Izabela Rybarczyk


Emissions trading is currently a key element of Europe's climate and environmental policy, and the European Emissions Trading System (EU ETS) is the largest greenhouse gas emissions regulation system in the world. This article defines it within the theoretical and historical background, providing the basis for further research into determinants of prices of carbon dioxide emission allowances in the European Union. Critical review of the scientific literature is provided: the neoclassical paradigm of infinite economic growth and a perfectly effective allocation of factors, the efficient market hypothesis, market failure in the context of behavioural finance, state intervention as a method of internalizing the externalities, state failure within the context of state legislation and institutions. Further, the origins of emission trading systems in the world are presented and the functioning of exchange trading in the context of the EU ETS is discussed. Finally, the price evolution of EUA futures emission allowances is introduced.


emission trading system, ecology, macroeconomy, environment

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