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on Energy Economics |
| By: | Thomas Covert (University of Chicago); Michael Greenstone (University of Chicago); Christopher R. Knittel (MIT Sloan School of Management) |
| Abstract: | Scientists believe significant climate change is unavoidable without a drastic reduction in the emissions of greenhouse gases from the combustion of fossil fuels. However, few countries have implemented comprehensive policies that price this externality or devote serious resources to developing low carbon energy sources. In many respects, the world is betting that we will greatly reduce the use of fossil fuels because we will run out of inexpensive fossil fuels (i.e., decreases in supply) and/or technological advances will lead to the discovery of less expensive low carbon technologies (i.e., decreases in demand). The historical record indicates that the supply of fossil fuels has consistently increased over time and that their relative price advantage over low carbon energy sources has not declined substantially over time. Without robust efforts to correct the market failures around greenhouse gases, relying on supply and/or demand forces to limit greenhouse gas emissions is relying heavily on hope. |
| Keywords: | fossil fuels, alternative energy, renewables, climate change, fracking, technological change |
| JEL: | Q31 Q41 Q42 Q54 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2016-02&r=ene |
| By: | Martin Distekamp (GWS - Institute of Economic Structures Research); Mark Meyer (GWS - Institute of Economic Structures Research) |
| Abstract: | Though the sustainability research community as well as international decision makers seem to share the conviction that, akin to the challenges of climate policy, a great transi-tion will also be needed in order to decouple human wellbeing from resource use over the next decades, there exist only scarce quantitative assessments of possible transition scenarios which do also concern this matter. Our paper is intended to advance this branch of research by a presentation of key scenario insights from the global simulation model GINFORS which take account of the complex interrelations between different environmental objectives. Whereas a multitude of publications already applied various MRIO databases for ex post assessments of resource-related national footprint indicators, there exist only scarce ex ante assessments of possible transition scenarios concerning this matter. The modelling framework of GINFORS also rests on a MRIO database. Thus, GINFORS is also able to map quantitative indicators of material extractions embedded in regional consumption activities over the global supply chain. |
| Keywords: | raw material consumption, RMC, raw material input, RMI, CO2 emissions, macro-econometric model, GINFORS, MRIO, WIOD, policy simulations, resource-efficiency, low-carbon economy |
| JEL: | Q34 Q37 Q51 Q56 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:gws:dpaper:16-10&r=ene |
| By: | Janda, Karel; Tuma, Ladislav |
| Abstract: | We consider future prospects of solar energy in Central Europe. We first provide the description of the Czech energy situation with emphasize on photovoltaic energy. After that we estimate the merit-order effect. In last five years the Czech wholesale price of electricity decreased on average by 0.009 EUR/MWh. The total average merit-order effect over five-year period was 4.544 EUR/MWh. The effects were more pronounced in later years. New Czech solar projects are not viable without subsidies and new projects would not be able to profitable without public support. Thus solar power plants do not appear to be a reasonable choice in the Czech Republic. Nevertheless, low Czech wholesale electricity prices make all electricity sources not competitive. |
| Keywords: | solar; photovoltaics; electricity; merit order effect |
| JEL: | Q41 Q42 Q47 |
| Date: | 2016–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74884&r=ene |
| By: | Janda, Karel; Tuma, Ladislav |
| Abstract: | We consider the electricity grid imbalance settlement mechanism in the Czech Republic. We focus on the influence of photovoltaic electricity on the behavior of the system imbalance in this mechanism. Out of the family of GARCH models, we use TARCH model, which allows different behavior if the residual are negative, to model the asymmetric effect of positive or negative electricity system imbalance. Our results show that the introduction of photovoltaics has substantial effect on the Czech electricity system imbalance, leading to positive system imbalance. The influence of photovoltaics on the volatility of the Czech electricity system imbalance is statistically significant, but it is not substantial in economic terms. |
| Keywords: | solar; photovoltaics; electricity; system imbalance |
| JEL: | Q4 Q41 Q42 Q47 |
| Date: | 2016–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74883&r=ene |
| By: | Neuhoff, Karsten; Richstein, Joern; May, Nils |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esrepo:147412&r=ene |
| By: | Hoai-Son Nguyen (CleanED - Clean Energy and Sustainable Development Lab - USTH - Université des Sciences et des Technologies de Hanoi); Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - AgroParisTech - École des Ponts ParisTech (ENPC) - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement) |
| Abstract: | This statistical report contribute facts and numbers on the state of access to electricity for all in Vietnam, based on large-scale surveys conducted in the time period 2008-2014. Its theoretical contribution to debates on energy poverty is to account for the human dimension by using an self-reported satisfaction indicator. Surveys asked people if respondents had enough electricity to meet their households needs. We find that in Vietnam, the problem of providing access to clean energy for all is largely solved for now. The fraction of households without access to electricity is below two percent. This represents in the order of a million people. And the fraction of households declaring unsatisfied electricity needs is below three percent. The median level of electricity usage in 2014 was 100 kWh per month per household. An overwhelming majority of households spend less than 6% of their income on electricity, but the effort level is increasing. Highlights In 2014, 97.7 % of households in Vietnam used grid electricity for lighting. In 2014, out of four Vietnamese households, one used less than 50 kWh per month, and another between 50 kWh and 100 kWh. In 2014, 95 % of Vietnamese households devote less than 6.2 % of income to electricity. Between 2010 and 2014, the share of income that Vietnamese households devote to electricity increased by about one third. In 2010, one out of four households in Vietnam declared that their electricity use was insufficient to meet their needs. That ratio dropped under 3 % in 2014. In 2014, half of the households in Vietnam who declared insufficient electricity used less than 22 kWh per month. In 2014, among households using less than 22 kWh per month, only one out of six declared that their needs were not met. |
| Keywords: | vietnam, electrification, energy poverty |
| Date: | 2016–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ciredw:hal-01389981&r=ene |
| By: | Khraief, Naceur; Shahbaz, Muhammad; Mallick, Hrushikesh; Loganathan, Nanthakumar |
| Abstract: | This paper aims to empirically re-examine whether economic growth has effect on electricity consumption for Algerian economy. We have incorporated urbanisation and trade openness in electricity demand function as additional determinants of electrictyy consumption for the period of 1971-2012. For empirical purpose, we have applied the recently developed combined cointegration test proposed by Bayer and Hanck (2013) and bounds testing approach to cointegration by Pesaran et al. (2001) for establishing the cointegration between the variables by accomodating structural breaks. The results expose that income growth leads to higher electricity demand along with urbanization being another major contributing factor of rising electricity demand. In contrast, trade openness leads to reduce electricity demand. The causal association between the variables is further exmained with the application of innovation accounting approach of Vector Autoregressive (VAR). The empirical evidence indicates the presence of the neutral effect between income growth and electricity use. Urbanization causes electricity use and electricity use causes urbanization in Granger sense. |
| Keywords: | Electricity, Growth, Urbanization, Trade Openness |
| JEL: | A1 |
| Date: | 2016–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74870&r=ene |
| By: | Llopis, Maria Teresa Sanchis (University of Valencia and Figuerola Institute of History and Social Sciences) |
| Abstract: | Following the growth accounting approach introduced by Oliner & Sichel (2000, 2002) to evaluate the impact of information and communications technologies on the U.S. economy in the 1990s, this paper analyses the impact of electricity on Spanish economic growth in the period 1958-1970. Spain was a follower country that exhibited the benefits of electricity nearly half a century after it had its biggest impact in the U.S. The results confirm that electricity played a significant role in Spain via the three channels identified in the literature for quantifying the contribution of a general purpose technology (GPT): capital deepening, the total factor productivity effect and the spillover effect. The overall impact is greater than that estimated for other follower countries in the 1920s. The main boost to growth came from improvements in productivity in developments in electric plants electricity and the production of electrical capital goods, not from electricity use. We also find a weaker positive effect of spillovers in electricity-using industries. The laggard effect of electrification in Spain, in spite of its early start, confirms that a GPT needs time to establish new institutional arrangements and complementary investments in order to display positive linkages deriving from the new technology. |
| Keywords: | Technological change, Aggregate Productivity, Spain (country studies) JEL Classification: O33, O47, O52 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:309&r=ene |
| By: | Rynhart, Gary.; Chang, Jae-Hee.; Huynh, Phu. |
| Keywords: | future of work, technological change, electrical industry, electronics industry, ASEAN countries |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994909523402676&r=ene |
| By: | Tsani Fauziah Rakhmah; Yanfei Li (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Keywords: | electricity market, operational planning, ASEAN, European Union |
| JEL: | N75 Q40 Q48 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2016-26&r=ene |
| By: | Matteo Bonato (Department of Economics and Econometrics, University of Johannesburg, South Africa); Riza Demirer (Department of Economics and Finance, Southern Illinois University Edwardsville, USA); Rangan Gupta (Department of Economics, University of Pretoria, South Africa) |
| Abstract: | Da et al. (2015b) report that the industrial electricity usage growth rate carries predictive ability over stock returns up to one year. Using the recently developed nonparametric causality test by Nishiyama et al. (2011), we show that the predictive power of industrial electricity usage can be explained by an “industry effect” that is transmitted via the volatility channel. We argue that the countercyclical premium associated with industrial electricity usage growth is driven by the industry components that drive stock reversals, thus resulting in the negative relationship between today’s industrial electricity usage and stock returns in the future. The findings are in line with the notion that the returns on industry portfolios are informative about macroeconomic fundamentals and suggest that the informational value of industrial electricity usage as a business cycle variable may be an artifact of return reversals driven by past industry performance |
| Keywords: | Asset Returns, Industry, Realized Volatility, Nonlinear Causality |
| JEL: | C22 G1 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201679&r=ene |
| By: | Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Adhurim Haxhimusa (Research Institute for Regulatory Economics, Vienna University of Economics and Business) |
| Abstract: | Using hourly data, we show that the convergence of German and French electricity spot prices depends on the employed generation mix structure, on the trade (export/import) capacity between the two countries, and on characteristics of neighbouring markets. Only when German and French electricity markets employ "similar" generation mixes price spreads vanish, and the likelihood for congestion of electricity flows is significantly reduced. This implies that, at least, a part of the convergence that was documented in recent literature is spurious, because it is not (only) driven by the forces of arbitrage, but by the similarity of the generation structures. The direction of congestion matters in this regard. Furthermore, we document consistent evidence for the most important predictions of trade theory if markets are characterized by increasing marginal cost (i.e. supply) curves and limited cross-border capacities. |
| Keywords: | Market Integration, Electricity, Renewables, Technology Differences, Jaffe Index |
| JEL: | D47 F15 L81 L98 Q42 Q48 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp237&r=ene |
| By: | Kaltenegger, Oliver; Löschel, Andreas; Baikowski, Martin; Lingens, Jörg |
| Abstract: | Affordable energy is one of the objectives of EU's energy policy. This goal has been challenged by many factors inuencing energy prices and costs such as developments in global energy markets, the EU ETS and the promotion of renewables. Analysing energy costs (prices times quantity) instead of prices has the advantage of taking into account quantity adjustments. However, it does not allow for monitoring the burden which energy costs pose on firms. For this purpose, both the European Commission and the Energy Expert Commission of the German Government recommend using real unit energy costs, defined as energy costs as fraction of value added. We develop an input-output based (real unit) energy cost accounting framework and study the trends in Germany and the EU between 1995 and 2011. We find that many of the unveiled developments are not adequately represented in the political debate, especially with regard to indirect costs (via energy embodied in intermediate inputs), which are more diffcult to assess. Indirect energy costs are on the rise, are larger than direct costs in many industries, are increasingly imported and amplify the asymmetric impacts of legal exceptions available to energy-intensive industries. |
| Keywords: | Direct energy costs,Indirect energy costs,Energy costs of intermediate consumption,Real unit energy costs,Energy cost analysis,Input-output based (total real unit) energy cost accounting |
| JEL: | O14 Q48 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cawmdp:88&r=ene |
| By: | Kumar, Mantu; Babu, M Suresh; Loganathan, Nanthakumar; Shahbaz, Muhammad |
| Abstract: | Using annual data for the period 1971-2011, this study explores the relationship between financial development and energy consumption for Saudi Arabia by endogenizing economic growth, capital and urbanization as additional determinants in the energy demand function. The combined cointegration test proposed by Bayer-Hanck (2013) is used to estimate the long-run and short-run relationships among the series. The robustness of cointegration results is also tested by employing Pesaran’s et al. (2001) Autoregressive Distributed Lag (ARDL) model accommodating structural break in the series. Both conventional and structural break unit root tests are applied in order to test the stationarity properties of the series. The causal relationship between the variables is further investigated by applying Innovative Accounting Approach (IAA). Both Bayer-Hanck’s combined cointegration and Pesaran’s ARDL bounds testing models confirm the presence of cointegration among the series. After confirming the existence of cointegration among the series, the overall results from the estimation of an ARDL energy demand function reveal that in the long-run, financial development adds in energy demand in Saudi Arabia. Furthermore, while economic growth is negatively related to energy consumption, urbanization and capital are the key factors leading to increased energy demand in the long-run. The findings also confirm the non-linear and inverted U-shaped relationship between financial development and energy demand for the Saudi Arabian economy. Finally, an evidence of unidirectional causality running from financial development to energy demand is found. These results urge for the attention of the policy makers in Saudi Arabia to design a comprehensive energy conservation policy to minimize the consequences of massive energy consumption on environmental quality and energy export-driven revenue by adding financial development, urbanization and capital as main explanatory determinants in the energy demand function. |
| Keywords: | Financial Development, Energy Consumption, Saudi Arabia |
| JEL: | C1 |
| Date: | 2016–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74946&r=ene |
| By: | Croner, Daniel; Frankovic, Ivan |
| Abstract: | This paper analyses recent energy intensity trends of 40 major economies. Our main focus lies on the question whether improvements in energy efficiency were due to structural change towards a greener economy or a consequence of technological improvements. We account for intersectoral trade by using the World Input-Output database and adjust sector-specific energy use via the environmentally extended input-output analysis. We find strongdifferences between adjusted and unadjusted energy consumption across sectors, particularly in the construction and electricity industry. Using the three factor Logarithmic Mean Divisia Index method, our decomposition analysis shows that recent energy intensity reductions were mostly driven by technological advances. Structural changes within countries played only a minor role, whereas international trade by itself even increased global energy intensity. Compared to a previous study that used unadjusted sectoral energy data, we find structural effects on energy intensity reductions to be systematically weaker under adjusted data. The differences are particularly striking on a country-level, e.g. for Japan and Turkey. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuweco:082016&r=ene |
| By: | Janda, Karel; Kourilek, Jakub |
| Abstract: | We study relationship between biodiesel, as a most important biofuel in the EU, relevant feedstock commodities and fossil fuels. Our main interest is to capture relationship between biodiesel and natural gas. They are both used either directly as a fuel or indirectly in form of additives in transport. Therefore, our purpose is to �nd price linkage between biofuel and natural gas to support or reject the claim that they compete as alternative fuels and potential substitutes. The estimated price link between biodiesel and diesel is negative and the strongest among analysed commodities. The price transmission between biodiesel and natural gas is the weakest one. |
| Keywords: | biofuels, shale gas |
| JEL: | Q16 Q42 |
| Date: | 2016–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74887&r=ene |
| By: | Janda, Karel; Kourilek, Jakub |
| Abstract: | World e�ort to reduce climate changes drives demand for more environmentally friendly alternative fuels, since transport emits quarter of total greenhouse gas emissions. For many years biofuels were main mean for achieving more green transport. Nevertheless, there are rising concerns that some of biofuels have negative environmental and social impacts sometimes worse than fossil fuels. This work links European Union's biofuels development with expansion of natural gas caused by exploitation from shale formations. We conclude that the expansion will not be driven by exploitation of shale gas at European Union territory. |
| Keywords: | biofuels, shale gas |
| JEL: | Q16 Q42 |
| Date: | 2016–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74885&r=ene |
| By: | Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Mario Liebensteiner (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | We estimate cost functions to derive productivity growth using a unique database on costs and outputs of essentially all regulated Austrian gas distribution companies over the period 2002–2013, covering the times before and after the introduction of incentive regulation in 2008. We estimate a concave relation between total costs and time, and a significant one-off but permanent reduction in real costs after an imposed reduction in granted costs in the course of the introduction of incentive regulation. Our results imply that technological opportunities were higher in the early years of the sample than in later years, and that productivity growth grinded to a halt from 2008 on. We conclude that technological opportunities are exhausted (for the time being) in the Austrian gas distribution sector giving rise to an optimal general X factor (X-gen) of zero for the foreseeable future. |
| Keywords: | X-gen, Productivity, Regulation, Gas distribution |
| JEL: | L22 L25 L51 Q48 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp236&r=ene |
| By: | Yves Jégourel |
| Abstract: | En actant, fin septembre 2016, qu'il était nécessaire de réduire l'offre de brut, l'Organisation des pays producteurs de pétrole (OPEP) a de toute évidence marqué les esprits. Conjugué à l'amélioration de certains fondamentaux, l'accord de principe ainsi obtenu a créé les conditions d'un rebond des prix pétroliers. Des dynamiques spéculatives visant à tirer profit de cette embellie sont néanmoins à l'oeuvre, dans un contexte de marché où les surcapacités de production demeurent présentes. La remontée des cours demeure fragile et ce n'est que si l'OPEP parvient à donner à cet accord une portée opérationnelle sur le moyen terme qu'un changement de paradigme pourra s'effectuer. Outre les contraintes (géo) politiques fortes que cela implique, force est de constater que la tâche sera rude. L'OPEP devra en effet composer avec la réalité de l'offre mondiale et s'engager dans une politique de « fine tuning » visant à maintenir les cours dans une bande de fluctuation permettant d'améliorer la situation financière de ses membres, sans néanmoins (trop) relancer la production des autres pays producteurs. |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:ocp:ppaper:pb-16/29&r=ene |
| By: | Mehak Moazam (Pakistan Institute of Development Economics, Islamabad); M. Ali Kemal (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | The study attempted to investigate the determinants of inflation in case of Pakistan and to check the validity of monetarist stance that inflation is always and everywhere a monetary phenomenon by investigating the impact of oil prices, M2 and GDP on prices. The descriptive analysis shows there is strong correlation between money supply and prices and also between GDP and prices while the correlation between oil prices and CPI is (0.60) less as compare to other variables. The important finding of the paper is that oil prices have short run impact on inflation whereas money supply is the long run determinant of inflation in case of Pakistan. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2016:144&r=ene |
| By: | Huntington, Hillard |
| Abstract: | Sustained energy price increases in the United States have preceded declines in economic activity as far back as 1890. This finding applies to two different historical GDP data sets. It suggests a much longer national experience with rising energy prices that began well before the period after World War Two. This problem emerged well before the US transition towards petroleum products when coal was an important energy source. This relationship varies with the state of the economy and appears less evident during some periods, as in the years following the 1929 stock market crash. |
| Keywords: | economic history; supply shocks; energy and the economy |
| JEL: | N51 N71 O51 Q43 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74935&r=ene |
| By: | Takuji Fueki (Bank of Japan); Hiroka Higashi (Bank of Japan); Naoto Higashio (Bank of Japan); Jouchi Nakajima (Bank of Japan); Shinsuke Ohyama (Bank of Japan); Yoichiro Tamanyu (Bank of Japan) |
| Abstract: | This paper proposes a simple but comprehensive structural vector autoregression (SVAR) model to examine the underlying factors of oil price dynamics by explicitly incorporating the role of expectations on future aggregate demand and oil supply as well as financial investors' role in the crude oil market. Our main findings are threefold. First, our empirical analysis shows that shocks on expectations and financial factors in the oil market explain more than 40 percent of historical oil price fluctuations. In particular, expected future oil supply shocks are more than twice as important as realized and expected aggregate demand shocks or financial factor shocks in accounting for the oil price developments. Second, focusing on a recent large drop in oil prices since 2014, the analysis reveals that expected future oil supply shocks were the dominant driver of oil price falls from January 2014 to January 2015, while expected and realized aggregate demand shocks played a major role in oil price falls from June 2015 to February 2016. Finally, we show that the influence of oil price shocks on global output varies by the nature of each shock. |
| Keywords: | Oil demand and supply; Oil price; Financial factor; Structural vector autoregressive model |
| JEL: | C32 E44 G12 G15 |
| Date: | 2016–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:boj:bojwps:wp16e17&r=ene |
| By: | Eromenko, Igor |
| Abstract: | Dutch disease or resource curse is an adverse effect of high dependence on exports of natural resources, such as oil and gas, or other inflows, such as remittances or foreign aid. Dutch disease is known to lead to appreciation of the real exchange rate, decline in tradable sectors (mostly industry and agriculture) and surge in non-tradable sectors (services). This means unfavourable development of an economy where retail trade or construction would grow, but production sectors would be atrophied. Such economies become vulnerable and may suffer if inflow of currency from natural resources or remittances dries out. This study tests whether large inflow of foreign currency coming to Kyrgyzstan and Tajikistan from labour migrants has caused Dutch disease as described by Corden (1984) and Corden and Neary (1982): appreciation of the real exchange rate, decline in tradable sectors and surge in non-tradable sectors. Furthermore, the paper takes one step further and looks at this phenomenon from the point of view of importing Dutch disease from resource-rich countries to resource-poor countries. Results show that symptoms of Dutch disease are present in Kyrgyzstan and Tajikistan. There is an evidence of deindustrialisation, higher growth rates and larger share of service sector in GDP. In addition, high oil prices showed strong appreciation effect on local currencies of Kyrgyzstan and Tajikistan indicating the transfer of Dutch disease from resource-rich Russia. |
| Keywords: | Dutch disease, labour remittances, migration, natural resources, exchange rate |
| JEL: | F22 F24 F31 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74965&r=ene |
| By: | Shovan Ray (Indira Gandhi Institute of Development Research); A. Ganesh Kumar (Indira Gandhi Institute of Development Research); Sumana Chaudhuri (Durgadevi Saraf Institute of Management Studies) |
| Abstract: | Social Cost Benefit Analysis has long been used as a useful tool to appraise and evaluate the value to a society of a range of investment projects. Various important aspects of this method have been subject to scrutiny over the decades, such as the appropriate discount rate, whether the Ramsey Rule of `pure time preference' should be applied as impatience with a positive rate or zero-rated with concern for future generations; these are important concerns since the choice of discount rates deeply affect the valuations of future income streams. Other aspects concerning financial flows and appropriate `shadow prices' have also undergone considerable attention. However, when a mega-project with the character of a `universal intermediate' is considered, its multiplier effects may be wide-ranging and permeate several economic and social layers, and may be captured only in the aggregates. This study, a sequel to a paper that ignores such macro-aggregative benefits, examines the costs and benefits of Vadinar refinery in Gujarat with a focus on this welfare dimension on society for the project. The study allows for this large scale benefit accrual and examines the net economic benefit of refining at Vadinar by Essar Oil to the region, the state and the country by Social Cost Benefit Analysis. The framework thus explores a methodological breakthrough in SCBA studies. In constituting the macroeconomic effects of expansion of the mega oil refinery, the economic impact is estimated using the Computable General Equilibrium (CGE) model and incorporated into the cost benefit analysis. This assimilation of CBA with macroeconomic externality obtained from the CGE model framework is perhaps only one of its kind in economic analysis of major infrastructure projects of any country. SCBA when combined with CGE as an analytical tool can be gainfully employed to appraise or evaluate large scale projects like oil refineries, especially when they make a splash with their mega-sizes as the Essar Oil refinery is. |
| Keywords: | Social Cost Benefit Analysis, Economic Impact, Computable General Equilibrium (CGE) Model, Oil Refinery |
| JEL: | B41 C51 C52 C53 C54 C55 D50 D58 D60 D61 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2016-024&r=ene |
| By: | Beccue, Phillip; Huntington, Hillard |
| Abstract: | The probability of the size and duration of another oil disruption is critical to estimating the value of any policies for reducing the economic damages from a sudden oil supply disruption. The Energy Modeling Forum at Stanford University developed a risk assessment framework and evaluated the likelihood of one or more foreign oil disruptions over the next ten years. The risk assessment was conducted through a series of two workshops attended by leading geopolitical, military and oil-market experts who provided their expertise on the probability of different events occurring, and their corresponding link to major disruptions in key oil market regions. The study evaluated 5 primary regions of production: Saudi Arabia, Other Persian Gulf, Africa, Latin America, and Russian / Caspian States. The final results of the risk assessment convey a range of insights across the three dimensions of magnitude, likelihood, and length of a disruption. These conclusions are net of offsets (e.g., OPEC spare capacity), with the notable exception that the SPR is not included as a source of offsets. At least once during the 10-year time frame (2016-2025), the probability of a net (of offsets) disruption of 2 MMBD (million barrels per day) or more lasting at least 1 month is approximately 80%. |
| Keywords: | Oil supply disruptions; risk assessment |
| JEL: | Q34 Q41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74986&r=ene |
| By: | Moustapha Pemy |
| Abstract: | This paper studies the optimal extraction and taxation of nonrenewable natural resources. It is well known the market values of the main strategic resources such as oil, natural gas, uranium, copper,...,etc, fluctuate randomly following global and seasonal macro-economic parameters, these values are modeled using Markov switching L\'evy processes. We formulate this problem as a differential game where the two players are the mining company whose aim is to maximize the revenues generated from its extracting activities and the government agency in charge of regulating and taxing natural resources. We prove the existence of a Nash equilibrium and characterize the value functions of this differential game as the unique viscosity solutions of the corresponding Hamilton Jacobi Isaacs equations. Furthermore, optimal extraction and taxation policies that should be applied when the equilibrium is reached are derived. In addition, we construct and prove the convergence of a numerical scheme for approximating the value functions and optimal policies. A numerical example is presented to illustrate our findings. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1611.02547&r=ene |
| By: | Nouf Alsharif (Department of Economics, University of Sussex); Sambit Bhattacharyya (Department of Economics, University of Sussex); Maurizio Intartaglia (Department of Economics, University of Sussex) |
| Abstract: | Diversification is often presented as a desirable policy objective for petroleum rich nations. Yet very little is known about the causes and consequences of diversification in petroleum rich states. In this paper we review the recent literature on diversification in oil-exporting states. We identify gaps and shortcomings in this literature along with documenting some trends in non-oil exports and non-oil private sector employment in hydrocarbon rich countries. We conclude with an agenda for research addressing the potential gaps in the literature. |
| Keywords: | petroleum wealth, economic diversification |
| JEL: | D72 O11 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:sus:susewp:9816&r=ene |
| By: | Gerd Ahlert (GWS - Institute of Economic Structures Research); Frank Hohmann (GWS - Institute of Economic Structures Research); Michael Lettenmeier (GWS - Institute of Economic Structures Research); Christa Liedke (GWS - Institute of Economic Structures Research); Mark Meyer (GWS - Institute of Economic Structures Research); Sören Steger (GWS - Institute of Economic Structures Research); Helena Walter (GWS - Institute of Economic Structures Research) |
| Abstract: | On behalf of the German Federal Environment Agency (UBA) the research project „Global nachhaltige materielle Wohlstandsniveaus“ analysed material needs for German households’ spending on durable consumer goods. Based on these findings, prototypical household endowments can be classified within the boundary conditions of global fairness and sustainable resource use. The applied classification scheme is based on the methodological concept of availability corridors which was developed and implemented over the project term by the Institute of Economic Structures Research (GWS) and the Wuppertal Institute for Climate, Environment and Energy. This methodological research has been accompanied by software development activities: A handy, easy understandable and instructive web tool ( http://resourcetool.gws-os.com/ ) has been established which illustrates the main findings of the research project in an intuitive way. Users can experience the research topic "raw material consumption and sustainability" in the context of own household endowments and identify the implied material needs of individual consumption patterns. |
| Keywords: | availability corridor, disposition corridor, sustainability, global fairness, durable home appliances, raw materials inventory, useful live, web tool |
| JEL: | A2 E6 Q3 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:gws:dpaper:16-2&r=ene |
| By: | Stephan Heblich (University of Bristol); Alex Trew (University of St Andrews); Yanos Zylberberg (University of Bristol) |
| Abstract: | Why are the East sides of former industrial cities like London or New York poorer and more deprived? We argue that this observation is the most visible consequence of the historically unequal distribution of air pollutants across neighborhoods. In this paper, we geolocate nearly 5,000 industrial chimneys in 70 English cities in 1880 and use an atmospheric dispersion model to recreate the spatial distribution of pollution. First, individual-level census data show that pollution induced neighborhood sorting during the course of the nineteenth century. Historical pollution patterns explain up to 15% of within-city deprivation in 1881. Second, these equilibria persist to this day even though the pollution that initially caused them has waned. A quantitative model shows the role of non-linearities and tipping-like dynamics in such persistence. |
| Keywords: | Neighborhood Sorting, Historical Pollution, Deprivation, Per- sistence, Environmental Disamenity. |
| JEL: | R23 Q53 N90 |
| URL: | http://d.repec.org/n?u=RePEc:san:wpecon:1613&r=ene |
| By: | Tatyana Deryugina; Garth Heutel; Nolan H. Miller; David Molitor; Julian Reif |
| Abstract: | We estimate the effect of acute air pollution exposure on mortality, life-years lost, and health care utilization among the US elderly. We address endogeneity and measurement error using a novel instrument for air pollution that strongly predicts changes in fine particulate matter (PM 2.5) concentrations: changes in the local wind direction. Using detailed administrative data on the universe of Medicare beneficiaries, we find that an increase in daily PM 2.5 concentrations increases three-day county-level mortality, hospitalizations, and inpatient spending, and that these effects are not explained by co-transported pollutants like ozone and carbon monoxide. We then develop a new methodology to estimate the number of life-years lost due to PM 2.5. Our estimate is much smaller than one calculated using traditional methods, which do not adequately account for the relatively low life expectancy of those killed by pollution. Heterogeneity analysis reveals that life-years lost due to PM 2.5 varies inversely with individual life expectancy, indicating that unhealthy individuals are disproportionately vulnerable to air pollution. However, the largest aggregate burden is borne by those with medium life expectancy, who are both vulnerable and comprise a large share of the elderly population. |
| JEL: | I1 Q53 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22796&r=ene |
| By: | Sven Rudolph; Achim Lerch; Takeshi Kawakatsu |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:kue:epaper:e-16-009&r=ene |
| By: | Liao, Xianchun; Dogan, Eyup; Baek, Jungho |
| Abstract: | This paper examines the income-energy-SO2 emissions nexus by taking a corruption variable into account. To that end, the panel cointegration methods are applied to 29 Chinese provinces over 1999-2012. The authors' empirical evidence shows that an increase in the number of anticorruption cases tends to drive down SO2 emissions in China. It is also found that income growth appears to have a beneficial effect on decreasing SO2 emissions over the past two decades. Finally, energy consumption is found to increase SO2 emissions. |
| Keywords: | China,corruption,environment,EKC,panel,SO2 |
| JEL: | C23 Q56 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201643&r=ene |
| By: | Matthew Gibson (Williams College) |
| Abstract: | Regulations may cause firms to re-optimize over pollution inputs, leading to unintended consequences. By regulating air emissions in particular counties, the Clean Air Act (CAA) gives rms incentives to substitute: 1) toward polluting other media, like landlls and waterways; and 2) toward pollution from plants in other counties. Using EPA Toxic Release Inventory data, I examine the eect of CAA regulation on these types of substitution. Regulated plants increase water emissions by 105 percent (72 log points). Regulation of an average plant increases air emissions at unregulated plants within the same firm by 13 percent. This leakage offsets 57 percent of emissions reductions by regulated firms. |
| JEL: | Q53 Q52 H23 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2016-04&r=ene |
| By: | Shimon, Otieno Peter; Ogutu, Chris Ackello; Mburu, John; Nyikal, Rose Adhiambo |
| Abstract: | The need to minimize farm-level greenhouse gas (GHG) emissions from Kenya’s smallholder French bean production is gaining increased attention. French beam production has over the years adopted private voluntary standards notably Global-GAP that regulates both environmental and food safety aspects among farmers. Despite increasing global warming concerns, the impact of Global-GAP policy on smallholder farmers’ GHG emissions is unclear. This paper documents effects of Global-GAP policy on GHG emissions among French bean farmers in Central and Eastern regions of Kenya using household data collected between September and October 2013 from a random sample of 616 farmers. The study used a combined linear programming (LP) and life cycle assessment (LCA) models to examine the economic and environmental metrics and ordinary least squares (OLS) regression method to analyze factors affecting farm-level GHG emissions. Eco-efficiency, defined as net farm income divided by global warming potential, was used as an integrated indicator for assessing the economic and environmental feasibilities. There was a significant (p>0.05) higher eco-efficiency in Kenya Shillings per ton of carbon dioxide equivalence (Kshs per tCO2e) among Global-GAP policy complying farmers compared to non-complying farmers due to a reduced GWP (by 7 percent) and a higher net farm income given the optimum activity level used. The Global-GAP regulatory measures on the management practices seems to have caused economic advantage in exchange for environmental advantage (lower emissions in tCO2e by 7 percent). The regression model results found that Global-GAP compliance negatively and significantly affect GHG emissions. It further found that region of the farmer, French bean yields, gasoline fuel use, DAP fertilizer application and French bean seed positively and significantly affected smallholder farmer’ GHG emissions. More explicitly, the model using these explanatory variables indicates that smallholder farmers complying with Global-GAP policy are more likely to emit less GHG compared to non-complying farmers. The paper recommends inclusion of Global-GAP compliance and these other significant socio-economic factors in the smallholder French bean greenhouse gas emission reduction strategies by the government and industry stakeholders. |
| Keywords: | Global-GAP, Greenhouse gas emissions, Eco-efficiency, LCA model, LP model, smallholder, French beans, Central region, Eastern region, Kenya, Crop Production/Industries, Farm Management, Production Economics, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:246437&r=ene |
| By: | Tomas Balint (Centre d'Economie de la Sorbonne); Francesco Lamperti (Scuola Superiore Sant'Anna di Pisa - Institute of Economics and LEM); Antoine Mandel (Centre d'Economie de la Sorbonne - Paris School of Economics); Mauro Napoletano (OFCE-Sciences Po and SKEMA Business School (Sophia-Antipolis)); Andrea Roventini (Scuola Superiore Sant'Anna di Pisa - LEM and OFCE); Alessandro Sapio (University Parthenope of Naples) |
| Abstract: | We provide a survey of the micro and macro economics of climate change from a complexity science perspective and we discuss the challenges ahead for this line of research. We identify four areas of the literature where complex system models have already produced valuable insights: (i) coalition formation and climate negotiations, (ii) macroeconomic impacts of climate-related events, (iii) energy markets and (iv) diffusion of climate-friendly technologies. On each of these issues, accounting for heterogeneity, interactions and disequilibrium dynamics provides a complementary and novel perspective to the one of standard equilibrium models. Furthermore, it highlights the potential economic benefits of mitigation and adaptation policies and the risk of under-estimating systemic climate change-related risks |
| Keywords: | climate change; climate policy; climate economics; complex systems; agent-based models; socio-economic networks |
| JEL: | C63 Q40 Q50 Q54 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:16058&r=ene |
| By: | Alessandro Vercelli (DEPS, University of Siena and SOAS, University of London); Eric Clark (University of Lund); Andrew Gouldson (The University of Leeds) |
| Abstract: | This paper investigates the relationship between finance and environmental sustainability. The first part summarises a few crucial methodological and foundational issues underlying meaning and implications of financialisation, sustainability and their mutual relation. The second part focuses on a particularly significant case study: the unsustainability of the existing energy system based on carbon fuels focusing on the urgency of a rapid transition to a low carbon economy. The third part explores which role financial instruments may play to facilitate the transition towards a low carbon economy. In particular, it investigates the implications for sustainability of the growing trade of energy derivatives. The forth part examines the consequences of the disembedment of money from the socioecological flows of matter and energy. The fifth part investigates the relations between financialisation of built environments and urban sustainability. The final part of the paper draws the main policy implications from the preceding analysis in the light of the growing problems affecting environmental policy in a financialised economy. The main policy conclusion is that, notwithstanding the growing conflict between the ongoing process of financialisation and sustainability, finance has to play a crucial role to implement a process of convergence towards a sustainable path of development. |
| Keywords: | financialisation, sustainability, low carbon economy, energy derivatives, disembedment of money, financialisation of built environment, urban sustainability, green paradox, sustainability policies |
| JEL: | B40 F10 F18 G15 H50 O11 O33 P10 P52 Q20 Q30 Q40 |
| Date: | 2016–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper166&r=ene |
| By: | Billette de Villemeur, Etienne; Leroux, Justin |
| Abstract: | We explore an alternative to existing economic instruments to tackle climate change: carbon liabilities. Such liabilities would hold countries responsible for future climate damage to the tune of their emissions over time. The prospect of having to repay this carbon debt over time is enough to discipline emitters, leading to the efficient emissions level. Contrary to existing instruments, our scheme does not rest on a consensus regarding the discount factor nor about climate forecasts; this, together with its reliance on observed damage, allows for better international participation as well as to a fairer division of costs and risks. |
| Keywords: | Carbon liabilities, climate policy, market instruments, Pigou tax |
| JEL: | H23 Q54 |
| Date: | 2016–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74998&r=ene |
| By: | Joungseok Park |
| Abstract: | I show that a credibility gap is created between the scientist and the government if the preference of the scientist is not perfectly aligned with that of the government. I find a remarkable result that the credibility gap is eliminated and the ex-ante social welfare is maximized if and only if the scientist’s preference is perfectly aligned with that of the government, not with that of the median voter. This is endogenously achieved when the government is allowed to appoint its optimal scientist without election concerns. In the case where the government has election concerns, if the median voter perceives an alarming message from the climate scientist, then even a “right-wing” government must choose an aggressive climate change policy to avoid losing the election. Accordingly, it will prefer to appoint a climate scientist who is unlikely to send an alarming message. Thus the government deliberately creates a credibility gap which may cause a distorted climate change policy in a democracy. Key Words: Climate Change; Cheap-Talk; Elections; SocialWelfare. |
| JEL: | D72 D83 H89 Q48 Q54 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:16-19&r=ene |
| By: | Kent D. Daniel; Robert B. Litterman; Gernot Wagner |
| Abstract: | Pricing greenhouse gas emissions is a risk management problem. It involves making trade-offs between consumption today and unknown and potentially catastrophic damages in the (distant) future. The optimal carbon price is based on society’s willingness to substitute consumption across time and across uncertain states of nature. A large body of work in macroeconomics and finance has attempted to infer societal preferences using the observed behavior of asset prices, and has concluded that the standard preference specifications are inconsistent with observed asset valuations. This literature has developed a richer set of preferences that are more consistent with asset price behavior. In this paper, we explore the implications of these richer preference specifications for the Social Cost of Carbon (SCC), the expected discounted damage of each marginal ton of carbon emissions at an optimal emissions reductions pathway. We develop a simple discrete-time model in which the representative agent has an Epstein-Zin preference specification, and in which uncertainty about the effect of carbon emissions on global temperature and on eventual damages is gradually resolved over time. In our model the SCC is equal to the value of the carbon emissions price at any given point in time that maximizes the utility of the representative agent at that time. We embed a number of features including tail risk, the potential for technological change, and backstop technologies. When coupled with the potential for low-probability, high-impact outcomes, our calibration allows us to decompose the SCC into the expected damages and the risk-premium. In contrast to most modeled carbon price paths, our calibration suggests a high SCC today that is expected to decline over time. It also points to the importance of backstop technologies and, in contrast to standard specifications, to potentially very large deadweight costs of delay. We find, for example, that with damage distributions calibrated to an SCC of $40, a value associated with only a small risk premium, the deadweight loss in utility associated with delaying the implementation of optimal pricing by 15 years is equivalent to a 6% loss of consumption. |
| JEL: | G0 G12 Q51 Q54 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22795&r=ene |
| By: | Robert S. Pindyck |
| Abstract: | An estimate of the social cost of carbon (SCC) is key to climate policy. But how should we estimate the SCC? A common approach is to use an integrated assessment model (IAM) to simulate time paths for the atmospheric CO2 concentration, its impact on global mean temperature, and the resulting reductions in GDP and consumption. I have argued that IAMs have serious deficiencies that make them poorly suited for this job, but what is the alternative? I present a more transparent approach to estimating an average SCC, which I argue is a more useful guide for policy than the marginal SCC derived from IAMs. I rely on a survey through which I elicit expert opinions regarding (1) the probabilities of alternative economic outcomes of climate change, including extreme outcomes such as a 20% or greater reduction in GDP, but not the particular causes of those outcomes; and (2) the reduction in emissions required to avert an extreme outcome. My estimate of the average SCC is the ratio of the present value of damages from an extreme outcome to the total emission reduction needed to avert such an outcome. I discuss the survey instrument, explain how experts were identified, and present results. I obtain SCC estimates of $200/mt or higher, but the variation across experts is large. Trimming outliers and focusing on experts who expressed a high degree of confidence in their answers yields lower SCCs, $80 to $100/mt. |
| JEL: | D81 Q5 Q54 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22807&r=ene |