How Emission Certificate Allocations Distort Fossil Investments: The German Example

Pahle, Michael; Fan, Lei; Schill, Wolf-Peter

doi:10.2139/ssrn.1767908

Cited by 5 publications

(6 citation statements)

References 40 publications

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“…Like all infra-marginal plants, VREs earn additional carbon rents if the emission price increases and the pricesetting technology is pricing in the additional costs in their bidding (Möst et al, 2016;Pahle et al, 2011;Veith et al, 2009) 19 . In this context, the marginal (price-setting) plant does not profit from higher emission prices but has higher costs of production.…”

Section: Development Of Emission Prices and System Demandmentioning

confidence: 99%

The impact of intraday markets on the market value of flexibility — Decomposing effects on profile and the imbalance costs

Pape

2018

Energy Economics

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An increasing share of variable renewable energy sources (VREs) basically affects the electricity price formation in two ways: (1) The so-called merit order effect tends to lower the base price level and challenges conventional plants to remain profitable. (2) Due to the variable nature of renewable energy infeed, the shortterm demand for flexibility increases and changes the volatility of electricity prices. The more variable prices offer opportunities for controllable electricity producers (CEPs) to provide up-and down-ramping flexibility to increase their revenues. In contrast, the VREs with high degrees of simultaneity tend to pay for this flexibility in the electricity spot market to reduce their imbalance exposure. The intraday market (IDM) for electricity has gained importance for the market value of different technologies lately and continues to expand due to the increasing efforts to balance within-day deviation from day-ahead schedules. This article presents a combination and extension of two existing models to capture the peculiarities of the intraday price formation and to analyse the impact of the IDM on the market value of VREs and CEPs. Doing so, the paper suggests an adjustment of the classical market value factor metric and to go beyond classical day-ahead market (DAM) information. The article shows that market value factors (MVFs) can be stabilized if the IDM delivers 'marketbased' price signals for the costs of flexibility, that are sufficient to activate flexibilities prior to the usually more expensive imbalance mechanism (IBM). Yet, the MVFs from single VRE technologies will worsen if their market share is high enough to outweigh forecast errors from other technologies and if they become a permanent price maker in the IDM and the IBM.

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Section: Development Of Emission Prices and System Demandmentioning

confidence: 99%

The impact of intraday markets on the market value of flexibility — Decomposing effects on profile and the imbalance costs

Pape

2018

Energy Economics

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“…This in turn pushed down their price, and the impact of ETS on the transition to low‐carbon production in Europe proved minimal (Laing et al ., ). At the same time, ETS helped power sector companies make considerable profits by letting them pass the market cost of emission allowances (obtained for free from the government) on to the electricity price (Pahle et al ., ). These problems made the Commission substantially revise the allocation scheme.…”

Section: Eu Market‐making In the Ets And Service Sectorsmentioning

confidence: 97%

Weak Labour, Strong Interests: Polish Trade Unions and the Integration of EU Energy and Service Markets

Bernaciak

Lis

2016

J of Common Market Studies

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This paper examines the motives behind the EU-level activism of CEE trade unions, which are commonly regarded as weak actors. To this end, it studies lobbying and protest actions staged by Polish labour organizations in relation to proposals for the EU Emission Trading Scheme Directive and the EU Services Directive. The analysis confirms the salience of interest-based accounts of supranational union action, but it also shows that labour interests are context-specific, influenced by economic conditions and regulatory changes in particular market segments. In this regard, priority given by the unions to job preservation or the improvement of social standards has important implications for their positions; it also determines the selection of their allies at national and transnational levels

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“…In particular, they investigated the price convergence among the different German trading hubs and with the hub established in The Netherlands. Instead, Pahle et al (2011) proposed an investigation of the effect of the EU emission trading scheme on investments in power capacity in Germany. They discussed some distortions of the mechanism which benefit carbon-intensive technologies, such as hard coal power plants, rather than carbon-friendly technologies, such as natural gas power stations.…”

Section: Literature Reviewmentioning

confidence: 99%

Overview of the Italian natural gas sector

Bianco

2018

IJESM

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Purpose The purpose of this study is to analyze the natural gas sector in Italy, with a specific focus on the regulatory framework, the development of infrastructures and the supply and demand balance. Design/methodology/approach The research has been developed by applying qualitative and quantitative methodologies. In particular, a review and a qualitative analysis have been proposed to analyze the regulatory framework and the development of infrastructure, whereas the consumption trend is quantitatively examined by means of the decomposition analysis. Findings This study highlights how the legislation is complete and in line with European Union (EU) prescriptions, and how the infrastructure is quite well-developed, even though many expected developments are on hold due to the current market conditions. The supply and demand balance highlights a decreasing trend of the consumption owing to the aggressive development of renewables and permanence of a weak economic growth. Finally, the decomposition analysis of total and sectorial natural gas demand has emphasized that the increase of energy intensity can be considered responsible for a large share of consumption between 1995 and 2014. Originality/value The paper details the status of the natural gas sector in Italy, which is one of the largest consumers of natural gas within the EU. Despite its importance, the Italian natural gas sector has not been subjected to extensive research, and this paper represents a first attempt to provide an overview of the sector.

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How Emission Certificate Allocations Distort Fossil Investments: The German Example

Cited by 5 publications

References 40 publications

The impact of intraday markets on the market value of flexibility — Decomposing effects on profile and the imbalance costs

The impact of intraday markets on the market value of flexibility — Decomposing effects on profile and the imbalance costs

Weak Labour, Strong Interests: Polish Trade Unions and the Integration of EU Energy and Service Markets

Overview of the Italian natural gas sector

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