The internalization of externalities in the production of electricity: Willingness to pay for the attributes of a policy for renewable energy

This paper investigates the willingness to pay of a sample of residents of Bath, England, for a hypothetical program that promotes the production of renewable energy. Using choice experiments, we assess the preferences of respondents for a policy for the promotion of renewable energy that: (i) contributes to the internalization of the external costs caused by fossil fuel technologies; (ii) affects the short-term security of energy supply; (iii) has an impact on the employment in the energy sector; and (iv) leads to an increase in the electricity bill. Responses to the choice questions show that our respondents are in favour of a policy for renewable energy and that they attach a high value to a policy that brings private and public benefits in terms of climate change and energy security benefits. Our results therefore suggest that consumers are willing to pay a higher price for electricity in order to internalize the external costs in terms of energy security, climate change and air pollution caused by the production of electricity.     

Clean Energy Trade Governance: Reconciling Trade Liberalism and Climate Interventionism?

Scaling-up clean energy is vital to global efforts to address climate change. Promoting international trade in clean energy products (e.g. wind turbines, solar panels) can make an important contribution to this end through business and market expansion effects. If ratified, the landmark Paris COP21 Agreement will commit states to firmer climate actions, this necessarily requiring them to strengthen their promotion of clean energy technologies. Well over a hundred countries already have active policies in this area, many including industrial policy measures that impact on the international competitiveness of their clean energy sector. At the same time, governments have gradually liberalised their clean energy trade regimes, and large producers are negotiating an Environmental Goods Agreement (EGA). Clean energy trade is expanding and disputes among nations in this sector are growing. The World Trade Organisation (WTO) still has limited ‘policy space’ for climate action. Meanwhile, the United Nations Framework Convention on Climate Change (UNFCCC) still had narrow and infrequent connections with trade matters. Moreover, WTO-UNFCCC engagement on trade-climate issues overall has been largely confined to information sharing and secretariat-level dialogue. This paper explores the extent to which clean energy trade is currently governed, where certain governance gaps and deficiencies exists, and argues why addressing them could help expand trade in clean energy products. It also contends that the most fundamental challenge for the future governance of clean energy trade concerns how to reconcile ramped-up interventionist climate action with an essentially liberal trade order.     

FACTOR ENDOWMENTS, TRADE LIBERALIZATION, AND THE FUTURE OF APEC TRADE PATTERNS

The heads of state of Asia-Pacific Economic Cooperation (APEC) nations have committed member nations to remove all barriers to trade both among themselves and with respect to the rest of the world by 2020. The present paper uses a simple econometric model of bilateral trade flows based on country size, relative factor endowments, and trade barriers of importing as well as exporting countries to estimate the shares by country of origin in imports of each of the 16 major APEC countries and the rest of the world for each of 45 commodity groups comprising world trade in commodities. The estimates reveal that APEC trade would be expanded by 13% with complete liberalization of tariff barriers, by an additional 5% if nontariff barriers are also removed, and by another 4% if the rest of the world would also remove all barriers to trade. Variants on this base scenario show that such trade expansion could be substantially reduced were trade liberalization, capital growth, or both to be reduced in the countries affected by the Asian financial crisis. ( JEL Fl, F17)     

能源政策演变:基于自然观和发展观维度的分析

从自然观和发展观的维度分析不同时期能源政策的演进历程及内在动因,对厘清制定能源政策的思想基础和变化趋向具有重要意义。梳理了工业革命以来世界能源政策的演变历程:石油危机爆发以后,现实的能源约束和世界范围内兴起的自然价值主义思潮直接催生了各国能源政策的涌现;而随着生态中心主义思潮的兴起,当前越来越多的国家开始注重发展新能源。从未来能源政策的发展趋势看,发展新能源技术将是人类解决生态危机、提高掌控自然环境能力的必然选择。     

Permit markets,carbon prices and the creation of innovation clusters

Innovation clusters combining public and private effort to develop breakthrough technologies promise greater technological advances to slow down climate change. We use a multi-country model with an emission trading system to examine whether and how international climate policy can incentivize countries to create such innovation clusters. We find that a minimal carbon price is needed to attract applied research firms, but countries may nevertheless fail to invest in complementary research infrastructure. We construct a mechanism that leads to innovation clusters when emissions targets are set before uncertainty surrounding technological developments is resolved. It is a combination of low permit endowments for the country with the lowest costs to build the needed infrastructure, compensation for this country by profits from permit trade, and maximal possible permit endowments for the remaining countries. We outline how the EU-ETS can be further refined according to this mechanism.     

Adverse Welfare Shocks and Pro‐Environmental Behavior: Evidence from the Global Economic Crisis

This paper examines the effects of the 2008–9 global economic crisis on people's pro‐environmental behavior and willingness to pay for climate change mitigation. We hypothesize that the crisis has affected pro‐environmental behaviors through tightening of budget constraints and relaxation of time constraints. Using data from a large representative survey Life in Transition II, conducted in 35 European and Central Asian countries in 2010, we find that people adversely affected by the crisis are more likely to act in an environmentally‐friendly way, but less likely to be willing to pay for climate change mitigation. Our findings confirm the importance of time and budget constraints for undertaking pro‐environmental action, and highlight a potentially positive role of adverse, external welfare shocks in shaping pro‐environmental behavior.     

化石能源耗竭与气候变化约束下的经济低碳转型

本文构建了一个包含产品生产、技术研发、新能源生产和温室气体减排四个部门的内生增长模型;并运用最优控制理论,研究了在化石能源耗竭与气候变化约束下,经济低碳转型中的一系列关键变量的长期行为方式和中短期平衡增长路径;进而刻画了劳动力在各部门间的配置和转移、化石能源价格、排放空间价格对能源结构、碳强度、消费、单位劳动碳减排量、单位劳动产出等变量的影响机制;同时揭示了运用一些政策工具实现经济低碳转型的时机选择。     

Carbon leakages: a general equilibrium view

The effectiveness of unilateral action to curb carbon emissions has been dismissed because of possible “carbon leakages”, this referring to the rise of emissions in non-participating countries. This paper offers a general equilibrium (GE) exploration of the key mechanisms and factors underlying the size of carbon leakages. We developed a two-region, two-goods simplified GE framework, incorporating three types of fossil fuels (coal, oil and low-carbon energy), international trade and capital mobility. The model was designed to make tractable extensive multidimensional sensitivity analysis. The results suggest that the coal supply elasticity plays a critical role, while substitution elasticities between traded goods and international capital mobility appear relatively less influential. The shape of the production function also matters for the size of the leakages. Confirming the results obtained with large computable GE models, for a wide range of parameters’ values, carbon leakages appear to be small. Therefore, the argument that unilateral carbon abatement action taken by a large group of countries (such as the Annex 1 group) is flawed by significant carbon leakages is not supported by our sensitivity analysis. The likelihood of small leakages favours in fact the formation of a worldwide coalition to stabilise climate change.     

绿色经济的新动向

当前,全球面对金融危机和气候变化的双重挑战,需要各国的共同努力来建立一个新的全球经济、贸易和发展体系。对中国而言,资本市场对创新的忽视一直是使中国经济中的短板,是制约技术创新的瓶颈因素之一。中国发展绿色经济,既是实现科学发展的重要契机,也是实现大国崛起的重要契机。     

能源回报趋势对我国经济增长的影响分析

随着开采难度的增加,化石能源生产过程中的能源消耗量不断增长,可供于经济社会能够真正使用的净能源量也随之变动,这将对我国的经济增长产生不可估量的影响。基于此,本文从"净能源"角度提出化石能源供应净量的概念,并预测至2025年我国化石能源产量、净进口量、生产过程中的消耗量;进而,将取得的重要参数和预测数据应用到能源型生产函数中,通过Lingo软件模拟出化石能源供应净量的变动对我国经济增长的影响,计算得出:在基准情景下,我国GDP增速呈逐步放缓的趋势,2011-2015年间为9.26%,2016-2020年间为6.01%,2021-2025年间为4.29%,目前正处于高速增长阶段过渡到中速增长阶段甚至是低速增长阶段的新时期。     

Gender Analysis of the Policy Responses to High Oil Prices: A Case Study of South Africa

ABSTRACT

The 2007–8 surge in oil prices has created concern about its impacts on poor and vulnerable populations in developing countries. Government management of the energy crisis was shown to be important in reducing adverse impacts. This study uses an applied general equilibrium framework to examine alternative policy and external shocks with the recent surge in oil prices in South Africa through a gender lens. Simulation results show that although the 2007–8 energy crisis contributed to slowing down South African gross domestic product (GDP) growth and reducing employment and earnings, the distributional impact between men and women has been neutral. This neutrality is driven by an increase in capital inflows, which has mitigated the exchange rate depreciation owing to the oil price hike. Without an increase in capital inflows, the crisis would have significantly depreciated the exchange rate and contributed to decreasing women's market opportunities and increasing women's workload as compared to men.     

Probabilistic temperature change projections and energy system implications of greenhouse gas emission scenarios

This paper explores the implications for global average temperature change of a set of reference and mitigation scenarios in a probabilistic framework. First, we use published probability density functions for climate sensitivity to investigate the likelihood of achieving targets expressed as levels or rates of global average temperature change. We find, for example, that limiting warming to 3 C above pre-industrial levels with at least a medium likelihood requires cumulative emissions reductions on the order of 30-60% below one unmitigated reference scenario by 2100, while a more favorable baseline scenario requires no reductions at all to achieve this outcome with the same likelihood. We further conclude that the rate of temperature change may prove to be more difficult to control, especially if most of the mitigation effort is postponed until later in the century. Rate of change targets of 0.1–0.2 °C/decade are unlikely to be achieved by a target for the long-term level of climate change alone. Second, we quantify relationships between mitigation costs and the likelihood of achieving various targets and show how this depends strongly on the reference scenario. Third, we explore relationships between medium-term achievements and long-term climate change outcomes. Our results suggest that atmospheric concentrations and the share of zero-carbon energy in the middle of the 21st century are key indicators of the likelihood of meeting long-term climate change goals cost-effectively. They also suggest that interim targets could be an effective means of keeping long-term target options open. Our analysis shows that least-cost mitigation strategies for reaching low climate change targets include a wide portfolio of reduction measures. In particular, fundamental long-term structural changes in the energy system in these scenarios are a necessary but not sufficient condition to achieve high likelihoods for low temperature targets. The cost-effective portfolio of emissions reductions must also address demand-side measures and include mitigation options in the industry, agriculture, and the forest sector.     

Energy price shocks and milk price adjustments

Much previous research on energy price transmission sheds light on the relationship between oil prices and aggregate commodity prices, such as for agricultural products, or food price indexes. This letter uses data from 12 U.S. cities between 2001 and 2011 to examine how energy prices are transmitted to fluid milk products at the retail level. Results indicate the existence of an asymmetric energy pass-through (a rise is transmitted faster than a fall in prices) and that private label milk products are more insulated from energy price shocks and adjust at similar rate with national manufacturer brands.     

经济增长与气候稳定是否相协调?——以中国和印度为例

世界资本主义目前正接受着气候变化的挑战,这主要是由与矿石燃料消耗相关的温室气体的排放造成的。为了预防这一灾难性环境后果威胁到人类的生存,在资本主义内部必须对经济增长做出根本性和即时性承诺。从对在世界经济中中国和印度的崛起与气候危机之间的相互关系分析表明,要达到减排目标几乎需要实现经济零增长,以减轻气候危机。在大量使用矿石燃料基础上的传统发展模式不再适用,中国和印度需要更改它们的发展模式。只有一种重在社会和环境进步,而不是经济增长的新型发展战略,才可以为人类未来带来更多的福祉。     

Convergence of the world’s energy use

This paper uses the sequential panel selection method to examine the convergence of the energy use of 107 countries. It contributes by analyzing the order of convergence and the factors affecting the difference in convergence using improved methods. We provide robust evidence to indicate that seven out of ten countries have been convergent during the period examined, and strong decoupling across countries does not exist. Additionally, high-income and upper-middle-income countries show convergence characteristics earlier than lower middle-income and low-income countries. This means that high-income and upper-middle-income countries are the first to achieve steady-state levels by adjusting their industrial structure and adopting new technologies, and energy exporters have dominant control over energy use. We find that energy-exporting countries converge before energy importers do. These results mean that the energy use of most countries is in accordance with the convergence theory. It also shows that GDP per capita, industrialization level and latitude have great impacts on convergence, especially for industrialization. Our research provides a reference for countries around the world to adjust their energy use policies and to realize a rational flow of energy resources.     

Buying versus Leasing Fuel Deposits for Preservation*

In a two‐period model with two groups of countries that extract, trade, and consume fossil fuels, a climate coalition fights against climate change by purchasing or leasing deposits to prevent their extraction and seeks to manipulate fuel prices in its favor. The policy of purchasing deposits is inefficient because it leaves the first‐period climate externality non‐internalized. By contrast, the deposit‐lease policy turns out to be efficient if it eliminates strategic action in the fuel markets. In an empirically calibrated economy, the coalition's welfare and total welfare are greater with the deposit‐lease policy than with the deposit‐purchase policy if the discount rate is smaller than 2.7 percent per annum.     

Environmental Policy and the International Diffusion of Cleaner Energy Technologies

Technology transfer is an important channel of technological change and sustainable development for countries with less innovative ability than technological leaders. This paper studies whether domestic environmental policies affect the inward technology transfer of cleaner innovation from abroad. We focus specifically on the power sector, for its important role in the decarbonization process, by looking at zero-carbon (renewable) and carbon-saving (efficient fossil) technologies for energy production. Using data on cross-country patent applications, we provide evidence that environmental policy contributes to attracting foreign cleaner technology options to OECD markets but not to non-OECD markets. We show that this is due to the nature of the implemented policy instruments. Market-based approaches positively impact technology transfer to both OECD and non-OECD economies, while non-market based approaches have at best only a weak effect in OECD countries. Domestic environmental policies may provide too weak a signal for foreign innovators in countries off the technological frontier. This calls for a strengthening of policy incentives for technology transfer in light of pressing climate change objectives.     

Policy Framework for Transition to a Low-Carbon World Economy

Climate change mitigation policy is the most difficult to come before our polity in living memory. There can be no solution without international agreement involving all substantial economies, and yet each country has an incentive to free ride on others. The international agreement must have five parts: agreement on the objective in terms of concentrations of greenhouse gases in the atmosphere, agreement on allocation of an emissions entitlements budget among countries, agreement on rules for international trade in entitlements, agreement on developed countries taking the lead on development of low-emissions technologies, and agreement on assistance from developed countries for climate change mitigation in developing countries. Two sources of market failure must be corrected to achieve emissions reduction targets efficiently: the external costs of emitting greenhouse gases and the external benefits of private investment in innovation in relation to low-emissions technologies.     

Fundamentals and Sovereign Risk of Emerging Markets

We empirically assess the relative importance of various economic fundamentals in accounting for the sovereign credit default swap (CDS) spreads of emerging markets during 2004–2012, which encompasses the global financial crisis of 2008–2009. Inflation, state fragility, external debt and commodity terms of trade volatility were positively associated, while trade openness and a more favourable fiscal balance/GDP ratio were negatively associated with sovereign CDS spreads. Yet the relative importance of economic fundamentals in the pricing of sovereign risk varies over time. The key factors are trade openness and state fragility in the pre‐crisis period, the external debt/GDP ratio and inflation in the crisis period, and inflation and the public debt/GDP ratio in the post‐crisis period. Asian countries enjoy lower sovereign spreads than Latin American countries, and this gap widened during and after the crisis. Trade openness was the biggest factor behind Asia's lower sovereign spreads before the crisis, and inflation during and after the crisis. The results imply that external factors were paramount in pricing sovereign risk prior to the crisis, but internal factors associated with the capacity to adjust to adverse shocks gained prominence during and after the crisis.     

Climate policy vs. agricultural productivity shocks in a dynamic computable general equilibrium (CGE) modeling framework: The case of a developing economy

The main objective of this paper is to compare the cost of climate policy consistent with the 2 °C global warming target (Paris Agreement target) with the cost of climate change induced agricultural productivity shocks, using a recursive dynamic CGE model for India. The social cost of carbon, in terms of loss in agriculture sector, is estimated to be about 2 percent of GDP, at zero rate of discount, under conservative forecasts of fall in agricultural productivity. In comparison, the cost of climate policy consistent with the Paris Agreement target of 2 °C is about 1 percent of GDP. Thus, there is a strong case for the adoption of ambitious climate policy in India, provided other countries also adhere to the same. Besides, revenues generated from the carbon tax and emission allowance could be a means to support the development and adoption of new energy and agricultural technologies, to increase social sector expenditure and to reduce abatement costs.