Restricting the import of ‘emission credits’ in the EU: a power struggle between states and institutions

Flåm, Karoline Hægstad

doi:10.1007/s10784-008-9081-7

Cited by 20 publications

(3 citation statements)

References 15 publications

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“…This is often referred to as "supplementarity principle" (Michaelowa, 2014). The initial no-cap option under the EU Linking Directive was pushed by EU Member states but the EU commission prevailed (Flåm, 2009). The total demand for international carbon credits from the EU ETS was thus estimated at around 1.6 billion tCO 2 e until 2020 (Bellassen, Stephan, & Leguet, 2011).…”

Section: Falling Demand For Carbon Creditsmentioning

confidence: 99%

Evolution of international carbon markets: lessons for the Paris Agreement

Michaelowa

Shishlov

Brescia

2019

WIREs Climate Change

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The Paris Agreement will greatly benefit from the past experience with international market mechanisms for greenhouse gas (GHG) emissions reductions and related regulatory systems, which have gone through four periods with specific challenges. The first period 1997–2004 operationalized the mechanisms defined in the Kyoto Protocol, the Clean Development Mechanism (CDM) and Joint Implementation (JI). Pilot activities in different sectors were undertaken by the public sector, and the first baseline and monitoring methodologies officially approved. Between 2005 and 2011, the carbon markets expanded massively. The EU emission trading scheme (EU ETS) was linked to the Kyoto mechanisms, creating demand for carbon credits from the private sector. During this “gold rush” period criticism emerged with regarding the uneven geographical distribution of projects, as well as environmental integrity problems related to baselines and additionality. The next period saw a collapse in carbon prices between 2012 and 2014, limiting the development of new projects. The quantitative limits on the use of offsets in the EU ETS were reached and the failure to agree on a new international regime resulted in a drying up of demand from governments. The 2015–2018 period is characterized by a gradual stabilization of the international climate regime. The Paris Agreement adopted in 2015 increases complexity through global participation in mitigation. Future carbon markets will therefore face both old challenges—supply–demand balance, environmental integrity, transaction costs—and new ones—interactions with other policies and national targets, and sectoral/policy baselines and additionality checks preventing hot air proliferation. This article is categorized under: The Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior

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Section: Falling Demand For Carbon Creditsmentioning

confidence: 99%

Evolution of international carbon markets: lessons for the Paris Agreement

Michaelowa

Shishlov

Brescia

2019

WIREs Climate Change

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“…One important reason for this broad EP support was that the EU did not have time for further decision-making to get the system in place to comply with the Kyoto Protocol commitments (Skjaerseth and Wettestad, 2008). In the negotiations on the Linking Directive, the EP supported the Commission's proposal for a cap on imported credits, whereas a majority of the member states opposed a cap (Flåm, 2008).…”

Section: Decision-makingmentioning

confidence: 99%

EU emissions trading: Legitimacy and stringency

Skjærseth

2010

Env Pol Gov

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The stringency and potential effectiveness of the EU Emissions Trading System (EU ETS) has increased with the revisions adopted in December 2008. This article explores whether the increase in stringency has been based on a corresponding broadening of the basis for legitimacy. The EU has increasingly departed from the legitimacy basis of state consent by applying qualified majority voting and direct regulation at non-state level to improve the effectiveness of environmental policy. In turn, these developments have increased the need for multi-level legitimacy at various levels of society. The main conclusion is that the recent increase in the stringency and potential effectiveness of the EU ETS has indeed been based on a broader legitimacy basis. However, a broader legitimacy basis does not necessarily ensure widespread acceptance and support in the future. Much will depend on the system's capacity to deliver significant results.

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“…Changing from the current "allocation option" to the "compliance option" decreases the distortive effects from EUA allocation and is thus an improvement. However, changing from the allocation to the compliance option potentially carries a transaction (negotiation) cost if the limits have to be negotiated again (Flåm, 2009). …”

Section: Discussionmentioning

confidence: 99%

Implementing CDM Limits in the EU ETS: A Law and Economics Approach

Vasa

2011

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The EU allows installations, subject to Emissions Trading, to use a limited volume of certified emissions reductions (CERs) generated through the Clean Development Mechanism (CDM) to cover their greenhouse gas emission. For the year 2008, the CER limits, which are differentiated by EU Member State potentially created substantial arbitrage rents, due to the CER-EUA spread in the range of 250 million Euro. This paper discusses different options for the allocation of this rent. The paper finds that according to economic theory making the right to use CERs tradable or the regulator pre-committing to buying CERs at the level of the limit reduces the inefficiencies connected to the current regulation. Auctioning these CER usage rights furthermore shifts the rents created through the CER-EUA spread to the state. The improved design and implementation of CDM limits justifies an intervention of the EU policy maker to correct previously competition distorting choices. Terms of use: Documents in

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Restricting the import of ‘emission credits’ in the EU: a power struggle between states and institutions

Abstract: Cap, Climate policy, CDM, ETS, EU, JI, Kyoto Protocol, Linking, Project mechanisms,

Cited by 20 publications

References 15 publications

Evolution of international carbon markets: lessons for the Paris Agreement

Evolution of international carbon markets: lessons for the Paris Agreement

EU emissions trading: Legitimacy and stringency

Implementing CDM Limits in the EU ETS: A Law and Economics Approach

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