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Explaining the interplay of three markets: green certificates, carbon emissions and electricity
Department of Forest Economics, Swedish University of Agricultural Sciences, Umeå, Sweden.
Umeå University, Faculty of Social Sciences, Center for Environmental and Resource Economics (CERE). Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.
2018 (English)In: Energy Economics, ISSN 0140-9883, E-ISSN 1873-6181, Vol. 71, p. 1-13Article in journal (Refereed) Published
Abstract [en]

The European Union's Emissions Trading System (EU ETS) and the Swedish-Norwegian Tradable Green Certificate System (Swedish-Norwegian TGC system) are two market-based instruments that have the overlapping goals to mitigate greenhouse gas (GHG) emissions by shifting economies to cleaner energy sources. Understanding the price signals and interactions of these two newly created markets is essential for all decision makers – regulators and direct market participants – who aim to reach the predefined policy goals in the most efficient manner. The interaction between these policy instruments has been widely examined from the theoretical perspective. This research contributes to the literature by empirically examining the interplay between the prices of three markets: (1) the price of tradable green certificates (TGC) in the Swedish-Norwegian TGC system, (2) the price of carbon in the EU ETS and (3) the price of electricity in the Nord Pool. We use a multivariate vector-autoregressive (VAR) approach to take into account the endogenous relationships between these prices. Our empirical results do not support the theoretical considerations that the impacts of carbon prices on TGC prices and hence on renewable electricity production are negative. Contrary, we find that, to date, increases in carbon prices positively affect TGC prices in the short run.

Place, publisher, year, edition, pages
Elsevier, 2018. Vol. 71, p. 1-13
Keyword [en]
Renewable energy, Electricity, Green certificates, Emissions trading
National Category
Energy Systems Economics
Identifiers
URN: urn:nbn:se:umu:diva-145433DOI: 10.1016/j.eneco.2018.01.012ISI: 000431159100001OAI: oai:DiVA.org:umu-145433DiVA, id: diva2:1187446
Available from: 2018-03-05 Created: 2018-03-05 Last updated: 2018-06-09Bibliographically approved

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Jaraite, Jurate

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CiteExportLink to record
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Citation style
  • apa
  • ieee
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  • vancouver
  • Other style
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  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
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  • Other locale
More languages
Output format
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  • asciidoc
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