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Abstract This paper provides new empirical insights on the capital structure of project-financed LNG infrastructures and gas pipeline projects, by using data relating to projects whose financial close occurred between June 2004 and March 2011. Most results are consistent with the basic view of risk-averse funds suppliers. Especially, the projects located in risky countries and larger projects tend to exhibit lower debt ratios and less-concentrated equity ownerships. In addition, regasification projects appear to have a more diluted equity ownership. Methodological issues raised by the financing of these projects are also examined from a capital-budgeting perspective. In particular, the equity residual method, usually used by industrial practitioners to value these projects, should be adjusted.

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.

The sustainability assessment methodology has to be demonstrated in order to become the tool in the engineering practice. This chapter is devoted to the attempt to evaluate the sustainability of energy systems and show how it can be used in the everyday engineering practice. Obviously, this type of approach has its limitation due to the lack of data for the serious consideration of the system. But it should be anticipated that these excises might serve as guidance for eventual future applications. Also, it should be emphasised that this type of methodology will become an useful tool only if it proves to be justified in the engineering practice.

Abstract This study aims to assess the efficiency of the fossil fuel taxation scheme currently in effect in Switzerland. To this end, the concept of implicit CO2 prices is introduced, based on which prices for different fossil fuel uses are derived. Implicit CO2 prices are defined as the difference between actual prices paid by consumers and efficient domestic fuel prices. Efficient domestic fuel prices, in turn, consist of private production costs, a uniform value added tax and only local external costs, not including external costs due to CO2 emissions and global climate change. The resulting prices differ substantially, which suggests that there is considerable cost-saving potential in reducing CO2 emissions in Switzerland. For passenger cars and air traffic, the implicit prices are negative. For these uses, higher fuel charges would therefore be beneficial from a purely domestic perspective, i.e., without considering the negative repercussions of global warming.

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.