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Tradable emission permits: beyond pollution abatement motives

Maria Eugenia Sanin ()
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Maria Eugenia Sanin: EPEE, Université d´Evry Val d´Essonne; Chaire Energie et Prospérité - École Polytechnique; Chaire European Electricity Markets - Dauphine Foundation.

No 16-01, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: In this paper we study how the electricity market character- istics determines the choices made by electricity generators in the U.S. market for SO2 allowances. Counterparts can be cho- sen among three alternatives: market makers, brokers or another generator. We find that the SO2 allowances market is de facto regionalized due to the regionalization of the electricity market. The national dimension only appears when there are local im- balances in the electricity market that give strong incentives to search for a better price outside of the region. Additionally, we identify the influence of the regulatory framework, i.e. the divi- sion in phases and the chosen allowance surrender date. Finally, we show that the previous results are robust to Enron's abnormal behavior during 2000-2001 and its posterior bankruptcy.

Keywords: radable emission permits; counterpart choice; acid rain market (search for similar items in EconPapers)
JEL-codes: D22 D40 D62 L50 L94 Q58 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2016
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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