EU ETS and Investment Decisions:: The Case of the German Electricity Industry
AbstractIn 2005, the EU launched the European Emission Trading Scheme (EU ETS) to reduce CO2 emissions and spur low carbon investments. There is only little empirical evidence regarding its actual effects on corporate investment decisions. We investigate these effects in case studies in the German electricity sector. We find that companies in the sector integrate costs for CO2 in their investment decisions. The EU ETS constitutes a main driver for small-scale investments with short amortization times. Its impact on large-scale investments in power plants or in R&D efforts is limited. To overcome this weakness, policy makers should reflect their long-term reduction intentions in the scarcity of allowances, provide more incentives to increase efficiency, and reduce regulatory uncertainty.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal European Management Journal.
Volume (Year): 25 (2007)
Issue (Month): 6 (December)
Contact details of provider:
Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/115/description#description
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Pahle, Michael & Fan, Lin & Schill, Wolf-Peter, 2011. "How emission certificate allocations distort fossil investments: The German example," Energy Policy, Elsevier, vol. 39(4), pages 1975-1987, April.
- Zhang, Yue-Jun & Wei, Yi-Ming, 2010. "An overview of current research on EU ETS: Evidence from its operating mechanism and economic effect," Applied Energy, Elsevier, vol. 87(6), pages 1804-1814, June.
- Neil Ross Lambie, 2010. "Understanding the effect of an emissions trading scheme on electricity generator investment and retirement behaviour: the proposed Carbon Pollution Reduction Scheme," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), pages 203-217, 04.
- Heindl, Peter & Lutz, Benjamin, 2012. "Carbon management: Evidence from case studies of German firms under the EU ETS," ZEW Discussion Papers 12-079, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Timothy Considine & Donald F. Larson, 2012. "Short Term Electric Production Technology Switching Under Carbon Cap and Trade," Energies, MDPI, Open Access Journal, vol. 5(10), pages 4165-4185, October.
- Rogge, Karoline S. & Hoffmann, Volker H., 2010. "The impact of the EU ETS on the sectoral innovation system for power generation technologies - Findings for Germany," Energy Policy, Elsevier, vol. 38(12), pages 7639-7652, December.
- Wang, Qiang & Chen, Xi, 2013. "Rethinking and reshaping the climate policy: Literature review and proposed guidelines," Renewable and Sustainable Energy Reviews, Elsevier, vol. 21(C), pages 469-477.
- Pahle, Michael, 2010. "Germany's dash for coal: Exploring drivers and factors," Energy Policy, Elsevier, vol. 38(7), pages 3431-3442, July.
- Oberndorfer, Ulrich, 2008. "EU Emission Allowances and the Stock Market: Evidence from the Electricity Industry," ZEW Discussion Papers 08-059, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Rogge, Karoline S. & Schneider, Malte & Hoffmann, Volker H., 2010. "The innovation impact of EU emission trading: findings of company case studies in the German power sector," Working Papers "Sustainability and Innovation" S2/2010, Fraunhofer Institute for Systems and Innovation Research (ISI).
- Christian Engau & Volker Hoffmann, 2011. "Corporate response strategies to regulatory uncertainty: evidence from uncertainty about post-Kyoto regulation," Policy Sciences, Springer, vol. 44(1), pages 53-80, March.
- Oberndorfer, Ulrich, 2009. "EU Emission Allowances and the stock market: Evidence from the electricity industry," Ecological Economics, Elsevier, vol. 68(4), pages 1116-1126, February.
- Gulbrandsen, Lars H. & Stenqvist, Christian, 2013. "The limited effect of EU emissions trading on corporate climate strategies: Comparison of a Swedish and a Norwegian pulp and paper company," Energy Policy, Elsevier, vol. 56(C), pages 516-525.
- Wilfried Ehrenfeld, 2012. "Towards a Theory of Climate Innovation - A Model Framework for Analyzing Drivers and Determinants," IWH Discussion Papers 1, Halle Institute for Economic Research.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.