Advanced Search
MyIDEAS: Login

Long-Run Equilibrium Modeling of Alternative Emissions Allowance Allocation Systems in Electric Power Markets

Contents:

Author Info

  • Schulkin, J.Z.
  • Hobbs, B.F.
  • Pang, J.

Abstract

A question in the design of carbon dioxide trading systems is how allowances are to be initially allocated: by auction, by giving away fixed amounts, or by allocating based on output, fuel, or other decisions. The latter system can bias investment, operations, and pricing decisions, and increase costs relative to other systems. A nonlinear complementarity model is used to investigate long-run equilibria that would result under alternative systems for power markets characterized by time varying demand and multiple generation technologies. Existence of equilibria is shown under mild conditions. Solutions show that allocating allowances to new capacity based on fuel use or generator type can distort generation mixes, invert the operating order of power plants, and inflate consumer costs. The distortions can be smaller for tighter CO2 restrictions, and are somewhat mitigated if there are also electricity capacity markets or minimum-run restrictions on coal plants.

Download Info

If 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.
File URL: http://www.electricitypolicy.org.uk/pubs/wp/eprg0719.pdf
Our checks indicate that this address may not be valid because: 403 Forbidden. If this is indeed the case, please notify (Howard Cobb)
File Function: Working Paper Version
Download Restriction: no

Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0748.

as in new window
Length: 24
Date of creation: Sep 2007
Date of revision:
Handle: RePEc:cam:camdae:0748

Contact details of provider:
Web page: http://www.econ.cam.ac.uk/index.htm

Related research

Keywords: Emissions trading; allowance allocations; electricity; air pollution; auction; grandfathering; cost-effectiveness; greenhouse gases; climate change; global warming; carbon dioxide; generation investment.;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Paul Kleindorfer & Lide Li, 2011. "Portfolio risk management and carbon emissions valuation in electric power," Journal of Regulatory Economics, Springer, vol. 40(3), pages 219-236, December.
  2. David F. Drake, 2011. "Carbon Tariffs: Impacts on Technology Choice, Regional Competitiveness, and Global Emissions," Harvard Business School Working Papers 12-029, Harvard Business School.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cam:camdae:0748. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Howard Cobb).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.