Impact of Changes in Membership on Prices of a Unified Carbon Market: Case Study of the European Union Emissions Trading System
Using the event study methodology, the paper studies the effects of 22 key events in countries’ process of entering and exiting the European Union on returns of European Union Allowance (EUA) future prices in the EU Emissions Trading System (EU ETS). The events include 17 entry events concerning the...
Published in: | Sustainability |
---|---|
Main Authors: | , |
Format: | Text |
Language: | English |
Published: |
Multidisciplinary Digital Publishing Institute
2022
|
Subjects: | |
Online Access: | https://doi.org/10.3390/su142113806 |
id |
ftmdpi:oai:mdpi.com:/2071-1050/14/21/13806/ |
---|---|
record_format |
openpolar |
spelling |
ftmdpi:oai:mdpi.com:/2071-1050/14/21/13806/ 2023-08-20T04:07:29+02:00 Impact of Changes in Membership on Prices of a Unified Carbon Market: Case Study of the European Union Emissions Trading System Yue Xu Dayu Zhai agris 2022-10-25 application/pdf https://doi.org/10.3390/su142113806 EN eng Multidisciplinary Digital Publishing Institute Resources and Sustainable Utilization https://dx.doi.org/10.3390/su142113806 https://creativecommons.org/licenses/by/4.0/ Sustainability; Volume 14; Issue 21; Pages: 13806 unified carbon market carbon price EU member states EU ETS event study Text 2022 ftmdpi https://doi.org/10.3390/su142113806 2023-08-01T07:01:29Z Using the event study methodology, the paper studies the effects of 22 key events in countries’ process of entering and exiting the European Union on returns of European Union Allowance (EUA) future prices in the EU Emissions Trading System (EU ETS). The events include 17 entry events concerning the signing of relevant agreements, becoming a candidate or potential candidate country, the process of a negotiation and formally entering the EU, and five exit events including the process of Brexit and the suspension of Iceland. The results show that two entry events involving Albania and Ukraine, respectively, have a significant positive impact, and five entry events have a significant negative impact. Among the exit events, the announcement of the Brexit referendum results causes significant negative market reaction. Most events regarding small carbon emitters entering the EU lead to negative cumulative abnormal returns (CAR) of EUA prices, and a significant negative correlation between the countries’ annual average carbon emissions and CAR is found, while the change of national allocation plans does not affect the market reaction notably. In the process of establishing a unified carbon market, regulators should carry out appropriate policy arrangements of emission allowances allocation when new members join, in order to guide market expectations and enhance market stability. Text Iceland MDPI Open Access Publishing Sustainability 14 21 13806 |
institution |
Open Polar |
collection |
MDPI Open Access Publishing |
op_collection_id |
ftmdpi |
language |
English |
topic |
unified carbon market carbon price EU member states EU ETS event study |
spellingShingle |
unified carbon market carbon price EU member states EU ETS event study Yue Xu Dayu Zhai Impact of Changes in Membership on Prices of a Unified Carbon Market: Case Study of the European Union Emissions Trading System |
topic_facet |
unified carbon market carbon price EU member states EU ETS event study |
description |
Using the event study methodology, the paper studies the effects of 22 key events in countries’ process of entering and exiting the European Union on returns of European Union Allowance (EUA) future prices in the EU Emissions Trading System (EU ETS). The events include 17 entry events concerning the signing of relevant agreements, becoming a candidate or potential candidate country, the process of a negotiation and formally entering the EU, and five exit events including the process of Brexit and the suspension of Iceland. The results show that two entry events involving Albania and Ukraine, respectively, have a significant positive impact, and five entry events have a significant negative impact. Among the exit events, the announcement of the Brexit referendum results causes significant negative market reaction. Most events regarding small carbon emitters entering the EU lead to negative cumulative abnormal returns (CAR) of EUA prices, and a significant negative correlation between the countries’ annual average carbon emissions and CAR is found, while the change of national allocation plans does not affect the market reaction notably. In the process of establishing a unified carbon market, regulators should carry out appropriate policy arrangements of emission allowances allocation when new members join, in order to guide market expectations and enhance market stability. |
format |
Text |
author |
Yue Xu Dayu Zhai |
author_facet |
Yue Xu Dayu Zhai |
author_sort |
Yue Xu |
title |
Impact of Changes in Membership on Prices of a Unified Carbon Market: Case Study of the European Union Emissions Trading System |
title_short |
Impact of Changes in Membership on Prices of a Unified Carbon Market: Case Study of the European Union Emissions Trading System |
title_full |
Impact of Changes in Membership on Prices of a Unified Carbon Market: Case Study of the European Union Emissions Trading System |
title_fullStr |
Impact of Changes in Membership on Prices of a Unified Carbon Market: Case Study of the European Union Emissions Trading System |
title_full_unstemmed |
Impact of Changes in Membership on Prices of a Unified Carbon Market: Case Study of the European Union Emissions Trading System |
title_sort |
impact of changes in membership on prices of a unified carbon market: case study of the european union emissions trading system |
publisher |
Multidisciplinary Digital Publishing Institute |
publishDate |
2022 |
url |
https://doi.org/10.3390/su142113806 |
op_coverage |
agris |
genre |
Iceland |
genre_facet |
Iceland |
op_source |
Sustainability; Volume 14; Issue 21; Pages: 13806 |
op_relation |
Resources and Sustainable Utilization https://dx.doi.org/10.3390/su142113806 |
op_rights |
https://creativecommons.org/licenses/by/4.0/ |
op_doi |
https://doi.org/10.3390/su142113806 |
container_title |
Sustainability |
container_volume |
14 |
container_issue |
21 |
container_start_page |
13806 |
_version_ |
1774719155007651840 |