Management of Emissions Permits: threats of the European Emissions Trading System

Abstract

Since the beginning of the millennium, heavy industrial companies in the EU must face the threat related to duty of emissions trading. The aim of this paper is to assess an impact of selected indicators of the emissions trading system (EU ETS) – number of grandfathered permits (allowances) to a company for free and emissions price for different type of permits. That is enabled by the parameterization and sensitivity analysis of the simple linear programming model which maximizes the total profit margin of the company. Analyses in this paper are performed using the data of one real iron and steel producing company in the Czech Republic. The influence of the chosen factors is explored for the second and the available part of the third trading phase of the EU ETS.