Sensitivity Analysis of Key Factors Influencing Carbon Prices under the EU ETS

Abstract

The carbon market has become a major mechanism for global carbon emission reduction. However, the actual operation of the carbon market does not meet the expectation due to the drastic fluctuation of carbon prices. It is of great importance for regulators to fully understand the dynamic operation of the carbon market. This paper employs the carbon market dynamic assessment model to analyze key factors including emission reduction targets and power loads, which influence carbon prices under the European Union Emissions Trading System (EU ETS). The feasibility of the model is verified by simulating the carbon price crisis of the second stage of EU ETS. The simulation results specify that the total emissions are more susceptible to changes of power loads than emission reduction targets, which explains why the European Commission could do little to stabilize the carbon market when facing the disturbances of the global financial crisis and the European crisis. In addition, the threshold carbon price has a great important influence on emission reductions, which is of great importance for regulators to improve the market efficiency. Furthermore, according to the transfer rate from carbon prices to electricity prices, governmental subsidies could be needed to ensure the stability of the power grid.

Enhancing renewable energy certificate transactions through reinforcement learning and smart contracts integration

“…Researchers worldwide, especially in China, Europe, and the United States, have thoroughly explored the rules of the green certificate market [5][6][7][8] , circulation methods 9 , price simulations 10 , and market models 11,12 . Through trading games [13][14][15] , equilibrium models 16 , the integration of electricity markets with green certificate markets [17][18][19] , the coupling of green certificates with carbon emissions 46,47 , market combinations 48 , the impact of carbon pricing 49 , and the effect of electricity load 50 , scholars aim to understand and optimize the dynamics and efficiency of the GC market.…”

Repowering Industrial Combined Heat and Power Units: a Contribution to Cleaner Energy Production

“…Many existing thermal power plants (TPPs) and CHPs throughout Europe have to face their advanced age, deteriorated efficiency and the strengthening pressure to lower their carbon footprint [7,8] both due to legislation [9] and growing carbon price [10,11]. On the contrary to radical solutions such as rapid shut down of coal power plants which is associated with immense costs [12], rehabilitation and repowering of the existing units to prolong their service, increase their efficiency and decrease the pollutants emissions appears more feasible [13,14].…”

The Influencing Factors of the Carbon Trading Price: A Case of China against a “Double Carbon” Background

“…But these factors differ in factor selection, time, or spatial dimension and are not necessarily leading to consistent conclusions [9]. Much more literature focuses on the European carbon market or individual pilot market in China [4,[10][11][12][13][14][15][16], while there are few literature studies for the 2017-2021 period of the China markets. Factors vary according to single or mixed types, and the corresponding impacts empirically differ in their correlation direction and degree across pilot markets [1,4,15].…”