In search of the carbon price : The european CO2 emission trading scheme : from ex ante and ex post analysis to the protection in 2020.

Summary This thesis is an evaluation of the first two phases of the EU ETS. It is based on the progressive construction of a simulation model, ZEPHYR-Flex, which aims to reproduce the price and emission evolutions observed between 2005 and 2012, and to project them until 2020 under different sets of assumptions. The ex-post analysis of the first eight years of the system reveals that, in order to understand its evolution, it is necessary to study in detail the role played by three flexibility mechanisms: allowance trading, spatial flexibility (carbon credits), and temporal flexibility (banking/borrowing). First, we build a techno-economic framework that serves as the basis for the mechanism simulating allowance trading in the model. The role of carbon credits is then examined and a scenario for their use until 2020 is calculated on this basis. Next, temporal flexibility is introduced into the model which, once the three flexibility mechanisms are combined, can reproduce the past trajectory of price and emissions. The model and the lessons learned from the first two phases are then used in different forward-looking scenarios to 2020. Among the scenarios tested, only a reinforcement of the emission cap in line with the 2050 European objective is able to restore confidence and expectations associated with the system, two factors that condition the effectiveness of the EU ETS in the long term. The need to properly articulate the EU ETS with other climate-energy policies is also stressed.