What is it about?
Financial options - forwards and futures - can help moderate carbon markets. These provide additional flexibilities in addition to existing designs that use price floors and price ceilings.
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Why is it important?
Carbon markets can use the same types of mechanisms - options - that have been used in other markets to manage risk.
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This page is a summary of: Carbon emission permit price volatility reduction through financial options, Energy Economics, January 2016, Elsevier, DOI: 10.1016/j.eneco.2014.06.001.
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