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Afzal S Siddiqui - One of the best experts on this subject based on the ideXlab platform.

  • implications of the EU Emissions Trading system for the south east EUrope regional electricity market
    Energy Economics, 2017
    Co-Authors: Verena Viskovic, Yihsu Chen, Afzal S Siddiqui
    Abstract:

    As part of its climate policy, the EUropean Union (EU) aims to reduce greenhouse gas (GHG) Emissions levels by 20% by the year 2020 compared to 1990 levels. Although the EU is projected to reach this goal, its achievement of objectives under its Emissions Trading System (ETS) may be delayed by carbon leakage, which is defined as a situation in which the reduction in Emissions in the ETS region is partially offset by an increase in carbon Emissions in the non-ETS regions. We study the interaction between Emissions and hydropower availability in order to estimate the magnitude of carbon leakage in the South-East EUrope Regional Electricity Market (SEE-REM) via a bottom-up partial equilibrium framework. We find that 6.3% to 40.5% of the Emissions reduction achieved in the ETS part of SEE-REM could be leaked to the non-ETS part depending on the price of allowances. Somewhat surprisingly, greater hydropower availability may increase Emissions in the ETS part of SEE-REM. However, carbon leakage might be limited by demand response to higher electricity prices in the non-ETS area of SEE-REM. Such carbon leakage can affect both the competitiveness of producers in ETS member countries on the periphery of the ETS and the achievement of EU targets for CO2 Emissions reduction. Meanwhile, higher non-ETS electricity prices imply that the current policy can have undesirable outcomes for consumers in non-ETS countries, while non-ETS producers would experience an increase in their profits due to higher power prices as well as exports. The presence of carbon leakage in SEE-REM suggests that current EU policy might become more effective when it is expanded to cover more countries in the future.

Ling Xiong - One of the best experts on this subject based on the ideXlab platform.

  • the allowance mechanism of china s carbon Trading pilots a comparative analysis with schemes in EU and california
    Applied Energy, 2017
    Co-Authors: Ling Xiong, Bo Shen, Shaozhou Qi, Lynn Price, Bin Ye
    Abstract:

    The allowance mechanism is one of the core and sensitive aspects in the design of a carbon Emissions Trading scheme and affects the compliance cost for each entity covered under the scheme. By examining China’s allowance mechanism from two aspects-allowance allocation and allowance distribution, this paper compares China’s carbon Trading pilots with the EU Emissions Trading Scheme and California Cap-and-Trade Program. The comparison identifies the unique features in allowance mechanism and particular issues that affect the efficiency of the pilots. The paper also recommends courses of action to strengthen China’s existing pilots and to build valuable experiences for the establishment of the national cap-and-trade system in China.

  • assessment of allowance mechanismin china s carbon Trading pilots
    Energy Procedia, 2015
    Co-Authors: Ling Xiong, Bo Shen, Shaozhou Qi, Lynn Price
    Abstract:

    Abstract The allowance mechanism is one of the core and sensitive aspectsindesign of a carbon Trading scheme andaffects the compliance cost for each company covered under the scheme. By examiningChina's allowance mechanismfromtwo aspectsincluding allowance allocation and allowance distribution, this paper comparesChina's carbon Trading pilots with the EU Emissions Trading System and CaliforniaCap-and-Trade Program, and through the comparison identify issues that affectthe efficiency of the pilots. The paper also recommends course of actions to strengthen China's existing pilots and buildvaluable experiences for the establishment of the national cap-and-trade system in China.

Ulrich J Wagner - One of the best experts on this subject based on the ideXlab platform.

  • the impact of the EUropean union Emissions Trading scheme on regulated firms what is the evidence after ten years
    Review of Environmental Economics and Policy, 2016
    Co-Authors: Ralf Martin, Mirabelle Muuls, Ulrich J Wagner
    Abstract:

    Abstract This article reviews the recent literature on ex post evaluation of the impacts of the EUropean Union (EU) Emissions Trading Scheme (ETS) on regulated firms in the industrial and power sec...

  • industry compensation under relocation risk a firm level analysis of the EU Emissions Trading scheme
    The American Economic Review, 2014
    Co-Authors: Ralf Martin, Mirabelle Muuls, Laure B De Preux, Ulrich J Wagner
    Abstract:

    When regulated firms are offered compensation to prevent them from relocating, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage caused by relocation. We formalize this fundamental economic logic and apply it to analyzing compensation rules proposed under the EU Emissions Trading Scheme, where emission permits are allocated free of charge to carbon-intensive and trade-exposed industries. We show that this practice results in substantial overcompensation for given carbon leakage risk. Efficient permit allocation reduces the aggregate risk of job loss by more than half without increasing aggregate compensation. (JEL H23, Q52, Q53, Q54, Q58)

  • the impact of carbon Trading on industry evidence from german manufacturing firms
    VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy, 2014
    Co-Authors: Sebastian Petrick, Ulrich J Wagner
    Abstract:

    We estimate the causal impact of the EU Emissions Trading Scheme on manufacturing firms using comprehensive panel data from the German production census. Semiparametric matching estimators yield robust evidence that the policy caused treated firms to abate onefifth of their CO2 Emissions between 2007 and 2010 relative to non-treated firms. This reduction was achieved predominantly by improving energy efficiency and by curbing the consumption of natural gas and petrolEUm products, but not electricity use. We find no evidence that Emissions Trading lowered employment, turnover or exports of treated firms.

  • on the empirical content of carbon leakage criteria in the EU Emissions Trading scheme
    LSE Research Online Documents on Economics, 2014
    Co-Authors: Ralf Martin, Mirabelle Muuls, Laure B De Preux, Ulrich J Wagner
    Abstract:

    The EU Emissions Trading Scheme continues to exempt industries deemed at risk of carbon leakage from permit auctions. Carbon leakage risk is established based on the carbon intensity and trade exposure of each 4-digit industry. Using a novel measure of carbon leakage risk obtained in interviews with almost 400 managers at regulated firms in six countries, we show that carbon intensity is strongly correlated with leakage risk whereas overall trade exposure is not. In spite of this, most exemptions from auctioning are granted to industries with high trade exposure to developed and less developed countries. Our analysis suggests two ways of tightening the exemption criteria without increasing relocation risk among non-exempt industries. The first one is to exempt trade exposed industries only if they are also carbon intensive. The second one is to consider exposure to trade only with less developed countries. By modifying the carbon leakage criteria along these lines, EUropean governments could raise additional revenue from permit auctions of up to €3. billion per year, based on a permit price of €30.

  • industry compensation under relocation risk a firm level analysis of the EU Emissions Trading scheme
    Social Science Research Network, 2013
    Co-Authors: Ralf Martin, Mirabelle Muuls, Laure B De Preux, Ulrich J Wagner
    Abstract:

    When regulated firms are offered compensation to prevent them from relocating, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage caused by relocation. We formalize this fundamental economic logic and apply it to analyzing compensation rules proposed under the EU Emissions Trading Scheme, where emission permits are allocated free of charge to carbon intensive and trade exposed industries. We show that this practice results in substantial overcompensation for given carbon leakage risk. Efficient permit allocation reduces the aggregate risk of job loss by more than half without increasing aggregate compensation.

Lynn Price - One of the best experts on this subject based on the ideXlab platform.

  • the allowance mechanism of china s carbon Trading pilots a comparative analysis with schemes in EU and california
    Applied Energy, 2017
    Co-Authors: Ling Xiong, Bo Shen, Shaozhou Qi, Lynn Price, Bin Ye
    Abstract:

    The allowance mechanism is one of the core and sensitive aspects in the design of a carbon Emissions Trading scheme and affects the compliance cost for each entity covered under the scheme. By examining China’s allowance mechanism from two aspects-allowance allocation and allowance distribution, this paper compares China’s carbon Trading pilots with the EU Emissions Trading Scheme and California Cap-and-Trade Program. The comparison identifies the unique features in allowance mechanism and particular issues that affect the efficiency of the pilots. The paper also recommends courses of action to strengthen China’s existing pilots and to build valuable experiences for the establishment of the national cap-and-trade system in China.

  • assessment of allowance mechanismin china s carbon Trading pilots
    Energy Procedia, 2015
    Co-Authors: Ling Xiong, Bo Shen, Shaozhou Qi, Lynn Price
    Abstract:

    Abstract The allowance mechanism is one of the core and sensitive aspectsindesign of a carbon Trading scheme andaffects the compliance cost for each company covered under the scheme. By examiningChina's allowance mechanismfromtwo aspectsincluding allowance allocation and allowance distribution, this paper comparesChina's carbon Trading pilots with the EU Emissions Trading System and CaliforniaCap-and-Trade Program, and through the comparison identify issues that affectthe efficiency of the pilots. The paper also recommends course of actions to strengthen China's existing pilots and buildvaluable experiences for the establishment of the national cap-and-trade system in China.

Cal Muckley - One of the best experts on this subject based on the ideXlab platform.

  • a microstructure analysis of the carbon finance market
    International Review of Financial Analysis, 2014
    Co-Authors: Don Bredin, Stuart Hyde, Cal Muckley
    Abstract:

    The EUropean Union Emissions Trading Scheme is the key policy instrument of the EUropean Commission's Climate Change Program aimed at reducing greenhouse gas Emissions to 8% below 1990 levels by 2012. The key asset traded under the scheme is the EUropean Union allowance (EUA). This article examines ultra high frequency data to assess the extent of the development in the futures market of the EU Emissions Trading Scheme. Our results indicate significant developments consistent with sequential information arrival. They also indicate a negative contemporaneous relationship between volume and volatility for all contracts. The implication is that liquidity traders dominate any role played by informed traders. Incorporating the duration between trades in our analysis has significant impact suggesting that any empirical investigation of the intra-day volume–volatility relationship needs to actively account for the impact of time elapse between trades.

  • a microstructure analysis of the carbon finance market
    Social Science Research Network, 2013
    Co-Authors: Don Bredin, Stuart Hyde, Cal Muckley
    Abstract:

    The EUropean Union Emissions Trading Scheme is the key policy instrument of the EUropean Commission's Climate Change Program aimed at reducing greenhouse gas Emissions to eight percent below 1990 levels by 2012. The key asset traded under the scheme is the EUropean Union allowance (EUA). This article examines ultra high frequency data to assess the extent of the development in the futures market of the EU Emissions Trading Scheme. Our results indicate significant developments consistent with sequential information arrival. They also indicate a negative contemporaneous relationship between volume and volatility for all contracts. The implication is that liquidity traders dominate any role played by informed traders. Incorporating the duration between trades in our analysis has significant impact suggesting that any empirical investigation of the intra-day volume-volatility relationship needs to actively account for the impact of time elapse between trades.

  • an emerging equilibrium in the EU Emissions Trading scheme
    Energy Economics, 2011
    Co-Authors: Don Bredin, Cal Muckley
    Abstract:

    Abstract The EUropean Union's Emissions Trading Scheme (ETS) is the key policy instrument of the EUropean Commission's Climate Change Program aimed at reducing greenhouse gas Emissions to eight percent below 1990 levels by 2012. A critically important element of the EU ETS is the establishment of a market determined price for EU allowances. This article examines the extent to which several theoretically founded factors including, economic growth, energy prices and weather conditions determine the expected prices of the EUropean Union CO 2 allowances during the 2005 through to the 2009 period. The novel aspect of our study is that we examine heavily traded futures instruments that have an expiry date in Phase 2 of the EU ETS. Our study adopts both static and recursive versions of the Johansen multivariate cointegration likelihood ratio test as well as a variation on this test with a view to controlling for time varying volatility effects. Our results are indicative of a new pricing regime emerging in Phase 2 and point to a maturing market driven by the fundamentals. These results are valuable both for traders of EU allowances and for those policy makers seeking to improve the design of the EUropean Union ETS.