The Kyoto Protocol has not only created carbon emission reduction obligations for industrialized countries, but also opportunities for the private sector to participate in its "flexible mechanisms". One of these mechanisms is Joint Implementation, which allows private legal entities to engage in...

In order to meet the Kyoto Protocol's greenhouse gas emissions targets, the EU has implemented an Emissions Trading Scheme (EU ETS) as a cornerstone of its climate policy. The main attribute of this mechanism is its inherent flexibility. It offers companies the possibility of tailoring a carbon...

The Emissions Trading Scheme (ETS) constrains industrial polluters to buy/sell CO2 allowances depending on a regional depolluting objective of -8% of CO2 emissions by 2012 compared to 1990 levels. Companies may also buy carbon offsets from developing countries, funding emissions cuts there...

In order to meet the Kyoto Protocol’s greenhouse gas emissions targets, the EU has implemented an Emissions Trading Scheme (EU ETS) as a cornerstone of its climate policy. The main attribute of this mechanism is its inherent flexibility. It offers companies the possibility of tailoring a...

A number of studies have tested for cointegration between spot and futures prices in the European carbon markets. These studies tend to focus on the price discovery role of futures versus spot prices. In this paper, we draw the attention to the short- and long-run dynamic linkages among distinct...

Coal-fired power plants may enjoy a significant advantage relative to gas plants in terms of cheaper fuel cost. Still, this advantage may erode or even turn into disadvantage depending on CO2 emission allowance price. This price will presumably rise in both the Kyoto Protocol commitment period...

This study analyzes the forecasting accuracy of the implied volatility of options on futures contracts for the delivery of CO2 emission allowances (carbon options) traded on the European Climate Exchange. We demonstrate that option implied volatility is highly informative about the variance of...