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Estimating Coal Price Dynamics with the Principal Components Method

Author

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  • Festic, Mejra

    (Mejra Festić, Faculty of Economics and Business, University of Maribor; EIPF - Economic Institute, Ljubljana. SLOVENIA. mejra.festic@eipf.si; fax: 00386 2 250 81 77)

  • Repina, Sebastijan

    (EIPF - Economic Institute, Ljubljana.)

  • Volcjak, Robert

    (EIPF - Economic Institute, Ljubljana)

Abstract

The future use of coal depends on environmental protection measures and the Kyoto Protocol, the price of CO2 emission coupons, consumption, new technologies, the price of other energy sources and the liberalization of the electricity markets. The prices of emission coupons will impact the costs of electricity energy production. Due to the relatively higher reference costs of alternative energy sources, we can not expect that the share of coal as an energy source will lower significantly as a source of electricity production in the future. From the point of view of regional economic aspects and the reference costs of electricity production, we could state that using coal in the near future is also tied to the socio-economic aspects of mining domestic coal. Using it in thermo plants is also enabled by the conditions of priority dispatching (since 2000) in the EU economies. We assessed the influence of prices and the use of other energy sources, environmental measures, energy efficiency and the influence of electricity market liberalisation on coal price movements. Our estimation shows that, if the prices of other energy sources and electricity increase, the price of coal increases. If the use of other energy sources increases, and if the gross uses of industrial waste and renewable resources increase, the price of coal decreases. Environmental protection measures contribute to an increase in coal prices. A higher quotient of energy efficiency decelerates the price of coal. And the euro (to dollar) appreciation decelerates coal prices.

Suggested Citation

  • Festic, Mejra & Repina, Sebastijan & Volcjak, Robert, 2010. "Estimating Coal Price Dynamics with the Principal Components Method," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 188-212, July.
    • Handle: RePEc:rjr:romjef:v::y:2010:i:2:p:188-212
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    References listed on IDEAS

    as
    1. Breusch, T S, 1978. "Testing for Autocorrelation in Dynamic Linear Models," Australian Economic Papers, Wiley Blackwell, vol. 17(31), pages 334-355, December.
    2. Harris, David, 1997. "Principal Components Analysis of Cointegrated Time Series," Econometric Theory, Cambridge University Press, vol. 13(4), pages 529-557, February.
    3. Massimiliano Marcellino & Carlo A. Favero & Francesca Neglia, 2005. "Principal components at work: the empirical analysis of monetary policy with large data sets," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(5), pages 603-620.
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    Cited by:

    1. Shiqiu Zhu & Yuanying Chi & Kaiye Gao & Yahui Chen & Rui Peng, 2022. "Analysis of Influencing Factors of Thermal Coal Price," Energies, MDPI, vol. 15(15), pages 1-16, August.
    2. Ambya Ambya & Lies Maria Hamzah, 2022. "Indonesian Coal Exports: Dynamic Panel Analysis Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 12(1), pages 390-395.

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    More about this item

    Keywords

    coal prices; environmental protection measures; priority dispatching;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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