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Spring 2018

The Journal of Energy and Development

volume 43, number 2, spring 2018 (copyright 2018)

Amine Lahiani, Avik Sinha, and Muhammad Shahbaz, “Renewable Energy Consumption, Income, CO 2 Emissions, and Oil Prices in G7 Countries: The Importance of Asymmetries,” The Journal of Energy and Development, volume 43, number 2 (spring 2018, copyright 2018), pp. 157191.


This paper investigates the asymmetric transmission of income, carbon dioxide (CO 2 ) emissions, and oil prices to renewable energy consumption for the long and short run in G7 (Canada, France, Germany, Italy, Spain, the United Kingdom, and the United States) countries using quarterly data over the period from first quarter 1955 to fourth quarter 2014. We employ the nonlinear autoregressive distributed lags (NARDL) model to test for the long-run and short-run sensitivities of renewable energy consumption to its determinants. We find that income significantly influences renewable energy consumption in a symmetric manner in the long-run for the United States, the United Kingdom, France, and Germany and in an asymmetric manner in Japan. However, renewable energy consumption is found to be insensitive to income in the long run for Italy. Renewable energy consumption is positively and symmetrically affected by CO 2 emissions in the long run for the United States, France, Germany, Japan, and Italy. CO 2 emissions impact renewable energy consumption in an asymmetric manner for Canada but are insignificant for the United Kingdom in the long run. In the long run, oil prices influence renewable energy consumption in an asymmetric manner in the United States, symmetrically in the United Kingdom and France but insignificantly in Canada, Germany, Japan, and Italy. Given the need to establish a global green energy environment, our findings have important implications for energy policy makers in the world.

Keywords: renewable energy, economic growth, carbon dioxide emissions, oil prices, nonlinear autoregressive distributed lags (NARDL), G7 economies, United States, United Kingdom, France, Germany, Italy, Japan, Canada

Bob Carbaugh and Toni Sipic, “Electric Utilities: How Electricity is Priced,” The Journal of Energy and Development, volume 43, number 2 (spring 2018, copyright 2018), pp. 193211.


The purpose of this paper is to provide a primer on the electricity industry and, in particular, on how

electricity is priced. The concepts discussed in this paper provide applications of concepts that college students learn in principles of microeconomics, intermediate microeconomics, industrial organization, government and business, and managerial economics. The paper aims to make recent developments in electricity pricing accessible to a wide audience of readers and to provide them a timely and interesting application of the economics of electric utilities.

Keywords: electricity pricing, utilities, energy economics, peak-load pricing, flat rates, interruptible rates, natural monopoly, declining block rates, inverted rates, economic modeling

Awa Diouf and Bertrand Laporte, “Oil Contracts and Government Take: Issues for Senegal and Developing Countries,” The Journal of Energy and Development, volume 43, number 2 (spring 2018, copyright 2018), pp. 213234.


The analysis of the Senegal oil tax regime highlights that, regardless of the contract, average effective tax rates in Senegal are low compared to other African oil producer countries, and the taxation regime is regressive. Developing countries, therefore, must be vigilant in defining the applicable tax regime, both for the oil sector and, more generally, for extractive industries. The choice of the production sharing contract is certainly the most widespread, but it does not guarantee either the tax system progressivity or a sufficient government take. Therefore, the taxation rules that specify the production sharing contract must be established by skillfully combining income-based taxes and production-based taxes to define a progressive and sufficiently remunerative tax system for both parties, the state, and the investor. The balance between these two types of taxation should be systematically calibrated using a rent-sharing model. For Senegal, in particular, it involves a revision of the oil code in force.

Keywords: developing countries, extractive industries, oil contract, government take, Senegal, oil tax regime, natural resources, oil rent sharing

Katherine Farrow, Gilles Grolleau, Lisette Ibanez, and Naoufel Mzoughi, “Social Norm Interventions as an Underappreciated Lever for Behavior Change in Energy Conservation,” The Journal of Energy and Development, volume 43, number 2 (spring 2018, copyright 2018), pp. 235



Although promising advances have been made in the use of non-pecuniary interventions as low-cost policy instruments to encourage climate-related behavior change, a significant amount remains to be understood. Experimental evidence has shown that behavioral interventions that leverage social norms can be a reliable tool for behavior change with respect to energy conservation. We review several policy lessons based on this literature, such as how to implement social norm interventions so as to avoid counterproductive outcomes, and emphasize that more research is needed in order to further improve the effectiveness of this type of intervention. We identify a variety of topics for future research, such as

complementarity with other behavioral interventions, conflict between norms pertaining to various reference groups, the dynamics of descriptive and normative information, and identity considerations.

Keywords: energy conservation, behavioral economics, social norms, behavior change, sustainability, nudge, social information, boomerang effect, conformity, bias

Lee Morrison, “Southern Gas Corridor: The Geopolitical and Geo-Economic Implications of an Energy Mega-Project,” The Journal of Energy and Development, volume 43, number 2 (spring 2018, copyright 2018), pp. 251291.


The Southern Gas Corridor ranks among the largest international energy mega-projects in world history. It also portends a reshuffling of the geopolitical order of Central Asia and Europe; it has further implications for as many of 50 nations; and it will grow to be an important geo-economic tool used to gain advantages in international relations.

Physically, it is a natural gas pipeline extending from Azerbaijan to Italy with the capability of shipping up to 16 billion cubic meters of gas annually, mostly to Turkey and Italy. The total project includes substantial expansions of both the Shah Deniz gas fields in the Caspian Sea and the Sangachal processing terminal onshore. From there, it is broken into the three pipeline segments: The Southern Caucuses Pipeline Expansion from Azerbaijan through Georgia; the Trans-Anatolian Pipeline through Turkey; and the Trans-Adriatic Pipeline through Greece, Albania, and Italy. It is a critical infrastructure project, but it is also an important marker planted by Europe to stabilize its energy markets and diversify its energy supplies away from Russia. International infrastructure projects of this magnitude have varying degrees of support or opposition of numerous governments, corporations, and supranational organizations. These tendrils are not constrained by mere geography or even by markets. They can lead to surprising destinations, and their exploration and understanding helps clarify international relations, hostilities, and seemingly unnatural alliances. The nations with a geopolitical or geo-economic interest in this project can be loosely categorized in seven groups: Owner-Operators, Financiers and Capitalists, Producers, Transit States, Consumers, Competitors, and Attendants. The nations falling into each category share similar interests and will have similar levels of support or opposition. Nations with the greatest investment or interest in each category and those belonging to multiple categories will presumably have more significant levels of influence. The results of this examination show that, other than Italy, the European Union has surprisingly little

geopolitical influence over the development of the Southern Gas Corridor. Furthermore, Russia’s

influence has been and will continue to be significant despite its absence as a current Producer, Transit State, or Consumer. Its involvement as a potential supplier, partial owner, and competitor has given the

country a substantial voice in the project’s development. In addition, Russia’s growing alliance with Turkey and its newly budding friendship with Italy raise further questions about the long-term viability of

the Southern Gas Corridor. The European Union’s goal to help stabilize energy supplies by diversifying

away from Russia has not been altogether successful.

Keywords: Albania, Azerbaijan, Bulgaria, Caspian Sea, China, Europe, European Union, Georgia, Germany, Greece, Italy, Iran, Iraq, LNG, Natural Gas, Pipelines, Russia, Southern Caucasus Pipeline Expansion (SCPX), Southern Gas Corridor (SGC), Sangachal Terminal, Shah Deniz II, Southern Caucuses, Trans-Anatolian Pipeline (TANAP), Trans-Adriatic Pipeline (TAP), Trans-Anatolian, Trans- Adriatic, Trans-Caspian, Turkey, Turkmenistan, United Kingdom

Farid Makhlouf and Kamal Kasmaoui, “The Impact of Oil Price on Remittances: The Case of Morocco,” The Journal of Energy and Development, volume 43, number 2 (spring 2018, copyright 2018), pp. 293310.


This paper examines the effects of an oil price shock on a small open economy that imports oil and

exports labor. It investigates the effects of oil price shocks on remittances to Morocco, using available monthly data over the period from January 2004 to December 2010. By controlling other potential determinants of remittances, such as the exchange rate, interest, and inflation, the article finds that remittances respond positively to changes in oil price. Empirical results indicate that a 1-percent increase in oil price could have increased the remittances price by 0.62 percent. The results are robust across the various techniques that were utilized. This research finds that the main transmission channel is consumer prices in the country of origin. It argues that the increasing of international remittances can mitigate the effects of an oil price shock on the purchasing power of the household.

Keywords: oil prices, remittances, vector error-correction model (VECM) analysis, Morocco