We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
The Impact of the EU ETS on Prices, Profits and Emissions in the Power Sector: Simulation Results with the COMPETES EU20 Model.
- Authors
Lise, Wietze; Sijm, Jos; Hobbs, Benjamin
- Abstract
This paper analyses the impact of the EU Emissions Trading Scheme (ETS) on electricity prices, in particular on wholesale power markets across the EU. To study this impact, this paper discusses the major results of a bottom-up modelling analysis of the implications of emissions trading for the performance of the wholesale power market in 20 European countries. The analyses show that a significant part of the costs of (freely allocated) CO emission allowances is passed through to power prices, resulting in higher electricity prices for consumers and additional (‘windfall’) profits for power producers, even in cases of full auctioning. In addition, they show that the ETS-induced increases in power prices depend not only on the level of CO prices but also on the structure of the power market, i.e., the incidence of market power, and the price responsiveness of power demand. Finally, the analyses show that the internalization and pass-through of carbon costs are crucial elements in a policy regime to reduce CO emissions by both changing the mix of power generation technologies and lowering total electricity demand.
- Subjects
ELECTRICITY; PRICES; WINDFALL profits; PROFITEERING; CARBON taxes; ELECTRIC power production; ELECTRICITY markets; ELECTRIC power distribution; MARKETING
- Publication
Environmental & Resource Economics, 2010, Vol 47, Issue 1, p23
- ISSN
0924-6460
- Publication type
Article
- DOI
10.1007/s10640-010-9362-9