 Influences from the European Parliament on EU emissions pricesPeter Deeney, Mark Cummins, Michael Dowling and Alan F. Smeaton Energy Policy, 2016, vol. 88, issue C, 561-572 Abstract: The decisions of the European Parliament (EP) are shown to influence both EU emission allowance (EUA) prices and volatility. Reductions in price and increases in volatility are observed when EP decisions are (i) not “party-political” in origin, (ii) made during times of low market sentiment, or (iii) made during times of low market attention. Daily EUA prices from 2007 to 2014 are used in the study, with decisions analysed using an event study approach for price impact, and a GARCH specification for volatility impact. Our findings suggest the need for policymakers to improve communication of long-term strategies for the EUA market. This aims to reduce the evident ongoing uncertainty experienced by traders around each decision made by the EP. The finding that sentiment and market attention at the time of an EP decision influences the market's reaction indicates a need to consider market dynamics in terms of decision timing, so that market turbulence is not an unintended by-product of an EP decision. Some form of medium term forward guidance may be called for. Keywords: EU emission allowances; Market sentiment; Media exposure; European Parliament (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:88:y:2016:i:c:p:561-572 DOI: 10.1016/j.enpol.2015.06.026 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
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