Exploring the Linkages Between Carbon Markets and Sustainable Innovations in the Energy Sector: Lessons from the EU Emissions Trading Scheme

Abstract

The working paper summarizes results of a research project on company behaviour in the EU Emissions Trading Scheme. The study looks at the first trading phase of the EU ETS and combines quantitative surveys with qualitative case studies in four different countries: Germany, the UK, Denmark and the Netherlands. In this paper, we look at seven company case studies in Denmark and Germany to analyze how emissions trading might trigger sustainable innovations within companies in the energy sector in a systematic way. Four potential channels are identified: the allocation of emission rights by the legislator, the CO 2 trading decisions within the companies, the make or buy-decision in the electricity market, and sustainable innovations through technologies or new organizational processes. We conclude from our case studies that the EU ETS has a potential to trigger sustainable innovations in the electricity sector, but that the outcome of the first trading phase is disappointing in this respect.

Capabilities and Strategic Entrepreneurship in Public Organizations

“…Public entrepreneurs possess and/or develop differential capabilities in legitimacy and institutional change (e.g., by passing new laws and regulations), which can help create or co‐create markets. Examples include legislation by the European Commission (Convery and Redmond, ; Knoll and Engels, ) that helped in the creation of carbon markets (Olmstead and Stavins, ; Stavins, ) and legislation aimed at promoting the use of electric cars in California (Calef and Goble, ; Kemp, ). Such market co‐creation helps generate new wealth that enables both the public and the private sector to benefit and, thus, satisfy their respective objectives.…”

Modelling Electricity Price Expectations in a Day-Ahead Market: A Case of Latvia

“…From the practical point of view, the electricity price expectations are important to analyse seeking to facilitate the process of the electricity production decision making, as it was argued by Knoll and Engels (2012), as well as Panapakidis and Dagoumas (2016). From the scientific viewpoint, the analysis of the topic is relevant seeking to solve the methodological insufficiencies by binding into the entire system the fundamentals of electricity prices, the electricity price forecasting methods, the decision making and the results of economic performance.…”