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2013 | Book

The GTAP-E: Model Description and Improvements Read chapter Read first chapter

The Dynamics of Environmental and Economic Systems

Innovation, Environmental Policy and Competitiveness

Editors: Valeria Costantini, Massimiliano Mazzanti

Publisher: Springer Netherlands

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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About this book

Exploiting econometric techniques aimed at dealing with the dynamics of economic systems and the heterogeneity of agents performances, the volume integrates innovation-based reasoning with ex-post analyses, and presents ex-ante analyses able to evaluate the role of climate change policies by using computable general equilibrium models such as the Global Trade Analysis Project for Energy (GTAP-E). The authors merge and use a range of datasets, including OECD-PATSTAT and STAN, to test novel techniques informed by evolutionary economic theories and the Porter hypothesis. The immediate relevance and applicability of the models will strengthen the hand of policy analysts for whom the dynamic efficiency of environmental policy is a new, high-profile evaluation criterion.

Table of Contents

Frontmatter

Modelling macroeconomic scenarios: energy issues, economic performances and environmental policy

Chapter 1. The GTAP-E: Model Description and Improvements
Abstract
A modified version of the GTAP-E model is developed in order to assess the effects of alternative climate change policies on economic and carbon emissions. We propose regional disaggregation which allows the role of major countries in economic as well as emission responses to be better defined. Sector disaggregation is closely related to international energy balances in order to calibrate the model on more realistic emission levels. An ad hoc emission intensity calibration is also implemented for better representation of sector-based emission levels. A specific analysis on substitution elasticities in the energy nests completes the proposed adjustments to the original GTAP-E model.
Alessandro Antimiani, Valeria Costantini, Chiara Martini, Alessandro Palma, Maria Cristina Tommasino
Chapter 2. Carbon Leakage and Trade Adjustment Policies
Abstract
A modified version of the CGE GTAP-E model is used to assess economic and carbon emission effects related to alternative policy measures implemented to reduce carbon leakage. We explore a set of scenarios and compare solutions where Kyoto Annex I countries introduce carbon border taxes based on domestic carbon tax in order to solve the carbon leakage problem unilaterally and solutions where carbon border taxes are determined according to specific objectives. Results provide evidence of the scarce effectiveness of trade measures in reducing carbon leakage and enhancing economic competitiveness and the strong negative welfare effects they have not only on non-Annex countries but also on some Annex I countries.
Alessandro Antimiani, Valeria Costantini, Chiara Martini, Luca Salvatici, Maria Cristina Tommasino
Chapter 3. Theoretical Approaches to Dynamic Efficiency in Policy Contexts: The Case of Renewable Electricity
Abstract
Dynamic efficiency (or the ability of a policy instrument to generate a continuous incentive for technical improvements and cost reductions in technologies) is central to the assessment and choice of environmental and energy policies in long-run scenarios where innovation lock-in is relevant. This is also the case in instruments that support electricity from renewable energy sources (RES-E). In contrast with effectiveness and static efficiency assessment criteria, the innovation effects of such support have received much less attention from both a theoretical and an empirical perspective. Several theoretical perspectives have paid some attention to these innovation effects, including the traditional economics approach, the systems of innovation perspective and the literature on learning effects. The aims of this chapter are to provide an overview of those perspectives and to build bridges between them.
Pablo Del Río, Mercedes Bleda
Chapter 4. Energy Efficiency Policy in the USA: The Impact of the Industrial Assessment Centres (IAC) Programme and State and Regional Climate Policy Actions
Abstract
The impact that two US policies have had on energy consumption and carbon emissions of small and medium enterprises (SME) is analysed in this chapter. The first policy is the Industrial Assessment Centres (IAC) programme from the Department of Energy (DOE) of the US government in which assessments are offered to companies to identify energy efficiency (EE) measures. A probit model is used for a clearer understanding of EE investment determinants in SMEs. The second consists of the US State and Regional Climate Policy actions of the US Environmental Protection Agency (EPA). Panel data is used to analyse the impact of both policies, combining information on emissions and energy consumption per unit of real GDP for 51 US states over 19 years with data on EE investments as a consequence of the first policy, and, finally, 30 climate policies implemented at state and regional levels. The results show that some policies are more effective than others in reducing energy consumption and carbon emissions. There are also notable differences across states regarding climate policy and investment decisions.
Luis Maria Abadie, Ramon Arigoni Ortiz, Ibon Galarraga, Anil Markandya
Chapter 5. The Role and Effectiveness of Environmental and Social Regulations in Creating Innovation Offsets and Enhancing Firm Competitiveness
Abstract
The research study reported here analyses the link between sustainability-related and similar regulation and environmental and sustainability-related innovation in firms and ultimately the effect on economic performance and competitive advantage. Our study of these effects uses case study data and survey data for German manufacturing firms. Emphasis is placed on the interaction of different kinds of regulations differentiated between standard/limit-based, market-based or voluntary agreements and types of innovation, specifically product versus process innovation. Circumstances such as stringency and range of regulations and their corresponding impact are also considered since their effect on firms’ innovation processes matters in terms of acceleration, framework building or indirect effects. We find that innovations triggered by regulation can improve the environmental performance of the affected product itself and/or related processes and that this leads to innovation offsets which exceed the costs of compliance and enhance competitiveness. Furthermore, setting effects of environmental regulation as well as interactions between markets and first-mover advantages could be identified amongst others as key variables that affect the potential for innovation offsets.
Marcus Wagner

Environmental innovation and competitiveness: linking micro, meso and macro analysis in the dynamics

Chapter 6. Implications of Policy Uncertainty for Innovation in Environmental Technologies: The Case of Public R&D Budgets
Abstract
The role that environmental policy uncertainty can play on innovation in environmental technologies has not been extensively assessed empirically. In this chapter, we seek to assess the impact of environmental policy uncertainty on innovation, using patent data as a proxy for innovation and volatility in public expenditures on ‘environmental’ R&D as a measure of policy uncertainty. Drawing upon a panel data set of 23 OECD countries over the period 1986–2007, support is found for the negative effect of public R&D volatility on innovation. In the base model, a 10% increase in policy uncertainty is seen to cause a 1.2–2.8% decrease in environmental patent activity, whereas a 10% increase in government support for R&D will increase innovation by 2.6–3.9%.
Margarita Kalamova, Nick Johnstone, Ivan Haščič
Chapter 7. Eco-Activity and Innovativeness: What Is Their Relation to Environmental Performance in Consumer Firms and Industrial Firms?
Abstract
This chapter examines the link between environmental performance, corporate social performance and innovativeness for consumer and industrial firms, using company data on R&D, environmental and corporate social performance from the Kinder, Lydenberg and Domini (KLD) database for US-based firms. We find empirically that during the period from 1999 to 2008, there has been an increase in environmental action, especially since 2004. A positive correlation is found to exist between environmental and non-environmental social performance in many dimensions and a positive but weak link between environmental performance and R&D per employee or unit of sales. This chapter shows that there is a difference between consumer and industrial firms in terms of the evolution of eco-activities and environmental impact. Contrary to what we expected, industrial firms undertook more product-related eco-activities than consumer firms. Industrial firms also showed a greater increase in process-related eco-activity. The increase in eco-activity went with an increase in eco-impact in both company types, suggesting that environmental action did not arrest environmental degradation overall.
Nicoline Oehme, René Kemp
Chapter 8. Environmental Policy and Induced Technological Change in European Industries
Abstract
The study provides an empirical analysis of the effects of environmental policy on technological innovation in a specific field of environmental technologies. The econometric analysis is based on information on innovation activities deriving from various Community Innovation Survey waves and information on environmental accounts (NAMEA) for a large set of European industries. The empirical results show the existence of a robust enhancing effect played by environmental policy with respect to energy and resource efficiency innovations. In addition, the introduction of energy and resource efficiency technologies is found to be positively associated with innovative investment and to be strictly related to improved product quality. These results proved to be robust to the use of alternative proxies of the stringency of environmental policy and to the introduction of different control variables in different model specifications.
Francesco Crespi
Chapter 9. Closing the Gap? Dynamic Analyses of Emission Efficiency and Sector Productivity in Europe
Abstract
This chapter investigates the patterns of emission efficiency growth of 23 manufacturing sectors in 12 European countries with a focus on five emissions (CO2, NOx, NMVOC, SOx and CO). Emission efficiency growth is expected to be triggered by an improvement in the efficiency of frontier countries through the diffusion of better technologies to laggard countries. This effect is likely to differ according to the distance from the frontier country. Finally, the role of productivity patterns (total factor productivity) and energy price dynamics is assessed. Results based on the European NAMEA (National Accounting Matrix including Environmental Accounts) further merged with sector accounts highlight significant spillovers from leaders in emission efficiency and a general tendency to converge for laggard countries and sectors (except for NMVOC emission efficiency). Energy prices induce substantial improvements in emission efficiency, with the effect being generally stronger for sectors and countries farther away from the emission efficiency frontier. Finally, total factor productivity (TFP) is strongly correlated with emission efficiency, while the distance from TFP frontier significantly harms emission efficiency growth.
Giovanni Marin
Chapter 10. Waste Technological Dynamics and Policy Effects: Evidence from OECD Patent Data
Abstract
This chapter examines the effect of environmental policies on technological change, in the field of waste management. This study is conducted using patent data on 28 OECD countries over the period 1980–2005 and considers five different technological fields related to the waste sector. Even though the analysis confirms that policies actually played a positive, significant role in promoting the development of green innovations, this effect is highly non-linear and strongly depends on time. As previous works have highlighted, the technological maturity of the sector, especially if compared with other areas of environmental innovation such as renewables, is reflected in a decreasing effect of policies on innovation trends. If a first wave of policies, which dates back to the 1990s, was able to promote technological change, this effect is now less evident. Nevertheless, it is reasonable to conclude that if no policy efforts had been introduced, the slowdown in the trend of patenting in waste-related sectors would have been even more pronounced.
Francesco Nicolli
Chapter 11. BioPat: An Investigation Tool for Analysis of Industry Evolution, Technological Paths and Policy Impact in the Biofuels Sector
Abstract
This chapter describes the methodology, characteristics and potential use of BioPat, a dataset containing patents in the field of biofuels. The innovative methodology we use aims to solve drawbacks related to how patent data are allocated and organised in international databases. In order to create a database which includes patents strictly related to the investigated field, we propose an original method based on keywords, rather than on International Patent Classification (IPC) codes. Starting with a systematic mapping of biofuel production processes, we built a simplified but comprehensive description of the technological domain related to the production of biofuels by applying so-called process analysis. The keyword selection relies on an iterative approach, based on an analysis of recent scientific literature. The database was finalised with a series of interviews with experts in the biofuels sector and compared with IPC-based biofuel codes, revealing improved accuracy when selecting data using our methodology.
Valeria Costantini, Francesco Crespi, Ylenia Curci
Backmatter
Metadata
Title
The Dynamics of Environmental and Economic Systems
Editors
Valeria Costantini
Massimiliano Mazzanti
Copyright Year
2013
Publisher
Springer Netherlands
Electronic ISBN
978-94-007-5089-0
Print ISBN
978-94-007-5088-3
DOI
https://doi.org/10.1007/978-94-007-5089-0