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DIW Discussion Papers 1714 / 2017
Low and uncertain carbon prices are often stated as a major obstacle for industrial sector investments in technologies to deliver deep emissions reductions. Project-based carbon contracts underwritten by national governments could addressregulatory risk, lower financing costs and strengthen incentives for emission reductions at investment and operation stage. In this paper design options for project-based ...
2017| Jörn Richstein
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DIW Discussion Papers 1712 / 2017
Greenhouse gas emission benchmarks are widely implemented as a policy tool, as more countries move to implement carbon pricing mechanisms for industrial emissions. In particular, benchmarks are used to determine the level of free allowance allocation in emission trading schemes, which are distributed as a measure to prevent carbon leakage. This paper analyses how benchmark designs impact firms’ production ...
2017| Vera Zipperer, Misato Sato, Karsten Neuhoff
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DIW Discussion Papers 1710 / 2017
In this paper we show that carbon pricing is subject to time-inconsistency and we investigate solutions to improve on the problem and restore the incentive for the private sector to invest in low-carbon innovation. We show that a superior price- investment equilibrium can be sustained in the long-term, if the policy-maker is enough forward looking and allowed to build reputation. In the short-term, ...
2017| Olga Chiappinelli, Karsten Neuhoff
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DIW Discussion Papers 1704 / 2017
We exploit a new dataset based on EU procurement award notices to investigate the relationship between the degree of centralization of public procurement and its performance. We focus on the case of Italy, where all levels of government, along with a number of other public institutions, are involved in procurement and are subject to the same EU regulation. We find that i) municipalities and utilities, ...
2017| Olga Chiappinelli
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DIW Discussion Papers 1699 / 2017
This paper analyzes the dynamic relationship between CO2 emissions, energy consumption, GDP, and trade-openness from 1971 to 2013, based on the Environmental Kuznets Curve (EKC) hypothesis for 70 WTO countries. Using recently developed secondgeneration panel data methods, the empirical results support the EKC hypothesis for the high-, middle-, and lower-income panels used. Concerning the energy consumption ...
2017| Lars Sorge, Anne Neumann
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DIW Discussion Papers 1684 / 2017
Power systems with increasing shares of wind and solar power generation have higher capital and lower operational costs than traditional technologies. This increases the importance of the cost of finance for total system cost. We quantify how renewable policy design can influence cost of finance by addressing regulatory risk and facilitating hedging. We use interview data on wind power financing costs ...
2017| Nils May, Karsten Neuhoff
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DIW Discussion Papers 1620 / 2016
Nearly every carbon price regulates the production of carbon emissions, typically at midstream points of compliance, such as a power plant. Over the last six years, however, policymakers in Australia, California, China, Japan, and Korea implemented carbon prices that regulate the consumption of carbon emissions, where points of compliance are farther downstream, such as distributors or final consumers. ...
2016| Clayton Munnings, William Acworth, Oliver Sartor, Yong-Gun Kim, Karsten Neuhoff
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DIW Discussion Papers 1607 / 2016
This paper presents a novel theory of corruption in public procurement. It considers an agency setting of contract execution where the principal is a politician who can commit to a contract auditing policy. It is found that a benevolent politician, by choosing a sufficiently strict auditing, deters the contracting firm from padding costs, conversely, a selfish politician chooses a relatively lax auditing ...
2016| Olga Chiappinelli
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DIW Discussion Papers 1601 / 2016
Moving non-incremental innovations from the pilot scale to full commercial scale raises questions about the need and implementation of public support. Heuristics from the literature put policy makers in a dilemma between addressing a market failure and acknowledging a government failure: incentives for private investments in large scale demonstrations are weak (the valley of death) but the track record ...
2016| Gregory F. Nemet, Martina Kraus, Vera Zipperer
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DIW Discussion Papers 1579 / 2016
A world of unequal carbon prices requires measures aimed at preventing carbon leakage. Climate policy imperatives demand that such measures must be compatible with the goal of sending a carbon price signal down the value chain. For carbon intensive materials, the combination of dynamic free allocation combined with Inclusion of Consumption (IoC) into emissions trading systems such as the European Union ...
2016| Roland Ismer, Manuel Haussner, Karsten Neuhoff, William Acworth