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Session Chair: Qingxin He, East Carolina University
Location:Auditorium J: Aina Uhde
Presentations
Fossil fuel pricing and vulnerable households
Lassi Ahlvik1, Tuomas Kaariaho1, Matti Liski2, Iivo Vehviläinen2
1University of Helsinki, Finland; 2Aalto University, Finland
Discussant: Elisa Rottner (ZEW Mannheim)
This paper studies the unequal impacts of fossil fuel pricing. Using household-level microdata from Finland during the 2022 European Energy Crisis and exploiting quasi-random contract expiration dates, we study how households respond to higher energy prices. We find that high- and middle-income households reduce energy use and modestly increase earnings, whereas low-income groups face rising defaults and cut back on their basic consumption. A longer adjustment period softens the shock, as households anticipate the price hike before it occurs. Finally, we use data to identify the vulnerable groups that experience pronounced negative effects from the shock.
Energy, Emissions and the Product Mix: Understanding the Role of Product Portfolio Choices in the Green Transformation
Kathrine von Graevenitz1,2, Joscha Krug1,2, Elisa Rottner1
1ZEW Mannheim, Germany; 2University of Mannheim, Germany
Discussant: Guillaume Wald (Mines Paris - PSL)
Understanding what leads firms to reduce their greenhouse gas emissions is crucial to manage the green industrial transformation. Aggregate evidence suggests that a shift towards cleaner product portfolios is an important channel through which firms decrease their emissions. But using German administrative micro-data, we show that firm-level product portfolio choices do not follow predictions of existing theory: We observe a re-shuffling within the most emissions-intensive products rather than a shift away from them. We also find that firms with wider product scopes are more emissions-intensive than others – even though they should be the most productive firms according to existing theory. To make sense of these findings, we extend the canonical model of product portfolio choice to include energy as a factor of production. In our model framework, heterogeneous energy prices between firms (e.g. due to differences in regulation or fuel composition) can explain the unexpected empirical patterns we observe. This has important implications for the design of green industrial policy.
Making jobs out of the energy transition: Evidence from the French Energy Efficiency Obligations scheme
Guillaume Wald1, François Cohen2, Victor Kahn1
1Mines Paris - PSL, France; 2Universidad de Barcelona
Discussant: Qingxin He (East Carolina University)
Vast amounts are being invested in the energy transition worldwide, with
optimistic expectations of economic growth and green job creation. Yet, we crucially lack expost validations of the multiplier effects widely used to quantify new green jobs. Focusing on the French Energy Efficiency Obligations scheme, this paper provides the first ex-post
estimate of the employment effect of a large energy-retrofit investment program. We exploit
a discontinuity in the provision of subsidies and use a novel synthetic control method on
disaggregated data to estimate regional-level employment effects. We estimate that the
scheme created 1.5 jobs per million euros invested, mostly in a permanent position within
micro enterprises. Hourly wages remained unaffected, suggesting that additional investments are captured by higher margins.
CO2 Tax and Coal Combustion Byproduct Effects on Electricity Fuel Switching
Qingxin He, Jonathan Lee
East Carolina University, United States of America
Discussant: Lassi Ahlvik (University of Helsinki)
Short and long-run price responsiveness of coal and natural demand is estimated using a 30-year panel of U.S. electricity plants. CO2 taxes are projected to reduce emissions by 31% to 40% and 46% to 64% in the short and long run, respectively. These reductions are primarily due to intensive margin changes in fuel demand rather than intra-plant fuel switching. Importantly, contracts to sell coal combustion byproducts are a deterrent to switching from coal to natural gas. Specifically, we find that contracts to sell coal combustion byproducts are worth roughly $20 million USD annually on average for coal-fired power plants.
