Modelling a market stability reserve in carbon markets

Arbeitspapier

We examine under which conditions a cap-and-trade mechanism can deliver a dynamically efficient abatement pathway and contribute to a robust investment framework. For this we develop a numerical dynamic partial-equilibrium model that includes differentiated objective functions of different market participants for holding emission allowances based on their banking strategy. If the surplus of allowances is large, as currently observed in the European Union Emissions Trading System, the equilibrium market outcome can deviate from an efficient abatement pathway and performance of the policy is reduced against a set of key criteria (dynamic efficiency, price credibility, price consistency, and robustness to shocks). The model is applied to assess design options of quantity and price based market stability reserves as discussed in Europe. Both price and quantity based mechanisms can improve the performance of the EU ETS against key criteria.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: DIW Discussion Papers ; No. 1483

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Expectations; Speculations ; General Financial Markets: Government Policy and Regulation ; Energy: Government Policy
• Thema: Computational Model ; Emissions trading ; Environmental Regulation ; Market stability reserve

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Schopp, Anne ; Acworth, William ; Huppmann, Daniel ; Neuhoff, Karsten
• Ereignis: Veröffentlichung
• (wer): Deutsches Institut für Wirtschaftsforschung (DIW)
• (wo): Berlin
• (wann): 2015

Weitere Informationen

• Handle: http://hdl.handle.net/10419/110328
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ