28 research outputs found
Banking and backloading emission permits
In this article we focus on carbon price dynamics, more specically the impact of a policy envisaged by the European Commission to increase the CO2 price. This policy consists of removing a share of the allowances allocated for a period in order to reallocate some or all of them during the following period. To analyze the impact of this backloading we determine the CO2 market equilibrium with and without the policy, considering not only the market for permits but also the output market of regulated sectors. We propose a two-period model without uncertainty, where the market for permits is perfectly competitive, and the output market can be either com- petitive or oligopolistic. First, we dene the condition for which banking from one period to another is optimal. This condition, that is the absence of arbitrage opportunities (AOA), depends on not only from the per period initial allocation but also on production market fundamentals. When this condition is satisfied, the market for emission is shown intertemporally efficient. Second, we show that the back-loadingpolicy may be such that theAOA is no longer veried and thus create inefficiencies or being ineffective
Gas Release and Transport Capacity Investment as Instruments to Foster Competition in Gas Markets
Motivated by recent policy events experienced by the European natural gas industry,
this paper develops a simple model for analyzing the interaction between
gas release and capacity investment programs as tools to improve the performance
of imperfectly competitive markets. We consider a regional market in
which a measure that has an incumbent release part of its gas to a marketer
complements a program of investment in transport capacity dedicated to imports
by the marketer, at a regulated transport charge, of competitively-priced
gas. First, we examine the case where transport capacity is regulated while gas
release is not, i.e., the volume of gas released is determined by the incumbent.
We then analyze the effect of the "artifcial" duopoly created by the regulator
when the latter regulates both gas release and transport capacity. Finally, using
information on the French industry, we calibrate the basic demand and cost
elements of the model and perform some simulations of these two scenarios. Besides
allowing us to analyze the economic properties of these scenarios, a policy
implication that comes out of the empirical analysis is that, when combined
with network expansion investments, gas-release measures applied under regulatory
control are indeed effective short-term policies for promoting gas-to-gas
competition
Gas Release and Transport Capacity Investment as Instruments to Foster Competition in Gas Markets
Motivated by recent policy events experienced by the European natural gas industry,
this paper develops a simple model for analyzing the interaction between
gas release and capacity investment programs as tools to improve the performance
of imperfectly competitive markets. We consider a regional market in
which a measure that has an incumbent release part of its gas to a marketer
complements a program of investment in transport capacity dedicated to imports
by the marketer, at a regulated transport charge, of competitively-priced
gas. First, we examine the case where transport capacity is regulated while gas
release is not, i.e., the volume of gas released is determined by the incumbent.
We then analyze the effect of the "artifcial" duopoly created by the regulator
when the latter regulates both gas release and transport capacity. Finally, using
information on the French industry, we calibrate the basic demand and cost
elements of the model and perform some simulations of these two scenarios. Besides
allowing us to analyze the economic properties of these scenarios, a policy
implication that comes out of the empirical analysis is that, when combined
with network expansion investments, gas-release measures applied under regulatory
control are indeed effective short-term policies for promoting gas-to-gas
competition
Storage and Security of Supply in the Medium Run
This paper analyzes the role of private storage in a market for a commodity (e.g. natural gas) whose supply is subject to the threat of an irreversible disruption. We focus on the medium term in which seasonality of demand and exhaustibility can be neglected. We characterize the price and inventory dynamics (accumulation, drainage and limit stocks) in a competitive equilibrium with rational expectations. We show the robustness of our results to alternative scenarios in which either a disruption has finite duration or the crisis is foreseen. During the crisis consumers may put pressure on the Government to intervene, but too severe antispeculative measures would inefficiently discourage storage. Practical solutions to this dilemma cause welfare losses that we characterize and quantify
Décisions d'investissement et de démantèlement sous incertitude : une application au secteur électrique
Investment and Decommissioning Decisions Under Uncertainty : an Application to the Electricity Sector
by Corinne Chaton
The purpose of this study is to use real options theory to answer the following question : Is it necessary, in France, to invest in new nuclear power units or should some of the existing units be decommissioned ? The theoretical model developed establishes two price thresholds which determine investment or decommissioning rules for a regulated risk-neutral firm which does not know the future price of its input. It also provides an empirical reading of past choices in construction of French nuclear power plants. The main finding is that, on a certain number of theoretical and empirical assumptions, it is optimal at present is to leave French nuclear power capacity unchanged. Other more general findings follow from the theoretical model. Thus an increase in uncertainty facilitates investment, defers decommissioning and extends the range of input prices for which there is no change in capacity. Key-words : investment, partial irreversibility, uncertainty, inelasticity, options. JEL Classification : D8L’objectif de cette étude est d’utiliser la théorie des options réelles pour tenter de répondre à la question suivante : faut-il, en France, investir dans de nouvelles unités électronucléaires ou faut-il démanteler certaines unités existantes ? Le modèle théorique élaboré détermine deux seuils de prix qui définissent les règles d’investissement et de démantèlement dans le cas d’une firme réglementée, neutre au risque et qui ne connaît pas le prix futur de son intrant. Il fournit aussi une lecture a posteriori des choix passés de construction des centrales nucléaires françaises. La principale conclusion est que sous un certain nombre d’hypothèses théoriques et empiriques, il est optimal actuellement de ne pas modifier la capacité électronucléaire française. D’autres conclusions, plus générales, découlent du modèle théorique. Ainsi, un accroissement de l’incertitude facilite l’investissement, retarde le démantèlement et élargit l’intervalle des prix de l’intrant pour lesquels il n’y a pas de modification des capacités de production. Mots-clés : investissement, irréversibilité partielle, incertitude, inélasticité, options. Classification JEL : D8.Chaton Corinne. Décisions d'investissement et de démantèlement sous incertitude : une application au secteur électrique. In: Économie & prévision, n°149, 2001-3. Options Réelles. pp. 15-28