Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Daily Overview |
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Climate change mitigation: emissions trading and standards Location: Auditorium L: Ingrid Simonnæs Session Chair: Arthur WILLEMAERS, Université de Pau et des Pays de l'adour | |
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Speculation and policy credibility in the EU Emission Trading System 1: Euro-Mediterranean Center on Climate Change (CMCC) (Italy); 2: Bologna University (Italy) This paper develops a dynamic behavioural model of the European Union Emissions Trading System (EU ETS) to analyse the impact of speculation and credibility shocks on permit prices and emissions. The model incorporates compliance firms and speculators, who follow distinct trading strategies – fundamentalist, noise trading, and trend-following. Calibrated to EU ETS data, we find that speculation has a non-monotonic effect on prices and emissions: at low levels, it slightly raises prices and reduces emissions, while at higher levels, it depresses prices, delays abatement, and amplifies volatility. Negative credibility shocks significantly affect prices and emissions, with their impact depending on the timing of the shock, and speculation prolonging their effects. Finally, we examine a reform to the Market Stability Reserve (MSR) in which the upper and lower thresholds are gradually reduced. Our results show that this reform accelerates emissions reductions and enhances the system’s resilience to speculation and credibility shocks. | |