Stochastic Differential Equation Models for the Price of European CO2 Emissions Allowances

Cai, Wei; Pan, Jiafeng

doi:10.3390/su9020207

Cited by 7 publications

(7 citation statements)

References 20 publications

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“…The main mechanism was free allocation based on past emissions. Since 2013, auctioning is the default method of allocating emission allowances (Cai and Pan 2017). The accurate prediction of carbon prices is an information useful for carbon traders, brokers and firms, who can use this information to manage their portfolios.…”

Section: Literature Reviewmentioning

confidence: 99%

The Profitability of Residential Photovoltaic Systems. A New Scheme of Subsidies Based on the Price of CO2 in a Developed PV Market

D’Adamo

2018

Social Sciences

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Photovoltaic (PV) resource drives the clean global economy of the future. Its sustainability is widely confirmed in literature, however some countries present a growth very low in the last years. A new policy proposal is examined in this work. It aims to stimulate a new diffusion of PV plants in mature markets (e.g., Italy) regarding residential consumers. The subsidy is given to the amount of energy produced by PV plant for a period of 20 years (equal to its lifetime) and its value is calculated according to the scheme of European Emissions Trading System (EU ETS). Discounted Cash Flow (DCF) is used as economic method and two indexes are proposed: Net Present Value (NPV) and Discounted Payback Time (DPBT). The baseline case studies vary in function of two variables; (i) the share of self-consumption (30%, 40% and 50%) and (ii) the price of emissions avoided (10, 35 and 70 € per ton of CO2eq). Results confirms the environmental advantages of PV sources as alternative to the use of fossil fuels (685 gCO2eq/kWh) and economic opportunities are verified in several scenarios (from 48 €/kW to 1357 €/kW). In particular, the profitability of PV systems is greater with a subsidized rate of fiscal deduction of 50% in comparison to subsidies with a value of carbon dioxide lower than 18.50 €/tCO2eq.

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Section: Literature Reviewmentioning

confidence: 99%

The Profitability of Residential Photovoltaic Systems. A New Scheme of Subsidies Based on the Price of CO2 in a Developed PV Market

D’Adamo

2018

Social Sciences

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“…In 2005, tradable green certificate schemes and carbon pricing mechanisms were introduced in the EU with the Emissions Trading System (ETS). They were driven by coal and gas prices from 2005 to 2007; by electricity prices from 2008 to 2012 [14]; and by a focus on auctioning rather than free allocation from 2013 to 2020 [15]; from 2021 to 2030, the focus is on sectors most at risk of relocating their production outside of the EU [16]. In December 2022, the Council and the European Parliament implemented the Carbon Border Adjustment Mechanism (CBAM) to prevent the risk of carbon leakage, which occurs when companies move their carbon-intensive production outside the EU, where less stringent climate policies prevail, or when EU products are replaced by more carbon-intensive imports [17].…”

Section: Introductionmentioning

confidence: 99%

Greenhouse Gas Emissions Forecasts in Countries of the European Union by Means of a Multifactor Algorithm

et al. 2023

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A novel multifactor algorithm is developed with the aim of estimating GHG emissions in the EU countries and forecasting different future scenarios. This is created starting from (1) GDP, (2) population and (3) renewable energy share (RES). The determination coefficient (R2) of the multiple regression adopted reaches a value of 0.96; thus, only 4% of the GHG variation cannot be explained by the combination of the three variables. Germany is removed from the model after analysing the statistical outliers, as it presents an unusual behaviour within the European context. Also, France, Italy and Ireland are removed in the forecast analysis since they are characterised by corrected weighting values above the threshold value of the algorithm (0.156). The results show that GHG emissions decrease 14% in a low-growth-rate scenario, increase 24% in an average-growth scenario and increase 104% in a high-growth-rate scenario. Countries that improve the most are the ones that are currently underdeveloped in RES and are expected to decrease their population in the future (Croatia, Latvia, Cyprus and Greece). Other countries currently well positioned but with expected population growth (Sweden, Luxemburg and Denmark) or with expected intense GDP growth (Estonia and Malta) may lack decarbonisation levers. Therefore, policy makers should introduce additional subsidy schemes and tax exemptions in both developed and less developed countries to meet EU decarbonisation targets.

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“…First attempts to model stand growth and yield were done in Germany by Schwappach [4], and in Austria by Guttenberg [5]. At that time, graphical smoothing of omitted in deterministic models [21,22]. The first SDEs models were introduced to forestry by Suzuki (1971) [23] and Sloboda (1977) [24].…”

Section: Introductionmentioning

confidence: 99%

Modeling Dynamics of Structural Components of Forest Stands Based on Trivariate Stochastic Differential Equation

Rupšys

2019

Forests

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Research Highlights: Today’s approaches to modeling of forest stands are in most cases based on that the regression models and they are constructed as static sub-models describing individual stands variables. The disadvantages of this method; it is laborious because too many different equations need to be assessed and empirical choices of candidate equations make the results subjective; it does not relate to the stand variables dynamics against the age dimension (time); and does not consider the underlying covariance structure driving changes in the stand variables. In this study, the dynamical model defined by a fixed-and mixed effect parameters trivariate stochastic differential equation (SDE) is introduced and described how such a model can be used to model quadratic mean diameter, mean height, number of trees per hectare, self-thinning line, stand basal area, stand volume per hectare and much more. Background and Objectives: New developed marginal and conditional trivariate probability density functions, combining information generated from an age-dependent variance-covariance matrix of quadratic mean diameter, mean height and number of trees per hectare, improve stand growth prediction, and forecast (in forecast the future is completely unavailable and must only be estimated from historical patterns) accuracies. Materials and Methods: Fixed-and mixed effect parameters SDE models were harmonized to predict and forecast the dynamics of quadratic mean diameter, mean height, number of trees per hectare, basal area, stand volume per hectare, and their current and mean increments. The results and experience from applying the SDE concepts and techniques in an extensive whole stand growth and yield analysis are described using a Scots pine (Pinus sylvestris L.) experimental dataset in Lithuania. Results: The mixed effects scenario SDE model showed high accuracy, the percentage root mean square error values for quadratic mean diameter, mean height, number of trees per hectare, stand basal area and stand volume per hectare predictions (forecasts) were 3.37% (10.44%), 1.82% (2.07%), 1.76% (2.93%), 6.65% (10.41%) and 6.50% (8.93%), respectively. In the same way, the quadratic mean diameter, mean height, number of trees per hectare, stand basal area and stand volume per hectare prediction (forecast) relationships had high values of the coefficient of determination, R2, 0.998 (0.987), 0.997 (0.992), 0.997 (0.988), 0.968 (0.984) and 0.966 (0.980), respectively. Conclusions: The approach presented in this paper can be used for developing a new generation stand growth and yield models.

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Stochastic Differential Equation Models for the Price of European CO2 Emissions Allowances

Cited by 7 publications

References 20 publications

The Profitability of Residential Photovoltaic Systems. A New Scheme of Subsidies Based on the Price of CO2 in a Developed PV Market

The Profitability of Residential Photovoltaic Systems. A New Scheme of Subsidies Based on the Price of CO2 in a Developed PV Market

Greenhouse Gas Emissions Forecasts in Countries of the European Union by Means of a Multifactor Algorithm

Modeling Dynamics of Structural Components of Forest Stands Based on Trivariate Stochastic Differential Equation

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