The French National Debate on the Ecological Transition has revealed various major issues related to the implementation of the energy transition, among which the questions of identifying relevant transition pathways. The work undertaken by the Experts Committee has established several transition paths, depending on : (i) the evolution of energy demand level, (ii) the penetration of new uses (behaviors and technologies), (iii) the nature of the proposed energy mix and the speed of implementation these changes by 2050.
The purpose of this Chair is to lead collaborative academic research in order to bring powerful insights on innovative funding schemes dedicated to the energy transition (financial engineering and regulatory issues) as well as to provide relevant tools to assess associated performances (macro-economic models for instance).
Output-based allocations (OBAs) are typically used in emission trading schemes to mitigate leakage in sectors at risk. Recent work has shown they may also help to stabilize prices in markets subject to supply and demand shocks. We extend previous work to simultaneously include both leakage and volatility.
The paper studies pollution permit markets in which a fraction of permits are allocated to firms based on their output. Output-based allocations, which are receiving increasing attention in the design of carbon markets around the world are shown to be optimal under demand and supply volatility despite the output distortions they may create.
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