Universität zu Köln

Bocklet, Johanna, Hintermayer, Martin, Schmidt, Lukas and Wildgrube, Theresa (2019). The reformed EU ETS - Intertemporal emission trading with restricted banking. Energy Econ., 84. AMSTERDAM: ELSEVIER. ISSN 1873-6181

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Abstract

With the increase of the linear reduction factor, the implementation of the market stability reserve and the introduction of the cancellation mechanism, the EU ETS changed fundamentally. We develop a discrete time model of the intertemporal allowance market that accurately depicts these reforms assuming that prices develop with the Hotelling rule as long as the aggregated bank is non-empty. A sensitivity analysis ensures the robustness of the model results regarding its input parameters. The accurate modelling of the EU ETS allows for a decomposition of the effects of the individual amendments and the evaluation of their cost effectiveness. The market stability reserve shifts emissions to the future but is allowance preserving. A onetime cancellation reduces the overall emission cap, increasing allowance prices in the long run, but does not significantly impact the emission and price path in the short run. The increased linear reduction factor leads with 9 billion cancelled allowances to a stronger reduction than the cancellation mechanism and is therefore the main price driver of the reform. (C) 2019 Elsevier B.V. All rights reserved.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Bocklet, Johanna UNSPECIFIED UNSPECIFIED UNSPECIFIED Hintermayer, Martin UNSPECIFIED UNSPECIFIED UNSPECIFIED Schmidt, Lukas UNSPECIFIED UNSPECIFIED UNSPECIFIED Wildgrube, Theresa UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-131679
DOI:	10.1016/j.eneco.2019.104486
Journal or Publication Title:	Energy Econ.
Volume:	84
Date:	2019
Publisher:	ELSEVIER
Place of Publication:	AMSTERDAM
ISSN:	1873-6181
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language RESERVE Multiple languages Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/13167