Energy Transition

Did the shale gas boom reduce US CO2 emissions?

Abstract: The shale gas boom in the US is widely seen as responsible for reducing US CO2 emissions through substitution of gas for coal in power generation. The story is more complex because increased gas use in other sectors may not be displacing carbon-intensive fuels, but rather reducing incentives to adopt more efficient processes and less carbon-intensive products. In this paper we consider the emissions implications for the U.S. under a counterfactual modeling of the 2011 US economy without the shale gas boom. We apply a general equilibrium model of the 2011 US economy, estimating the supply responses of coal-fired and gas-fired generations based on U.S. state-level data. We find that under the counterfactual, the higher gas price has a dampening effect on economic activities and consequently lowers non-power sectors’ emissions. As many have observed, absent a full economy-wide model, power sector emissions increase because of gas-to-coal switch as a result of higher gas prices. However, we find across a wide range of model settings that if gas prices would have remained at 2007 levels in 2011, economy-wide emissions would have been lower. Only a model setting that allowed very little reduction in electricity demand, reflecting a short-run demand response, generated an increase in economy-wide emissions. In other words, the shale gas boom likely led to higher emissions except possibly in the very short run, and in all cases in the long run if the low gas prices persist.

Institutional complementarities: The origins of experimentation in China's plug-in electric vehicle industry

Abstract: A vast literature on technology transitions within industries suggests that early phases of new technologies are marked by periods of intense experimentation, but we know little about the conditions under which these periods emerge. We apply inductive, grounded theory-building techniques to examine what prompts firms to experiment across one emerging technology platform—plug-in electric vehicles (PEVs)—in China. Triangulating annual vehicle make and model sales data from 2003 to 2016 (plus monthly data from 2010 to 2016); 112 English and Mandarin archival documents from industry, academic, and news outlets; and 51 semi-structured interviews with industry, government, and academic stakeholders, we develop four in-depth case studies. We find that in contrast to the innovation trajectories of multinational and Chinese arms of joint venture (JV) firms, independent domestic Chinese firms (those with no history of international JV partnerships) are undertaking significant experimentation across multiple levels—infrastructure, core system, subsystem, and component—of the emerging PEV technology platform. We propose the concept of “institutional complementarities” to describe how interactions among institutions—here the national JV regulation and local market support and subsidies—may have turned regional markets into protected laboratories, extending the incubation periods for independent domestic firm experimentation. While this diverse experimentation may be an important antecedent of technology transition, consolidation induced by national policy standardization or competitive pressure may be required for PEV innovations to scale beyond their early, protected regional markets.

Highlights: 

•Local and national institutions may be combining in unexpected ways to foster experimentation across EV technology platform.

•We propose the concept of “institutional complementarities” to describe this unexpected phenomenon.

•Experimentation across an emerging technology platform may be important in enabling technology transitions.
 
•To scale beyond early, protected markets, consolidation enabled by policy or competitive pressure may be required.
    Climate Change and Developing Country Growth: The Cases of Malawi, Mozambique and Zambia

    Summary: This study examines how climate change impacts and global mitigation policies relate to the economic interests of developing countries to 2050. Focusing on Malawi, Mozambique and Zambia, the co-authors apply a biophysical and economic modeling approach that incorporates climate uncertainty and allows for rigorous comparison of climate, biophysical and economic outcomes across a wide range of global mitigation policy scenarios.

    The researchers find that effective global mitigation policies generate two key benefits for these nations: (1) more favorable and less variable economic outcomes due to mitigation of climate impacts, and (2) reduced global fossil fuel production prices, relative to an unconstrained emissions scenario, leading to significantly reduced fuel import costs. Combined, these economic benefits exceed projected mitigation costs for each country. These results show that for most energy-importing developing countries, global mitigation policies are advantageous even in the relatively near term, with much larger benefits accruing after 2050.

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