Free allocation rules in the EU emissions trading system: what does the empirical literature show?

Verde, Stefano F.; Teixidó-Figueras, Jordi; Marcantonini, Claudio; Labandeira, Xavier

doi:10.1080/14693062.2018.1549969

Cited by 35 publications

(16 citation statements)

References 30 publications

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“…This weakening is consistent with diminutions in ambition observed in other cases (Burns et al ., , ). The second case, 2010/778/EU, transferred five million additional free allowances to Denmark, after the state argued successfully that its baseline was disproportionately higher than other ETS states (for discussions of permit allocation, see Caney, ; Verde et al ., ). The third case (2011/278/EU) harmonized the allocation of free allowances across states that are party to the ETS.…”

Section: Discussionmentioning

confidence: 97%

Crisis, Climate Change and Comitology: Policy Dismantling Via the Backdoor?

Burns

Tobin

2020

J of Common Market Studies

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The EU is reputed to be a climate pioneer. However, the EU has been beset by crises, with potentially negative consequences for climate ambitions. The coding and analysis of EU climate legislation between 1998 and 2015 reveal that while the rate of creating climate policy has increased since the onset of the crisis, the ambition of these policies has waned. Technical policy instruments (comitology) at the EU level, namely delegated and implementing acts (DIA), are analysed alongside the legislation adopted under the ordinary legislative procedure (OLP). If they were applied as indicated in the treaties, the technical DIA measures should not influence the EU's policy ambitions, but in fact, during the crisis era, DIA measures were used more frequently than during the pre-crisis era, and used in three out of the four cases that weaken policy, suggesting that a minor dismantling of climate policy is taking place at EU level, but via the back door.

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Section: Discussionmentioning

confidence: 97%

Crisis, Climate Change and Comitology: Policy Dismantling Via the Backdoor?

Burns

Tobin

2020

J of Common Market Studies

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“…As Table 1 shows, only 20% of all the studies reviewed draw on data stretching as far as the first years of Phase III (2013)(2014)(2015)(2016)(2017)(2018)(2019)(2020). This is relevant because major changes were introduced in the third trading period, most notably regarding free allocation rules (Verde et al, 2019). Besides, carbon prices have increased dramatically in the final part of Phase III (a fourfold increase between autumn 2017 and autumn 2018).…”

Section: Sample Coveragementioning

confidence: 99%

The Impact of the Eu Emissions Trading System on Competitiveness and Carbon Leakage: The Econometric Evidence

Verde

2020

Journal of Economic Surveys

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This paper carefully surveys the econometric literature that tests for competitiveness effects and related carbon leakage caused by the EU Emissions Trading System (EU ETS). The results of this literature tell us that to date there is no evidence of the EU ETS having had widespread negative or positive effects on the competitiveness of regulated firms, nor is there evidence of significant carbon leakage. However, the paper also identifies three important caveats to this general conclusion. Firstly, the evidence we have still largely refers to the first two trading periods, namely Phases I (2005–2007) and II (2008–2012). Secondly, some heterogeneity of estimated effects is observed, but patterns, notably sectoral patterns, hardly emerge. Thirdly, very little explored is whether the EU ETS has had long‐term effects on the economy via investment leakage or firm dynamics. Further empirical studies investigating these long‐term effects are particularly desirable.

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“…The cap is now determined at the EU level (rather than being the sum of national caps) and a single set of rules governs allowance allocation. The regime of allowance allocation radically changed too, with auctioning becoming the default allocation method for the electricity sector and benchmarked free allocation applying to the others (Verde et al ., 2018). In 2015, the establishment of the Market Stability Reserve (MSR) was a key addition to the EU ETS, as it introduced flexibility in allowance supply.…”

Section: The Eu's and China's Etss And Their Companion Policiesmentioning

confidence: 99%

The EU ETS and its companion policies: any insight for China's ETS?

et al. 2021

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This paper analyses the role that companion policies have had in the reduction of emissions regulated by the EU Emissions Trading System (EU ETS) and the related policy interactions, with a view to identifying relevant insights for China's forthcoming Emissions Trading System (ETS). The investigation rests on: (a) the observation of the EU's and China's ETSs and policy mixes; (b) economic theory concerning companion policies and ETS design; and (c) empirical ex-post evidence from the EU ETS. Three main conclusions emerge from the analysis. First, China's ETS, while not imposing a fixed cap on emissions, will not be immune to waterbed effects of companion policies. Second, the European experience stresses the importance of making explicit the objectives pursued by companion policies, and of balancing policies for innovation and policies for adoption of low-carbon technologies. Third, in the presence of a major market surplus, only permanent adjustments to allowance supply can be effective in raising prices.

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Free allocation rules in the EU emissions trading system: what does the empirical literature show?

Cited by 35 publications

References 30 publications

Crisis, Climate Change and Comitology: Policy Dismantling Via the Backdoor?

Crisis, Climate Change and Comitology: Policy Dismantling Via the Backdoor?

The Impact of the Eu Emissions Trading System on Competitiveness and Carbon Leakage: The Econometric Evidence

The EU ETS and its companion policies: any insight for China's ETS?

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