EU Energy Policy Blog

Gas models mainly focus on the oligopolistic character of the European gas market. This emphasis responds to two concerns. Firstly, it is commonly (but not universally) admitted that the upstream gas market is concentrated. This reduces competitiveness and security of supply, which may in turn limit the recourse to gas in the European quest for sustainability. Secondly, the Commission and industrial consumers are also worried about concentration in the downstream market. The industry complains that it leads to high prices and hence reduces its competitiveness. Can gas models tell us something relevant about these questions?
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The Directive 2003/87 that establishes the European emission trading scheme (EU-ETS) is in many respects remarkable. It tackles one of the most serious problems of our time. It shows that Europeans can still pass critical pieces of legislation on difficult matters without endless discussions. Last, it introduces an economically sound policy … up to some point. Its implementation indeed reveals some bizarre practice of the Commission in the review of national allocation of CO2 allowances. Continue reading »