December 5, 2010

A Two-Sector Model of the European Union Emissions Trading Scheme

by Suzanne Shaw

- The subject of this paper is a model which has been developed to estimate EU-ETS constrained emissions and consequent EU ETS permit market equilibrium prices in the medium term. The model, in its current stage, is conceived for the case of a permit market composed of two EU27-aggregated sectors: electric and non-electric, and for the specific case of full banking and borrowing. The paper presents the conceptual approach of the model, its main features and quantitative relationships, together with the method of resolution under perfect foresight.

Shaw, S. (2010). "A Two-Sector Model of the European Union Emissions Trading Scheme." Available at SSRN, Jul 2010.