‘Economic and distributive effects of alternative allocations of tradable CO2 emission rights in Spain’

José Ignacio Pérez Arriaga, Juan Pablo Montero Ayala, María Loureiro García, Miguel Enrique Rodríguez Méndez, Pedro Linares Llamas.

For the present project, we combine three different approaches: i) an integrated model of applied general equilibrium (macro) and residential energy demand (micro), especially designed for the study of environmental policies in Spain; ii) an oligopolistic supply model of the Spanish electricity sector, devised for a detailed study of the effects of environmental regulation in the Spanish case, and iii) a theoretical model of the emissions market in which small and large emitters interact and rights can be saved, which numerically simulates the resulting international prices.

The main aim of the project is to realistically and credibly reproduce the effects of differing degrees of global and sectoral control over greenhouse gas emissions, that is, of differing national allocation plans (NAPs). The approach outlined is particularly suitable for this purpose, as it supports interactions between supply and demand, between different sectors and consumers and between energy products. It also considers the effects of the international emissions market on Spanish participants.