Centre for Climate and Energy Policy Working Papers (CCEP)
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Publication Metadata only Modeling the emissions-income relationship using long-run growth rates(Crawford School of Public Policy, The Australian National University, 2014-02) Anjum, Z.; Burke, P.; Gerlagh, R.; Stern, C.We adopt a new representation of the relationship between emissions and income using long-run growth rates. Our approach allows us to test multiple hypotheses about the drivers of per capita emissions in a single framework and avoid several of the econometric issues that have plagued previous studies. We find that for carbon dioxide emissions, scale, convergence, and resource endowment effects are statistically significant. For sulfur emissions, the scale and convergence effects are significant, there is a strong negative time effect, and non-English legal origin and higher population density are associated with more rapidly declining emissions. The environmental Kuznets effect is not statistically significant in our full sample for either carbon or sulfur.Publication Metadata only An analysis of the costs of energy saving and CO2 mitigation in rural households in China(Crawford School of Public Policy, The Australian National University, 2017-01) Zhang, Weishi; Stern, David I.; Liu, Xianbing; Cai, Wenjia; Wang, CanHouseholds may imperfectly implement energy saving measures. This study identifies two factors resulting in imperfect use of energy-saving technology by households. First, households often continue to use old technologies alongside new ones, and, second, technologies have shorter actual lifetimes than their designed lifetimes. We take these factors into account when computing marginal energy conservation cost and marginal CO2 abatement cost using data collected from a survey of rural households in three provinces in China. The results show that most space heating technologies are cost negative and their marginal abatement cost under full implementation ranges from -60 to 15 USD/t-CO2, while the marginal abatement cost of cooking technologies ranges from 12 to 85 USD/t-CO2. The marginal abatement costs of the majority of technologies increased after accounting for the two implementation factors. The marginal abatement cost in the imperfect implementation scenario is higher, with a range of -1 to 15 USD/t-CO2 for space heating, and 18 to 165 USD/t-CO2 for cooking. Assuming implementation factors are constant until 2035, annually achievable CO2 mitigation by 2035 is estimated to be 57, 11, and 10 Mt-CO2/y in Hebei, Guizhou, and Guangxi Provinces, respectively.Publication Metadata only What factors affect the competiveness of power generation sector in China? An analysis based on game cross-efficiency(Crawford School of Public Policy, The Australian National University, 2017-01) Xie, Bai-Chen; Gao, Jie; Zhang, Shuang; Zhang, ZhongXiangChina's unbundling reform in 2002 aimed to introduce competitiveness into the power industry, especially the generation sector, to improve its operational efficiency. Meanwhile, great concern about a range of environmental problems and global climate change increasingly calls for saving energy and abating emissions. Thus, the ability to balance the reduction of carbon emissions with economic benefits may to a great extent determine the competitiveness of power generation sector. This study first adopts the game cross-efficiency approach to evaluate the environmental efficiency of the generation sectors in China's 30 provinces. It then employs a system generalized method of moments model to explore the determinants of their performance while eliminating the associated endogeneity problem. The results of this first study combining the two methods indicate that efficiency gaps do exist among the regions even though overall efficiency has been improved. Despite the negative correlation between environmental efficiency and the thermal power ratio, the power mix should be adjusted gradually. The average firm size and capacity utilization rates are positive factors boosting the environmental efficiency. The incentive policies for clean energy development should be differentiated across regions according to their power mix and self-sufficiency ratio.Publication Metadata only APEC's exports of environmental goods: an exploratory analysis of performance(Crawford School of Public Policy, The Australian National University, 2018-03) Tran, H. T. T.; Kalirajan, K.Understanding the determinants of Environmental goods (EGs) trade is imperative for trade promotion and environmental protection. As the impacts of the determinants differ among EGs subgroups and countries, examining these determinants for each subgroup is necessary for policy recommendations. Export performances measured in terms of export efficiency using the stochastic frontier gravity model and data from APEC from 2007 to 2014 suggest that, albeit, the efforts in tariff reduction of APEC, do not appear to have reduced the constraints to increasing export efficiency of EGs trade over the period of analysis. Through the APEC regional cooperation, there is an urgent need to transfer technology in EGs to those countries with poor export efficiency from those countries enjoying the high level of realization of export efficiency including Japan, USA, China, and Canada.Publication Metadata only Energy paths in the European Union: A model-based clustering approach(Crawford School of Public Policy, The Australian National University, 2017-01) Csereklyei, Zsuzsanna; Thurner, Paul W.; Langer, Johannes; K?chenhoff, HelmutThis paper examines typical "?energy paths"?, i.e. the intertemporal development of the energy mixes of the member states of the European Union over 1971-2010. We apply model based clustering to detect major energy profiles and their compositional dynamics. The seven identified clusters show typical combinations of energy carriers dominating the primary energy consumption of a country. We find that countries tend to take a path towards higher quality energy mixes over time, however path inertia and dependencies arise from both infrastructure and resource endowments. Higher energy quality profiles are usually associated with higher national income and energy use per capita, supporting some evidence on the existence of a national-level energy ladder. We also find convergence in energy intensity over time, and a relationship between own resources and import dependency.Publication Open Access Energy price reform in China(Crawford School of Public Policy, The Australian National University, 2018-03) Zhang, Z. X.China has determined to assign the market a decisive role in allocating resources. To that end, getting energy prices right is crucial because this sends clear signals to both producers and consumers of energy. While the overall trend of China's energy pricing reform since 1984 has been moving away from the prices set by the central government in the centrally planned economy and towards a more market-oriented pricing mechanism, the pace and scale of the reform differ across energy types. This article discusses the evolution of price reforms for coal, petroleum products, natural gas, electricity and renewable power in China, and provides some analysis of these energy price reforms, in order to allow the market to play a decisive role in resource allocation and help China's transition to a low-carbon economy.Publication Open Access Allocating carbon responsibility: the role of spatial production fragmentation(Crawford School of Public Policy, The Australian National University, 2019-01) ZhanG, Z.; Zhang, Z.; Zhu, K.A number of studies have compared national carbon abatement responsibility under different carbon accounting schemes. However, the difficulty of the shift among different national carbon accounting schemes has rarely been quantitatively evaluated in the literature. Spatial production fragmentation over the recent decades has led to geographical separation among the primary inputs supplying regions, carbon emitting regions, and final consuming regions. The purpose of this paper is to reveal the effects of spatial production fragmentation on the shift from production-based to consumption-based and income-based national carbon accounting. Based on both demand- and supply-driven input-output analytical frameworks, this paper analyses the allocation of carbon responsibility for embodied and enabled emissions along production chains over the period 1995-2009. It was found that as much as 25% of embodied emissions and 20% of enabled emissions crossed national borders more than once in 2009. The shift among different carbon accounting schemes is not only related to the magnitude of trade related emissions but also related to border-crossing frequency associated with emissions embodied in or enabled by international trade. The increasingly fragmented production networks complicate the shift from production-based to consumption-based or income-based accounting and weaken the effectiveness of consumption-based or income-based accounting.Publication Open Access Using income contingent loans for the financing of the next million Australian solar rooftops(Crawford School of Public Policy, The Australian National University, 2015-03) Baldwin, K.; Chapman, B.; Raya, U.Rooftop solar systems have two major benefits: a reduction of carbon emissions (a public good) and future energy bill savings for consumers. However, the availability of solar energy systems to low-income households is constrained by access to finance for the initial investment cost, an issue which could potentially be addressed with the use of income contingent loans (ICLs). By applying unconditional quantile econometric methods to HILDA income data we illustrate that for a $10,000 loan for home owners ICLs can be used with little or no cost to government to help finance the next one million solar energy devices.Publication Open Access Windows of opportunity for catching up in formative clean-tech sectors and the rise of China in concentrated solar power(Crawford School of Public Policy, The Australian National University, 2021-01) Gosens, J.; Gilmanova, A.; Lilliestam, J.We analyse the potential for industry entry and catching up by latecomer countries or firms in formative sectors, by deriving a framework that builds on the concept of windows of opportunity for catching up. This framework highlights differences in technological, market, and institutional characteristics between formative and mature sectors, and elaborates how this may affect opportunities for catching up. We apply this framework to the global Concentrated Solar Power sector, in which China has rapidly narrowed the gap to the global forefront in terms of technological capabilities and market competitiveness. We find that the formative nature of the sector resulted in turbulent development of the technological, market, and institutional dimensions, making it more difficult for early leaders to retain leadership, and therefore easier for latecomer firms or countries to catch up. This signals an increased role in early-stage technology development in the next phase of the energy transition.Publication Open Access China's post-COVID-19 stimulus: no Green New Deal in sight(Crawford School of Public Policy, The Australian National University, 2020-03) Gosens, J.; Jotzo, F.Much hope has been placed on China's decisions regarding low-carbon stimulus following COVID-19. Analysis of China's recent Government Work Report suggests that while a repeat of recovery measures focused on high-emissions infrastructure following the 2008 global recession is not in the cards, a Chinese Green New Deal is not in sight either. Much investment is flowing to fossil fuel industries, whilst support policies for renewable energy industries are absent from Beijing's recovery program. These signs of environmental ambition taking a back seat are worrisome given that Beijing is currently designing its 14th Five-Year Plan. Published in Environmental Innovation and Societal Transitions.Publication Open Access Carbon pricing efficacy: Cross-country evidence(Crawford School of Public Policy, The Australian National University, 2020-02) Best, R.; Burke, P. J.; Jotzo, F.To date there has been an absence of cross-country empirical studies on the efficacy of carbon pricing. In this paper we present estimates of the contribution of carbon pricing to reducing national carbon dioxide (CO2) emissions from fuel combustion, using several econometric modelling approaches that control for other key policies and for structural factors that are relevant for emissions. We use data for 142 countries over a period of two decades, 43 of which had a carbon price in place at the national level or below by the end of the study period. We find evidence that the average annual growth rate of CO2 emissions from fuel combustion has been around two percentage points lower in countries that have had a carbon price compared to countries without. An additional euro per tonne of CO2 in carbon price is associated with a reduction in the subsequent annual emissions growth rate of approximately 0.3 percentage points, all else equal. While it is impossible to fully control for all relevant influences on emissions growth, our estimates suggest that the emissions trajectories of countries with and without carbon prices tend to diverge over time.Publication Open Access The greening of South-South trade: levels, growth, and specialization of trade in clean energy technologies between countries in the global South(Crawford School of Public Policy, The Australian National University, 2020-02) Gosens, J.Countries in the global South, or developing and emerging economies, are experiencing rapid economic growth, and increased economic integration with other countries in the global South, including trade. Some analysts have raised concerns that such South-South trade might encourage the use of outdated conventional energy technologies, and lock developing countries into high carbon growth paths. Here, trade data from the UN Comtrade database is analyzed with a gravity model of trade. Results show that levels of clean energy technologies in South-south trade were relatively low up until the first half of the 2010's, but that these are entirely comparable to North-North or other trade flows in recent years. The analysis thus finds no evidence to support concerns that South-South trade might encourage high carbon development. South-South trade contains particularly high levels of solar PV, hydropower, and electric two-wheeler technologies, whilst exporters in the global North are more competitive in markets for wind power equipment and electric vehicles. Trade in electric vehicles is the fastest growing class of clean energy technologies, and the dominance of Northern countries in their exports may mean that South-South trade could, in the foreseeable future, once again lag behind in levels of clean energy technologies.Publication Open Access Designing electricity markets for high penetration of zero or low marginal cost intermittent energy sources(Crawford School of Public Policy, The Australian National University, 2020-01) Gordon, L.; Stern, D.; Shanker, A.; Hogan, M.This article explores key market design issues to be addressed in future electricity markets dominated by intermittent renewable generation with near zero private marginal costs for generating electricity. Changing technology mixes will change market outcomes, but they do not change the fundamental economic principles behind market design. Market-clearing prices in such a market are not necessarily mostly zero even in an energy-only market, especially with grid scale storage, an active demand side of the market, and scarcity pricing. However, increasing intermittent generator penetration increases the importance for adequately pricing scarcity and all network constraints and services. Such pricing is required to deliver investment incentives for the right technologies to locate at the right locations to efficiently maintain a stable and reliable electrical network.Publication Open Access Have vehicle registration restrictions improved urban air quality in Japan?(Crawford School of Public Policy, The Australian National University, 2019-04) Nishitateno, S.; Burke, P. J.About 2.6 million non-compliant vehicles were removed from designated metropolitan areas in Japan after the introduction of vehicle registration restrictions under the 1992 Automobile NOx Control Law. Based on a difference-in-differences framework and using a monitor-level panel dataset for the period January 1981-December 2015, we find that the intervention led to a 3-6% reduction in the monthly mean ambient concentration of nitrogen dioxide (NO2) in the treated areas. Back-of-the-envelope calculations identify benefits equal to about US$104 million as a result of reduced mortality from asthma.Publication Open Access Evaluating the effectiveness of Australia's Small-scale Renewable Energy Scheme for rooftop solar(Crawford School of Public Policy, The Australian National University, 2019-03) Best, R.; Burke, P. J.; Nishitateno, S.Australia has among the highest rates of small-scale solar photovoltaic adoption in the world, with substantial geographical variation in uptake. Using postcode-level data up to December 2018, we quantify the impact of Australia's spatially-differentiated Small-scale Renewable Energy Scheme on solar uptake. We use spatial autoregressive models and other approaches such as a regression discontinuity design. The results indicate that postcodes receiving a higher subsidy factor have significantly more small-scale solar installations, after controlling for solar exposure and spatial patterns in the data. The subsidy elasticity of small-scale solar capacity installations during 2018 was around 1.2. We use this estimate to calculate that an increase in the subsidy flowing to new installations would be able to reduce carbon dioxide emissions at a subsidy cost of around US$36 per tonne, depending on assumptions.Publication Open Access Technology choices in the U.S. electricity industry before and after market restructuring(Crawford School of Public Policy, The Australian National University, 2017-01) Csereklyei, Z.; Stern, D.We study the drivers of the adoption of electricity generation technologies between 1970 and 2014 in the lower 48 U.S. states. Since the 1990s, major electricity market restructuring took place in some parts of the United States. We explore the implications of changing from a regulated "?cost-of-service"? or rate of return system to a partly and fully deregulated market on technology and fuel choices. We find that electricity market deregulation resulted in significant immediate investment in various natural gas technologies, and a reduction in coal investments. However, market deregulation impacted less negatively on high efficiency coal technologies. In states that adopted wholesale electricity markets, high natural gas prices resulted in more investment in coal and renewable technologies.Publication Open Access Product homogeneity, knowledge spillovers, and innovation: Why energy sector is perplexed by a slow pace of technological progress(Crawford School of Public Policy, The Australian National University, 2015-01) Jin, W.; Zhang, Z.There is a growing body of literature mentioning the slow pace of energy technological progress as compared to other technologies like information technology (IT), but the reasons why energy sector is perplexed by slow innovation remain unexplained. Based on a variety-expanding endogenous technological change model, this paper provides a rigorous economic exposition of the mechanism that underlies the slow progress of energy technological innovation. We show that in decentralized market equilibrium the growth rate of energy technology variety is lower than that of IT variety. This stems from both market fundamentals where the homogeneity of end-use energy goods is less likely to harness the pecuniary externality embedded in the household's love-for-variety preference, and technology fundamentals where the capital-intensiveness of energy technology inhibits the non-pecuniary technological externality due to knowledge spillovers. We further show that a social planner solution can promote energy technological progress, yet still cannot achieve an outcome in which energy technology variety grows faster than IT variety. By targeting subsidies on energy technology R&D and the use of intermediate primary energy inputs by secondary energy producers, the decentralized market equilibrium can achieve an outcome in which energy technology grows faster than IT.Publication Open Access The environmental Kuznets curve after 25 years(Crawford School of Public Policy, The Australian National University, 2015-04) Stern, D.The environmental Kuznets curve (EKC) has been the dominant approach among economists to modeling aggregate pollution emissions and ambient pollution concentrations over the last quarter century. Despite this, the EKC was criticized almost from the start and decomposition approaches have been more popular in other disciplines working on global climate change. More recently, convergence approaches to modeling emissions have become popular. This paper reviews the history of the EKC and alternative approaches. Applying an approach that synthesizes the EKC and convergence approaches, I show that convergence is important for explaining both pollution emissions and concentrations. On the other hand, while economic growth has had a monotonic positive effect on carbon and sulfur emissions, the EKC holds for concentrations of particulates. Negative time effects are important for sulfur emissions. The EKC seems to be most useful for modeling the ambient concentrations of pollutants it was originally applied to.Publication Open Access Long-run estimates of interfuel and interfactor elasticities(Crawford School of Public Policy, The Australian National University, 2016-01) Ma, C.; Stern, D.Meta-analyses of interfuel and capital-energy elasticities of substitution show that elasticity estimates are dependent on the type of data - time series, panel, or crosssection - and the estimators used. Econometric theory suggests that the between estimator might generate the best estimates of long-run elasticities but no existing estimates of elasticities of substitution have used it. Alternatively, Chirinko et al. argued in favor of estimating long-run elasticities of substitution using a long-run difference estimator. We provide estimates of China's interfuel and interfactor elasticities of substitution using the between and long-run difference estimators. To address potential omitted variables bias, we add province level inefficiency and national technological change terms to our regression model. The results show that demand for coal and electricity in China is very inelastic, while demand for diesel and gasoline is elastic. With the exception of gasoline and diesel, there are limited substitution possibilities among the fuels. Substitution possibilities are greater between energy and labor than between energy and capital. The results are quite different to some previous studies for China but coincide well with the patterns found in meta-analyses for long-run estimates of elasticities of substitution.Publication Open Access Carbon-based Border Tax Adjustments and China's International Trade: Analysis based on a Dynamic Computable General Equilibrium Model(Crawford School of Public Policy, The Australian National University, 2013-01) Tang, L.; Bao, Q.; Zhang, Z.; Wang, S.With large shares in global trade and carbon emissions, China's international trade is supposed to be significantly affected by the proposed carbon-based border tax adjustments (BTAs). This paper examines the impacts of BTAs imposed by USA and EU on China's international trade, based on a multi-sector dynamic computable general equilibrium (CGE) model. The simulation results suggest that BTAs would have a negative impact on China's international trade in terms of large losses in both exports and imports. As an additional border tariff, BTAs will directly affect China's exports by cutting down exports price level, whereas Chinese exporting enterprises will accordingly modify their strategies, significantly shifting from exports to domestic markets and from regions with BTAs policies towards other regions without them. Moreover, BTAs will affect China's total imports and sectoral import through influencing the whole economy in an indirect but more intricate way. Furthermore, the simulation results for coping policies indicate that enhancing China's power in world price determination and improving energy technology efficiency will effectively help mitigate the damages caused by BTAs.