Temporal restrictions on emissions trading and the implications for the carbon futures market: Lessons from the EU emissions trading scheme

Daskalakis, George ORCID: https://orcid.org/0000-0003-4421-7167 (2018) Temporal restrictions on emissions trading and the implications for the carbon futures market: Lessons from the EU emissions trading scheme. Energy Policy, 115. 88–91. ISSN 0301-4215

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Abstract

Prohibiting the intertemporal trading of emission allowances induces positive risk premia in futures prices when the trading of the contracts and their expiry take place in time periods separated by this trading ban. In Phase I of the EU Emissions Trading Scheme (EU ETS) these were in the order of about 28% of the futures price on average, depending on the contract's expiry in Phase II. Environmental policy makers should avoid such restrictions as they result in increased hedging costs for polluters that are, since emission allowances represent opportunity costs, potentially borne by consumers.

Item Type:	Article
Uncontrolled Keywords:	emission allowances,intertemporal trading,carbon futures,risk premia,eu ets
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Finance Group
Depositing User:	Pure Connector
Date Deposited:	08 Jan 2018 15:15
Last Modified:	21 Oct 2022 17:33
URI:	https://ueaeprints.uea.ac.uk/id/eprint/65897
DOI:	10.1016/j.enpol.2018.01.008

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