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on Regulation |
| By: | Frondel, Manuel; Schubert, Stefanie |
| Abstract: | In 2021, Germany will launch a national emissions trading system (ETS) in its road transport and housing sectors. This climate policy instrument aims at raising the energy cost burden of those households and firms that consume fossil fuels, the major source of carbon dioxide (CO2) emissions. A promising approach to secure public acceptance for such a carbon pricing would be to entirely reallocate the resulting "carbon" revenues to consumers. This article discusses three alternatives: a) a per-capita reallocation to private households, b) the reduction of electricity prices by, e.g., decreasing the electricity tax, as well as c) targeted financial aid for vulnerable consumers, such as increasing housing benefits. To estimate both the revenues originating from carbon pricing and the resulting emission savings, we use price elasticities on individual energy consumption in the road transport and housing sector from the empirical literature. Most effective with respect to alleviating the burden of poor households would be increasing housing benefits. While this measure would not require large monetary resources, we argue that the remaining revenues should be preferably employed to reduce Germany's electricity tax, given the steadily increasing amount of electricity generated by renewable energy technologies. |
| Keywords: | Electricity tax,housing benefits,distributional effects |
| JEL: | D12 Q21 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:869&r=all |
| By: | Just, Lisa (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Wetzel, Heike (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | In this paper, we use a comprehensive and unique data set of financial, technical and structural characteristics of German distribution network operators from 2011 to 2017 to estimate both the transient and persistent cost efficiency of German distribution network operators. In addition, we analyze the effect of an increasing capacity of distributed generation from renewable energy sources on the total costs of distribution network operators. Our results indicate an average cost reduction potential of approximately 12 percent in the short term and approximately 18 percent in the long term for German electricity distribution network operators. Furthermore, we find that distributed generation from renewable energy sources is a significant cost driver in the production process of network operators. Our study thus contributes to the ongoing debate on incentive regulation and efficiency benchmarking in electricity distribution industries and provides valuable insights for policymakers and regulators. |
| Keywords: | Electricity distribution; regulation; transient cost efficiency; persistent cost efficiency; distributed generation; stochastic frontier analysis |
| JEL: | D24 L23 L51 L94 |
| Date: | 2020–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2020_009&r=all |
| By: | Kelvin Say; Michele John |
| Abstract: | With Australia's significant capacity of household PV, decreasing battery costs may lead to widespread use of household PV-battery systems. As the adoption of these systems are heavily influenced by retail tariffs, this paper analyses the effects of flat retail tariffs with households free to invest in PV battery systems. Using Perth, Australia for context, an open-source model is used to simulate household PV battery investments over a 20-year period. We find that flat usage and feed-in tariffs lead to distinct residual demand patterns as households' transition from PV-only to PV-battery systems. Analysing these patterns qualitatively from the bottom-up, we identify tipping point transitions that may challenge future electricity system management, market participation and energy policy. The continued use of flat tariffs incentivises PV-battery households to maximise self-consumption, which reduces annual grid-imports, increases annual grid-exports, and shifts residual demand towards winter. Diurnal and seasonal demand patterns continue to change as PV-battery households eventually become net-generators. Unmanaged, these bottom-up changes may complicate energy decarbonisation efforts within centralised electricity markets and suggests that policymakers should prepare for PV-battery households to play a more active role in the energy system. |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2012.00934&r=all |
| By: | Hintermann, Beat (University of Basel); Zarkovic, Maja (University of Basel); di Maria, Corrado; Wagner, Ulrich J. |
| Abstract: | We investigate productivity and cost pass-through of German manufacturing firms using administrative data from 2001 to 2014. Our framework allows for the estimation of quantity-based production functions for multi-product firms while controlling for unobserved productivity shocks and unobserved input quality. Using our parameter estimates, we can compute total factor productivity, markups and marginal costs. We find no effect of the EU ETS on firm productivity or profits for the whole sector, and a positive effect for some industries. Firms pass on shocks to materials costs completely, or even more than completely, whereas pass-through of energy costs is around 35-60%. Although pass-through of energy costs is incomplete, it nevertheless allowed firms to recover more than their total carbon costs due to generous free allocation of allowances. Our results add to the recent literature concerning the causal effects of climate policy on firms and are relevant for policy makers when defining the level of free allowance allocation to industry. |
| Keywords: | Productivity; production function; markup; cost pass-through; EU ETS; climate policy |
| JEL: | D24 H23 Q52 Q54 |
| Date: | 2020–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2020/11&r=all |
| By: | Fajardy, M.; Reiner, D M. |
| Abstract: | Heating and cooling are responsible for over 50% of the world’s final energy consumption, and over 40% of global CO2 emissions. With an increasingly decarbonised electricity grid, the electrification of heating offers one potential alternative to the incumbent, heavily fossil-fuel dominated heating system. However, the high penetration of renewables, the high seasonality and hourly variability of heat demand, and an increasing domestic demand for energy services, including cooling, pose significant balancing challenges for both hourly system operation and the long-term investment decision planning of electricity systems. The combination of both demand-response measures and the integration of flexible systems will be required to deliver low carbon heating and cooling, while integrating an increasing share of renewable electricity, and managing peak load. We provide a global overview of the technical, economic and policy challenges and opportunities to decarbonise heating demand through electrification, in the context of rising demand for cooling services. |
| Keywords: | Heating, cooling, electrification, decarbonisation, peak load management, demand response |
| JEL: | L95 O13 Q41 Q42 |
| Date: | 2020–12–09 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:20120&r=all |
| By: | Stefan Ambec (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jessica Coria (GU - University of Gothenburg) |
| 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 NO x 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 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02945523&r=all |
| By: | Ewens, Michael (California Institute of Technology); Xiao, Kairong; Xu, Ting |
| Abstract: | Many disclosure and internal governance regulations for U.S. public firms trigger when a firm’s public float exceeds a threshold. Consistent with firms seeking to avoid costly regulation, we document significant bunching around multiple regulatory thresholds introduced from 1992 to 2012. We present a revealed preference estimation strategy that uses this behavior to quantify regulatory costs. Our estimates show that various disclosure and internal governance rules leads to a total compliance cost of 4.3% of the market capitalization for a median U.S. public firm. We apply the estimated costs to firms’ public-private choice and show that regulatory costs significantly impact private firms’ decisions to go public, while have limited effects on public firms’ decisions to go private. |
| Date: | 2020–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:pdv8n&r=all |
| By: | ITF |
| Abstract: | This report examines the climate impact of personal and shared electric kick-scooters, bicycles, e-bikes, electric mopeds, as well as car-based ride-sharing services. Users in cities across the globe are rapidly adopting new mobility forms, helped by digital connectivity and electrification technologies. New urban mobility services are often sold as “green” solutions. But what is their real impact on energy demand and greenhouse gas emissions? This study analysesthe life-cycle performance of a range of new vehicles and services based on their technical characteristics, operation and maintenance, and compares it with that of privately owned cars and public transport. Finally, the report identifies solutions to make new mobility a useful part of the urban transport mix while helping to reduce energy use and limit climate change. |
| Date: | 2020–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:itfaac:86-en&r=all |
| By: | Ruhnau, Oliver |
| Abstract: | Wind and solar energy are often expected to fall victim to their own success: the higher their share in electricity production, the more their revenue on electricity markets (their “market value”) declines. While in conventional power systems, the market value may converge to zero, this study demonstrates that “green” hydrogen production, through adding electricity demand in low-price hours, can effectively and permanently halt the decline. With an analytical derivation, a Monte Carlo simulation, and a numerical electricity market model, I find that – due to flexible hydrogen production – market values in 2050 likely converge above €19 ± 9 per MWh for solar energy and above €27 ± 8 per MWh for wind energy. This is in the range of the projected levelized costs of renewables and has profound implications. Market-based renewables may hence be within reach. |
| Keywords: | Renewable energy,Hydrogen electrolysis,Electricity market,Electricity economics,Integrated energy system,Flexible electricity demand |
| JEL: | Q4 Q40 Q41 Q42 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:227075&r=all |
| By: | Stefan Ambec (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Claude Crampes (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | The presence of consumers able to respond to changes in wholesale electricity prices facilitates the penetration of renewable intermittent sources of energy such as wind or sun power. We investigate how adapting demand to intermittent electricity supply by making consumers price-responsive-thanks to smart meters and home automation appliances-impacts the energy mix. We show that it almost always reduces carbon emissions. Furthermore , when consumers are not too risk-averse, demand response is socially beneficial because the loss from exposing consumers to volatile prices is more than offset by lower production and environmental costs. However, the gain is decreasing when the proportion of reactive consumers increases. Therefore, depending on the costs of the necessary smart hardware, it may be non-optimal to equip the whole population. |
| Keywords: | smart meters,demand response,dynamic pricing,renewables,intermittency,electricity |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02945519&r=all |
| By: | World Bank |
| Keywords: | Energy - Energy Policies & Economics Energy - Energy Technology & Transmission Energy - Renewable Energy Energy - Solar Energy Energy - Windpower |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:33971&r=all |
| By: | Saunders, Harry (Carnegie Institution for Science, Global Ecology Group, Stanford, USA); Roy, Joyashree (Asian Institute of Technology, Thailand); Azevedo, Inês M.L. (Stanford University, USA); Chakravarty, Debalina (Indian Institute of Management-Calcutta); Dasgubta, Shyamasree (Indian Institute of Technology Mandi, India); de la Rue du Can, Stephane (Lawrence Berkeley National Laboratory, USA); Druckman, Angela (University of Surrey, UK); Fouquet, Roger (London School of Economics and Political Science, UK); Grubb, Michael (University College London, UK); Qiang Lin, Bo (Xiamen University, China); Lowe, Robert (University College London, UK); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); McCoy, Daire (London School of Economics and Political Science, UK); Mundaca, Luis (International Institute for Industrial Environmental Economics at Lund University, Sweden); Oreszczyn, Tadj (University College London, UK); Sorrell, Steve (University of Sussex, UK); Stern, David (Australian National University); Tanaka, Kanako (Japan Science and Technology Agency, Japan); Wei, Taoyuan (CICERO Center for International Climate Research, Norway) |
| Abstract: | This article presents a critical assessment of research and practices that emerged over last 40 years that may be brought under the umbrella of “energy efficiency,” spanning different aggregations and domains – from individual producing and consuming agents to economy-wide effects, the role of innovation, and the influence of policy. It highlights advances in understanding the benefits of energy efficiency innovation, improvements in economic and measurement methods and tools, and progress in bending downward the energy use per unit economic output curve, which has taken over a century. We focus on how well deliberate policy actions have influenced energy users in the uptake of energy efficiency. We also note how policies pursued thus far have put less attention on social welfare, inequity issues, and need to better account for complex dynamics associated with how micro actions affect macro outcomes, and to include a richer interdisciplinary approach. |
| JEL: | N70 O33 Q40 Q41 Q43 Q48 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2020_016&r=all |
| By: | Martin Fiszbein; Jeanne Lafortune; Ethan G. Lewis; José Tessada |
| Abstract: | We use city-industry data from 1890 to 1940 to identify the impact of electricity on manufacturing. We exploit cross-industry variation in pre-electricity energy intensity combined with geographic variation in proximity to early hydroelectric power plants. Labor productivity gains from the arrival of electricity were rapid and long-lasting. Electricity was labor-saving, induced capital deepening, and a hollowing out of the labor skills distribution. We document significant heterogeneity in electricity's effects: in sector-county pairs where the average firm was initially large, we find no significant expansion in employment, while in markets with relatively small firms, output and employment increased. |
| JEL: | J24 L11 O33 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28076&r=all |
| By: | Stefan Ambec (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Philippe de Donder (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | The presence of consumers able to respond to changes in wholesale electricity prices facilitates the penetration of renewable intermittent sources of energy such as wind or sun power. We investigate how adapting demand to intermittent electricity supply by making consumers price-responsive - thanks to smart meters and home automation appliances - impacts the energy mix. We show that it almost always reduces carbon emissions. Furthermore, when consumers are not too risk-averse, demand response is socially beneficial because the loss from exposing consumers to volatile prices is more than offset by lower production and environmental costs. However, the gain is decreasing when the proportion of reactive consumers increases. Therefore, depending on the costs of the necessary smart hardware, it may be non-optimal to equip the whole population. |
| Keywords: | Environmental regulation,Corporate social responsibility,Green consumerism,Product differentiation,Tax,Standard,Green label,Political economy |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02945517&r=all |
| By: | Newbery, D. |
| Abstract: | At high levels of wind penetration the requirements of dispatchable reserves and inertia limit the volume of wind that can be accepted; the surplus is then curtailed. Marginal curtailment is 3-4+ times the average curtailment, but even in an efficiently designed market, price signals for wind investment are given by average not marginal curtailment, requiring a corrective charge to restore efficiency. The paper sets out a model calibrated to Ireland in 2026, showing the sources of distortion, formulae for the subsidies and charges needed to deliver the efficient level of renewables penetration, and estimates of their magnitude. |
| Keywords: | Wind curtailment, market failures, corrective charges |
| JEL: | H23 L94 Q28 Q42 Q48 |
| Date: | 2020–12–09 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:20119&r=all |
| By: | Axel Gautier (HEC Liège, Université de Liège, CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain, LCII - Liège Competition and Innovation Institute, CESifo - CESifo); Julien Jacqmin (NEOMA - Neoma Business School); Jean-Christophe Poudou (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier, UM - Université de Montpellier) |
| Abstract: | Energy consumers can invest in photovoltaic (PV) panels and become prosumers. The benefit of such an investment depends on the regulatory framework. We consider a population of heterogenous consumers, with respect to both the cost of decentralized production and their degree of self-consumption.it is efficient to have investment by low-cost and high self-consumption profiles. We determine the optimal tariff in the presence of heterogenous prosumers. Net metering fails to screen consumers on the self-consumption dimension. Net purchasing can lead to the efficient investment if the tariffs are non-Coasian that is fixed fees exceed the grid operator's fixed costs. |
| Keywords: | Decentralized production unit,grid regulation,solar panels,grid tariffs JEL Codes: D13,L51,L94,Q42 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02988150&r=all |
| By: | Stefan Ambec (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | Environmental markets distribute tradable rights on natural resources that are available for free on the earth such as water, biomass or clean air. In a framework where users differ solely in respect of their access to the resource, I investigate the allocation of rights that are accepted in the sense that, after trading, users obtain at least what they can achieve by sharing the resources they control. I show that, among all accepted rights, the more egalitarian ones do not allow any redistribution among users. Consequently, compared to an efficient allocation of resources, the net trading of rights always increases inequality. |
| Keywords: | Common-pool resources,Environmental externalities,Property rights,Cooperative game,Fairness,Tradable quotas,Emission permits |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02945513&r=all |