1. See The World Bank. (2008) State and Trends of the Carbon Market 2008. Washington DC: The World Bank, The EU ETS is described in Section ‘The European Union Emissions Trading Scheme (EU ETS)’.
2. According to the World Bank, less than 2 per cent of EU ETS trading occurred on the spot market, and between 2 and 3 per cent of trading involved options in 2007.
3. A European Union Allowance (EUA) gives the holder the right to emit 1 tonne of carbon dioxide. Each futures contract represents 1000 EUAs. ECX CFI contract specifications are provided in the Appendix.
4. Studies of carbon pricing include Mansanet-Bataller et al,5 Sijm et al,6 Alberola et al,7 Convery and Redmond,8 Daskalakis et al,9 and Daskalakis and Markellos.10 Studies of information asymmetry and uncertainty in the European carbon market include Mansanet-Bataller and Pardo11 and Chevallier et al. 12 Studies of carbon market efficiency and price discovery include Daskalakis and Markellos10 and Milunovich and Joyeux.13
5. Mansanet-Bataller, M., Pardo, A. and Valor, E. (2007) CO2 prices, energy and weather. The Energy Journal 28 (3): 73–92.