The determinants of allowance prices in the European Emissions Trading Scheme - Can we expect an efficient allowance market 2008?
AbstractThe European emissions trading scheme (EU-ETS) for CO2 is the largest existing emissions trading scheme in the world. The main reason for the implementation of this scheme is to reach the European Kyoto targets at minimal cost and to establish a price for emissions. The right to emit CO2 therefore becomes a scarce production input. In this paper we want to analyze the determinants of the price for allowances in the EU-ETS and study whether it reacts to fundamental influence factors such as energy prices. The results show, that as long as the market viewed the allowances as a scarce input factor, the price reacts to changes in energy prices and weather variations.
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1387.
Length: 26 pages
Date of creation: Nov 2007
Date of revision:
European Emissions Trading Scheme; allowance prices; energy prices; weather variation;
Find related papers by JEL classification:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-12-01 (All new papers)
- NEP-EEC-2007-12-01 (European Economics)
- NEP-ENE-2007-12-01 (Energy Economics)
- NEP-ENV-2007-12-01 (Environmental Economics)
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