Date
2009
Notes
Série "Economie de l'énergie", EN, n° 11. Ce texte est également paru dans la série des WP du LEDa, en anglais : http://basepub.dauphine.fr/xmlui/123456789/2570
Dewey
Economie de la terre et des ressources naturelles
Sujet
Electricity Market; European Union Carbon Trading Scheme; Carbon Allowances
JEL code
Q48; L94
Journal issue
Economies et Sociétés. Série EN, Economie de l'énergie
Volume
43
Number
10
Publication date
10-2009
Article pages
1623-1627
Publisher
ISMEA
Author
Cruciani, Michel
Keppler, Jan-Horst
Type
Article accepté pour publication ou publié
Abstract (EN)
With the introduction of CO2 allowances, the European Union Carbon Trading Scheme (EU ETS) has imposed a price on the CO2 emissions of power generating companies. In line with economic theory, these companies pass on the costs of allowances and integrate it into the price of electricity. Due to the specific remuneration of electricity supplied at different periods due to fluctuating demand this affects the infra-marginal rents gained by different technologies. This paper provides a methodology for determining the specific interaction of the imposition of such a CO2 constraint on the price-setting mechanism in the power generation sector, given the context of marginal cost pricing in a liberalized European electricity market. As nearly 100 % of these allowances are allocated for free between 2005 and 2012, previous marginal and inframarginal rents have been profoundly modified since 2005. Building on the proposed methodology, the article provides an empirical estimation of the rents of power producers during Phase I of the EU-ETS (2005 – 2007) according to the different technologies. Finally, the paper assesses the impact on rents of the upcoming switch from free allocation of allowances to auctioning by 2013.