Pub Date : 2025-06-18DOI: 10.1016/j.reseneeco.2025.101513
Maryam Feyzollahi, Nima Rafizadeh
This study quantifies the impact of residential electricity prices on greenhouse gas (GHG) emissions, addressing a critical gap in climate policy analysis. Using panel data from 48 contiguous U.S. states (1990–2017), we develop a novel decomposition framework for the residential electricity price elasticity of GHG emissions (REPE-GHG) and employ two-step GMM estimation to address price endogeneity and dynamic consumption adjustments. Our results reveal a short-run residential electricity price elasticity of GHG emissions of −0.6% and a long-run elasticity of −5.2%. We find substantial regional heterogeneity, with elasticities in the Midwest and South significantly exceeding those in the Northeast. Moreover, the REPE-GHG exhibits a marked downward trend over time, accelerating post-2005. These findings suggest that uniform national pricing policies may be suboptimal and that price-based interventions become less effective as energy systems evolve.
{"title":"The price-emissions nexus in U.S. residential electricity markets","authors":"Maryam Feyzollahi, Nima Rafizadeh","doi":"10.1016/j.reseneeco.2025.101513","DOIUrl":"10.1016/j.reseneeco.2025.101513","url":null,"abstract":"<div><div>This study quantifies the impact of residential electricity prices on greenhouse gas (GHG) emissions, addressing a critical gap in climate policy analysis. Using panel data from 48 contiguous U.S. states (1990–2017), we develop a novel decomposition framework for the residential electricity price elasticity of GHG emissions (REPE-GHG) and employ two-step GMM estimation to address price endogeneity and dynamic consumption adjustments. Our results reveal a short-run residential electricity price elasticity of GHG emissions of −0.6% and a long-run elasticity of −5.2%. We find substantial regional heterogeneity, with elasticities in the Midwest and South significantly exceeding those in the Northeast. Moreover, the REPE-GHG exhibits a marked downward trend over time, accelerating post-2005. These findings suggest that uniform national pricing policies may be suboptimal and that price-based interventions become less effective as energy systems evolve.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"83 ","pages":"Article 101513"},"PeriodicalIF":2.6,"publicationDate":"2025-06-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144366211","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-03DOI: 10.1016/j.reseneeco.2025.101512
Martin Drechsler
Numerous theoretical and empirical studies have demonstrated the potential of coordination incentives like the agglomeration bonus for the establishment of species habitat networks in agricultural landscapes. Less well understood is the social process behind this coordination, and how it affects the performance of the instrument. In the present paper this issue is addressed by simulating the coalition formation between several landowners in a stylized but structurally realistic landscape. Rather than assuming perfectly informed rational decision makers, the landowners are modeled as learning agents. A variety of learning strategies is considered. While these affect the coalition structure they have comparatively little influence on the land-use dynamics and the scheme expenditure, suggesting that knowledge about the details of the coordination process may be less relevant for predicting the performance of an agglomeration bonus. Instead, the performance is shown to mainly depend on the economic settings, such as the spatial correlation of the conservation costs, the spatial distribution of the landowners’ properties, and the presence or absence of side payments between the landowners – where the present results largely confirm the results of previous studies. A weak relationship is observed, though, between the average size of the coalitions on the one hand and the ecological scheme performance and scheme expenditure on the other. Confirming previous studies, budget-effectiveness gains of the agglomeration bonus are limited.
{"title":"Learning coalition formation under an agglomeration bonus: Impacts on coalition structure and scheme performance","authors":"Martin Drechsler","doi":"10.1016/j.reseneeco.2025.101512","DOIUrl":"10.1016/j.reseneeco.2025.101512","url":null,"abstract":"<div><div>Numerous theoretical and empirical studies have demonstrated the potential of coordination incentives like the agglomeration bonus for the establishment of species habitat networks in agricultural landscapes. Less well understood is the social process behind this coordination, and how it affects the performance of the instrument. In the present paper this issue is addressed by simulating the coalition formation between several landowners in a stylized but structurally realistic landscape. Rather than assuming perfectly informed rational decision makers, the landowners are modeled as learning agents. A variety of learning strategies is considered. While these affect the coalition structure they have comparatively little influence on the land-use dynamics and the scheme expenditure, suggesting that knowledge about the details of the coordination process may be less relevant for predicting the performance of an agglomeration bonus. Instead, the performance is shown to mainly depend on the economic settings, such as the spatial correlation of the conservation costs, the spatial distribution of the landowners’ properties, and the presence or absence of side payments between the landowners – where the present results largely confirm the results of previous studies. A weak relationship is observed, though, between the average size of the coalitions on the one hand and the ecological scheme performance and scheme expenditure on the other. Confirming previous studies, budget-effectiveness gains of the agglomeration bonus are limited.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"83 ","pages":"Article 101512"},"PeriodicalIF":2.6,"publicationDate":"2025-06-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144243287","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-05-28DOI: 10.1016/j.reseneeco.2025.101511
En-Ze Wang , Jiangchuan Xu
The environmental outcomes of voluntary environmental programs (VEPs) remain a controversial issue, especially in developing countries. We advance this subject by examining the impact of the ISO14001 Environmental Management System on firm-level energy intensity in China. The paper applies a difference-in-differences approach combined with propensity score matching to a unique panel dataset including all manufacturing firms obtaining ISO14001 certification during the period of 2008–2016. The results indicate that although VEP increases both energy consumption and output, the impact on output is significantly greater, leading to a reduction in energy intensity. This reduction is primarily achieved through capital upgrades and innovation rather than foreign trade. Furthermore, VEP exhibits spillover effects at the supply chain level, primarily benefiting upstream firms through mercantile credit rather than downstream firms. Finally, firms continue to benefit from VEP even after exiting this program, as their energy intensity does not increase.
{"title":"Something for nothing? The effect of voluntary environmental program on energy intensity","authors":"En-Ze Wang , Jiangchuan Xu","doi":"10.1016/j.reseneeco.2025.101511","DOIUrl":"10.1016/j.reseneeco.2025.101511","url":null,"abstract":"<div><div>The environmental outcomes of voluntary environmental programs (VEPs) remain a controversial issue, especially in developing countries. We advance this subject by examining the impact of the ISO14001 Environmental Management System on firm-level energy intensity in China. The paper applies a difference-in-differences approach combined with propensity score matching to a unique panel dataset including all manufacturing firms obtaining ISO14001 certification during the period of 2008–2016. The results indicate that although VEP increases both energy consumption and output, the impact on output is significantly greater, leading to a reduction in energy intensity. This reduction is primarily achieved through capital upgrades and innovation rather than foreign trade. Furthermore, VEP exhibits spillover effects at the supply chain level, primarily benefiting upstream firms through mercantile credit rather than downstream firms. Finally, firms continue to benefit from VEP even after exiting this program, as their energy intensity does not increase.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"83 ","pages":"Article 101511"},"PeriodicalIF":2.6,"publicationDate":"2025-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144184906","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-05-23DOI: 10.1016/j.reseneeco.2025.101509
Yuanyuan Yi , Wolfgang Habla , Jintao Xu
China’s economic growth has come at the expense of environmental quality and the degradation of natural resources. In this paper, we identify two sources of environmental degradation: career concerns by managers of state-owned forest enterprises (SFEs) that manage natural resources, and asymmetric information between managers and their superiors regarding the SFEs’ environmental performance. A manager of such an SFE is the agent with two principals: national and sub-national governments. As well as needing to meet ecological targets imposed by the national government, a manager wants profits and promotion into the ranks of sub-national government. We develop hypotheses based on a theoretical model and test them on China’s northeastern SFEs by combining satellite imagery on deforestation with economic survey data. We find that deforestation is more likely for managers of SFEs that have a larger area and are thus more difficult to monitor with respect to ecological targets. Furthermore, we find that sharing a larger proportion of profits with the sub-national government increases the likelihood of getting promoted.
{"title":"Managerial incentives for environmental degradation in Chinese-style federalism","authors":"Yuanyuan Yi , Wolfgang Habla , Jintao Xu","doi":"10.1016/j.reseneeco.2025.101509","DOIUrl":"10.1016/j.reseneeco.2025.101509","url":null,"abstract":"<div><div>China’s economic growth has come at the expense of environmental quality and the degradation of natural resources. In this paper, we identify two sources of environmental degradation: career concerns by managers of state-owned forest enterprises (SFEs) that manage natural resources, and asymmetric information between managers and their superiors regarding the SFEs’ environmental performance. A manager of such an SFE is the agent with two principals: national and sub-national governments. As well as needing to meet ecological targets imposed by the national government, a manager wants profits and promotion into the ranks of sub-national government. We develop hypotheses based on a theoretical model and test them on China’s northeastern SFEs by combining satellite imagery on deforestation with economic survey data. We find that deforestation is more likely for managers of SFEs that have a larger area and are thus more difficult to monitor with respect to ecological targets. Furthermore, we find that sharing a larger proportion of profits with the sub-national government increases the likelihood of getting promoted.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"83 ","pages":"Article 101509"},"PeriodicalIF":2.6,"publicationDate":"2025-05-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144205283","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-05-17DOI: 10.1016/j.reseneeco.2025.101499
Davide Bazzana, Nicola Comincioli, Camilla Gusperti, Demis Legrenzi, Massimiliano Carlo Pietro Rizzati, Sergio Vergalli
Carbon Capture Utilization and Storage (CCUS) is a pivotal technology for achieving ambitious climate targets. Despite its prominent inclusion in energy mix projections, its current deployment falls short of the required level and future uncertainties pose obstacles to its optimal diffusion. This study addresses two primary issues for the widespread adoption of CCUS. Firstly, it investigates how investments in CCUS technology either compete with or complement other green Research and Development (R&D) activity. Secondly, it explores how the heterogeneity among different economies and the peculiarities of CCUS technology itself might lead to alternative configurations compared to the current trajectory. To address these issues, this study introduces CCUS into a regional Integrated Assessment Model incorporating endogenous green R&D and heterogeneous cost functions over the 21st century. The findings reveals that undervaluing R&D costs may crowd out CCUS investments. Additionally, CCUS capital distribution by the end of the century requires substantial investments from regions with currently low deployment, such as China and lower-income countries. However, as Europe and other high income countries lose centrality in the global economy, they may become less willing to finance CCUS expansion, raising concerns about technology transfer and cost-sharing. The findings underscore the need for policies that reduce technological uncertainties and enhance international cooperation to ensure CCUS contributes effectively to emission reduction targets.
{"title":"Gotta Catch ’Em All: CCUS With endogenous technical change","authors":"Davide Bazzana, Nicola Comincioli, Camilla Gusperti, Demis Legrenzi, Massimiliano Carlo Pietro Rizzati, Sergio Vergalli","doi":"10.1016/j.reseneeco.2025.101499","DOIUrl":"10.1016/j.reseneeco.2025.101499","url":null,"abstract":"<div><div>Carbon Capture Utilization and Storage (CCUS) is a pivotal technology for achieving ambitious climate targets. Despite its prominent inclusion in energy mix projections, its current deployment falls short of the required level and future uncertainties pose obstacles to its optimal diffusion. This study addresses two primary issues for the widespread adoption of CCUS. Firstly, it investigates how investments in CCUS technology either compete with or complement other green Research and Development (R&D) activity. Secondly, it explores how the heterogeneity among different economies and the peculiarities of CCUS technology itself might lead to alternative configurations compared to the current trajectory. To address these issues, this study introduces CCUS into a regional Integrated Assessment Model incorporating endogenous green R&D and heterogeneous cost functions over the 21st century. The findings reveals that undervaluing R&D costs may crowd out CCUS investments. Additionally, CCUS capital distribution by the end of the century requires substantial investments from regions with currently low deployment, such as China and lower-income countries. However, as Europe and other high income countries lose centrality in the global economy, they may become less willing to finance CCUS expansion, raising concerns about technology transfer and cost-sharing. The findings underscore the need for policies that reduce technological uncertainties and enhance international cooperation to ensure CCUS contributes effectively to emission reduction targets.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"83 ","pages":"Article 101499"},"PeriodicalIF":2.6,"publicationDate":"2025-05-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144116950","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-05-14DOI: 10.1016/j.reseneeco.2025.101500
Mehdi Nemati , Steven Buck , Hilary Soldati
This paper estimates how high-frequency online Home Water Use Reports (HWURs) affect household-level water consumption. The HWURs under the study share social comparisons, consumption analytics, leak alerts, and conservation information to residential accounts, primarily through digital communications. The data utilized in this paper is a daily panel dataset that tracks single-family residential households from January 2013 to September 2019. We found a 6.2 % reduction in average daily household water consumption for a typical household enrolled in the program. We estimate heterogeneous treatment effects by the day of the week, the content of push notifications, and baseline consumption quintile. For the latter, we provide an illustrative test to emphasize how mean reversion can severely bias a naïve panel data estimator for heterogeneous treatment effects when the source of heterogeneity is the outcome variable. We also find evidence that leak alerts effectively reduce water consumption immediately following the alert.
{"title":"High-frequency analytics and residential water consumption: Estimating heterogeneous effects","authors":"Mehdi Nemati , Steven Buck , Hilary Soldati","doi":"10.1016/j.reseneeco.2025.101500","DOIUrl":"10.1016/j.reseneeco.2025.101500","url":null,"abstract":"<div><div>This paper estimates how high-frequency online Home Water Use Reports (HWURs) affect household-level water consumption. The HWURs under the study share social comparisons, consumption analytics, leak alerts, and conservation information to residential accounts, primarily through digital communications. The data utilized in this paper is a daily panel dataset that tracks single-family residential households from January 2013 to September 2019. We found a 6.2 % reduction in average daily household water consumption for a typical household enrolled in the program. We estimate heterogeneous treatment effects by the day of the week, the content of push notifications, and baseline consumption quintile. For the latter, we provide an illustrative test to emphasize how mean reversion can severely bias a naïve panel data estimator for heterogeneous treatment effects when the source of heterogeneity is the outcome variable. We also find evidence that leak alerts effectively reduce water consumption immediately following the alert.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"83 ","pages":"Article 101500"},"PeriodicalIF":2.6,"publicationDate":"2025-05-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144069695","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-30DOI: 10.1016/j.reseneeco.2025.101498
Peio Alcorta , Petr Mariel
Despite its implications for parameter estimation, endogeneity is often overlooked in applications of discrete choice modeling. In environmental valuation, research on endogeneity typically focuses on the case when it originates in the utilities of the underlying random utility maximization model rather than in the class allocation probabilities of a latent class model (LCM). This paper addresses that gap by assuming the allocation function of an LCM includes an endogenous latent variable and examining four scenarios: (i) omitting this latent variable, (ii) directly including an endogenous indicator, (iii) using a multiple indicator solution that accounts for endogeneity, and (iv) employing a hybrid choice model. Simulation results reveal that while the allocation function parameters suffer bias in the first two scenarios, they are consistently estimated in the latter two. Notably, willingness to pay estimates remain unbiased in all these scenarios. We support these findings through simulation studies and draw connections to the existing statistical literature. Furthermore, we apply these insights to a case study focusing on seaweed-based renewable energy in the UK.
{"title":"Beyond biases: Exploring endogeneity in the allocation function of latent class models for environmental valuation","authors":"Peio Alcorta , Petr Mariel","doi":"10.1016/j.reseneeco.2025.101498","DOIUrl":"10.1016/j.reseneeco.2025.101498","url":null,"abstract":"<div><div>Despite its implications for parameter estimation, endogeneity is often overlooked in applications of discrete choice modeling. In environmental valuation, research on endogeneity typically focuses on the case when it originates in the utilities of the underlying random utility maximization model rather than in the class allocation probabilities of a latent class model (LCM). This paper addresses that gap by assuming the allocation function of an LCM includes an endogenous latent variable and examining four scenarios: (i) omitting this latent variable, (ii) directly including an endogenous indicator, (iii) using a multiple indicator solution that accounts for endogeneity, and (iv) employing a hybrid choice model. Simulation results reveal that while the allocation function parameters suffer bias in the first two scenarios, they are consistently estimated in the latter two. Notably, willingness to pay estimates remain unbiased in all these scenarios. We support these findings through simulation studies and draw connections to the existing statistical literature. Furthermore, we apply these insights to a case study focusing on seaweed-based renewable energy in the UK.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"83 ","pages":"Article 101498"},"PeriodicalIF":2.6,"publicationDate":"2025-04-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143917793","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Due to their ability to mitigate price risks, Contracts for Difference (CfDs) gained popularity amidst high electricity prices during the energy crisis in 2022. Depending on their specific design, CfDs are known to affect investment and dispatch decisions in electricity markets. We evaluate these effects in a fully decarbonised, sector-coupled European electricity market in terms of their impact on the power system and from an investor’s and consumer perspective. We consider four different types of governmental CfDs awarded to wind onshore power plants in a competitive auction for the contracts’ underlying strike price. On the one hand, the CfD types differ in terms of the allowed direction and unit (energy vs. capacity) of payments with consequences for dispatch decisions. On the other hand, they apply different reference prices with implications for investment decisions as reflected by optimally derived strike prices. Implementing the CfDs in an energy system optimisation model, we find that these differences affect curtailment, electrolyser load and market prices in fully decarbonised electricity markets. From a consumer’s perspective, our results show that system costs are lowest for types of CfDs that foster investments in more system-friendly power plants. For investors, in turn, these types of CfDs incur the highest discrepancy of ex ante expected and ex post realised CfD payments, such that they do not necessarily suffice to recover their costs. We conclude that this could be addressed by an adequate risk premium on the strike price, which should be subject to future research.
{"title":"Does the difference make a difference? Evaluating Contracts for Difference design in a fully decarbonised European electricity market","authors":"Silke Johanndeiter , Niina Helistö , Valentin Bertsch","doi":"10.1016/j.reseneeco.2025.101495","DOIUrl":"10.1016/j.reseneeco.2025.101495","url":null,"abstract":"<div><div>Due to their ability to mitigate price risks, Contracts for Difference (CfDs) gained popularity amidst high electricity prices during the energy crisis in 2022. Depending on their specific design, CfDs are known to affect investment and dispatch decisions in electricity markets. We evaluate these effects in a fully decarbonised, sector-coupled European electricity market in terms of their impact on the power system and from an investor’s and consumer perspective. We consider four different types of governmental CfDs awarded to wind onshore power plants in a competitive auction for the contracts’ underlying strike price. On the one hand, the CfD types differ in terms of the allowed direction and unit (energy vs. capacity) of payments with consequences for dispatch decisions. On the other hand, they apply different reference prices with implications for investment decisions as reflected by optimally derived strike prices. Implementing the CfDs in an energy system optimisation model, we find that these differences affect curtailment, electrolyser load and market prices in fully decarbonised electricity markets. From a consumer’s perspective, our results show that system costs are lowest for types of CfDs that foster investments in more system-friendly power plants. For investors, in turn, these types of CfDs incur the highest discrepancy of ex ante expected and ex post realised CfD payments, such that they do not necessarily suffice to recover their costs. We conclude that this could be addressed by an adequate risk premium on the strike price, which should be subject to future research.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"83 ","pages":"Article 101495"},"PeriodicalIF":2.6,"publicationDate":"2025-04-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143895682","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-10DOI: 10.1016/j.reseneeco.2025.101497
Xiao-Bing Zhang , Yinxin Fei , Hongbo Duan , Ugur Soytas , Patricia Crifo , Thomas Sterner
As one of the most common adaptation or coping strategies to a warming world, air conditioning consumes a large amount of energy. While the adoption of energy-efficient air conditioners (ACs) could reduce energy consumption, it usually comes with a higher upfront cost. This paper investigates consumers’ tradeoffs between upfront (purchase) costs and future energy costs in AC purchases, using product-level data from the AC market in China for 274 cities from 2013 to 2018. The results show that the Chinese consumers are over-discounting future energy costs in AC purchases, with an implicit discount rate of 24 %, indicating the existence of energy efficiency gap in air conditioning in China. Besides, the implicit discount rates are found to be lower for consumers in cities with higher per-capita GDP, higher education, larger household size, and in southern China, and are lower for the purchases of relatively cheaper ACs. On average, over-discounting in energy costs leads to an increase in annual energy consumption by around 7.5 % and a welfare loss of 8.24 billion Yuan for Chinese AC consumers. With global warming, consumer welfare loss caused by over-discounting will increase by 69 %-104 % by mid-century in different Shared Socioeconomic Pathways (SSP) scenarios.
{"title":"Implicit discount rates and energy efficiency gap in air conditioning: Evidence from the Chinese market","authors":"Xiao-Bing Zhang , Yinxin Fei , Hongbo Duan , Ugur Soytas , Patricia Crifo , Thomas Sterner","doi":"10.1016/j.reseneeco.2025.101497","DOIUrl":"10.1016/j.reseneeco.2025.101497","url":null,"abstract":"<div><div>As one of the most common adaptation or coping strategies to a warming world, air conditioning consumes a large amount of energy. While the adoption of energy-efficient air conditioners (ACs) could reduce energy consumption, it usually comes with a higher upfront cost. This paper investigates consumers’ tradeoffs between upfront (purchase) costs and future energy costs in AC purchases, using product-level data from the AC market in China for 274 cities from 2013 to 2018. The results show that the Chinese consumers are over-discounting future energy costs in AC purchases, with an implicit discount rate of 24 %, indicating the existence of energy efficiency gap in air conditioning in China. Besides, the implicit discount rates are found to be lower for consumers in cities with higher per-capita GDP, higher education, larger household size, and in southern China, and are lower for the purchases of relatively cheaper ACs. On average, over-discounting in energy costs leads to an increase in annual energy consumption by around 7.5 % and a welfare loss of 8.24 billion Yuan for Chinese AC consumers. With global warming, consumer welfare loss caused by over-discounting will increase by 69 %-104 % by mid-century in different Shared Socioeconomic Pathways (SSP) scenarios.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"82 ","pages":"Article 101497"},"PeriodicalIF":2.6,"publicationDate":"2025-04-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143838633","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-10DOI: 10.1016/j.reseneeco.2025.101494
Per-Olov Johansson , Bengt Kriström
The steel industry accounts for approximately 7%–8% of global carbon dioxide emissions. To address this, several initiatives aim to establish carbon-neutral steel production by replacing coal with hydrogen derived from fossil-free electricity. These projects, however, depend on substantial state subsidies, raising questions about their economic viability, especially under comprehensive carbon policies, such as those outlined in the EU’s Fit-for-55 package. Our analysis employs a cost–benefit framework grounded in general equilibrium theory, which explicitly considers the direct and indirect effects of policies on primary and secondary markets, as well as broader economic interdependencies. By integrating the EU Emissions Trading System (ETS) and Carbon Border Adjustment Mechanisms (CBAMs) into this framework, we provide a rigorous evaluation of the social desirability of hydrogen-based steel production. Our findings, based on a case study of a large-scale plant in northern Sweden, indicate significant social losses, with potentially far-reaching implications for similar projects across the EU. We might see a da capo of the 1970s European steel crisis.
{"title":"“Green” steel investments in the EU: Pie in the sky?","authors":"Per-Olov Johansson , Bengt Kriström","doi":"10.1016/j.reseneeco.2025.101494","DOIUrl":"10.1016/j.reseneeco.2025.101494","url":null,"abstract":"<div><div>The steel industry accounts for approximately 7%–8% of global carbon dioxide emissions. To address this, several initiatives aim to establish carbon-neutral steel production by replacing coal with hydrogen derived from fossil-free electricity. These projects, however, depend on substantial state subsidies, raising questions about their economic viability, especially under comprehensive carbon policies, such as those outlined in the EU’s Fit-for-55 package. Our analysis employs a cost–benefit framework grounded in general equilibrium theory, which explicitly considers the direct and indirect effects of policies on primary and secondary markets, as well as broader economic interdependencies. By integrating the EU Emissions Trading System (ETS) and Carbon Border Adjustment Mechanisms (CBAMs) into this framework, we provide a rigorous evaluation of the social desirability of hydrogen-based steel production. Our findings, based on a case study of a large-scale plant in northern Sweden, indicate significant social losses, with potentially far-reaching implications for similar projects across the EU. We might see a da capo of the 1970s European steel crisis.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"82 ","pages":"Article 101494"},"PeriodicalIF":2.6,"publicationDate":"2025-04-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143838632","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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