Natural Gas demand at the utility level: An application of dynamic elasticities

Previous studies provide strong evidence that energy demand elasticities vary across regions and states, arguing in favor of conducting energy demand studies at the smallest unit of observation for which good quality data are readily available, that is the utility level. We use monthly data from the residential sector of Xcel Energy’s service territory in Colorado for the period January 1994 to September 2006. Based on a very general Autoregressive Distributed Lag model this paper uses a new approach to simulate the dynamic behavior of natural gas demand and obtain dynamic elasticities. Knowing consumers’ response on a unit time basis enables one to answer a number of questions, such as, the length of time needed to reach demand stability. Responses to price and income were found to be much lower—even in the long run—than what has been commonly suggested in the literature. Interestingly, we find that the long run equilibrium is reached relatively quickly, around 18 months after a change in price or income has occurred, while the literature implies a much longer period for complete adjustments to take place

A Transparent and Effective Cash Assistance Program: Dream or Reality?

This policy brief proposes a quasi-universal cash transfer program that is essential and timely, particularly in light of the dire socio-economic situation in the country. However, the program should be very carefully designed and implemented in a transparent manner so as not to be used as a medium for vote-buying. Ensuring strong oversight mechanisms and anti-corruption safeguards also provides an opportunity to regain the trust of the Lebanese and other stakeholders, which is the cornerstone of any successful economic recovery plan

NUCLEAR ECONOMICS: ONE SIZE CANNOT FIT ALL

For countries contemplating joining the “nuclear renaissance” as it has been dubbed, there is an important lesson to be learned. Nuclear electricity has been and remains to be a very controversial topic characterized by wildly conflicting statistics. Multiple issues remain the subject of fierce debate, as spectacularly divergent numbers are plentiful in the literature. When performing any economic analysis of nuclear power it is critical that policymakers, scientists, and nuclear experts do so with eyes wide open and not simply pass on published results without questioning the assumptions, models, and methodologies used. When it comes to nuclear power, “one size cannot fit all” and any economic analysis should be custom-made to the specific country and location under study

Can Lebanon’s Economy Be Saved? A Plan for Revival

The recent financial and economic meltdown in Lebanon is the result of 30 years of social, economic, financial and fiscal mismanagement, amplified by the COVID-19 pandemic, and further exacerbated by the Beirut Port explosion. Lebanese citizens’ trust as well as the international community’s trust in the government have unfortunately been destroyed over the past few years. Consequently, Lebanon’s sole option today is to rebuild confidence in the government and the public institutions by implementing economic reforms and concurrently seek an IMF program which will pave the way for additional financing from other international sources. The most important confidence-building step is a clear financial and economic plan that has the support of all key stakeholders. The current article presents a roadmap for a reforms-driven export-led growth strategy for Lebanon. Ultimately, the goal is to ‘jump start’ the economy on a path of sustainable, inclusive, and equitable economic growth. Such growth should be grounded in a small open economy model and driven by low tariffs, a flexible exchange rate regime, and a dynamic export sector built on competitive and comparative advantages. This plan partially builds on proposals and recommendations provided by previous economic plans and policy notes

Challenges for CO2 mitigation in the Lebanese electric power sector

Similarly to other developing countries the electricity sector in Lebanon is monopolized by a vertically-integrated public utility, Electricite Du Liban (EDL). EDL‘s supply is characterized by frequent and lengthy power cuts that have given rise to an alternative, informal, and unregulated backup sector, which serves to satisfy electricity demand during the extended blackout periods. This paper examines the evolvement of the backup sector and its related CO2 emissions via the use of scenario analysis. The economic and energy policy implications of each scenario are discussed and a number of policy options are presented to ensure that the growth in CO2 emissions is contained. Results clearly indicate that the backup sector plays a critical role in the success of any greenhouse gas mitigation commitment undertaken by Lebanon. A clear strategy on dealing with this sector needs to be devised simultaneously if not prior to any climate change policy at the national level

Challenges to International Climate Policy – Lessons Learned and Alternatives

The atmosphere represents a global commons and containing global warming can be con�sidered an international public good. There is now increasing consensus that in order to avoid high risks of climate change the concentration of greenhouse gases in the atmosphere should not exceed the 500ppm CO2e by 2050. To reach the desired target a strong international effort with binding emission caps for major polluting countries is required. The success of any post-Kyoto agreement at mitigating global warming stands or falls with the participation of developing countries, of which China and India are among the top five emitters in the world. Underlying the difficulty of reaching a comprehensive agreement are two basic issues pertaining to the public good nature of the atmosphere. First, reducing greenhouse gas emissions is costly while benefits are shared universally; this gives nations an incentive to free ride. Second, there are large differences in past, current and projected future emissions. Independent of its particular shape, a post-Kyoto agreement will likely have an emissions trading system as its centerpiece. In this paper we present, based on the experiences with the Kyoto Protocol and the EU-ETS the challenges to be overcome when designing a global carbon market. The economic theories of public choice and of regulation will be used to shed light on the im�portance of design features when developing the blueprint for such global carbon market. Looking at the divergent positions taken by developed and developing countries we argue in favor of decentralized measure

The causal relationship between energy consumption and economic growth in Lebanon

This paper investigates the dynamic causal relationship between energy consumption and economic growth in Lebanon over the period 1980-2009. Within a bivariate framework, imposed on us due to data limitations, and in an effort to increase the robustness of our results, we employ a variety of causality tests, namely, Hsiao, Toda-Yamamoto, and vector error-correction based Granger causality tests. We find strong evidence of a bidirectional relationship both in the short run and in the long run, indicating that energy is a limiting factor to economic growth in Lebanon. From a policy perspective, the confirmation of the feedback hypothesis warns against the use of policy instruments geared towards restricting energy consumption, as these may lead to adverse effects on economic growth. Consequently, there is a pressing need to revise the current national energy policy that calls for a 5% energy conservation target. Also, to shield the country from external supply shocks, given its substantial dependence on energy imports, policymakers should emphasize the development of domestic energy resources. Further, the most pertinent implication is that relaxing the present electric capacity shortages should be made a national priority, in view of its potential positive effect on the economy

A Tale of Two Crises: Turkey of the Early Aughts and Today’s Lebanon

Crises in emerging economies often involve capital flow reversals, devaluations, and large drops in real activity, and are typically caused by unsustainable fiscal positions, financial sector fragility, and political instability. All these factors were present in the crises endured by Turkey and Lebanon, albeit with a 20-year difference

The end game to Lebanon’s woes: IMF reform and political willingness

The Lebanese economic crisis which began in 2019 has been described by the World Bank as one of the top three most severe crises globally since 1850. We discuss the events leading to Lebanon’s ongoing economic crisis and the reasons behind the government’s failure to reach an agreement with the International Monetary Fund to halt the downward spiral of the economy and promote recovery. The crisis’ link to the political makeup of ruling coalitions makes it such that any solution to it lies in cutting the knots that bind political and economic interests in Lebanon

What can GCC countries learn from well-established green power markets in other countries?

The GCC countries are well positioned to introduce a successful voluntary green power market. To set the stage for a good uptake of green power products: (1) awareness and marketing campaigns should be launched early on, (2) certification by an international independent accreditation firm should be made compulsory, and (3) to maximize the public prestige factor customers could be given wall decals or car stickers to display. However, even the strongest voluntary markets around the world still suffer from low penetration rates. However, this can soon change with the continuous decline in RE prices. However, in the meantime the GCC governments can start preparing the ground for a successful introduction of voluntary green power markets