Institutional Change and Environment: Lessons from the European Emission Trading System

Abstract

After more than ten years of operation of EU-ETS trading, it is time to analyse the results and draw lessons from the experience. Economic research typically considers emission price as the main explanatory variables when measuring the effects of Emission Trading Systems. The novelty of this work is to analyse whether or not trade alone, as an institutional change, is effective in reducing greenhouse gases emissions. The objective of this paper is to analyse to what extent the EU-ETS as a "regulatory" instrument of the supply of allowances is responsible for the effectiveness of the carbon market as a basic tool in the reduction of emissions. The analysis also includes other overlapping policies aimed at fighting climate change, for example, the promotion of renewables. For the empirical analysis, an econometric model is estimated using panel data for the 28 European Union countries between 1990 and 2014. The econometric model include three dummy variables to measure the effectiveness of the three phases of the EU-ETS commerce in reducing emissions. Furthermore, we analyse how effective the phases are when renewables energies are included in the analysis. The results show that the EU-ETS is effective to reduce emissions and each phase has a greater impact on the reduction. Nevertheless, the system should be more flexible to adapt to the fluctuations in the demand for rights.

Systematic review and meta-analysis of ex-post evaluations on the effectiveness of carbon pricing

“…Increases in the carbon prices led to additional emissions reductions in Sweden 68 and the United Kingdom 69 . Similar effects are found for the EU ETS, where the effectiveness increases with the increasing stringency from phases I, II, and III [70][71][72][73] .…”

Effectiveness of carbon pricing – A systematic review and meta-analysis of the ex-post literature

“…Increases in the carbon prices led to additional emission reductions in Sweden [43] and the United Kingdom [44]. Similar effects are found for the EU ETS, where the effectiveness increases with the increasing stringency from phases I, II, and III [45,46,47,48]. In the heterogeneity assessment conducted for this review we find that studies conducted for longer time periods after the introduction of the carbon price report larger emission reduction effects compared to assessments for shorter time periods.…”

Can the development of digital construction reduce enterprise carbon emission intensity? New evidence from Chinese construction enterprises

“…On the other hand, construction companies are bound to adopt more digital construction technologies, increase R&D investment, improve R&D and innovation capacity, and generate new and more productive energy efficient technologies through the innovation process (Petrovićand Lobanov, 2020), in order to improve efficiency and reduce costs in the planning, design, construction and building operation phases. An increase in R&D investment reduces CO 2 emissions through direct and indirect effects (rebound effects, spillover effects) (Fernańdez Fernańdez et al, 2018). As a result of the above analysis, there is a mechanism of "digital construction development → enterprise R&D innovation capability improvement → carbon emission intensity reduction", and hypothesis H2 is verified.…”