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USAEE Dialogue

Vol. 22, No. 3 (October 2014)

USAEE Dialogue is the official on-line Newsletter of the US Association for Energy Economics.  Its mission is to communicate recent research, analyses and case studies on issues of energy economics that are of general interest to the membership. Articles are invited from members of IAEE in all sectors of the energy economics’ community -- business/consulting, government and academia (including students) -- who live and/or work in North America. USAEE Dialogue is also a forum for reports of local USAEE Chapter activities. For further information please consult: "Guidelines for Submissions of Articles" at

http://www.usaee.org/pdf/blog/Dialogue_Article_Submission_Guidelines.pdf

 


 

From the President, USAEE

 
Michael Canes
Distinguished Fellow
Logistics Management Institute
(McLean, VA)
 

 

I’m pleased to report to the USAEE membership that we hosted an extremely successful IAEE international conference in New York City this past June.  Record numbers of participants (583) and of abstract submissions (over 780) were just two metrics reflecting the interest and response of IAEE members from around the world, including of course the USA.  The conference was organized so as to be of interest not only to our academic members but also to those from business and government.  For example, there was a session on oil and gas reserve evaluation and financing, two on emerging challenges to electric utilities, and another on recent developments in transportation.  Happily, USAEE also managed to make some money from the conference, money that will be fully reinvested in Association activities to offer ever improving services to the membership.

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From the Editor

 
Robert Eric Borgström
Advisor on Energy Regulatory Policy & Management
(Washington, DC)
 
 

As we busy ourselves with fall activities, this issue of USAEE Dialogue reflects upon the highly successful IAEE International Conference that we enjoyed this summer in New York City.  Included herein is an overview of the conference by USAEE National Student Representative, Derek Nixon; write-ups on the Student Best Paper Award, the Student Poster Competition and the Case Study Competition; and summaries of selected Concurrent Session Presentations.

Also featured in this issue are the following full-length papers from our fellow USAEE members:

  • “From Rio to Kyoto to Paris: Hopes and Realities for Global Warming Policy,” by Joel Darmstadter, Senior Fellow of Resources for the Future and this year’s recipient of USAEE’s Adelman-Frankel Award.
  • “Energy in 2013 – Taking Stock: Highlights from the 2014 BP Statistical Review of World Energy,” by Mark Finley of BP America and his colleagues at BP plc in London.  And,
  • “EPA’s Program for Carbon Reductions Is in Line with Power Sector Trends,” by John R. Weinberger, an attorney and public power consultant specializing in energy and environmental issues.

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Featured Articles 

 

An invited paper by the Recipient of the 2014 USAEE's Adelman-Frankel Award

From Rio to Kyoto to Paris:

Hopes and Realities for Global Warming Policy

 

 
Joel Darmstadter
Senior Fellow,
Resources for the Future,
(Washington, DC)

 

In Nov. 2015, delegates from around the world will assemble in Paris to debate and draft a comprehensive global agreement on policies, effective 2020, to spare humanity the distress and risks of climate change and global warming.  Inevitably, a key element of such an agreement would mean focusing on society’s continued and major dependence on fossil energy, whose greenhouse gas emissions a preponderant segment of the scientific community considers the underlying cause of the climatic threat.[1]  Yet, when judged by historic trends and unfulfilled goals, the path ahead seems problematic.

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Energy in 2013 – Taking Stock:

Highlights from the 2014 BP Statistical Review of World Energy

 

 
 
Mark Finley
General Manager, Global Markets,
BP America, Inc.
(Washington, DC)
 
  
Christof Rühl
Chief Economist & Vice President, BP plc
(London, UK)
 
 
Alexander Naumov
Macro Economist, BP plc
(London, UK )

  

 

 

 

Today, the energy world looks rather different than it did ten years ago; much of what we took for granted has changed. The dominant role of the developing world in energy growth, oil prices above $100 and a wide gap between regional gas prices, the emergence at scale of renewables and uncoventional oil and gas – many would have found all of this hard to believe ten years ago.  Yet, nowdays we think of these trends as normal. If we loosely group together fuels that classify as “new”, simply by virtue of having not been of any materiality a decade ago, including renewables, then these accounted for 81% of global primary energy production growth last year.  The global energy system is huge and moves only slowly, but it does move. It is the purpose of this paper to review the latest global energy developments and to document changes in global energy markets based on the 2014 edition of BP Statistical Review of World Energy.[1] The best place to start is by investigating the relationship between energy and the economy.

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EPA’s Program for Carbon Reductions Is In Line With Power Sector Trends

 
John R. Weinberger *
(Washington, DC)

 

U.S. EPA’s recently proposed “Clean Power Plan,” to limit power plant CO₂ emissions to 30% below 2005 levels by 2030, sets modest and attainable goals.[i]  The proposed EPA rule regulates emissions at the state level.  It sets a 2030 aggregate emission rate target for each state and allows states enormous flexibility to develop and implement their own policies to improve carbon emission rates, or develop policies jointly with other states.  The Clean Power Plan will not bring about dramatic transformation of the power sector, but instead will lock-in market and regulatory trends that are already in place. 

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The 37th IAEE International Conference

 New York City - June 15-18, 2014

"Energy and the Economy"

 

  Michael Canes, USAEE President and Omowumi Iledare, IAEE President preside over the 37th IAEE International Conference, which with 583 attendees from 44 countries was the best-attended conference in our organization's history!

 


Additional photos from the Conference can be found at https://www.flickr.com/photos/100973643@N06/sets/72157644912402210/ .

 


USAEE Awards Presented During the Conference

 

2014 Adelman-Frankel Award

This award is given to an individual or organization for a unique and innovative contribution to the field of energy economics.

  
Joel Darmstadter
Resources for the Future (Washington, DC)

 


 

2014 Senior Fellow Awards

The Senior Fellow Award is given to individuals who have exemplified distinguished service in the field of energy economics and/or the USAEE.

 
Kevin F. Forbes
Catholic University of America (Washington, DC)
 
Lori Smith Schell
Empowered Energy (Durango, CO)

Adonis Yatchew

University of Toronto (Canada)

 

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Overview of the Conference

 

Derek Nixon
Doctoral Candidate,
University of California, Davis

USAEE National Student Representative

 

The 37th IAEE International Conference in New York City was an unambiguous success, drawing 583 attendees from 44 separate countries. Attendees spanned across diverse sectors, with 454 energy professionals and 129 students. As IAEE president Omowumi Iledare said in his opening remarks, IAEE is approaching 5000 global members, and we are well placed to address global access to energy, energy best practices, and resource and environmental stewardship. A hallmark of our organization is within- and across-sector interaction of business professionals, government representatives and academia that helps us to solve global issues. The theme of the conference, “Energy & the Economy,” was timely in that the U.S. is anticipated to overtake Russia and Saudi Arabia as the largest producers of natural gas and oil in the world in 2014. The conference explored the domestic and global implications of this shift, the extent to which the shale revolution will be replicated worldwide, and the benefits and costs such a global revolution would have.

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2014 IAEE Best Student Paper Competition

 

Thomas Drennen, Prof., Economics and Environmental Studies (Chair), Hobart and William Smith College (Geneva, NY) with finalists of the 2014 IAEE Best Student Paper Competition: [from left] Sara Fogelberg (co-author with Ewa Lazarczyk Carlson, who was unable to attend due to illness); Dan Werner (winner); Jacquelyn Pless and Phillip M. Richter during the IAEE International Conference in New York City.

 

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Student Poster Competition

 

Winner, Monday Poster Session

Xiaohu ("Tiger") Luo

Tsinghua University (Beijing, China) &
Joint Program on the Science & Policy of Global Change, MIT (Cambridge, MA)

 

“How Might Interprovincial Migration Affect the Impact of China’s Energy Policies?”

 

Winner, Tuesday Poster Session

Laura-Lucia Richter

University of Cambridge (UK)

 

 “Social Effects in the Diffusion of Solar Photovoltaic Technology in the UK”

  

Organizer of the Student Poster Competition
John Holding, Independent Practitioner,
IAEE/BIEE (East Sussex, UK)
  
 

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 3rd Annual USAEE Case Competition

 

Eric Hittinger, Asst. Prof., Public Policy, Rochester Institute of Technology (Rochester, NY), and organizer of the USAEE Case Competition, with Jeff Kessler and Firas Abu-Sneneh of the first place award winning team from the University of California, Davis, during the IAEE International Conference in New York City.

 

 

 

 

  

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Summaries of Selected Concurrent Sessions Presentations

 

 

Energy and Capacity Market Effects of Carbon Mitigation Policies in Restructured Markets

 

 
Jared Moore
Doctoral Candidate, Engineering & Public Policy,
Carnegie Mellon University (Pittsburgh, PA)
 
Jay Apt
Professor, Engineering and Public Policy, Tepper School of Business,
Carnegie Mellon University (Pittsburgh, PA) 

 

 

The U.S. Environmental Protection Agency (EPA) has proposed regulations for greenhouse gas emissions from existing power plants through Section 111(d) of the Clean Air Act.  We examined the cost per tonne of CO2 mitigated in PJM under two policies,  a carbon price and renewable portfolio standards (RPS).  We examined these policies from two perspectives: the social perspective (where wealth transfers are neutral) and the consumer perpsective.  Regardless of perspective, we found that a carbon price was more cost effective if gas prices were low ($4/MMBTU).  From the perspective of consumers, however, the RPS may be more cost effective in PJM under high gas prices ($7/MMBTU) because the added energy supply lowers market clearing prices.  We found that both policies have consequences in capacity markets and that the RPS can be more cost effective than a carbon price only under continued excess capacity supply coupled with high gas prices.

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Shale Oil and Gas Boom and Emission Reduction Targets:

Tradeoffs between Gains and Costs

 

Farzad Taheripour
Asst. Prof., Dept. of Agricultural Economics
Purdue University (W. Lafayette, IN)
 
 
Wallace E. Tyner
James & Lois Ackerman Professor
Dept of Agricultural Economics
Purdue University (W. Lafayette, IN)

 

 

Supplies of oil and gas from shale resources have increased in recent years in the US, and they are expected to increase in the future as well. The expansion in supplies of these energy sources provides substantial economic benefit for the US economy. But how large is the economic benefit? How does the size of the economic benefit of shale oil and gas compare with the likely costs of climate policies to reduce US greenhouse gas (GHG) emissions? These are the questions we address in this paper.

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Unconventional Gas Development and Local Public Finance:

Evidence from the Barnett Shale

 

 
 
Jeremy G. Weber
Asst. Prof., Graduate School of Public and International Affairs,
University of Pittsburgh (Pittsburgh, PA)
 
J. Wesley Burnett
Asst. Prof., Dept. of Economics,
College of Charleston (Charleston, SC)
 
Irene M. Xiarchos
Natural Resource Economist, Office of the Chief Economist,
U.S. Dept. of Agriculture (Washington, DC)
 

 

 

 

 

Oil and natural gas production is experiencing a renaissance in the US with the increased development from shale formations over the past several years. Drilling has created jobs and generated public revenues for local and state governments (Weber, 2012; Pless, 2012; Raimi and Newell, 2014).  This study evaluates the medium to long-term effects of shale gas development on zip code level housing values over the 1997 to 2013 period in Texas’ Barnett Shale.[1] As demonstrated in Figure 1, the Barnett Shale formation splits the Dallas-Fort Worth metropolitan area in half, with all of the drilling occurring on the western side and none occurring on the eastern side. In examining the evolution of housing values, we connect the natural resource economics literature on the effects of extractive industries to the public economics literature on local public finances and property values – in Texas the oil and gas development provide property tax revenue for local schools and governments.

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2014 IAEE Best Student Paper Award Winner

 

Electricity Market Price Volatility:

The Importance of Ramping Costs

 
Dan Werner,
Doctoral Candidate, Department of Agricultural and Resource Economics,
University of Maryland (College Park, MD)

 

 

Within the past fifteen years, most electricity markets across the United States have restructured to allow competition in the generation of electricity. Since inception, high price volatility has plagued wholesale electricity prices, creating major implications for risk-averse market participants and system operators tasked with maintaining grid reliability. The expected rise in intermittent renewable generation has augmented these volatility concerns, since various generator types may affect volatility differently.

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From the Chapters

The Presidents of local USAEE Chapters are cordially invited to submit write-ups with photographs about their chapter activities.  Please contact the Editor at robertborgstrom2@gmail.com for further information and submission guidelines.

 

 


Welcoming our newest affiliate,

Colorado School of Mines Chapter (Golden, CO)

 

CSM Chapter Officers:[from left] Mathew Doyle, Vice President; Jacquelyn Pless, Secretary; Braeton Smith, President; and Ernesto Guzman, Treasurer

 

The Colorado School of Mines (CSM) Chapter, the newest affiliate of USAEE, has been close to a year in the making and finally kicked off with its first meeting in April 2014. CSM is the ideal place for a USAEE chapter as it has a thriving energy community and houses the well-known Mineral and Energy Economics program, where an abundance of students and faculty researching energy issues reside. The chapter was primarily borne out of a strong desire to see better representation of the program at the USAEE conferences, but the chapter objectives have grown to include a speaker series, Denver-area networking events, discussion lunches, USAEE conference scholarships, and other activities.

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National Capital Area Chapter (Washington, DC)

 18th Annual Washington Energy Policy Conference

Guy Caruso, CSIS Senior Advisor to the Energy and National Security Program; and Mark Lively, NCAC-USAEE President, addressing the 18th Annual Washington Energy Policy Conference.

 

On April 22 2014, the National Area Chapter of the U.S. Association for Energy Economics (NCAC-USAEE) held its 18th annual Washington Energy Policy Conference. As has been the case since 2010, this highly-regarded event was held in partnership with the Center for Strategic and International Studies (CSIS).  The Conference was a great success with a packed house which at times was standing room only in a room setup for 130 people.  At the long day event, fifteen speakers and five moderators addressed the topic, “Disruptive Technologies Shock All Energy Sectors, We didn’t see them coming.  We don’t know what’s next.  How will they shape the future?”  

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Forthcoming Conferences

An important benefit of your USAEE membership is the opportunity to participate in a variety of IAEE events around the world as well as our annual North American Conference.  

  

14th IAEE European Conference: 

"Sustainable Energy Policies and Strategies for Europe"

Rome, Italy - October 28-31, 2014

http://www.iaee2014europe.it

 

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5th Latin America Energy Economics Meeting (ELAEE)

 "Energy Outlook in Latin America and Caribbean: Challenges, Constraints and Opportunities"

Medellin, Colombia

March 16 - 18, 2015

5elaee.aladee.org/5ELAEE2015

The 5th ELAEE will take place in Medellin on March 16 - 18, 2015; and will feature first level world-speakers, notable business and political leaders, academics, consultants and analysts that simultaneously will alternate discussions and debates about the aforementioned and related topics. The conference will provide opportunities to delegates that include encounters among energy professionals and specialists during receptions and session breaks.

Authors wishing to make concurrent session presentations must submit online an abstract that briefly describes the research or case study, by the deadline of November 16, 2014.  See instructions at 5elaee.aladee.org/5ELAEE2015. 

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38th IAEE International Conference

Antalya, Turkey

May 24 - 27, 2015

www.iaee15.org

 

WELCOME TO ANTALYA!

I hereby would like to invite USAEE members to attend the 38th IAEE International Conference in Antalya, Turkey. Antalya, the World’s third most visited city by number of international arrivals, is only a short flight from Istanbul with easy and frequent connections from the USA. Delegates may wish to use the occasion and setting as the focal point for a Mediterranean vacation. The conference will take place when spring leads into summer, at a time of ideal temperatures for comfortable outdoor activities and swimming. The five-star conference hotel, a luxury resort located directly on the beach, features a spa area with Turkish bath, a water park with slides and 2 championship golf courses. The perfect location of Antalya offers the oppourtunity to reach a number of quite popular historical and touristic spots. Our suggested post-conference tours include the destinations of Cappodocia - the Land Of The Fairy Chimneys, Pamukkale - The Cotton Castle, Ephesus - the Temple of Artemis, and Demre – the birthplace of St. Nicholas, along with the option of a blue cruise for a recreational voyage along the Turkish Riviera.

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33rd USAEE North American Conference

"The Dynamic Energy Landscape"

Pittsburgh, Pennsylvania - Oct. 25 - 28, 2015

www.usaee.org/usaee2015

 

We are pleased to invite you to attend the 33rd USAEE/IAEE North American Conference, which will be held October 25-28, 2015, in Pittsburgh, Pennsylvania, one of the main centers of American Energy. The theme of the conference is “The Dynamic Energy Landscape,” an appropriate theme because of the challenges facing government and industry decision makers to formulate a clear path forward. Massive transformations are occurring in how and where energy is produced and consumed.  These transformations are affecting economies and expected to continue to do so

The conference will bring together business, government, academic, and other professionals to explore the conference theme through a series of plenary, concurrent, and poster sessions.  The meeting will also provide networking opportunities for participants through informal receptions, breaks between sessions, public outreach, and student recruitment.  The Conference Committee is planning several offsite tours that will be of interest to those wanting a direct and close-up perspective on the region's dynamic energy landscape.

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