Price Volatility and Banking in Green Certificate Markets

Eirik Amundsen (), Fridrik Mar Baldursson () and Jørgen Mortensen

Environmental & Resource Economics, 2006, vol. 35, issue 4, pages 259-287

Abstract: There is concern that prices in a market for Green Certificates (GCs) primarily based on volatile wind power will fluctuate excessively, leading to corresponding volatility of electricity prices. Applying a rational expectations simulation model of competitive storage and speculation of GCs the paper shows that the introduction of banking of GCs may reduce price volatility considerably and lead to increased social surplus. Banking lowers average prices and is therefore not necessarily to the benefit of “green producers”. Proposed price bounds on GC-prices will reduce the importance of banking and even of the GC system itself. Copyright Springer Science+Business Media, Inc. 2006

Keywords: commodity speculation; electricity; environment; green certificates; marketable permits; uncertainty; Q28; Q42; Q48 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s10640-006-9015-1 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Price Volatility and Banking in Green Certificate Markets (2005)
Working Paper: Price Volatility and Banking in Green Certificate Markets (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:kap:enreec:v:35:y:2006:i:4:p:259-287

Access Statistics for this article

Environmental & Resource Economics is edited by I.J. Bateman and R.K. Turner

More articles in Environmental & Resource Economics from European Association of Environmental and Resource Economists
Series data maintained by Guenther Eichhorn ().