• Energy Research

European countries have experienced strong heat waves over the last two decades. The frequency and magnitude of such extreme weather events are expected to increase in the near future. Using an interdisciplinary approach, which combines meteorological, epidemiological and economic analyses, we assess the cost of heat-induced reductions in outdoor worker productivity in Europe caused by the heat waves in August of 2003, July of 2010, and July of 2015. We found that for the top ten most affected European countries, average direct economic losses in agriculture accounted for $59–90 per worker and for construction, it was $41–72 per worker. Direct economic losses were especially high in countries, such as Cyprus, Italy, and Spain. Social costs of heat-induced reductions in worker productivity in agriculture and construction account for an average of $2–3 per capita.

Domestic gas prices in Russia are administratively regulated, and they are substantially lower than export netback prices. The administrative price regulation operates as an implicit subsidy on domestic gas consumption. The Russian government aims to liberalise domestic wholesale gas prices in the long term. While the “export netback parity” is defined as a political objective, it seems not to be a necessary target anymore. The export netback parity is not economically rational for Russia because the average export netback price of gas is higher than the marginal cost due to Gazprom's market power in export gas markets. An optimal domestic gas price is still not well-defined. This paper addresses this question by employing a comparative static, single-country, multi-sector Computable Generation Equilibrium model (CGE). The administrative regulation of domestic gas prices is explicitly modelled. The main findings are as follows. An increase in the domestic gas price provides economic efficiency gains: the more elastic the export and domestic demand for gas, the larger the welfare gains. The optimal domestic gas price should be approximately 55% of the export netback price. Increasing the domestic gas price provides additional government revenues, which can be used to reduce distortionary taxes. On sectoral effects, the structure of the Russian economy shifts from energy toward non-energy intensive sectors in response to an increase in the domestic gas price. There is an increase in the export supply of gas. Furthermore, an increase in the domestic gas price leads to a reduction in total CO2 emissions.

Russia is not only one of the world?s major sources of carbon based energy ? coal, oil and gas ? but is also one the most intensive users of energy. Furthermore, Russia accounts for a disproportionately large share of global carbon dioxide emissions ? some 5% to 6% of global carbon dioxide emissions (EIA, 2011a). It has been estimated (World Bank, 2008) that Russia could reduce its use of primary energy use by 45% with consequent economic and environmental benefits. High energy and carbon intensity of the Russia economy is, inter alia, explained by low energy prices due to high export taxes as well as administrative regulation of domestic prices of gas and electricity and low environmental taxes. Carbon taxes are one such Pigouvian tax and they would address concerns on several fronts simultaneously. In the short to medium term they would, inter alia, lead to lower GHG emissions and encourage the diffusion of more energy efficient technologies. In the longer term, the increased cost of energy inputs is expected to induce technological progress. In this analysis, the macroeconomic and sectoral effects of carbon taxes on the Russia economy are examined. This analysis addresses the following objectives: i) to test the double dividend hypothesis under perfect and imperfect competition in output markets, to analyse ii) the incidence of carbon taxes, iii) impacts on sectoral competitiveness, iv) effects on income equity, and v) interactions of carbon taxes with other taxes. A computable single-country multi-sector comparative static CGE model is employed. Russland verfugt nicht nur uber einen der grosten Vorrate an kohlenstoffbasierter Energie wie Kohle, Rohol und Gas, sondern ist auch einer der grosten Energieverbraucher. Daruber hinaus ist Russland fur einen uberproportional grosen Anteil von Kohlendioxid-Emission - etwa 5% bis 6% ? der weltweiten Kohlendioxidemission verantwortlich. Mit der Einfuhrung einer Kohlendioxidsteuer konnten gleichzeitig unterschiedliche Wirkungen erzielt werden. Kurz- und mittelfristig wurden Kohlenstoffsteuern sowohl zu einer Reduzierung von Treibhausgasemissionen als auch zur Einfuhrung von energieeffizienteren Technologien fuhren. Langfristig wird erwartet, dass hohe Energiekosten den Anreiz zur Entwicklung und zur Investition in energiesparenden technischen Fortschritt erhohen. Die vorliegende Arbeit analysiert und bewertet die makrookonomischen und sektoralen Auswirkungen einer Einfuhrung von Kohlenstoffsteuern auf die russische Wirtschaft. Die Ziele der Arbeit bestehen darin, die Hypothese der doppelten Dividende fur den Fall des vollkommenen und des unvollkommenen Wettbewerbs auf Gutermarkten zu uberprufen und die Inzidenz einer Kohlenstoffsteuer, ihre Auswirkungen auf die sektorale Wettbewerbsfahigkeit, ihre Auswirkungen auf die Einkommensverteilung und die Interaktion von Kohlenstoffsteuern mit anderen Steuern zu analysieren und zu bewerten. Als methodischer Ansatz wurde ein Single-Country und Multi-Sektor Model gewahlt.

Climate change can significantly impact agriculture, leading to food security challenges. Most previous studies have investigated the direct climate impact on crops while neglecting the impact of heat stress on agricultural labor. Here, we assess the economic consequences of climate impacts on four major crops—maize, soybean, wheat, and rice—for scenarios involving low and high greenhouse gas emissions. Our analysis is based on the output from a new generation of global climate and crop models to drive a multiregional economic model. We find that, even under a high-emission scenario, the effect of CO$_2$ fertilization could lead to higher yields, resulting in lower prices for major crops, except for maize. However, heat-induced losses in agricultural labor could offset the potential economic benefits of CO$_2$ fertilization in crop production in Asia and Africa. Our findings emphasize the importance of addressing heat-stress impacts on agricultural labor through proactive adaptation measures.

Abstract Russia is one of the world's major sources of carbon based energy as well as one its most intensive users. Introducing carbon taxes can lead to a reduction in emissions and encourage investment in energy efficiency. We investigate the economic effects of carbon taxes on the Russian economy under perfect competition and a Cournot oligopoly in output markets. The main findings are: (i) substituting carbon taxes for labour taxes can yield a strong double dividend in Russia; however, welfare gains strongly depend on the labour supply elasticity and elasticities of substitution between capital, labour, and energy. (ii) Under the assumption of a Cournot oligopoly with homogenous products and symmetric firms in the markets for natural gas, petroleum and chemical products, metals, and minerals, welfare costs of the environmental tax reform can be higher than under perfect competition. This is because introducing carbon taxes leads to a reduction in already sub-optimal output, thereby exacerbating pre-existing distortions arising from imperfect competition. (iii) Furthermore, increases in energy costs can result in higher mark-ups in some markets because of less competition resulting from firms' exit.

Abstract A large part of government revenues in Russia comes from royalties and export taxes on crude oil, oil products, and gas. Recently, the Russian government has considered reducing export taxes on crude oil and oil products compensated by an increase in the royalty on crude oil. The objective of the paper is to analyse the economy-wide effects of this proposal. Moreover, a hypothetical replacement of export taxes and royalties with a pure rent tax is analysed. A static, single-country, multi-sector computable generation equilibrium (CGE) model is employed. The primary findings are as follows. A replacement of export taxes on crude oil and oil products with a royalty on crude oil provides substantial allocative efficiency gains, but this policy is not a superior one. Welfare could be substantially improved when the export taxes and royalty are replaced with a pure rent tax that can be implemented in the form of a cash-flow tax. On the negative side, reducing export taxes on crude oil and oil products results in a strong appreciation of the currency. As a result, domestic producers become less competitive in domestic markets, and there is a massive increase in import demand.

Abstract Domestic gas prices in Russia are substantially lower than export netback prices. The Russian government aims to increase the domestic price level in the long term. The objective of this paper is to analyse the long-term effects of higher gas prices in Russia on the European gas market. The analysis is based on a modified analytical and a numerical Hotelling model. The main findings are as follows. Under a price elasticity of demand equalling −0.5, a 70% increase in the domestic gas price in Russia results in an annual average reduction in domestic gas consumption of 116 bcm. The export supply to Europe could be affected via two channels: (i) a stock effect and (ii) scarcity rents. The results show that in the presence of a stock effect with an elasticity equalling unity, the annual average increase in the export supply to Europe could account for 33.7 bcm. Although Russia may not face a resource constraint in the short and medium terms, scarcity effects could become more relevant in the future. A reduction in domestic gas consumption could reduce the future scarcity rent, implying a higher potential for exporting gas in the long term. Overall, total gas consumption in Europe could annually increase by 17.5 bcm on average. As the stock elasticity increases, so does the increase in total gas consumption. Furthermore, the results show that increasing the domestic gas price is associated with an annual average increase in the export tax revenue from gas of 38.4 billion USD and an annual average reduction in the domestic gas subsidy of 34.1 billion USD.

Abstract At the end of 2014, Russia and China signed a framework for their second natural gas agreement. According to this agreement, Russia will supply 30 billion cubic metres of gas to China over 30 years via the future Altai pipeline, which will connect Asian and European gas markets. This paper analyses the long-term impacts of this second agreement on the European gas market, based on a modified Hotelling model. We found that gas exports to China could result in re-optimisation of the Russian profit maximisation strategy in Europe via a stock effect, which occurs when the marginal production cost is affected by the remaining stock. The results show that the export supply to Europe could decrease by 11.8 bcm annually under a stock elasticity equalling unity. Furthermore, gas exports to China will reduce the long-term potential of Russia to supply gas to Europe. While scarcity of gas reserves may not be an issue for Russia in the medium term, it could become more important in the future. Our results show that Russia could take a stronger bargaining position after 2051. Overall, total gas consumption in Europe could decrease by 8.5 bcm annually.