Drawing on financial mathematics theory and the latest academic literature, this thesis develops a quantitative model for the term structure of European Union Allowance (EUA) futures prices within the EU Emissions Trading System (EU ETS). The thesis first examines the theoretical determinants of EUA futures price dynamics and the unique characteristics of this carbon market. Building on this foundation, a term structure model is derived to capture the relationship between futures contracts of different maturities and the underlying market factors driving allowance prices. Finally, the model parameters are estimated using recent data. The objective is to enhance the understanding of the market dynamics and provide insights into the predictability of EUA futures prices.

Introductory literature:
The Term Structure of European Carbon Futures and the Predictive Power of Speculators and Hedgers by Lina Franziska Lautner, Tom L. Dudda, Tony Klein :: SSRN

https://www.ft.com/content/1d4be2a3-e986-40e1-96a4-2ef732ed143a?syn-25a6b1a6=1

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Investigation of accuracy of different RAG approaches for measuring corporate climate disclosure.

Literature: arxiv.org/abs/2505.22752.

Literature:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4276886

The EU Emissions Trading System (EU ETS) is strongly influenced by policy interventions and regulatory developments. Information relevant to market participants arrives both through regular, scheduled announcements and irregular policy events. Scheduled announcements include the publication of verified emissions, emissions forecasts, annual cap adjustments, auction volumes, and other regulatory reports that directly affect expectations regarding the future supply and demand of emission allowances. In addition, irregular events such as proposals for market reforms, revisions of the ETS Directive, changes to the Market Stability Reserve (MSR), political negotiations, and unexpected regulatory announcements can substantially alter market participants' expectations. Because the value of EU Allowances (EUAs) is largely determined by future regulatory constraints and expected scarcity, policy announcements represent a key source of uncertainty in the carbon market. The thesis reviews and compares the statistical models and findings of the existing literature, and applies an adopted model to recent data.

Introductory literature:
Politics matters: Regulatory events as catalysts for price formation under cap-and-trades
Influences from the European Parliament on EU emissions prices
Emission permits and the announcement of realized emissions: Price impact, trading volume, and volatilities

This thesis investigates the heterogeneity of commercial trading in the European Union Emissions Trading System (EU ETS).  Initially, it reviews the economic rationale of hedging in carbon markets and derives expected trading patterns from theory. Using transaction-level data from the European Union Transaction Log (EUTL), these theoretical predictions are then compared with observed trading behavior to assess whether firms trade primarily for compliance and risk management purposes or engage in more active trading strategies.

Introductory literature:
ESMA50-481369926-34622 Market report: EU carbon markets 2026
https://www.isda.org/a/soigE/Role-of-Derivatives-in-Carbon-Markets.pdf

Analysis and implementation of net-zero metrics in net-zero investing. 

Literature: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4283998