Industrial Energy Prices Research Articles

What drives industrial energy prices?

What drives industrial energy prices?

Asymmetric effects of industrial energy prices on carbon productivity.

Energy price is a key factor in reducing carbon emissions. This paper assesses the relationship between energy prices and carbon emissions from the industrial sector in China. Using panel data covering 31 industrial sectors for the period 2003 to 2015, we calculate the industrial energy price index and then estimate the effects of sector-level energy prices on carbon emissions based on a panel smooth transition regression model. The results show that the nexus between industrial energy prices and carbon emissions is nonlinear overall, and energy prices have a significantly negative effect on carbon emissions, while this negative effect gradually weakens with an increase in energy prices. Moreover, the negative effect of energy prices on carbon emissions is more significant in energy-intensive sectors when energy prices exceed the threshold value. The findings emphasize the importance of energy prices for energy conservation and emission reduction and imply that energy prices can be used as a regulation tool for government industrial energy saving and emission reduction.

Modelling industrial energy demand in Saudi Arabia

Between 1986 and 2016, industrial energy consumption in Saudi Arabia increased by tenfold, making it one of the largest end-use sectors in the Kingdom. Despite its importance, there appear to be no published econometric studies on aggregate industrial energy demand in Saudi Arabia. We model aggregate industrial energy demand in Saudi Arabia using Harvey’s (1989) Structural Time Series Model, showing that it is both price and income inelastic, with estimated long-run elasticities of −0.34 and 0.60, respectively. The estimated underlying energy demand trend suggests improvements in energy efficiency starting from 2010.Applying decomposition analysis to the estimated econometric equation highlights the prominent roles of the activity effect (the growth in industrial value added) and the structure effect (the shift towards energy-intensive production) in driving industrial energy demand growth. Moreover, the decomposition shows how exogenous factors such as energy efficiency helped mitigate some of that growth, delivering cumulative savings of 6.8 million tonnes of oil equivalent (Mtoe) between 2010 and 2016.Saudi Arabia implemented a broad energy price reform program in 2016, which raised electricity, fuel, and water prices for households and industry. The decomposition results reveal that, holding all else constant, higher industrial energy prices in 2016 reduced the sector’s energy consumption by 6.9 %, a decrease of around 3.0 Mtoe. Saudi policymakers could therefore build on the current policy of energy price reform and energy efficiency standards to mitigate the rate of growth of industrial energy consumption, increase economic efficiency, and maintain industrial sector competitiveness.

Energy efficiency and sustainable growth in industrial sectors in European Union countries: A nonlinear ARDL approach

Abstract It can be said that economic growth, providing it ensures a clean and safe environment, is one of the main objectives of many countries. With this in mind, an important question needs to be asked; what is the relationship between energy efficiency and economic growth? This can only be answered through an empirical analysis. By carrying out such an analysis, using the energy efficiency of the industrial sector for 11 European Union countries for a time span from 1997 to 2015, it should be possible to understand if the energy efficiency measures and investments being made are driving economies towards greater energy efficiency and sustainable growth. This paper uses a nonlinear ARDL model, which allows short- and long-run relationships to be analysed for the ascending and descending movements of variables. The results indicate that investment is increasing energy efficiency, while at the same time reducing greenhouse gas emissions. Economic growth is driving economies to greater energy efficiency. The same result is found in the Industrial Energy Price Index. To verify robustness, the Environmental Kuznets curve was estimated, using Gross Domestic Product per capita and, as an alternative, the Industrial Production Index. To ensure increased energy efficiency along with sustainable growth, policymakers must adapt their policies and devise new ones to both incentivise investment, and control energy pricing. Alternative ways of electricity generation, such as renewable sources, could allow the economy to grow in a more sustainable way. Such mechanisms would let policymakers develop policies for greener and more sustainable growth, while at the same time encouraging the efficient use of energy.

Industrial energy prices and export competitiveness: evidence from India

This paper empirically measures the impact of sectoral energy price differential between trading partners on Indian exports. Using dynamic gravity model, we estimate the response of Indian exports for 11 energy-intensive sectors to sectoral-level energy price asymmetry. We observe the absence of the contemporaneous effect of energy price differential on Indian exports, but the presence of persistence effects. We find that a 10% increase in relative energy prices negatively affects Indian sectoral exports by about 1% ranging from 0.9% for chemicals to 1.4% for non-ferrous metals, revealing a larger impact for energy-intensive sectors. These small effects imply that the concerns of carbon leakage are largely overplayed.

Sources of emission reductions: Market and policy-stringency effects

International trade and economic development affect air emissions. Previous studies have decomposed their effects into scale, composition, and technique effects. While the scale and composition effects occur through market responses, the technique effect is a policy-stringency influence through the mix of environmental policies. This study analyzes whether the market or policy-stringency effects are more prominent. Previous studies have been unable to adequately separate the market and policy-stringency effects. To independently measure the technique effect, we use two indicators of policy stringency, i.e. shadow prices of energy and industrial energy prices. These policy stringency measures are treated as endogenous. The effects on six types of air emissions are estimated utilizing a sector-specific, international panel dataset that includes newly industrialized and former transition economies. The empirical results show that the major source of emissions reductions is the policy-stringency effect through carbon-related policies. Pollution offshoring to countries with weaker carbon-related regulation has a minor role in the reduction of air emissions.

Environmental Policy, Innovation, and Productivity Growth: Controlling the Effects of Regulation and Endogeneity

We analyze the environmental regulation-productivity nexus and add to the literature in two main ways. First, shadow prices of energy and industrial energy prices are employed as relative measures of policy stringency. To ensure the robustness of the results, the model is also estimated for five alternative measures that have been applied in prior research. Second, we address the endogeneity of environmental regulation, innovation, and trade openness. A cross-country multi-sectoral dataset is utilized, including newly industrialized countries and former transition economies. The estimates show that the positive effects of increases in environmental policy stringency on productivity, which have often been reported in the more recent studies, change to mainly insignificant effects once simultaneity is controlled for. Hence, no support for the strong Porter Hypothesis can be found. Instead, stricter environmental regulation fosters innovation and, therefore, has an indirect, yet not decisive, positive effect on productivity growth.

Hungarian Energy Prices in an OECD Comparison

The goal of the study is to assess the effect of the utility cost reductions announced by the Hungarian government in 2012 on Hungarian energy prices. The effects are discussed in an OECD comparison. It is concluded that the government price control has resulted in a 15% steeper price reduction occurring 5-7 quarters earlier, compared to other OECD countries. The price reductions saved around 202 billion HUF for Hungarian households in 2014, which was around 0.63% of the GDP. If prices are compared to the monthly average wages however, household energy prices are still high in Hungary. One of the costs of the reduction in household energy prices was an increase in energy prices for industry: the industry/household price ratio is highest among OECD countries in the case of natural gas, and third highest for electricity.

Asymmetric industrial energy prices and international trade

This paper measures the response of bilateral trade flows to differences in industrial energy prices across countries. Using a rich panel dataset with 42 countries, 62 manufacturing sectors over 16 years (1996–2011) and covering 60% of global merchandise trade, we estimate the short-run effects of sector-level energy price asymmetry on trade. We find that changes in relative energy prices have a statistically significant but very small impact on imports. On average, a 10% increase in the energy price difference between two country-sectors increases imports by 0.2%. The impact is larger for energy-intensive sectors. Even in these sectors, however, the magnitude of the effect is such that changes in energy price differences across time explain less than 0.01% of the variation in trade flows. Simulations based on our model predict that a €40–65/tCO2 price of carbon in the EU ETS would increase Europe's imports from the rest of the world by less than 0.05% and decrease exports by 0.2%.

Energy Pricing in Developing Countries

This paper investigates the electric energy tariff in the developing countries on the basis of per unit system analysis. The smallest actual value of a tariff in the sample of countries is considered as the base for the studied system and so, a comparison is done. A tariff map is proposed for the dynamic variation of tariffs in different countries where the map becomes as a texture image. This simplifies comments and conclusions for the tariff traveling within others. The sample of countries is extended to three continents in order to differentiate between different systems of energy tariffs. It contains four groups as: Arab countries in two divisions, Asian group and African countries where different investigations and directions may be applied with. Single-phase and three-phase electric loads have been inserted and analyzed. A normalized fluctuation factor is proposed as an indicator to determine the philosophy of tariff variation in each country relative to others. Both domestic and commercial tariffs are analyzed and a sample of industrial energy price is investigated for specified power demands. It is recommended to use normalized fluctuation factor and tariff map for the evaluation of economic support.

The Impact of SADC Trade on Energy Use

SADC’s competitiveness in many industrial products is dependent on its abundant natural resources, resulting in significant trade in natural resource (and in some cases energy) based products. These mining and manufacturing goods have benefited from the region’s policy of subsidising industrial energy prices. There is thus sufficient reason to believe that SADC’s trade in industrial goods has a significant impact on the energy requirements of the countries within the region. This study adopts a structural input-output approach to test the extent to which this hypothesis is valid. The effects that SADC industry trade components have on the region’s energy use patterns are then decomposed using the refined Laspeyres technique in order to establish the underlying causes of change in the country’s energy requirements. JEL Classification: Q56

Economic viability of short rotation coppice for energy production for reuse of caesium-contaminated land in Belarus

Following the Chernobyl accident, changed land use such that the products of the land are radiologically acceptable and assure an economic return is a potentially sustainable remediation option. In this study, Short rotation coppice (SRC) for energy production is evaluated as an alternative land use in contaminated areas. If the radiological and technical feasibility criteria are met, the economic viability of the SRC wood production and conversion of the biofuel to energy is a prerequisite for promotion of this alternative landuse. Data were collected for Belarus conditions and the economics of SRC production and conversion side were modelled using the Renewable Energy Crop Analysis Programme (RECAP). The profitability of SRC production largely depends on crop yield, harvesting method and price of the delivered biofuel, labour and machinery cost playing a minor role. The required internal rate of return (IRR) of 5% at the production side is only obtained with high biofuel prices (40 EUR t −1) and a biomass yield of at least 6 t ha −1 . For appropriate soil conditions, potential SRC yields are high (10– 12 t ha −1 yr −1) . However, in Belarus, most soils are sandy for which yield estimates are too low (5 t ha −1) to make production profitable. Cut and chip harvesting is more profitable than stick harvesting. On the conversion side, heat and power plant investment schemes are only profitable when industrial energy prices are considered. Systems are not viable at lower domestic rates with IRR being always smaller than the 10% required for industry in Belarus. Large-scale heat conversion systems are the most profitable and revenue may be considerable with the IRR between 16% and 59%. Electricity routes are usually unprofitable. Waste disposal costs are only a small fraction of the total costs and revenue.

Analysis of energy intensity developments in manufacturing sectors in industrialized and developing countries

This paper studies the development of energy intensity over time and its relationship with the sectoral economic development. Three variables are analyzed with respect to their impact on energy intensity; total sectoral economic activity, sectoral gross fixed capital formation and industrial energy prices. Panel analysis was conducted for ten manufacturing industries using pooled data of 39 countries between 1971 and 1996. This study finds that capital formation has the effect of increasing energy intensity and this effect is stronger where sectoral output is larger. The innovative value of this study deals with a large number of countries and describes in detail the manufacturing industries for which empirical evidence is provided. Another focus of this study is on the generation of an industrial energy intensity database which includes estimates of industrial energy prices for different countries. The database includes most of the Organization for Economic Cooperation and Development countries as well as other countries in Asia and Latin America.