Trading electricity under different carbon pricing constraints: the French-German case-Reference-Cited by-同舟云学术

Trading electricity under different carbon pricing constraints: the French-German case

Published:2023-04-26 Issue: Volume: Page:
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Author:

Chaton Corinne¹,Creti Anna²

Affiliation:

1. Finance for Energy Market Research Centre (FIME)

2. University of Paris Dauphine, Climate Economics Chair

Abstract

Abstract There is an ongoing debate regarding possible reforms in the EU ETS (Emissions Trading System) market. One of the measures considered is a price floor that would prevent the price from reaching very low values. This regulation instrument has been implemented for permits, in other markets like California. We contribute to the recent literature on the carbon price floor (CPF) by analysing its effect on the electricity sector in interconnected countries. We characterise electricity trade and carbon market equilibria under symmetric and asymmetric regulations and simulate our results for the French and German electricity markets. The French-German electricity trading case illustrates the likely impact of CPF measures, which may have counterintuitive effects on carbon prices.

Publisher

Research Square Platform LLC

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