This article investigates firms’ banking and pooling behaviors in the context of the EU Emissions Trading Scheme (EU ETS) during Phase I (2005-2007). It provides an overview of the questions raised at the firm-level by the introduction and implementation of the EU trading system in terms of...

An increase in the demand for agricultural goods leads to the use of more intensive cultivation methods. Though Ricardo sees no difficulties in the intensification process, their existence is revealed by the possible occurrence of multiple equilibria. A general theory of intensive rent is based...

This paper investigates the link between wholesale electricity prices in Europe and the CO2 cost, i.e. the price of European Union Allowances (EUAs), over the two first phases of the European Union Emissions Trading Scheme (EU ETS). We set up a theoretical framework and an empirical model to...

The article investigates the development of carbon prices in Europe from 2005 to 2009 and its drivers, before providing the essential precepts for the Copenhagen negotiations. The experience of the European carbon market will highlight negotiations on a major issue: the carbon pricing....

With the increased availability of high-frequency financial market data in recent years, the extraction of “realized” volatility (from intraday squared returns) has led to numerous theoretical developments and empirical applications for a wide range of equity and commodity markets. This...

This article critically examines the EU ETS intertemporal market during its Phase I (2005-2007). We test the Hotelling rule as a key element of a competitive equilibrium to validate whether allowance prices rise at the same rate as the interest rate. Including readily observable characteristics...

This article analyzes the modelling of risk premia in CO2 allowances spot and futures prices, valid for compliance under the EU Emissions Trading Scheme (EU ETS). Similarly to electricity markets, a salient characteristic of CO2 allowances is that the theory of storage does not hold, as CO2...

This chapter identifies the main price drivers of European Union Allowances (EUAs), valid for compliance under the European Union Emissions Trading Scheme (EU ETS) created in 2005 to regulate CO2 emissions of more than 10,000 high carbon-intensive installations across Member States. Based on key...

Previous literature has identified oil and gas prices as being the main drivers of CO2 prices in a univariate Generalized Autoregressive Conditional Heteroscedasticity (GARCH) econometric framework (Alberola et al., 2008; Oberndorfer, 2009). By contrast, we argue in this article that the...

This article investigates the modelling of the convenience yield in the European carbon market by using daily and intradaily measures of volatility. The convenience yield stems from differences in spot and futures prices, and can explain why firms hold inventories. The main findings are that (i)...