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on Regulation |
| By: | Thure Traber |
| Abstract: | The reduced attractiveness of investments in reliable power plants under conditions of liberalized markets and the transition towards renewable energies has brought a discussion on capacity policies to Europe. We use a partial equilibrium model to compare important effects of three basic policies. A strategic reserve policy and a capacity market policy with administratively set capacity targets, and the obligation of generators to hold certificates of reliable capacities in relation to their supply. We find important differences of policies for consumers and producers that are depending on existing power plant structure and the elasticity of demand particularly in the medium term perspective until the year 2023. In the longer term until 2033 the results differ less pronounced. However, for the German case we demonstrate the potential to effectively reduce the burden on the economy to achieve a prescribed target through the implementation of a capacity certificate system. |
| Keywords: | Electricity market; capacity mechanism; investment model |
| JEL: | C63 D61 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1385&r=reg |
| By: | Daniel Huppmann; Jonas Egerer |
| Abstract: | The transformation of the European energy system requires substantial investment in transmission capacity to facilitate cross-border trade and to efficiently integrate renewable energy sources. However, network planning in the EU is still mainly a national prerogative. In contrast to other studies aiming to identify the pan-European (continental) welfare-optimal transmission expansion, we investigate the impact of national regulators deciding on network investment strategically, with the aim of maximizing consumer surplus and generator profits in their jurisdiction. This reflects the inadequacy of current mechanisms to compensate for welfare re-allocations across national boundaries arising from network upgrades. We propose a three-stage equilibrium model to describe the Nash game between zonal planners (i.e., national governments, regulators, or system operators), each taking into account the impact of network expansion on the electricity spot market and the resulting welfare effects on the constituents within her jurisdiction. Using a four-node sample network, we identify several Nash equilibria of the game between the zonal planners, and illustrate the failure to reach the first-best welfare expansion in the absence of an effective compensation mechanism. |
| Keywords: | Electricity transmission, network expansion, Generalized Nash equilibrium (GNE), mixed-integer equilibrium problem under equilibrium constraints (MI-EPEC) |
| JEL: | L51 C61 C72 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1379&r=reg |
| By: | Bjørndal, Endre (Dept. of Business and Management Science, Norwegian School of Economics); Bjørndal, Mette (Dept. of Business and Management Science, Norwegian School of Economics); Gribkovskaia, Victoria (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | Presently in the Nordic day-ahead market, zonal pricing or market splitting is used for relieving congestion between a predetermined set of price areas. Constraints internal to the price areas are resolved by counter trading or redispatching in the regulation market. In a model of the Nordic electricity market we consider an hourly case from winter 2010 and present analyses of the effects of different congestion management methods on prices, quantities, surpluses and network utilization. We also study the effects of two different ways of taking into account security constraints. |
| Keywords: | Congestion management; Zonal pricing; Dayahead market simulation |
| JEL: | Q00 |
| Date: | 2014–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2014_030&r=reg |
| By: | Curtis, John; di Cosmo, Valeria; Deane, Paul |
| Keywords: | Climate policy/electricity/Interconnection/Ireland/Policy |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb2014/1/7&r=reg |
| By: | Patrice Bougette (University of Nice Sophia Antipolis, France; GREDEG CNRS); Christophe Charlier (University of Nice Sophia Antipolis, France; GREDEG CNRS) |
| Abstract: | Faced with the energy transition imperative, governments have to decide about public policy to promote renewable electrical energy production and to protect domestic power generation equipment industries. For example, the Canada - Renewable energy dispute is over Feed-in tariff (FIT) programs in Ontario that have a local content requirement (LCR). The EU and Japan claimed that FIT programs constitute subsidies that go against the SCM Agreement, and that the LCR is incompatible with the non-discrimination principle of the World Trade Organization (WTO). This paper investigates this issue using an international quality differentiated duopoly model in which power generation equipment producers compete on price. FIT programs including those with a LCR are compared for their impacts on trade, profits, amount of renewable electricity produced, and welfare. When 'quantities' are taken into account, the results confirm discrimination. However, introducing a difference in the quality of the power generation equipment produced on both sides of the border provides more mitigated results. Finally, the results enable discussion of the question of whether environmental protection can be put forward as a reason for subsidizing renewable energy producers in light of the SCM Agreement. |
| Keywords: | Feed-in tariffs, Subsidies, Local content requirement, Industrial policy, Canada - Renewable energy dispute, Trade policy |
| JEL: | F18 L52 Q42 Q48 Q56 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2014-20&r=reg |
| By: | di Cosmo, Valeria; Lyons, Seán; Nolan, Anne |
| Keywords: | electricity |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb2014/2/2&r=reg |
| By: | Durmaz, Tunc (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | I consider an economy with fossil fuel and renewable energy and energy storage, and search for the conditions that lead to welfare improvements when energy is stored. I then solve for the optimal decision rule and analyze the long-run tendencies of the economy-energy variables. The findings are threefold. First, energy storage is fostered by the convexity of the marginal utility (prudence), the marginal cost function for fossil fuel energy, and the degree of intermittency. Second, considering a low penetration of renewable energy to the power grid, energy storage is not welfare improving if the fossil fuel energy cost function is linear. Third, energy storage creates an added value to renewable energy investments when actively used. By showing the in uence that energy storage can have on energy generation and investment decisions, I hope that the current work can be in uential in a more generous treatment of energy supply in future energy-economy-climate models. |
| Keywords: | Energy storage; Fossil fuel energy; Renewable energy; Precautionary savings; Collocation method; Monte Carlo simulations. |
| JEL: | C61 C63 G31 Q21 Q41 Q42 |
| Date: | 2014–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2014_018&r=reg |
| By: | di Cosmo, Valeria; Malaguzzi Valeri, Laura |
| Keywords: | wind generation |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb2014/2/1&r=reg |
| By: | Matthew Tisdale; Thilo Grau; Karsten Neuhoff |
| Abstract: | The 2014 reform of the German Renewable Energy Act introduces a mandatory shift from a fixed feed-in tariff to a floating premium system. This is envisaged to create additional incentives for project developers, but also impacts revenues and costs for new investments in wind generation. Thus uncertainties for example about balancing costs and the impact of the location specific generation profile on the average price received by a wind project are allocated to renewable projects. We first estimate the magnitude of the impacts on wind projects based on historic and cross-country comparison. We then apply a cash-flow model for project finance to illustrate to what extent the impact of the uncertainty for project investors reduces the scale of debt that can be accessed by projects and thus increases financing costs. |
| Keywords: | Feed in tariff, financing renewables, project finance |
| JEL: | G32 L51 L94 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1387&r=reg |
| By: | Louis-Gaëtan Giraudet (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech); D. Finon (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech) |
| Abstract: | White certificate obligations impose energy savings targets on energy companies and allow them to trade energy savings certificates. They can be seen as a means of internalizing energy-use externalities and addressing energy efficiency market failures. This paper reviews existing evaluations of experiences with white certificate obligations in Great Britain, Italy and France. Ex ante microeconomic analysis find that the obligation is best modelled as a hybrid subsidy-tax instrument, whereby energy companies subsidize energy efficiency and pass-through the subsidy cost onto energy prices. Ex post static efficiency assessments find largely positive benefit-cost balances, with national differences reflecting heterogeneity in technical potentials. Compliance involved little trading between obligated parties. Whether the cost borne by obligated parties was recovered through increased energy revenue could not be ascertained. Ex post dynamic efficiency assessments find that in addition to addressing liquidity constraints through subsidies, white certificate obligations seem to have addressed informational and organisational market failures. Confidence in these conclusions is limited by the fact that no econometric analysis was performed. Yet the lack of publicly available data, a counterpart to the rationale of the instrument of harnessing private financing, makes any empirical evaluation of white certificate obligations challenging. |
| Keywords: | White certificate obligation, energy savings, energy efficiency gap, static efficiency, dynamic efficiency |
| Date: | 2014–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01016110&r=reg |
| By: | Lauriane Mouysset (ECO-PUB - Economie Publique - Institut national de la recherche agronomique (INRA) : UMR0210 - Institut National Agronomique Paris-Grignon) |
| Abstract: | The future of agriculture constitutes a major challenge to the achievement of sustainable development. There are new perspectives on greening(focusing on ecological objectives) and sustainability (combining both ecological and social goals). Academic papers rather study the ecological efficiency of agricultural public policies, while real public policies, such as in the European Common Agricultural Policy, examine both ecological and social considerations. The objective of this paper is to consider economic, social and ecological objectives within the design of agricultural public policies. Using a bio-economic model applied to France, we compare different optimal public strategies. We show that, when the biodiversity objectives are either very limited or very demanding, grassland subsidies are the best instruments from both green and sustainable points of view. However for medium objectives, reducing crops subsidies is the cheapest way to green the CAP, while subsidies on grasslands are the only strategy from a sustainability perspective. Our work highlights new trade-offs related to policy implementation, such as social acceptance or technical difficulties, and the spatial equity of performance among regions. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01011669&r=reg |
| By: | Nabila Arfaoui (University of Nice Sophia Antipolis, France; GREDEG CNRS) |
| Abstract: | Numerous theoretical and empirical studies show a positive correlation between eco-innovation and environmental regulation. However, very few analyses explain how environmental policies drive eco-innovation. This paper tries to fill this gap by studying eco-innovation-friendly mechanisms in the way the European REACH (Registration, Evaluation, Authorization and restriction of Chemicals) regulation has been designed. The aim of REACH, which entered into force in 2007 is "to ensure a high level of protection of human health and the environment while improving competitiveness and innovation", which makes it an appropriate subject for analysis of the relation between regulation and eco-innovation. The study uses data from a unique original survey, which identifies innovation-friendly mechanisms in relation with the push/pull effect of regulation on environmental innovations. Our results show that extended responsibility of producers has a positive impact to "pull demand" toward environmental innovation. Moreover the obligation to exchange information along the supply chain and the process of authorization play an important role to “push” environmental innovation. |
| Keywords: | Eco-innovation, REACH, Regulatory Push/Pull effect, Econometric modeling |
| JEL: | Q55 Q58 C51 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2014-19&r=reg |
| By: | Brockwell, Erik (Umeå University) |
| Abstract: | This article aims to examine how sin taxation changes long-term consumer behavior regarding commodities which are deemed harmful for both health and the environment. These include tobacco, alcoholic beverages, sugar and confectionary, household energy, and motor fuel. Specifically, we examine the signaling effect from taxation which is seen if a tax increase leads to a significantly larger change in consumption than a producer price change. The empirical analysis is conducted by a US panel data study, during the period 1988-2012 for the four US census regions, using the Almost Ideal Demand System (AIDS). We find the main result to be that the signaling effect from taxation is significant for tobacco (at the 10% significance level) as well as for electricity and motor fuel (at the 5% significance level). |
| Keywords: | taxation; signaling; public policy; regulation; legislation; almost ideal demand system; panel data |
| JEL: | C23 D12 H23 I18 |
| Date: | 2014–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2014_004&r=reg |
| By: | Ognedal, Tone (Dept. of Economics, University of Oslo) |
| Abstract: | There is a growing interest in morale as a potential substitute for sanctions, encouraged by exerimental evidence that people's morale affect their economic decisions. I show that while morale may be a substitute for sanctions for each citizen, it is not a substitute in the market. In a model where employed and self-employed differ in their opportunities for tax evasion, I demonstrate that a higher fraction of tax compliant citizens may reduce social surplus and tax revenues. In contrast to sanctions, morale usually differ between individuals and this distorts the ranking of costs among sellers and willingness to pay among consumer. Tax evading sellers crowd out tax compliant sellers with higher productivity. Tax evading buyers crowd out tax compliant buyers with higher willingness to pay. As a result, improved tax morale may lead to less efficient production and exchange. Experiments show how sanctions crowd out morale in some settings. My paper points to the opposite problem in markets: Low sanctions may crowd out morale. While the paper explores the effects of tax morale only, the results apply to a wide range of areas where morale matters for peoples choices in he market, such as environmental and safety regulation. |
| Keywords: | Tax morale; Tax evasion; Norms; Sanctions |
| JEL: | D01 H26 K42 |
| Date: | 2014–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2014_004&r=reg |
| By: | Afful, Efua Amoonua |
| Abstract: | This paper estimates the Non-Accelerating Inflation Rate of Unemployment (NAIRU) for 15 OECD economies from 1990 to 2012 using an iterative Phillips curve process and tests the relationship between strictness of employment protection and the NAIRU. A possible negative externality of employment protection legislation is a higher level of structural unemployment. Using Prais-winsten estimation correcting for panel-level heteroscedasticity a panel-specific first-order autoregressive process, results indicate that there is no relationship between strictness of protection for individual and collective dismissals for regular contracts and the NAIRU. The effect of strictness of employment protection for regular contracts is sensitive to model specification; the coefficient loses its significance when full controls are used in estimation. An implication is that deregulation is not a necessary policy tool in addressing the problem of structural unemployment. |
| Keywords: | NAIRU, natural rate, structural unemployment, employment protection legislation |
| JEL: | E24 J48 K31 |
| Date: | 2014–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56875&r=reg |
| By: | Anita Kottwitz; Anja Oppermann; C. Katharina Spieß |
| Abstract: | While the health benefits of breastfeeding for both mothers and children are well known, breastfeeding may make it difficult for mothers to return early to the labor market. Maternity and parental leave regulations have been designed to reduce this conflict. In 2007, Germany put into effect a new parental leave benefit (Elterngeld). The related reform increased the number of parents eligible for benefits and changed the amount and duration of the benefits. The reform sought to decrease the pressure to return to the labor market soon after childbirth, especially for those parents who did not benefit under the old system. The current paper investigates whether this reform of parental leave impacted breastfeeding initiation and duration in Germany. We draw on representative survey data from the German Socio-Economic Panel Study (SOEP) from 2002 through 2012. Three breastfeeding measures are exploited 1) breastfeeding at birth or no breastfeeding initiation; 2) breastfeeding for at least four months; and 3) breastfeeding for at least six months. We find no effect of the Elterngeld reform on breastfeeding initiation or breastfeeding for at least six months, but do find an effect on breastfeeding for at least four months. Applying a difference-in-difference approach, it is shown that mothers who were not affected by the reform did not change their breastfeeding behavior. Breastfeeding duration increased among mothers who benefited from the reform. The results were robust over various sensitivity tests including placebo regressions and controlling for regional indicators, among others. Thus, our empirical results provide evidence that the reform's goal of allowing parents to spend more time with their children during the first year of life also impacted breastfeeding behavior. |
| Keywords: | Breastfeeding, parental leave, reform effects, Germany |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp670&r=reg |