Incidence and impact: The regional variation of poverty effects due to fossil fuel subsidy reform

Since fossil fuel subsidy reforms can induce significant distributional shifts and price shocks, effective compensation and social protection programs are crucial. Based on the statistical simulation model by Araar and Verme (2012), this study estimates the regional variability of direct welfare effects of removing fuel subsidies in Nigeria. Uncompensated subsidy removal is estimated to increase the national poverty rate by 3–4% on average. However, uniform cash compensation that appears effective at the national average, is found to fail to mitigate price shocks in 16 of 37 states – thus putting livelihoods (and public support for reforms) at risk. States that are estimated to incur the largest welfare shocks, coincide with hotspots of civil unrest following Nigeria's 2012 subsidy reform attempt. The study illustrates how regionally disaggregated compensation can be revenue neutral, and maintain or reduce pre-reform poverty rates in all states. Overall, it highlights the importance of understanding differences in vulnerability, and designing tailored social protection schemes which ensure public support for subsidy reforms.     

Market,welfare and land-use implications of lignocellulosic bioethanol in Hawai'i

This article examines land-use, market and welfare implications of lignocellulosic bioethanol production in Hawai'i to satisfy 10% and 20% of the State's gasoline demand in line with the State's ethanol blending mandate and Alternative Fuels Standard (AFS). A static computable general equilibrium (CGE) model is used to evaluate four alternative support mechanisms for bioethanol. Namely: i) a federal blending tax credit, ii) a long-term purchase contract, iii) a state production subsidy financed by a lump-sum tax and iv) a state production subsidy financed by an ad valorem gasoline tax. We find that because Hawaii-produced bioethanol is relatively costly, all scenarios are welfare reducing for Hawaii residents: estimated between −0.14% and −0.32%. Unsurprisingly, Hawaii's economy and its residents fair best under the federal blending tax credit scenario, with a positive impact to gross state product of $49 million. Otherwise, impacts to gross state product are negative (up to −$63 million). We additionally find that Hawaii-based bioethanol is not likely to offer substantial greenhouse gas emissions savings in comparison to imported biofuel, and as such the policy cost per tonne of emissions displaced ranges between $130 and $2100/tonne of CO₂e. The policies serve to increase the value of agricultural lands, where we estimate that the value of pasture land could as well.     

Reforming fossil fuel prices in India: Dilemma of a developing economy

Over the period between 1990–1 and 2012–3, fossil fuel use on farms has risen and its indirect use in farming, particularly for non-energy purposes, is also growing. Consequently, both energy intensity and fossil fuel intensity are rising for Indian agriculture. But, these are declining for the aggregate Indian economy. Thus, revision of fossil fuel prices acquires greater significance for Indian agriculture than for rest of the economy. There are significant differences across crops. The crop-level analysis is supplemented by an alternative approach that utilizes a three-sector input–output (I–O) model for the Indian economy representing farming, fossil fuels, and rest of economy. Fossil fuels sector is assessed to portray, in general, strong forward linkages. The increase in total cost of farming, for a given change in fossil fuel prices, is estimated as a multiple of increase in direct input cost of fossil fuels in farming. From the three-sector aggregated economy this multiple was estimated at 3.99 for 1998–9. But it grew to 6.7 in 2007–8. The findings have stronger ramifications than commonly recognized, for inflation and cost of implementing the policy on food security.     

Implicit CO2 prices of fossil fuel use in Switzerland

This study aims to assess the efficiency of the fossil fuel taxation scheme currently in effect in Switzerland. To this end, the concept of implicit CO₂ prices is introduced, based on which prices for different fossil fuel uses are derived. Implicit CO₂ prices are defined as the difference between actual prices paid by consumers and efficient domestic fuel prices. Efficient domestic fuel prices, in turn, consist of private production costs, a uniform value added tax and only local external costs, not including external costs due to CO₂ emissions and global climate change.The resulting prices differ substantially, which suggests that there is considerable cost-saving potential in reducing CO₂ emissions in Switzerland. For passenger cars and air traffic, the implicit prices are negative. For these uses, higher fuel charges would therefore be beneficial from a purely domestic perspective, i.e., without considering the negative repercussions of global warming.     

Effects of future fossil fuel use on CO2 levels in the atmosphere

A model based on fossil fuel use per capita and United Nations population predictions has been developed to predict global fossil fuel use and the resulting levels of CO₂ in the atmosphere. The results suggest levels of CO₂ will increase to between 415 and 421 ppm by 2025. Countries with energy-intensive economies will be responsible for the majority of CO₂ emissions, while nations with large populations but low energy consumption per capita will have less of an effect. A major increase in nuclear power generation will not have a significant impact on CO₂ levels over this time scale.     

Forecasting production of fossil fuel sources in Turkey using a comparative regression and ARIMA model

This study aims at forecasting the most possible curve for domestic fossil fuel production of Turkey to help policy makers to develop policy implications for rapidly growing dependency problem on imported fossil fuels. The fossil fuel dependency problem is international in scope and context and Turkey is a typical example for emerging energy markets of the developing world. We developed a decision support system for forecasting fossil fuel production by applying a regression, ARIMA and SARIMA method to the historical data from 1950 to 2003 in a comparative manner. The method integrates each model by using some decision parameters related to goodness-of-fit and confidence interval, behavior of the curve, and reserves. Different forecasting models are proposed for different fossil fuel types. The best result is obtained for oil since the reserve classifications used it is much better defined them for the others. Our findings show that the fossil fuel production peak has already been reached; indicating the total fossil fuel production of the country will diminish and theoretically will end in 2038. However, production is expected to end in 2019 for hard coal, in 2024 for natural gas, in 2029 for oil and 2031 for asphaltite. The gap between the fossil fuel consumption and production is growing enormously and it reaches in 2030 to approximately twice of what it is in 2000.     

Improving energy consumption structure: A comprehensive assessment of fossil energy subsidies reform in China

Fossil energy subsidies reform would be an effective way to improve the energy consumption structure; however, the reform needs to be assessed comprehensively beforehand as it would exert uncertain impacts on economy, society and environment. In this paper, we use price-gap approach to estimate the fossil energy subsidies of China, then establish CGE model that contains pollutant emissions accounts and CO₂ emissions account to stimulate the fossil energy subsidies reform under different scenarios, and the environmental economic analysis concept is introduced to monetize the pollutant reduction benefits. Furthermore, we analyze the possibility and scope of improving the energy consumption structure from the perspective of technical and economic analysis. Analytical results show that the energy consumption structure could be improved by different extent by removing coal or oil subsidies, while the economic and social indexes will be influenced distinctively. Meanwhile, the effects of cutting coal subsidies are more feasible than that of cutting oil subsidies overall. It is recommended to implement fossil energy subsidies gradually, cut the coal first and then cut oil subsidies successively.     

A comparative study of dynamic changes in CO2 emission performance of fossil fuel power plants in China and Korea

This paper aims to conduct a comparative study of the changes in CO₂ emission performance of state-owned fossil fuel power plants between China and Korea. For this purpose, we combine the concept of the metafrontier Malmquist productivity index and the non-radial directional distance function to develop a new index called the non-radial metafrontier Malmquist CO₂ emission performance index (NMMCPI). This new methodology allows for the incorporation of technological heterogeneities and slack variables into the previously introduced Malmquist CO₂ emission performance index (MCPI). The NMMCPI can be derived by solving several non-radial data envelopment analysis (DEA) models. The NMMCPI can be decomposed into an efficiency change (EC) index, a best-practice gap change (BPC) index, and a technology gap change (TGC) index. By fixing the non-energy inputs, we measure the pure CO₂ emission performance change. Based on the proposed indices, the comparative study between Chinese and Korean fossil fuel power industries is conducted for the 2005–2010 period. Empirical results indicate significant differences in terms of various decomposed CO₂ emission performance changes between China and Korea. Korean power plants demonstrate improvements in innovation, while Chinese power plants demonstrate a higher ability for technological leadership. Some related policy implications are also proposed based on the empirical results.     

Designing an electricity tax system in presence of international regulations and multiple public goals: An empirical assessment

The European competition rules restrict governments’ opportunity to differentiate terms of energy accessibility among firms and industries. This easily runs counter with regional and industrial goals of national energy policies. Norway levies a tax on use of electricity, but exempts main industrial usages. This analysis assesses alternative, internationally legal, designs of the system in terms of their effects on efficiency and distribution, including industrial objectives. Among the reforms we explore, removing the exemptions would be the most effective way of raising revenue, but it would be politically costly by deteriorating the competitiveness of today's favoured industries. An entire abolishment of the electricity tax, and replacing revenue by increased VAT, would generate a more equal distribution of standard of living and, at the same time, avoid the trade-off between efficiency and competitiveness.     

Application of genetic algorithm (GA) technique on demand estimation of fossil fuels in Turkey

The main objective is to investigate Turkey's fossil fuels demand, projection and supplies by using the structure of the Turkish industry and economic conditions. This study develops scenarios to analyze fossil fuels consumption and makes future projections based on a genetic algorithm (GA). The models developed in the nonlinear form are applied to the coal, oil and natural gas demand of Turkey. Genetic algorithm demand estimation models (GA-DEM) are developed to estimate the future coal, oil and natural gas demand values based on population, gross national product, import and export figures. It may be concluded that the proposed models can be used as alternative solutions and estimation techniques for the future fossil fuel utilization values of any country. In the study, coal, oil and natural gas consumption of Turkey are projected. Turkish fossil fuel demand is increased dramatically. Especially, coal, oil and natural gas consumption values are estimated to increase almost 2.82, 1.73 and 4.83 times between 2000 and 2020. In the figures GA-DEM results are compared with World Energy Council Turkish National Committee (WECTNC) projections. The observed results indicate that WECTNC overestimates the fossil fuel consumptions.     

Assessing the economic efficiency of bioenergy technologies in climate mitigation and fossil fuel replacement in Austria using a techno-economic approach

The core issues of the Austrian energy policy agenda include reducing greenhouse gas (GHG) emissions and dependence on fossil fuels. Within this study, the costs of GHG mitigation and fossil fuel replacement (abatement costs) of established and upcoming bioenergy technologies for heat, electricity and transport fuel production are assessed. Sensitivity analyses and projections up to 2030 illustrate the effect of dynamic parameters on specific abatement costs.     

Accounting for quality: Issues with modeling the impact of R&D on economic growth and carbon emissions in developing economies

The literature on climate policy modeling has paid scant attention to the important role that R&D is already playing in industrializing countries such as China, where R&D investments are targeting not only productivity improvements but also enhancements in the quality and variety of products. We focus here on the effects of quality-enhancing innovation on energy use and GHG emissions in developing countries. We construct an analytical model to show that efficiency-improving and quality-enhancing R&D have opposing influences on energy and emission intensities, with the efficiency-improving R&D having an attenuating effect and quality-enhancing R&D having an amplifying effect. We find that the balance of these opposing forces depends on the elasticity of upstream output with respect to efficiency-improving R&D, the elasticity of downstream output with respect to upstream quality-enhancing R&D occurring upstream, and the relative shares of emissions-intensive inputs in the costs of production of upstream versus downstream industries. We employ a computable general equilibrium (CGE) simulation of the Chinese economy to illustrate the difficulties that arise in incorporating these results into models for climate policy analysis, and we offer a simple remedy.     

An econometrics view of worldwide fossil fuel consumption and the role of US

Crude oil, coal and gas, known as fossil fuels, play a crucial role in the global economy. This paper proposes new econometrics modelling to demonstrate the trend of fossil fuels consumption. The main variables affecting consumption trends are: world reserves, the price of fossil fuels, US production and US net imports. All variables have been analysed individually for more than half a century. The research found that while the consumption of fossil fuels worldwide has increased trends in the US production and net imports have been dependent on the type of fossil fuels. Most of the US coal and gas production has been for domestic use, which is why it does not have a strong influence on worldwide fossil fuel prices. Moreover, the reserves of fossil fuels have not shown any diminution during the last couple of decades and predictions that they were about to run out are not substantiated. The nominal and real price of fossil fuels was found to change depending on the type. Finally, estimates of three econometric models for the consumption of fossil fuels from 1949 to 2006 are presented which identify the effects of significant variables.     

Estimates of energy subsidies in China and impact of energy subsidy reform

For a transitional economy such as China, some energy subsidies are reasonable, and sometimes even necessary for achieving social goals. However, with rising energy prices and environmental concerns, we see conflicts emerging between energy subsidies, energy demand/supply fundamentals and climate change considerations. Energy subsidies have important implications for sustainable development through their effects on energy use, efficiency and the choice of fuel source. This paper applies the price-gap approach to estimate China's energy subsidies. Results indicate that China's energy subsidies amounted to CNY 356.73 billion in 2007, equivalent to 1.43% of GDP. Subsidies for oil products consumption are the largest, followed by subsidies for the electricity and coal sectors. Furthermore, a CGE model is used to analyze the economic impacts of energy subsidy reforms. Our findings show that removing energy subsidies will result in a significant fall in energy demand and emissions, but will have negative impacts on macroeconomic variables. We conclude that offsetting policies could be adopted such that certain shares of these subsidies are reallocated to support other sustainable development measures, which could lead to reducing energy intensity and favoring the environment.     

An assessment of fossil fuel energy use and CO2 emissions from farm field operations using a regional level crop and land use database for Canada

The Canadian Economic and Emissions Model for Agriculture (CEEMA) is considered a potentially useful tool for investigating the impacts of biofuel feedstock production on rural land use. Fossil CO₂ emissions from fieldwork in the CEEMA model were upgraded with the Fossil Fuel Farm Fieldwork Energy and Emissions (F4E2) simulation model. There was very close agreement between the two models at the national level, but differences between the two models at the regional scale and among the three major land uses illustrated the need to revise CEEMA. Emission coefficients from the F4E2 model will give the upgraded CEEMA a more realistic response to the energy requirements by specific field operations and to differences between the major forms of land cover (annuals and perennials). The highest fossil fuel CO₂ emission intensity for fieldwork in 2001 was in Quebec at 0.19 t{CO₂}/ha, followed by Ontario at 0.17 t{CO₂}/ha, while the emission intensities were the lowest in Western Canada, at 0.12 t{CO₂}/ha. Fossil CO₂ emissions from just annual crops in Canada was 0.16 t/ha and the emissions from just harvesting perennial forages was 0.07 t{CO₂}/ha. Fieldwork to maintain summerfallow emitted only 0.02 t{CO₂}/ha.     

Directed technical change and differentiation of climate policy

This paper studies the cost effectiveness of climate policy if there are technology externalities. For this purpose, we develop a forward looking model that captures empirical links between CO₂ emissions associated with energy use, directed technical change and the economy. We find our most cost effective climate policy to include a combination of R&D subsidies and CO₂ emission constraints, although R&D subsidies raise the shadow value of the CO₂ constraint (i.e. CO₂ price) because of a strong rebound effect from stimulating innovation. Furthermore, we find that cost effectiveness of climate policy improves if it is differentiated between technologies. Even our rudimentary distinction between CO₂ intensive technologies and non-CO₂ intensive technologies lead to this result. Such differentiated climate policy encourages growth in the non-CO₂ intensive sectors and discourages growth in CO₂ intensive sectors by harnessing positive effects of technology externalities on total factor productivity in the former and letting the latter bear relatively more of the abatement burden. This result is robust to whether emission constraints, R&D subsidies or combinations of both are used as climate policy instruments.     

Impacts of carbon motivated border tax adjustments on competitiveness across regions in China

China is a large developing country with high carbon intensity. It is likely that China will have to face the challenge of CBTA (carbon motivated border tax adjustments) in future. Meanwhile, CBTA would create price gap between CBTA users and target countries, and change the competitiveness of different producers. Under such circumstances, this paper seeks to contribute to the debate on CBTA by focusing on the potential impacts of CBTA on different regions of China from a perspective of competitiveness. We adopt two geographical divides in China (eastern-central-western zones, high-trade-openness to low-trade-openness regions), and simulate the potential impacts across regions through a general equilibrium model. Our simulation results show that CBTA would affect competitiveness of different producers, their comparative advantages, relative trade shares, outputs and emissions. CBTA would induce structure change of the economy, and result in a shift of industrial output toward non-industrial output. There are significant differences in the effects of CBTA among different regions in China. CBTA would result in a relocation of outputs across regions in China. Therefore, CBTA would also have impact on China’s regional development policy.     

Key factors affecting long-term penetration of global onshore wind energy integrating top-down and bottom-up approaches

We quantified key factors affecting the penetration of global onshore wind energy by 2050. We analyzed a large set of scenarios by combining a wind resource model and a computable general equilibrium (CGE) model. Five factors, including onshore wind resource potential, investment cost, balancing cost, transmission cost and climate change mitigation policy, were considered to generate 96 scenarios and regression analysis was used to assess relevance among the factors. We found that the strongest factors were resource potential and climate target, followed by wind power technology investment cost. Other factors, such as balancing and transmission costs, had relatively smaller impacts. World total onshore wind power in 2050 increases by 13.2 and 15.5 (41% and 49% of 2005 total power generation, respectively) EJ/year if wind potential rises from low to medium and high levels, respectively. Furthermore, 5.9, 17.8, and 24.3 EJ/year of additional wind power could be generated under climate targets of 650, 550 and 450 ppm CO_2-eq, respectively. Moreover, reducing wind power technology investment cost would increase global wind power by another 9.2 EJ/year. The methodology can be extended to assess other mitigation technologies if the related data is available.     

Effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries

Electric power sector reforms in the electricity supply industry have had an impact on industrial and household prices in developing countries in Latin America, the former Soviet Union, and Eastern Europe. Using original panel data for 83 countries during the period from 1985 to 2002, we examine how each policy instrument of the reform measures influenced electricity prices for countries in the above regions. We found that variables such as entry of independent power producers (IPP), unbundling of generation and transmission, establishment of a regulatory agency, and the introduction of a wholesale spot market have had a variety of impacts on electricity prices, some of which were not always consistent with expected results. The research findings suggest that neither unbundling nor introduction of a wholesale pool market on their own necessarily reduces the electric power price. In fact, contrary to expectations, there was a tendency for the price to rise. However, coexistent with an independent regulator, unbundling may work to reduce electricity prices. Privatization and the introduction of foreign IPP and retail competition lower electricity prices in some regions, but not all.