Beschreibung:
This paper examines the influence of climate policy conditions on energy market efficiency. The study uses high and low European Union Allowance (EUA) prices and a Climate Policy Uncertainty Index (CPU) to represent different policy states. Our results show a significant impact of climate policy conditions on energy market efficiency. Specifically, energy market efficiency is lower during periods of high climate policy uncertainty or high EUA prices than during periods of low climate policy uncertainty or low EUA prices. Moreover, it is even lower than during the global financial crisis. In addition, the effect of climate policy conditions on the crude oil market efficiency is greater than that of the natural gas market. Furthermore, when climate policy uncertainties or EUA price states are high, volatility rises, resulting in poor form efficiency. The report emphasizes the possible negative effects of climate policies on the energy market. As a result, establishing a stable and predictable climate policy framework, as well as maintaining a balance between environmental aims and the functioning of the energy market, is critical