In the State of Ohio, the electric regulatory landscape permits local governments to become energy suppliers to residents and small businesses through community choice aggregation (CCA). Some CCAs provide enrollees 100% renewable electricity. Concurrently, the federal government offers an income tax credit (ITC) for the purchase of a solar array. With policy incentives, it is important to ensure they encourage behavior beyond the baseline scenario without the ITC. This is known as “additionality.” Renewable aggregation programs may crowd out the benefits of the ITC, violating additionality. This paper assesses additionality of the ITC in the context of Ohio’s CCA programs. The actual additionality can depend on whether renewable energy is already being supplied to the site of a solar array. Hence, we study the relationship between CCA and solar adoption probability to determine whether tax incentives are additional. Using panel data methods and post-estimation simulations, we discern if additionality is violated where these programs overlap. We find aggregation programs increase the probability of solar adoption and that $0.79 of every dollar spent on the income tax credit in Ohio is non-additional. This will help policymakers determine the efficacy of funds allocated to their programs.

This study develops a generalized evaluation framework that can be used to quantify the financial, economic, stakeholder, and environmental impacts of renewable energy support programs. The application of this framework is demonstrated by evaluating the feed-in tariff (FIT) program for solar distributed energy resources (DER) in Ontario, Canada. Our analysis reveals that Ontario’s FIT program has successfully promoted the adoption of solar DER across communities. However, the program has caused inequitable societal outcomes through a cross-subsidization with a present value of 9 CAD billion, paid for by the electricity consumer base for the benefit of only the 0.06 percent of electricity consumers who could install solar systems. The cost imposed on the Canadian economy ranges from 2.86 to 5.37 CAD billion, depending on the discount rate applied. The sensitivity analysis results indicate that the burden of this program on the Canadian economy would have been reduced by 50 percent if the program had been delayed and implemented in 2016 instead of 2010 due to the declining trend in solar system investment costs. The lessons from this analysis provide insights for designing future environmental and emission reduction policies.

Energy access is often considered a catalyst for development. Yet, the binary classification of household electrification misses important variation in service quality and in how households use electricity. To examine the benefits of household electrification and illustrate the importance of using more nuanced classifications of energy access, this article develops a metric called the Energy Access Dividend (EAD), which quantifies the electrification benefits forgone due to slow and incomplete energy transitions. This framework is flexible, allowing for the estimation of a variety of electrification benefits such as reduced lighting and cell phone charging expenditures, environmental improvements, time use and asset ownership changes, and improvements associated with productive energy use. To demonstrate the applicability of this framework, we calculate the EAD for several proposed electrification trajectory alternatives in Honduras. We find that in Honduras, a country with high rates of basic electricity access, achieving immediate universal, high-quality electricity would generate nearly $697 million in benefits over the period leading up to 2050. We also estimate the EADs associated with more limited immediate electrification as well as geographically based electrification scenarios, demonstrating that these calculations can inform priorities for energy policy design.

We propose a carbon tax policy for Delhi—the most polluted capital globally—which will fundamentally change the energy mix of Delhi’s economy toward clean, green energy and guarantee universal access to electricity, transport, and food, up to a certain amount. Any carbon mitigation strategy needs to alter our dependence on fossil fuels, requiring a systemic overhaul of its energy mix. Implementing a carbon tax will mitigate emissions and mobilise revenue for our proposed redistributive program: Right to Food, Energy, and Travel (RFET). The policy is designed to advocate for the ‘poor over the rich’ to compensate for the ‘rich hiding behind’ the poor by emitting the majority of carbon and pollutants. Using input–output analysis, we estimate the class-wise distribution of carbon emissions in Delhi. We find that the necessary tax would be US$112.5 per metric ton of carbon dioxide in order for this program to work. The free entitlement of fuel and electricity per household comes out to be 2040 kWh per annum, and there is an annual universal travel pass of US$75 per person for use in public transport and an annual per capita availability of food of US$205.

Equity and efficiency are crucial issues behind any tax reform, but they are particularly relevant in countries with high inequality and large shares of poverty. This paper provides a comprehensive socio-economic empirical assessment of Mexico's proposed (and partially implemented) tax reforms in the energy domain, and of a hypothetical partial removal of existing electricity subsidies. Using a rich household income and expenditure survey within the context of a demand system adjustment of non-durable goods, the article provides the public-revenue, environmental and distributional impacts from the simulation of different combinations of energy taxation, subsidy-removal and distributive offsets. The paper also provides detailed ex-ante evidence on the effects of compensatory devices that may contribute to the successful implementation of energy reform packages and significant poverty alleviation in Mexico.

Innovation is an important part of energy policy, and encouraging clean energy innovation is often an explicit goal of policy makers. For local governments, promoting clean energy innovation is seen not only as a pathway to a cleaner economy but also as a tool for promoting the local economy. But is such optimism warranted? There is a substantial literature examining the relationships between innovation and environmental policy, but few studies focus explicitly on innovation at the state and local level. In this paper, I provide key lessons from research on clean energy innovation, focusing on lessons relevant for state and local governments. I then summarize the results of a recent working paper by Fu et al. (2018) that studied wind energy innovation across individual states in the United States. While state-level policies can promote clean energy innovation, it is overall market size that matters most. Thus, innovation need not occur in those states most actively promoting clean energy. I conclude with lessons for state and local governments drawn from both this work and the broader literature on energy innovation.

In this article, we present a model of the electricity sector where generation technologies are intermittent. The economic value of an electricity generation technology is given by integrating its production profile with the market price of electricity. We use estimates of the consumer's intertemporal elasticity of substitution for electricity consumption while parameterizing the model empirically to numerically calculate the elasticity between renewables and fossil energy. We find that there is a non-constant elasticity of substitution between renewable and fossil energy that depends on prices and intermittency. This suggests that the efficacy and welfare effects of carbon taxes and renewable subsidies vary geographically. Subsidizing research into battery technology and tailoring policy for local energy markets can mitigate these distributional side effects while complementing traditional policies used to promote renewable energy.

As countries develop, they are likely to face challenges in meeting growing energy demand and in ensuring energy security. Given this, and the problem of climate change, improving demand-side energy efficiency is pivotal to ensuring sustainable development. However, agents often underinvest in energy-efficient technologies due to behavioral failures such as low levels of energy-related financial literacy, defined as the combination of energy knowledge and cognitive abilities needed to evaluate the lifetime costs of durables. Using novel data, we analyze the levels and determinants of energy-related financial literacy of households in urban areas in the eastern lowlands of Nepal, and whether it is correlated with their attitudes towards replacement of energy-inefficient appliances. We find that respondents have low levels of energy-related financial literacy, and higher levels of literacy are associated with more rational attitudes towards appliance replacement. The findings of this study are relevant to addressing the energy-efficiency gap in developing countries.

The impact of oil governance on the extraction path of non-renewable resources is theoretically ambiguous. By employing field-level data in the South East Asia region, we utilize a change in the institutional design of oil governance in Indonesia to determine its impact on oil and gas extraction paths. From the empirical results, we infer that the move to create a separate regulatory agency and make the national oil company a purely business entity led to a reduction in the extraction path of oil, the size of which varies for different sizes of resource stock. This finding reiterates the importance of strengthening ownership rights for non-renewable resources to avoid over-extraction and facilitate more sustainable economic outcomes.

Government support uncertainty, scarce yield information, and the inherent risk in bioeconomic phenomena are some of the deterrents faced by investors in the nascent cellulosic biofuel industry. A financial probabilistic model was developed to contrast the economic feasibility of producing cellulosic biofuels from energy cane and sweet sorghum using three technologies: hydrolysis, pyrolysis, and gasification. Hydrolysis and pyrolysis proved feasible (showed possibilities of a positive net present value) without government support and conditioned to stochastic feedstock yields and biofuel prices. Gasification was feasible with government support. Improved feedstock and biofuel productivity would considerably raise the feasibility probabilities for hydrolysis and pyrolysis without government support.

According to engineering analyses, energy-intensive commercial buildings have ample opportunities to reduce energy use while saving money, but many seemingly profitable strategies go unadopted. This study explores potential barriers to energy- and refrigerant-reducing investments in supermarket refrigeration. While supermarkets are large energy users, energy and refrigerant account for a relatively small proportion of expenditures. However, due to the intensely competitive nature of the industry, reducing refrigeration costs could have a sizable impact on supermarkets’ bottom lines. Given the scarcity of empirical data in this context, we conducted focus groups and interviews with U.S. supermarket representatives to elicit information about potential barriers to investment and used content analysis to qualitatively evaluate results. Participant statements suggest that the rate at which they adopt specific energy-reducing refrigeration technologies and practices correlates fairly well with estimates of expected payback. Uncertainty and imperfect information about the performance of new technologies, high opportunity costs of capital, and tradeoffs with other valued system attributes such as reliability and customer appeal were the most pervasive potential barriers discussed by participants, although split incentives between firms and contractors or employees also played a role for some firms. Our assessment is that these factors have moderately limited or slowed investments in energy-saving refrigeration technologies for many firms; only in the cases of uncertainty/imperfect information and split incentives between firms and contractors or employees are these barriers potentially indicative of market failures. In addition, in several instances we identify ways in which analysts could improve engineering-based net present value calculations to make them more consistent with actual firm decisions.

This article examines the impact of the 2012 drought and the biofuels mandate on the U.S. grain and livestock markets and estimates the mandate waiver required to offset the impact on the corn price. The framework used is a stochastic equilibrium displacement model that integrates the beef, pork, and poultry markets with the corn, distillers’ grain, soybean, soymeal, and ethanol markets. The corn and beef markets are found to be the most vulnerable. A mandate waiver of approximately 23% is required to fully negate the impact of the drought on corn prices. The waiver is equivalent to a 13.7% reduction in ethanol consumption.

The efficient use of market-based policy instruments is an area of increasing importance as scholars and policymakers work to balance effective climate policy with economic growth. Carbon allowances and carbon offsets, despite being statutorily substitutable, behave in practice like imperfect substitutes. This paper provides a synthesis of extant work, market data and the regulatory frameworks of the world’s major carbon markets, and provides a comprehensive assessment of the drivers of demand for carbon offsets. It also provides a detailed assessment of the process through which international carbon offsets are produced, the UN’s Clean Development Mechanism. Demand for carbon offsets is heavily influenced by key programme design parameters that are specific to carbon market design and its implementation. These design parameters heavily influence the degree to which transaction costs, regulatory uncertainty and risk factor into the decisions of firms operating within the carbon trading programme. This paper also identifies key extra-statutory drivers that are outside of the policymaker’s control, which should be considered in both the policy design and the implementation process. This paper provides an instructive set of guiding criteria for policymakers and scholars for the design of future market-based environmental policy.

As a result of the increase in the real cost of fossil fuel-based energy in recent years, federal and state governments have taken a more active role in energy policy by creating incentives to develop alternative sources of energy, including biofuels. However, policymakers often become focused on the specific type of energy and not the energy services consumers ultimately value. The lack of recognition of energy as a commodity results in policies that ignore the characteristics of the associated markets: easy entry and exit, no barriers to entry, and sensitivity to changes in supply and demand. Consequently, energy industries may fail to arise because entrepreneurs must be able to account for all costs and earn—at a minimum—a competitive return on the investment. This article evaluates the options available to policymakers related to biofuels, which are of particular concern to the South, and includes an assessment of the knowledge base on which policy decisions are made.

The interconnections of agriculture and energy markets have increased through the rise in the new biofuel agribusinesses and the oil-ethanol-corn linkages. The question is whether these linkages have a causal structure by which oil prices affect commodity prices and through these links, instability is transferred from energy markets to already volatile agricultural markets. In this article, we present empirical results using contemporary time-series analysis and Granger causality supplemented by a directed graph theory modeling approach to identify the links and plausible contemporaneous causal structures among energy and commodity variables. The results show that although there is a strong correlation among oil and commodity prices, the evidence for a causal link from oil to commodity prices is mixed.

While agricultural economics literature has become rife with the economics of ethanol production and cellulosic ethanol feedstock production, little has been written about capital investment necessary for the magnitude of industry development mandated by the Energy Security and Independence Act of 2007. Financing the development of the ethanol industry to meet the 36 billion gallon production capacity set for 2022 (with 16 billion gallons from cellulosic ethanol) will require capital investments exceeding $100 billion for production facilities, plus extensive investment in feedstock establishment and transportation/handling infrastructure. Federal support associated with political mandates does not address all of the financial issues related with the development of the industry in such a relatively short timeframe. This article addresses the challenges associated with and the conditions necessary for achieving the private investment needed to expand the ethanol industry in the United States.

Rapidly declining gasoline prices from their record high during the summer of 2008, while ethanol prices remained relatively high, made it difficult for many bio-fuel policy modelers to fully explain the impacts of U.S. bio-fuel policies on fuel prices. Using profit-maximization models for blenders, refiners, and distillers, we conduct a comparative static analysis to measure the relative magnitudes of the impacts of tax credits and blending mandates on fuel-energy market equilibrium prices. Our results indicate that first, the prices of all fuels including conventional gasoline, ethanol, and blended gasoline decline as the biofuel tax credit increases, but they increase as the rate of the blending mandate increases. Second, the shadow value of a blending mandate represents the marginal rate of substitution between the marginal price change associated with a blending mandate and the marginal price change associated with a bio-fuel tax credit. Therefore, bio-fuel policies can affect the prices of all fuels including conventional gasoline, ethanol, and blended gasoline. Finally, ethanol imports are affected by domestic blender's market-power effects, more than by the import duty imposed to offset the tax credit associated with the use of imported ethanol in the blending process.

This article analyses the origin of the persistently high level of electricity prices that hampered the expansion of electricity consumption during the interwar period in Porto. Initially, the rent-seeking behaviour of both the supply firm and the City Hall at the local level affected the expansion of the local electricity market. During the 1930s, this collusion at municipal level coincided with unpredictable energy policies at state level. This circumstance impeded the indispensable increase of scale and the building of a regional market of electricity in north Portugal. The literature on regulation and institutional analysis has proved very useful. Finally, though equally important, primary sources from company archives and institutional bodies were also employed.