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on Regulation |
| By: | Hannu S. Laine; Jyri Salpakari; Erin E. Looney; Hele Savin; Ian Marius Peters; Tonio Buonassisi |
| Abstract: | Space conditioning, and cooling in particular, is a key factor in human productivity and well-being across the globe. During the 21st century, global cooling demand is expected to grow significantly due to the increase in wealth and population in sunny nations across the globe and the advance of global warming. The same locations that see high demand for cooling are also ideal for electricity generation via photovoltaics (PV). Despite the apparent synergy between cooling demand and PV generation, the potential of the cooling sector to sustain PV generation has not been assessed on a global scale. Here, we perform a global assessment of increased PV electricity adoption enabled by the residential cooling sector during the 21st century. Already today, utilizing PV production for cooling could facilitate an additional installed PV capacity of approximately 540 GW, more than the global PV capacity of today. Using established scenarios of population and income growth, as well as accounting for future global warming, we further project that the global residential cooling sector could sustain an added PV capacity between 20-200 GW each year for most of the 21st century, on par with the current global manufacturing capacity of 100 GW. Furthermore, we find that without storage, PV could directly power approximately 50% of cooling demand, and that this fraction is set to increase from 49% to 56% during the 21st century, as cooling demand grows in locations where PV and cooling have a higher synergy. With this geographic shift in demand, the potential of distributed storage also grows. We simulate that with a 1 m$^3$ water-based latent thermal storage per household, the fraction of cooling demand met with PV would increase from 55% to 70% during the century. These results show that the synergy between cooling and PV is notable and could significantly accelerate the growth of the global PV industry. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1902.10080&r=all |
| By: | Bocklet, Johanna (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Hintermayer, Martin (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Schmidt, Lukas (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Wildgrube, Theresa (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | With the increase of the linear reduction factor (LRF), the implementation of the market stability reserve (MSR) and the introduction of the cancellation mechanism (CM), the EU ETS changed fundamentally. We develop a discrete time model of the intertemporal allowance market that accurately depicts these reforms assuming that prices develop with the Hotelling rule as long as the TNAC is non-empty. A sensitivity analysis ensures the robustness of the model results regarding its input parameters. The accurate modelling of the EU ETS allows for a decomposition of the effects of the individual amendments and the evaluation of the dynamic efficiency. The MSR shifts emissions to the future but is allowance preserving. The CM reduces the overall emission cap, increasing allowance prices in the long run, but does not significantly impact the emission and price path in the short run. The increased LRF leads with 9 billion cancelled allowances to a stronger reduction than the CM and is therefore the main price driver of the reform. |
| Keywords: | Market Stability Reserve; Dynamic Optimization; Cap and Trade; EU ETS; Cancellation Mechanism; Intertemporal Trading |
| JEL: | C61 H23 H41 L52 P14 Q48 Q54 Q58 |
| Date: | 2019–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2019_004&r=all |
| By: | Heimvik, Arild (University of Bergen, Department of Economics); Amundsen, Eirik S. (University of Bergen, Department of Economics) |
| Abstract: | The paper analyzes the problem of achieving a target path of emission reductions in the electricity sector, using a scheme of tradable green certificates (TGC). There are two types of generation, renewable and fossil. The latter causes the emissions. The paper also examines effects from emission regulation on construction of new renewable generation capacity. Outcomes are compared with an emission fee and a subsidy. The analytical results are simulated with a numerical model and social surplus are calculated for the different instruments. Two versions of the percentage requirement are devised for the TGC scheme. Results show that the target path of emission reductions is achievable, but incentives for new renewable generation capacity will be sub-optimal, regardless of the version of the percentage requirement. The TGC scheme is neither the most accurate nor the most cost-efficient, instrument but it does lead to a smaller reduction of social surplus than a subsidy. |
| Keywords: | Emission regulation; energy policy; green certificates; Pigouvian taxes; subsidies |
| JEL: | C70 Q24 Q42 Q48 |
| Date: | 2019–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2019_001&r=all |
| By: | Karimu, Amin (CERE - the Center for Environmental and Resource Economics); Kiran B. Krishnamurthy, Chandra (CERE - the Center for Environmental and Resource Economics); Vesterberg, Mattias (CERE - the Center for Environmental and Resource Economics) |
| Abstract: | In this study, using sub-hourly appliance-level data from a representative sample of Swedish households on standard tariffs, we investigate the welfare and emission implications of moving to a mandatory dynamic pricing scheme. We treat demand during different hours of a day to affect utility differently, and account for the derived nature of electricity demand by explicitly considering the services (end-use demands) that drive hourly electricity demand. We use the flexible EASI demand system, which accommodates both observed and unobserved heterogeneity in preferences, to understand changes in load consequent to moving to dynamic pricing schemes. We find changes in load patterns across hours to be relatively small (with at most a three percent reduction during the morning peak, and a two percent increase in the off-peak times), and welfare and emissions to decrease slightly (a maximum of 0.2 percent and 0.25 percent, respectively). Overall, in the context of a decentralized electricity retail setting such as in Sweden, our results call into question both the desirability (from a short-run welfare perspective) or the feasibility (from a consumer perspective) of the emphasis on ensuring that the retail price of electricity be aligned to the hourly marginal cost. |
| Keywords: | Appliance holdings; Electricity; Energy demand; Demand system; Dynamic pricing |
| JEL: | C30 D12 Q41 |
| Date: | 2019–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2019_004&r=all |
| By: | Jesse Burkhardt; Kenneth Gillingham; Praveen K. Kopalle |
| Abstract: | This study examines a field experiment in Texas that includes pricing and informational interventions to encourage energy conservation during summer peak load days when the social cost of generation is the highest. We estimate that our critical peak pricing intervention reduces electricity consumption by 14%. Using unique high frequency appliance-level data, we can attribute 74% of this response to air conditioning. In contrast, we find minimal response to active information provision and conservation appeals. A complementary experimental program also lowers nighttime prices during the off-peak season, providing the first evidence of electric vehicle loadshifting in response to price. |
| JEL: | D83 L94 L98 Q41 Q48 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25576&r=all |
| By: | Bardey, David; Gromb, Denis; Martimort, David; Pouyet, Jérôme |
| Abstract: | A monopoly seller advises buyers about which of two goods best fits their needs but may be tempted to steer buyers towards the higher margin good. For the seller to collect information about a buyer's needs and provide truthful advice, the profits from selling both goods must lie within an implementability cone. In the optimal regulation, pricing distortions and information-collection incentives are controlled separately by price regulation and fixed rewards respectively. This no longer holds when the seller has private information about costs as both problems interact. We study the extent to which competition and the threat by buyers to switch sellers can substitute for regulation. |
| Keywords: | asymmetric information; Expertise; Mis-Selling; regulation |
| JEL: | D82 G24 I11 L13 L15 L51 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13543&r=all |
| By: | Sébastien Houde; Erica Myers |
| Abstract: | We estimate whether consumers respond to local energy costs when purchasing appliances. Using a dataset from an appliance retailer, we compare demand responsiveness to a measure of energy costs that varies with local energy prices versus purchase prices. We strongly reject that consumers are unresponsive to local energy costs under a wide range of assumptions. These findings run counter to the popular wisdom, which motivates energy standards, that energy costs are a shrouded attribute. Capital investments are an important channel for electricity demand response and may explain some of the large differences between short and long run electricity price elasticities. |
| JEL: | D12 D83 Q41 Q50 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25591&r=all |
| By: | Sarfati, Mahir (Royal Institute of Technology (KTH)); Hesamzadeh, Mohammed Reza (Royal Institute of Technology (KTH)); Holmberg, Pär (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Electricity markets employ different congestion management methods to handle the limited transmission capacity of the power system. This paper compares production efficiency and other aspects of nodal and zonal pricing. We consider two types of zonal pricing: zonal pricing with Available Transmission Capacity (ATC) and zonal pricing with Flow-Based Market Coupling (FBMC). We develop a mathematical model to study the imperfect competition under zonal pricing with FBMC. Zonal pricing with FBMC is employed in two stages, a day-ahead market stage and a re-dispatch stage. We show that the optimality conditions and market clearing conditions can be reformulated as a mixed integer linear program (MILP), which is straightforward to implement. Zonal pricing with ATC and nodal pricing is used as our benchmarks. The imperfect competition under zonal pricing with ATC and nodal pricing are also formulated as MILP models. All MILP models are demonstrated on 6-node and the modified IEEE 24-node systems. Our numerical results show that the zonal pricing with ATC results in large production inefficiencies due to the inc-dec game. Improving the representation of the transmission network as in the zonal pricing with FBMC mitigates the inc-dec game. |
| Keywords: | Congestion management; Zonal pricing; Flow-based market coupling |
| JEL: | C61 C72 D43 L13 L94 |
| Date: | 2019–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1264&r=all |
| By: | Jakub Sokolowski; Aneta Kielczewska; Piotr Lewandowski |
| Abstract: | The EU Member States are obliged to assess the scale of energy poverty in their respective national contexts. We propose a new definition of energy poverty in Poland, with different levels of specificity corresponding to the needs of different levels of administration. We also propose a set of five indicators for measuring energy poverty based on data from the Polish Household Budget Survey. Two expenditure-based indicators identify energy-poor households: a modified version of the Low Income High Cost indicator and an indicator based on actual energy expenditures. Three self-reported indicators related to financial capability, the physical condition of the dwelling, and the subjective level of thermal comfort are used to measure the severity of energy poverty. We find that all five indicators show that the older the dwelling is, the higher the risk of energy poverty is. Moreover, while the expenditure-based measures show that households living in detached houses have higher energy poverty rates than households living in multifamily buildings, the thermal comfort indicator shows the opposite relationship. Households living in dwellings without central heating are at a higher risk of energy poverty, according to all self-reported indicators. |
| Keywords: | fuel poverty, LIHC, thermal comfort, energy affordability |
| JEL: | I32 Q40 R29 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:report:rr012019&r=all |
| By: | Fujii, Hidemichi; Managi, Shunsuke; Kaneko, Shinji |
| Abstract: | This study analyzes air pollutant substances management in Chinese industrial sectors from 1998 to 2009. Decomposition analysis applying the logarithmic mean divisia index is used to analyze changes in air pollutant substances emissions by the following five factors: coal pollution intensity (CPI), end-of-pipe treatment (EOP), energy mix (EM), productive efficiency change (EFF), and production scale changes (PSC). We focus on the three pollutants which are sulfur dioxide (SO2), dust substance, and soot substance. We clarify SO2 emissions from Chinese industrial sectors have increased because of the increase in the production scale. However, the inducing EOP equipment and improvements in energy efficiency have prevented an increase in SO2 emissions commensurate with the production increasing. Second, soot emissions were successfully reduced and controlled in all industries except the steel industry between 1998 and 2009, even though the production scale expanded for these industries. This reduction is achieved because of improvements in the EOP equipment technology and in energy efficiency. Finally, dust emissions decreased by nearly 65% between 1998 and 2009 in the Chinese industrial sectors. This successful emissions reduction was achieved by implementing EOP and pollution prevention activities during the production processes, especially in the cement industry. We clarify that pollution prevention effect in cement industry is mainly caused by production technological development rather than scale merit. |
| Keywords: | Sustainable industrial production; Pollution prevention; End-of-pipe; Air pollution; Scale merit; China |
| JEL: | Q01 Q53 Q56 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92234&r=all |
| By: | Kounetas, Konstantinos; Stergiou, Eirini |
| Abstract: | Assessment of industrial-level energy efficiency development is a critical research topic that has infiltrated in the global battle against climate change. A balanced panel of fourteen European industries from twenty-four countries for the period 1995-2011 is introduced into a metafrontier framework. Reflecting the divergent views on the importance of desirable and undesirable outcomes in the pursuit of energy efficiency, the proposed approach estimate industrial performance by prioritizing either economic or environmental criterion incorporating technological heterogeneity. It is found that small-scale economies exhibit persistent high energy efficiency scores. Regarding energy efficiency determinants, path dependence phenomena have a strong presence, climate characteristics occurs, while energy mix displays linear but also non-linear relationships. Finally, regardless of the method employed, there is a strong evidence of conditional and unconditional convergence. |
| Keywords: | European industries, Energy efficiency, Technology heterogeneity,Directional distance function, Energy mix, Path dependence, Convergence. |
| JEL: | D24 D29 Q40 Q49 |
| Date: | 2019–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92314&r=all |
| By: | Schaufele, Brandon |
| Abstract: | Two basic propositions underlying the economics of taxation -- that excess burdens increase in elasticities and tax rates -- are shown to cause the stringency of a Pigouvian tax to vary nonlinearly with output prices. This varying stringency of carbon taxation contributes to unfavorable competitiveness consequences following shocks to demand. Empirically, this paper measures the change in carbon tax stringency by structurally recovering the supply schedule for a particular industry such that elasticities and carbon tax rates change according to the distribution of output prices. Based on this supply function, the relationship between marginal excess burden, a measure of policy stringency from the industry's perspective, and product prices is estimated. Results for the Canadian cattle industry show that with moderately high output prices, supply elasticities are small, tax rates are low and the efficiency cost of a carbon tax (gross of environmental benefits), such as the one introduced in Canada, is less than \$0.01 per dollar tax revenue. As prices decline, supply curves become increasingly elastic, tax rates rise and marginal excess burdens grow rapidly. |
| Keywords: | Carbon pricing; cattle; marginal excess burden; production function |
| JEL: | H23 Q1 Q5 |
| Date: | 2019–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92132&r=all |
| By: | Kim, Jungwook (Korea Development Institute) |
| Abstract: | Private–public partnership (PPP) methods are considered to be an effective way to narrow the gap between demand and supply of social infrastructure. If successfully pursued, PPP can deliver benefits to users, governments, and the private sector, or the so-called triple wins. Enhancing efficiency by reducing cost and time overruns is beneficial to users and governments, and better quality of service is expected via PPP. It will also examine the factors that have been important for shaping the county’s PPP landscape, including fiscal soundness, unsolicited project proposals, and the refinancing and renegotiation of PPPs. PPPs are not a must-have solution but an option for building and upgrading infrastructure. In conclusion, PPPs are being promoted because it can mobilize needed resources from the private sector, maximize value for money, bring creativity and efficiency to a project, and be a source of fiscal stimulus. That said, countries should be clear on why they are promoting the PPP modality for infrastructure. |
| Keywords: | economic growth; infrastructures; public–private partnership; value for money |
| JEL: | E60 H54 H81 |
| Date: | 2018–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0557&r=all |
| By: | Kurdin, Alexander (Курдин, Александр) (The Russian Presidential Academy of National Economy and Public Administration) |
| Abstract: | The paper reflects the systematization and historical analysis of approaches to the regulation of natural monopolies that have been used in the United States and Europe over the past century. The focus is on the oil and gas sector, electric power industry and rail transportation as the largest areas of activity of natural monopolies. The study of international experience allows us to identify trends in the development of regulation of natural monopolies and assess the prospects for applying this experience to Russian enterprises. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:021928&r=all |
| By: | Cespa, Giovanni; Vives, Xavier |
| Abstract: | We assess the consequences for market quality and welfare of different entry regimes and exchange pricing policies in a context of limited market participation. To this end we integrate a two-period market microstructure model with an exchange competition model with entry in which exchanges supply technological services, and have market power. We find that technological services can be strategic substitutes or complements in platform competition. Free entry of platforms delivers a superior outcome in terms of liquidity and (generally) welfare compared to the case of an unregulated monopoly. Controlling entry or, even better typically, platform fees may further increase welfare. The market may deliver excessive or insufficient entry. However, if the regulator is constrained to not making transfers to platforms then there is never insufficient entry. |
| Keywords: | Cournot with free entry; Endogenous Market Structure; Industrial Organization of Exchanges; market fragmentation; platform competition; welfare |
| JEL: | G10 G12 G14 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13415&r=all |
| By: | Zare Mehrjerdi, Mahla; Saghaian, Sayed |
| Keywords: | Agribusiness |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea19:284325&r=all |