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on Regulation |
| By: | Hanan Ishaque (Alpen-Adria University Klagenfurt) |
| Abstract: | The use of renewable energy (RE) sources contributes to the sustainable development goals of climate change mitigation and access to clean and affordable energy. To diversify the electricity mix, reduce reliance on fossil-fuels and abate powers sector CO2 emissions, the Government of Pakistan developed a policy to incentivize RE deployment by offering upfront feed-in tariffs (FIT). This paper attempts to estimate the cost of CO2 emission abatement with RE incentives for solar and wind power plants for the period 2015-2020. The implicit cost of CO2 abatement defined as the ratio of net cost of RE to CO2 emissions avoided is estimated to be $116/tCO2 for wind and $78/tCO2 for solar power. The payment to generators guaranteed by FITs is a major determinant and explains the difference between the implicit abatement costs of solar and wind power. These estimates, however, are sensitive to the resources displaced by RE and the fuel prices. This study provides a framework to the policymakers for analysis of RE incentives recognizing the dynamic nature of the abatement cost metric and discusses policy implications in the light of the results. |
| Keywords: | CO2 abatement cost, renewable energy, feed-in tariff, Pakistan |
| JEL: | C54 E60 O13 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:8209672&r=reg |
| By: | Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros); Jorge Padilla (Compass Lexecon) |
| Abstract: | This paper examines the optimal capacity choices of conventional power generators after the introduction of renewable production. We start with a basic and generally accepted model of the liberalized wholesale electricity market in which firms have insufficient incentives to invest and we illustrate how the entry of renewable generation tends to aggravate that problem. We show that the incentives to invest in firm capacity (e.g. conventional thermal plants) may be restored by means of a capacity auction mechanism. That mechanism is vulnerable and, hence, may prove ineffective unless governments can credibly commit not to sponsor the entry of new capacity outside the auction mechanism. We explain that such commitment may be particularly difficult in the current political context where energy policy is conditioned by environmental and industrial-policy goals. We finally propose a way to enhance the credibility of capacity auctions by committing to optimally retire idle (conventional) power plants in response to entry outside the auction. |
| Keywords: | Conventional generation, renewable energy, security of supply, missing-money problem, environmental goals, capacity payments. |
| JEL: | L51 L94 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2018_1801&r=reg |
| By: | Fels, Markus |
| Abstract: | Cost-sharing is regarded as an important tool to reduce moral hazard in health insurance. Contrary to standard prediction, however, such requirements are found to decrease utilization both of efficient and of inefficient care. I employ a simple model that incorporates two possible explanations - consumer mistakes and limited access - to assess the welfare implications of different insurance designs. I find cost-sharing never to be an optimal solution as it produces two novel inefficiencies by limiting access. An alternative design, relying on bonuses, has no such side effects and achieves the same incentivization. |
| Keywords: | Moral Hazard,Limited Access,Cost-Sharing,Insurance Rebates |
| JEL: | D82 I13 I14 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181532&r=reg |
| By: | Renner, Sebastian; Lay, Jann; Schleicher, Michael |
| Abstract: | We study the welfare, energy poverty, and CO2 emission implications of energy price change scenarios in Indonesia. Our analysis extends previous analyses of energy price impacts at the household level in several ways. First, by employing a household energy demand system (QUAIDS), we are able to distinguish between first- and second-order welfare effects over the income distribution. Our analysis shows considerable heterogeneity of welfare impacts. For gasoline and electricity, first-order calculations overestimate welfare effects by 10 to 20 per cent for price changes between 20 and 50 per cent. Second, our results point to the ownership of energy-processing durables as another source of impact heterogeneity. Poor households that own these goods may be hit particularly strongly by energy price increases. Third, we extend the welfare analysis beyond the money-metric utility effects and look at energy poverty, which is understood as the absence of or imperfect access to reliable and clean modern energy services. Drawing on the estimated demand function, we find that price increases have substantial effects on energy poverty. Fourth, our analysis explicitly considers the emissions effects of energy price scenarios. We find that reduced household energy demand implies a substantial reduction in emissions. The analysis thus indicates that energy prices may serve as an effective mitigation instrument but also have important adverse welfare effects. The latter can, however, be mitigated by appropriate compensation policies. |
| Keywords: | energy subsidies,climate policy,poverty,distributional effects,energy poverty |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gigawp:302&r=reg |
| By: | Alvaro Gonzalez-Castellanos; David Pozo; Sergio Martinez; Luis Lopez; Ingrid Oliveros |
| Abstract: | The creation of the Renewable Energy Law (Law 1715 of 2014) promotes the introduction of large-scale renewable energy generation in the Colombian electricity market. The new legislation aims to diversify the country's generation matrix, mainly composed of hydro and fuel-based generation, with a share of 66% and 34% respectively. Currently, three wind generation projects, with an aggregated capacity of 500 MW, have been commissioned in the North of the country. This study analyses the economic impact of the large-scale introduction of wind generation on both, the market spot price and conventional generation plants operation. For this purpose, the study builds a unit commitment model to mimic the current market legislation and the system's generation data. We show that the introduction of wind energy into the Colombian electricity market would impact the generation share of large hydro and gas-fired power plants. The hydro generation has an important role in balancing the generation for fluctuations on the wind resource. Meanwhile, the gas-fired plants would decrease their participation in the market, proportionally to the introduction of wind generation in the system, by as low as 20% of its current operation. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1810.11458&r=reg |
| By: | Debasis Mitra; Abhinav Sridhar |
| Abstract: | The formation of consortiums of a broadband access Internet Service Provider (ISP) and multiple Content Providers (CP) is considered for large-scale content caching. The consortium members share costs from operations and investments in the supporting infrastructure. Correspondingly, the model's cost function includes marginal and fixed costs; the latter has been important in determining industry structure. Also, if Net Neutrality regulations permit, additional network capacity on the ISP's last mile may be contracted by the CPs. The number of subscribers is determined by a combination of users' price elasticity of demand and Quality of Experience. The profit generated by a coalition after pricing and design optimization determines the game's characteristic function. Coalition formation is by a bargaining procedure due to Okada (1996) based on random proposers in a non-cooperative, multi-player game-theoretic framework. A necessary and sufficient condition is obtained for the Grand Coalition to form, which bounds subsidies from large to small contributors. Caching is generally supported even under Net Neutrality regulations. The Grand Coalition's profit matches upper bounds. Numerical results illustrate the analytic results. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1810.10660&r=reg |
| By: | Renner, Sebastian; Lay, Jann; Greve, Hannes |
| Abstract: | We analyse the effects of environmental taxes on welfare and carbon emissions at the household level for the case of Mexico. The integrated welfare-environmental analysis, which is based on a censored energy consumer demand system, extends previous work in two ways. First, the estimation of a full matrix of substitution elasticities allows us to test the necessity of incorporating second-order effects into the welfare analysis. Second, the substitution elasticities derived from the demand system are used to estimate the shortrun CO2 emission-reduction potential. We find that first-order approximations of welfare effects provide reasonable estimates, particularly for carbon taxes. Analog to evidence in other low- and middle-income countries, the taxation of all energy items is found to be regressive, with the exception of motor fuels. The inclusion of CH4 and N2O in a carbon tax regime comes with particularly regressive impacts because of its strong effects on food prices. The analysis of the emission implications of different tax scenarios indicates that short-run emission reductions at the household level can be substantial - though the effects depend on how revenue is recycled. This effectiveness combined with moderate and manageable adverse distributional impacts renders the carbon tax a preferred mitigation instrument. Considering the large effect of food price increases on poverty and the limited additional emission-saving potential, the inclusion of CH4 and N2O in a carbon tax regime is not advisable. |
| Keywords: | climate policy,energy policy,Mexico,poverty,distributional effects |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gigawp:301&r=reg |
| By: | Johansson, Per-Olov (Stockholm School of Economics); Kriström, Bengt (Department of Economics, SLU) |
| Abstract: | This paper offers a non-technical overview of the issues involved when applying cost-benefit analysis (CBA) to hydropower, both in terms of new installations and changing existing regulatory structures. Our focus is on the conceptual and empirical problems of applying CBA to provide decision support in such cases. A large body of literature now exists on the social net values of generating electricity from moving water. The studies focusing values related to the ecological system include, but are not limited to, effects on climate, aesthetics, landscape, recreation and wildlife. Taken together, they confirm the view that the public invariably seems to place significant values on the integrity of the ecological system. It does, however, not seem possible to draw general conclusions from the literature on whether or not a given (dis)investment will pass a cost-benefit test; the end-result depends entirely on the specifics. |
| Keywords: | Cost-Benefit Analysis; Ecosystem Services; Energy; Sustainable Energy System; Hydropower |
| JEL: | H43 Q41 Q42 Q51 |
| Date: | 2018–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2018_009&r=reg |
| By: | Geraci, Andrea (University of Oxford); Nardotto, Mattia (KU Leuven); Reggiani, Tommaso G. (Masaryk University); Sabatini, Fabio (Sapienza University of Rome) |
| Abstract: | We study how the diffusion of broadband Internet affects social capital using two data sets from the UK. Our empirical strategy exploits the fact that broadband access has long depended on customers' position in the voice telecommunication infrastructure that was designed in the 1930s. The actual speed of an Internet connection, in fact, rapidly decays with the distance of the dwelling from the specific node of the network serving its area. Merging unique information about the topology of the voice network with geocoded longitudinal data about individual social capital, we show that access to broadband Internet caused a significant decline in forms of offline interaction and civic engagement. Overall, our results suggest that broadband penetration substantially crowded out several aspects of social capital. |
| Keywords: | ICT, broadband infrastructure, networks, Internet, social capital, civic capital |
| JEL: | C91 D9 D91 Z1 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11855&r=reg |
| By: | Francesco Lamperti (Université Panthéon-Sorbonne - Paris 1 (UP1)); Giovanni Dosi (Laboratory of Economics and Management); Mauro Napoletano (Observatoire français des conjonctures économiques); Andrea Roventini (Laboratory of Economics and Management (LEM)); Sandro Sapio (Universita degli studi di Napoli "Parthenope" [Napoli]) |
| Abstract: | In this work, we employ an agent-based integrated assessment model to study the likelihood of transition to green, sustainable growth in presence of climate damages. The model comprises heterogeneous fossil-fuel and renewable plants, capital- and consumption-good firms and a climate box linking greenhouse gasses emission to temperature dynamics and microeconomic climate shocks affecting labour productivity and energy demand of firms. Simulation results show that the economy possesses two statistical equilibria: a carbon-intensive lock-in and a sustainable growth path characterized by better macroeconomic performances. Once climate damages are accounted for, the likelihood of a green transition depends on the damage function employed. In particular, aggregate and quadratic damage functions overlook the impact of climate change on the transition to sustainability; to the contrary, more realistic micro-level damages are found to deeply influence the chances of a transition. Finally, we run a series of policy experiments on carbon (fossil fuel) taxes and green subsidies. We find that the effectiveness of such marketbased instruments depends on the different channels climate change affects the economy through, and complementary policies might be required to avoid carbon-intensive lock-ins. |
| Keywords: | Climate change; Agent based models; Transition; Energy policy; Growth |
| JEL: | C63 Q40 Q50 Q54 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/5vt1fet9fq9o5pkgj2qh2vn1cm&r=reg |
| By: | Fischer, Christian; Rasch, Alexander |
| Abstract: | We analyze a situation in which two horizontally differentiated firms compete in two-part tariffs (i.e., a linear and fixed price), and some consumers are not informed about the linear per-unit price. We show that there is a non-monotone relationship between the degree of consumer-side transparency and firm profits. Moreover, different from a situation without uninformed consumers, firms may make higher profits under two-part tariffs than under fixed fees only. There is also a non-monotone relationship between transparency and consumer surplus. Our model can explain why firms are against the abolishment of roaming fees and why the European Commission (EC) promotes it. |
| Keywords: | fixed fee,linear price,roaming,transparency,two-part tariff |
| JEL: | D43 L13 L42 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181642&r=reg |
| By: | ITF |
| Abstract: | This report identifies policy priorities, megatrends and pressing issues regarding the decarbonisation of urban passenger transport. It presents the results of an expert survey on important challenges in the area and summarises the findings of a workshop with 36 experts from 12 countries regarding strategies for the transition to carbon-neutral urban passenger transport. |
| Date: | 2018–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:itfaac:59-en&r=reg |
| By: | Gérard Pogorel (Télécom ParisTech (Institut Mines-Télécom)) |
| Date: | 2018–10–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01892202&r=reg |
| By: | David A. Belsley; Roy E. Welsch |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:139&r=reg |
| By: | Chen, Chaoyi; Polemis, Michael; Stengos, Thanasis |
| Abstract: | We employ a pooled panel threshold model along the lines of Seo and Shin (2016) within an error correction framework to re-investigate the “rockets and feathers” hypothesis. The empirical results confirm the superiority of the threshold model compared to the baseline linear specifications, while attributing the asymmetric gasoline adjustment mechanism to Exchange Rate Pass Through (ERPT). |
| Keywords: | Gasoline asymmetry; Threshold; ERPT; Error Correction Model; EU |
| JEL: | C24 L16 |
| Date: | 2018–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89575&r=reg |