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on Regulation |
| By: | Germeshausen, Robert; Wölfing, Nikolas |
| Abstract: | The parameterisation of energy and climate policies often depends on the technology, which is price-setting in electricity markets. We propose two simple approaches to determine marginal technologies in electricity wholesale from available data. Both approaches are complementary, computationally lightweight, and do not require specific software. Identification is based upon assumptions which are commonly used in more complex energy system models and which vary according to the approach. We illustrate the relevance of our approach for consistent policy parameterization with an example from the compensation scheme for indirect emission costs from the EU Emissions Trading Scheme (EU ETS). We find that the current policy design severely overweighs CO2 emissions from lignite power plants in the CWE power market. |
| Keywords: | marginal technology,price formation,power market,indirect cost compensation |
| JEL: | Q41 Q48 Q58 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19031&r=all |
| By: | Matthias Jordan; Volker Lenz; Markus Millinger; Katja Oehmichen; Daniela Thr\"an |
| Abstract: | Meeting the defined greenhouse gas (GHG) reduction targets in Germany is only possible by switching to renewable technologies in the energy sector. A major share of that reduction needs to be covered by the heat sector, which accounts for ~35% of the energy based emissions in Germany. Biomass is the renewable key player in the heterogeneous heat sector today. Its properties such as weather independency, simple storage and flexible utilization open up a wide field of applications for biomass. However, in a future heat sector fulfilling GHG reduction targets and energy sectors being increasingly connected: which bioenergy technology concepts are competitive options against other renewable heating systems? In this paper, the cost optimal allocation of the limited German biomass potential is investigated under longterm scenarios using a mathematical optimization approach. The model results show that bioenergy can be a competitive option in the future. Especially the use of biomass from residues can be highly competitive in hybrid combined heat and power (CHP) pellet combustion plants in the private household sector. However, towards 2050, wood based biomass use in high temperature industry applications is found to be the most cost efficient way to reduce heat based emissions by 95% in 2050. |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1908.10065&r=all |
| By: | Ambec, Stefan (Toulouse School of Economics, University of Toulouse Capitol (INRA) and University of Gothenburg); Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | We propose informational spillovers as a new rationale for the use of multiple policy instruments to mitigate a single externality. We investigate the design of a pollution standard when the firms’ abatement costs are unknown and emissions are taxed. A firm might abate pollution beyond what is required by the standard by equalizing its marginal abatement costs to the tax rate, thereby revealing information about its abatement cost. We analyze how a regulator can take advantage of this information to design the standard. In a dynamic setting, the regulator relaxes the initial standard in order to induce more information revelation, which would allow her to set a standard closer to the first best in the second period. Updating standards, though, generates a ratchet effect since the low-cost firms might strategically hide their cost by abating no more than required by the standard. We provide conditions for the separating equilibrium to hold when firms act strategically. We illustrate our theoretical results with the case of NOx regulation in Sweden. We find evidence that the firms that are taxed experience more frequent standard updates. |
| Keywords: | pollution; externalities; asymmetric information; environmental regulation; tax; standards; multiple policies; ratchet effect; nitrogen oxides |
| JEL: | D04 D21 H23 L51 Q48 Q58 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0774&r=all |
| By: | Cloete, Schalk; Hirth, Lion |
| Abstract: | Capital-intensive CO2 capture plants become uneconomical at the low running hours implied by a renewables-based power system. To address this challenge, the novel gas switching reforming (GSR) power and hydrogen plant was recently proposed. When electricity is scarce, GSR generates power. When electricity is abundant, rather than shutting down, GSR keeps operating and produces hydrogen instead, maintaining a high capacity factor for all CO2 capture, transport, and storage infrastructure. This study assesses the interplay between this flexible GSR technology and variable renewables using a power system model. The model optimizes investment and hourly dispatch of 13 different technologies to minimize total system costs. Results show that the inclusion of GSR brings substantial benefits relative to conventional CO2 capture. When a CO2 price of €100/ton is implemented, inclusion of GSR increases the optimal wind and solar share from 32% to 47%, lowers total system costs by 8%, and reduces total system emissions from 45 to 4 kgCO2/MWh. In addition, GSR produces clean hydrogen equivalent to about 90% of total electricity demand, which can be used to decarbonize transport and industry. GSR could therefore become a key enabling technology for a decarbonization effort led by wind and solar power. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:202076&r=all |
| By: | Christina Littlejohn; Stef Proost |
| Abstract: | The transport sector is the only sector where carbon emissions continue to grow. This has led policy makers to propose ambitious policies to reduce emissions in the car sector, in particular fuel efficiency standards, portfolio mandates for Electric Vehicles and purchase taxes or subsidies. A portfolio mandate describes a minimum quota of annual electric vehicle sales. We use a two-period model for the car manufacturing sector to compare the cost efficiency of these policies. The model has gasoline fuelled cars (GV) compete with battery electric cars (EV). Both types of cars have endogenous technological progress that is triggered by environmental policies, including tradable fuel efficiency standards, portfolio mandates, carbon taxes, purchase taxes and R&D subsidies. EVs can serve as batteries that permit grid operators to shift off peak (renewable) electricity to peak hour supply. The model is calibrated to evaluate the EU policy to reduce average carbon emissions of cars by 37,5% in 2030. We assess the cost-efficiency of three types of policy instruments evaluating production costs, fuel costs, and externalities. We find that a fuel efficiency standard targeting gasoline cars achieves emission reductions at a much lower cost than a portfolio mandate for Electric cars. |
| Keywords: | electric vehicles, EU climate policy, climate change, portfolio mandate, R&D |
| JEL: | Q54 Q58 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7789&r=all |
| By: | Schillinger, Moritz (University of Basel); Weigt, Hannes (University of Basel) |
| Abstract: | In an electricity system, demand and supply have to be balanced in real time. Since most energy is traded before real time already in forward, day-ahead and intraday markets imbalances can occur. To ensure the balance between demand and supply even if power plants deviate from their schedules, the system operator procures balancing capacity and energy in balancing markets. The market outcomes may significantly differ from one country to the other depending on the underlying generation technologies and market design. In this paper, we have a look at the balancing market prices of a hydro-dominated electricity system using Switzerland as a case study. By using a short-term hydropower operation model and a set of Swiss hydropower plants, we are able to identify a competitive benchmark for Swiss balancing market prices defined by the opportunity costs of hydropower for providing balancing capacity. Our results show that Swiss balancing market prices are influenced by several drivers but do not hint at any market imperfections. |
| Keywords: | hydropower ; cross-market optimization ; balancing ; Switzerland |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2019/13&r=all |
| By: | Baiardi, Donatella |
| Abstract: | Yes, they matter. To reply to this question, we assess the impact of energy efficiency and renewable energy policies on six different air pollutants: carbon dioxide (CO2), methane (CH4), nitrous oxides (N2O), non-methane volatile organic compounds (NMVOCs), nitrogen oxides (NOx) and sulphur dioxide (SO2) in the case of the Italian provinces in the decade 2005-2015. The empirical analysis is performed in a panel data context by means of propensity score matching with multiple treatment, since our framework is characterized by the presence of two treatments, corresponding to the two different energy policies analyzed, i.e. energy efficiency policy and renewable policy. These two policies can be applied by each province as mutually exclusive strategies or as joint strategies. Our results show that renewable policies are the most efficient in terms of climate goals especially when planned on a local scale, while energy efficiency policies alone are ineffective. Moreover, the success of these policies depends on the type of pollutant to be reduced. Finally, we note that the effect of these two policies was reinforced by the counter-cyclical fiscal policies implemented to contrast the Global Financial Crisis in 2008. |
| Keywords: | Energy efficiency policies,Renewable energy policies,Global air pollutants,Local air pollutants,Propensity score matching with multiple treatment,Italian provinces |
| JEL: | Q50 Q40 Q53 Q58 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:202077&r=all |
| By: | Schillinger, Moritz (University of Basel) |
| Abstract: | In 2017, the Swiss electorate voted to transition the Swiss energy system towards energy efficiency and renewable energy resources. This transition entails many changes to the existing energy technologies and the supporting markets. In particular, this paper focuses on the Swiss electricity balancing markets and their adaptation in the context of the energy transition. I use an operational model for a set of Swiss hydropower plants to quantify the opportunity costs of balancing provision for hydropower under the past, current, and future Swiss balancing market designs. My results show that compared to the former balancing market design, significant cost savings can be achieved by the planned modifications. In addition, I show how the opportunity cost dynamics may change in the future with an increasing share of variable renewable energy in the system. |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2019/14&r=all |
| By: | Betz, Regina (University of Basel); Geissmann, Thomas; Kosch, Mirjam; Schillinger, Moritz (University of Basel); Weigt, Hannes (University of Basel) |
| Abstract: | Water fees are a remuneration to be paid by the operators of hydropower plants to the owners of the water resource right. In Switzerland the fee is based on the gross capacity of the plant and independent from market conditions. This regulation implies that cantons and municipalities have a constant income from water fees, because the whole market risk lies with the producers. As revenues of hydropower companies have dropped after 2012 due to low electricity prices Swiss hydropower producers have been calling for a change in the water fee regime. The currently most probable policy change is a flexibilization of water fees. Within this paper we analyse the impacts of different water fee reform options - and how they depend on market conditions - from the hydropower producers (companies) and resource owners (cantons and municipalities) perspective. We find that electricity market price developments dominate the water fees in most cases, but for a range of electricity prices between 40 and 60 CHF/MWh water fees can make a difference. However, there is a larger variability between plants than between market scenarios, i.e., in every scenario, we find plants that make profits and others that make losses. We also show that a uniform water fee favors storage/pump-storage plants, whereas a differentiation of the water fee level by plant type favors run-of-river units. |
| Keywords: | hydropower ; Switzerland ; water fees |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2019/12&r=all |
| By: | Mehdi Abbas (Pacte, Laboratoire de sciences sociales - UPMF - Université Pierre Mendès France - Grenoble 2 - UJF - Université Joseph Fourier - Grenoble 1 - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Catherine Locatelli (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes) |
| Abstract: | The interdependencies between the EU and its external natural gas suppliers and Russia question the transformative impact of interdependence linked to hybridization processes. Our approach combines theories of institutional change, and French Regulation Theory. These approaches lead to a new look to characterize the way in which the confrontation of two regulatory systems (EU and Russia) is resolved today. The importance of the European market leads however to an adaptation of the Russian governance model for gas exchanges. But it also implies a transformation of the European model. The competitive norm acts as a lever to bring about hybridization of regulations in the Russian gas sector and EU energy policy. |
| Keywords: | Institutional hybridization,natural gas exchanges,relationship between EU and Russia,institutional change |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02272171&r=all |
| By: | Fullerton, Don; Ta, Chi L. |
| Keywords: | Resource/ Energy Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291235&r=all |
| By: | Nathan Dahlin; Rahul Jain |
| Abstract: | We consider a two stage market mechanism for trading electricity including renewable generation as an alternative to the widely used multi-settlement market structure. The two stage market structure allows for recourse decisions by the market operator, which is not possible in today's markets. We allow for different generation cost curves in the forward and the real-time stage. We have considered costs of demand response programs, and black outs but have ignored network structure for the sake of simplicity. Our first result is to show existence (by construction) of a sequential competitive equilibrium (SCEq) in such a two-stage market. We then argue social welfare properties of such an SCEq. We then design a market mechanism that achieves social welfare maximization when the market participants are non-strategic. |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1909.00508&r=all |
| By: | OECD |
| Abstract: | This paper takes stock of recent developments related to online consumer ratings and reviews and their effects on consumer behaviour. It provides an overview of key consumer benefits and risks associated with user-generated feedback, and identifies consumer policy challenges, including misleading and deceptive practices, a lack of accuracy, and consumer biases. It also points to issues for further consideration by consumer policy makers and enforcement authorities, as well as businesses and consumer organisations. |
| Date: | 2019–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaab:289-en&r=all |
| By: | Haqiqi, Iman; Hertel, Thomas W. |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291097&r=all |
| By: | Pestel, Nico (IZA); Wozny, Florian (IZA) |
| Abstract: | This paper studies health effects from restricting the access of high-emission vehicles to innercities by implementing Low Emission Zones. For identification, we exploit variation in the timing and the spatial distribution of the introduction of new Low Emission Zones across cities in Germany. We use detailed hospitalization data combined with geo-coded information on the coverage of Low Emission Zones. We find that Low Emission Zones significantly reduce levels of air pollution in urban areas and that these improvements in air quality translate into population health benefits. The number of diagnoses related to air pollution is significantly reduced for hospitals located within or in close proximity to a Low Emission Zone after it becomes effective. The results are mainly driven by reductions in chronic cardiovascular and respiratory diseases. |
| Keywords: | Low Emission Zone, air pollution, health, Germany |
| JEL: | I18 Q52 Q53 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12545&r=all |