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Journals / Sosyoekonomi / 2010 / Cilt: 12 - Sayı: 12

Is There a Stochastic Trend in European Union Emission Trading Scheme Prices?

Don BREDIN
Cal MUCKLEY
Pages
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Publication Date
2010-09-01
DOI
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

This finding is indicative of incoherence between the European Union ETS de jure policy, with regard to transiting to a low carbon economy, and EUA price behavior.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:The European Union’s Emission Trading Scheme (ETS) is the key policy instrument of the European Commissions Climate Change Program aimed at reducing greenhouse gas emissions to eight percent below 1990 levels by 2012.
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Key Findings & Data:In this vein, this article finds evidence to the contrary indicating the presence of a stochastic trend (a unit root) in EU Allowance prices during the period from April 2005 through to July 2009.
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Conclusion & Impact:This finding is indicative of incoherence between the European Union ETS de jure policy, with regard to transiting to a low carbon economy, and EUA price behavior.
🔬Design:Research Article
📍Scope:2012 Verileri
⚙️Variables:Domain Parameters

Abstract

The European Union’s Emission Trading Scheme (ETS) is the key policy instrument of the European Commissions Climate Change Program aimed at reducing greenhouse gas emissions to eight percent below 1990 levels by 2012. The key asset traded under the scheme is the European Union Allowance (EUA). To further curtail greenhouse gas emissions the EU Allowance prices should follow a stationary path about a persistent upward trend. In this vein, this article finds evidence to the contrary indicating the presence of a stochastic trend (a unit root) in EU Allowance prices during the period from April 2005 through to July 2009. This finding is indicative of incoherence between the European Union ETS de jure policy, with regard to transiting to a low carbon economy, and EUA price behavior.

Özet

The European Union’s Emission Trading Scheme (ETS) is the key policy instrument of the European Commissions Climate Change Program aimed at reducing greenhouse gas emissions to eight percent below 1990 levels by 2012. The key asset traded under the scheme is the European Union Allowance (EUA). To further curtail greenhouse gas emissions the EU Allowance prices should follow a stationary path about a persistent upward trend. In this vein, this article finds evidence to the contrary indicating the presence of a stochastic trend (a unit root) in EU Allowance prices during the period from April 2005 through to July 2009. This finding is indicative of incoherence between the European Union ETS de jure policy, with regard to transiting to a low carbon economy, and EUA price behavior.

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Cite This Article

BREDIN, D., MUCKLEY, C. (2010). Is There a Stochastic Trend in European Union Emission Trading Scheme Prices?. Sosyoekonomi, Cilt: 12 - Sayı: 12. https://ajindex.com/articles/139709

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