Climate Futures Markets

Rita l. D'Ecclesia

Chapter 19 in The World Scientific Handbook of Futures Markets, 2015, pp 567-603 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Scientific research confirms that humans have caused most of climate change in recent decades. Climate change will continue, at a pace determined by the past, present, and future emissions of heat-trapping gases, namely Carbon Dioxide (CO2), Sulfur Dioxide (SO2) and Nitrogen Dioxide those will is expected to cause large amounts of warming in the future and reducing emissions has become one of the main goals of developed countries since the Kyoto Protocol signing in 1997. A market for emission allowances, often called “carbon markets”, has been created which has shown an interesting dynamic in the last decade. Futures markets emission allowances were introduced at the “Chicago Climate Futures Exchange” in 2004, and at the “European Climate Exchange” in 2005. Unusually Europe has been the driver of regulation and innovation in the global climate change arena. Carbon markets were not immune to the economic crisis and in the past 5 years have shown enormous volatility and were even completely delisted in the U.S. market.

Keywords: Futures Markets; Pricing; Risk Management; Futures Trading; Stock Indexes; Interest Rates; Futures Prices; Portfolio Theory; Hedge Funds; Foreign Exchange (search for similar items in EconPapers)
Date: 2015
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