Section: Contracts and Grants with Industry

Collaboration with ADEME: carbon value and carbon tax in the context of renewable energies deployment

Participants : Mireille Bossy, Olivier Davidau.

Started in January 2009, this collaboration funded by the French Environment and Energy Management Agency (ADEME), involves the Center for Applied Mathematics (CMA), at Mines ParisTech, Coprin and Tosca teams at INRIA. It focuses on a short term carbon value derived from the so-called financial carbon market , the European Union Emission Trading Scheme (EU ETS), which is a framework for GHG emissions reduction in European industry.

The objective of this project is to study the compatibility and complementarity of a carbon tax and a target for renewable energy deployment.

As a first step, we are developing a method for assessing the EU ETS value. We consider the constraints related to emission allowances distributed through national plans of allocation (NAP) and the mechanisms of taxes that are taking place. The work will focus on electricity producers, key players in the market in its first phase (NAP-I, 2005-2007). The impact of the Renewable Energies park of the electricity producers on their own carbon value will be particularly studied.

We selected the financial concept of indifference price as a relevant methodology. Modelling strategies of production and emission of market quotas therefore rely on stochastic optimal control problems and associated Hamilton-Jacobi-Bellman equations.