nep-reg New Economics Papers
on Regulation
Issue of 2015‒03‒27
seven papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Cost-effectiveness as Energy Policy Mechanisms: The Paradox of Technology-neutral and Technology-specific Policies in the Short and Long Term By Paulo Henrique de Mello Santana
  2. A risk perspective on market integration and the reform of support of renewables in Germany By Pahle, Michael; Schweizerhof, Henriette
  3. The Burden of Germany’s Energy Transition – An Empirical Analysis of Distributional Effects By Manuel Frondel; Stephan Sommer; Colin Vance
  4. Local Employment Impact from Competing Energy Sources: Shale Gas Versus Wind Generation in Texas By Peter R Hartley; Kenneth B Medlock III; Ted Temzelides; Xinya Zhang
  5. Market Share Analysis of Mobile Operators in Turkey By Hulisi Öğüt; Asunur Cezar; Merve Guven
  6. Renewable Energy Sources and their Reflection on Regional Economic Growth in the Czech republic By Vukica Janković; Helena Mitwallyova
  7. Evaluation of bonus-malus systems for reducing car fleet CO2 emissions in Sweden By Habibi, Shiva; Beser Hugosson, Muriel; Sundbergh , Pia; Algers, Staffan

  1. By: Paulo Henrique de Mello Santana (Universidade Federal do ABC and Regional Research Institute, West Virginia University)
    Abstract: When choosing policy mechanisms to design and deploy energy policies, policymakers typically seek cost-effective ones, linking cost effectiveness to the lowest cost of support for RES-E generation and/or consumer costs. The objectives of this paper are to analyze the cost-effectiveness of renewable portfolio standards (RPS), feed-in tariffs (FIT) and auctions in the short and long term, considering both technology-neutral and technology-specific approaches. Results show that RPS and auctions are more cost-effective than feed-in tariffs (FIT) in the short term if cost-effectiveness is defined as minimizing consumer costs. Also, if one or more emerging technologies with higher levelized life cycle costs (LCC), low cumulative production and high experience elasticity are considered in the pool of RES-E policy design, a technology-neutral approach in the short-term could lock out these emerging technologies, avoiding a long term LCC reduction. In this case, a technology-specific policy used in the short-term would reflect lower total generation policy costs in the long term if compared with a technology-neutral policy in both short and long term. This paper calls this phenomenon the paradox of technology-neutral and technology-specific policies in the long term. Considering the results, this paper suggests a mix of technology-neutral and technology-specific policies using RPS or auction mechanisms to promote RES-E.
    Keywords: energy policy, feed-in tariff, auctions, renewable portfolio standard, cost-effectiveness
    JEL: Q49 O33 D44 Q29 Q52
    Date: 2015–03
  2. By: Pahle, Michael; Schweizerhof, Henriette
    Abstract: After more than a decade of supporting power from renewable energy (RE) through guaranteed feed-in tariffs, the German Government has initiated reforms to integrate RE into the market. To eventually achieve market integration requires that RE investors carry power market risks, in particular the power price risk. At the same time however, under the current financial structure higher risks are likely to have a negative impact on the bankability of new RE projects, which by extension may endanger further deployment and the achievement of renewable targets with it. Against this background we take a risk perspective to assess the past and upcoming EEG reforms, with the aim of developing a proposal to gradually shift risk towards RE investors without endangering project finance. To that end we first discuss the case for more market risk and classify the specific respective risks for RE, analyze how they have been allocated so far, and find that past policy reforms have initiated only a marginal transfer of revenue risks to renewables. On that basis we argue that more ambitious steps in this direction need to be taken, for which regulatory complexity and reform outcome uncertainty suggest a continuous and transparent transition rather than a grand all-at-once intervention. We outline and discuss two elements that could be at the center of it: First, a support framework that creates incentives for RE projects to increasingly take risks, for which we propose a cascading risk auction mechanism that prioritizes “more risky” projects. Second, design options for (a) “more risky” support contracts and (b) risk transfer in power purchase contracts, which if standardized could help to develop and establish suitable risk mitigation and management approaches on the side of financers. While this paper does not deliver a fully spelled-out action plan for these elements, it provides a basic sketch and identifies the main research gaps that should be filled for implementing it. Giving the long lead times of reforms and the need to think ahead that arises from it, we are sure that this proposal can make an important contribution to the next EEG reform in Germany expected for 2016/2017.
    Keywords: Germany,renewable support,risk
    JEL: D81 Q28 Q42 Q58
    Date: 2015–02
  3. By: Manuel Frondel; Stephan Sommer; Colin Vance
    Abstract: Germany’s energy transition has been accompanied by a near doubling of power prices for private households since the outset of the new millennium. Millions of poor households and those that are close to the poverty threshold are likely to suffer from these increases in electricity cost. Focusing on low-income households, this paper illustrates the distributional implications of Germany’s energy transition by investigating their electricity cost burden between 2006 and 2012, using data from the German Residential Energy Consumption Survey (GRECS). Our estimates suggest that in 2012, on average, households at poverty risk allocated 5.5% of their income to power and, hence, paid nearly as much for covering their electricity consumption as for heating purposes. Given Germany’s ambitious targets to expand the share of costly renewable technologies in electricity consumption, which has broad support among the electorate, it is to be expected that households’ expenditure for power will increase in the upcoming years. This raises the urgent question of how to mitigate the regressive impact of further increasing electricity prices on poor households. Direct cash transfers are suggested here as a non-distortionary instrument for easing the burden of high prices, one that is directly targeted at those endangered by energy poverty.
    Keywords: Energy transition; feed-in tariff; German Residential Energy Consumption Survey
    JEL: Q21 Q28 Q47
    Date: 2015–02
  4. By: Peter R Hartley (Rice University and University of Western Australia); Kenneth B Medlock III (Rice University); Ted Temzelides (Rice University); Xinya Zhang (Rice University)
    Abstract: The rapid development of both wind power and of shale gas has been receiving significant attention both in the media and among policy makers. Since these are competing sources of electricity generation, it is informative to investigate their relative merits regarding job creation. We use a panel econometric model to estimate the historical job-creating performance of wind versus that of shale oil and gas. The model is estimated using monthly county level data from Texas from 2001 to 2011. Both first-difference and GMM methods show that shale-related activity has brought strong employment to Texas: 77 short-term jobs or 6.4 full-time equivalent (FTE) jobs per well. Given that 5482 new directional/fractured wells were drilled in Texas in 2011, this implies that about 35000 FTE jobs were created in that year alone. We did not, however, find a corresponding impact on wages. Our estimations did not identify a non-negligible impact from the wind industry on either employment or wages.
    Date: 2014
  5. By: Hulisi Öğüt (TOBB Economics and Technology University); Asunur Cezar (TOBB University of Economics and Tehnology); Merve Guven (Agricultural and Rural Development Support Institution)
    Abstract: We investigate the factors influencing the demand for mobile voice services in Turkey using firm level data which spans from January 2008 to December 2012. The competition in mobile telecommunication market in Turkey has become more intense as a result of mobile number portability (MNP) service introduced in 2008 and 3G technology introduced in 2009. The intense competition not only helps to keep prices down but also supports subscriber growth. Besides prices, we believe that network effects have an impact on market growth. Approximating sales levels using subscription levels and churn rates and using revenue per minute (RPM) as a price measure, we find that while price has a significant negative impact on the demand for mobile services, network effects has a significant positive impact on demand for mobile services. We also estimate own and cross price elasticities of the firms operating in mobile telecommunication market.
    Keywords: telecommunication;3G; mobile number portability
    JEL: L96
    Date: 2014–06
  6. By: Vukica Janković (University of Economics, Prague); Helena Mitwallyova (University of Economics, Prague)
    Abstract: Paper explore relation betweeen energy and regional development and more precisly the influence of renewable energy installation and production on regional economic growth in the Czech Republic. The Czech Republic has long tradition in energy sector, more than 100 years of stable and self –sufficient energy production. The base of energy sector consist of energy production from coal, followed by nuclear energy as a second impotant energy resource. Renewable energy sources have the relatively small share in total energy mix, compared to the other EU member states. Their faster commercial production and usage have been existing from the resent history, after the accession of the Czech Republic into the European Union. Supported by tha state, renewable energy power has fast growth, which caused different influence through regions of the Czech Republic.
    Keywords: renewable energy resources, Czech Republic, regional growth
    JEL: O44 Q01
    Date: 2014–10
  7. By: Habibi, Shiva (KTH); Beser Hugosson, Muriel (KTH); Sundbergh , Pia (Trafa); Algers, Staffan (KTH)
    Abstract: Early 2014, an official Swedish government investigation report (FFF-report) was released proposing a policy package to promote a Fossil Free Fleet in Sweden by 2050. One objective of this policy package is to design a bonus-malus system that pushes the Swedish fleet composition towards the EU objectives of the average CO2 emissions of 95 g/km for new cars by 2021. The proposed scenarios address cars bought by private persons as well as by companies. These scenarios differ in designs for registration tax, vehicle circulation tax, clean car premiums, company car benefits tax and fuel tax. We use the Swedish car fleet model system to predict the effects of the proposed scenarios on the Swedish car fleet composition. Also, we build a simple supply model to predict future supply. Our model results show that none of the three proposed scenarios is actually successful enough to meet the Swedish average CO2 emissions target of 95 g/km in 2020. The average CO2 emissions in two of these scenarios are actually higher than in the business as usual scenario. Relative to a business as usual scenario the number of ethanol and gas cars is reduced in the other scenarios which are negative results in terms of fossil fuel independence. Also, the bonus-malus system gives a positive net result in terms of budget effects showing that car buyers choose to pay the malus for a car with higher emissions rather than to be attracted by the bonus of a car with lower emissions.
    Keywords: Bonus-malus; CO2 emission policies; Car fleet modeling; Vehicle supply model
    JEL: R40
    Date: 2015–03–23

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