Description:
The following work will provide further insights into the influence of European Emission Allowance (EUA) prices on carbon dioxide trends and relevant variables of the economic-financial climate-environmental system considering a large set of time series. Results highlighted how CO2 appears to be more influenced by commodity prices, climate variables, along with past industrial performances. Furthermore, a shock of carbon prices could potentially exert significant turbulence on the carbon dioxide series, fading in intensity as time goes by. Despite some instances, there appears to be a straightforward (negative) effect on the influence of carbon prices on the system. Further analyses identified how the external contribution to the variance appears to be quite limited for the variable of interest and the others. This work sheds light on the influence the EU ETS exerts on a set of multidimensional variables, considering the possible sources of shocks and implementing adjustment mechanisms for EUA prices