Roger Fouquet

Climatic implications of the Kyoto Protocol: the contribution of international spillover

We explore the long-run impact of the Kyoto Protocol commitments to limit greenhouse gas emissions under various assumptions about the international spillover arising from actions led by the industrialised countries. International spillover comprises many complex processes including substitution due to price effects, diffusion of technology innovations, and policy and political spillovers. We represent these in terms of their aggregate impact on emission intensities over the next century. Limiting industrialised country emissions alone has limited environmental benefit if there is no international spillover; in our base case atmospheric concentrations by the end of the century rise to 730 ppm. However, this implies a large divergence of emission intensities, contrary to both empirical long term aggregate trends, and to identifiable influences towards convergence associated with economic globalisation. In contrast, if spillover leads to convergence of emission intensities by 2100, atmospheric concentrations are kept to below 560 ppm and are close to stabilising. Weargue that zero or negative international spillover, as assumed in manyanalyses, is not credible; we estimate the most likely range for the international spillover parameter in our model to be 0.5–1.0. For our base scenario this would imply a mean global average temperature change from pre-industrial levels by 2100 of 2.7–3.4 °C instead of 4.2 °C,and rising at only 0.15–0.29 °C/decade instead of 0.45 °C/decade.Long-run sea-level rise is greatly curtailed. The regional benefits to the industrialised countries are also magnified because of the spillover to developing county emissions. Although the aggregate degree of spillover is uncertain, the available evidence suggests that it will be important and environmentally beneficial in aggregate. Spillover will help to spread the global effectiveness of the Kyoto first period and subsequent commitments, and deserves much further scrutiny.

The Long Run Demand for Lighting:Elasticities and Rebound Effects in Different Phases of Economic Development

The provision of artificial light was revolutionised by a series of discontinuous innovations in lighting appliances, fuels, infrastructures and institutions during the nineteenth and twentieth centuries. In Britain, the real price of lighting fell dramatically (3,000-fold between 1800 and 2000) and quality rose. Along with rises in real income and population, these developments meant that total consumption of lighting was 40,000 times greater by2000 than in 1800. The paper presents estimates of the income and price elasticities of demand for lighting services over the past three hundred years, and explores how they evolved. Income and price elasticities increased dramatically (to 3.5 and -1.7, respectively) between the 1840s and the 1890s and fell rapidly in the twentieth century. Even in the twentieth century and at the beginning of the twenty-first century, rebound effects in the lighting market still appear to be potentially important. This paper provides a first case study of the long run effects of socio-economic change and technological innovation on the consumption of energy services in the UK. We suggest that understanding the evolution of the demand for energy services and the factors that influence it contributes to a better understanding of future energy uses and associated greenhouse gas emissions.

The European and global potential of carbon dioxide sequestration in tackling climate change

Abstract Although, it has received relatively little attention as a potential method of combating climate change in comparison to energy reduction measures and development of carbon-free energy technologies, sequestration of carbon dioxide in geologic or biospheric sinks has enormous potential. This paper reviews the potential for sequestration using geological and ocean storage as a means of reducing carbon dioxide emissions. Considerable quantities of carbon dioxide separated from natural gas deposits and from hydrogen production from steam reforming of methane are already used in enhanced oil recovery and in extraction of coalbed methane, the carbon dioxide remaining sequestered at the end of the process. A number of barriers lie in the way of its implementation on a large scale. There are concerns about possible environmental effects of large-scale injection of carbon dioxide especially into the oceans. Available technologies, especially of separating and capturing the carbon dioxide from waste stream, have high costs at present, perhaps representing an additional 40–100% onto the costs of generating electricity. In most of the world there are no mechanisms to encourage firms to consider sequestration. Considerable R&D is required to bring down the costs of the process, to elucidate the environmental effects of storage and to ensure that carbon dioxide will not escape from stores in unacceptably short timescales. However, the potential of sequestration should not be underestimated as a contribution to global climate change mitigation measures.

Divergences in Long-Run Trends in the Prices of Energy and Energy Services

This article presents new evidence on very long-run trends in the prices of energy and energy services, such as heat, power, transport, and light, using seven hundred years of data for the United Kingdom. The article has two main findings. First, it shows that, in general, there was an upward trend in average energy prices before the Industrial Revolution and a decline afterward, which was associated with the shift from traditional energy sources to fossil fuels. In the second half of the twentieth century, however, average energy prices did rise, reflecting not so much rising resource scarcity as greater value to consumers, as consumers shifted to energy sources that provided the desired services more efficiently. Second, the article highlights the dangers of focusing on the price of energy rather than the price of energy services when considering the long run. The price of energy ignores major technological improvements and their benefits to the consumer. This failure to focus on energy services is likely to lead to incorrect estimates of consumer responsiveness to changes in price and income. The article suggests that the inclusion of service prices and consumption variables would lead to more reliable models of long-run energy demand and forecasts of carbon dioxide emissions.

Long-Run Demand for Energy Services: Income and Price Elasticities over Two Hundred Years

This article investigates how the demand for energy services has changed since the Industrial Revolution. It presents evidence on the income and price elasticities of demand for domestic heating, passenger transport, and lighting in the United Kingdom over the last two hundred years. As the economy developed and energy service prices fell, income elasticities have generally followed an inverse U-shape curve, and price elasticities have generally followed a U-shape curve. However, these general trends also appear to have been affected by energy and technological transitions, which boosted demand (by either encouraging poorer consumers to fully enter the market or offering new attributes of value to wealthier consumers). The evidence presented offers insights that will be helpful for identifying likely future trends in energy use and carbon dioxide emissions, and for developing long-term climate policies. (JEL: Q41, N73, N74, D12)

The United Kingdom demand for renewable electricity in a liberalised market

Abstract This paper analyses how the liberalisation of the UK electricity market in 1998 may encourage demand for renewable electricity through pricing and informational incentives. The analysis argues that prices and beliefs will be crucial for influencing customers’ willingness to pay for environmental costs associated with electricity generation, as well as their decision to not just buy the cheapest electricity. In 1998, when UK electricity markets are liberated, a small price differential between renewable and standard electricity – certainly less than 20% – and clear, credible and captivating information about the external costs of electricity generation could create a considerable demand for renewable electricity. But, because renewable generating capacity will initially be small and slow to adjust to incentives, initially high demand may drive up prices, discouraging customers from wanting to buy renewable electricity. Low demand, on the other hand, will not provide the incentives to invest new capacity, which probably means that renewable technology will not be able to reduce its unit costs of electricity generation and compete in a liberalised market without continued financial support. To avoid either scenario, this paper recommends that Government should extend the non-fossil fuel obligation (NFFO) to promote investment in renewable technology, provide tax incentives to minimise the price differential between renewable and standard electricity, encouarge non-governmental organisations to develop schemes for providing customers with clear, consistent and reliable information about sources of renewable electricity, and stagger the introduction of electricity liberalisation. While the analysis is of a speculative nature, such policies may create incentives for markets to reduce environmental damage associated with electricity generation.

The impact of VAT introduction on UK residential energy demand: An investigation using the cointegration approach

Abstract Over a two-year period, which started in April 1994, the real price of energy to UK households was expected to rise by 17.5% as a result of value-added tax (VAT) introduction. The regressive nature of the tax forced the government to limit VAT on residential fuel to 8%. Using a cointegration approach, to take account of the non-stationarity fuel consumption time series, this paper estimates real energy and fuel specific price and income elasticities for the period 1974:1–1994:1. They suggest that natural gas has a positive real energy price elasticity indicating that, as real price of energy rises, households scrap inefficient heaters and invest in more efficient ones, principally natural gas. These estimates enable projections to be made of the impact of the introduction of VAT and imply a rise in natural gas consumption as a result of the additional VAT, although at the expense of other less efficient fuels. Overall residential energy consumption, however, is unlikely to fall significantly from the tax, suggesting that it is an inappropriate way of achieving environmental objectives.

Methanol infrastructure — will it affect the introduction of SPFC vehicles?

The possibility that future solid polymer fuel cell vehicles will be fuelled by methanol has been suggested. If this is the case, it will have significant implications for the future structure of the methanol supply industry, and methanol supply and availability may have an impact on the take-up of these SPFC vehicles. In this study, a model assessing the possible future penetration of methanol SPFC vehicles was constructed. This suggested that it would be possible for SPFC vehicles to achieve rapid market penetration after an initially slow start. A further model indicated that methanol supply would be adequate for vehicle demand until about 2013, when significant new capacity would be required. The cost of this new capacity was estimated, along with the cost of providing refuelling infrastructure such as road tankers, storage, and suitable fuelling stations. Amortising the cost over a short period (to 2013) could double the pre-tax price of methanol as a fuel, while over a longer timeframe (to 2029) it would add less than 10% to this value. The model suggests that methanol capacity need not be a constraint to the future introduction of SPFC vehicles using it as a fuel, but that other factors such as fuel purity and safety must be carefully considered before real costs can be calculated.

Long-run carbon dioxide emissions and environmental Kuznets curves: different pathways to development?

This fine collection of original essays is in recognition of Colin Robinson, who has been at the forefront of thinking in energy economics for over 30 years. Energy in a Competitive Market brings together both prominent academics and practitioners to honour his outstanding and unique contribution. The authors cover a wide and fascinating selection of topics incorporating the whole spectrum of energy economics. In doing so, they examine the belief that markets are the key to the effective allocation of resources, a notion which arguably applies as much to energy as it does to any other commodity.

Role of screening in reducing invasive cervical cancer registrations in England

Objective –To estimate the effect of screening on invasive cervical cancer registrations in England. Setting –The Health of the Nation target for cervical cancer seeks to reduce the incidence of invasive cases (ICD 180) by at least 20% between 1986 and 2000. Method - The available area-level statistics on invasive cervical cancer registrations, screening activity, and socioeconomic and behavioural characteristics for 145 district health authorities in England over the period 1985–91 were collected. A multiple regression analysis sought to explain variations in incidence rates by relating screening and socioeconomic and behavioural variables to registration rates. Results —Districts with higher unemployment levels and higher numbers of pregnancies in young women had higher registration rates for invasive cervical cancer. The cervical smear rate for women aged 35–64 in a district was positively related to registrations, whereas the relation was negative for the 20–34 age group. Conclusions –The higher registration rates for invasive cervical cancer in districts with higher cervical smear rates for women aged 35–64 may reflect historically lower screening cover. The negative relation between the cervical smear rate and invasive cervical cancer registrations in women aged 20–34 is accompanied by high registration rates for preinvasive (ON III) cervical cancer (ICD 233.1). For the advantages of the Pap test to be fully realised, and for invasive cervical cancer registrations to fall in line with the Health of the Nation targets, a comprehensive screening programme, with a high take up rate is required. The various changes to the screening programme introduced since 1988 should help to achieve this. Public health policy should focus on educating the population about the risk factors for cervical cancer and the significance of screening.