| 1. |
- Burtraw, Dallas, et al.
(författare)
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A Price Floor Solution to the Allowance Surplus in the EU ETS : Mistra Indigo Policy Paper no.2
- 2013
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- Since 2008 there has been a rapid buildup of surplus emissions allowances in the EU ETS. The European Commission has presented six structural options to address the oversupply of allowances on a long-term basis. One option would introduce price management mechanisms, which could allow for the use of a price floor. A price floor has been mischaracterized as a tax, an instrument that has historically faced political opposition, and the commission states that an explicit carbon price objective would alter the nature of the EU ETS being a quantity-based market instrument. However, a price floor is structurally different from a tax in multiple ways, and its merits are well documented in the academic literature. This rule-based approach could reinforce the market-based philosophy and investment climate of the ETS.
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| 2. |
- Burtraw, Dallas, et al.
(författare)
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Climate Policy Options and Consequences in the International Spotlight: A Report for Industry on the Implications of Domestic Policy Design and Global Negotiations
- 2015
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- Following the 2009 Copenhagen Summit, momentum for mitigating global climate change has been spurred by the idea that success at the international level must be built around existing national policies. The Mistra Indigo research program —a collaboration among IVL Swedish Environmental Research Institute, the University of Gothenburg’s Department of Economics, and Resources for the Future—was created to analyze this bottom-up approach to climate policy. From 2012-2015 the program brought together leading experts in economics and environmental policy, with the goal of understanding how to design and select environmental policy instruments to promote longterm, cost-effective global climate change mitigation change while taking into account the uncertain ties of international policy.
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| 3. |
- Holt, Charles, et al.
(författare)
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Teaching Opportunity Cost in an Emissions Permit Experiment
- 2010
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Ingår i: International Review of Economics Education. - : Elsevier. - 1477-3880. ; 9:2, s. 34-42
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Tidskriftsartikel (refereegranskat)abstract
- This paper describes an individual choice experiment that can be used to teach students how to correctly account for opportunity costs in production decisions. Students play the role of producers that require a fuel input and an emissions permit for production. Given fixed market prices, they make production quantity decisions based on their costs. Permits have a constant price throughout the experiment.In one treatment, students have to purchase both a fuel input and an emissions permit for each production unit. In a second treatment, they receive permits for free and any unused permits are sold on their behalf at the permit price. If students correctly incorporate opportunity costs, they will have the same supply function in both treatments. This experiment motivates classroom discussion of opportunity costs and emission permit allocation under cap and trade schemes. The European Union Emissions Trading Scheme (EU ETS) provides a relevant example for classroom discussion, as industry earned significant 'windfall profits' from free allocation of emissions permits in the early phases of the program.
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| 4. |
- Löfgren, Åsa, 1972, et al.
(författare)
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Architecture of the EU Emissions Trading System in Phase 3 and the Distribution of Allowance Asset Values
- 2015
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- Recent changes to the EU Emissions Trading System introduce structural changes regarding the initial distribution of emissions allowances, which are worth tens of billions of euros. A key change is the expanding role for auctions, which account for about half of the allowance allocation now and will be a growing share going forward. The use of revenue from auctions is a decision left to EU Member States and appears increasingly important. Well over half of auction revenue to date has been directed to energy and climate related purposes. Further, we do not find evidence that Member States have used state aid to electricity-intensive firms to strategically support domestic industry. The trading system is evolving in a way that is likely to improve its performance, but there remain important questions related the future price of allowances and the distribution and use of asset value created under the trading system.
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| 5. |
- Palmer, Karen, et al.
(författare)
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Managing Cost Variability in Emission Allowance Markets
- 2008
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- The issue of managing costs in an emissions-trading program a controversial one, with short-run and long-run dimensions. Short-run disruptions in fuel supply due to natural or geo-political events can cause price fluctuations in fuel markets that have negative consequences on the economy, so in the short run policy makers might want to ameliorate these price fluctuations. Another concern has to do with cost management in the long run, where the issue has often played a role as a political proxy for the level of economic commitment to climate policy. Of course, the ultimate cost management tool is an emissions tax because the cost of the tax is predetermined and not subject to vacillations of an allowance market. We develop another idea, which is symmetric cost management within an emissions-trading program, in some detail. This approach would place a 'collar' on prices by combining a high-side price safety valve with a price floor. By providing for a ceiling and a floor on allowance prices, the mechanism we propose preserves incentives for investors to invest in clean technologies, which helps address the long-run issue of the cost of emissions reductions, and also guards against short-run variability. Such a mechanism could help the world to achieve the near term incentives to trim emissions that come with putting a price on CO2 with the longer run gains that come from greater investment in clean technologies such as renewables that might spark cost-reductions and technological breakthroughs that will be necessary to fight global warming effectively
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| 6. |
- Sterner, Thomas, 1952, et al.
(författare)
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Tradable Performance Standards in the Transportation Sector
- 2020
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Annan publikation (övrigt vetenskapligt/konstnärligt)abstract
- Several tradable performance standard (TPS) programs have recently been implemented in the US transportation sector: regulations for greenhouse gas emissions from passenger cars and trucks (national), zero-emission vehicle programs (10 states), the Renewable Fuel Standard (national), and low-carbon fuel standards (two states). The primary motivations are to promote innovation, to address consumers’ undervaluation of efficiency, and to reduce externalities, such as air pollution and the risks of dependence on foreign oil. A TPS sets a standard of technology performance but leaves technology choice to the producers; it increases the relative costs of technologies with undesirable performance characteristics and lowers the costs of technologies with desirable characteristics. We review the TPS programs and compare TPS with carbon pricing. Whereas carbon pricing creates incentives for both output reduction and technology change, TPS programs do not fully internalize the costs of emissions, resulting in lower price effects on products and raising the total cost of emissions reductions compared with carbon pricing. However, a TPS provides stronger incentives for upstream innovation and technology transformation. We show that TPS programs are generally additive to the effects of carbon pricing, so the policies can be combined without sacrificing the efficiency properties achieved by pricing. Given that the expected carbon price may be too low to substantially affect transportation demand or technology change, combining TPS with a carbon price may be necessary to drive innovation and achieve a sustained low-carbon transformation in the sector.
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| 7. |
- Wråke, Markus, et al.
(författare)
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Interaction Between the EU ETS and the Nordic Electricity Market: Setting the Scene
- 2008
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- This white paper sets the scene for research on the interaction between the electricity market and the European Emissions Trading Scheme (EU ETS). We look at conceptual aspects of price formation, and compare empirical evidence with theoretical expectations through a review of the literature on the functioning of the Nordic electricity market and the EU ETS. From this review a set of prioritised research questions emerges, and we then go on to map available methods to these research questions. This forms a foundation for research that explores different aspects of uncertainty, options for organising the EU ETS and analysis of how the EU ETS may affect price level and volatility in the allowance and electricity markets, as well as investment. Ultimately, the research project that this white paper is a product from, aims to improve the understanding of how the EU ETS, through the electricity market, will affect consumers and the environment. This paper builds a foundation for assessing which specific research questions are most important and where our efforts would add most value. In consideration of the interaction between emissions trading and the electricity market, several related but separate issues and research questions are relevant to analyse. To keep the questions as clearly defined and distinct as possible, we summarize the focus of further research in four areas that frame the discussion on the interaction between the EU ETS and the electricity market, and in broad terms the incentives for investment behaviour that are created. + Understanding and managing uncertainty. + Price interactions between the EU ETS and the Nordic power market. + Incentives for investment created by various approaches to allowance allocation. + How other climate related policies such as renewable support programs interact with the EU ETS and electricity markets.
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| 8. |
- Wråke, Markus, et al.
(författare)
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Opportunity cost for Free Allocations of Emissions Permits : An Experimental Analysis
- 2010
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Ingår i: Environmental and Resource Economics. - : Springer-Verlag New York. - 0924-6460 .- 1573-1502. ; 46:3, s. 331-336
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Tidskriftsartikel (refereegranskat)abstract
- An important feature of emissions trading is how emissions permits are allocated. The choice between an auction and free allocation should not influence firms' production choices nor consumer prices according to economic theory. However, many parties expect the method of allocation to affect product prices. This paper describes an experimental investigation into price determination under a cap-and-trade program with different allocation methods. Participants initially display diverse pricing strategies. However, given a simple economic setting in which earnings depend on behavior, we find that subjects learn to consider the opportunity cost of permits and overall behavior moves toward the economic prediction.
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| 9. |
- Wråke, Markus, et al.
(författare)
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Pricing strategies under emissions trading : an experimental analysis
- 2009
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- Transportation within the EU, as in most of the industrialized world, shows an increasing trend in CO2 emissions. This calls for measures both to decrease the amount of transportation and/or to increase the efficiency in the vehicle fleet. The present paper addresses the latter by providing a simple and transparent analytical model that illustrates how different policy measures address different parts of an interlinked system, which determines the composition of the future car fleet. Apart from being simple, and thereby providing an intuitive framework, the model highlights the difference between initial responses to policies and the outcome in equilibrium both in the short and the long run.
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| 10. |
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