Program for the 35th Meeting of the Norwegian Association for Economists (Forskermøtet)
University of Stavanger 7-8 January, 2013 Contributed Sessions I: CLIMATE (10:45-12-45, UiS AR-G201)
Chair: Øyvind Hoveid
Does a Renewable Fuel Standard for Biofuels Reduce Climate Change Costs?
Knut Einar Rosendahl (with Mads Greaker and Michael Hoel)
Discussant: Snorre Kverndokk
Equity in Climate Policy: Can Carbon Leakage be Justified?
Snorre Kverndokk (with Eric Nævdal, Linda Nøstbakken)
Discussant: Katinka Kristine Holtsmark
Quota Markets and the Effect of Unilateral Support of Renewables
Katinka Kristine Holtsmark (with Kristoffer Midttømme)
Discussant: Øyvind Hoveid
Linking Models of Climate, Weather, Crops and Economic Behavior
Øyvind Hoveid
Discussant: Knut Einar Rosendahl
Her er forfatternes sammendrag av det første paperet.
SvarSlettDoes a renewable fuel standard for biofuels reduce climate change costs?
Abstract: Recent contributions have questioned whether biofuels policies actually lead to any reductions in climate change costs. In this paper we make two contributions to the literature. First, we study the market effects of a renewable fuel standard. But opposed to most previous studies we model the supply of fossil fuels taking into account that fossil fuels is a non-renewable resource. Second, we model emissions from land use change explicitly when we evaluate the climate effects of the renewable fuel standard. We find that extraction of fossil fuels in most cases will decline initially as a consequence of the standard. Furthermore, even for biofuels that are almost as emissions-intensive as oil, a standard may have beneficial climate effects. The reason is that it tends to reduce total fuel consumption over the first few decades. Finally, if only a subset of coun tries introduce a renewable fuel standard, we will have carbon leakage to the rest of the world. However, we may still have declining climate change costs as global extraction of fossil fuels is postponed.
Sammendrag av andre paperet.
SvarSlettEquity in Climate Policy: Can Carbon Leakage be Justified?
Abstract: This paper focuses on two equity aspects of climate policy, intra- and intergenerational equity, and analyzes the implications of equity preferences on climate policy, and on the production and consumption patterns in rich and poor countries. We develop a dynamic two-region model, in which each region suffers from local pollution and global warming, but also has an inequality aversion over current consumption allocations. Inequality aversion over consumption lifts the consumption path of the poor region, while it lowers the consumption path of the rich region, which must take a greater share of the climate burden. Therefore, a high abatement in the rich region is met by more pollution in the poor region, thus justifying carbon leakages. Moreover, the poor region may even be allowed to increase emissions relative to business as usual under the optimal climate policy. These effects are reinforced when introducing transfers between the regions. However, loans to poor countries to reduce inequality may result in a debt crisis, and debt remittance may be part of the optimal climate policy.
Sammendrag av tredje paper.
SvarSlettQuota markets and the effect of unilateral support of renewables.
Abstract: The introduction of the renewable electricity subsidy scheme "green certificates" has led to a debate on whether - and how - the resulting increase in renewable electricity production will affect current and future emissions of greenhouse gases in Europe. The EU has reached an agreement on a quota cap (EU ETS), and a fixed path for this cap up until year 2020. All emissions from the power sector are included in the the EU ETS. As long as the cap is fixed, the only channel through which increased production of renewable electricity could affect emissions, is through affecting emissions - or the quota cap - in the future. After 2020, the cap will be subject to renegotiations. However, it is not clear which mechanisms are at play when the quota cap is negotiated, and hence how increased renewable electricity production will affect future negotiations, and the future quota cap. In this paper, we build a theoretical model that is used to analyze the effect of an increase in the supply of renewable electricity within a quota market, for several different assumptions regarding how the quota cap is negotiated. By allowing for more than one renewable electricity technology, and including technological development as endogenous in the model, we show that it is not clear how higher renewable electricity supply will affect renegotiations over the quota cap, and hence future emissions. Our model highlights the importance of the assumptions that are made concerning the mechanisms that are in place when a quota cap is negotiated or renegotiated, and shows that to give predictions regarding the effect of subsidy schemes such as the green certificates, it is essential to understand this process.