Atelier CIREQ-CIRANO en économie de l’environnement et des ressources naturelles
Hassan Benchekroun (McGill U.), Sophie Bernard (Polytechnique Montreal), Robert Cairns (McGill U.), Justin Leroux (HEC Montreal), Martino Pelli (U. de Sherbrooke), Charles Seguin (HEC Montreal)
* English follows
Cet atelier est organisé en collaboration avec le CIRANO. Il est conjoint avec les départements d’économique des universités de Montréal, du Québec à Montréal, McGill et HEC Montréal.
L’atelier s’adresse aux chercheurs et étudiants de doctorat qui s’intéressent à l’économie des ressources naturelles et de l’environnement.
Conférencier
Katherine Wagner (Vancouver School of Economics, University of British Columbia)
Technology Lock-In and Optimal Carbon Pricing
Résumé : This paper studies the implications of energy prices today for energy efficiency and climate policy in the future. If adjustment costs mediate manufacturing plants’ responses to increases in energy prices, incumbents may be limited in their ability to re-optimize energy-inefficient production technologies chosen based on past market conditions. Using U.S. Census microdata and quasi-experimental variation in energy prices, we first show that the initial electricity prices that manufacturing plants pay in their first year of operations are important determinants of long-run energy intensity. Plants that open when the prices of electricity and fossil fuel inputs into electricity are low consume more energy throughout their lifetime, regardless of current electricity prices. We then estimate that the productivity of energy inputs is persistently lower for plants that open when electricity is cheap, and these differences in relative input productivities can fully explain the effects of entry-year electricity prices on subsequent energy intensity. We discuss how this “technology lock-in” increases the emissions costs of delayed action on carbon policy.
Inscription
Cet événement aura lieu en ligne. L’inscription est gratuite mais obligatoire.
This workshop is organized in collaboration with CIRANO and is joint with the economics departments of the universities of Montréal, Québec at Montréal, McGill and HEC Montréal.
The event is addressed to researchers and PhD students interested in natural resource and environmental economics.
Speaker
Katherine Wagner (Vancouver School of Economics, University of British Columbia)
Technology Lock-In and Optimal Carbon Pricing
Abstract : This paper studies the implications of energy prices today for energy efficiency and climate policy in the future. If adjustment costs mediate manufacturing plants’ responses to increases in energy prices, incumbents may be limited in their ability to re-optimize energy-inefficient production technologies chosen based on past market conditions. Using U.S. Census microdata and quasi-experimental variation in energy prices, we first show that the initial electricity prices that manufacturing plants pay in their first year of operations are important determinants of long-run energy intensity. Plants that open when the prices of electricity and fossil fuel inputs into electricity are low consume more energy throughout their lifetime, regardless of current electricity prices. We then estimate that the productivity of energy inputs is persistently lower for plants that open when electricity is cheap, and these differences in relative input productivities can fully explain the effects of entry-year electricity prices on subsequent energy intensity. We discuss how this “technology lock-in” increases the emissions costs of delayed action on carbon policy.
Registration
This event will be taking place online. Registration is free but required.