Keywords
Lithuania
Latvia
Estonia
energy mix
energy prices
How to Cite
Abstract
ETS (CO2 Emissions Trading Scheme) is one of the mechanisms that allow for controlling and striving to reduce greenhouse gas emissions worldwide. However, it is also another cost for CO2 emission producers, affecting the final price of energy. The aim of the article is to enrich the discussion by explaining the relationship between ETS prices and the level of share of renewable energy sources in the overall energy mix of the countries selected for analysis (Lithuania, Latvia, Estonia). The research covered the period 2000-2022. It was conducted using the following methods: literature studies, descriptive analysis of statistical data and deduction. The analysis led to the conclusions: the increase in CO2 emission allowance prices (ETS) forced a change in energy policy in Lithuania, Latvia and Estonia. In 2008, the ETS price was EUR 25/tonne of CO2, while in 2023, it was around EUR 50/tonne of CO2. An increase in the share of renewable energy sources was noted in the analysed countries. In Lithuania, wind, solar, and biomass energy are the most developed, while in Latvia, further investments were made in hydroelectric power plants. The situation was the worst in Estonia, from the development point of view, as solar and wind power plants were developed to a small extent. In 2000, the share of renewable energy in the overall energy mix was for Estonia: at less than 1%, Lithuania at around 3%, and Latvia at 68%. In 2022, under the influence of ETS fees, the renewable energy source indicator increased for: Estonia: to 45%, Lithuania: 74.7%, Latvia 72% in the overall energy mix.
References
Amundsen, E. S., & Mortensen, J. B. (2001). The Danish green certificate market: some simple analytical results. Energy Economics, 23(5), 489-509. https://doi.org/10.1016/S0140-9883(01)00079-2
Anke, C., & Möst, D. (2021). The expansion of RES and the EU ETS – valuable addition or conflicting instruments? Energy Policy, 150, 112125. https://doi.org/10.1016/j.enpol.2020.112125
Antimiani, A., Costantini, V., Martini, C., Salvatici, L., & Tommasino, M. C. (2013). Assessing alternative solutions to carbon leakage. Energy Economics, 36. 299-311. https://doi.org/10.1016/j.eneco.2012.08.042
Arlinghaus, J. (2015). Impacts of Carbon Prices on Indicators of Competitiveness: A Review of Empirical Findings. https://doi.org/10.1787/5js37p21grzq-en
Bariss, U., Dolge, K., Kaķis, R., & Blumberga, D. (2021). Emission Trading Impact to GHG Changes in Power Production towards Green Deal Target. Proceedings of IEEE 62nd International Scientific Conference on Power and Electrical Engineering of Riga Technical University (RTUCON 2021), Latvia, Riga, 473-477. https://doi.org/10.1109/RTUCON53541.2021.9711734
Baskutis, S., Baskutiene, J., Navickas, V., Bilan, Y., & Cieśliński, W. (2021). Perspectives and Problems of Using Renewable Energy Sources and Implementation of Local “Green” Initiatives: A Regional Assessment. Energies, 14(18), 5888. https://doi.org/10.3390/en14185888
Bayer, P., & Aklin, M. (2020). The European Union Emissions Trading System reduced CO2 emissions despite low prices. PNAS, 117(16), 8804-8812. https://doi.org/10.1073/pnas.1918128117
Betz, R. A., & Schmidt, T. S. (2016). Transfer patterns in Phase I of the EU Emissions Trading System: a first reality check based on cluster analysis. Climate Policy, 16(4), 474-495. https://doi.org/10.1080/14693062.2015.1028319
Böhringer, C., & Rosendahl, K. E. (2010). Green promotes the dirtiest: on the interaction between black and green quotas in energy markets. Journal of Regular Economics, 37, 316-325. https://doi.org/10.1007/s11149-010-9116-1
Bohringer, C., Carbone, E. J., & Rutherford, T. F. (2012). Embodied Carbon Tariffs. Scandinavian Journal of Economics, 120(1), 183-210. https://doi.org/10.1111/sjoe.12211
Böning, J., Di Nino, V., & Folger, T. (2023). Benefits and costs of the ETS in the EU. a lesson learned for the CBAM design. https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2764~3ff8cb597b.en.pdf
Busch, S., Kasdorp, R., Koolen, D., Mercier, A., & Spooner, M. (2023). The Development of Renewable Energy in the Electricity Market. https://economy-finance.ec.europa.eu/system/files/2023-06/dp187_en_energy%20markets.pdf
Byskov Lindberg, M. (2019). The EU Emissions Trading System and Renewable Energy Policies: Friends or Foes in the European Policy Mix? Politics and Governance, 7(1), 105-123. https://doi.org/10.17645/pag.v7i1.1800
Chan, H. S. R., Li, S., & Zhang, F. (2013). Firm competitiveness and the European Union emissions trading scheme. Energy Policy, 63, 1056-1064. https://doi.org/10.1016/j.enpol.2013.09.032
Chomać-Piasecka, E., Sobczak, A., & Soboń, D. (2023). The Potential and Development of the Geothermal Energy Market in Poland and the Baltic States—Selected Aspects. Energies, 15(11), 4142. https://doi.org/10.3390/en15114142
Chomać-Pierzecka, E., Kokiel, A., Rogozińska-Mitrut, J., Sobczak, A., Soboń, D., & Stasiak, J. (2022). Analysis and Evaluation of the Photovoltaic Market in Poland and the Baltic States. Energies, 15(2), 669. https://doi.org/10.3390/en15020669
De Jonghe, C., Delarue, E., Belmans, R., & D’haeseleer, W. (2009). Interactions between measures for the support of electricity from renewable energy sources and CO2 mitigation. Energy Policy, 37(11), 4743-4752. http://dx.doi.org/10.1016/j.enpol.2009.06.033
Commission Implementing Regulation (EU) No 749/2014 of 30 June 2014 on structure, format, submission processes and review of information reported by Member States pursuant to Regulation (EU) No 525/2013 of the European Parliament and of the Council, Pub. L. No. 32014R0749, 203 OJ L (2024). https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32014R0749
De Nederlandsche Bank. (2021, August 30). Improved European carbon pricing has limited impact on competitiveness. https://www.dnb.nl/en/general-news/news-2021/improved-european-carbon-pricing-has-limited-impact-on-competitiveness/
Degirmenci, T., & Yavuz, H. (2024). Environmental taxes. R&D expenditures and renewable energy consumption in EU countries: Are fiscal instruments effective in the expansion of clean energy? Energy, 299(C), 131466. https://doi.org/10.1016/j.energy.2024.131466
Delbeke, J., Dombrowicki, P., & Vis, P. (2021). Key Issues for the Coming Trade and Climate Debate. https://doi.org/10.2870/163281
EEA. (2024, March 4). EUA future prices 2008–2012. https://www.eea.europa.eu/data-and-maps/figures/eua-future-prices-
Energy Instarat. (2024, March 3). Ceny. https://energy.instrat.pl/ceny/eu-ets/ (in Polish).
European Bank for Reconstruction and Development. (2022). Country diagnostics. Diagnostic of Estonia, Latvia and Lithuania. https://www.ebrd.com/publications/country-diagnostics
Fankhauser, S., Hepburn, C., & Park, J. (2010). Combining multiple climate policy instruments: how not to do it. Climate Change Economics, 01(03), 209-225. http://dx.doi.org/10.1142/S2010007810000169
Fischer, C., & Fox, K. A. (2012). Comparing policies to combat emissions leakage: Border carbon adjustments versus rebates. Journal of Environmental Economics and Management, 64(2), 199-216. https://doi.org/10.1016/j.jeem.2012.01.005
Fischer, C., & Newell, R. G. (2008). Environmental and technology policies for climate change mitigation. Journal of Environmental Economics and Management, 55(2), 142-162. https://doi.org/10.1016/j.jeem.2007.11.001
Galinis, A., Martišauskas, L., Jääskeläinen, J., & Olkkonen, V. (2020). Implications of carbon price paths on energy security in four Baltic region countries. Energy Strategy Reviews, 30, 100509. https://doi.org/10.1016/j.esr.2020.100509
Gawel, E., Lehmann, P., Purkus, A., Söderholm, P., & Witte, K. (2017). Rationales for technology-specific RES support and their relevance for German policy. Energy Policy, 102, 16-26. https://doi.org/10.1016/j.enpol.2016.12.007
Gawel, E., Strunz, S., & Lehmann, P. (2014). A public choice view on the climate and energy policy mix in the EU—how do the emissions trading scheme and support for renewable energies interact? Energy Policy, 64, 175-182. https://doi.org/10.1016/j.enpol.2013.09.008
Hahn, R. W., & Hester, G. L. (1989). Marketable Permits: Lessons for Theory and Practice. Ecology Law Quarterly, 16(2), 361. https://doi.org/10.15779/Z387R7P
Hindsberger, M., Nybroe, M. H., Ravn, H. F., & Schmidt, R. (2003). Co-existence of electricity. TEP. and TGC markets in the Baltic Sea Region. Energy Policy, 31(1), 85-96. http://dx.doi.org/10.1016/S0301-4215(02)00120-9
Holmgren, S., Pever, M., & Fischer, K. (2019). Constructing low-carbon futures? Competing storylines in the Estonian energy sector's translation of EU energy goals. Energy Policy, 135, 111063. https://doi.org/10.1016/j.enpol.2019.111063
Jaffe, A. B., Newell, R. G., & Stavins, R. N. (2005). A tale of two market failures: technology and environmental policy. Ecological Economics, 54(2-3), 164-174. https://doi.org/10.1016/j.ecolecon.2004.12.027
Jensen, S. G., & Skytte, K. (2003). Simultaneous attainment of energy goals by means of green certificates and emission permits. Energy Policy, 31(1), 63-71. https://doi.org/10.1016/S0301-4215(02)00118-0
Joltreau, E., & Sommerfeld, K. (2019). Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms’ competitiveness? Empirical findings from the literature. Climate Policy, 19(4), 453-471. https://doi.org/10.1080/14693062.2018.1502145
Jung, H., & Song, Ch.-K. (2023). Effects of emission trading scheme (ETS) on change rate of carbon emission. Scientific Reports, 13, 912. https://doi.org/10.1038/s41598-023-28154-6
Kaaret, K., Tool, B., Suik, K., & Kirsimaa, K. (2022). Reaching Climate Neutrality in Estonia – a progress update. https://www.sei.org/publications/reaching-climate-neutrality-in-estonia-a-progress-update/
Kalkuhl, M., Edenhofer, O., & Lessmann, K. (2012). Learning or lock-in: optimal technology policies to support mitigation. Resource and Energy Economics, 34(1), 1-23. http://dx.doi.org/10.1016/j.reseneeco.2011.08.001
Kalkuhl, M., Edenhofer, O., & Lessmann, K. (2013). Renewable energy subsidies: second-best policy or fatal aberration for mitigation? Resource and Energy Economics, 35(3), 217-234. https://doi.org/10.1016/j.reseneeco.2013.01.002
Knopf, B., Nahmmacher, P., & Schmid, E. (2015). The European renewable energy target for 2030—an impact assessment of the electricity sector. Energy Policy, 85(7), 50-60. http://dx.doi.org/10.1016/j.enpol.2015.05.010
KOBiZE. (2024). Raport z rynku CO2. https://www.kobize.pl/uploads/materialy/materialy_do_pobrania/raport_co2/2024/KOBiZE_Analiza_rynku_CO2_stycze%C5%84_2024.pdf (in Polish).
Krūmiņš, J., & Kļaviņš, M. (2022). The Baltic States’ Move toward a Sustainable Energy Future. Energies, 15(21), 8230. https://doi.org/10.3390/en15218230
Kuzior, A., Samusevych, Y., Lyeonov, S., Krawczyk, D., & Grytsyshen, D. (2023). Applying Energy Taxes to Promote a Clean. Sustainable and Secure Energy System: Finding the Preferable Approaches. Energies, 16(10), 4203. https://doi.org/10.3390/en16104203
Kverndokk, S., & Rosendahl, K. E. (2007). Climate policies and learning by doing: impacts and timing of technology subsidies. Resource and Energy Economics, 29, 58-82. http://dx.doi.org/10.1016/j.reseneeco.2006.02.007
Landis, F., & Heindl, P. (2019). Renewable Energy Targets in the Context of the EU ETS: Whom do They Benefit Exactly? The Energy Journal, 40(6), 129-170. https://doi.org/10.5547/01956574.40.6.flan
Lecuyer, O., & Quirion, P. (2013). Can uncertainty justify overlapping policy instruments to mitigate emissions? Ecological Economics, 93, 177-191. https://doi.org/10.1016/j.ecolecon.2013.05.009
Lehmann, P. (2013). Supplementing an emissions tax by a feed-in tariff for renewable electricity to address learning spillovers. Energy Policy, 61, 635-641. https://doi.org/10.1016/j.enpol.2013.06.072
Lehmann, P., & Söderholm, P. (2018). Can technology-specific deployment policies be cost-effective? The case of renewable energy support schemes. Environmental and Resource Economics, 71, 475-505. https://doi.org/10.1007/s10640-017-0169-9
Linares, P., Santos, F. J., & Ventosa, M. (2008). Coordination of carbon reduction and renewable energy support policies. Climate Policy, 8, 377-394. http://dx.doi.org/10.3763/cpol.2007.0361
Lu, J., Ren, L., Yao, S., Rong, D., Skare, M., & Streimikis, J. (2020). Renewable energy barriers and coping strategies: Evidence from the Baltic States. Sustainable Development, 28(1), 352-367. https://doi.org/10.1002/sd.2030
Martin, R., Muuls, M., de Preux, L. B., & Wagner, U. J. (2014). Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme. American Economic Review, 104(8), 2482-2508. https://doi.org/10.1257/aer.104.8.2482
Meran, G., & Wittmann, N. (2012). Green, brown, and now white certificates: are three one too many? A micro-model of market interaction. Environmental and Resource Economics, 53, 507-532. https://doi.org/10.1007/s10640-012-9574-2
Ministru kabinets. (2019). Latvijas Stratēģija Klimatneitralitātes Sasniegšanai Līdz 2050. Gadam. https://ec.europa.eu/clima/sites/lts/lts_lv_lv.pdf (in Latvian).
Młynarski, T. (2014). Europejski system handlu uprawnieniami do emisji. Między ekologią a ekonomią. Kultura i Polityka, 15, 98-108. http://cejsh.icm.edu.pl/cejsh/element/bwmeta1.element.desklight-fcc72ce5-518c-484a-be80-864cc1f55919 (in Polish).
Oberndorfer, U., & Rennings, K. (2006). The impacts of the European Union emissions trading scheme on competitiveness in Europe. ZEW Discussion Papers, 06-051. https://hdl.handle.net/10419/24506
Our World in Data. (2024, March 3). Share of electricity production by source, World. https://ourworldindata.org/grapher/share-elec-by-source?
Palmer, K., & Burtraw, D. (2005). Cost-effectiveness of renewable electricity policies. Energy Economics, 27(6), 873-894. https://doi.org/10.1016/j.eneco.2005.09.007
Paltsev, S., Reilly, J. M., Jacoby, H. D., & Morris, J. F. (2009). The cost of climate policy in the United States. Energy Economics, 31(2), S235-S243. http://dx.doi.org/10.1016/j.eneco.2009.06.005
Petrick, S., & Wagner, U. J. (2014). The Impact of Carbon Trading on Industry: Evidence from German Manufacturing Firms. Kiel Working Paper, 1912. https://econpapers.repec.org/scripts/redir.pf?u=https%3A%2F%2Fwww.econstor.eu%2Fbitstream%2F10419%2F94357%2F1%2F781557828.pdf;h=repec:zbw:ifwkwp:1912
Requate, T. (2015). Green tradable certificates versus feed-in tariffs in the promotion of renewable energy shares. Environmental Economics and Policy Studies, 17, 211-239. https://doi.org/10.1007/s10018-014-0096-8
Roos, I., Soosaar, S., Wołkowa, A., & Streimikene, D. (2012). Greenhouse gas emission reduction perspectives in the Baltic States in frames of EU energy and climate policy. Renewable and Sustainable Energy Reviews, 16(4), 2133-2146. https://doi.org/10.1016/j.rser.2012.01.013
Schmidt, R., & Marschinski, R. (2009). A model of technological breakthrough in the renewable energy sector. Ecological Economics, 69(2), 435-444. https://doi.org/10.1016/j.ecolecon.2009.08.023
Štreimikiene, D., Mikalauskienė, A., Atkočiūnienė, Z., & Mikalauskas, I. (2019). Renewable energy strategies of the Baltic States. Energy & Environment, 30(2), 363-381. https://doi.org/10.1177/0958305X18790961
Ulph, A., & Ulph, D. (2013). Optimal climate change policies when governments cannot commit. Environmental & Resource Economics, 56, 161-176. https://doi.org/10.1007/s10640-013-9682-7
Verde, S. F. (2020). The Impact of the EU Emissions Trading System on Competitiveness and Carbon Leakage: The Econometric Evidence. Journal of Economic Surveys, 34(2), 320-343. https://doi.org/10.1111/joes.12356
Wagner, U., Muuls, M., Martin, R., & Colmer, J. (2014). The Causal Effects of the European Union Emissions Trading Scheme: Evidence from French Manufacturing Plants. https://conference.iza.org/conference_files/EnvEmpl2014/martin_r7617.pdf
WysokieNapięcie.pl. (2020). Costs of electricity production in new power plants (USD/MWh). https://wysokienapiecie.pl/
Zhang, Y., & Wei, Y. (2009). An overview of current research on EU ETS: Evidence from its operating mechanism and economic effect. Applied Energy, 87(6), 1804-1814. https://doi.org/10.1016/j.apenergy.2009.12.019
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Copyright (c) 2024 Economics and Environment