Econometric analysis of Australian emissions markets and electricity prices

Cotton, D; De Mello, L

Econometric analysis of Australian emissions markets and electricity prices

Cotton, D De Mello, L

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Publication Type:: Journal Article
Citation:: Energy Policy, 2014, 74 (C), pp. 475 - 485
Issue Date:: 2014-01-01

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Field	Value	Language
dc.contributor.author	Cotton, D	en_US
dc.contributor.author	De Mello, L https://orcid.org/0000-0002-2625-7969	en_US
dc.date.available	2020-05-25T19:10:29Z
dc.date.issued	2014-01-01	en_US
dc.identifier.citation	Energy Policy, 2014, 74 (C), pp. 475 - 485	en_US
dc.identifier.issn	0301-4215	en_US
dc.identifier.uri	http://hdl.handle.net/10453/30447
dc.description.abstract	© 2014 Elsevier Ltd. Emissions trading schemes aim to reduce the emissions in certain pollutants using a market based scheme where participants can buy and sell permits for these emissions. This paper analyses the efficiency of the two largest schemes in Australia, the NSW Greenhouse Gas Abatement Scheme and the Mandatory Renewable Energy Trading Scheme, through their effect on the electricity prices from 2004 to 2010. We use a long run structural modelling technique for thefirst time on this market. It provides a practical long-run approach to structural relationships which enable the determination of the effectiveness of the theoretical expectations of these schemes. The generalised forecast error variance decomposition analysisfinds that both schemes' emissions prices have little effect on electricity prices. Generalised impulse response function analysis support thisfinding indicating that when shocks are applied to electricity by the two schemes it returns to equilibrium very quickly. This indicates that these schemes are not having the effect anticipated in their legislation.	en_US
dc.relation.ispartof	Energy Policy	en_US
dc.relation.isbasedon	10.1016/j.enpol.2014.07.024	en_US
dc.subject.classification	Energy	en_US
dc.title	Econometric analysis of Australian emissions markets and electricity prices	en_US
dc.type	Journal Article
utslib.citation.volume	C	en_US
utslib.citation.volume	74	en_US
utslib.for	1403 Econometrics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
utslib.copyright.status	open_access
pubs.issue	C	en_US
pubs.publication-status	Published	en_US
pubs.volume	74	en_US

Abstract:

© 2014 Elsevier Ltd. Emissions trading schemes aim to reduce the emissions in certain pollutants using a market based scheme where participants can buy and sell permits for these emissions. This paper analyses the efficiency of the two largest schemes in Australia, the NSW Greenhouse Gas Abatement Scheme and the Mandatory Renewable Energy Trading Scheme, through their effect on the electricity prices from 2004 to 2010. We use a long run structural modelling technique for thefirst time on this market. It provides a practical long-run approach to structural relationships which enable the determination of the effectiveness of the theoretical expectations of these schemes. The generalised forecast error variance decomposition analysisfinds that both schemes' emissions prices have little effect on electricity prices. Generalised impulse response function analysis support thisfinding indicating that when shocks are applied to electricity by the two schemes it returns to equilibrium very quickly. This indicates that these schemes are not having the effect anticipated in their legislation.

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http://hdl.handle.net/10453/30447