nep-reg New Economics Papers
on Regulation
Issue of 2017‒03‒12
six papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. The merit order effect of Czech renewable energy By Petra Lunackova; Jan Prusa; Karel Janda
  2. Renewable and Non-Renewable Electricity Consumption, Carbon Emissions and GDP: Evidence From Mediterranean Countries By Fateh Belaïd; Maha Harbaoui Zrelli
  3. Environmental policy and directed technological change: evidence from the European carbon market By Raphael Calel; Antoine Dechezlepretre
  4. Renewable Natural Gas as a Solution to Climate Goals: Response to California's Low Carbon Fuel Standard By Scheitrum, Daniel
  5. The firm location race – Regulating incentive packages given to firms by local and regional governments By Hanke, Philip; Philip, Hanke; Klaus, Heine
  6. Regulatory policy In Latin America: An analysis of the state of play By Tobias Querbach; Christiane Arndt

  1. By: Petra Lunackova; Jan Prusa; Karel Janda
    Abstract: We assess the impact of photovoltaic power plants and other renewable sources on the electricity supply curve in the Czech Republic. The merit order effect is estimated as the elasticity of electricity spot price with respect to change in supply of electricity from renewable sources. Data for the Czech electricity spot market from 2010 to 2015 are analyzed as this is the period with the steepest increase in a renewable generation capacity. The effect is estimated separately for solar and other renewable sources. We find a significant difference between these two groups. Our results show that based on hourly, daily and weekly data energy produced by Czech solar power plants does not decrease electricity spot price, creating double cost to the end consumer. However, the merit order effect based on averaged daily and weekly data is shown to exist for other renewable sources excluding solar (mainly water and wind). This contributes to the conclusion that the Czech renewables policy that prefers solar to other renewable sources may be considered as suboptimal.
    Keywords: energy subsidies, photovoltaic, renewables, merit order effect
    JEL: Q42 H23 M21
    Date: 2017–03
  2. By: Fateh Belaïd (University Paris-Est); Maha Harbaoui Zrelli
    Abstract: The imperative to reduce Co2 emissions is stronger than ever. According to many studies, renewable energy (electricity) has one of the most significant cost-effective potentials for reducing energy-related greenhouse gas emissions. Increasing the supply of renewable energy would allow for the replacement of carbon-intensive energy sources and significantly reduce pollutant emissions. The major focus of this article is to investigate the causal relationship between renewable and non-renewable electricity consumption, GDP and CO2 emissions for the North and South shores of Mediterranean over the period 1980-2012. Panel unit root tests, cointegration technique allowing cross-section dependence among the panel and causality tests are used to investigate this relationship. The results provide panel empirical evidence that there is a short-run bidirectional causality between GDP, renewable electricity consumption and CO2 emissions; and between non-renewable electricity consumption, GDP and renewable electricity consumption. As for the long-run causal relationship, the result indicates that there is bidirectional causality between non-renewable electricity consumption and CO2 emissions. However, there is evidence of unidirectional causal relationship running from GDP to CO2 emissions and non-renewable electricity consumption; from renewable electricity consumption to CO2 emissions. The findings imply that non-renewable electricity consumption and economic growth stimulate CO2 emissions in Southern and Northern Mediterranean countries while renewable electricity reduces it. Therefore, expansion of renewable energy sources is a strategic plan for addressing energy security and reducing carbon emissions to protect the environment for future generations.
    Date: 2016–08
  3. By: Raphael Calel; Antoine Dechezlepretre
    Abstract: This paper investigates the impact of the European Union Emissions Trading System (EU ETS) on technological change, exploiting installations-level inclusion criteria to estimate the System's causal impact on firms' patenting. We find that the EU ETS has increased low-carbon innovation among regulated firms by as much as 10%, while not crowding out patenting for other technologies. We also find evidence that the EU ETS has not impacted patenting beyond the set of regulated companies. These results imply that the EU ETS accounts for nearly a 1% increase in European low-carbon patenting compared to a counterfactual scenario.
    Keywords: directed technological change; EU emissions trading system; policy evaluation
    JEL: C14 O3 Q55 Q58
    Date: 2016–03
  4. By: Scheitrum, Daniel
    Abstract: Natural gas is a growing portion of transportation fuel consumed in California. While natural gas has a slight environmental benefit relative to the use of conventional liquid fuels, such as gasoline and diesel, the environmental performance of natural gas can be greatly improved by procurement from renewable sources. Yet renewable natural gas (RNG) production is too expensive to compete with fossil natural gas in the absence of policy intervention. I consider the impacts of the LCFS policy on four pathways of RNG production: (1) dairy manure, (2) municipal solid waste, (3) wastewater treatment plants, and (4) landfill gas. Using a novel dataset of California RNG supply estimates, I construct a static, multi-market, partial equilibrium model of the California fuels markets to evaluate the supply response of RNG to existing California fuel policy, the Low Carbon Fuel Standard (LCFS). I also evaluate policy response of natural gas from fossil sources, gasoline, ethanol, diesel, and biodiesel fuels. Additionally, I apply a method of modeling consumer fuel switching to accurately reflect the extent to which fuel substitution is possible in the short term. I assess the economic surplus, climate, and RNG response to the LCFS policy and compare the policy efficiency of the LCFS to a hypothetical carbon tax. My findings indicate that the LCFS policy is sufficient to incentivize substantial quantities of RNG production; enough to supply the entire market for vehicular natural gas. Further, the LCFS is less efficient than a carbon tax, but when combined with a price ceiling, the policy approaches the efficiency of a carbon tax as the LCFS policy become more stringent.
    Keywords: renewable natural gas, methane abatement, fuel standards, multi-market partial equilibrium
    JEL: Q18 Q4 Q42 Q5
    Date: 2017–02–28
  5. By: Hanke, Philip; Philip, Hanke; Klaus, Heine
    Abstract: This paper analyzes the competition between jurisdictions for the relocation of firms and its implications for the various national and international subsidy control regimes (state aid control). We model the attraction of firms to jurisdictions through subsidies as a race with continuous investment over time, where local governments exert inefficiently high efforts, which increase with the number of competitors and their respective spending. This setting makes the case for better investment and subsidy controls by higher-level governments while emphasizing structural problems of implementation at the same time.
    JEL: H71 K21 L50
    Date: 2016
  6. By: Tobias Querbach; Christiane Arndt
    Abstract: Regulation is a critical tool by which governments seek to foster economic growth and social well-being. Countries in Latin America are increasingly investing in processes and institutions that support regulatory quality. Based on the OECD Indicators of Regulatory Policy and Governance (iREG) for Latin America 2016, this paper explores the state of play of regulatory policy in seven countries in Latin America and identifies potential opportunities to improve. The annex includes individual profiles of each of the countries covered, highlighting key achievements and challenges. The analysis of the data shows that countries in the LAC region have taken steps to improve their regulatory governance framework but important gaps remain in most countries in terms of the implementation of key tools, such as consultation with stakeholders, Regulatory Impact Assessment (RIA) and ex post evaluation. Strengthening the institutional oversight of the regulatory process will be critical to ensure the consistent implementation of these tools in the future.
    Keywords: better regulation, consultation, evaluation, regulatory impact assessment, regulatory policy, stakeholder engagement
    JEL: H11 K2 K4 N46
    Date: 2017–03–08

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