ECON783 Energy and Resource Economics 能源与资源经济学代写 Question 1 (a) Explain the different scenarios that the International Energy Agency use in their World Energy Outlook. (4 marks)...View details
ECON783 Energy and Resource Economics
能源经济代考 Question 1 See lecture slides (a) Explain the different scenarios that the International Energy Agency use in their World Energy Outlook. (4 marks)
(Time Allowed: One and a half hours)
NOTE: ANSWER UP TO THREE (3) of the SIX (6) questions.
Each question is worth 20 marks.
Total marks = 60
Answer any THREE questions.
Question 1 See lecture slides
(a) Explain the different scenarios that the International Energy Agency use in their World Energy Outlook. (4 marks)
(b) What has the impact of the COVID-19 pandemic on world energy demand. Briefly explain the IEA’s sustainable recovery plan. (5 marks)
(c) Explain why demand for electricity is expected to increase faster than overall energy demand over the next three decades. Why does it increase faster in the Sustainable Development Scenario compared to the Stated Policy scenario? Investment in Electricity flexibility is expected to be higher than investment in new capacity. Explain what flexibility is and why so much investment is needed for this. (6 marks)
(d) Describe current market conditions of the world oil market. What are the key drivers of supply currently? What are the key drivers of demand going forward? Explain why oil demand is expected to decrease steadily until 2050 in the Sustainable Development Scenario. (5 marks)
Question 2 (20 Marks) 能源经济代考
Consider a monopoly owner of a mine which can operate for two periods. Total mining costs are TC=80 q0 in the first period and TC=50q1 in the second period and the market demand curve is pt =500-50qt. There are 6 units of the resource R0 to allocate across the two periods. The interest rate is r = 0.1.
(a) Write down the Hotelling rule for the mining amounts qt for a Monopoly. (2 marks)
(b) Calculate the optimal mining amounts qt , the prices pt for both periods and the present value of the total profits. (8 marks)
(c) Would the present value of the profits of the monopolist increase if R0 increases to 20 units. Explain why or why not? (2 marks)
(d) Suppose now the government introduces a tax of $100 per unit. Calculate the new mining path and present value of the profits. Does the profit increase or decrease? Explain why. (8 marks)
Question 3 能源经济代考
Suppose that you are an owner of a mineral mine. The market is competitive. You want to maximise your discounted profit stream. qt is the amount of the mineral consumed (and mined) in each time period. The discount rate is δ and the initial reserves are R0. The inverse demand function is pt=a-bqt and your cost function is C=cqt2. Assume the mine is exhausted after T periods with T known.
(a) Write down the resource constraint equation. (2 marks)
(b) Write down your maximisation problem and construct the Lagrangian function. (2 marks)
(c) Write down the first order conditions. (2 marks)
(d) Derive the Hotelling rule for this problem and explain the intuition behind it. (4 marks)
(e) Find the mining amount for each time period as a function of the initial price p0. (8 marks)
(f) Write down an equation which determine “p0 ”. You don’t need to solve the equation (2 marks)
Question 4 能源经济代考
Suppose two electricity generation firms supply energy to the spot market. Each firm has Cournot conjectures about the other firm. Demand in the spot market is given by p = 800 – 2q where q = q1+q2. Firm i produces qi. There are no mining costs. Suppose that the forward contract price is f and each firm has forward contracts of Qi for i = 1,2.
(a) Write down the profit for firm 1 from the spot market, forward contract market and total profit. All power is traded through the spot market. (2 marks)
(b) Write down the reaction function for each firm. (2 marks)
(c) Work out the Nash equilibrium quantities offered by each firm as a function of Q1 and Q2. What is the total quantity supplied and the price? (4 marks)
(d) Impose the no-arbitrage condition that f = p. Now find the profit for each firm as a function of the contract positions and derive the best response for firm 1 for Q1 in terms of Q2 and a similar expression for firm 2. Hence find the Nash
equilibrium for contract positions as a function of Qi and hence the forward quantities as well spot market price and aggregate quantity supplied to the spot market (8 marks)
(e) Show that the price is lower if both firms engage in the forward contract market (1 mark)
(f) Now explain why firms engage in the forward contract market by calculating the pay-off matrix assuming either both firms don’t enter into forward contracts, both do, or 1 does and the other doesn’t. Show that the Nash equilibrium outcome is an example of a prisoner’s dilemma with both firms entering the spot market (3 marks)
Question 5 能源经济代考
Suppose in an electricity market the power generation plants have the following capacities and cost structure
|Type||MC ($MWh)||Capacity (MW)||Fixed Cost|
(a) Draw the competitive supply curve for the production of electric energy on this system (2 marks)
(b) Assume that demand is 2500 Mw and is completely price inelastic in the very short run. What would be the spot price be in a perfectly competitive wholesale electricity market? (2 marks)
(c) Assume that demand is 4000 Mw and is completely price inelastic in the very short run. What would be the spot price be in a perfectly competitive wholesale electricity market? (2 marks)
(d) Assume that demand equation is Q=7000-0.5p. Draw the demand and supply curves. What is the competitive market price? (6 marks)
(e) Now find the optimum capacity mix if demand can be curtailed at a price of $5000 the base of the demand curve is above 6000MW. The load duration equation for the base of the demand curve is d(s)=6000-4000s (8 marks)
Question 6 [Won’t be covered in 2021 test] 能源经济代考
(a) Suppose there are three sectors in the NZ economy –transport, electricity and agriculture. The marginal abatement cure for agriculture is MACA =20XA , for transport MACT=10XT and for electricity it is MACE=5XE. Initial emissions for electricity are 10 Mt, for transport 30Mt and for agriculture they are 20Mt. Total emissions are 60Mt. X is emission reductions for the different sectors.
(i)Derive and draw the economy wide marginal abatement curve. [hint. remember the most any sector can abate emissions is up to total initial emissions]. Note points of interest on your graph. (5 marks)
(ii) What carbon tax would be needed to ensure a 66.7% reduction in emissions? (2 marks)
(iii) What is the abatement for each sector to achieve the 60% reduction in emissions, (2 marks)
(iv) Calculate the total cost of the 60% reduction in emissions. (2 marks)
(v) Suppose the government decided not to include agriculture (so no carbon tax on agriculture is imposed). Calculate the tax needed for the two remaining sectors and total costs now as well as the abatement for each sector. (2 marks)
(vi) What is the difference in total costs between (iii) and (iv). Comment on your results. (2 marks)
(vii) Now suppose that an analysis of the marginal benefits for carbon emission abatement is MB=800-10X. Calculate the optimum amount of abatement (with all three sectors participating), the carbon tax which would ensure this level of abatement and illustrate with a diagram. (5 marks)