|
|
|
|
||||
|
||||
Economic Consequences of Emission Trading Schemes: Evidence from the European Power SectorStefan VeithUniversity of Bremen - Faculty of Business Studies and Economics Joerg R. WernerFrankfurt School of Finance & Management gemeinnützige GmbH Jochen ZimmermannUniversity of Bremen - Faculty of Business Studies and Economics; University of Bremen - Chair of Accounting and Control January 15, 2008 Energy Economics, Vol. 31, No. 4, pp. 605-613, 2009 Abstract: The European emission trading scheme regulates the pollution of carbon dioxide for more than 11,000 facilities. Nevertheless quickly doubts arose about the efficiency of allocation methods and of the trade in emission allowances. Hence this paper tests for the hypothesis of economic insignificance with regard to the biggest of affected industries, the electricity generating sector. Employing a multifactor market model it is shown that returns on common stock in this industry are positively correlated with rising prices for emission allowances. Investors estimate that the firms are not only able to pass on a material share of the regulatory burden to customers but even achieve to generate windfall profits by overcompensating for the costs. As opposed to this prediction for the whole market, an adverse exposition could be found for utilities that mainly generate electricity from fossil fuels.
Keywords: Emission trade, Emission rights, CAPM, Electricity industry JEL Classification: G12, K23 Accepted Paper SeriesDate posted: January 15, 2008 ; Last revised: December 3, 2009Suggested CitationContact Information
|
|
||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo6 in 0.296 seconds
