The competitive environment of the European electricity sector in the post-Kyoto scenarios

Carrillo-Hermosilla, Javier and Del Río, Pablo and Könnölä, Totti and García, Carlos (2006): The competitive environment of the European electricity sector in the post-Kyoto scenarios.

Abstract

This paper shows how the uncertainty associated to the absence of a post-Kyoto regime regarding Greenhouse Gas mitigation is affecting investments in mitigation activities in the EU electricity sector and, thus, future emissions levels. Based on a wide survey of EU power companies, the paper identifies the most likely post-Kyoto scenarios considered by these firms and how they are coping with such uncertainty in their current investment decisions. The major conclusion is that the non-existence of a post-Kyoto regime is having a negative effect on current business investment decisions in mitigation activities, increasing risk premiums and financing costs. All in all, the companies surveyed foresee post-Kyoto compliance regimes with emissions trading systems that would guarantee the continuity of the value of the reductions made beforehand, although they differ in their perceptions of the form that a post-Kyoto regime could take.

• Item Type: MPRA Paper
• Language: English
• Keywords: Post-Kyoto scenarios; EU electricity sector; investment decisions
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q48 - Government Policy; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L94 - Electric Utilities; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming

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