Measuring Carbon Price Volatility and Its Impact on the - PowerPoint PPT Presentation

Measuring Carbon Price Volatility and Its Impact on the Effectiveness of the ETS Scheme Professor Nils-Henrik von der Fehr University of Oslo and CERRE Expert Workshop on Carbon Price Volatility Brussels, 14 October 2015

The Textbook Model

Some Issues • Overall cap • Distribution of quotas • Allocation of allowances • Trade • Prices

Prices: the Ten First Years Source: www.businessspectator.com.au

Price Volatility: Measurement • Short-run fluctuations – price spikes • Long-run variations – trends • Unpredictability – underlying causes

Price Volatility: Implications • Market participation – hedging • Abatement – cost efficiency • Investment – capital intensive and long-lived assets • Location

Price Volatility: Affected Parties • Regulated industries – directly • Other industries – indirectly – DSOs & TSOs – other network industries

Prof. Nils-Henrik von der Fehr University of Oslo and CERRE Centre on Regulation in Europe (CERRE) asbl Rue de l’Industrie, 42 (box 16) B-1040 Brussels Ph: +32 2 230 83 60 Fax: +32 2 230 83 70 bl@cerre.eu www.cerre.eu