Koch N.,Mercator Research Institute on Global Commons and Climate Change
Energy Economics | Year: 2014
This paper shows that extreme energy price changes, located in the 10% tails of the distribution, cluster across energy futures markets during the boom-bust cycle of 2006 to 2012. Using multinominal logit regressions, we find that the coincidence of such tail events cannot be explained solely by common supply and demand fundamentals. Instead, we provide evidence that the transmission of extreme price changes occurs through a financial demand channel. Specifically, changes in the net long position of hedge funds are associated with a significant increase in the probability of coincident large positive and negative returns across energy markets. Evidence that index investments drive tail events is limited. Further, we identify adverse shocks to speculator funding liquidity as determinant of synchronized price drops across energy markets. The likelihood of extreme negative returns in more than one market significantly increases when the TED spread rises. © 2014 Elsevier B.V.
Kunreuther H.,University of Pennsylvania |
Heal G.,The New School |
Allen M.,University of Oxford |
Edenhofer O.,Potsdam Institute for Climate Impact Research |
And 3 more authors.
Nature Climate Change | Year: 2013
The selection of climate policies should be an exercise in risk management reflecting the many relevant sources of uncertainty. Studies of climate change and its impacts rarely yield consensus on the distribution of exposure, vulnerability or possible outcomes. Hence policy analysis cannot effectively evaluate alternatives using standard approaches, such as expected utility theory and benefit-cost analysis. This Perspective highlights the value of robust decision-making tools designed for situations such as evaluating climate policies, where consensus on probability distributions is not available and stakeholders differ in their degree of risk tolerance. A broader risk-management approach enables a range of possible outcomes to be examined, as well as the uncertainty surrounding their likelihoods. © 2013 Macmillan Publishers Limited. All rights reserved.
Schwerhoff G.,Mercator Research Institute on Global Commons and Climate Change
Climate Policy | Year: 2016
The comment on my article Schwerhoff [(2016). The economics of leadership in climate change mitigation. Climate Policy, 16, 196–214] points out that leadership in climate change mitigation can trigger negative reaction mechanisms (free-riding and leakage) and that Climate Clubs are needed instead of leadership. In my response I address the concerns expressed in the comment and I advance two arguments in favour of studying and communicating positive reaction mechanisms. First, there is sound scientific evidence on the positive reaction mechanisms and the relative strength of positive and negative mechanisms is unknown. Second, countries or regions without the ability or willingness to implement sanctions may nevertheless wish to take the initiative. They deserve complete information on the effects of leadership. © 2016 Informa UK Limited, trading as Taylor & Francis Group
Lamb W.F.,Mercator Research Institute on Global Commons and Climate Change
Journal of Cleaner Production | Year: 2016
This paper explores the underlying development outcomes and cumulative emissions trajectories of 20 middle-income countries from Eastern Europe, Latin America, North Africa and South Asia. First, well-being outcomes are assessed, defined in terms of access to education, democratic and legal rights, and the infrastructures that support physical health. Second, emissions trajectories are estimated to 2050, taking into account current trends in energy consumption and carbon intensity, a likely start-date for stringent climate policy arising from the Paris Agreement (2020), and maximum feasible rates of mitigation. Comparing these estimates to a per capita allocation from the global carbon budget associated with 2 °C, ten countries have low-carbon development trends that will not exceed their allocation. Of these, Costa Rica and Uruguay are achieving very high well-being outcomes, while many more are delivering good outcomes in at least two domains of human need. However, most are seriously deficient in terms of social well-being (education, democratic and legal rights). These results call into question the socio-economic convergence of developing countries with industrialised countries; but they also reaffirm the low-emissions cost of extending good infrastructure access and physical health outcomes to all, demonstrated by the existence of multiple countries that continue to avoid carbon-intensive development. © 2016 Elsevier Ltd.
Creutzig F.,Mercator Research Institute on Global Commons and Climate Change
Urban Climate | Year: 2014
Urban form and transportation infrastructure mutually influence each other. For example, dense Hong Kong is served by a viable and efficient public transit network, whereas many sprawled US cities are best served with automobiles. Here we present a simple model of a mono-centric city with two modes, public transit and automobiles, and transport infrastructure investments. The contribution to the literature is two-fold. First, adding to urban economic theory, we analyze how public transport costs are endogenously determined by fuel price and urban form if an urban planner provides the infrastructure. But a private mass transport provider would underinvest into public transport infrastructure. Second, adding to the ongoing discussion on urban transport and energy use, this two-modal model can help to explain empirical observations on urban form, transport CO2 emissions and modal share, emphasizing the causal role of transport costs for urban form. The results encourage further research in the economics of sustainable and energy-efficient cities. © 2014 Elsevier B.V.