COVID-19 Tests the Market Stability Reserve

We compare the decrease in energy demand and CO2 emissions in Europe during the financial crisis 2008–2009 with the expected drop in demand and emissions due to COVID-19, and the price response of the EU Emission Trading System (EU ETS). We ask whether the rather limited current price reduction may...

Descripción completa

Detalles Bibliográficos
Autores principales: Gerlagh, Reyer, Heijmans, Roweno J. R. K., Rosendahl, Knut Einar
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Springer Netherlands 2020
Materias:
Article
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7399596/
https://www.ncbi.nlm.nih.gov/pubmed/32836848
http://dx.doi.org/10.1007/s10640-020-00441-0
_version_ 1783566171419705344
author Gerlagh, Reyer
Heijmans, Roweno J. R. K.
Rosendahl, Knut Einar
author_facet Gerlagh, Reyer
Heijmans, Roweno J. R. K.
Rosendahl, Knut Einar
author_sort Gerlagh, Reyer
collection PubMed
description We compare the decrease in energy demand and CO2 emissions in Europe during the financial crisis 2008–2009 with the expected drop in demand and emissions due to COVID-19, and the price response of the EU Emission Trading System (EU ETS). We ask whether the rather limited current price reduction may be due to the Market Stability Reserve (MSR), implemented in the EU ETS between the two crises. Stylized facts and basic theory are complemented with simulations based on a model of the EU ETS. Together, they suggest a mixed result. The MSR stabilizes the EU ETS price in turbulent times, but imperfectly. We show that the more persistent the COVID-19 shock is, the less the MSR is able to serve its purpose.
format Online
Article
Text
id pubmed-7399596
institution National Center for Biotechnology Information
language English
publishDate 2020
publisher Springer Netherlands
record_format MEDLINE/PubMed
spelling pubmed-73995962020-08-04 COVID-19 Tests the Market Stability Reserve Gerlagh, Reyer Heijmans, Roweno J. R. K. Rosendahl, Knut Einar Environ Resour Econ (Dordr) Article We compare the decrease in energy demand and CO2 emissions in Europe during the financial crisis 2008–2009 with the expected drop in demand and emissions due to COVID-19, and the price response of the EU Emission Trading System (EU ETS). We ask whether the rather limited current price reduction may be due to the Market Stability Reserve (MSR), implemented in the EU ETS between the two crises. Stylized facts and basic theory are complemented with simulations based on a model of the EU ETS. Together, they suggest a mixed result. The MSR stabilizes the EU ETS price in turbulent times, but imperfectly. We show that the more persistent the COVID-19 shock is, the less the MSR is able to serve its purpose. Springer Netherlands 2020-08-04 2020 /pmc/articles/PMC7399596/ /pubmed/32836848 http://dx.doi.org/10.1007/s10640-020-00441-0 Text en © The Author(s) 2020 https://creativecommons.org/licenses/by/4.0/Open AccessThis article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ (https://creativecommons.org/licenses/by/4.0/) .
spellingShingle Article
Gerlagh, Reyer
Heijmans, Roweno J. R. K.
Rosendahl, Knut Einar
COVID-19 Tests the Market Stability Reserve
title COVID-19 Tests the Market Stability Reserve
title_full COVID-19 Tests the Market Stability Reserve
title_fullStr COVID-19 Tests the Market Stability Reserve
title_full_unstemmed COVID-19 Tests the Market Stability Reserve
title_short COVID-19 Tests the Market Stability Reserve
title_sort covid-19 tests the market stability reserve
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7399596/
https://www.ncbi.nlm.nih.gov/pubmed/32836848
http://dx.doi.org/10.1007/s10640-020-00441-0
work_keys_str_mv AT gerlaghreyer covid19teststhemarketstabilityreserve
AT heijmansrowenojrk covid19teststhemarketstabilityreserve
AT rosendahlknuteinar covid19teststhemarketstabilityreserve

Ejemplares similares