nep-reg New Economics Papers
on Regulation
Issue of 2016‒05‒28
eleven papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Promotion of Renewables and the Challenges in the Water Sector By Daniel Rais
  2. The rationales for technology-specific renewable energy support: Conceptual arguments and their relevance for Germany By Gawel, Erik; Lehmann, Paul; Purkus, Alexandra; Söderholm, Patrik; Witte, Katherina
  3. Strategic Subsidies for Green Goods By Carolyn Fischer
  4. Inclusion of Consumption into Emissions Trading Systems: Legal Design and Practical Administration By Roland Ismer; Manuel Haussner; Karsten Neuhoff; William Acworth
  5. Economic dynamics and technology diffusion in Indian power sector By B. Sudhakara Reddy
  6. The role of regulation on entry : evidence from the Italian provinces By Bripi,Francesco
  7. A Preliminary Model of Regulating Natural Capital Funds for Renewable Energy By Alsayyed, Nidal; Zhu, Weihang
  8. Fuel Prices, Restructuring, and Natural Gas Plant Operations By Matthew Doyle; Harrison Fell
  9. Price Regulation and Environmental Externalities: Evidence from Methane Leaks By Catherine Hausman; Lucija Muehlenbachs
  10. Uniform Service, Uniform Productivity? Regional Efficiency of the Imperial German Postal, Telegraph and Telephone Service By Florian Ploeckl
  11. Efficiency in Domestic Space Heating: An Estimation of the Direct Rebound Effect for Domestic Heating in the U.S. By Benjamin Volland

  1. By: Daniel Rais
    Abstract: Abstract This paper outlines the interlinkages between the water policies integration objective and the decarbonisation objective. It concludes that low-carbon renewable electricity policy scenario may have negative externalities on the water body under the existing regulatory framework in the EU. The analysis is mainly dealt within the framework of the European Union’s Renewable Energy Directive of 2009 (RES Directive).
    Date: 2015–02–09
  2. By: Gawel, Erik; Lehmann, Paul; Purkus, Alexandra; Söderholm, Patrik; Witte, Katherina
    Abstract: In order to achieve cost-effective RES-E deployment it is often argued that technology-neutral support schemes for renewables are indispensable. Against this background, RES-E support policies making widely use of technology differentiation in remuneration settings, e.g. across the EU, are frequently criticized from a theoretical point of view. However, in this paper we provide a systematic critique of the technology neutrality concept as a foundation for designing policy support schemes in the RES-E technology field. Specifically, the main objective of the paper is to scrutinize the arguments for technology-neutrality, and discuss three conceptual arguments for why technology-specific support schemes could in fact help minimize the societal costs of reaching future RES-E targets. We also briefly address different political economy concerns, which could constrain the choice of cost-effective policy support schemes, and that have to be taken into account for economic policy advice. For empirical illustration of the key arguments we refer to the case of German RES-E support.
    Keywords: renewable energy technologies,technology-specific support,market failures,Germany
    JEL: O38 Q42 Q48 Q55
    Date: 2016
  3. By: Carolyn Fischer (Resources for the Future, Gothenburg University, FEEM, and CESifo Research Network)
    Abstract: Globally and locally, government support policies for green goods (like renewable energy) are much more popular internationally than raising the cost of bads (as through carbon taxes). These support policies may encourage downstream consumption (renewable energy deployment) or upstream development and manufacturing of those technologies. The use of subsidies—particularly upstream ones—is disciplined by World Trade Organization agreements, and its subsidies code lacks exceptions for transboundary externalities like human health or resource conservation, including those related to combating global climate change. The strategic trade literature has devoted little attention to the range of market failures related to green goods. This paper considers the market for a new environmental good that when consumed downstream may provide external benefits like reduced emissions. The technology is traded internationally but provided by a limited set of upstream suppliers that may operate in imperfect markets, such as with market power or external scale economies. We examine the national incentives and global rationales for offering production and consumption subsidies in producer countries, allowing that some of the downstream market may lie in nonregulating third-party countries. Although technology producer countries can benefit from restraints on upstream subsidies, global welfare is higher without them, and market failures imply that optimal subsidies are even higher. We supplement the analysis with numerical simulations of the case of renewable energy, exploring optimal subsidies for the major renewable energy producing and consuming regions and the cost of restrictions on upstream subsidies.
    Keywords: International Trade, Subsidies, Imperfect Competition, Externalities, Emissions Leakage
    JEL: F13 F18 H21 Q5
    Date: 2016–03
  4. By: Roland Ismer; Manuel Haussner; Karsten Neuhoff; William Acworth
    Abstract: A world of unequal carbon prices requires measures aimed at preventing carbon leakage. Climate policy imperatives demand that such measures must be compatible with the goal of sending a carbon price signal down the value chain. For carbon intensive materials, the combination of dynamic free allocation combined with Inclusion of Consumption (IoC) into emissions trading systems such as the European Union Emissions Trading Scheme (EU ETS) arguably fulfils both the aims of preventing carbon leakage and of sending the price signal. The paper presents concrete proposals regarding the legal design and practical administration of this mechanism. It argues that the IoC is, provided appropriate choices are made, ripe for implementation.
    Keywords: Carbon pricing, value chain, consumption charge
    JEL: H23 K23 L61
    Date: 2016
  5. By: B. Sudhakara Reddy (Indira Gandhi Institute of Development Research)
    Abstract: There is a growing concern among policy makers about how electricity is generated and consumed in the context of energy security and global climate change. In such a scenario, renewable energy sources, especially solar and wind energy, are likely to play a significant role in providing reliable and sustainable electricity to consumers as they are locally available and their carbon foot print is small. The future share of power by renewables will greatly depend on the expected generation cost and the government's support to investments in the sector. Using levelised cost approach, capital cost, operating and fuel costs of major electricity generation technologies are compared. Then, a forecast is made for electricity generation in India, using non-linear Bass diffusion model over 15-year horizon, until 2030 for all major energy technologies, viz., coal, natural gas, hydro, solar, wind, and biomass. The results show how present trends and future forecasts of electricity-generating technologies change the electricity generation mix, and how solar and wind power may increase their share in the total generation. However, fossil fuels will continue to remain competitive relative to renewables due to their cost advantage. The main issue considered here is whether each energy technology has reached its maximum penetration level. This helps set out a path for renewable energy technology diffusion in the Indian power sector.
    Keywords: Cost, Diffusion, Power, Renewables, Technology
    JEL: P28 Q41 Q42 Q48
    Date: 2016–05
  6. By: Bripi,Francesco
    Abstract: This paper studies the effects of differences in local administrative burdens in Italy in the years 2005?2007 preceding a major reform that sped up firm registration procedures. Combining regulatory data from a survey on Italian provinces before the reform (costs and time to start a business) with industry-level entry rates of limited liability firms, it explores the effects of regulatory barriers on the average of the annual entry rates across industries with different natural propensities to enter the market. The estimates of the cross-sectional analysis show that lengthier and, to some extent, more costly procedures reduced entry in sectors with naturally high entry. A one-day delay in registration procedures reduces the entry rate in highly dynamic sectors by more than 1 percent. These results hold when I include measures of local financial development and of efficiency of bankruptcy procedures are included.
    Keywords: Banks&Banking Reform,Economic Theory&Research,Access to Finance,Transport Economics Policy&Planning,Information and Communication Technologies
    Date: 2016–04–26
  7. By: Alsayyed, Nidal; Zhu, Weihang
    Abstract: Framing sustainable environmental laws in regulating Natural Capital funds for Renewable Energy (RE) is central to the discussion on sustainability strategies. Natural Capital is that limited form of capital assets or service (tangible or intangible) that satisfies basic and social conditions for human existence and protection. This paper proposes an analytical regulatory model utilizing Neural Network (NN) of substantive and procedural issues framing the regulatory parameters associated with Natural capital funding. The model proposed recognizes the fact that the purpose of any legal system is not only to assign duties and responsibilities in protecting rights of individuals and groups in their respective endeavors; but for effective modelling of natural structures as well. Through a preliminary discussion of European and USA markets’; regulatory systems with a focus on market and social values, it attempts to discern a practical model to formulate social and regulatory measures on financial structures and energy matters that are considered rights and obligations of individuals and organizations in conducting their businesses. As it has been a subject of academic, government, and public discussions with intense controversies, finding the differences of methodological, and analytical foundation will most probably lead to deeper insight into regulating funds for renewable energy.
    Keywords: Natural Capital, sustainable, ISO: International Organization for Standardization, climate change, Neural Network (NN)
    JEL: N7 O13 P28 Q0 Q42 Q47 Q5 Q56
    Date: 2016–04–05
  8. By: Matthew Doyle (Division of Economics and Business, Colorado School of Mines); Harrison Fell (Division of Economics and Business, Colorado School of Mines)
    Abstract: Switching from coal-fired to natural gas-fired generation and increasing the thermal efficiency (energy generated per unit of energy burned) of fossil fuel fired electricity generation plants has been identified as ways of achieving meaningful emission reductions. In this study, we examine the fuel-price responsiveness across gas plant technologies and across the market structures in which the plants operate. We find that there are significant differences in the generation and efficiency responses of gas plants to fuel prices across generation technologies and market structures. Specifically, our results indicate that, regardless of market structure, generation from natural gas combined cycle (NGCC) plants is responsive to both coal and gas prices, but that generation from simple cycle (NGSC) plants only respond to gas prices. On the other hand, with respect to efficiency, we generally find that only NGCC plants operating in deregulated regions show statistically significant efficiency improvements in response to coal price increases and that, generally, neither NGCC or NGSC plants, regardless of market structure, respond in any significant way to gas prices. Finally, using these parameter estimates, we calculate emissions savings from efficiency improvements and fuel-switching possibilities.
    Date: 2016–04
  9. By: Catherine Hausman; Lucija Muehlenbachs
    Abstract: Price regulations are widely used to reduce inefficiencies from natural monopolies, but they can introduce other inefficiencies, such as the failure to cost-minimize. We examine a previously unstudied distortion in the natural gas distribution sector that allows firms to pass the cost of lost gas on to their customers. We show that firms abate leaks below what is theoretically optimal for a private firm – expenditure on abatement is well below the cost of lost gas. Additionally, natural gas, primarily composed of methane, is both explosive and a potent greenhouse gas. Thus the climate impacts of leaked methane greatly exacerbate the inefficiencies created by imperfect price regulation.
    JEL: D22 D42 L95 Q41
    Date: 2016–05
  10. By: Florian Ploeckl (School of Economics, University of Adelaide)
    Abstract: Using the regional productivity of the Reichspost, the postal service of the German Empire, I investigate whether a public monopolist operates with uniform regional productivity. Using DEA efficiency scores we derive the relative productivity of the post, telegraph and telephone sectors from 1891 to 1908. Results show a fairly stable system with substantial raw productivity differences between postal districts and that the expansion of the service offset technological productivity increases for the mail service.
    Keywords: Productivity, Public Monopoly, Information Technology
    JEL: D24 L32 L87 L96 N74
    Date: 2016–05
  11. By: Benjamin Volland (Institute of economic research IRENE, Faculty of Economics, University of Neuchâtel, Switzerland)
    Abstract: Improvements in energy efficiency are increasingly seen as a key strategy to reduce energy consumption in the domestic sector. Yet, concerns are mounting that households rebound, meaning that they adapt to efficiency gains by increasing their demand, as efficiency improvements reduce relative costs of energy. This study investigates the elasticity of household energy consumption for space heating with respect to changes in household heating efficiency. We account for the simultaneity of energy efficiency and energy consumption by applying an instrumental variable approach. Using data from the 2009 Residential Energy Consumption Survey, we document that while there is substantial ‘takeback’ among US households, rebound rates are far too small to dominate energy savings from these improvements. Estimates of the direct rebound effect in domestic heating are about 30%. Moreover, we find no evidence for a substantial indirect rebound at the household level. However, we document that the degree of ‘takeback’ increases in energy prices, suggesting that price-based and efficiency-based policy instruments may counteract each other.
    Keywords: Energy efficiency, rebound effect, space heating.
    JEL: D12 Q51 Q41 R22
    Date: 2016–05

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