Understanding fuel switching under the EU ETS

Bertrand, Vincent

Understanding fuel switching under the EU ETS

International Journal of Global Energy Issues, 2012, vol. 35, issue 6, 494-517

Abstract: Since the creation of the European Union Emission Trading Scheme (EU ETS), European power producers have monitored carbon emissions resulting from the composition of their production. Fuel switching is the main short-term abatement measure under the EU ETS. It consists in substituting combined cycle gas turbines (CCGTs) for hard-coal plants in off-peak power generation. Thereby coal plants run for shorter periods, allowing power producers to reduce their CO₂ emissions. The aim of this paper is two-fold. First, we summarise the main characteristics of fuel switching under the EU ETS. Second, we show how differences in the energy/environmental efficiency of power plants impact the marginal cost of fuel switching. We demonstrate that the level of switching effort influences the dependence of the marginal cost of switching on fuel prices. The marginal cost of switching is shown to be increasingly dependent on the gas price as the switching effort increases, whereas the net effect is undetermined for the coal price. All the conclusions are summarised in several illustrative examples.

Keywords: fuel switching; European Union Emission Trading Scheme; EU ETS; energy economics; carbon finance; cabon emissions; carbon trading; short-term abatement; CO2; carbon dioxide; combined cycle gas turbines; CCGTs; energy efficiency; environmental efficiency; power plants; fuel prices; marginal cost; gas price; coal price. (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.inderscience.com/link.php?id=51733 (text/html)
Access to full text is restricted to subscribers.

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:ids:ijgeni:v:35:y:2012:i:6:p:494-517

Access Statistics for this article

More articles in International Journal of Global Energy Issues from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().