nep-env New Economics Papers
on Environmental Economics
Issue of 2007‒05‒04
three papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Carbon Tax or Carbon Permits: The Impact on Generators' Risks By Richard Green
  2. Testing Market Efficiency and Price Discovery in European Carbon Markets By George Milunovich; Roselyne Joyeux
  3. Technologies énergétiques : la nouvelle donne économique By Patrick Criqui; Philippe Menanteau

  1. By: Richard Green
    Abstract: Volatile fuel prices affect both the cost and price of electricity in a liberalised market. Generators with the price-setting technology will face less risk to their profit margins than those with a technology that is not price-setting, even if its costs are not volatile. Emissions permit prices may respond to relative fuel prices, further increasing volatility. This paper simulates the impact of this on generators' profits, comparing an emissions trading scheme and a carbon tax against predictions for the UK in 2020. The carbon tax reduces the volatility faced by nuclear generators, but raises that faced by fossil fuel stations. Optimal portfolios would contain a higher proportion of nuclear plant if a carbon tax was adopted
    Keywords: Electricity, emissions trading, emissions taxes, fuel price risk
    JEL: L94
    Date: 2007–03
  2. By: George Milunovich (Department of Economics, Macquarie University); Roselyne Joyeux (Department of Economics, Macquarie University)
    Abstract: We examine the issues of market efficiency and price discovery in the European Union carbon futures market. Our findings suggest that none of the carbon futures contracts examined here are priced according to the cost-of-carry model, although two of the three futures contracts studied here form a stable long-run relationship with the spot price, and hence act as adequate risk mitigation instruments. We apply a new testing procedure and find weak evidence of convenience yield in the market for carbon allowances. In terms of price discovery, it appears that the spot and futures markets share information efficiently and contribute to price discovery jointly. Similar to the information diffusion pattern found in returns, we report some evidence of bi-directional volatility transfers between the spot and various futures contracts.
    Keywords: Carbon-dioxide allowances, futures, cost-of-carry, price discovery, market efficiency, cointegration, granger causality, volatility spillover, global warming.
    JEL: C32 G13 G14 C32 Q25 Q40
    Date: 2007–03
  3. By: Patrick Criqui (LEPII - Laboratoire d'économie de la prospective et de l'intégration internationale - [CNRS : UMR5252] - [Université Pierre Mendès-France - Grenoble II]); Philippe Menanteau (LEPII - Laboratoire d'économie de la prospective et de l'intégration internationale - [CNRS : UMR5252] - [Université Pierre Mendès-France - Grenoble II])
    Abstract: Le pétrole et le gaz naturel se font de plus en plus rares. Les énergies émettrices de CO2 sont de plus en plus surveillées. Les énergies renouvelables sont de plus en plus attendues. Face à cette nouvelle donne, le secteur de l'énergie évolue rapidement. Déjà, certains grands groupes réorientent ou diversifient leur activité. Quels choix faut-il faire pour les technologies énergétiques de demain ?
    Date: 2007–04–25

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