innovation in the energy sector lessons learnt from r d expenditures and patents in selected iea countries abstract long time series of the iea and international patent offices offer a huge potential for scientific investigations of the energy innovation process thus this paper deals with a broad literature review on innovation drivers and barriers and an analysis of the knowledge induced by public research and development expenditures r d and patents in the energy sector the cumulative knowledge stock induced by public r d expenditures in 14 investigated iea countries is 102 3 bn eur in 2013 nuclear energy has the largest share of 43 9 bn eur followed by energy efficiency accounting for 14 9 bn eur fossil fuels with 13 5 bn eur and renewable energy with 12 1 bn eur a regression analysis indicates a linear relation between the gdp and the cumulative knowledge with each billion eur of gdp leading to an additional knowledge of 3 1 mil eur however linearity is not given for single energy technologies further the results show that appropriate public r d funding for research and development associated with a subsequent promotion of the market diffusion of a niche technology may lead to a breakthrough of the respective technology

uncertainty and endogenous technical change in climate policy models until recently endogenous technical change and uncertainty have been modeled separately in climate policy models in this paper we review the emerging literature that considers both these elements together taken as a whole the literature indicates that explicitly including uncertainty has important quantitative and qualitative impacts on optimal climate change technology policy

induced innovations and climate change policy with the recent progress in bonn and marrakech on the details required for implementing the kyoto protocol entry into force in 2003 is now a possibility this paper assesses the potential macroeconomic impacts of the kyoto protocol given the recent negotiated developments in addition given the recent attempts in the literature to model endogenous technical change in general equilibrium models a new methodology for incorporating the induced innovations hypothesis into a general equilibrium model is described and implemented in line with previous work it is found that incorporation of the hypothesis reduces abatement costs

when starting with the most expensive option makes sense optimal timing cost and sectoral allocation of abatement investment this paper finds that it is optimal to start a long term emission reduction strategy with significant short term abatement investment even if the optimal carbon price starts low and grows progressively over time moreover optimal marginal abatement investment costs differ across sectors of the economy it may be preferable to spend 25 dollars to avoid the marginal ton of carbon in a sector where abatement capital is expensive such as public transportation or in a sector with large abatement potential such as the power sector than 15 dollars for the marginal ton in a sector with lower cost or lower abatement potential the reason distinct from learning spillovers is that reducing greenhouse gas emissions requires investment in long lived abatement capital such as clean power plants or public transport infrastructure the value of abatement investment comes from avoided emissions but also from the value of abatement capital in the future the optimal levelized cost of conserved carbon can thus be higher than the optimal carbon price it is higher in sectors with higher investment needs those where abatement capital is more expensive or sectors with larger abatement potential we compare our approach to the traditional abatement cost curve model and discuss implications for policy design

seasonalities in security returns the case of earnings announcements abstract we document a seasonal pattern in stock returns around quarterly earnings announcement dates small firms show large positive abnormal returns and a sizable increase in the variability of returns around these dates only part of the large abnormal returns can be accounted for by the tendency of firms with good news to announce early large firms show no abnormal returns around announcement dates and a much smaller increase in variability

price reaction and disagreement over public signal abstract we develop a theory of endogenous disagreement over the interpretation of public news based on the optimal expectation model proposed by brunnermeier and parker 2005 in our model each agent can form an optimal interpretation and agree to disagree with others we find that endogenous disagreement and trade may arise following public news events the model predicts that the market price overreacts to uninformative news and underreacts to informative news thus providing a unified account for the drift in price following significant news events and the excessive price volatility in response to noisy information

is carbon lock in blocking investments in the hydrogen economy a survey of actors strategies the difficulty of introducing hydrogen and fuel cells in the market stems from the fact that they are not an evolutionary innovation such as biofuels or hybrid cars instead they create a disruption in technological utilization the domination of oil technologies sets a socio economical context favoring actors involved in the current paradigm and gives less opportunity to alternative fuels to develop and challenge the status quo if this hypothesis is correct then companies interested in the hydrogen economy would not become active because of an unstable context or contradictory interests concerning the replacement of the present system a review of actions and announcements of main actors shows that technology readiness and the absence of infrastructure are the major justifications to delay investments some measures are discussed which could be deployed in order to reduce uncertainties such as regulation of carbon emissions from cars technological subvention and partnerships for infrastructure implementation

an estimation of the swiss hydropower rent the electricity generation in switzerland is mostly based on hydropower 58 and nuclear power 38 the exploitation of water in the hydropower sector can generate significant economic rent one possibility to capture this rent is through royalties or fees this system has been used in switzerland since many decades however the actual water fee system is not flexible and does not take into consideration different production costs between the type and location of hydropower plants furthermore storage plants can sell electricity to a higher price than run of river plants a flexible system is needed in a liberalized electricity market to take into account these different production situations and the fact that prices may vary considerably over time the main goal of this paper is to calculate the potential economic rent that could be generated in the swiss hydropower sector under a future liberalized market based on the results of the paper it can be concluded that the introduction of a flexible fee system could improve the competitiveness of the hydropower sector and promote an energy system based on renewable energy sources

endogenous implementation of technology gap in energy optimization models a systematic analysis within times g5 model evaluation of global diffusion potential of learning technologies and their timely specific cost development across regions is always a challenging issue for the future technology policy preparation further the process of evaluation gains interest especially by endogenous treatment of energy technologies under uncertainty in learning rates with technology gap across the regions in global regional cluster learning approach this work devised implemented and examined new methodologies on technology gaps a practical problem using two broad concepts of knowledge deficit and time lag approaches in global learning applying the floor cost approach methodology the study was executed in a multi regional technology rich and long horizon bottom up linear energy system model on the integrated markal efom system times framework global learning selects highest learning technologies in maximum uncertainty of learning rate scenario whereas any form of technology gap retards the global learning process and discourages the technologies deployment time lag notions of technology gaps prefer heavy utilization of learning technologies in developed economies for early reduction of specific cost technology gaps of any kind should be reduced among economies through the promotion and enactment of various policies by governments in order to utilize the technological resources by mass deployment to combat ongoing climate change

measuring the value of induced technological change in this paper we analyze the value of induced technological change itc for cutting the costs of reaching climate stabilization targets using techniques from the tax burden literature first itc is valuable as it increases the elasticity of emissions with respect to carbon prices and thereby it decreases the burden associated with an enforced emission reduction second under itc emission abatement may generate a positive learning dividend when the social value of the induced change in learning exceeds its costs we discuss under which assumptions we expect itc to turn out a valuable feature or not we also carry out a numerical analysis with two models one focusing on energy savings the other focusing on energy transition the models suggest that both the decreased carbon tax burden and the learning dividend gain can be substantial compared to the costs of abatement without itc

short and long run marginal cost pricing on their alleged equivalence abstract the equivalence between short run marginal cost srmc and long run marginal cost lrmc in a fully adjusted equilibrium has been proved over and over again in the literature dealing with public utility pricing this basic result has been taken to imply that it is optimal to set prices at lrmc important contributions to this literature are reviewed in this paper the equivalence however is valid only under the very restrictive assumption that the capacity can be varied continuously this means that indivisibilities irreversibilities and durability of investments are ignored where such phenomena exist as in electricity production and distribution pricing according to lrmc is neither theoretically valid nor applicable it is not surprising that it has been difficult for public utilities to define the lrmc concept operationally average cost concepts are used as approximations under these circumstances we find it advisable to dispense with the lrmc concept altogether and rely on pricing based on srmc

do deployment policies pick technologies by not picking applications a simulation of investment decisions in technologies with multiple applications abstract the role of deployment policies that aim to foster technological change has grown considerably especially in the fields of energy and climate however recent research has shown that the adoption of deployment policies carries the potential of locking in the technology that is most cost effective at the point of policy introduction but may be inefficient in the long term the present paper contributes to the emerging literature on the role of deployment policies in creating path dependency and eventually technology lock in while previous studies focused on the relationship between lock in and the technology specificity of deployment policies this paper introduces a new factor the existence of multiple applications for a technology we argue that this factor is highly relevant for technological lock in and should be considered by policy makers to support our argument we simulate the competition among four stationary battery technologies across energy system applications in an investment simulation model this simulation shows that the degree of competition among technologies differs strongly across applications which corresponds with a highly varying lock in probability hence selecting applications in deployment policies very likely corresponds to selecting technologies we discuss the implications of these results for both policy makers and for the academic debate on deployment policies and technological lock in as well as on technology assessment and governance more generally based on the notion that policies can have different technology specificity levels we develop the idea of the application specificity of policies and provide examples of currently enacted deployment policies that vary in terms of their technology and application specificity

a review of residential tiered electricity pricing in china abstract at present the unformed market oriented pricing mechanism has become a great challenge faced by china s electricity pricing and the unreasonable electricity pricing caused by cross subsidization has become increasingly serious with the economic development and energy shortage tiered electricity price tep which was developed and used since 1970s was introduced into china as a new electricity pricing method for residential electricity consumption the tep can also improve the tariffs the behaviors and the efficiency of residential electricity consumption in this study we use the fundamental theory of the electricity economics to analyze the pricing methods and the forms of china s power market with the reform of electric power industry we also point out the characteristics of residential tiered electricity pricing in china which is also compared with other countries such as the united states and japan the main factors influencing the residential tiered electricity pricing design are discussed in this paper from the perspectives of users the electric power enterprise and government regulation then we point out the main problems of china s existing tiered electricity pricing including inadequate level of public awareness and acceptance unreasonable tiered and electricity price standard insufficient reflection in regional differences less combination with other electricity pricing forms and low level of smart meter application

the market for tradable ghg permits under the kyoto protocol a survey of model studies abstract this paper gathers results from 25 models of the market for tradable greenhouse gas ghg emission permits under the kyoto protocol due to diverging projections of emissions growth and different modeling approaches the model results differ substantially the average market volume is approximately 17 and 33 billion usd under global trading and annex b trading respectively including non carbon ghg lowers compliance costs and permit prices in the absence of the us permit demand roughly equals hot air from the former soviet union these countries can increase their revenues from selling permits by restricting supply which raises the permit price

a review of uncertainties in technology experience curves abstract the use of log linear experience curves or learning curves relating reductions in the unit cost of technologies to their cumulative production or installed capacity has become a common method of representing endogenous technical change in energy economic models used for policy analysis yet there are significant uncertainties in such formulations whose impact on key model results have been insufficiently examined or considered this paper reviews the major types of uncertainty in log linear experience curves and their effect on projected rates of cost reduction uncertainties are found not only in the learning rate parameter of a log linear model but also in the functional form that determines the shape of an experience curve evidence for alternative forms such as an s shaped curve is reviewed along with case studies that demonstrate the uncertainties associated with cost increases during early commercialization of a technology a phenomena that is widely recognized but rarely quantified or incorporated in learning models additional factors discussed include the effects of learning discontinuities institutional forgetting and the influence of social economic and political factors we then review other models of causality which aim to improve modelers ability to explain and predict the influence of other underlying processes that contribute to technology cost reductions in addition to learning ignoring other types of underlying mechanisms can create a false sense of precision and overestimate the true contribution of learning currently however uncertainties in such multi factor models remain large due to the difficulties of estimating key parameters such as private sector r d investments and extending models of a specific technology to a broader suite of technologies and cost projections pending the development and validation of more robust models of technological change we suggest ways to significantly improve the characterization and reporting of current learning model uncertainties and their impacts on the results of energy economic models to help reduce the potential for drawing inappropriate or erroneous policy conclusions

innovation policy for directing technical change in the power sector this paper discusses policy instruments for redirecting technical change within the electricity sector to mitigate climate change first we unravel the mechanism behind directed technical change explaining why markets may underprovide innovations in expensive renewable technologies in comparison to innovations in energy efficient fossil fuel generators subsequently we characterize technical change in electricity generation technologies stressing the heterogeneity of knowledge spillovers both within and between clean electricity generation technologies we argue that there exists a rationale for a portfolio approach to innovation in the electricity sector i e optimal innovation policies are neither fully generic nor fully specific and they need to be adapted in response to new information learned by the government the existing innovation literature does not however provide a clear cut answer for designing such a policy we compare policy instruments and argue that public r d support to clean technologies either in the form of subsidies or prizes seems to be the prime candidate for implementing non generic innovation policy

an options approach to investment in a hydrogen infrastructure this paper discusses the investments needed for the introduction of hydrogen as a transport fuel using option theory we develop a model to calculate the value and optimal timing of a first commercial rollout of hydrogen vehicles in a larger area taking japan as a specific example we find that the project is best viewed as an out of the money call option with a small but positive option value we estimate this value at approximately 1 5 billion euros without tax advantages an important finding is that the moment of investment is first and foremost determined by the maturing of the technology by contrast the investment timing is not as much affected by deployment strategy as is frequently thought in particular whether or not the hydrogen retail infrastructure is introduced smoothly does not sensitively influence the investment timing fairly independent of parameter assumptions the project value at the moment of deployment is negative for the retailer and positive for the car manufacturer this implies the need for a negotiated partnership finally we assess various forms of government support e g subsidies or tax cuts looking at the effectiveness of this support spending in relation to the advancement of hydrogen deployment we find again because investment timing is primarily determined by technology maturation that tax incentives are relatively ineffective we are lead to believe that government subsidy for technology development is a more effective means to achieve earlier investment as faster production cost reductions for hydrogen and fuel cell vehicles lead to accelerated investment

optimal carbon taxes for china and implications for power generation welfare and the environment abstract china is expected to constitute about half of the world s emissions between 2010 and 2040 as concerns about climate change intensify the chinese government is poised to commit to a low carbon economy these conditions make china a suitable case in which to study how emission policies impact on energy supply welfare and the environment to achieve this purpose we incorporate abatement technologies into the gtap computable general equilibrium model and show that optimal taxes range between 0 03 for services and 2 02 for manufacturing in most cases simulated tax rates are by far higher than pollution taxes stipulated in the new chinese environmental tax law furthermore despite a decline in output of many sectors including the electricity sector overall welfare gains exist from introducing carbon taxes moreover these taxes reduce environmental pollution by approximately 62 5 in general carbon taxes are insufficient for mitigation in china and due to a coal dominant energy structure implementing these taxes leads to a decline in power generation hence the chinese aggressive investment strategy for renewable electricity technologies as stipulated in its 13th five year plan is understandable

measuring the temporal dynamics of policy mixes an empirical analysis of renewable energy policy mixes balance and design features in nine countries abstract complex societal or environmental problems require fast and substantial socio technical transitions for instance in the case of climate change these transitions need to take place in the energy transport and several industry sectors to induce and accelerate such transitions numerous policy interventions are required which interact with each other in policy mixes while several conceptual studies on policy mixes have been published recently there is very little empirical research apart from single case or small n studies it has been prominently argued that the debate about policy mixes has reached an impasse partly due to this lack of empirical work this paper addresses this gap by providing a first analysis of the temporal dynamics of complex policy mixes to do so we develop a conceptualization and measurement of policy mix balance across instrument types as well as policy mix design features in the form of intensity as a general and technology specificity as a technology focused design feature this allows us to answer the question how temporal dynamics of policy mixes differ between countries regarding their balance and design features our measurement approach is developed bottom up i e policies are assessed individually and then aggregated systematically at the policy mix level this enables overcoming the dependent variable problem in the study of policy change i e the problem of measuring policy output more specifically we develop a comparative dataset of 522 renewable energy policies in nine oecd countries our analysis shows that countries policy mix dynamics vary strongly regarding some variables e g technology specificity but less regarding others e g balance as a validity check we also test the effects of these mix dynamics on policy outcome in the form of renewable energy technology diffusion we reflect our findings in light of the theoretical debates around policy mixes and policy design and discuss how our results provoke an agenda for the new generation of research on policy mixes we specifically discuss avenues for future research with a particular focus on the politics of policy mixes

the earnings announcement premium around the globe abstract u s stocks have been shown to earn higher returns during earnings announcement months than during non announcement months we document that this earnings announcement premium exists across the globe moreover it is not isolated to a few countries of the 20 countries with enough data to conduct a within country analysis nine exhibit a significantly positive premium a cross country analysis finds that the premium is strongest in countries with the greatest increase in idiosyncratic volatility around the time of their firms earnings announcements suggesting that uncertainty over the earnings information to be disclosed is a primary driver of the global announcement premium

the dynamic impact of unilateral environmental policies this paper builds a two country two sector polluting nonpolluting trade model with directed technical change examining whether unilateral environmental policies can ensure sustainable growth the emission rate of the polluting sector depends on its relative use of a clean and a dirty input a unilateral policy combining clean research subsidies and a trade tax can ensure sustainable growth while unilateral carbon taxes alone increase innovation in the polluting sector abroad and generally cannot ensure sustainable growth relative to autarky and exogenous technical change respectively trade and directed technical change accelerate environmental degradation either under laissez faire or with unilateral carbon taxes yet both help reduce environmental degradation under the appropriate unilateral policy i characterize the optimal unilateral policy analytically and numerically using calibrated simulations knowledge spillovers have the potential to reduce the otherwise large welfare costs of restricting policy to onecountry

earnings news and small traders an intraday analysis abstract this study separates trading volume into buyer and seller initiated activities and examines the directional volume reaction in small and large trades to different types of earnings news good bad news triggers brief but intense buying selling in the large trades however a persistent period of unusually high buying activity is observed in the small trades irrespective of the news this anomalous proclivity of small traders to buy is robust across firm size trading volume and different earnings expectation models several explanations are discussed although the behavior does not seem fully explained by existing theories

technical change and the marginal cost of abatement abstract we address one aspect of the treatment of technical change in the environmental economics literature how technical change impacts the marginal cost of abatement we review a selection of papers that employ a variety of representations of technical change and show that these representations have quite different and sometimes surprising effects on the marginal costs of pollution reductions we argue that these varied representations in fact correspond to a variety of different technology options we then present results indicating that this representation matters the impacts of technical change on the marginal cost of abatement can crucially impact policy analysis

is there a relationship between public expenditures in energy r d and carbon emissions per gdp an empirical investigation abstract energy innovation plays a crucial role in the reduction of carbon emissions in order to design climate and energy policies that promote the development deployment and diffusion of new energy technologies policy makers not only require a theoretical understanding of the energy innovation system but also empirical evidence of the effects that policy actions have had this paper focuses on public energy r d a traditional and controversial option among the various climate technology policies and empirically analyses its relationship with carbon emissions per gdp i e carbon intensity and its two components energy intensity and the carbon factor evidence of the causality links that have prevailed in 13 advanced economies over the 1980 2004 period has been obtained through dynamic panel models our findings confirm that government r d spending is not sufficient by itself to boost the energy innovation process public energy r d has been successful in improving energy efficiency at country level but it has failed to have a significant impact on the carbon factor and carbon intensity at the same time the formation of energy r d budgets is found to be significantly affected by carbon trends

investment planning in electricity production under co2 price uncertainty the electricity markets have undergone significant changes during the last years on the one hand the market deregulation has increased significantly the uncertainty on future electricity prices on the other hand the kyoto protocol and the establishment of emission restrictions as well as the development of emission trading systems has added another expense stream for conventional fuel electricity producers and a potential income stream for renewable electricity producers the emission allowance prices are another source of uncertainty for electricity producers the scope of this work is to investigate the effect that various scenarios for emission allowance price evolution may have on the orders for new electricity generation technologies and therefore on the future electricity generation mix of greece the renewable energy generation targets are taken into consideration as a constraint of the system and the learning rates of the various technologies are included in the calculations the national electricity generation system is modelled for long term analysis and an optimisation method is applied in order to come up with the optimal generating mix that minimises electricity generation cost while satisfying the national emissions reduction targets and incorporating the uncertainty of emission allowance prices in addition an investigation is made to identify if a point should be expected when renewable energy will be more profitable than conventional fuel electricity generation the work is interesting for investment planning in the electricity market as it may provide directions on which technologies are most probable to dominate the market in the future and therefore are of interest to be included in the future power portfolios of related investors

applying real options analysis to assess cleaner energy development strategies abstract the energy industry accounts for the largest portion of co 2 emissions is facing the issue of compliance with the national clean energy policy the methodology for evaluating the energy mix policy is crucial because of the characteristics of lead time embedded with the power generation facilities investment and the uncertainty of future electricity demand in this paper a modified binomial model based on sequential compound options which may account for the lead time and uncertainty as a whole is established and a numerical example on evaluating the optional strategies and the strategic value of the cleaner energy policy is also presented it is found that the optimal decision at some nodes in the binomial tree is path dependent which is different from the standard sequential compound option model with lead time or time lag concept the proposed modified binomial sequential compound real options model can be generalized and extensively applied to solve the general decision problems that deal with the long lead time of many government policies as well as capital intensive investments

on the sources of technological change assessing the evidence this paper uses a selective review of the economic literature on technological change to support four points that are important for interpreting and incorporating technological change into formal models of energy and the environment the review 1 supports the notion that no single source dominates the process of technological change it supports roles for rd 3 indicates that these spillovers are often indirect requiring own industry activities to utilize and 4 indicates that simple experience curve calibrations often used in formal models likely include a range of sources of technological change in addition to learning by doing some of which might not be induced by the sorts of policies typically considered in the climate context

technological learning in energy environment economy modelling a survey abstract this paper aims at providing an overview and a critical analysis of the technological learning concept and its incorporation in energy environment economy models a special emphasis is put on surveying and discussing through the so called learning curve both studies estimating learning rates in the energy field and studies incorporating endogenous technological learning in bottom up and top down models the survey of learning rate estimations gives special attention to interpreting and explaining the sources of variability of estimated rates which is shown to be mainly inherent in r d expenditures the problem of omitted variable bias the endogeneity relationship and the role of spillovers large scale models survey show that despite some methodological and computational complexity related to the non linearity and the non convexity associated with the learning curve incorporation results of the numerous modelling experiments give several new insights with regard to the analysis of the prospects of specific technological options and their cost decrease potential bottom up models and with regard to the analysis of strategic considerations especially inherent in the innovation and energy diffusion process in particular the energy sector s endogenous responses to environment policy instruments top down models

a review of learning rates for electricity supply technologies a variety of mathematical models have been proposed to characterize and quantify the dependency of electricity supply technology costs on various drivers of technological change the most prevalent model form called a learning curve or experience curve is a log linear equation relating the unit cost of a technology to its cumulative installed capacity or electricity generated this one factor model is also the most common method used to represent endogenous technical change in large scale energy economic models that inform energy planning and policy analysis a characteristic parameter is the learning rate defined as the fractional reduction in cost for each doubling of cumulative production or capacity in this paper a literature review of the learning rates reported for 11 power generation technologies employing an array of fossil fuels nuclear and renewable energy sources is presented the review also includes multi factor models proposed for some energy technologies especially two factor models relating cost to cumulative expenditures for research and development r d as well as the cumulative installed capacity or electricity production of a technology for all technologies studied we found substantial variability as much as an order of magnitude in reported learning rates across different studies such variability is not readily explained by systematic differences in the time intervals geographic regions choice of independent variable or other parameters of each study this uncertainty in learning rates together with other limitations of current learning curve formulations suggests the need for much more careful and systematic examination of the influence of how different factors and assumptions affect policy relevant outcomes related to the future choice and cost of electricity supply and other energy technologies

climate policies and induced technological change which to choose the carrot or the stick policies to reduce emissions of greenhousegases such as co2 will affect the rate andpattern of technological change in alternativeenergy supply and other production processes imperfections in markets for non pollutingtechnologies imply that a decentralised economydoes not deliver a socially optimal outcome and this could justify policy interventionssuch as subsidies this paper considers thewelfare effects of technology subsidies as partof a carbon abatement policy package we arguethat the presence of spillovers in alternativeenergy technologies does not necessarily implythat subsidy policies are welfare improving weillustrate this point in the context of ageneral equilibrium model with two forms ofcarbon free energy an existing alternative energy which is a substitute for carbon basedfuels and new vintage energy which providesa carbon free replacement for existing energyservices subsidisation of alternative energyon the grounds of spillover effects can bewelfare worsening if it crowds out new vintagetechnologies

bending the learning curve abstract the aim of this paper is to improve the application of the learning curve a popular tool used for forecasting future costs of renewable technologies in integrated assessment models iams first we formally discuss under what assumptions the traditional ols estimates of the learning curve can deliver meaningful predictions in iams we argue that the most problematic of them are the absence of any effect of technology cost on its demand reverse causality and the ability of iams to predict all determinants of cumulative capacity next we show that these assumptions can be relaxed by modifying the traditional econometric method used to estimate the learning curve the new estimation approach presented in this paper is robust to the two problems identified but preserves the reduced form character of the learning curve finally we provide new estimates of learning curves for wind turbines and pv technologies which are tailored for use in iams our results suggest that the learning rate should be revised upward for solar pv our estimate of learning rate for wind technology is almost the same as the traditional ols estimates

the effect of local and global learning on the cost of renewable energy in developing countries high upfront costs are a critical barrier for investments in clean infrastructure technologies in developing countries this paper uses a case study of thailand s electricity sector to create realistic estimates for the relative contributions of local and global technological learning to reducing these cost in the future and discusses implications of such learnings for international climate policy for six renewable electricity technologies we derive estimates for the share of locally and globally sourced goods and services and analyze the effects of local and global learning during the implementation of thailand s renewable energy targets for 2021 our results suggest that in aggregate the largest potential for cost reduction lies in local learning this finding lends quantitative support to the argument that the conditions enabling local learning such as a skilled workforce a stable regulatory framework and the establishment of sustainable business models have a more significant impact on cost of renewable energy in developing countries than global technology learning curves the recent shift of international support under the united nations framework convention on climate change towards country specific technology support is therefore promising however our results also show that the relative importance of local and global learning differs significantly between technologies and is determined by technology and country characteristics this suggests that international support need to consider both the global perspective and local context and framework conditions in order to reap the full benefits of technological learning across the wide range of clean technologies

incorporating life cycle external cost in optimization of the electricity generation mix the present work aims to examine the strategic decision of future electricity generation mix considering together with all other factors the effect of the external cost associated with the available power generation technology options not only during their operation but also during their whole life cycle the analysis has been performed by integrating the life cycle assessment concept into a linear programming model for the yearly decisions on which option should be used to minimize the electricity generation cost the model has been applied for the case of greece for the years 2012 2050 and has led to several interesting results firstly most of the new generating capacity should be renewable mostly biomass and wind while natural gas is usually the only conventional fuel technology chosen if externalities are considered wind energy increases its share and hydro power replaces significant amounts of biomass generated energy furthermore a sensitivity analysis has been performed one of the most important findings is that natural gas increases its contribution when externalities are increased summing up external cost has been found to be a significant percentage of the total electricity generation cost for some energy sources therefore significantly changing the ranking order of cost competitiveness for the energy sources examined

how important is the financial media in global markets this article studies differences in the information content of 870 000 news announcements in 56 markets around the world in most developed markets a firm s stock price moves much more on days with public news about the firm in contrast in many emerging markets volatility is similar on news and non news days we examine several hypotheses for our findings cross country differences in stock price reactions are best explained by insider trading followed by differences in the quality of the news dissemination mechanism our findings are useful for quantifying the extent of insider trading and how the financial media affects international markets jel g14 g15 public news announcements are a major mechanism for disseminating information to investors each day the financial media releases thousands of articles covering companies in markets worldwide investors use this news to estimate assets fundamental values despite the perceived importance of the

carbon prices for the next hundred years this paper examines the socially optimal pricing of carbon emissions over time when climate change impacts are unknown potentially high consequence events the carbon price tends to increase with income but learning about impacts or their absence decouples the carbon price from income growth the price should grow faster than the economy if the past warming is not substantial enough for learning the true long run social cost it grows slower than the economy as soon as the warming generates information about events that could have arrived but have not done so a quantitative assessment shows that the price grows roughly at the rate of the economy for the next 100 years

do idiosyncratic jumps matter abstract we show that idiosyncratic jumps are a key determinant of mean stock returns from both an ex post and ex ante perspective ex post the entire annual average return of a typical stock accrues on the four days on which its price jumps ex ante idiosyncratic jump risk earns a premium a value weighted weekly long short portfolio that buys sells stocks with high low predicted jump probabilities earns annualized mean returns of 9 4 and four factor alphas of 8 1 this strategy s returns are larger when there are greater limits to arbitrage these results are consistent with investor aversion to idiosyncratic jump risk

option pricing of earnings announcement risks this paper uses option prices to learn about the equity price uncertainty surrounding information released on earnings announcement dates to do this we introduce reduced form models and estimators to separate price uncertainty regarding earnings announcements from normal day to day volatility empirically we find strong support for the importance of earnings announcements we find that the anticipated price uncertainty is quantitatively large varies across time and is informative about the future return volatility finally we quantify the impact of earnings announcements on formal option pricing models

economic and environmental effects under resource scarcity and substitution between renewable and non renewable resources we build a general equilibrium model with renewable non polluting and non renewable polluting resources to analyze the interaction and compatibility between economic growth and a cleaner environment the study is in two phases i resource extraction production costs are constant ii resource producers invest in knowledge to reduce extraction production costs endogenizing technical change with constant costs there is a permanent trade off between economic growth and a cleaner environment with endogenous technical change it is possible to harmonize more output and less emissions by replacing non renewable resources for renewable ones we also conduct a sensitivity analysis to explore three specific policy actions with constant costs the best policy action is the imposition of a higher renewable resources standard while with endogenous technical change under certain conditions all policy interventions may benefit both the economy and the environment

optimal emission taxes for full internalization of environmental externalities abstract the present study proposes a set of optimal emissions fees that could be used to reduce the damages caused by industrial pollution the approach we use allows for the setting of pollution taxes at their economically appropriate level in particular tax rates are computed for china india and 19 sub saharan african countries all other world regions are grouped according to income level such as low income lower middle income upper middle income and high income economies our results show that constructed optimal pollution taxes range as high as 2 9 per 1 dollar of output for heavy manufacturing in the high income countries and as low as 0 01 in the service sectors of the low income countries these results show that a full internalization of the damages in each sector calls for raising the tax rates in some sectors and lowering them in others

the relation between price changes and trading volume a survey this paper reviews previous and current research on the relation between price changes and trading volume in financial markets and makes four contributions first two empiri cal relations are established volume is positively related to the magnitude of the price change and in equity markets to the price change per se second previous theoretical research on the price volume relation is summarized and critiqued and major insights are emphasized third a simple model ofthe price volume relation is proposed that is consis tent with several seemingly unrelated or contradictory observations and fourth several directions for future research are identified

second best renewable subsidies to de carbonize the economy commitment and the green paradox climate change must deal with two market failures global warming and learning by doing in renewable energy production the first best policy consists of an aggressive renewables subsidy in the near term and a gradually rising and falling carbon tax given that global carbon taxes remain elusive policy makers might have to rely on a second best subsidy only with credible commitment the second best subsidy is higher than the social benefit of learning to cut the transition time and peak warming close to first best levels at the cost of higher fossil fuel use in the short run weak green paradox without commitment the second best subsidy is set to the social benefit of learning it generates smaller weak green paradox effects but the transition to the carbon free takes longer and cumulative carbon emissions are higher under first best and second best with pre commitment peak warming is 2 1 2 3 circ c under second best without commitment 3 5 circ c and without any policy 5 1 circ c above pre industrial levels not being able to commit yields a welfare loss of 95 of initial gdp compared to first best being able to commit brings this figure down to 7

long run marginal electricity generation costs in israel abstract this paper presents two methods for calculating long run marginal electricity generation costs based on the techniques used for long term expansion planning according to the first method long run marginal costs are calculated as incremental costs required to supply additional demands peak shoulder and off peak demands to each hourly demand group separately these costs include the present value of capital fuel and operation and maintenance o m costs throughout the planning period in the second method the long run marginal capacity cost element is calculated as an additional reduced cost resulting from bringing forward postponing generation capacity investments in order to supply incremented decremented demands in every hour throughout the planning period the annualized marginal capacity cost is allocated among the hours according to the distribution of the unsupplied energy and is added to the energy marginal cost to obtain the long run marginal cost both methods are implemented through models used for long term optimal generation system expansion planning in addition the second method uses a chronological simulation of generation system operation a detailed case study of the israeli electric generation system is also presented

technological change and the timing of mitigation measures we use a coupled carbon cycle and energy systems engineering model to analyze the future time path of carbon emissions under an illustrative co2 concentration stabilization limit of 550 ppm our findings confirm the emission pattern as found by wre global emissions rise initially pass through stabilization in order to decline in the second half of the 21st century we show that for a given co2 concentration target emission trajectories within an intertemporal optimization framework depend mainly on two factors the discount rate and the representation of technological change as either static or dynamic we obtain a similar near term emission time path as wre when using a model with static technology and a discount rate of 7 we obtain a trajectory with lower emissions in the near term when using a lower discount rate and or treating technology dynamics endogenously in the model we briefly outline a model that endogenizes technological change through learning curves we then compare differences in emission trajectories between alternative model formulations of technological change they are sufficiently small as to be of secondary importance when compared to treating co2 concentration stabilization as an inter temporal optimization problem or not whereas our results confirm the computational results of wre we arrive nonetheless at different policy conclusions if long term emission reduction is the goal we cannot follow business as usual even in the short term action needs to start now action does not necessarily mean aggressive short term emission reductions but rather enhanced r d and technology demonstration efforts that stimulate technological learning these are the necessary preconditions that long term reduction targets can be met with improved technology and at costs lower than today we close by pointing out two further critical issues uncertainty and the possible mismatch between the world of economic models and that of climate policy

learning by doing and the costs of a backstop for energy transition and sustainability we assess the impact of being able to substitute an unlimited but costly energy substitute like wind solar for a non renewable resource like oil coal in a model of sustainable growth the prospects for sustainability on the optimal path depend crucially on the costs of this substitute furthermore the poorer a country measured in terms of capital stock at a given point in time the later it should switch to the renewable substitute and the more likely it will be unsustainable taking learning by doing in account we find that this leads to an earlier switching time but does not guarantee sustainability

r d investment strategy for climate change abstract the economic costs of stabilizing greenhouse gas concentrations over the coming century depend critically on the development of new technologies in the energy sector our research and development r d investment strategy is the control variable for technology availability this paper proposes an analytic framework for determining optimal r d investment allocation and presents some numerical results to demonstrate the implementation of the methodology the value of technological advance in three targeted areas fossil based generation renewables and carbon capture and storage is represented by the increase in expected welfare in the presence of an emissions policy constraint of initially uncertain stringency r d expenditure increases the probability of advance optimal investment is determined by its relationship with success probability which is assumed to exhibit decreasing returns to scale relative to the value of success while the numerical results are speculative the paper offers insights into the nature of an optimal technology strategy for addressing climate change

when does the bond price reaction to earnings announcements predict future stock returns abstract in this paper i show that the bond price reaction to earnings announcements has predictive power for post announcement stock returns and that this predictive ability is driven by the bonds of non investment grade firms i find that bonds predictive ability is more pronounced in firms that have a lower level of institutional shareholder ownership and whose bonds are more liquid this paper enhances our understanding of the relation between the stock and bond markets and complements the literature which documents whether and under what circumstances various accounting based measures and financial statement components predict post announcement stock returns

integrated assessment of global climate change with learning by doing and energy related research and development this paper presents a small scale version of an integrated assessment model iam of global climate change which is based on a global regionally differentiated computable general equilibrium cge model with endogenous technological change this model can be viewed as a basic framework for analyzing a broad range of economic issues related to climate change in particular since technological change is represented in two ways on the one hand there is learning by doing lbd in non fossil energy supply technologies and on the other hand there is research and development r d driven energy saving technical progress in production computational experiments are added for illustrating the role of technological innovation in a world both with and without cooperation in the solution of the global climate problem

the use of real options approach in energy sector investments abstract energy shortage global warming and climate change led to an increase in the use of alternative sources of energy with renewable energy sources res playing a fundamental role in this new energetic paradigm however the investment costs often constitute a major barrier to their spread use moreover the overall benefits of renewable energy technologies are often not well understood and consequently they are often evaluated to be not as cost effective as traditional technologies from the moment that the energy sector started a deregulation process with a high level of competitiveness and associated increased market uncertainty traditional project evaluation techniques alone became insufficient to properly deal with these additional risk and uncertainty factors the diffusion of the renewable energy technologies is also affected by this feature the way investors evaluate their investments call now for the use of more sophisticated evaluation techniques real options approach can deal with these issues and as so began to be considered and applied for the energy sector decision aid this approach it is now extensively widespread in evaluating investment projects in the energy sector a large set of applications in almost all fields of energy decision making from electricity generation technologies appraisal to policy evaluation is available in the literature however the use of this technique in the field of res is still limited and worth to be analysed this paper addresses this issue a review of the current state of the art in the application of real options approach to investments in non renewable energy sources and res is presented giving perspectives for further research in this field

expectations management and stock returns we establish a link between firms managing investors performance expectations earnings announcement premiums and cyclical patterns i e seasonalities in returns firms that are more likely to manage expectations toward beatable levels predictably earn lower returns before and higher returns during their earnings announcements this pattern repeats across firms fiscal quarters suggesting firms manufacture positive surprises by negatively biasing investors expectations ahead of announcing earnings we corroborate these findings using non price based outcomes indicative of expectations management together our findings are consistent with the pressure for firms to meet earnings targets shaping the cross section of firms stock returns

on the environmental economic and budgetary impacts of fossil fuel prices a dynamic general equilibrium analysis of the portuguese case abstract this paper examines the influence of fossil fuel prices on carbon dioxide emissions economic activity and the public sector account in portugal it uses a dynamic general equilibrium model which highlights the mechanisms of endogenous growth and includes a detailed modeling of the public sector fuel price scenarios are based on forecasts by the us department of energy doe us the international energy agency iea oecd and ihs global insight inc the differences in relative fuel prices among the three scenarios lead to substantially different environmental impacts higher fuel prices in the doe us scenario lead to a 10 2 reduction in the policy effort required to meet the eu 2020 emission targets while relative price changes in the iea oecd scenario result in a 19 2 increase in the required policy effort and decreasing fuel prices increase the emissions deficit by 95 9 under the ihs scenario in terms of the long term economic impacts our results suggest a 2 2 reduction in gdp in the doe us scenario and 1 9 in the iea oecd scenario and an increase of 1 4 in the ihs scenario as to the budgetary impact higher fuel prices lead to lower tax revenues which coupled with a reduction in public spending translates to lower public deficits from a methodological perspective our results highlight the importance of the mechanisms of endogenous growth a scenario of higher fuel prices would under exogenous economic growth assumptions result in larger baseline emissions growth substantially smaller economic effects and rather different budgetary effects from a policy perspective our results highlight the importance of fossil fuel prices in defining the level of policy intervention required for compliance with international and domestic climate change legislation

a climate change policy induced shift from innovations in carbon energy production to carbon energy savings abstract we develop an endogenous growth model with capital labor and carbon energy as production factors and three technology variables that measure accumulated innovations for carbon energy production carbon energy savings and neutral growth all markets are complete and perfect except for research for which we assume that the marginal social benefits exceed the marginal private benefits by factor four the model constants are calibrated so that the model reproduces the relevant global trends over the 1970 2000 period the model contains a simple climate module and is used to assess the impact of induced technological change itc for a policy that aims at a maximum level of atmospheric co2 concentration 450 ppmv itc is shown to reduce the required carbon tax by more than a factor 2 and to reduce costs of such a policy by half when we do not constrain aggregate r d expenditures to benchmark levels costs are further reduced numerical simulations show that knowledge accumulation shifts from energy production to energy saving technology we discuss reasons for differences between our results and earlier results reported in the literature

understanding the numbers game abstract two well known stylized facts on earnings management are that the earnings surprise distribution has a discontinuity at zero and that positive earnings surprises are associated with positive abnormal returns we link these two facts in a model of the earnings management decision in which the manager trades off the capital market benefits of meeting earnings benchmarks against the costs of manipulation we develop a new structural methodology to estimate the model and uncover the unobserved cost function the estimated model parameters yield the percentage of manipulating firms magnitude of manipulation noise in manipulation and sufficient statistics to evaluate proxies for identifying firms suspected of manipulation finally we use the sarbanes oxley act as a policy experiment and find that by increasing costs the act reduced equilibrium earnings management by 36 this reduction occurred despite an increase in benefits consistent with the market rationally becoming less skeptical of firms that just meet benchmarks

endogenous technological change in climate change modelling this article investigates the impact on optimal co2 abatement and carbon tax levels of introducing endogenous technological change in a macroeconomic model of climate change we analyse technological change as a function of cumulative capacity as incorporated recently in energy systems models our calculations confirm that including endogenous innovation implies earlier emission reduction to meet atmospheric carbon concentration constraints however the effect is stronger than suggested in the literature moreover the development of non fossil energy technologies constitutes the most important opportunity for emission reductions optimal carbon tax levels reducing fossil energy use are lower than usually advocated