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The role of speculation during the recent increase in EU emissions allowance prices

Author

Listed:
  • Ampudia, Miguel
  • Bua, Giovanna
  • Kapp, Daniel
  • Salakhova, Dilyara

Abstract

The price of emissions allowances traded on the EU Emissions Trading System (ETS) has risen from below €10 per metric tonne of carbon to above €90 since the beginning of 2018. This box outlines the main reasons behind this increase and examines whether speculative activity may have played a significant role. It concludes that, at present, tangible evidence for a marked increase in speculative activity related to potential changes in market structure appears scarce. Furthermore, a speculation index suggests that, while speculation appears to have increased slightly since early 2019, it remains relatively moderate and well below readings during earlier phases of the ETS. JEL Classification: G12, G14, G38

Suggested Citation

  • Ampudia, Miguel & Bua, Giovanna & Kapp, Daniel & Salakhova, Dilyara, 2022. "The role of speculation during the recent increase in EU emissions allowance prices," Economic Bulletin Boxes, European Central Bank, vol. 3.
    • Handle: RePEc:ecb:ecbbox:2022:0003:6
    Note: 2445760
    as

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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2022/html/ecb.ebbox202203_06~ca1e9ea13e.en.html
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    Citations

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    Cited by:

    1. Sitarz, Joanna & Pahle, Michael & Osorio, Sebastian & Luderer, Gunnar & Pietzcker, Robert, 2023. "EU carbon prices signal high policy credibility and farsighted actors," EconStor Preprints 280455, ZBW - Leibniz Information Centre for Economics.
    2. Hideki Nishigaki, 2023. "The impact of rising EU Allowance prices on core inflation in the Eurozone," Economic Affairs, Wiley Blackwell, vol. 43(2), pages 245-264, June.
    3. repec:crb:wpaper:2023-01 is not listed on IDEAS

    More about this item

    Keywords

    ; ETS; EU Allowance prices; Price drivers;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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