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Influence of renewable energy on carbon prices in the USA.

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2019
Coşkun, Hilal Esi
In this study, the decrease in carbon prices is explained with increasing incentives to renewable energy sources and with economic growth, energy prices and carbon permits. For this purpose, we analyze the carbon market prices in the US for energy markets. Carbon prices are low in the US compared to other countries. The reason behind the low price can be increasing incentives to renewable energy resources in the USA. To explore the reasons and justifications, we employ econometric methods on real life data from USA. In this context, linear regression, VEC model and panel data analysis are performed according to their applicability and use. As a result, a significant and negative relationship is observed between CO2 prices and renewable portfolio standards and carbon allowances in the US CO2 market. Also, there is a significant and positive relationship between CO2 prices and industrial production. Finally, oil and natural gas prices have a negative effect on CO2 price while coal price has a positive effect on CO2 price.