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The Economic Geography of European Carbon Market Trading

Author

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  • Eric Knight

    () (Department of Geography and the Environment, University of Oxford)

Abstract

The European Union Emissions Trading Scheme (EU ETS) is the world's first regional 10 carbon trading market. This article is a quantitative attempt to examine the temporal and spatial geography of European carbon trading. We show that carbon markets are especially sensitive to two factors: staging across time (Phase I versus II of the EU ETS) and across space (energy market structures in Europe). Carbon markets serve as a vehicle to better understand the economic geography of financial markets. Building on the theoretical vocabulary of the geography of finance, the article suggests that certain national factors (market structure) and institutional factors (regulatory phases) better explain how carbon markets operate than company level differences. These findings indicate that geographers have a key role to play in highlighting the local ramifications of carbon markets if and when the world moves towards its ambition for a global carbon market.

Suggested Citation

  • Eric Knight, 2010. "The Economic Geography of European Carbon Market Trading," CCEP Working Papers 0510, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:ccepwp:0510
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    File URL: http://ccep.anu.edu.au/data/2010/pdf/wpaper/CCEP-5-10.pdf
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    More about this item

    Keywords

    Climate change; tradable permits; European Union;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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