy is easier to implement but more expensive. Our numerical application shows that, in the absence of policy intervention, CCS adoption is delayed by ten years relative to the social optimum. To achieve the optimal timing, the fixed-cost subsidy would need to cover about 70\% of the investment cost, while the time-dependent subsidy would be roughly three times less expensive. |
| Keywords: | cement, CCS, imperfect competition, innovation games, |
| JEL: | L13 O31 Q5 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:fae:wpaper:2025.08 |
| By: | Lesly CASSIN (BETA Université de Lorraine); Paolo MELINDI-GHIDI (AMSE); Fabien PRIEUR (CEE-M Université de Montpellier) |
| Abstract: | This article analyzes the impact of income inequality on environmental policy in the presence of green consumers. We first perform an empirical analysis using a panel of European countries over the period 1995-2021. The results show a negative relationship between inequality and public environmental expenditure, which is weaker with higher inequality. We also find a negative correlation between environmental expenditure and green consumption, that highlights the substitutable nature of the relationship between the two variables. We next develop a model with two main ingredients: citizens with different income capacities have access to two commodities that differ in terms of environmental impact, and they vote on the environmental policy. In equilibrium, the population is divided into two groups, conventional vs green consumers. An increase in inequality raises the marginal cost of policy through size and composition effects. The higher the equilibrium tax, the larger the overall effect. This provides us with an explanation of the main empirical result. |
| Keywords: | income distribution, , inequality, green consumption, environmental public expenditure, |
| JEL: | Q58 H23 D31 D72 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:fae:wpaper:2025.010 |
| By: | Amit Kumar (Indian Council for Research on International Economic Relations (ICRIER)) |
| Abstract: | This paper examines the geopolitical structures governing critical mineral markets and assesses how they shape India's exposure to supply disruptions, price volatility, and strategic competition using the Dependency Risk Index (DRI). By analysing where and how India sources key minerals, the study identifies a layered risk profile encompassing resource concentration, trade dependencies, and geopolitical leverage. The paper argues that informed, data-driven policy design, spanning overseas mineral partnerships, domestic recycling, substitution, and international cooperation, will be central to mitigating these risks. Decisions taken in the current decade will play a decisive role in determining India’s energy sovereignty, industrial competitiveness, and global positioning in the geopolitics of electrification by 2030 and beyond. |
| Keywords: | critical minerals, dependency risk index, mineral trade, critical mineral geopolitics, trade flows, icrier |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:65 |
| By: | Phoebe Koundouri (Dept. of International and European Economic Studies, Athens University of Economics and Business); Angelos Alamanos; Giannis Arampatzidis; Ebun Akinsete (ICRE8); Dimitris Raptis; Anna Triantafyllidou |
| Abstract: | Crises such as rapid population and demand growth, droughts, resource availability fluctuations, and supply-chain disruptions increasingly expose hidden fragilities in socio-technical systems. At the same time, they generate political momentum and practical urgency for institutional and governance innovation, as emergency measures often become prototypes for routine practice. This paper develops a national-scale, multi-sector water-energy-emissions (W-E-E) scenario model for Rwanda and uses it to test how demand growth, hydrological stress, and supply-side choices jointly shape future energy security and emissions trajectories through 2050. The analysis shows that, under SSP2 and especially SSP5 growth conditions, emissions remain strongly demand-driven; therefore, even ambitious demand-side and supply-side measures are best interpreted as pathways that moderate, rather than fully reverse, emissions growth. The contribution of the study is to identify which combinations of efficiency, electrification, renewable deployment, thermal retirement, and hydrological risk management most effectively reduce system stress and improve resilience under compound crises. |
| Keywords: | Water-energy-emissions nexus, Multi-crisis scenario analysis, LEAP, Hydropower, Energy system resilience, Droughts, Rwanda |
| Date: | 2026–06–09 |
| URL: | https://d.repec.org/n?u=RePEc:aue:wpaper:2618 |
| By: | Asa Watten; John Bistline; Geoffrey Blanford |
| Abstract: | We estimate that data centers caused average retail electricity rates to fall modestly in the United States from 2015 to 2024 using an instrumental variables approach. Despite prevailing sentiment, the finding is consistent with economic reasoning: existing large power system fixed costs, economies of scale in transmission and distribution, and declining unit costs for generation imply that durable demand growth lowers average prices. We find patterns of economies of scale for transmission, distribution, and generation costs as well as within and across retail customer classes. We caution that future supply constraints could reverse the effect. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.19777 |
| By: | Mahdi Fawaz (CEPN Ð USPN); Donatella Gatti (CEPN Ð USPN) |
| Abstract: | There is a growing consensus that policies such as carbon taxes are needed to improve environmental performance. We propose a theoretical framework and a model to examine how environmental concerns determine political support for carbon taxation and the incentives for the poor to revolt, replace the incumbent government, and achieve a fairer distribution of income. Our main result is that the incentive to revolt is an inverted U-shaped function of environmental performance. On the empirical side, we construct a normalized Social Unrest Index (SUI) based on riots and battles data from the ACLED database. Then, we analyze the determinants of SUI in a panel of 211 countries between 1997 and 2022 including a quadratic term of the EPI index (Yale University). We find an inverted U-shaped relationship that is robust in all the specifications tested. In autocratic regimes, as EPI rises from 30% to 40%, SUI predicted average almost doubles from 12.8% to 20.4%, while it falls at higher EPI levels. Our results have important policy implications. |
| Keywords: | Social Unrest, Environmental Performance, Carbon Tax, Redistribution, Democracy |
| JEL: | H23 O13 Q56 P18 P43 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:fae:wpaper:2025.07 |
| By: | Thomas Valade; Michael Benzaquen; Matthieu Cristelli; Stanislao Gualdi; Pierre Lenders |
| Abstract: | At the intersection of rising wealth inequality and intensifying environmental pressures, we investigate a reverse causal relationship that has received comparatively little attention: wealth inequality may not only be a consequence of environmental crises, but also act as a structural obstacle to the ecological transition itself. We develop a stylized agent-based model in which heterogeneous agents, whose initial wealth follows a Pareto distribution, allocate their income between either a Brown or a Green sector through a utility function. The function is designed to capture the trade-off between short-term returns and exposure to long-term systemic risks. A central ingredient is that wealthier agents perceive themselves as less vulnerable to environmental shocks, thereby reducing the amount of resources available for the transition. We show that, beyond inequality thresholds compatible with those observed in most developed countries, the economy remains locked in a Brown regime, even when a substantial share of agents is sensitive to externalities. We then assess a set of stylized fiscal policies (basic income, carbon taxation, Green incentives, and a combined scheme) and find that their effectiveness depends strongly on the inequality regime and on the regressivity embedded in the fiscal mechanism, revealing multidimensional trade-offs between transition speed, cumulative environmental destruction, growth, and fiscal pressure. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.14331 |
| By: | Ralf Martin; Maxwell Read; Arjun Shah; Anna Valero; Dennis Verhoeven |
| Abstract: | Spillovers from innovation can boost regional growth |
| Keywords: | Green Growth, UK Economy |
| Date: | 2026–06–19 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:734 |
| By: | Saakstra, Sake |
| Abstract: | Clean-technology investment under policy-regime transition exhibits a structure that the canonical real-options framework characterises only partially. We develop a dynamic-investment model in which an irreversible project decision is taken sequentially across four lifecycle stages (front-end design, final investment decision, construction, operations) under two sources of stochastic variation: the payoff-determining state variable (e.g. carbon price, technology cost) and the policy-regime credibility belief that determines whether the policy environment will persist over the investment horizon. The optimal cancellation policy is characterised by stage-dependent thresholds that respond to five comparative-statics channels: the expected-return channel, the uncertainty channel, the timing/option-value channel, the coordination channel, and the implementation-cost channel. The policy-credibility extension delivers a formal proposition that the optimal threshold is monotonically decreasing in policy-credibility belief whenever the policy-conditional payoff exceeds the regime-reversal baseline. The framework's primary contribution is methodological discipline: each of the five channels is matched to a pre-registered falsifiability criterion that specifies, in advance of empirical testing, both the observable implication and the numerical threshold at which the channel hypothesis would be rejected. This disciplinary structure addresses a long-standing concern in mechanism-based empirical research that mechanisms can be formulated ex-post to rationalise observed patterns. Eighteen mechanism predictions are catalogued, of which fourteen would be classified as confirmed, two as partial, and two as falsified against existing empirical evidence from related clean-hydrogen investment research. The two falsifications - the EU Innovation Fund capex-grant null and the EU Carbon Border Adjustment Mechanism transitional-phase null - are themselves substantive contributions to the literature on policy-design effectiveness, identifying which frictions are binding in the contemporary capital-abundant clean-technology environment. The framework is sector-agnostic and applies to any clean-technology investment context with sufficient sample size, regime-transition observation, and project-level data on cancellation events. The implications for the design of clean-technology policy portfolios are explicit: multi-friction-addressing instruments dominate single-friction high-magnitude instruments; credibility-anchoring instruments substitute for direct payoff transfers; and capex-grant instruments without offtake-commitment requirements are predicted to fail under the prevailing contemporary environment. |
| Keywords: | real options, irreversible investment, policy uncertainty, transition risk, mechanism design, clean technology, pre-registered falsifiability, comparative statics |
| JEL: | D81 D89 G31 Q42 Q48 Q49 |
| Date: | 2028–05–28 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129310 |
| By: | Issa SANOU (Université Paris-Panthéon-Assas) |
| Abstract: | This paper presents a new perspective on environmental tax reform. Assuming that households prefer clean goods over dirty ones, we demonstrate that implementing taxes on dirty goods alongside subsidies for clean goods can lead to an increase in employment. This rise in employment is driven by enhanced purchasing power resulting from a greater decline in prices compared to wages, motivating households to work more. As for the environmental dividend, consumption of polluting goods tends to decrease. However, an unintended feedback effect emerges due to the increased purchasing power resulting from the positive impact of subsidies on employment and the consumption of non-polluting goods. If the two types of goods are not perfect substitutes, this rise in purchasing power can lead to greater consumption of polluting goods, thereby limiting improvements in environmental quality. Hence, while subsidy policies can be more acceptable due to the employment benefit, their efficiency is still questionable. |
| Keywords: | Environmental tax, Subsidy, Clean goods, Dirty goods, Employment |
| JEL: | D62 D63 H23 Q52 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:fae:wpaper:2026.04 |
| By: | Gern, Klaus-Jürgen; Kooths, Stefan; Krohn, Johanna; Liu, Wan-hsin; Reents, Jan |
| Abstract: | In the spring of 2026, global growth slowed amid rising energy prices and heightened geopolitical risks, . While production in the Persian Gulf countries has slumped, the economy remained firmly on an upward trajectory in most other countries. In the United States in particular, the economy is expected to continue expanding at a largely unchanged pace. Positive momentum continues to come from the boom in AI technology, which is providing strong impetus for trade and investment. Currently, financial markets appear to continue expecting that oil and gas production and transportation in the Gulf region will soon return to normal levels. In this scenario, which is also underlying our forecast, the consequences for the global economy will remain limited, the rise in inflation temporary, and the monetary policy response moderate. However, as the conflict has now lasted significantly longer than expected in March, we have reduced our forecast for global output growth-measured in terms of purchasing power parity-for this year from 3.1 percent to 2.8 percent. For the coming year, a rebound to 3.3 percent is then expected (March forecast: 3.2 percent). The main risk to this forecast is a prolonged closure of the Strait of Hormuz meaning that oil supplies remain at their current sharply reduced levels for a significantly longer period of time, which would lead to a much more severe and prolonged slowdown in the global economy. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkeo:341657 |
| By: | Park, Eunseong; Rausch, Sebastian; Karplus, Valerie J. |
| Abstract: | CO2-Grenzausgleichsmaßnahmen (Border Carbon Adjustments, BCAs) werden zu einem zentralen Instrument der klimaorientierten Handelspolitik, um Carbon Leakage zu begrenzen und zugleich die heimische Industrie zu schützen. Ihre Wirkung hängt jedoch grundlegend vom Design ab. Dieser policy brief vergleicht mengenbasierte BCAs wie den CO2-Grenzausgleichsmechanismus der EU (EU-CBAM), die die gesamten im Produkt enthaltenen Emissionen bepreisen, mit benchmarkbasierten Vorschlägen, die nur Emissionen oberhalb eines Intensitätsbenchmarks bepreisen. Auf Basis neuer Forschung zur globalen Stahlindustrie zeigen wir, dass ein benchmarkbasiertes BCA eine Emissionsabgabe mit einer impliziten Outputsubvention verbindet. Das schwächt das CO2-Preissignal, fördert die Umlenkung saubererer Produktion in regulierte Märkte und kann über unterbepreiste Vorprodukte wie Roheisen vertikale Emissionsverlagerung auslösen. In einem EU-ähnlichen Umfeld mit inländischer CO2-Bepreisung übermittelt das benchmarkbasierte Design nur 36 Prozent des mengenbasierten Grenzpreises, der dieselbe globale Emissionsminderung erzielen würde. In einem US-ähnlichen Umfeld ohne inländischen Preisanker wirkt es weniger als Klimainstrument denn als Industrietarif, der Knappheitsrenten zugunsten inländischer nachgelagerter Industrien verschiebt. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewpbs:341661 |
| By: | Joseph Nyangon |
| Abstract: | The global push for electric vehicles (EVs) has sharply increased demand for critical minerals such as cobalt and lithium, creating a tension between rapid industrial growth and long-term sustainability. Extraction is concentrated in a few regions -- notably the Democratic Republic of Congo (DRC), Chile, and Argentina -- where it has produced serious socio-environmental harms, including ecosystem degradation, labour exploitation, and the displacement of Indigenous communities. In the DRC, cobalt mining is frequently linked to child labour and hazardous working conditions; in Chile, lithium extraction intensifies water scarcity and threatens local agriculture and biodiversity. Policy instruments such as the U.S. Inflation Reduction Act (IRA) seek to promote ethical sourcing, but an extraction-driven model continues to deepen global inequalities. This chapter examines the contested temporalities of the transition, in which the short-term economic incentives of extraction conflict with longer-term environmental and social goals. It argues for a place-based framework built on community-centred governance, sustainable mining practices, and circular-economy strategies, including recycling and material substitution, to align resource security with equity and ensure that the shift to EVs does not reproduce the injustices it aims to address. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.24356 |
| By: | Ansar, Muhammad Uzair |
| Abstract: | This research covers Qatar's LNG-driven export economy from 2010 to 2025, with a scenario analysis for a supply shock in 2026. The dataset draws on GDP figures from the World Bank national accounts¹, total export values from World Bank trade indicators², LNG production volumes from the Energy Institute Statistical Review³, and LNG price series from Macrotrends Asia LNG (JKM) data⁴. The full compiled dataset is in Appendix A. The defining pattern across the sixteen years is a stark contrast: LNG export volumes were broadly stable — rising gradually from around 2, 746 MMBtu million in 2010 to roughly 3, 700–3, 900 MMBtu million by the mid2010s and holding there — while revenues swung from $16.42 billion in 2020 to $129.88 billion in 2022. The LNG Export-to-GDP ratio mirrored this: up from 20.77% in 2010 to 55.03% in 2022, then back to ~20% by 2024–2025 — tracking the global LNG price cycle almost exactly. At its peak, more than half of Qatar's entire GDP was effectively attributable to a single commodity whose price it does not control. The 2026 attack on Ras Laffan introduces a different kind of problem. A 17% capacity reduction means annual LNG revenue losses of around $20 billion — not because prices have fallen, but because the infrastructure to produce and liquefy the gas is no longer fully operational. The LNG/GDP ratio will remain suppressed until capacity is rebuilt, which could take three to five years. |
| Keywords: | Qatar LNG |
| JEL: | E23 E27 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129324 |
| By: | George Kapetanios; Steven Ongena; Alexia Ventouri; Huiyan Xiao |
| Abstract: | This paper examines how firm-level determinants of industrial emissions evolve over time as firms adapt to environmental regulation, economic conditions, and organisational constraints. Using a panel of 204 U.S. industrial facilities observed from 1992 to 2023, we link facility-level emissions from the Toxics Release Inventory to firm financial characteristics, managerial attributes, local labour-market conditions, and aggregate macroeconomic indicators. We employ a time-varying mean-group estimator that allows average relationships to change smoothly over time while accommodating persistent heterogeneity across facilities. We find several covariates display episodic associations with emissions growth. The results reveal pronounced stage-like dynamics in emissions determinants, with firm-level characteristics and aggregate conditions dominating in different periods. From an innovation-policy perspective, the findings highlight that firms' responses to environmental regulation are time-dependent and shaped by their adaptive capacity. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.22994 |
| By: | Sumner, Andrew; Klingebiel, Stephan |
| Abstract: | The 2026 US-Israel-Iran war and the closure of the Strait of Hormuz have triggered one of the largest oil supply disruptions in modern history. Brent crude prices rose sharply, producing a major external shock for oil-importing developing economies at a moment when the international development system was already under severe strain. Petrochemical products shipped through the strait are also vital for agriculture, medicine and industry. The largest contraction on record of official development assistance (ODA) had already been recorded in 2025, while geopolitical tensions and rising defence expenditures are reshaping ODA spending priorities and development policy directions. This brief examines how the oil shock will impact development cooperation. The significance of the oil shock lies not only in the price increase itself but also in its timing, and it arrives amid an ongoing reconfiguration of development cooperation. The analysis is organised around two postulates that underpin the post-Cold War development architecture. The first is the existence of states in the Global South with sufficient authority and developmental aspirations and capacity to pursue broad-based development goals. The second is the existence of donor countries willing and able to support those states' aspirations. The oil shock weakens both postulates through different mechanisms. For many oil-importing developing countries, rising fuel, food and transport costs intensify fiscal stress, debt vulnerabilities and pressures on state capacity. Fragile states without strategic importance are especially exposed. At the same time, donor countries face mounting pressures from fiscal tightening, defence spending, domestic cost-of-living politics and growing scepticism towards multilateralism. These dynamics risk reinforcing one another in the sense that weakening state capacity can intensify instability, while rising instability may further reduce political support for development co-operation in donor countries. The brief argues that alternative financing sources such as Gulf finance, South-South cooperation and climate finance are unlikely to compensate for the scale of OECD donors' retrenchment. The likely result is a more fragmented, transactional and geographically selective development cooperation system, in which the countries most in need are increasingly among the least likely to receive sustained support unless they hold geopolitical importance. Three policy implications follow from the war. First, the multilateral development financing architecture requires urgent bolstering. Instruments such as the World Bank's International Development Association and the IMF's Poverty Reduction and Growth Trust face growing pressure precisely as low-income countries (LICs) confront simultaneous food, fuel, debt and financing shocks. Second, the increasing concentration of concessional finance to strategically prioritised states should not be treated as inevitable. Fragile states risk declining concessional finance and multilateral reach despite acute humanitarian need. Third, European donors must decide whether development cooperation remains anchored in poverty reduction or becomes subordinated to defence, migration and geopolitical priorities. |
| Keywords: | Development cooperation, development policy, official development assisstance (ODA), oil shock, Fragile states, Debt distress, Geopolitical fragmentation, Multilateralism, Concessional finance, Strait of Hormuz |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:idospb:341384 |
| By: | Valérie Mignon; Carl Grekou; Emmanuel Hache |
| Abstract: | This paper investigates the historical determinants of real mineral commodity prices using a structurally identified vector autoregression (SVAR) with incomplete identification. Drawing on a large sample of mineral commodities covering more than a century of data, we identify supply, aggregate demand, and metal-specific demand shocks using economically motivated prior distributions. Historical decompositions show that price fluctuations are predominantly driven by demand-side forces, with metal-specific demand shocks accounting for the largest share of variation. Aggregate demand shocks also play an important role, particularly during periods of global instability, while the contribution of supply shocks is more limited and tends to decline over time. Elasticity estimates indicate that prices respond more strongly and more persistently to demand shocks than to supply shocks, whereas supply responses remain weak in the short run. We also document substantial heterogeneity across mineral commodities and over time, reflecting differences in adjustment mechanisms across markets. Overall, our findings highlight the central role of demand in mineral commodity price formation and provide little support for the view that increasing scarcity has been the dominant force shaping observed price dynamics over the period considered. Instead, fluctuations in mineral commodity prices appear to be primarily driven by demand-side factors rather than by tightening supply conditions. |
| Keywords: | Mineral commodities; Commodity price dynamics; Resource scarcity; Structural VAR; Historical decomposition |
| JEL: | Q31 Q32 C32 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2026-12 |
| By: | Li, Aurora |
| Abstract: | Welche Folgen haben Leitzinserhöhungen der EZB auf Energieinvestitionen in Deutschland? Um diese Frage zu beantworten, schauen wir auf verschiedene geldpolitische Szenarien und analysieren deren Auswirkungen auf die Finanzierungskosten für erneuerbare Energien und Stromnetze. Im Gegensatz zu vielen Vorgängerstudien berücksichtigen wir dabei auch die Förder- und Regulierungssysteme Deutschlands. Unsere Analyse zeigt, dass restriktive Geldpolitik den Ausbau erneuerbarer Energien verteuert. Unter dem Förderregime des Erneuerbare-Energien-Gesetzes können diese Kosten aber zulasten des Bundeshaushalts kompensiert werden - so steigen potenziell die Förderkosten um bis zu 2, 1 Milliarden Euro pro Kohorte über die gesamte Laufzeit. Auch beim Stromnetz können höhere Leitzinsen durch die Netzregulierung abgefedert werden. Allerdings tragen hier die Endkund:innen die Mehrkosten. Sprich: Die Strompreise steigen. Friktionen in den Fördersystemen und in der Regulation können zusätzlich dazu führen, dass Investitionen ausbleiben. Um sowohl fiskalische Sicherheit als auch stabile Verbraucherpreise zu gewährleisten, regen wir eine engere Koordination zwischen Geld- und Fiskalpolitik an. |
| Keywords: | Geldpolitik, Energieinvestitionen, Förderregime, Fiskalpolitik |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:dzimps:341177 |
| By: | Schröten, Johannes; Steitz, Janek; Inan, Mediha; Digulla, Frederik; Wauer, Niels; Ostermayer, Max; Illenseer, Niklas |
| Abstract: | Deutschlands knapp 900 Energieversorgungsunternehmen (EVU) müssen 647 Milliarden Euro in Strom- und Wärmenetze investieren. Dafür fehlen bis zu 68 Milliarden Euro an Eigenkapital. Nach Ausschöpfung bestehender Spielräume verbleiben rund 13 Milliarden Euro, vor allem bei kommunalen Stadtwerken. Ohne diese Mittel reicht die Bonität vieler EVU nicht aus, um genügend Fremdkapital für die Finanzierung der Netzinvestitionen aufzunehmen - eine Gefahr für Energiewende und Wirtschaftsstandort. Die Lösung liegt in hybridem Kapital: nachrangige und staatlich abgesicherte Kredite können die Bonität der EVU stärken, ohne die angespannten öffentlichen Haushalte zu belasten. Einzelne Vorreiter wie Hannover und Hessen zeigen, dass es funktioniert. Was fehlt, ist ein einheitlicher Rahmen. Diese Studie liefert die Blaupause für einen "Deutschland-Standard": Kommunen stellen über Konzernkredite wirtschaftliches Eigenkapital bereit. Länder erweitern die Investitionsmöglichkeiten von Kommunen und unterstützen mit eigenen Programmen. Der Bund setzt mit Kredit- und Absicherungsprogrammen unter dem Dach des Deutschlandfonds einheitliche Standards und mobilisiert privates Kapital über einen Private-Investor-Pool. |
| Keywords: | Deutschlandfonds, Eigenkapitallücke, Energieversorgungsunternehmen |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:dzimps:341203 |