How large are the impacts of carbon-motivated border tax adjustments on China and how to mitigate them?

There have been growing clamours for carbon-motivated border tax adjustments (CBTAs) targeted at countries that do not accept the carbon emission reduction targets. Currently, China is the largest carbon emitter with large annual incremental carbon emissions and might have to face the challenge of CBTA. Therefore, it is a pressing policy challenge for the government to get prepared for mitigating the negative impacts of CBTAs on China. In this article, we compare the impacts of CBTAs across large developing economies and compare the performances of different policy options to mitigate the negative impacts. The main findings are as follows. First, CBTA would affect different economies and different sectors differently. CBTA would result in a shift of production across sectors and relocation of output from the target countries to CBTA users. Second, CBTA would contribute to world's emissions reduction, but less than expected due to carbon leakage. Finally, policy options, which could reduce the present distorting effects, would be preferred to other policy options that would add additional distorting effects to the economy. Looking ahead, the Chinese government should get prepared for mitigating the negative impacts of CBTAs because its economy could be adversely affected.     

Coal consumption in China: How to bend down the curve?

Noting the recent decline in the coal consumption in China, a variety of prior literature studies the peak of coal consumption and finds mixed results. This paper systematically studies the historical rules, the driving mechanism, as well as the future trend of coal consumption in China. First, through comparative analysis and breakpoint regression, we find that there are three consecutive inverted U-shapes between China's coal consumption and economic development from 1965 to 2016, and they reach inflection points in 1980, 1998, and 2013, respectively. Second, the LMDI decomposition analysis of coal consumption reveals that output effects and intensity effects jointly determine the overall trend of each inverted U, and structural effects play a key role in the formation of each inverted U-shaped inflection point. Finally, the forecast shows that coal consumption will decline at an average annual rate of 0.4% from 2017 to 2030, and by then it will be basically in a plateau period. There is a big gap between the consumption trend and the inverted U scenario. In order to bend the coal consumption curve downward and ensure that 2013 will become a long-term peak, the government should accelerate the optimization of the industrial structure and energy consumption structure, and improve coal consumption efficiency continuously through a mix of policies.     

What are the categories of geopolitical risks that could drive oil prices higher? Acts or threats?

This study characterizes the oil market as a nonlinear-switching phenomenon and examines its dynamics in response to changes in geopolitical risks over low- and high-risk scenarios. We separate the shocks due to geopolitical acts from those due to geopolitical threats to address whether the serious effects of geopolitical risks are mostly due to increased threats of adverse events or to their realization as acts. While we find the acts to generate a positive and strong impact on oil price dynamics, the effect of threats appears to be moderate or non-significant. Imperfect information in the oil price determination, the history of oil supply disruptions emanating from geopolitical events, the continued rise in populism in the world, oil market volatility, multifractility and the time-varying degree of weak-form efficiency have been advanced to explain the unforeseen responses of oil prices to geopolitical threats. To accommodate recent oil-related events, we construct a composite geopolitical risk indicator by accounting for contemporaneous sources of geopolitical risks, namely global trade tensions, US-China relation risks, US-Iran tensions, Saudi Arabia’s uncertainty and Venezuela’s crisis. The combined effects have an outsized impact on oil prices.     

Electricity savings and CO2 emissions reduction in buildings sector: How important the network losses are in the calculation?

The increase of CO₂ emissions and the emerging climate change are the most serious environmental problems nowadays and limit economic development. This increase is mainly attributed to the growing world population and the related growth in energy demand, which results in the vast consumption of fossil fuels in the power generation sector. Significant actions for the implementation of energy saving measures have been adopted worldwide for reducing greenhouse gas emissions. CO₂ calculators have been developed to evaluate the effectiveness of these measures, relating energy to CO₂ emissions. These calculators include in most cases the entire power system. The purpose of this work was to evaluate the role of the electricity networks' losses in the actual CO₂ reduction potential, following the implementation of energy saving measures, in relation to the network's voltage level in which the infrastructure is connected. Buildings are representative due to their volume and to different voltage levels of power supply. The work presented was conducted in the framework of the Intelligent Energy Europe Programme entitled Bottom Up to Kyoto (BUtK), as a part of an evaluation of the CO₂ emissions' reduction potential through energy savings measures in 6 municipalities of EU's New Member States.     

Dealing with surplus emissions in the climate negotiations after Copenhagen: What are the options for compromise?

This paper analyses the environmental and financial consequences of various strategies of dealing with surplus emission allowances in the aftermath of the Copenhagen Accord. This topic remains relevant, in particular, with respect to the Russian negotiation position, as this country is the largest holder of surplus emissions. It is concluded that not addressing the surplus problem is not a feasible negotiation option, as the sheer size of the surpluses would jeopardise the environmental integrity of any future agreement. Cancelling surpluses against Russia’s will, though viable, is not desirable, as it might well lead to this country opting out of this climate treaty. Three options for compromise have been selected and analysed here: (1) stricter targets for Annex I countries; (2) strategic reserve for Russia; (3) institutionalising optimal banking. It is concluded that, whereas option 1 is environmentally the best, in the present political context it is probably less feasible. The other two options, although environmentally suboptimal, seem politically more favourable. Our analysis suggests that maximal revenues for surplus-holding countries arise by releasing only a limited amount of surplus credits to the market. The institutionalisation of this effect could be a key lever to a politically feasible agreement on surplus emissions.     

Putting renewables and energy efficiency to work: How many jobs can the clean energy industry generate in the US?

An analytical job creation model for the US power sector from 2009 to 2030 is presented. The model synthesizes data from 15 job studies covering renewable energy (RE), energy efficiency (EE), carbon capture and storage (CCS) and nuclear power. The paper employs a consistent methodology of normalizing job data to average employment per unit energy produced over plant lifetime. Job losses in the coal and natural gas industry are modeled to project net employment impacts. Benefits and drawbacks of the methodology are assessed and the resulting model is used for job projections under various renewable portfolio standards (RPS), EE, and low carbon energy scenarios We find that all non-fossil fuel technologies (renewable energy, EE, low carbon) create more jobs per unit energy than coal and natural gas. Aggressive EE measures combined with a 30% RPS target in 2030 can generate over 4 million full-time-equivalent job-years by 2030 while increasing nuclear power to 25% and CCS to 10% of overall generation in 2030 can yield an additional 500,000 job-years.     

What happens to the relationship between EU allowances prices and stock market indices in Europe?

The stock market may reflect the economic conditions of an economy and a positive economic situation is expected to improve the companies' profits, which makes company shares more attractive since the expected dividends to shareholders will be larger. Theoretically, higher economic activity leads to higher energy demand and, consequently, higher carbon emissions, which give rise to higher EU allowances (EUA) prices. Therefore, the stock market and EUA prices seem to be connected, with causality going from the stock markets to EUA prices. This paper formally tests for it, showing that the causality effectively runs from the stock market to the European Climate Exchange market. Furthermore, the paper studies the effects of the evolution of European stock markets on the EUA spot prices.     

Local ownership of ethanol plants: What are the effects on communities?

The rapid expansion of ethanol plants across the U.S. state of Iowa has fueled debate about the burdens and benefits of local (in-state investors) versus non-local ownership of biorefineries. Central to these concerns is the extent to which non-local, absentee owners might reap the benefits of the ethanol industry at the expense of local communities. A key argument within the rural development literature is that local ownership of firms has a positive effect on the long-term well-being and sustainability of the communities in which they are situated. This literature asserts that firms operate at different scales, with local firms embedded within local supply chains and institutions, and non-local firms embedded within national and international networks and institutions. Conversely, there is a growing body of work within the alternative agrifood systems literature that cautions against the ‘local trap’; the assumption that the local scale is inherently good and therefore advantageous. Despite this broader debate, the literature on local ownership and renewable energy remains limited. This paper addresses this gap by drawing on case study research of the community effects of ethanol plant ownership structure from the perspective of community leaders. My findings suggest that differences between the structure and effects of local versus non-local ownership of firms on communities are rather more ambiguous than the literature asserts. Therefore, assumptions about the benefits of local ownership may be overstated and concepts of ‘local’ and ‘non-local’ may be inadequate for considering firm outcomes on the civic welfare and socioeconomic well-being of a community.     

What can we learn from North American transport energy demand restraint policies of the 1970s and 1980s and public reactions to them?

This paper offers a North American perspective on the possible reaction of the general public to regulatory instruments addressing energy consumption, and by implication, carbon emissions. Its purpose is to reflect on some of the lessons learnt from research on consumer behaviour undertaken by the author and colleagues in the wake of the oil shortages of 1973 (OPEC embargo) and 1979 (interruption of Iranian production). The paper does not, therefore, provide an extensive review of related literature. It first outlines very briefly the policy context of the past 30 years and the classes of transport energy demand restraint policies of the 1970s and 1980s. It then describes some key lessons from our research during those two decades and concludes with some speculation on their relevance to demand-side management that is motivated by concerns over greenhouse gas emissions.     

How to measure the overall energy savings linked to policies and energy services at the national level?

The Energy End-use Efficiency and Energy Services Directive (ESD) of the European Union requires the member states to define and attain an overall target of at least 9% annual energy savings between 2008 and 2016. Even if this target is indicative, this is the first international framework mandating countries to report on their energy savings results and prove achievement of their targets. The directive thus also required the development of harmonised calculation methods that can be used by member states for this proof and reporting. Existing literature covers most of the usual issues related to energy savings evaluation, but mostly looking at single, given energy efficiency programmes or policies. The evaluation objective for the ESD implementation is different, as it aims at accounting for the whole energy savings achieved in a country. Moreover, one of the main difficulties is the diversity in history and experience on this topic among the member states. In this context, the European project EMEEES has worked out an integrated system of bottom-up and top-down methods for the measurement of energy savings. The paper presents the overview of its final results. The proposals, inter alia, include 20 bottom-up and 14 top-down case applications of general evaluation methods. They enable more than 90% of the potential energy savings to be measured and reported. They were used as a starting point by the European Commission to develop the methods recently recommended to the member states. Furthermore, the paper briefly discusses the importance of the quantity to be measured—all or additional energy savings—and the effect of measures implemented before the entering into force of the ESD (‘early action’), and what this meant for the methods to be developed. It compares the main elements of calculation needed to ensure consistent results between bottom-up and top-down methods at the overall national level. Finally, general conclusions are drawn about what could be the next steps in developing an evaluation system that enables a high degree of comparability of results between different countries.     

Status and perspectives of renewable energy policy and deployment in the European Union—What is needed to reach the 2020 targets?

This article evaluates the status of current RES deployment, policies and barriers in the EU-27 member states and compares it to the required to meet the 2020 targets. The evaluation relies strongly on the quantitative deployment status and policy effectiveness indicators. European RES deployment and policy has progressed strongly in recent years, but the growth here has been mainly driven by effective policies in a small or medium number of top runner countries. Across Europe, the highest average policy effectiveness over six years was reached for onshore wind (4.2%), biofuels (3.6%) and biomass electricity (2.7%), while in the heat sector, all technologies score below 2%. Comparing the recent progress to the required growth for meeting the 2020 target, it appears that some countries largely exceed the interim targets of the RES Directive 2009/28/EC. Despite this, Europe will need additional policy effort to reach the 2020 target. Critical success factors include implementing effective and efficient policies that attract sufficient investments, reducing administrative and grid related barriers, especially in currently less advanced countries, upgrading the power grid infrastructure, dismantling financial barriers in the heat sector, realising sustainability standards for biomass, and lowering energy demand through increased energy efficiency efforts.     

What is the potential for biogas digesters to improve soil fertility and crop production in Sub-Saharan Africa?

Three alternative soil amendments of organic wastes are considered: application of untreated animal manures, bioslurry from biogas digestion, composted materials, and biochar produced by pyrolysis cook-stoves. Application of untreated manures provides high input of available nutrients, which results in an initial flush in crop growth. However, risks of losing nutrients are high because manure is usually applied before sowing to avoid reduced yields due to phytotoxicity, resulting in increased losses by leaching or volatilization. Furthermore, the heterogeneous nature of untreated manures results in immobilization of nutrients by carbon-rich materials. A greater amount of nutrients are potentially available to crops from applied bioslurry. Typically 5–10% of the nitrogen is lost during anaerobic digestion, but bioslurry provides immediately available nutrients that can be applied as needed, so reducing risks of nutrient loss. If, however, bioslurry was applied in a single dose, losses would be similar in magnitude to untreated manures. Risks of nutrient losses are also lower when wastes are applied as composts, but in contrast to bioslurry, this is because the concentration of immediately available nutrients is very low, most nutrients being held in organic form that will become available only slowly over the growing season. Composts provide an option for single dose application, but a larger proportion of nitrogen is lost during composting (26–51%) than during anaerobic digestion (5–10%). Losses of nitrogen during pyrolysis are also very high (70–90%), but biochar can reduce losses of native soil nutrients by providing exchange sites that hold nutrients in the soil.     

What causes the change in energy demand in the economy?: The role of technological change

This paper proposes a simple and theoretically clear approach to the estimation of technological change in a multisector general equilibrium framework. This study employs the Multiple Calibration Decomposition Analysis (MCDA) to evaluate technological change that is responsible for changes in energy use and carbon dioxide emissions in the Japanese economy in the oil crises period from 1970 to 1985. The MCDA serves as an elementary way of separating structural change due to technological change from that due to price substitution effects, capturing the interdependence among economic sectors. The empirical result provides a better understanding of the effects on the economy of technological change in that significant period.     

Frack to the future: What enticed small firms to enter the natural gas market during the hydraulic fracturing boom?

The shale gas boom of the early 2000s saw the highest and most volatile natural gas prices and production in history. Advances in horizontal drilling, 3-D seismic imaging, and hydraulic fracturing made it highly profitable for firms to produce large quantities of shale gas. This period was also characterized by a shift in market structure. The U.S. natural gas market was historically defined by large firms, but a large number of small firms began entering the market after 2000. While small firms made a negligible contribution to natural gas production during the shale gas boom, their entry may signal overcapitalization, productivity growth, and increased responsiveness of natural gas markets to exogenous shocks. We develop a real options model of market entry and exit and use data on natural gas drilling activity to test three potential explanations for small firm entry during the boom: 1. technological advances, 2. land lease speculation, and 3. regime change in natural gas prices. Our analysis provides mixed support for the first explanation but strong support for the last two.     

From oil to consumer energy prices: How much asymmetry along the way?

A longstanding question in macroeconomics is whether fuel prices react more to increases than to decreases of the price of oil. This paper analyzes the response of weekly gasoline and gasoil prices to oil prices in the U.S., the euro area and the four largest euro area countries (Germany, France, Italy and Spain) using nonlinear impulse response functions and forecast accuracy tests. While for the U.S. both approaches point to the presence of asymmetries in the adjustment of retail prices, for the euro area the evidence is mixed.     

CO2-free hydrogen as a substitute to fossil fuels: What are the targets? Prospective assessment of the hydrogen market attractiveness

Hydrogen is usually presented as a promising energy carrier that has a major role to play in low carbon mobility, through the use of fuel cells. However, such a market is not expected in the short term. In the meantime, hydrogen may also contribute to reduce carbon emissions in diverse sectors: oil refining, low carbon mobility through the industrial deployment of advanced biofuels, natural gas consumption, and methanol production. According to the targeted market, objective costs are rather different; and so is the reachable mitigated CO₂ amount.     

Understanding ‘local’ opposition to wind development in the UK: How big is a backyard?

In recognition of the environmental and economic threats posed by climate change; decisive steps are now being taken to stabilise greenhouse gas emissions. One sector receiving particular attention within the UK is that of electricity generation. As such, the government has introduced ambitious targets for increasing renewable generating capacity within the country. Wind turbines are expected to play a significant role in meeting these targets; however, despite high levels of support for the technology in principle, specific projects are often delayed or rejected on account of local opposition. This study aimed to establish how attitudes towards development might vary with respect to increasing distance from the identified sites. Participants were required to register their opinion towards development at a number of on- and off-shore locations in the UK. The results indicated that participants were most favourable to offshore development and least favourable to development at the identified sites. Attitudes to onshore development indicated that so long as a proposed location was anticipated to be ‘out of sight’ it was considered in relatively general terms. The results are discussed with reference to site visibility and landscape concerns and clearly support calls for a shift towards community-focussed development strategies.     

Oil-exporting countries of the Persian Gulf: What happened to all that money?

Our objective is to assess the economic performance of Middle Eastern oil-exporting countries over the past 25 years based on their general economic characteristics (economic dependence on a depletable resource) and attendant policy requirements (transforming to a non-depletable resource-based economy). As oil-exporting countries, we assess the macroeconomic and development policies that they should have implemented and have actually implemented over time. We find that their policies have rarely been consistent with the requirements of exhaustible resource-based economies. This has resulted in a widespread misallocation of resources and a divergence from their essential goal of economic transformation.     

How important are national companies for oil and gas sector performance? Lessons from the Bolivia and Brazil case studies

Control of natural resources, especially oil and gas, has been a major issue in the consideration of underdevelopment. In the present commodity boom, some Latin American economies are reforming their resource exploitation regimes, especially those issues linked with foreign capital share. The purpose of this report is to analyze these changes in the Bolivian and Brazilian oil and gas sectors in order to answer such questions as: Which property system combining public and private capital is the most suitable? Which regulating framework can guarantee a sustainable increase in output and investment? Our analyses lead to the conclusion that the regulatory framework can establish a particular ownership structure that is considered favorable for improving the performance of oil and gas sector, but the internal dynamics and the historical trajectories of enterprises will also be determining factors that interact with the given regulatory framework, generating mixed results.