California's carbon market and energy prices: a wavelet analysis

• DOI: 10.1098/rsta.2017.0256
• Publication Date: 2018-07-09T07:35:11Z
• Authors: Luís Aguiar-Conraria; Maria Joana Soares; Rita Sousa
• Keywords: Carbon price

Carbon price is a key variable in management and risk decisions activities related to the burning of fossil fuels. Different major players this market, such as polluters, regulators financial actors, have different time horizons. We use innovative multivariate wavelet analysis tools, including partial coherence gain, study link between carbon prices final energy frequency dimensions California's officially known California cap-and-trade programme. find that gasoline lead an anti-phase relation with prices. This result very stable at lower frequencies (close 1-year period cycles), it also present before mid-2015 20-34 weeks band. Regarding electricity, we about period, rise reflected higher electricity conclude first 5 years compliance programme show emissions trading significant measure for climate change mitigation, visible rising The quantitative analytics supports recent decision extend current market 2030 without need complementary pricing schemes.This article part theme issue 'Redundancy rules: continuous transform comes age'.