CO2 trade and market power in the EU electricity sector

Gert Svendsen and Morten Vesterdal
Additional contact information
Morten Vesterdal: Atel Trading, Switzerland

No 02-11, Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: The EU commission is planning to launch an emission trading market for greenhouse gases within near future. This to meet its obligations under the United Nations Framework Convention on Climate Change and the Kyoto Protocol. After a theoretical discussion on market power in such a market, we turn to the empirical evidence which suggests that a reasonable number of sources of CO2 emissions in the power sector exists for boilers larger than 25MW. Overall, together with the contestable single market for electricity, the risk of significant strategic behaviour seems negligible. Thus, the electric utility sector seems a suitable testing ground for an EU-scheme of emissions trading. In the longer run, it will be important to broaden the scope of the trading scheme as the inclusion of other sectors will further limit the risk of market power.

Keywords: European Union; energy economics and policy; greenhouse gases; CO2; permit market; market power; Kyoto protocol; electricity sector (search for similar items in EconPapers)
JEL-codes: H20 H40 Q28 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2002-05-07
New Economics Papers: this item is included in nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.hha.dk/nat/WPER/02-11_gts.pdf (application/pdf)

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:hhs:aareco:2002_011

Access Statistics for this paper

More papers in Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Helle Vinbaek Stenholt ( this e-mail address is bad, please contact ).