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Begin New Search Topic Energy Policy Political Geography Global Focus Content Type Working Paper Publication Year within 5 Years

1. Navigating the Crises in European Energy

Author:
Michael Grubb
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The energy crisis engulfing Europe is a crisis of both gas and electricity markets, with huge cost impacts on consumers across all European countries. In Britain, half of typical household energy expenditure arises from electricity. This paper examines how the cost of gas-powered generation feeds through to electricity bills, on the principle of marginal cost pricing, setting the price for most of the time though it accounts for only about 40% of GB generation. Combined with the steep decline in wind and solar costs over the past decade, this has resulted in an unprecedented degree of ‘cost inversion’ in the electricity system. We offer estimates of the increase of revenues across the wholesale market, and outline five principles for reform for addressing the combined challenges of energy costs and accelerating low-carbon transition.
Topic:
Climate Change, Energy Policy, Environment, Green Technology, and Energy Crisis
Political Geography:
Global Focus

2. Who’s Responsible for Climate Change? New Evidence Based on Country-Level Estimates of Climate Debt

Author:
Benedict Clements, Sanjeev Gupta, and Jianhong Liu
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
In this paper, we introduce the concept of climate debt and provide country-level estimates through 2035 under a business-as-usual scenario. These estimates can help inform the debate on climate change by providing a clear view of which countries have (until the present) contributed the most to climate change, as well as the likely path for climate debt by country over the next 15 years. We then discuss the implications for carbon emissions if the G-20 countries and EU were to adopt either of the two policy options proposed in recent months: the first by President Biden for the US and the other by the EU for its member countries. The implications for fiscal policy are that beyond the need to keep public debt at sustainable levels, countries will also need to allocate funds for expected increases in pension and health spending associated with aging populations. As a result, there may be little room for new expenditures (such as green infrastructure or subsidies for clean energy) to reduce the growth of climate debt. Countries could turn to the revenue side, in particular greater taxation of energy with carbon taxes. This would have the advantage of reducing emissions while also helping countries to fund spending on green infrastructure.
Topic:
Climate Change, Energy Policy, Environment, Humanitarian Response, and Green Transition
Political Geography:
Global Focus

3. Valuing Climate Liabilities: Calculating the Cost of Countries’ Historical Damage from Carbon Emissions to Inform Future Climate Finance Commitments

Author:
Lee Robinson and Ian Mitchell
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
A central commitment of action on climate is the promise of “developed countries” to jointly mobilize $100 billion of climate finance per year by 2020 (and through to 2025), formalised at the UN climate change conference in 2010 (COP16). Five years later, the Paris Agreement reaffirmed this commitment and promised a new goal after 2025 “from a floor of USD 100 billion per year.” We propose an approach for calculating financial climate liabilities for each country based on their historical CO2 emissions, using the idea of an externality: a social cost that has not been borne by the agent whose actions produced it. The paper follows earlier work on calculating carbon debts (e.g., Kunnas, 2014) which we update with recent and authoritative research on carbon pricing methods. We also adjust for awareness, calculating the accruing of liabilities only from the time that countries knew that their emissions were harmful. We present several scenarios adjusting this and other assumptions. The main scenario produces a clearly quantified liability for each country and a total carbon liability to the world of $34 trillion, or $4,500 per capita. If this liability was used to set climate finance goals, it would suggest OECD countries would need to contribute $190 billion a year to 2100. The analysis also highlights that other industrialised countries, notably China and Russia, have also built-up substantial liabilities and should therefore also contribute to future climate finance goals.
Topic:
Climate Change, Energy Policy, Environment, Carbon Emissions, and Green Transition
Political Geography:
Global Focus

4. The Case for Transparency in Power Project Contracts: A Proposal for the Creation of Global Disclosure Standards and PPA Watch

Author:
Mohamed Rali Badissy, Charles Kenny, and Todd Moss
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
he purpose of a nation’s power sector is to deliver reliable electricity at the lowest cost and for the greatest benefit. At the heart of any private electricity generation project is a Power Purchase Agreement (PPA), a contract that contains key provisions such as price, payment stipulations, and obligations by the offtaker utility and/or host-government. Despite their significant effects on service quality and public finances, these contracts are often negotiated and signed in secret, with even the most basic terms shielded from the citizenry. This opacity has created risks and, in a growing number of cases, contributed to costly and damaging outcomes, such as overpayment, overcapacity, large debts, and grid instability. Drawing on examples from enhanced transparency in public budgets, sovereign debt, and extractive industries, we propose that governments agree to publish PPAs with any public sector obligation and that funders of private generation projects also agree to minimum disclosure standards. The objective is to create incentives for better practice, improve governance of the power sector, reduce transaction costs, and ultimately, to deliver cheaper and more reliable power for people and businesses. Transparency of PPAs would support the efforts of government policymakers and planners, investors, and development finance institutions to accelerate energy market development and to reap the benefits of open competition. Greater disclosure would also provide crucial information for citizens to hold their own governments accountable for the contracts they sign on behalf of the public.
Topic:
Economics, Energy Policy, Transparency, Electricity, and Purchasing Power
Political Geography:
Global Focus

5. Long-Term Macroeconomic Projections of the World Economy

Author:
Lionel Fontagné, Erica Perego, and Gianluca Santoni
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
What will the global economy look like in a generation? The answer depends on the multiple forces driving long-term growth (demography, education, diffusion of technical progress, energy costs, investment and saving behaviour, international capital mobility) and requires a comprehensive framework to conceptualise them. We re-estimate the three-factor (capital, energy, labour) MAcro-econometric model of the Global Economy (MaGE), initially developed by Fouré et al. (2013), with a database covering 170 countries using state-of-the-art methods. We thus establish the long-term structural relationships that drive the dynamics of the World economy. The model projections to 2050 illustrate the expected changes in the World economy and their driving forces. In light of the projected volume of energy consumption, making these projections compatible with climate imperatives calls for increased technology sharing at the international level in order to decouple economic growth from energy use.
Topic:
Economics, Energy Policy, International Trade and Finance, and Macroeconomics
Political Geography:
Global Focus

6. Climate Policies after Paris: Pledge, Trade, and Recycle

Author:
Christopher Bohringer, Sonja Peterson, Thomas F. Rutherford, and Jan Schneider
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This article summarizes insights of the 36th Energy Modeling Forum study (EMF36) on the magnitude and distribution of economic adjustment costs to greenhouse gas emission reduction targets. Under the Paris Agreement countries voluntarily committed themselves to emission reductions – so-called Nationally Determined Contributions (NDCs) – in order to combat global warming. The study suggests that tightening of NDCs in line with the commonly agreed 2°C temperature target will induce global economic costs of roughly 1% in 2030 – yet, these costs are unevenly spread across regions with fossil fuel exporting countries being most adversely affected from the transition towards a low-carbon economy. In order to reduce adjustment costs at the global and regional level, comprehensive emissions trading which exploits leastcost abatement options is strongly desirable as it can relax contentious normative debates on equitable burden sharing. Lump-sum recycling of revenues from emissions pricing in equal amounts to every household appeals as an attractive strategy to mitigate regressive effects and thereby make stringent climate policy more acceptable on societal fairness grounds.
Topic:
Climate Change, Energy Policy, Environment, Recycling, and Carbon Emissions
Political Geography:
Global Focus

7. Fossil Fuel Subsidy Inventories vs. Net Carbon Prices: a Consistent Approach for Measuring Fossil Fuel Price Incentives

Author:
Jens Bohm and Sonja Peterson
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Different reports including the broadly cited OECD fossil fuel subsidy inventory arrive at high monetary values of fossil fuel subsidies and suggest that phasing out these subsidies has a high potential to increase the efficiency of climate policies. We show that the inventory approach gives misleading information about this potential since there is little correlation with net carbon prices that actually reflect the stringency of climate policies. We use data on net fossil fuel taxation from the OECD´s Taxing Energy Use report and augment it with data on subsidies and emission permits, to calculate national and sectoral net carbon prices for the top six emitters (China, US, India, Russia, Japan and Germany) and for Poland and Sweden, two European countries perceived as examples of opposing environmental policies. Our results show that in high-income countries, subsidies mainly relate to reduced fuel tax rates for certain uses, so that e.g. Sweden, for which the OECD inventory reports subsidies per ton of CO2 26 times higher than the US, has a 770% higher national net carbon price than the US. While Germany and Russia have similar subsidy levels in the OECD inventory, the national net carbon price in Germany is 50 €/tCO2, while producer subsidies lead to a negative net carbon price of -6€/tCO2 in Russia. Our results illustrate that raising taxes on fossil fuels will often lead to higher reported inventory subsidies. Inventory measures thus give little information about the efficiency of climate policy. Our analysis also shows the large differences in net carbon prices across countries and across sectors within countries. Net carbon prices should replace fossil fuel subsidies in the policy debates and become the basis for national energy tax reforms and international agreements on minimum carbon prices.
Topic:
Climate Change, Energy Policy, Environment, Natural Resources, and Fossil Fuels
Political Geography:
Global Focus

8. Social Contracts: Embracing a Just Technological and Energy Transition

Author:
Ian Goldin
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
Social contracts determine what is to be provided and by whom. In democracies, political processes determine these outcomes, with the extent to which individuals, communities, cities, businesses, governments, and other actors and institutions provide education, health, security, infrastructure, and justice to shape what comes to be understood as the social contract. Whether prevailing social contracts produce desirable consequences, such as human rights, individual freedom, self-determination, human development, prosperity, and equality reflects their efficacy. What is considered an effective contract in the US or Europe, may however be viewed very differently in China, with the priorities and norms associated with shaping social contracts, as well as the means to achieve them, varying from country to country and over time. In this brief, author Ian Goldin shows that many existing social contracts are inadequate and require renewal to overcome countries’ failures to address the needs of the majority of their citizens. New pressures on societies arising from the pace of change associated with the technological and energy revolutions have created an urgent need to build new social contracts which ensure that no one is left behind. This need has been made all the more urgent by the COVID-19 pandemic, which has shown the extent to which large parts of society—informal sector workers, uninsured self-employed, unemployed, migrants, and others—have fallen by the wayside due to outdated or non-existent social contracts. Establishing secure and comprehensive social contracts is not synonymous with the establishment of a welfare state, as this is only one way to secure effective social contracts. How welfare states adapt to meet the new technological and energy transition, and which other models may serve to build effective social contracts is a key question.
Topic:
Energy Policy, Science and Technology, Peace, Justice, Social Contract, Transition, and Inclusion
Political Geography:
Global Focus

9. DART-BIO: A technical description

Author:
Ruth Delzeit, Tobias Heimann, Franziska Schunemann, and Mareike Soder
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The goal of this technical paper is to present in a transparent way a detailed description of the DART-BIO model – the bioeconomy and land use version of the DART model. Key feature of the DART-BIO model is the explicit representation of the vegetable oil industry and the biofuel sector. The paper describes the construction and aggregation of the database used for the DART-BIO model. Further the theoretical structure of the model is elaborated. Thereby, crucial assumptions, elasticities and parameters embedded in the model are presented.
Topic:
Climate Change, Energy Policy, Oil, Biology, and Farming
Political Geography:
Global Focus

10. Energy Transition Fact Sheet: Pathways to 100% Clean Electricity

Author:
Center on Global Energy Policy
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
In order to decarbonize the US economy at a reasonable cost and on an accelerated timeline, the country needs to both grow and rapidly decarbonize the power sector. This process will require many new technologies that support an affordable, equitable, and achievable transition. Expanding the clean-electricity focus beyond variable renewable technologies to include other types of zero-carbon power—as well as investing in the transmission and distribution grid that delivers this power to communities around the country—will allow the US to build a reliable, secure, and sustainable zero-carbon power system.
Topic:
Energy Policy, Renewable Energy, and Carbon Emissions
Political Geography:
Global Focus