Economics should be open

November 26, 2008

15% reduction in trans-Atlantic aviation from carbon costs

Filed under: Carbon Trading — Tags: , , , , — howardchong @ 11:49 pm

So, the European carbon cap-and-trade system (ETS, European Trading Scheme) is strongly moving towards forcing all flights into and out of the EU  to participate; i.e. buy carbon credits. It doesn’t matter if they get allocated them for free, because this opportunity cost will be passed on. See 

What affect would this have on transatlantic travel?

Here’s a back of the envelope calculation that says this will decrease the number of flights across the atlantic by roughly 15%.  A round-trip from Boston Logan to London Heathrow is 3.2 Tons of CO2 (when including Radiative forcing, using the calaulator at Assume a carbon price of about $30/ton (rough estimate of prices, source: ECX).  That’s about a $90 price increase. Assume a $900 price on travel (Orbitz). That’s a 10% price increase. If you assume a price elasticity of 1.5, you get the conclusion of a 15% reduction in transatlantic airline travel.

I make no judgment whether this is a good or bad thing. I like cheap travel. But I also like the environment. The main principle is that if we’re going to force power plants to pay for carbon costs, then everyone should pay. There are no sacred cows that I think should be exempted.

The only other comment is that I think there are considerable loopholes that need to be addressed in implementing this policy. Does a non-stop from SF to Paris get charged for the full distance but a 1-stop with a stop in Boston get charged just for the Atlantic portion? What about 1-stops to Iceland? (This might be the perfect plan to bail out Iceland).

The other thing is that this means that airlines will need to cut back capacity by about 15%. This isn’t hard to do, they already react to changing fuel prices. But if they know this is down the line, this would be a reason to delay heavy investment in more planes.


November 17, 2008

perl script for transposing Stata outreg2 output

Filed under: coding, Data Insights, Stata — Tags: , , — howardchong @ 10:38 pm

I’m using Stata’s outreg2 command and love it. But I run this look over 600 stocks. Excel doesn’t allow me to view 600 columns (Except in the newer version).  So, I need to transpose the outreg2 file. It’s too wide. Too many columns.

My former post on someone else’s perl script ( actually doesn’t work correctly. I had to make two modifications, and the result is the perl script downloadable from here:

The two modifications are that 1) files are saved with tabs rather than commas. No big deal, I just changed the split operator and 2) the original script freaked out when there were blanks in the data. All blanks are ignored.

November 14, 2008

STATA: Generating a bunch of lagged variables

Filed under: coding, Stata — Tags: , — howardchong @ 10:23 pm

This small blog post is just a note on how to create a bunch of lagged variables using a simple forvalues loop.

* this gives you a list of your variables
foreach varname in varlist qqq - zzz {
* this says to generate lagged variables for all variables in the
* variable list between qqq and zzz
  forvalues i=1/9 {
  *generate 9 lagged values for each
     by date, sort: gen lag`i'`varname'=`varname'[_n-`i']

so, if you have variables 10 varaibles between qqq and zzz inclusive, this script will generate 9 lagged variables for each.

November 6, 2008

EPER, consistency with indirect emissions, email

So using EPER (European Pollution Emissions Register), I’ve found some anomalies with Aluminum data. The main question is whether some countries might be counting indirect emissions (akin to life cycle analysis). Aluminum,  as I understand it (I can cite a McKenzie report), has very small direct process emissions and mainly uses electricity. Since the CO2 generated is usually attributed to the power plant, that CO2 is “indirectly” emitted by Aluminum producers.

On the same token, my personal direct emissions are the gasoline/petrol and natural gas I burn. The indirect is all the CO2 associated with the electricity I use.

Here is a letter I sent to EPER folks at the European Commission. Hope I get a response!



To Whom It May Concern:
I am a researcher at the Univ of California, Berkeley working with the EPER data. First of all, I want to thank you for providing this information; I’ve found the information very useful and appreciate full access to the database tables (MS ACCESS).
I have a question about the underlying the questionnaire, a copy of which I could not find online (ASIDE: does every country implement their own version of the questionnaire?). My question regards direct vs indirect emissions of CO2 and double-counting. If a manufacturing firm only uses electricity, is the manufacturer’s CO2 emissions zero and the indirect CO2 is reported at the utility level?
Aluminum, anecdotally, should have very small direct CO2 emissions because the main input is electricity. However, the following is just one example of an aluminum producer record with very large CO2 emissions. This leads me to believe that indirect emissions are counted sometimes.
Thank you in advance for your help in understanding the data.

CountryID:  DE

ReportYear:  2004

Emission.FacilityID:  216219


Address:  Aluminiumallee 1

City:  Essen


Emissions (metric tons):  301000

Code:  2.1/2.2/2.3/2.4/2.5/2.6

Description:  Metal industry and metal ore roasting or sintering installations, Installations for the production of ferrous and non-ferrous metals

Text:   Aluminium production                                                                                                                                                                                   

MainActivity:  1

ActivityID:  12

Howard Chong
Dept. of Agricultural and Resource Economics and UC Energy Institute
UC Berkeley
Office: 510-643-4831
Cell: 510-333-0539

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