Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 361: The Impact of the EU Emissions Trading System on CO2 Intensity in Electricity Generation
Anna Widerberg () and Markus Wråke
Additional contact information
Anna Widerberg: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG
Markus Wråke: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG, and, IVL Swedish Environmental Research Institute Ltd, Box 210 60, 100 31 Stockholm, Sweden
Abstract: Prior to the launch of the EU Emissions Trading System (EU ETS) in 2005, the electricity sector was widely proclaimed to have more low-cost emission abatement opportunities than other sectors. If this were true, effects of the EU ETS on carbon dioxide (CO2) emissions would likely be visible in the electricity sector. Our study looks at the effect of the price of emission allowances (EUA) on CO2 emissions from Swedish electricity generation, using an econometric time series analysis for the period 2004–2008. We control for effects of other input prices and hydropower reservoir levels. Our results do not indicate any link between the price of EUA and the CO2 emissions of Swedish electricity production. A number of reasons may explain this result and we conclude that other determinants of fossil fuel use in Swedish electricity generation probably diminished the effects of the EU ETS.
Keywords: Emissions trading; carbon dioxide; climate change; electricity; carbon intensity
22 pages, June 9, 2009
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