Javier Contreras, Natalia Alguacil, and Juan García
Emission allocation policies, Market equilibrium, Electricity markets
The main objective of this paper is to analyze the equilibrium in electricity markets under three different CO2 emission allocation policies: i) a fixed amount of allowances is globally allocated to the polluting agents; ii) a fixed amount of allowances is individually allocated to each pollutant and iii) an initial amount of allowances is individually allocated and can be traded among polluting agents. The comparison of the three models allows determining which scenarios are the most economically favorable for each market agent. The proposed methodologies have been tested on an illustrative example and conclusions are drawn.
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