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on Energy Economics |
| By: | Wietschel, Martin; Held, Anne; Pfluger, Benjamin; Ragwitz, Mario |
| Abstract: | [Summary and conclusions] A stronger integration across energy sectors can contribute to achieving climate targets, provided that fossil fuels are substituted by renewable energy sources. One analysis for the German energy market estimates the potential GHG-emission savings due to sector coupling to 50 Mio t of CO2 emissions by 2030 (see Wietschel et al. 2017). A high potential to reduce GHG-emissions in the short and medium term is provided by direct electrification options: e-mobility, heat pumps and electric blast furnace. In the longer term, trolley trucks may also contribute to GHG-emission reductions, but the technology is not yet mature and it will depend on the achievable technology and cost development. There are also options in the industry sector, including methanol, ammonium or refineries, but these options are still far from being economically efficient. Producing electricity mainly based on RES is crucial for exploiting the GHGemission reduction potential of sector coupling technologies. However, we believe that a timely market entry of sector coupling technologies is required in order to exploit potentials on a longer term. The current electricity mix still shows considerable shares of fossil fuels, but a further increase of the RES-E share is a precondition for exploiting the GHG-emission reduction potential of sector coupling technologies. Wietschel et al. (2017) suggest using options with high efficiencies and a high GHG-emission reduction potential in the early phase of the transformation mainly for reasons of public and social acceptance. Sector coupling technologies may also contribute to increasing energy efficiency (e.g. e-mobility, electric steel) and thus reduce GHG-emissions due to efficiency improvements. For example, heat pumps make use of the ambient heat and can therefore improve efficiencies. Wietschel et al. (2017) have estimated for Germany that final energy consumption can be reduced by 180 TWh due to the efficiency effect by 2030, whilst electricity demand of new applications would increase by 50 TWh. Finally, sector-coupling technologies can increase the flexibility of the power system, which can be particularly relevant for systems with high shares of variable RES-E. However, the flexibility potential of different options and technologies strongly differs. According to Wietschel et al. (2017) there are high potentials for e-mobility and electrode boilers in heating networks. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisisi:s082020&r=all |
| By: | Shyekhha, Siamak (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Borggrefe, Frieder (German Aerospace Center (DLR)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)) |
| Abstract: | Auctions have recently been introduced in many countries as a useful alternative to accomplish renewable energy supports. However, they are often accompanied by a high concentration of renewable energy power plants at productive sites, at the expense of other, less favorable sites. This paper studies the impact of alternative renewable energy auction designs on the promotion of renewable energy in Germany using a novel multi-level approach. To do so, we analyze auctions on three different spatial levels: the national auction, the regional auction-type I (federal states level) and the regional auction-type II (north/south auction). The initial step for modeling renewable energy auction schemes in Germany is to investigate the onshore wind potential with a high regional and temporal resolution, using the GIS-data-based tool REMix-ENDAT. The results of this analysis show a considerable as yet untapped onshore wind potential in the southern federal states of Germany. Second, an onshore wind auction model is developed using a system dynamics approach. Finally, the comparison of the support payment for different auction designs is evaluated using the electricity market simulation model (HECTOR). Findings indicate that more bidders from the southern federal states can win in the regional auctions. Detailed spatial analysis reveals a trade-off between balanced diversity of bidders and average auction price (the price difference varies from 0.5 €-ct/kWh to 1.5 €-ct/kWh in different scenarios). We conduct that, a noticeable potential support payment saving from regional auctions should be exploited in long-term renewable energy policy designs. |
| Keywords: | Renewable auction design; System dynamics; Support payment |
| JEL: | D44 D47 Q28 Q47 |
| Date: | 2019–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2019_022&r=all |
| By: | Max Luke; Priyanshi Somani; Turner Cotterman; Dhruv Suri; Stephen J. Lee |
| Abstract: | Recent studies conclude that the global coronavirus (COVID-19) pandemic decreased power sector CO$_2$ emissions worldwide. We analyze the statistical significance of CO$_2$ emissions reductions in the U.S power sector from March through July 2020 and we present model-informed expectations of the likelihood of sustained reductions in CO$_2$ emissions. We use Gaussian process (GP) regression to assess whether CO$_2$ emissions reductions would have occurred with reasonable probability in the absence of COVID-19 considering uncertainty due to factors unrelated to the pandemic. We show that CO$_2$ emissions are lower than levels expected in the absence of COVID-19 for each month from March through July 2020 but that those monthly reductions are not statistically significant considering hypothesis tests at 5% significance levels. To make predictions about whether COVID-19-related CO$_2$ emissions reductions will be sustained in the power sector, we assess the relative impacts of the pandemic on electricity generation (E) and on the carbon intensity of electricity supply (C/E). E is on average 2.9\% lower than what we would expect in the absence of COVID-19 from March through July 2020. We expect E to rebound alongside a recovery of the U.S. economy. C/E is determined to be 2.7% lower on average than what we would expect in the absence of COVID-19 from March through July 2020. Reductions in C/E are mostly attributable to reductions in the share of coal-fired electricity generation. We analyze the expected profitability through 2021 of the 845 coal-fired power plant units operating in the U.S. We find that only 76 of those units, representing 1.3% of total coal generation capacity, were expected to be profitable prior to COVID-19 but are no longer expected to be profitable. We conclude that COVID-19 is unlikely to have a material impact on U.S. power sector CO$_2$ emissions in the long-run. |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2008.06660&r=all |
| By: | Tancrède Voituriez (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UM3 - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique, Cirad-ES - Département Environnements et Sociétés - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, IDDRI - Institut du Développement Durable et des Relations Internationales - Institut d'Études Politiques [IEP] - Paris, WIL - World Inequality Lab) |
| Abstract: | In 2015, the world nations agreed to tackle the "two greatest challenges of our century" to paraphrase Nick Stern (2009) – namely growing inequality and climate change. They signed up the Agenda 2030 and endorsed its 17 sustainable development goals (SDGs), thereby committing to shift development patterns towards sustainable paths. The same year, the Paris Agreement on climate change was celebrated as a breakthrough in environmental governance, marking a watershed between an old world suffocating under fossil-fuel pollution, and a green new world matching the economic aspiration of a growing world middle class within a ‘safe operating space for humanity' (Steffen et al., 2015). The transition from one world to the other is not part of any handbook however, nor was it laid out in companion texts to the SDGs and the Paris Agreement. The recipe for turning coal, oil and gas into carbon-free watts and joules while curbing the seemingly irresistible rise of income and wealth inequalities seems as coveted as were alchemist formulae to turn sand into gold a few centuries ago. The practicality of the transition remains debatable, as global inequality and CO2 emissions seem stubbornly stuck to their long-term rising trend (Wid, 2018 ; Carbon Tracker Institute, 2019). To tackle the magnitude of inequality and environmental intertwined challenges, some scholars framed the concept of green welfare state or "ecostate" almost twenty years ago. They called for a transformation of the welfare state as we know it in most of OECD countries into a governance system supplying the insurance mechanisms and public goods and services to cope with environmental degradation and shocks. This paper is a quest of emerging ecostate in existing literature, and in most recent data. The first section presents a literature review on welfare state and ecostate, and on the expected transition from one to the other. In section two, we update Wood and Gough (2006) typology on welfare regimes to include the most recent available data covering income inequalities and environmental performance. We conduct an empirical multivariate analysis and come up with four distinct type of ecostates: unequal, super unequal, balanced and insecure. We focus in sections four and five on the particular case of insecure ecostates, which gathers a large share of emerging economies. Taking Nigeria as an example, we delineate the characteristics of ecostate insecurity and possible way forward, drawing on ongoing in-house research made in this country. Research gaps and bridging initiatives are hinted at in conclusion. |
| Keywords: | climate change adaptation,Nigeria,insecurity,environment,green welfare states,ecostates,developing countries,inequality |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wilwps:hal-02876972&r=all |
| By: | L. Vanessa Smith (DERS, University of York.); Nori Tarui (Department of Economics, University of Hawaii.); Takashi Yamagata (DERS, University of York & ISER, Osaka University.) |
| Abstract: | This paper demonstrates how the global vector autoregressive (GVAR) modelling framework can be used for producing conditional forecasts of global fossil fuel consumption and CO2 emissions, as well as for conducting counterfactual analysis related to carbon pricing, conditional on alternative GDP scenarios. The choice of the conditioning variable does not limit the generality of the approach. The proposed analysis can be useful in guiding and informing policy making as illustrated by our application, which conditions on two-year horizon GDP forecast trajectories by the International Monetary Fund. These trajectories are associated with the global economic shock due to the COVID-19 pandemic. Our model makes use of a unique quarterly data set of coal, natural gas, and oil consumption, output and exchange rates, including global fossil fuel prices for 32 major CO2 emitting countries. The results show that fossil fuel consumption and CO2 emissions are expected to return to their pre-crisis levels, and even exceed them, within the two-year horizon despite the large reductions in the first quarter following the outbreak. More robust growth is anticipated for emerging than for advanced economies. Recovery to the pre-crisis levels is expected even if another wave of pandemic occurs within a year. Results from the counterfactual carbon pricing scenario indicate that an increase in coal prices is expected to have a smaller impact on GDP than on fossil fuel consumption. Thus, the COVID-19 pandemic would not provide countries with a strong reason to delay climate change mitigation efforts. |
| Keywords: | fuel consumption; CO2 emissions; Global VAR (GVAR); conditional forecasts; carbon pricing; COVID-19 |
| JEL: | C33 O50 P18 Q41 Q43 Q47 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:was:dpaper:2004&r=all |
| By: | Bertsch, Valentin; Di Cosmo, Valeria |
| Abstract: | The European Union has set ambitious targets for expanding renewable energy to meet emission reduction goals. After a period of subsidy-driven investments, the costs of renewables decreased strongly and renewable support schemes shift towards more market-based approaches. We therefore analyse the market-based profitability of wind onshore and offshore and solar PV across Europe to determine where it is optimal to invest and understand which factors drive the profitability of investments. We use a power systems model to simulate the whole European electricity market in 2030. Using the renewables’ revenues determined by the model, we calculate the profitability of each technology in each country. We also analyse how effective renewables are in terms of emission reduction. Investments are found not to be homogeneously profitable across Europe, i.e. cooperation between European countries can be expected to achieve the overall targets at lower costs than nationally-driven approaches. We also find that in many countries, wind onshore and solar PV are profitable by 2030 in absence of any financial support, whereas wind offshore does never seem profitable without support. Finally, RES expansion alone will not guarantee an effective reduction of CO2 emissions. |
| Keywords: | Renewable Energy; Renewable Energy Target; Renewable Electricity Target; EU Electricity Market; Profitability; Emission Reduction; Carbon Price; Carbon Price Floor |
| JEL: | Q42 Q52 Q58 |
| Date: | 2020–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101822&r=all |
| By: | Shahbaz, Muhammad; Nasir, Muhammad Ali; Hille, Erik; Kumar, Mantu |
| Abstract: | The 4th industrial revolution and global decarbonisation are frequently referred to as two, interrelated megatrends. In particular, the former, technological revolution is expected to fundamentally change the economy, society, and financial systems, and may also create opportunities towards a zero-carbon future. Therefore, in the presence of the UK’s legally binding commitment to achieve a net-zero emissions target by 2050, we analyse the role of economic growth, R&D expenditures, financial development, and energy consumption in causing carbon dioxide (CO2) emissions. Our analysis is based on historical annual data from 1870 to 2017, thereby employing the bootstrapping bounds testing approach to examine short- and long-run relationships. The results suggest the existence of cointegration between CO2 emissions and its determinants. Financial development and energy consumption lead to environmental degradation, but R&D expenditures help reducing CO2 emissions. The estimated environmental effects of economic growth support the EKC hypothesis. While a U-shaped relationship is depicted between financial development and CO2 emissions, the nexus between R&D expenditures and CO2 emissions is analogues to the EKC. In the context of the efforts to tackle climate change, our findings suggest policy prescriptions by using financial development and R&D expenditures as key tools to meet the emissions target. |
| Keywords: | CO2 Emissions, Economic Growth, Financial Development, R&D Expenditures, Net-zero Emissions |
| JEL: | Q5 |
| Date: | 2020–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102022&r=all |
| By: | Tensay Meles; L. (Lisa B.) Ryan; Joe Wheatley |
| Abstract: | The COVID-19 crisis comes at a complex moment for European climate policy as it pivots from a 40% 2030 emissions reduction target to a European Green Deal that is in better alignment with long-term Paris Agreement goals. Here, the implications of the dramatic fall in economic output associated with the crisis are examined using a representative range of growth scenarios. With lower economic activity resulting from the COVID-19 crisis, existing policy measures could achieve the 40% target sooner than 2030. However, we find that even in the most severe economic scenario examined, this falls well short of the 50-55% emissions reduction target under the Green Deal. Maintaining the existing 40% target in 2030 with reduced policy measures on the other hand would move European climate policy away from the required path. This analysis indicates the feasibility of increased climate ambition in the wake of the pandemic and supports the Green Deal 50-55% targets in 2030. |
| Keywords: | Climate change policy; Greenhouse gas emissions; Economic recovery; COVID-19 economic effects; Energy demand |
| JEL: | Q5 Q54 Q58 E6 Q43 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:202012&r=all |
| By: | Fabian Stöckl |
| Abstract: | When analyzing potential ways to counter climate change, standard models of green growth abstract from investment in substitutability between “clean” and “dirty” energy inputs. Instead, they rely on the assumption that efficiency with respect to fossil fuels can be increased perpetually. However, this is not in line with observed firm investment behavior and the limits to efficiency imposed by thermodynamic laws. In this paper, I develop a growth model that explicitly accounts for endogenous investment to increase input substitutability, in addition to investment in efficiency. The model predicts that, for a growing economy, there is always investment in both substitutability and efficiency, even without a carbon cap and with non-infinite fossil fuel prices. Most importantly, in the long-run, with sufficient investment in substitutability, fossil fuels become inessential for production. Moreover, the model predicts a declining income share of fossil fuels, an outcome not featured by standard models based on purely efficiency-enhancing technological progress. Overall, the model generates an endogenous path of transition from an economy characterized by a low elasticity of substitution to one characterized by a high elasticity. In doing so, it still nests the results derived from a purely efficiency-based directed technical change framework as a special case. In addition, this paper analyzes the scope for policy intervention, showing that even a temporary subsidy/tax can trigger a full transformation toward green growth. |
| Keywords: | Elasticity of substitution, endogenous (sigma-augmenting) technological change, growth, investment incentives, climate policy, decarbonization |
| JEL: | Q20 Q30 O30 O40 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1886&r=all |
| By: | Li,Shanjun; Zhu,Xianglei; Ma,Yiding; Zhang,Fan; Zhou,Hui |
| Abstract: | To promote the development and diffusion of electric vehicles, central and local governments in many countries have adopted various incentive programs. This study examines the policy and market drivers behind the rapid development of the electric vehicle market in China, by far the largest one in the world. The analysis is based on the most comprehensive data on electric vehicle sales, local and central government incentive programs, and charging stations in 150 cities from 2015 to 2018. The study addresses the potential endogeneity of key variables, such as local policies and charging infrastructure, using the border regression design and instrumental variable method. The analysis shows that central and local subsidies accounted for over half of the electric vehicles sold during the data period. Investment in charging infrastructure is much more cost-effective than consumer purchase subsidies. In addition, the policy that merely provided electric vehicles a distinctively license plate was strikingly effective. These findings demonstrate the varying efficacy across policy instruments and highlight the critical role of government in promoting fuel-saving technologies. |
| Keywords: | Energy and Environment,Energy Demand,Energy and Mining,Multi Modal Transport,Ports&Waterways,Energy Policies&Economics,Transport Services |
| Date: | 2020–08–13 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9359&r=all |
| By: | Sanghamitra Mukherjee; Séin Healy; Tensay Meles; L. (Lisa B.) Ryan; Robert Mooney; Lindsay Sharpe; Paul Hayes |
| Abstract: | This paper aims to understand what motivates the adoption of key renewable energy technologies (RET) in early adopter markets. Electrification of heat and transport, through the deployment of heat pumps, electric vehicles and solar photovoltaic panels, combined with renewable sources of electricity is a key strategy for policymakers to combat climate change. Notwithstanding their social benefits, uptake remains low. Thus, targeted policy measures are needed to address this. We conduct a survey of a nationally representative sample of Irish households to better understand the motivations behind RET adoption and find fundamental differences between adopters and non-adopters. Current adopters tend to be younger, highly educated, of higher socio-economic status, and are likely to live in newer buildings of generous size. While non-adopters self-report as being more sustainable, adopters appear to be stronger believers that their own decisions impact climate change. Thus, environmental attitudes are an insufficient predictor of uptake. Instead, poor understanding of new technologies often inhibits uptake. Word-of-mouth recommendation matters greatly in communicating the use and benefits of new technology as evident from the significantly larger social networks that adopters enjoy. With this information, a range of monetary and non-monetary policy incentives can be designed according to public preferences. |
| Keywords: | Household survey; Technology adoption policy; Heat pumps; Solar PV; Electric vehicles; Consumer behaviour |
| JEL: | D1 D9 O3 Q4 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:202004&r=all |
| By: | Fabian Stöckl; Alexander Zerrahn |
| Abstract: | We fit CES and VES production functions to data from a numerical bottom-up optimization model of electricity supply with clean and dirty inputs. This approach allows for studying high shares of clean energy not observable today and for isolating mechanisms that impact the elasticity of substitution between clean and dirty energy. Central results show that (i) dirty inputs are not essential for production. As long as some energy storage is available, the elasticity of substitution between clean and dirty inputs is above unity; (ii) no single clean technology is indispensable, but a balanced mix facilitates substitution; (iii) substitution is harder for higher shares of clean energy. Finally, we demonstrate how changing availability of generation and storage technologies can be implemented in macroeconomic models. |
| Keywords: | Elasticity of substitution, clean and dirty energy, electricity production, decarbonization, green growth |
| JEL: | O44 Q42 Q43 Q55 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1885&r=all |
| By: | Raul Bajo Buenestado (University of Navarra) |
| Abstract: | A number of countries in Sub-Saharan Africa have recently deployed billions of dollars to improve their electricity infrastructure. However, aggregate data shows that the relative number of households with an electricity connection at home has barely increased. In this paper we study the role of blackouts to partially explain why there have been relatively few additional households with electricity access despite the increase in electrification expenditure. Using geo-localized survey data from Kenya, we find that households that live in neighborhoods in which power outages are relatively more frequent are (at least) about 6%-9% less likely to have electricity at home. We also find that households that have electricity access but which experience frequent power outages are also less likely to purchase electrical appliances. |
| Keywords: | Energy poverty, Electricity access, Electrification rates, Sub-Saharan Africa |
| JEL: | L94 O13 Q41 Q48 |
| Date: | 2020–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:una:unccee:wp0220&r=all |
| By: | Chyong, C K.; Li, C.; Reiner, D.; Roques, F. |
| Abstract: | We develop a new framework that can be used to analyse interactions between solar and wind generation using a Mean-Variance Portfolio Theory (MPT) framework. We use this framework to understand the role of electricity transmission integrating a high share of Variable Renewable Energy (VRE) and investigate the optimal generation mix consisting of wind and solar for Australia’s National Electricity Market (NEM). For the same level of risk, we find that the average capacity factor of VRE could be 7% higher if transmission constraints are alleviated. Our results show that in order to minimise the risks of a VREdominated generation portfolio, transmission capacity and efficient access will become very important – at a high level of VRE penetration in NEM, a marginal increase in transmission capacity reduces system risks associated with wind and solar uncertainties by ca. 0.25 p.p. Lack of transmission capacity therefore implies potentially greater risks to VRE generators and hence higher energy costs at high levels of VRE penetration. Using our proposed approach (residual demand minimisation), which accounts for the dynamics of electricity generation associated with wind and solar as well as with demand, we find investment in solar generation is rewarded more than when using an output maximisation approach that ignores patterns of demand. For example, on average, solar share reaches 15.4% under the residual demand minimisation approach versus 12.5% under output maximisation approach. Investment in solar is also sensitive to the way we formulate our risk objective, being less favourable if we consider only peak hours than if we consider all hours. Further, our results suggest that wind generation and transmission capacity expansion are complements NEMwide while solar generation and wind generation are complements within the same region. |
| Keywords: | electricity planning, transmission capacity, geographic and technological diversification, mean-variance portfolio theory (MPT) |
| JEL: | Q48 L98 G11 Q42 C60 |
| Date: | 2020–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2077&r=all |
| By: | Pillai N., Vijayamohanan |
| Abstract: | The traditional interest in energy efficiency has centred on a single energy input factor in terms of productivity that has become famous through the index method in terms of activity output per unit of energy use. The enquiry that has proceeded from the problems associated with this method has led to identifying the effect source of variation, in terms of decomposition analysis. A variant of factor decomposition analysis, index decomposition analysis takes energy as a single factor of production, and explores various effects on energy intensity changes, by decomposing these changes into pure intensity changes effect, structure changes effect and activity changes effect. The present paper seeks to measure energy efficiency in Kerala in terms of index decomposition analysis, using the Logarithmic Mean Divisia Index (LMDI) method. For the empirical exercise of decomposition, we consider two energy sectors of Kerala: power sector and petroleum sector. Since the petroleum consumption data is available only for the period from 2007-08 to 2016-17, we take this as our study period for the analysis. As the measure of activity, we have the usual real gross State domestic product (GSDP at 2011-12 prices). First we analyse the two sectors separately, and then the combined sector is analysed for decomposition. The petroleum consumption data relating only to the secondary and tertiary sub-sectors, the less-efficient petroleum sector is found to overweigh the combined energy sector of Kerala to such an extent that the energy-efficiency potential of these two sub-sectors gets clouded. A sufficiently high degree of energy efficiency in the petroleum sector can indeed reverse this anomaly. |
| Keywords: | Energy efficiency, Kerala, Power sector, Index decomposition, Divisia index. |
| JEL: | C13 C51 Q4 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101981&r=all |
| By: | Abedullah (Chief of Research, Pakistan Institute of Development Economics, Islamabad.); Muhammad Tanvir (Pakistan Institute of Development Economics, Islamabad.) |
| Abstract: | About 3 billion people are relying on polluting sources of energy in developing countries. These polluting sources are responsible for 4 million deaths and 2.7 percent of the global burden of disease. Ninety-four percent of households in rural areas of Pakistan are using solid biomass for cooking and heating. Being mainly involved in cooking, rural women are highly vulnerable to hazardous pollutants. The extant literature has rarely explored the impact of indoor air pollution on women health in Pakistan. The present study unveils the effect of polluting fuel burning on symptoms of acute upper respiratory infections such as sore throat, cough, congestion, breathing difficulties, and fatigue. A household survey was conducted by employing a multi-stage sampling technique to collect data from 252 households from Abbottabad and Haripur districts of Khyber Pakhtunkhwa province. The diversification in domestic tasks, number of windows in kitchen and use of mask in close kitchen have negative and significant correlation with respiratory health symptoms. However, solid fuels, exposure to pollution, and close kitchen are found to have positive and significant impacts on respiratory health symptoms. The results of standardized regression model reveal that use of polluting energy sources in close kitchen are contributing more than twice to respiratory symptoms than in open kitchen. Exposure to pollution, solid fuels and close kitchen are major culprits for respiratory health symptoms among rural women responsible for kitchen work. The study concludes that awareness campaigns on the benefits of using clean energy sources, importance of windows and masks in close kitchen and open kitchen among rural women may help to significantly reduce the burden of respiratory health problems. |
| Keywords: | Indoor air pollution, polluting fuel and respiratory symptoms, Pakistan |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2020:12&r=all |
| By: | Tangerås, Thomas (Research Institute of Industrial Economics (IFN)) |
| Abstract: | In a ’smart’ electricity distribution network, flexible distribution resources (FDRs) can be coordinated to improve efficiency. But coordination enables whoever controls such resources to exercise market power. The paper establishes the following efficiency rankings of market structures: Aggregators competing for FDRs are more efficient than a distribution system operator (DSO) controlling resources, which is more efficient than no FDR market. A no- market solution is more efficient than an FDR market featuring either (i) both DSO and aggregators; or (ii) a monopoly aggregator also supplying generation to the real-time market. The paper also characterizes a regulation that implements the efficient outcome. |
| Keywords: | Aggregator; Distribution system operator; Market power; Real-time market; Regulation; Smart grid |
| JEL: | H41 L12 L51 L94 |
| Date: | 2020–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1351&r=all |
| By: | Grant Allan (Deparrment of Economics, University of Strathclyde); Christos Barkoumas (Deparrment of Economics, University of Strathclyde); Andrew Ross (Deparrment of Economics, University of Strathclyde); Ashank Sinha (Deparrment of Economics, University of Strathclyde) |
| Abstract: | UK policymakers are seeking to use the levers of a more active industrial policy to develop economic opportunities, including through new and expanded trading opportunities. At the same time, the UK Government has committed to a net zero greenhouse gas emissions target by 2050. While increases in exports are expected to raise economic activity, it is unclear what impact this will have on UK energy use and emissions. With a main plank of the UK strategy the development of _Sector Deals", it is unknown whether this is also true for specific industrial sectors. We examine this empirically in a multisectoral Computable General Equilibrium model of the UK that captures the interdependence between economic activity, energy use and emissions. Our results suggest that while economic outcomes move in the desired direction there are mixed impacts on energy use, UK territorial industrial emissions, and the energy- and emissions-intensity of the UK economy. Notably, we identify instances where growing exports in specific sectors help to meet the objectives of both the Clean Growth Strategy and Industrial Strategy. |
| Keywords: | energy policy, industrial strategy, trade policy, emissions |
| JEL: | C68 D58 Q43 Q48 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:2008&r=all |
| By: | Mireille Chiroleu-Assouline (PSE - Paris School of Economics, UP1 - Université Panthéon-Sorbonne); Mouez Fodha (PSE - Paris School of Economics, UP1 - Université Panthéon-Sorbonne); Yassine Kirat (PSE - Paris School of Economics, UP1 - Université Panthéon-Sorbonne) |
| Abstract: | Among the ten countries with the highest carbon intensity, six are natural resource-rich countries. This suggests the existence of a carbon curse: resource-rich countries would tend to follow more carbon-intensive development paths than resource-poor countries. We investigate this assumption empirically using a panel data method covering 29 countries (OECD and BRIC) and seven sectors over the 1995-2009 period. First, at the macroeconomic level, we find that the relationship between national CO 2 emissions per unit of GDP and abundance in natural resources is U-shaped. The carbon curse appears only after the turning point. Second, we measure the impact of resource abundance on sectoral emissions for two groups of countries based on their resource endowments. We show that a country rich in natural resources pollutes relatively more in resource-related sectors as well as all other sectors. Our results suggest that the debate on climate change mitigation should rather focus on a comparison of resource-rich countries versus resource-poor countries than the developed-country versus developing-country debate. |
| Keywords: | carbon curse,carbon intensity,resource-rich economies |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02902393&r=all |
| By: | ITO Koichiro; ZHANG Shuang |
| Abstract: | Inefficient energy pricing hinders economic development in many countries. We examine long-run effects of a recent heating reform in China that replaced a commonly-used fixed-payment system with individually-metered pricing. Using staggered policy rollouts and administrative data on household-level daily heating consumption, we find that the reform induced long-run reductions in heating usage and generated substantial welfare gains. Consumers gradually learned how to conserve heating effectively, making short-run evaluations underestimate the policy impacts. Our results suggest that energy price reform is an effective way to improve allocative efficiency and air quality in developing countries, where unmetered-inefficient pricing is still ubiquitous. |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:20062&r=all |
| By: | Peng-Fei Dai (TJU); Xiong Xiong (TJU); Wei-Xing Zhou (ECUST) |
| Abstract: | This paper aims to examine whether the global economic policy uncertainty (GEPU) and uncertainty changes have different impacts on crude oil futures volatility. We establish single-factor and two-factor models under the GARCH-MIDAS framework to investigate the predictive power of GEPU and GEPU changes excluding and including realized volatility. The findings show that the models with rolling-window specification perform better than those with fixed-span specification. For single-factor models, the GEPU index and its changes, as well as realized volatility, are consistent effective factors in predicting the volatility of crude oil futures. Specially, GEPU changes have stronger predictive power than the GEPU index. For two-factor models, GEPU is not an effective forecast factor for the volatility of WTI crude oil futures or Brent crude oil futures. The two-factor model with GEPU changes contains more information and exhibits stronger forecasting ability for crude oil futures market volatility than the single-factor models. The GEPU changes are indeed the main source of long-term volatility of the crude oil futures. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2007.12838&r=all |
| By: | Isphording, Ingo E. (IZA); Pestel, Nico (IZA) |
| Abstract: | We study the impact of short-term exposure to ambient air pollution on the spread and severity of COVID-19 in Germany. We combine data on county-by-day level on confirmed cases and deaths with information on local air quality and weather conditions and exploit short-term variation in the concentration of particulate matter (PM10) and ozone (O3). We apply fixed effects regressions controlling for global time-varying confounding factors and regional time-invariant confounding factors on the county level, as well as potentially confounding weather conditions and the regional stage of the pandemic. We find significant positive effects of PM10 concentration after the onset of the illness on COVID-19 deaths specifically for elderly patients (80+ years): higher levels of air pollution by one standard deviation 3 to 12 days after developing symptoms increase deaths by 30 percent (males) and 35 percent (females) of the mean. In addition, air pollution raises the number of confirmed cases of COVID-19. The timing of results supports mechanisms of air pollution affecting the severity of already realized infections. Air pollution appears not to affect the probability of infection itself. |
| Keywords: | COVID-19, health, air pollution, Germany |
| JEL: | I12 I18 Q53 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13418&r=all |
| By: | Deniozos, Nikolaos (National and Kapodistrian University of Greece - Department of Turkish Studies and Modern Asian Studies); Vlados, Charis (Democritus University of Thrace, Department of Economics); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics) |
| Abstract: | A geo-economic development analysis in the Balkans under the perspective of the interests of Greece is useful to conceive better the ever-increasing tense framework of globalization's restructuring. Both the study of the different sources of energy (petroleum and, increasingly, natural gas) and the numerous new geopolitical changes demonstrate the existing tensions within the contemporary international strategic relations. The energy security of the Balkans region presents an excellent case to study and realize the contradicted interests in national, regional and supranational level. |
| Keywords: | Energy and the Balkans; new globalization; contemporary geo-economic analysis; energy security; energy policy |
| JEL: | F69 O13 Q49 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:ris:duthrp:2019_021&r=all |
| By: | Sinha, Avik; Sengupta, Tuhin; Kalugina, Olga; Awais Gulzar, Muhammad |
| Abstract: | Despite the ongoing research on energy innovation and economic growth, little is known on how degree of energy innovation impacts income inequality within a nation. To address this research gap, we have developed a bivariate model to analyze how distribution of energy innovation affects the income distribution in a certain country. Using the Fisher Ideal Index, we have calculated energy efficiency as an indicator of energy innovation. Quantile-on-Quantile regression has been applied to capture the impact on energy innovation across different income quantiles in Next 11 countries. Results show that energy innovation can have different outcomes, across the member countries of N11 group, namely a) equitable and positive impact, (b) negative impact, and (c) inequitable impact in terms of distribution of income. We have inferred important policy implications, which might lead to sustainable development strategies in N11 countries. This study is one of the first to establish the direct link between energy innovation and income inequality across different quantiles within a nation. Further, we successfully demonstrate the application of advanced quantile methods in inferring Sustainable Development Goal (SDG) focused policy implications. |
| Keywords: | Energy Innovation; Energy Efficiency; Income Inequality; Sustainable Development Goals; Quantile-on-Quantile Regression |
| JEL: | O3 O30 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102007&r=all |
| By: | Wolff, Stefanie (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)) |
| Abstract: | In this paper, we spatially map the willingness to pay for e-vehicle charging options according to the availability of public charging spots. We combine a Discrete Choice Experiment on charging preferences with a data set of public charging spots. Our results show spatial heterogeneity, i.e. respondents’ choices depend on the quantity of public charging spots available to them. Non-availability of public charging spots in the vicinity has a larger effect on the choice probability than 1, 2, or 3 charging spots have. This could be evidence for charging infrastructure awareness. For the charging locations, we find marked spatial heterogeneity in the willingness to pay subject to the number of available public charging spots. The interaction of charging location with the number of public charging spots reveals a strong preference for charging at home rather than at work or charging on the road. However, with every additional public charging spot, respondents are more likely to charge away from home. This holds until the number of charging spots has reached a tipping point at which respondents become indifferent between home and work charging. When the tipping point is exceeded, respondents rather charge at work than at home. Thus, with increasing numbers of charging spots, public chargers near home are less relevant than those near work. Eventually, public chargers away from home become more attractive. Also, with increasing numbers of charging spots our results reveal a fivefold greater willingness to pay for reducing waiting time (for a charging spot to become available) than for accelerating charging speed. Thus, charging point operators could surcharge by implementing a booking scheme than by implementing fast-charging. From the findings, we derive further implications for charging infrastructure policy, business models, and infrastructure planning, e.g. regarding the expected break-even points for rolling out charging infrastructure and the provision of green energy. |
| Keywords: | Electric mobility charging behavior; Charging spot awareness; Discrete Choice Experiment; Econometric modeling; Willingness to pay; Germany |
| JEL: | C25 D12 M38 Q58 R40 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2020_009&r=all |
| By: | Gayle, Philip; Lin, Ying |
| Abstract: | The significant worldwide decline in crude oil price beginning in mid-2014 through to 2015, which resulted in substantial fuel expense reductions for airlines, but no apparent commensurate reductions in industry average airfares has caused much public debate. This paper examines the market mechanisms through which crude oil price may influence airfare, which facilitates identifying the possible market and airline-specific characteristics that influence the extent to which crude oil price changes affect airfare. Interestingly, and new, our analysis reveals that the crude oil-airfare pass-through relationship can be either positive or negative, depending on various market and airline-specific characteristics. We find evidence that airline-specific jet fuel hedging strategy and market origin-destination distance contribute significantly to pass-through rates being negative. Specifically, the value of pass-through rate decreases with airline fuel hedging ratios and with market origin-destination distance, but increases with competition in origin-destination markets. Even when the pass-through relationship is positive, suggesting that a portion of airlines’ fuel cost savings is passed on to consumers via lower airfares, this research reveals the market and airline-specific factors that limit the size of these savings passed on to consumers via lower airfares. |
| Keywords: | Crude oil price-Airfare Cost Pass-through; Jet fuel hedging |
| JEL: | L13 L93 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102018&r=all |
| By: | J. Scott Holladay (Department of Economics, University of Tennessee); Lawrence D. LaPlue III (Department of Economics, New Mexico State University) |
| Abstract: | This paper decomposes pollution releases by U.S. manufacturing establishments to show the relative importance of four establishment-level channels: entry, exit, reallocation between survivors, and within-establishment adjustment of emissions intensity. Using a panel of establishment-level output and pollution emissions to air and water for U.S. manufacturers, we decompose changes in pollution emissions into the three channels typically presented in the literature: changes in scale (output), composition (industry market share), and industry-level technique (emissions intensity). We then decompose changes due to industry-level emissions intensity into four establishment level channels for three criteria air pollutants and water pollution. For volatile organic compound emissions, nearly two-thirds of the reduction in sector-level emissions intensity is due to within-establishment reductions in emissions intensity. The other third is driven by reallocation to cleaner establishments. Though the magnitudes differ, results are broadly similar for particulate matter and sulfur dioxide. Onsite releases of effluents to water exhibit a similar pattern, though the relative importance of reallocation is greater. Additionally we find that within-establishment reductions in water emissions are associated with increased transfers to offsite publicly owned treatment facilities. The heterogeneous contributions across channels suggests that the cleanup in the U.S. manufacturing sector likely has multiple sources. |
| Keywords: | Emissions Decomposition, Establishment Entry and Exit, Aggregate Emissions, Emissions Intensity |
| JEL: | C10 Q50 Q56 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:ten:wpaper:2020-01&r=all |
| By: | David Deller (Centre for Competition Policy, University of East Anglia); Catherine Waddams Price (Centre for Competition Policy and Norwich Business School, University of East Anglia) |
| Abstract: | The retail energy market in the UK is highly politicised and since the turn of the millennium successive governments have pursued significant policies designed to ease the affordability of energy for certain groups. One of these policies, namely Winter Fuel Payments, represent both a significant increase in resources targeted at affordability support and a shift in emphasis from those on low incomes towards the elderly. This paper tracks the proportion of household expenditure devoted to energy between 1992 and 2014, implementing a major new correction to energy expenditure for households with prepayment meters, who tend to be low income households. First, the time series is used to argue that the political salience of distributional concerns in the retail energy market should not come as a surprise. Second, we find that while households with a head aged over 80 have elevated energy expenditure shares (similar to households at the bottom of the income distribution), pensioners aged 65-70 have energy expenditure shares comparable to households at the middle of the income distribution. Third, mapping major policy developments against the time series shows the most generous and ambitious affordability support schemes were introduced when energy was nearing its most affordable over a 35-year period, suggesting political considerations influenced both the recipients of support and the timing of interventions. |
| Date: | 2018–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaccp:2018_01&r=all |
| By: | Benedikt Janzen; Doina Maria Radulescu |
| Abstract: | We employ hourly electricity load data for Switzerland as a real time indicator of the economic effects of the lockdown following the spread of SARS-CoV-2. Our findings reveal that following the drastic lockdown, overall electricity use decreased by 4 per cent, with a reduction of even 11.3 per cent in the Canton of Ticino where the number of confirmed cases per capita was one of the highest in Switzerland and also stricter measures such as closures of construction sites and industrial companies were implemented on top of federal regulations. Looking at working days only, we estimate a Swiss-wide decrease in electricity consumption of 6.3 per cent. Assuming industry, services, transport and agriculture account for 67 per cent of electricity demand, the 4 per cent decrease in electricity use implies a 6 per cent output reduction in these sectors. In addition, the reduced electricity imports and the change in the generation mix of neighbouring countries, also translates into reduced CO2 emissions related to these imports. |
| Keywords: | COVID-19, economic indicator, electricity load, CO2 emissions |
| JEL: | C53 Q40 C30 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8363&r=all |
| By: | Pillai N., Vijayamohanan |
| Abstract: | Traditionally, there are two basically reciprocal energy efficiency Indicators: one, in terms of energy intensity, that is, energy use per unit of activity output, and the other, in terms of energy productivity, that is, activity output per unit of energy use. The enquiry that has proceeded from the problems associated with this method of a single energy input factor in terms of productivity has led to multi-factor productivity analysis. We have here two approaches: parametric and non-parametric. Parametric approach famously includes two methods: the erstwhile popular total factor energy productivity analysis and the currently fanciful stochastic frontier production function analysis; The non-parametric approach is popularly represented by data envelopment analysis. The present paper is an attempt to measure efficiency in electrical energy consumption in Kerala, India. We apply the parametric method of stochastic frontier production function analysis on a panel data of the Kerala power sector with three sectors (Primary, Secondary and Tertiary) for the period from 1970-71 to 2016-17. For a comparative purpose, we also have a regression with a pooled data stochastic frontier. The results indicate that the sector-wise technical efficiency estimates of the Kerala power sector are independent of time, which can significantly refer to a technically stagnant situation in energy efficiency. The implication of the time-varying decay model, even though statistically insignificant, of a falling trend in the technical efficiency of all the three sectors also is a hot matter of serious concerns. |
| Keywords: | Energy efficiency, Kerala, Power sector, Stochastic frontier, Technical efficiency. |
| JEL: | C13 C51 Q4 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101944&r=all |
| By: | Daniel L. Mendoza (Department of Atmospheric Sciences, University of Utah, Salt Lake City, Utah USA; Department of City & Metropolitan Planning, University of Utah, Salt Lake City, Utah USA); Tabitha M. Benney (Department of Political Science, University of Utah, Salt Lake City, Utah USA); Rajive Ganguli (Department of Mining Engineering, University of Utah, Salt Lake City, Utah USA); Rambabu Pothina (Department of Mining Engineering, University of Utah, Salt Lake City, Utah USA); Benjamin Krick (Department of Political Science, University of Utah, Salt Lake City, Utah USA); Cheryl S. Pirozzi (Division of Pulmonary and Critical Care Medicine, Department of Internal Medicine, School of Medicine, University of Utah, Salt Lake City, Utah USA); Erik T. Crosman (Department of Life, Earth, and Environmental Sciences, West Texas A&M University, Canyon, Texas USA); Yue Zhang (Division of Epidemiology, Department of Internal Medicine, School of Medicine, University of Utah, Salt Lake City, Utah USA) |
| Abstract: | In response to the COVID-19 pandemic, governments have implemented policies to curb the spread of the novel virus. Little is known about how these policies impact various groups in society. This paper explores the relationship between social distancing policies, traffic volumes and air quality and how they impact various socioeconomic groups. This study aims to understand how disparate communities respond to Stay-at-Home Orders and other social distancing policies to understand how human behavior in response to policy may play a part in the prevalence of COVID-19 positive cases. We collected data on traffic density, air quality, socio-economic status, and positive cases rates of COVID-19 for each zip code of Salt Lake County, Utah (USA) between February 17 and June 12, 2020. We studied the impact of social distancing policies across three periods of policy implementation. We found that wealthier and whiter zip codes experienced a greater reduction in traffic and air pollution during the Stay-at-Home period. However, air quality did not necessarily follow traffic volumes in every case due to the complexity of interactions between emissions and meteorology. We also found a strong relationship between lower socioeconomic status and positive COVID-19 rates. This study provides initial evidence for social distancing's effectiveness in limiting the spread of COVID-19, while providing insight into how socioeconomic status has compounded vulnerability during this crisis. Behavior restrictions disproportionately benefit whiter and wealthier communities both through protection from spread of COVID-19 and reduction in air pollution. Such findings may be further compounded by the impacts of air pollution, which likely exacerbate COVID-19 transmission and mortality rates. Policy makers need to consider adapting social distancing policies to maximize equity in health protection. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2008.01828&r=all |
| By: | Boda Kang; Christina Sklibosios Nikitopoulos (Finance Discipline Group, UTS Business School, University of Technology Sydney); Marcel Prokopczuk |
| Abstract: | To assess the economic determinants of oil futures volatility, we firstly develop and estimate a multi-factor oil futures pricing model with stochastic volatility that is able to disentangle long-term, medium-term and short-term variations in commodity markets volatility. The volatility estimates reveal that in line with theory, the volatility factors are unspanned, persistent and carry negative market price of risk, while crude oil markets are becoming more integrated with financial markets. After 2004, short-term volatility is driven by industrial production, term and credit spreads, the S&P 500 and the US dollar index, along with the traditional drivers including hedging pressure and VIX. Medium-term volatility is consistently related to open interest and credit spreads, while after 2004 oil sector variables such as inventory and consumption also impact this part of the term structure. Interest rates mostly matter for long-term futures price volatility. |
| Keywords: | oil market; volatility; term structure; macroeconomy |
| JEL: | G12 G13 C58 Q40 |
| Date: | 2019–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:rpaper:401&r=all |
| By: | Isaksen, Elisabeth Thuestad |
| Abstract: | Evaluating the effectiveness of international agreements is inherently difficult due to problems such as self-selection, spillovers, anticipation effects, and aggregate-level data. In this paper, I provide new and arguably more credible estimates on the effects of three major pollution protocols on SO2, NOx, and VOC emissions. I do so by combining a newly available global dataset on emissions dating back to 1970 with a generalized version of the synthetic control method. By constructing “synthetic” controls that mimic the pre-treatment development of each affected country, I mitigate bias caused by self-selection and non-parallel emission trends. The broader data coverage - both geographically and over time - allows me to examine the importance of spillovers and anticipation effects. Results from the estimation show that all three protocols induced emissions reductions well beyond a (synthetic) counterfactual development. |
| Keywords: | Emissions; International environmental agreements; Pollution; Synthetic control method; Grantham Research Institute on Climate Change and the Environment; Research Council of Norway (grant 215831) |
| JEL: | Q53 Q58 F53 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:105812&r=all |
| By: | Hayat, Arshad; Rakshit, Shoumyadeep |
| Abstract: | Natural resources are expected to worsen institutional quality, thus slowing economic growth. In this paper, we investigate the link between institutional quality, natural resources, and economic growth. We used a panel data of 117 countries, growth relevant IRCG, institutional quality indicators, and apply the system generalized method of moments. Our results confirm that institutional quality promotes economic growth. We found that natural resource slows down the growth-inducing impact institutional quality only in for corruption and democratic accountability, thus confirming the idea of the natural resource curse. Natural resources were, however, found to enhance the institutions' induced economic growth for all other indicators except corruption, democratic accountability, and bureaucracy, thus confirming the idea of so-called natural resource blessing. The results are robust for two model specifications and across two different indicators of natural resource abundance, namely, natural resource exports and natural resource rents. |
| Keywords: | Natural resources, institutional quality, economic growth |
| JEL: | O43 Q32 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101704&r=all |
| By: | Denny IRAWAN; OKIMOTO Tatsuyoshi |
| Abstract: | Investment is an inherent component of business activities. This study examines the tendency of resource firms to overinvest induced by the business cycle and uncertainties. The analysis is conducted using unbalanced panel data drawn from 584 resource companies across 32 countries covering 1986 to 2017 in four resource sectors: (1) alternative energy, (2) forestry and paper, (3) mining, and (4) oil and gas producers. The results indicate that the forestry and paper sector overinvests relative to the standard investment level predicted by the investment function regardless of the sample period, while the alternative energy sector tends to underinvest. Also, many emerging economies, including Brazil, China, India, Indonesia, Russia, and South Korea, are found to have overinvested over the last three decades or so. In addition, the results suggest that commodity price inflation plays a more important role in inducing firms' overinvestment than commodity price uncertainty. It is also found that the home country's business cycle significantly affects overinvestment, with the sign alternating from negative to positive after the global financial crisis. Furthermore, the finding also shows no significant relationship between global geopolitical risk and overinvestment but a significantly positive relationship is found between global economic and country-level governance policy uncertainties and overinvestment. Lastly, the results suggest that the effect of overinvestment on firm performance after three years is positive, especially for firms in the mining sector. |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:20059&r=all |
| By: | Xiaojun Chen; Yun Shi; Xiaozhou Wang |
| Abstract: | Equilibrium models for energy markets under uncertain demand and supply have attracted considerable attentions. This paper focuses on modelling crude oil market share under the COVID-19 pandemic using two-stage stochastic equilibrium. We describe the uncertainties in the demand and supply by random variables and provide two types of production decisions (here-and-now and wait-and-see). The here-and-now decision in the first stage does not depend on the outcome of random events to be revealed in the future and the wait-and-see decision in the second stage is allowed to depend on the random events in the future and adjust the feasibility of the here-and-now decision in rare unexpected scenarios such as those observed during the COVID-19 pandemic. We develop a fast algorithm to find a solution of the two-stage stochastic equilibrium. We show the robustness of the two-stage stochastic equilibrium model for forecasting the oil market share using the real market data from January 2019 to May 2020. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2007.15265&r=all |
| By: | David Deller (Centre for Competition Policy, University of East Anglia); Glen Turner (Centre for Competition Policy, University of East Anglia); Catherine Waddams Price (Centre for Competition Policy and Norwich Business School, University of East Anglia) |
| Abstract: | The introduction of a price cap for consumers who have not switched to cheaper deals in the British energy market reflects increasing political concern about the higher prices paid by these consumers compared with their more active counterparts. In this paper, we demonstrate the variations in prices paid by inactive consumers for electricity in different parts of Britain over the last 45 years. The regions identified as the cheapest and most expensive vary noticeably over the period, while the magnitude of the regional differences are, if anything, lower since the introduction of competition than they were before privatisation. We explore the characteristics of consumers who stated that they had never switched supplier, and who were therefore subject to these regional price differences, using unique data from a consumer survey in 2011. Responses to the question ‘have you ever switched supplier’ identified several characteristics of inactive consumers which were consistent with the findings of previous studies: not being retired, having lower electricity expenditure, not having a gas supply and using certain payment methods are associated with a consumer reporting never having switched. However applying a consistency test (namely observing whether consumers reported being with their region’s incumbent supplier) highlighted a number of issues with relying solely on survey data to identify long-term inactivity. |
| Date: | 2018–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaccp:2018_10&r=all |
| By: | Tom Hargreaves (Science, Society and Sustainability (3S) research group, University of East Anglia); Noel Longhurst (Science, Society and Sustainability (3S) research group Tyndall Centre for Climate Change Research, University of East Anglia) |
| Abstract: | Dominant policy understandings of fuel poverty tend to overlook its lived experience. This results in narrow, overly technical problem framings and solutions that neglect the multiple, inter-related and dynamic factors that shape experiences of fuel poverty in situ. Recent qualitative work that has examined the lived experience of fuel poverty has begun to recognise the importance of emotional and subjective experiences to experiences of energy vulnerability, but these are generally regarded as consequences of the problem and thus are not treated as central to analyses. This paper explores a range of emotional engagements with energy vulnerability. The paper draws on new empirical data taken from 16 semi-structured interviews with social housing tenants as well as 10 interviews and a focus group (n=8) with housing association employees. Three distinct forms of emotion engagement were identified as of critical importance for experiences of energy vulnerability: i) worry, fear and control; ii) relationships of care; iii) embarrassment, trust and gratitude. Crucially, and for the first time, the paper shows that emotions are not merely a consequence of energy vulnerability but can also help to cause it. The paper concludes with a discussion of the policy implications of these findings. |
| Keywords: | Fuel poverty, energy vulnerability, emotions, qualitative, interviews. |
| Date: | 2018–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaccp:2018_07&r=all |
| By: | Fateh Belaid |
| Abstract: | This article, using ERF-LIS harmonized microdata, develops an empirical model to investigate the unexplored extent and fuel poverty explanatory factors in Egypt and Jordan. First, we use the “Low income – High Consumption” indicator to measure the fuel poverty extent. Second, we implement a multivariate statistical approach to untangle the fuel poor household profile. Then, to explore the factors driving the risk of falling into fuel poverty situations we use a logistic regression model. This research is an important empirical contribution to the sparse literature of fuel vulnerability in MENA countries. It puts forward an empirical approach, which is helpful in discerning and targeting families most in need of energy and financial related assistance. From policy perspectives, the findings provide promising ways of accounting for the fuel poverty phenomenon as a vector of inequality trends in the MENA region. The main findings of the research point to the crucial instrumental role of economic conditions, reducing inequalities and access to education facilities in attenuating fuel poverty in Egypt and Jordan. Policies that mitigate fuel poverty may thus have direct impacts on both well-being and inequalities reduction. |
| JEL: | C1 D1 I3 Q4 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:lis:liswps:789&r=all |
| By: | Lisa Taruttis; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen (Campus Essen)) |
| Abstract: | The German government aims at a climate-neutral building stock by 2050 to reach the goals defined in the Climate Action Plan 2050. Increasing the energy efficiency of existing buildings is therefore a high priority. For this purpose, investments of private homeowners will play a major role since about 46.5% of the German dwellings are owner-occupied. To identify potential monetary benefits of investing in energetic retrofits, we investigate whether energy efficiency is reflected in property values of single-family houses in Germany. Thereby we examine possible heterogeneous effects among regions. With 455,413 individual observations on a 1km²-grid level for 2014 to 2018, this study adds to the literature 1) by examining the effect of energy efficiency on housing values for Germany on a more small-scale level and specifically investigating regional disparities in this context and 2) by estimating an energy efficiency value-to-cost ratio. Applying a hedonic analysis, we find a positive relationship between energy efficiency and asking prices. We also find evidence for regional disparities. Effects are significantly weaker in large cities compared to other urban areas, whereas the impact in rural areas is much stronger. Since property values are expected to decline in rural regions, homeowners could alleviate this development by increasing the energy efficiency of their dwellings. |
| Keywords: | Energy efficiency, residential buildings, regional disparities, German housing market, hedonic analysis, housing value |
| JEL: | C31 Q40 R21 R31 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:2004&r=all |
| By: | Lutz Kilian; Xiaoqing Zhou |
| Abstract: | The conventional wisdom that inflation expectations respond to the level of the price of oil (or the price of gasoline) is based on testing the null hypothesis of a zero slope coefficient in a static single-equation regression model fit to aggregate data. Given that the regressor in this model is not stationary, the null distribution of the t-test statistic is nonstandard, invalidating the use of the normal approximation. Once the critical values are adjusted, these regressions provide no support for the conventional wisdom. Using a new structural vector regression model, however, we demonstrate that gasoline price shocks may indeed drive one-year household inflation expectations. The model shows that there have been several such episodes since 1990. In particular, the rise in household inflation expectations between 2009 and 2013 is almost entirely explained by a large increase in gasoline prices. However, on average, gasoline price shocks account for only 39% of the variation in household inflation expectations since 1981. |
| Keywords: | household survey; Inflation; anchor; oil price; missing disinflation; gasoline price; expectations |
| JEL: | E31 E52 Q43 |
| Date: | 2020–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:88598&r=all |
| By: | Grafström, Jonas (The Ratio Institute) |
| Abstract: | China is currently hailed as the world’s premier wind power producer. However, despite twice the installed wind power capacity compared to the United States in 2015, the Chinese installed capacity produces less power. Grid connectivity is remarkably low, Chinese firms have few international granted patents, and export is minimal even though production capacity far exceeds the domestic production needs. Using the tools of Austrian economics, failures in China's wind power development from 1980-2016 is documented and analysed. From a theoretical standpoint, both a planning problem and an entrepreneurial problem is evident where governmental policies create misallocation of resources and a hampering of technological development. |
| Keywords: | China; Wind power; Economic Planning; Austrian school; Technology; Energy |
| JEL: | O32 P21 Q55 Q58 |
| Date: | 2020–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0336&r=all |
| By: | Polbin, Andrey; Shumilov, Andrei |
| Abstract: | This paper examines the relationship between the Russian ruble/US dollar exchange rate and global oil prices using autoregressive model with Markovian regime shifts. Empirical analysis on daily data for 2009–2019 shows that exchange rate dynamics is best described by three regimes, characterized as follows: 1) weak exchange rate reaction to oil price shocks – low conditional volatility of exchange rate changes; 2) strong reaction – moderate volatility; 3) strong reaction – high volatility. Regime 3 covers crisis periods, when ruble depreciated substantially. Regime 1 prevailed during the period of managed exchange rate arrangement lasted until November 2014. After adoption of a floating exchange rate and inflation targeting policy, regime 1 became regularly identified since mid-2017. This result can be attributed to the introduction in 2017 of a new budget rule, aimed to reduce dependence of exchange rate on oil price fluctuations. Switches between regimes could also be due to fluctuations in the uncertainty measured by the indices of geopolitical risk and economic policy uncertainty for Russia. It is also shown that the model with three regimes outperforms the random walk and linear models of the ruble exchange rate in an out-of-sample fit exercise. The proposed model can be used for identifying the current exchange rate regime in real time, scenario analysis of the consequences for the ruble exchange rate under alternative oil price trajectories, as well as in developing strategies for hedging currency risks by the private sector. |
| Keywords: | exchange rate; Russian ruble; oil prices; autoregressive Markov regime switching model; out-of-sample fit |
| JEL: | C22 C51 E58 F31 Q43 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102450&r=all |
| By: | Cloé Garnache; Pierre Mérel |
| Abstract: | This paper derives the incidence of a pollution tax in a stylized general equilibrium framework, building on previous work by Fullerton and Heutel (2007a). Using the CPI as numeraire, we show that tax incidence is a simpler problem than previously thought, and that general insights can be derived without the need to restrict the parameter space. In addition, the counter-intuitive possibility that an increase in the tax could lead to worse pollution outcomes vanishes. The choice of the CPI as numeraire is further justified by the fact that environmental taxes, for instance carbon taxes, are typically indexed on inflation. |
| Keywords: | tax incidence, general equilibrium, relative prices, numeraire |
| JEL: | Q52 H23 H22 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8354&r=all |
| By: | Guglielmo Maria Caporale; Luis A. Gil-Alana; Nieves Carmona-González |
| Abstract: | This paper examines the statistical properties of daily PM10 in eight European capitals (Amsterdam, Berlin, Brussels, Helsinki, London, Luxembourg, Madrid and Paris) over the period 2014-2020 by applying a fractional integration framework; this is more general than the standard approach based on the classical dichotomy between I(0) stationary and I(1) non-stationary series used in most other studies on air pollutants. All series are found to be characterised by long memory and fractional integration, with orders of integration in the range (0, 1), which implies that mean reversion occurs and shocks do not have permanent effects. Persistence is highest in the case of Brussels, Amsterdam and London. The presence of negative trends in Brussels, Paris and Berlin indicates some degree of success in reducing pollution in these capitals. |
| Keywords: | fractional integration, long memory, persistence, trends, air pollutants, PM10 |
| JEL: | C22 Q53 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8402&r=all |
| By: | International Monetary Fund |
| Abstract: | This Selected Issues paper discusses further concrete steps to improve the governance of state-owned enterprise (SOE) and of the oil sector, given their importance to fiscal transparency and sustainability. Reducing leakages in the petroleum sector is especially macroeconomically critical, given Nigeria’s current fiscal and external dependence on oil revenue. This paper provides an overview of developments, recent reforms, and challenges, and outlines policy recommendations for stronger governance and corruption prevention, detection, and resolution, including through anti-money laundering and combating the financing of terrorism measures that are useful beyond the petroleum sector. Strengthening transparency is needed to ensure that Nigeria receives maximum benefits from the oil and gas sector. The Nigerian authorities must accelerate their anti-corruption efforts to maintain momentum against both entrenched challenges and evolving threats. Achieving critical improvements to SOE governance and Anti-Money Laundering and Combating the Financing of Terrorism efforts will require a combination of legislative action, institutional reform, and additional resources. |
| Keywords: | Economic growth;Economic recovery;Development;Private sector;Poverty;Logit,firm performance,EITI,Eurobond,AML |
| Date: | 2019–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2019/093&r=all |
| By: | Jean-Pierre Bompard (Humanité et Biodiversité Paris); Dominique Bureau (MTES - Ministère de la Transition Ecologique et Solidaire); Nicolas Treich (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Michel Trommetter (GAEL [2020-....] - Laboratoire d'Economie Appliquée de Grenoble [2020-....] - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA [2020-....] - Université Grenoble Alpes [2020-....] - Grenoble INP [2020-....] - Institut polytechnique de Grenoble - Grenoble Institute of Technology [2020-....] - UGA [2020-....] - Université Grenoble Alpes [2020-....]) |
| Abstract: | La pandémie COVID-19 nous rappelle l'importance des problèmes sanitaires à l'interface entre l'Humain, l'animal et l'environnement : près des deux tiers des maladies infectieuses humaines proviennent de pathogènes partagés avec des animaux sauvages ou domestiques. Alors que le nombre de personnes atteintes de maladies infectieuses diminue, notamment dans les régions occidentales, paradoxalement le nombre d'épidémies infectieuses continue de croître. Le rôle joué par la dégradation des écosystèmes, notamment la déforestation, dans le phénomène de « saut de la barrière des espèces » est questionné, de même que, plus généralement, celui de nos modes de vie (régimes et filières alimentaires, commerce…). Ainsi, cette pandémie suggère non seulement de réévaluer les politiques publiques existantes de contrôle et gestion sanitaires, mais aussi de voir comment celles-ci devraient être complétées au niveau de l'orientation des comportements économiques. Pour prévenir les futures épidémies et en réduire les impacts, il importe de comprendre quels mécanismes génèrent les épidémies et l'augmentation de leur fréquence ou sévérité ; en particulier dans quelle mesure les changements globaux et les facteurs anthropiques modifient la donne. S'il est difficile, voire illusoire, d'empêcher les animaux de développer des maladies transmissibles aux humains, et nécessaire de contrôler leur apparition et de gérer les conséquences sanitaires et économiques, un des moyens pour diminuer les risques d'épidémie consisterait à agir aussi en amont. A cet égard, la préservation des habitats naturels, la diminution de la consommation carnée, la réduction de la taille des élevages intensifs et l'arrêt de la commercialisation (légale ou non) de la viande d'animaux sauvages constitueraient autant de mesures cohérentes et efficaces pour des politiques de santé publique de demain « une seule santé ». |
| Keywords: | préservation des ecosystèmes,zoonose,Covid-19,pandémie,politique environnementale |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02907115&r=all |
| By: | Anastasios Evgenidis; Masashige Hamano; Wessel N. Vermeulen |
| Abstract: | We apply a Bayesian Panel VAR (BPVAR) and DSGE approach to study the regional effects of the 2011 Great East Japan Earthquake. We disentangle the persistent fall in electricity supply following the Fukushima accident, from the immediate but more temporary production shock attributable to the natural disaster. Specifically, we estimate the contribution of the electricity fall on the regions' economic recovery. First, we estimate a BPVAR with regional-level data on industrial production, prices, and trade, to obtain impulse responses of the natural disaster shock. We find that all regions experienced a strong and persistent decline in trade, and long-lasting disruptions on production. Inflationary pressures were strong but short-lived. Second, we present a DSGE model that can capture key observations from this empirical model, and provide theoretical impulse response functions that distinguish the immediate earthquake shock from the persistent electricity supply shock. Thirdly, in line with the predictions from the theoretical model, counterfactual analysis via conditional forecasts based on our BPVAR reveals that the Japanese regional economies, particularly the hit regions, did experience a loss in production and trade due to the persistent fall in electricity supply. |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e152&r=all |
| By: | Claudia Foroni; Francesco Ravazzolo; Luca Rossini |
| Abstract: | We analyse the importance of low frequency hard and soft macroeconomic information, respectively the industrial production index and the manufacturing Purchasing Managers' Index surveys, for forecasting high-frequency daily electricity prices in two of the main European markets, Germany and Italy. We do that by means of mixed-frequency models, introducing a Bayesian approach to reverse unrestricted MIDAS models (RU-MIDAS). Despite the general parsimonious structure of standard MIDAS models, the RU-MIDAS has a large set of parameters when several predictors are considered simultaneously and Bayesian inference is useful for imposing parameter restrictions. We study the forecasting accuracy for different horizons (from $1$ day ahead to $28$ days ahead) and by considering different specifications of the models. Results indicate that the macroeconomic low frequency variables are more important for short horizons than for longer horizons. Moreover, accuracy increases by combining hard and soft information, and using only surveys gives less accurate forecasts than using only industrial production data. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2007.13566&r=all |
| By: | Szekeres, Szabolcs |
| Abstract: | The Weitzman-Gollier Puzzle centered on the question of whether certainty equivalent discount rates should be growing or declining functions of time in capital markets with perfectly autocorrelated stochastic interest rates. Absent a convincing solution of the puzzle in the context of risk neutrality, most of the literature trying to reconcile the two approaches appealed to the notion of risk-aversion, and many claim having solved the puzzle while endorsing the notion of declining discount rates (DDRs). This note proves that the DDR recommendation results from the fallacy of ignoring that the expectation of the inverses is not equal to the inverse of the expectation and shows how incorrect CERs can be computed from correct ones and vice versa. Consequently, the Weitzman-Gollier Puzzle is not a puzzle, but an insidious, long undetected mistake. |
| Keywords: | Weitzman-Gollier Puzzle; Declining discount rates; Discounting |
| JEL: | D61 H43 |
| Date: | 2020–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102344&r=all |
| By: | Piera Bello (Istituto di economia politica (IDEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera) |
| Abstract: | This study investigates the effects of driving on air quality and road safety by exploiting exogenous variation in traffic flows associated with the Swiss franc’s appreciation. During the Swiss franc’s appreciation, the volume of cars crossing the Swiss-Italian border rose considerably– the higher purchasing power of Swiss francs in the Euro area induced more Italian workers to cross the border daily to work in Switzerland and increased the propensity for Swiss consumers to shop abroad (Bello, 2019). By using hourly data on traffic flows, road accidents, and air pollution, I show that the higher mobility across the border increased the concentration of oxides of nitrogen at peak hours during working days and the risk of road traffic accidents with personal injuries at late morning on non-working days. The elasticity to the the number of cars of both variables of interest turns out to be larger than 1, providing evidence of a harmful externality. This suggests the need for programmes that treat traffic congestion, air quality, and road safety jointly. Moreover, the existence of an externality has important implications for optimal road use pricing. |
| Keywords: | safety and accidents, air pollution, traffic, geographic labor mobility, cross-border shopping, exchange rate |
| JEL: | Q53 R41 J61 D12 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpidep:2001&r=all |
| By: | Szekeres, Szabolcs |
| Abstract: | A numerical model is used to experimentally compute certainty equivalent discount rates (CERs) of risk neutral and risk-averse decision makers. Investors are characterized by utility functions of the constant-intertemporal-elasticity-of-substitution (CIES) type. Stochastic interest rates are generated using a Cox, Ingersoll & Ross (CIR) type model, calibrated to 1992-2017 US three-month Treasury Bill rates. The paper replicates empirical studies providing evidence for declining discount rates (DDRs) and tests claims regarding risk averse CERs in a descriptive discounting context. It is shown that DDRs as proposed by Weitzman are based on a fallacy. The reviewed papers seeking empirical evidence of DDRs repeat the mistake. Risk averse CERs can be decline with time because of portfolio effects. If these are low, risk averse CERs are slightly lower than risk neutral ones but not secularly declining. |
| Keywords: | Weitzman-Gollier puzzle; declining discount rates; discounting |
| JEL: | D61 H43 |
| Date: | 2020–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102233&r=all |
| By: | Fusillo, Fabrizio (University of Turin) |
| Abstract: | A large body of existing literature extensively studied the economic deter-minants and effects of environmental innovations. However, only a few studiesanalyzed the specific features of green technologies in the early phasesof theinvention process. The aim of this paper is to investigate knowledgerecombi-nation patterns in the green domain. The focus is on identifying whether andhow different bodies of technology are combined and integrated. Exploitinga large sample of European patent data, from 1980 to 2012, the paper inves-tigates the degree of diversity in the knowledge sources and the generationphase of green inventions. Using the Integration Score as an index of techno-logical diversity we compare the recombinant features of Green Technologieswith a control sample of “Traditional Technologies†, accurately drawn fromthe universe of all patent applications. Empirical results suggest that, aftercontrolling for a number of typical characteristics which may affect diversity,Green Technologies systematically show a higher degree of diversitywhencompared to non-green ones. |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:202015&r=all |
| By: | Deniozos, Nikolaos (National and Kapodistrian University of Greece - Department of Turkish Studies and Modern Asian Studies); Vlados, Charis (Democritus University of Thrace, Department of Economics); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics); Digkas, Agis-Georgios (National and Kapodistrian University of Greece - Department of Turkish Studies and Modern Asian Studies) |
| Abstract: | The “geopolitical complex” of Southeastern Europe, as a sub-system of the Europe-Asia-Middle East system, highlights its geo-economic dimension since the discovery of hydrocarbons in this geographical area has become a major geopolitical factor, resulting to competitions, conflicts, and strategic alliances among different actors/players. In this context, the particular space and time play an essential role, since the decision-making process has become a vital determinant of the necessary geostrategic synthesis under conditions of uncertainty and risk. This article approaches the subject under consideration by applying quantitative decision-making methods under uncertainty and/or limited uncertainty (risk) conditions by actors/players of the region; it examines the choice of alternative strategies that highlight not only the maximization of the actors’ geopolitical benefits but also provides added value to already formed strategic alliances. It also attempts to answer the question of how the construction of an LNG terminal can generate multiple benefits from its location and operation by presenting a theoretical model. |
| Keywords: | geopolitical complex; geoeconomics; hydrocarbons; strategic alliances; geostrategic decision making |
| JEL: | D81 P16 |
| Date: | 2019–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:duthrp:2019_010&r=all |
| By: | Çam , Eren (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Lencz, Dominic (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | In the European Union’s (EU) gas transmission system, transporting gas requires the booking of transmission capacities. For this purpose, long-term and short-term capacity products are offered. Short-term capacities are priced by multiplying long-term capacity tariffs with factors called multipliers, making them comparably more expensive. As such, the level of multipliers directly affects how capacity is booked and may significantly impact infrastructure utilisation and welfare—an issue that has not received attention in the literature so far. Using a theoretical approach, we show that multipliers equal to 1 minimise costs and maximise welfare. In contrast, higher multipliers are associated with decreasing welfare. Yet, policymakers may favour higher multipliers, as we find that multipliers greater than 1 but sufficiently low can maximise consumer surplus by leading to reduced hub prices and lower regional price spreads on average. These findings are expected to hold for the large majority of the EU countries. Nevertheless, we also identify situations in which capacity demand can become inelastic depending on the proportion of multipliers with respect to the relative cost of transmission versus storage. In such cases, varying multipliers are found to have no effect on infrastructure utilisation, prices and welfare. |
| Keywords: | gas transmission networks; entry-exit tariffs; multipliers; NC CAM |
| JEL: | L51 L95 Q41 |
| Date: | 2020–08–17 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2020_002&r=all |