Price Volatility and Banking in Green Certificate Markets

Eirik S. Amundsen, Fridrik Baldursson () and Jørgen Birk Mortensen
Additional contact information
Eirik S. Amundsen: Department of Economics, University of Bergen
Jørgen Birk Mortensen: Institute of Economics, University of Copenhagen

No 05-08, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: There is concern that prices in a market for Green Certificates (GCs) primarily based on volatile wind power will fluctuate excessively, leading to corresponding volatility of electricity prices. Applying a rational expectations simulation model of competitive storage and speculation of GCs the paper shows that the introduction of banking of GCs may reduce price volatility considerably and lead to increased social surplus. Banking lowers average prices and is therefore not necessarily to the benefit of “green producers”. Proposed price bounds on GC-prices will reduce the importance of banking and even of the GC system itself.

Keywords: electricity; environment; commodity speculation; green certificates; marketable permits; uncertainty (search for similar items in EconPapers)
JEL-codes: Q28 Q42 Q48 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2005-07
New Economics Papers: this item is included in nep-ene, nep-env, nep-fin and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.econ.ku.dk/english/research/publications/wp/2005/0508.pdf/ (application/pdf)

Related works:
Journal Article: Price Volatility and Banking in Green Certificate Markets (2006)
Working Paper: Price Volatility and Banking in Green Certificate Markets (2003)
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:kud:kuiedp:0508

Access Statistics for this paper

More papers in Discussion Papers from University of Copenhagen. Department of Economics Oester Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().