The EU Emissions Trading Scheme: the Effects of Industrial Production and CO2 Emissions on Carbon Prices

Emilic Alberola, Julien Chevallier and Benoît Chèze

Economie Internationale, 2008, issue 116, 93-126

Abstract: This article critically examines the impact of industrial production for sectors covered by the EU Emissions Trading Scheme (EU ETS) on emissions allowance spot prices during Phase I (2005-2007). First, sector production indices are used as a proxy of economic activity in sectors covered by the EU ETS. Second, a ratio of allowance allocation relative to baseline CO2 emissions is used to measure the extent to which installations are constrained by the EU ETS. We show that carbon price changes react not only to energy prices forecast errors and extreme temperatures events, but also to industrial production in three sectors covered by the EU ETS: combustion, paper and iron.

Keywords: EU ETS; Emissions Trading; Carbon Pricing; CO2 Emissions; Industrial Production (search for similar items in EconPapers)
JEL-codes: L11 L16 Q48 Q54 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepiei:2008-4td

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