The Paris Agreement and Electricity Markets Outside the EU
Contemporary Economics, Vol. 12. No. 4, pp. 419-432, 2018
14 Pages Posted: 24 May 2019
Date Written: December 31, 2018
Climate change has been at the center of economic and social discussion for some years. The passage of time has intensified this debate and reflection. A well-known relevant event in this domain was the signature of the Paris Agreement in 2014, and its subsequent enforcement by European Union (EU) member countries. This study examines if the climate change measures adopted by the Agreement had an impact on the electricity sector outside the EU28, seeking to assess whether there is international diversity in these markets or if they work uniformly at global level. The goal of this work is to study the behavior of spot electricity prices before and after the Agreement was signed by EU members, analyze its effect in terms of spot prices, and determine the conditions that lead to stability and non-stability. We examine the behavior of spot electricity prices in two different electricity markets: the US and Brazil. The study applies both qualitative methodologies, namely fsQCA, and quantitative methodology, in order to identify changes in the pattern of electricity price behavior with the advent of the Agreement. Arguably, regulatory theory still incorporates the effects of the emergence of global dynamics in the regulation process. However, what this article suggests is that changes in regulatory frameworks with global impact, even if exogenous to a specific market, can profoundly alter the dynamics of that market.
Keywords: electricity markets, spot price, Paris Agreement, fsQCA
JEL Classification: F68, G18, K32, P28, P48, Q43, Q58
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