In several OECD countries such as the United Kingdom, the United States and France, nuclear power is envisioned as having a role to play alongside renewables to reduce greenhouse gas emissions. Leaving aside post-Fukushima-Daiichi safety concerns, the major issue for nuclear power is whether new builds could be achieved at reasonable costs. In fact, ever…
Number 2
All quiet on the western front? Transmission capacity development in the Nordic electricity market
Infrastructure plays an obvious and crucial role in electricity markets. Physical infrastructure must exist for the supply to meet demand in real time. In addition, it accommodates the efficient exchange of cost-efficient production across borders, and can bean important part ofsharingresourcesforreliabilitypurposes.However, in the historically successful Nordic electricity market, the cross-border transmission grid investments are lagging…
An International Carbon-Price Commitment Promotes Cooperation
To promote cooperation in international climate negotiations, negotiators should focus on a common commitment. Such commitments have the advantage of facilitating reciprocal “I will if you will” agreements in a group. Reciprocity is the basis for cooperation in repeated public goods games, and a uniform price would provide a natural focal point for a common…
Negotiating effective institutions against climate change
In environmental matters, the free riding generated by the lack of collective action is aggravated by concerns about leakages and by the desire to receive compensation in future negotiations. The dominant “pledge and review” approach to mitigation will deliver appealing promises and renewed victory statements, only to prolong the waiting game. The climate change global…
Overcoming the Copenhagen Failure with Flexible Commitments
The fundamental issues presented by climate change are first, that the global environment is a global public good and second, the question of how to share the burden of providing a better climate. Everyone would like to “free ride” on the efforts of others, but there is disagreement over who is free riding. The Kyoto…
Internalizing the Climate Externality: Can a Uniform Price Commitment Help?
It is difficult to resolve the global warming free-rider externality problem by negotiating many different quantity targets. By contrast, negotiating a single internationally-binding minimum carbon price (the proceeds from which are domestically retained) counters self-interest by incentivizing agents to internalize the externality. In this contribution I attempt to sketch out, mostly with verbal arguments, the…
Symposium on “International Climate Negotiations” – Introduction
Towards a general “Europeanization” of EU Member States’ energy policies?
It is often argued that energy policy is too fragmented across EU Member States and should be “Europeanized” to pave the way towards an efficiently organized European power system, which rests on the internal market for energy and a pan-European super-grid. However, this view neglects i) the heterogeneity of European energy policies in terms of…
Book Reviews
Security of Supply, the Role of Interconnectors and Option Values : insights from the GB Capacity Auction
The UK Government has carefully designed a Capacity Mechanism to deliver reliable electricity. This paper criticises the determination of the amount to procure, and argues that the amount set for the first auction was excessive, particularly (but not exclusively) in ignoring the contribution from interconnectors. Too little attention was given to either the political economy…