Date
2015
Dewey
Economie de la terre et des ressources naturelles
Sujet
CO2 prices; Banking; Back-loading; ETS reform
JEL code
Q.Q4.Q43; Q.Q4.Q41
Journal issue
Energy Policy
Volume
82
Publication date
2015
Article pages
332-341
Publisher
IPC Science and Technology Press
Author
Chaton, Corinne
Creti, Anna
Peluchon, Benoît
Type
Article accepté pour publication ou publié
Abstract (EN)
In this article we focus on the so-called back-loading policy adopted by the European Commission to increase the carbon market price. This environmental measure consists of removing a share of the allowances allocated for a given period in order to reallocate some or all of them later on. To analyze the impact of the permits back-loading, we determine the CO2 price equilibrium with and without the policy measure, considering not only the market for permits but also the output market of regulated sectors. We propose a two-period model, where the market for permits is perfectly competitive, and the output market can be either competitive or oligopolistic. First, we define the condition under which banking from one period to another is optimal. This condition, that is the absence of arbitrage opportunities (AOA), depends not only from the period initial allocation but also on production market fundamentals. When this condition is satisfied, the market for emission is shown intertemporally efficient. Second, we point out that the back-loading measure may create inefficiencies or leave unaffected the permits price, if it alters the AOA.