IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Efficiency, Productivity and Environmental Policy: A Case Study of Power Generation in the EU

This study uses the EU public power generating sector as a case study to investigate the environmental efficiency and productivity enhancing performance of the EU ETS in its pilot phase. Using Data Envelopment Analysis methods, we measures the environmental efficiency and the productivity growth registered in public power generation across the EU over the 1996-2007 period. In the second stage of our analysis we attempt to explain changes in productivity and efficiency over time using state-of-the-art econometric techniques. Our analysis suggests two conclusions: on the one hand carbon pricing led to an increase in environmental efficiency and to a shift outwards of the technological frontier; on the other hand, the overly generous allocation of emission permits had a negative impact on both measures. These results are shown to be quite robust to changes in controls and specifications.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www-sekon.slu.se/~gbost/CERE_WP2011-3.pdf
Download Restriction: no

Paper provided by CERE - the Center for Environmental and Resource Economics in its series CERE Working Papers with number 2011:3.

as
in new window

Length: 25 pages
Date of creation: 22 Feb 2011
Date of revision:
Handle: RePEc:hhs:slucer:2011_003
Contact details of provider: Web page: http://www.cere.se

References listed on IDEAS
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.:

as in new window
  1. Tim J. Coelli & D.S. Prasada Rao, 2003. "Total Factor Productivity Growth in Agriculture: A Malmquist Index Analysis of 93 Countries,1980-2000," CEPA Working Papers Series WP022003, School of Economics, University of Queensland, Australia.
  2. Parry, Ian W.H. & Goulder, Lawrence H., 2008. "Instrument Choice in Environmental Policy," Discussion Papers dp-08-07, Resources For the Future.
  3. Erik D. Delarue & A. Denny Ellerman & William D. D'Haeseleer, 2010. "Short-Term Co2 Abatement In The European Power Sector: 2005–2006," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 113-133.
  4. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435 Elsevier.
  5. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "Measuring environmental performance under different environmental DEA technologies," Energy Economics, Elsevier, vol. 30(1), pages 1-14, January.
  6. SIMAR, Léopold & WILSON, Paul, 1996. "Estimating and bootstrapping malmquist indices," CORE Discussion Papers 1996060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Yang, Hongliang & Pollitt, Michael, 2009. "Incorporating both undesirable outputs and uncontrollable variables into DEA: The performance of Chinese coal-fired power plants," European Journal of Operational Research, Elsevier, vol. 197(3), pages 1095-1105, September.
  8. Widerberg, Anna & Wråke, Markus, 2009. "The Impact of the EU Emissions Trading System on CO2 Intensity in Electricity Generation," Working Papers in Economics 361, University of Gothenburg, Department of Economics.
  9. Corrado Di Maria & Barry Anderson & Frank Convery, 2009. "Abatement and Allocation in the Pilot Phase of the EU ETS," Working Papers 2009.110, Fondazione Eni Enrico Mattei.
  10. Fleishman, Rachel & Alexander, Rob & Bretschneider, Stuart & Popp, David, 2009. "Does regulation stimulate productivity? The effect of air quality policies on the efficiency of US power plants," Energy Policy, Elsevier, vol. 37(11), pages 4574-4582, November.
  11. Tooraj Jamasb and Michael Pollitt, 2005. "Electricity Market Reform in the European Union: Review of Progress toward Liberalization & Integration," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 11-42.
  12. A. Ellerman & Barbara Buchner, 2008. "Over-Allocation or Abatement? A Preliminary Analysis of the EU ETS Based on the 2005–06 Emissions Data," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(2), pages 267-287, October.
  13. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
  14. Voigt, Sebastian & Hoffmann, Tim, 2009. "What Drives the Efficiency of Hard Coal Fuelled Electricity Generation? An Empirical Assessment," ZEW Discussion Papers 09-011, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  15. Graus, Wina & Worrell, Ernst, 2009. "Trend in efficiency and capacity of fossil power generation in the EU," Energy Policy, Elsevier, vol. 37(6), pages 2147-2160, June.
  16. Frank Convery, 2009. "Origins and Development of the EU ETS," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(3), pages 391-412, July.
  17. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
  18. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March.
  19. Zhou, P. & Ang, B.W., 2008. "Linear programming models for measuring economy-wide energy efficiency performance," Energy Policy, Elsevier, vol. 36(8), pages 2901-2906, August.
  20. De Perthuis, Christian & Convery, Frank J. & Ellerman, Denny, 2010. "Pricing carbon : the European Union Emissions Trading Scheme," Economics Papers from University Paris Dauphine 123456789/10174, Paris Dauphine University.
  21. Yaisawarng, Suthathip & Klein, J Douglass, 1994. "The Effects of Sulfur Dioxide Controls on Productivity Change in the U.S. Electric Power Industry," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 447-60, August.
  22. Soderholm, Patrik, 2001. "Fossil fuel flexibility in west European power generation and the impact of system load factors," Energy Economics, Elsevier, vol. 23(1), pages 77-97, January.
  23. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2003. "Chapter 11 Technological change and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 11, pages 461-516 Elsevier.
  24. Andr�s J Picazo-Tadeo & Andr�s Garc�a-Reche, 2007. "What makes environmental performance differ between firms? Empirical evidence from the Spanish tile industry," Environment and Planning A, Pion Ltd, London, vol. 39(9), pages 2232-2247, September.
  25. Fare, Rolf & Grosskopf, Shawna & Tyteca, Daniel, 1996. "An activity analysis model of the environmental performance of firms--application to fossil-fuel-fired electric utilities," Ecological Economics, Elsevier, vol. 18(2), pages 161-175, August.
  26. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
  27. Zhou, P. & Ang, B.W. & Han, J.Y., 2010. "Total factor carbon emission performance: A Malmquist index analysis," Energy Economics, Elsevier, vol. 32(1), pages 194-201, January.
  28. Requate, Till & Unold, Wolfram, 2003. "Environmental policy incentives to adopt advanced abatement technology:: Will the true ranking please stand up?," European Economic Review, Elsevier, vol. 47(1), pages 125-146, February.
  29. Korhonen, Pekka J. & Luptacik, Mikulas, 2004. "Eco-efficiency analysis of power plants: An extension of data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 154(2), pages 437-446, April.
  30. Tietenberg, T H, 1990. "Economic Instruments for Environmental Regulation," Oxford Review of Economic Policy, Oxford University Press, vol. 6(1), pages 17-33, Spring.
  31. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:hhs:slucer:2011_003. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mona Bonta Bergman)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.