COSubscript2/Subscript emission allowances and

Authors: Carlos Pinho Mara Madaleno

Publish Date: 2011/06/07

Volume: 13, Issue: 3, Pages: 259-281

PDF Link

Abstract

This empirical work examines interactions between carbon electricity and fossil fuel coal oil and natural gas returns Impacts of emission trading are studied with the Vector Error Autoregressive Correction Model VECM approach for 5 endogenous variables using monthly data from October 2005 to October 2009 throughout Europe Germany France and Nordic countries by taking into account their heterogeneity Results reveal that nuclear power generation could limit increases in prices of electricity and that the effect of carbon depends on the energy mix and electricity deregulation stage of the country under analysis It seems that in the European Energy Exchange EEX more carbon coercion was undergone and innovations in carbon are stronger in electricity prices In sum carbon constraints on the cost of coal and electricity production depend on the country analyzed which addresses an answer to the impact of the recently created European Union Emission Trading System EU ETS In this respect it also provides further development directions of the EU ETS while recognizing its features and effects on other energy markets drawing some lessons in terms of domestic policiesThis research has been supported by the Portuguese Foundation for Science and Technology FCT under the grant number SFRH/BD/19948/2004 provided to the second author We would like to thank EEX Powernext and Nord Pool markets for providing us with the necessary data Electricity and CO2 data come directly from their official websites

Keywords: