On the role of regulatory standards: Specification and some empirical evidence from motor vehicle fuel economy

This paper proposes a simple model to evaluate the role of regulatory controls. It is formulated so as to enable drawing empirical conclusions on the basis of usual hypothesis tests. Three potential roles of standards are examined they can act as penalties for non-compliant firms, as norms to which all firms converge, and as controls with cumulative impact over time. I test this specification focusing on automobile fuel economy (CAFE) standards that have been imposed in the US since 1978, using annual data from each major auto manufacturer. Results show that CAFE rules, functioning mainly as penalties, have been an important determinant of car fuel consumption. The hypothesis that standards acted also as norms is rejected. Finally, the automobile industry as a whole became less constrained by regulations over the years because of stagnating CAFE standards since 1990 and progress in vehicle technology.

An Empirical analysis of electricity consumption in Cyprus

The paper presents the first empirical analysis of electricity consumption in Cyprus. Using annual data from 1960 to 2004, we have examined electricity use in the residential and the services sectors, which are the fastest-growing electricity consumers in the island, and its interaction with income, prices and the weather. The analysis was performed with the aid of time series analysis techniques such as unit root tests with and without a structural break in levels, cointegration tests, Vector Error Correction models, Granger causality tests and impulse response functions. Results show long-term elasticities of electricity use above unity for income, and of the order of -0.3 to -0.4 for prices. In the short term electricity consumption is rather inelastic, mostly affected by weather fluctuations. Granger causality tests confirm exogeneity of electricity prices and bidirectional causality between residential electricity consumption and private income. The commercial sector is less elastic and reverts faster to equilibrium than the residential sector. Despite the relatively small sample size, results reported here are quite robust and can be used for forecasts and policy analyses.unit root, structural break, cointegration, Granger causality, impulse response

Designing Carbon Taxation Schemes for Automobiles: A Simulation Exercise for Germany

Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet little is known about the effectiveness and overall economic impact of these schemes. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to purchasers of low-carbon automobiles. We estimate a discrete choice model of demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. The analysis shows that a well-designed scheme can lead to emission reductions without reducing overall welfare.CO2 emissions, German automobile market, feebates, carbon taxation

Designing Carbon Taxation Schemes for Automobiles: A Simulation Exercise for Germany

Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet little is known about the effectiveness and overall economic impact of these schemes. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to purchasers of low-carbon automobiles. e estimate a discrete choice model of demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. The analysis shows that a well-designed scheme can lead to emission reductions without reducing overall welfare.CO2 emissions, German Automobile Market, Feebates, Carbon Taxation

Transport consumption inequalities and redistributive effects of taxes: A comparison of France, Denmark and Cyprus

We evaluate household transport consumption inequalities in France, Denmark and Cyprus, investigate their temporal dynamics and estimate the redistributive effects of taxes on different commodity categories. A comparative analysis is carried out in light of the differences between these countries, most notably in terms of car taxation systems and car ownership levels. A decomposition by expenditure component of the Gini index is applied, using household-level data from repeated cross-sections of expenditure surveys spanning long time periods. The results highlight the effect of car social diffusion. The relative contribution of vehicle use items to total expenditure inequality decreases over time, thus reflecting the more and more widespread use of the car. Moreover, fuel taxes become regressive (i.e. they affect the poor more than the rich), while the progressive character of taxes on the remaining car use commodities weakens with time. Taxes on transport goods and services as a whole are progressive (i.e. they affect the rich more than the poor). However, this is principally due to the progressivity of taxes on automobile purchases. The progressivity of taxes on car purchases is by far much stronger in Denmark. In this country, these taxes are so high that car purchase costs can be afforded only by high incomes. These findings underline the fact that equity issues should not be overlooked when designing policies to attenuate the environmental impact of cars. Increasing car use costs, notably fuel prices, through an increase of uniform taxes would be particularly inequitable.Inequality; transport consumption; household expenditure surveys; Gini index; decomposition by component; redistributive effects of taxes

An empirical time series analysis of energy consumption in Cyprus

This report presents the first econometric analysis of energy consumption in Cyprus. Time series analysed were those of residential, commercial, industrial and agricultural electricity use, gasoline consumption as well as the aggregate non-electricity and total energy consumption using annual data from 1960 to 2004. The dynamic interaction between the corresponding energy form and appropriate income, price and weather variables was examined through the application of widely used time series analysis techniques such as unit root and cointegration tests, Vector Error Correction (VEC) models, Granger causality tests and impulse response functions. Because of power and size problems associated with these methods in small samples, single-equation autoregressive distributed lag (ARDL) models were also employed for each energy variable. The validity of inferences made with such models has been reestablished in the late 1990s thanks to the work of Pesaran-Shin-Smith. Results from cointegration tests and VEC models show that a long-run equilibrium relationship between energy, income and prices exists for most energy uses. The long-term impact of income and prices on energy use is significant, with elasticities similar to those reported for other countries (above unity for income, less than 0.5 for prices in absolute terms). Weather fluctuations seem to be the most significant cause of short-term variation in electricity use (albeit with small elasticity values). Granger causality tests indicate that energy prices can be treated as purely exogenous, income and prices often Granger-cause energy use, and there is bidirectional causality between most energy forms and income or economic activity. ARDL test results have to be interpreted in conjunction with those of the cointegration tests. In the cases of residential and commercial electricity consumption, elasticities are found to be similar with those of the VEC model, whereas results of the two methods are different for the long-term elasticities of gasoline and industrial electricity consumption. Despite the quite small sample size, which poses limitations on the analysis, the evidence from both the VEC and ARDL models shows that results are meaningful and robust for residential, commercial and industrial electricity as well as gasoline consumption. This finding is important as it allows the corresponding income, price and weather elasticities to be used for forecasting purposes and policy analyses.Association of Cyprus Commercial Banks, Central Bank of Cyprus, Planning Burea

Climate Change in Cyprus: review of the impacts and outline of an adaptation strategy

According to the current scientific consensus, warming of the global climate system seems to be unambiguous and is most likely due to anthropogenic emissions of greenhouse gases. Anthropogenic climate change has been characterised as ‘the largest market failure’ that mankind has ever been faced with. Mediterranean Europe is expected to experience the most adverse climate change effects compared to other European regions. Cyprus, an island state in the south-east Mediterranean, already has a semi-arid climate, with hot summers and mild winters, and the most severe water scarcity problem in Europe. The island is situated on a hot spot and is projected to face significant temperature increases and decline in precipitation levels. This book addresses in a complete yet concise manner the knowledge available by the end of 2015 about expected impacts from climate change in Cyprus and outlines the main ingredients of an adaptation strategy

Evolution of fuel consumption in Europe

A recent study has revised the assumptions and the fuel economy values for the baseline scenarios used to predict fuel consumption evolution in Europe. Considering historical developments and observable future trends, the estimated fuel consumption values for the coming decades result higher than those assumed by previous studies