Number 3
Rethinking Gas Markets–and Capacity
The “U.S. Model” of natural gas markets is based on long-term, point-to-point commercial capacity rights (MDQXY) that reflect the physical capacity of the pipeline and are traded frequently among system users (shippers) in markets independent of the transmission system operator (TSO). When physical capacity is complex and scarce and the gas market is dynamic there…
Marginal Costs with Wings a Ball and Chain Pipelines and Institutional Foundations for the U.S. Gas Market
The United States has highly competitive gas markets (spot and futures), showing prices in recent years that have definitively diverged from world oil prices. Those gas markets were not “built” in the manner of administered electricity markets. Rather, they were the result of a revolution in federal pipeline regulation designed purposely to free the gas…
Designing the European Gas Market: More Liquid & Less Natural?
Designing a gas market is defining how the commodity, the transmission and ancillary services are traded. The European Union has built the commoditization of natural gas through the socialization of several costs of trade. This choice aims at obtaining more liquid markets through the creation of virtual hubs of trade. These virtual hubs ignore most…
German Nuclear Policy Reconsidered: Implications for the Electricity Market
In the aftermath of the nuclear catastrophe in Fukushima-Daiichi, German nuclear policy has been reconsidered. This paper demonstrates the economic effects of an accelerated nuclear phase-out in Germany on the European electricity market. An optimization model is used to analyze two scenarios with different lifetimes for nuclear plants in Germany (phase-out vs. prolongation). Based on…
Cost-effectiveness and Economic Incidence of a Clean Energy Standard
A Clean Energy Standard (CES) is a flexible, market-based policy instrument that could be adopted to reduce greenhouse gas emissions from the U.S. electricity system over time. This paper uses several well-known energy system and electricity models to analyze a CES that reflects broad principles outlined in President Obama’s January 2011 State of the Union…
Impacts of Biofuels Policies in the EU
Biofuels have the potential of playing an important role in the renewable energy sources panorama, ensuring the achievement of multiple goals such as security of supply, reduction of greenhouse gas (GHG) emissions, creation of green jobs, and development of business opportunities in the agricultural and rural sectors. Subsidies to the sector were justified on this…
Development and Application of Greenhouse Gas Performance Benchmarks in the European Union Emissions Trading Scheme
In the European Union Emissions Trading Scheme’s third trading period (2013-2020), the free allocation of emission allowances will be based on greenhouse gas performance benchmarks. This policy note describes how the revised rules were developed, how they will be applied in practice, and what they imply for operators of installations subject to the system. It…
Linking Emission Trading Schemes: A Short Note
In principle, linking emission trading schemes would favour the depletion of low-cost abatement opportunities that are geographically spread over the globe. However, this would only be possible if the price of the emission permits in the different schemes converge to one price. Using a simple model-free structure, the paper first assesses how a unilateral link…