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This paper shows how the effect of fuel prices varies with the level of electricity demand. It analyzes the relationship between daily prices of electricity, natural gas and carbon emission allowances with a semiparametric varying smooth coefficient cointegration model. Different electricity generation technologies have distinct fuel price dependencies, which allows estimating the structure of the power plant portfolio by exploiting market prices. The semiparametric model indicates a technology switch from coal to gas at roughly 85% of maximum demand. This model is used to analyze the market impact of the nuclear moratorium by the German Government in March 2011. Futures prices of electricity, natural gas and emission allowances are used to show that the market efficiently accounts for the suspended capacity and correctly expects that several nuclear plants will not be switched on after the moratorium. Keywords: Electricity market, Merit order, Cointegration, Varying coefficient, Nuclear moratorium, Event study, 1. INTRODUCTION Electricity is a homogeneous good that cannot be stored at reasonable economic costs. However, the demand is highly seasonal and needs to be satisfied at all times. Hence, [...]

Byline: Tatiana Ermolieva (1), Yuri Ermoliev (1), Gunther Fischer (1), Matthias Jonas (1), Marek Makowski (1), Fabian Wagner (1) Abstract: The idea of market-based carbon emission trading and carbon taxes is gaining in popularity as a global climate change policy instrument. However, these mechanisms might not necessarily have a positive outcome unless their value reflects socioeconomic and environmental impacts and regulations. Moreover, the fact that they have various inherent exogenous and endogenous uncertainties raises serious concerns about their ability to reduce emissions in a cost-effective way. This paper aims to introduce a simple stochastic model that allows the robustness of economic mechanisms for emission reduction under multiple natural and human-related uncertainties to be analyzed. Unlike standard equilibrium state analysis, the model shows that the explicit introduction of uncertainties regarding emissions, abatement costs, and equilibrium states makes it almost impossible for existing market-based trading and carbon taxes to be environmentally safe and cost-effective. Here we propose a computerized multi-agent trading model. This can be viewed as a prototype to simulate an emission trading market that is regulated in a decentralized way. We argue that a market of this type is better equipped to deal with long-term emission reductions, their direct regulation, irreversibility, and 'lock-in' equilibria. Author Affiliation: (1) International Institute for Applied Systems Analysis, Schlossplatz 1, 2361, Laxenburg, Austria Article History: Registration Date: 22/06/2010 Received Date: 05/01/2009 Accepted Date: 15/06/2010 Online Date: 16/07/2010

The open-soure computable general equilibrium model called CIM-EARTH is used to study scenarios for taxing carbon emissions. The model shows that greater carbon dioxide emissions from developing countries would undo 20 percent of reductions made by the Annex B of the Kyoto region even with a $105 per tonne carbon tax.

A study of the question of accounting for the anthropogenic contribution of different countries or groups of countries to the increase of global temperature, instead of being restricted to their carbon emissions as adopted in the Kyoto protocol on sharing of responsibility are discussed. A discussion on the methodology and scientific aspects of the Brazilian Proposal (BP) by SBSTA/UNFCCC and results of energy sector and land use change contributions to the climate response by different countries is also presented.

A discussion on the relationship between the transaction costs in emissions trading, particularly carbondioxide emission and the early action effort to reduce transaction costs in line with the EU Green paper in the case of the Kyoto Protocol is presented. Results obtained by studying model emissions trading using GEM-E3 world version show that in general early action is a cost-efficient progress for the Kyoto compliance, cases of early action becoming inefficient are also cited.

The development of an emission permit market model to determine the level of market distortion is discussed.

The government has opted to allocate quotas free of charge to emission-intensive industries in order to avoid firm closure. The extent, to which the investment in the abatement technology and firm closure may be affected by making the free quotas tradable or non-tradable, is examined.

Climate policy uses carbon emissions trading as a key instrument for helping to reduce emissive pollutants. This paper examines some equity issues that are influential on emission rights allocation decisions.

INTRODUCTION This paper traces the development of the Clean Air Act ("CAA" or "the Act") from its inception in 1970 through the 1990 Amendments. Significant emphasis is placed on the [...]

The utility of the National Energy Modeling System (NEMS) as an evaluation tool for testing the implications of cultural, economic and political factors in energy and environmental management and policy is severely limited by its modular design. The modularity of the NEMS means that each module in the model performs its own relaxation of factors which increases the confidence parameters in each results. A compilation of these increases in the NEMS increases the discontinuities in the general model, leading to less accuracy of the model upon which policies are based.

An intertemporal, continuous-time model of emission trading, banking and borrowing is presented. The decentralized behavior of companies is shown to lead to the least-cost solution attainable under joint-cost minimization using optimal-control theory. Explicit solutions for the time paths of emissions and permit prices are seen when companies are permitted to bank and borrow and when companies are only permitted to bank emission permits.

Policy formulation in sustainable development can benefit from treating pollution emissions as a form of economic indicator. In the case of air emissions, when these emissions are valued in terms of marginal social cost or as a green net national product, the values are derived in terms of the sustainable use of the resource. The value calculated for cumulative emission effects can then be factored by policy makers into economic programs, which consider these emissions' potential costs to the economy.

Marketable permits programs are receiving more attention as a means of controlling aggregate pollution emissions. An organized trading process is compared to a revenue neutral action to determine the better permit trading system. Both options involve a historically-based initial allocation of permits and are tested within competitive and non-competitive environments. The aim is to choose a mechanism that combines political viability and economic efficiency. The results indicate that the organized trading process is the better option.

Byline: Bruce C. Cohen, Walter C. Labys The purpose of this paper is to review from a critical point of view some of the attempts we have made to model CO2 concentrations in the atmosphere in relation to ongoing carbon emissions and their connection with energy use. These results have been published previously in the International Journal of Global Energy Issues and the International Journal of Environment and Pollution and are annexed as Tables 1 and 2.

Research describing pollution permit trading is presented. In particular the determination and influence of the permit discount rate is investigated with reference to the social costs of intertemporal trading.