Standards versus Standards: The Effects of Different

Helfand, Gloria E.

doi:10.4324/9781315197296-1

Cited by 38 publications

(33 citation statements)

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“…Newell and Pizer (2008) shows that the ex post emission cap can be indexed to any observable variable that is correlated with the firm's private signals about its abatement cost. The ranking conditions are extended to include the ability of the firms to respond to regulation in the extensive margin, by increasing their outputs (or whatever index the instrument uses) as in Helfand (1991), Fischer and Springborn (2011), and Holland (2012), or by adopting clean technologies as in Caparros et al (2015). Although increased outputs under the intensity instrument can lead to higher economic growth, the associated environmental impacts might be undesirable, especially when the intensity instruments are implemented with grandfathered tradable permits (Kling and Zhao (2000)).…”

Section: Introductionmentioning

confidence: 99%

Aggregate Emission Intensity Targets: Applications to the Paris Agreement

Zhao

2018

SSRN Journal

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We develop the concept of aggregate emission targets, which are goals for national emissions but do not dictate the forms of regulation used to achieve the goals. We compare aggregate emission intensity, quantity, and price targets adopted at the national level but implemented cost effectively at the firm level. We obtain simple ranking conditions that depend on the slope ratio of marginal emission damage and marginal abatement cost curves, and threshold parameters determined by the variance and covariance of GDP and business-as-usual emission. We apply the ranking conditions to the top 12 CO2 emitters with specific GHG targets in the Paris Agreement, and obtain a robust result that intensity targets dominate quantity targets for most of these nations. JEL: Q58

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Section: Introductionmentioning

confidence: 99%

Aggregate Emission Intensity Targets: Applications to the Paris Agreement

Zhao

2018

SSRN Journal

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“…4). Models assuming uniform firms without emissions trading come to a similar conclusion (e. g. Helfand, 1991;Ebert, 1998;Dijkstra, 1999:chpt. 3;Fischer, 2001;Boom and Dijkstra, 2009;Holland et al, 2009).…”

Section: Industry Output Market Structure and Economic Efficiencymentioning

confidence: 80%

“…It took more than two decades before the insight began to dawn that capand-trade and setting a performance standard with the option to trade emissions above and below the standard are instruments that differ not only in cost efficiency but also in their impact on the volume of output. The first step was set by Helfand (1991). In his basic model a ceiling on a firm's total emissions leads to the highest efficiency and to a lower level of output than setting a standard mandating emissions per unit.…”

Section: Two Emissions Trading Conceptsmentioning

confidence: 99%

“…The component lacking in the marginal cost of output is calculated by multiplying the mandated emissions of the additional product with either the marginal cost of abating emissions or with the price of an emission reduction certificate (Boom and Dijkstra, 2009). The non-included abatement cost of marginal output under a performance standard has been interpreted as an implicit output subsidy (Helfand, 1991), which also holds for PSRT (e. g. Fischer, 2001;Dewees, 2001;Boom, 2006:chpt. 4;Boom and Dijkstra, 2009;Holland, 2012).…”

Section: Decisions At Firm Levelmentioning

confidence: 99%

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Emissions Trading Hybrids: The Case of the EU ETS

Woerdman

Nentjes

2019

Review of Law &Amp; Economics

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We argue that the European Union Emissions Trading System (EU ETS) has evolved into a hybrid of two design variants, allowance trading (cap-andtrade) and credit trading (performance standard rate trading), with an added feature of industry support to minimize carbon leakage. In particular the current rules tying free allowances to production capacity expansion, plant closure and capacity use have transformed the efficient cap-and-trade program that stood at the origins of the EU ETS into a system that even surpasses credit trading in paying hidden product subsidies to firms. This combination of rules encourages an inefficiently high level of investment in production capacity and an inefficiently high output in industries exposed to international competition. The result is a sub-optimal EU Emissions Trading 'Hybrid' (which we therefore label as 'EU ETH').European Parliament and the Council of the European Union have since adopted an amending Emissions Trading Directive introducing some new rules to apply in the current and third period 2013-2020 (Directive 2009/29/EC). Early 2018 the European Council approved another reform of the EU Emissions Trading System (EU ETS) for the next and fourth period 2021-2030 (Directive (EU) 2018/410). In this paper we aim to examine which rules have changed between the first and the third period and how efficiently the reduction of CO 2 emissions is currently being achieved under the EU ETS. Our economic analysis thus focuses on legal amendments made to the EU ETS so far (2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018)(2019)(2020), leaving an analysis of the next period's rules (2021-2030) for future research.We start with a survey of the economic-analytical literature on emissions trading and use that knowledge to assess the efficiency of the original EU Emissions Trading Directive of 2003 and its deterioration due to the changes after 2013. We will explain why the additional rules applying to capacity expansion and plant closure lead to sub-optimal outcomes. A next set of new rules added an extra criterion for the allocation of free allowances by tying their number to the level of operations relative to capacity. Although this was possibly meant as a reparation, we will argue that this has in fact done further damage to the efficiency of the scheme. The various rather complex criteria for the allocation of free allowances did already receive attention by a number of scholars, such as Ahman and Holmgren (2006), Ellerman (2008), Christin et al. (2011), Meunier et al. (2014) and Branger et al. (2015. However, the niche of our paper is that we: (a) perform the analysis based on the conceptual distinction between allowance trading (cap-and-trade) and credit trading (performance standard rate trading); (b) use the current laws and regulations to model firm behaviour under the amended EU ETS; and (c) clarify -in two tables -how the successive revisions of rules in the past have affected corporate decisions and hence the efficiency of EU ETS.In Section...

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“…This describes the case where the regulator uses command and control policy as efficiency standards (e.g. emissions per unit of output) that can only be met by a single and/or specific technology (for pollution standards see for example Helfand, 1991) -as exemplified in recent government policy towards U.K. diesel cars in major cities. In the second case, ex post model, the firm decides for the output and then the regulator sets the level of the new anti-pollution technology.…”

Section: Introductionmentioning

confidence: 99%

Game of Regional Environmental Policy: Europe and US

2018

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We analyse a different timing implementation of environmental regulation and compare the effects on the markets from a policy innovation perspective. The paper addresses the question: Should a regulator try to commit to a policy (ex-ante regulation) or rather adapt its policy to a firm's decisions (ex-post)? The findings are of interest towards improving regulatory effectiveness and economics efficiencies, e.g. for the transatlantic regional relationship between EU and USA. Our findings highlight differences in policy timing between markets may be harmful. The transatlantic regulators should consider the timing of the policy innovation for the achievement of mutual benefits. AbstractWe analyse a different timing implementation of environmental regulation and compare the effects on the markets from a policy innovation perspective. The paper addresses the question: Should a regulator try to commit to a policy (ex-ante regulation) or rather adapt its policy to a firm's decisions (ex-post)? The findings are of interest towards improving regulatory effectiveness and economics efficiencies, e.g. for the transatlantic regional relationship between EU and USA. Our findings highlight differences in policy timing between markets may be harmful. The transatlantic regulators should consider the timing of the policy innovation for the achievement of mutual benefits.

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Standards versus Standards: The Effects of Different

Cited by 38 publications

References 0 publications

Aggregate Emission Intensity Targets: Applications to the Paris Agreement

Aggregate Emission Intensity Targets: Applications to the Paris Agreement

Emissions Trading Hybrids: The Case of the EU ETS

Game of Regional Environmental Policy: Europe and US

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