[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/ucp/renvpo/doi10.1086-721015.html
   My bibliography  Save this article

The European Union Emissions Trading System Market Stability Reserve: Does It Stabilize or Destabilize the Market?

Author

Listed:
  • Grischa Perino
  • Maximilian Willner
  • Simon Quemin
  • Michael Pahle
Abstract
The Market Stability Reserve (MSR) was introduced into the European Union Emissions Trading System to address a historical surplus of emission allowances and to improve the system’s resilience to major shocks through automatic adjustments to the supply of allowances. We summarize the main strengths and weaknesses of the MSR and identify when it stabilizes the market as intended, as well as when it is destabilizing. We argue that recently proposed design changes strengthen both its stabilizing and destabilizing effects. We conclude that a price-based supply adjustment mechanism would help to address the main shortcomings rooted in the banking-based approach of the current MSR design.

Suggested Citation

  • Grischa Perino & Maximilian Willner & Simon Quemin & Michael Pahle, 2022. "The European Union Emissions Trading System Market Stability Reserve: Does It Stabilize or Destabilize the Market?," Review of Environmental Economics and Policy, University of Chicago Press, vol. 16(2), pages 338-345.
    • Handle: RePEc:ucp:renvpo:doi:10.1086/721015
    DOI: 10.1086/721015
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/721015
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/721015
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/721015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    2. Estelle Cantillon & Aurélie Slechten, 2024. "Market Design for the Environment," NBER Chapters, in: New Directions in Market Design, National Bureau of Economic Research, Inc.
    3. Rickels, Wilfried & Rothenstein, Roland & Schenuit, Felix & Fridahl, Mathias, 2022. "Procure, Bank, Release: Carbon Removal Certificate Reserves to Manage Carbon Prices on the Path to Net-Zero," Open Access Publications from Kiel Institute for the World Economy 266370, Kiel Institute for the World Economy (IfW Kiel).
    4. Lebeau, Alexis & Petitet, Marie & Quemin, Simon & Saguan, Marcelo, 2024. "Long-term issues with the Energy-Only Market design in the context of deep decarbonization," Energy Economics, Elsevier, vol. 132(C).
    5. Eslahi, Mohammadehsan & Mazza, Paolo, 2023. "Can weather variables and electricity demand predict carbon emissions allowances prices? Evidence from the first three phases of the EU ETS," Ecological Economics, Elsevier, vol. 214(C).
    6. Salant, Stephen & Shobe, William & Uler, Neslihan, 2023. "The effects of seemingly nonbinding price floors: An experimental analysis," European Economic Review, Elsevier, vol. 159(C).
    7. Shobande, Olatunji A. & Ogbeifun, Lawrence & Tiwari, Aviral Kumar, 2024. "Extricating the impacts of emissions trading system and energy transition on carbon intensity," Applied Energy, Elsevier, vol. 357(C).
    8. Heijmans, Roweno J.R.K., 2023. "Adjustable emissions caps and the price of pollution," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:renvpo:doi:10.1086/721015. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/REEP .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.