nep-reg New Economics Papers
on Regulation
Issue of 2020‒04‒06
fourteen papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Reforming Inefficient Energy Pricing: Evidence from China By Koichiro Ito; Shuang Zhang
  2. Residential Energy Efficiency Investment and Demand Response Under Different Electricity Pricing Schemes: A Physical-Microeconomic Approach. By Walid Matar
  3. An economic assessment of the residential PV self-consumption support under different network tariffs By Olivier Rebenaque
  4. The energy transition : Does ownership matter for realizing public interest objectives? By P.W.J. de Bijl; Helanya Fourie
  5. Household fuel choice and use: A multiplediscrete-continuous framework By Melkamu Daniel , Aemiro
  6. Automated Vehicles are Expected to Increase Driving and Emissions Without Policy Intervention By Rodier, Caroline; Jaller, Miguel; Pourrahmani, Elham; Pahwa, Anmol; Bischoff, Joschka; Freedman, Joel
  7. Technology, Sustainability, and Marketing of Battery Electric and Hydrogen Fuel Cell Medium-Duty and Heavy-Duty Trucks and Buses in 2020-2040 By Burke, Andrew; Sinha, Anish Kumar
  8. Forecasting natural gas prices using highly flexible time-varying parameter models By Gao, Shen; Hou, Chenghan; Nguyen, Bao H.
  9. Household heterogeneity in valuing electricity demand flexibility services By Melkamu Daniel , Aemiro Melkamu Daniel
  10. CO2 Mitigation Policy for Indian Thermal Power Sector-Potential Gains from Emission Trading By Surender Kumar; Shunsuke Managi; Rakesh Kumar Jain
  11. Measuring the Cost of Regulation: A Text-Based Approach By Charles W. Calomiris; Harry Mamaysky; Ruoke Yang
  12. Pollution emission and institutions nexus in Africa By Mignamissi, Dieudonné
  13. Ride-Hailing Holds Promise for Facilitating More Transit Use in the San Francisco Bay Area By Alemi, Farzad; Rodier, Caroline
  14. Characteristics and Experiences of Ride-Hailing Drivers with Plug-in Electric Vehicles By Sanguinetti, Angela; Kurani, Ken

  1. By: Koichiro Ito; Shuang Zhang
    Abstract: Inefficient energy pricing hinders economic development in many countries. We examine long-run effects of a recent heating reform in China that replaced a commonly-used fixed-payment system with individually-metered pricing. Using staggered policy rollouts and administrative data on household-level daily heating consumption, we find that the reform induced long-run reductions in heating usage and generated substantial welfare gains. Consumers gradually learned how to conserve heating effectively, making short-run evaluations underestimate the policy impacts. Our results suggest that energy price reform is an effective way to improve allocative efficiency and air quality in developing countries, where unmetered-inefficient pricing is still ubiquitous.
    JEL: L38 L51 L97 O1 O38 O44 Q4 Q41 Q5 Q53 Q56
    Date: 2020–03
  2. By: Walid Matar (King Abdullah Petroleum Studies and Research Center)
    Abstract: This paper expands on a previously-presented methodology that merges the physical properties of energy with microeconomic principles: The physical side of the model informs how much electricity is used to satisfy services that people desire, while the microeconomic side imposes a utility function to represent household satisfaction. This paper adds energy efficiency investment to the price-based behavioral demand response and presents results representative of the long-run steady-state. It examines several electricity pricing schemes and energy efficiency options, with the costs and benefits of each option explicitly modeled in the physical representation.
    Keywords: Microeconomics, Electricity pricing schemes, Economic modelling, Household satisfaction
    Date: 2020–03–24
  3. By: Olivier Rebenaque (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEC - Chaire Economie du Climat - Université Paris Dauphine-PSL)
    Abstract: By generating their own electricity with photovoltaic (PV) panels, households are less dependent on the grid. However, because there is a mismatch between PV generation and consumption, the economic benefits from the bill savings are usually low compared to the economic compensation of the excess electricity fed into the grid. The economic benefits may drop by the implementation of Time-of-Use tariffs or capacity tariff because the prices and the peak load might be higher in the evening at night when PV generation does not occur. Stationary batteries might increase PV self-consumption by storing PV production when electricity prices are low and releasing it during peak prices. However, Feed-in-tariffs applied on the excess generation does not encourage prosumers to invest in a battery. In this paper, we assess the profitability of a PV investment under the current French subsidy scheme. Then, we propose an alternative policy which guarantees an upfront purchase subsidy for the PV and battery investments but without Feed-in tariffs. Based on this alternative policy, we simulate economic benefits from various PV and battery capacities with different pricings. We show that PV self-consumption investment is more profitable with Feed-in tariffs than with a battery premium under Time-of-Use and capacity tariff. Nonetheless, the current subsidy scheme is costly compared to the implementation of a battery premium. Thus, some policy recommendations are provided to improve subsidy scheme.
    Keywords: Battery storage profitability,self-consumption,network tariff,Simulation model,LCOE,energy policy
    Date: 2020–02
  4. By: P.W.J. de Bijl; Helanya Fourie
    Abstract: This paper explores the relationship between local public ownership and the sustainability mission of companies in the energy transition. Public ownership may matter due to "contractual incompleteness" where legislation and regulation fall short in dealing with market failures or addressing public interests. Ownership provides a measure of influence and control over the mission and strategy of a company, which is important considering the unanticipated consequences of the energy transition. The role of municipal ownership is underlined by the growing popularity of district heating and cooling systems and the impact of the energy transition on the urban environment. Highlights • It’s impossible to anticipate and regulate all consequences of the energy transition • Market failure may arise due contractual incompleteness • Public ownership can align the objectives of energy companies with public interests • Spatial impacts of the energy transition require shareholders with local interests
    Keywords: energy transition, public ownership, incomplete contracts
    Date: 2019–12
  5. By: Melkamu Daniel , Aemiro (CERE - the Center for Environmental and Resource Economics)
    Abstract: This paper provides a joint analysis of multiple fuel types and use choices and explores the socio-demographic and housing characteristics that affect household fuel use decisions. Using household survey data from urban Ethiopia, this paper estimates a mixed multiple discretecontinuous extreme value (MMDCEV) model. The results indicate that households with a female head are more likely to combine traditional biomass fuels (firewood and charcoal) and electricity for different uses, while households with less-educated heads, larger families, and poorer living conditions (fewer rooms) tend to rely on traditional biomass fuels. The results also show that households with an individual electricity meter are significantly less likely to use charcoal. Further, the results show that the satiation effect from increased use of a fuel is relatively higher for firewood and lower for electricity. The findings in this paper can be useful to inform energy policy, including more effective targeting of subsidies for liquefied petroleum gas (LPG) purchases and private electricity meter installations, and for interventions that promote adoption of improved biomass cookstoves.
    Keywords: Energy expenditure; fuel choice; fuel substitution; multiple fuel use
    JEL: C25 D13 O13 Q23 Q42 R21
    Date: 2020–03–27
  6. By: Rodier, Caroline; Jaller, Miguel; Pourrahmani, Elham; Pahwa, Anmol; Bischoff, Joschka; Freedman, Joel
    Abstract: Researchers at UC Davis explored what an automated vehicle future in the San Francisco Bay Area might look like by simulating: 1) A 100% personal automated vehicle future and its effects on travel and greenhouse emissions. 2) The introduction of an automated taxi service with plausible per-mile fares and its effects on conventional personal vehicle and transit travel. The researchers used the Metropolitan Transportation Commission’s activity-based travel demand model (MTC-ABM) and MATSim, an agent-based transportation model, to carry out the simulations. This policy brief summarizes the results, which provide insight into the relative benefits of each service and automated vehicle technology and the potential market for these services. View the NCST Project Webpage
    Keywords: Engineering, Social and Behavioral Sciences, Intelligent vehicles, Multi-agent systems, Multimodal transportation, Public transit, Ridesharing, Simulation, Traffic simulation, Travel behavior, Travel demand, Value of time
    Date: 2020–03–01
  7. By: Burke, Andrew; Sinha, Anish Kumar
    Abstract: The objective of this study is to project the introduction of battery-electric and fuel cell technologies into the medium-duty and heavy-duty vehicle markets and to identify which markets will be most suitable for each of technologies and the factors (technical, economic, operational) which will be most critical to their successful introduction. The use of renewable energy sources to generate electricity and produce hydrogen are key considerations of the analysis. The present status of the battery-electric and hydrogen/fuel cell technologies are reviewed in detail and the futures of these technologies are projected. The design and performance of various types of buses and trucks are described based on detailed simulations of the various electrified vehicles. The total cost of ownership (TCO) of each bus/truck type were calculated using EXCEL spreadsheets and their market prospects projected for 2020-2040. It was concluded that before any of the electrified vehicles can be cost competitive with the corresponding diesel powered vehicle, the unit cost of batteries must be $80-100/kWh and the unit cost of the fuel cell system must be $80-100/kW. The long term economics of battery-electric buses and trucks looks more favorable than that for the fuel cell/hydrogen option if the range requirement (miles) for the vehicle can be met using batteries. This is primarily due to the significantly lower energy operating cost ($/mi) using electricity than hydrogen. View the NCST Project Webpage
    Keywords: Engineering, Battery-electric vehicles, fuel cell vehicles, trucks, buses, sustainable fueling, hydrogen storage and production
    Date: 2020–03–01
  8. By: Gao, Shen (Center for Economics, Finance and Management Studies, Hunan University, China.); Hou, Chenghan (Center for Economics, Finance and Management Studies, Hunan University, China.); Nguyen, Bao H. (Tasmanian School of Business & Economics, University of Tasmania)
    Abstract: The growing disintegration between the natural gas and oil prices, together with shale revolution and market financialization, lead to continued fundamental changes in the natural gas markets. To capture these structural changes, this paper considers a wide set of highly flexible time-varying parameter models to evaluate the out-of-sample forecasting performance of the natural gas spot prices across the US, European and Japanese markets. The results show that for both Japan and EU markets, the best forecasting performance is found when the model allows for drastic changes in the conditional mean and gradual changes in the conditional volatility. For the US market, however, no model performs systematically better than the simple autoregressive model. Full sample estimation results further con- firm that allowing t-distributed error is important in modelling the natural gas prices, especially for EU markets.
    Keywords: natural gas price; structural breaks; forecasting; time-varying pa- rameter; Markov switching; stochastic volatility.
    JEL: C32 E32 Q43
    Date: 2020
  9. By: Melkamu Daniel , Aemiro Melkamu Daniel (CERE - the Center for Environmental and Resource Economics)
    Abstract: In this paper, we seek to investigate heterogeneity in households’ valuation of electricity contract attributes that reflect demand-side flexibility in the Swedish residential sector. Using stated preference data generated from a choice experiment, we estimate a mixed logit model in willingness-to-pay space and derive individual-specific conditional mean valuations for contract attributes which include various load controls and distribution of electricity consumption information. We perform a posterior analysis and identify different segments based on the monetary values households attach to the contract attributes. We find that a large proportion of households asks for substantial compensation to accept various load controls and to share their electricity consumption information. However, some households are willing to share their electricity consumption information and ask for relatively lower compensation to allow load controls. We also find that some households that accept load controls at a relatively low compensation require a sizeable compensation to share their electricity consumption information, and vice versa. From the perspective of the contract providers, these findings suggest that information-optional contracts can generate more customers than contracts that bundle households’ consumption information with various load controls.
    Keywords: Choice experiment; demand flexibility; direct load control; electricity contract; household heterogeneity
    JEL: D12 Q41 Q48 Q51
    Date: 2020–03–27
  10. By: Surender Kumar (Department of Economics, Delhi School of Economics); Shunsuke Managi (Urban Institute & Departments of Urban and Environmental Engineering,Kyushu University, 744 Motooka, Nishi-ku,Fukuoka); Rakesh Kumar Jain (Department of Business Economics South Campus, University of Delhi & Indian Railways, New Delhi India)
    Abstract: This study shows potential cost savings by adoption of emission trading in India. At the Paris Agreement, India pledged to reduce CO2 emissions intensity by about 30-35 percent by 2030 relative to 2005. Applying joint production function of electricity and CO2 emissions, we find that India could have saved about US$ 5 to 8 billion, if she had constituted an emission trading system, with the provision of banking and borrowing over the study period of 5 years. To our knowledge, this is the first study measuring foregone gains due to absence of a nationwide carbon emission-trading program in coal fired thermal power sector, using an ex-post analysis.
    JEL: Q54 Q56 O13
    Date: 2019–12
  11. By: Charles W. Calomiris; Harry Mamaysky; Ruoke Yang
    Abstract: We derive a measure of firm-level regulatory costs from the text of corporate earnings calls. We then use this measure to study the effect of regulation on companies’ operating fundamentals and cost of capital. We find that higher regulatory cost results in slower sales growth, an effect which is mitigated for large firms. Furthermore, we find a one-standard deviation increase in our preferred measure of regulatory cost is associated with an increase in firms’ cost of capital of close to 3% per year. These findings suggest that regulatory risk is a major cost to firms, but the largest firms are able to manage that risk better.
    JEL: G18 G38 K2 L51
    Date: 2020–03
  12. By: Mignamissi, Dieudonné
    Abstract: This paper tests the pollution emissions and institutions quality nexus in Africa, through political regime and governance indicators. We apply the system GMM estimator on a dynamic panel of 50 African countries over the period 1990-2014. The key finding suggests that a reinforcement of legislation through the improvement of institutional quality has a negative and significant effect on pollution emissions. Moreover, the findings validate the Environmental Kuznets Curve hypothesis in Africa. The results call for some policy recommendations in environmental regulation for African economies, including strengthening of institutional quality, adoption of specialized investment promotion agencies on the attractiveness of green FDI, implementation of incentive mechanisms in favour of companies that have adopted greening program of their activities
    Keywords: Pollution emissions, institutions, Africa
    JEL: Q52 Q56
    Date: 2020–03
  13. By: Alemi, Farzad; Rodier, Caroline
    Abstract: Increasing transit use has many benefits, including reducing traffic congestion and greenhouse gas (GHG) emissions. However, riders need to be able to get to a station in order to use transit. Walking is an option only for those within a limited radius of a station. Driving to a station may be feasible for some, but providing sufficient parking can be expensive and land intensive. The rise of ride-hailing companies such as Uber and Lyft presents a new opportunity for bridging the “first-mile” gap to high quality transit. Transit agencies are beginning to launch pilot projects to test public-private partnerships with ride-hailing companies to increase access to transit. This policy brief summarizes findings from researchers at UC Davis who used existing modeling tools and data to understand the potential market demand for a first-mile transit access service in the San Francisco Bay Area. They modeled the likelihood of commuters who drive alone to switch to using ride-hailing and the Bay Area Rapid Transit (BART) rail system to get to work based on travel time, cost, and distance to a BART station. They explored the magnitude of change in overall travel time and cost for travelers who switch from driving alone to using ride-hailing and BART, as well as potential changes to vehicle miles traveled (VMT) and GHG emissions at both the regional and station level. View the NCST Project Webpage
    Keywords: Engineering, Social and Behavioral Sciences, Accessibility, Choice models, Public transit, Ridership, Ridesharing, Ridesourcing, Simulation, Travel costs, Travel demand, Vehicle miles of travel
    Date: 2020–03–01
  14. By: Sanguinetti, Angela; Kurani, Ken
    Abstract: Electrification of transportation network companies (TNCs; e.g., Uber and Lyft) presents a path for reduced emissions as well as potential benefits to drivers via reduced costs for fueling and vehicle maintenance. This report describes 732 TNC PEV drivers in the United States in terms of their demographic characteristics, motivations for driving PEVs on TNCs, charging patterns, and ideas to improve the experience of driving PEVs on TNCs. Greater understanding of these early adopters can inform strategies to promote further adoption. The economic benefits of fuel and maintenance savings associated with PEVs featured in drivers’ reported motivations for PEV adoption. Most BEV and PHEV drivers reported charging their PEV every day, most often at home and overnight, and most were willing to charge once or more while actively driving on TNCs. A large cluster of TNC PEV drivers reported predominately using public DC fast charging, indicating a heavy reliance on public charging infrastructure. Range limitations topped the list of reasons why PHEV drivers did not opt for a BEV, and increased range topped the list of PEV drivers’ wishes to better support PEVs on TNCs. The next most common wish was for more charger locations. The third and fourth ranked wishes were financial bonuses for trip targets and more pre-trip information, which are more exclusively under the control of TNCs.
    Keywords: Social and Behavioral Sciences, electric vehicle, adoption, ride-hailing, ride-sharing, transportation network company
    Date: 2020–03–01

This nep-reg issue is ©2020 by Natalia Fabra. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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