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25 pages, 2872 KiB

Open AccessArticle

Interaction of Consumer Heterogeneity and Technological Progress in the US Electric Vehicle Market

by Ranjit R. Desai, Eric Hittinger and Eric Williams

Energies 2022, 15(13), 4722; https://doi.org/10.3390/en15134722 - 28 Jun 2022

Cited by 11 | Viewed by 2992

Abstract

Electric Technology Vehicles (ETVs: hybrid, electric, and plug-in hybrid) may reach price parity with incumbent internal combustion vehicles (ICEVs) in the near future. Climate policy for transportation will depend on the degree to which consumers prefer ETVs, and price parity is a key factor. In this study, we explore the interaction between future cost reductions and the economically motivated adoption of ETVs. We construct a model of the U.S. personal vehicle market accounting for heterogenous use and vehicle preferences, in which adoption induces cost reductions that increase future market share. Model results indicate that price parity is reached for most consumers in a number of cost scenarios, but not with constant ICEV costs and modest ETV cost declines. A price parity future suggests that government support could be temporary and phased out after a successful market transition. However, if ETVs continue to be more expensive than ICEVs, then lasting government support is needed. Heterogeneity is essential to understanding the market transition: treating consumers as heterogeneous results in an ETV market share 23% higher than assuming average consumers. Future work can clarify ETV support policy by resolving uncertainty in cost trajectories and modeling dynamic and heterogenous consumer markets. Full article

(This article belongs to the Special Issue Policy and Finance for Clean Energy Transition)

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42 pages, 3709 KiB

Open AccessArticle

Estimating the Employment and Fiscal Consequences of Thermal Coal Phase-Out in China

by Alex Clark and Weirong Zhang

Energies 2022, 15(3), 800; https://doi.org/10.3390/en15030800 - 22 Jan 2022

Cited by 11 | Viewed by 5919

Abstract

China hosts over half of global coal-fired power generation capacity and has the world’s largest coal reserves. Its 2060 carbon neutrality goal will require coal-fired electricity generation to shrink dramatically, with or without carbon capture and storage technology. Two macroeconomic areas in which the socioeconomic impact of this decline is felt are losses in jobs and tax revenues supported by thermal coal mining, transport and power generation. At the national level, under a ‘baseline’ (B) scenario consistent with China’s carbon neutrality goal, labour productivity growth in coal mining implies that significant job losses will occur nationally in the medium term, even if all coal plants continue operating as planned. Jobs supported by the coal power industry would decline from an estimated 2.7 million in 2021, to 1.44 million in 2035 and 94,000 in 2050, with jobs losses from mining alone expected to exceed 1.1 million by 2035. Tax revenues from thermal coal would total approximately CNY 300 billion annually from 2021–2030, peaking in 2023 at CNY 340 billion. This is significantly less than estimated subsidies of at least CNY 480 billion, suggesting coal is likely a net fiscal drain on China’s public finances, even without accounting for the costs of local pollution and the social cost of carbon. As coal plant retirements accelerate, from 2034 onwards, fiscal revenues begin to fall more rapidly, with rates of decline rising from 1% in the 2020s to over 10% a year by the 2040s. More aggressive climate policy and technology scenarios bring job and tax losses forward in time, while a No Transition policy, in which all currently planned coal plants are built, delays but does not ultimately prevent these losses. At the provincial level, China’s major coal-producing provinces will likely face challenges in managing the localised effects of expected job losses and finding productive alternative uses for this labour. Governments of coal-producing provinces like Inner Mongolia, with an industry highly dependent on exports to other provinces, are more exposed than others to declining tax revenues from coal, and more insulated from job losses, given their high current degree of labour efficiency. Although their provincial revenues are likely to remain stable until the early 2030s under the B scenario, the possibility of increasing policy stringency underlines the need for revenue and skill base diversification. At the firm level, China’s ‘Big Five’ state-owned power companies were responsible for over 40% of both jobs and tax revenues in 2021. The number of jobs supported by the activities of each of the largest ten firms, with one exception, will decline by 71–84% by the early 2040s, with the tax contribution of each declining by 43–69% in the same period. Full article

(This article belongs to the Special Issue Policy and Finance for Clean Energy Transition)

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19 pages, 1117 KiB

Open AccessArticle

Financial Instruments to Address Renewable Energy Project Risks in India

by Gireesh Shrimali

Energies 2021, 14(19), 6405; https://doi.org/10.3390/en14196405 - 7 Oct 2021

Cited by 2 | Viewed by 2594

Abstract

This paper provides a summary of financial instruments to address two biggest risks to renewable projects in India. These risks include the following: first, off-taker (or counterparty) risk, which relates to payment delays by public-sector distribution companies to independent power producers, which then impact project level cash flows in the domestic currency; second, currency (or foreign exchange) risk related to currency fluctuations, which impact foreign investor level cash flows in foreign currencies. This paper then describes multiple solutions for each of these risks, using public funding mechanisms. For payment delays, the category of solutions is termed Payment Security Mechanisms; whereas, for currency fluctuations, the category of solutions is termed Foreign Exchange Hedging Facilities. The coverage in this paper shows the evolution of the solutions from theory to practice over time. These solutions are likely to be applicable to other developing countries. Full article

(This article belongs to the Special Issue Policy and Finance for Clean Energy Transition)

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