Carbon complexities

The EU ETS adds price complexity to European energy markets and the trend towards pan-European markets means far more complex models will be needed to model carbon risk, writes Bjorn Brochmann

Over the past two decades, European power markets have taken important steps towards a pan-European market. The EU emissions trading scheme (EU ETS), introduced in January 2005, has added a new dimension and established new price correlations between markets.

Further down the road, continued liberalisation within the EU will lead to more uniform and more stable energy pricing. However, this