causalities between co2 electricity and other energy variables during phase i and phase ii of the eu ets the topic of this article is the analysis of the interplay between daily carbon electricity and gas price data with the european union emission trading system eu ets for co2 emissions in a first step we have performed granger causality tests for phase i of the eu ets january 2005 until december 2007 and the first year of phase ii of the eu ets 2008 the analysis includes both spot and forward markets given the close interactions between the two sets of markets the results show that during phase i coal and gas prices through the clean dark and spark spread impacted co2 futures prices which in return granger caused electricity prices during the first year of the phase ii the short run rent capture theory in which electricity prices granger cause co2 prices prevailed on the basis of the qualitative results of the granger causality tests we obtained the formulation testable equations for quantitative analysis standard ols regressions yielded statistically robust and theoretically coherent results

addressing leakage in the eu ets border adjustment or output based allocation the eu ets has been criticised for threatening the competitiveness of european industry and generating carbon leakage i e increasing foreign greenhouse gas emissions two main options have been put forward to tackle these concerns border adjustments and output based allocation i e allocation of free allowances in proportion to current production we compare various configurations of these two options as well as a scenario with full auctioning and no border adjustment against this background we develop a model of the main sectors covered by the eu ets electricity steel cement and aluminium we conclude that the most efficient way to tackle leakage is auctioning with border adjustment which generally induces a negative leakage a spillover this holds even if the border adjustment does not include indirect emissions if it is based on eu rather than foreign specific emissions or for some values of the parameters if it covers only imports another relatively efficient policy is to combine auctioning in the electricity sector and output based allocation in exposed industries especially if free allowances are given both for direct and indirect emissions i e those generated by the generation of the electricity consumed although output based allocation is generally less effective than border adjustment to tackle leakage it is more effective to mitigate production losses in the sectors affected by the ets which may ease climate policy adoption c 2011 elsevier b v all rights reserved

gone with the wind valuing the visual impacts of wind turbines through house prices this study provides quantitative evidence on the local benefits and costs of wind farm developments in england and wales focussing on their visual environmental impacts in the tradition of studies in environmental public and urban economics housing sales prices are used to reveal local preferences for views of wind farm developments estimation is based on quasi experimental research designs that compare price changes occurring in places where wind farms become visible with price changes in appropriate comparison groups these groups include places close to wind farms that became visible in the past or where they will become operational in the future and places close to wind farms sites but where the turbines are hidden by the terrain all these comparisons suggest that wind farm visibility reduces local house prices and the implied visual environmental costs are substantial

does money talk the effect of a monetary attribute on the marginal values in a choice experiment when designing choice experiments for nonmarket valuation the role of the price attribute is of major importance in the energy sector the uncertainty of future direction of changes in prices makes it difficult to include an adequate price vector in the design we separately investigate the implication of using price vectors with increases and decreases in tariffs from current levels on marginal value estimate from choice experiment data developed using prospect theory in addition we also analyse the effect of excluding the price vector on these marginal values by and large our results support the neoclassical theory as we find that the means of the conditional estimates of the marginal values of attributes are unaffected by the direction of the price change and from exclusion of the price attribute however the distributions show a larger spread of values when the choice experiment implies a tariff decrease which may have policy implications

conformity and the demand for environmental goods the existing literature on eco labeling and green consumerism has been framed within a classical market context where price and quality are the drivers of consumer choice however it seems possible that consumers are also concerned about the choices made by other consumers in fact it is unclear that people s consumption decisions are made independently of social context for instance under the desire to conform to certain social norms or in the presence of status concerns some individuals may be willing to pay a higher price premium for green products the more widespread green consumerism is in society we test this hypothesis using a choice experiment where the respondents were asked to choose among coffee products varying with respect to their share of ecological beans share of fair trade beans and price three treatments were used differing only in the information given about the choices made by other consumers we find different responses to the treatments across individuals and we can only confirm our hypothesis of conformity for women although men appear to have stronger preferences for ecological coffee than women have

valuing the attributes of renewable energy investments increasing the proportion of power derived from renewable energy sources is becoming an increasingly important part of many countries s strategies to achieve reductions in greenhouse gas emissions however renewable energy investments can often have external costs and benefits which need to be taken into account if socially optimal investments are to be made this paper attempts to estimate the magnitude of these external costs and benefits for the case of renewable technologies in scotland a country which has set particularly ambitious targets for expanding renewable energy the external effects we consider are those on landscape quality wildlife and air quality we also consider the welfare implications of different investment strategies for employment and electricity prices the methodology used to do this is the choice experiment technique renewable technologies considered include hydro on shore and off shore wind power and biomass welfare changes for different combinations of impacts associated with different investment strategies are estimated we also test for differences in preferences towards these impacts between urban and rural communities and between high and low income households

structural changes in volatility and stock market development evidence for spain abstract in this paper we review the factors that lead to changes in stock market volatility and use alternative methodologies of endogenous breakpoint detection in order to analyze whether the volatility of the spanish stock market has changed significantly over the period 1941 2001 this period corresponds to years of profound development of both the financial and the productive sides of the economy in this country the analysis of the spanish stock market suggests that volatility has behaved in a different manner over the period 1941 2001 after three decades of low volatility a structural break in volatility is detected in 1972 coinciding with the opening of the spanish economy from 1972 to 2001 the years of more intense financial development the stock market presents a higher level of volatility and lower persistence this effect is partly attributable to the increased growth of trading volume brought about by the economic development process

carbon pass through in the electricity sector an econometric analysis abstract we conduct an econometric analysis to investigate the carbon pass through in the greek electricity sector for this reason we utilize a rich micro level panel dataset including hourly data for 24 thermal power plants spanning the period from january 2014 to december 2017 in order to study the pass through of emissions costs to wholesale electricity prices we employ an instrumental variable approach our findings survived several robustness checks accounting for logged linear and non linear econometric specifications the empirical results indicate the existence of an almost complete pass through revealing that retailers fully internalize the cost of co2 permits this study incurs important policy implications since the complete pass through signify that wholesale electricity prices will increase at least in the short run however the overall effect on retail prices will be mostly affected by the amount of co2 permits and the fuel energy mix

oil prices and the stock prices of alternative energy companies energy security issues coupled with increased concern over the natural environment are driving factors behind oil price movements while it is widely accepted that rising oil prices are good for the financial performance of alternative energy companies there has been relatively little statistical work done to measure just how sensitive the financial performance of alternative energy companies are to changes in oil prices in this paper a four variable vector autoregression model is developed and estimated in order to investigate the empirical relationship between alternative energy stock prices technology stock prices oil prices and interest rates our results show technology stock prices and oil prices each individually granger cause the stock prices of alternative energy companies simulation results show that a shock to technology stock prices has a larger impact on alternative energy stock prices than does a shock to oil prices these results should be of use to investors managers and policy makers

a derivation of the marginal abatement cost curve abstract the relationship between a firm s technology and its marginal abatement cost mac curve is explored even under the simplest specifications the mac curve will be kinked at some point except under a special assumption which in reality could easily be violated the nondifferentiability implies that the choice of instrument under uncertainty may depend on the targeted level of emissions reduction also stability conditions for dynamic tax mechanisms may be violated in the neighborhood of the kink point a policy implication is that in some cases output restrictions are as efficient as emissions restrictions in contrast to previous results

technological innovation and real investment booms and busts abstract we investigate why new high risk technologies can attract excessive and often unprofitable investment we develop an equilibrium model in which rational risk averse agents overinvest in a risky technology possibly to the point that its expected return is negative overinvestment results from relative wealth concerns which arise endogenously from the imperfect tradability of future endowments competition over future consumption leads to an indirect utility for wealth with keeping up with the joneses properties that can induce herding because overinvestment increases with the risk of the technology our model can explain why new risky technological innovations may promote investment bubbles

econometric analysis of australian emissions markets and electricity prices emissions trading schemes aim to reduce the emissions in certain pollutants using a market based scheme where participants can buy and sell permits for these emissions this paper analyses the efficiency of the two largest schemes in australia the nsw greenhouse gas abatement scheme and the mandatory renewable energy trading scheme through their effect on the electricity prices from 2004 to 2010 we use a long run structural modelling technique for the first time on this market it provides a practical long run approach to structural relationships which enable the determination of the effectiveness of the theoretical expectations of these schemes the generalised forecast error variance decomposition analysis finds that both schemes emissions prices have little effect on electricity prices generalised impulse response function analysis support this finding indicating that when shocks are applied to electricity by the two schemes it returns to equilibrium very quickly this indicates that these schemes are not having the effect anticipated in their legislation

windfall profits in the power sector during phase iii of the eu ets interplay and effects of renewables and carbon prices abstract since power utilities were originally grandfathered into the eu ets by way of a free allocation of carbon emission allowances eua the issue of windfall profits accruing to producers with carbon intensive generation portfolios has been the subject of critical analysis one of the chief aims of the switch to a predominantly auction based allocation system at the onset of phase iii of the eu ets was to negate the incidence of windfall profits the following analysis examines the merits of this policy aim drawing on economic theory of power markets a linear optimisation model covering the electricity market of the eu member states is deployed to investigate this question scenarios reflecting developments over a medium term horizon 10 years are developed with which carbon prices are endogenously determined their effects on the contribution margins of producers in the member states are subsequently evaluated the overall findings indicate that the incidence of windfall profits in the power sector remains prevalent in the overwhelming majority of eu countries the analysis suggests that the carbon intensiveness of the respective generation fleet is not the deciding factor as to whether producers earn windfall profits but rather the fundamental generation structure of the power plant fleet the results raise questions about the capacity of the current eu ets regime to provide the desired decarbonising effect on power producers generation portfolios in european power markets

carbon pricing and electricity markets the case of the australian clean energy bill abstract we examine the impact of the clean energy bill on the price behavior of electricity futures contracts in the australian national electricity market first we compute ex ante forward risk premiums in the pre tax period until june 2012 then derive market implied expectations about additional costs of the carbon pricing mechanism cpm on generators as well as pass through rates during the carbon tax july 2012 june 2014 and post tax after july 2014 periods our results suggest that the observed carbon premiums became increasingly higher once the carbon tax had been proposed and subsequently legislated in 2011 during periods where market participants could be relatively certain that the tax would be effective we find expected carbon pass through rates between 67 and 150 which seem to be inversely related to emission intensities in the regional markets our results are also a clear indication of strong policy uncertainty with regards to the cpm and suggest that in the future a stable and long term policy framework would be required for a carbon pricing mechanism to have its full effect

technological change and the stock market tobin s average q has usually been well above 1 but fell below 1 during 1974 1984 our model explains this pattern and reconciles it with unchanging aggregate investment the stock market value in the numerator of q reflects ownership of physical capital and knowledge but the denominator measures just physical capital therefore q is usually above 1 periodic arrivals of important new technologies such as the microprocessor in the 1970 s suddenly render old knowledge and capital obsolete causing the stock market to drop national accounts measures of physical capital miss this rapid obsolescence then q appears to drop below 1 jel e44 o3 o41

marginal co2 cost pass through under imperfect competition in power markets abstract in line with economic theory carbon ets determines a rise in marginal cost equal to the carbon opportunity cost regardless of whether carbon allowances are allocated free of charge or not this paper aims at evaluating to what extent firms in imperfectly competitive markets will pass through into electricity prices the increase in cost by using the load duration curve approach and the dominant firm with competitive fringe model we show that the result is ambiguous the increase in price can be either lower or higher than the marginal co2 cost depending on several structural factors the degree of market concentration the available capacity whether there is excess capacity or not the power plant mix in the market and the power demand level peak vs off peak hours the empirical analysis of the italian context an emblematic case of imperfectly competitive market which can be split into four sub markets with different structural features provides a contribution supporting the model predictions market power therefore would determine a significant deviation from the full pass through rule but we cannot know the sign of this deviation a priori i e without before taking carefully into account the structural features of the power market

does ecological economics have a future contradiction and reinvention in the age of climate change abstract this paper addresses the role of neoclassical methodologies in ecological economics and the contradictions these methodologies pose to the field s critical founding principles we first consider robert costanza s treatment of nicholas stern s global deal and then survey climate change related articles published in this journal over the past five years this survey reveals how mainstream neoclassical methodologies dominate discourse and do so by marginalizing more critical political economy analyses this situation imperils the field s founding vision of a no growth steady state it also fails to address the related growth dynamics of capitalism without such a critical treatment the field s formal embrace of methodological pluralism actually entails an ideological empiricism that renders ecological economics theoretically incoherent this situation undermines the field s historical promise as an alternative economic paradigm ecological economics now faces a problematic future its survival in a form faithful to its founding vision will require an explicit choice to address its internal contradictions and reinvent itself in ways relevant to our contemporary context without such a choice ecological economics will likely succumb to an implicit acceptance of the hegemony of mainstream economic methodologies and their pro growth imperatives

a turbine is not only a turbine the role of social context and fairness characteristics for the local acceptance of wind power to gain acceptance for renewable energy production sites it is not sufficient to develop the appropriate technology without taking the social context and fairness concerns into account using a factorial survey experiment we investigate the influence of both on the local acceptance of wind turbine developments in germany and poland two countries differing in installed wind power capacity respondents were surveyed with hypothetical situations describing the construction of wind farms varying in the opportunity to participate in the planning process participatory justice the distribution of turbines across regions distributive justice and ownership among other characteristics we find higher acceptance levels in poland than in germany respondents in both countries are willing to accept new turbines in their vicinity if they can participate in decision making the turbines are owned by a group of citizens and if the generated electricity is consumed in the region instead of being exported overall participatory justice is more important than distributive justice confirming previous results we also find that respondents who already have turbines in their vicinity show higher acceptance levels than those who are not yet affected thus the negative externalities are likely to be overestimated in the planning and implementation process

the development and deployment of low carbon energy technologies the role of economic interests and cultural worldviews on public support large scale deployment of low carbon energy technologies is crucial to mitigating climate change and public support is an important barrier to policies and projects that facilitate deployment this paper provides insights to the origins of public opposition that can impede the adoption of low carbon technologies by investigating how perceptions are shaped by local economic interests and individual cultural worldviews the research considers both carbon capture and storage and wind energy technologies because they differ in maturity economic impact and resource base further for each technology the research examines support for two types of policies deployment in local community and public funding for research and development results indicate the influence of economic interests and cultural worldviews is policy specific individual cultural worldviews do not affect support for the deployment of technology but they do significantly influence a person s support for publicly funded research and development conversely local economic interests have a significant role in determining support for deployment while they do not affect support for research and development

wind farms where and how to place them a choice experiment approach to measure consumer preferences for characteristics of wind farm establishments in sweden this paper explores preferences among the general public in sweden for attributes related to the establishment of wind power farms the method applied is a choice experiment where people are asked to choose between two hypothetical wind farms characterized by different attributes five attributes are included in the experiment i type of landscape ii type of ownership iii the degree of local participation in the planning process iv the choice to transfer revenue to the society in a pre specified way and v a monetary cost in terms of an additional electricity certificate fee the data are analyzed with multinomial logit random parameter logit and latent class models the results indicate that consumers in sweden are more likely to accept the higher renewable electricity certificate fee if a wind power farms in areas used for recreational purposes are substantially avoided b the establishment is anchored by whole or partial ownership in the local community and c the locals are involved in the planning and implementation process our policy simulation exercise shows that respondents are willing to pay a higher electricity fee corresponding to about 0 6 euro cents per kwh to avoid wind farms located in the mountainous area and private ownership

willingness to accept local wind energy development does the compensation mechanism matter wind power development projects often include compensation for the affected communities but little is known about the efficacy of the alternative compensation mechanisms this study addresses this question by examining the relative potential of private and public compensation we conduct a choice experiment ce that investigates household preferences of compensation for the local siting of a hypothetical wind park households chose among different alternatives where each alternative was characterized by three varying attributes the number of turbines the level of private compensation and the level of public compensation results indicate the wind park imposes welfare losses to local residents and non local recreational users with about 35 of these losses corresponding to non use values findings show that households prefer public compensation to private compensation with household s willingness to accept being lower with public compensation than private compensation this finding suggests that estimates of local resistance to wind development depends on the compensation mechanism

price drivers and structural breaks in european carbon prices 2005 2007 this article aims at characterizing the daily price fundamentals of european union allowances euas traded since 2005 as part of the emissions trading scheme ets the presence of two structural changes on april 2006 following the disclosure of 2005 verified emissions and on october 2006 following the european commission announcement of stricter phase ii allocation allows to isolate distinct fundamentals evolving overtime the results extend previous literature by showing that eua spot prices react not only to energy prices with forecast errors but also to unanticipated temperatures changes during colder events besides the sub period decomposition of the pilot phase gives a better grasp of institutional and market events that drive allowance price changes

carbon prices and ccs investment a comparative study between the european union and china abstract carbon capture and storage is considered as a key option for climate change mitigation policy makers and investors need to know when ccs becomes economically attractive integrating ccs in a power plant adds significant costs which can be offset by a sufficient co 2 price however most markets have failed currently the weak carbon price threatens ccs deployment in the european union eu in china a carbon regulation is appearing and ccs encounters a rising interest this study investigates two questions how much is the extra cost of a ccs plant in the eu in comparison with china second what is the co 2 price beyond which ccs plants become more profitable than reference plants in the eu and in china to address these issues i conducted a literature review on public studies about ccs costs to objectively assess the profitability of ccs plants i constructed a net present value model to calculate the levelised cost of electricity and the breakeven co 2 price ccs plants become the most profitable plant type beyond 115 tco 2 in the eu vs 45 tco 2 in china offshore transport and storage costs i advise on the optimal plant type choice depending on the co 2 price in both countries

does emission permit allocation affect co2 cost pass through a theoretical analysis abstract carbon emissions trading may result in co 2 cost pass through and its rate is influenced by a number of factors this paper theoretically investigates how emission permit allocation affects co 2 cost pass through rate by developing a nash cournot oligopolistic market equilibrium model we find that the derived co 2 cost pass through rates are consistent when grandfathering and auctioning rules are used for permit allocation which are higher than that for benchmarking rule it has also been found that the magnitude of co 2 cost pass through rate is relevant to the type of definition product market structure and average carbon intensity of the industry we suggest that policy makers first use benchmarking rule to attract firms to participate at the early stage of emissions trading system ets and then take auctioning rule when ets is well developed

dynamic multiscale interactions between european carbon and electricity markets during 2005 2016 this study explores the dynamic multiscale interactions between carbon and electricity markets during phases i 2005 2007 ii 2008 2012 and ongoing iii 2013 2016 by introducing the bivariate empirical mode decomposition bemd linear and nonlinear granger causality tests firstly bemd is used to decompose the european carbon and electricity prices into several pairs of simple modes with different timescales secondly causality tests are performed at each pair of modes with a similar timescale significant but asymmetric causalities can be found that the bidirectional linear causality turns to a unidirectional one running from the electricity price to the carbon price from phase i to phase iii whereas the nonlinear interaction enhances from insignificance to significance during the three phases the causality at short timescale is consistent with that of the original data while the causalities at mid and long timescales are more diversified the findings obtained show that the effect of carbon market on the electricity market is weakening which indicates that it is needed to increase its efficiency by raising the carbon price moreover a dynamic adjusting mechanism of emission allowances will be called for as well as the guidance aimed at different timescales in the future

acceptance of wind power development and exposure not in anybody s backyard abstract despite a large stated preference sp literature on wind power externalities few sp studies employ a case control approach to examine whether people s acceptance of new wind power developments and renewable energy initiatives increases or decreases with exposure furthermore the existing studies are inconclusive on this issue in a case control discrete choice experiment we measure the level of acceptance in terms of people s willingness to accept wta for having future land based wind power developments in norway comparing exposed and non exposed people s wta we find that exposure lowers acceptance furthermore exposed people are also unwilling to pay as much to increase general domestic renewable energy production from all sources as non exposed people and thus have lower acceptance for such renewable energy policy initiatives after testing for type of exposure we argue that the inconclusiveness in the literature of how exposure affects acceptance of wind power developments could be due to the fact that impacts considered differ somewhat across studies

a literature review of economic studies on carbon pricing and australian wholesale electricity markets abstract with the ongoing development of australian anthropogenic climate change mitigation policies there has been a steady increase in modelling studies undertaken to estimate australian carbon prices and their impact on existing electricity markets this article summarises some of the more prominent studies completed by many of australia s foremost economic modelling firms we developed a simple approach for testing the consistency of these studies and their findings in relation to carbon pass through unfortunately we have established that the studies are entirely inconsistent in their estimation of carbon pass through furthermore we were unable to establish why the estimation of carbon pass through varies so significantly this has important implications for policy makers given much of the compensation to be paid to households and businesses under the clean energy future package is predicated on simple assumptions of carbon pass through based upon our analysis of these economic studies our conclusion is that australian policy makers are best guided by relying upon the numerous a posteriori estimations of pass through in the european union emissions trading scheme ets rather than australian a priori studies

allowance price drivers in the first phase of the eu ets abstract in the first phase of the eu emissions trading scheme eu ets the price per ton of co 2 initially rose to over 30 the price then collapsed to essentially zero by mid 2007 by deriving a structural model of the allowance price under the assumption of efficient markets i examine the extent to which this variation in price can be explained by marginal abatement costs i then gradually relax the model by allowing for delayed adjustment of price to fundamentals as well as by introducing lagged lhs variables the pattern of results suggests that while prices were not initially driven by marginal abatement costs this inefficiency was largely corrected after the accounting of 2005 emissions in april 2006

increasing carbon pricing in the eu evaluating the options abstract a streamlined model applied at the member state level is used to evaluate possibilities for greater reliance on carbon pricing to meet the european union s mitigation pledge for the paris agreement the economic welfare costs of currently envisioned policies including the emissions trading system ets requirements for energy efficiency vehicle emission rates and national targets for non ets emissions are estimated at 1 1 of eu gdp in 2030 or 167 per ton of carbon dioxide co2 reduced on net these policies lose a small amount of revenue 0 05 of eu gdp a series of reforms progressively extending emissions pricing across sectors and countries reduces costs by about 0 6 of 2030 eu gdp or 90 per ton of co2 reduced while increasing revenues by almost 1 of eu gdp higher emissions prices in the eu ets would create the largest welfare gain and no country is made worse off from this reform

using conjoint analysis to quantify public preferences over the environmental impacts of wind farms an example from spain this paper focuses on the effect on people s utility of the potential environmental impacts of wind farm developments we report on research designed to provide insight into their preferences and we show how two alternative choice modelling techniques can be used to estimate them our results show that significant social costs in the form of environmental impacts can be associated with wind farm developments as relative environmental values are revealed by these methods it would be possible to develop wind farms in such a way that minimises the total social costs of the investment and which maximises its net benefits

why environmental management may yield no regret pollution abatement options empirical evidence supports the existence of pollution abatement possibilities at negative costs the so called no regret options we provide a microeconomic rationale for the existence of such potential at the firm level an econometric application confirms that pollution abatement cost curves with no regret options are compatible with a standard production function as stated in our theoretical model c 2008 elsevier b v all rights reserved

the information technology revolution and the stock market evidence since 1968 the ratio of stock market capitalization to gdp has varied by a factor of 5 in 1972 the ratio stood at above unity but by 1974 it had fallen to 0 45 where it stayed for the next decade it then began a steady climb and today it stands above 2 we argue that the it revolution was behind this and moreover that the capitalization gdp ratio is likely to decline and then rise after any major technological shift the three assumptions that deliver the result are

dynamics of biofuel stock prices a bayesian approach we use bayesian markov chain monte carlo methods to investigate the linkage between the volatility of ethanol security prices and the uncertainty surrounding the profitability of ethanol production and the price variations of non ethanol energy securities the joint evolution of return and volatility is modeled as a stochastic process that incorporates jumps in both return and volatility while a strong and significant correlation is found between the volatility of ethanol securities and profit uncertainty from june 2005 to july 2008 the dynamic pattern of ethanol stock volatility is strikingly similar to that of the s p 500 energy sector index in the more recent period our evidence lends support to the findings in the literature on rational learning from uncertainty in determining the equity price and volatility during the adoption and development of a technological innovation

time variation in european carbon pass through rates in electricity futures prices the european union emissions trading scheme is a means to price emission allowances electricity market prices should reflect these market prices of emission allowances as they are a cost factor for power producers the pass through rate is the fraction of the emission allowance price that is passed through to electricity market prices it is often measured and presented as an average or a fixed estimate over some time period however we expect that the pass through rates should actually vary over time as electricity supply curves reflect the marginal costs of different producers that differ in emission intensity we apply a kalman filter approach to observe pass through rates in germany and u k and find strong support for time varying instead of fixed pass through rates although policy makers are interested in the impact of a policy on average our results indicate that one needs to be careful with the time frame over which pass through rates are measured for policy evaluation as an incorrect chosen evaluation period could cause an under or overestimation of the pass through rate in addition our model helps to provide policy makers with insight in the development of pass through rates when market circumstances change with respect to power production

rents in the european power sector due to carbon trading abstract the european union emissions trading scheme eu ets has imposed a price on the allowances for co2 emissions of electricity companies integrating this allowance price into the price of electricity earns a rent for companies who have received these allowances for free during phase i 2005 2007 rents corresponding to the aggregate value of allocated allowances amounted to roughly 13 billion per year however due to the specific price setting mechanism in electricity markets true rents were considerably higher this is due to the fact that companies also that have not received any allowances gain additional infra marginal rents to the extent that their variable costs are below the new market price after inclusion of the allowance price producers with low carbon emissions and low marginal costs thus also benefit substantially from carbon pricing this paper develops a methodology to determine the specific interaction of the imposition of such a co2 constraint and the price setting mechanism in the electricity sector under the assumption of marginal cost pricing in a liberalized european electricity market the article thus provides an empirical estimate of the true total rents of power producers during phase i of the eu ets 2005 2007 the eu ets generated in phase i additional rents in excess of 19 billion per year for electricity producers these transfers are distributed very unevenly between different electricity producers in a second step the paper assesses the impact of switching from free allocation to an auctioning of allowances in 2013 we show that such a switch to auctioning will continue to create additional infra marginal rents for certain producers and will leave the electricity sector as a whole better off than before the introduction of the eu ets

first evidence of asymmetric cost pass through of eu emissions allowances examining wholesale electricity prices in germany abstract we test the hypothesis that rising prices of emission allowances have a stronger impact on wholesale electricity prices than falling prices asymmetric cost pass through using an autoregressive distributed lag model we confirm this hypothesis for the german market

values in the wind a hedonic analysis of wind power facilities the siting of wind facilities is extremely controversial this paper uses data on 11 331 property transactions over nine years in northern new york state to explore the effects of new wind facilities on property values we use a fixed effects framework to control for omitted variables and endogeneity biases we find that nearby wind facilities significantly reduce property values in two of the three counties studied these results indicate that existing compensation to local homeowners communities may not be sufficient to prevent a loss of property values jel q51 q53

impact of the economic recession on the european power sector s co2 emissions abstract this paper investigates the impact of the economic recession on co 2 emissions in the european power sector during the years 2008 and 2009 three main determinants of the power sector s emissions are identified the demand for electricity the co 2 price and fuel prices a counterfactual scenario has been set up for each of these i e what these parameters would have been if not affected by the recession a simulation model of the european power sector is then employed comparing a historical reference simulation taking the parameters as actually occurred with the counterfactual scenarios the lower electricity demand due to the recession is shown to have by far the largest impact accounting for an emission reduction of about 175 mton the lower co 2 price due to the recession resulted in an increase in emissions by about 30 mton the impact of fuel prices is more difficult to retrieve an indicative reduction of about 17 mton is obtained mainly as a consequence of the low gas prices in 2009 the simulated combined impact of the parameters results in an emission reduction of about 150 mton in the european power sector over the years 2008 and 2009 as a consequence of the recession

the dynamic linkage effect between energy and emissions allowances price for regional emissions trading scheme pilots in china abstract china s emissions trading scheme cets pilots are emerging and fragmented markets these emissions allowances markets may exhibit a different fundamental price process from the european union s eu and the united states us emissions trading scheme ets the dynamic linkage effects between energy and emissions allowances prices are investigated for regional ets pilots in china using cointegration techniques the empirical results confirm that in the long run coal oil and natural gas prices are the main determinant factors of regional emissions allowances prices except for the second phase beijing ets pilots however their long run cointegration relationships in the beijing and shanghai pilots are not exactly in line with the guangdong and hubei pilots in the short run the changes in oil and natural gas prices in the second phase beijing ets pilot the natural gas prices in the shanghai ets pilot and the coal prices in the hubei ets pilot are found to have significant effects on regional emissions allowances prices in china finally regional energy pricing inefficiency regional emissions trading market overreaction and their inefficient fundaments may provide major obstacles in reducing the effectiveness of the fossil energy price pass through to emissions allowances prices in regional ets pilots

does innovation cause stock market runups evidence from the great crash this article examines the stock market s changing valuation of corporate patentable assets between 1910 and 1939 it shows that the value of knowl edge capital increased significantly during the 1920s compared to the 1910s as investors responded to the quality of technological inventions innovation was an important driver of the late 1920s stock market runup and the great crash did not reflect a significant revaluation of knowledge capital relative to physical capital although substantial quantities of influential patents were accumulated during the post crash recovery high technology firms did not earn significant excess returns over low technology firms for most of the 1930s

an overview of co2 cost pass through to electricity prices in europe this paper investigates the link between wholesale electricity prices in europe and the co2 cost i e the price of european union allowances euas over the two first phases of the european union emissions trading scheme eu ets we set up a theoretical framework and an empirical model to estimate to what extent daily fluctuations of co2 costs may have impacted electricity prices regarding estimation results for the first phase of the eu ets about 42 of estimated pass through rates appear to be statistically significant while only one third of them are statistically different from zero in the second phase we try to improve those results by proposing alternative estimates based on the eu ets compliance periods

introducing the emissions trading system to china s electricity sector challenges and opportunities we examine the challenges and opportunities to introduce emissions trading ets in china s electricity sector in which the interaction between ets and electricity market reform plays a major role china s electricity sector is currently in a slow progress towards a more competitive and market based system both equal share dispatching policy and regulated wholesale and retail pricing policies pose significant challenges for implementation of ets in china s electricity sector one of the important points of ets is to give a price for carbon emissions and establish a cost pass through mechanism reminded that the essential of carbon pricing is to put a price on carbon emissions that is equal to discounted value of the external damages it should be regarded as a part of broader policy package for energy and resources price reform this will require that any low carbon power policy should be considered as a part of whole policy package aiming at further liberalizing the electricity sector in china three policy options are identified to incorporate ets with electricity reform under different circumstances a combination of those three options is also proposed to break the lock and reinforce the positive interaction between ets and the transition towards a competitive electricity system in link with current pilot ets designs a roadmap to introduce ets in a stepwise manner is suggested

sectors under scrutiny evaluation of indicators to assess the risk of carbon leakage in the uk and germany one of the central debates surrounding the design of the european union emissions trading scheme is the approach to address carbon leakage concerns correctly identifying the economic activities exposed to the risk of carbon leakage represents the first step in mitigating the risk effectively this paper assesses the robustness of the quantitative assessment criteria used by the european commission for phase 3 for example we apply the criteria to data for uk and germany and compare the results with the commissions assessment conducted at the aggregated eu level this reveals that sectors exposure risk to carbon leakage can vary across different member states due to differences in production processes technologies and fuel mix process emissions recycling rate differences product mix differences sector classification statistical boundaries activity allocation differences and finally difference in data quality overall we find that relative carbon intensity of sectors measured as cost increase relative to gross value added provides a robust metric the analysis also highlights the importance of using high quality and disaggregated data for this assessment

simulated likelihood estimation of diffusions with an application to exchange rate dynamics in incomplete markets abstract we present an econometric method for estimating the parameters of a diffusion model from discretely sampled data the estimator is transparent adaptive and inherits the asymptotic properties of the generally unattainable maximum likelihood estimator we use this method to estimate a new continuous time model of the joint dynamics of interest rates in two countries and the exchange rate between the two currencies the model allows financial markets to be incomplete and specifies the degree of incompleteness as a stochastic process our empirical results offer several new insights into the dynamics of exchange rates

rural versus urban preferences for renewable energy developments development of renewable energy resources such as wind farms and hydro electric schemes are being promoted as a new method of expanding and diversifying employment in rural areas however such energy projects are associated with a range of environmental impacts which might be detrimental to other economic activities such as those based on nature tourism the authors use a choice experiment to quantify peoples preferences over environmental and employment impacts that may result from the deployment of renewable energy projects in rural areas of scotland focussing in particular on any differences between the preferences of urban and rural dwellers and on heterogeneity within these groups rural and urban households are shown to have different welfare gains which are dependent on the type of renewable energy technology and on the scale of project under consideration