James L. Sweeney

A commodity hierarchy model of the rental housing market

Abstract This paper presents and analyzes a theoretical model of the rental housing market which addresses the durable-good nature and the heterogeneous nature of housing, while focusing on the quality distribution of housing units. Units of different qualities are viewed as distinct substitute commodities. New construction rates, deterioration rates, rental prices, and stocks are considered to be endogenous. Equilibrium concepts are introduced; both the long-run and short-run equilibria are shown to exist and to be unique. Comparative static results are established. The models utility is demonstrated by its application to the analysis of several housing market programs.

Economics of depletable resources: market forces and intertemporal bias

A theoretical model is developed of the extraction patterns of a non-renewable resource in order to examine the effects of various market forces caused by intertemporal allocations of known reserves. The extent of the original reserve limits the total quantity of the resource that can be extracted over time. The model is conducted with all parties cognizant of the quantities they control, the related costs of extraction, future price trends, and future government actions. A purely competitive market is found to support optimal allocations, while percentage depletion allowances are found to encourage over-extraction. The direction of bias as a result of price controls requires further data. Monopolies can lead to current under-use or over-use, which will determine future availability. Over-use can also result from insecure imported sources unless appropriate tariffs are imposed. A market imperfection function concept is used to derive these results. 16 references. (DCK)

Housing unit maintenance and the mode of tenure

Abstract Empirical studies have demonstrated that owner-occupied housing units tend to be better maintained than rental units. This paper presents an economic model which explains the observations. It is shown that, under a set of perfect market assumptions, an owner-occupant will maintain his housing unit at a higher rate than will a landlord. The effects of changing tenure times, of changing incomes, and of transactions costs are analyzed and testable hypotheses are developed. While the model is applied only to housing, it is applicable to a wider class of durable goods which may either be rented or user owned.

Evaluation of a proposal for reliable low-cost grid power with 100% wind, water, and solar

A number of analyses, meta-analyses, and assessments, including those performed by the Intergovernmental Panel on Climate Change, the National Oceanic and Atmospheric Administration, the National Renewable Energy Laboratory, and the International Energy Agency, have concluded that deployment of a diverse portfolio of clean energy technologies makes a transition to a low-carbon-emission energy system both more feasible and less costly than other pathways. In contrast, Jacobson et al. [Jacobson MZ, Delucchi MA, Cameron MA, Frew BA (2015) Proc Natl Acad Sci USA 112(49):15060–15065] argue that it is feasible to provide “low-cost solutions to the grid reliability problem with 100% penetration of WWS [wind, water and solar power] across all energy sectors in the continental United States between 2050 and 2055”, with only electricity and hydrogen as energy carriers. In this paper, we evaluate that study and find significant shortcomings in the analysis. In particular, we point out that this work used invalid modeling tools, contained modeling errors, and made implausible and inadequately supported assumptions. Policy makers should treat with caution any visions of a rapid, reliable, and low-cost transition to entire energy systems that relies almost exclusively on wind, solar, and hydroelectric power. Significance Previous analyses have found that the most feasible route to a low-carbon energy future is one that adopts a diverse portfolio of technologies. In contrast, Jacobson et al. (2015) consider whether the future primary energy sources for the United States could be narrowed to almost exclusively wind, solar, and hydroelectric power and suggest that this can be done at “low-cost” in a way that supplies all power with a probability of loss of load “that exceeds electric-utility-industry standards for reliability”. We find that their analysis involves errors, inappropriate methods, and implausible assumptions. Their study does not provide credible evidence for rejecting the conclusions of previous analyses that point to the benefits of considering a broad portfolio of energy system options. A policy prescription that overpromises on the benefits of relying on a narrower portfolio of technologies options could be counterproductive, seriously impeding the move to a cost effective decarbonized energy system.

BARRIERS TO IMPLEMENTING LOW-CARBON TECHNOLOGIES

This paper reviews the major barriers to the adoption of low-carbon technologies, with a focus on market failures that provide a rationale for policy intervention to improve economic efficiency. Market failures include externalities, asymmetric information, institutional failures, regulatory failures, and failures of consumer or firm decision-making. We discuss central generation renewable energy technologies, CCS technology, distribution generation renewable energy, and technologies to reduce the demand for energy. For each technology category, we assess whether and how policy might improve economic efficiency, and point to key open research questions.

Optimal growth with depletable resources

Abstract Optimal growth trajectories for Cobb-Douglas economies facing a depletable resource constraint and possessing a utilitarian objective function are examined. It is shown that for a large enough discount factor, there exists a locus of initial ‘balanced endowments’ from which the ‘balanced endowments trajectory’ is characterized by linear closed-loop optimal controls and exponentially growing or decaying economic activity. The rate of technical progress requisite to assure continual per capita economic growth is derived. Optimal solutions from arbitrary endowments are characterized. If a balanced endowments trajectory exists, then the optimal path from arbitrary initial capital and resource stocks converges monotonically to a balanced endowments trajectory. Initial endowments of capital and the resource both influence the long-run levels of economic activity, although not the long-run growth rates. The comparative magnitude of the elasticity of marginal utility and capitals share of output are critical in determining whether a larger initial capital stock leads to greater or smaller levels of long-run economic activity, but increases in the resource stock always lead to long-run increases in economic activity.

Defining a standard metric for electricity savings

The growing investment by governments and electric utilities in energy efficiency programs highlights the need for simple tools to help assess and explain the size of the potential resource. One technique that is commonly used in this effort is to characterize electricity savings in terms of avoided power plants, because it is easier for people to visualize a power plant than it is to understand an abstraction such as billions of kilowatt-hours. Unfortunately, there is no standardization around the characteristics of such power plants. In this letter we define parameters for a standard avoided power plant that have physical meaning and intuitive plausibility, for use in back-of-the-envelope calculations. For the prototypical plant this article settles on a 500 MW existing coal plant operating at a 70% capacity factor with 7% T&D losses. Displacing such a plant for one year would save 3 billion kWh/year at the meter and reduce emissions by 3 million metric tons of CO2 per year. The proposed name for this metric is the Rosenfeld, in keeping with the tradition among scientists of naming units in honor of the person most responsible for the discovery and widespread adoption of the underlying scientific principle in question—Dr Arthur H Rosenfeld.

California Electricity Restructuring, The Crisis, and Its Aftermath

This chapter provides an overview of Californias electricity restructuring in the mid-1990s. Californias goal was to deregulate both the wholesale and the retail electricity market, after a transition period during which utilities would be able to recover stranded costs. The California experience proves that electricity deregulation has been an utter failure in California, and by extension, is likely to be a failure elsewhere. In California, restructuring has set the stage for widespread wholesale market competition and adequate electric generation capacity. Californias restructuring has resulted in increases in new electric generating plants proposed, approved, and under construction. The California experience illustrates that actions economically isolating the supply side of markets from the demand side create problems. Californias electric system includes both complicated organizations and complex economic structures. Flaws in the California market design encouraged market gaming or exercise of market power by generators, traders, utilities, and the state itself. Nevertheless, the future regulatory direction remains uncertain, with some advocates trying to force a return to a vertically integrated monopoly structure and others striving to improve regulatory rules within a partially regulated, partially deregulated system.

Effects of Federal policies on gasoline consumption

Abstract Utilizing theory and econometric evidence presented within, this paper provides rough quantitative estimates of the impacts on passenger car gasoline consumption of several Federal policies. Three distinct time periods are distinguished: pre-embargo, post-embargo but before new car efficiencies standards, and post-standards. In the pre-embargo period the net effect was to reduce gasoline consumption, while for four years after the embargo, policies tended to encourage consumption. The new car average fuel efficiency standards, first effective in 1978, can be expected to greatly influence passenger car gasoline consumption by forcing (possibly uneconomically large) increases in fleet efficiency. With these standards in operation, other policies will have little or no incremental effect on new car efficiency but can work only through influencing vehicle miles: the new car efficiency response to such programs will have been preempted by the standards. For the post-standards era, the net impact of Federal programs will be a reduction in gasoline consumption and a decrease in price elasticity of passenger car gasoline demand.

Low Carbon Growth

Highlights major technological, regulatory and behavioral options that would decrease energy use in economically efficient ways and slow the rate of damage we are causing to the atmosphere.