Kiel Working Papers, Kiel Institute for World Economics
No 1387:
The determinants of allowance prices in the European Emissions Trading Scheme - Can we expect an efficient allowance market 2008?
Wilfried Rickels, Vicki Duscha, Andreas Keller and Sonja Peterson
Abstract: The 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.
Keywords: European Emissions Trading Scheme, allowance prices, energy prices, weather variation; (follow links to similar papers)
JEL-Codes: C22,; Q56,; Q58,; Q54; (follow links to similar papers)
26 pages, November 2007
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