The impact of the EU ETS on the corporate value of European electricity corporations

Mo, Jiao; Zhu, Lei; Fan, Ying

doi:10.1016/j.energy.2012.02.037

Cited by 62 publications

(52 citation statements)

References 25 publications

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“…Mo et al . () extend the analysis of previous works mainly by comparing estimated effects across trading periods. The estimation sample covers the years 2006–2009, thus straddling Phases I and II.…”

Section: The Evidencementioning

confidence: 70%

The Impact of the Eu Emissions Trading System on Competitiveness and Carbon Leakage: The Econometric Evidence

Verde

2020

Journal of Economic Surveys

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This paper carefully surveys the econometric literature that tests for competitiveness effects and related carbon leakage caused by the EU Emissions Trading System (EU ETS). The results of this literature tell us that to date there is no evidence of the EU ETS having had widespread negative or positive effects on the competitiveness of regulated firms, nor is there evidence of significant carbon leakage. However, the paper also identifies three important caveats to this general conclusion. Firstly, the evidence we have still largely refers to the first two trading periods, namely Phases I (2005–2007) and II (2008–2012). Secondly, some heterogeneity of estimated effects is observed, but patterns, notably sectoral patterns, hardly emerge. Thirdly, very little explored is whether the EU ETS has had long‐term effects on the economy via investment leakage or firm dynamics. Further empirical studies investigating these long‐term effects are particularly desirable.

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Section: The Evidencementioning

confidence: 70%

The Impact of the Eu Emissions Trading System on Competitiveness and Carbon Leakage: The Econometric Evidence

Verde

2020

Journal of Economic Surveys

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“…What we have outlined above is only one aspect of the interaction between different policy instruments, that is, the synergy effect; the other one is the possible conflict effect. Some previous studies have pointed out that too stringent a policy for supporting renewable energy may lower carbon prices by reducing the demand for carbon emission permits in the carbon market (Fankhauser et al, 2010;Fischer and Preonas, 2010;Greaker et al, 2008), which would undermine the effect of the emission trading scheme on emission abatement and, especially, on low carbon energy investment (Grubb and Neuhoff, 2006;Abadie and Chamorro, 2008;Blanco and Rodrigues, 2008;Nordhaus, 2011;Mo et al, 2012;Löfgren et al, 2013;Mo et al, 2016). For example, the carbon prices set out by the EU ETS are low for several reasons, including the generous allocation of allowances, the lavish use of credits from offsetting projects, the outbreak of the financial crisis and so on.…”

Section: Introductionmentioning

confidence: 99%

Coordinating carbon pricing policy and renewable energy policy with a case study in China

2017

Computers & Industrial Engineering

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In order to reduce greenhouse gas (GHG) emissions, many countries have set various kinds of policy targets and introduced policy instruments accordingly, such as carbon pricing and renewable electricity subsidies. As a consequence, potential interactions and, especially, conflicts between these co-existing instruments have become a significant concern. In this paper, a partial equilibrium model is constructed to explore the interaction between carbon pricing and renewable electricity subsidies. Based on this model, the following issues are explored: the conditions under which a single policy is optimal and the scenarios where a policy mix is necessary in the realisation of the outlined policy targets, and the means by which to coordinate different policy targets to reduce the negative effects of any potential conflicts, especially possible CO 2 price collapses. The optimal portfolio of the two policy targets is obtained, and the method of coordinating them to stablize CO 2 prices is delineated. Thereafter, an empirical study of China's 2 case is conducted. The results show that with the policy targets set by the Chinese government for 2020, renewable energy power subsidies may lead to a collapse of CO 2 prices, and a tightening of the carbon emission budget is necessary to stablize the latter.

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“…For instance, Mo et al (2012) indicated that positive EUA prices generated corporate value depreciation during phase II. By using a modified multifactor model similar to Eq.…”

Section: Power Sector Vecm Estimationmentioning

confidence: 99%

“…Some scholars have concluded that the EU ETS has had a positive effect on power companies: Oberndorfer (2009), Veith et al (2009), Keppler and Cruciani (2010a), Mo et al (2012) and Chan et al (2013) found that EUA price variations and stock returns or revenue of the European electricity corporations are shown to be positively correlated. However, the particular effect of EUA price variations on electricity corporations' stock returns might vary with country (Oberndorfer 2009 found a significantly small negative relationship for Spain), EU ETS phase (Mo et al (2013) found a positive and negative correlation during phase I and II respectively), allocation of allowances over time (emission based or generation benchmark based) and power generation technology (Bode (2006) found that lignite-fired power plant operators had the highest positive impact by using an emission based approach, whereas the gas-fuelled plant operators obtained it by using a generation benchmark as basis for the allocation).…”

Section: Introductionmentioning

confidence: 99%

Firm-specific impacts of CO2 prices on the stock market value of the Spanish power industry

2016

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EU ETS impacts on stock market returns of Spanish power sector. Long-run positive effect of EU ETS on market returns is found only in Phase II. No short-run effects were found. EUA price effect is company-specific. a r t i c l e i n f o b s t r a c tEuropean Union carbon emissions allowances (EUA) price fluctuations can affect electricity companies' stock market values as these oscillations may change firms' profitability and thus investors' decisions. This outcome can differ not only contingent on the EU ETS Phase, but also on firms' generation mix. Moreover, stock markets may react differently to EUA increases in comparison to decreases, thus asymmetrically.By using daily data from January 2008 to July 2014, this article analyses long-run equilibrium relations and short-run interactions between the aggregated electricity industry stock market returns and EUA price changes. Moreover, we test if the relationship between EUA price variations and electricity stock returns is asymmetric and if the carbon price effect and the asymmetry are power firm-specific.Adding to earlier studies, we initially provide an inspection of the individual impact of EU ETS Phase II and on-going Phase III; followed by a comparative analysis between power firms which core activity relies on renewable energy sources and those whose sources are fundamentally non-renewable ones.A statistically significant positive long-run impact of EU ETS on the aggregated power sector stock market return is found concerning Phase II and works asymmetrically. Moreover, evidence is provided demonstrating that asymmetry and EUA effects are power firm-specific.

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The impact of the EU ETS on the corporate value of European electricity corporations

Cited by 62 publications

References 25 publications

The Impact of the Eu Emissions Trading System on Competitiveness and Carbon Leakage: The Econometric Evidence

The Impact of the Eu Emissions Trading System on Competitiveness and Carbon Leakage: The Econometric Evidence

Coordinating carbon pricing policy and renewable energy policy with a case study in China

Firm-specific impacts of CO2 prices on the stock market value of the Spanish power industry

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