Reflections on implementing EU ETS

Testing Informational Efficiency in the EU ETS

The paper deals with the analysis of informational efficiency of the European emissions trading scheme (EU ETS) with the goal of stating whether or not the system has been able to achieve its proclaimed cost-efficiency within the first two trading periods. The efficient market hypothesis suggests that profiting from predicting price behaviour is difficult as the market price should incorporate ...

An Analysis of Allowance Banking in the EU ETS

The existence of some 2 billion unused EU Allowances (EUAs) at the end of Phase II of the EU’s Emissions Trading System (EU ETS) has sparked considerable debate about structural shortcomings of the EU ETS. However, there has been a surprising lack of interest in considering the accumulation of EUAs in light of the theory of intertemporal permit trading, i.e. allowance banking. In this paper we ...

EU-ETS and Nordic Electricity: A CVAR Approach

A cointegrated vector autoregressive (CVAR) model is estimated to determine the dynamic relationship between Nordic wholesale electricity prices and EU emissions trading scheme (EU-ETS) CO2 allowance prices. An impulse response analysis reveals that electricity prices have large short-term responses to CO2 price shocks, but that this response dampens over time. Using hourly Nordic electricity s...

Can the future EU ETS support wind energy investments?

This article discusses how the future Emissions Trading Scheme legislation should be designed to allow the European Union to comply with the 20% greenhouse gas emissions reduction target, while at the same time promoting wind energy investments. We examine whether CO2 prices could eventually replace the existing support schemes for wind and if they adequately capture its benefits. The analysis ...

Reform Options for the European Emissions Trading System ( EU ETS )