Price Equilibrium
Suzanne Shaw
20-21/06/2011
Workshop: cartel Cap and Trade with Offsets
1
Contents
scene & Objective of the Zephyr EU ETS
modelling tool
Zephyr vs. existent models
Description of the model
Analysis of Offsets exercising on EU ETS Carbon Price
Model set up
Scenarios
Results and analysis
Remarks & Conclusions
Background & Objectives of the Zephyr
modelling work
Zephyr is a model of the European marriage Emissions
Trading System (EU ETS) permit scheme
Its origin came from a longing to:
Understand the driving forces behind EUA sets & reactions of
the system to « shocks »: economic, technological, related
markets (eg. energy)
Analyse the concern of EU ETS institutional rules (eg. cap, credit
use, covered sectors) on permit system dynamics
Provide insight to EU ETS market actors (policy-makers, EU ETS
sectors) to purify structure and effectiveness of system
Existing permit system models ply a starting basis for
studying these issues
Zephyr vs. Existing emission permit models
Econometric models: define a statistcial alliance betw.
permit price &
various (generally short-term) price determinants
Majority decompose EU ETS prices from perspective of EUAs as financial assets: focus on
power price behaviour , short-term price forecasting, volatility, VaR calculation
Others place main underlying price drivers (energy prices, temperatures…) &
analyse their impact on prices & price trends
Optimisation models: identify an opitimal emissions path & permit price
escape for least-cost compliance
Allow more detailed representation of underlying price formation processes
Zephyr: Builds on optimisation approach with participation of following
features
Detailed representation of emissions of the electricity sector (cf. energy-equilibrium
type models)
Medium-term meter horizon: 10-15 yrs (vs. short-term econometric...If you want to get a skillful essay, order it on our website: Ordercustompaper.com
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