July 27, 2008

The Factors Behind CO2 Emission Reduction in Transition Economies.

by Katrin Millock, Natalia Zugravu and Gerard Duchene

- The Central and Eastern European countries significantly reduced their carbon dioxide emissions between 1995 and 2003. Was this emission reduction just the fortuitous result of the major economic transformation undergone by countries in the transition? Or is it rather a result of more stringent environmental policy? The objective of the article is to answer this question through a simultaneous equation model of the demand (emissions) and supply (environmental stringency) of pollution.

Millock, K., N. Zugravu and G. Duchene (2008). "The Factors Behind CO2 Emission Reduction in Transition Economies." Feem Nota di Lavoro 58.08, Jul 2008.

Evaluating Voluntary Climate Programs in the United States.

by William A. Pizer, Richard D. Morgenstern and Jhih-Shyang Shih

- Despite the growing importance of voluntary programs as tools for environmental management, they have been subject to quite limited evaluation. Program evaluation in the absence of randomized experiments is difficult because the decision to participate may not be random and, in particular, may be correlated with the outcomes. The present study is designed to overcome these problems by gauging the environmental effectiveness of two voluntary climate change programs: the U.S. Environmental Protection Agency’s Climate Wise program and the U.S. Department of Energy’s Voluntary Reporting of Greenhouse Gases Program.

Pizer, W.A., R.D. Morgenstern and J.S. Shih (2008). "Evaluating Voluntary Climate Programs in the United States." RFF Discussion Paper DP 08-13, Jul 2008.

Managing Costs in a U.S. Greenhouse Gas Trading Program: A Workshop Summary.

by William A. Pizer

- Cost containment has emerged as a major point of contention in the current congressional debate about designing a cap-and-trade program to limit future U.S. greenhouse gas (GHG) emissions. This paper reviews basic concepts and policy options for cost management. The different sources and temporal dimensions of cost uncertainty are explored, along with possible mechanisms for addressing short- and long-term cost concerns, including banking and borrowing, emissions offsets, a price cap (or safety valve), quantity-limited allowance reserve, and the concept of an oversight entity for GHG allowance markets modeled on the Federal Reserve.

Pizer, W.A. (2008). "Managing Costs in a U.S. Greenhouse Gas Trading Program: A Workshop Summary." RFF Discussion Paper DP-08-23, Jul 2008.

Compensation for Electricity Consumers under a U.S. CO2 Emissions Cap.

by Anthony Paul, Dallas Burtraw and Karen L. Palmer

- Policies to cap emissions of carbon dioxide (CO2) in the U.S. economy could pose significant costs on the electricity sector, which contributes roughly 40 percent of total CO2 emissions in the U.S. Using a detailed simulation model of the electricity sector, this paper evaluates alternative ways that emission allowances can be allocated.

Paul, A., D. Burtraw and K.L. Palmer (2008). "Compensation for Electricity Consumers under a U.S. CO2 Emissions Cap." RFF Discussion Paper DP 08-25, Jul 2008.

Environmental Taxes.

by Don Fullerton, Andrew Leicester and Stephen Smith

- This chapter provides an overview of key economic issues in the use of taxation as an instrument of environmental policy in the UK. It first reviews economic arguments for using taxes and other market mechanisms in environmental policy, discusses the choice of tax base, and considers the value of the revenue from environmental taxes. It is argued that environmental tax revenues do not significantly alter economic constraints on tax policy, and that environmental taxes need to be justified primarily by the cost-effective achievement of environmental goals.

Fullerton, D., A. Leicester and S. Smith (2008). "Environmental Taxes." NBER Working Paper No. 14197, Jul 2008.

Optimal Control of Pollutants with Delayed Stock Accumulation.

by Ralph Winkler

- This paper studies the optimal control of a pollutant that accumulates with a delay. It is shown that optimal paths are, in general, non-monotonic and oscillatory, but monotonic if the objective function is additively separable. Hence, using additively separable objective functions as an approximation to a general objective function may be a misspecification. A numerical example illustrates that an additively separable approximation performs considerably worse in delayed compared to instantaneous stock accumulation.

Winkler, R. (2008). "Optimal Control of Pollutants with Delayed Stock Accumulation." Center of Economic Research at ETH Zurich, Switzerland, Jul 2008.

Declining Discount Rates: Economic Justifications and Implications for Long-Run Policy.

by Christian Gollier, Phoebe Koundouri and Theologos Pantelidis

- The use of a Declining Discount Rate (DDR), in cost-benefit analysis (CBA), compared to the use of a Constant Discount Rate, implies that the policy maker will put relatively more effort to improve social welfare in the far distant future than in the shorter time. This paper assesses the willingness to pay for (very) distant benefits, which should inform the desirability of policies and projects with immediate costs and distant benefits. The main point in this paper is that when uncertainty is introduced, the case for DDRs and the availability of a reliable empirical method for their estimation become compelling for CBA of long-run policies and projects.

Gollier, C., P. Koundouri and T. Pantelidis (2008). "Declining Discount Rates: Economic Justifications and Implications for Long-Run Policy." UMR Lerna Publications 08.17.261, Jun 2008.

Ecological Discounting.

by Christian Gollier

- Which rates should we use to discount costs and benefits of different nature at different time horizons? This paper answers this question by considering a representative agent consuming two goods whose availability evolves over time in a stochastic way. The Ramsey rule is extended by taking into account the degree of substitutability between the two goods and of the uncertainty surrounding the economic and environmental growths. The rate at which environmental impacts should be discounted is in general different from the one at which monetary benefits should be discounted. This paper provides arguments in favor of an ecological discount rate smaller than the economic discount rate.

Gollier, C. (2008). "Ecological Discounting." UMR Lerna Publications 08.18.262, Jul 2008.

Discounting with Fat-Tailed Economic Growth.

by Christian Gollier

- When the growth of aggregate consumption exhibits no serial correlation, the socially efficient discount rate is independent of the time horizon, because the wealth effect and the precautionary effect are proportional to the time horizon. In this paper, alternative growth processes are studied: an AR(1), a Brownian motion with unknown trend or volatility, a two-state regime switching model, and a model with an uncertain return of capital. All these models exhibit some persistence of shocks on the growth rate of the economy and fat tails, which implies that one should discount more distant costs and benefits at a smaller rate.

Gollier, C. (2008). "Discounting with Fat-Tailed Economic Growth." UMR Lerna Publications 08.19.263, Jul 2008.

Why Warner-Lieberman Failed and How to Get America’s Working Families behind the Next Cap-and-Trade Bill.

by David Wheeler

- Many observers have attributed the Senate’s failure to pass the Warner-Lieberman cap-and-trade bill to widespread denial of global warming and disinformation campaigns by energy companies. But public concern over global warming is now so widespread that other explanations are needed. This paper contains uses and econometric analysis of Senators’ votes to investigate the role of concerns about higher energy costs in states that are relatively poor or dependent on fossil fuels for power production.

Wheeler, D. (2008). "Why Warner-Lieberman Failed and How to Get America's Working Families behind the Next Cap-and-Trade Bill." Center for Global Development Working Paper 149, Jul 2008.

A Note on Emissions Taxes and Incomplete Information.

by Carlos A. Chavez and John K. Stranlund

- In contrast with what we perceive is the conventional wisdom about setting emissions taxes under uncertainty, this paper shows that setting a uniform tax equal to expected marginal damage is not generally efficient under incomplete information about firms’ abatement costs and damages from pollution.

Chavez, C.A. and J.K. Stranlund (2008). "A Note on Emissions Taxes and Incomplete Information." University of Massachusetts Amherst Department of Resource Economics Working Paper No. 2008-5, Jul 2008.

Bankruptcy Risk and Imperfectly Enforced Emissions Taxes.

by John K. Stranlund and Wei Zhang

- Under favorable but reasonable conditions, an imperfectly enforced emissions tax produces the efficient allocation of individual emissions control; aggregate emissions are independent of whether enforcement of the tax is sufficient to induce the full compliance of firms, and differences in individual violations are independent of firm-level differences. All of these desirable characteristics disappear when some firms under an emissions tax risk bankruptcy: the allocation of emissions control is inefficient, imperfect enforcement causes higher aggregate emissions, and financially insecure firms choose higher violations.

Stranlund, J.K. and W. Zhang (2008). "Bankruptcy Risk and Imperfectly Enforced Emissions Taxes." University of Massachusetts Amherst Department of Resource Economics Working Paper No. 2008-3, Jul 2008.

The Problem of Maintaining Compliance within Stable Coalitions: Experimental Evidence.

by David M. McEvoy, James J. Murphy, John M. Spraggon and John K. Stranlund

- This study examines the performance of stable cooperative coalitions that form to provide a public good when coalition members have the opportunity to not comply with their commitments. To counteract the incentive to violate their commitments, coalition members fund a third-party enforcer. This leads to the theoretical conclusion that stable coalitions are larger (and provide more of a public good) when their members must finance enforcement relative to when compliance is ensured without the need for costly enforcement. However, experiments reveal that giving coalition members the opportunity to violate their commitments while requiring them to finance enforcement to maintain compliance reduces the overall provision of the public good.

McEvoy, D.M., J.J. Murphy, J.M. Spraggon and J.K. Stranlund (2008). "The Problem of Maintaining Compliance within Stable Coalitions: Experimental Evidence." University of Massachusetts Amherst Department of Resource Economics Working Paper No. 2008-2, Jul 2008.

Building on Kyoto: Towards A Realistic Global Climate Agreement.

by Warwick J. McKibbin and Peter J. Wilcoxen

- In this paper, the authors discuss an alternative framework for international climate policy, the McKibbin-Wilcoxen Hybrid - an approach that focuses on coordinated actions rather than mandated, inflexible outcomes. Rather than committing to achieve specified emissions targets, participating countries would agree to adopt coordinated actions that are clear, measurable and enforceable within national borders. A framework based on common actions rather than common targets is particularly useful for accommodating the needs of developing countries.

McKibbin, W.J. and P.J. Wilcoxen (2008). "Building on Kyoto: Towards A Realistic Global Climate Agreement." CAMA Working Paper 13.2008, Jun 2008.

Preventing the Tragedy of the CO2 Commons: Exploring China’s Growth and the International Climate Framework.

by Warwick J. McKibbin, Peter J. Wilcoxen and Wing Thye Woo

- This paper use a dynamic multi-country general equilibrium model (the G-Cubed Model) to project a realistic BAU trajectory of carbon dioxide (CO2) emissions, and we find it to be even above the CO2 emissions from the high-growth scenario estimated by the Energy Information Agency in 2007. This outcome is a reminder that it has been usual so far to underestimate the growth in China energy consumption. Authors evaluate the merits of the different market-based CO2 reduction mechanisms like a carbon tax, a cap-and-trade scheme, and the McKibbin-Wilcoxen Hybrid (MWH) approach. Unexpected developments cause the different CO2 reduction mechanisms to create very different costs. Both the international carbon tax and the MWH approach are more economically efficient responses to uncertainty than the cap-and-trade scheme of the Kyoto Protocol.

Mckibbin, W.J., P.J. Wilcoxen and W.T. Woo (2008). "Preventing the Tragedy of the Co2 Commons: Exploring China's Growth and the International Climate Framework." CAMA Working Paper 14.2008, Jun 2008.

Addressing Human Vulnerability to Climate Change: Toward a 'No Regrets' Approach.

by Rasmus Heltberg, Steen Jorgensen and Paul B. Siegel

- This paper presents and applies a conceptual framework to address human vulnerability to climate change. Drawing upon social risk management and asset-based approaches, the conceptual framework provides a unifying lens to examine links between risks, adaptation, and vulnerability. The result is an integrated approach to increase the capacity of society to manage climate risks with a view to reduce the vulnerability of households and maintain or increase the opportunities for sustainable development.

Heltberg, R., S. Jorgensen and P.B. Siegel (2008). "Addressing Human Vulnerability to Climate Change: Toward a 'No Regrets' Approach." World Bank, Jul 2008.

How Oil from the North Went South.

by Samuel A. Van Vactor

- Until recently, most oil reserves were concentrated in a handful of super-giant fields, the largest of which are located in and around the Persian Gulf. Since the 1970s, oil supplies have grown significantly and become less concentrated, but most of the new finds are smaller or are located in high cost environments. A number of exploration geologists and neo-Malthusians have predicted the imminent peak of conventional oil production. Their concern ignores the immense size of lower-grade petroleum resources around the globe. The expected development of low-grade oil resources is a difficult step up the staircase of rising cost, but is well within the range of current technology and investment resources. The relevant question is the cost effectiveness of pursing such a strategy; it is not an issue of scarcity.

Van Vactor, S.A (2008). "How Oil from the North Went South." USAEE Working Paper No. 08-009, Jul 2008.

Imperfect Enforcement of Emissions Trading and Industry Welfare: A Laboratory Investigation.

by John K. Stranlund, James J. Murphy and John M. Spraggon

- This paper uses laboratory experiments to investigate the performance of emission permit markets when compliance is imperfectly enforced. In particular the authors examine deviations in observed aggregate payoffs and expected penalties from those derived from a model of risk-neutral payoff-maximizing firms. Results show that the experimental emissions markets were reasonably efficient at allocating individual emission control choices despite imperfect enforcement and significant noncompliance. However, violations and expected penalties were lower than predicted when these are predicted to be high, but were about the same as predicted values when these values were predicted to be low.

Stranlund, J.K., J.J. Murphy and J.M. Spraggon (2008). "Imperfect Enforcement of Emissions Trading and Industry Welfare: A Laboratory Investigation." University of Massachusetts Amherst Department of Resource Economics Working Paper No. 2008-1, Mar 2008.

July 20, 2008

"Twin Peaks" in Energy Prices: A Polluting Fossil Fuel with Learning in the Clean Substitute.

by Ujjayant Chakravorty, Andrew Leach and Michel Moreaux

- This paper contains a model to examine how environmental regulation in the form of a cap on aggregate emissions from a fossil fuel will affect the arrival of a clean substitute. The cost of the clean substitute decreases with cumulative use because of learning-by-doing. A surprising result is that energy prices may initially increase but then decline when we attain the targeted level of pollution, followed later by another cycle of rising and falling prices. The main implication is that environmental regulation when accompanied by learning may lead to cyclical behavior of energy prices.

Chakravorty, U., A. Leach and M. Moreaux (2008). "'Twin Peaks' in Energy Prices: A Polluting Fossil Fuel with Learning in the Clean Substitute." UMR Lerna Publications 08.15.259, Jul 2008.

Allocating Emissions Rights: Are Equal Shares, Fair Shares?

by Richard Starkey

- The paper finds that there is little support within the literature for the notion that the atmosphere or emissions sinks are a commons, at least in the (implicit) sense that non-philosophers use the word. It further finds that there is no alternative support for Equal Per Capita Allocation from within right-libertarianism. Support from egalitarian liberalism and left-libertarianism is at best qualified in the sense that an equal per capita allocation may be the closest allocation in practice to the somewhat unequal allocations that these perspectives would find fairest in theory.

Starkey, R. (2008). "Allocating Emissions Rights: Are Equal Shares, Fair Shares?" Tyndall Centre Working Paper 118, Jul 2008.

Technological Uncertainty and Cost-effectiveness of CO2 Emission Trading Schemes.

by Andreas Löschel and Vincent M. Otto

- This paper studies implications of uncertainty about the arrival date of a competitive CO2 backstop technology for the design of cost-effective CO2 emission trading schemes. A dynamic general equilibrium model is used to captures empirical links between CO2 emissions associated with energy use, the rate and direction of technical change and the economy. CO2 capture and storage (CCS) is the backstop technology whose competitiveness is anticipated or not.

Löschel, A. and V.M. Otto (2008). "Technological Uncertainty and Cost-effectiveness of CO2 Emission Trading Schemes." ZEW Discussion Paper No. 08-050, Jul 2008.

Employment Impacts of EU Biofuels Policy: Combining Bottom-up Technology Information and Sectoral Market Simulations in an Input-output Framework.

by Frederik Neuwahl, Andreas Löschel, Ignazio Mongelli and Luis Delgado

- This paper analyses the employment consequences of policies aimed to support biofuels in the European Union. The employment impacts of increasing biofuels shares are calculated by taking into account a set of elements comprising the demand for capital goods required to produce biofuels, the additional demand for agricultural feedstock, higher fuel prices or reduced household budget in the case of price subsidisation, price effects ensuing from a hypothetical world oil price reduction linked to substitution in the EU market, and price impacts on agro-food commodities. Employment effects are assessed in an input-output framework taking into account bottom-up technology information to specify biofuels activities and linked to partial equilibrium models for the agricultural and energy sectors.

Neuwahl, F., A. Löschel, I. Mongelli und L. Delgado (2008). "Employment Impacts of EU Biofuels Policy: Combining Bottom-up Technology Information and Sectoral Market Simulations in an Input-output Framework." ZEW Discussion Paper No. 08-049, Jul 2008.

On Modeling and Interpreting the Economics of Catastrophic Climate Change.

by Martin L. Weitzman

- With climate change as prototype example, this paper analyzes the implications of structural uncertainty for the economics of low-probability high-impact catastrophes. Even when updated by Bayesian learning, uncertain structural parameters induce a critical "tail fattening" of posterior-predictive distributions. Such fattened tails have strong implications for situations, like climate change, where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages. This paper shows that the economic consequences of fat-tailed structural uncertainty (along with unsureness about high-temperature damages) can readily outweigh the effects of discounting in climate-change policy analysis.

Weitzman, M.L (2008). "On Modeling and Interpreting the Economics of Catastrophic Climate Change." Harvard University, Final Draft, Jul 2008.

Interpreting Interim Deviations from Cost Projections for Publicly-Supported Energy Technologies.

by Gregory F. Nemet

- Widespread public funding of nascent energy technologies, combined with recent increases in the costs of those that have been most heavily supported, has raised the stakes of a policy dilemma: should policy makers sustain these programs anticipating that recent cost increases are temporary disturbances or should they eliminate them to avoid risking billions of dollars of public funds on technological dead ends? This paper uses experience curves for photovoltaics (PV) and wind to (1) estimate the range of possible policy outcomes and (2) introduce new ways of assessing near term cost dynamics.

Nemet, G.F. (2008). "Interpreting Interim Deviations from Cost Projections for Publicly-Supported Energy Technologies." La Follette School Working Paper No. 2008-012, Jun 2008.

July 13, 2008

Garnaut Climate Change Review - Draft Report.

by Ross Garnaut

- The Draft Report describes the methodology that the Review is applying to evaluation of the costs and benefits of climate change; to the application of the science of climate change to Australia; to the international context of Australian mitigation, and to Australian mitigation policy. The Draft Report is a stage in the journey toward the Final Report at the end of September 2008. It follows the Interim Report and the Emissions Trading Scheme Discussion Paper released in February 2008 and March 2008 respectively. The Draft Report has been released on 4 July 2008.

Link to Report Summary.

To download the full Draft Report [13.6MB] or to download single chapters follow the link to the Garnaut Climate Change Review Web Site.

Greenhouse Gas Emission Mitigation and Energy Intensities in Agriculture.

by Uwe A. Schneider and Pete Smith

- Energy efficiency and greenhouse gas emissions are closely linked. This paper reviews agricultural options to reduce energy intensities and their impacts, discusses important accounting issues related to system boundaries, land scarcity, and measurement units, and compares agricultural energy intensities and improvement potentials on an international level. Agricultural development in the past decades, while increasing yields, led to lower average energy efficiencies between the sixties and mid eighties. In the last two decades, energy intensities in developed countries increased, however, with little impact on greenhouse gas emissions. Efficiency differences across countries suggest a maximum improvement potential of 500 million tons of CO2 annually.

Schneider, U.A. and P. Smith (2008). "Greenhouse Gas Emission Mitigation and Energy Intensities in Agriculture." FNU-164, Hamburg University and Centre for Marine and Atmospheric Science, Hamburg, Jul 2008.

Toward a Post-Kyoto Climate Change Architecture: A Political Analysis.

by Robert O. Keohane and Kal Raustiala

- This paper proposes an international climate architecture that builds on broad public support in developed nation and uses multilateral international institutions to extend its effects to countries without such "green" publics. First, it is suggested that politicians' desire for public recognition could be manipulated through an "economy of esteem" in which incentives, such as prizes for climate leadership, are used to encourage additional climate-related actions. Second, it is argued that an international cap-and-trade system in which buyers are liable for the validity of their emissions permits is the only international architecture that is likely to solve the three problems of (1) participation by many nations, (2) effectiveness at reducing global greenhouse gas emissions, and (3) compliance by all participants.

Keohane, R.O. and K. Raustiala (2008). "Toward a Post-Kyoto Climate Change Architecture: A Political Analysis." Discussion Paper 2008-01, Harvard Project on International Climate Agreements, Jul 2008.

Is the Climate Sensitivity Even More Uncertain?

by Katsumasa Tanaka, Thomas Raddatz, Brian C. O’Neill and Christian H. Reick

- Uncertainty in climate sensitivity is a fundamental problem for projections of the future climate. Climate sensitivity is defined as the equilibrium response of global-mean surface air temperature to a doubling of the atmospheric CO2 concentration from the preindustrial level. In spite of various efforts to estimate its value, climate sensitivity is still not well constrained, posing a difficulty to informing climate change policy. This paper shows that the climate sensitivity is in fact even more uncertain than has been found by earlier studies.

Tanaka, K., T. Raddatz, B.C. O’Neill and C.H. Reick (2008). "Is the Climate Sensitivity Even More Uncertain?" IIASA Interim Report, IR-08-012, Jul 2008.

Biofuels for Transportation: A Climate Perspective.

by Naomi Peña

- This paper offers an introduction to the current state of play for biofuels: the technologies used in their production, their GHG emissions, and associated policy issues.

Peña, N. (2008). "Biofuels for Transportation: A Climate Perspective." Pew Climate Center, Solutions White Paper Series, Jun 2008.

July 6, 2008

U.S. Annual Energy Review.

by the Energy Information Administration

- The Annual Energy Review (AER) is the Energy Information Administration's primary report of historical annual energy statistics. For many series, data begin with the year 1949. Included are data on total energy production, consumption, and trade; overviews of petroleum, natural gas, coal, electricity, nuclear energy, renewable energy, international energy, as well as financial and environmental indicators; and data unit conversion tables.

EIA (2008). "Annual Energy Review." Energy Information Administration, Jul 2008.

Climate Choreography: How Open and Distributed Innovation Could Accelerate Technology Development and Deployment.

by Lewis Milford, Daniel Dutcher and Todd Barker

- This new report from CEG calls for new "distributed" and "open" innovation strategies to accelerate climate technology innovation, and a new and independent global institution to fund and use these 21st century networked strategies. The report is based on input from meetings and discussions over the last two years with representatives from companies, NGOs and governments around the world.

Milford, L., D. Dutcher and T. Barker (2008). "Climate Choreography: How Open and Distributed Innovation Could Accelerate Technology Development and Deployment." Clean Energy Group Report, Jul 2008.

Climate Change and Economic Growth: Evidence from the Last Half Century.

by Melissa Dell, Benjamin F. Jones and Benjamin A. Olken

- This paper uses annual variation in temperature and precipitation over the past 50 years to examine the impact of climatic changes on economic activity throughout the world. There are three primary results. First, higher temperatures substantially reduce economic growth in poor countries but have little effect in rich countries. Second, higher temperatures appear to reduce growth rates in poor countries, rather than just the level of output. Third, higher temperatures have wide-ranging effects in poor nations, reducing agricultural output, industrial output, and aggregate investment, and increasing political instability.

Dell, M., B.F. Jones and B.A. Olken (2008). "Climate Change and Economic Growth: Evidence from the Last Half Century." NBER Working Paper No. 14132, Jun 2008.

The Impact of Urbanization on CO2 Emissions: Evidence from Developing Countries.

by Inmaculada Martínez-Zarzoso

- This paper analyzes the impact of urbanization on CO2 emissions in developing countries. Results show that, whereas the impact of population growth on emissions is above unity and only slightly different for upper, middle, and low-income countries, additional demographic variables, namely, urbanization, demonstrate a very different impact on emissions for low and lower-middle-income countries and upper-middle income countries. For the first set of countries, the elasticity, emission-urbanization, is higher than unity, whereas in the second group, the elasticity is 0.72, which is in accordance with the higher environmental impact observed in less developed regions. However, in upper-middle income countries and highly developed countries, the elasticity, emission-urbanization, is negative.

Martinez-Zarzoso, I. (2008). "The Impact of Urbanization on CO2 Emissions: Evidence from Developing Countries." FEEM Working Paper No. 50.2008, Jun 2008.

Managing R&D Risk in Renewable Energy.

by Gordon C. Rausser and Maya Papineau

- As firms increase their exposure in renewable energy markets, the public sector will be increasingly be pulled in the direction of insuring against the downside risks of clean energy investments. A central question arises in this context: what is the optimal ex-ante allocation of renewable energy R&D investment across the emerging technologies? From the standpoint of societal welfare, the optimal allocation of such support is fundamentally a problem of ex-ante portfolio analysis under risk and uncertainty. This paper presents the components of an ex-ante portfolio analysis of both public and private sector R&D risks in renewable energy.

Rausser, G.C. and M. Papineau (2008). "Managing R&D Risk in Renewable Energy." Department of Agricultural & Resource Economics, UCB. CUDARE Working Paper 1058, Jun 2008.

Inducing Socio-Technological Revolution in Energy Network Investment to Address Climate Change.

by Nicholas A.A. Howarth

- This paper argues that society has approached a turning point in the evolution of energy networks where it maybe possible to break from path-dependent high-carbon institutions to a new, low-carbon energy system. To develop this argument, first an evolutionary institutional economics model of agent behaviour is articulated in the context of the energy sector and climate change pressures. Secondly, building on the central role financial capital plays in this model, a historical analysis of the European energy sector is outlined. Finally, the policy implications of this analysis are made.

Howarth, N.A.A. (2008). "Inducing Socio-Technological Revolution in Energy Network Investment to Address Climate Change: An Evolutionary Institutional Economics Model of Agent Behaviour." Oxford University, School of Geography Working Paper 08-17, Jun 2008.

Confronting Climate Change: A Strategy for U.S. Foreign Policy.

by George E. Pataki, Thomas J. Wilsack, Michael A. Levi and David G. Victor

- Chaired by former New York governor George E. Pataki and former Iowa governor Thomas J. Vilsack, the CFR-sponsored Independent Task Force says that the United States must leverage ambitious, comprehensive, and equitable action at home to advance an effective policy abroad. It lays out a U.S. negotiating strategy for a global climate accord, outlining what the United States should be willing to offer and what it should expect others, including the rapidly emerging economies, to do in return.

Pataki, G.E., T.J. Wilsack, M.A. Levi and D.G. Victor (2008). "Confronting Climate Change: A Strategy for U.S. Foreign Policy." CFR Independent Task Force Report No. 61, Jun 2008.

Policymaking Under Pressure: The Perils of Incremental Responses to Climate Change.

by Cary Coglianese and Jocelyn D'Ambrosio

- Bolstered by the political science literature on the promise of incrementalism and democratic experimentalism, many proponents of climate change action favor incremental steps in the hope that they will improve the environment or at least serve as a basis for more comprehensive policies. Against this hopeful view, this paper explains why ad hoc responses to climate change may well be no better than, and possibly will be worse than, no action at all. Incremental climate change policies can give rise to predictable and nontrivial problems, such as non-effect, leakage, climate side effects, other side effects, lock-in, and lulling.

Coglianese, C. and J. D'Ambrosio (2008). "Policymaking Under Pressure: The Perils of Incremental Responses to Climate Change." Reg-Markets Center Working Paper 08-17, Jun 2008.

The Effect of Energy Efficiency on Swedish Carbon Dioxide Emissions 1993-2004.

by Asa Löfgren and Adrian Muller

- This paper undertakes a decomposition analysis using the Logarithmic-mean Divisia Index method (LMDI) to investigate the overall change in CO2 emissions from 1993-2004 in the Swedish business and industry sectors, and to identify the most important factors explaining this change. The authors find that only four sectors (agriculture; pulp and paper; basic metal; land transportation), out of the eight sectors that each contribute with more than 5% of total CO2 emissions, contributed to a decrease in CO2 emissions through increased energy efficiency. Even more striking is the result that on the aggregate level for the whole economy and summarizing over the whole period 1993-2004, a slightly positive effect of energy effciency on CO2 emissions can be identified, while changes in relative size, i.e. overall structural change, and substitution to cleaner fuels have been more important regarding reductions in aggregate emissions.

Löfgren, A. and A. Muller (2008). "The effect of energy efficiency on Swedish carbon dioxide emissions 1993-2004." University of Gothenburg. School of Business, Economics and Law, Working Papers in Economics No 311, Jun 2008.

Annual European Community greenhouse gas inventory 1990 - 2006 and inventory report 2008.

by the European Environment Agency

- This report is the annual submission of the greenhouse gas inventory of the European Community to the United Nations Framework Convention on Climate Change and the Kyoto Protocol. It presents greenhouse gas emissions between 1990 and 2006 for EU-27, EU-15, individual Member States and economic sectors. Between 2005 and 2006 emissions within the EU-27 fell by 0.3 %, and now stand 7.7 % below 1990 levels. Emissions in the 15 pre-2004 Member States (EU-15) decreased by 0.8% and now stand 2.7% below their levels in the base year (1990 in most cases).

European Environment Agency (2008). "Annual European Community Greenhouse Gas Inventory 1990-2006 and Inventory Report 2008." Technical report No 6/2008, Jun 2008.

Summary [484 KB]

Report [6028 KB]