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European carbon prices fundamentals in 2005-2007: the effects of energy markets, temperatures and sectorial production

Author

Listed:
  • Emilie Alberola
  • Julien Chevallier

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Benoît Chèze

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

This article aims at characterizing the daily price fundamentals of European Union Allowances (EUAs) traded since 2005 as part of the Emissions Trading Scheme (ETS). First, the presence of two structural changes on April, 2006 following the disclosure of 2005 verified emissions and on October, 2006 following the European Commission announcement of stricter Phase II allocation allow to isolate distinct fundamentals evolving overtime. The results extend previous literature by showing that spot prices react not only to other energy markets and temperatures, but also to economic activity within the main sectors covered by the EU ETS such as proxied by sectoral production indices. Besides, the sub-period decomposition of the pilot phase gives a better grasp of institutional and market events that drive allowance price changes.

Suggested Citation

  • Emilie Alberola & Julien Chevallier & Benoît Chèze, 2007. "European carbon prices fundamentals in 2005-2007: the effects of energy markets, temperatures and sectorial production," Working Papers hal-04139200, HAL.
    • Handle: RePEc:hal:wpaper:hal-04139200
    Note: View the original document on HAL open archive server: https://hal.science/hal-04139200
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    References listed on IDEAS

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