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asma Jul 19, 2013 06:44 AM
hi..im student of financial mathematics..
im doing my research on mathematical model for carbon permit price..
i have done research..but i did not found any math model in setting up the carbon price.
can you share what are the factors that affect the carbon permit price?
or may be you can share the mathematical model used in determining the carbon permit price?
Replies (1)
EEA Jul 23, 2013 09:50 AM
Hi Asma,
first, I should highlight that the EEA doesn't regulate carbon permit prices. The EEA collects environmental data from the Member Countries, other EU institutions and international organisations. Based on this information, we produce reports on various environmental topics.

However, we have recently used carbon prices for our 2011 report on externalities (http://www.eea.europa.eu/[…]/industrial-air-pollution-cost-europe). There, the marginal abatement cost was used to evaluate the external costs of CO2 emissions – in the absence of more robust reference in terms of social cost of carbon, but work this matter is currently being done by the IPCC. The approach we used followed the UK approach, which basically provided a set of carbon values used in UK policy appraisal and evaluation (a value of 33.5 EUR/tonne CO2 eq. for 2020). It seems that the British Department of Energy and Climate Change (DECC) has since modified the way in which the carbon values are estimated, so this approach may not be suitable in the future (https://www.gov.uk/carbon-valuation).

In 2012, the European Commission invited Member States to use the following assumptions on carbon prices for the preparation of national projections of greenhouse gas emissions, to be reported to the Commission in 2013 under EU legislation.

EU ETS Carbon price (in €2010/tCO2)
2015: 10 2020: 17 2025: 27 2030: 37

Source: based on continuation of the current market forward price trend (for 2015) and on results of the 2010 PRIMES EU reference scenario 2050 (for 2020-2030), see SEC(2011) 288, Impact Assessment to the Roadmap for moving to a competitive low carbon economy in 2050

You may find it useful to study the references above for your research. We hope that you find this information useful.