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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
Date
2019-04-24
Author
Advisors
Pratson, Lincoln
Timmins, Chris
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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 thesisDepartment
EconomicsPermalink
https://hdl.handle.net/10161/18558Citation
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.Collections
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Rights for Collection: Undergraduate Honors Theses and Student papers
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