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on Resource Economics |
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Issue of 2013‒07‒20
nine papers chosen by |
| By: | Richardson, Nathan (Resources for the Future); Fraas, Arthur G. (Resources for the Future) |
| Abstract: | Over the last half decade, a variety of federal legislative proposals for limiting greenhouse gas (GHG) emissions have been put forward, most of which would set a price on carbon. As of early 2013, the one politically plausible policy appears to be a carbon tax, passed as part of a larger fiscal reform package. Meanwhile, the US Environmental Protection Agency has begun regulating GHG emissions from a variety of sources using its authority under the Clean Air Act. It may be necessary to choose between these two policies, however. The Waxman–Markey cap-and-trade bill that failed in 2009 would have preempted much of this authority, and it appears likely that a carbon tax law would do the same. But how can one make this choice? What are the key questions and issues to consider? The purpose of this paper is to compare these policies. Our aim here is therefore not to determine whether an exchange is wise or unwise. Instead, our intention is to give policymakers and other interested readers an impartial assessment of both policies and, in particular, the features that are important to a comparative evaluation. We don’t give answers, but hope at least to give the right questions to ask. |
| Keywords: | Clean Air Act, carbon pricing, greenhouse gas emissions, cap and trade, climate policy |
| JEL: | H20 H23 Q50 Q54 Q58 |
| Date: | 2013–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-13&r=res |
| By: | Robert S. Pindyck |
| Abstract: | Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of carbon (SCC) and evaluate alternative abatement policies. These models have crucial flaws that make them close to useless as tools for policy analysis: certain inputs (e.g. the discount rate) are arbitrary, but have huge effects on the SCC estimates the models produce; the models' descriptions of the impact of climate change are completely ad hoc, with no theoretical or empirical foundation; and the models can tell us nothing about the most important driver of the SCC, the possibility of a catastrophic climate outcome. IAM-based analyses of climate policy create a perception of knowledge and precision, but that perception is illusory and misleading. |
| JEL: | D81 Q5 Q54 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19244&r=res |
| By: | Dascher, Kristof |
| Abstract: | Global emissions of carbon dioxide need to fall lest climate change will accelerate. Any effective climate policy must raise the price of carbon consumption. From an urban perspective, one desirable effect of a carbon tax would be to induce households to move closer to where they work. This paper shows that: If the initial distribution of commuting distances (the city silhouette) is skewed towards the periphery then a carbon tax will leave resident landlords better off - even if these landlords need to shoulder those extra commuting costs themselves, too. If resident landlords are decisive then this insight provides an urban silhouette based explanation of why some governments appear so much more willing to confront their citizens with the true cost of emitting carbon dioxide than others. More briefly, the paper suggests a connection between urban form and climate politics. |
| Keywords: | Urban Silhouette, Climate Policy, Political Economy, Carbon Tax |
| JEL: | H41 Q54 R12 |
| Date: | 2013–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48375&r=res |
| By: | John Foster (Department of Economics, University of Queensland); William Paul Bell (Department of Economics, University of Queensland); Craig Froome; Phil Wild (Department of Economics, University of Queensland); Liam Wagner (Department of Economics, University of Queensland); Deepak Sharma (Centre for Energy Policy, University of Technology, Sydney); Suwin Sandu (Centre for Energy Policy, University of Technology, Sydney); Suchi Misra (Centre for Energy Policy, University of Technology, Sydney); Ravindra Bagia (Centre for Energy Policy, University of Technology, Sydney) |
| Abstract: | This non-technical summary presents the findings and recommendations from the project called ‘Analysis of institutional adaptability to redress electricity infrastructure vulnerability due to climate change’. The objectives of the project are to examine the adaptive capacity of existing institutional arrangements in the National Electricity Market (NEM) to existing and predicted climate change conditions. Specifically the project: identifies climate change adaptation issues in the NEM; analyses climate change impacts on reliability in the NEM under alternative climate change scenarios to 2030, particularly what adaptation strategies the power generation and supply network infrastructure will need; and assesses the robustness of the institutional arrangements that supports effective adaptation. The project finds that four factors are hindering or required for adaptation to climate change: fragmentation of the NEM, both politically and economically; accelerated deterioration of the transmission and distribution infrastructure due to climate change requiring the deployment of technology to defer investment in transmission and distribution; lacking mechanisms to develop a diversified portfolio of generation technology and energy sources to reduce supply risk; and failure to model and treat the NEM as a national node based entity rather than state based. The project’s findings are primarily to address climate change issues but if these four factors are addressed, the resilience of the NEM is improved to handle other adverse contingences. For instance, the two factors driving the largest increases in electricity prices are investment in transmission and distribution and fossil fuel prices. Peak demand drives the investment in transmission and distribution but peak demand is only for a relatively short period. Exacerbating this effect is increasing underutilisation of transmission and distribution driven by both solar photo voltaic (PV) uptake and climate change. Using demand side management (DSM) to shift demand to outside peak periods provides one method to defer investment in transmission and distribution. Recommendation 2 addresses investment deferment. The commodity boom has increased both price and price volatility of fossil fuels where the lack of diversity in generation makes electricity prices very sensitive to fossil fuel prices and disruptions in supply. A diversified portfolio of generation would ameliorate the price sensitivity and supply disruptions. Furthermore, long term electricity price rises are likely to ensue as the fossil fuels become depleted. A diversified portfolio of generation would also ready the NEM for this contingency. Recommendation 3 addresses diversified portfolios. This project makes four inter-related recommendations to address the four factors listed above. Chapter 10 discusses the justification for these recommendations in more detail. |
| Keywords: | Climate change adaptation; Climate change mitigation; electricity demand; electricity generation; transmission; distribution; Australian National Electricity Market; Feed-in tariffs; FiT; solar PV; residential solar PV; reverse auction FiT; parity; Levelised cost of energy; LCOE; Diffusion of innovations; dynamic efficiency; allocative efficiency; Sustainable; Social progress; Environmental protection; Social inequity; DUOS; TUOS; smart meters; institutional adaptation; |
| JEL: | H1 H4 L94 Q2 Q3 Q40 Q5 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqeemg:6-2013&r=res |
| By: | Marcel Kohler |
| Abstract: | The effect of trade liberalisation on environmental conditions has yielded significant debate in the energy economics literature. Although research on the relationship between energy consumption, emissions and economic growth is not new in South Africa, no study specifically addresses the role that SA’s foreign trade plays in this context. A surprising fact given trade is one of the most important factors that can explain the Environmental Kuznets Curve. Our research employs recent SA trade and energy data and modern econometric techniques to investigate this. The main finding is the existence of a long run relationship between environmental quality, levels of per capita energy use and foreign trade in SA. As anticipated per capita energy use has a significant long run effect in raising the country’s CO2 emission levels, yet surprisingly higher levels of trade act to reduce these emissions. Granger causality tests confirm the existence of a positive bidirectional relationship between per capita energy use and CO2 emissions. Whilst we also find positive bidirectional causality between trade and income per capita and between trade and per capita energy use, it appears that SA trade liberalisation has not contributed to a long run growth in pollution-intensive activities nor higher emission levels. |
| Keywords: | CO2 Emissions, Energy, Foreign Trade |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:356&r=res |
| By: | Eskeland, Gunnar S. (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | One may misread economic theory on climate policy to provide a warning against unilateral mitigation. While important lessons are drawn from ‘global problems require global solutions’, these say little about what to do in a phase before or without a global agreement - or with weak ones. In the literature on cooperation and leadership in provision of public goods, early provision may stimulate provision from others. A key to leadership is signaling; an early mover has private information and is motivated in part by knowing that others will follow. Others will follow if they understand that the early mover demonstrates that emission reductions are feasible and adoptable. Our analysis finds that early movers will be cognizant of what they need to demonstrate, and they will be concerned about and act on carbon leakage. Leadership can be deterred by concerns for free riding, but this is more likely for a country or coalition that is large in terms of emissions and face others who are both large and vulnerable to climate change. We suggest leadership is possible early in this century: numbers indicate that few – if any - need find themselves deterred from early action of some sort. |
| Keywords: | Climate policy; unilateral mitigation |
| JEL: | Q00 Q50 Q54 |
| Date: | 2013–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2013_006&r=res |
| By: | McConnell, Virginia (Resources for the Future) |
| Abstract: | New Corporate Average Fuel Economy (CAFE) standards were recently passed in the United States with the twin goals of reducing greenhouse gas emissions and oil use. The new standards represent a dramatic change from recent policy. This paper examines the key features of the new rules, and compares them to previous CAFE standards in terms of flexibility and structure. The importance of consumer preferences and market forces on CAFE outcomes are identified. In the second part of the paper, the perspective of the consumer is explored. Consumer assessments of fuel economy savings with more fuel-efficient vehicles may be biased or incomplete, leading many to argue that there is an “energy efficiency gap” in consumer demand for vehicles. Reasons for such a gap, such as market failures, behavioral responses, and market barriers, are summarized. The implications for policy are discussed, including the role of combining CAFE with other policies. |
| Keywords: | CAFE, vehicle regulation, energy efficiency, environmental policy |
| JEL: | Q42 Q48 Q54 Q58 |
| Date: | 2013–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-14&r=res |
| By: | Andrea Vaona (Department of Economics (University of Verona)) |
| Abstract: | The present paper assesses the impacts of renewable energy generation and globalization on income inequality in Argentina. We make use of vector autoregression models. We find that globalization and hydroelectric power increase inequality, while the opposite holds true for other renewable energy sources. Several robustness checks are considered. Policy implications are discussed keeping into account the specific Argentinean context. |
| Keywords: | Argentina, VAR, energy sources, inequality, globalization |
| JEL: | Q20 Q40 D63 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:ver:wpaper:12/2013&r=res |
| By: | Newell, Richard G.; Siikamäki, Juha (Resources for the Future) |
| Abstract: | We evaluate the effectiveness of energy efficiency labeling in guiding household appliance choice decisions. Using a carefully designed choice experiment with several alternative labeling treatments, we disentangle the relative importance of different types of information and intertemporal behavior (i.e., discounting) in guiding energy efficiency behavior. We find that simple information on the economic value of saving energy was the most important element guiding more cost-efficient investments in appliance energy efficiency, with information on physical energy use and carbon dioxide emissions having additional but lesser importance. The degree to which the current EnergyGuide label guided cost-efficient decisions depends importantly on the discount rate assumed appropriate for the analysis. Using individual discount rates separately elicited in our study, we find that the current EnergyGuide label came very close to guiding cost-efficient decisions, on average. However, using a uniform five percent rate for discounting—which was much lower than the average individual elicited rate—the EnergyGuide label led to choices that result in a one-third undervaluation of energy efficiency. We find that labels that not only nudged people with dispassionate monetary or physical information, but also endorsed a model (with Energy Star) or gave a suggestive grade to a model (as with the EU-style label), had a substantial impact in encouraging the choice of appliances with higher energy efficiency. Our results reinforce the centrality of views on intertemporal choice and discounting, both in terms of understanding individual behavior and in guiding public policy decisions. |
| Keywords: | energy efficiency behavior, gap, information label, discounting, time preference gap, choice experiment, mixed logit |
| JEL: | C91 D12 D91 D83 H43 Q41 Q48 |
| Date: | 2013–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-17&r=res |