We investigate the economic factors that drive electricity risk premia in the European emissions constrained economy. Our analysis is undertaken for monthly baseload electricity futures for delivery in the Nordic, French and British power markets. We find that electricity risk premia are...

The trading of carbon dioxide (CO2) emission allowances, or permits, has been established in recent years as one of the primary mechanisms for tackling global warming and climate change. The European Union (EU) has taken an important initiative in this direction by establishing in 2003 the first...

Regulated firms under the EU Emissions Trading Scheme (EU ETS) face annually a strict deadline for buying any lacking emissions allowances and attain environmental compliance. By employing a complete dataset of firm-level transactions during Phase I and II of the scheme, our objective in this...