Carbon Pricing under Political Constraints

The economic prescription for climate change is clear: price carbon dioxide (CO2) and other greenhouse gas emissions to internalize climate damages. In practice, a variety of political economy constraints prevent the introduction of a carbon price equal to the full social cost of emissions. This paper develops insights about the design of climate policy in the face of binding political constraints, formulated here as limits on the CO2 price itself, on increases in energy prices, and on energy consumer and producer surplus loss. We employ a stylized model of the energy sector to develop intuition about the welfare-maximizing combination of CO2 price, subsidy for clean energy production, and lump-sum transfers to energy consumers or producers under each constraint. We find that the strategic use of subsidies or transfers can compensate for or relieve political constraints and significantly improve the efficiency and environmental efficacy of carbon pricing policies..

Political economy constraints on carbon pricing policies: What are the implications for economic efficiency, environmental efficacy, and climate policy design?

The economic benefits of a green building – Evidence from Malaysia

During the last decade, the rising trend in energy prices and its potential effect on food prices have become a controversial issue between policy-makers and economists. Therefore, research addressing the relationship between food and macroeconomic variables, such as energy prices, will be useful in providing information for the design of appropriate economic policies. This study uses data from Iran to examine the impacts (short- and long-term) of exchange rate and energy prices on food prices. Iran is a good case study as in recent years its consumers have faced a rapid increase in both fuel and food prices. The variables employed in this study are the prices of ten food products, exchange rate (the value of Iranian rial per US dollar), and petroleum prices. All data in this study are from the Statistical Centre of Iran (SCI). We employ the panel unit root test, Pedroni co-integration tests, Pooled Mean Group (PMG), Mean Group (MG), and Dynamic Fixed Effects (DFE) estimation techniques, applied to a panel of monthly prices for ten food products for the period of March 1995 to February 2018. Results show that in both the short- and long-run, food prices would increase in response to an increase in energy prices. Findings also suggest that the appreciation of the United States Dollar (USD) in terms of the Iranian rial exerts a positive and significant impact on food prices in the long run.

The article characterizes shocks and energy crises in the modern global economy. International markets have periodical changes of supply and demand conditions, supply chains disruptions which causing prices volatility. Global shocks during the COVID-19 pandemic led to a slowdown in the economies, disruptions in global supply chains and a drop in demand and prices for raw materials and energy resources. Russia's war in Ukraine became a global shock and provoked consequent social, migration, economic, financial, logistical shocks. Such shocks as a result of russian military aggression in Ukraine caused global crises – energy, food and financial. International supply and demand shocks affected the nature and outcomes of the European energy crisis. During pandemic since 2020 the energy consumption contracted therefore the demand shock has raised and affected energy prices decrease. Russian aggression in Ukraine in 2023 caused global market uncertainty. supply shocks and prices increase. Especially there was a sharp increase of prices on the energy markets of Europe, which caused significant economic consequences for business and households. Increase in energy prices and market volatility affected inflation, business and population in Europe. The consumer prices inflation in the Eurozone mostly grown since mid-2022 in time of the high energy prices. From the beginning of 2023 the inflation in Europe is gradually reducing following the contraction of energy prices, but forecasted to remain on the relatively high level. At the same time, global factors make it possible to diversify energy sources and overcome the crisis. The energy prices analysis have theoretical and practical significance for the stability of the economy. The principles of solidarity are implemented in the energy sector, in particular in the development of the European Energy Community, to which Ukraine has also joined. The European energy crisis led to improve the efficiency of energy utilization, supply regulation, energy saving, technological progress and the development of alternative energy. The balanced short-term and medium-term measures should be implemented to support energy prices stability.

The European energy crisis not only led to an increase in energy prices but also to a recession in the Moldovan economy. After the end of the energy crisis, stagnation was registered in Moldova. The recession and subsequent stagnation led to an increase in the number of people living below the poverty line, as well as to the rise in energy poverty. Thus, in these circumstances, the study of energy vulnerability and its impact on the quality of life has become especially relevant. Therefore, the main research problem in this article is to analyze energy vulnerability as a risk factor for the decline in the quality of life in Moldova. The aim of the research is to assess the relationship between energy vulnerability and quality of life in Moldova. The main objectives of this study are to analyze the theoretical aspects of the concept of energy vulnerability, identify and analyze the determinants of energy vulnerability, and conduct an empirical assessment of the impact of energy vulnerability on households in Moldova. The object of the study is energy vulnerability and its impact on the quality of life. The article examines the theoretical aspects of the concept of energy vulnerability, as well as the determinants of energy vulnerability. Research methods: abstract logical method, comparative analysis method, statistical and economic methods. The central hypothesis: Moldova’s energy vulnerability at the macro level is transformed into a decline in the quality of life and into deprivation of households at the micro level. The statement of basic materials: The conducted empirical analysis showed that Moldova is vulnerable to external energy shocks, as it mainly imports energy resources. Domestic primary energy production covered 22.2% of total energy consumption, while domestic electricity production covered 11.3% of total electricity consumption in 2023. The primary sources of electricity are the CHP (Combined Heat and Power) plants in Chisinau and Balti, as well as the growing green energy. But, unfortunately, the share of renewable energy is still small. Moldova is pursuing a strategy of energy resource diversification to strengthen energy security. To this end, the synchronization of Moldovan power grids with the European ENTSO-E (European Network of Transmission System Operators for Electricity) network and the construction of the Iasi-Ungheni-Chisinau gas pipeline were carried out. However, the implementation of these projects has not yet yielded tangible results. The main reason is the increase in the price of energy resources, which has negatively affected the competitiveness of goods, as their prices have also risen due to the rise in energy costs. As a result, there is a decline in production and an increase in the number of unemployed, which negatively affects the quality of life. At the same time, the increase in tariffs for energy resources has led to a rise in the share of energy expenditure above 10% of total consumer spending, which indicates both energy poverty and a decrease in the quality of life of the population. The originality and practical significance of the study: This study contributes to the scientific literature by presenting the results of an empirical analysis using the example of a country with a high dependence on energy imports. In this paper, the authors examine how the impact of external shocks on energy vulnerability is manifested in the quality of life of the population. Conclusions and prospects for further research: The results of the study revealed that energy vulnerability is a persistent issue in Moldova. It is leading to energy poverty and limiting the basic opportunities of the population to access quality food, to purchase clothes and shoes, since, within the available budget, households are forced to reduce other expenditure items to cover the costs of heating, hot water, and electricity. The transition to lower-quality nutrition leads to health problems. Thus, energy vulnerability will lead to a decrease in the quality of life and is an obstacle to a decent life.

A Model of Price Correlations between Clean Energy Indices and Energy Commodities

Major increases in energy prices since 1973 have raised considerable interest in the effect of a continuation of these increases on interregional competition. There is speculation in the Northeast that a general increase in energy prices will cause agricultural production to shift closer to the consumers. This production shift supposedly will lead to self-sufficiency in many products which were once grown in the Northeast and are now largely imported from other regions. This paper uses a simple interregional trade model to estimate the possible impact of higher energy prices on interregional competition, and on the Northeast in particular. It does this by assuming values for the relevant variables in the model and estimating the changes in the system. A range of values are used to estimate the sensitivity of the conclusions to the assumptions.

A majority of energy is consumed to control the indoor environment for human activities and industrial production. The demand for energies for these two uses are reflected in demand for different types of real estate and the volume of industrial outputs. The purpose of this study is to examine the long-run equilibrium and short-run dynamics between real energy prices and demand for different types of real estate and industrial output in China. Energy prices are measured in the real price of fuels and power. Demand for different types of real estate is measured in their sales volume in the first hand market, that is, floor areas of new real estate sold by developers. Industrial output is measured by the net output (value added) of the industrial sector. All data series were tested for stationarity (i.e., the existence of a unit root) before testing for a co-integration relationship. We found no long-term equilibrium relationship between energy prices and the demand for real estate and industrial output as predicted by theory, probably due to increased supply of energy efficient buildings. There is also no short-run relationship between energy prices and demand for housing due to the increase in vacancy rate resulting from speculative demand for housing. However, demand for commercial properties appeared to lead energy prices. Finally, there is strong evidence suggesting that an increase in energy prices will significantly reduce industrial output but not vice versa.

This paper studies the effect of a shock in the hospitality sector, namely the energy price increase, with stated preference methods and performs the subsequent analysis with a mixture of quantitative and qualitative tools. The hospitality sector is very important and is the backbone of the tourism industry worldwide. We designed and administered two semi-structured anonymous questionnaires that were sent randomly to recipients for completion. One questionnaire investigated tourists’ behavior, visit and their stay and their spending intentions, whereas the second questionnaire investigated the hoteliers/managers estimations and beliefs on energy price increases and whether or how this price increase would have an effect on tourists’ behavior and their visit, stay and spending intentions in the destination. Through two surveys, we collected answers to questions for three consecutive years—2021: representing the past/before the energy crisis, 2022: the present/the time of the crisis breakout and 2023: the future/after the crisis outbreak. Overall, a lower tourist expenditure is found for the future due to the energy price shock, but there are no significant differences between the answers of the two groups. Our results are insightful for tourism policy makers, hoteliers and managers and particularly those economies that rely heavily on tourism, e.g., island economies.

Wastewater treatment technology is constantly evolving not only to respond to changes in the composition and quantity of incoming water, but also to ensure that the process and result of wastewater treatment comply with applicable legislation. This article will focus on the integration of energy regulations into the wastewater treatment process. One of the key documents is Lex OZE III, which is an energy law, but has a direct impact on WWTPs, especially in the field of renewable resources and energy self-sufficiency. The entire energy sector is undergoing dynamic changes, and the increase in energy prices is increasing pressure regarding the optimization of its costs and use of new energy trends in the field of wastewater treatment, ensuring effective local production using the potential of the WWTP to cover its own energy consumption.

Μετά την πρώτη ενεργειακή κρίση την δεκαετία του ’70 κατά την οποία τα περιορισμένα αποθέματα ενέργειας προκάλεσαν την πρώτη σημαντική αύξηση στην τιμή της ενέργειας, η χρήση ενέργειας στα θερμοκήπια έχει γίνει κύριο ερευνητικό ζήτημα. Η ανάγκη για μείωση του ενεργειακού κόστους είναι σημαντική, γιατί η ενέργεια αποτελεί σημαντικό κλάσμα του συνολικού κόστους παραγωγής. Στις Μεσογειακές χώρες έχει υπολογιστεί ότι η χρήση ενέργειας για έλεγχο των συνθηκών περιβάλλοντος και ειδικότερα για τη θέρμανση, είναι 20% - 30% του συνολικού κόστους παραγωγής, ποσοστό το οποίο στις βορειότερες χώρες αυξάνεται. Ταυτόχρονα, με το έντονο ενδιαφέρον για το παγκόσμιο φαινόμενο του θερμοκηπίου και τις κλιματικές αλλαγές, η χρήση των συμβατικών καυσίμων είναι και πάλι στην πολιτική ατζέντα. Έτσι και η βιομηχανία θερμοκηπίων είναι αντιμέτωπη με οικονομική, πολιτική και κοινωνική πίεση για μείωση της χρήσης ενέργειας και βελτίωση της ενεργειακής απόδοσης των θερμοκηπίων μέσω τεχνολογικών καινοτομιών. Η κατανάλωση ενέργειας για τη θέρμανση του θερμοκηπίου αποτελεί ένα πολύ σοβαρό πρόβλημα διότι οι απώλειες του θερμοκηπίου σε θερμότητα λόγω των λεπτών τοιχωμάτων του και της κατασκευής του, είναι πολύ μεγάλες, 6-12 φορές μεγαλύτερες από εκείνες ενός συνήθους κτίσματος ίσου όγκου. Η θερμότητα παρέχεται στο θερμοκήπιο κυρίως μέσω συμβατικών συστημάτων θέρμανσης (συστήματα σωληνώσεων θερμού νερού, συστήματα θερμού αέρα) και σε περιορισμένη έκταση με χρήση ανανεώσιμων πηγών ενέργειας (ηλιακή, γεωθερμία, βιομάζα). Για να επιτευχθεί με αυτές τις μεθόδους η απαραίτητη θερμοκρασία στο επίπεδο των φυτών, το εσωτερικό του θερμοκηπίου πρέπει να θερμανθεί στην ίδια ή υψηλότερη θερμοκρασία από την επιθυμητή θερμοκρασία των φυτών με αποτέλεσμα την δημιουργία ισοθερμοκρασιακού κλίματος σε ολόκληρο το θερμοκήπιο (όλον κλίμα). Το αποτέλεσμα αυτής της πρακτικής σε όλες τις μελέτες που διεξάγονται είναι ότι, τα θερμοκήπια καταναλώνουν απαράδεκτα υψηλά ποσά ενέργειας σε σχέση με την ενέργεια που απορροφάται από τα φυτά, για να καλύπτουν τις αυξημένες ενεργειακές απώλειες που λόγω κατασκευής παρουσιάζουν. Στην παρούσα εργασία αναπτύσσεται μια ολοκληρωμένη πρόταση για την δημιουργία ενός “ψυχρού θερμοκηπίου” στο οποίο τα φυτά θα λαμβάνουν απευθείας την ενέργεια που χρειάζονται προκειμένου να φτάσουν και να διατηρήσουν την επιθυμητή για την ανάπτυξή τους θερμοκρασία χωρίς να υπάρχει ανάγκη για αύξηση της θερμοκρασίας του αέρα του θερμοκηπίου. Για τον σκοπό αυτό χρησιμοποιείται σύστημα θέρμανσης με μικρού μήκους υπέρυθρη ακτινοβολία (NIR). Σε αυτά τα συστήματα η θερμότητα μεταδίδεται απευθείας από την πηγή στον δέκτη, στην προκειμένη περίπτωση στα φυτά και το έδαφος και το αποτέλεσμα είναι η δημιουργία ισοθερμοκρασιακού κλίματος μόνο στην περιοχή του φυτικού θόλου (τοπικό κλίμα). Ειδικότερα η παρούσα εργασία αντιμετωπίζει τη θερμική συμπεριφορά του θερμοκηπίου λαμβάνοντας υπόψη όλα τα ουσιαστικά θερμικά φαινόμενα που συμβαίνουν κατά την διάρκεια θέρμανσης (με συμβατικό και με σύστημα θέρμανσης με ακτινοβολία) και παρουσία καλλιέργειας. Γι αυτό τον λόγο δίνεται ιδιαίτερη βαρύτητα στην ανάπτυξη ενός μαθηματικού μοντέλου που προσομοιάζει επαρκώς τις κύριες διαδικασίες μεταφοράς θερμότητας μέσα στο θερμοκήπιο, το οποίο περιλαμβάνει ένα σύνολο λειτουργικών συνθηκών, και στο οποίο καθορίζονται με σχετική ακρίβεια οι παράγοντες που επηρεάζουν την θερμική συμπεριφορά του θερμοκηπίου. Το μοντέλο προσομοίωσης δίνει την δυνατότητα αξιόπιστης περιγραφής του περιβάλλοντος του θερμοκηπίου, και σαφούς εκτίμησης των ενεργειακών αναγκών του και με τις δύο τεχνικές θέρμανσης. Έτσι προσδιορίζεται το εξοικονομούμενο ενεργειακό όφελος που προκύπτει με τη χρήση συστήματος θέρμανσης με ακτινοβολία. Ο έλεγχος της ποιότητας του μοντέλου προσομοίωσης και η περαιτέρω βελτίωσή του γίνεται με σύγκριση των θεωρητικών αποτελεσμάτων με πειραματικά δεδομένα, η συλλογή και επεξεργασία των οποίων αποτελεί τον πυρήνα της έρευνας. Τα πειραματικά δεδομένα προέρχονται από πειράματα που διεξήχθησαν σε δύο πειραματικά θερμοκήπια συζευγμένα με αυτόματο μετεωρολογικό σταθμό, στα οποία εφαρμόζεται συμβατικό σύστημα θέρμανσης και θέρμανση με υπέρυθρη ακτινοβολία αντίστοιχα. Αυτό δίνει την δυνατότητα πιστοποίησης των δυνατοτήτων της θέρμανσης με ακτινοβολία και ποσοτικοποίησης του ενεργειακού οφέλους που επιτυγχάνεται. Συμπερασματικά, η συστηματική θεωρητική και πειραματική μελέτη ενός “ψυχρού” θερμοκηπίου με χρήση μικρού μήκους υπέρυθρης ακτινοβολίας (NIR) και ενός “θερμού θερμοκηπίου” με χρήση συμβατικού συστήματος θέρμανσης αναδεικνύουν το κύριο πλεονέκτημα της υπέρυθρης ακτινοβολίας, δηλαδή η θερμότητα να μεταδίδεται απευθείας από το σύστημα ακτινοβολίας στα φυτά και το έδαφος χωρίς να παρεμβάλλεται ο αέρας του εσωτερικού περιβάλλοντος του θερμοκηπίου. Αυτό οδηγεί σε ομοιομορφία θέρμανσης του φυτικού θόλου και ταυτόχρονα σε σημαντική εξοικονόμηση ενέργειας της τάξεως του 40-50%.

El repunte del consumo de energía que se ha producido tras la fase aguda de la pandemia COVID-19 ha supuesto, a lo largo de 2021, un incremento en los precios de la energía que, tras la invasión rusa de Ucrania, han alcanzado importantes picos no previstos por los analistas. La incertidumbre en torno a la seguridad del suministro de gas natural que necesita Europa para acometer la transición energética, ha conducido a un replanteamiento de la estrategia de descarbonización que los representantes europeos se plantearon durante la COP21 de París. En este artículo analizamos el comportamiento y tendencias del mercado del gas natural, con especial enfoque en la situación en Europa, y analizaremos las consecuencias que está teniendo la actual crisis energética y económica generada por el previsible incumplimiento ruso de los acuerdos de suministro de gas natural a Europa tras la condena europea de la invasión rusa de Ucrania.--------------------------------------------------------The spike in energy consumption following the acute phase of the COVID-19 pandemic has led, throughout 2021, to an increase in energy prices which, following the Russian invasion of Ukraine, have reached significant peaks not foreseen by analysts. The uncertainty surrounding the security of natural gas supply that Europe needs to undertake the energy transition has led to a reassessment of the decarbonisation strategy that European representatives proposed during the COP21 in Paris. In this article we analyse the behaviour and trends in the natural gas market, with a special focus on the situation in Europe, and we will analyse the consequences that the current energy and economic crisis generated by the predictable Russian non-compliance with the agreements to supply natural gas to Europe after the European condemnation of the Russian invasion of Ukraine.

Since China’s reform and opening up, although energy intensity of manufacturing industry has showed a trend of decline overly, compared with developed countries, it remains high. The research object of this paper is energy intensity of manufacturing industry, based on Wuli–Shili-Renli system methodology, it builds factors system of energy intensity of manufacturing industry. Based on time series data from 1980 to 2014, it uses VAR model to explore influence law of various factors on manufacturing energy intensity. Impulse response analysis shows that in the short term, the whole society fixed asset investment structure, technological progress, economic development level and structure of property rights have a great influence on energy intensity. With the increase of technological progress rate, per capita GDP, proportion of state-owned enterprises, manufacturing energy intensity starts to reduce; with the increase of proportion of investment in fixed asset of energy intensive industries, manufacturing energy intensity starts to rise. In the long term, energy price, energy consumption structure, FDI and industry structure have a great influence on manufacturing energy intensity. With the increase of proportions of coal consumption and heavy industry, manufacturing energy intensity starts to rise; with the increase of energy price, manufacturing energy intensity starts to reduce. Variance decomposition shows that energy consumption structure, energy price and technological progress have a greater contribution to manufacturing energy intensity, optimizing energy consumption structure, controlling energy price and promoting technological progress are important approaches to reducing manufacturing energy intensity.

Applications of linear programming in analyzing and evaluating various policies related to agriculture have been numerous. The use of quadratic programming is relatively less common. The computational aspects of the problem present an important limitation on the use of quadratic programming when size of the model used is relatively large. In the present study, separable programming was applied to solve a quadratic programming model of U.S. agriculture. The quadratic objective function of the model was transformed into a separable function using eigenvalues and eigenvectors of the demand matrix. The quadratic programming model is formulated in such a way that number of constraints in the model is relatively small which facilitates application of separable programming to a broad spectrum of problems;The quadratic programming model is used to analyze the impact of alternative energy price and supply situations on the crop production sector of U.S. agriculture. In recent years, continuous rise in energy prices and prospects of reduction in fossil fuel-based energy supply are having numerous effects on the use of energy in all sectors of the economy and development of competing energy sources. In the present study, impact of alternative energy situations is analyzed on a number of variables related to agriculture which may be listed as follows: land, water, nitrogen and energy use in farming, regional crop production patterns, methods of farming, resource and output prices, energy and nonenergy related expenses in crop production, farm income and consumer expenditures on farm products at farm level;With increased energy prices, reduction in the use of inputs such as water and commercial fertilizer nitrogen which require energy was observed similarly. Reduction in irrigated farming and increase in acreages under minimum tillage were also observed as means of accomplishing reductions in energy use. But the decrease in energy used in farm production was very small relative to the increase in energy prices. Crop prices at farm-level, total cost of crop production, consumer expenditures at farm level and net farm income all increase due to increased energy prices;When energy supplies are reduced, the main results are similar to those observed when the energy prices increased. Regional level reduction in energy supply, rather than the national level reduction causes the nonenergy related cost of production to increase under the former alternative relative to the latter.