EU ETS and Investment Decisions:: The Case of the German Electricity Industry

Volker H. Hoffmann

European Management Journal, 2007, vol. 25, issue 6, 464-474

Abstract: In 2005, the EU launched the European Emission Trading Scheme (EU ETS) to reduce CO2 emissions and spur low carbon investments. There is only little empirical evidence regarding its actual effects on corporate investment decisions. We investigate these effects in case studies in the German electricity sector. We find that companies in the sector integrate costs for CO2 in their investment decisions. The EU ETS constitutes a main driver for small-scale investments with short amortization times. Its impact on large-scale investments in power plants or in R&D efforts is limited. To overcome this weakness, policy makers should reflect their long-term reduction intentions in the scarcity of allowances, provide more incentives to increase efficiency, and reduce regulatory uncertainty.

Keywords: Emission; trading; Technology; investments; Electricity; industry (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (102)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0263237307000837
Full text for ScienceDirect subscribers only

Related works:
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: https://EconPapers.repec.org/RePEc:eee:eurman:v:25:y:2007:i:6:p:464-474

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/115/bibliographic
http://www.elsevier. ... me/115/bibliographic

Access Statistics for this article

European Management Journal is currently edited by Michael Haenlein

More articles in European Management Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().