Dynamic Effects in International Carbon Emission Markets: Evidence from ECX CER

Heng-yu, WU; Hu, Genhua; Qin, Siyi; Liu, Jixian

doi:10.1109/bife.2011.51

Cited by 1 publication

(1 citation statement)

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“…The linkage between carbon futures markets with the energy market and the effectiveness of the carbon futures markets to combat GHG are two strands of studies relevant to this topic. This dynamic development of financial markets and carbon futures has attracted numerous researchers and practitioners with quantitative models (Wu et al, 2011). More often, the focus on the interaction between power systems and carbon policies is considered from the power market and emission reduction perspectives.…”

Section: Emission Allowances Models In Electricity Marketmentioning

confidence: 99%

Contracts in Electricity Markets under EU ETS: A Stochastic Programming Approach

Abate,

Riccardi,

Ruiz

2021

Preprint

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The European Union Emission Trading Scheme (EU ETS) is a cornerstone of the EU's strategy to fight climate change and an important device for plummeting greenhouse gas (GHG) emissions in an economically efficient manner. The power industry has switched to an auction-based allocation system at the onset of Phase III of the EU ETS to bring economic efficiency by negating windfall profits that have been resulted from grandfathered allocation of allowances in the previous phases. In this work, we analyze and simulate the interaction of oligopolistic generators in an electricity market with a gametheoretical framework where the electricity and the emissions markets interact in a twostage electricity market. For analytical simplicity, we assume a single futures market where the electricity is committed at the futures price, and the emissions allowance is contracted in advance, prior to a spot market where the energy and allowances delivery takes place. Moreover, a coherent risk measure is applied (Conditional Value at Risk) to model both risk averse and risk neutral generators and a two-stage stochastic optimization setting is introduced to deal with the uncertainty of renewable capacity, demand, generation, and emission costs. The performance of the proposed equilibrium model and its main properties are examined through realistic numerical simulations. Our results show that renewable generators are surging and substituting conventional generators without compromising social welfare. Hence, both renewable deployment and emission allowance auctioning are effectively reducing GHG emissions and promoting low-carbon economic path.

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Section: Emission Allowances Models In Electricity Marketmentioning

confidence: 99%