CERE members and renowned researchers like Jean Tirole (awarded the Nobel Memorial Prize in Economics Sciences in 2014), and Paul Joskow (at MIT) attended the Toulouse Conference on The Economics of Energy and Climate Change.
On September 8-9, CERE members Runar Brännlund, Jurate Jaraite and Amin Karim attended the Tenth Conference on The Economics of Energy and Climate Change organized by Toulouse School of Economics (TSE). Jurate Jaraite presented her paper "Transaction Costs of Emissions Trading vs. Carbon Taxes", that we reported on in the last newsletter, written together with Jessica Coria. Amin Karimu presented his paper "Energy Efficient R&D Investment and Aggregate Energy Demand: Evidence from OECD Countries" jointly written with Runar Brännlund. In the paper the authors presented a different perspective in the debate on energy efficiency and energy demand by classifying the impact of efficiency policy into a direct and indirect effect (rebound effect). The paper examines the direct effect of energy efficient R&D capital on energy demand for OECD countries. Overall, their empirical results suggest a reasonable reduction in energy demand and associated CO2 emissions from an increase in energy efficient R&D investment based on the direct effect, which varies across the countries. The countries that will benefit the most from an increase in energy efficient R&D investment include Portugal, Norway, Spain, Denmark and Austria in our sample. However countries such as Sweden, Netherland, Italy, UK and USA will benefit the least from such an investment. This differences in terms of reduction in energy demand and CO2 emissions is likely due to the differences in abetment cost for emissions and the level at which energy efficient R&D activities has already been implemented. The key lesson from all this is that energy efficiency measures are likely to generate some reduction in energy demand but the reductions can be sizeable if such policies are combined with taxes in order to generate the maximum reduction in energy demand and CO2 emissions.
Jean Tirole (TSE), who in 2014 was awarded the Nobel Memorial Prize in Economics Sciences, and Paul Joskow (at MIT) closed the conference by sharing their views on why the existing climate change mitigation policies are "failing on almost all fronts" and on what can be expected from the approaching the United Nations Climate Change Conference which will be held in Paris at the end of this year.
Read more about the conference
Details on the Karimu and Brännlund paper