Universität zu Köln

Wildgrube, Theresa (2024). Essays on the Economics of Carbon Pricing. PhD thesis, Universität zu Köln.

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Abstract

The dissertation presents four essays on carbon pricing instruments (CPI). Its leading questions are: Are the design options for CPIs that are currently discussed effective and efficient? How does the dynamic nature of emission trading drive its outcome compared to other CPIs? The research note in chapter 2 sets up an analytical model to investigate the effect of learning by doing on the intertemporal distribution of abatement efforts in an ETS. While learning by doing increases early abatement under a carbon tax, the effect is ambiguous under an emission trading system. If the regulator sets the emissions cap or tax level under uncertainty and learning by doing is stronger than expected, total costs are higher under a carbon tax than under an ETS. If learning by doing is weaker, a carbon tax performs better. Chapters 3 and 4 analyze the 2018 reform and the 2021 reform proposal of the EU ETS. Chapter 3 develops a discrete time model of the intertemporal allowance market that accurately depicts the market stability reserve and the cancellation mechanism in the EU ETS. The model allows for a decomposition of the effects of the individual amendments and the evaluation of their cost effectiveness. Chapter 4 extends the model developed in chapter 3 to assess the impact of the 2021 reform proposal. The adjusted MSR regulation may increase resilience to shocks. Yet, it may also decrease MSR intake, reducing the MSR’s ability to regulate allowance supply. The fixed cancellation threshold is effective in increasing the predictability of the mechanism. Chapter 5 analyzes under which circumstances Carbon Contracts for Differences (CCfDs) are useful instruments to complement ETSs. An analytical model assesses the welfare effects of CCfDs comparing them to other carbon pricing regimes. The chapter finds CCfDs can be beneficial policy instruments, as they hedge firms’ risk, encouraging investments when firms’ risk aversion would otherwise inhibit them. However, as CCfDs hedge the firms’ revenues, they might safeguard production with a technology that is ex-post socially not optimal.

Item Type:	Thesis (PhD thesis)
Translated title:	Title Language Aufsätze zur Ökonomik der CO2-Bepreisung German
Creators:	Creators Email ORCID ORCID Put Code Wildgrube, Theresa twildgr1@smail.uni-koeln.de UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-719081
Date:	2024
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Externe Einrichtungen > An-Institute > Associated Institutes of the Faculty of Management, Economics and Social Sciences > Institute for Energy Economics
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language Carbon pricing English Emissions trading English EU ETS UNSPECIFIED Market Stability Reserve English Intertemporal optimization English Carbon Contracts for Difference UNSPECIFIED
Date of oral exam:	10 August 2023
Referee:	Name Academic Title Bettzüge, Marc Oliver Prof. Dr. Bierbrauer, Felix Prof. Dr.
Funders:	Bundesministerium für Bildung und Forschung
Projects:	Kopernikusprojekt ENSURE 2
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/71908