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on Regulation |
| By: | Burmeister, Johannes; Peterson, Sonja |
| Abstract: | Given that the carbon price in the EU Emissions Trading System is only around 5€/tCO2 while consensus about a more stringent EU climate policy is very unlikely in the near future, we explore the potential scope and optimal design of additional national climate policies in the current EU policy framework. In particular, we suggest to implement a type of carbon price floor in the national EU ETS sectors that either allows for i) shifting emissions to non-ETS sectors like housing and transport or ii) retiring EU-wide emission allowances. In a simple theoretical framework with two countries and two sectors, we show that these two policy options are efficient up to a certain carbon price threshold. Moreover, efficiency is the highest at an optimal carbon price level equaling a weighted sum of the price differentials between ETS and non-ETS sectors. In order to determine the empirical relevance, we conduct a numerical partial equilibrium analysis of the EU carbon market in 2020. We find that Germany shows the highest potential to reduce EU-wide inefficiencies. With a price floor of 36€/tCO2 in 2020, Germany could reduce national climate policy costs by 13% if emissions are shifted from the ETS to non-ETS sectors. If they are willing to take on additional costs by retiring emission allowances, they are able to reduce EU ETS emissions by 1.6%. |
| Keywords: | Climate policy,EU Emission Trading System,Overlapping regulation,Carbon price floors,Abatement costs |
| JEL: | Q58 H21 H23 D58 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2052&r=reg |
| By: | Daniel Daví-Arderius (University of Barcelone & Chair of Energy Sustainability, IEB); María-Eugenia Sanin (Université d´Evry Val d´Essonne & Ecole Polytechnique); Elisa Trujillo-Baute (University of Warrick & Chair of Energy Sustainability, IEB) |
| Abstract: | Worldwide, countries are implementing policies to develop greener energy markets. In Europe, the ¨2030 Energy and Climate Package¨ asks for further reductions of GHG, renewable sources integration, and energy efficiency targets. These objectives may counterbalance each other modifying the electricity flows, and hence, affecting the electricity losses. Precisely, the extra amount of energy necessary to cover losses is the departure point from which we analyze the impact of losses on CO2 emissions. With this purpose we use Spanish market and system data with hourly frequency from 2011 to 2013. Our results show that electricity losses significantly explain CO2 emissions, with higher CO2 emissions when covering losses that those on the average system. Additionally, we find that the market closing technologies used to cover losses have positive and significant impacts on CO2 emissions: when polluting technologies (coal or combined cycle) close the market, the impact of losses on CO2 emissions is greater in comparison with the rest of technologies (CHP, renewables or hydropower). From these results we make some policy recommendations to reduce the impact of losses on CO2 emissions. |
| Keywords: | Electricity losses; CO2 Emissions; Electricity markets; Renewable energy |
| JEL: | L11 Q40 Q50 Q54 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2016-23&r=reg |
| By: | Mikołaj Czajkowski (Faculty of Economi Sciences, University of Warsaw); Maciej Sobolewski (Faculty of Economi Sciences, University of Warsaw) |
| Abstract: | Recent models of network competition demonstrate the incentives of incumbents to reduce receiver benefits in rival networks through excessive off-net pricing. Theoretical reasoning behind strategic use of call externalities assumes that receiving calls contributes to consumer utility. This paper tests this critical assumption with choice data elicited from users of mobile telephones. We find that receiver benefits are a significant driver of subscription choices and assess customer base stealing effect encountered by the late entrant. Our findings confirm that call externalities can be used to limit late entrants’ growth as has been observed in many European mobile telephony markets. |
| Keywords: | call externalities, personal network effects, entry deterrence, mobile telephony, stated preferences, discrete choice experiment |
| JEL: | L1 L86 D62 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2016-27&r=reg |
| By: | Brown, David P. (University of Alberta, Department of Economics); Sappington, David E. M. (University of Florida, Department of Economics) |
| Abstract: | We examine the role that maximum demand charges (MDCs) can play in avoiding the death spiral that some utilities may otherwise face as the distributed generation (DG) of electricity proliferates. We find that MDCs generally secure gains for consumers that do not undertake DG, and often secure gains for consumers that undertake DG. However, the welfare gains tend to be modest in plausible settings. Furthermore, time-of-use pricing often secures larger welfare gains than do MDCs. |
| Keywords: | maximum demand charges; distributed generation; time-of-use prices; electricity regulation |
| JEL: | D47 L50 L94 Q40 |
| Date: | 2016–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2016_016&r=reg |
| By: | Geoffrey Heal |
| Abstract: | The increasing importance of intermittent renewable energy sources suggests a growing importance for energy storage as a way of smoothing the variable output. In this paper I investigate factors affecting the amount of energy storage needed, including the degree of intermittency and the correlations between wind and solar power outputs at different locations. |
| JEL: | Q4 Q53 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22752&r=reg |
| By: | Tomaso Duso; Florian Szücs |
| Abstract: | We analyze the pass-through of cost changes to retail tariffs in the German electricity market over the 2007 to 2014 period. We find an average pass-through rate of around 60%, which significantly varies with demand factors: while the pass-through rate to baseline tariffs, where firms have higher market power, is only 50%, it increases to 70% in the competitive segment of the market. Although the pass-through rate of independent firms is significantly higher than that of other firms in the competitive market segment, the extent of supply-side heterogeneity is limited. Thus, the firms’ ability to exercise market power appears to be constrained by competition and largely determined by demand side factors. Finally, we find that the pass-through rate in the competitive market segment has been approaching unity over the past years, indicating a rise in competitive pressure. |
| Keywords: | Electricity retail, pass-through, Germany |
| JEL: | C23 D22 D43 L13 L94 Q41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1614&r=reg |
| By: | Nomsa Phindile Nkosi; Johane Dikgang |
| Abstract: | Discussions between policymakers about renewable energy have gained momentum in recent years, amid growing recognition of the need for more investment in green energy sources. The question is whether households in developing countries like South Africa will support green energy actions if it comes at an additional cost or whether they are simply arm-chair environmentalist. To assess this, we use the contingency valuation method (CVM) to identify the determinants of support for renewable energy. It is vital that households’ determinants of the additional cost burden associated with renewable energy are assessed, in an effort to win public acceptance of the introduction of renewable energy. The US$966 willingness to pay (WTP) for renewable energy represents a significant premium over generation costs, and signals social acceptance of renewable energy. Most importantly, given the wide degree of heterogeneity in WTP models, a clear message to policymakers and stakeholders is that they need to do more to communicate the economic and environmental benefits associated with renewable energy. |
| Keywords: | bivariate probit, renewable energy, willingness to pa |
| JEL: | Q20 Q40 Q50 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:638&r=reg |
| By: | Edouard Schaal (New York University); Pablo Fajgelbaum (UCLA) |
| Abstract: | Abstract We develop a new theory of transport networks and study its implications for trade and growth. Given arbitrary demand and supply patterns, the model gives rise to endogenous bilateral trade costs. We first show how different spatial configurations of output and demand give rise to different types of networks. We determine conditions under which the ensuing network features spatial distributions of price gaps and employment that correspond to what is observed empirically. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:1138&r=reg |
| By: | Tedi Skiti (Department of Economics, Duke University) |
| Abstract: | How does strategic investment affect entry of new technologies and market structure? This article investigates the role of competition in firms’ technology adoption decisions in the U.S. wireline broadband industry. I present a model of strategic entry deterrence and study how internet service providers’ interactions affect their technology deployment at local markets. The goal is to capture an important trade-off: cable firms adopt a new cable system to provide higher speeds, but the adoption has a preemptive effect on fiber firms’ entry. I collect and combine unique firm-level data on broadband technology deployment and markets under entry threat for New York State. I provide evidence of strategic investment by cable incumbents to deter fiber entry. Counterfactual scenarios suggest that the industry has experienced 16% excessive investment in cable adoption and 12% underinvestment in fiber entry both of which are explained by these deterrence strategies. In addition, subsidies to cable incumbents in small markets reduce fiber entry rate by 50%. I also find that policies that promote statewide entry mitigate the effects from these deterrence strategies and increase fiber entry rate by 30%. These results have wide implications for technology diffusion, quality provision and optimal subsidy policy in markets with strategic technology adoption and entry threat. |
| Keywords: | Broadband, Strategic Investment, Technology Adoption, Entry Threat, Deterrence |
| JEL: | L13 L41 L96 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1615&r=reg |
| By: | Anna Kowalska-Pyzalska |
| Abstract: | The paper discusses the incentives and barriers of the successful adoption of the innovative energy services in the energy market. The literature review of the outcomes from field experiments and research surveys is enhanced by the results from a pilot study regarding willingness to pay for green energy and by an agent-based model of diffusion of innovative dynamic electricity tariffs. It was found out that to achieve large market penetration rates of the innovative energy services, the consumers must be aware of them. They must be also supported by the access to reliable information and advice to limit their confusion of choice. The perceived difficulty of adoption should be reduced to encourage consumers to get interested in the energy services. Also the distribution channels of the innovation, namely social influence in the consumers' social networks and advertisement in mass-media should be effectively used to boost the diffusion. The great attention should be put on the negative word of mouth, which may limit or even stop the diffusion of innovation. |
| Keywords: | Diffusion of innovation; Incentives and barriers of adoption; Energy market; Willingness to pay; Agent-based modeling and simulation |
| JEL: | C63 O33 Q48 Q55 |
| Date: | 2016–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:wuu:wpaper:hsc1609&r=reg |