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Impact of the economic recession on the European power sector's CO2 emissions

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  • Declercq, Bruno
  • Delarue, Erik
  • D'haeseleer, William

Abstract

This paper investigates the impact of the economic recession on CO2 emissions in the European power sector, during the years 2008 and 2009. Three main determinants of the power sector's emissions are identified: the demand for electricity, the CO2 price, and fuel prices. A counterfactual scenario has been set up for each of these, i.e., what these parameters would have been if not affected by the recession. A simulation model of the European power sector is then employed, comparing a historical reference simulation (taking the parameters as actually occurred) with the counterfactual scenarios. The lower electricity demand (due to the recession) is shown to have by far the largest impact, accounting for an emission reduction of about 175Â Mton. The lower CO2 price (due to the recession) resulted in an increase in emissions by about 30Â Mton. The impact of fuel prices is more difficult to retrieve; an indicative reduction of about 17Â Mton is obtained, mainly as a consequence of the low gas prices in 2009. The simulated combined impact of the parameters results in an emission reduction of about 150Â Mton in the European power sector over the years 2008 and 2009 as a consequence of the recession.

Suggested Citation

  • Declercq, Bruno & Delarue, Erik & D'haeseleer, William, 2011. "Impact of the economic recession on the European power sector's CO2 emissions," Energy Policy, Elsevier, vol. 39(3), pages 1677-1686, March.
  • Handle: RePEc:eee:enepol:v:39:y:2011:i:3:p:1677-1686
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    References listed on IDEAS

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    2. Keppler, Jan Horst & Mansanet-Bataller, Maria, 2010. "Causalities between CO2, electricity, and other energy variables during phase I and phase II of the EU ETS," Energy Policy, Elsevier, vol. 38(7), pages 3329-3341, July.
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    Cited by:

    1. repec:gam:jeners:v:9:y:2016:i:4:p:224:d:66298 is not listed on IDEAS
    2. Bel, Germà & Joseph, Stephan, 2015. "Emission abatement: Untangling the impacts of the EU ETS and the economic crisis," Energy Economics, Elsevier, vol. 49(C), pages 531-539.
    3. Shahbaz, Muhammad, 2013. "Does financial instability increase environmental degradation? Fresh evidence from Pakistan," Economic Modelling, Elsevier, vol. 33(C), pages 537-544.
    4. Raphaël Trotignon & Pierre-André Jouvet & Boris Solier & Simon Quemin & Jérémy Elbeze, 2015. "European carbon market: lessons on the impact of a market stability reserve using the Zephyr model," Working Papers 1511, Chaire Economie du climat.
    5. Segnon, Mawuli & Lux, Thomas & Gupta, Rangan, 2017. "Modeling and forecasting the volatility of carbon dioxide emission allowance prices: A review and comparison of modern volatility models," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 692-704.
    6. Shahbaz, Muhammad, 2010. "Does financial instability increase environmental pollution in Pakistan?," MPRA Paper 31360, University Library of Munich, Germany, revised 28 Mar 2011.
    7. Koch, Nicolas & Fuss, Sabine & Grosjean, Godefroy & Edenhofer, Ottmar, 2014. "Causes of the EU ETS price drop: Recession, CDM, renewable policies or a bit of everything?—New evidence," Energy Policy, Elsevier, vol. 73(C), pages 676-685.
    8. Chevallier, Julien, 2011. "Evaluating the carbon-macroeconomy relationship: Evidence from threshold vector error-correction and Markov-switching VAR models," Economic Modelling, Elsevier, vol. 28(6), pages 2634-2656.
    9. Jouvet, Pierre-André & Solier, Boris, 2013. "An overview of CO2 cost pass-through to electricity prices in Europe," Energy Policy, Elsevier, pages 1370-1376.
    10. Ana L. Gonçalves & Maria C. M. Alvim-Ferraz & Fernando G. Martins & Manuel Simões & José C. M. Pires, 2016. "Integration of Microalgae-Based Bioenergy Production into a Petrochemical Complex: Techno-Economic Assessment," Energies, MDPI, Open Access Journal, vol. 9(4), pages 1-17, March.
    11. Zhao, Xiaoli & Yin, Haitao & Zhao, Yue, 2015. "Impact of environmental regulations on the efficiency and CO2 emissions of power plants in China," Applied Energy, Elsevier, pages 238-247.
    12. Chevallier, Julien, 2011. "A model of carbon price interactions with macroeconomic and energy dynamics," Energy Economics, Elsevier, vol. 33(6), pages 1295-1312.
    13. repec:eee:rensus:v:79:y:2017:i:c:p:646-655 is not listed on IDEAS
    14. Andor, Mark Andreas & Frondel, Manuel & Neuhoff, Karsten & Petrick, Sebastian & Rüster, Sophia, 2016. "Klimaschutzpolitik in Europa: Wie kann ein Politikmix gestaltet werden?," RWI Materialien 103, RWI - Leibniz-Institut für Wirtschaftsforschung.
    15. Tan, Xue-Ping & Wang, Xin-Yu, 2017. "Dependence changes between the carbon price and its fundamentals: A quantile regression approach," Applied Energy, Elsevier, pages 306-325.
    16. Zhao, Xiaoli & Ma, Qian & Yang, Rui, 2013. "Factors influencing CO2 emissions in China's power industry: Co-integration analysis," Energy Policy, Elsevier, vol. 57(C), pages 89-98.
    17. repec:dau:papers:123456789/7761 is not listed on IDEAS

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