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on Regulation |
| By: | di Cosmo; Lynch, Muireann A. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp497&r=reg |
| By: | Eric Bowen (West Virginia University, College of Business and Economics); Donald J. Lacombe (West Virginia University, Regional Research Institute) |
| Abstract: | While several studies have examined the effectiveness of renewable portfolio standard laws on renewable generation in states, previous literature has not assessed the potential for spatial dependence in these policies. Spatial dependence in the electric grid is likely, considering the connectivity of the electric grid across NERC regions. Using the latest spatial panel methods, this paper estimates a number of econometric models to examine the impact of RPS policies when spatial autocorrelation is taken into account. Consistent with previous literature, we find that RPS laws do not have a significant impact on renewable generation within a state. However, once spatial dependence is accounted for, we find evidence that a state’s RPS laws have a significant positive impact on the share of renewable generation the NERC region as a whole. These findings provide evidence that electricity markets are efficiently finding the lowest-cost locations to serve renewable load to states with more stringent RPS laws. |
| Keywords: | Renewable Portfolio Standards, Renewable Energy Policy, Spatial Econometrics |
| JEL: | Q42 Q48 R15 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:15-03&r=reg |
| By: | Frédéric Branger (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - CIRAD - Centre de coopération internationale en recherche agronomique pour le développement - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - AgroParisTech, AgroParisTech); Jean-Pierre Ponssard (Department of Economics, Ecole Polytechnique - CNRS - Polytechnique - X); Oliver Sartor (IDDRI - Institut du Développement Durable et des Relations Internationales - Institut d'Études Politiques [IEP] - Paris); Misato Sato (LSE - London School of Economics) |
| Abstract: | This paper investigates incentives for firms to increase output above the activity level thresholds (ALTs) in order to obtain more free allowances in the EU Emissions Trading Scheme. While ALTs were introduced in order to reduce excess free allocation to low-activity installations, for installations operating below the threshold, the financial gain from increasing output to reach the threshold may outweigh the costs. Using installation level data for 246 clinker plants, we estimate the effect of ALTs on output decisions. The ALTs induced 5.8Mt of excess clinker production in 2012 (4% of total EU output), which corresponds to 5.2Mt of excess CO2 emissions (over 5% of total sector emissions). As intended, ALTs do reduce overallocation (by 6.6million allowances) relative to a scenario without ALTs, but an alternative output based allocation would further reduce overallocation by 39.5million allowances (29% of total cement sector free allocation). Firms responded disproportionately to ALTs in countries with low demand, especially in Spain and Greece. The excess clinker output lead to increased EU clinker and cement exports, production shifting between plants and also an increase in clinker content of cement thus reducing the carbon efficiency of cement production. |
| Date: | 2014–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ciredw:hal-01072736&r=reg |
| By: | Thomas Kallabis; Christian Pape; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen) |
| Abstract: | The German market has seen a plunge in wholesale electricity prices from 2007 until 2014, when base futures prices dropped by more than 40 percent. In this paper we determine the fundamental components of electricity futures prices and quantify their impact on the price drop as well as on operation margins. Our methodology is based on a parsimonious model in which the supply stack is approximated by piecewise linear functions. A fundamental futures price estimate can then be given by averaging up the hourly equilibrium prices over the fu-tures contract’s delivery period. It turns out that the parsimonious model is able to replicate electricity futures prices and discover non-linear dependencies in futures price formation. We quantify which of the factors fuel prices, emission prices, renewable feed-in, conventional generation capacities, and demand developments contributed most to the observed price slide. |
| Keywords: | Futures Prices, Bid Stack, Fundamental Factors, German Electricity Market, Price Modeling, Efficient Markets, Market Expectations, Piecewise Linear Function, Investment Decision |
| JEL: | Q43 O10 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:1504&r=reg |
| By: | Jorge Balat (Johns Hopkins University); Juan E. Carranza (Banco de la República de Colombia); Juan D. Martin (Universidad ICESI) |
| Abstract: | In this paper we formulate a dynamic multi-unit auction model to characterize bidding behavior in hydro power dominated electricity markets. Our model implies that, in order to maximize expected profits, hydro producers will submit bid prices above its marginal production costs that account for the intertemporal opportunity cost of water and the expected strategic effects of bids on rivals’ behavior. We test the predictions of our model against data of the Colombian electricity market, where hydro producers hold 63% of total installed capacity, and find evidence consistent with both dynamic and strategic behavior. Classification JEL: L25, D22, D44. |
| Keywords: | Dynamic auction model, Bidding behavior, Market power, Electricity markets. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:886&r=reg |
| By: | Aune, Finn Roar; Golombek, Rolf; Moe, Arild; Rosendahl , Knut Einar (School of Economics and Business, Norwegian University of Life Sciences); Le Tissier, Hilde Hallre |
| Abstract: | The Russian gas market is highly regulated. In this paper we examine possible impacts of regulatory changes on the demand side of this market. In particular, we consider the effects on Russian energy consumers of removing natural gas subsidies, and how changes in Russian gas consumption may affect its gas export to Europe. We also examine the importance of Russian pipeline capacity to Europe, as well as impacts of hypothetical changes in Russian gas export behavior. For this purpose, we use a detailed numerical model for the energy markets in Europe and Russia – LIBEMOD. Our results suggest that removing implicit subsidies to Russian gas consumers will have substantial impacts on total consumption of gas in Russia, especially in the electricity sector. Gas exports to Europe will be significantly affected as more gas becomes available for exports. Removal of other market imperfections in the Russian energy markets has smaller impacts on prices and quantities than removing gas subsidies. More competitive Russian gas export behavior would lead to much higher gas export to Europe, but our results suggest that Russian welfare would drop due to lower gas export prices. |
| Keywords: | Russian gas prices; Russian gas export; European energy market |
| JEL: | C63 F10 Q41 Q48 |
| Date: | 2015–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsseb:2015_011&r=reg |
| By: | Mark Olsthoorn (MTS - Management Technologique et Strategique - Grenoble École de Management (GEM)); Joachim Schleich (Virginia Polytechnic Institute and State University [Blacksburg] - Virginia Polytechnic Institute and State University, MTS - Management Technologique et Strategique - Grenoble École de Management (GEM), Fraunhofer ISI - Fraunhofer Institute for Systems and Innovation Research - Fraunhofer Institute for Systems and Innovation Research); Marian Klobasa D (Fraunhofer ISI - Fraunhofer Institute for Systems and Innovation Research - Fraunhofer Institute for Systems and Innovation Research) |
| Abstract: | As countries move toward larger shares of renewable electricity, the slow diffusion of active electricity load management should concern energy policy makers and users alike. Active load management can increase capacity factors and thereby reduce the need for new capacity, improve reliability, and lower electricity prices. This paper conceptually and empirically explores barriers to load shift in industry from an end-user perspective. An online survey, based on a taxonomy of barriers developed in the realm of energy efficiency, was carried out among manufacturing sites in mostly Southern Germany. Findings suggest that the most important barriers are risk of disruption of operations, impact on product quality, and uncertainty about cost savings. Of little concern are access to capital, lack of employee skills, and data security. Statistical tests suggest that companies for which electricity has higher strategic value rate financial and regulatory risk higher than smaller ones. Companies with a continuous production process report lower barrier scores than companies using batch or justin- time production. A principal component analysis clusters the barriers and multivariate analysis with the factor scores confirms the prominence of technical risk as a barrier to load shift. The results provide guidance for policy making and future empirical studies. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:gemptp:hal-01104611&r=reg |
| By: | Lisa Anouliès (Université Paris-Sud, RITM) |
| Abstract: | Cap-and-trade programs are presently the cornerstone of climate change policies and proposals in many countries. I investigate the economic and environmental effects of different designs for this policy in a general equilibrium setting when firms are heterogeneous and in monopolistic competition. This study first predicts that the cap on emissions perfectly defines the environmental quality but has no effect on firms’ profits and decisions to enter or exit the market. On the contrary, increasing the share of free allocation of emissions allowances reallocates resources among firms toward the most productive ones: the initial allocation of allowances therefore impacts firms’ entry and exit decisions and aggregate economic variables but not the environment. Firm heterogeneity magnifies this economic effect of a change in the initial allocation of allowances. |
| Keywords: | Emissions trading, Heterogeneous firms, Monopolistic competition |
| JEL: | Q58 D43 H23 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2015.10&r=reg |
| By: | Libo Wu (School of Economics, Fudan University); Weiqi Tang (School of Economics, Fudan University) |
| Abstract: | Energy conservation and greenhouse gas (GHG) abatement have been included in the national development strategy of China. However, the rigidity in command-and-control mechanisms and arbitrariness in assignment of GHG abatement burden across regions have caused unnecessary losses in both economic efficiency and social equity. In this paper, we use an Inter-Regional Dynamic CGE (IRD-CGE) model to simulate economic and welfare impacts of climate policies on national and regional level, including carbon intensity targets, regional emission constraints and cap-and-trade mechanism. Comparison among alternative emission reduction policy mechanisms indicates that emission trading scheme can not only moderate the economic and social welfare losses, but also improve social equity by decoupling the allocation of emission permits from economic optimization of emission reduction scheme. From this perspective, emissions trading bridges the concerns for economic efficiency and social equity, since emission permits could be reallocated as an income transfer so as to promote inter-regional equity, while economic efficiency is maintained. Keywords: greenhouse gas emissions; energy conservation; emission reduction; pollution; cap-and-trade mechanism |
| JEL: | Q54 Q56 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1505&r=reg |