A network-based analysis of the European Emission Market

Andreas Karpf (1, 2) , Antoine Mandel (1, 2) , Stefano Battiston (3)

1 CES - Centre d'économie de la Sorbonne
2 PSE - Paris School of Economics
3 Department of Banking and Finance

This paper analyses the European Emission Trading System (ETS) from a network perspective. It is shown that the network exhibits a strong core-periphery structure also reflected in the network formation process. Due to a lack of centralized market places, operators of installations which fall under the EU ETS regulations have to resort to local networks or financial intermediaries if they want to participate in the market. This undermines the central idea of the ETS to exploit marginal abatement costs.

Mots clés: network; emission market; ETS; network topology

Domaines: Economies et finances; Statistiques [math.ST]

Andreas Karpf, Antoine Mandel, Stefano Battiston. A network-based analysis of the European Emission Market. 2015. ⟨halshs-01243694⟩