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Cross-border electricity market effects due to price caps in an emission trading system: An agent-based approach

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  • Richstein, Jörn C.
  • Chappin, Emile J.L.
  • de Vries, Laurens J.

Abstract

The recent low CO2 prices in the European Union Emission Trading Scheme (EU ETS) have triggered a discussion whether the EU ETS needs to be adjusted. We study the effects of CO2 price floors and a price ceiling on the dynamic investment pathway of two interlinked electricity markets (loosely based on Great Britain, which already has introduced a price floor, and on Central Western Europe). Using an agent-based electricity market simulation with endogenous investment and a CO2 market (including banking), we analyse the cross-border effects of national policies as well as system-wide policy options.

Suggested Citation

  • Richstein, Jörn C. & Chappin, Emile J.L. & de Vries, Laurens J., 2014. "Cross-border electricity market effects due to price caps in an emission trading system: An agent-based approach," Energy Policy, Elsevier, vol. 71(C), pages 139-158.
  • Handle: RePEc:eee:enepol:v:71:y:2014:i:c:p:139-158
    DOI: 10.1016/j.enpol.2014.03.037
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    Cited by:

    1. repec:eee:juipol:v:48:y:2017:i:c:p:76-91 is not listed on IDEAS
    2. Moradi, Mohammad H. & Razini, Saleh & Mahdi Hosseinian, S., 2016. "State of art of multiagent systems in power engineering: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 814-824.
    3. repec:eee:juipol:v:46:y:2017:i:c:p:33-47 is not listed on IDEAS
    4. repec:eee:enepol:v:111:y:2017:i:c:p:255-267 is not listed on IDEAS
    5. Jaskólski, Marcin, 2016. "Modelling long-term technological transition of Polish power system using MARKAL: Emission trade impact," Energy Policy, Elsevier, vol. 97(C), pages 365-377.
    6. Weiss, Olga & Bogdanov, Dmitry & Salovaara, Kaisa & Honkapuro, Samuli, 2017. "Market designs for a 100% renewable energy system: Case isolated power system of Israel," Energy, Elsevier, vol. 119(C), pages 266-277.
    7. repec:eee:appene:v:217:y:2018:i:c:p:440-455 is not listed on IDEAS
    8. Bhagwat, Pradyumna C. & Richstein, Jörn C. & Chappin, Emile J.L. & de Vries, Laurens J., 2016. "The effectiveness of a strategic reserve in the presence of a high portfolio share of renewable energy sources," Utilities Policy, Elsevier, vol. 39(C), pages 13-28.
    9. Iychettira, Kaveri K. & Hakvoort, Rudi A. & Linares, Pedro & de Jeu, Rob, 2017. "Towards a comprehensive policy for electricity from renewable energy: Designing for social welfare," Applied Energy, Elsevier, vol. 187(C), pages 228-242.
    10. Richstein, Jörn C. & Chappin, Émile J.L. & de Vries, Laurens J., 2015. "The market (in-)stability reserve for EU carbon emission trading: Why it might fail and how to improve it," Utilities Policy, Elsevier, vol. 35(C), pages 1-18.
    11. repec:eee:rensus:v:75:y:2017:i:c:p:660-667 is not listed on IDEAS
    12. Falcke, Florian & Madlener, Reinhard, 2016. "Potential Impacts of the Planned Market Stability Reserve on Speculators’ Behavior in the EU Emissions Trading System," FCN Working Papers 9/2016, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    13. repec:eee:rensus:v:82:y:2018:i:p3:p:3441-3451 is not listed on IDEAS
    14. Richstein, Jörn C. & Chappin, Émile J.L. & de Vries, Laurens J., 2015. "Adjusting the CO2 cap to subsidised RES generation: Can CO2 prices be decoupled from renewable policy?," Applied Energy, Elsevier, vol. 156(C), pages 693-702.

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    Keywords

    EU-ETS; CO2 price caps; Agent-based modelling;

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