Category Archives: Working Papers 2006

EPRG 0632

Karsten Neuhoff, Markus Åhman, Regina Betz, Johanna Cludius, Federico Ferrario, Kristina Holmgren, Gabriella Pal, Michael Grubb, Felix Matthes, Karoline Rogge, Joachim Schleich, Jos Sijm, Andreas Tuerk, Claudia Kettner, Neil Walker

Implications of announced Phase 2 National Allocation Plans for the EU ETS

EPRG 0632 Non-Technical Summary | PDF

Also published in:

  • Neuhoff, K., Åhman, M., Betz, R., Cludius, J., Ferrario, F., Holmgren, K., Pal, G., Grubb, M., Matthes, F., Rogge, K., Sato, M., Schleich, J., Sijm, J., Tuerk, A., Kettner, C. and Walker, N. (2006), “Implications of Announced Phase 2 National Allocation Plans for the EU ETS”, Climate Policy 6(4)

Abstract: We quantified the volume of free allowances that different National Allocation Plans proposed to allocate to existing and new installations, with specific reference to the power sector. Most countries continue to allocate based on historic emissions, contrary to hopes for improved allocation methods, with allocations to installations frequently based on 2005 emission data; this may strengthen belief in the private sector that emissions in the coming years will influence their subsequent allowance allocation. Allocations to new installations provide high and frequently fuel differentiated subsidies, risking significant distortions to investment choices. Thus in addition to being numerically weak in aggregate, proposed allocation plans reveal continuing if diverse problems, including perverse incentives. Ensuring the effectiveness of EU ETS in the coming years will require credible evidence to the private sector that free allowance allocation will be drastically reduced post-2012, or these problems otherwise addressed.

Keywords: Emission Trading, National Allocation Plans, Comparison, European Member states


EPRG 0631

Karsten Neuhoff, Federico Ferrario, Michael Grubb, Etienne Gabel, Kim Keats Emission projections 2008-2012 versus NAPs II EPRG 0631 Non-Technical Summary | PDF Also published in: Neuhoff, K  (2006), “Emission projections 2008-2012 versus NAPs II”, Climate Policy, Volume: 6, Issue: 4, Pages: 395-410 Abstract: We compare the national allocation plans, proposed and submitted by EU member… Read more

EPRG 0630

Maria Heinrich, Karsten Neuhoff Choosing to save EPRG 0630 Non-Technical Summary | PDF Abstract: Various barriers for the uptake of energy-efficiency measures in the domestic sector have been identified. Projects try to quantify the effect of individual barriers like transaction costs, information lack, access to technologies or convenience. We propose to use the ‘consumer choice… Read more

EPRG 0629

Joseph Doucet, Stephen Littlechild Negotiated Settlements and the National Energy Board in Canada EPRG 0629 Non-Technical Summary | PDF Abstract: Recent research suggests the widespread use and innovative nature of negotiated settlements in public utility regulation, particularly at FERC and in Florida. Such settlements began to emerge in the Canadian oil and gas pipeline sector… Read more

EPRG 0628

Richard Gilbert, David Newbery Electricity Merger Policy in the Shadow of Regulation EPRG 0628 Non-Technical Summary | PDF Also published in: “Antitrust and Regulation in the EU and US: Legal and Economic Perspectives”, ed. P. Leveque and H Shelanski, Edward Elgar 2010 Abstract: Electricity mergers pose distinctive challenges for competition policy – in market definition… Read more

EPRG 0627

Karsten Neuhoff — Where can international cooperation support domestic climate policy? EPRG 0627 Non-Technical Summary | PDF Abstract: A move to a low Carbon economy involves (1) internalisation of CO2 externalities, (2) advancement of technologies and (3) removal of barriers and evolution of institutions. National governments that want to realise these goals can choose from… Read more

EPRG 0626

Fabien Roques, David Newbery, William Nuttall Fuel mix diversification incentives in liberalised electricity markets: a Mean-Variance Portfolio Theory Approach EPRG 0626 Non-Technical Summary | PDF Also published in: Energy Economics 30 (4) 2008, 1831-1849. Available at: ScienceDirect Abstract: The risks and returns associated with different choices of electricity generation technology cannot properly be considered in… Read more

EPRG 0625

Roland Ismer, Karsten Neuhoff Commitments through Financial Options: A Way to Facilitate Compliance with Climate Change Obligations EPRG 0625 Non-Technical Summary | PDF Also published in: Grubb, M. and Neuhoff, K. (2006), “Allocation and Competitiveness in the EU Emissions Trading Scheme: Policy Overview”, Climate Policy 6(1) Abstract: Governments willing to commit themselves to maintain carbon prices at… Read more

EPRG 0624

David Newbery Power Reform, Private Investment and Regional Co-operation EPRG 0624 Non-Technical Summary | PDF Also published in: Newbery, D.M. (2007) ‘Power sector reform, private investment and regional co-operation’ chapter 6 in South Asia – Regional Integration and Growth, Washington, D.C.: World Bank Report 37858-SAS, pp 107-28, McMillan Press, India Abstract: Modern infrastructure, particularly electricity,… Read more

EPRG 0623

David Bonilla Energy Prices, Production and the Adoption of Cogeneration in the UK and the Netherlands EPRG 0623 Non-Technical Summary | PDF Abstract: Whenever industrial plants consume power and heat there is a need to consider energy efficiency investment on a cogeneration (CHP) plant. We investigate economic incentives influencing the adoption of energy saving technology… Read more

EPRG 0622

Michael Grubb, Karsten Neuhoff Allocation and Competitiveness in the EU Emissions Trading Scheme: Policy Overview EPRG 0622 Non-Technical Summary | PDF Also published in: Grubb, Michael & Neuhoff, Karsten (2006). “Allocation and Competitiveness in the EU Emissions Trading Scheme: Policy Overview”,  Climate Policy, Volume 6, Issue 1, 2006. pages 7-30 Abstract: The European emissions trading… Read more

EPRG 0621

Cameron Hepburn, Michael Grubb, Karsten Neuhoff, Felix Matthes, Maximilien Tse Auctioning of EU ETS Phase II allowances: how and why? EPRG 0621 Non-Technical Summary | PDF Also published in: Hepburn, C., Grubb, M., Neuhoff, K., Matthes, F. and Tse, M. (2006), “Auctioning of EU ETS Phase II Allowances: How and Why?”, Climate Policy 6(1) Abstract: The European Directive… Read more

EPRG 0620

Angus Johnston Free allocation of allowances under the EU Emissions Trading System – legal issues EPRG 0620 Non-Technical Summary | PDF Also published in: Johnston, Angus (2006) “Free allocation of allowances under the EU Emissions Trading System – legal issues”, Climate Policy.  Volume: 6, Issue: 1, Pages: 115-136 Abstract: This paper provides a legal analysis… Read more

EPRG 0619

Fabien Roques, William Nuttall, David Newbery Using Probabilistic Analysis to Value Power Generation Investments Under Uncertainty EPRG 0619 Non-Technical Summary | PDF Abstract: This paper reviews the limits of the traditional ‘levelised cost’ approach to properly take into account risks and uncertainties when valuing different power generation technologies. We introduce a probabilistic valuation model of… Read more

EPRG 0618

Karsten Neuhoff, Kim Keats, Misato Sato Allocation, Incentives and Distortions: The Impact of EU ETS Emissions Allowance Allocations to the Electricity Sector EPRG 0618 Non-Technical Summary | PDF Also published in: Neuhoff, K. “Allocation, Incentives and Distortions: The Impact of EU ETS Emissions Allowance Allocations to the Electricity Sector”, Climate Policy Vol 6 Issue 1… Read more

EPRG 0617

Jos Sijm, Karsten Neuhoff, Yihsu Chen CO2 Cost Pass Through and Windfall Profits in the Power Sector EPRG 0617 Non-Technical Summary | PDF Also published in: Sijm, J., Neuhoff, K. and Chen, Y. (2006) “CO2 Cost Pass Through and Windfall Profits in the Power Sector”, Climate Policy 6(1) Abstract: In order to cover their CO2… Read more

EPRG 0616

Fabien Roques Price Cap Regulation and Investment Incentives Under Demand Uncertainty EPRG 0616 Non-Technical Summary | PDF Abstract: We study the e¤ect of price cap regulation on investment in new capacity in an oligopolistic (Cournot) industry, using a continuous time model with stochastic demand. A price cap has two mutually competing e¤ects on investment under… Read more

EPRG 0615

Stephen Littlechild Stipulations, the Consumer Advocate and Utility Regulation in Florida EPRG 0615 Non-Technical Summary | PDF Also published in: Littlechild, Stephen (2009) “Stipulated settlements, the consumer advocate and utility regulation in Florida,” Journal of Regulatory Economics, Springer, vol. 35(1), pages 96-109, February Abstract: Relatively little is known about the practice of settlement rather than… Read more

EPRG 0614

Stephan Alberth, Chris Hope Policy Implications of Stochastic Learning using a Modified PAGE2002 Model EPRG 0614 Non-Technical Summary | PDF Abstract: We consider the importance of Endogenous Technical Change (ETC) on the risk profiles for different abatement strategies using the PAGE2002 model with ETC. Three outcomes from this modelling research have significant impacts on the… Read more

EPRG 0613

Stephan Alberth, Chris Hope Developing the PAGE2002 Model with Endogenous Technical Change EPRG 0613 Non-Technical Summary | PDF Abstract: Presented research demonstrates the inclusion of endogenous technical change into the PAGE2002 integrated assessment model of climate change. The ‘experience curve’ or learning-by-doing concept, made popular by the Boston Consulting Group during the 1960′s provides a… Read more

EPRG 0612

William Nuttall Nuclear Renaissance Requires Nuclear Enlightenment EPRG 0612 Non Technical Summary | PDF Also published in: Nuclear or Not? Does Nuclear Power Have a Place in a Sustainable Energy Future?  (2007) Editor D. Elliot, Palgrave and Macmillan, ISBN 978-0-230-50764-7  Nuttall, WJ and Taylor, S. “Financing the Nuclear Renaissance”, European Review of Energy Markets, 3 (2)… Read more

EPRG 0611

David Newbery The Relationship Between Regulation and Competition Policy for Network Utilities EPRG 0611 Non-Technical Summary | PDF Abstract: One of the central questions facing the regulatory and competition authorities is whether to delegate the regulation of the potentially competitive elements of the utility to specialised regulatory agencies, or whether they should be solely subject… Read more

EPRG 0610

Anne Neumann, Christian Von Hirschhausen Long-Term Contracts and Asset Specificity Revisited – An Empirical Analysis of Producer-Importer Relations in the Natural Gas Industry EPRG 0610 Non-Technical Summary | PDF Abstract: In this paper, we analyze structural changes in long-term contracts in the international trade of natural gas. Using a unique data set of 262 long-term… Read more

EPRG 0609

Richard Green, Arturo Lorenzoni, Yannick Perez, Michael Pollitt Benchmarking Electricity Liberalisation in Europe EPRG 0609 Non-Technical Summary | PDF Abstract: In this paper, we discuss the choice and use of benchmarks in each of five areas relevant to an assessment of the progress of EU electricity sector liberalisation. These areas are market design, market power,… Read more

EPRG 0608

Tooraj Jamasb Technical Change Theory and Learning Curves: Patterns of Progress in Energy Technologies EPRG 0608 Non-Technical Summary | PDF Also published in: Jamasb, Tooraj. (2007) “Technical Change Theory and Learning Curves: Patterns of Progress in Electricity Generation Technologies”. Energy Journal, Vol. 28, No. 3. , pp. 51-71 Abstract: Better understanding of the role of… Read more

EPRG 0607

David Reiner From Public Understanding to Public Policy: Public Views on Energy, Technology & Climate Science in the United States EPRG 0607 Non-Technical Summary | PDF Also published in: Reiner, David. “From public understanding to public policy: public views on energy, technology and climate science in the United States” chapter in “Driving Climate Change: cutting… Read more

EPRG 0606

Karsten Neuhoff, Rick Sellers Mainstreaming New Renewable Energy Technologies: Enhancing Market Learning EPRG 0606 Non-Technical Summary | PDF Abstract: This paper outlines the benefits, obstacles and options for governments to support international markets for technology development. International markets for new energy technologies offer greater scope, thereby increasing the incentives and opportunities for technology improvements. As… Read more

EPRG 0605

Jean-Michel Glachant, Francois Leveque Electricity Internal Market in the European Union: What to do next? EPRG 0605 Non-Technical Summary | PDF Abstract: Like in the US, the EU “internal electricity market” remains unfinished and its construction can stall, fracturing into “national blocks” separated by permanent “border effects”. This is exactly what this paper seeks to… Read more

EPRG 0604

Joseph Doucet, Stephen Littlechild Negotiated Settlements: The development of economic and legal thinking EPRG 0604 Non-Technical Summary | PDF Abstract: Negotiated settlements are a form of regulation of public utilities that is alternative or complementary to the conventional process of litigation. The Federal Power Commission pioneered the use of settlements in the early 1960s as… Read more

EPRG 0603

Karsten Neuhoff, Andreas Ehrenmann, Lucy Butler, Jim Cust, Harriet Hoexter, Kim Keats, Adam Kreczko, Graham Sinden Space and Time: Wind in an Investment Planning Model EPRG 0603 Non-Technical Summary | PDF Abstract: Investment planning models inform investment decisions and government policies. Current models do not capture the intermittent nature of renewable energy sources, restricting the… Read more

EPRG 0602

Xinmin Hu, Daniel Ralph Using EPECs to Model Bilevel Games in Restructured Electricity Markets with Locational Prices EPRG 0602 Non-Technical Summary | PDF Abstract: We study a bilevel noncooperative game-theoretic model of restructured electricity markets, with locational marginal prices. Each player faces a bilevel optimization problem that we remodel as a mathematical program with equilibrium… Read more

EPRG 0601

Louis Coulomb, Karsten Neuhoff Learning Curves and Changing Product Attributes: the Case of Wind Turbines EPRG 0601 Non-Technical Summary | PDF Abstract: The heuristic concept of learning curves describes cost reductions as a function of cumulative production. A study of the Liberty shipbuilders suggested that product quality and production scale are other relevant factors that… Read more