carbon leakage and capacity based allocations is the eu right competitiveness and carbon leakage are major concerns for the design of co2 emissions permits markets in the absence of a global carbon tax and of border carbon adjustments output based allocation is a third best solution and is actually implemented australia california new zealand the eu has followed a different route free allowances are allocated to existing or new capacities in proportion to a benchmark independent of actual production this paper compares these two schemes in a formal setting and shows that the optimal one is in fact a combination of both schemes or output based allocation alone if uncertainty is limited a key assumption of our analysis is that the short term import pressure depends both on the existing capacities and the level of demand which is typical in capital intensive and internationally traded sectors a calibration of the model is used to discuss the eu scheme for the cement sector in the third phase of the eu ets 2013 2020 this allows for a quantification of various policies in terms of welfare investment production company profits public revenues and leakage

average cost pricing versus serial cost sharing an axiomatic comparison abstract a finite group of agents share a one output production function a cost sharing rule allocates the total cost among the users for every conceivable profile of output demands we investigate the space of possible cost sharing rules from an axiomatic perspective we provide two characterizations of average cost pricing one based on the axioms of additivity and monotonicity both with respect to the cost function and the other based on the axioms of additivity and a version of consistency we also provide a characterization of serial cost sharing based essentially on additivity and a free lunch axiom journal of economic literature classification numbers d63 d78 c79

should a carbon tax be differentiated across sectors abstract if some but not all countries are cooperating to reduce co2 emissions one could make the following argument a high carbon tax for carbon intensive tradeable sectors in the cooperating countries will reduce the production of goods from these sectors and therefore co2 emissions in the cooperating countries however this will to a large extent be counteracted by increased production of such goods in the countries that have no climate policy and since it is only total co2 emissions from all countries that are relevant for the climate there is no point in a policy that simply relocates co2 emissions from the cooperating countries to the countries that have no climate policy according to this line of reasoning carbon intensive tradeable sectors should thus face a lower carbon tax than other sectors of the economy this paper shows that a carbon tax should not be differentiated across sectors in the economy provided one can use import and export tariffs on all traded goods it is also shown that such a differentiation of carbon taxes is optimal for the cooperating countries if they are prevented from using tariffs on the traded goods however informational or political factors constraining the use of tariffs are likely also to constrain the possibility of differentiating carbon taxes between sectors

stochastic modelling of renewable energy sources from operators point of view a survey abstract high penetration of renewable energy sources especially weather dependent sources has increased the power systems uncertainties for any analysis in power systems such as planning and operation it is essential to confront the stochastic nature of these sources in order to get much more precise results since operators need proper strategies and methods to decline negative effects of the stochastic behaviour of renewable power generators such as total operation cost growth this paper provides a review of different state of the art approaches from the operator s viewpoint for handling the stochastic behaviour of renewable sources hence in this paper three different strategies are categorized for stochastic analysis of these sources the first strategy is mathematical modelling including stochastic dependency and independency multi dimensional dependence forecast and scenarios afterwards demand side management which is one of the other approaches for dealing with these uncertainties is investigated and different demand response programs and some methods to model them are presented finally the effect of different electricity market schemes and relevant optimization methods to mitigate the variations of renewable energy sources are discussed the study demonstrates that an operator should choose one or a combination of these three approaches based on its requirements

climate policy and fiscal constraints do tax interactions outweigh carbon leakage climate policymaking faces twin challenges of carbon leakage and public sector revenue requirements a large literature advocates the use of carbon dioxide co2 pricing and recycling the revenues to lower distorting taxes as a way to minimize costs in this paper we explore the implications of labor tax interactions for the cost effectiveness of border adjustments and other measures to cope with leakage we find that for plausible values of labor supply elasticities the cost savings from revenue recycling are significant from 15 to 25 percent the cost savings from anti leakage measures are generally smaller but also significant particularly for small coalitions or more binding reduction targets tax interactions further enhance the cost savings from border adjustments but make other measures like rebates or exemptions less attractive

an integrated framework for cost allocation in a multi owned transmission system this paper describes a methodology for allocating transmission costs among users of a centralized transmission service in the proposed approach the share of each participant is proportional to its impact on power system transmission investment requirements this allocation rule provides incentives for all participants to remain in the pool and ensures revenue reconciliation it is shown that under some simplifying assumptions the proposed scheme reduces to a modified mw mile rule thus providing some insight on that method s economic basis other issues such as credits for counterflows and distortions due to economies of scale are also addressed the methodology is illustrated in case studies with the brazilian power system

the cross country implications of alternative climate policies abstract because of worldwide growing concerns about global climate change great interest has been expressed in the potential of alternative climate policies to reduce global carbon emissions in this paper we compare cross country implications of alternative climate policies including unilateral and multilateral climate policies our main findings are as follows firstly there are large differences in cross country effects of alternative unilateral climate policies when the same given carbon emission reductions are achieved in each abating country respectively meanwhile cross border externalities undermine efficiency of unilateral climate policies secondly there are significant differences in cross country implications of alternative multilateral climate policies when the same global emission reductions are allocated in several different ways among abating countries thirdly it is difficult to reach a stable global climate treaty since any abating country has the incentive to argue for small carbon emission reductions finally multilateral climate policies can reduce the negative impacts of cross border externalities but cannot cure all cross border externalities looking ahead it will be a great policy challenge for the world to reduce carbon emissions in a cost effective way

distributed stochastic market clearing with high penetration wind power integrating renewable energy into the modern power grid requires risk cognizant dispatch of resources to account for the stochastic availability of renewables toward this goal day ahead stochastic market clearing with high penetration wind energy is pursued in this paper based on the dc optimal power flow opf the objective is to minimize the social cost which consists of conventional generation costs end user disutility as well as a risk measure of the system re dispatching cost capitalizing on the conditional value at risk cvar the novel model is able to mitigate the potentially high risk of the recourse actions to compensate wind forecast errors the resulting convex optimization task is tackled via a distribution free sample average based approximation to bypass the prohibitively complex high dimensional integration furthermore to cope with possibly large scale dispatchable loads a fast distributed solver is developed with guaranteed convergence using the alternating direction method of multipliers admm numerical results tested on a modified benchmark system are reported to corroborate the merits of the novel framework and proposed approaches

pricing and the news vendor problem a review with extensions in the newsvendor problem a decision maker facing random demand for a perishable product decides how much of it to stock for a single selling period this simple problem with its intuitively appealing solution is a crucial building block of stochastic inventory theory which comprises a vast literature focusing on operational efficiency typically in this literature market parameters such as demand and selling price are exogenous however incorporating these factors into the mode l can provide an excellent vehicle for examining how operational problems interact with marketing issues to influence decision making at the firm level in this paper we examine an extension of the newsvendor problem in which stocking quantity and selling price are set simultaneously we provide a comprehensive review that synthesizes existing results for the single period problem and develop additional results to enrich the existing knowledge base we also review and develop insight into a dynamic inventory extension of this problem and motivate the applicability of such models

mitigation of adverse effects on competitiveness and leakage of unilateral eu climate policy an assessment of policy instruments the european union eu has developed a strategy to mitigate climate change by cutting greenhouse gas ghg emissions and fostering low carbon technologies however the risk of implementing unilateral policies is that distortive effects are generated at the global scale affecting world energy prices international competitiveness and the geographical allocation of carbon intensive production processes using a dynamic cge model we assess the rate of carbon leakage and adverse impacts on competitiveness in a number of scenarios over the period 2010 2050 according to the model results we highlight two major issues first in the case of a unilateral eu climate policy carbon leakage and negative effects on competitiveness are quite serious anti leakage measures can only mitigate leakage and adverse economic impacts on competitiveness in a limited way on the contrary an optimality analysis addressing the environmental effectiveness cost effectiveness and political feasibility of alternative policy solutions reveals that the eu long term decarbonisation strategy by investing in energy efficiency and renewable energy might ensure protection of vulnerable manufacturing activities while enhancing the competitiveness of technologically advanced industries

stochastic security for operations planning with significant wind power generation in their attempt to cut down on greenhouse gas emissions from electricity generation several countries are committed to install wind power generation up to and beyond the 10 20 penetration mark however the large scale integration of wind power represents a challenge for power system operations planning because wind power 1 cannot be dispatched in the classical sense and 2 its output varies as weather conditions change this warrants the investigation of alternative short term power system operations planning methods capable of better coping with the nature of wind generation while maintaining or even improving the current reliability and economic performance of power systems to this end this paper formulates a short term forward electricity market clearing problem with stochastic security capable of accounting for nondispatchable and variable wind power generation sources the principal benefit of this stochastic operation planning approach is that when compared to a deterministic worst case scenario planning philosophy it allows greater wind power penetration without sacrificing security

the efficiency cost of protective measures in climate policy despite recent achievements towards a global climate agreement climate action to reduce greenhouse gas emissions remains quite heterogeneous across countries energy intensive and trade exposed eite industries in industrialized countries are concerned on stringent domestic emission pricing that puts them at a competitive disadvantage against producers of similar goods in other countries with more lenient emission regulation this paper focuses on climate policy design in the united states of america us and compares the economic implications of four alternative protective measures for us eite industries i output based rebates ii exemptions from emission pricing iii energy intensity standards and iv carbon intensity standards using a large scale computable general equilibrium model we quantify how these protective measures affect competitiveness of us eite industries we find that protective measures can improve common trade related competitiveness indicators such as revealed comparative advantage or relative world trade shares but at the same time may lead to a decline in the output value for eite industries because of negative income effects the economy wide cost of emission abatement under protective measures increase as compared to uniform emission pricing stand alone such that the gains of protective measures for eite exports may be more than compensated through losses in domestic eite demand

energy market design for renewable resources imbalance settlements and efficiency robustness tradeoffs this paper examines optimal energy market bidding behavior for stochastic resources when energy imbalance payments are determined endogenously from market clearing conditions some electricity markets require wind producers to settle day ahead offers based on their real time energy production this is usually justified by economic and cost causation principles without considering the effects of these policies on curtailment and system balancing costs under these real time settlement requirements demand and wind forecast errors impact the effective penalty price so strategic behavior affects the penalty price paid by producers this paper formulates a two stage game where producers place energy bids in the day ahead market and then choose a curtailment level in real time and it derives the symmetric subgame perfect equilibrium strategy for producers it details how supply curve convexity and resource correlation can lead wind producers to bid conservatively even when they are not risk averse the results show that market based pricing mechanisms improve tradeoffs between system efficiency and mean squared bid error as compared to the case where penalty levels are determined by alternative policies suggesting additional benefits of market based penalty prices beyond those previously studied

unilateral climate policy design efficiency and equity implications of alternative instruments to reduce carbon leakage abstract global cost effectiveness of unilateral emission abatement can be seriously hampered by carbon leakage we assess three widely discussed proposals for leakage reduction carbon motivated border tax adjustments industry exemptions from carbon regulation and output based allocation of emission allowances we find that none of these measures amounts to a magic bullet when both efficiency and equity criteria matter compared to unilateral emission pricing alone border carbon adjustments are most effective in leakage reduction and promotion of global cost effectiveness but can markedly exacerbate regional inequality exemptions and output based allocation tend to avoid distributional pitfalls but are less effective in leakage reduction and global cost savings exemptions may even decrease global cost effectiveness of unilateral emission abatement

trading wind generation in short term energy markets even with state of the art forecasting methods the short term generation of wind farms cannot be predicted with a high degree of accuracy in a market situation these forecasting errors lead to commercial risk through imbalance costs when advance contracting this situation is one that needs to be addressed due to the steady increase in the amount of grid connected wind generation combined with the rise of deregulated market orientated electricity systems in the presence of imbalance prices and uncertain generation a method is required to determine the optimum level of contract energy to be sold on the advance markets such a method is presented here using markov probabilities for a wind farm and demonstrates substantial reductions in the imbalance costs the effect of market closure delays and forecasting window lengths are also shown

local matching of flexible load in smart grids abstract today s power systems are experiencing a transition from primarily fossil fuel based generation toward greater shares of renewable energy sources it becomes increasingly costly to manage the resulting uncertainty and variability in power system operations solely through flexible generation assets incorporating demand side flexibility through appropriately designed incentive structures can add an additional lever to balance demand and supply based on a supply model using empirical wind generation data and a discrete model of flexible demand with temporal constraints we design and evaluate a local online market mechanism for matching flexible load and uncertain supply under this mechanism truthful reporting of flexibility is a dominant strategy for consumers reducing payments and increasing the likelihood of allocation suppliers during periods of scarce supply benefit from elevated critical value payments as a result of flexibility induced competition on the demand side we find that for a wide range of the key parameters supply capacity flexibility level the cost of ensuring incentive compatibility in a smart grid market relative to the welfare optimal matching is relatively small this suggests that local matching of demand and supply can be organized in a decentral manner in the presence of a sufficiently flexible demand side extending the stylized demand model to include complementary demand structures we demonstrate that decentral matching induces only minor efficiency losses if demand is sufficiently flexible furthermore by accounting for physical grid limitations we show that flexibility and grid capacity exhibit complementary characteristics

intraday trading of wind energy in this paper we tackle the problem of a wind power producer participating in a short term electricity market that allows for the continuous but potentially illiquid intraday trading of energy considering the realistic case of a wind farm operating in the western danish price area of nord pool we build a simple but effective algorithm for the wind power producer to fully benefit from the elbas intraday market we then investigate the sensitivity of the obtained benefits to the maximum volume of energy the wind power producer is willing to trade in the intraday market the ultimate aim of the trade either to decrease energy imbalances or to increase profits and to the installed capacity of the wind farm our numerical results reveal that the wind power producer can substantially increase his revenues by partaking in the intraday market but with diminishing returns to scale a result that we attribute to the low liquidity of elbas

towards a cost causation based tariff for distribution networks with dg this paper decomposes the effects of the transition from an average cost distribution tariff to a cost causation based distribution tariff in terms of time and location that uses nodal prices to recover losses and an extent of use method to recover fixed network costs based on use at coincident peak our decomposition is designed so that the effects of using coincident peak and location for fixed network charges as well as using marginal losses under constraints recovering the exact amount of losses and recovering exactly the cost of network service in total can be isolated and analyzed separately we apply our tariff transition and decomposition method to an example network with data from uruguay to isolate the various effects with and without a distributed generation dg resource we show moving to coincident peak charges and to fully charging for marginal losses while rebating the merchandising surplus through the fixed charges have the greatest effects on changes in distribution tariff charges dg provides countervailing cost changes to distribution tariffs for loads through loss reductions and the implicit creation of new network capacity for which it is paid the interaction of all these effects may lead to outcomes that are counter intuitive which further supports the need to decompose the tariff changes to fully understand the reasons for the direction and magnitude of changes in tariff charges in the transition to tariffs based more on cost causation

dynamic climate policy under firm relocation the implications of phasing out free allowances the allocation of free allowances for firms within the european union emissions trading scheme was found to lead to substantial overcompensation which is why some stakeholders recently called for phasing out of free allowances in the near term this paper analyzes the consequences of phasing out free allowances in a two period model when one country unilaterally implements climate policies a carbon price induces firms to invest in abatement capital but may lead to the relocation of some firms the regulator addresses the relocation problem by offering firms transfers i e free allowances conditional on maintaining the production in the regulating country if transfers are unrestricted in both periods then the regulator implements the first best by equalizing the carbon price with the marginal environmental damage and using transfers to prevent any relocation however if transfers in the future period are restricted the planner optimally implements a declining carbon price path with the first period price exceeding the marginal environmental damage a high carbon price triggers investments in abatement capital and thus creates a lock in effect with a larger abatement capital stock firms are less affected by carbon prices in the future and therefore less prone to relocate in the second period

carbon abatement and international spillovers carbon abatement policies in large open economies affect both the allocation of domestic resources and international market prices a change in international prices implies an indirect secondary burden or benefit for all trading countries based on simulations with a large scale computable general equilibrium model of global trade and energy use we show that international spillovers have important welfare implications for carbon abatement policies designed to meet exogenous emission reduction targets we present a decomposition of the total welfare effect of carbon abatement policies into a primary domestic market effect at constant international prices and a secondary international spillover impact as a result of changes in international prices this decomposition reveals the extent to which domestic abatement costs are increased or decreased as a result of the impact of carbon abatement on international prices

bringing wind energy to market wind energy is a rapidly growing source of renewable energy generation however the current extra market approach to its assimilation into the electric grid will not scale at deep penetration levels in this paper we investigate how an independent wind power producer might optimally offer its variable power into a competitive electricity market for energy starting with a stochastic model for wind power production and a model for a perfectly competitive two settlement market we derive explicit formulae for optimal contract offerings and the corresponding optimal expected profit as wind is an inherently variable source of energy we explore the sensitivity of optimal expected profit to uncertainty in the underlying wind process we also examine the role of forecast information and recourse markets in this setting we quantify the role of reserves in increasing reliability of offered contracts and obtain analytical expressions for marginal profits resulting from investments in improved forecasting and local auxiliary generation the formulae make explicit the relationship between price signals and the value of such firming strategies

coalitional aggregation of wind power this paper explores scenarios in which independent wind power producers form willing coalitions to exploit the reduction in aggregate power output variability obtainable through geographic diversity in the setting of a two settlement electricity market we examine the advantage gained through optimal coalitional contract offering strategies for quantity risk reduction we show that a group of independent wind power producers can always improve their expected profit by cooperatively offering their aggregated power using coalitional game theory we identify sharing mechanisms to fairly allocate the profits to coalition members we show that the resulting coalitional game is balanced guaranteeing that the core of the game is necessarily nonempty in addition we propose a profit sharing mechanism that minimizes the worst case dissatisfaction to recover an imputation in the core finally we illustrate our theoretical results with empirical studies using data from five representative wind farms in upstate new york

carbon leakage grandfathering as an incentive device to avert firm relocation emission allowances are sometimes distributed for free in an early phase of a cap and trade scheme to reduce adverse effects on the profitability of firms this paper investigates whether grandfathering can also be used to avert the relocation of firms to countries with lower carbon prices we show that under certain conditions relocation can be averted in the long run even if the grandfathering scheme is phased out over time and immediate relocation is profitable in its absence this requires that the permit price triggers sufficient investments into low carbon technologies or abatement capital that create a lock in effect which makes relocation unprofitable

minimization of imbalance cost trading wind power on the short term power market present power markets are designed for trading conventional generation for wind generation to participate in a short term energy market lengthy wind power production forecasts are required although wind speed forecasting techniques are constantly improving wind speed forecasts are never perfect and resulting wind power forecast errors imply imbalance costs for wind farm owners in this paper a new method for minimization of imbalance costs is developed stochastic programming is used to generate optimal wind power production bids for a short term power market a wind power forecast error is represented as a stochastic process the imbalance costs resulting from this strategy are then compared to the case when wind power production bids on a short term power market are based directly on a wind speed forecast

the impact of wind generation on wholesale electricity prices in the hydro rich pacific northwest extant literature documents that wind generation can reduce wholesale electricity market prices by displacing conventional generation but how large is the wholesale price effect of wind generation in an electricity market dominated by hydroelectric generation we explore this question by analyzing the impact of wind generation on wholesale electricity prices in the pacific northwest region of the united states this hydro rich system tends to be energy limited rather than capacity constrained with its marginal generation during the hydro runoff season often a hydro unit instead of a natural gas fired unit we find that increased wind generation reduces wholesale market prices by a small but statistically significant amount while a hydro rich system can integrate wind generation at a lower cost than a thermal dominated region the direct economic benefits to end users from greater investment in wind power may be negligible

unilateral climate policy and competitiveness economic implications of differential emission pricing unilateral emission reduction commitments raise concerns on international competitiveness and emission leakage that result in preferential regulatory treatment of domestic energy intensive and trade exposed industries our analysis illustrates the potential pitfalls of climate policy design which narrowly focuses on competitiveness concerns about energy intensive and trade exposed eite branches the sector specific gains of preferential regulation in favour of these branches must be traded off against the additional burden imposed on other industries beyond burden shifting between industries differential emission pricing bears the risk for substantial excess cost in emission reduction as policy concedes too low carbon prices to eite industries and thereby foregoes relatively cheap abatement options in these sectors from the perspective of global cost effectiveness we find that differential emission pricing of eite industries hardly reduces emission leakage since the latter is driven through robust international energy market responses to emission constraints as a consequence the scope for efficiency compared to uniform pricing is very limited only towards stringent emission reduction targets will a moderate price differentiation achieve sufficient gains from leakage reduction to offset the losses of diverging marginal abatement cost

cost allocation and net load variability a basic principle of electricity market design is that cost allocation should follow cost causation as closely as possible as renewable resources play a larger role in electricity generation system operators have become increasingly concerned about costs related to variability in net load while variable generation resources have attracted a great deal of attention along these lines load is a larger source of variability in most systems this paper introduces a shapley value framework to assess the total system cost attributable to electricity market participants that either exacerbate or alleviate net load variability furthermore this paper investigates the extent to which these costs are adequately reflected in wholesale market prices numerical tests indicate that the cost of variability on the hourly time scale is in most cases internalized by market integrated generators and buyers mitigating concerns that variability imposes a socialized cost from ramping or cycling of thermal generators

a stochastic two settlement equilibrium model for electricity markets with wind generation incentives to encourage the uptake of renewable energy generation have fostered wind energy in many power systems these incentives usually take the form of market instruments e g feed in tariff or premium that are not directly amenable to optimization representations of the market in this paper we propose an equilibrium model of the short term market to address the impact of wind operation under different structural assumptions the model is formulated for several price taking risk averse firms in competition it accounts for wind generation uncertainty and embeds a representation of the day ahead and balancing mechanisms the consumer is modeled by a linear inverse demand function we focus on feed in premium as the incentive to wind as this is the instrument most favored today in european discussions the model is formulated as a stochastic equilibrium problem where the karush kuhn tucker kkt conditions from the optimization problem of each firm are simultaneously solved together with market clearing conditions on energy capacity for reserve and energy for reserve the problem for each firm consists of a two stage stochastic optimization problem with a recourse function based on the conditional value at risk cvar as a risk measure due to price taking assumptions the model is a single stage complementarity problem it is implemented and solved using the software gams an example based on a stylized simplification of the spanish power market and motivated by the impact of wind penetration on the revenue of conventional plants is used to illustrate the proposed approach

border carbon adjustment and trade retaliation what would be the cost for the european union unilateral climate policy such as carbon pricing represents an additional cost to the economy especially to energy intensive industrial sectors as well as those exposed to international competition a border carbon adjustment bca is often presented as an attractive policy option for countries that wish to go ahead without waiting for a global climate agreement we used the computable general equilibrium model mirage to simulate the impact of the introduction of a bca on imports of energy intensive products in eu and efta countries and to evaluate the exports their main trade partners would lose given that a bca is a trade measure it might cause disputes at the world trade organization wto if the bca is considered illegal the losses suffered by some partners may justify trade retaliations at that point it would be likely that prohibitive retaliatory tariffs target sensitive products in the eu which are often related to the european agricultural sector these trade measures would limit the drop in production in the energy intensive and trade exposed eite sectors but at the expense of the other sectors nevertheless neither the bca nor retaliation would have sizeable impacts on real income or gdp in the eu or on the retaliators while leading to a small decrease in global emissions

cost effective unilateral climate policy design size matters given the bleak prospects for a global agreement on mitigating climate change pressure for unilateral abatement is increasing a major challenge is emissions leakage border carbon adjustments and output based allocation of emissions allowances can increase effectiveness of unilateral action but introduce distortions of their own we assess antileakage measures as a function of abatement coalition size we first develop a partial equilibrium analytical framework to see how these instruments affect emissions within and outside the coalition we then employ a computable general equilibrium model of international trade and energy use to assess the strategies as the coalition grows we find that full border adjustments rank first in global cost effectiveness followed by import tariffs and output based rebates the differences across measures and their overall appeal decline as the abatement coalition grows in terms of cost the coalition countries prefer border carbon adjustments countries outside the coalition prefer output based rebates

ordinal cost sharing abstract we ask how the best known mechanisms for solving cost sharing problems with homogeneous cost functions the value proportional and serial mechanisms should be extended to arbitrary problems we propose the ordinality axiom which requires that cost shares should be invariant under essentially all increasing transformations of the measuring scales following thevalueapproach first we present an axiomatization of the shapley shubik rule based on ordinality next we define and axiomatize two extensions of theserialmechanism which contrary to the friedman moulin rule are ordinal finally we note that the aumann shapley extension of theproportionalmechanism is not ordinal we propose and defend an alternative proportional extension which does satisfy ordinality journal of economic literatureclassification numbers d63 c71

the implicit value of corn base acreage the impact of recent changes to the u s commodity program and efficacy of environmental regulations designed to discourage continuous corn rotations will depend upon the value farmers place on corn base acreage this paper estimates this value by assuming that the benefits of access to the program are capitalized into farmland rents using iowa rental survey data and a hedonic pricing approach the rent gradient for base acreage is found to be on the order of 12 per acre the discounted stream of returns to base acreage suggests an asset value for corn base of approximately 200 per acre

parcelling virtual carbon in the pollution haven hypothesis the methodology proposed in this paper allows us to parcel the pollution haven hypothesis phh into a bi regional input output framework to analyse whether the specialisation of countries in different stages of production and or in final goods trading generates an increase or a decrease in global emissions as a consequence of international trade we apply the model to the spain china trade relationship as it existed in 2005 finding a phh of 29 667 ktco2 if this trade had not existed so each country had met its demand for intermediate and final goods global emissions would have been reduced by these 29 667 ktco2 of this phh 43 5 corresponds to imports of final goods 32 4 is related to imports of intermediate goods for the last stage of production the remainder 24 1 is caused by global value chains gvc between the countries only 3229 ktco2 of phh emissions are linked to domestic emissions from the sector in which the imports are produced the rest is explained by domestic linkages or successive rounds of domestic production which supports the existence of an indirect phh together with a trade growth in the last years the fall of trade barriers would have implied a transformation of global production chains that have boosted global emissions

robust technology policy against emission leakage the case of upstream subsidies asymmetric regulation of a global pollutant between countries can alter the competitiveness of industries and lead to emissions leakage which hampers countries welfare in order to limit leakage governments consider supporting domestic trade exposed firms by subsidizing their investments in abatement technology the suppliers of such technologies tend to be less than perfectly competitive particularly when both emissions regulations and advanced technologies are new in this context of twin market failures we consider the relative effects and desirability of subsidies for abatement technology we find a more robust recommendation for upstream subsidies than for downstream subsidies downstream subsidies tend to increase global abatement technology prices reduce pollution abatement abroad and increase emission leakage on the contrary upstream subsidies reduce abatement technology prices and hence also emissions leakage

trading wind generation from short term probabilistic forecasts of wind power due to the fluctuating nature of the wind resource a wind power producer participating in a liberalized electricity market is subject to penalties related to regulation costs accurate forecasts of wind generation are therefore paramount for reducing such penalties and thus maximizing revenue despite the fact that increasing accuracy in spot forecasts may reduce penalties this paper shows that if such forecasts are accompanied with information on their uncertainty i e in the form of predictive distributions then this can be the basis for defining advanced strategies for market participation such strategies permit to further increase revenues and thus enhance competitiveness of wind generation compared to other forms of dispatchable generation this paper formulates a general methodology for deriving optimal bidding strategies based on probabilistic forecasts of wind generation as well as on modeling of the sensitivity a wind power producer may have to regulation costs the benefits resulting from the application of these strategies are clearly demonstrated on the test case of the participation of a multi mw wind farm in the dutch electricity market over a year

downscaling heterogeneous household outcomes in dynamic cge models for energy economic analysis abstract downscaling methods for dynamic computable general equilibrium models are developed and analyzed the methods produce outcomes for a variety of different household types by downscaling the aggregate quantities from an economic growth model with a representative household this approach uses household survey data and long term population projections for different household types to compare the performance of the downscaling methods vs a general equilibrium model with multiple household groups under a variety of conditions including demographic change technological change and a carbon tax both recursive dynamic and forward looking downscaling methods produce results that approximate well a multiple household model run the recursive dynamic downscaling method is applied to an illustrative example estimating impacts of a carbon tax on aggregate co 2 emissions and the energy demand of different household groups for a middle of the road development scenario

implicit prices of soil characteristics for farmland in iowa arguments have long persisted that purchasers pay too much for poor land i e less productive more erosive relative to the higher quality counterpart in other words purchasers are either irrational or poorly informed relative to the differences in land productivity between poor and good farmland similar arguments have been advanced concerning the willingness to pay rent on the part of tenant operators little empirical evidence exists to support or reject this hypothesis farmland appraisals are sometimes cited as evidence to support the contention but such empiricism may indicate more about the quality and biases of appraisers than about the behavior or efficient functioning of the farmland market resolution of this issue is extremely important to the formation of soil conservation policy designed to protect soil productivity irrational behavior on the part of land purchasers may lead one to infer that the market system is failing to recognize adequately the soil productivity consequences of soil erosion if this oversight consistently leads to excessive soil erosion from society s perspective then some form of government intervention may be necessary to protect the welfare of society assuming that such intervention is capable of correcting the market failure

environmental policies and agricultural land values evidence from the dutch nutrient quota system the paper analyzes the impact of the phosphate based animal production rights on agricultural land values in the netherlands we claim that the existence of mandatory production control program with regional restriction on trading causes a disproportional increase in land prices in the surplus region where the quota is binding relative to the deficit region where the quota is not binding and that the increase in the cost of environmental compliance should generate an eroding effect on the existing gap in land prices the parameters of an inverse land demand model estimated with panel data support both hypotheses

the costs of compliance a cge assessment of canada s policy options under the kyoto protocol canada has committed itself under the kyoto protocol to reduce greenhouse gas emissions between 2008 and 2012 on average by six per cent from the base 1990 level as of 2009 however canada s greenhouse gas emissions are far above its 1990 level which calls for stringent short term policy measures if canada is to meet its legally binding commitment this paper uses a multi region multi commodity static general equilibrium model to quantify the economic impacts of alternative compliance strategies for canada in the context of climate policies undertaken by other kyoto parties the numerical results confirm fears by canadian policymakers of substantial economic adjustment costs should canada fulfill its kyoto commitments solely through domestic action however a rigorous use of the project based cdm on top of international emissions trading could allow canada to live up to its international climate policy commitment at politically much more tolerable costs

opportunity cost bidding by wind generators in forward markets analytical results wind generation must trade in forward electricity markets based on imperfect forecasts of its output and real time prices when the real time price differs for generators that are short and long the optimal forward strategy must be based on the opportunity costs of charges and payments in real time rather than a central estimate of wind output we present analytical results for wind s optimal forward strategy in the risk neutral case the optimal strategy is determined by the distribution of real time available wind capacity and the expected real time prices conditioned on the forward price and wind out turn our approach is simpler and more computationally efficient than formulations requiring specification of full joint distributions or a large set of scenarios informative closed form examples are derived for particular specifications of the wind price dependence structure in the usual case of uncertain forward prices the optimal bidding strategy generally consists of a bid curve for wind power rather than a fixed quantity bid a discussion of the risk averse problem is also provided an analytical result is available for aversion to production volume risk however we doubt whether wind owners should be risk averse with respect to the income from a single settlement period given the large number of such periods in a year

trade from resource rich countries avoids the existence of a global pollution haven hypothesis abstract free trade agreements are currently receiving much attention in the media and politics one important question concerning free trade is its effect on the environment for example in carbon dioxide emissions the goal of this paper is to provide evidence on the validity of the pollution haven hypothesis using a multi regional input output approach for six regions and the rest of the world as a whole our findings indicate that in the period from 1995 to 2009 international trade has allowed the global economy to reduce its overall co2 emissions compared to a hypothetical situation without international trade the total amount of emissions saved was 15 06 gt in the period under consideration however not all of the seven regions in our model have been able to reduce their co2 emissions through trade global value chains have led to china becoming a pollution haven for other regions and its exports have increased world emissions to 1 28 gt co2 in 2008 however what allows a net saving of emissions on a global scale is the supply of energy and natural resources from a set of peripheral economies which in our geographical categorization are mostly integrated in the region of the rest of the world

three methods to share joint costs or surplus abstract we study cost sharing methods with variable demands of heterogeneous goods additive in the cost function and meeting the dummy axiom we consider four axioms scale invariance si demand monotonicity dm upper bound for homogeneous goods ubh placing a natural cap on cost shares when goods are homogeneous average cost pricing for homogeneous goods acph the random order values based on stand alone costs are characterized by si and dm serial costsharing by dm and ub the aumann shapley pricing method by si and acph no other combination of the four axioms is compatible with additivity and dummy journal of economic literature classification numbers c71 d62 d63

economic and environmental impact analysis of carbon tariffs on chinese exports as an alternative measure for the proposal of border tax adjustments btas advocated by the countries that seek to abate co2 emissions hereafter referred to as abating countries export carbon tax ect voluntarily conducted by the developing countries has been widely discussed in recent years this paper uses the multi regional and multi commodity computable general equilibrium cge model and the gtap8 1 database to investigate the economic and environmental effects of carbon tariffs on chinese exports the following three policy scenarios are considered 1 the abating countries implement cap and trade emission programs without btas 2 the unilaterally abating countries levy import tariffs and export subsidies on non abating countries and 3 the abating countries implement unilateral climate policies combined with ect imposed by china the ect policy of china is evaluated with a carbon price set at 17 us t co2 results illustrate that the ect voluntarily implemented by china is ineffective in reducing its domestic co2 emissions moreover ect merely has a minor impact on global emissions finally the competitiveness of china s energy intensive and trade exposed eite industries suffers substantial losses if export tariffs are imposed however china s gains in terms of welfare and gross domestic product gdp would be slightly improved if an ect policy is implemented compared to the scenario where china is subjected to btas levied by the abating coalition in the light of the tradeoff between tariff revenue for welfare and competiveness losses of the eite industries it is therefore difficult to conclude that carbon tariff on chinese exports is an alternative policy to btas

cost of service segmentation of energy consumers uncertainty in consumption is a key challenge at energy utility companies which are faced with balancing highly stochastic demand with increasingly volatile supply characterized by significant penetration rates of intermittent renewable sources this paper proposes a methodology to quantify uncertainty in consumption that highlights the dependence of the cost of service with volatility in demand we use a large and rich dataset of consumption time series to provide evidence that there is a substantial degree of high level structure in the statistics of consumption across users which may be partially explained by certain characteristics of the users to uncover this structure we propose a new technique for extracting typical statistical signatures of consumption energy demand distributions edds that is based on clustering distributions using a fast approximated algorithm we next study the factors influencing the choice of consumption signature and identify certain types of appliances and behaviors related to appliance operation that are most predictive finally we comment on how structure in consumption statistics may be used to target residential energy efficiency programs to achieve greatest impact in curtailing cost of service

optimal management and sizing of energy storage under dynamic pricing for the efficient integration of renewable energy we address the optimal energy storage management and sizing problem in the presence of renewable energy and dynamic pricing associated with electricity from the grid we formulate the problem as a stochastic dynamic program that aims to minimize the long run average cost of electricity used and investment in storage if any while satisfying all the demand we model storage with ramp constraints conversion losses dissipation losses and an investment cost we prove the existence of an optimal storage management policy under mild assumptions and show that it has a dual threshold structure under this policy we derive structural results which indicate that the marginal value from storage decreases with its size and that the optimal storage size can be computed efficiently we prove a rather surprising result as we characterize the maximum value of storage under constant prices and i i d net demand processes if the storage is a profitable investment then the ratio of the amortized cost of storage to the constant price is less than 1 4 we further perform sensitivity analysis on the size of optimal storage and its gain via a case study finally with a computational study on real data we demonstrate significant savings with energy storage

pool strategy of a price maker wind power producer we consider the problem of a wind power producer trading energy in short term electricity markets the producer is a price taker in the day ahead market but a price maker in the balancing market and aims at optimizing its expected revenues from these market floors the problem is formulated as a mathematical program with equilibrium constraints mpec and cast as a mixed integer linear program milp which can be solved employing off the shelf optimization software the optimal bid is shown to deliver significantly improved performance compared to traditional bids such as the conditional mean or median forecast of wind power distribution finally sensitivity analyses are carried out to assess the impact on the offering strategy of the producer s penetration in the market of the correlation between wind power production and residual system deviation and of the shape of the forecast distribution of wind power production

effects on a corn soybean farm of uncertainty about the future of farm programs dynamic programming techniques are used to evaluate effects of uncertainty about continuation of farm programs on planting decisions during the last year of the 1990 farm bill results indicate farm level decisions are affected by uncertainty only when the farmer s subjective probability if the continuation of farm programs is very low the optimal value functions in different versions f the model can also be used to estimate the implicit value of base acreage

why are there large differences in performances when the same carbon emission reductions are achieved in different countries great interest has been in unilateral climate policies given present difficulty of establishing stable global coordinated agreements in this paper we investigate underlining factors explaining large differences in performances when the same carbon emission reductions are achieved in different abating countries to this end we develop a new multi country general equilibrium model incorporating six countries or world regions two goods six production inputs capital mobility energy mobility and international trade meanwhile we adopt two performance indicators with carbon leakage representing environmental efficiency and carbon emission abatement costs revealing cost effectiveness our findings are as follows firstly there are large differences in performances among these unilateral climate policies as evidenced by large differences in leakage rates and carbon emission abatement costs secondly the new global climate treaties to replace the kyoto protocol should be able to induce more carbon emission reductions in countries with low carbon emission reduction costs since such setting contributes to global cost savings finally developed countries have high carbon emission abatement costs compared with large developing countries china and india in this paper implying that there should be trade off mechanisms between efficiency and equity regarding how to allocate carbon emission reductions among countries

wind aggregation via risky power markets aggregation of diverse wind power sources can effectively reduce their uncertainty and hence the cost of wind energy integration a risky power contract is proposed by which wind power producers wpps can trade uncertain future power for efficient wind aggregation a two settlement market with both the risky power contract and a conventional firm power contract is shown to have a unique competitive equilibrium ce characterized in closed form the marginal contribution and diversity contribution of each wpp to the group of all wpps are fairly reflected in the profit earned by this wpp at the ce moreover the ce achieves the same total profit as achieved by a grand coalition of wpps in a coalitional game setting the profit allocation induced by the ce is always in the core and is achieved via a non cooperative risky power market the benefits of the risky power market are demonstrated using wind generation and locational marginal price data for ten wpps in the pjm interconnection

carbon control policies competitiveness and border tax adjustments abstract several propositions have recently been made to use border tax adjustments btas to address the loss of competitiveness induced by unilateral stringent domestic pollution control policies this paper explores in a general equilibrium framework the sectoral and welfare implications of a unilateral domestic ghg control policy combined with a bta scheme using the canadian economy as an illustration we assess the extent to which btas achieve their objectives and analyze the impacts of different methods of recycling the bta proceeds to support domestic industries our simulation results suggest that imposing btas on the imports of non fossil and energy intensive products reduces or removes completely the negative competitiveness impacts that domestic industries suffer from the use of the proceeds of the btas to support domestic energy intensive industries improves their competitiveness and more importantly in some cases overprotects them as it allows them to even increase their output in comparison to the benchmark without emissions control our results also shed light on the existence of heterogeneity in the composition of energy intensive industries as far as the recycling method of the bta proceeds is concerned energy intensive industries that are more oriented toward the domestic market are better off with the recycling of the bta proceeds towards gross output than towards exports alone finally abstracting from the environmental benefits of reduced emissions we find that a bta entails a higher welfare cost to households

uniform and non uniform second best input taxes we investigate second best input based taxes foragricultural nonpoint pollution control when marketprices are endogenous and production isheterogeneous theoretically we derive the optimalforms of taxes which take account of heterogeneity non uniform taxes and a tax which does not auniform tax empirically we use a multi factor market equilibrium simulation model to determineoptimal tax rates and associated equity effects particularly differences in landowner gains lossesacross a heterogeneous region when market prices areendogenous second best tax policies result inpecuniary externalities that affect existingenvironmental externalities in particular thepecuniary externalities amplify the effect of producerheterogeneity on determination of sub regionaldifferences in tax rates and returns to land particularly for the uniform policy with endogenousprices the uniform tax rate is considerably higherthan any of the non uniform rates and ironically thenon uniform taxes result in less dispersion oflandowner gains across sub regions than the uniformtax

electricity market participation of wind farms the success story of the spanish pragmatism abstract in the last 10 years more than 15 gw of wind power asociacion empresarial eolica spanish wind energy association nota de prensa press release 17 de enero de 2008 http www aeeolica org doc np 080117 espana supera los 15000 mw eolicos pdf have been installed in spain of which more than 3 5 gw in 2007 furthermore plans are to reach 20 gw by 2010 and there are expectations of an installed capacity exceeding 40 gw by 2020 this article will present the innovative solutions for technical and economical integration that allow to reach such high level wind penetration objectives the system peaks at around 44 gw and is almost isolated it will be described how the regulation has evolved from a pure feed in tariff to a market premium option where technical and economic integration has been a priority today approximately 97 of installed wind capacity accesses the spanish wholesale electricity market market integration has been crucial sending the correct signals to participants to look for the optimum technical solutions technical improvements have come from both wind power producers fault ride through capabilities visibility and controllability of wind power power production forecasting reactive power control and the system operator specific control centre dedicated to renewable energy sources res new security analysis tools gaining technical confidence of wind capabilities

sources of emission reductions market and policy stringency effects abstract international trade and economic development affect air emissions previous studies have decomposed their effects into scale composition and technique effects while the scale and composition effects occur through market responses the technique effect is a policy stringency influence through the mix of environmental policies this study analyzes whether the market or policy stringency effects are more prominent previous studies have been unable to adequately separate the market and policy stringency effects to independently measure the technique effect we use two indicators of policy stringency i e shadow prices of energy and industrial energy prices these policy stringency measures are treated as endogenous the effects on six types of air emissions are estimated utilizing a sector specific international panel dataset that includes newly industrialized and former transition economies the empirical results show that the major source of emissions reductions is the policy stringency effect through carbon related policies pollution offshoring to countries with weaker carbon related regulation has a minor role in the reduction of air emissions

operational strategies for a portfolio of wind farms and chp plants in a two price balancing market in this paper we explore the portfolio effect of a system consisting of a combined heat and power chp plant and a wind farm the goal is to increase the overall profit of the portfolio by reducing imbalances and consequently their implicit penalty in a two price balancing market for electricity we investigate two different operational strategies which differ in whether the chp plant and the wind farm are operated jointly or independently and we evaluate their economic performance on a real case study based on a chp wind system located in the western part of denmark we present a comprehensive mathematical model for describing the different heat and power production units of the chp plant and suggest different ways of determining its operation in a setup with two trading floors a day ahead market and a balancing market we build a simulation framework that runs in a rolling horizon fashion so that forecasts for heat demand wind power production and market prices are updated at each iteration we conclude that the portfolio strategy is the most profitable due to the two price structure of the balancing market this encourages producers to handle their imbalances outside the market

farmland rental prices in gm soybean areas of argentina do contractual arrangements matter abstractin this paper we study the determinants of the rental price of farmland in the argentinian pampas in particular we examine the price of lease contracts using a hedonic price model while controlling for other potential sources of variation using firsthand data for 255 plots our results indicate that both short term contracts and contracts with sowing pools push rental prices upwards we also find that soybean yields have a significant impact on land rental prices these results suggest that if argentina intends to protect the enormous natural advantage it has for agricultural production it should consider strictly regulating land rental contracts

cost causation based allocations of costs for market integration of renewable energy an important problem in modern electrical power systems is the inherent variability and uncertainty of renewable energy resources allocating the costs generated by the variable resources in a just and reasonable manner is crucial for economic efficiency in this paper we develop an axiomatic framework for allocating the deviation costs generated by variable resources using the cost causation based principle the cost causation principle has a long historical tradition in electrical energy systems and has been proved to provide economic efficiency we apply the new cost causation based framework to allocate the cost in the production deviation of a group of renewable energy producers and thereby help promote the market integration of renewable energy the resulting cost allocation framework is then applied to five wind power producers bidding in the iberian electricity market in europe using real data on wind speeds and market prices