CO2 Prices, Energy and Weather
Angel Pardo and
The Energy Journal, 2007, vol. Volume 28, issue Number 3, 73-92
One of the main objectives of the European Union Emission Trading Scheme is the establishment of a market price level for allowances that show to European CO2 emitting installations the environmental impact of their polluting activities. The aim of this paper is to focus on the daily price changes during 2005 in an attempt to examine the underlying rationality of pricing behaviour. Specifically, we study the effect of those weather and non-weather variables that academic and market agents consider as the major determinants of the of CO2 price levels. The results show that the energy sources are the principal factors in the determination of CO2 price levels, and that only extreme temperatures influence them.
JEL-codes: F0 (search for similar items in EconPapers)
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