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The Impact of the EU Emissions Trading System on CO2 Intensity in Electricity Generation

  • Widerberg, Anna

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Wråke, Markus

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Prior to the launch of the EU Emissions Trading System (EU ETS) in 2005, the electricity sector was widely proclaimed to have more low-cost emission abatement opportunities than other sectors. If this were true, effects of the EU ETS on carbon dioxide (CO2) emissions would likely be visible in the electricity sector. Our study looks at the effect of the price of emission allowances (EUA) on CO2 emissions from Swedish electricity generation, using an econometric time series analysis for the period 2004–2008. We control for effects of other input prices and hydropower reservoir levels. Our results do not indicate any link between the price of EUA and the CO2 emissions of Swedish electricity production. A number of reasons may explain this result and we conclude that other determinants of fossil fuel use in Swedish electricity generation probably diminished the effects of the EU ETS.

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File URL: http://hdl.handle.net/2077/20392
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 361.

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Length: 22 pages
Date of creation: 09 Jun 2009
Date of revision:
Handle: RePEc:hhs:gunwpe:0361
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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  1. Sijm, J. & Neuhoff, K. & Chen, Y., 2006. "CO2 cost pass through and windfall profits in the power sector," Cambridge Working Papers in Economics 0639, Faculty of Economics, University of Cambridge.
  2. Alberola, Emilie & Chevallier, Julien & Cheze, Benoi^t, 2008. "Price drivers and structural breaks in European carbon prices 2005-2007," Energy Policy, Elsevier, vol. 36(2), pages 787-797, February.
  3. Harrison Fell, 2010. "EU-ETS and Nordic Electricity: A CVAR Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-26.
  4. Barbara Buchner & Denny Ellerman, 2006. "Over-Allocation or Abatement? A Preliminary Analysis of the Eu Ets Based on the 2005 Emissions Data," Working Papers 2006.139, Fondazione Eni Enrico Mattei.
  5. Derek W. Bunn & Carlo Fezzi, 2007. "Interaction of European Carbon Trading and Energy Prices," Working Papers 2007.63, Fondazione Eni Enrico Mattei.
  6. Perron, P. & Bai, J., 1995. "Estimating and Testing Linear Models with Multiple Structural Changes," Cahiers de recherche 9552, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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