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on Regulation |
| By: | Rolf Golombek; Mads Greaker; Snorre Kverndokk; Lin Ma |
| Abstract: | We model the value chain of Carbon Capture, transport and Storage (CCS) by focusing on the decisions taking by actors involved in either capture, transport or storage of CO2. Plants emitting CO2 are located along a Salop circle. If these invest in carbon capture facilities, the captured CO2 is transported to terminals, which again transport the received amount of CO2 to a storage site. We study different market structures, all suffering from market imperfections such as network effects, market power and economics of scale in addition to the environmental externality from emissions. Thus, to ensure socially optimal CCS investments, the government must use more than one policy instrument. A numerical specification of the model finds that the actually observed CCS investments are much lower than what is socially optimal simply because the price of CO2 emissions has been far too low. If the carbon tax is set equal to the social cost of carbon and is sufficiently high to justify CCS investments, but the government does not use other instruments to correct for the other market imperfections, CCS investments differ significantly between the alternative market structures. In particular, investment in terminals may be too high, while investment in capture facilities could still be too low. |
| Keywords: | carbon capture and storage, indirect network effects, Salop circle, carbon tax, market imperfections, tipping points |
| JEL: | H23 L13 L51 Q35 Q38 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9047&r= |
| By: | Ivan Faiella (Bank of Italy); Luciano Lavecchia (Bank of Italy) |
| Abstract: | This paper proposes a novel methodology to estimate the demand and elasticity of electricity, heating, and private transport fuels by aligning the microdata of the Italian Household Budget Survey with several external sources. These estimates are used to evaluate the effects of a set of one-off carbon taxes on energy demand and expenditure. According to our simulations, the increase in energy prices prompted by carbon taxation would decrease energy demand for all uses considered. Our simulations suggest that the effects of carbon taxation are generally regressive: expenditure would increase more for poorer households while their energy demand is compressed. The carbon tax could achieve a significant decrease in GHG emissions and raise revenues, which could be recycled to compensate vulnerable households or reinvested to support the energy transition. |
| Keywords: | household energy demand, Italy, climate change, carbon tax, energy poverty |
| JEL: | Q41 Q54 Q58 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_614_21&r= |
| By: | Saptorshee Kanto Chakraborty (Paris School of Economics); Massimiliano Mazzanti (University of Ferrara; SEEDS, Italy) |
| Abstract: | Renewable electricity is a pillar of the sustainability transition being pursued through climate and energy policy strategies, and the European Green Deal represents a potential investment plan for this new phase of development. Economic growth can be inƒfluenced by the expansion of renewable electricity consumption, but the nature of their relationship is ambiguous and depends on various economic and policy factors. Th‘is paper investigates the long-run relationship between renewable electricity consumption and economic growth in selected countries over the period 1971-2015 using econometric panel data techniques that specifi€cally address cross-country heterogeneity and cross-sectional dependence. Our fi€ndings suggest that, on average, there is a signi€cant positive long-term relationship between renewable electricity consumption and economic growth, although Granger causality is not detected. Regarding causality, we do fi€nd per capita economic growth to be a causal factor for total electricity consumption. |
| Keywords: | Electricity Consumption, Economic Growth, Renewables, Cross-sectional Dependence, CS-ARDL Model, CS-DL Model |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:0421&r= |
| By: | Thiess Büttner; Boryana Madzharova |
| Abstract: | This paper studies seven rebate programs aiming at accelerating the replacement of energy-intensive household appliances. Based on a large product-level data set for several European countries, we study the effects on unit sales and prices of both subsidized and non-subsidized products. The empirical identification strategy exploits the temporary implementation of the rebates in regional segments of the European Common Market. The results for unit sales indicate that subsidies can be an effective instrument for stimulating purchases of energy efficient appliances. While the strength of the stimulus proves sensitive to program design, we find limited evidence of intertemporal substitution, and no indication that program effects are driven by a drop in sales of non-subsidized products. In some cases, sales of non-subsidized products increase, a finding that we attribute to information campaigns associated with the rebate programs. Price effects are modest, implying that subsidies are mostly passed through to consumers. Considering the actual energy savings, however, our analysis shows that rebate programs are a relatively expensive way to improve energy efficiency. |
| Keywords: | rebate programs, energy efficiency, household appliances, program evaluation |
| JEL: | H23 Q48 D12 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9048&r= |
| By: | Hardman, Scott; Tal, Gil |
| Abstract: | For the market introduction of electric vehicles to be successful, first-time adopters need to make continual purchases of the vehicles. Discontinuance, the act of abandoning a new technology after once being an adopter, has implications for market growth and could prevent electric vehicles from ever reaching 100% market share. Using results from five surveys of electric vehicle owners, the researchers examine discontinuance among battery electric and plug-in hybrid electric vehicle adopters. In this sample, discontinuance occurs at a rate of 21% for plug-in hybrid adopters and 19% for battery electric vehicle adopters. They show that discontinuance is related to dissatisfaction with convenience of charging, owning household vehicles with lower efficiencies, being a later adopter of PEVs, not having Level 2 (220V) charging from home, and not being male. Despite consumers overcoming initial barriers of PEVs, it appears some barriers, notably their refueling style, resurface during ownership and eventually become a barrier to continuing with PEV ownership. View the NCST Project Webpage |
| Keywords: | Social and Behavioral Sciences, Electric vehicle, market, consumers, survey |
| Date: | 2021–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt11n6f4hs&r= |
| By: | Colin von Negenborn (HU Berlin) |
| Abstract: | This paper provides a novel rationale for the regulation of market size when heterogeneous firms compete. A regulator seeks to maximize total welfare by choosing the number of firms allowed to enter the market, e.g. by issuing a certain number of licenses. Opening up the market for more firms has a two-fold effect: it increases competition and thus welfare, but at the same time, it also attracts more cost-intensive firms, driving down average production efficiency. The regulator hence faces a trade-off between raising beneficial competition and detrimental costs. If goods are sufficiently substitutable, the latter effect can outweigh the former. It is then optimal to restrict the market size, rationalizing a limit to competition. This result holds even in the absence of entry costs, search costs or increasing returns to scale, which previous literature required. |
| Keywords: | regulation; imperfect competition; oligopolies; |
| JEL: | D43 L13 L51 |
| Date: | 2019–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:183&r= |
| By: | Wimmers, Alexander (RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)) |
| Abstract: | Because electricity is a homogeneous commodity, the origin of a specific MWh of delivered green electricity cannot be determined. Thus, Guarantees of Origin (GoO) were introduced in order to enhance transparency on the origin of production of green electricity in Europe. The separation of electricity and GoO trade has resulted in a prosperous GoO market that is, however, characterized by non-transparency and speculative behavior. Historic price development occurs seemingly arbitrarily and can therefore not be used to forecast future GoO prices. Bearing this in mind, this paper firstly provides an overview of the European GoO market and an analysis of the historic price development; secondly, it proposes a model for determining future price developments of European GoOs for different renewable energy technologies in different countries up to 2040. Four different scenarios are considered. It was found that prices for GoOs will increase on average in the next years, with prices ranging from 1.77 to 3.36 €/MWh in 2040. Coupled with rising demand for green electricity and further standardization of issuance procedures as well as the projected price developments, GoOs might well become a useful tool for the promotion of green electricity production in the EU. |
| Keywords: | renewable energy; green electricity; policy; willingness to pay; power purchase agreement; Europe; guarantees of origin |
| JEL: | O33 O52 Q42 Q48 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2020_017&r= |
| By: | Micha{\l} Narajewski; Florian Ziel |
| Abstract: | Electricity exchanges offer several trading possibilities for market participants: starting with futures products through the spot market consisting of the auction and continuous part, and ending with the balancing market. This variety of choice creates a new question for traders - when to trade to maximize the gain. This problem is not trivial especially for trading larger volumes as the market participants should also consider their own price impact. The following paper raises this issue considering two markets: the hourly EPEX Day-Ahead Auction and the quarter-hourly EPEX Intraday Auction. We consider a realistic setting which includes a forecasting study and a suitable evaluation. For a meaningful optimization many price scenarios are considered that we obtain using bootstrap with models that are well-known and researched in the electricity price forecasting literature. The own market impact is predicted by mimicking the demand or supply shift in the respectful auction curves. A number of trading strategies is considered, e.g. minimization of the trading costs, risk neutral or risk averse agents. Additionally, we provide theoretical results for risk neutral agents. Especially we show when the optimal trading path coincides with the solution that minimizes transaction costs. The application study is conducted using the German market data, but the presented methods can be easily utilized with other two auction-based markets. They could be also generalized to other market types, what is discussed in the paper as well. The empirical results show that market participants could increase their gains significantly compared to simple benchmark strategies. |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2104.14204&r= |
| By: | Sauro Mocetti (Bank of Italy); Giacomo Roma (Bank of Italy) |
| Abstract: | Local public transport is an important determinant of the growth and the competitiveness of territories. This paper describes the functioning of this public service in the main Italian cities, comparing it internationally and analysing the regional gaps within the country. It highlights the possible effects that well-functioning local public transport systems have on the mobility of people, the labour and the real estate markets, as well as examines the links between its performance and a number of institutional and operational factors. This paper also analyses how this sector fared during the health crisis and outlines some possible scenarios for its evolution in the future. |
| Keywords: | urban public transport, mobility, regulation, governance, covid-19 |
| JEL: | R41 L91 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_615_21&r= |
| By: | Fu, Shihe; Viard, V. Brian |
| Abstract: | We review recent empirical economic studies on urban ambient air pollution from a mayor’s perspective. We discuss the sources of urban air pollution, the economic costs that it imposes, and the policy tools available to a mayor to alleviate it. For economic costs, we briefly summarize traditional estimates of health and mortality costs and focus on more recent evidence on mental and psychological health, labor productivity and supply, avoidance behavior, willingness to pay for clean air and long-term (multi-decade) impacts. The policy tools we evaluate include pollution information disclosure, auto license and driving restrictions, congestion tolls, public transit investments, emission standards and controls, and gasoline taxes. We also discuss challenges posed by transboundary pollution across cities and the extent to which mayors’ incentives encourage tackling air pollution under different political systems. We briefly discuss possible future research agendas. |
| Keywords: | urban air pollution; environmental costs and benefits; urban public policy, environmental policies; incentives |
| JEL: | H23 H75 O18 Q51 Q52 |
| Date: | 2021–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107434&r= |
| By: | Gert Bijnens (Economics and Research Department, NBB and KULeuven); John Hutchinson (European Central Bank); Jozef Konings (KULeuven, University of Liverpool and Nazarbayev University); Arthur Saint Guilhem (European Central Bank) |
| Abstract: | Increased investment in clean electricity generation or the introduction of a carbon tax will most likely lead to higher electricity prices. We examine the effect from changing electricity prices on manufacturing employment. Analyzing firm-level data, we find that rising electricity prices lead to a negative impact on labor demand and investment in sectors most reliant on electricity as an input factor. Since these sectors are unevenly spread across countries and regions, the labor impact will also be unevenly spread with the highest impact in Southern Germany and Northern Italy. We also identify an additional channel that leads to heterogeneous responses. When electricity prices rise, financially constrained firms reduce employment more than less constrained firms. This implies a potentially mitigating role for monetary policy. |
| Keywords: | environmental regulation, labor demand, employment, manufacturing industry, monetary policy |
| JEL: | E52 H23 J23 Q48 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202104-399&r= |
| By: | Emanuel Kohlscheen; Richhild Moessner; Előd Takáts |
| Abstract: | We use a comprehensive database of 121 countries over the 1971-2016 period to study how macroeconomic factors drive carbon (carbon-dioxide) emissions. For this purpose, dynamic panel regressions are estimated. Carbon emissions rise with economic development, manufacturing activity, urbanization and increasingly with economic growth. In electricity generation, the use of coal, and to a lesser degree of oil, is associated with higher carbon emissions, while renewable energy use is already associated with lower national emissions in advanced economies. We also uncover a non-linearity: economic overheating is particularly harmful when coal use is more intensive. The results suggest that mitigating economic cycles might also reduce carbon emissions. |
| Keywords: | carbon dioxide, climate change, coal, emissions, energy, environment, growth, pollution, urbanisation |
| JEL: | O40 O44 Q00 Q40 Q50 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:937&r= |