IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20240061.html
   My bibliography  Save this paper

Enhancing Regional Resilience for Energy Price Shocks: Efficient Gas Use and Upstream Decarbonization

Author

Listed:
  • Sacha den Nijs

    (Vrije Universiteit Amsterdam)

  • Mark Thissen

    (Vrije Universiteit Amsterdam and Tinbergen Institute)

Abstract

Resilience and competitiveness in relation to fossil energy dependencies is of increasing concern to industries and policy makers. We investigate to what extent the competitive position of industries in European regions are sensitive to changes in fossil fuel prices, and whether reductions in gas use along the value chain may increase regional industry resilience. A new spatial revealed cost competition model based on the input-output price model is used and calibrated to multi-regional world input-output tables on an EU NUTS 2 level. We obtain elasticities of fossil fuel prices on revealed cost competitiveness and analyze how they are affected by increased efficiency and electrification in production. We show that European regions are resilient to global coal price increases, whereas they are vulnerable to gas price shocks. The transition towards using less gas in production, by efficiency improvements or electrification, can reduce these gas price vulnerabilities. However, when competitors become more efficient instead, the vulnerability to such shocks may increase. Decarbonizing upstream sectors like electricity generation in the own region, own country or in Europe, can increase resilience of downstream industrial sectors in most European regions.

Suggested Citation

  • Sacha den Nijs & Mark Thissen, 2024. "Enhancing Regional Resilience for Energy Price Shocks: Efficient Gas Use and Upstream Decarbonization," Tinbergen Institute Discussion Papers 24-061/VIII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20240061
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/24061.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Abbas Valadkhani & William F. Mitchell, 2002. "Assessing the Impact of Changes in Petroleum Prices on Inflation and Household Expenditures in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(2), pages 122-132, June.
    2. Marcel P. Timmer & Bart Los & Robert Stehrer & Gaaitzen J. de Vries, 2013. "Fragmentation, incomes and jobs: an analysis of European competitiveness [Who captures value in global supply chains?]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 28(76), pages 613-661.
    3. Mark Thissen & Frank van Oort & Dario Diodato & Arjan Ruijs, 2013. "Regional Competitiveness and Smart Specialization in Europe," Books, Edward Elgar Publishing, number 15331.
    4. Mark Thissen & Frank van Oort & Philip McCann & Raquel Ortega-Argilés & Trond Husby, 2020. "The Implications of Brexit for UK and EU Regional Competitiveness," Economic Geography, Taylor & Francis Journals, vol. 96(5), pages 397-421, October.
    5. repec:bla:ecpoli:v:28:y:2013:i:76:p:613-661 is not listed on IDEAS
    6. Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
    7. Ward, Hauke & Steckel, Jan Christoph & Jakob, Michael, 2019. "How global climate policy could affect competitiveness," Energy Economics, Elsevier, vol. 84(S1).
    8. Wu, Libo & Li, Jing & Zhang, ZhongXiang, 2013. "Inflationary effect of oil-price shocks in an imperfect market: A partial transmission input–output analysis," Journal of Policy Modeling, Elsevier, vol. 35(2), pages 354-369.
    9. repec:oup:ecpoli:v:28:y:2013:i:76:p:613-661 is not listed on IDEAS
    10. Sara Meerow & Joshua P. Newell, 2015. "Resilience and Complexity: A Bibliometric Review and Prospects for Industrial Ecology," Journal of Industrial Ecology, Yale University, vol. 19(2), pages 236-251, April.
    11. Andrew J. Hoffman & Charles J. Corbett & Nitin Joglekar & Peter Wells, 2014. "Special Feature on Industrial Ecology as a Source of Competitive Advantage," Journal of Industrial Ecology, Yale University, vol. 18(5), pages 597-602, October.
    12. Ron Martin, 2012. "Regional economic resilience, hysteresis and recessionary shocks," Journal of Economic Geography, Oxford University Press, vol. 12(1), pages 1-32, January.
    13. Chiacchio, Francesco & De Santis, Roberto A. & Gunnella, Vanessa & Lebastard, Laura, 2023. "How have higher energy prices affected industrial production and imports?," Economic Bulletin Boxes, European Central Bank, vol. 1.
    14. Daniel C. Esty & Michael E. Porter, 1998. "Industrial Ecology and Competitiveness: Strategic Implications for the Firm," Journal of Industrial Ecology, Yale University, vol. 2(1), pages 35-43, January.
    15. Scholten, Daniel & Bazilian, Morgan & Overland, Indra & Westphal, Kirsten, 2020. "The geopolitics of renewables: New board, new game," Energy Policy, Elsevier, vol. 138(C).
    16. William H. Miernyk, 1976. "Some Regional Impacts Of The Rising Costs Of Energy," Papers in Regional Science, Wiley Blackwell, vol. 37(1), pages 213-227, January.
    17. Többen, Johannes, 2017. "Regional Net Impacts and Social Distribution Effects of Promoting Renewable Energies in Germany," Ecological Economics, Elsevier, vol. 135(C), pages 195-208.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pierre-Alexandre Balland & David Rigby & Ron Boschma, 2015. "The technological resilience of US cities," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 8(2), pages 167-184.
    2. Többen, Johannes, 2017. "Regional Net Impacts and Social Distribution Effects of Promoting Renewable Energies in Germany," Ecological Economics, Elsevier, vol. 135(C), pages 195-208.
    3. Andrey A. Gnidchenko & Vladimir A. Salnikov, 2015. "Net Comparative Advantage Index: Overcoming the Drawbacks of the Existing Indices," HSE Working papers WP BRP 119/EC/2015, National Research University Higher School of Economics.
    4. Ron Boschma, 2015. "Towards an Evolutionary Perspective on Regional Resilience," Regional Studies, Taylor & Francis Journals, vol. 49(5), pages 733-751, May.
    5. Steven Brakman & Harry Garretsen & Charles van Marrewijk & Charles van Marrewijk, 2014. "The Crisis and Regional Resilience in Europe: On the Importance of Urbanization and Specialization," CESifo Working Paper Series 4724, CESifo.
    6. Jean D. Kabongo & Olivier Boiral, 2017. "Doing More with Less: Building Dynamic Capabilities for Eco‐Efficiency," Business Strategy and the Environment, Wiley Blackwell, vol. 26(7), pages 956-971, November.
    7. Luca Fraccascia & Vahid Yazdanpanah & Guido Capelleveen & Devrim Murat Yazan, 2021. "Energy-based industrial symbiosis: a literature review for circular energy transition," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(4), pages 4791-4825, April.
    8. Matthias Walz & Edeltraud Guenther, 2021. "What effects does material flow cost accounting have for companies?: Evidence from a case studies analysis," Journal of Industrial Ecology, Yale University, vol. 25(3), pages 593-613, June.
    9. Marina Capparucci & Emanuela Ghignoni & Alina Verashchagina & Natalia Vorozhbit, 2015. "The Drivers of Innovation in the Italian Manufacturing Sector," Economia & lavoro, Carocci editore, issue 3, pages 111-128.
    10. Gallaher, Adam & Graziano, Marcello & Fiaschetti, Maurizio, 2021. "Legacy and shockwaves: A spatial analysis of strengthening resilience of the power grid in Connecticut," Energy Policy, Elsevier, vol. 159(C).
    11. Jarreau, Joachim & Poncet, Sandra, 2012. "Export sophistication and economic growth: Evidence from China," Journal of Development Economics, Elsevier, vol. 97(2), pages 281-292.
    12. Tapio Riepponen & Mikko Moilanen & Jaakko Simonen, 2023. "Themes of resilience in the economics literature: A topic modeling approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(2), pages 326-356, April.
    13. Ariu, Andrea & Breinlich, Holger & Corcos, Gregory & Mion, Giordano, 2019. "The interconnections between services and goods trade at the firm-level," Journal of International Economics, Elsevier, vol. 116(C), pages 173-188.
    14. Los, Bart & Timmer, Marcel P. & de Vries, Gaaitzen J., 2015. "How important are exports for job growth in China? A demand side analysis," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 19-32.
    15. Roberto Antonietti & Ron Boschma, 2021. "Social capital, resilience, and regional diversification in Italy [Social capital, innovation and growth: evidence from Europe]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(3), pages 762-777.
    16. Rodríguez-Puello, Gabriel, 2024. "Digging for Trouble? Uncovering the Link Between Mining Booms and Crime," OSF Preprints s8ayp_v1, Center for Open Science.
    17. Gideon Ndubuisi & Solomon Owusu, 2021. "How important is GVC participation to export upgrading?," The World Economy, Wiley Blackwell, vol. 44(10), pages 2887-2908, October.
    18. Sonali Chowdhry & Julian Hinz & Katrin Kamin & Joschka Wanner, 2024. "Brothers in arms: the value of coalitions in sanctions regimes," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 39(118), pages 471-512.
    19. Auer, Raphael A. & Mehrotra, Aaron, 2014. "Trade linkages and the globalisation of inflation in Asia and the Pacific," Journal of International Money and Finance, Elsevier, vol. 49(PA), pages 129-151.
    20. Stefan Pahl & Marcel P. Timmer, 2020. "Do Global Value Chains Enhance Economic Upgrading? A Long View," Journal of Development Studies, Taylor & Francis Journals, vol. 56(9), pages 1683-1705, July.

    More about this item

    Keywords

    Competitiveness; regional resilience; fossil fuels; energy efficiency; global value chains; input-output analysis;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20240061. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.