TH`ESE Docteur de l'Université Paris-Dauphine Morgan HERVÉ ...

to be verified by the empirical data we collect and by a real options investment
model we built for the occasion. First, the price of carbon might not
be enough to give an incentive for investment in low-carbon / carbon-free
generation units and could even delay such investments due to regulatory
uncertainty. Second, investment in CCS is subject to bargaining direct support
from the EC or EU Member states and the price of carbon might not
play the support role it is supposed to. Third, investments in renewables
is a direct response to renewable policies and it is unclear to what extent
carbon markets are helping or distorting the incentive (and conversely, to
what extent technology-dedicated incentives support or distort the EU ETS
policy). Our chief focus is to what extent carbon prices direct and have
directed investments towards specific low-carbon technologies.
The PhD thesis is organized in three main chapters. First, we look at the
EU ETS in great details to understand how it might have impacted European
utilities and how they actually coped with the newly introduced carbon
constraint (chapter 1). To better understand whether the EU ETS actually
gave the incentive to invest in low carbon technologies, we tackle the issue
using two complementary approaches. First, we compiled and analysed six
years of European utilities’ financial statements and corporate communications
for the top 5 most carbon constrained utilities in order to reconstitute
the evolution of the power plant investment pipeline (chapter 2). Second,
we resorted to a model based on the real options approach in order to grasp
the impact of an uncertain carbon price on corporate investment decisions
using scenarios (chapter 3).
In the first chapter of the thesis (”European utilities’ response to the European
Union Emissions Trading Scheme”), we focus on the newly introduced
EU ETS climate policy, some other determining factors for investment in
generation (technology-specific incentives and the impact of the financial
and economic crisis) and the responses deployed by European utilities to
deal with the EU ETS. The aim of this chapter is to provide both background
information on the EU ETS and gain insights on how the price
signal sent by the EU ETS affected decision-making in the European power
sector. For the policy review, we mostly resorted to the academic literature,
official releases from the European Commission and Member states and market
analyses from carbon market research groups. For the European utilities
responses, in addition to this, we used elements from the corporate literature
(financial statements, corporate communications, etc.). We discuss how the
EU ETS was introduced and how the constraint was gradually increased
for compliance buyers. We highlight that European utilities benefited from
transitory measures and some provisions to accommodate that constraint
with the use of offsets or the ability to bank carbon allowances from one
year to another. Since the beginning of the EU ETS, the work-in-progress
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