Environmental Valuation & Cost-Benefit News

Summary: The paper provides new empirical evidence on the relationship between environmental efficiency and labour productivity using industry level data. We first provide a critical and extensive discussion around the interconnected issues of environmental efficiency and performance, firm performances and labour productivity, and environmental and non-environmental innovation dynamics. The most recent literature dealing with environmental innovation, environmental regulations and economic performances is taken as reference. We then test a newly adapted EKC hypothesis, by verifying the correlation between the two trends of environmental efficiency (productivity, namely sector emission on added value) and labour productivity (added value on employees) over a dynamic path. We exploit official NAMEA data sources for Italy over 1990-2002 for 29 sectoral branches. The period is crucial since environmental issues and then environmental policies came into the arena, and a restructuring of the economy occurred. It is thus interesting to assess the extent to which capital investments for the economy as a whole are associated with a positive or negative correlation between environmental efficiency of productive branches and labour productivity, often claimed by mainstream theory dealing with innovation in environmental economics. We believe that on the basis of the theoretical and empirical analyses focusing on innovation paths, firm performances and environmental externalities, there are good reasons to expect a positive correlation between environmental and labour productivities, or in alternative terms a negative correlation between mission intensity of production and labour productivity. The tested hypothesis is crucial within the long standing discussion over the potential trade-off or complementarity between environmental and labour productivity, strictly associated with sectoral and national technological innovation paths. The main added value of the paper is the analysis of the aforementioned hypothesis by exploiting a panel data set based on official NAMEA sectoral disaggregated accounting data, providing both cross section heterogeneity and a sufficient time span. We find that for most emissions, if not all, a negative correlation emerges between labour productivity and environmental productivity. Though this trend appears driven by the macro sectors services, manufacturing and industry, this evidence is not homogenous across emissions. In some cases U-shapes arise, mainly for services, and the assessment of Turning Points is crucial. Manufacturing and industry, all in all, seem to have a stronger weight. Overall, then, labour productivity dynamics seem to be complementary to a decreasing emission intensity of productive processes. The extent to which this evidence derives from endogenous market forces, industrial restructuring and/or from policy effects is scope for further research. The relative role of manufacturing and services in explaining this pattern is also to be analysed in future empirical analyses. In addition, the role of capital stocks and trade openness are extensions which may add value to future analyses carried out on the same NAMEA dataset.

by Massimiliano Mazzanti 1 and Roberto Zoboli
1. University of Ferrara; via voltapaletto 22, Ferrara, Italy; mzzmsm@unife.it
2. CERIS CNR & Catholic University of Milan

Keywords: Decoupling, NAMEA Emissions, Labour Productivity, Sectoral Added Value, Kuznets Curves, Environmental Efficiency
http://www.feem.it/Feem/Pub/Publications/WPapers/WP2007-040.htm?WP_Page=1
Fondazione Eni Enrico Mattei (FEEM) www.feem.it
http://www.feem.it/Feem/Pub/Publications/WPapers/WP2007-040.htm?WP_Page=1

AASHE, the Association for the Advancement of Sustainability in Higher Education, has released a new guide intended to help campuses overcome a major barrier to implementing sustainability projects. The how-to manual, entitled Creating a Campus Sustainability Revolving Loan Fund: A Guide for Students, describes an innovative and powerful mechanism for financing sustainability projects, such as energy efficiency upgrades and renewable energy installations, on campus.

The high initial cost of many sustainability projects can often deter campuses from implementing them, despite the fact that such projects often have long-term cost savings. A revolving loan fund helps overcome this challenge by providing zero or low interest loans to fund money-saving sustainability projects. A portion of the savings generated from these projects is then reinvested into the fund until the loan has been paid off. The guide provides step-by-step directions for establishing such a fund, based on the experiences of the authors in setting up a revolving loan fund at Macalester College.

The authors, both sophomores at Macalester, led the effort to create the College's Clean Energy Revolving Fund (CERF). CERF is distinct from most other campus sustainability revolving loan funds in that students sit on the board that administers the fund and evaluate project proposals.

"We wanted to ensure that, in addition to helping finance sustainability projects on campus, the fund would educate and empower students, said Timothy Den Herder-Thomas, one of the authors. "Our guide is specifically targeted to help students at other campuses establish revolving loan funds that include substantial student involvement."

The guide provides several examples of how institutions have used revolving loan funds to fund sustainability projects. Most notably, Harvard's Green Campus Loan Fund has invested almost $9 million in over 160 projects and achieved an average return on investment of over 30 percent.

"Despite the promise of revolving loan funds to advance sustainability on campus, only a handful of campuses have actually created such funds," said Tom Kimmerer, AASHE's Executive Director. "We hope this guide will enable many more campuses to establish campus sustainability revolving loan funds."

The guide is available for download at: http://www.aashe.org/resources/pdf/CERF.pdf

About AASHE:
AASHE is an association of colleges and universities in the U.S. and Canada working to create a sustainable future. It was founded in 2006 with a mission to promote sustainability in all sectors of higher education - from governance and operations to curriculum and outreach - through education, communication, research and professional development. AASHE defines sustainability in an inclusive way, encompassing human and ecological health, social justice, secure livelihoods, and a better world for all generations.

Source: Press Release - April 12, 2007
http://www.aashe.org/highlights/cerf.php
Association for the Advancement of Sustainability in Higher Education
AASHE www.aashe.org

The Long Island Pine Barrens Society has concluded a six-month study of Long Island’s land preservation efforts and has warned that if the present rate of land acquisition continues, the region will “fail by nearly half” to secure 25,000 acres of open space and 10,000 acres of farmland before final build-out of Long Island, projected for 2015.

The study chronicled the 50-year history of land preservation on Long Island from creation of the Fire Island National Seashore to the landmark Farmland Preservation Program to saving the Long Island Pine Barrens. While praising Long Island land preservation efforts as “second-to-none nationally,” the White Paper, issued April 19, describes the challenge of saving open space and farmland in a region where land prices are high and government programs are fragmented.
Housing is scarce and competition fierce for parcels of available land.

Pine Barrens Society President Alan Singer said, “Preservation of the Pine Barrens required an almost ‘Apollo program to the moon.’ While the total expense of Pine Barrens preservation was smaller, the current cost of land and the little time left to accomplish the goal will require a still greater effort,” he said. “Instead of faulting a most worthy past effort, we must re-double our efforts to obtain the needed funds and streamline processes and procedures for the end-state,” he added.

The report documents the efforts of federal, state, county and town governments to purchase open space and the development rights to agricultural lands. It concludes that Long Islanders have committed $1.27 billion dollars to the effort over half a century, securing nearly 60,000 acres of open space and farmland. Further, Long Islanders have spent more money on land preservation than the residents of 45 of the 50 states.

The report backs a plan by The Nature Conservancy embraced last January by more than 100 business, environmental and civic leaders and elected officials. Called “Long Island’s Last Stand,” it identified and prioritized the preservation of 35,000 acres among
the 70,000 remaining “up for grabs” before all the land on Long Island is either developed or saved. This milestone is projected by planners for 2015, but some say most of the land use decisions concerning the future fate of this acreage will be made in the
next three to five years.

“Most Long Islanders embrace this worthy goal, vote in record numbers to fund it and commend government for our progress to date,” said PBS Executive Director Richard Amper. “However, what worked in past decades cannot succeed in the current one, absent a significant increase in funding levels and expanded and expedited processes
for saving the land.” Entitled, “On Course for Failure: A Call to Action on Open Space,“ the report lists more than a dozen recommendations for accelerating the purchase of open space and development rights on farmland. Among the needed actions are extension of existing and creation of new funding sources, increased personnel and streamlined procedures. A recent study by the independent Long Island Index also concluded that the Island needed to expedite land preservation efforts.

The Pine Barrens Society called on Long Island leaders to review the assessment; then press for coordinated accelerated acquisition. “Environmentally, drinking water and habitat are at stake. Economically, tourism, farming and housing our workforce can afford
are all at stake. And in terms of quality-of-life, everything is on the line,” Amper concluded.

The group's report called for more government spending and streamlining the land acquisition process. Reaching the 35,000-acre goal would cost an estimated $3.2 billion -- $2 billion of which could come from existing sources such as a dedicated portion of Suffolk's sales tax revenue, it said.

Robert Wieboldt, executive vice president of the Long Island Builders Institute, disputed that figure, saying that at least $5 billion would be needed -- money that he said might be better spent on infrastructure.

Nassau and Suffolk county officials said Wednesday that they supported open space preservation but that land costs and the willingness of owners to sell their land or development rights placed constraints on local governments.

Two-thirds of the proposed funding would come from existing government programs, but they must be extended and/or altered.

The report breaks down the money this way:
-- Suffolk County’s quarter penny sales tax, which partly funds open space and is due to sunset in 2013, must be extended to 2020
-- Nassau County will have to float a $100 million bond act
-- New York State has to give the Island more money out of its Environmental Protection Fund in addition to shepherding through a $2 billion bond act
-- Brookhaven Town has to put on the ballot in November a real estate transfer tax, called a Community Preservation Fund, which funds open space preservation and get it passed, joining the five East End towns which extended their CPFs last November from 2015 to 2030.

Source Press Release from Long Island Pine Barrens Society www.pinebarrens.org
April 19, 2007
http://www.pinebarrens.org/openspace.asp
Long Island Business News www.libn.com
http://www.libn.com/breakingNews.htm?articleID=7514&sourceReferrer=flashReport
Newsday www.newsday.com
http://www.newsday.com/news/local/longisland/ny-liland0419,0,4537102.story?coll=ny-linews-headlines

Summary: In this paper we discuss how a Decision Support System (DSS) for managing the marine environment can be set up. We use the Driving force-Pressure-State-Impact-Respond (DPSIR) framework to analyze which are the major driving forces impacting upon the marine environment in the North Sea. Moreover, a number of potential responses are identified. Furthermore, a preliminary and simplified optimization model has been set up and can be used in a DSS to decide on the best location of marine reserves for the protection of species. The model is based on a bio-economic metapopulation model that can be used to decide which parts of the sea should be opened for fisheries and which should be protected as marine reserve. It accounts for the dispersal of fish and considers both the economic returns from fisheries and the ecological value of marine biodiversity. A number of suggestions are given on how to extend and improve the DSS.

By Arjan Ruijs 1, Hongyu Ding 2, and Ekko C. van Ierland 1
1. Wageningen University, P.O. Box 8130, Wageningen, The Netherlands; Arjan.Ruijs@wur.nl
2. Fondazione Eni Enrico Mattei and Venice International University,

Keywords: Decision Support System, Marine Biodiversity Conservation, DPSIR Framework, Bioeconomic Modeling, North Sea

Fondazione Eni Enrico Mattei (FEEM) www.feem.it
http://www.feem.it/Feem/Pub/Publications/WPapers/WP2007-023.htm?WP_Page=1
Working Paper 23.07

Washington has many agencies with specialized jurisdiction over particular markets or issues. Competition is important and desirable in all of these markets. Economic theory, backed by numerous studies, predicts that increased competition and the ensuing market forces work best for meeting consumer needs. Regulatory agencies differ, however, in the extent to which they actually factor competition into their decisions. This workshop will explore and evaluate practical policy tools that are available to regulators for fostering competition.

AGENDA

8:30 A.M.: Registration and Continental Breakfast
9:00: Welcome, ROBERT HAHN, Joint Center
9:10: Introduction, DEBORAH PLATT MAJORAS, FTC
9:45: PANEL I - How can agencies seek to foster competition in their industries?
PAUL ATKINS, SEC
SEAN ENNIS, OECD
DANIEL MERON, Department of Health & Human Services
CHARLES NOTTINGHAM, Surface Transportation Board
11:15: PANEL II - Identifying abuses of the regulatory process by firms that wish to harm their competitors.
MARC KESSELMAN, USDA
BRIAN MANNIX, EPA
JEFFREY ROSEN, OMB
TODD ZYWICKI, GMU
12:30: Luncheon, THOMAS O. BARNETT, DOJ
1:45: PANEL III: Where should we go from here?
DENNIS CARLTON, DOJ
WILLIAM KOVACIC, FTC
TIMOTHY MURIS, GMU
ROBERT PITOFSKY, Arnold & Porter LLP
3:00: Adjournment

Note: AEI-Brookings Joint Center events are generally available as free webcasts following the event

AEI-Brookings Joint Center www.aei-brookings.org
Wohlstetter Conference Center, Twelfth Floor, AEI
1150 Seventeenth Street, N.W., Washington, D.C. 20036
http://www.aei-brookings.org/events/page.php?id=163

Abstract: Double bounded dichotomous choice (DBDC) contingent valuation offers increased efficiency of willingness to pay (WTP) estimates compared with the single bounded format. However, evidence suggests DBDC generates anomalous respondent behaviour. This paper provides the first investigation and explanation of these anomalies in health. Results suggest the incentives for truthful preference revelation are altered in the presence of a follow up question. This result is found using both regression techniques and analysis of raw responses. Although findings suggest ‘very certain’ respondents exhibit less anomalous behaviour inconsistencies remain across bounds. The results of this study question the use of iterative valuation formats.

Keywords: Contingent valuation; Anomalies; Prospect theory; Anchoring; Calibration

by Verity Watson and Mandy Ryan; Health Economics Research Unit, Institute of Applied Health Sciences, University of Aberdeen, Polwarth Building, Foresterhill, Aberdeen, AB25 9ZD, UK; Telephone: +44 1224 555937; fax: +44 1224 550926.

Journal of Health Economics via Elsevier Science Direct www.ScienceDirect.com
Volume 26, Issue 3; 1 May 2007; Pages 463-482
http://dx.doi.org/10.1016/j.jhealeco.2006.10.009

Abstract: Several recent education reform measures, including the federal No Child Left Behind Act (NCLB), couple school choice with accountability measures to allow parents of children in under-performing schools the opportunity to choose higher-performing schools. We use the introduction of NCLB in the Charlotte-Mecklenburg School District to determine if the choice component had an impact on the schools parents chose and if those changed choices led to academic gains. We find that 16% of parents responded to NCLB notification by choosing schools that had on average 1 standard deviation higher average test scores than their current NCLB school. We then use the lottery assignment of students to chosen schools to test if changed choices led to improved academic outcomes. On average, lottery winners experience a significant decline in suspension rates relative to lottery losers. We also find that students winning lotteries to attend substantially better (above-median) schools experience significant gains in test scores. Because proximity to high-scoring schools drives both the probability of choosing an alternative school and the average test score at the school chosen, our results suggest that the availability of proximate and high-scoring schools is an important factor in determining the degree to which school choice and accountability programs can succeed at increasing choice and immediate academic outcomes for students at under-performing schools.

by Justine S. Hastings and Jeffrey M. Weinstein
National Bureau of Economic Research (NBER) www.NBER.org
Working Paper No. 13009; April, 2007
http://papers.nber.org/papers/W13009

Prato and Fagre offer the first systematic, multi-disciplinary assessment of the challenges involved in managing the Crown of the Continent Ecosystem (CCE), an area of the Rocky Mountains that includes northwestern Montana, southwestern Alberta, and southeastern British Columbia. The spectacular landscapes, extensive recreational options, and broad employment opportunities of the CCE have made it one of the fastest growing regions in the United States and Canada, and have lead to a shift in its economic base from extractive resource industries to service-oriented recreation and tourism industries. In the process, however, the amenities and attributes that draw people to this "New West" are under threat. Pastoral scenes are disappearing as agricultural lands and other open spaces are converted to residential uses, biodiversity is endangered by the fragmentation of fish and wildlife habitats, and many areas are experiencing a decline in air and water quality.

Sustaining Rocky Mountain Landscapes provides a scientific basis for communities to develop policies for managing the growth and economic transformation of the CCE without sacrificing the quality of life and environment for which the land is renowned. The book begins with a natural and economic history of the CCE. It follows with an assessment of current physical and biological conditions in the CCE. The contributors then explore how social, economic, demographic, and environmental forces are transforming ecosystem structure and function. They consider ecosystem change in response to changing patterns of land use, pollution, and drought; the increasing risk of wildfire to wildlife and to human life and property; and the implications of global climate change on the CCE. A final, policy-focused, section of the book looks at transboundary issues in ecosystem management and evaluates the potential of community-based and adaptive approaches in ecosystem management.

Table of Contents

Part I. Introduction
1. Searching for Ecosystem Sustainability, Tony Prato and Dan Fagre
2. Crown of the Continent Ecosystem: Profile of a Treasured Landscape, Ben Long

Part II. Social Dimensions
3. Native Peoples and Archaeology of Waterton-Glacier International Peace Park, Brian O.K. Reeves
4. Economic Growth and Landscape Change, Tony Prato, Dan Fagre, and Ramanathan Sugumaran
5. Sustaining Wildland Recreation: Issues, Challenges, and Opportunities, Stephen F. McCool and John C. Adams

PART III. Biophysical Dimensions
6. Alpine Ecosystem Dynamics and Change: A View from the Heights, George P. Malanson, David R. Butler, and Dan Fagre
7. Conserving Biodiversity, Michael Quinn and Len Broberg
8. Aquatic Ecosystem Health, F. Richard Hauer, Jack A. Stanford, Mark S. Lorang, Bonnie K. Ellis, and James A. Craft
9. Conserving Water Resources, James M. Byrne and Stefan Kienzle,

PART IV. Ecosystem Dynamics

10. Paleo-Perspectives on Climate and Ecosystem Change, Greg Pederson, Cathy Whitlock, Emma Watson, Brian Luckman, and Lisa Graumlich
11. Modeling and Monitoring Biophysical Dynamics and Change, Dan Fagre
12. Ecosystem Responses to Global Climate Change, Dan Fagre
13. Fire Regimes and Their Management, Robert E. Keane and Carl Key

PART V. Management Issues and Challenges
14. Cumulative Effects Analysis and the Crown Managers Partnership, Michael Quinn, Danah Duke, and Guy Greenaway
15. Transboundary Conservation and the Yellowstone to Yukon Conservation Initiative, Marguerite H. Mahr
16. Adaptive Ecosystem Management, Tony Prato
17. Challenges of Managing Glacier National Park in a Regional Context, Tara Carolin, Steve Gniadek, Sallie Hejl, Joyce Lapp, Dawn LaFleur, Leo Marnell, Richard Menicke, and Jack Potter
18. Resolving Transboundary Conflicts: The Role of Community-based Advocacy, Steve Thompson and David Thomas
19. Achieving Ecosystem Sustainability, Tony Prato and Dan Fagre

Paper: $42.00; ISBN 978-1-933115-46-7;
Cloth: $90.00; ISBN 978-1-933115-45-0

Tony Prato 1 and Dan Fagre 2, Editors
1. Professor of ecological economics in the Division of Applied Social Sciences, and co-director of the Center for Agricultural, Resource and Environmental Systems at the University of Missouri-Columbia.
2. Research ecologist and global change research coordinator at the USGS Northern Rocky Mountain Science Center in West Glacier, MT.

Forthcoming April 2007
Resources For the Future Press www.rff.org/rff/RFF_PRESS
http://www.rff.org/rff/RFF_Press/CustomBookPages/SustainingRockyMountainLandscapes.cfm

Now that the Democrats control Congress, Americans will see more emphasis on social programs. But voters' reluctance to expand such programs, coupled with a budget deficit, will force legislators to do more with less. Fortunately, better targeting of resources could yield huge benefits. The question is: How?

Society rightly wants to improve the chances of people who have drawn a bad ticket in life's lottery ("bad draws"), yet the government often spends substantial resources on the wrong people. We need to avoid "bad bets" and remove the "bad apples," so our dollars go further and better serve those who will benefit the most.

Bad bets are people who will not benefit as much from outside help as would others in equally bad or worse situations.

Pneumonia, once regarded as the "Old Man's Friend," offered the very frail a dignified death. Now we spend millions of dollars per year offering Alzheimer's patients an abysmal existence by keeping them alive on dialysis. Opinion leaders and litigation exacerbate the problem: A leading medical journal recently attacked one of our poorest states for proposing to give extra coverage to its Medicaid patients who join weight-loss or antismoking programs -- a cost-effective way to improve health and extend life.

Bad apples are people in a program whose irresponsible, illegal, or immoral conduct harms the far more numerous good apples in the same program. Bad apples also harm the good ones by stigmatizing the group, making voters less willing to support programs to benefit it. The classic bad apple is the chronic disrupter in public housing or schools. Parochial schools, which remove bad apples more readily, outperform public schools in educating equally disadvantaged students at much lower cost. Misguided laws make it harder than it should be for public schools to transfer these students. Homeless shelters and public housing authorities face worse difficulties. Only after years of litigation can they hope to evict even chronic rule-breakers.

Why do we keep spending on bad bets and bad apples? Healthcare is the most wasteful area for bad bets. Although Americans accept the need for triage medicine on the battlefield, we bridle at rationing healthcare, particularly where a patient is a bad bet through no fault of her own -- say, because she suffers from a debilitating, treatment-resistant condition. Advocates for those who suffer from specific diseases fight hard to keep payers from cutting off resources. Critical features of our healthcare system -- insurance coverage, professional ethics, doctors' "can-do" spirit, free-rider problems, special-interest groups -- push government to place big chips on bad bets.
...
These obstacles can be surmounted. Better information can often defeat fuzzy analysis and parochial interests. The Clinton-era welfare-reform law, which imposed work requirements and time limits for benefits, dealt with bad bets and bad apples among recipients. The public now has a much more favorable view of those still receiving assistance. Also, Medicare now bases certain payments to providers on a patient's condition, not on the amount of treatment the patient receives. This change has significantly reduced hospital use in the last 90 days of life. In-hospital deaths have dropped sharply, while less costly home-care and other non-hospital treatments have risen, thus saving resources and providing a more humane process of death.

Political courage also helps. The New York City Housing Authority, for example, recently amended eviction procedures to remove disruptive tenants more quickly without sacrificing due process.

by Peter H. Schuck of Yale Law School and Richard J. Zeckhauser of Harvard's Kennedy School of Government, authors of "Targeting in Social Programs: Avoiding Bad Bets, Removing Bad Apples."
This article appeared in The Boston Globe on March 26, 2007.

FOR FULL STORY GO TO:
http://www.aei.brookings.org/policy/page.php?id=286
AEI-Brookings Joint Center www.aei.brookings.org
Policy Matters 07-14; April 2007.

To help more hospitals share best practices for developing "green" – or environmentally sound – programs, the Premier Safety Institute recently launched a new public Web site, "Green Corner."

Located at www.premierinc.com/greencorner, the site showcases hospital and supplier success stories about "green" initiatives that contribute to a safer, healthier community environment. Stories are categorized under major topics, such as energy savings and waste reduction, making it easy for hospitals to find specific information on programs of interest.

"Going green" not only is a smart way for hospitals to protect the environment, it also allows them to reduce operational costs, gain a competitive advantage and keep staff and patients satisfied.

"'Green Corner' provides a valuable resource for healthcare professionals seeking anecdotes about how their peers in the hospital industry are tackling important community environmental issues – both simple and complex," said Gina Pugliese, RN, vice president of the Premier Safety Institute. Pugliese noted that such information can provide an important starting point for projects whose ultimate goal is to reduce waste, save money and protect a community's quality of life both now and for future generations.

The new site also complements the Safety Institute's free, electronic newsletter, "Green Link," that highlights the latest news on "green" healthcare practices and purchasing.

In addition, "Green Corner" expands the Premier Environmentally Preferable Purchasing (EPP) program's public suite of offerings – which currently includes electronic tools to support critical environmental efforts such as mercury pollution prevention and computer recycling. Premier's EPP program, a collaboration of the Safety Institute and Premier's group purchasing program, supports the efforts of members and the industry-at-large to enhance the safety and health of patients, healthcare workers and the environment. For example, on behalf of hundreds of hospitals and the communities they serve, the EPP program recently secured purchasing agreements with Dell and Gateway for computers and electronic devices that address significant environmental concerns regarding the manufacturing, use and end-of-life disposal and/or recycling of electronics.

Two examples of success stories follow:

The goals of the Boston’s Beth Israel Deaconess Medical Center's Environmental Servicesteam’s paper recycling program were to offer recycling options to medical center employees, provide a place to dispose of confidential patient information and reduce the overall cost of waste disposal. By 2004, the medical center had recycled 283 tons of paper and 355 tons of cardboard. With the onset of HIPAA
privacy regulations that took effect in 2004, the department was allocated one additional full-time employee to provide the service for the entire main campus. Since 2004, Beth Israel Deaconess has recycled an additional 400 tons of paper and 337 tons of cardboard. Since the effort began in 2002, the program has diverted 1,375 tons of paper and cardboard from its solid waste stream, saving the hospital more than $150,000.

Saint Francis Care of Hartford, CT, the largest Catholic hospital in New England, isn’t content being among the top 10 percent energy efficient businesses in the country. Designated as an Energy Star business, the 617-bed medical center has a long track record of projects aimed at improving environmental health. Since receiving its first Energy Star label in 2003, Saint Francis has become the first hospital in Connecticut to install its own fuel cell. The 200-kilowatt unit supplements the hospital’s electric power grid feed to provide base load power to Saint Francis and supplemental power in the event of a problem with the grid.

The hospital also recovers the heat produced by the fuel cell to improve the performance and increase the efficiency of its hot water systems. In 2005, the hospital’s fuel cell had a 57 percent operating efficiency, reducing fuel consumption by 25 percent and CO2 emissions by 690 tons per year.

Saint Francis is currently working on a major energy conservation project that will include HVAC, lighting and upgraded boiler controls. The result will be a projected savings of more than $2 million annually.

The hospital recently began to implement a facility-wide Results Based Maintenance (RBM) program to validate HVAC performance and identify further savings opportunities. Building management suspected that the facility’s temperature control system was not properly programmed in one wing of the building after learning that hospital personnel were routinely adjusting thermostats in the morning because they were too warm, and changing them during the day to compensate for fluctuations in temperature, partly attributed to higher staffing levels. Making use of OptiNet, a suite of technologies and sensing capabilities for facility-wide performance based monitoring and control, the hospital first conducted a HVAC survey to independently review temperature and humidity, filtration efficiency, control strategies, ventilation efficiency and potential pollutants. Two test areas on each of the two floors were sampled. These four points were chosen to maximize the coverage of the monitoring system on each floor, sampling both a densely populated area and an open area. Each floor consists of an open reception area, a central nurses’ station, and a separate area of small treatment rooms served by a common hallway. The system validated their suspicions and revealed that temperature controls during the heating season were incorrectly programmed. In three of the four test areas, the night setback function was not operating and space temperature was remaining constant. In the fourth area, it was discovered that the settings were inverted, bringing temperatures from 76 degrees during occupied hours to 84 degrees during all 13 unoccupied hours. Resetting the controls system for proper night setback helped building management add to its energy savings. Using the Optima monitor with its reporting tool, survey results indicated ventilation rates ranging from 81 to 140 cubic feet per minute (CFM) per person. CFM measures the amount of air a blower or fan can move in a given period of time. Saint Francis estimated that it could generate energy savings by lowering a current rate of 86 CFM to a new rate of 25 CFM per person. Including savings from night setback and economizer settings, the facility is positioned to save approximately $9,100 per year in total energy costs in this 30,000 square foot area.

The facility’s laundry operates six days a week, processing 7 million pounds in 2005 alone. The hospital looked into retrofitting its existing equipment to use ozone as a means to save energy, water and chemicals. The plan worked. Ozone allows the equipment to run
at lower temperatures with equal or better efficacy than before.
After investing $100,000 in an EnviroSaver II Ozone installation from WET-TECH, the hospital began realizing immediate savings. Mark Arcelaschi, general manager, estimated that the $100,000 investment paid for itself in just over one year. The entire ozone system was recently moved to a new laundry facility, which will produce 12 million pounds of laundry for Saint Francis and three other hospitals.

About Premier, 2006 Malcolm Baldrige National Quality Award recipient

Serving 1,700 hospitals and more than 45,000 other healthcare sites, Premier Inc. is the largest healthcare alliance in the United States dedicated to improving patient outcomes while safely reducing the cost of care. Owned by not-for-profit hospitals, Premier operates the nation's largest healthcare purchasing network, the most comprehensive repository of hospital clinical and financial information and one of the largest policy-holder owned, hospital professional liability risk-retention groups in healthcare. Premier's Safety Institute provides publicly available safety resources and tools to promote a safe healthcare delivery environment for patients, workers, and the environment. Headquartered in San Diego, Premier has offices in Charlotte, N.C. and Washington. For more information, visit www.premierinc.com.

Source: Press Release from Premier Inc. www.premierinc.com
April 13, 2007
http://www.premierinc.com/quality-safety/tools-services/safety/news/2007/04/green-corner-press-release-04-13-07.jsp
Contact: Gina Pugliese, RN, MS, Vice president, Safety Institute

Table of Contents

Analysis of the silicon market: Will thin films profit?
Pages 3121-3125
by W.G.J.H.M. van Sark, G.W. Brandsen, M. Fleuster and M.P. Hekkert
Abstract: The photovoltaic industry has been growing with astonishing rates over the past years. The supply of silicon to the wafer-based industry has recently become a problem. This paper presents a thorough analysis of the PV industry and quantifies the silicon shortage. It is expected that this leads to a decrease in production in 2006 rather than the usual increase. Due to a mismatch in expansion plans of silicon feedstock manufacturers and solar cell manufacturers, a large cell overcapacity will persist up to 2010. The thin-film PV market is expected to profit from the silicon shortage problem; its market share may substantially increase to about 25% in 2010.

Joint bidding restriction policy for selective E&P firms in the US Gulf of Mexico OCS: How persuasive is its effectiveness?
Pages 3126-3133
by Omowumi O. Iledare and Allan G. Pulsipher
Abstract: The principal Minerals Management Service (MMS) policy or regulation intended to promote competition (or inhibit collusion) in the lease market is the Restricted Joint Bidders List. It is compiled and published twice a year and applies to all lease sales held during the subsequent six-month period or until the next list is issued. This paper applies descriptive and econometric analyses to data on lease sales in the US Gulf of Mexico OCS region to evaluate the effectiveness of this policy. In the aggregate, empirical analyses suggest that the imposition of joint bid restrictions on some E&P firms reduces bidding effectiveness for petroleum leases on the OCS. The patterns of bidding for leases on the OCS by E&P firms restricted from bidding jointly do not seem to indicate anticompetitive behavior. Further, joint bidding is found to be consistently associated with higher average high bids and this seems to be consistent with, and perhaps enhances competition in the lease market.

Financial evaluation of renewable energy technologies for irrigation water pumping in India
Pages 3134-3144
by Pallav Purohit
Abstract: An attempt to develop a simple framework for financial evaluation of renewable energy technologies (RETs) such as photovoltaic (PV) pump, windmill pump, biogas and producer gas-driven dual fuel engine pumps for irrigation water pumping has been made. The unit cost of water and unit cost of useful energy delivered by the RETs have been estimated. The monetary benefits that accrued to the end-user have been quantified in terms of the amount of diesel or electricity saved. Financial figures of merit for the investments made in the RETs have been estimated. The effect of fuel price escalation on these measures of financial performance has also been evaluated along with the estimation of the break-even prices of fuels likely to be substituted by RETs. Results of some exemplifying calculations are presented and briefly discussed.

What is the limit of Chinese coal supplies—A STELLA model of Hubbert Peak
Pages 3145-3154
by Zaipu Tao and Mingyu Li
Abstract: American geophysicist M. King Hubbert in 1956 first introduced a logistic equation to estimate the peak and lifetime production for oil of USA. In his 1956 article “Nuclear Energy and the Fossil Fuels”, in which he predicted the production peak for the USA, Hubbert used 80 pages of differential equations to draw his conclusions. That earned him some criticism, because only those with profound mathematical knowledge could understand. Hubbert presented in his 1982 article, “Techniques of Prediction as Applied to the Production of Oil and Gas” an alternative method that was much more accessible. Since then, a fierce debate ensued on the so-called Hubbert Peak, including also its methodology.

The production of coal fields generally appears like a bell-shaped curve—a gradual increase to maximum output, then a short peak and a gradual decline. Some people thought the capacity of coal supply only depended on the economical cost and technological factors, but did not consider the life cycle of coal fields, namely, that once the output has reached Hubbert Peak, no matter by whatever effort, one cannot increase production. This paper proposes to use the generic STELLA model to simulate Hubbert Peak, particularly for the Chinese raw coal production. This model is demonstrated as being robust. According to this simulation, the coal peak in China comes between 2025 and 2032 with peak production at about 3339–4452 million tonnes. Before the peak comes, Chinese coal output will grow by about 3%–4% annually; after the peak, however, the output will fall. China's coal demand at 2050 would be about 2500 Mt of raw coal and possess 42.6% of total primary energy. The figure of coal demand, 2500 Mt, would be beyond possible supply, which is 2338 Mt according to the Hubbert curve of this paper. The gap between coal supply and demand will be 7% of the demand at 2050. Notably, the sustainability of Chinese “coal dominated” energy policy will be challenged seriously by this so-called Hubbert Peak. In the coming decades China should find a new energy development policy related to supply diversification.

Performance assessment of electric power generations using an adaptive neural network algorithm
Pages 3155-3166
by A. Azadeh, S.F. Ghaderi, M. Anvari and M. Saberi
Abstract: Efficiency frontier analysis has been an important approach of evaluating firms’ performance in private and public sectors. There have been many efficiency frontier analysis methods reported in the literature. However, the assumptions made for each of these methods are restrictive. Each of these methodologies has its strength as well as major limitations. This study proposes a non-parametric efficiency frontier analysis method based on the adaptive neural network technique for measuring efficiency as a complementary tool for the common techniques of the efficiency studies in the previous studies. The proposed computational method is able to find a stochastic frontier based on a set of input–output observational data and do not require explicit assumptions about the function structure of the stochastic frontier. In this algorithm, for calculating the efficiency scores, a similar approach to econometric methods has been used. Moreover, the effect of the return to scale of decision-making units (DMUs) on its efficiency is included and the unit used for the correction is selected by notice of its scale (under constant return to scale assumption). An example using real data is presented for illustrative purposes. In the application to the power generation sector of Iran, we find that the neural network provide more robust results and identifies more efficient units than the conventional methods since better performance patterns are explored. Moreover, principle component analysis (PCA) is used to verify the findings of the proposed algorithm.

Scenarios of application of energy certification procedure for residential buildings in Lebanon
Pages 3167-3178
by R. Cantin, A. Mourtada, G. Guarracino, N. Adra, M. Nasser and F. Maamari
Abstract: This paper describes the results of a French–Lebanese scientific cooperation, between 2001 and 2005, about “Rational use of energy in the residential buildings in Lebanon and adaptation of an energy certification procedure”. The aim of this project is to promote the energy efficiency in the existing residential buildings in Lebanon, using an energy certification procedure, and to evaluate the energy certification foresight with prospective methods.

The paper first describes an energy investigation in Lebanese residential buildings, and the energy certification procedure. It presents the foresight methodology implemented to identify the key variables and the actors. Finally, the paper exposes the morphological method which allows to elaborate three scenarios of energy performance certification. These scenarios are presented in order to provide a decision making for the actors of the Lebanese energy policy.

Scenario-based analyses of energy system development and its environmental implications in Thailand
by Ram M. Shrestha, Sunil Malla and Migara H. Liyanage
Abstract: Thailand is one of the fastest growing energy-intensive economies in Southeast Asia. To formulate sound energy policies in the country, it is important to understand the impact of energy use on the environment over the long-period. This study examines energy system development and its associated greenhouse gas and local air pollutant emissions under four scenarios in Thailand through the year 2050. The four scenarios involve different growth paths for economy, population, energy efficiency and penetration of renewable energy technologies. The paper assesses the changes in primary energy supply mix, sector-wise final energy demand, energy import dependency and CO2, SO2 and NOx emissions under four scenarios using end-use based Asia-Pacific Integrated Assessment Model (AIM/Enduse) of Thailand.

Fuel taxes: An important instrument for climate policy
Pages 3194-3202
by Thomas Sterner
Abstract: This article shows that fuel taxes serve a very important role for the environment and that we risk a backlash of increased emissions if they are abolished. Fuel taxes have restrained growth in fuel demand and associated carbon emissions. Although fuel demand is large and growing, our analysis shows that it would have been much higher in the absence of domestic fuel taxes. People often assert that fuel demand is inelastic but there is strong research evidence showing the opposite. The price elasticity is in fact quite high but only in the long-run: in the short run it may be quite inelastic which has important implications for policy makers. Had Europe not followed a policy of high fuel taxation but had low US taxes, then fuel demand would have been twice as large. Hypothetical transport demand in the whole OECD area is calculated for various tax scenarios and the results show that fuel taxes are the single most powerful climate policy instrument implemented to date—yet this fact is not usually given due attention in the debate.

How to make the clean development mechanism sustainable—The potential of rent extraction
Pages 3203-3212
by Adrian Muller
Abstract: The clean development mechanism (CDM) should foster sustainable development and greenhouse gas emission reductions. The design of the CDM and first experience suggest that it may not achieve these goals. Developing countries hosting CDM projects may lose cheap emission reduction possibilities for their own future use, and sustainable development and technology transfer may not take place. On the other hand, the CDM has the potential to generate considerable rents if permit prices are high or costs low. To account for equity and distributional issues, a deliberate decision on how to distribute these rents could be taken and the potential failure of the CDM in meeting its goals calls for some further regulation. I suggest to combine these two issues and to extract the rents by a profit tax. Ideally, the tax revenues could contribute to national sustainable development strategies, to offset external costs imposed by CDM projects and to extract part of the resource rent they may generate. The international character of the CDM could offer a frame for internationally coordinated tax design. This would hedge against a potential race to the bottom.

Strategic niche management for biofuels: Analysing past experiments for developing new biofuel policies
Pages 3213-3225
W.W.M. van der Laak, R.P.J.M. Raven and G.P.J. Verbong
Biofuels have gained a lot of attention since the implementation of the 2003 European Directive on biofuels. In the Netherlands the contribution of biofuels is still very limited despite several experiments in the past. This article aims to contribute to the development of successful policies for stimulating biofuels by analysing three experiments in depth. The approach of strategic niche management (SNM) is used to explain success and failure of these projects. Based on the analysis as well as recent innovation literature we develop a list of guidelines that is important to consider when developing biofuel policies.

Decomposition and decoupling effects of carbon dioxide emission from highway transportation in Taiwan, Germany, Japan and South Korea
Pages 3226-3235
by I.J. Lu, Sue J. Lin and Charles Lewis
Abstract: We adopted the Divisia index approach to explore the impacts of five factors on the total carbon dioxide emissions from highway vehicles in Germany, Japan, South Korea and Taiwan during 1990–2002. CO2 emission was decomposed into emission coefficient, vehicle fuel intensity, vehicle ownership, population intensity and economic growth. In addition, the decoupling effects among economic growth, transport energy demand and CO2 emission were analyzed to better understand the fuel performance and CO2 mitigation strategies for each country. From our results, we suggest that the rapid growths of economy and vehicle ownership were the most important factors for the increased CO2 emissions, whereas population intensity contributed significantly to emission decrease. Energy conservation performance and CO2 mitigation in each country are strongly correlated with environmental pressure and economic driving force, except for Germany in 1993 and Taiwan during 1992–1996. To decouple the economic growth and environmental pressure, proponents of sustainable transport policy in Taiwan should focus on improving the operation and energy use of its highway transportation system by implementing an intelligent transportation system (ITS) with demand management, constructing an integrated feeder system, and encouraging the use of green transport modes.

Life cycle cost analysis of alternative vehicles and fuels in Thailand
Pages 3236-3246
by Martin Goedecke, Supaporn Therdthianwong and Shabbir H. Gheewala
Abstract: High crude oil prices and pollution problems have drawn attention to alternative vehicle technologies and fuels for the transportation sector. The question is: What are the benefits/costs of these technologies for society? To answer this question in a quantitative way, a web-based model (http://vehiclesandfuels.memebot.com) has been developed to calculate the societal life cycle costs, the consumer life cycle costs and the tax for different vehicle technologies. By comparing these costs it is possible to draw conclusions about the social benefit and the related tax structure. The model should help to guide decisions toward optimality, which refers to maximum social benefit. The model was applied to the case of Thailand. The life cycle cost of 13 different alternative vehicle technologies in Thailand have been calculated and the tax structure analyzed.

A preliminary assessment of the market coupling arrangement on the Kontek cable
Pages 3247-3255
by Tarjei Kristiansen
Abstract: This paper presents a preliminary assessment of the market coupling arrangement on the Kontek (KT) cable between East Denmark and Germany and an assessment of the original auction mechanism. KT, the new spot price area, was introduced in Germany on October 5, 2005 to facilitate a market coupling arrangement on the KT cable between East Denmark and Germany. We would expect the KT price to correlate more with the European Energy Exchange (EEX) price because arbitrage normally levelizes the price. However, spot prices in late 2005 were both high and volatile because congestion management practices in Sweden transferred internal bottlenecks to the cable between Sweden and East Denmark. Since spot prices were equal in East Denmark and the KT area for a substantial time, it implies that some hours had no congestion on the KT cable. Market players valued the previous monthly auctions for transmission capacity more than the daily auctions. Compared to the daily auctions, market players received smaller payoffs on average for the market coupling arrangement, and the smallest payoffs for the monthly auctions.

Power sector scenarios for Thailand: An exploratory analysis 2002–2022
Pages 3256-3269
by Yacob Mulugetta, Nathinee Mantajit and Tim Jackson
Abstract: Power sector scenarios for Thailand are constructed in this paper to represent the range of opportunities and constraints associated with divergent set of technical and policy options. They include Business-As-Usual (BAU), No-New-Coal (NNC), and Green Futures (GF) scenarios over a 20-year period (2002–2022). The results from the BAU scenario show that fossil fuels will continue to dominate electricity generation in Thailand during the study period. Similar results are obtained for the NNC option, although the dependence shifts from coal and oil towards natural gas-based power generation. This may represent a better environmental pathway but an all out shift from coal to natural gas is likely to increase Thailand's dependence on imported fuel, making it more vulnerable to unstable global oil and gas prices. The GF scenario offers a more optimistic route that allows the country to confront its energy security dilemma whilst fulfilling its environmental commitments by giving renewable energy technologies a prominent place in the country's power generation mix. Over the study period, our result showed little difference between the three scenarios in terms of financing new generation plants despite an early misgiving about the viability of an ambitious renewable energy programme. This paper also goes beyond the financial evaluation of each scenario to provide a comparison of the scenarios in terms of their greenhouse gas emissions together with the comparative costs of emissions reductions. Indeed, if such externalities are taken into account to determine ‘viability’, the GF scenario represents an attractive way forward for the Thai power sector.

Reining China's industrial energy—Challenges of promoting expedient measures in a Chinese actor environment
Pages 3270-3279
by Joakim Nordqvist
Abstract: This article aims to illuminate the complexities involved in efforts to influence China's energy future. It brings forth three observations. First: China's authoritarian appearance is deceptive. Second: learning about concealed but pivotal actors and their motivations is not easy but important. Third: technology diffusion is obstructed by differences in expectations. Three summarising messages conclude the presentation, noting that in order to progress one needs to (i) look beyond official consensus, (ii) address differences in technology perceptions and (iii) be watchful of the inconclusiveness of synthesised information—such as projections of the future. These findings are the result of an analytic and China-oriented exploration of three adjoining fields, i.e. of actors and their different roles in decision-making, of two recent energy futures studies, and of conceptual frameworks for understanding technology.

Energy geopolitics and Iran–Pakistan–India gas pipeline
Pages 3280-3301
by Shiv Kumar Verma
Abstract: With the growing energy demands in India and its neighboring countries, Iran–Pakistan–India (IPI) gas pipeline assumes special significance. Energy-deficient countries such as India, China, and Pakistan are vying to acquire gas fields in different parts of the world. This has led to two conspicuous developments: first, they are competing against each other and secondly, a situation is emerging where they might have to confront the US and the western countries in the near future in their attempt to control energy bases. The proposed IPI pipeline is an attempt to acquire such base. However, Pakistan is playing its own game to maximize its leverages. Pakistan, which refuses to establish even normal trading ties with India, craves to earn hundreds of millions of dollars in transit fees and other annual royalties from a gas pipeline which runs from Iran's South Pars fields to Barmer in western India. Pakistan promises to subsidize its gas imports from Iran and thus also become a major forex earner. It is willing to give pipeline related ‘international guarantees’ notwithstanding its record of covert actions in breach of international law (such as the export of terrorism) and its reluctance to reciprocally provide India what World Trade Organization (WTO) rules obligate it to do—Most Favored Nation (MFN) status. India is looking at the possibility of using some set of norms for securing gas supply through pipeline as the European Union has already initiated a discussion on the issue. The key point that is relevant to India's plan to build a pipeline to source gas from Iran relates to national treatment for pipeline. Under the principle of national treatment which also figures in relation to foreign direct investment (FDI), the country through which a pipeline transits should provide some level of security to the transiting pipeline as it would have provided to its domestic pipelines. This paper will endeavor to analyze, first, the significance of this pipeline for India and then the geopolitics involved in it.

Cyprus solar water heating cluster: A missed opportunity?
Pages 3302-3315
by Christos N. Maxoulis, Harris P. Charalampous and Soteris A. Kalogirou
Abstract: Cyprus is often called the “sun island” because of the amount of sunshine received all year round. The abundance of solar radiation together with a good technological base has created favourable conditions for the exploitation of solar energy on the island. This led to the development of a pioneering solar collector industry in Cyprus, which in the mid-1980s was flourishing. The result was an outstanding figure of installed solar collector area per inhabitant. Nowadays, Cyprus is cited as the country with the highest solar collector area installed per inhabitant, worldwide. This means that the local market for solar thermal collectors (for domestic applications) is now rather saturated. It was only rational to assume that Cypriot firms equipped with their gained expertise and leading edge would have safeguarded a sustainable growth and have an international orientation, focusing on exports in an emerging European and eastern Mediterranean thermal solar market. Unfortunately, this is not the case today.

This paper reviews the economic performance and the competitiveness of Cyprus and the evolution of the solar water heating (SWH) industry using the cluster theory of Michael Porter. Its aim is to give insight and explanations for the success of the sector domestically, its failure with regards to exporting activity, pinpoint the industry in the European map and finally give recommendations for the cross the boarders commercial success of the industry.

Parameters affecting the life cycle performance of PV technologies and systems
Pages 3316-3326
by Sergio Pacca, Deepak Sivaraman and Gregory A. Keoleian
Abstract: This paper assesses modeling parameters that affect the environmental performance of two state-of-the-art photovoltaic (PV) electricity generation technologies: the PVL136 thin film laminates and the KC120 multi-crystalline modules. We selected three metrics to assess the modules’ environmental performance, which are part of an actual 33 kW installation in Ann Arbor, MI. The net energy ratio (NER), the energy pay back time (E-PBT), and the CO2 emissions are calculated using process based LCA methods. The results reveal some of the parameters, such as the level of solar radiation, the position of the modules, the modules’ manufacturing energy intensity and its corresponding fuel mix, and the solar radiation conversion efficiency of the modules, which affect the final analytical results. A sensitivity analysis shows the effect of selected parameters on the final results. For the baseline scenario, the E-PBT for the PVL136 and KC120 are 3.2 and 7.5 years, respectively. When expected future conversion efficiencies are tested, the E-PBT is 1.6 and 5.7 years for the PVL136 and the KC120, respectively. Based on the US fuel mix, the CO2 emissions for the PVL136 and the KC120 are 34.3 and 72.4 g of CO2/kW h, respectively. The most effective way to improve the modules’ environmental performance is to reduce the energy input in the manufacturing phase of the modules, provided that other parameters remain constant. Consequently, the use of PV as an electricity source during PV manufacturing is also assessed. The NER of the supplier PV is key for the performance of this scheme. The results show that the NER based on a PV system can be 3.7 times higher than the NER based on electricity supplied by the traditional grid mix, and the CO2 emissions can be reduced by 80%.

Does willingness to pay for green energy differ by source?
Pages 3327-3334
by Allison M. Borchers, Joshua M. Duke and George R. Parsons
Abstract: We present the findings of a choice experiment designed to estimate consumer preferences and willingness-to-pay (WTP) for voluntary participation in green energy electricity programs. Our model estimates WTP for a generic “green energy” source and compares it to WTP for green energy from specific sources, including wind, solar, farm methane, and biomass. Our results show that there exists a positive WTP for green energy electricity. Further, individuals have a preference for solar over a generic green and wind. Biomass and farm methane are found to be the least preferred sources.

High gas dependence for power generation in Thailand: The vulnerability analysis
Pages 3335-3346
by Thanawat Nakawiro and Subhes C. Bhattacharyya
Abstract: Thailand uses 74% of its natural gas supply for power generation and 70% of its power comes from gas-based technology. High dependence on natural gas in power generation raises concerns about security of electricity supply that could affect competitiveness of Thai manufacturing and other industries at the global level. The effect of fuel dependence on security of electricity supply has received less emphasis in the literature. Given this gap, this research examines the economic impact of high dependence on natural gas for power generation in Thailand by analyzing the effect of changes in fuel prices (including fuel oil and natural gas) on electricity tariff in Thailand. At the same time, the research quantifies the vulnerability of the Thai economy due to high gas dependence in power generation. Our research shows that for every 10% change in natural gas price, electricity tariff in Thailand would change by 3.5%. In addition, we found that the gas bill for power generation consumed between 1.94% and 3.05% of gross domestic product (GDP) between 2000 and 2004 and in terms of GDP share per unit of energy, gas dependence in power generation is almost similar to that of crude oil import dependence. We also found that the basic metal industry, being an electricity intensive industry, is the most affected industry. Additionally, we find that volatility of gas price is the main factor behind the vulnerability concern. The research accordingly simulates two mitigation options of the problem, namely reducing gas dependence and increasing efficiency of gas-fired power plants, where the results show that these methods can reduce the vulnerability of the country from high gas dependence in power generation.

The effect of financial constraints, technological progress and long-term contracts on tradable green certificates
Pages 3347-3359
by Paolo Agnolucci
Abstract: Tradable green certificates (TGCs) have recently become a diffuse instrument to support renewable electricity in OECD countries. Although it is perhaps too early to draw a conclusive judgement on the effectiveness of this instrument in increasing renewable capacity and decreasing the price of certificates, one view in the literature maintains that long-term contracts are of particular importance for TGCs to be effective. This paper contributes to this debate by analysing how financial constraints and technological progress can induce investors to hold pessimistic expectations of their ability to sell green certificates and still make a profit. Clearly, these expectations will prevent investors from building new capacity to fulfil the quota comprised in TGCs and will keep the price of certificates traded in the market high. As this kind of expectation is not influenced by most design features of TGCs, one can conclude that long-term contracts are particularly important in determining the effectiveness and cost-effectiveness of these instruments. Some attention should therefore be paid to the features of the TGCs, which induce obliged parties to offer long-term contracts to renewable generators.

Promoting regional energy co-operation in South Asia
Pages 3360-3368
by Leena Srivastava and Neha Misra
Abstract: Energy is a key ingredient of the socio-economic development of any region. South Asia is not only one of the fastest growing regions in the world; it is also one of the poorest, which thus puts energy at the very heart of the development process in the region. This paper looks at the challenges faced by the South Asia sub-region for economic co-operation (SASEC) comprised of Bangladesh, Bhutan, India and Nepal, and also at the role of greater regional energy co-operation therein. The region is characterized by pressures of growing economies and increasing population. While the per capita energy consumption is one of the lowest in the world, energy intensity continues to be very high. A large portion of the population lacks access to modern sources of energy and depends on traditional sources that are not only inefficient but also have severe health and environmental problems associated with them. Increasing oil import dependency and huge investment needs for energy market development pose a further challenge. The region has a good resource potential and tremendous scope for energy co-operation, which can play a key role in addressing many of these energy security concerns and in putting it on the path of sustainable development. It is ironic that the record in the area has been so limited and that too in the most basic form of co-operation, i.e. bilateral arrangements between countries. This paper puts forth a multi-pronged strategy for sub-regional energy co-operation encompassing softer options aimed at confidence building to more substantial and larger scale co-operation efforts. Delays in decision making to ensure stronger and mutually beneficial co-operation efforts are associated with high costs not only to the energy sector but also for the entire development agenda. With the precarious energy situation in the region and unprecedented increases in international oil prices seen in recent times, it is high time for policy makers, financing institutions, NGOs and the civil society to push for a greater integration of the SASEC energy sector.

An assessment of the Danish–German cross-border auctions
Pages 3369-3382
by Tarjei Kristiansen
Abstract: This paper presents an analysis of the auction prices at the cross-border auction between West Denmark and Germany and between East Denmark and Germany (the Kontek cable). Monthly and annual transmission capacities appear to be more highly valued than daily transmission capacity on average. The two cross-border auctions show different trends: the auctions between West Denmark and Germany exhibit a higher level of prices in the southbound direction, and between East Denmark and Germany, higher prices in the northbound direction. We find a relatively strong correspondence in the pricing of products over different time frames (daily, monthly and annual auctions) between West Denmark and Germany and a weak correspondence for the products between East Denmark and Germany. In the daily auctions, market players can decide whether to use their capacity after the clearing of the day-ahead market, while in the monthly and annual auctions they must decide whether to use their capacity prior to clearing. If they choose not to use their capacity, the use-it-or-lose-it principle applies. The capacity is then subsequently released to the daily market. Since the daily cross-border auctions are free of commitment, they should be valued as options. Likewise, in the monthly and annual auctions market players can choose not to nominate their capacity but as this must occur before the clearing of the day-ahead market, they will not know the directions of the power flows a priori. If they nominate the capacity they must use it; if the direction turns out to be “wrong,” it is then possible to purchase capacity in the opposite direction in the daily auctions. If market players can accurately predict the outcome of the spot markets day ahead, the value of monthly and annual capacity should more closely reflect the value of an option. Thus, one would expect the value of the monthly and annual capacity to be between the value of an option and an obligation. Although this suggests that the average price of daily capacity should be greater than monthly and annual capacity, our data do not support this hypothesis. The daily, monthly and annual capacity auctions do not reflect the value of the underlying asset as specified by the appropriate valuation of the energy price differentials between West Denmark and Germany and East Denmark and Germany. Therefore, market players are exposed to substantial variation in fees for congestion management on the cross-border. We study whether arbitrage improves over time and discern no obvious trend.

Since the explicit auction procedure has not been cost-efficient, a better approach appears to be the new market coupling arrangement introduced on the Kontek cable and on the border between West Denmark and Germany, with the result that market players will pay a congestion management fee (i.e. area price difference) equal to the energy price differential resulting from the market coupling mechanism.

Integration of multiple national markets for electricity: The case of Norway and Sweden
Pages 3383-3394
by Eirik S. Amundsen and Lars Bergman
Abstract: During the second part of the 1990s the Nordic (Denmark, Finland, Norway and Sweden) countries have created a unique multinational market for electricity. This paper aims to analyse the degree of integration of the different national markets that constitute the Nordic electricity market. In particular the Norwegian and Swedish wholesale and retail electricity markets are analysed. The results suggest that the wholesale markets are well integrated. Thus prices differ significantly only during periods with unusually high or low supply of hydropower. However, the retail markets are not integrated to the same degree. Thus retail prices and trade margins differ significantly. Differences in the national electricity market legislation seem to be a key factor behind these differences.

Environmental benefits of distributed generation with and without emissions trading
Pages 3395-3409
by A.G. Tsikalakis and N.D. Hatziargyriou
Abstract: The need for improving energy efficiency and reducing CO2 emissions and other pollutants, as well as the restructuring of energy markets has favoured the increase of distributed energy resources (DER). The co-ordinated control of these sources comprising renewable energy sources (RES) and distributed generators (DG) characterised by higher efficiencies and lower emissions compared to central thermal generation, when based on coal or oil provide several environmental benefits. These benefits can be quantified based on DER participation in the CO2 emission trading market. This paper provides a method to calculate emissions savings achieved by the marginal operation of DER in liberalised market conditions using available emissions data. The participation of DER in emissions trading markets is also studied, with respect to profits, pollutants decrease and change in operating schedules. It is shown that the operation of DER can significantly reduce pollutants, provided sufficient remuneration from CO2 emission trading market participation is provided. Moreover, it is shown that using average emissions values to calculate the environmental benefits of DER might provide misleading results.

Economic structure and pollution intensity within the environmental input–output framework
Pages 3410-3417
by Maria Llop
Abstract: The environmental input–output approach reveals the channels through which the environmental burdens of production activities are transmitted throughout the economy. This paper uses the input–output framework and analyses the changes in Spanish emission multipliers during the period 1995–2000. By decomposing the total changes in multipliers into different components, it is possible to evaluate separately the effects of economic structure and pollution intensity captured by the environmental input–output model. Specifically, in this study, we distinguish between the effects on multipliers caused by changes in emission coefficients (the pollution intensity effects) and the effects on multipliers caused by changes in technical coefficients (the economic structure effects). Our results show a significant reduction in the pollution intensity of production activities, which contributed negatively to changes in emission multipliers. They also show that the economic structure contributed positively to changes in emission multipliers. Together, these two effects lead to a small reduction in multipliers during the period of analysis. My results also show significant differences in the individual behaviour of different sectors in terms of their contribution to multiplier changes. Since there are considerable differences in the way individual sectors affect the changes in emission levels, and in the intensity of these effects, this means that the final effects will basically depend on the activity considered.

The adoption of domestic solar-power systems: Do consumers assess product attributes in a stepwise process?
Pages 3418-3423
by Adam Faiers, Charles Neame and Matt Cook
Abstract: The adoption of an innovation is partly dependent on the consumers’ perception of the product attributes, starting with the ‘relative advantage’ a product may have over another existing product, and also include issues of compatibility, complexity, observability and trialability. Using diffusion of innovations theory as a conceptual framework, this paper describes a case study that investigated the innovation adoption process that a group of identified potential adopters of domestic solar thermal systems stated they would follow. Data was generated from the results of a postal survey to a group of 43 defined innovators and a group of 350 assumed ‘early majority’, pragmatic consumers. The survey results showed that while the pragmatic customers did follow the process as theorised in diffusion theory, the innovators disregarded the observability attributes of the innovation and went ahead with implementation without having seen the products beforehand. The group of innovators was also split in their opinion that ‘complexity’ may be a limiting factor. There were differences in the pragmatic group between certain demographic sub groups. Conclusions are drawn on how the findings may impact marketing activities.

Energy-efficiency standards for electric motors in Brazilian industry
Pages 3424-3439
by Agenor Gomes Pinto Garcia, Alexandre S. Szklo, Roberto Schaeffer and Michael A. McNeil
Abstract: The first regulation of the “Energy Efficient Act” for electric motors, launched in 2002, established two sets of minimum efficiency performance standards (MEPS), for ‘standard’ (mandatory) and ‘high efficiency’ (voluntary) motors. An updated regulation, from the end of 2005 (Edict 553/2005), established the previous high-efficiency MEPS as mandatory for all motors in the Brazilian market. This paper analyses the consequences of this new regulation, which is foreseen to take effect in 2010. These new Brazilian MEPS are compatible with those implemented in other countries. The cost–benefit analysis, considered for different scenarios for industrial consumers, showed that motor substitution (from standard to high efficiency) is generally advantageous. A sample of nine thousand industrial motors has been used, with measured operation in actual conditions, to analyze the investment cost–benefit in three different scenarios. This analysis also demonstrated the benefit of motor substitution, with an average MWh cost from 20 to 35 US$, and with only a few substitutions presenting an unfavorable cost–benefit relationship to the user. We assess that Edict 553 avoided construction of 350 MW of hydroelectric capacity. Nevertheless, since the cost of conserved energy for this energy-saving measure is generally below the marginal cost of expansion of the Brazilian electric system, we propose mechanisms to share investment costs among the society as a whole, including demand-side bidding.

Effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries
Pages 3440-3462
by Hiroaki Nagayama
Abstract: Electric power sector reforms in the electricity supply industry have had an impact on industrial and household prices in developing countries in Latin America, the former Soviet Union, and Eastern Europe. Using original panel data for 83 countries during the period from 1985 to 2002, we examine how each policy instrument of the reform measures influenced electricity prices for countries in the above regions. We found that variables such as entry of independent power producers (IPP), unbundling of generation and transmission, establishment of a regulatory agency, and the introduction of a wholesale spot market have had a variety of impacts on electricity prices, some of which were not always consistent with expected results. The research findings suggest that neither unbundling nor introduction of a wholesale pool market on their own necessarily reduces the electric power price. In fact, contrary to expectations, there was a tendency for the price to rise. However, coexistent with an independent regulator, unbundling may work to reduce electricity prices. Privatization and the introduction of foreign IPP and retail competition lower electricity prices in some regions, but not all.

The role of buying consortia among SMEs in the electricity market in Italy
Pages 3463-3472
by Marco Alderighi
Abstract: We model the electricity market in Italy, focusing on the impact of buying consortia among SMEs on the behaviour of the large electricity producers and sellers. We show that consortia may in certain circumstances produce a pro-competitive result, i.e. they may induce a reduction of prices not only for consortia members but also for firms not in the consortia.

Modelling energy systems for developing countries
Pages 3473-3482
F. Urban, R.M.J. Benders and H.C. Moll
Abstract: Developing countries’ energy use is rapidly increasing, which affects global climate change and global and regional energy settings. Energy models are helpful for exploring the future of developing and industrialised countries. However, energy systems of developing countries differ from those of industrialised countries, which has consequences for energy modelling. New requirements need to be met by present-day energy models to adequately explore the future of developing countries’ energy systems. This paper aims to assess if the main characteristics of developing countries are adequately incorporated in present-day energy models. We first discuss these main characteristics, focusing particularly on developing Asia, and then present a model comparison of 12 selected energy models to test their suitability for developing countries. We conclude that many models are biased towards industrialised countries, neglecting main characteristics of developing countries, e.g. the informal economy, supply shortages, poor performance of the power sector, structural economic change, electrification, traditional bio-fuels, urban–rural divide. To more adequately address the energy systems of developing countries, energy models have to be adjusted and new models have to be built. We therefore indicate how to improve energy models for increasing their suitability for developing countries and give advice on modelling techniques and data requirements.

Behaviors and housing inertia are key factors in determining the consequences of a shock in transportation costs
Pages 3483-3495
by François Gusdorf and Stéphane Hallegatte
Abstract: This paper investigates the consequences of a sudden increase in transportation costs when household behaviors and building inertia are accounted for. A theoretical framework is proposed, capturing the interactions between behaviors, transportation costs and urban structure. Numerical simulations show that changes in households and landowners’ choices reduce significantly the long-term adverse effects of a shock in transportation costs. Indeed, the shock translates, over the long run, into a more concentrated housing that limits households utility losses and maintains landowners’ income. But, because of building inertia, the shock leads first to a long transition, during which the adjustment is constrained by a suboptimal housing-supply structure. Then, households support larger losses than in the final stage, though lower than with no behavior adjustment, and landowners experience a large decrease in their aggregate income and an important redistribution of wealth. Thus, behaviors and building inertia are key factors in determining the vulnerability to transportation price variability and to the introduction of climate policies. Our policy conclusions are that: (i) if a long-term increase in transportation costs is unavoidable because of climate change or resource scarcity, a smooth change prevents to some extent the negative transition effects and (ii) fast-growing cities of the developing world can reduce their future vulnerability to shocks in transportation costs through the implementation of policies that limit urban sprawl.

World offshore energy loss statistics
Pages 3496-3525
by Mark J. Kaiser
Abstract: Offshore operations present a unique set of environmental conditions and adverse exposure not observed in a land environment taking place in a confined space in a hostile environment under the constant danger of catastrophe and loss. It is possible to engineer some risks to a very low threshold of probability, but losses and unforeseen events can never be entirely eliminated because of cost considerations, the human factor, and environmental uncertainty. Risk events occur infrequently but have the potential of generating large losses, as evident by the 2005 hurricane season in the Gulf of Mexico, which was the most destructive and costliest natural disaster in the history of offshore production. The purpose of this paper is to provide a statistical assessment of energy losses in offshore basins using the Willis Energy Loss database. A description of the loss categories and causes of property damage are provided, followed by a statistical assessment of damage and loss broken out by region, cause, and loss category for the time horizon 1970–2004. The impact of the 2004–2005 hurricane season in the Gulf of Mexico is summarized.

Is energy consumption per capita broken stationary? New evidence from regional-based panels
Pages 3526-3540
by Pei-Fen Chen and Chien-Chiang Lee
Abstract: For the first time, a new panel unit root testing procedure, developed by [51]Carrion-i-Silvestre et al. [2005. Breaking the panels: an application to GDP per capita. Econometrics Journal 8, 159