Pub Date : 2025-05-01Epub Date: 2025-02-13DOI: 10.1016/j.reseneeco.2025.101491
Libo Wu , Yang Zhou
This paper investigates how social norms influence energy conservation behaviors in China. Through a field experiment, we demonstrate that simply providing social comparison information can lead to significant energy reductions, even when the potential consumption and monetary gains from energy savings are limited. Specifically, energy consumption was reduced by 0.42 kWh, sufficient to meet a household’s daily energy needs for lighting. Our findings further indicate that this conservation effect is only significant for households using convenient payment schemes (quick-pay) via other digital platforms, which only offer monetary costs without other information. Hence, attention and information on energy consumption are relatively lacking for these households. This result reveals the potential mechanism of social norms as a reminder, drawing users’ attention to their energy consumption behaviors. This study offers valuable insights into the application and mechanism of social norms, emphasizing the importance of providing additional reminder information as auto- and quick-pay schemes become more prevalent.
{"title":"Social norms and energy conservation in China","authors":"Libo Wu , Yang Zhou","doi":"10.1016/j.reseneeco.2025.101491","DOIUrl":"10.1016/j.reseneeco.2025.101491","url":null,"abstract":"<div><div>This paper investigates how social norms influence energy conservation behaviors in China. Through a field experiment, we demonstrate that simply providing social comparison information can lead to significant energy reductions, even when the potential consumption and monetary gains from energy savings are limited. Specifically, energy consumption was reduced by 0.42 kWh, sufficient to meet a household’s daily energy needs for lighting. Our findings further indicate that this conservation effect is only significant for households using convenient payment schemes (quick-pay) via other digital platforms, which only offer monetary costs without other information. Hence, attention and information on energy consumption are relatively lacking for these households. This result reveals the potential mechanism of social norms as a reminder, drawing users’ attention to their energy consumption behaviors. This study offers valuable insights into the application and mechanism of social norms, emphasizing the importance of providing additional reminder information as auto- and quick-pay schemes become more prevalent.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"82 ","pages":"Article 101491"},"PeriodicalIF":2.6,"publicationDate":"2025-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143430230","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 : 2025-05-01Epub Date: 2025-01-23DOI: 10.1016/j.reseneeco.2025.101480
Axel Gautier , Julien Jacqmin , Jean-Christophe Poudou
Energy communities involve various agents who decide to invest in renewable production units. This paper examines how these communities interact with the energy system and can decrease its overall cost. First, we show that an energy community can contribute positively to welfare if the electricity produced by the investment is consumed close to its place of production, i.e if the community has a high degree of collective self-consumption. Second, our analysis identifies the condition on prices and grid tariffs to align the community’s interest with welfare maximization. We also show that some of these grid tariffs do not have a negative impact on non-members of the community and could therefore limit potential distributional issues. Third, various internal organizations of the energy communities are feasible. We show that the internal organization impacts the distribution of benefits among members but not the investment and the global efficiency of the community.
{"title":"The energy community and the grid","authors":"Axel Gautier , Julien Jacqmin , Jean-Christophe Poudou","doi":"10.1016/j.reseneeco.2025.101480","DOIUrl":"10.1016/j.reseneeco.2025.101480","url":null,"abstract":"<div><div>Energy communities involve various agents who decide to invest in renewable production units. This paper examines how these communities interact with the energy system and can decrease its overall cost. First, we show that an energy community can contribute positively to welfare if the electricity produced by the investment is consumed close to its place of production, <em>i.e</em> if the community has a high degree of collective self-consumption. Second, our analysis identifies the condition on prices and grid tariffs to align the community’s interest with welfare maximization. We also show that some of these grid tariffs do not have a negative impact on non-members of the community and could therefore limit potential distributional issues. Third, various internal organizations of the energy communities are feasible. We show that the internal organization impacts the distribution of benefits among members but not the investment and the global efficiency of the community.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"82 ","pages":"Article 101480"},"PeriodicalIF":2.6,"publicationDate":"2025-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143176020","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-05-01Epub Date: 2025-01-22DOI: 10.1016/j.reseneeco.2025.101478
Raúl Pezoa , Louis de Grange , Rodrigo Troncoso
Electrification of vehicles is recognized as a key strategy for meeting global climate change targets and achieving a sustainable transport industry. Despite extensive efforts by governments worldwide, electric vehicle (EV) penetration remains low, suggesting that some disadvantages of this technology are significant barriers to consumer adoption. However, most of these barriers are associated with vehicle purchase and may not apply to rental or sporadic use. In this paper, unlike most of the existing literature that focuses on purchase decisions, we study the factors influencing EV adoption within a ride-hailing context. To achieve this, employ full real user data for electric and conventional vehicles for ride-hailing trips in Santiago, Chile. Since at the time of study the electric option is a still a very novel service, we first characterize the early adopter users, and we compare them to non-adopters. Our results align with those reported for EV purchases. For instance, higher-income individuals are more likely to adopt EV in the context of ride-hailing. This suggests that, even with fewer adoption barriers in ride-hailing services, significant inequalities in access or preferences may persist. Additionally, we find that frequent users of the ride-hailing service are more inclined to try the electric option. Then, we develop a binary choice setting to estimate the willingness to pay for the electric option. The explanatory variables include fare, trip time, and wait time of each alternative. The main result indicates that users choosing the electric option are willing to sacrifice a small amount of additional travel time and much more wait time to use that alternative. Additionally, for longer trips there is a higher probability that a user will choose the electric option. Finally, we conduct sensitivity analyses, finding that a lower EV market share drives up the willingness to pay, making the EV option less elastic.
{"title":"Paying to depollute: The case of electric ride-hailing","authors":"Raúl Pezoa , Louis de Grange , Rodrigo Troncoso","doi":"10.1016/j.reseneeco.2025.101478","DOIUrl":"10.1016/j.reseneeco.2025.101478","url":null,"abstract":"<div><div>Electrification of vehicles is recognized as a key strategy for meeting global climate change targets and achieving a sustainable transport industry. Despite extensive efforts by governments worldwide, electric vehicle (EV) penetration remains low, suggesting that some disadvantages of this technology are significant barriers to consumer adoption. However, most of these barriers are associated with vehicle purchase and may not apply to rental or sporadic use. In this paper, unlike most of the existing literature that focuses on purchase decisions, we study the factors influencing EV adoption within a ride-hailing context. To achieve this, employ full real user data for electric and conventional vehicles for ride-hailing trips in Santiago, Chile. Since at the time of study the electric option is a still a very novel service, we first characterize the early adopter users, and we compare them to non-adopters. Our results align with those reported for EV purchases. For instance, higher-income individuals are more likely to adopt EV in the context of ride-hailing. This suggests that, even with fewer adoption barriers in ride-hailing services, significant inequalities in access or preferences may persist. Additionally, we find that frequent users of the ride-hailing service are more inclined to try the electric option. Then, we develop a binary choice setting to estimate the willingness to pay for the electric option. The explanatory variables include fare, trip time, and wait time of each alternative. The main result indicates that users choosing the electric option are willing to sacrifice a small amount of additional travel time and much more wait time to use that alternative. Additionally, for longer trips there is a higher probability that a user will choose the electric option. Finally, we conduct sensitivity analyses, finding that a lower EV market share drives up the willingness to pay, making the EV option less elastic.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"82 ","pages":"Article 101478"},"PeriodicalIF":2.6,"publicationDate":"2025-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143176018","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 : 2025-05-01Epub 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":"2025-05-01","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 : 2025-05-01Epub Date: 2025-03-27DOI: 10.1016/j.reseneeco.2025.101493
Patrick Grüning
This study develops a small open economy dynamic stochastic general equilibrium model with green and brown intermediate goods, banks subject to capital requirements, and public investment. The model is used to analyze which environmental, fiscal, and bank regulation policies are effective facilitators of the domestic economy’s green transition. Among the policies and structural changes that can generate an exogenously imposed and fixed emissions reduction, most costly is the exogenous world brown energy price increase, followed by the introduction of an emissions cap, while the introduction of domestic carbon taxes leads to the smallest decrease of GDP in the long run. Bank regulation policies are not capable of generating large emissions reductions, while fiscal policies can only generate smaller emissions reductions at higher costs than the aforementioned policies.
{"title":"Fiscal, environmental, and bank regulation policies in a small open economy for the green transition","authors":"Patrick Grüning","doi":"10.1016/j.reseneeco.2025.101493","DOIUrl":"10.1016/j.reseneeco.2025.101493","url":null,"abstract":"<div><div>This study develops a small open economy dynamic stochastic general equilibrium model with green and brown intermediate goods, banks subject to capital requirements, and public investment. The model is used to analyze which environmental, fiscal, and bank regulation policies are effective facilitators of the domestic economy’s green transition. Among the policies and structural changes that can generate an exogenously imposed and fixed emissions reduction, most costly is the exogenous world brown energy price increase, followed by the introduction of an emissions cap, while the introduction of domestic carbon taxes leads to the smallest decrease of GDP in the long run. Bank regulation policies are not capable of generating large emissions reductions, while fiscal policies can only generate smaller emissions reductions at higher costs than the aforementioned policies.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"82 ","pages":"Article 101493"},"PeriodicalIF":2.6,"publicationDate":"2025-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143747484","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 : 2025-05-01Epub Date: 2025-02-13DOI: 10.1016/j.reseneeco.2025.101488
Puja Singhal , Stephan Sommer , Kathrin Kaestner , Michael Pahle
Rental housing, where tenants are responsible for their own energy bills but landlords are responsible for the dwelling’s energy performance, may pose a particular challenge for investments in energy efficiency. In this paper, we describe the severity of this split-incentive problem by comparing homes purchased for own use with those rented out on the German housing market, where the share of renters is particularly high and the majority of rented apartments is owned by private individuals. Using data on energy performance scores from Germany’s largest online housing market platform between 2019 and 2021, we find on average economically small differences in the energy efficiency levels between apartments that differ by tenure type. Even though there are heterogeneous effects, also across broker types, by and large, our findings suggest that there may not be a critical energy efficiency deficit in the German multi apartment building sector.
{"title":"Split-incentives in energy efficiency investments? Evidence from rental housing","authors":"Puja Singhal , Stephan Sommer , Kathrin Kaestner , Michael Pahle","doi":"10.1016/j.reseneeco.2025.101488","DOIUrl":"10.1016/j.reseneeco.2025.101488","url":null,"abstract":"<div><div>Rental housing, where tenants are responsible for their own energy bills but landlords are responsible for the dwelling’s energy performance, may pose a particular challenge for investments in energy efficiency. In this paper, we describe the severity of this split-incentive problem by comparing homes purchased for own use with those rented out on the German housing market, where the share of renters is particularly high and the majority of rented apartments is owned by private individuals. Using data on energy performance scores from Germany’s largest online housing market platform between 2019 and 2021, we find on average economically small differences in the energy efficiency levels between apartments that differ by tenure type. Even though there are heterogeneous effects, also across broker types, by and large, our findings suggest that there may not be a critical energy efficiency deficit in the German multi apartment building sector.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"82 ","pages":"Article 101488"},"PeriodicalIF":2.6,"publicationDate":"2025-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143422007","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-05-01Epub Date: 2025-04-09DOI: 10.1016/j.reseneeco.2025.101496
Petr Mariel , Alaitz Artabe
This paper introduces a simulation-based method designed to detect unusually high frequencies of specific choice patterns in discrete choice data. Its empirical size and power are then evaluated through a series of simulation exercises. The results show that the empirical size is consistently lower than the assumed theoretical significance level, and that the test power approaches 100 % when the observed choice pattern appears approximately 2.5 times more frequently than expected. The proposed test is applied to a real data set obtained by means of a discrete choice experiment focused on air pollution in South Delhi, India.
{"title":"A simulation-based method for testing an abnormally high incidence of specific choice patterns in discrete choice data","authors":"Petr Mariel , Alaitz Artabe","doi":"10.1016/j.reseneeco.2025.101496","DOIUrl":"10.1016/j.reseneeco.2025.101496","url":null,"abstract":"<div><div>This paper introduces a simulation-based method designed to detect unusually high frequencies of specific choice patterns in discrete choice data. Its empirical size and power are then evaluated through a series of simulation exercises. The results show that the empirical size is consistently lower than the assumed theoretical significance level, and that the test power approaches 100 % when the observed choice pattern appears approximately 2.5 times more frequently than expected. The proposed test is applied to a real data set obtained by means of a discrete choice experiment focused on air pollution in South Delhi, India.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"82 ","pages":"Article 101496"},"PeriodicalIF":2.6,"publicationDate":"2025-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143834381","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 : 2025-05-01Epub Date: 2025-02-06DOI: 10.1016/j.reseneeco.2025.101479
Gregory Galay , Jennifer Winter
The development of oil and gas resources while maximizing production has been the primary objective of policymakers and regulators in Alberta, Canada for many decades. When oil prices were sufficiently high, environmental risks and other concerns received little attention. When oil prices collapsed in 2014, Alberta’s inventory of inactive, decommissioned, and orphaned wells grew dramatically. It is now a complex problem for operators, regulators, and policymakers and the return of high oil prices has not resolved the issue. This article uses a real options model to evaluate firms’ end-of-life decisions for oil wells in Alberta subject to mean-reverting oil prices, to understand the factors that affect a firm’s decision to reclaim an oil well at the end of its useful life versus leaving it unreclaimed. We focus on a firm’s optimal management of a representative oil well in response to different policy decisions, rather than a socially optimal outcome that internalizes the negative externalities of oil and gas development. Results under our baseline parameters show that firms operating a representative oil well will extract over 95 per cent of the reserves in place and reclaim the well. When the cost to decommission or cost to reclaim a well is larger than the cost of maintaining an inactive well, the firm will still extract over 95 per cent of reserves but will leave the well in an inactive state (not able to produce) and never reclaim the well. This suggests that some of the unreclaimed oil and gas wells have high decommissioning or reclamation costs. If those cleanup are correlated with environmental risks (groundwater contamination, gas migration, etc.) then the inventory of inactive oil and gas wells could be populated with the riskiest wells, adding an additional level of complexity to the issue of unreclaimed oil and gas wells in Alberta. We examine the effect of a time limit on inactivity or a bond has on end-of-life decisions. Our results suggest that neither policy on its own ensure wells with high decommissioning or reclamation costs are reclaimed at the end of useful life. However, a combination of a time limit on inactivity and a bond could be useful policy instruments to help ensure high-cost oil and gas wells are reclaimed at the end of their life.
{"title":"No end in sight: End-of-life management of oil wells in Alberta","authors":"Gregory Galay , Jennifer Winter","doi":"10.1016/j.reseneeco.2025.101479","DOIUrl":"10.1016/j.reseneeco.2025.101479","url":null,"abstract":"<div><div>The development of oil and gas resources while maximizing production has been the primary objective of policymakers and regulators in Alberta, Canada for many decades. When oil prices were sufficiently high, environmental risks and other concerns received little attention. When oil prices collapsed in 2014, Alberta’s inventory of inactive, decommissioned, and orphaned wells grew dramatically. It is now a complex problem for operators, regulators, and policymakers and the return of high oil prices has not resolved the issue. This article uses a real options model to evaluate firms’ end-of-life decisions for oil wells in Alberta subject to mean-reverting oil prices, to understand the factors that affect a firm’s decision to reclaim an oil well at the end of its useful life versus leaving it unreclaimed. We focus on a firm’s optimal management of a representative oil well in response to different policy decisions, rather than a socially optimal outcome that internalizes the negative externalities of oil and gas development. Results under our baseline parameters show that firms operating a representative oil well will extract over 95 per cent of the reserves in place and reclaim the well. When the cost to decommission or cost to reclaim a well is larger than the cost of maintaining an inactive well, the firm will still extract over 95 per cent of reserves but will leave the well in an inactive state (not able to produce) and never reclaim the well. This suggests that some of the unreclaimed oil and gas wells have high decommissioning or reclamation costs. If those cleanup are correlated with environmental risks (groundwater contamination, gas migration, etc.) then the inventory of inactive oil and gas wells could be populated with the riskiest wells, adding an additional level of complexity to the issue of unreclaimed oil and gas wells in Alberta. We examine the effect of a time limit on inactivity or a bond has on end-of-life decisions. Our results suggest that neither policy on its own ensure wells with high decommissioning or reclamation costs are reclaimed at the end of useful life. However, a combination of a time limit on inactivity and a bond could be useful policy instruments to help ensure high-cost oil and gas wells are reclaimed at the end of their life.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"82 ","pages":"Article 101479"},"PeriodicalIF":2.6,"publicationDate":"2025-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143422006","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 : 2025-05-01Epub 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":"2025-05-01","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}
Pub Date : 2025-02-01Epub Date: 2025-01-10DOI: 10.1016/j.reseneeco.2025.101477
Zhenyang Pi , Ke Wang
Cost-reduction investments by leading electric vehicle (EV) automakers like Tesla are essential in lowering EV prices and accelerating market adoption. However, the impact of these investments on the electrification strategies of traditional gasoline vehicle (GV) automakers remains unclear, particularly when spillovers to GV automakers producing perfectly substitutable EVs are possible. This study examines the interaction between these factors within a Cournot competition model involving one EV automaker and one GV automaker, revealing three key insights. First, the EV automaker’s cost-reduction investments do not necessarily encourage the GV automaker to pursue electrification, even with significant spillovers; the outcome also depends on product substitutability between GVs and EVs. Second, the EV automaker tends to increase investments under low spillovers and decrease them under high spillovers in response to GV automaker electrification. Nevertheless, these investments cannot fully offset the profit erosion caused by GV automaker electrification. Third, these findings remain qualitatively robust across several extended scenarios, including asymmetric consumer reservation prices, imperfect EV substitution, a shift from quantity to price competition, and a Stackelberg game framework. The model is also extended to evaluate the effects of three government interventions—purchase subsidies, carbon taxes, and emission standards—alongside the impact of oligopolistic competition.
{"title":"Does lower electric vehicle production cost spur traditional automaker electrification? Spillovers of cost-reduction investments","authors":"Zhenyang Pi , Ke Wang","doi":"10.1016/j.reseneeco.2025.101477","DOIUrl":"10.1016/j.reseneeco.2025.101477","url":null,"abstract":"<div><div>Cost-reduction investments by leading electric vehicle (EV) automakers like Tesla are essential in lowering EV prices and accelerating market adoption. However, the impact of these investments on the electrification strategies of traditional gasoline vehicle (GV) automakers remains unclear, particularly when spillovers to GV automakers producing perfectly substitutable EVs are possible. This study examines the interaction between these factors within a Cournot competition model involving one EV automaker and one GV automaker, revealing three key insights. First, the EV automaker’s cost-reduction investments do not necessarily encourage the GV automaker to pursue electrification, even with significant spillovers; the outcome also depends on product substitutability between GVs and EVs. Second, the EV automaker tends to increase investments under low spillovers and decrease them under high spillovers in response to GV automaker electrification. Nevertheless, these investments cannot fully offset the profit erosion caused by GV automaker electrification. Third, these findings remain qualitatively robust across several extended scenarios, including asymmetric consumer reservation prices, imperfect EV substitution, a shift from quantity to price competition, and a Stackelberg game framework. The model is also extended to evaluate the effects of three government interventions—purchase subsidies, carbon taxes, and emission standards—alongside the impact of oligopolistic competition.</div></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"81 ","pages":"Article 101477"},"PeriodicalIF":2.6,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143096255","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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