With the increase of the linear reduction factor (LRF), the implementation of the market stability reserve (MSR) and the introduction of the cancellation mechanism (CM), the EU ETS changed fundamentally. We develop a discrete time model of the intertemporal allowance market that accurately...

This paper uses a discrete-time partial equilibrium model of the European Emissions Trading System (EU ETS)to analyze the impact of the recent reform on allowance prices. By including bounded rationality such as myopia or hedging requirements, we find that the Hotelling price path is no longer...

The latest reform of European Union Emission Trading System (EU ETS) enables overlapping policies, such as national coal phase-outs, to affect total emissions. For evaluatingoverlapping policies, this paper applies a detailed partial equilibrium model of the EU ETS.Under perfect foresight,...

Recently, several articles rely on marginal abatement cost (MAC) curves to analyze the EU ETS. While the assumptions on MAC curves drive the results, the prevailing literature on the EU ETS does not take the shape of MAC curves into account. This paper discusses the implications of MAC curve...

To tackle structural supply-demand imbalances and to increase price stability in times of economic crises,policy makers reformed the European Union Emission Trading System (EU ETS) substantially in 2015 and 2018. As the COVID-19 pandemic led to an unforeseen contraction of the economy,it serves...

To achieve the EU's new climate target of reducing emissions by at least 55% until 2030, the European Commission proposed a reform of the EU ETS in its 'Fit for 55' legislative package. The reform entails an increase of the linear reduction factor (LRF), an adjustment of the intake rules for the...