Project description

The project «The influence of market structure and regulation on carbon markets» analyzes the impact of different market structures and regulatory approaches on carbon markets. This includes the market structure and regulation of the carbon market itself as well as of product, in particular energy, and financial markets. As electricity generation causes a major part of carbon emissions, the main emphasis for product market regulation is put on the electricity markets as well as its manifold interactions with carbon markets. In a first approach, we identify classify types of regulations that possibly impact carbon markets. Based on the classification scheme, we develop a framework to analyze the functioning of carbon markets and, in particular, the cost and ecological efficiency of carbon markets. The developed framework is applied to five different case studies (European Emission Trading Scheme, California, Mexico, South Korea, and China). Case studies are based on legal document analysis, literature review, and empirical analyses of relevant data (allowances prices, trading volume, energy prices, market concentration, sectoral emissions). Interviews with stakeholders and political actors complement our empirical and document based approach.