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on Regulation |
| By: | L. (Lisa B.) Ryan; Sarah La Monaca; Linda Mastrandrea; Petr Spodniak |
| Abstract: | Legacy electricity retail tariffs are ill-adapted to future electricity systems and markets, particularly with regard to accommodating the multi-faceted shift toward decarbonisation. We examine how retail tariffs need to be reformed to not only meet the future revenue requirements of energy-suppliers and networks but also to help achieve the environmental objectives of the energy transition. While existing literature has explored the link between retail tariff structure design, wholesale markets and/or network cost recovery, there is less recognition of the impact of tariff structure design on environmental objectives. This paper reviews the demand responsiveness of household customers to electricity prices and implications of retail tariff structure and design for the policy targets of CO2 emissions, energy efficiency, and renewable electricity generation, in addition to electricity system. A review of the literature provides a theoretical basis for price elasticity of demand and electricity retail tariff design, and we explore the environmental implications for future retail tariff design options via examples of various tariff structures in the EU and US. The research links the topics of emissions mitigation policy and market design, and should add empirical insights to the body of academic literature on future electricity markets. It should also be of interest to policy makers wishing to consider retail tariff structures that promote decarbonisation of the electricity system through multiple objectives of improved energy efficiency and increased shares of renewable electricity within future electricity markets. |
| Keywords: | Electricity systems; Decarbonisation; Energy transition; Retail tariff structure design |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:oapubs:10197/9911&r=all |
| By: | Jan Abrell (ZHAW Winterthur and ETH Zurich, Switzerland); Mirjam Kosch (ZHAW Winterthur and ETH Zurich, Switzerland); Sebastian Rausch (ETH Zurich, Switzerland) |
| Abstract: | Carbon taxes are commonly seen as a rational policy response to climate change, but little is known about their performance from an ex-post perspective. This paper analyzes the emissions and cost impacts of the UK CPS, a carbon tax levied on all fossil-fired power plants. To overcome the problem of a missing control group, we propose a novel approach for policy evaluation which leverages economic theory and machine learning techniques for counterfactual prediction. Our results indicate that in the period 2013-2016 the CPS lowered emissions by 6.2 percent at an average cost of € 18 per ton. We find substantial temporal heterogeneity in tax-induced impacts which stems from variation in relative fuel prices. An important implication for climate policy is that a higher carbon tax does not necessarily lead to higher emissions reductions or higher costs. |
| Keywords: | Climate Policy, Carbon Tax, Carbon Pricing, Electricity, Coal, Natural Gas, United Kingdom, Carbon Price Surcharge, Policy Evaluation, Causal Inference, Machine Learning |
| JEL: | C54 Q48 Q52 Q58 L94 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:19-317&r=all |
| By: | L. (Lisa B.) Ryan; Sarah La Monaca |
| Abstract: | Electrification of vehicle fleets, particularly in countries with increasing shares of renewable electricity supply, represents an important pathway toward low-carbon mobility. This report examines the role of electric vehicle (EV) charging infrastructure as a key enabler for EV uptake, and explores business models and policy approaches for promoting deployment. It then applies observed key principles to assess the Irish EV charging services market and identifies key recommendations for Irish policy. |
| Keywords: | Electric vehicles (EV); Low-carbon mobility; Irish policy |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:oapubs:10197/9912&r=all |
| By: | Marañón-Ledesma, Hector; Tomasgard, Asgeir |
| Abstract: | Short-term Electricity Demand Response (DR) is an emerging technology in Europe's Electricity markets that will introduce a new degree of flexibility. The objective of this work is to analyze to what extent the untapped DR potential can facilitate an optimal transition to an European low emission power system. The benefits of DR consists of a reduction in peak load consumption, which leads to reduction in capacity investments, production and consumption savings, reduced congestion phases, reliable integration of intermittent renewable resources and supply and demand flexibility. The capabilities of DR are studied in the European Model for Power Investment with (High Shares of) Renewable Energy (EMPIRE), which is an electricity sector model with a time span of 30 years ending in 2050. The model is two-stage stochastic that includes uncertainty at the operational level and energy economics dynamics at a strategic level. The main contribution of this article is designing the investment-operation DR module within the EMPIRE framework. It models several classes of shiftable and curtailable loads in residential, commercial and industrial sectors, including flexibility periods, operational costs and endogenous DR investments, for 31 European countries. The results show that DR capacity substitutes partially flexible supply side capacity from peak gas plants and battery storage, in addition to enabling more solar PV production. |
| Keywords: | Demand Response; Flexibility; Linear Stochastic Optimization; Demand Side Management; European Power System; Energy Economics |
| JEL: | C61 D81 L97 Q4 Q41 |
| Date: | 2019–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93341&r=all |
| By: | Schmalensee, Richard (Massachusetts Institute of Technology); Stavins, Robert N. (Harvard Kennedy School) |
| Abstract: | The U.S. Clean Air Act, passed in 1970 with strong bipartisan support, was the first environmental law to give the Federal government a serious regulatory role, established the architecture of the U.S. air pollution control system, and became a model for subsequent environmental laws in the United States and globally. We outline the Act's key provisions, as well as the main changes Congress has made to it over time. We assess the evolution of air pollution control policy under the Clean Air Act, with particular attention to the types of policy instruments used. We provide a generic assessment of the major types of policy instruments, and we trace and assess the historical evolution of EPA's policy instrument use, with particular focus on the increased use of market-based policy instruments, beginning in the 1970s and culminating in the 1990s. Over the past fifty years, air pollution regulation has gradually become much more complex, and over the past twenty years, policy debates have become increasingly partisan and polarized, to the point that it has become impossible to amend the Act or pass other legislation to address the new threat of climate change. |
| JEL: | Q40 Q48 Q54 Q58 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp18-039&r=all |
| By: | Richter, Philipp M.; Runkel, Marco; Schmidt, Robert C. |
| Abstract: | The loss of international competitiveness of domestic industries remains a key obstacle to the implementation of effective carbon prices in a world without harmonized climate policies. We analyze countries' non-cooperative choices of emissions taxes under imperfect competition and mobile polluting firms. In our general equilibrium setup with trade, wage effects prevent all firms from locating in the same country. While under local or no pollution countries achieve the first-best, under transboundary pollution taxes are inefficiently low and lower than under autarky where only the "standard" free-riding incentive distorts emissions taxes. This effect is more pronounced when polluting firms are mobile. |
| Keywords: | Strategic Environmental Policy,Firm Location,Carbon Leakage,General Equilibrium |
| JEL: | F12 F18 H23 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tudcep:0219&r=all |
| By: | Jääskeläinen, Jan; Tukiainen, Janne |
| Abstract: | We provide novel stylized facts about competition, bidding, entry and bidders across a wide spectrum of public procurement auctions using comprehensive and rich Finnish data. Competition for publicly procured contracts is relatively low with a median bidder count of two (three conditional on receiving any bids). Bidders typically are very heterogeneous in size, which likely limits competition further. Competition seems to work roughly as expected as on average (standardized) bids mainly decrease with the number of actual and potential bidders. Using information on registrations as a good proxy for potential bidders, we show that the ratio of actual to potential bidders increases with the number of actual bidders. We also show that being present in the contracting authority's municipality or province correlates positively with registering, entry (bidding) and winning, but other firm characteristics matter less. While attracting more competition by means of contract and auction rule design is a desirable policy goal and we show suggestive evidence that the use of scoring rule can be an entry barrier, increasing competition may be in practice difficult. Therefore, reservation prices may be a more useful policy tool to alleviate issues associated with the lack of competition. |
| Keywords: | competition, entry, public procurement, Local public finance and provision of public services, D44, H57, H76, L11, |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:118&r=all |
| By: | Arvind Shrivats; Sebastian Jaimungal |
| Abstract: | Solar Renewable Energy Certificate Markets (SREC) markets are a relatively novel market-based system to incentivize the production of energy from solar means. A regulator imposes a floor on the amount of energy each regulated firm must generate from solar power in a given period, providing them with certificates for each generated MWh. Firms offset these certificates against the floor, paying a penalty for any lacking certificates. Certificates are tradable assets, allowing firms to purchase/sell them freely. In this work, we formulate a stochastic control problem for generating and trading in SREC markets for a regulated firm's perspective accounting for generation and trading costs, and the impact both have on prices. We provide a characterisation of the optimal strategy using the stochastic maximum principle and develop a numerical algorithm to solve this control problem, Based on this numerical solution, we provide detail and intuition for the optimal strategy for a regulated firm. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1904.06337&r=all |
| By: | L. (Lisa B.) Ryan; Andrew J. Kelly; Ivan Petrov; Yulu Guo; Sarah La Monaca |
| Abstract: | Building on COM/ENV/EPOC/CTPA/CFA/RD(2018)1, this document presents a social cost-benefit analysis of reforms in the motor vehicle taxes in Ireland since 2008. |
| Keywords: | Social cost-benefit analysis; Reforms in motor vehicle taxes; Ireland |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:oapubs:com/env/epoc/ctpa/cfa(2018)6&r=all |
| By: | Shapiro, Joseph S |
| Abstract: | U.S. investment to decrease pollution in rivers, lakes, and other surface waters has exceeded $1.9 trillion since 1960, and has also exceeded the cost of most other U.S. environmental initiatives. These investments come both from the 1972 Clean Water Act and the largely voluntary efforts to control pollution from agriculture and urban runoff. This paper reviews the methods and conclusions of about 20 recent evaluations of these policies. Surprisingly, most analyses estimate that these policies’ benefits are much smaller than their costs; the benefit/cost ratio from the median study is 0.37. Yet existing evidence is limited and undercounts many types of benefits. We conclude that it is unclear whether many of these regulations truly fail a benefit/cost test or whether existing evidence understates their net benefits; we also describe specific questions that when answered would help eliminate this uncertainty. |
| Keywords: | Social and Behavioral Sciences, Water pollution, Clean Water Act, cost-benefit analysis, cost-effectiveness analysis, environmental regulation |
| Date: | 2018–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt2qq4d7vn&r=all |
| By: | Bartram, Sohnke M. (Warwick Business School - Department of Finance); Hou, Kewei (Ohio State University (OSU) - Department of Finance); Kim, Sehoon (University of Florida - Department of Finance, Insurance and Real Estate) |
| Abstract: | We document that localized policies designed to mitigate climate risk can lead to regulatory arbitrage by firms, resulting in unintended consequences. Using detailed plant level data, we investigate the impact of the most extensive regional climate policy in the United States, the California cap-and-trade program, on corporate real activities such as greenhouse gas emissions and plant ownership. We show that industrial plants governed by the policy reduce emissions in California when the parent company is financially constrained, but that these firms internally reallocate their emissions to plants located in other states. Similarly, constrained firms are more likely to reduce ownership in Californian plants and increase ownership in plants outside California. In contrast, unconstrained firms generally do not adjust plant emissions and ownership either in California or in other states. Overall, firms do not reduce their total emissions when part of their assets are affected by the regulation, but in fact increase them if financially constrained. The results document real spillover effects stemming from resource reallocations by constrained firms to avoid regulatory costs, undermining the effectiveness of localized policies. Our study has important implications for the current debate on global climate policy agreements. |
| JEL: | G18 G31 G32 Q52 Q54 Q58 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2019-04&r=all |
| By: | Mohamed Belhaj (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Frédéric Deroïan (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We consider a network game with local complementarities. A policymaker, aiming at minimizing or maximizing aggregate effort, contracts with a single agent on the network to trade effort change against transfer. The policymaker has to find the best agent and the optimal contract to offer. Our study shows that for all utilities with linear best-responses, it only takes two statistics about the position of each agent on the network to identify the key player: the Bonacich centrality and the self-loop centrality. We also characterize key players under linear quadratic utilities for various contractual arrangements. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01981885&r=all |
| By: | Cyril Bourgeois (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech); Louis-Gaëtan Giraudet (ENPC - École des Ponts ParisTech, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech); Philippe Quirion (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech, CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | As carbon taxes gain traction and grow tighter in OECD countries, the question of their recycling becomes crucial for political acceptance. Considering the impact of the French carbon tax in the residential sector, we examine the trade-offs between fuel poverty alleviation, energy savings and economic leverage for two revenue-recycling options-as a lump-sum payment or as a subsidy for energy efficiency improvement, each restricted to low-income households-defined as those belonging to the first two quantiles of the income distribution. We do so using Res-IRF, a highly detailed energy-economy model that interacts housing features (single vs. multi-family, energy efficiency, heating fuel) with key household characteristics (tenancy status, income of both owners and occupants). We find that the energy efficiency subsidy recycling is superior to the lump-sum payment in all respects; it even fully offsets the regressive effect of the carbon tax from 2025 onwards. No recycling, however, effectively addresses fuel poverty in private, rented housing. |
| Keywords: | carbon tax,revenue-recycling,building sector,fuel poverty,energy efficiency subsidies JEL codes: D63,H23,Q47 |
| Date: | 2019–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ciredw:hal-02073964&r=all |
| By: | Muehlegger, Eric; Rapson, David |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2019–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt5fm8n2fx&r=all |
| By: | Sonia Schwartz (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Johanna Choumert-Nkolo (EDI - Economic Development Initiatives Limited); Jean-Louis Combes (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Pascale Combes Motel (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Éric Nazindigouba Kere (BAD - Banque africaine de développement / African Development Bank) |
| Abstract: | This paper analyses the determinants of the optimal size of protected areas and what conducts neighboring effects. We investigate in which measure the infrastructure effect and the scarcity effect matter. We obtain several results. The size of protected area mainly depends on preferences toward forest, on the firms' production costs and on the relation between municipalities. As far as total deforestation is concerned asymmetric regulation is better than no regulation. The infrastructure effect always leads to smaller protected areas than the scarcity effect. Under the infrastructure effect, centralized decisions do not always work in favor of larger protected areas than decentralized decisions contrary to the scarcity effect. We also show that decentralized decisions can reach the first best under the infrastructure effect without public intervention. A study of protected areas in the Brazilian Legal Amazônia corroborates our theoretical results. |
| Keywords: | Protected areas,Deforestation,Nash equilibrium,Environmental federalism,Brazilian Legal Amazônia |
| Date: | 2019–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02082753&r=all |