Carbon Pricing

Review of the EU ETS Literature: A Bibliometric Perspective ArXiv ID: 2409.01739 “View on arXiv” Authors: Unknown Abstract This study conducts a bibliometric review of scientific literature on the European Union Emissions Trading System (EU ETS) from 2004 to 2024, using research articles from the Scopus database. Using the Bibliometrix R package, we analyze publication trends, key themes, influential authors, and prominent journals related to the EU ETS. Our results indicate a notable increase in research activity over the past two decades, particularly during significant policy changes and economic events affecting carbon markets. Key research focuses include carbon pricing, market volatility, and economic impacts, highlighting a shift toward financial analysis and policy implications. Thematic mapping shows cap-and-trade systems, and carbon leakage as central topics linking various research areas. Additionally, we observe key areas where further research could be beneficial, such as expanding non-parametric methodologies, deepening the exploration of macroeconomic factors, and enhancing the examination of financial market connections. Moreover, we highlight recent and innovative papers that contribute new insights, showcasing emerging trends and cutting-edge approaches within the field. This review provides insights for researchers and policymakers, highlighting the evolving landscape of EU ETS research and its relevance to global climate strategies. ...

Investigating the price determinants of the European Emission Trading System: a non-parametric approach ArXiv ID: 2406.05094 “View on arXiv” Authors: Unknown Abstract 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 prices is paramount for effective policy making and strategy implementation. We propose the use of the Information Imbalance, a recently introduced non-parametric measure quantifying the degree to which a set of variables is informative with respect to another one, to study the relationships among macroeconomic, economic, uncertainty, and energy variables concerning EU ETS prices. Our analysis shows that in Phase 3 commodity related variables such as the ERIX index are the most informative to explain the behaviour of the EU ETS market price. Transitioning to Phase 4, financial fluctuations take centre stage, with the uncertainty in the EUR/CHF exchange rate emerging as a crucial determinant. These results reflect the disruptive impacts of the COVID-19 pandemic and the energy crisis in reshaping the importance of the different variables. Beyond variable analysis, we also propose to leverage the Information Imbalance to address the problem of mixed-frequency forecasting, and we identify the weekly time scale as the most informative for predicting the EU ETS price. Finally, we show how the Information Imbalance can be effectively combined with Gaussian Process regression for efficient nowcasting and forecasting using very small sets of highly informative predictors. ...