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We introduce a model for the evolution of emissions and the price of emissions allowances in a carbon market such as the European Union Emissions Trading System (EU ETS). The model accounts for multiple trading periods, or phases, with…
Carbon pricing has become a central pillar of modern climate policy, with carbon taxes and emissions trading systems (ETS) serving as the two dominant approaches. Although economic theory suggests these instruments are equivalent under…
Existing emissions trading system (ETS) designs inhibit emissions but do not constrain warming to any fxed level, preventing certainty of the global path of warming. Instead, they have the indirect objective of reducing emissions. They…
The European Union Emission Trading Scheme (EU ETS) is a cornerstone of the EU's strategy to fight climate change and an important device for plummeting greenhouse gas (GHG) emissions in an economically efficient manner. The power industry…
In 2018, allowance prices in the EU Emission Trading Scheme (EU ETS) experienced a run-up from persistently low levels in previous years. Regulators attribute this to a comprehensive reform in the same year, and are confident the new price…
The growing urgency of the climate crisis has driven the implementation of diverse policy instruments to mitigate greenhouse gas (GHG) emissions. Among them, carbon pricing mechanisms such as carbon taxes and emissions trading systems…
Tackling climate change is at the top of many agendas. In this context, emission trading schemes are considered as promising tools. The regulatory framework for an emission trading scheme introduces a market for emission allowances and…
The European Union Emissions Trading System (EU ETS) is a key policy tool for reducing greenhouse gas emissions and advancing toward a net-zero economy. Under this scheme, tradeable carbon credits, European Union Allowances (EUAs), are…
Emissions markets play a vital role in emissions reduction by incentivizing firms to minimize costs. However, their effectiveness heavily depends on the decisions of policymakers, future economic activity, and the availability of abatement…
The European Union Emissions Trading System (EU ETS), the world's first and largest cap-and-trade carbon market, is a cornerstone of EU climate policy. This study provides a comprehensive empirical analysis of the EU carbon market's…
Putting a price on carbon -- with taxes or developing carbon markets -- is a widely used policy measure to achieve the target of net-zero emissions by 2050. This paper tackles the issue of producing point, direction-of-change, and density…
The European carbon market plays a pivotal role in the European Union's ambitious target of achieving carbon neutrality by 2050. Understanding the intricacies of factors influencing European Union Emission Trading System (EU ETS) market…
Mandatory emission trading schemes are being established around the world. Participants of such market schemes are always exposed to risks. This leads to the creation of an accompanying market for emission-linked derivatives. To evaluate…
Since the beginning of this century, there has been a growing body of research and developments supporting the participation of energy storage systems (ESS) in the emission reduction mandates. However, regardless of these efforts and…
Carbon emissions significantly contribute to climate change, and carbon credits have emerged as a key tool for mitigating environmental damage and helping organizations manage their carbon footprint. Despite their growing importance across…
The European Union Emission Trading Scheme is a carbon emission allowance trading system designed by Europe to achieve emission reduction targets. The amount of carbon emission caused by production activities is closely related to the…
The global carbon market is fragmented and characterized by limited pricing transparency and empirical evidence, creating challenges for investors and policymakers in identifying carbon management opportunities. The European Union is among…
In this note, we present an existence result of a Nash equilibrium between electricity producers selling their production on an electricity market and buying CO2 emission allowances on an auction carbon market. The producers' strategies…
Environmental, Social, and Governance (ESG) finance is a cornerstone of modern finance and investment, as it changes the classical return-risk view of investment by incorporating an additional dimension of investment performance: the ESG…
We introduce two simple models of forward-backward stochastic differential equations with a singular terminal condition and we explain how and why they appear naturally as models for the valuation of CO2 emission allowances. Single phase…