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The aggregate manufacturing energy intensity of 28 countries in Eastern Europe and Central Asia had declined by 35 percent during 1998-2008. This study reveals strong evidence of convergence: less efficient countries improved more rapidly and the cross-country variance in energy productivity narrowed over time. An index decomposition analysis indicates that energy intensities declined largely because of more efficient energy use rather than shifts from energy intensive to less intensive manufacturing activities. Income growth and energy price increases were the main drivers of the convergence. They dominated the impact of trade, which led to specialization in energy intensive industries.

Climate Change Economics --- Energy --- Energy and Environment --- Energy Demand --- Energy Production and Transportation --- Energy Productivity Convergence --- Environment and Energy Efficiency --- Index Decomposition --- Manufacturing Energy Intensity --- Trade --- Eastern Europe and Central Asia

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Emission permit trading is a centerpiece of the Kyoto Protocol which allows participating nations to trade and bank greenhouse gas permits under the Framework Convention on Climate Change. When market conditions evolve stochastically, emission trading produces a dynamic problem, in which anticipation about the future economic environment affects current banking decisions. In this paper, the author explores the effect of increased uncertainty over future output prices and input costs on the temporal distribution of emissions. In a dynamic programming setting, a permit price is a convex function of stochastic prices of electricity and fuel. Increased uncertainty about future market conditions increases the expected permit price and causes a risk-neutral firm to reduce ex ante emissions so as to smooth out marginal abatement costs over time. The convexity results from the asymmetric impact of changes in counterfactual emissions on the change of marginal abatement costs. Empirical analysis corroborates the theoretical prediction. The author finds that a 1 percent increase in electricity price volatility measured by the annualized standard deviation of percentage price change is associated with an average decrease in the annual emission rate by 0.88 percent. Numerical simulation suggests that high uncertainty could induce substantially early abatements, as well as large compliance costs, therefore imposing a tradeoff between environmental benefits and economic efficiency. The author discusses policy implications for designing an effective and efficient global carbon market.

Abatement Costs --- Carbon Market --- Carbon Policy and Trading --- Clean Air --- Climate Change --- Climate Change Policy --- Demand For Energy --- Electricity --- Electricity Price --- Emerging Markets --- Emission --- Emission Cap --- Emissions --- Energy --- Energy and Environment --- Energy Production and Transportation --- Environment --- Environment and Energy Efficiency --- Environmental Economics and Policies --- Facilities --- Fuel --- Greenhouse Gas --- Investment --- Macroeconomics and Economic Growth --- Markets and Market Access --- Permit Trading --- Price --- Prices --- Private Sector Development --- Public Sector Development --- Sulfur --- Sulfur Dioxide

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The Government of the Republic of Belarus (GoB) plans to increase district heating tariffs to cost-recovery levels and gradually phase out subsidies, replacing them with social assistance programs. Residential DH tariffs in Belarus are currently at roughly 10-21 percent of cost-recovery levels. DH subsidies are highly regressive, add costs to business, and create significant fiscal risks and macroeconomic vulnerabilities. The study analyzes the social, sectoral, and fiscal impacts of the proposed tariff reform, and identifies and recommends measures to mitigate adverse impacts of district heating tariff increases on the households. The analysis shows that a negative social impact is manageable if a tariff increase is accompanied by countervailing measures to compensate for the loss of purchasing power, in particular of the poor, through targeted social assistance and energy efficiency programs. The reform is more likely to be successful if communication campaigns to address consumer concerns are carried out before significant price increases, and consumer engagement and monitoring systems are established. When tariff reform and mitigation measures are properly sequenced and coordinated, the reform will become more socially acceptable, consumers will benefit from better quality of services, the government will achieve positive fiscal savings, and the DH sector will become sustainable in the long term. The study analyzes the social, sectoral, and fiscal impacts of the proposed district heating tariff reform in Belarus, and identifies and recommends measures to mitigate adverse impacts of district heating tariff increases on the households.

Tariff --- Heating --- Subsidies --- Government policy --- Business subsidies --- Corporate subsidies --- Corporate welfare --- Government subsidies --- Grants --- Subventions --- Vouchers (Subsidies) --- Welfare, Corporate --- Buildings --- Ad valorem tariff --- Border taxes --- Customs (Tariff) --- Customs duties --- Duties --- Fees, Import --- Import controls --- Import fees --- Tariff on raw materials --- Heating and ventilation --- Government aid --- Foreign trade promotion --- Trade adjustment assistance --- Heat engineering --- Boilers --- Stoves --- Commercial policy --- Indirect taxation --- Revenue --- Customs administration --- Favored nation clause --- Non-tariff trade barriers --- Reciprocity (Commerce) --- Environmental engineering

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This paper analyzes the dynamic effects of rate-of-return regulation on firms'emissions compliance behavior when the price of emissions permits is uncertain. The paper shows that uncertainty regarding the price of permits would motivate a regulated firm to adopt a more self-sufficient strategy and would reduce the cost-effectiveness of emission allowance trading. When allowance transactions are treated as capital investments, uncertainty could reverse the classic Averch-Johnson effect, so that a regulated firm would purchase fewer permits in the ex ante period than its unregulated counterpart. These results are driven by the asymmetric impact of a price change on the expected marginal value of allowances under rate-of-return regulation. A wider variation in the permit price and a decline in the regulated rate of return would amplify the asymmetry. These results have implications for the efficiency of the proposed global carbon trading system.

Energy --- Environment --- Finance and Financial Sector Development --- Macroeconomics and Economic Growth

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As many as 50 million people in Pakistan may still live without connection to the electric grid. Pakistan also has some of the world's worst power outages. Using data from a nationally representative two-period panel survey, this paper presents the first empirical evidence on the cost of unreliable electricity supply to households in Pakistan. The results show that lack of connectivity and poor reliability may be costing the country at least USD 4.5 billion (1.7 percent of gross domestic product) a year. Addressing the problem requires energy sector reforms to correct regulatory and institutional distortions in the gas and electricity sectors.

Benefits Of Electrification --- Education --- Educational Sciences --- Electric Power --- Electricity --- Energy --- Energy and Environment --- Energy Demand --- Energy Policies & Economics --- Health Care Services Industry --- Household Welfare --- Industry --- Rural Electrification