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on Energy Economics |
| By: | Evens Salies (Observatoire Français des Conjonctures Économiques) |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0919&r=ene |
| By: | Margarita Genius (Department of Economics, University of Crete, Greece); Spyro Stefanou (Pennsylvania State University); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece) |
| Abstract: | A theoretical framework is developed for decomposing partial factor productivity and measuring technical inefficiency when the underlying technology is characterized by factor non-substitution. With Farrell's (1957) radial index of technical inefficiency being inappropriate in this case, Russell's (1985; 1987) non-radial indices are adapted to measure technical inefficiency in a Leontief model. A system of factor demand equations with a regime specific technical inefficiency term is proposed and estimated allowing for dependence across inputs using a copula approach. Then the paper presents a complete decomposition of partial factor productivity changes using a dataset of U.S. steam-power electric generation utilities. |
| Date: | 2009–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0913&r=ene |
| By: | Randall A. LaViolette; Lory A. Ellebracht; Kevin L. Stamber; Charles J. Gieseler; Benjamin K. Cook |
| Abstract: | A minimal model of a market of myopic non-cooperative agents who trade bilaterally with random bids reproduces qualitative features of short-term electric power markets, such as those in California and New England. Each agent knows its own budget and preferences but not those of any other agent. The near-equilibrium price established mid-way through the trading session diverges to both much higher and much lower prices towards the end of the trading session. This price divergence emerges in the model without any possibility that the agents could have conspired to "game" the market. The results were weakly sensitive to the endowments but strongly sensitive to the nature of the agent's preferences and budget constraints. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:0905.2366&r=ene |
| By: | JULLIEN, Bruno; POUYET, Jérôme; SAND-ZANTMAN, Wilfried |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:20999&r=ene |
| By: | Ian Ayres; Sophie Raseman; Alice Shih |
| Abstract: | By providing feedback to customers on home electricity and natural gas usage with a focus on peer comparisons, utilities can reduce energy consumption at a low cost. We analyze data from two large-scale, random-assignment field experiments conducted by utility companies providing electricity (the Sacramento Municipal Utility District (SMUD)) and electricity and natural gas (Puget Sound Energy (PSE)), in partnership with a private company, Positive Energy/oPower, which provides monthly or quarterly mailed peer feedback reports to customers. We find reductions in energy consumption of 1.2% (PSE) to 2.1% percent (SMUD), with the decrease sustained over time (seven months (PSE) and twelve months (SMUD)). |
| JEL: | O13 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15386&r=ene |
| By: | Thomas Eichner; Rüdiger Pethig |
| Abstract: | A small open economy produces a consumer good along with green and black energy and imports fossil fuel for black-energy production at an uncertain world market price. Efficient risk management requires curbing fuel consumption, and hence carbon emissions, when consumers are prudent. Moreover, if consumer preferences display constant absolute risk aversion (implying prudence), an efficient response to increasing risk is promoting green energy and reducing total energy production. Unregulated competitive markets are inefficient when consumers are risk averse. With the plausible assumption of prudent consumers and risk neutral producers, taxing both fossil fuel and green energy restores efficiency. |
| Keywords: | Price uncertainty, black energy, green energy, fossil fuel |
| JEL: | F18 Q42 Q48 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:sie:siegen:138-09&r=ene |
| By: | Constant Tra (Department of Economics, University of Nevada, Las Vegas) |
| Abstract: | Renewable Portfolio Standards (RPS) have been a contentious issue amongst policymakers in recent years. Neoclassical theory would suggest that, in the short-run, RPS mandates will raise electricity rates if the cost of electricity generation via renewable energy technologies exceeds that of convention fossil fuel technologies. This study uses a quasi-experimental approach to investigate the effect of RPS policies on retail residential electricity rates. The study provides one of the first econometric investigations of the economic effect of RPS mandates. The empirical approach uses a panel dataset of 2,602 U.S. electric utilities from 1990 to 2006. The empirical findings provide several policy insights on the effect of RPS mandates. First, a state RPS mandate, on average, positively affects the average residential electricity rate. Second, no spillover effect exists for the RPS effect on electricity rates. In other words, utilities that operate in a RPS state, but are not subject to an RPS requirement, do not experience a significant increase in electric rates. Third, the RPS effect on residential electricity rates is significantly lower in states with a higher wind and solar energy potential. Finally, the magnitude of the RPS effect on residential electricity rates increases for utilities subject to higher requirements. The estimated elasticity of residential electricity rates with respect to an RPS requirement equals roughly 0.3. |
| Keywords: | Renewable energy, Electricity, Renewable Portfolio Standards |
| JEL: | Q42 Q48 L98 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:nlv:wpaper:0923&r=ene |
| By: | Greg Buckman (Fenner School of Environment and Society, The Australian National University, Australia); Mark Diesendorf (Institute of Environmental Studies, University of New South Wales, Australia) |
| Abstract: | If long-term greenhouse gas emissions in Australia are to be reduced, renewable energy is likely to be critical. This is particularly so if deep cuts are eventually implemented. Current government policies ( including emissions trading and electricity, the feed-in tariffs announced in 2008), are likely to have only modest impacts on renewable electricity generation in Australia at least until 2020. Australia’s renewable electricity base will remain narrow with little solar technologies’ contribution before 2020. This will not provide an adequate basis for delivering long-term deep cuts to Australia’s greenhouse emissions nor for achieving major greenhouse gas emission reductions at least cost. The future of Australia’s renewable electricity rests mainly with the success, or otherwise, of its Mandatory Renewable Energy Target and expanded Renewable Energy Target. Their effectiveness may be eroded, however, by the long-term banking of tradable certificates used with both target mechanisms. Unless there is a change of policy mechanisms, Australia will probably fail to reach its renewable electricity target of 20 per cent by 2020. Australia will also fail to build up its solar and hot rock geothermal electricity generation capacity to make large supply contributions beyond 2020. |
| Keywords: | Renewable electricity, energy, greenhouse emissions, emissions trading, renewable portfolio standard, feed-in tariff. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0930&r=ene |
| By: | Michi NISHIHARA (Graduate School of Economics, Osaka University) |
| Abstract: | This paper investigates the decision of an automaker concerning the alternative promotion of a hybrid vehicle (HV) and a full electric vehicle (EV). We evaluate the HV project by considering the option to change promotion from the HV to the EV in the future. The results not only extend previous findings concerning American options on multiple assets, but also include several new implications. One notable observation is that the increased market demand for EVs can accelerate the promotion of the HV because of the embedded option. |
| Keywords: | real options, American options on multiple assets, exercise region, alternative projects, hybrid and electric vehicles. |
| JEL: | C61 G13 G31 O32 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0931&r=ene |
| By: | Mohamed El Hedi Arouri (LEO); Julien Fouquau (LEO) |
| Abstract: | This paper examines the short-run relationships between oil prices and GCC stock markets. Since GCC countries are major world energy market players, their stock markets may be susceptible to oil price shocks. To account for the fact that stock markets may respond nonlinearly to oil price shocks, we have examined both linear and nonlinear relationships. Our findings show that there are significant links between the two variables in Qatar, Oman, and UAE. Thus, stock markets in these countries react positively to oil price increases. For Bahrain, Kuwait, and Saudi Arabia we found that oil price changes do not affect stock market returns. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:0905.3870&r=ene |
| By: | Elisaveta Archanskaïa (Observatoire Français des Conjonctures Économiques); Jerome Creel (Observatoire Français des Conjonctures Économiques); Paul Hubert (Observatoire Français des Conjonctures Économiques) |
| Abstract: | This article studies the impact of oil shocks on the macroeconomy in two ways insofar unexploited in the literature. The analysis is conducted at the global level, and it explicitly accounts for the potentially changing nature of oil shocks. Based on an original world GDP series and a grouping of oil shocks according to their nature, we find that oil supply shocks negatively impact world growth, contrary to oil demand shocks, procyclical in their nature. This result is robust at the national level for the US. Furthermore, endogenous monetary policy is shown to have no countercyclical effects in the context of an oil demand shock. |
| Keywords: | Oil shocks, Oil demand shocks, Oil supply shocks, Causality |
| JEL: | E32 Q43 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0902&r=ene |
| By: | Sylvain Rossiaud (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II) |
| Abstract: | Cet article se propose de rendre compte et d'évaluer les interactions entre les trois évolutions qui structurent l'industrie pétrolière russe depuis le début du second mandat présidentiel de V. Poutine : le ralentissement de la croissance de la production ainsi que la baise absolue de cette dernière observée en 2008, la réorganisation de cette industrie marquée par l'augmentation du rôle des compagnies pétrolières publiques et, enfin, les ajustements apportés aux dispositions contractuelles encadrant les activités de l'amont pétrolier. Il est montré, d'une part, que la baisse de la production actuelle est la résultante de l'épuisement des stratégies de court terme des compagnies privées russes et, d'autre part, que les ajustements des contrats sont insuffisants pour permettre d'orienter les compagnies russes vers des stratégies de plus long terme. Dans cette perspective, l'augmentation du rôle des compagnies pétrolières publiques peut être analysée comme une réponse organisationnelle à cette impasse institutionnelle. |
| Keywords: | INDUSTRIE PETROLIERE ; RUSSIE |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00416538_v1&r=ene |
| By: | Breisinger, Clemens; Diao, Xinshen; Schweickert, Rainer; Wiebelt, Manfred |
| Abstract: | "Contemporary policy debates on the macroeconomics of resource booms often concentrate on the short-run Dutch disease effects of public expenditure, ignoring the possible long-term effects of alternative revenue-allocation options and the supply-side impact of royalty-financed public investments. In a simple model applied here, the government decides the level and timing of resource-rent spending. This model also considers productivity spillovers over time, which may exhibit a sector bias toward domestic production or exports. A dynamic computable general equilibrium (DCGE) model is used to simulate the effect of temporary oil revenue inflows to Ghana. The simulations show that beyond the short-run Dutch disease effects, the relationship between windfall profits, growth, and households' welfare is less straightforward than what the simple model of the “resource curse” suggests. The DCGE model results suggest that designing a rule that allocates oil revenues to both productivity-enhancing investments and an oil fund is crucial to achieving shared growth and macroeconomic stability." from authors' abstract |
| Keywords: | Oil fund, Public expenditures, Growth, Computable general equilibrium (CGE) analysis, Development strategies, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:893&r=ene |
| By: | Damiano Brigo; Kyriakos Chourdakis; Imane Bakkar |
| Abstract: | It is commonly accepted that Commodities futures and forward prices, in principle, agree under some simplifying assumptions. One of the most relevant assumptions is the absence of counterparty risk. Indeed, due to margining, futures have practically no counterparty risk. Forwards, instead, may bear the full risk of default for the counterparty when traded with brokers or outside clearing houses, or when embedded in other contracts such as swaps. In this paper we focus on energy commodities and on Oil in particular. We use a hybrid commodities-credit model to asses impact of counterparty risk in pricing formulas, both in the gross effect of default probabilities and on the subtler effects of credit spread volatility, commodities volatility and credit-commodities correlation. We illustrate our general approach with a case study based on an oil swap, showing that an accurate valuation of counterparty risk depends on volatilities and correlation and cannot be accounted for precisely through a pre-defined multiplier. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:0901.1099&r=ene |
| By: | Fatih Karanfil (Galatasaray University); Yasser Yeddir-Tamsamani (Observatoire Français des Conjonctures Économiques) |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0912&r=ene |
| By: | Craig W. Rismiller; Wallace E. Tyner (Department of Agricultural Economics, College of Agriculture, Purdue University) |
| Abstract: | The passage of U.S. laws mandating and subsidizing advanced cellulosic biofuels may spur the development of a commercial cellulosic biofuels industry. However, a cellulosic industry will only develop if the overall economics including government incentives render investment in the sector attractive to private investors.This study compares the profitability of three biofuel production types: grain based ethanol, cellulosic biochemical ethanol, and cellulosic thermochemical biofuels. In order to compare the current profitability of each of the production types, the Biofuels Comparison Model (BCM) was developed. The BCM is a spreadsheet model that estimates the net present value (NPV) for each production type given input and output prices, technical, and financial assumptions. The BCM can be updated to reflect the current profitability through embedded web price links. The study finds that grain, biochemical, and thermochemical production types are all currently unprofitable when subsidies and mandates are ignored. However, the grain based ethanol process is predicted to be the most profitable (lowest loss) compared to the cellulosic biofuels. When the 2008 Farm Bill subsidies are added to the BCM, all three production types are projected to be profitable. With the addition of the different subsidies, the cellulosic biofuels are estimated to have higher NPV’s than grain based ethanol. When compared on an energy equivalent basis, the estimated cost of producing grain ethanol is $114/bbl. crude oil equivalent, biochemical ethanol $141/bbl., and thermochemical gasoline $108/bbl. |
| Keywords: | biofuels, cellulosic biofuels, corn ethanol, biofuel economics |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pae:wpaper:09-06&r=ene |
| By: | CHAKRAVORTY, Ujjayant; HUBERT, Marie-HéLèNe; MOREAUX, Michel |
| Date: | 2009–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:21028&r=ene |
| By: | Jonathan R.Evers (PhD Student, Griffith University, Australia); Tor Hundloe (Environmental Management, Griffith University, Australia); Peter Daniels (Griffith University, Australia) |
| Abstract: | This research has been carried out to establish; the importance of valuing externalities in relating decision making to the triple bottom line of ethanol production. By treating organic wastes as a resource and applying a different method of waste management, organic wastes could contribute significantly to global energy needs. The ethanol distillation process has a waste product - stillage; a soup like waste stream that contains substantial organic content. By digesting this material to optimum efficiency there are three resources recovered – biogas (80% methane), biosolids (high in nutrients equivalent to high grade fertiliser) and recyclable water. Current waste treatment in the ethanol production industry focuses on drying the stillage waste and using the resultant material as mulch to be spread over crops; energy intensive, has little benefit and increases the cost of production. Therefore if a waste treatment process could convert the waste into recoverable resources; such as methane; then the subsequent methane utilised back in the distillation / production process as a source of energy, this would essentially reduce the cost of producing ethanol in accordance with the true costs being considered – in other words making sure all externalities are valued. Unless an economic advantage can be established, the true benefit of valuing this type of waste treatment is redundant. This relates to the current way in which the economy works. Ultimately all decisions of business and industry relate to the bottom line, the profitability of a project, will the project make money. By putting a value on externalities associated with a project or process it can be shown whether a project will be profitable, even when considering the impact on the environment and society, not just the economy. Ultimately, when all externalities can be quantified and valued and shown to be positive - the project is inherently sustainable Values for the externalities can be derived from various references such as: current market value. Carbon now has a value per tonne of emissions established in several markets around the world – these values can be attributed directly to energy use. The value of water has been established through research and can also be attributed to water use. The total economic value (TEV) of water, can be broken down into three components: the direct use-value (used or potentially useable by humans); the ecological support value (value to the environment), and the option value (value to society from having the resource available at some time in the future to be used). Ecosystem support value is associated with the assumed contributions of the resource cycles in their naturally-occurring states, or in some similar state, to provide flows to the ecosphere of the area – such as carbon, water and nitrogen. To the degree that the water is removed from the area, as with the industrial uses, for instance, this value is lost. Use value is triggered explicitly by the removal of the water from the aquifer, and its delivery to a specified user, or its storage in a location where it is available for use, in some way, by humans. Therefore, this research aims to show that within ethanol distillation, by utilising waste treatment to recover resources, using those resources directly in the operation / process / production, valuing all externalities associated both foregone and utilised; the cost of production should decrease when scrutinised from an environmental economic perspective. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0931&r=ene |
| By: | David I.Stern (Arndt-Corden Division of Economics, Research School of Pacific and Asian Studies, The Australian National University, Australia) |
| Abstract: | A recent paper in the Journal of Environmental Economics and Management points out that time effects are not uniquely identified in reduced-form models, such as the environmental Kuznets curve. This Research Report proposes a solution that assumes the time effect is common to each pair of most similar countries. The between estimator makes no a priori assumption about the nature of the time-effects and is likely to provide consistent estimates of long-run relationships in real-world data situations. This research applies several common panel data estimators to the data set for carbon and sulfur emissions in the OECD collected by Vollebergh et al. and the global sulfur dataset compiled by Stern and Common The between estimates of the sulfur-income elasticity are 0.732 in the OECD and 1.157 in the global data set. The estimated carbon-income elasticity is 1.612. |
| JEL: | C23 Q53 Q56 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0934&r=ene |
| By: | Russell Smyth; Ingrid Nielsen; Qingguo Zhai; Tiemin Liu; Yin Liu; Chunyong Tang; Zhihong Wang; Zuxiang Wang; Juyong Zhang |
| Abstract: | We examine the relationship between atmospheric pollution, water pollution, traffic congestion, access to parkland and personal well-being using a survey administered across six Chinese cities in 2007. In contrast to existing studies of the determinants of well-being by economists, which have typically employed single item indicators to measure well-being, we use the Personal Well-Being Index (PWI). We also employ the Job Satisfaction Survey (JSS) to measure job satisfaction, which is one of the variables for which we control when examining the relationship between environmental surroundings and personal well-being. Previous research by psychologists has shown the PWI and JSS to have good psychometric properties in western and Chinese samples. A robust finding is that in cities with higher levels of atmospheric pollution and traffic congestion, respondents report lower levels of personal well-being ceteris paribus. Specifically, we find that a one standard deviation increase in suspended particles or sulphur dioxide emissions is roughly equivalent to a 12-13 per cent reduction in average monthly income in the six cities. |
| Keywords: | China, Environment, Pollution, Personal Well-Being. |
| JEL: | A13 D60 |
| Date: | 2009–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-11&r=ene |
| By: | Sonia Akter (Crawford School of Economics and Government, the Australian National University, Australia); Jeff Bennett (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | This paper proposes an extension to existing models of non-expected utility (NEU) in the stated preference (SP) literature. The extension incorporates the impact of multiple sources of ambiguity in individual decision making behavior. Empirical testing of the proposed decision model was carried out in Australia using a dichotomous choice contingent valuation study of a national ‘Carbon Pollution Reduction Scheme (CPRS)’. The results of the study demonstrate that subjective expectations of the context scenario and subjective policy expectations are important determinants of individual decision making in a SP framework. Furthermore, the results of the study demonstrate that decision weight functions are non-linear (quadratic) in subjective scenario expectations and subjective policy expectation. Although evidence was found to link willingness to pay to scenario ambiguity, policy ambiguity was found to have no statistically significant influence on individual decision making |
| JEL: | C93 D81 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0932&r=ene |
| By: | Marta Biancardi; Giovanni Villani |
| Abstract: | The paper investigates the stability of the International Environmental Agreement in a model of emission reduction. We consider a two stage game, in which in the first stage each country decides whether or not to join the agreement while, in the second stage, the quantity of emissions reduction is chosen. Agents may act cooperatively, building coalitions and acting according to the interest of the coalition, or they make their choices taking care of their individual interest only. Unlike conventional coalition stability models, we assume that countries are not identical but they are divided in two different kinds: developing countries and developed ones; the first have a lower attention about environmental pollution than developed ones. According to environmental awareness, stable coalitions of different sizes occur. On this subject, we present a Maple algorithm to compute the optimal costs and the abatement level for each coalition forms assuming an arbitrary number of developed and developing countries and to determine the internal and the external stability. In order to expand a coalition of any size to the grand coalition, which reaches the greatest abatement level and the lowest aggregate costs, we introduce monetary transfers. |
| Keywords: | IEA; Coalition stability; Implementation; Monetary Transfers |
| JEL: | F50 C70 C60 H23 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:ufg:qdsems:09-2009&r=ene |
| By: | Frank Jotzo (Research School of Pacific and Asian Studies, the Australian National University, Australia); Regina Betz (Centre for Energy and Environmental Markets, School of Economics, University of New South Wales, Australia) |
| Abstract: | A detailed proposal for an economy-wide emissions trading scheme in Australia was tabled by the government in December 2008 with a proposed start date for mid-2010. The government proposes unilateral linking, with no initial bilateral linkages, through the clean development mechanism and joint implementation. The proposal has resulted in serious concern about significant permit price increases and price capping, leading to a ban on permit sales. This research paper evaluates the proposed Australian scheme in relation to international emissions trading and linkages. Different scenarios for the Australian permit price under unilateral linking are considered. Options for bilateral linking with the European Union and New Zealand schemes are also evaluated, including access to ‘hot air’ units. The research paper argues that Australia needs to dismantle linking obstacles, such as the price cap, and move towards suitable bilateral linking schemes. |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0914&r=ene |
| By: | Regina Betz (Centre for Energy and Environmental Markets, School of Economics, University of New South Wales, Australia); Todd Sanderson (Agriculture and Resource Economics, Faculty of Agriculture, Food and Natural Resources, University of Sydney); Tihomir Ancev (Agriculture and Resource Economics, Faculty of Agriculture, Food and Natural Resources, University of Sydney) |
| Abstract: | Regulators around the world are currently considering national emissions trading systems (ETS) as a cost-effective way to reduce greenhouse gas emissions. ETS installations coverage is one of the numerous design issues confronting them. ‘Blanket coverage’ that includes all an economy’s industrial emitters of greenhouse gases has some intuitive appeal. Although it seems equitable it does not, however, take into full account all the costs related to the extent of coverage. This report shows how an alternative approach of ‘efficient coverage’ can achieve the same emission reduction outcome at lower social cost. The approach is based on maximising the benefits of including installations in an ETS, while at the same time taking into account all relevant transaction costs. A broad definition of transaction costs is used – the regulatory costs to the government as well as regulatory costs imposed on covered installations. Particularly for relatively modest emissions reduction targets, the study found there are significant cost savings with an ‘efficient coverage’ compared with ‘blanket coverage’. Key words: Emissions Trading Scheme, Environmental Policy, Installation Coverage, Transaction costs. |
| JEL: | Q50 Q58 H23 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0928&r=ene |
| By: | Regina Betz; Stefan Seifert (University of Karlsruhe, Germany); Peter Cramton (University of Maryland, USA); Suzi Kerr (Moto Research and Public Policy, New Zealand) |
| Abstract: | Allocating permits based on individual historical emissions (‘grandfathering’), or industry benchmark data, is an important design aspect of an emissions trading scheme. Free permit allocation has proven complex and inefficient (particularly in the European Union) with distribution implications also politically difficult to justify. For these reasons, auctioning emissions permits has become more popular than allocating permits. The European Union is now moving towards auctioning more than 50 per cent of all permits in 2013. In the US, the Regional Greenhouse Gas Initiative (RGGI) has started with auctioning 100 per cent of permits. The Australian proposal for a Carbon Pollution Reduction Scheme (CPRS) also provides for auctioning a significant share of total permits. This report discusses important theoretical and practical auction design aspects for allocating emissions permits in Australia. Particularly interesting is the proposal to simultaneously auction multiple emissions units of different vintages. The specific design details proposed have been adopted by the Australian Government in their CPRS White Paper. |
| Keywords: | Climate policy, Greenhouse gases, Auctions, Emissions trading |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0929&r=ene |
| By: | Nicola Cantore (Overseas Development Institute, Università Cattolica del Sacro Cuore, Milan); Emilio Padilla Rosa (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona) |
| Abstract: | An abundant scientific literature about climate change economics points out that the future participation of developing countries in international environmental policies will depend on their amount of pay offs inside and outside specific agreements. These studies are aimed at analyzing coalitions stability typically through a game theoretical approach. Though these contributions represent a corner stone in the research field investigating future plausible international coalitions and the reasons behind the difficulties incurred over time to implement emissions stabilizing actions, they cannot disentangle satisfactorily the role that equality play in inducing poor regions to tackle global warming. If we focus on the Stern Review findings stressing that climate change will generate heavy damages and policy actions will be costly in a finite time horizon, we understand why there is a great incentive to free ride in order to exploit benefits from emissions reduction efforts of others. The reluctance of poor countries in joining international agreements is mainly supported by historical responsibility of rich regions in generating atmospheric carbon concentration, whereas rich countries claim that emissions stabilizing policies will be effective only when developing countries will join them. Scholars recently outline that a perceived fairness in the distribution of emissions would facilitate a wide spread participation in international agreements. In this paper we overview the literature about distributional aspects of emissions by focusing on those contributions investigating past trends of emissions distribution through empirical data and future trajectories through simulations obtained by integrated assessment models. We will explain methodologies used to elaborate data and the link between real data and those coming from simulations. Results from this strand of research will be interpreted in order to discuss future negotiations for post Kyoto agreements that will be the focus of the next Conference of the Parties in Copenhagen at the end of 2009. A particular attention will be devoted to the role that technological change will play in affecting the distribution of emissions over time and to how spillovers and experience diffusion could influence equality issues and future outcomes of policy negotiations. |
| Keywords: | climate change, equality, emissions, technology, spillovers |
| JEL: | Q52 Q53 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:uab:wprdea:wpdea0907&r=ene |
| By: | Gilbert Metcalf |
| Abstract: | In previous papers I have described a revenue and distributionally neutral approach to reducing U.S. greenhouse gas emissions that uses a carbon tax. The revenue from the carbon tax is used to finance an environmental earned income tax credit designed to be distributionally neutral. The carbon tax reform proposal is also revenue neutral and avoids conflating carbon policy with debates over the appropriate size of the federal budget. This paper describes a variant to address concerns of environmentalists that a carbon tax does not provide certainty of emission reductions over the control period. The Responsive Emissions Autonomous Carbon Tax (REACT) combines the short-run price stability of a carbon tax with the long-run certainty of emission reductions over a control period. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0731&r=ene |
| By: | David Stern (ANU Climate Change Institute, the Australian National University, Australia) |
| Abstract: | The aim of this study is to measure and understand the long-term factors behind trends in energy and carbon intensity in different economies. It also looks at how improvements in energy efficiency are spread to countries around the world. Of particular interest is the rate at which efficiency improvements spread from developed to developing countries and what affects this diffusion. Countries that are considered are Australia, major European economies, USA, Canada, Mexico, Japan, China, and India. Key Words: Energy efficiency, carbon emissions, environmental Kuznets curve, economic growth |
| JEL: | Q43 Q55 Q56 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0920&r=ene |
| By: | Sonia Akter (Crawford School of Economics and Government, the Australian National University, Australia); Jeff Bennett (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | This study aims to show how Australian households perceive climate change and what they are prepared to do to reduce the harmful effects of climate change. A web-based survey in November 2008 asked approximately 600 New South Wales households about their willingness to pay additional household expenses caused by the Carbon Pollution Reduction Scheme (CPRS) proposed by the Australian government. The Contingent Valuation Method (CVM), a widely used non-market valuation technique, was applied. Results of the study show there is a positive demand to mitigate climate change in Australia resulting from a wish to avoid climate change. Households’ willingness to pay (WTP) for climate change was, however, significantly curbed as households were uncertain about the extent of climate change and whether climate change policies are effective. Australian household support for the CPRS is influenced by schemes of other major greenhouse gas emitting countries (global co-operation). Only when people who didn’t answer the survey are assumed to value climate change mitigation the same as people who did answer the survey, do the benefits of the CPRS, as estimated by respondents’ WTP, exceed its costs. Key words: Contingent valuation, climate change, Carbon Pollution Reduction Scheme, willingness to pay, uncertainty, Australia |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0919&r=ene |
| By: | John C.V. Pezzey (Fenner School of Environment and Society, Australian National University, Canberra, Australia); Salim Mazouz (Eco Perspectives, Canberra, Australia); Frank Jotzo (Research School of Pacific and Asian Studies, the Australian National University, Australia) |
| Abstract: | The Australian Government's Carbon Pollution Reduction Scheme (CPRS), March 2009, set a target of 5 to 15 per cent emission cuts during 2000 and 2020. The proposed target is weak and is likely to increase mitigation costs in Australia in the long run. This research report analyses the target’s efficiency as well as provisions for preventing carbon leakage. The research also looks at the nature of changes to the CPRS made during 2008 as well as the likely cause of these changes. The free allocation of output-linked, tradable permits to Emissions-Intensive, Trade-Exposed (EITE) sectors was much higher than previously proposed and greater than what is needed to prevent carbon leakage. This means EITE emissions could rise by 13 per cent during 2010 and 2020. To meet the proposed national targets, non-EITE sectors must also cut emissions by 34 to 51 per cent (or make equivalent permit imports). This is far from a cost-effective outcome. The weak targets and over-generous EITE assistance illustrate how collective action by the ‘carbon lobby’ can damage economic efficiency. To resist this, new national or international institutions to assess lobby claims impartially are needed. More government publicity about the true economic importance of carbon-intensive sectors is also required. Over-concern that voluntary emission cuts will be nullified by the CPRS is another, different, demonstration of lobby power. Key words: climate policy, Australia, targets, emission trading, carbon leakage, lobbying |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0924&r=ene |
| By: | Huifang Tian; John Whalley |
| Abstract: | Large population / rapidly growing economies such as China and India have argued that in the upcoming UNFCCC negotiations in Copenhagen, any emission reduction targets they take on should be based on their intensity of emissions (emissions/$GDP) on a target date not the level of emissions. They argue that this will allow room for their continued high growth, and level commitments in the presence of sharply differential growth between OECD and non-OECD economies represent asymmetric and unacceptable arrangements. Much of the policy literature agrees with this position, also arguing that while there is equivalence between commitments if growth rates are certain, where growth rates are uncertain equivalence breaks down. However, no explicit models or experimental design are used to support this claim. Here we use a modeling framework in which countries face a business as usual (BAU) growth profile under no mitigation, and can mitigate (reduce consumption) and lower temperature change but with a utility loss. International trade enters through trade in country differentiated goods, and the impact of mitigation on country welfare depends critically on the assumed severity of climate related damage. We then consider cases where country growth rates are uncertain, and compare the impacts of levels versus intensity commitments, with the latter made equivalent in the sense that expected emissions are the same. There are different senses of this equivalence; global equivalence with differing country impacts, or strict country by country equivalence. Under intensity commitments there is more variation in both consumption and emissions than is the case with level commitments, and we show cases where level commitments are preferred to intensity commitments by all countries. Whether this is the case also depends upon how growth rate uncertainty is specified. We are also able to consider packages of mixed level and intensity commitments by country which might be the outcome of UNFCCC negotiations. Outcomes can thus be opposite to prevailing opinion, but it depends on how the equivalent targets are specified. |
| JEL: | F02 F18 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15370&r=ene |
| By: | Hooi Hooi Lean; Russell Smyth |
| Abstract: | This study examines the causal relationship between carbon dioxide emissions, electricity consumption and economic growth within a panel vector error correction model for five ASEAN countries over the period 1980 to 2006. The long-run estimates indicate that there is a statistically significant positive association between electricity consumption and emissions and a non-linear relationship between emissions and real output, consistent with the Environmental Kuznets Curve. The long-run estimates, however, do not indicate the direction of causality between the variables. The results from the Granger causality tests suggest that in the long-run there is unidirectional Granger causality running from electricity consumption and emissions to economic growth. The results also point to unidirectional Granger causality running from emissions to electricity consumption in the short-run. |
| Keywords: | ASEAN, carbon dioxide emissions, energy consumption, economic growth. |
| JEL: | Q43 Q53 Q56 |
| Date: | 2009–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-13&r=ene |
| By: | Frank Jotzo (Research School of Pacific and Asian Studies, the Australian National University, Australia) |
| Abstract: | The Asia-Pacific region is the major source of global growth in greenhouse gas emissions. Strong action is needed in Asian countries, particularly China and India, to reduce these global emissions. Driven by the desire to limit energy consumption, some Asian countries already have domestic policies to limit greenhouse gas emission. But much more ambitious policies are needed to turn emission trends around. This research report examines the implications of international efforts to mitigate the impacts of human activity on climate in the Asia-Pacific region. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0911&r=ene |
| By: | Gilbert Metcalf |
| Abstract: | The U.S. tax code provides a number of subsidies for low-carbon technologies. I discuss the difficulties of achieving key policy goals with subsidies as opposed to using taxes to raise the price of pollution-related activities. In particular, subsidies lower the cost of energy (on average) rather than raising it. Thus consumer demand responses work at cross purposed to the goal of reducing emissions (especially as average cost pricing is used for electricity). Second, it is difficult to achieve technology neutrality with subsidies-here defined as an equal subsidy cost per ton of CO2 avoided. Third, many subsidies are inframarginal. Finally, subsidies often suffer from unintended interactions with other policies. I conclude with some observations on the use of price-based instruments. In particular I discuss how a carbon tax could be designed to achieve environmental goals of emission caps over a control period. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0733&r=ene |