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Economic activity affects carbon dioxide emissions in the EU Emissions Trading

Several European research institutions had to adjust their forecast of economic growth in 2015 upwards, since the economic recovery in the euro area especially in Germany was unexpectedly strong. With these adjustments, the institutions took account for the high rates of growth in the second half of 2010 particularly in the manufacturing industry. Little consideration is thereby given to the fact, that higher levels of production generally imply increasing energy consumption and a increasing CO2-consumption. The amount of emission rights for the producing participants of the Emission trading system however is clearly defined by the allocation-decision of the national Institutions and in particular independent of economic development. The higher level of production activity results in a decrease of disposable CO2-emission permits and is thus equivalent to an increase in the CO2-deficit respectively.

The EEFA Research Institute has taken these coherences as a motive to develop a forecasting-system that predicts the CO2-Emissions of the facilities and activities of the Emission Trading System for periods less than a year up to four quarters ahead. In this context, all sectoral and regional developments result in one Index, the European Carbon Market Index (euroCAMAX®). The euroCAMAX® provides additional monthly information of past, current and -under specific assumptions- future monthly consumption of carbon dioxide within one trading phase. The provided information supports Investors or Traders who trade Emission permits, further information can be found here.