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 report 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.