UK Carbon Price Dynamics: Long-Memory Effects and AI-Based Forecasting

Key Points

• Long-memory effects significantly influence carbon price dynamics, affecting market stability and predictions.
• Carbon price forecasting showed a notable decrease in error rates, enhancing prediction precision by up to 30%.
• Utilizing machine learning models, this observational analysis evaluated 10 years of carbon pricing data to uncover patterns.
• Highlights the importance of AI in improving forecasting accuracy, indicating a need for advanced predictive models.