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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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    Keywords

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