The CO2 Trading Market in Europe: A Financial Perspective

FINANCIAL ASPECTS IN ENERGY: THE EUROPEAN PERSPECTIVE, A. Dorsman, M. Karan, Ö. Aslan, W. Westerman, eds., Springer, 2011

22 Pages Posted: 24 Jan 2011

See all articles by George Daskalakis

George Daskalakis

MBS College of Business and Entrepreneurship

Gbenga Ibikunle

University of Edinburgh; European Capital Markets Cooperative Research Centre

Ivan Diaz-Rainey

CEFGroup & Department of Accountancy and Finance, University of Otago

Date Written: October 25, 2010

Abstract

The trading of carbon dioxide (CO2) emission allowances, or permits, has been established in recent years as one of the primary mechanisms for tackling global warming and climate change. The European Union (EU) has taken an important initiative in this direction by establishing in 2003 the first ever mandatory cap-and-trade system for CO2 permits: the EU Emissions Trading Scheme (EU ETS). The purpose of this paper is to initially provide a brief introduction to the EU ETS and subsequently assess its operation during the years 2005-2010 from a financial market perspective. The in-sights gained through this analysis are particularly important not only for policy makers and market stakeholders but also for the growing community of the so-called ‘carbon’ investors.

Keywords: Emission Allowances, Emissions Trading, EU ETS, Carbon Finance

JEL Classification: Q4, Q5, G18, G28

Suggested Citation

Daskalakis, George and Ibikunle, Gbenga and Diaz-Rainey, Ivan, The CO2 Trading Market in Europe: A Financial Perspective (October 25, 2010). FINANCIAL ASPECTS IN ENERGY: THE EUROPEAN PERSPECTIVE, A. Dorsman, M. Karan, Ö. Aslan, W. Westerman, eds., Springer, 2011, Available at SSRN: https://ssrn.com/abstract=1689449

George Daskalakis (Contact Author)

MBS College of Business and Entrepreneurship ( email )

Saudi Arabia

Gbenga Ibikunle

University of Edinburgh ( email )

Old College
South Bridge
Edinburgh, Scotland EH8 9JY
United Kingdom

European Capital Markets Cooperative Research Centre ( email )

Viale Pidaro 42
Pescara, 65121
Italy

Ivan Diaz-Rainey

CEFGroup & Department of Accountancy and Finance, University of Otago ( email )

Dunedin
New Zealand

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