The European carbon market (2005-2007): banking, pricing and risk-hedging strategies
AbstractAt the stage of international post-Kyoto negotiations, the adoption of ambitious public policies raises an increasing interest, as society has a whole is more concerned by the scale of damages and the potential irreversibility linked to climate change. The introduction of a tradable permits market in Europe on January 1, 2005, in order to provide incentives to Member-States to take early abatement measures, may be seen as a decisive first step towards that direction. The creation of the EU ETS has indeed revealed the key role played by the European Union in the preservation of the global public good that constitutes the climate. This article reviews the market rules of the European carbon market during 2005-2007. More particularly, it synthesizes theoretical and empirical analyses of banking and borrowing provisions, price drivers and risk-hedging strategies attached to tradable quotas, which were introduced to cover the CO2 emissions of around 10,600 installations in Europe.
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Date of creation: 22 Feb 2010
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Climate Change Policy; Emissions Trading; EU ETS; European carbon market; Banking Borrowing; Carbon Pricing; Spot Prices; Futures Prices; Option Prices; Risk-Hedging Strategies;
Other versions of this item:
- Chevallier, Julien, 2011. "The European Carbon Market (2005-2007): Banking, Pricing and Risk-Hedging Strategies," Economics Papers from University Paris Dauphine 123456789/6789, Paris Dauphine University.
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-06 (All new papers)
- NEP-ENE-2010-03-06 (Energy Economics)
- NEP-ENV-2010-03-06 (Environmental Economics)
- NEP-EUR-2010-03-06 (Microeconomic European Issues)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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