C ARBON MARKETS REGULATION : T HE CASE FOR A CO 2 C ENTRAL B ANK Christian de Perthuis Paris-Dauphine University, Climate Economics Chair Paris, September 9 th, 2011
2 La régulation des marchés du carbone : principales questions Les dysfonctionnements observés et la démarche « Market oversight enhancement. Trois questions : – Sécurité des infrastructures – Statut juridique des quotas de CO2 – Articulation avec régulations existantes Lenjeu du traitement de linformation La « banque centrale du carbone » – Objectifs de long terme et cibles intermédiaires : quel partage des rôles avec lautorité publique ? – Régulation des marchés : faut-il des prix cibles ? – Volet institutionnel : lorganisme indépendant organisateur des enchère, embryon de la BCE ?
3 Main failings on the European carbon market
4 The task of a CO 2 central bank compared to a standard central bank Monetary MarketCarbon Market Final objectiveLong-term monetary stabilityShort- and long-term emissions reduction at lowest cost Market oversightIntegrity and liquidity of transactions Price instrumentInterest ratesCarbon prices Quantitative regulation Primary marketSupply of central money (M 0 )Allowances auctioning Secondary market- Open Market (sell and buy monetary assets) - Exchange rate - Sell and buy carbon assets - Links with other markets (offsets, other cap and trades, etc.) Lender of last resortRefinance banks in the event of liquidity crisis Additional allowances supply used as a safety valve Reporting to public authorities (European Council, European Parliament and Commission) - Annual and quarterly reports on the monetary and economic situation - Public hearings in the EU Parliament - Annual report on the carbon price and on the GHC emissions reduction long-term path - Quarterly reports on EU-ETS and carbon price
5 Supply and demand equilibrium
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