Firm Trading Behaviour and Transaction Costs in the European Union’s Emission Trading System: An Empirical Assessment

To the best of our knowledge, this study is one of the first to empirically analyse the trading behaviour of all ETS firms during the first phase of the EU’s Emissions Trading System. We use a unique dataset which allows investigating the importance of permit trading transaction costs, such as information costs and search costs. This paper shows that transaction costs can play an important role in the initial years of the programme. These costs are significant in explaining why a number of ETS firms did not sell their unused allowances on the market. This study also supports the concerns that transaction costs might be excessive for smaller participants.emission trading; Europe; firm level data; transaction costs

The effect of mandatory agro-environmental policy on farm environmental performance

The EU farmers are subject to mandatory cross compliance measures requiring them to meet environmental conditions to be eligible for public support. These obligations reinforce incentives for the farmers to change their behaviour towards the environment. We apply quasi-experimental methods to measure the causal relationship between cross-compliance and farm environmental performance. We find that cross compliance reduced farm fertiliser and pesticide expenditure. This result also holds for farmers who participated in other voluntary agro-environmental schemes. However, the results do not support our expectations that farmers who relied on larger shares of public payments had a stronger motivation to improve their environmental performance.agriculture; Common Agriculture Policy; cross-compliance; environment; EU; farm

Determinants of Environmental Expenditure and Investment: Evidence from Sweden

This paper provides new evidence on the determinants of environmental expenditure and investment. Also, by employing the Heckman selection models, we study how environmental expenditure and investment by Swedish industrial firms responded to the national and international policies directed to mitigate air pollution during the period 1999 through 2008. We find that firms that use carbon intensive fuels such as oil and gas are more likely to spend to and invest in the environment. Larger, more profitable and more energy intensive firms are more likely to incur environmental expenditure/investment. Overall, an important finding of our econometric analysis is that environmental regulation both on the national and international levels are highly relevant motivations for environmental expenditure and investment.environmental expenditure and investment; environmental policy; EU ETS; panel data

The effects of wind power on electricity markets: A case study of the Swedish intraday market

We investigate the process of electricity price formation in the Swedish intraday market, given a large share of wind power in the Swedish electricity system. According to Karanfil and Li's (2017) approach, if the intraday market is efficient, with large shares of intermittent electricity in the entire electricity system, intraday prices should send signals based on scarcity pricing for balancing power. Based on this theory, we analyze Swedish electricity market data for the period 2015?2018 and find that the Swedish intraday market, despite its small trading volumes, is functioning properly. In particular, our results show that intraday price premia mostly respond to wind power forecast errors and other imbalances resulting from either supply or demand sides of the electricity market, as they should if the intraday market is efficient. The results of wind power forecast errors hold for central and southern Sweden, but not for northern Sweden where the share of wind power production is still very small. However, we find no effect of unplanned nuclear power plant outages on intraday price premia.We investigate the process of electricity price formation in the Swedish intraday market, given a large share of wind power in the Swedish electricity system. According to Karanfil and Li's (2017) approach, if the intraday market is efficient, with large shares of intermittent electricity in the entire electricity system, intraday prices should send signals based on scarcity pricing for balancing power. Based on this theory, we analyze Swedish electricity market data for the period 2015?2018 and find that the Swedish intraday market, despite its small trading volumes, is functioning properly. In particular, our results show that intraday price premia mostly respond to wind power forecast errors and other imbalances resulting from either supply or demand sides of the electricity market, as they should if the intraday market is efficient. The results of wind power forecast errors hold for central and southern Sweden, but not for northern Sweden where the share of wind power production is still very small. However, we find no effect of unplanned nuclear power plant outages on intraday price premia. ? 2021 Elsevier B.V. All rights reserved

Information policies and biased cost perceptions : The case of Swedish residential energy consumption

Households typically receive utility bills where all electricity use during a fixed period is lumped together. The lack of direct feedback in the form of marginal costs of using specific electric appliances potentially leads to mistakes in households' decision-making because of biased cost perceptions. In this paper, we test the commonly held notion that lack of relevant energy-related knowledge results in cost underestimation of using electric appliances that may lead to over-consumption of energy. Contrary to this notion, our results show that less knowledgeable energy consumers tend to have higher cost perceptions than others. This finding implies that less knowledgeable energy consumers may consume too little of energy. We also find that a substantial share of the sampled households, in particular less knowledgeable energy consumers, are less willing to receive relevant cost-free information about their energy use and costs. This finding suggests that poor energy-related knowledge may not only be a matter of high information search and processing costs, but also a matter of consumers’ limited attention capacity

The effect of descriptive information provision on electricity consumption: Experimental evidence from Lithuania

Studies on the effects of information provision on residential energy use conclude that such information can promote households' energy-saving investments and conservation behavior. However, most of these studies are conducted in the U.S. or in other OECD countries, where households, on average, are richer and consume more electricity. This study evaluates the effect of descriptive information provision on residential electricity consumption in a less wealthy OECD country – Lithuania. By using a randomized experiment, we find that the availability of descriptive hourly electricity information provided on web portals reduces electricity consumption by about 8.6%. This effect is equivalent to an annual energy saving of 241 kWh per household. The effect is more pronounced for households with high energy consumption, living in rural areas and detached houses

Climate change adaptation and productive efficiency of subsistence farming: A bias-corrected panel data stochastic frontier approach

We explore the impact of climate change adaptation on the technical efficiency of Ethiopian farmers using panel data collected from 6,820 farm plots. We employ Green's (2010) stochastic frontier approach and propensity score matching to address selection bias. Our results reveal that climate change adaptation improves the efficiency of maize, wheat, and barley production. We also show that failure to account for selection bias underestimates the average efficiency level. Our findings imply that the expansion of climate change adaptation at larger scales will provide a double benefit by curbing climate-related risks and increasing the efficiency of farmers. Moreover, increasing credit access and introducing mechanisms that allow farmers to get enough amount of water during the main growing season will enhance the efficiency of subsistence farmers

Ownership links and enhanced EUTL dataset

1 data file, 1 documentation fileThe Ownership Links and Enhanced EUTL Dataset provides detailed information on the matching of Person Holding Accounts (PHAs) and Operator Holding Accounts (OHAs) with the companies that own them. We matched the current information on EU ETS account holders to historical information on parent companies, for both groups of these EU ETS accounts. A technical note is provided with a detailed explanation of the matching procedure and the contents of the dataset. In the European Union Emission Trading Scheme (EU ETS), information regarding obligated installations, their respective account holders, compliance and transaction data are stored within the European Transaction Log (EUTL). This data is administered and published at the account level. However, limited and/or incomplete information is provided on the associated firms and sectors. When analysing the data, it is essential to establish links between these EU ETS accounts and parent companies since they are ultimately responsible for the allowance trade these accounts are involved with. In order to increase the scope of research on the EU ETS, several researchers immersed themselves in linking and aggregating EU ETS accounts to obtain EU ETS compliance and transactions data at the company-level. To avoid further duplication of effort by other researchers but also to allow for cross-checking of these EU ETS account linkages, we decided to make the database publicly available. Supported by the European Commission (DG Climate Action), the latest version of this database, The Ownership Links and Enhanced EUTL Dataset , is hosted by the European University Institute (EUI). We gratefully acknowledge permission by Bureau van Dijk to use and publish historical firm ownership data and the associated identification codes