Emission Trading

by Antes, Ralf; Hansjurgens, Bernd; Letmathe, Peter

• ISBN13: 9780387736525
• ISBN10: 0387736522
• Format: Hardcover
• Copyright: 2008-07-05
• Publisher: Springer Verlag

Summary

Emissions trading challenges the management of companies in an entirely new manner: Not only does it, like other market-based environmental policy instruments, allow for a bigger flexibility in management decisions concerning emission issues. More importantly, it shifts the mode of governance of environmental policy from hierarchy to market. But how is this change reflected in management processes, decisions and organizational structures? The contributions in this book discuss the theoretical implications of different institutional designs of emissions trading schemes, review schemes that have been implemented in the US and Europe, and evaluate the range of investment decisions and corporate strategies which have resulted from the new policy framework.

Table of Contents

Preface and acknowledgements	p. V
Introduction	p. XIII
Institutional design
Companies and regulators in emissions trading programs	p. 3
Introduction	p. 4
Industry's role: strategic planner and entrepreneur	p. 5
Role of regulators	p. 11
Industry attitudes toward US program administrators	p. 14
The European Union Emissions Trading System	p. 14
Conclusions	p. 16
Business and emissions trading from a public choice perspective - waiting for a new paradigm to emerge	p. 21
Introduction	p. 22
Emissions trading in economic theory	p. 22
The contribution of Public Choice Theory	p. 24
The ETS and its implementation in Germany	p. 27
Outlook	p. 31
Product-based benchmarks as a basis for the rational use of energy and corporate sustainability	p. 37
Introduction	p. 38
Allocation of emission allowances	p. 38
Alternative allocation method	p. 41
Results for cement production	p. 42
Conclusion	p. 47
Double Auction experiments and their relevance for emissions trading	p. 49
Introduction	p. 50
Previous results and motivation for new experiments	p. 51
Experiment	p. 53
Discussion	p. 64
Conclusions	p. 65
The influence of the allocation method on market liquidity, volatility and firms' investment decisions	p. 69
Introduction	p. 70
Different methods of primary allocation and efficiency	p. 71
Liquidity and volatility: a model describing their interdependence	p. 72
A conceptual framework	p. 76
Primary allocation and allowance market liquidity	p. 77
Firms' decisions under allowance price uncertainty	p. 82
Conclusions and further research questions	p. 86
Investment and corporate decision
Studying the effects of CO[subscript 2] emissions trading on the electricity market: A multi-agent-based approach	p. 91
Introduction	p. 92
The multi-agent approach	p. 92
A multi-agent electricity and emissions market simulation model	p. 94
Expected results	p. 99
Summary and outlook	p. 99
Real options analysis for renewable energy technologies in a GHG emissions trading environment	p. 103
Introduction	p. 104
Market-based mechanisms and cap and trade programs	p. 105
Renewable energy strategies and photovoltaic energy sources	p. 109
Photovoltaic technology and costs	p. 110
Investment appraisal using real options	p. 112
Real options example applied to PV technology	p. 113
Conclusions and future research	p. 117
The European electricity market - impact of emissions trading	p. 121
Introduction	p. 122
Demand for new power plants in Germany and Europe	p. 122
A model to analyse the implications of emissions trading for the electricity sector	p. 123
Model results	p. 126
Assumptions of the analysis	p. 129
Conclusions	p. 130
A case study on risk and return implications of emissions trading in power generation investments	p. 133
Introduction	p. 134
Risk Management in power generation investments	p. 135
Model	p. 137
Data	p. 140
Results	p. 143
Conclusions	p. 144
Investment decisions and emissions trading	p. 149
Introduction	p. 150
Methodology - the theoretical framework for valuation under uncertainty	p. 151
Derivation of the payments from production theory and production planning	p. 152
Valuation of investments in environmental protection technology with regard to tradable permits	p. 154
Conclusion	p. 163
Corporate strategies
Emissions trading and Corporate Sustainability Management	p. 167
Introduction	p. 168
Sustainability and Corporate Sustainability Management	p. 169
Impact of emissions trading on Corporate Sustainability Management	p. 171
Conclusion and outlook	p. 179
Links of corporate energy management strategies in Europe with the European Union emissions trading system and environmental management systems	p. 183
Introduction	p. 184
Corporate energy management strategies and links to EMS, the EU ETS and climate policy	p. 184
Data and research method	p. 187
Estimation results	p. 188
Conclusions and implications	p. 191
The implementation of emissions trading in companies	p. 193
Introduction	p. 194
The politics of implementing emissions trading	p. 195
Methodology and data	p. 197
The advancement of emissions trading in companies	p. 198
Conclusion	p. 206
Corporate strategy and the Kyoto mechanisms - institutional and transaction cost perspectives	p. 209
Introduction	p. 210
Theoretical perspectives on corporate behaviour	p. 211
Corporate views on the project mechanisms	p. 216
Corporate strategy related to Kyoto project mechanisms	p. 220
Conclusions	p. 230
Understanding business participation in UK emissions trading: dimensions of choice and influences on market development	p. 235
Introduction	p. 236
Emissions trading schemes and emissions markets	p. 236
Emissions trading as a multi-dimensional instrument	p. 238
Resources and capacities for participation in emissions trading	p. 239
Incentive seeking behaviour?	p. 241
Resources, capacities and market development in the UK ETS	p. 243
Capacities for day to day management of emissions trading	p. 243
Fears of non-compliance	p. 244
Conclusions and discussion	p. 246
Corporate response to emissions trading in Lithuania	p. 251
Introduction	p. 252
Emissions trading in Lithuania	p. 253
Companies' responses to emissions trading	p. 256
Conclusions	p. 261
The authors	p. 265
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