CONSERVED ENERGY SUPPLY CURVES FOR U.S. BUILDINGS

Comparison of nine conservation supply curves for electricity shows that fully implementing a series of energy efficiency measures will result in annual saving of 734 billion kWh (BkWh). This is 45 percent of 1989 U.S. building sector electricity use of 1627 BkWh and represents a $29 billion saving. When translated to units of conserved carbon dioxide (CC CO₂), this annual saving is 514 megatonnes, which is 10 percent of the total 1989 U.S. carbon dioxide (CO₂) emissions from all sources. Implementing additional fuel efficiency measures would result in further potential saving of 5·2 quads of fuel (natural gas and oil) per year, or another 300 megatonnes of CO₂, at a net savings of $20 billion. Fuel switching (replacing electric resistance heat with on-site natural gas combustion) would produce annual saving of another 74 megatonnes of CO₂ at a net saving of $6·8 billion. Thus, total CO₂ saving from these combined efficiency measures are 890 megatonnes at a net saving of $56 billion per year.     

OFFSETTING NEW CO2 EMISSIONS: A RATIONAL FIRST GREENHOUSE POLICY STEP

This paper describes and assesses a policy to slow the increase of carbon dioxide (CO2) emissions in the atmosphere. Policy governing new CO₂ sources would either prevent emissions, procure compensating emissions reductions, or sequester emissions in sinks. The paper uses electric power plants to demonstrate the mechanics of the policy and the control or offset choices. Offset options include scrubbing, fuel switching, investments in energy conservation and efficiency, and afforestation.
Costs per ton ofC0₂ sequestered range from $1.35 for planting shade trees to $59.41 for scrubbing. All options except scrubbing cost less than $11.00, and the median cost is around $6.00 per ton removed. Planting trees on erodible cropland in conjunction with the Conservation Reserve Program combines the goals of reduced erosion, surplus agricultural production, and greenhouse warming. This policy is a first sane step toward reducing the accumulation of greenhouse gases. Having an international framework for managing emissions is most desirable. In the interim, however, the United States can demonstrate environmental leadership, generate substantial conservation benefits, and spark ingenuity in searching for alternatives, broadening the options, and lowering the ultimate costs of reducing CO₂ emissions.     

Emissions Trading, Wealth Transfers and the Wounded Bull Scenario in Power Generation

Electricity generators accept that emissions trading is fundamental to meeting CO₂ reduction targets. But unless a percentage of permits are allocated, existing generators will face non-trivial wealth transfers. Seldom contemplated in academic works are the adverse economic consequences of an all-auction approach to emissions trading. Using Victoria to illustrate, we find that once CO₂ prices exceed $17.50/t, the marginal coal generator facing large wealth transfers will withhold generating capacity to raise prices and recoup stranded investments, thus becoming a 'wounded bull' in the market place. This has material welfare implications with modelling results indicate an intermediate-run 300 per cent increase in wholesale power prices.     

EQUITY AND EFFECTIVENESS OF POSSIBLE CO2 TREATY PROPOSALS

The Montreal Protocol on chlorofluorocarbon control established an important precedent for global environmental treaties that include both developing countries and industrial countries. This paper evaluates seven possible treaty proposals to control carbon dioxide (CO₂) emissions. Growth-rate control proposals fail on effectiveness of control or on equity differences between developing countries and industrial countries. Complex proposals link policies in population growth, economic development, world energy taxation, and forestation. These complex proposals, which appear to be both effective and equitable, can defer or avoid CO2 doubling.     

POLLUTION AND POLLUTION ABATEMENT IN THE NATIONAL ACCOUNTS

Building on the approach of Weitzman, as extended by Hartwick and Mäler, five models of national accounts in a dynamic competitive economy with pollution externalities are constructed: flow pollutants, stock pollutants, fossil fuels and CO₂, living resources and acid rain, and household defensive expenditures. The results measure welfare rather than national product per se . The general conclusions are that abatement expenditures should be treated as intermediate consumption, that adjustments need to be made for both pollution emissions and natural pollution dissipation processes, that marginal social costs should be used to value emissions, and that the level of environmental services must be valued in measuring welfare. Not only should household defensive expenditures not be subtracted from the welfare measure, under plausible assumptions the adjustment to welfare (as opposed to NNP) includes a value greater than the level of household defensive expenditure.     

ABATEMENT COST HETEROGENEITY IN PHASE I ELECTRIC UTILITIES

The market-based instruments embodied in the Acid Rain Program have been instrumental in the reduction of SO₂ and NO _x emissions from electric utilities. Economic theory suggests that tradable pollution permit systems encourage polluters to reallocate pollution burdens to take advantage of any differences in marginal abatement costs. Such reallocations improve the efficiency of pollution reduction. This article evaluates the effectiveness of the first phase of the Acid Rain Program in achieving increased homogeneity of marginal abatement costs using an output distance function approach. The results indicate that plants have been successful in adapting to this more flexible regulatory framework.     

Highway Spending and Induced Vehicle Emissions: Evidence from the US states

This paper investigates the impact of state and local government highway spending on vehicle emissions. A theoretical framework is constructed to show the effect of government highway spending on passenger and freight vehicle emissions and decompose the effect into a rebound effect, an induced demand effect and an interaction effect. We then develop an empirical strategy and combine state-level data in the US to test the induced CO2 emissions by government highway spending. We find that there are positive and significant total effects of government highway spending on passenger and freight vehicle emissions. The magnitude of these effects, however, significantly differs from one another as the elasticity of freight vehicle emissions with respect to government highway spending is four times larger than that in the passenger sector. The difference can be plausibly explained by the rebound effect and the interaction effect. We argue that policies regarding government spending on highway projects, especially those relying on cost-benefit analysis, should account for the potential difference in induced environmental impacts between passenger and freight vehicles.     

Correcting NDP for SO2 and NOx Emissions: Implementation of a Theoretical Model in Practice

The theoretical and the practical studies in the field of environmental accounting are often two separate lines of work. In this study, we develop an optimal control theory model for adjusting NDP for the effects of SO₂ and NO_x emissions, and subsequently insert empirically estimated values. The model includes correction entries for the effects on welfare, real capital, health and the quality and quantity of renewable natural resources. In the empirical valuation study, production losses were estimated with dose-response functions. Recreational and other welfare values were estimated by the contingent valuation (CV) method. Effects on capital depreciation are also included. For comparison, abatement costs and environmental protection expenditures for reducing sulfur and nitrogen emissions were estimated. The theoretical model was then utilized to calculate the adjustment to NDP in a consistent manner. The estimated damage value of sulfur is close to the Swedish sulfur tax.     

Applying engineering and fleet detail to represent passenger vehicle transport in a computable general equilibrium model

A well-known challenge in computable general equilibrium (CGE) models is to maintain correspondence between the forecasted economic and physical quantities over time. Maintaining such a correspondence is necessary to understand how economic forecasts reflect, and are constrained by, relationships within the underlying physical system. This work develops a method for projecting global demand for passenger vehicle transport, retaining supplemental physical accounting for vehicle stock, fuel use, and greenhouse gas (GHG) emissions. This method is implemented in the MIT Emissions Prediction and Policy Analysis Version 5 (EPPA5) model and includes several advances over previous approaches. First, the relationship between per-capita income and demand for passenger vehicle transport services (in vehicle-miles traveled, or VMT) is based on econometric estimates and modeled using quasi-homothetic preferences. Second, the passenger vehicle transport sector is structured to capture opportunities to reduce fleet-level gasoline use through the application of vehicle efficiency or alternative fuel vehicle technologies, introduction of alternative fuels, or reduction in demand for VMT. Third, alternative fuel vehicles (AFVs) are represented in the EPPA model. Fixed costs as well as learning effects that could influence the rate of AFV introduction are captured explicitly. This model development lays the foundation for assessing policies that differentiate based on vehicle age and efficiency, alter the relative prices of fuels, or focus on promoting specific advanced vehicle or fuel technologies.     

INCOME INEQUALITY AND POVERTY: SOME PROBLEMS

In an important recent book dealing with the measurement of income inequality with particular reference to poverty,¹ Prof. N. Kakwani derives several poverty indices, investigates the effect of negative income tax schemes with the help of those indices and gives a numerical illustration based on Malaysian data.
The aim of this note is to point out some logical flaws in his argument. Some of the ideas expressed in the part of his book we are concerned with have been disseminated for some time now² and referred to in subsequent literature;³ yet their shortcomings do not seem to have attracted anyone's attention. The introductory section gives a concise presentation of the relevant part of Kakwani's contribution. The next two sections deal with some problems with his approach.     

Measurement of Dematerialization/Materialization: A Case Analysis of Energy Saving and Decarbonization in OECD Countries, 1960–95

This article establishes a conceptual framework for dematerialization and materialization, and develops a complete decomposition model for measuring them. Based on our conceptual framework and method, dematerialization in the energy use of the OECD from 1960 to 1995 has been analyzed. During this period, the increase in energy demand was 3597.95 Mtoe. However, the improvement of energy efficiency decreased energy demand by 827.20 Mtoe, and structural shifts decreased energy demand by 139.04 Mtoe. Thus, real energy demand only increased by 2631.71 Mtoe, and the energy saved was 966.24 Mtoe and the energy saving rate was 17.98% for this period. The energy saving rate was about 0.56% per year. In the same period, the increase of CO₂ emissions was 9672.95 Mton. The fuel switching, the improvement of energy efficiency, and structural shifts decreased CO₂ emissions by 1899.67, 2150.31, and 379.07 Mton, respectively. Real CO₂ emissions only increased by 5243.93 Mton, the decarbon was 4429.02 Mton and the decarbonization rate for the period was 29.57%. The decarbon rate was about 0.997% per year. These results show that significant dematerialization has been achieved in the OECD during this period.     

MULTIPOLLUTANT EFFICIENCY STANDARDS FOR ELECTRICITY PRODUCTION

This study contains a simulation of a coal-fired electric plant subject to multiple pollutant standards for SO₂ and NO _x . It shows that firms may not choose the lowest cost technology. The firm's cost-minimizing choice is compared for three increasingly stringent standards: the 1990 Clean Air Act Amendments, the 1997 New Source Performance Standards, and the 2002 North Carolina Clean Smokestacks Act. The study finds support on cost-benefit grounds for the 2002 North Carolina standard, which is the most stringent standard, but not for the 1997 NSPS. (JEL Q28 , Q25 , L94 )     

经济发展水平、产业结构与碳排放强度——中国省级面板数据分析

利用我国29个省市自治区1995—2007年的面板数据,本文分析了二氧化碳排放强度同经济发展水平及产业结构之间的关系。通过多项计量检验,比较了不同计量模型之后,笔者选取了能够修正面板异相关和自相关的可行的广义最小二乘法(FGLS)模型。研究表明,(1)碳强度同人均GDP之间存在"N"形关系。(2)第二产业比重同碳强度存在正相关关系,即第二产业比重越高,二氧化碳排放强度就越高。(3)对经济发展与碳排放之间关系进行的情景分析表明,如果产业结构不改变,没有实施另外的政策,经济增长速度本身难以引致碳排放强度的大幅下降,2020年二氧化碳排放强度下降40%~45%的目标难以实现。     

Housing Wealth Effects: Cross‐sectional Evidence from New Vehicle Registrations

We investigate the relationship between housing wealth and consumption using postcode‐level variation in house prices and administrative data on new passenger vehicle registrations as a proxy for consumption. We find a robust cross‐sectional relationship, and in our preferred specification estimate an elasticity of new passenger vehicle registrations with respect to gross housing wealth of 0.4–0.5, which based on our preferred calibration implies a marginal propensity to consume for total consumption of less than 0.5 cents. Notably, we find evidence that the relationship between house prices and new vehicle registrations is heterogeneous in income.     

THE LORENZ ORDER AND THE EFFECTS OF TAXATION POLICIES

To any finite population of n individuals with associated incomes x ₁…, x _n we can associate a Lorenz curve. By associating this population with a random variable X representing the income of a randomly chosen individual of the population, the concept of a Lorenz curve and the associated partial order (the Lorenz Order) based on nested Lorenz curves is readily extended to be defined in the class of all non-negative integrable random variables. In this context well known results on inequality attenuating and inequality rank preserving taxation policies are found to admit simple more general proofs. Some results on the effects of random taxation are also reviewed. The effects of applying different taxation policies within subpopulations lead one to consider questions regarding inequality attenuation results in mixture settings. It is observed that, more generally, inequality comparisons can be unambiguously made between any non-negative variables even if measured in dissimilar units.     

Revisiting carbon Kuznets curves with endogenous breaks modeling: evidence of decoupling and saturation (but few inverted-Us) for individual OECD countries

This paper tests for a carbon Kuznets curve (CKC) by examining the carbon emissions per capita–GDP per capita relationship individually, for 21 OECD countries over 1870–2010 using a reduced-form, linear model that allows for multiple endogenously determined breaks. This approach addresses several important econometric and modeling issues, e.g., (1) it is highly flexible and can approximate complicated nonlinear relationships without presuming a priori any particular relationship; (2) it avoids the nonlinear transformations of potentially nonstationary income. For 10 of 14 countries that were ultimately estimated, the uncovered emission–income relationship was either (1) decoupling—where income no longer affected emissions in a statistically significant way, (2) saturation—where the emissions elasticity of income is declining, less than proportional, but still positive, or (3) no transition—where the emissions elasticity of income is (or very near) unity. For only four countries did the emissions–income relationship become negative—i.e., a CKC. In concert with previous work, we conclude that the finding of a CKC is country-specific and that the shared timing among countries is important in income-environment transitions.     

Energy consumption,income, and carbon emissions in the United States

This paper investigates the effect of energy consumption and output on carbon emissions in the United States. Earlier research focused on testing the existence and/or shape of an environmental Kuznets curve without taking energy consumption into account. We investigate the Granger causality relationship between income, energy consumption, and carbon emissions, including labor and gross fixed capital formation in the model. We find that income does not Granger cause carbon emissions in the US in the long run, but energy use does. Hence, income growth by itself may not become a solution to environmental problems.     

Economic Impacts of Reducing NOx Emissions in Norway

Using a multisector computable general equilibrium model for the Norwegian economy, the impacts on main macroeconomic indicators of reducing NO_x emissions are analyzed. Seven specific technical measures regarding passenger cars, trucks, ships and industrial processes are studied. The measures have somewhat different impacts on the macroeconomy. Especially the measure pertaining to light and heavy duty trucks leads to an increase in GDP, because of higher income from indirect taxes. However, the sum of value added in the production sectors is reduced. The other measures cause a decrease in GDP. All in all, we find that the costs, in terms of reductions in GDP and private consumption, incurred from the introduction of additional NO_x emissions control measures are quite small.     

Economic growth and greenhouse gas emissions

Recent empirical research has examined the relationship between certain indicators of environmental degradation and income, concluding that in some cases an inverted U-shaped relationship, which has been called an environmental Kuznets curve (EKC), exists between these variables. Unfortunately, this inverted U-shaped relationship does not hold for greenhouse gas emissions. One explanation of the absence of EKC-like behavior in greenhouse gas emissions is that greenhouse gases are special pollutants that create global, not local, disutility. But the international nature of global warming is not the only reason that prevents de-linking greenhouse gas emissions from economic growth. The intergenerational nature of the negative impact of greenhouse gas emissions may have also been an important factor preventing the implementation of greenhouse gas abatement measures in the past. In this paper we explore the effect that the presence of intergenerational spillovers has on the emissions–income relationship. We use a numerically calibrated overlapping generations model of climate–economy interactions. We conclude that: (1) the intertemporal responsibility of the regulatory agency, (2) the institutional capacity to make intergenerational transfers and (3) the presence of intergenerationally lagged impact of emissions constitute important determinants of the relationship between economic growth and greenhouse gas emissions.     

Is the Green Solow Model Valid for $$\hbox {CO}_{2}$$ Emissions in the European Union?

This paper addresses the \(\hbox {CO}_{2}\) emission patterns of the European Union from 1950 to 2010, and examines the validity of the Green Solow model, which simulates \(\hbox {CO}_{2}\) emissions growth by including only Solow forces and assuming emission intensity growth to be exogenous and constant. This study verifies that an environmental Kuznets curve (EKC) trajectory exists for per capita \(\hbox {CO}_{2}\) emissions in the European Union, that emission intensity growth is decreasing over time, and that the decreasing intensity growth reflects variations of the dependent variable in the specifications of the Green Solow model. The critique by Stefanski (On the mechanics of the Green Solow model. OxCarre Research Paper 47, OxCarre & Laval University, Oxford, 2013) of the Green Solow model assumption of exogenous and constant intensity growth is validated. The EKC is defined as the emissions plotted against income and emission intensity is defined as the ratio of emissions to income. The EKC and emission intensity share identical definitions and similar transition trajectories over time. The transition of the EKC trajectory and decline in emission intensity growth began before worldwide attention was focused on global warming.