Funding entity Fundación BBVA
We propose in this project the construction of a model capable of providing in a rigourous and comprehensive manner the economic and distributive effects derived from the application of the European carbon-dioxide emissions trading market to the Spanish economy. We will combine three different approximations: i) an integrated model of applied general equilibrium (macro) and residential energy demand (micro) specifically designed for the study of environmental policies in Spain; ii) an oligopolistic supply model of the Spanish electricity system, especially suited for studying in detail the effects of environmental regulations in this sector; and iii) a theoretical model of the emissions trading market in which large and small emitters interact and in which there is a possibility to save permits, with which the resulting international prices are simulated.
The major objective of the project is to reproduce in a credible and realistic way the effects of different intensities in the global and sectoral control of GHG emissions, that is, of different national allocation plans. Therefore it the approach proposed is highly recommended, since it allows for the interactions between supply and demand, between the different producing sectors and consumers, between energy products, and also studies the effects of the international permit market on Spanish participants.