Has the restructuring of EU electricity markets reduced industrial electricity prices? ESRI Research Bulletin 2015/1/2

The restructuring of electricity markets has been underway around the world since the 1980s. Restructuring (or “liberalisation”) has generally involved separation of vertically-integrated monopolies, privatisation of certain segments of the electricity market and incentive-based regulation for those parts of the industry not generally amenable to competition. The restructuring of the electricity market in the European Union is the most significant cross-jurisdiction reform of the electricity-supply industry to date

Restructuring European electricity markets: A panel data analysis

This paper looks at the restructuring of European electricity markets that has been taking place since the 1990s. This liberalisation process, driven largely by EU legislation aiming to create a single market for electricity, has led to significant changes in how electricity markets in member states operate. In this paper I estimate the impact of the restructuring process on electricity prices for industrial consumers. Much of the literature to date estimating the impacts of electricity market restructuring fails to take into account the potential endogeneity of the reform process. By using dynamic panel-data techniques, I aim to overcome this shortcoming. I find that once the potential endogeneity of reforms is accounted for, restructuring has, as of yet, had no statistically significant impact on electricity prices. This research highlights the importance of accounting for dynamics and endogeneity before drawing inferences about the results of EU electricity-market reform

Compensating communities to reduce resistance to energy infrastructure development. ESRI Research Bulletin, 2018/01

Ireland has ambitious plans to reduce the level of greenhouse gases emitted from electricity generation by increasing the amount of power that is generated from renewable technologies. Doing so will require a significant expansion of wind farms, and an accompanying expansion of the electricity transmission network (the “grid”). Previous analyses that we have conducted have shown that Irish residents are generally favourably disposed towards further development of renewable generation technologies; however, in practice, planners and policy makers are frequently met with objections from local communities to specific siting proposals. Community resistance to electricity infrastructure development can result in unhappy residents, frustrated planners, and project delays. In this research we consider a range of procedures that could be adopted in order to involve local communities in these projects. Such procedures may potentially reduce resistance amongst local communities

Are classroom internet use and academic performance higher after government broadband subsidies to primary schools?

This paper combines data from a government programme providing broadband access to primary schools in Ireland with survey microdata on schools’, teachers’ and pupils use of the internet to examine the links between public subsidies, classroom use of the internet and educational performance. Provision of broadband service under a government scheme was associated with more than a doubling of teachers’ use of the internet in class after about a two year lag. Better computing facilities in schools were also associated with higher internet use, but advertised download speed was not statistically significant. A second set of models show that use of the internet in class was associated with significantly higher average mathematics scores on standardised tests. There was also a less robust positive association with reading scores. A set of confounding factors is included, with results broadly in line with previous literature

Capital-Energy Substitution: Evidence from a Panel of Irish Manufacturing Firms. ESRI Research Bulletin 2014/3/3

Using firm-level data from the Irish Census of Industrial Production for the period from 1991-2009, we look at how Irish manufacturing firms adjust their input mix in response to changing energy prices. We find that an increase in the price of energy causes the demand for energy inputs to fall, while the demand for capital, material and labour inputs rises. This indicates that the other factors of production are substitutable with energy in the Irish manufacturing sector

Factor input substitution in Irish manufacturing

We use a translog cost function to model production in the Irish manufacturing sector over the period from 1991 to 2009. We estimate both own- and cross-price elasticities and Morishima elasticities of substitution between capital, labour, materials and energy. We find that capital and energy are substitutes in the production process. Across all firms we find that a 1% rise in the price of energy is associated with an increase of 0.1% in the demand for capital. The Morishima elasticities, which reflect the technological substitution potential, indicate that a 1% increase in the price of energy causes the capital/energy input ratio to increase by 1.58%. The demand for capital in larger, more energy-intensive, foreign-owned and export-oriented firms is less responsive to increases in energy prices. We also observe a sharp decline in firms' responsiveness between the first half of the sample period (the 1990s) and second half (the 2000s)

Decomposing patterns of emission intensity in the EU and China: how much does trade matter?. ESRI WP462. July 2013

This paper uses data from the World Input Output Database (WIOD) to examine channels through which CO2 emissions are embodied within and imported into the European production process. We apply a metric to calculate sectoral emission intensity and thus rank countries and sectors in the EU in terms of their emission intensity, and look at the evolution of patterns of emission intensity in 2005 and in 2009. We use an input-output price model to simulate the effect that a rise in the price of EU-ETS allowances, from $17 to$25 /tonne, would have on the final price of goods in each EU country and sector. We find that all countries in the EU reduced the emission-intensity of their production processes from 2005 to 2009, and we find that the reduction was greatest in those sectors regulated under the ETS. Comparisons of emission intensity between countries show that industries in Central and Eastern Europe are more emission intensive than those of Northern Europe, where industries import emission-intensive goods rather than producing them domestically. Finally we examine the trade in intermediate goods from China into the EU to examine possible increases in carbon leakage from 2005 to 2009. Results show that while emissions embodied in imported intermediate goods have increased from 2005 to 2009, this increase is not limited to, nor particularly notable in, the sectors regulated by the ETS

Factor Input Substitution in Irish Manufacturing. ESRI WP475. January 2014

We use a translog cost function to model production in the Irish manufacturing sector over the period from 1991 to 2009. We estimate both own- and cross-price elasticities and Morishima elasticities of substitution between capital, labour, materials and energy. We find that capital and energy are substitutes in the production process. Across all firms we find that a 1% rise in the price of energy is associated with an increase of 0.1% in the demand for capital. The Morishima elasticities, which reflect the technological substitution potential, indicate that a 1% increase in the price of energy causes the capital/energy input ratio to increase by 1.58%. The demand for capital in larger, more energy-intensive, foreign-owned and export-oriented firms is less responsive to increases in energy prices. We also observe a sharp decline in firms’ responsiveness between the first half of the sample period (the 1990s) and second half (the 2000s)

Carbon tax scenarios and their effects on the Irish energy sector

In this paper we use annual time series data from 1960 to 2008 to estimate the long run price and income elasticities underlying energy demand in Ireland. The Irish economy is divided into five sectors: residential, industrial, commercial, agricultural and transport, and separate energy demand equations are estimated for all sectors. Energy demand is broken down by fuel type, and price and income elasticitieis are estimated for the primary fuels in the Irish fuel mix. Using the estimated price and income elasticities we forecast Irish sectoral energy demand out to 2025. The share of electricity in the Irish fuel mix is predicted to grow over time, as the share of carbon intensive fuels such as coal, oil and peat, falls. The share of electricity in total energy demand grows most in the industrial and commercial sectors, while oil remains an important fuel in the residential and transport sectors. Having estimated the baseline forecasts, two different carbon tax scenarios are imposed and the impact of these scenarios on energy demand, carbon dioxide emissions, and government revenue is assessed. If it is assumed that the level of the carbon tax will track the futures price of carbon under the EU-ETS, the carbon tax will rise from €21.50 per tonne CO2 in 2012 (the first year forecasted) to €41 in 2025. Results show that under this scenario total emissions would be reduced by approximately 861,000 tonnes of CO2 in 2025 relative to a zero carbon tax scenario, and that such a tax would generate €1.1 billion in revenue in the same year. We also examine a high tax scenario under which emissions reductions and revenue generated will be greater. Finally, in order to assess the macroeconomic effects of a carbon tax, the carbon tax scenarios were run in HERMES, the ESRI's medium-term macroeconomic model. The results from HERMES show that, a carbon tax of €41 per tonne CO2 would lead to a 0.21 per cent contraction in GDP, and a 0.08 per cent reduction in employment. A higher carbon tax would lead to greater contractions in output