Impact of the carbon price on the integrating European electricity market

Aatola, Piia; Ollikainen, Markku; Toppinen, Anne

doi:10.1016/j.enpol.2013.06.036

Cited by 48 publications

(29 citation statements)

References 24 publications

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“…However, in their research, the carbon trading price is fixed and the impacts of the carbon trading price on the product carbon footprint decision are not discussed. For the former, some studies show that there are many factors influencing the carbon trading price, such as the economic and policy factors [22][23][24], so there is a certain gap between theory and management practice of cap-and-trade regulation. For the latter, the current developments in the product carbon footprint are supported and reviewed by organization, and this measure can report the low-carbon degree of the product and its production and environmental performance in supply chains [25][26][27].…”

Section: Literature Reviewmentioning

confidence: 99%

Joint Pricing and Product Carbon Footprint Decisions and Coordination of Supply Chain with Cap-and-Trade Regulation

2018

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Abstract:The implementation of cap-and-trade regulation worldwide is bound to have some effects on supply chain decision-making. This paper investigates optimal pricing and product carbon footprint decisions of the supply chain consisting of a manufacturer and a retailer under cap-and-trade regulation by applying optimization and game theory. By comparing the optimal results between the centralized and decentralized decision-making models, we find that the optimal product carbon footprint and selling price not only depend on the carbon trading price and carbon cap allocated by the government, but also relate to the initial carbon footprint of the product and the decision-making methods in the supply chain. It is found that there is also a "double marginalization" in the decentralized situation, thus we coordinate the supply chain using a two-part tariff contract. Specifically, only the manufacturer adjusts dynamically the wholesale price and fixed fee within the coordinating contract according to different initial carbon footprint and the range of the carbon cap reduction by the government. Finally, we obtain several interesting conclusions from the numerical examples and provide managerial insights and policy implications from the analytical results.

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Section: Literature Reviewmentioning

confidence: 99%

Joint Pricing and Product Carbon Footprint Decisions and Coordination of Supply Chain with Cap-and-Trade Regulation

2018

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“…Cointegration analysis was broadly applied to assess convergence and was at most employed to three sub-periods to capture changes in time (Aatola et al, 2013). Cointegration analysis requires nonstationarity of the time series; in order to meet this criterion researchers either aggregated the data (e.g.…”

Section: On Electricity Market Integration and Fuel And Carbon Price mentioning

confidence: 99%

“…They found the impact of carbon prices to depend on the countries' energy mixes. Aatola et al (2013) assessed the effect of carbon prices on the integration of European electricity markets using Granger causality, correlation and cointegration analysis. Comparing three sub periods, their findings support the association with energy mixes, but also indicate that there is variation with time and plant technology.…”

Section: On Electricity Market Integration and Fuel And Carbon Price mentioning

confidence: 99%

“…In Europe, natural gas, coal and carbon prices have been found to be associated with electricity price movements (Aatola et al, 2013;Asche et al, 2006;Bollino et al, 2013;Castagneto-Gisey, 2014, Mjelde andBessler, 2009), as the costs of generation are a large share of electricity prices. Most European states, however, have limited fossil fuel resources that can be used for electricity generation at the required scale.…”

Section: Introductionmentioning

confidence: 99%

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Time-varying convergence in European electricity spot markets and their association with carbon and fuel prices

2016

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Long-run dynamics of electricity prices are expected to reflect fuel price developments, since fuels generally account for a large share in the cost of generation. As an integrated European market for electricity develops, wholesale electricity prices should be converging as a result of market coupling and increased interconnectivity. Electricity mixes are also changing, spurred by a drive to significantly increase the share of renewables. Consequently, the electricity wholesale price dynamics are evolving, and the fuel-electricity price nexus that has been described in the literature is likely to reflect this evolution. This study investigates associations between spot prices from the British, French and Nordpool markets with those in connected electricity markets and fuel input prices, from December 2005 to October 2013. In order to assess the timevarying dynamics of electricity spot price series, localized autocorrelation functions are used. Electricity spot prices in the three markets are found to have stationary and non-stationary periods. When a trend in spot prices is observed, it is likely to reflect the trend in fuel prices. Cointegration analysis is then used to assess co-movement between electricity spot prices and fuel inputs to generation. The results show that British electricity spot prices are associated with fuel prices and not with price developments in connected markets, while the opposite is observed in the French and Nordpool day-ahead markets.

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“…And the energy is the most important demand factor, which has been recognized by many scholars. Aatola (2013) further study and show that the impact of the European integrated electricity market on the price of carbon emissions market do exist [3]. Zhu (2014) using structural breakpoint test to analyze the carbon emission market, the result shows that unexpected events led to structural changes in the carbon market and there are cointegration relationship exists among the carbon price, energy price, industrial production, temperature and other factors [4].…”

Section: Review Of the Literaturementioning

confidence: 99%

A Model of Carbon Price Interactions with International Embodied Carbon

Yan¹

2017

JSS

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This paper takes the EU as an example to discuss the relationship between international embodied carbon and carbon price through VAR model. The result shows that there is a long-term interaction but an asymmetric relationship between them: The impact of the scale of international embodied carbon on carbon futures price is significantly negative, while the impact of carbon futures price on the scale of international embodied carbon is negligible. Then this paper tries to come up with corresponding policy suggestion in the end based on empirical findings.

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Impact of the carbon price on the integrating European electricity market

Cited by 48 publications

References 24 publications

Joint Pricing and Product Carbon Footprint Decisions and Coordination of Supply Chain with Cap-and-Trade Regulation

Joint Pricing and Product Carbon Footprint Decisions and Coordination of Supply Chain with Cap-and-Trade Regulation

Time-varying convergence in European electricity spot markets and their association with carbon and fuel prices

A Model of Carbon Price Interactions with International Embodied Carbon

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