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    Responses to EU Carbon Pricing: The Effect of Carbon Emissions Allowances on Renewable Energy Development in Advanced and Transitional EU Members

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    Date
    2019-04-24
    Author
    Dearing, Jack
    Advisors
    Pratson, Lincoln
    Timmins, Chris
    Repository Usage Stats
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    Abstract
    Using electricity price, generation, installed capacity, and carbon price data from the European Union from January 2015 to December 2018, this study finds that the carbon pricing in the European Union Emissions Trading Scheme (EU ETS) incentivizes electricity sector carbon emission reductions through renewable energy deployment only for economically advanced EU members. Transitional economies show a weak to modest carbon emission increase despite a common carbon price. This study estimates an electricity supply curve, or merit order, for 24 EU ETS members using a Tobit regression model and analyzes changes in this curve using a linear bspline. These shifts provide insight into how carbon pricing affected energy generation, price, and CO2 emissions for two distinct categories of EU member states. The advanced category as a whole saw a strong electricity sector decrease in carbon emissions, both over time and from carbon pricing, while the transitional category as a whole saw a weak increase. This indicates that advanced EU members in Northern, Western, and Central Europe likely sold permits to transitional ones in Southern and Eastern Europe. While these findings may initially reflect the gains from trade of carbon emissions permits inherent in the European Union Emissions Trading Scheme’s design, the implications of how these two distinct groups have changed electricity generation present challenges to the ultimate long-term goal of EU-wide carbon neutrality by 2050, particularly in transitional economies’ electricity sectors.
    Type
    Honors thesis
    Department
    Economics
    Subject
    Carbon Pricing
    Renewable Energy
    Cap-and-Trade
    European Union
    Electricity Market
    Permalink
    https://hdl.handle.net/10161/18558
    Citation
    Dearing, Jack (2019). Responses to EU Carbon Pricing: The Effect of Carbon Emissions Allowances on Renewable Energy Development in Advanced and Transitional EU Members. Honors thesis, Duke University. Retrieved from https://hdl.handle.net/10161/18558.
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    Creative Commons License
    This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.

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