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Cooperation between WegCenter and Institute of Banking and Finance.

Workshop Institutional Framework for the Carbon Market: Can Financial Markets and Institutions be a Model? University of Graz Nov 25, 2010. Cooperation between WegCenter and Institute of Banking and Finance.

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Cooperation between WegCenter and Institute of Banking and Finance.

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  1. InFra_CO2 WorkshopInstitutional Framework for the Carbon Market:Can Financial Markets and Institutions be a Model?University of GrazNov 25, 2010

  2. Cooperation between WegCenter and Institute of Banking and Finance. • Background: Increasing number of Emission Trading Systems (Cap-and-Trade). EU ETS serving as an outrider. • Sparse literature on best-practice concerning institutional design of carbon markets (e.g. market access, price-management, market oversight, …). • What lessons can be learned from other markets?

  3. Central project questions include: • Can carbon markets such as the EU-ETS achieve more than least cost abatement? • Does the carbon price influence companies‘ investment decisions? • What are the alternative institutional designs for carbon markets? • What can carbon markets learn from financial and commodity markets? • What is and what should be the role of the financial sector in the carbon market?

  4. Canadian ETS Max 550 Mt CO2eq Start: ? Japanese ETS Max 1.300 Mt CO2eq Start: ? US ETS Max 6.000 Mt CO2eq Start: ? EU ETS 2.000 Mt CO2 Start: 2005 South Korean ETS Max 560 Mt CO2eq Start: 2013 ? NZ ETS 98 Mt CO2eq Start: 2008 South African ETS Max 450 Mt CO2eq Start: ? Australian ETS Max 360 Mt CO2eq Start: 2010 Existing and Emerging ETS

  5. Can carbon markets such as the EU-ETS achieve more than least cost abatement? EC Communication, May 2010, „Analysis of options to move beyond 20% greenhouse gas emission reductions and assessing the risk of carbon leakage“ „A tighter ETS cap would have the effect of strengthening the incentive effect of the carbon market“

  6. Does the carbon price influence companies investment decisions? ...and under which conditions? …..in which sectors? Ist there any evidence so far in the EU-ETS?

  7. What is and what should be the role of the financial sector in the carbon market? By far the biggest share of the total volume in the European carbon market is seen in derivative trades (forwards, futures and options) Derivatives risk transfer and price discovery as number of market participants is increased

  8. What can carbon markets learn from financial and commodity markets? What is the difference between the Carbon market and other commodity markets? Can lessons from failures of financial market regulation help to design future carbon market regulations?

  9. What are the alternative institutional designs for carbon markets? Do we need a price management and in which form? Is a higher degree market oversight needed? In the US discussion on position limits or restrictions on who can participate Do we need a new regulator? The US cap- and trade proposal provide for the establishment of a carbon bank or a carbon market efficiency board

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