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Allowance price drivers in the first phase of the EU ETS
JournalArticle (Originalarbeit in einer wissenschaftlichen Zeitschrift)
ID 413779
Author(s) Hintermann, Beat
Author(s) at UniBasel Hintermann, Beat
Year 2010
Title Allowance price drivers in the first phase of the EU ETS
Journal Journal of environmental economics and management
Volume 59
Number 1
Pages / Article-Number 43-56
Keywords Emissions permit markets, Air pollution, Climate change, Bubble, Speculation, CO(2), Asset pricing, EU ETS

In the first phase of the EU Emissions Trading Scheme (EU ETS), the price per ton of CO2 initially rose to over €30; the price then collapsed to essentially zero by mid 2007. By deriving a structural model of the allowance price under the assumption of efficient markets I examine the extent to which this variation in price can be explained by marginal abatement costs. I then gradually relax the model by allowing for delayed adjustment of price to fundamentals, as well as by introducing lagged LHS variables. The pattern of the results suggests that while prices were not initially driven by marginal abatement costs, this inefficiency was largely corrected after the accounting of 2005 emissions in April 2006.

Publisher Academic Press
ISSN/ISBN 0095-0696
Full Text on edoc Available
Digital Object Identifier DOI 10.1016/j.jeem.2009.07.002
ISI-Number WOS:000274113300004
Document type (ISI) Article

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