Informational Barriers to Energy Efficiency - Theory and European Policies. Bruges European Economic Research (BEER) Papers 15/2009

This BEER addresses informational barriers to energy efficiency. It is a widely acknowledged result that an energy efficiency gap exists implying that the level of energy efficiency is at an inefficiently low level. Several barriers to energy efficiency create this gap and the presence of asymmetric information is likely to be one such barrier. In this article a theoretical framework is presented addressing the issues of moral hazard and adverse selection related to energy efficiency. Based on the theoretical framework, European policies on energy efficiency are evaluated. The article is divided into two main parts. The first part presents the theory on information asymmetries and its consequences on energy efficiency focusing on the problems of moral hazard and adverse selection. Having established a theoretical framework to understand the agency barriers to energy efficiency, the second part evaluates the policies of the European Union on energy efficiency. The BEER finds that problems of moral hazard and adverse selection indeed can help explain the seemingly low levels of energy. In both presented models the cost to the principal from implementing high energy efficiency outcome is increased with the informational asymmetries. The theory reveals two implications to policies on energy efficiency. First, the development of measures to enable contractual parties to base remuneration on energy performance must be enhanced, and second, the information on technologies and the education of consumers and installers on energy efficiency must be increased. This could be complemented with certification of installers and energy efficiency advisors to enable consumers to select good agents. Finally, it is found that the preferred EU policy instrument on energy efficiency, so far, seems to be the use of minimum requirements. Less used in EU legislation is the use of measuring and verification as well as the use of certifications. Therefore, it is concluded that the EU should consider an increased use of these instruments, and in particular focus on a further development of standards on measurability and verification as well as an increased focus on education of consumers as well as installers and advisors on energy efficiency.

Real options in the context of innovation and development policies and practices. ACES Working Papers, 2012

This paper proposes to build on previous research on the use of real options in strategic decision making (Carayannis and Sipp, 2010) and instill some real options-related concepts stemming from systems design, more particularly engineering. It also builds on previously-established concepts of strategic knowledge serendipity and arbitrage and strategic knowledge co-opetition, co-evolution and co-specialization developed by Carayannis (2009). The application of real options “in” system and real options to innovation and innovation policies demonstrate how embedded real options can more effectively be identified and therefore the decision to execute them or not more effectively made.

Re-designing the European Climate and Energy policies post-2020. European Policy Brief No. 29, March 2014

Ensuring the sustainability, security and cost-competitiveness of energy supplies for the EU citizens are the main objectives of the EU climate and energy policy, which remains high on the EU agenda. The next European legislature will have the difficult task to reconcile these different objectives into a comprehensive 2030 framework for climate and energy policies. Taking into account the changing energy dynamics, this paper analyses thus the state of play of these objectives today in order to better understand how the 2030 framework for climate and energy policies should be designed.

National Role Conceptions and Foreign Policies: France and Germany Compared. CES Germany & Europe Working Papers, No. 02.4, 2002

In spite of domestic and international political changes, French and German foreign policies have displayed high degrees of continuity between the late 1950s and the mid-1990s. Over the same time period, the directions of the two states’ foreign policies have also continued to differ from each other. Why do states similar in many respects often part ways in what they want and do? This article argues that the French and German national role conceptions (NRCs) account for both of these continuities. NRCs are domestically shared understandings regarding the proper role and purpose of one’s own state as a social collectivity in the international arena. As internal reference systems, they affect national interests and foreign policies. This article reestablishes the NRC concept, empirically codes it for France and Germany for the time period under consideration, and demonstrates comparatively how different NRCs lead to varying interests and policies across the major policy areas in security, defense, and armament.

Matching research and innovation policies in EU countries. Bruegel Working Paper 2015/16, December 2015

The European Union has prioritised the pursuit of innovation based growth and targeting of resources to promote research and development, but performance on innovation remains weak.With the lack of results comes fatigue, waning interest and mounting criticism about policy. Should the EU abandon its ambition to become the most innovative region in the world?We examine EU member state research and innovation policies. We assess whether the deployment of innovation policy instruments in EU countries matches their innovation capacity performance relative to other EU countries.We find a relative homogeneity of policy mixes in EU countries, despite the fairly wide and stable differences in their innovation capacities.Our analysis therefore provides a rationale for a more comprehensive review of innovation policy mixes to assess their adequacy in addressing country specific innovation challenges.

The euro area's tightrope walk: debt and competitiveness in Italy and Spain. Bruegel Policy Contribution 2013/11, September 2013

Competitiveness adjustment in struggling southern euro-area members requires persistently lower inflation than in major trading partners, but low inflation worsens public debt sustainability. When average euro-area inflation undershoots the two percent target, the conflict between intra-euro relative price adjustment and debt sustainability is more severe. In our baseline scenario, the projected public debt ratio reduction in Italy and Spain is too slow and does not meet the European fiscal rule. Debt projections are very sensitive to underlying assumptions and even small negative deviations from GDP growth, inflation and budget surplus assumptions can easily result in a runaway debt trajectory. The case for a greater than five percent of GDP primary budget surplus is very weak. Beyond vitally important structural reforms, the top priority is to ensure that euro area inflation does not undershoot the two percent target, which requires national policy actions and more accommodative monetary policy. The latter would weaken the euro exchange rate, thereby facilitating further intra-euro adjustment. More effective policies are needed to foster growth. But if all else fails, the European Central Bank’s Outright Monetary Transactions could reduce borrowing costs.

Unholy compromise in the eurozone and how to right it. CEPS Policy Brief No. 277, 16 July 2012

This paper reviews the causes of the ongoing crisis in the eurozone and the policies needed to restore stability in financial markets and reassure a bewildered public. Its main message is that the EU will not overcome the crisis until it has a comprehensive and convincing set of policies in place; able to address simultaneously budgetary discipline and the sovereign debt crisis, the banking crisis, adequate liquidity provision by the ECB and dismal growth. The text updates and expands on his Policy Brief contributed in the run-up to the emergency European Council meeting at the end of June.

Student's cross-perception of the economic crises in the European Union and in Southeast Asia. EU Centre in Singapore Working Paper No. 11, December 2012

The financial crisis of 1997-1998 in Southeast Asia and the European Union’s financial crisis of 2008 followed by the sovereign debt crisis represented major policy events in the regions and beyond. The crises triggered policy adjustments with implications on economic and other policies. This paper aims at evaluating the perception of university students in the European Union (EU) and Southeast Asia on the management of these crises. It strives to confirm several ex ante assumptions about the relationship between students’ background, their policy orientation and their knowledge of the European Union and ASEAN policies. It also provides an analysis of the students’ evaluation of the geopolitical importance of the global regions and the EU and ASEAN policies. The paper is based on opinion surveys conducted during the first part of 2012 at four universities, two in the EU and two in ASEAN countries. In the eyes of EU and ASEAN students, the EU crisis is not being managed appropriately. The citizens of the EU surveyed were even significantly more critical of the EU’s anti-crisis measures than any other surveyed group. Their ASEAN counterparts were generally more positive in their evaluations.

Memo to Merkel: Post-election Germany and Europe. Bruegel Policy Brief 2013/05, 24 September 2013

Recent economic data points to the seeds of an economic recovery in the European Union. However, significant risks remain and bold policies are still needed. There are three central risks. Competitiveness adjustment is incomplete, casting doubt on the sustainability of public debt. Banking remains unstable and fragmented along national lines, resulting in unfavorable financial conditions, which further erode growth, job creation and competitiveness. Rising unemployment, especially among the young, is inequitable, unjust and politically risky. Germany has a central role to play in addressing these risks. The new German government should work on three priorities: Domestic economic policy should be more supportive of growth and adjustment, with higher public investment, a greater role for high-value added services, and more supportive immigration policy. Germany should support a meaningful banking union with a centralised resolution mechanism requiring a transfer of sovereignty to Europe for all countries including Germany. The establishment of a private investment initiative combined with a European Youth Education Fund and labour market reforms should be promoted. Building on these priorities, a significant deepening of the euro area is needed, with a genuine transfer of sovereignty, stronger institutions and democratically legitimate decision-making structures in areas of common policy.

Europe's social problem and its implications for economic growth. Bruegel Policy Brief 2014/03, 1 April 2014

The European Union faces major social problems. More than six million jobs were lost from 2008-13 and poverty has increased. Fiscal consolidation has generally attempted to spare social protection from spending cuts, but the distribution of adjustment costs between the young and old has been uneven; a growing generational divide is evident, disadvantaging the young. The efficiency of the social security systems of EU countries varies widely. Countries with greater inequality tended to have higher household borrowing prior to the crisis resulting in more subdued consumption growth during the crisis. The resulting high private debt, high unemployment, poverty and more limited access to education undermine long-term growth and social and political stability. Policymakers face three main challenges. First, addressing unemployment and poverty should remain a high priority not only for its own sake, but because these problems undermine public debt sustainability and growth. Second, bold policies in various areas are required. Most labour, social and fiscal policies are the responsibility of member states, requiring national reforms. But better coordination of demand management at European level is also necessary in order to create jobs. Third, tax/benefit systems should be reviewed for improved efficiency, inter- generational equity and fair burden sharing between the wealthy and poor.