Stefan Weishaar, Edwin Woerdman

Carbon & Climate Law Review, Volume 6 (2012), Issue 2, Page 114 - 127

This paper presents empirical evidence of a small but statistically highly significant windfall profit in the German spot auctions of allowances under the EU Emissions Trading System in the second trading phase. Auction prices lie with 7 and 8 Eurocents below the Leipzig Energy Exchange and the Paris Blue Next market price, respectively. Compared to the Initial Public Offerings literature the under-pricing effect is small. However, it does call into question the wide-spread belief that allowance auctioning eradicates all windfall profits. Moreover, it is examined if these windfall profits give rise to State aid concerns. We argue that auctions in the second and third trading phase pass the private investor test and thus do not constitute State aid, although selectivity could become problematic in the third trading phase. We conclude that the political problem of windfall profits for the energy sector may persist in the third trading phase.

Avelien Haan-Kamminga, Martha Roggenkamp, Edwin Woerdman

Carbon & Climate Law Review, Volume 4 (2010), Issue 3, Page 240 - 249

The new EU Directive for the geological storage of CO2 aims at providing a legal framework for the development of CCS. However, the Directive does not remove all legal barriers and uncertainties. Capture, transport and storage of CO2 are covered by a large number of international, European and national regulations, resulting in various legal unknowns. These obstacles and uncertainties need to be removed in order to provide companies with a proper incentive to invest in CCS.