CO2 Allowance & Electricity Price Interaction

With the introduction of CO₂ emission constraints on power generators in the European Union, climate policy is starting to have notable effects on energy markets. This paper sheds light on the links between CO₂ prices, electricity prices, and electricity costs to industry. It is based on a series of interviews with industrial and electricity stakeholders, as well as a rich literature seeking to estimate the exact effect of CO₂ prices on electricity prices.