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on Energy Economics |
| By: | David Popp; Richard G. Newell; Adam B. Jaffe |
| Abstract: | Within the field of environmental economics, the role of technological change has received much attention. The long-term nature of many environmental problems, such as climate change, makes understanding the evolution of technology an important part of projecting future impacts. Moreover, in many cases environmental problems cannot be addressed, or can only be addressed at great cost, using existing technologies. Providing incentives to develop new environmentally-friendly technologies then becomes a focus of environmental policy. This chapter reviews the literature on technological change and the environment. Our goals are to introduce technological change economists to how the lessons of the economics of technological change have been applied in the field of environmental economics, and suggest ways in which scholars of technological change could contribute to the field of environmental economics. |
| JEL: | O30 Q53 Q54 Q55 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14832&r=ene |
| By: | Francesco Lippi (University of Sassari, EIEF and CEPR); Andrea Nobili (Bank of Italy) |
| Abstract: | We consider an economy in which the oil costs, industrial production, and other macroeconomic variables fluctuate in response to fundamental domestic and external demand and supply shocks. We estimate the effects of these structural shocks on US monthly data for the 1973.1-2007.12 period using robust sign restrictions suggested by theory. The interplay between the oil market and the US economy goes in both directions. About 20% of changes in the cost of oil come in response to US aggregate demand shocks, while shocks originating in the oil market also affect the US economy, the impact depending on the nature of the shock: a negative oil supply shock reduces US output, whereas a positive oil demand shock has a positive and persistent effect on GDP. |
| Keywords: | Business cycle; Oil prices; Structural VAR |
| JEL: | C32 E3 F4 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_704_09&r=ene |
| By: | Daniel Huppmann; Franziska Holz |
| Abstract: | This paper proposes a partial equilibrium model to describe the global crude oil market. Pricing on the global crude oil market is strongly influenced by price indices such as WTI (USA) and Brent (Northwest Europe). Adapting an approach for pool-based electricity markets, the model captures the particularities of these benchmark price indices and their influence on the market of physical oil. This approach is compared to a model with bilateral trade relations as is traditionally used in models of energy markets. With these two model approaches, we compute the equilibrium solutions for several market power scenarios to investigate whether the multi-pool approach may be better suited than the bilateral trade model to describe the crude oil market. The pool-based approach yields, in general, results closer to observed quantities and prices, with the best fit obtained by the scenario of an OPEC oligopoly. We conclude that the price indices indeed are important on the global crude market in determining the prices and flows, and that OPEC effectively exerts market power, but in a non-cooperative way. |
| Keywords: | crude oil, market structure, cartel, pool market, simulation model |
| JEL: | L13 L71 Q41 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp869&r=ene |
| By: | Kamil Dybczak; David Vonka; Nico van der Windt |
| Abstract: | In the course of 2002 up to the end of 2007, very steep growth of oil prices, but no remarkable slowdown of either the world economy or the Czech economy, was observed. This phenomenon raises a question about the impact of oil prices on modern economies. Analyzing the available data we can conclude that notwithstanding the full dependence of the Czech economy on oil imports, its overall dependence on imported energy sources is relatively low. Compared to the EU15 level the energy intensity of the Czech economy is quite high. Nevertheless, further improvements in this area are expected. Furthermore, the appreciation of CZK and the set-up of the tax system significantly reduced the volatility of the consumer oil price between 2002 and 2007. Using a structural CGE model we quantify the impact of oil price changes on the Czech economy and demonstrate that it is not dramatic despite the oil price turmoil in the years 2000 to the end of 2007. We find that a 20% increase in the CZK oil price tends to decrease the GDP level by 1:5% and 0:8% in the short and long run, respectively. Short-run annual GDP growth decreases by 0:3 p.p. Concerning prices, inflation would accelerate by around 0:4 p.p. per annum in the short run. |
| Keywords: | CGE, Czech Republic, oil price. |
| JEL: | C68 Q43 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2008/5&r=ene |
| By: | Soren T. Anderson; James M. Sallee |
| Abstract: | Corporate Average Fuel Economy (CAFE) regulations constrain automakers to produce vehicles whose average efficiency exceeds a minimum standard. A “loophole" in the program allows firms to relax this constraint by producing gasoline-ethanol flexible-fuel vehicles, which are credited with far better mileage than they actually achieve. In this paper, we demonstrate that when firms use this loophole, they reveal the marginal cost of complying with the standard. This is because firms equate the marginal cost of relaxing the constraint via the loophole with the marginal cost of complying through other means, such as selling smaller vehicles or installing fuel-saving technologies. We show that under certain conditions the marginal cost of relaxing the constraint via the loophole is a simple function of readily available parameters. We demonstrate empirically that these sufficient conditions hold in recent years for major U.S. automakers. We calculate that the cost of increasing CAFE standards by one mile per gallon is between $8 and $28 in lost profit per vehicle for domestic automakers. These costs are far lower than other recent estimates based on more complicated methodologies. Unlike these other estimates, our costs are well below the noncompliance penalty of $55, which should serve as a plausible upper bound, and which has been used as a cost parameter in previous research. More generally, the loophole methodology we develop here may help reveal marginal compliance costs for other regulations whose costs are otherwise difficult to gauge. |
| Keywords: | CAFE, fuel efficiency, loopholes |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:har:wpaper:0901&r=ene |
| By: | Manzan, sebastiano; Zerom, Dawit |
| Abstract: | The evaluation of the impact of an increase in gasoline tax on demand relies crucially on the estimate of the price elasticity. This paper presents an extended application of the Partially Linear Additive Model (PLAM) to the analysis of gasoline demand using a panel of US households, focusing mainly on the estimation of the price elasticity. Unlike previous semi-parametric studies that use household-level data, we work with vehicle-level data within households that can potentially add richer details to the price variable. Both households and vehicles data are obtained from the Residential Transportation Energy Consumption Survey (RTECS) of 1991 and 1994, conducted by the US Energy Information Administration (EIA). As expected, the derived vehicle-based gasoline price has significant dispersion across the country and across grades of gasoline. By using a PLAM specification for gasoline demand, we obtain a measure of gasoline price elasticity that circumvents the implausible price effects reported in earlier studies. In particular, our results show the price elasticity ranges between −0.2, at low prices, and −0.5, at high prices, suggesting that households might respond differently to price changes depending on the level of price. In addition, we estimate separately the model to households that buy only regular gasoline and those that buy also midgrade/premium gasoline. The results show that the price elasticities for these groups are increasing in price and that regular households are more price sensitive compared to non-regular. |
| Keywords: | semiparametric methods; partially linear additive model; gasoline demand |
| JEL: | C14 D12 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:14386&r=ene |
| By: | Dilan Ölcer |
| Abstract: | For many countries rich in oil, gas and minerals, development remains an elusive goal. The rich get richer, the poor stay poor, inequality rises, economies stagnate, corruption flourishes and conflict deepens. The Extractive Industries Transparency Initiative (EITI) has helped to direct attention towards this sector, which has traditionally been shrouded in secrecy. It is one of the international “soft law” tools supported by the international development community to curb corruption and help resource-rich countries benefit from the revenues from their soil. However, corruption indicators show that EITI countries are not really improving their scores. Does this suggest that there should be a scaling down of expectations about what the EITI could deliver or can it be made more effective? This paper highlights deficiencies in the way the EITI works and makes recommendations that seek to increase the effectiveness of this initiative.<BR>Pour beaucoup de pays riches en pétrole, en gaz ou en minerais, le développement semble hors d’atteinte : les riches s’enrichissent, les pauvres restent pauvres, les inégalités augmentent, l’économie stagne, la corruption s’étend et les conflits s’aggravent. L’initiative pour la transparence dans les industries extractives (ITIE) a contribué à mettre en lumière un secteur longtemps resté dans l’ombre. C’est un des instruments de soft law de la communauté internationale pour lutter contre la corruption et aider les pays riches en matières premières à bénéficier des revenus de leur sol. Néanmoins, les indicateurs de corruption montrent que les pays qui ont adopté l’ITIE n’ont pas vraiment amélioré leur performance en la matière. Faut-il alors attendre moins de l’ITIE ? Peut-elle être plus efficace ? Ce papier souligne certaines limites du fonctionnement de l’ITIE et formule des recommandations pour renforcer son efficacité. |
| Keywords: | corruption, transparency, transparence, natural resources, corruption, EITI, ITIE, matières premières |
| JEL: | M14 Q32 Q38 |
| Date: | 2009–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaaa:276-en&r=ene |
| By: | James M. Sallee |
| Abstract: | A variety of state and federal tax incentives have been used to subsidize gas electric hybrid vehicles. In this paper, I estimate the incidence of these tax incentives using microdata on sales of the Toyota Prius, in order to determine who benefits from these policies. I focus on three sharp changes in federal subsidies stemming from the Energy Policy Act of 2005 and assemble several pieces of evidence which indicate that consumers captured nearly all of the benefit. First, subsidy exclusive transaction prices do not jump in the anticipated direction in response to large changes in federal tax incentives. Second, estimates that account for consumer heterogeneity indicate that consumers captured the majority of the gains. Third, a state panel regression on state tax incentives shows that state tax incentives have little or no effect on transaction prices, which is consistent with the federal result. The conclusion that consumers captured the subsidy poses a challenge to standard models of tax incidence. Toyota faced a binding capacity constraint when the credit was introduced. Given a fixed supply, standard models predict that Toyota would capture the subsidy. I argue that consumers gained instead because Toyota believed that raising prices to clear the market would lower future demand for hybrids. I outline a stylized model in which current prices influence future demand and show that a capacity constraint can generate the tax incidence observed in the data. I then discuss factors that could give rise to such a demand system, drawing on the theory of search among alternatives and the behavioral literature on fairness. Finally, I draw lessons for the study of tax incidence in other markets. |
| Keywords: | hybrid vehicles, tax credit, tax incidence, |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:har:wpaper:0815&r=ene |
| By: | Hayes, Dermot J.; Babcock, Bruce A.; Fabiosa, Jacinto F.; Tokgoz, Simla; Elobeid, Amani; Yu, Tun-Hsiang; Dong, Fengxia; Hart, Chad E.; Chavez, Edward; Pan, Suwen; Carriquiry, Miguel A.; Dumortier, Jerome |
| Abstract: | We examine four scenarios for the evolution of the biofuel sector using a partial equilibrium model of the world agricultural sector. The model includes the new Renewable Fuels Standard in the 2007 energy act, the two-way relationship between fossil energy and biofuel markets, and a new trend toward corn oil extraction in ethanol plants. At one extreme, one scenario eliminates all support to the biofuel sector when the energy price is low, while the other extreme assumes no distribution bottleneck in ethanol demand growth when the energy price is high. Of the remaining two scenarios, one considers a pure market force driving ethanol demand growth because of the high energy price while the other is a policy-induced shock with removal of the biofuel tax credit when the energy price is high. We find that the biofuel sector expands with a higher energy price, raising prices of most agricultural commodities through demand-side adjustments for primary feedstocks and supply-side adjustments for substitute crops and livestock. With the removal of all support, including the tax credit, the biofuel sector shrinks, lowering the prices of most agricultural commodities. We also find that, given distribution bottlenecks, cellulosic ethanol crowds marketing channels, resulting in a discounted price of corn-based ethanol. The blenders’ credit and consumption mandates provide a price floor for ethanol and for corn. Finally, the tight linkage between the energy and agricultural sectors resulting from the expanding biofuel sector may raise the possibility of spillover effects of OPEC’s market power on the agricultural sector. |
| Keywords: | biofuels, EISA, ethanol, tax credit, world agricultural sector model. |
| Date: | 2009–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:13052&r=ene |
| By: | Jacinto F. Fabiosa (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); John C. Beghin; Fengxia Dong (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Amani Elobeid (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Simla Tokgoz (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Tun-Hsiang (Edward) Yu |
| Abstract: | We quantify the emergence of biofuel markets and its impact on U.S. and world agriculture for the coming decade using the multi-market, multi-commodity international FAPRI (Food and Agricultural Policy Research Institute) model. The model incorporates the trade-offs between biofuel, feed, and food production and consumption and international feedback effects of the emergence through world commodity prices and trade. We examine land allocation by type of crop, and pasture use for countries growing feedstock for ethanol (corn, sorghum, wheat, sugarcane, and other grains) and major crops competing with feedstock for land resources such as oilseeds. We shock the model with exogenous changes in ethanol demand, first in the United States, then in Brazil, China, the European Union-25, and India, and compute shock multipliers for land allocation decisions for crops and countries of interest. The multipliers show at the margin how sensitive land allocation is to the growing demand for ethanol. Land moves away from major crops and pasture competing for resources with feedstock crops. Because of the high U.S. tariff on ethanol, higher U.S. demand for ethanol translates into a U.S. ethanol production expansion. The latter has global effects on land allocation as higher coarse grain prices transmit worldwide. Changes in U.S. coarse grain prices also affect U.S. wheat and oilseed prices, which are all transmitted to world markets. In contrast, expansion in Brazil ethanol use and production chiefly affects land used for sugarcane production in Brazil and to a lesser extent in other sugar-producing countries, but with small impacts on other land uses in most countries. |
| Keywords: | acreage, area, biofuel, corn, crops, ethanol, FAPRI model, feedstock, land, sugar, sugarcane. JEL Code: Q42, Q17, Q18, Q15 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:09-wp488&r=ene |
| By: | Arie ten Cate |
| Abstract: | In this memorandum the optimal capacity of Combined Heat and Power (CHP) is derived, using a simple model with an analytical solution. The solution is expressed as the fraction of the time during which the heat demand exceeds the optimal CHP heat production capacity. |
| Keywords: | energy; chp; micro-chp; cogeneration; heating; electricity |
| JEL: | Q4 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:memodm:220&r=ene |
| By: | Mohamed Haikel Khalfallah (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines) |
| Abstract: | In this paper we study the problem of long-term capacity adequacy in electricity markets. We implement a dynamic model in which operators compete for investment and electricity production under imperfect Cournot competition. The main aim of this work is tocompare three investment incentive mechanisms: reliability options, forward capacity market - which are both market-based - and capacity payments. Apart from the oligopoly case, we also analyze collusion and monopoly cases. Stochastic dynamic programming is used to deal with the stochastic environment of the market (future demand) and mixed complementarityproblem formulation is employed to find a solution to this game. The main finding of this study is that market-based mechanisms would be the most cost-efficient mechanism for assuring long-term system adequacy and encouraging earlier and adequate new investments in the system. Moreover, generators would exert market power when introducing capacity payments. Finally, compared with a Cournot oligopoly, collusion and monopolistic situations lead to more installed capacities with market-based mechanisms and increase end-users' payments. |
| Keywords: | Electricity markets; capacity adequacy; dynamic programming; Nash-Cournot model; mixed complementarity problem |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00371842_v1&r=ene |
| By: | Balázs Égert |
| Abstract: | This paper finds that coherent regulatory policies can boost investment in network industries of OECD economies. Rate-of-return regulation is generally thought to result in overinvestment, while incentive regulation is believed to entail underinvestment. Yet, previous empirical work has generally found that the introduction of incentive regulation has not systematically changed investment in network industries. According to the theoretical literature, regulatory uncertainty exposes both types of regimes to the danger of underinvestment. However, regulatory uncertainty is arguably higher under rate-of-return regulation because investment decisions (what can be included in the rate base) are usually evaluated in a discretionary manner, while firms operating under incentive regulation are less affected by this behaviour. In addition, incentive regulation encourages investment in cost-reducing technologies. Using Bayesian model averaging techniques, this paper shows that incentive regulation implemented jointly with an independent sector regulator (indicating lower regulatory uncertainty) has a strong positive impact on investment in network industries. In addition, lower barriers to entry are also found to encourage sectoral investment. These results support the importance of implementing policies in a coherent framework.<P>L’investissement dans les industries de réseaux : Le rôle de la régulation incitative et de l’indépendance du régulateur sectoriel<BR>Ce document montre que des politiques de régulation cohérentes peuvent encourager l’investissement dans les industries de réseaux. Il est généralement admis que la régulation par le taux de rendement a tendance à causer un surinvestissement, tandis qu’une régulation incitative pourrait produire une situation de sous-investissement. Pourtant, la littérature empirique montre que l’introduction de régimes recourant à l’incitation n’a pas, de manière générale, impacté l’investissement dans les industries de réseaux. D’après la littérature théorique, l’incertitude réglementaire accroît le risque d’un sous-investissement dans les deux types de régime. L’incertitude réglementaire est cependant plus élevée dans un régime par le taux de rendement en raison des décisions discrétionnaires d’investissement (éventuellement inclus dans la base du taux de rendement), alors que les entreprises dans un régime incitatif sont moins affectées par ce genre de décisions. De plus, la régulation incitative favorise l’investissement dans les technologies visant à réduire les coûts. Par des techniques d’estimation bayesienne, ce papier montre qu’une régulation incitative mise en place en même temps qu’un régulateur sectoriel indépendant influence positivement l’investissement dans les industries de réseaux. De plus, la réduction des barrières à l’entrée encourage, elle aussi, l’investissement. Ces résultats soulignent l’importance de la mise en oeuvre cohérente des politiques sectorielles. |
| Keywords: | investment, investissement, network industries, régulation, cost-plus regulation, industries de réseaux, incentive regulation, régulation incitative, price cap, indépendance réglementaire, regulatory independence, rate-of-return regulation, régulation par le taux de rendement |
| JEL: | L51 L97 L98 |
| Date: | 2009–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:688-en&r=ene |
| By: | CAULIER, Jean-Franois; MAULEON, Ana (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); VANNETELBOSCH, Vincent (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)) |
| Abstract: | We develop a theoretical framework that allows us to study which bilateral links and coalition structures are going to emerge at equilibrium. We define the notion of coalitional network to represent a network and a coalition structure, where the network specifies the nature of the relationship each individual has with his coalition members and with individuals outside his coalition. To predict the coalitional networks that are going to emerge at equilibrium we propose the concept of contractual stability which requires that any change made to the coalitional network needs the consent of both the deviating players and their original coalition partners. We show that there always exists a contractually stable coalitional network under the simple majority decision rule and the component-wise egalitarian or majoritarian allocation rules. Moreover, requiring the consent of group members may help to reconcile stability and efficiency. |
| Keywords: | networks, coalition structures, contractual stability, allocation rules. |
| JEL: | A14 C70 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2008066&r=ene |
| By: | Simona O. Negro; Veronique Vasseur; Wilfried van Sark; Marko Hekkert |
| Abstract: | Renewable energy technologies have a hard time to break through in the existing energy regime. In this paper we focus on analysing the mechanisms behind this problematic technology diffusion. We take the theoretical perspective of innovation system dynamics and apply this to photovoltaic solar energy technology (PV) in the Netherlands. The reason for this is that there is a long history of policy efforts in The Netherlands to stimulate PV but results in terms of diffusion of PV panels is disappointingly low, which clearly constitutes a case of slow diffusion. The history of the development of the PV innovation system is analysed in terms of seven key processes that are essential for the build up of innovation systems. We show that the processes related to knowledge development are very stable but that large fluctuations are present in the processes related to ‘guidance of the search’ and ‘market formation’. Surprisingly, entrepreneurial activities are not too much affected by fluctuating market formation activities. We relate this to market formation in neighbouring countries and discuss the theoretical implications for the technological innovation system framework. |
| Keywords: | Photovoltaic, Innovation system dynamics, Motors of Change |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:uis:wpaper:0904&r=ene |
| By: | Leo Wangler (University of Jena, Germany) |
| Abstract: | This paper discusses aspects related to the green technology sector in Germany. In a ï¬rst step institutional reforms enabling diffusion of green technologies are analysed. Cost arguments are also taken into account. In a second step a theoretical model developed by Tanguay et al. (2004) is modiï¬ed in order to evaluate the efï¬ciency of the institutional setting in a political economy framework. The model is able to show that command and control policies (CCPs) are accompanied by cost-inefï¬ciencies depending on the political weight of the green technology sector. Because actual costs related to the support of green technologies are relatively low, the theoretical predictions of the model are moderated. Nevertheless, as additional money will be transferred to the green technology sector during the next decades, interest groups will gain additional political power and the problem of cost inefï¬ciency can therefore become more relevant. The paper gives important hints whether the CCP system installed in Germany is the right instrument in order to increase the share of energy produced with green technologies from 12.5% (in 2010) up to a level of 30% (in 2020). |
| Keywords: | Regulation, Renewable Energies, Green Technologies, EEG, SEG |
| JEL: | D72 H21 L52 Q28 Q48 |
| Date: | 2009–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-024&r=ene |
| By: | Stephane Salaet; Jordi Roca (Universitat de Barcelona) |
| Abstract: | In terms of global warming, early peak forecasts in oil and natural gas seem reasonably good news because most emissions arise from fossil fuel burning. However, this can be misleading if coal resources are as enormous as some estimations report because a switch between low carbon content fossil fuels (oil and natural gas) and high carbon content (coal) can be envisaged. Following this hypothesis we develop peak oil and natural gas scenarios where coal supplies what is needed for levelling off fossil fuel energy as soon as oil and natural gas reach their joint peak. We estimate the implications in terms of greenhouse gas emissions and we compare them with the most pessimistic IPCC scenario. Our conclusion is, despite this IPCC scenario probably being unrealistic, the limitation of fossil fuel resources is not quite sufficient to avoid very dangerous emission future evolutions. CO2 concentrations well above 450 ppm at the end of the century are derived and, in addition, no sign of stabilization is observed. |
| Keywords: | peak oil, global warming, non renewable resource models |
| JEL: | Q3 C6 Q4 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2009223&r=ene |
| By: | OGGIONI, Giorgia (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); SMEERS, Yves (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)) |
| Abstract: | The progressive relocation of part of the Energy Intensive Industries (EIIs) out of Europe is one of the possible consequences of the combination of emission charges and higher electricity prices entailed by the EU-Emission Trading Scheme (EU-ETS). In order to mitigate this effect, EIIs have asked for special power contracts whereby they would be supplied from dedicated power capacities at average (capacity, fuel, transmission and emission allowance) costs. We model this situation on a prototype power system calibrated on four countries of Central Western Europe. In order to capture the main feature of EIIs' demand, we separate the consumer market in two segments: EIIs and the rest. EIIs buy electricity at average cost price while the rest pays marginal cost. We consider two different types of EIIs' contractual arrangements: a single region wide and zonal average cost prices. We also analyze the cases where generators only rely on existing capacities or can invest in new ones. We find that these average cost contracts can indeed partially mitigate the incentive to relocate activities but with quite diverse regional impacts depending on different national power policies. Models are formulated as a non-monotone complementarity problems with endogenous energy, transmission and allowance prices and are implemented in GAMS. |
| Keywords: | average cost based contracts, carbon leakage, complementarity conditions, EU-ETS. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2008062&r=ene |
| By: | Mandell, Svante (vti – Swedish National Road and Transport Research Institute) |
| Abstract: | This paper takes its departure in two observations from the EU’s climate policy. First, the EU has adopted a dual approach with a trading scheme covering CO2 emissions from the energy intensive industry, while the remaining emitters are subject to emission taxes. Second, the targets are quantitatively phrased, i.e., there is an upper limit on the total CO2 emissions. These observations are of interest under the realistic assumption of abatement costs being uncertain. Then the dual approach is likely not ex post cost effective. Furthermore, earlier literature suggests that an emissions tax on CO2 yields lower expected efficiency losses than a tradable permit scheme. Thus, quantitative targets, which are easier fulfilled through a trading scheme, stand in contrast to taxes being the preferable policy instrument. The present paper addresses, by the means of a stylized model, the two observations and shows when and why a dual approach is optimal from an efficiency point of view given an upper limit on total emissions. What determines the characteristics of the optimal solution, e.g., size of the trading vs. taxed sector and tax levels, is studied in some detail. |
| Keywords: | Climate; Emissions tax; Emissions trading; Policy; Regulation; Uncertainty |
| JEL: | H23 L51 Q28 Q58 |
| Date: | 2009–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vtiwps:2009_004&r=ene |
| By: | Pierre Villa |
| Abstract: | L’article aborde sous des angles multiples l’equivalence entre taxation et droits d’emission polluante : la premiere fixe les prix, les seconds les quantites. L’equivalence est plus formelle que substantielle. La fiscalite est le fait generateur. Le marche des droits n’existe pas spontanement et le prix y est instable parce que l’offre n’est pas independante de la demande. Il est manipulable aussi bien lors de la distribution des droits gratuits que lors des interventions au cours de la periode de conformite. Il ne peut exister qu’accompagne d’une fiscalite sur les emissions. Pour eviter ces inconvenients les droits doivent etre distribues par adjudication discriminante sans droits gratuits. La fiscalite ou le prix des droits sont une valeur reelle d’option correspondant au cout du changement de technique reduisant la pollution. Pour que ce cout conduise a une reduction de la pollution, il est necessaire de financer les activites d’innovation d’un montant superieur a la fiscalite environnementale afin de deplacer les facteurs de production vers cette activite. Comme la question de l’innovation est du meme ordre que pour l’extraction des energies fossiles, l’equivalence fiscale entre les taxes sur la pollution et l’energie est mediatisee par les taxes sur le capital qui operent les transferts de facteurs vers le secteur de la recherche qui peut etre non marchand. La decentralisation par le marche impose que la depollution ait un cout marchand. |
| Keywords: | Equivalence; droits d'emission echangeable; fiscalite de l'environnement |
| JEL: | E61 E62 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2009-05&r=ene |
| By: | Fabiosa, Jacinto F.; Beghin, John C.; Dong, Fengxia; Elobeid, Amani; Tokgoz, Simla; Yu, Tun-Hsiang |
| Abstract: | We quantify the emergence of biofuel markets and its impact on U.S. and world agriculture for the coming decade using the multi-market, multi-commodity international FAPRI (Food and Agricultural Policy Research Institute) model. The model incorporates the trade-offs between biofuel, feed, and food production and consumption and international feedback effects of the emergence through world commodity prices and trade. We examine land allocation by type of crop, and pasture use for countries growing feedstock for ethanol (corn, sorghum, wheat, sugarcane, and other grains) and major crops competing with feedstock for land resources such as oilseeds. We shock the model with exogenous changes in ethanol demand, first in the United States, then in Brazil, China, the European Union-25, and India, and compute shock multipliers for land allocation decisions for crops and countries of interest. The multipliers show at the margin how sensitive land allocation is to the growing demand for ethanol. Land moves away from major crops and pasture competing for resources with feedstock crops. Because of the high U.S. tariff on ethanol, higher U.S. demand for ethanol translates into a U.S. ethanol production expansion. The latter has global effects on land allocation as higher coarse grain prices transmit worldwide. Changes in U.S. coarse grain prices also affect U.S. wheat and oilseed prices, which are all transmitted to world markets. In contrast, expansion in Brazil ethanol use and production chiefly affects land used for sugarcane production in Brazil and to a lesser extent in other sugar-producing countries, but with small impacts on other land uses in most countries. |
| Keywords: | acreage, area, biofuel, corn, crops, ethanol, FAPRI model, feedstock, land, sugar, sugarcane. |
| Date: | 2009–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:13054&r=ene |
| By: | Mehdi Abbas (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II) |
| Abstract: | Cette note aborde les différentes stratégies multilatérales que pourrait mettre en oeuvre l'Union européenne dans la phase préparatoire pour un accord post-Kyoto, et développe la proposition d'un système de gouvernance commun à la CCNUCC et à l'OMC. |
| Keywords: | changement climatique ; après-Kyoto ; gouvernance internationale ; accord international |
| Date: | 2009–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00371057_v1&r=ene |
| By: | Cole, Scott (Department of Economics, Umeå University); Brännlund, Runar (Department of Economics, Umeå University) |
| Abstract: | Several countries are responding to the climate change threat with various policy measures (e.g., taxes, permit trading, regulations, information campaigns, etc). While the effectiveness of different measures (instruments) has been studied extensively, very little research exists related to public preferences for alternative measures. This paper describes the results of a pilot study to determine whether a choice experiment might be a feasible approach for measuring preferences for carbon dioxide reduction policies, while ensuring careful consideration of the budget constraint facing households. We focus on estimating the public’s marginal utilities and implicit prices for a select group of attributes that describe climate policy measures in general. The results from the pilot study indicate that when respondents trade-off the cost of alternative and unlabeled policy measures, they are willing to pay for those that encourage (1) the development of environmentally-friendly technology and (2) climate awareness among the Swedish population. Finding (1) could be interpreted to mean public support for market-based measures (e.g., taxes and permit trading) while finding (2) seems to support the use of information in the design of climate policy measures in order to encourage carbon dioxide-reducing behavior. Finally, our pilot study assumed that respondents’ preferences for the cost-sharing burden (equity) of measures might be defined in terms of an individual’s ability to pay. Given this assumption, our results indicate weak preferences for non-regressive cost distribution, but progressive cost distribution had no effect on choice. We offer several possible conclusions from this preliminary investigation into climate policy preferences. |
| Keywords: | market-based mechanisms; information effects; equity; choice experiment; preferences |
| JEL: | Q48 Q50 Q54 Q55 |
| Date: | 2009–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0767&r=ene |
| By: | Nelson, Gerald C. |
| Keywords: | Climate change, Copenhagen, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:16(1)&r=ene |
| By: | Minh Ha-Duong (CIRED - Centre international de recherche sur l'environnement et le développement - CIRAD : UMR56 - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Nationale du Génie Rural des Eaux et des Forêts); Rodica Loisel (CIRED - Centre international de recherche sur l'environnement et le développement - CIRAD : UMR56 - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Nationale du Génie Rural des Eaux et des Forêts) |
| Abstract: | Leakage is one of the main concerns of all parties involved with the development of Carbon Capture and Storage. From an economic point of view, Van der Zwaan and Gerlagh (2009) suggest that CCS remains a valuable option even with CO2 leakage rate as high as of a few % per year. But what is valuable is, ultimately, determined by social preferences and parameters that are beyond economic modeling. Examining the point of view of four stakeholder groups: industry, policy-makers, environmental NGOs and the general public, we conclude that there is a social agreement today: zero is the only acceptable carbon leakage rate. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00348128_v1&r=ene |
| By: | Oggioni, Giorgia (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); Smeers, Yves (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE); ---) |
| Abstract: | Carbon leakage in this pape ris the phenomenon whereby Electricity Intensive Industries subject to harsh environmental standards move their activity or part of it to more environmentally lenient regions. Carbon leakage has been mentioned as a possible outcome of the EU Emission Trading Scheme. Different studies are underway to assess the reality of the phenomenon and to devise policies to mitigate its possible impact. One remedy, proposed by the Energy Intensive Industries is to combine free emission allowances with a pricing of electricity whereby energy emissions and transmission costs are bundled and sold on an average cost basis. The paper attempts to model this proposal. We cast the problem in a spatial model of the power sector where generators can develop new capacities, the transmission system is organized on a flowgate basis, emission allowances are auctioned, except possibly for industries, and traded. The consumer market is decomposed in two segments. Industries purchase electricity according to some form of average cost price, the rest of the market is supplied at marginal cost. These equilibrium models are non convex. We present the models and discuss their properties. Companion papers report policy implications. |
| Keywords: | carbon leakage, emission trading scheme, electricity, energy policies, equilibrum, complementarity. |
| JEL: | C61 L23 O14 O33 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2008076&r=ene |