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Abstract International politics affects the oil trade. But do financial and commercial traders who participate in spot oil trading also respond to changes in international politics? We construct a firm-level dataset for all U.S. oil-importing companies over 1986–2008 to examine how these firms respond to increases in “political distance” between the U.S. and her trading partners, measured by divergence in their UN General Assembly voting patterns. Consistent with previous macro evidence, we first show that individual firms diversify their oil imports politically, even after controlling for unobserved firm heterogeneity. However, the political pattern of oil imports is not entirely driven by the concerns of hold-up risks, which exist when oil transactions via term contracts are associated with backward vertical FDI that is subject to expropriation. In particular, our results indicate that even financial and commercial traders significantly reduce their oil imports from U.S. political enemies. Interestingly, while these traders diversify their oil imports politically immediately after changes in international politics, other oil companies reduce their oil imports with a significant time lag. Our findings suggest that in designing regulations to avoid harmful repercussions on commodity and financial assets, policymakers need to understand the nature of political risk.

Abstract We demonstrate the importance of stock turnover on industrial energy efficiency through a literature review and a case study of energy-intensive equipment, i.e. the electric arc furnace in the US steel industry. We describe the common methods for assessing stock turnover. We have found that both stock turnover and retrofit are important elements to explain the energy efficiency improvement rates. We investigated the development of electricity use in electric arc furnaces in the United States by tracking the development of individual furnaces over the period 1990–2002. This provides a detailed picture of changes in the stock or fleet of furnaces through turnover and/or retrofit. Our results confirm the results of other empirical studies that there is no clear lifetime of equipment. However, retired furnaces are distinctly less efficient than furnaces remaining in the stock, while new furnaces are distinctly more efficient than the average stock. We found an annual average improvement in specific electricity consumption of 1.3%/year over the studied period, of which 0.7%/year was due to stock turnover and 0.5%/year due to retrofit of stock in service throughout the period.

Abstract Many energy-related investments are made without a clear financial understanding of their values, risks, and volatilities. In the face of this uncertainty, the investor—such as a building owner or an energy service company—will often choose to implement only the most certain and thus limited energy-efficiency measures. Conversely, commodities traders and other sophisticated investors accustomed to evaluating investments on a value, risk, and volatility basis often overlook energy-efficiency investments because risk and volatility information are not provided. Fortunately, energy-efficiency investments easily lend themselves to such analysis using tools similar to those applied to supply side risk management. Accurate and robust analysis demands a high level of understanding of the physical aspects of energy-efficiency, which enables the translation of physical performance data into the language of investment. With a risk management analysis framework in place, the two groups—energy-efficiency experts and investment decision-makers—can exchange the information they need to expand investment in demand-side energy projects. In this article, we first present the case for financial risk analysis in energy efficiency in the buildings sector. We then describe techniques and examples of how to identify, quantify, and manage risk. Finally, we describe emerging market-based opportunities in risk management for energy efficiency.

Abstract Numerous countries have set up strategic petroleum reserves (SPRs) in response to oil disruptions since 1970. While numerous studies model such programs, we found few that evaluate SPRs' historical performance. Thus, we evaluate the U.S. SPR's performance by comparing actual real costs with estimated real benefits. From 1976 to 2014, the real U.S. SPR cost was about $219 billion real (2014$) dollars, whereas the real benefit was only $122 billion. Sensitivity testing suggests such negative net benefits are qualitatively robust. However, if world oil demand is extremely inelastic to oil price or GDP is elastic enough to oil price shocks, the estimated U.S. SPR net benefit is positive. Sensitivity testing around total real costs and benefits range from $380 billion to $80 billion. Limited testing of IEA coordinated drawdowns suggests that total U.S. benefits jump from $122 billion to more than $400 billion putting the SPR strongly in the black. Limited testing of private sector inventory changes was more disappointing and tentatively suggests private activities may at times have offset some of the government drawdowns. With 20-20 hindsight, initial experimentation found that better management could have significantly enhanced the value of the U.S. SPR, especially for the 1990-91 disruption.

Abstract Like cities, many large national parks in the United States often include “urban” visitor and residential areas that mostly demand (rather than produce) energy and key urban materials. The U.S. National Park Service has committed to quantifying and reducing scopes 1 and 2 emissions by 35% and scope 3 emissions by 10% by 2020 for all parks. Current inventories however do not provide the specificity or granularity to evaluate solutions that address fundamental inefficiencies in these inventories. By quantifying and comparing the importance of different inventory sectors as well as upstream and downstream emissions in Yosemite National Park (YNP), this carbon footprint provides a case study and potential template for quantifying future emissions reductions, and for evaluating tradeoffs between them. Results indicate that visitor-related emissions comprise the largest fraction of the Yosemite carbon footprint, and that increases in annual visitation (3.43–3.90 million) coincide with and likely drive interannual increases in the magnitude of Yosemite′s extended inventory (126,000–130,000 t CO2e). Given this, it is recommended that “per visitor” efficiency be used as a metric to track progress. In this respect, YNP has annually decreased kilograms of GHG emissions per visitor from 36.58 (2008) to 32.90 (2011). We discuss opportunities for reducing this measure further.

In a recent paper Huntington lays some of the groundwork for more meaningful discussions between economists and technologists on the apparent underinvestment in energy efficiency. In a discussion illustrated by a production function, he points out that the technical efficiency of economic actors should be treated as an empirical question. Huntington's groundwork can be further extended by observing that there is a close relationship between production functions and conservation supply curves, an analytical tool routinely used by technologists. Here we show that a conservation supply curve can be obtained from a production function by a simple transformation.

Abstract The benefit-cost analysis of standards to reduce vehicle greenhouse gas emissions and improve fuel economy by the U.S. Environmental Protection Agency (EPA) and the Department of Transportation (DOT) displays large net benefits from fuel savings for new vehicle buyers. This finding points to an energy efficiency gap: the energy-saving technology provided in private markets appears not to include all the technologies that produce net private benefits. The gap exists if the costs of energy-saving technologies are lower than the present value of fuel reductions, and “hidden costs” – undesirable aspects of the new technologies – do not exceed the net financial benefits. This study examines the existence of hidden costs in energy-saving technologies through a content analysis of auto reviews of model-year 2014 vehicles. Results suggest that it is possible to use fuel-saving technologies on vehicles without imposing hidden costs. For each technology examined, reviews with positive evaluations outnumbered those with negative evaluations. Evidence is scant of a robust relationship between vehicles’ use of energy-saving technologies and negatively rated operational characteristics, such as handling or acceleration. Results do not provide evidence for hidden costs as the explanation of the efficiency gap for vehicle fuel-saving technologies.

Using an experiment embedded within a representative survey, this study examined the interactive effect of party identification and risk/benefit perception on public opinion about biofuels. Democrats tended to be more supportive of biofuels than Republicans. However, the effect of party identification on opinion about biofuels varied when individuals considered the risk/benefit of biofuels in different domains. Individuals who reported greater affiliation with the Democratic Party were likely to support funding biofuels research when primed with the economic risks or the social/ethical benefits of biofuels. For those who considered the social/ethical benefits of biofuels, more self-identified Democrats were likely to support biofuels production and use. However, more self-identified Democrats were less supportive of biofuels production and use when they considered the political risks of biofuels. Implications are discussed.

Abstract In modern developed economies, one of the primary objectives is to manage the transition from polluting to cleaner technologies as efficiently as possible. By now, in the current empirical literature, one can identify technological spillovers from environmental innovations as a major driver of this process. Specific energy policy aspects connected with industry behaviour have yet to be explored. The aim of this paper is to investigate energy efficiency via environmental innovation and the resulting degree of resilience and adaptation of both developed and developing countries. The work applies the non-parametric DEA (Data Envelopment Analysis) framework and Tobit analysis. For this scope, it is built a panel dataset made of some 5000 observations based on energy policy and sustainable development variables for 136 OECD and non-OECD countries. The results show that knowledge spillovers from environmental innovations reduce inefficiency and therefore strengthen the resilience of economies that decide and manage to invest adequately in the transition to more sustainable technologies. Besides, OECD countries improve their energy efficiency scores over time, whilst non-OECD countries do not. This implies that sustainable technologies transition is made more efficient by environmental innovation but the process is fostered by disposing of a resilient economic system – hence, vulnerability can affect the transition. These hypotheses lead to important economic, social and environmental implications for energy policy modelling.