Carbon Price Drivers: An Updated Literature Review

9 Pages Posted: 17 Apr 2011

See all articles by Julien Chevallier

Julien Chevallier

University of Paris 8 Vincennes-Saint Denis

Date Written: April 1, 2011


Since the creation of the European Union Emissions Trading Scheme (EU ETS) in 2005, a burgeoning academic literature has emerged to identify the factors that shape the price of carbon, where one European Union Allowance is equal to one ton of CO2-equivalent emitted in the atmosphere. Thus, there is a need for an updated and thorough literature review on the state-of-the-art on topic that this paper aims to fulfill. Namely, we consider the main econometric studies that have been recently published in the academic literature, which feature the influence of the following determinants to explain the variation of the price of carbon: institutional decisions; energy prices and weather events; macroeconomic and financial market shocks. The paper concludes with some directions for future research in this area.

Keywords: Carbon Price, Banking Borrowing, Energy Prices, Macroeconomy, Financial Markets, Econometrics

JEL Classification: C01, G01, Q40, Q54

Suggested Citation

Chevallier, Julien, Carbon Price Drivers: An Updated Literature Review (April 1, 2011). Available at SSRN: or

Julien Chevallier (Contact Author)

University of Paris 8 Vincennes-Saint Denis ( email )


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