European carbon market advances in efficiency and integration with commodities, study reveals
The efficiency of the European carbon market (EU ETS) is increasing, indicating greater maturity and integration with the global financial system. This is the main conclusion of a study published in the journal Applied Economics , written by FGV EAESP researcher Natalia Diniz-Maganini , co-authored by Ajith Venugopal and Abdul Rasheed.
The research analyzed daily data from the S&P GSCI Carbon Emission Allowances (US) EUR and S&P GSCI Commodity Indices between 2010 and 2024. The results show that carbon prices are now more accurately reflecting relevant market information, which favors rational decisions by companies regarding investments in low-carbon technologies.
Another important finding was the strengthening of the correlation between carbon prices and commodities such as oil and agricultural products, especially since 2016. This highlights a growing integration between the carbon market and other energy and financial markets.
The study also highlights the hybrid nature of the system, which combines market mechanisms with state regulation. Although progress is evident, the authors point out the need for advances in transparency, monitoring and standardization to increase the effectiveness of these instruments in the fight against climate change.
