Social acceptance of renewable energy: Some examples from Europe and Developing Africa

Current energy systems are in most instances not fully working sustainably. The provision and use of energy only consider limited resources, risk potential or financial constraints on a limited scale. Furthermore, the knowledge and benefits are only available for a minor group of the population or are outright neglected. The availability of different resources for energy purposes determines economic development, as well as the status of the society and the environment. The access to energy grids has an impact on socio-economic living standards of communities. This not fully developed system is causing climate change with all its related outcomes. This investigation takes into consideration different views on renewable energy systems — such as international discussions about biomass use for energy production, “fuel versus food”, biogas use — and attempts to compare major prospects of social acceptance of renewable energy in Europe and Africa. Can all obstacles to the use of renewable energy be so profound that the overall strategy of reducing anthropogenic causes of climate change be seriously affected?

Social acceptance of renewable energy: Some examples from Europe and Developing Africa

Current energy systems are in most instances not fully working sustainably. The provision and use of energy only consider limited resources, risk potential or financial constraints on a limited scale. Furthermore, the knowledge and benefits are only available for a minor group of the population or are outright neglected. The availability of different resources for energy purposes determines economic development, as well as the status of the society and the environment. The access to energy grids has an impact on socio-economic living standards of communities. This not fully developed system is causing climate change with all its related outcomes. This investigation takes into consideration different views on renewable energy systems — such as international discussions about biomass use for energy production, “fuel versus food”, biogas use — and attempts to compare major prospects of social acceptance of renewable energy in Europe and Africa. Can all obstacles to the use of renewable energy be so profound that the overall strategy of reducing anthropogenic causes of climate change be seriously affected?

Hedging under liquidity constraints

Although risk management can be justified by financial distress, the theoretical models usually contain hedging instruments free of funding risk. In practice, management of the counterparty risk in derivative transactions is of enhanced importance, consequently not only is trading on exchanges subject to the presence of a margin account, but also in bilateral (OTC) agreements parties will require margins or collateral from their partners in order to hedge the mark-tomarket loss of the transaction. The aim of this paper is to present and compare two models where the financing need of the hedging instrument also appears, influencing the hedging strategy and the optimal hedging ratio. Both models contain the same source of risk and optimisation criterion, but the liquidity risk is modelled in different ways. In the first model, there is no additional financing resource that can be used to finance the margin account in case of a margin call, which entails the risk of liquidation of the hedging position. In the second model, the financing is available but a given credit spread is to be paid for this, so hedging can become costly.