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The Economic Geography of European Carbon Market Trading

Eric Knight ()
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Eric Knight: Department of Geography and the Environment, University of Oxford

CCEP Working Papers from Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University

Abstract: The European Union Emissions Trading Scheme (EU ETS) is the world's first regional 10 carbon trading market. This article is a quantitative attempt to examine the temporal and spatial geography of European carbon trading. We show that carbon markets are especially sensitive to two factors: staging across time (Phase I versus II of the EU ETS) and across space (energy market structures in Europe). Carbon markets serve as a vehicle to better understand the economic geography of financial markets. Building on the theoretical vocabulary of the geography of finance, the article suggests that certain national factors (market structure) and institutional factors (regulatory phases) better explain how carbon markets operate than company level differences. These findings indicate that geographers have a key role to play in highlighting the local ramifications of carbon markets if and when the world moves towards its ambition for a global carbon market.

Keywords: Climate change; tradable permits; European Union (search for similar items in EconPapers)
JEL-codes: Q54 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-res
Date: 2010-10
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Persistent link: http://EconPapers.repec.org/RePEc:een:ccepwp:0510

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