Carbon Dioxide Emission Allowances Research Articles

Valuation of Ecosystem Services Based on EU Carbon Allowances-Optimal Recovery for a Coal Mining Area.

This paper presents a new way of valuing ecosystem services based on the price of EU carbon dioxide emission allowances. Its main advantage is that it facilitates the monetisation of non-provisioning ecosystem services, which is the Achilles heel of current frameworks. The research approach is built on the notion that land rehabilitation and ecological restoration involve trade-offs between ecosystem services. A quantitative assessment (valuation) of these trade-offs is necessary to make sound decisions. However, using different valuation methods to estimate monetary values creates a non-comparability in the valuation process that is difficult to correct. To address this problem, in the first place, the propagation of imprecise preference statements in hierarchical weighting is proposed, avoiding the non-comparability caused by the different current approaches while reducing the effort of preference elicitation. In the second place, to achieve consistency, monetisation of all non-provisioning ecosystem services was carried on the above comparison and the monetary valuation of the attribute with the most direct and market-related valuation possible: carbon sequestration, using the EU Emissions Trading System. A former coal mining area exemplifies the valuation of ecosystem services provided by alternative ecological restoration scenarios. The aim is to estimate their contribution to human well-being, understand the incentives faced by decision makers to manage ecosystems in different ways and assess the values of alternative solutions. An exercise is then carried out to show that the price of EU carbon permits (as of December 2021) after the price escalation that coincides with phase 4 of the allocation of allowances under the EU Emissions Trading System can be estimated by prioritising biodiversity over other ecosystem services.

Review of Closed SCO2 and Semi-Closed Oxy–Fuel Combustion Power Cycles for Multi-Scale Power Generation in Terms of Energy, Ecology and Economic Efficiency

Today, with the increases in organic fuel prices and growing legislative restrictions aimed at increasing environmental safety and reducing our carbon footprint, the task of increasing thermal power plant efficiency is becoming more and more topical. Transforming combusting fuel thermal energy into electric power more efficiently will allow the reduction of the fuel cost fraction in the cost structure and decrease harmful emissions, especially greenhouse gases, as less fuel will be consumed. There are traditional ways of improving thermal power plant energy efficiency: increasing turbine inlet temperature and utilizing exhaust heat. An alternative way to improve energy efficiency is the use of supercritical CO2 power cycles, which have a number of advantages over traditional ones due to carbon dioxide’s thermophysical properties. In particular, the use of carbon dioxide allows increasing efficiency by reducing compression and friction losses in the wheel spaces of the turbines; in addition, it is known that CO2 turbomachinery has smaller dimensions compared to traditional steam and gas turbines of similar capacity. Furthermore, semi-closed oxy–fuel combustion power cycles can reduce greenhouse gases emissions by many times; at the same time, they have characteristics of efficiency and specific capital costs comparable with traditional cycles. Given the high volatility of fuel prices, as well as the rising prices of carbon dioxide emission allowances, changes in efficiency, capital costs and specific greenhouse gas emissions can lead to a change in the cost of electricity generation. In this paper, key closed and semi-closed supercritical CO2 combustion power cycles and their promising modifications are considered from the point of view of energy, economic and environmental efficiency; the cycles that are optimal in terms of technical and economic characteristics are identified among those considered.

Restoring Coal Mining-Affected Areas: The Missing Ecosystem Services.

Multi-criteria decision analysis and cost-benefit analysis, either individually or in combination, have been used as the preferred tools to develop ecosystem services valuation, presenting significant discrepancies and variations between the calculated values. To counteract this problem, a new framework was developed based on a hierarchical weighting of the non-provisioning ecosystem services, using biodiversity as the reference ecosystem service since it is the easiest to apprehend. Their monetisation was made using the average price of EU carbon dioxide emission allowances during 2019 and 2020, obtaining reasonable and comparable results in line with what was expected for the study region. However, the revised EU Emissions Trading System Directive, which will apply from 2021-2030, generated a price escalation of carbon allowances, making it necessary to adjust or rethink the proposed framework. To achieve this goal, the paper proposes the introduction of new vectors or "missing ecosystem services" to counterbalance efforts to eliminate carbon dioxide emissions without necessarily removing humans from the equation: welfare and human health. As the linkages regarding ecosystem health, ecological restoration and human health are not well known, only welfare was incorporated into the framework. The results were highly satisfactory, in line with what was expected for the study region and the ones obtained before the price escalation of carbon allowances that started in 2021.

The Effects of Surface Lignite Mines Closure on the Particulates Concentrations in the Vicinity of Large-Scale Extraction Activities

The European green deal and energy transition policies and the competition primarily shaped by the high price of carbon dioxide emission allowances and the consistently reduced cost of renewable energy technologies directly affect the coal and lignite extraction industry. Lignite production in Western Macedonia Lignite Centre reduced from 43.2 million tons in 2010 to 10.3 million tons in 2020. This development affects the ambient air quality of the large lignite mine area, as evidenced by the records of 10 monitoring stations incorporating the laser light scattering method. All stations measure reduced particulate matter (PM10 and PM2.5) concentrations compared to the period before 2010, while the number of annual exceedances of the limit value for the daily average PM10 concentrations has been decreased. Moreover, differences in air quality measurements of monitoring stations related to their distance from mining activities now tend to be minimized. Based on these facts, it can be predicted that, after the closure of lignite extraction and the electricity generation activities, the concentration of particulates in the atmosphere will reach the typical levels for rural areas of Southern Europe, no matter what the mines’ land reforestation and repurposing program will include.

THEORETICAL FRAMEWORK AND HISTORICAL BACKGROUD OF THE DEVELOPMENT OF THE EUROPEAN EMISSION TRADING SYSTEM

Emissions trading is currently a key element of Europe's climate and environmental policy, and the European Emissions Trading System (EU ETS) is the largest greenhouse gas emissions regulation system in the world. This article defines it within the theoretical and historical background, providing the basis for further research into determinants of prices of carbon dioxide emission allowances in the European Union. Critical review of the scientific literature is provided: the neoclassical paradigm of infinite economic growth and a perfectly effective allocation of factors, the efficient market hypothesis, market failure in the context of behavioural finance, state intervention as a method of internalizing the externalities, state failure within the context of state legislation and institutions. Further, the origins of emission trading systems in the world are presented and the functioning of exchange trading in the context of the EU ETS is discussed. Finally, the price evolution of EUA futures emission allowances is introduced.

The Impact of EU Allowance Prices on the Stock Market Indices of the European Power Industries: Evidence From the Ongoing EU ETS Phase III

The European Union Emissions Trading Scheme (EU ETS) was created in 2005 to price every ton of carbon dioxide emissions. Within this framework, EU carbon dioxide emission allowances can affect electric power industry stock performance. This article uses a multifactor market model and a panel data econometric technique to investigate the long-run impact of EU carbon dioxide emission allowances on the European power sector. We also use panel cointegration to check whether there is a long-run relationship, and fully modified ordinary least square and dynamic ordinary least square to estimate any such relationship. The panel data include a daily sample for the ongoing EU ETS Phase III (from 1 January 2013 until 22 April 2017) and data from six European Union members (Austria, France, Germany, Italy, Netherlands, and Spain). The estimated coefficients suggest that EU allowance prices have a statistically significant and positive long-run effect on the European power sector stock market in EU ETS Phase III. This potentially supports EU efforts to toughen carbon reduction regime targets in order to remove the surplus from the system.

Analyzing the impact of fossil fuel import reliance on electricity prices: The case of the Iberian Electricity Market

Spain and Portugal are highly dependent on energy from abroad, importing more than 70% of all the energy they consume. This high energy dependence could involve important effects on the level and stability of their electricity prices as a half the gross electricity generated in both countries came from power stations using imported combustible fuels (such as natural gas, coal and oil). In general, changes in the prices of these fossil fuels can directly affect household electricity prices, since generation costs are likely to be transmitted through to the wholesale electricity market. Moreover, in the framework of the European Union Emission Trading System, electricity production technologies tend to incorporate their costs of carbon dioxide emission allowances in sale offers with the consequent increase of the electricity prices. The objective of this paper is to analyze the influence of fossil fuel costs and prices of carbon dioxide emission allowances in the EU on the Spanish and Portuguese electricity prices. With this aim, a maximum entropy econometric approach is used. The obtained results indicate that not only the price of imported gas are very important in explaining Spanish and Portuguese electricity prices but also the price of carbon dioxide emission allowances in the EU.

Analysis of fuel efficiency of largest European airlines in the context of climate change mitigation

In recent years Greenhouse Gas (GHG) emissions released by aircraft engine and their contribution to climate change gained major importance among airlines operating across European Union member countries after the inclusion of the aviation sector in the European Union Emissions Trading Scheme (EU ETS). According to EU ETS, all intra-community flights became subject to GHG emission restrictions since the year 2012 with allocated annual carbon dioxide emission allowances that airlines will have to comply with. This research presents estimations of fuel consumption and carbon dioxide emissions among flight operations of aircraft used by largest European airlines in chosen flight routes of high daily passenger demand. Results show that some alternatives remain available for European airlines and some opportunities may emerge to reduce costs and increase revenues through enhanced engagement with air passengers towards a more environmentally friendly behaviour.

An Efficiency Evaluation of the EU’s Allocation of Carbon Emission Allowances

The allocation of carbon dioxide emission allowances has become one of the most important global issues. The main argument is the equity in the allocation of emission allowances. If the allocation is unfair, then economic development of some countries will be impeded. Therefore, to promote an emissions trading system, an equitable and reasonable allocation method that benefits every participant country is needed, so that countries will accept and implement the system accordingly.This study uses emission allowance as an input variable for evaluation and analysis. The output variables are energy consumption, government spending, and gross domestic product, based on the model developed by Gomes and Lins (2008). The study takes the zero sum game data envelopment analysis model to explore the allocation of emission allowances and the reallocation of emission allowances among 24 European Union members, hoping to find a comparatively fair and efficient allocation method for them. The empirical results show that first, the current allocation of emission allowances is inefficient. Second, after reallocation, those countries which implemented it most efficiently have more allowances. andThird, after the reallocation, G8 countries including the United Kingdom, France, and Italy have higher allowances than their initial allowences, implying that industrialized countries need more allowances to maintain their economic growth.

Modeling the price dynamics of CO 2 emission allowances

In this paper we analyze the short-term spot price behavior of carbon dioxide (CO 2) emission allowances of the new EU-wide CO 2 emissions trading system (EU ETS). After reviewing the stylized facts of this new class of assets we investigate several approaches for modeling the returns of emission allowances. Due to different phases of price and volatility behavior in the returns, we suggest the use of Markov switching and AR–GARCH models for stochastic modeling. We examine the approaches by conducting an in-sample and out-of-sample forecasting analysis and by comparing the results to alternative approaches. Our findings strongly support the adequacy of the models capturing characteristics like skewness, excess kurtosis and in particular different phases of volatility behavior in the returns.

Modeling the Price Dynamics of Co2 Emission Allowances

In this paper we analyze the short-term spot price behavior of carbon dioxide (CO2) emission allowances of the new EU-wide CO2 emissions trading system (EU-ETS). After reviewing the stylized facts of this new class of assets we investigate several approaches for modeling the returns of emission allowances. Due to the different phases of price and volatility behavior in the returns, we suggest the use of Markov switching and AR-GARCH models for stochastic modeling. We examine the approaches by conducting an in-sample and out-of-sample forecasting analysis and by comparing the results to alternative approaches. Our findings strongly support the adequacy of the models capturing characteristics like skewness, excess kurtosis and in particular different phases of volatility behavior in the returns.

Effects of CO<SUB align=right>2 emission reduction strategies on air pollution

Emission reduction strategies for air pollutants such as SO2 and Ox as well as for greenhouse gases (GHGs) usually do not consider the interdependencies between emission reduction measures. Taking into account the relevant energy, environmental and political framework it is the objective of this study to determine the influence of CO2 emission reduction strategies for the German state of Baden-Wurttemberg on emissions of SO2 and NOx. Furthermore, effects on SO2 and NOx emissions in Baden-Wurttemberg resulting from the implementation of an EU-wide trading of carbon dioxide emission allowances will be analysed. Therefore, the study is based on the development and application of an energy and material flow model for Baden-Wurttemberg with the help of which future developments in different sectors (e.g. energy supply, households, industry) are analysed. Different assumptions with respect to the economic and political framework are considered. The model results show that a CO2-reduction causes a considerable reduction of the pollutant SO2 and to a smaller extent of the pollutant NOx. This is due to the fact that the substantial measures necessary for a limitation of CO2 emissions are the increased use of natural gas and renewable energies in the energy supply sector as well as better insulation and efficient heating systems in the household sector. Furthermore, linking the model for Baden-Wurttemberg to an international power and emissions trading model shows that pollution emitters from Baden-Wurttemberg would buy CO2-certificates, resulting in a reduction of CO2 mitigation costs but also in higher emissions of CO2, SO2 and NOx in Baden-Wurttemberg compared to the scenario without emission trading. Finally, model results taking into account methodologies to evaluate different GHGs show that the integration of measures for the reduction of non-CO2 GHGs also results in an increase of air pollution compared to the CO2 reduction scenario.

The Effect on Asset Values of the Allocation of Carbon Dioxide Emission Allowances

Paradoxically, owners of existing generation assets may be better off by paying for carbon dioxide emission allowances rather than having them distributed for free. An analysis shows that it takes just 7.5 percent of the revenue raised under an auction to preserve the asset values of existing generators.