Carbon Markets and Their Modeling
Abstract
This talk introduces carbon markets as cap-and-trade systems designed to price emissions and coordinate decentralized abatement decisions. It reviews the institutional design of the EU ETS, its empirical effectiveness, and the economic trade-off between price and quantity instruments. The second part surveys key mathematical models of allowance price formation and presents an optimal regulation framework for dynamic allocation. The final part discusses ETS2 for diffuse emissions.
Watch recording ↗About the speaker
Professor of economics at Paris-Dauphine University since 2016 and lecturer at the Ecole Polytechnique (2015-2018), Africa Business School Affiliate (2019-2026). EDF R&D research-engineer in financial economics of energy markets (1998-2003) and manager (2003-2006). Co-founder and Director (2006-2013) of the Finance for Energy Markets Research Initiative, which received the AEF 2014 award of the best enterprise - university research initiative. Deputy-Director of EDF R&D Research department on generation and financial risk management (2014-2016). Plenary speaker at the SIAM Financial Mathematics & Engineering conference (2016) and at the World Congress Bachelier Finance Society (2018). Member of the Scientific Office of the Institut Louis Bachelier. Author of the monography Electricity Derivatives, Springer, 2015. Co-editor of the book Commodities, Energy and Environmental Finance, Fields Institute Communications, Springer, 2015. Holder of a patent on demand response management. Director of the Dauphine Master Program Economics & Finance (2017-2022). Co-Founder and Director of the Dauphine Master Degree Digital Economics (2020-2023). Principal investigator of the ANR project MIRTE from the PEPR Math-VIVES (2024-2028).