Price Volatility and Banking in Green Certificate Markets
AbstractThere 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.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 05-08.
Length: 34 pages
Date of creation: Jul 2005
Date of revision:
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electricity; environment; commodity speculation; green certificates; marketable permits; uncertainty;
Other versions of this item:
- Eirik Amundsen & Fridrik Baldursson & Jørgen Mortensen, 2006. "Price Volatility and Banking in Green Certificate Markets," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 35(4), pages 259-287, December.
- Amundsen, Eirik S. & Baldursson, Fridrik M. & Mortensen, Jørgen Birk, 2003. "Price Volatility and Banking in Green Certificate Markets," Working Papers in Economics 02/03, University of Bergen, Department of Economics.
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-07-25 (All new papers)
- NEP-ENE-2005-07-25 (Energy Economics)
- NEP-ENV-2005-07-25 (Environmental Economics)
- NEP-FIN-2005-07-25 (Finance)
- NEP-FMK-2005-07-25 (Financial Markets)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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