Regulation as determinant of EUA prices

In this paper we analyse the impact of supply and demand factors on EUA Phase II future prices, with a particular emphasis on the European Commission announcements regarding the organisation of Phase II and Phase III of the European Union Emission Trading Scheme. Using two different methodologies we find strong significance of EC announcements in particular regarding the National Allocation Plans and the cap for Phase III. Our results are particularly relevant to the light of the decisions that the EC must take to achieve the 20-20-20 objectives.