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Did the EU ETS Make a Difference? An Empirical Assessment Using Lithuanian Firm-Level Data

Jurate Jaraite-Kažukauske and Corrado Di Maria

Year: 2016
Volume: Volume 37
Number: Number 1
DOI: 10.5547/01956574.37.2.jjar
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Abstract:
We use a panel dataset of about 5,000 Lithuanian firms between 2003 and 2010, to assess the impact of the EU ETS on the environmental and economic performance of participating firms. Using a matching methodology, we are able to estimate the causal impact of EU ETS participation on CO2 emissions, CO2 intensity, investment behaviour and profitability of participating firms. Our results show that ETS participation did not lead to a reduction in CO2 emissions, while we identify a slight improvement in CO2 intensity. ETS participants are shown to have retired part of their less efficient capital stock, and to have made modest additional investments from 2010. We also show that the EU ETS did not represent a drag on the profitability of participating firms.



What is the Effect of Fuel Efficiency Information on Car Prices? Evidence from Switzerland

Anna Alberini, Markus Bareit and Massimo Filippini

Year: 2016
Volume: Volume 37
Number: Number 3
DOI: 10.5547/01956574.37.3.aalb
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Abstract:
Inadequate information is often identified as a potential cause for the so-called "energy efficiency gap," i.e., the sluggish pace of investment in energy efficiency technologies, which potentially affects a wide variety of energy-using goods, including road vehicles. To improve the fuel economy of vehicles, in 2003 Switzerland introduced a system of fuel economy and CO2 emissions labels for new passenger cars, based on grades from A (best) to G (worst). We have data for all cars approved for sale in Switzerland from 2000 to 2011. Hedonic regressions suggest that there is a fuel-economy premium, but do not allow us to identify whether the fuel economy label has an additional effect on car price, above and beyond the effect of fuel economy. To circumvent this problem, we turn to a sharp regression discontinuity design based on the mechanism used by the government to assign cars to the fuel economy label, which estimates the effect of the A label on price to be 6-11%. Matching estimators find this effect to be 5%.



Self-Generation and Households' Willingness to Pay for Reliable Electricity Service in Nigeria

Musiliu O. Oseni

Year: 2017
Volume: Volume 38
Number: Number 4
DOI: 10.5547/01956574.38.4.mose
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Abstract:
Many households in developing countries often engage in self-generation to mitigate the impacts of poor public electricity provision. What is less well known, however, is whether (and how) self-generation influences households' willingness to pay (WTP) for service reliability. Using data collected from a sample of Nigerian households, the results reveal that engagement in self-generation is positively correlated with WTP for reliability. This is despite the fact that self-generation reduces the negative welfare impact of unreliability. Further analyses, however, show that backup households' decisions to pay a higher amount than non-backup households are influenced by the costs of self-generation: an increase of N1 (US$0.006) in self-generation's fuel cost per-hour is associated with WTP about N5.22 (US$0.032) more in the monthly bill. However, households' WTP US$0.15-0.16/kWh of improved reliability is smaller than the marginal costs of reliability from self-generation - US$0.27-0.41/kWh. We conclude by discussing the policy implications of our findings.



Evaluating the Energy-Saving Effects of a Utility Demand-Side Management Program: A Difference-in-Difference Coarsened Exact Matching Approach

Richard Boampong

Year: 2020
Volume: Volume 41
Number: Number 4
DOI: 10.5547/01956574.41.4.rboa
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Abstract:
This paper seeks to estimate the energy-saving effect of a Demand-Side Management program, specifically Gainesville Regional Utility's (GRU) high-efficiency central Air Conditioner (AC) rebate program in which GRU offers incentives to its customers to replace their old, low-efficiency AC unit with a high-efficiency model. We use a difference-in-difference coarsened exact matching approach to reduce the imbalance of pre-treatment characteristics between treated and control households. We find substantial annual energy savings of the high-efficiency AC program. We disaggregate the energy-saving effects into summer peak effects, winter peak effects, and non-peak effects. The results indicate that the summer peak effects are substantial and statistically significant while there are little or no statistically significant effects of the program on winter peak demand. Also, by following program participants over a three-year period, we find that there is no statistically significant rebound effect of the high-efficiency AC rebate program.



Strategic Cost shifting in the Swedish District Heating and Electricity Markets

Magnus Söderberg

Year: 2020
Volume: Volume 41
Number: Number 5
DOI: 10.5547/01956574.41.5.msod
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Abstract:
Firms that operate combined heat and power (CHP) plants in Sweden face strong incentives to let their district heating (DH) customers subsidize the sales of electricity. This study investigates whether firms exploit the variation in competitive intensity across the two markets and 1) shift costs from electricity to DH, and 2) pass on any cost increase to consumers. A major empirical challenge is that firms endogenously decide whether to operate a CHP plant or not. Two different matching procedures are used to circumvent this problem. The results show that 1) compared with a similar non-CHP firm, the average CHP firm reports a DH cost that is 20�25% higher, 2) the extra cost that CHP firms report is fully passed on to consumers and 3) with reported costs, the price-cost margin is 8% for both groups and with imputed costs the margin increases to 30�35% for the CHP firms. The results are consistent with the presence of strategic cost shifting, which can be tackled through either stricter accounting rules or DH price regulation.



The Energy Efficiency Gap in the Rental Housing Market: It Takes Both Sides to Build a Bridge

Xavier Lambin, Joachim Schleich, and Corinne Faure

Year: 2023
Volume: Volume 44
Number: Number 1
DOI: 10.5547/01956574.44.1.xlam
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Abstract:
We revisit the issue of the energy efficiency (EE) gap by explicitly acknowledging the two-sided nature of the rental housing market and two-sided asymmetries of information between tenants and landlords. Employing a theoretical matching model, we show that Energy Performance Certificates (EPCs) that signal a dwelling’s energy performance induce optimal EE investments by landlords only if tenants pay their energy expenditures in full. When landlords pay part of the energy expenditures, they seek tenants who will conserve energy. Our model shows that asymmetry of information over tenant characteristics results in suboptimally low investments in EE. This may even render EPCs counterproductive. As a remedy, we show that tenant-side signaling needs to be rolled out jointly with EPCs and may even be sufficient when contracts include energy expenditures. Data from an original survey provides support for these insights and suggests that information on the tenants’ side contributes to more EE investment.



Oil Price Shocks and Current Account Imbalances within a Currency Union

Timo Baas and Ansgar Belke

Year: 2023
Volume: Volume 44
Number: Number 4
DOI: 10.5547/01956574.44.4.tbaa
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Abstract:
For over two decades, current account imbalances have been an essential issue in the global policy debate as they threaten the world economy's stability. More recently, the government debt crisis of the European Union shows that internal current account imbalances of a currency union may also add to these risks. Moreover, oil price fluctuations and a contracting monetary policy that reacts to oil prices, previously discussed to affect the current account, may threaten the currency union by increasing internal imbalances. Therefore, this paper analyzes the oil price shock's impact on current account imbalances of a currency union with asymmetric labor market institutions. In this context, we show that oil price shocks can have a long-lasting effect on internal balances that the common monetary policy authority can reduce by choosing a core inflation target. Targeting core inflation, however, comes at the cost of lower production and higher unemployment. We show that these costs can be significantly reduced by increasing labor market flexibility.





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