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Intereconomics

, Volume 47, Issue 2, pp 104–111 | Cite as

Emissions trading: Impact on electricity prices and energy-intensive industries

  • Manuel Frondel
  • Christoph M. Schmidt
  • Colin Vance
Emissions Trading

Abstract

Under the EU-wide Emission Trading Scheme (ETS), CO2 allowances have thus far been allocated largely free of charge. This paper presents a didactic synthesis on the impact of the ETS and argues that such a cost-free allocation will lead to an increase in electricity prices even when strong competition prevails in electricity markets. Electricity prices are also likely to increase as a consequence of the environmentally desirable fuel switch from coal to natural gas in the power sector when certifi cates are entirely auctioned in the power sector as of 2013. This tendency may be attenuated, but not outweighed, by the price decrease of CO2 allowances over the long term.

Keywords

Climate Policy Electricity Production Brown Coal Emission Trading Electricity Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© ZBW and Springer-Verlag 2012

Authors and Affiliations

  • Manuel Frondel
    • 1
  • Christoph M. Schmidt
    • 1
  • Colin Vance
    • 2
  1. 1.Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)Essen and Ruhr University BochumBochumGermany
  2. 2.Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)Essen and Jacobs University BremenBremenGermany

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