|
on Energy Economics |
| By: | Hahn, Robert W.; Anthoff, David |
| Abstract: | In this essay, we describe some important themes in energy and environmental policy. There are two main reasons for our interest in these policies. First, such policies will likely be important in the coming decades as issues related to climate change and energy security come to the fore. Second, there are important lessons to be learned from a careful review of the actual performance of energy and environmental policies. We undertake a selective survey of the literature to highlight what is known about the efficiency of particular kinds of policies, laws and regulations in these areas. |
| Keywords: | Environment, Regulatory Reform |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:6&r=ene |
| By: | Noel, Pierre |
| Abstract: | We welcome the European Commission's proposal for a Regulation on the security of gas supply which, it is hoped, will be agreed at the Energy Council in May. The Regulation aims to help member states improve their gas security policies as ECFR argued the EU should do in a Policy Brief published before the gas crisis of January 20091. However, there remain some problems with the proposed Regulation, in particular the mechanism through which member states will be required to devise and implement gas security policies. This note aims to outline how these problems can be resolved. |
| Keywords: | Environment |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:reg:rpubli:34&r=ene |
| By: | Muehlegger, Erich; Davis, Lucas W. |
| Abstract: | This paper measures the extent to which prices exceed marginal costs in the U.S. natural gas distribution market during the period 1991-2007. We find large departures from marginal cost pricing in all 50 states, with residential and commercial customers facing average markups of over 40%. Based on conservative estimates of the price elasticity of demand these distortions impose hundreds of millions of dollars of annual welfare loss. Moreover, current price schedules are an important pre-existing distortion which should be taken into account when evaluating carbon taxes and other policies aimed at addressing external costs. |
| Keywords: | Environment |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:579&r=ene |
| By: | Richard Pomfret (School of Economics, University of Adelaide) |
| Abstract: | Recent literature has focussed on institutional degradation and revenue volatility as major sources of a resource curse. Formerly centrally planned countries may be especially vulnerable due to their mutating institutions and macropolicy inexperience. This paper examines these issues through case studies of six former Soviet republics and Mongolia. The principal focus is on the methods of involving foreign partners in exploration and exploitation of natural resources and, to a lesser extent, on the use of revenues during resource booms. The consequences of alternative resource ownership patterns are difficult to model due to path dependency and the significance of the conjuncture of circumstances. Kazakhstan in the 1990s was a prime example of rent-seeking institutional degradation, but an exceptionally positive conjuncture in the 2000s (soaring oil prices, large oil and gas discoveries, and new pipelines) triggered institutional and policy evolution. Uzbekistan, by contrast, had less resource-rent-driven institutional degradation in the 1990s, but stagnated in the 2000s. Turkmenistan and Mongolia highlight the missed opportunities from not involving foreign partners, while Azerbaijan and the Kyrgyz Republic illustrate the less predictable outcomes following quick deals with foreign investors. Institutions matter, but the case studies suggest more complex relationships than revealed by simple correlations between indicators of institutional quality or of ownership patterns. |
| Keywords: | oil, gas, minerals, Central Asia, resource curse |
| JEL: | Q32 P35 O13 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:adl:wpaper:2010-16&r=ene |
| By: | Maria Lykidi; Jean-Michel Glachant; Pascal Gourdel |
| Abstract: | In many countries, the electricity systems are quitting the vertically integrated monopoly organization for an operation framed by competitive markets. In such a competitive regime one can ask what the optimal management of the nuclear generation set is. We place ourselves in a medium-term horizon of the management in order to take into account the seasonal variation of the demand level between winter (high demand) and summer (low demand). A flexible nuclear set is operated to follow a part of the demand variations. In this context, nuclear fuel stock can be analyzed like a reservoir since nuclear plants stop periodically (every 12 or 18 months) to reload their fuel. The operation of the reservoir allows different profiles of nuclear fuel uses during the different seasons of the year. We analyze it within a general deterministic dynamic framework with two types of generation: nuclear and non-nuclear thermal. We study the optimal management of the production in a perfectly competitive market. Then, we build a very simple numerical model (based on data from the French market) with nuclear plants being not operated strictly as base load power plants but within a flexible dispatch frame (like the French nuclear set). Our simulations explain why we must anticipate future demand to manage the current production of the nuclear set (myopia can not be total). Moreover, it is necessary in order to ensure the equilibrium supply-demand, to take into account the non-nuclear thermal capacities in the management of the nuclear set. They also suggest that non-nuclear thermal could stay marginal during most of the year including the months of low demand. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:1009&r=ene |
| By: | Guillaume De Roo |
| Abstract: | With the Nuclear Waste Policy Act of 1982, the responsibility of American utilities in the long-term management of spent nuclear fuel was limited to the payment of a fee. This narrow involvement did not result in faster or safer development of a solution for commercial nuclear waste. In most other countries, the financial liability and practical involvement of utilities appear more extensive. This paper highlights how such differences in institutional frameworks affect risk sharing and economic incentives. It argues that a greater allocation of risk and responsibility to the utilities should reenter the debate over nuclear waste in the US. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:1007&r=ene |
| By: | Vivek Sakhrani; John E. Parsons |
| Abstract: | The study is motivated by the question “what is the optimal tariff design?” While we do not offer an answer to this question, we use the different designs in four select countries to illuminate the issues involved in designing electricity network tariffs. Electricity networks are a resource shared by all network users. A tariff design that is clear to network users and well understood by them can help them make efficient decisions. A design that sets up conflicting or perverse incentives results in economic distortions. We find that there are a variety of choices and trade-offs while designing the electricity network tariffs for any electricity system. The tariff design must not only be influenced by the technical and economic characteristics of the system, but also the secondary policy objectives that policy makers wish to achieve, while allowing network companies to recover the costs of building and maintaining the network. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:1008&r=ene |
| By: | Borenstein, Severin |
| Abstract: | Utility regulators frequently focus as much or more on the distributional impact of electric rate structures as on their efficiency. The goal of protecting low-income consumers has become more central with recent increases in wholesale power costs and anticipation of significant costs of greenhouse gas emissions in the near future. These concerns have led to the widespread use of increasing-block pricing (IBP), under which the marginal price to the household increases as its daily or monthly usage rises. There is no cost basis for differentiating marginal price of electricity by consumption level, so perhaps nowhere is the conflict between efficiency and distributional goals greater than in the use of IBP. California has adopted some of the most steeply increasing-block tariffs in electric utility history. Combining household-level utility billing data with census data on income distribution by area, I derive estimates of the income redistribution effected by these increasing-block electricity tariffs. I find that the rate structure does redistribute income to lower-income groups, cutting the bills of households in the lowest income bracket by about 12% (about $5 per month). The effect would be about twice as large if not for the presence of another program that offers a different and lower rate structure to qualified low-income households. I find that the deadweight loss associated with IBP is likely to be large relative to the transfers. In contrast, I find that the means-tested program transfers income with much less economic inefficiency. A much larger share of the revenue redistributed by the IBP tariff, however, comes from the wealthiest quintile of households, so IBP may be a more progressive structure of redistribution. In carrying out the analysis, I also show that a common approach to studying (or controlling for) income distribution effects by using median household income within a census block group may substantially understate the potential effects. |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:602&r=ene |
| By: | Lui, Kerri; Holburn, Guy L. F.; Morand, Charles |
| Abstract: | Even though governments may adopt favourable regulatory policies for renewable power generation, their ability to encourage private sector investment depends also on the presence of regulatory governance institutions that provide credible long-term commitments to potential investors. In the case of Ontario we contend that, despite large market potential and comparatively strong regulatory incentive policies, weak regulatory governance is one factor that has accounted for the challenges in attracting and implementing large scale private investment in power generation at a reasonable cost. We find empirical support for our arguments in a unique survey of 63 wind power firms that assessed private sector opinions about the investment environment for renewable energy in Ontario. Compared to a range of factors, firms rated the stability of regulatory policy among the weakest aspects of Ontario?s business environment. However, policy stability ranked among the most important factors in firms? assessments of the attractiveness of alternative jurisdictions in their location decisions. Subsequent interviews revealed that firms have responded to this risk in Ontario by explicitly pricing it into wind project financial models – implying higher wind power prices for ratepayers – and by directing investment funds to other jurisdictions. We argue that policy stability in Ontario may be improved by devolving greater decision-making authority to regulatory agencies in the energy sector and by strengthening their institutional independence. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:reg:rpubli:596&r=ene |
| By: | Grossmann, Volker; Steger, Thomas M.; Trimborn, Timo |
| Abstract: | Previous research on optimal R\& D subsidies has focussed on the long run. This paper characterizes the optimal time path of R\& D subsidization in a semi- endogenous growth model, by exploiting a recently developed numerical method. Starting from the steady state under current R\& D subsidization in the US, the R\& D subsidy should significantly jump upwards and then slightly decrease over time. There is a negligible loss in welfare, however, from immediately setting the R\& D subsidy to its optimal long run level, compared to the case where the dynamically optimal policy is implemented. |
| Keywords: | R\& D subsidy, Transitional dynamics, Semi-endogenous growth, Welfare |
| JEL: | H20 O30 O40 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-453&r=ene |
| By: | Babcock, Bruce A. |
| Abstract: | Expanded mandates under the Renewable Fuel Standard provide ethanol and biodiesel producers a guaranteed future market at volumes that exceed what they have produced in the past. Despite having these mandates in place, biofuel producers continue to support tax credits and ethanol import tariffs. An examination of how the new mandates will be implemented shows that biofuel producers will receive little or no additional benefit from tax credits. Ethanol import tariffs will continue to provide U.S. corn ethanol producers a cost advantage over imported Brazilian sugarcane ethanol until at least 2013 when the demand for sugarcane ethanol to meet the noncellulosic advanced biofuel mandate starts to increase. |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:reg:briefs:586&r=ene |
| By: | Voudouris, V; Di Maio , C |
| Abstract: | he ACEGES (Agent-based Computational Economics of the Global Energy System) 1.0 model is an agent-based model of conventional oil production for 93 countries. The model accounts for four key uncertainties, namely Estimated Ultimate Recovery (EUR), estimated growth in oil demand, estimated growth in oil production and assumed peak/decline point. This documentation provides an overview of the ACEGES model capabilities and an example of how it can be used for long-term (discrete and continuous) scenarios of conventional oil production. |
| Keywords: | oil production; ACEGES; agent-based model; energy scenarios; oil forecasting |
| JEL: | Q41 C14 C63 C1 |
| Date: | 2010–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24269&r=ene |
| By: | Cavalcante, Mileno |
| Abstract: | The main objective of this paper is to analyze the behavior of the term structure of the WTI futures market between 2002 and 2009, period known by a sustained price rise followed by a price slump and again by a new price rise. To achieve this goal, we use Principal Component Analysis (PCA) to decompose WTI futures price series into components which are used to explain series variability (e.g. changes in its term structure). After it, we try to identify how changes in oil markets fundamentals (physical and financial) may have contributed to oil futures term structure variability. The impact of these variables on WTI term structure is assessed using impulse-response functions and variance decomposition analysis. This work is of interest to market analysts, hedgers, and traders, among others, because it helps to clarify how changes in oil markets may affect their strategies in these markets. |
| Keywords: | WTI Term Structure; Principal Components Analysis; VARXs Models; Futures Pricing; Oil Market Fundamentals |
| JEL: | C32 C14 Q49 G13 |
| Date: | 2010–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24263&r=ene |
| By: | Alessio Anzuini (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Marco J. Lombardi (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Patrizio Pagano (Banca d’Italia, Via Nazionale 91, I-00184 Rome, Italy.) |
| Abstract: | Global monetary conditions have often been cited as a driving factor of commodity prices. This paper investigates the empirical relationship between US monetary policy and commodity prices by means of a standard VAR system, commonly used in analysing the effects of monetary policy shocks. The results suggest that expansionary US monetary policy shocks drove up the broad commodity price index and all of its components. While these effects are significant, they however do not appear to be overwhelmingly large. This finding is also confirmed under different identification strategies for the monetary policy shock. JEL Classification: E31, E40, C32. |
| Keywords: | Monetary policy Shock, Oil Price, VAR. |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20101232&r=ene |
| By: | Nathan S. Balke; Stephen P.A. Brown; Mine K. Yücel |
| Abstract: | Oil price shocks are thought to have played a prominent role in U.S. economic activity. In this paper, we employ Bayesian methods with a dynamic stochastic general equilibrium model of world economic activity to identify the various sources of oil price shocks and economic fluctuation and to assess their effects on U.S. economic activity. We find that changes in oil prices are best understood as endogenous. Oil price shocks in the 1970s and early 1980s and the 2000s reflect differing mixes of shifts in oil supply and demand, and differing sources of oil price shocks have differing effects on economic activity. We also find that U.S. output fluctuations owe mostly to domestic shocks, with productivity shocks contributing to weakness in the 1970s and 1980s and strength in the 2000s. |
| Keywords: | Petroleum products - Prices ; Petroleum industry and trade ; Economic conditions - United States ; Business cycles |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:1003&r=ene |
| By: | Ping-Yu Chen (Department of Applied Economics, National Chung Hsing University); Chia-Lin Chang (Department of Applied Economics, National Chung Hsing University); Chi-Chung Chen (Department of Applied Economics, National Chung Hsing University); Michael McAleer (Erasmus University Rotterdam, Tinbergen Institute, The Netherlands, and Institute of Economic Research, Kyoto University) |
| Abstract: | The main purpose of this paper is to estimate the volatility in global fertilizer prices. The endogenous structural breakpoint unit root test and alternative volatility models, including the generalized autoregressive conditional heteroskedasticity (GARCH) model, Exponential GARCH (EGARCH) model, and GJR model are estimated for six global fertilizer prices and the crude oil price. Weekly data for 2003-2008 for the seven price series are analysed. The empirical results suggest that the volatility of global fertilizer prices and crude oil price from March to December 2008 are higher than in other periods, and that the peak crude oil price caused greater volatility in the crude oil price and global fertilizer prices. |
| Keywords: | Volatility, Global fertilizer price, Crude oil price, Non-renewable fertilizers, Structural breakpoint unit root test |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:705&r=ene |
| By: | Hampf, Benjamin; Krüger, Jens |
| Abstract: | We conduct an empirical analysis of the technical efficiency of cars sold in Germany in 2010. The analysis is performed using traditional data envelopment analysis (DEA) as well as directional distance functions (DDF). The approach of DDF allows incorporating the reduction of carbon dioxide emissions as an environmental goal in the efficiency analysis. A frontier separation approach is used to gain deeper insight for different car classes and regions of origin. Natural gas driven cars and sports-utility-vehicles are also treated as different groups. The results show that the efficiency measurement is significantly influenced by the incorporation of carbon dioxide emissions. Moreover, we find that there is indeed a trade-off between technological performance and environmental performance. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:dar:vpaper:43177&r=ene |
| By: | Borenstein, Severin |
| Abstract: | Human activity has disrupted the natural balance of greenhouse gases in the atmosphere and is causing climate change. Burning fossil fuels and deforestation result directly in about 9 gigatons of carbon (GtC) emissions per year against the backdrop of the natural carbon flux — emission and uptake — of about 210 GtC per year to and from oceans, vegetation, soils and the atmosphere. But scientific research now indicates that humans are also impacting the natural carbon cycle through less-direct, but very important, mechanisms that are more difficult to monitor and control. I explore the challenges this presents to market or regulatory mechanisms that might be used to reduce greenhouse gases: scientific uncertainty about these indirect processes, pricing heterogeneous impacts of similar human behaviors, and the difficulty of assigning property rights to a far larger set of activities than has previously been contemplated. While this does not undermine arguments for market mechanisms to control direct anthropogenic release of greenhouse gases, it suggests that more research is needed to determine how and whether these mechanisms can be extended to address indirect human impacts. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:607&r=ene |
| By: | Martin, Ralf; Muûls, Mirabelle; Wagner, Ulrich J. |
| Abstract: | The criteria proposed by the EU Commission to identify industries that will receive free emission permits in the third phase of the European Union Emissions Trading System (EU ETS) are not restrictive enough. Evidence from interviews with almost 800 managers in Europe shows that most of the sectors entitled to free emission permits are not facing an increased risk of closure or relocation outside of the EU as a consequence of permit auctioning. Free permit allocation is therefore just a transfer of tax payers' money to industry without any additional social benefit. We propose a simple modification of the Commission's criteria for free permit allocation which could save European tax payers at least €7 billion annually. |
| Keywords: | Environment |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:reg:briefs:594&r=ene |
| By: | Stavins, Robert N.; Hahn, Robert W. |
| Abstract: | We examine an implication of the “Coase Theorem†which has had an important impact both on environmental economics and on public policy in the environmental domain. Under certain conditions, the market equilibrium in a cap-and-trade system will be cost-effective and independent of the initial allocation of tradable rights. That is, the overall cost of achieving a given aggregate emission reduction will be minimized, and the final allocation of permits will be independent of the initial allocation. We call this the independence property. This property is very important because it allows equity and efficiency concerns to be separated in a relatively straightforward manner. In particular, the property means that the government can establish the overall pollution-reduction goal for a cap-and-trade system by setting the cap, and leave it up to the legislature – such as the U.S. Congress – to construct a constituency in support of the program by allocating the allowances to various interests without affecting either the environmental performance of the system or its aggregate social costs. Our primary objective in this paper is to examine the conditions under which the independence property is likely to hold – both in theory and in practice. A number of factors can call the independence property into question theoretically, including market power, transaction costs, non-cost-minimizing behavior, and conditional allowance allocations. We find that, in practice, there is support for the independence property in some, but not all cap-and-trade applications. |
| Keywords: | Environment |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:reg:rpubli:47&r=ene |
| By: | Hlavac, Marek |
| Abstract: | The first half of the paper provides a brief overview of the European Union’s Emission Trading System (EU ETS), and discusses how emission allowances have been allocated during the first two phases of the trading scheme. I then discuss the effects of auctioning off more emission allowances during Phase III of the EU ETS. I conclude that such a change would reduce the windfall profits of the initial allowance holders, and provide additional revenues that participating governments could use to support a variety of policies, some of which I discuss. |
| Keywords: | environmental economics; emissions trading; European Union; windfall profits |
| JEL: | Q5 P26 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24242&r=ene |
| By: | Margarita Robaina Alves (Universidade de Aveiro); Miguel Rodríguez (Facultade Empresariais e Turismo, 32004 Ourense, Spain); Catarina Roseta-Palma (Department of Economics and ERC-UNIDE, ISCTE-Lisbon University Institute) |
| Abstract: | Across Europe, CO2 emission permits represent one of the main policy instruments to comply with the limits established by the European Commission to achieve the goals of the Kyoto Protocol. In this paper we use microdata to address two issues regarding the impact of the European Carbon Market (EU ETS). On the one hand, we analyse the sectoral effects of the EU ETS in Portugal. The main goal is to study the outcomes of this policy in terms of the transactions carried out between sectors, as well as the distributive consequences. On the other hand, we also look at the regional impact. The pre-existing specialization of different regions in the production of different goods and services might lead to an uneven economic impact of the new permit market. In particular, Portuguese data indicate a distribution of revenue from low income to high income regions, or rather, between installations located in those regions. We focus on the first two years of operation of the EU ETS, using data for each one of the 244 Portuguese installations regulated by this market as well as financial data for 80% of these installations |
| Keywords: | Regional impact, sectoral impact, tradable CO2 permits, European Carbon Market. |
| JEL: | Q48 Q52 R38 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0021&r=ene |
| By: | Arthur van Benthem (Stanford University, Department of Economics); Suzi Kerr (Motu Economic and Public Policy Research) |
| Abstract: | As part of international climate change policy, voluntary opt-in programs to reduce emissions in unregulated sectors or countries have spurred considerable discussion. Since any regulator will make errors in predicting baselines, adverse selection will reduce efficiency since participants will self-select into the program. In contrast, pure subsidies lead to full participation but require large financial transfers; this is a particular challenge across countries. A global social planner facing costless transfers would choose such a subsidy to maximize efficiency. However, any actual policy needs to be individually rational for both the buying (industrialized) and selling (developing) country. We present a simple model to analyze this trade-off between adverse selection and infra-marginal transfers. The model leads to the following findings. First, extending the scale of voluntary programs both improves efficiency and reduces transfers. Second, the set of individually rational and Pareto efficient policies typically features a combination of credit discounting and stringent assigned baselines which reduce efficiency. Third, if the industrialized countries can be persuaded to be more generous, the feasible policy set can come close to the globally efficient policy to avoid deforestation.. |
| Keywords: | Voluntary opt-in; adverse selection; deforestation; offsets; emissions trading; REDD |
| JEL: | Q54 Q56 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:mtu:wpaper:10_04&r=ene |
| By: | Stavins, Robert N. |
| Abstract: | The straightforward way to slow climate change is to reduce the quantity of greenhouse gases (in particular, carbon dioxide) dumped into the atmosphere, giving the planet more time to recycle the offending chemicals. But in light of our late start, chances are we’re going to need all the help we can get to prevent brutal changes in weather, widespread coastal fl ooding and perhaps even the spread of diseases now confi ned to the tropics. Hence the logic in giving nature a helping hand in sequestering atmospheric carbon. |
| Keywords: | Environment |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:reg:rpubli:13&r=ene |
| By: | Weisbach, David |
| Abstract: | This paper analyzes the choice between taxes and cap and trade systems (also referred to here as a permit system or a quantity restriction) as methods of controlling greenhouse gas emissions. It argues that in the domestic context, with proper design, the two instruments are essentially the same. Commonly discussed differences in the two instruments are due to unjustified assumptions about design. In the climate change context and within a single country there is sufficient design flexibility that these differences can be substantially eliminated. To the extent that there are remaining differences, there should be a modest preference for taxes, but the benefits of taxes are swamped by the benefits of good design; even though the very best tax might be better than the very best quantity restriction, the first order of business is getting the design right. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:4&r=ene |
| By: | Goulder, Lawrence H.; Stavins, Robert N. |
| Abstract: | Federal action addressing climate change is likely to emerge either through new legislation or via the U.S. EPA’s authority under the Clean Air Act. The prospect of federal action raises important questions regarding the interconnections between federal efforts and state-level climate policy developments. In the presence of federal policies, to what extent will state efforts be costeffective? How does the co-existence of state- and federal-level policies affect the ability of state efforts to achieve emissions reductions? This paper addresses these questions. We find that state-level policy in the presence of a federal policy can be beneficial or problematic, depending on the nature of the overlap between the two systems, the relative stringency of the efforts, and the types of policy instruments engaged. When the federal policy sets limits on aggregate emissions quantities, or allows manufacturers or facilities to average performance across states, the emission reductions accomplished by a subset of U.S. states may reduce pressure on the constraints posed by the federal policy, thereby freeing facilities or manufacturers to increase emissions in other states. This leads to serious “emissions leakage” and a loss of cost-effectiveness at the national level. In contrast, when the federal policy sets prices for emissions or does not allow manufactures to average performance across states, these difficulties are usually avoided. Even in circumstances involving problematic interactions, there may be other attractions of state-level climate policy. We evaluate a number of arguments that have been made to support state-level climate policy in the presence of federal policies, even when problematic interactions arise. |
| Keywords: | Environment |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:589&r=ene |
| By: | Olmstead, Sheila M.; Stavins, Robert N. |
| Abstract: | We describe three essential elements of an effective post-2012 international global climate policy architecture: a means to ensure that key industrialized and developing nations are involved in differentiated but meaningful ways; an emphasis on an extended time path of targets; and inclusion of flexible market-based policy instruments to keep costs down and facilitate international equity. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change; addresses specific shortcomings of the Kyoto Protocol; and builds upon the foundation of the United Nations Framework Convention on Climate Change. |
| Keywords: | Environment |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:588&r=ene |
| By: | Pezzey, John C.V.; Mazouz, Salim; Jotzo, Frank |
| Abstract: | We analyse the long-term efficiency of the emissions target and of the provisions to reduce carbon leakage in the Australian Government's Carbon Pollution Reduction Scheme, as proposed in March 2009, and the nature and likely cause of changes to these features in the previous year. The target range of 5-15% cuts in national emission entitlements during 2000-2020 was weak, in that on balance it is too low to minimise Australia's long-term mitigation costs. The free allocation of outputlinked, tradable emission permits to Emissions-Intensive, Trade-Exposed (EITE) sectors was much higher than proposed earlier, or shown to be needed to deal with carbon leakage. It plausibly means that EITE emissions can rise by 13% during 2010-2020, while non-EITE sectors must cut emissions by 34-51% (or make equivalent permit imports) to meet the national targets proposed, far from a cost-effective outcome. The weak targets and excessive EITE assistance illustrate the efficiencydamaging power of collective action by the 'carbon lobby'. Resisting this requires new national or international institutions to assess lobby claims impartially, and more government publicity about the true economic importance of carbon-intensive sectors. Published in the Australian Journal of Agricultural and Resource Economics, volume 54, pages 185-202. |
| Keywords: | Environment |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:reg:rpubli:601&r=ene |
| By: | Helm, Dieter |
| Abstract: | Environmental issues in general, and climate change in particular, lend themselves to EU rather than national policy: many of the effects (such as acid rain and water pollution) are regional, and climate change is global. To date, the EU has had some notable successes, of which addressing the problem of acid rain is perhaps the most significant in both scale and impact. But when it comes to climate change, there has been much action but little effect. Even though the EU comprises over 20 per cent of world GDP, and despite its historical responsibility for a considerable amount of the carbon dioxide (CO2) in the atmosphere, its efforts in the last two decades have probably not made as much as one part per million difference. |
| Keywords: | Environment |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:7&r=ene |