Fuel Input Substitution under Tradable Carbon Permits System: Evidence from Finnish Energy Plants 2005-2008

Abstract. We use a panel dataset of about 5,000 Lithuanian firms between 2003 and 2010, to assess the impact of the EU ETS on the environmental and economic performance of participating firms. Using a matching methodology, we are able to estimate the causal impact of EU ETS participation on CO 2 emissions, CO 2 intensity, investment behaviour and profitability of participating firms. Our results show that ETS participation did not lead to a reduction in CO 2 emissions, while we identify a slight improvement in CO 2 intensity. ETS participants are shown to have retired part of their less efficient capital stock, and to have made modest additional investments from 2010. We also show that the EU ETS did not represent a drag on the profitability of participating firms.

Section: Introductionmentioning

confidence: 99%

Did the EU ETS Make a Difference? An Empirical Assessment Using Lithuanian Firm-Level Data

Jaraitė

Maria²

2016

“…Annual averages are calculated, and the prices are converted into Euro per MWh. For a study on the interaction and substitution effects between electricity, fuel and carbon prices, see for instance Linden et al (2013) and Fell et al (2015).…”

Section: (I) Economic Activitymentioning

confidence: 99%

On the CO2 Emissions Determinants During the EU ETS Phases I and II: A Plant-level Analysis Merging the EUTL and Platts Power Data

Chèze¹,

Chevallier²,

Berghmans³

et al. 2020

This article studies ex-post the CO2 emissions determinants during 2005-2012 by resorting to an original database merging the European Union Transaction Log (EUTL) with the World Electric Power Plants (WEPP) database maintained by Platts. We estimate the main drivers of CO2 emissions for the 1,453 power plants included in the EU ETS using plant-level panel data. During phases I and II, there has been a debate about whether the economic crisis was ultimately the only factor behind the fall in CO2 emissions. We find that the EU ETS kept some degree of effectiveness but only during phase I (2005-07). During phase II (2008-12), its impact has been largely impeded by the deep economic recession in 2008-2009 which became the leading cause of the emissions reduction. We disentangle the analysis not only by periods but also for each type of power plants. We conclude that the EU Commission's flagship climate policy could and should be enhanced by better coordination of overlapping climate policies.

“…Bertrand et al (2014) extend these works by estimating the potential biomass demand from both co-firing and dedicated biomass 6. www.argusmedia.com 7. One may also mention here the contributions by Linden et al (2013), andSands et al (2014), which consider co-firing among other options to investigate the substitution between fossil and non-fossil fuels in the Finnish power system (Linden et al, 2013), and the effect of bio-electricity with other power technologies for the carbon balance between mitigation and land use (Sands et al, 2014). However, since co-firing is not the focus of these papers (but rather a secondary question that is not analyzed alone), we do not discuss them in detail in this literature review.…”

Section: The Economics Of Co-firing: a Literature Overviewmentioning

confidence: 99%

Co-firing Coal with Biomass under Mandatory Obligation for Renewable Electricity: Implication for the Electricity Mix

Bertrand¹

2019

This paper analyses the effect of recognizing co-firing coal with biomass as renewable electricity. We provide simulations for the French and German electricity mix. Results indicate that, if co-firing is recognized as a renewable, coal may crowd-out traditional renewables with increased generation and additional investments. Regarding CO 2 emissions, we find surges when co-firing is recognized as a renewable. The rise is more significant in Germany due to greater coal capacity. In France, the magnitude depends on the share of nuclear with a lower increase when old nuclear plants are prolonged. Finally, we find that recognizing co-firing as a renewable reduces the overall costs for electricity. We balance the cost saving with the increased social cost from higher CO 2 emissions. Results show that the cost saving is lower than the increased carbon cost for society with carbon valuation around 100 Euros/tCO 2 , except in France when old nuclear plants are not decommissioned.