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Evaluating the application of different pricing regimes and low carbon investments in the European electricity market

Giorgia Oggioni and Yves Smeers

Energy Economics, 2012, vol. 34, issue 5, 1356-1369

Abstract: The EU-ETS is the first measure initiated by the EU to contribute to the decarbonization of the European energy sector. It is a cap and trade system that requires industries participating to the program to procure allowances to cover their emissions. Electricity Intensive Industries (EIIs) have complained that the system put their European plants at disadvantage compared to facilities located outside the EU. They have asked for actions to mitigate this effect; one of them is to have access to long term contracts with electricity suppliers, ideally with those operating carbon free plants. This paper presents and illustrates a method for assessing the impact of this measure on EIIs participating to the EU cap and trade system.

Keywords: Average cost based contracts; Energy intensive industries; EU-ETS; Investments (search for similar items in EconPapers)
JEL-codes: C68 D61 L11 L60 Q40 Q51 (search for similar items in EconPapers)
Date: 2012
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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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