nep-reg New Economics Papers
on Regulation
Issue of 2016‒01‒29
eight papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Cross-Country Electricity Trade, Renewable Energy and European Transmission Infrastructure Policy By Jan Abrell; Sebastian Rausch
  2. An Auction Framework to Integrate Dynamic Transmission Expansion Planning and Pay-as-bid Wind Connection Auctions By Farrell, Niall; Devine, Mel; Soroudi, Alireza
  3. Energy conservation in the residential sector : The role of policy and market forces By Aydin, Erdal
  4. Air transport liberalisation and airline network dynamics: Investigating the complex relationships By Frédéric Dobruszkes; Anne Graham
  5. Preventing environmental disasters : market based vs command and control policies By Francesco Lamperti; Mauro Napoletano; Andrea Roventini
  6. The Supply-side Effects of Energy Efficiency Labels By David Comerford; Ian Lange; Mirko Moro
  7. Bargaining for recharge: an analysis of cooperating and conjunctive surface water-groundwater management By Cobourn, Kelly M.; Amacher, Gregory S.; Elbakidze, Levan
  8. Auctions for the Support of Renewables: When and How? By Estelle Cantillon

  1. By: Jan Abrell (ETH Zurich, Switzerland); Sebastian Rausch (ETH Zurich, Switzerland)
    Abstract: This paper develops a multi-country multi-sector general equilibrium model, integrating high-frequency electricity dispatch and trade decisions, to study the eects of electricity transmission infrastructure (TI) expansion and re- newable energy (RE) penetration in Europe for gains from trade and carbon dioxide emissions in the power sector. TI can benet or degrade environ- mental outcomes, depending on RE penetration: it complements emissions abatement by mitigating dispatch problems associated with volatile and spa- tially dispersed RE but also promotes higher average generation from low- cost coal if RE production is too low. Against the backdrop of European decarbonization and planned TI expansion, we nd that emissions increase for current and targeted year-2020 levels of RE production and decrease for year-2030 targets. Enhanced TI yields sizeable gains from trade that de- pend positively on RE penetration, without creating large adverse impacts on regional equity.
    JEL: F18 Q28 Q43 Q48 C68
    Date: 2016–01
  2. By: Farrell, Niall; Devine, Mel; Soroudi, Alireza
    Abstract: Efficient renewables deployment requires the minimisation of both internal generation costs and external transmission expansion planning (TEP) costs. Competitive payas-bid connection auctions allow wind energy generators to reveal their costs of generation such that internal generation costs may be minimised. TEP costs have not been incorporated into such auctions to date. Integrating these procedures may allow for a global minimisation of internal generation and external TEP costs over many time periods. This paper develops an auction mechanism and associated modelling framework to carry this out. The contributions of this framework are verified using a numerical example. Our results show that ignoring generation costs in transmission expansion planning has quantifiable economic consequences, while traditional pay-as-bid auctions can benefit from incorporating features associated with TEP, such as multi-period optimisation. Full integration of both modelling frameworks leads to efficiency improvements, both in terms of reduced investor rentseeking and a more efficient deployment path.
    Date: 2016–01
  3. By: Aydin, Erdal (Tilburg University, School of Economics and Management)
    Abstract: In recent years, energy conservation has been a hot topic of debate among policy makers and researchers due to the concerns about global climate change and energy dependency. From a policy perspective, residential sector has been an important target for energy conservation policies as it is a major contributor to the total energy consumption and has a high potential for saving energy through efficiency measures. This dissertation focuses on three main research topics that are associated to the assessment and design of residential energy conservation policies. The first chapter investigates the impact of residential energy efficiency policies on household energy consumption. The second chapter examines the magnitude of rebound effect in residential energy consumption. Finally, the last chapter investigates the capitalization of energy efficiency in the housing market and examines the impact of Energy Performance Certificates (EPC) on the capitalization rate.
    Date: 2016
  4. By: Frédéric Dobruszkes; Anne Graham
    Date: 2016
  5. By: Francesco Lamperti (Institute of Economics, Scuola Superiore Sant'Anna); Mauro Napoletano (OFCE Sciences Po and Skema Businnes School); Andrea Roventini (Institute of Economics, Scuola Superiore Sant'Anna)
    Abstract: The aper compares the e?ects of market-based and command-and-control climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on the model proposed in Acemoglu et al. (2012, American Economic Review), we show that market-based policies (carbon taxes and subsidies towards clean sectors) exhibit bounded win- dow of opportunities: delays in their implementation make them completely ine?ective both in redirecting technical change and in avoiding environmental catastrophes. On the contrary, we ?nd that command-and-control interventions guarantee policy e?ectiveness irrespectively on the timing of their introduction. As command-and-control policies are always able to direct technical change toward "green" technologies and to prevent climate disasters, they constitute a valuable alternative to market-based interventions
    Keywords: Environmental Policy, Command and Control, Carbon Taxes, Disasters
    JEL: O33 O44 Q30 Q54 Q56 Q58
    Date: 2015–12
  6. By: David Comerford (Division of Economics, University of Stirling); Ian Lange (Division of Economics and Business, Colorado School of Mines); Mirko Moro (Division of Economics, University of Stirling)
    Abstract: We build on research documenting demand-side consequences of energy-efficiency labels for buildings by testing for a supply-side response. We exploit a natural experiment to test whether the introduction of mandatory energy labels for residential homes influenced investment in home energy efficiency. From 2008, vendors and lettors in the UK were required to publish a property's energy performance certificate (EPC). The EPC evaluates home energy efficiency overlaying a color-coded letter grade (from a green A to red G, respectively) on a pre-existent 0-100 point scale, the Standard Assessment Procedure (SAP) score. We hypothesize that the salient color letter grades will serve as targets when home owners are deciding the scale of investment to make in home energy efficiency. Consistent with this hypothesis, we find fewer homes just below, and more homes just above, the D grade threshold in the treatment years relative to the control years. This clustering is higher for homes that were traded after the EPC requirement was in effect. We conclude that there is a supply-side response to energy-efficiency labels.
    Keywords: energy efficiency, bunching, labels, thresholds
    JEL: Q48 L15 Q58 H23
    Date: 2016–01
  7. By: Cobourn, Kelly M.; Amacher, Gregory S.; Elbakidze, Levan
    Abstract: Recent negotiations between surface water and groundwater users in Idaho highlight a potential mechanism to resolve costly conflict that has arisen in many areas of the western U.S. where surface and groundwater resources are hydraulically connected. This article studies this type of agreement by developing a simple, dynamic model of cooperative bargaining between surface and groundwater users. The model reflects the potential gains to both types of water users from bargaining over a sustained reduction in groundwater pumping to increase surface water flows. In a non-cooperative setting, surface water users choose the groundwater pumping reduction to maximize their net production rents, but doing so is costly, which creates an incentive for surface water users to negotiate with groundwater users. With the theoretical model, we demonstrate that the Nash bargaining path of curtailments is lower than that in the non-cooperative outcome, but that it may be larger or smaller than the first-best outcome. The difference between the bargaining and first-best outcomes depends on the efficiency of groundwater irrigation and the relative bargaining power of surface water and groundwater users. In a numerical simulation, we show that when surface water users possess greater bargaining influence, the bargaining solution involves larger curtailments than is socially optimal and an improvement in irrigation efficiency drives the bargaining solution closer to the non-cooperative outcome. Conversely, when groundwater users possess greater bargaining influence, curtailments are lower than the socially optimal level and an improvement in efficiency drives the bargaining solution closer to the firstbest.
    Keywords: Nash bargaining, groundwater, prior appropriation, water rights, Environmental Economics and Policy, Q15,
    Date: 2015
  8. By: Estelle Cantillon
    Date: 2014–08–31

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