Investment risks in power generation: A comparison of fossil fuel and renewable energy dominated markets

We investigate liquidity and market efficiency on the world's largest carbon exchange, IntercontinentalExchange Inc.’s European Climate Exchange (ECX), by using intraday short-horizon return predictability as an inverse indicator of market efficiency. We find a strong relationship between liquidity and market efficiency such that when spreads narrow, return predictability diminishes. This is more pronounced for the highest trading carbon futures and during periods of low liquidity. Since the start of trading in Phase II of the EU Emissions Trading Scheme (EU-ETS) prices have continuously moved nearer to unity with efficient, random walk benchmarks, and this improves from year to year. Overall, our findings suggest that trading quality in the EU-ETS has improved markedly and matures over the 2008–2011 compliance years.

/pdf/liquidity-and-market-efficiency-in-the-world-s-largest-3bpa0n5nq2.pdf

Liquidity and market efficiency in the world's largest carbon market☆

The timeline of trading frictions in the European carbon market

An often cited critique of financial regulation is that it is a patchwork of legislation addressing past crises. This paper provides a forward looking account as to the financial risks that European wholesale energy and environmental markets (EEM) may pose and to what extent current regulatory regimes and legislative developments address these risks. In the first part of the paper we explore the nature of these risks within the context of past academic research on financial crises and financial regulation leading to a theoretical justification for the risk based financial regulation of EEM. The second part of the paper provides a summary of a legislative analysis of the evolving approach to the financial regulation of EEM conducted in a related paper. We discuss some of the likely impacts of these reform initiatives and make suggestions for further research.

The financial regulation of energy and environmental markets

The European Union's framework for FDI screening: Towards an ever more growing competence over energy policy?

Introduction: 1 Financial Aspects in Energy: The European Perspective.- Markets: 2 The Development of Energy Markets in Europe.- 3 Renewables in the Energy Market.- 4 The CO2 -Trading Market in Europe.- Prices: 5 Market Efficiency in a Changing Energy Environment.- 6 The Price Forming Process in Energy Markets.- 7 The Electricity Market, Day Ahead Market and Futures.- Regulations: The Disintegration of the Concept of Sovereignity and the Energy Sector in Europe.- 9 The EU Energy Policy After the Lisbon Treaty.- 10 The Developments of the European Electricity Market in a Juridical no Man's Land.- Firms: Value Creation with Wood-Based Energy Sources.- 12 Tackling With Natural Monopoly in Electricity and Natural Gas Markets

Financial aspects in energy : a European perspective

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Financial aspects in energy : a European perspective