• Energy Research

In view of pressing unemployment problems, policy makers across all parties jump on the prospects of renewable energy promotion as a job creation engine which can boost economic well-being. Our analytical model shows that initial labor market rigidities in theory provide some scope for such a double dividend. However, the practical outcome of renewable energy promotion might be sobering. Our computable general equilibrium analysis of subsidized electricity production from renewable energy sources (RES-E) in Germany suggests that the prospects for employment and welfare gains are quite limited and hinge crucially on the level of the subsidy rate and the financing mechanism. If RES-E subsidies are financed by labor taxes, welfare and employment effects are strictly negative for a broad range of subsidy rates. The use of an electricity tax to fund RES-E subsidies generates minor benefits for small subsidy rates but these benefits quickly turn into significant losses as the subsidy rate exceeds some threshold value.

Climate change is expected to have severe negative impacts on the livelihoods of smallholder farmers in developing countries. However, smallholder farmers and governments in these regions tend to be ill-prepared for the impacts of climate change. We present the results of a stakeholder-based multi-criteria analysis of climate change adaptation options for agriculture, natural resource management and water management in the upper Blue-Nile basin in Ethiopia. We use the PROMETHEE II outranking method to analyse data from a survey in which farmers and experts were asked to evaluate adaptation options based on potentially conflicting criteria. Adaptation options for soil and land management, such as crop rotation and composting, score high based on two sets of criteria for assessing adaptation options for agriculture. River diversion, preventing leaching and erosion, and drip irrigation are ranked highest as adaptation options for water management. Regarding natural resource management, the highest ranked adaptation options are afforestation, water retention and maximizing crop yield. Rankings by farmers and by experts are weakly correlated for agriculture and water management, and negatively correlated for natural resource management, which shows the importance of extension services and of involving farmers in the decision-making process to ensure the feasibility of adaptation options.

We develop a descriptive framework to facilitate policy instrument evaluation in relation to the low-carbon transition. The framework consists of a stock-taking and mapping analysis based on five questions. Four questions allow the policy maker to take stock of the existing set of instruments and provide a description of the key attributes and incentive of individual instruments. These attributes are subsequently mapped to identifiers of market failures related to the transition. A fifth question considers the coherence of the mix or package of policy instruments that the instruments constitute. The result is an overview of the incentives for firms and households to contribute to the transition towards a decarbonised economy. This can then be used to evaluate whether the set of policy instruments can be improved. We apply our framework to the residential and commercial (buildings) sector in an ambitious country, Austria.

The share of intermittent renewable electricity (IRE) in the future urban electricity system is expected to increase significantly. Sufficient back-up capacity is needed in the period when IRE output is low. Bioenergy is both dispatchable and carbon-neutral, and can hence be a promising option to back up IRE. The objective of this study is to explore the potential of urban waste biomass in backing up IRE in an urban electricity system. An urban electricity system model is developed to project future electricity generation configurations. Given the projected electricity generation configuration, the potential demand for bioenergy as back-up capacity is estimated by simulating hourly electricity demand and the supply of IRE for a whole year. The estimated potential demand for bioenergy is then compared with the potential supply of bioenergy from the urban waste stream. We apply our model using data for the city of Amsterdam, the Netherlands. The complementarity of wind and solar energy is found to reduce the demand for back-up capacity from bioenergy. An extreme weather day with hardly any wind and solar energy supply requires about 2800 tonne waste biomass per day in an emission reduction scenario and 1300 tonne waste biomass per day in a renewable energy quota scenario, respectively. The average daily waste biomass generated in the city is about 1400 tonne. Bioenergy storage as a buffer is found to be necessary due to the monthly fluctuations in both the supply and demand of waste biomass.

The ease with which firms can substitute away from energy to other inputs is an important determining factor in the costs of climate change mitigation policies. Climate policy simulation models usually represent this substitutability by using the Constant Elasticity of Substitution (CES) function with parameter values often taken from econometric studies. Hence, the accuracy of the estimated substitution parameters has a strong influence on the validity of the climate policy simulation. In this article, we attempt to replicate the results presented in a widely cited article in this field: ('Estimated substitution elasticities of a nested CES production function approach for Germany', Energy Economics, 20, 249-264). We first use the data and software reported in that article and compare our results with those reported in the original study. We then test the same data and a new, more recent, data set on German industrial data with an improved econometric approach. Despite applying various approaches and modifications, we are not able to replicate the results in We furthermore conclude that the data sets that are typically used to estimate nested CES functions often have too few observations and too little independent variation of the explanatory variables to obtain reliable estimates when using a direct non-linear approach.

AbstractAgriculture and forestry play an important role in emitting and storing greenhouse gases. For an efficient and cost‐effective climate policy, it is therefore important to include land use, land‐use change, and forestry (LULUCF) explicitly in economy‐climate models. This article gives an overview and assessment of existing approaches to include LULUCF into partial and general equilibrium economy‐climate models. For each class of models, we describe different examples, their treatment of land, and their potential for and applicability to policy analysis, as well as their shortcomings. We identify data requirements and conceptual problems, and provide suggestions for future research.

Abstract.  We study how restricting CO2 emissions affects resource prices and depletion over time. We use a Hotelling‐style model with two non‐renewable fossil fuels that differ in their carbon content (e.g., coal and natural gas) and in addition are imperfect substitutes in final good production. We show that an economy facing a CO2 flow‐constraint may substitute towards the relatively dirty input. As the economy tries to maximize output per unit of emissions it is not only carbon content that matters: productivity matters as well. With an announced constraint the economy first substitutes towards the less productive input such that more of the productive input is available when constrained. Preliminary empirical results suggest that it is cost‐effective to substitute away from dirty coal to cleaner oil or gas, but to substitute from natural gas towards the dirtier input oil.