Exploring the potential of the carbon credit program for hedging energy prices in Brazil.

The transition to a low-carbon economy is imperative to reduce reliance on fossil fuels and mitigate pollution emissions. This preposition also aligns with the United Nations Sustainable Development Goals (SDGs-13), which highlight the climate change action. In this vein, Brazil has implemented the Decarbonization Credit (CBIOS) program to incentivize biofuel production and promote environmental sustainability through carbon credit emissions. To this end, the present study evaluates the effectiveness of the CBIO contract as a hedging tool for investors in the face of energy price fluctuations and decarbonization efforts. Specifically, we employ conditional dynamic correlation (DCC-GARCH) and optimal hedge ratio (HR) techniques to assess the relationship between CBIO and the futures and spot prices of sugar, oil, and ethanol. Our findings suggest that the current CBIO contract is not an effective hedge against energy spot and future prices. However, our analysis identifies a strengthening correlation between ethanol traded in Chicago and CBIO over time, highlighting the potential for an underlying contract to serve as an effective hedging tool in the future. Our study adds to the existing literature on carbon pricing mechanisms and their impact on financial markets, emphasizing the importance of sustainable energy policies and their potential to mitigate the risks associated with energy price volatility and decarbonization efforts.

Are Mobility and COVID-19 Related? A Dynamic Analysis for Portuguese Districts.

In this research work, we propose to assess the dynamic correlation between different mobility indices, measured on a daily basis, and the new cases of COVID-19 in the different Portuguese districts. The analysis is based on global correlation measures, which capture linear and non-linear relationships in time series, in a robust and dynamic way, in a period without significant changes of non-pharmacological measures. The results show that mobility in retail and recreation, grocery and pharmacy, and public transport shows a higher correlation with new COVID-19 cases than mobility in parks, workplaces or residences. It should also be noted that this relationship is lower in districts with lower population density, which leads to the need for differentiated confinement policies in order to minimize the impacts of a terrible economic and social crisis.