Abstract: Since the creation of the European Union Emission Trading Scheme (EU ETS), European power producers have monitored carbon emissions resulting from the composition of their production. Fuel switching is the main short-term abatement measure under the EU ETS. It consists in substituting combined cycle gas turbines (CCGTs) for hard-coal plants in off-peak power generation. Thereby coal plants run for shorter periods, allowing power producers to reduce their CO2 emissions. The aim of this paper is two-fold. First, we summarise the main characteristics of fuel switching under the EU ETS. Second, we show how differences in the energy/environmental efficiency of power plants impact the marginal cost of fuel switching. We demonstrate that the level of switching effort influences the dependence of the marginal cost of switching on fuel prices. The marginal cost of switching is shown to be increasingly dependent on the gas price as the switching effort increases, whereas the net effect is undetermined for the coal price. All the conclusions are summarised in several illustrative examples.

Abstract: The research question of this paper is to analyse when an operator and a service provider prefer a fixed price contract, common in the oil and gas industry, versus the uncommon incentive-based contract. The contracts are modelled with 20 parameters and one free choice variable which is the time to complete the project determined by the service provider. The method is to determine the service provider’s first order condition and compare the two actors’ profits for the two contracts. The actors’ preferences for the two contracts are presented with analytical inequalities and graphic illustrations. We show when both actors, versus only one actor, prefer(s) the incentive-based contract. Both actors never jointly prefer the fixed price contract. The two actors collectively always prefer the incentive-based contract. This result follows since costs associated with moral hazard, adverse selection, monitoring, coordination, etc. decrease with the use of an incentive-based contract.

Abstract: Oleaginous plants such as Jatropha Curcas Linnaeus (JCL), not intended for human consumption but used for biodiesel production, could contribute to beneficial outcomes. This plant grows on poor land (arid and marginal land) and is drought resistant. Jatropha Curcas is native to South America and widely grown in South and Central America, Africa, and Asia (Achten et al., 2007; Kumar et al., 2011). Some areas in Tunisia may be suitable for JCL, although not for food production. The purpose of this paper is to evaluate the energy performance and potential of Jatropha Curcas for biodiesel production in Tunisia. The evaluation will be completed through the elaboration of an energy balance using life cycle assessment (LCA), which will facilitate the decision making process. Therefore, the cultivation of JCL production in Tunisia will be an experiment with uncertain results. The energy assessment reveals a negative energy return (EE = 0.42). Because of high investment costs and low yield per hectare, Jatropha is not a sound economic choice.

Abstract: The negative effects of energy consumption and pollution have restrained Chinese economy from further rapid sustainable growth. Examining their relationship with economic growth can lay a solid foundation for the decision-making of energy conservation and pollution reduction and ensure the sustainable development of Chinese economy. Using panel data of 30 Chinese provinces from 2001 to 2008, this paper builds a comprehensive model of pollution, energy consumption and economic growth and conducts an empirical study on the interactions between pollution, energy consumption and average GDP. The estimated results show that energy consumption has a greater impact on output compared with conventional factors of production such as labour (human capital) because energy consumption has higher output elasticity than labour. Pollution has relatively little effect on output, which means that China’s economic growth is still powered by physical capital expansion and substantial energy consumption. Energy consumption and pollution still increase with China’s economic growth and the EKC hypothesis is only partially confirmed.

Abstract: Fossil fuels are major sources of energy, and have several advantages over other primary energy sources. Without extensive dependence on fossil fuels, it is questionable whether our economic prosperity can continue. This paper analyses cointegration and causality between fossil fuel consumption and economic growth in the world over the period 1971 to 2008. The estimation results indicate that fossil fuel consumption and GDP are cointegrated and there exists long-run unidirectional causality from fossil fuel consumption to GDP. This paper also investigates the nexus between non-fossil energy consumption and GDP, and shows that there is no causality between the variables. The conclusions are that reducing fossil fuel consumption may hamper economic growth, and that it is unlikely that non-fossil energy will substantially replace fossil fuels. This paper also examines causal linkages between the variables using a trivariate model, and obtains the same results as those from the bivariate model.

Abstract: Supply costs curves for the Former Soviet Union (FSU) are constructed for conventional petroleum, which is defined as conventional oil, natural gas and natural gas liquids (NGL). The supply figures show how petroleum quantities vary with production costs over time. Five resource quality categories, distinguishable according to production costs, are used in the estimation. The quantities are allocated across the five categories in a fixed proportion in order to generate the supply cost curves. The role of annual productivity gains, i.e., technological progress, to the year 2030 is also included. Results indicate that petroleum in the FSU is abundant and can be produced economically. In addition, production costs are found to decrease further over time as technology advances. With appropriate energy policy, FSU petroleum resources should assist in meeting domestic and international energy demand.

Abstract: This paper uses the E-simulate model of electricity generation to estimate how much the stacking order of different technologies changes when a carbon price is introduced. Different coal and gas price scenarios are explored, and some sensitivity analysis is made of the relative market share of coal and gas under various carbon price levels. The objective of the paper is to estimate how much CO2 reduction could happen in the UK through fuel switching (coal to natural gas) for different carbon price levels during Phase II (2008-2012) of the EU ETS. This country is indeed reported to have the greatest potential within the EU thanks to its suitable fuel mix (39% of coal and 36% of gas in 2007). Our results feature that 27 Mton of CO2/year can be abated at carbon prices around e25/ton (essentially through fuel-switching during the summer), 36 Mton of CO2/year can be abated at carbon prices around e40/ton (in that case, the carbon price triggers fuel-switching during the whole year), and that a maximum of 40 Mton of CO2/year can be achieved at high carbon prices (e125/ton). We also provide various scenarios depending on the relative levels of fuel prices.

Abstract: Global warming is a universal problem nowadays. The recent United Nations Climate Change Conference in Copenhagen was partially successful because all participating countries realised the damages caused by greenhouse gas (GHG) emissions and promise to mitigate in the future course of time. India has also promised to reduce 20% to 25% of these emissions up to the year 2020. To implement this, there is a need of solid policy formulation and alternative methodologies. This paper presents the introduction of carbon tax in Indian power sector to mitigate the GHG emissions. Three scenarios with different carbon taxes and various energy saving cases have been developed using MARKAL energy system model. The simulation results show that full exploitation of energy conservation potential with 30% carbon tax lead to a sustainable development. About 72% CO2 emission will be reduced in the year 2045 as compared to the base case scenario. Other scenarios also show significant reduction in atmospheric emission.

Abstract: This paper empirically tests whether traders’ positions predict crude oil futures prices through a case study of the 2008 oil market turbulence. It is found that the three-week-long trend of traders’ net long position significantly forecasts prices when the prices excessively rise from April to July 2008. In specific, speculator’s trend forecasts price continuation, whereas the hedger’s trend predicts price reversals. However, during the price-collapsing period, no significant predictability is found. These findings provide two implications. First, the hedging-pressure theory can be supported in oil futures market when the market prices excessively rise and traders’ position data are used as trend concept. Second, the recent argument on ‘the 2008 oil bubble’ asserting that excessive rise in oil prices during the second quarter of 2008 is associated with speculator’s positions can be supported.

Abstract: The Southern African Region has been experiencing power shortages due to increased demand with static power supply as a result of limited investment in both generation and transmission infrastructure across the region. This paper discusses how the power utilities in the region plan to cope with the power challenges and the measures that are planned for the future.

Abstract: This paper explores whether the informational content of oil and gas prices has an impact on energy mutual fund returns. We first re-visit the relationship between oil and gas prices and energy index returns; our findings confirm that better energy index performance is associated with oil and gas price increases. Using the Fama and MacBeth (1973) two-stage regressions, we find that the information contained in oil and gas prices also plays a significant role in explaining energy mutual fund returns, making these an alternative investment to direct energy stock investments.