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on Regulation |
| By: | Arild Heimvik; Eirik S. Amundsen |
| Abstract: | The paper analyzes the problem of achieving a target path of emission reductions in the electricity sector, using a scheme of tradable green certificates (TGC). There are two types of generation, renewable and fossil. The latter causes the emissions. The paper also examines effects from emission regulation on construction of new renewable generation capacity. Outcomes are compared with an emission fee and a subsidy. The analytical results are simulated with a numerical model and social surplus are calculated for the different instruments. Two versions of the percentage requirement are devised for the TGC scheme. Results show that the target path of emission reductions is achievable, but incentives for new renewable generation capacity will be sub-optimal, regardless of the version of the percentage requirement. The TGC scheme is neither the most accurate nor the most cost-efficient, instrument but it does lead to a smaller reduction of social surplus than a subsidy. |
| Keywords: | emission regulation, energy policy, green certificates, Pigouvian taxes, subsidies |
| JEL: | C70 Q28 Q42 Q48 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7521&r=all |
| By: | Laura M. Andersen (Department of Food and Resource Economics, University of Copenhagen); Lars Gårn Hansen (Department of Food and Resource Economics, University of CopenhagenAuthor-Name: Tomas Baležentis); Carsten Lynge Jensen (Department of Food and Resource Economics, University of Copenhagen); Frank A. Wolak (Stanford University, Program on Energy and Sustainable Development and Department of Economics) |
| Abstract: | We report results from a large field experiment that with a few hours prior notice provided Danish residential consumers with dynamic price and environmental signals aimed at causing them to shift their consumption either into or away from certain hours of the day. The same marginal price signal is found to cause substantially larger consumption shifts into target hours compared to consumption shifts away from target hours. Consumption is also reduced in the hours of the day before and after these into target hours and there is weaker evidence of increased consumption in the hours surrounding away target hours. The same into versus away results hold for the environmental signals, although the absolute size of the effects are smaller. Using detailed household-level demographic information for all customers invited to participate in the experiment, both models are re-estimated accounting for this decision. For both the price and environmental treatments, the same qualitative results are obtained, but with uniformly smaller quantitative magnitudes. These selection-corrected estimates are used to perform a counterfactual experiment where all of the retailer’s residential customers are assumed to face these dynamic price signals. We find substantial wholesale energy cost savings for the retailer from declaring into events designed to shift consumption from high demand periods to low demand periods within the day, which suggests that such a pricing strategy could significantly reduce the cost of increasing the share of greenhouse gas free wind and solar electricity production in an electricity supply industry. |
| Keywords: | Dynamic electricity pricing, Energy demand, Randomized field experiments |
| JEL: | C93 L51 L94 Q41 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:foi:wpaper:2019_02&r=all |
| By: | Kube, Roland; von Graevenitz, Kathrine; Löschel, Andreas; Massier, Philipp |
| Abstract: | Voluntary environmental management programs for firms have become an increasingly popular instrument of environmental policy. However, the literature's conclusion on the effectiveness of such programs is ambiguous, and for the European region there is a lack of evidence based on a large control group. We seek to fill this gap with an evaluation of the Eco-Management and Audit Scheme (EMAS), introduced in 1995 by the European Union as a premium certification of continuous pro-environmental efforts above regulatory minimum standards. It is more demanding than other voluntary programs due to annual public reports of the environmental performance and targets for improvements. We use official firm-level production census data on the German manufacturing sector, a major energy consumer and emitter in Europe. To account for the self-selection of firms, we combine the Coarsened Exact Matching approach with a Difference-in-Differences estimation. Our results do not suggest reductions of firms' CO2 intensity and energy intensity neither before nor after certification. Moreover, program participants do not increase renewable energy consumption or investments into the protection of the environment and climate. Our results are robust to a variety of checks and call into question the effectiveness of the EMAS program concerning these particular outcome variables. |
| Keywords: | Voluntary Environmental Programs,Firm-level Energy Behavior,Matching Difference-in-Differences |
| JEL: | Q58 Q54 Q48 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19004&r=all |
| By: | Clement A. Tisdell |
| Abstract: | This article outlines the case for increasing our dependence on solar and wind power to generate electricity. It outlines the economic reasons why governments should provide financial incentives for the increased use and production of electricity from solar and wind power and identifies the policy instruments able to provide these incentives and encourage the development of this green electricity sector. Although wind and solar resources are usually classified as renewable resources, it is argued that classifying them as flow resources is more appropriate. Basic sustainability concerns about the use of alternative energy resources differ. The nature of these different concerns is clarified. Pigovian-type economic analysis is employed to provide an illustration of the superior social economic benefits of using solar and wind power to generate electricity rather than fossil fuels. However, it is also pointed out that there are economic and political constraints on increasing our reliance on solar and wind power to generate electricity. These include the unsatisfactory flow of these resources in some parts of the world, and constraints on economically and sustainably storing the electricity generated by using these resources. However, technological progress is likely to improve the prospects for storing electricity. Given that the demand for electricity can be expected to increase due to technological change and economic growth, it is more important than ever to pay attention to methods of electricity production (such as those utilizing solar and wind power) which are more environmentally friendly and which have superior sustainability qualities compared to the use of fossil fuels. In many parts of the world, greater reliance on solar and wind power will have these beneficial effects and positive social economic benefits. |
| Keywords: | Environmental Economics and Policy, Resource /Energy Economics and Policy |
| Date: | 2019–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uqseee:284459&r=all |
| By: | Blomgren-Hansen, Niels (Department of Economics, Copenhagen Business School) |
| Abstract: | The paper analyzes the excess entry hypothesis for sealed-bid first price public procurement auctions.The hypothesis is proved analytically for any feasible combination of bid preparation cost and bid evaluation cost when the bidders face a rectangular cost density function and confirmed in numerical simulations based on a family of flexible cost density functions. The excess entry hypothesis implies that the procurer may reduce both his own cost and the social cost by imposing a positive fee on the bids. Sequential search is a superior strategy to a public procurement auction whether or not the procurer imposes an optimal fee on the bids. |
| Keywords: | Excess entry; Public procurement auctions; Optimal fee; Sequential search |
| JEL: | D21 D43 D44 L13 L51 |
| Date: | 2019–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2019_001&r=all |
| By: | Rudolf Kerschbamer; Daniel Neururer; Matthias Sutter |
| Abstract: | Credence goods markets are characterized by pronounced informational asymmetries between consumers and expert sellers. As a consequence, consumers are often exploited and market efficiency is threatened. However, in the digital age, it has become easy and cheap for consumers to self-diagnose their needs using specialized webpages or to access other consumers' reviews on social media platforms in search for trustworthy sellers. We present a natural field experiment that examines the causal effect of information acquisition from new media on the level of sellers' price charges for computer repairs. We find that even a correct self-diagnosis of a consumer about the appropriate repair does not reduce prices, and that an incorrect diagnosis more than doubles them. Internet ratings of repair shops are a good predictor of prices. However, the predictive valued of reviews depends on whether they are judged as reliable or not. For reviews recommended by the platform Yelp we find that good ratings are associated with lower prices and bad ratings with higher prices, while non-recommended reviews have a clearly misleading effect, because non-recommended positive ratings increase the price. |
| Keywords: | credence goods, fraud, information acquisition, internet, field experiment |
| JEL: | C93 D82 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2019-02&r=all |
| By: | Cahen-Fourot, Louison; Campiglio, Emanuele; Dawkins, Elena; Godin, Antoine; Kemp-Benedict, Eric |
| Abstract: | This article develops a novel methodological framework to investigate the exposure of eco- nomic systems to the risk of physical capital stranding. Combining Input-Output (IO) and network theory, we define measures to identify both the sectors likely to trigger relevant capital stranding cascades and those most exposed to capital stranding risk. We show how, in a sample of ten European countries, mining is among the sectors with the highest external asset strand- ing multipliers. The sectors most affected by capital stranding triggered by decarbonisation include electricity and gas; coke and refined petroleum products; basic metals; and transporta- tion. From these sectors, stranding would frequently cascade down to chemicals; metal products; motor vehicles water and waste services; wholesale and retail trade; and public administration. Finally, we provide an estimate for the lower-bound amount of assets at risk of transition-related stranding, which is in the range of 0.6-8.2% of the overall productive capital stock for our sample of countries, mainly concentrated in the electricity and gas sector, manufacturing, and mining. These results confirm the systemic relevance of transition-related risks on European societies. |
| Keywords: | stranded assets, low-carbon transition, physical capital stocks, fossil fuels, input-output analysis, networks |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus045:6854&r=all |
| By: | Criscuolo, Chiara; Martin, Ralf; Overman, Henry G.; Van Reenen, John |
| Abstract: | We exploit changes in the area-specific eligibility criteria for a program to support jobs through investment subsidies. European rules determine whether an area is eligible for subsidies, and we construct instrumental variables for area eligibility based on parameters of these rule changes. Areas eligible for higher subsidies significantly increased jobs and reduced unemployment. A 10-percentage point increase in the maximum investment subsidy stimulates a 10 percent increase in manufacturing employment. This effect exists solely for small firms: large companies accept subsidies without increasing activity. There are positive effects on investment and employment for incumbent firms but not Total Factor Productivity. |
| JEL: | E24 G31 H25 L25 L52 R23 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:88837&r=all |