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Energy and carbon markets

Empirical law and economics studies
PhD ceremony:Mr M.A.P. (Thijs) Jong
When:February 12, 2018
Supervisor:prof. dr. O. (Oscar) Couwenberg
Co-supervisor:prof. dr. E. (Edwin) Woerdman
Where:Academy building RUG
Energy and carbon markets

This Ph.D. research focuses on the economic effects of energy and carbon market regulations in the EU. Hypotheses derived from Law and Economics, in particular property rights theory, are tested via three EU-wide empirical studies. The overall results are the following:

1) The EU Emissions Trading Scheme (EU ETS) is valued by investors as restricting pollution. Recommended is that the carbon market should more often receive signals on the scarcity in the EU ETS. This can be realized by having more moments during the year when firms need to surrender their emission allowances.

2) While large firms should be better able to optimize their usage of emission allowances within firm boundaries, they actually made more use of the carbon market than smaller firms do. This finding affirms that the EU ETS leads to cost savings for these firms.

3) The legal competences of National Regulatory Authorities are not aligned to the realizations of energy policy objectives in the energy markets they supervise. Recommended is a readjustment of these competences towards the policy objectives, in addition to a readjustment of the intrusiveness of these competences.

The EU ETS registry is also discussed, which is, in fact, the key data source for the first two empirical studies. The elements which can render the registry data incomplete and unequivocal are highlighted, and those which hindered an effective identification of the firms owning the EU allowances. Suggestions are provided for improvements of this registry structure.