Alternative policy impacts on US GHG emissions and energy security: A hybrid modeling approach

This study addresses the possible impacts of energy and climate policies, namely corporate average fleet efficiency (CAFE) standard, renewable fuel standard (RFS) and clean energy standard (CES), and an economy wide equivalent carbon tax on GHG emissions in the US to the year 2045. Bottom–up and top–down modeling approaches find widespread use in energy economic modeling and policy analysis, in which they differ mainly with respect to the emphasis placed on technology of the energy system and/or the comprehensiveness of endogenous market adjustments. For this study, we use a hybrid energy modeling approach, MARKAL–Macro, that combines the characteristics of two divergent approaches, in order to investigate and quantify the cost of climate policies for the US and an equivalent carbon tax. The approach incorporates Macro-economic feedbacks through a single sector neoclassical growth model while maintaining sectoral and technological detail of the bottom–up optimization framework with endogenous aggregated energy demand. Our analysis is done for two important objectives of the US energy policy: GHG reduction and increased energy security. Our results suggest that the emission tax achieves results quite similar to the CES policy but very different results in the transportation sector. The CAFE standard and RFS are more expensive than a carbon tax for emission reductions. However, the CAFE standard and RFS are much more efficient at achieving crude oil import reductions. The GDP losses are 2.0% and 1.2% relative to the base case for the policy case and carbon tax. That difference may be perceived as being small given the increased energy security gained from the CAFE and RFS policy measures and the uncertainty inherent in this type of analysis.     

Alternative technologies for US residential water heating : Energy savings and economic benefits

This article evaluates the energy savings and direct economic benefits of introducing heat pump and solar water heaters to the US residential market and the effects of a tax credit for solar installations. Energy savings are estimated for ten regions of the USA, as well as for the country as a whole, over the period 1977–2000. Changes in annual fuel bills and capital costs for water heaters are also computed. The results suggest that heat pump water heaters are likely to offer much larger benefits than solar heaters, even with tax credits. This is because heat pumps provide the same electricity savings (about 50%), but at a much lower capital cost.     

The role of public policy in optimizing renewable energy development in the greater southern Appalachian mountains

This research presents a third component of a comprehensive decision support system for energy planning that allows for combining existing electricity generating capabilities with increased use of renewable energy sources. It focuses on energy planning at the regional level, and concentrates specifically on the greater southern Appalachian mountains of the eastern United States: a region that was chosen for analysis not only due to its heavy dependence on coal for electricity, but also because of its potential for increased use of wind and solar power. Previous research used a geographic information system (GIS) model for identifying renewable energy potential to provide input data for a multi-objective linear programming (MOLP) model to determine the optimal constrained mix of renewable energy sources and existing fossil fuel facilities by balancing annual generation costs against the corresponding greenhouse gas emissions. This new component of the system analyzes three potential public policies—renewable portfolio standard, carbon tax, and renewable energy production tax credit—that have been used to foster increased renewable energy usage. These policies require minor modifications to the MOLP model for implementation. The results of these policy cases were then analyzed to determine the impact that these policies have on generation cost and pollution emissions within the region.     

The marginal cost of electricity used as backup for solar hot water systems: A case study

In this study, a method is developed for estimating the long run marginal cost to electric utilities of providing backup service for solar residential heating and hot water (HHW) systems. This method accounts for all investment, fuel, and operating costs required to provide the added electric service for HHW. From the information produced using this method, the impacts of various rate design philosophies and of government tax and regulatory policies on annual homeowner costs, fuel consumption patterns, environmental pollutants, and the net social cost of providing HHW service can be computed. Also, the differences in these parameters among solar, electric, and conventional HHW systems can be compared.In an initial study, it was found that for one Northeastern utility the estimated marginal cost of electricity for backup to solar hot water (HW) systems was less than that for comparable electric HW systems for the period of the mid to late 1990s. Load management (shifting all electricity use to off-peak periods) substantially reduced marginal costs for both electric and solar systems and essentially eliminated any difference between them. In all cases, the marginal cost was lower than the average cost of all electricity generated for market penetration rates that can realistically be expected to be experienced. The impact on total annual costs to homeowners of various electricity rate schemes and the impacts of Federal tax credits and property tax exemptions were computed. Net changes in resource consumption patterns due to the use of solar systems were estimated.     

An econometric analysis of energy input–output in Turkish agriculture

This study analyzes energy use and investigates influences of energy inputs and energy forms on output levels in Turkish agriculture during the period 1975–2000. The output level was calculated in the form of annual grain equivalent at aggregate level for 104 agricultural commodities except livestock products. Output level was specified as a function of total physical, fertilizer and seed energy, and ordinary least squares was employed to estimate equation parameters. The results show that total energy input has increased from 19.6 GJ/ha in 1975 to 45.7 GJ/ha in 2000, whereas total output energy has risen from 27.1 GJ/ha to a level of 39.1 GJ/ha. Energy efficiency indicators, input–output ratio, energy productivity and net energy have declined over the examined period. Total physical and fertilizer energy, particularly nitrogen, significantly contributed to output level with elasticities of 0.24 and 0.14, respectively. The results also revealed that non-renewable, direct and indirect energy forms had a positive impact on output level. Moreover, Turkish agriculture has experienced a substantial increase in non-renewable energy use. This inefficient energy use pattern in the Turkish agriculture can create some environmental problems such as increase in global warming, CO₂ emissions, and non-sustainability. Thus, policy makers should undertake new policy tools to ensure sustainability and efficient energy use.     

The energy demand and the impact by fossil fuels use in the Mexico City Metropolitan Area, from 1988 to 2000

Temporary variation for the demand of refining products which are used in the Mexico City Metropolitan Area (MCMA) is presented. Its consequent energy contribution is evaluated from 1988 to 2000. The annual estimation was integrated from a detailed inventory of fuels volume, so as the calculus of its respective energy equivalence. The fuel quality specifications, which have been required by regional Air Quality authority for controlling emissions to the atmosphere, are also presented for the same period. The evolution demand of fuels, in term of volume, quality and its energy contribution for this area, is compared with the national demand. On this regard, fuel pool differs in each bound and the demand along the same period has been increasing on both regions but at different rates, with 21% at MCMA and 31% countrywide. In 2000, the MCMA demanded 14% of the internal refining products volume sales, which represented 17% of the energy contribution to the country for those fuels. Likewise, the energy use coefficient (GJ per capita) was applied to compare this region with country trends. During 1996 and up to 2000, the MCMA presented slightly minor energy use per capita, than the rest of the country, and this period was distinguished also for using cleaner fuels and for obtaining improvements in air quality. On the other hand, MCMA and country greenhouse gases emissions will increase because of their fossil fuel dependence, so several mitigation measures must be implemented in the next decades.     

Gasoline taxes and revenue volatility: An application to California

This paper examines how applying different combinations of excise and sales taxes on motor fuels impact the volatility of retail fuel prices and tax revenues. Two features of gasoline and diesel markets make the choice of tax mechanism a unique problem. First, prices are very volatile. Second, demand for motor fuels is extremely inelastic. As a result, fuel expenditures vary substantially over time. Tying state revenues to these expenditures, as is the case with a sales tax, results in a volatile stream of revenue which imposes real costs on agents in an economy. On July 1, 2010, California enacted Assembly Bill x8-6, the “Gas Tax Swap”, increasing the excise tax and decreasing the sales tax on gasoline purchases. While the initial motivation behind the revenue neutral swap was to provide the state with greater flexibility within its budget, we highlight that this change has two potentially overlooked benefits; it reduces retail fuel price volatility and tax revenue volatility. Simulating the monthly fuel prices and tax revenues under alternative tax policies, we quantify the potential reductions in revenue volatility. The results reveal that greater benefits can be achieved by going beyond the tax swap and eliminating the gasoline sales tax entirely.     

The simple economics of motor vehicle pollution: A case for fuel tax

The volume of pollution produced by an automobile is determined by driver's behavior along three margins: (i) vehicle selection, (ii) kilometers driven, and (iii) on-road fuel economy. The first two margins have been studied extensively, however the third has received scant attention. How significant is this ‘intensive margin’? What would be the optimal policies when it is taken into account? The paper develops and analyzes a simple model of the technical and behavioral mechanisms that determine the volume emissions produced by a car. The results show that an optimal fuel tax would provide drivers with appropriate incentives along all three margins and that only public information is needed for a fuel tax to be set optimally. In contrast, an optimal distance tax would require private information. Lastly, relative to the optimal fuel tax, a simple uniform fuel tax is shown to be progressive. Thus, being already deployed worldwide, a uniform fuel tax is an attractive second-best policy. These findings should be accounted for when designing new mechanisms to alleviate motor vehicle pollution.     

Implications of CO2 reduction policies for a high carbon emitting economy

This paper uses a dynamic computable general equilibrium model to compare the macroeconomic and sectoral impacts of three environmental policies in Australia — an emissions trading scheme (ETS), an ETS combined with technological innovation in the renewable energy sector and a fuel tax as an alternative to the ETS. Overall, the impacts of the ETS were not significantly adverse. Although the fuel tax had similar impacts to the ETS on key macro-variables such as real GDP, employment, household consumption, exports and imports, it was however not effective compared to the latter in reducing emissions. Neither policy led to inflation growth of more than 0.8% for any coal mining and non-mining Australian state. At the sectoral level, the GDP growth of energy-intensive industries such as coal, iron ore, steel and coal-powered electricity generators is adversely affected while electricity generators who use gas and renewable energy sources and the forestry sector gain. It was also found that a 10% technological change in the renewable energy sector over a decade did not significantly improve the outcome when coupled with the ETS. Thus the Australian government's industry assistance to invest in low pollution technologies needs to be more aggressive to meet current and future international emission abatement targets.     

Policy effectiveness on emissions and cost reduction for hydrogen supply chains: The case for British Columbia

Hydrogen-specific policies are required to accelerate the adoption of low-carbon hydrogen. In this study, a range of economic instruments and regulations were incorporated explicitly to optimize a hydrogen supply chain. The effectivenes of policies aiming to enhance the financial viability of low-carbon hydrogen production was quantified. A spatially explicit, multi-period cost optimization model was developed for light duty hydrogen hydrogen vehicle deployment in British Columbia under three demand scenarios. Subsidies and regulations were coupled to current provincial policies (a carbon tax and a low carbon fuel standard). The results indicated that production tax credits and electricity incentives were up to 24 times more effective in facilitating low-carbon hydrogen production compared to capital subsidies, bans on steam methane reforming or the adoption of higher carbon taxes. The strategic deployment of policies over time was found to be more effective than cumulative subsidies.     

The role of hydrogen in the road transportation sector for a sustainable energy system: A case study of Korea

This study analyzes the impact of the introduction of hydrogen as fuel in the road transportation sector of Korea. Since this sector is completely dependent on petroleum and alternative technologies such as fuel cell vehicles, hydrogen is one alternative fuel that could meet the challenges that Korea is facing due to rising oil prices. This study uses a scenarios-based energy economic model including the hydrogen path way as a sub-energy system to explore the energy system of Korea through 2044. This study also constructs six scenarios consisting of three government policies concerning carbon dioxide reduction and two oil price scenarios in order to assess the impact on hydrogen as fuel in the road transportation sector. The results of this study show that in a particular case (high Btu tax and oil prices) the share of hydrogen would reach 76% of the road transportation sector, and hydrogen would be produced mainly from renewable and nuclear resources via electrolysis facilities. It is also revealed that hydrogen is effective at reducing carbon dioxide, improving energy efficiency and contributing to the energy security of Korea.     

Spatial and temporal optimization of hydrogen fuel supply chain for light duty passenger vehicles in British Columbia

British Columbia is well positioned to capitalize on its natural resources and its carbon policies towards the development of a hydrogen fueling network. A multi-period optimization model was developed to design a hydrogen fuel supply chain based on a mixed integer linear programming formulation. The model was applied to the light duty passenger vehicle sector in British Columbia under three hydrogen demand scenarios. As part of the objective function, the model incorporated the current provincial emissions mitigation policies, i.e., a carbon tax and a low-carbon fuel standard (LCFS). Based on cost, our model indicates that steam methane reforming (SMR) is the least costly hydrogen production technology even with carbon policies in place. However, SMR would result in higher emissions (compared to other pathways). Coupling the carbon tax with the LCFS can be a suitable policy option when hydrogen price and GHG emissions are weighted equally.     

How private car purchasing trends offset efficiency gains and the successful energy policy response

In 2006, energy-related CO₂ emissions from transport energy in Ireland were 168% above 1990 levels. Private cars were responsible for approx 45% of transport energy demand in 2006 (excluding fuel tourism). The average annual growth of new cars between 1990 and 2006 was 5.2%. This paper focuses on these new cars entering the private car fleet, in particular the purchasing trend towards larger size cars. This has considerably offset the improvements in the technical efficiency of individual car models. The analysis was carried out on the detailed data of each individual new vehicle entering the fleet in 2000–2006. The average CO₂ emissions per kilometre for new petrol cars entering the Irish fleet grew from 166 to 168 g CO₂/km from 2000 to 2005 and reduced to 164 in 2006. For diesel cars the average reduced from 166 in 2000 to 161 in 2006. The paper also discusses how a recent change in vehicle registration taxation and annual motor tax had a significant impact purchasing trends by supporting lower emission vehicles. Cars with emissions up to 155 g CO₂/km represented 41% of new private cars sold in Ireland in 2007 compared with 84% during the period July–November 2008.     

Current situation of energy conservation in high energy-consuming industries in Taiwan

Growing concern in Taiwan has arisen about energy consumption and its adverse environmental impact. The current situation of energy conservation in high energy-consuming industries in Taiwan, including the iron and steel, chemical, cement, pulp and paper, textiles and electric/electrical industries has been presented. Since the energy consumption of the top 100 energy users (T100) comprised over 50% of total industry energy consumption, focusing energy consumption reduction efforts on T100 energy users can achieve significant results. This study conducted on-site energy audits of 314 firms in Taiwan during 2000–2004, and identified potential electricity savings of 1,022,656 MWH, fuel oil savings of 174,643 kiloliters (KL), steam coal savings of 98,620 ton, and natural gas (NG) savings of 10,430 kilo cubic meters. The total potential energy saving thus was 489,505 KL of crude oil equivalent (KLOE), representing a reduction of 1,447,841 ton in the carbon dioxide emissions, equivalent to the annual carbon dioxide absorption capacity of a 39,131-ha plantation forest.     

Update of indicators for climate change mitigation in Greece

This paper analyses the factors affecting greenhouse gas (GHG) emissions in Greece, (i.e. the drivers of pressures on climate change), using environmental indicators related to energy, demographics and economic growth. The analysis is based on the data of 2008 and considers types of fuel and sectors. The Kaya identity is used to identify the relationship between drivers and pressures, using annual time series data of National GHG emissions, population, energy consumption and gross domestic product. The analysis shows that over the period 2000–2008, GHG emissions show a slight variation, but they are almost stabilised, with a total increase of 1.6%. Despite the economic growth over that period, this stabilisation may be considered as a combination of reductions in the energy intensity of GDP and the carbon intensity of energy, which are affected by improvements in energy efficiency and introduction of “cleaner” fuels, such as natural gas and renewables in the energy mixture of the country.     

A comparative analysis of energy and CO2 taxes on the primary energy mix for electricity generation

In many countries, economies are moving towards internalization of external costs of greenhouse‐gas (GHG) emissions. This can best be achieved by either imposing additional taxes or by using an emission‐permit‐trading scheme. The electricity sector is under scrutiny in the allocation of emission‐reduction objectives, not only because it is a large homogeneous target, but also because of the obvious emission‐reduction potential by decreasing power generation based on carbon‐intensive fuels. In this paper, we discuss the impact of a primary‐energy tax and a CO₂ tax on the dispatching strategy in power generation. In a case study for the Belgian power‐generating context, several tax levels are investigated and the impact on the optimal dispatch is simulated. The impact of the taxes on the power demand or on the investment strategies is not considered. As a conclusion, we find that a CO₂ tax is more effective than a primary‐energy tax. Both taxes accomplish an increased generation efficiency in the form of a promotion of combined‐cycle gas‐fired units over coal‐fired units. The CO₂ tax adds an incentive for fuel switching which can be achieved by altering the merit order of power plants or by switching to a fuel with a lower carbon content within a plant. For the CO₂ tax, 13 €/tonCO₂ is withheld as the optimal value which results in an emission reduction of 13% of the electricity‐related GHG emissions in the Belgian power context of 2000. A tax higher than 13 €/tonCO₂ does not contribute to the further reduction of GHGs. Copyright © 2005 John Wiley & Sons, Ltd.     

Direct application of geothermal energy: 2005 Worldwide review

This paper is a review of worldwide direct applications of geothermal energy. It attempts to update the surveys presented at and after the World Geothermal Congresses of 1995, 2000 and 2005. Seventy-two countries report direct utilization of geothermal energy. In May 2005, the direct-use projects had an estimated installed thermal capacity of 28,268 MWt. The thermal energy usage is 273,372 TJ/year (75,943 GWh/year), a 43% increase over 2000; the annual compound growth rate is 7.5%.The distribution of thermal energy used by category is approximately 32% for geothermal heat pumps, 30% for bathing and swimming (including balneology), 20% for space heating (of which 83% is for district heating), 7.5% for greenhouse and open-ground heating, 4% for industrial process heat, 4% for aquaculture pond and raceway heating, <1% for agricultural drying, <1% for snow melting and cooling, and <0.5% for other uses. The equivalent annual savings in fuel oil amounts to 170 million barrels (25.4 million tonnes) and 24 million tonnes in carbon emissions to the atmosphere.     

Should a vehicle fuel economy standard be combined with an economy-wide greenhouse gas emissions constraint? Implications for energy and climate policy in the United States

The United States has adopted fuel economy standards that require increases in the on-road efficiency of new passenger vehicles, with the goal of reducing petroleum use and (more recently) greenhouse gas (GHG) emissions. Understanding the cost and effectiveness of fuel economy standards, alone and in combination with economy-wide policies that constrain GHG emissions, is essential to inform coordinated design of future climate and energy policy. We use a computable general equilibrium model, the MIT Emissions Prediction and Policy Analysis (EPPA) model, to investigate the effect of combining a fuel economy standard with an economy-wide GHG emissions constraint in the United States. First, a fuel economy standard is shown to be at least six to fourteen times less cost effective than a price instrument (fuel tax) when targeting an identical reduction in cumulative gasoline use. Second, when combined with a cap-and-trade (CAT) policy, a binding fuel economy standard increases the cost of meeting the GHG emissions constraint by forcing expensive reductions in passenger vehicle gasoline use, displacing more cost-effective abatement opportunities. Third, the impact of adding a fuel economy standard to the CAT policy depends on the availability and cost of abatement opportunities in transport—if advanced biofuels provide a cost-competitive, low carbon alternative to gasoline, the fuel economy standard does not bind and the use of low carbon fuels in passenger vehicles makes a significantly larger contribution to GHG emissions abatement relative to the case when biofuels are not available. This analysis underscores the potentially large costs of a fuel economy standard relative to alternative policies aimed at reducing petroleum use and GHG emissions. It further emphasizes the need to consider sensitivity to vehicle technology and alternative fuel availability and costs as well as economy-wide responses when forecasting the energy, environmental, and economic outcomes of policy combinations.     

Analysis of energy use and CO2 emission in service industries: Evidence from Sweden

This study analyses the trends in energy use and CO₂ emissions for 19 sub-sectors in the Swedish service sectors following the classification of the International Standard Industrial Classification of all Economic Activities (ISIC) at the 2-digit level of aggregation over the period 1993–2008. This empirical study intends to examine energy use, energy efficiency and CO₂ emissions using data envelopment analysis (DEA) and panel data techniques. DEA is applied to assess energy efficiency within a production framework. Panel data techniques are used to determine which variables influence energy efficiency. The results show that Swedish services industries have increased energy consumption and CO₂ emissions in the period 1993–2008. The results from the DEA show significant variation in energy efficiency across service industries. The results also indicate that this sector has increased technical efficiency and energy efficiency while decreasing CO₂ emissions, especially in the later years of our sample period. The results of panel data techniques show that higher energy taxes, electricity consumption, investments and labour productivity generate higher energy efficiency, while higher fossil fuel consumption leads to lower energy efficiency. All findings of this study are important for developing effective energy policies that encourage better energy use and energy management in the service industries.     

Hydrogen's role in an uncertain energy future

This study explores global energy demand, and hydrogen's role, over the 21st century. It considers four illustrative cases: a high (1000 EJ) and a low (300 EJ) energy future, and for each of these conditions, a high (80%) and low (20%) fossil fuel energy share. We argue that neither high energy future is probable, because of resource limitations, and rising energy, environmental and money costs per unit of delivered energy as annual energy demand rises far beyond present levels. The low energy/low fossil case is most likely, followed by the low energy/high fossil case, although both require large cuts in energy use, and most probably, lifestyle changes in high energy use countries. Hydrogen production would be best favoured in the low fossil fuel options, with production both greater, and implemented earlier, in the higher energy case. It is thus least likely in the low energy/high fossil fuel case.