PowerPlay: Exploring decision making behaviors in energy efficiency markets

Computer models are widely used to analyze decisions about energy efficiency improvements in the residential and commercial sectors. Few models exist that can actually be run interactively by decision makers to play out alternative future scenarios. None are available that interactively capture the dynamics, subtleties and complexities of interdependent decisions by utilities, households and firms in an ever-changing technological and economic environment.This paper presents the features and experiences of PowerPlay, a computer-facilitated game which fills that gap and does more: it is a game to be played by at least a dozen player groups who interact with each other, make deals (or break them), plan for the future and revise decisions. The computer model functions like a game board to trace actions and offer choices. The observed behaviors can be analyzed to advance understanding of investment strategies and consumer choices; to generate experimentally-based data on energy efficiency changes; and to provide the basis for analyses that can substantiate or complement historical, time-series driven specifications of energy models.     

Incentives to (not) disclose energy performance information in the housing market

Disclosure of energy performance certificates (EPCs) is often incomplete, which hampers their effectiveness in relieving information asymmetries between landlords and tenants in the housing market. Even when a certificate is available, landlords do not always disclose it. This contradicts the unraveling result, according to which all landlords should disclose quality information unless it is costly to do so. We leverage a cross-sectional dataset of residential rental advertisements from the Belgian region of Brussels to empirically evaluate incentives to disclose an EPC. We find that two fundamental assumptions for the unraveling result are not confirmed in our setting: tenants do not necessarily value energy performance of rental property and do not appear to rationally adjust their expectations when faced with dwellings that withhold their EPC. The paper formulates specific policy advice for reforming EPC mechanisms to increase disclosure rates.     

国内外能源相对价格与中国的能源效率

提高能源效率是实现经济可持续发展和减少污染排放的根本途径。基于非线性平滑转换模型的分析显示,能源价格对能源效率的影响机制存在非线性的平滑转换。机制转换的主要引导因素是国内外能源价格指数的相对变化,机制转换的阈值近似为1。目前我国能源价格对能源效率的影响比较接近高效机制运行,增强能源价格的灵活性,可以实现能源消费者的自我选择,是提高我国能源效率的可行选择。     

GHG mitigation schemes and energy policies: A model-based assessment for the Italian economy

We build up a large scale dynamic general equilibrium model embodying a cap on pollutant emissions, an electricity sector and fuel consumption to analyse climate-energy policies for the Italian economy. Our results show how the trade-off between environmental quality and economic activity can be effectively overcome by recycling the revenues from the sales of emission permits in labour tax reductions. A tax combination aimed at reducing the consumption of fossil fuel, while simultaneously decreasing taxes on labour, is expansionary, but the final outcome is influenced by the underlying GHG emission policy. Tax incentives encouraging the use of clean energy sources, by discouraging the use of fossil fuel, produce a sizeable reallocation of emissions across sectors and are found to be expansionary. Overall the paper highlights the non-trivial interactions between the different fiscal tools in hand to meet the legally binding commitment on emission reduction, while limiting the potential negative fallout on the economy.     

On the mechanism of international technology diffusion for energy technological progress

As a needed methodological complement to the existing large-scale complex policy modelling for energy technology diffusion, this paper contributes to an analytical exposition of the fundamental mechanism of international technology diffusion (ITD) for energy technological progress. We offer two different and complementary perspectives to explore the dynamics of energy technology diffusion and progress. We first develop a Solow-type efficiency-improving model of energy technological progress which is described by improvements in primary energy-augmenting efficiency. We further provide a Romer-type variety-expanding model of energy technological progress which is represented by the expansion of differentiated varieties of primary energy technology blueprints. Analysis based on two different models reaches consistent results: there are potential forces in the world economy – working through ITD – that pull individual countries to advance energy technology, ensuring a cross-country convergence in the growth rates of energy technology in the balanced growth path. While ITD plays a role in a cross-country convergence in technological growth rates, cross-country differences in the efficiency of undertaking indigenous research and the capacity of absorbing foreign technology spillovers would lead to a cross-country divergence in the absolute levels of energy technology.     

Optimal information acquisition and monetary policy

I study optimal monetary policy with an expectational AS curve and private agents who optimally choose their amount of information pertinent to predicting policy. Shocks with time-varying variance (ARCH) induce interesting information acquisition (IA) dynamics; optimal IA affects optimal policy and vice versa. Under discretion, IA dynamics cause time-varying effectiveness of policy because of the expectational AS curve; policy may be rendered completely ineffective. In policy game equilibrium, a fall in the shock’s variance typically induces less IA and raises welfare. In one exceptional case the opposite occurs, a result which does not require implausible unstable equilibria. An agent becoming informed increases the endogenous component of economic volatility; IA therefore has a negative externality. Under commitment policy’s effectiveness is again time-varying, but policy is never completely ineffective: commitment enables the central bank to credibly limit policy’s volatility; this limits private agents’ incentive to become informed, so limits expectation-induced policy neutrality.     

New Labour, energy policy and 'competitive markets'

By the end of New Labour's first term four central objectivesof energy policy had become established: ‘cheap’energy, the relief of fuel poverty, a major reduction of carbondioxide emissions, and energy security through maintaining awide diversity of primary fuel supplies, all to be achievedthrough ‘competition’. After surveying New Labourenergy policy documents, the paper argues that New Labour failedto appreciate (i) the extent to which, under such a laissezfaire policy regime, these objectives were mutually inconsistent;(ii) that the apparent successes of energy market liberalisationduring the preceding Conservative Governments had little todo with ‘competition’; and (iii) that the transactioncosts of injecting increasing ‘competition’ intoboth British and European energy systems are likely to exacerbatethe growing threat to energy security. The paper concludes witha brief examination of the implications of transaction costeconomics for the organisational structure of the UK energysupply industry.     

我国能源消费存在的主要问题及对策分析

本文分析了我国能源消费具有消费结构以煤炭为主、能源价格改革滞后和能源金融市场发展不足的特点，能源消费存在对环境污染严重、能源利用效率较低和能源技术创新不足的问题。文章最后提出了提高能源使用效率、鼓励能源技术创新的途径和对策。     

Dynamics of the UK natural gas industry: System dynamics modelling and long-term energy policy analysis

We present a dynamic model of the indigenous natural gas industry in the UK. The model has been built using a system dynamics approach. Using the model several scenarios have been analyzed. We found that management of the supply-side policy alone cannot substantially postpone the discovery, production and consumption peak. We also found that the dynamics of the main variables, namely, exploration, production and consumption, are sensitive to initial demand conditions. Postponing the onset of gas price increases can therefore be achieved more effectively through efforts to reduce demand growth. One might expect that a low taxation policy would encourage more exploration and production of gas and thereby stimulate higher consumption rates. Instead, there was no overall net effect on production and consumption in the long term. The depletion effect on cost of exploration acts as counterbalance to low taxation policy. Depletion effect causes cost and thus price to rise further which depress consumption rate. The advances in exploration and production technology can delay the peak of exploration, production and consumption. Technological improvements mean lower cost of exploration and production which pressure down the long-term pattern of price dynamics.     

Coordination of sectoral climate policies and life cycle emissions

Drastically reducing greenhouse gas emissions involves numerous specific actions in each sector of the economy. The costs and abatement potential of these measures are interdependent because of sectoral linkages. For instance, the carbon footprint of electric vehicles depends on the electricity mix. This issue has received large attention in the literature on Life Cycle Assessments (LCA). This paper analyzes how life cycle considerations should be integrated into policy design. We model a partial equilibrium with two vertically connected sectors, an upstream (e.g. electricity) and a downstream (e.g. transportation) one. In each sector, a dirty and a clean technology are available. The clean downstream technology consumes the upstream good and may thus shift emissions to the upstream sector. Our main contribution is to detail how optimal subsidies on clean technologies should incorporate life cycle emissions when carbon pricing is limited. The optimal downstream subsidy should be corrected for all external costs generated in the upstream sector, not only unpriced pollution but also the fiscal externality due to the subsidy to the clean upstream technology. We also analyze the joint optimization of upstream and downstream policies. The upstream subsidy should not incorporate features of the downstream sector, whereas the downstream optimal subsidy depends upon the upstream sector characteristics. All results are illustrated using a calibrated example of the electrification of passenger cars.     

Energy efficiency and heating technology investments: Manipulating financial information in a discrete choice experiment

We elicit homeowners’ willingness to pay (WTP) for energy efficiency and low-carbon technologies in the context of heating appliance replacement. We employ a within-between subject design that involves manipulating information in a two-stage discrete choice experiment (DCE) and use WTP space estimation to identify the role of financial information in reducing fossil fuel use. We find that homeowners’ average valuation of energy efficiency exceeds associated heating cost savings, suggesting that they also consider non-monetary benefits when evaluating this type of investment, whereas information about private and pro-social benefits of investments only has a limited impact on WTP. Evidence also suggests that homeowners have a strong preference for the existing technology. Consequently, fossil fuel users’ WTP for switching to low-carbon technologies does not cover respective investment cost differentials, and we derive evidence on how combined subsidies and information can induce these users to opt out of fossil technologies.     

Trends and determinants of energy innovations: patents,environmental policies and oil prices

ABSTRACT

This paper examines the relationship between energy innovations, environmental policies and oil prices. With a panel of 19 OECD countries over the period 1990–2013, we test how the stringency of environmental policies has affected the intensity of energy patents, while controlling for the effect of oil prices and other country-level variables. We found that the overall level of policy stringency has exerted a more significant impact than individual country measures. Moreover, the recent reduction of energy patenting is discussed, especially in the light of the staggering drop of oil prices.     

Financing energy efficiency retrofits in Chilean households: The role of financial instruments,savings and uncertainty in energy transition

High firewood consumption for heating produces high levels of pollution in cities in central and southern Chile, with serious consequences for health and quality of life. Energy efficiency measures (EEMs) have been identified as the best strategy to reduce air pollution and maximize social benefits. However, their adoption has been slow. The objective of this article is to investigate household preferences for financial incentives needed to promote private investments in EEMs in Central-Southern Chilean households and study the role of energy savings and the uncertainty about potential savings in the investment decision, with the aim of finding solutions to increase the adoption of these technologies. We use a choice experiment to explore the trade-off between the investment costs, financial instruments, energy savings, and the uncertainty about achieving the theoretical savings provided by engineering and architectural models. The results show that financial instruments play the most important role in this decision, followed by the savings achieved by the retrofit. Householders prefer to finance their investments with a mix of their personal resources and medium-term credits, trying to avoid long-term commitments. Although uncertainty was found to be a significant variable, it seems to play a small role in the investment decision.     

Does diversity matter? A fresh inquiry into the energy,economy and environment nexus

ABSTRACT

The article extends the literature on the nexus among economy, environment and energy by incorporating an index of electricity generation diversity in production and emission functions. The index is mathematically equivalent to Herfindahl–Hirschman index. The index captures substantial information regarding the ongoing energy transition at the global level. The results obtained through pooled mean group estimation, on a dataset of fairly diversified group of countries, indicate that if diversity index increases by a percentage point, per capita income increases by 2.4% and per capita emissions are reduced by 0.71%. This is against the conventional wisdom in favour of specialization. The study has found some interesting long-run causal pathways. Firstly, the causality runs from diversification to income. Secondly, there is a causality running from electricity consumption to specialization. Thirdly, bi-directional causality runs between emissions and specialization. The results have interesting policy implications. The study supports the growth hypothesis that the electricity consumption drives the economy. As this inevitably increases emissions, a better pathway is through diversification. The fossil fuel intensive pathway may have been the preferred choice in the past for countries with low electricity consumption; the diversified portfolio appears to be prudent in the future.     

U.S. immigration regulations and India's information technology industry

The export-led growth of India's information technology (IT) industry has been nothing short of phenomenal over the past half-dozen years. Other studies have provided a number of explanations for the growth. This paper proposes that a significant factor has been overlooked or understated in prior explanations. Specifically, the Indian IT industry has utilized U.S. immigration regulations for competitive advantage to accelerate its growth. The importance of this factor is estimated through quantitative data analysis at the macro and firm levels. The analysis helps to explain why India's IT industry grew while that of other developing countries, with similar human capital resources and wage rates, did not. The U.S. Congress is currently debating U.S. immigration policies and may change them in the near future. Any changes will have significant effects on the future growth pattern of the Indian IT industry. Many developing countries have recognized India's success, and policymakers in those countries are implementing strategies to replicate it. The results from this study may help those policymakers better understand a key factor of India's success in exporting IT.     

Scenarios of technology and innovation policies in Europe: Investigating future governance

In Europe, public research, technology and innovation policies are no longer exclusively in the hands of national authorities: increasingly, national initiatives are supplemented by, or even competing with, regional innovation policies or transnational programmes, in particular the activities of the European Union. At the same time, industrial innovation increasingly occurs within international networks. Are we witnessing a change of governance in European innovation policy? Based on some theoretical assumptions concerning the relationship between the “political systems” and “innovation systems” in Europe, the paper speculates about the future governance of innovation policies, trying to pave ways for empirical analyses. It sketches three scenarios stretching from (1) the idea of an increasingly centralised and dominating European innovation policy arena to (2) the opposite, i.e., a progressive decentralisation and open competition between partly strengthened, partly weakened national or regional innovation systems and finally to (3) the vision of a centrally “mediated” mixture of competition and cooperation between diverse regional innovation cultures and a related governance structure.     

Do differences in attitudes explain differences in national climate change policies?

In meeting the threat posed by climate change nations have responded quite differently. Using an extensive data set this study explores factors that affect individuals' attitudes towards climate change and how those attitudes ultimately affect national climate change policy. The results show that attitudes do indeed matter in implementing policy and that attitudes are shaped not only by how individuals react to the specific attributes of climate change, but also by information, by the openness of society and by attitudes toward the trustworthiness of government.     

International sanctions’ impact on energy efficiency in target states

This paper investigates the impact of international sanctions on energy efficiency by employing the panel fixed effect as well as average marginal effect from the Tobit model via data on 30 sanctioned states over the period 1996–2015 with international sanctions including unilateral, plurilateral, U.S., EU, UN, economic, and non-economic cases. Overall, we find that the imposition of unilateral sanctions leads to a 0.067% decrease in energy efficiency, but that of plurilateral sanctions positively contribute to energy efficiency in the case of the full sample of countries. Moreover, the imposition of UN sanctions has a greater decrease on energy efficiency in the target states than the 0.042% reduction of energy efficiency when the sanctionist is the U.S. For robustness, empirical results indicate that the imposition of plurilateral sanctions results in a drop of energy efficiency in Islamic countries, but an increase in non-Islamic countries, while there are also negative shocks induced by the imposition of EU sanctions on energy efficiency in Asian countries, but not for non-Asian countries. We also consider endogenous problems and dynamic specification by using indicator variables and System GMM. In summary, our empirical findings provide policy suggestions for those sanctioned countries about how to maintain energy efficiency when facing international sanctions.     

Superexponential long-term trends in information technology

Moore's Law has created a popular perception of exponential progress in information technology. But is the progress of IT really exponential? In this paper we examine long time series of data documenting progress in information technology gathered by [1]. We analyze six different historical trends of progress for several technologies grouped into the following three functional tasks: information storage, information transportation (bandwidth), and information transformation (speed of computation). Five of the six datasets extend back to the nineteenth century. We perform statistical analyses and show that in all six cases one can reject the exponential hypothesis at statistically significant levels. In contrast, one cannot reject the hypothesis of superexponential growth with decreasing doubling times. This raises questions about whether past trends in the improvement of information technology are sustainable.     

The patterns of induced diffusion: Evidence from the international diffusion of wind energy

Recent years have seen growing academic interest in the concept of induced diffusion as efforts to address concerns about energy security and climate change have intensified. Research on induced diffusion explores whether policy tools or interventions can incentivise the diffusion of innovations. This body of literature has explored the effectiveness and efficiency of various policy interventions and as such has been mainly concerned with the determinants of diffusion. This paper is, by way of contrast, concerned with the patterns of diffusion when diffusion is induced. Drawing on the Bass and Davies models of innovation diffusion we develop a number of propositions that suggest that the patterns of diffusion are different when policy plays a role in the diffusion process. These propositions are then econometrically tested in the context of the international diffusion of wind energy in 25 OECD countries. We find that, as predicted, without effective and strong policy interventions, countries will have conventional logistic diffusion with very similar speeds of diffusion. However, as expected the patterns of diffusion take on a different functional form (Bass curve) when there is a strong policy inducement. We conclude by discussing the implications and limitations of these results and suggesting avenues for further research.