Carbon Tax or Carbon Permits: The Impact on Generators’ Risks

By Richard Green. 2008

112 citations recorded by the source corpus.

Volatile fuel prices affect both the cost and price of electricity in a liberalized market. Generators with the price-setting technology will face less risk to their profit margins than those with costs that are not correlated with price, even if those costs are not volatile. Emissions permit prices may respond to relative fuel prices, further increasing volatility. This paper simulates the impact of this on generators’ profits, comparing an emissions trading scheme and a carbon tax against predictions for the UK in 2020. The carbon tax reduces the volatility faced by nuclear generators, but raises that faced by fossil fuel stations. Optimal portfolios would contain a higher proportion of nuclear plant if a carbon tax was adopted.

Subfields: Economics and Econometrics, Electrical and Electronic Engineering, Finance

View Paper: https://www.semanticscholar.org/paper/a9cc6d11ccc5a10934721f05f1afce9f6460a0be

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. F. Kern
2. Karoline S. Rogge
3. Michael Howlett
4. Frank W. Geels
5. Benjamin Sovacool
6. David Popp
7. J. Schleich

In Electrical and Electronic Engineering

1. Michael Howlett
2. F. Kern
3. Karoline S. Rogge

In Finance

1. Michael Howlett
2. F. Kern
3. Karoline S. Rogge

Citations in the corpus

• Conceptual and empirical advances in analysing policy mixes for energy transitions (2017, background): “literature on addressing climate change focused on discussions about specific instruments suitable for internalising negative externalities arising from greenhouse gas emissions (tax versus trading) [18,19], it has been increasingly recognised that a multiplicity of instruments is needed to foster s”