On the Efficiency of the European Carbon Market: New Evidence from Phase II
Energy Policy, Vol. 54, pp. 369-375, 2013
14 Pages Posted: 21 Mar 2009 Last revised: 29 Apr 2014
Date Written: July 10, 2011
Abstract
I examine in the period 2008-2011 the efficiency of four carbon dioxide (CO2) emission allowance futures traded in the Intercontinental Exchange (ICE). To this end, I assess the profitability of trading strategies based on simple technical analysis rules and naïve forecasts. The results from 2010 onwards are consistent with weak market efficiency. In turn, this finding suggests that the European carbon market is gradually attaining a state of maturity.
Keywords: Emission Allowances, EU Emissions Trading Scheme, Market Efficiency
JEL Classification: G14, G18, Q20, Q28
Suggested Citation: Suggested Citation
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