This paper analyses distributional effects between participants of the EU Emissions Trading System (EU ETS) during its first trading period. To this end, a selection model is formulated and applied to a dataset based on account information and transfer data from the EU Transaction Log (EUTL). Four different ways of adding carbon prices to the…
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How Renewable Energy is Reshaping Europe’s Electricity Market Design
We present a systematic review of the challenges to the regulation of electricity markets that are posed by the integration of variable renewable energy sources. System integration is the key to developing the required flexibility, because flexibility options exist at all system levels and within the competitive as well as in the regulated (network) domains….
How Do Low Gas Prices Affect Costs and Benefits of US New Vehicle Fuel Economy Standards?
In their initial benefit-cost analysis of the 2012-2016 passenger vehicle fuel economy standards, the U.S. regulatory agencies estimated that the benefits of the standards would be three times greater than the costs. However, their analysis was based on the high gasoline prices forecasted at the time; after their analysis, expected gasoline prices fell by 25…
The Importance of Penalties and Pre-qualifications: A Model-based Assessment of the UK Renewables Auction Scheme
This paper assesses the multi-technology auctions for Contracts for Difference (CfDs) in the UK, with a special focus on how pre-qualifications and penalties affect bidders’ behaviour, risk aversion and bidding strategies and thus the auction outcomes in terms of prices and project implementation probability. The auctions are modelled to closely represent the auction design foreseen…
Book Reviews
The Coupled Cycles of Geopolitics and Oil Prices
We analyze the coupled cycles of Middle-East geopolitical violence and oil prices. Building on earlier work that shows that low oil prices are regularly followed by geopolitical strife, and that the latter is usually followed by higher oil prices, due to actual or feared disruption in oil supply, we focus in this paper on one…
Carbon Pricing and Cross-Border Electricity Trading for Climate Change Mitigation in South Asia
South Asia’s electricity supply system is quite carbon-intensive, particularly due to extensive use of coal. Under “business as usual,” that situation is expected to continue for several decades. Using an electricity system planning model, this study investigates two complementary strategies to reduce CO2 emission intensity of the power sector in South Asia: carbon pricing, and…
An Extended Analysis on the Remuneration of Capacity under Scarcity Conditions
This paper extends a recent analysis which investigated the impact of scarcity adders produced by operating reserve demand curves on the financial viability of generation units in the Belgian market. Our paper is inspired by practical considerations related to the implementation of the mechanism in European electricity markets. We are specifically interested in: (i) the…