The Best (and Worst) of GHG Emission Trading Systems: Comparing the EU ETS with Its Followers

Borghesi, Simone; Montini, Massimiliano

doi:10.3389/fenrg.2016.00027

Cited by 30 publications

(18 citation statements)

References 59 publications

(45 reference statements)

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“…In this respect, a large body of work by Chevallier and co-authors (see Chevallier, 2011 ;Zhu and Chevallier, 2017, for an overview) has investigated extensively drivers and structural changes in carbon prices, the informational efficiency of EU ETS, and cross-market linkages between emissions trading and energy markets (see Alberola et al, 2008 ;Zhu and Chevallier, 2017;Zhu et al, 2015a;2015b) . Complementarily, a large literature in mathematical finance (see e.g., Borovkov et al, 2011 ;Carmona and Hinz, 2011;Chevallier and Sévi, 2014 ;Howison and Schwarz, 2012) has proposed formal models of the dynamics of carbon prices as stochastic processes and derived therefrom pricing methodologies for carbon derivatives.…”

Section: Related Literaturementioning

confidence: 99%

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Price and network dynamics in the European carbon market

Karpf

Mandel

Battiston³

2018

Journal of Economic Behavior & Organization

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This paper presents an analysis of the European Emission Trading System as a transaction network. It is shown that, given the lack of well-identified trading institutions, industrial actors had to resort to local connections and financial intermediaries to participate in the market. This gave rise to a hierarchical structure in the transaction network. It is then shown that the asymmetries in the network induced market inefficiencies (e.g., increased bid-ask spread) and informational asymmetries, that have been exploited by central agents at the expense of less central ones. Albeit the efficiency of the market has improved from the beginning of Phase II, the asymmetry persists, imposing unnecessary additional costs on agents and reducing the effectiveness of the market as a mitigation instrument.

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Section: Related Literaturementioning

confidence: 99%

“…Therefore a set of empirical relationships between the structure of the trade network and the outcome/efficiency of the market is established. More specifically with regard to the latter, we track Borghesi and Montini, 2016 ;EEA, 2015) . the evolution of prices and bid-ask spreads.…”

Section: Introductionmentioning

confidence: 99%

Price and network dynamics in the European carbon market

Karpf

Mandel

Battiston³

2018

Journal of Economic Behavior & Organization

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“…With the completion of relevant agreements and the construction of ETS systems in the major economies of the world, the trading volume in 2020 is expected to approach 3.5 trillion. Following the "Kyoto Protocol" and the "United Nations Framework Convention on Climate Change," the European Union fully launched its ETS in 2005, which was the first ETS in the world and is the international ETS with the most successful operations and widest coverage [2]. New Zealand, South Korea, and other countries have launched mandatory nationwide domestic ETSs.…”

Section: Introductionmentioning

confidence: 99%

Sustainable Feasibility of Carbon Trading Policy on Heterogenetic Economic and Industrial Development

Zhang

et al. 2019

Sustainability

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A carbon emission trading system (ETS) is an effective market mechanism for promoting the reduction of global greenhouse gas emissions and achieving sustainable development between the economy and the environment. To analyze the emissions reduction effect and economic effect of China’s ETS and further discuss the mechanisms of economic development differences and industrial development differences on the final effect of the policy, this study adopts the propensity score matching-difference in differences method and triple difference method. The empirical results show the following: (1) The ETS can simultaneously achieve both the emissions reduction effect and economic effect when key control variables are included. (2) The population, carbon emissions intensity and per capita GDP have significant positive impacts on carbon emissions; the environmental pollution control intensity, research structure, and research intensity have negative impacts on carbon emissions; and the capita stock, employment, and energy consumption have significant positive economic effects. (3) The ETS has a stronger inhibitory effect on the provinces with higher levels of economic and service development compared to the provinces with lower levels of economic and service development. In contrast, the policy has a weaker inhibitory effect on provinces with higher levels of industrial and construction development compared with the lower level provinces.

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“…It covers more than 11,000 installations in 31 countries (all 28 EU members states plus Norway, Iceland, and Liechtenstein) and regulates nearly 45% of total EU GHGs, accounting for three quarters of international carbon trading [29]. Following the EU ETS, several other countries have adopted or are about to adopt similar instruments around the world (see [30] and [31] for an international comparison across existing ETSs).…”

Section: Introductionmentioning

confidence: 99%

Revising Emission Responsibilities through Consumption-Based Accounting: A European and Post-Brexit Perspective

2019

Self Cite

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International trade shifts production of a large amount of carbon dioxide (CO 2 ) emissions embodied in traded goods from the importing country to the exporting country. The European Union (EU) plays a prominent role in the flow of international-related emissions as it accounts for the second largest share of global exports and imports of goods. Consumption-based accountings (CBA) emerged as alternative to the traditional emission inventories based on the Intergovernmental Panel on Climate Change (IPCC) guidelines. According to the IPCC criteria, countries where products are consumed take no responsibility for the emissions produced by exporter countries, thus neglecting the emissions embodied in trade. By taking this aspect into account, CBA are considered of great importance in revealing emissions attributed to the final consumer. Using a CBA approach, this paper evaluates the impact of international trade in the EU in terms of CO2 emissions, looking both at the internal trade flows within the EU-28 and at the external trade flows between the EU and the rest of the world during the period 2012-2015. We find that the EU is a net importer of emissions as its emissions due to consumption exceed those due to production. In particular, in 2015 the ratio between importand export-embodied emissions was more than 3:1 for the EU-28 that imported 1317 Mt CO 2 from the rest of the world (mainly from China and Russia) while exporting only 424 Mt CO 2 . Concerning emissions flows among EU countries, Germany represents the largest importer, followed by the UK. To get a deeper understanding on possible environmental implications of Brexit on UK emission responsibilities, the paper also advances a few hypotheses on how trade flows could change based on the existing trade patterns of the UK. Data analysis shows that a 10% shift of UK imports from EU partners to its main non-EU trading partners (India, China, and US) would increase its emission responsibility by 5%. The increase in UK emission responsibility would more than double (+11%) in case of a 30% shift of UK imports. Similar results would apply if UK replaced its current EU partners with its main Commonwealth trading partners as a result of Brexit.

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The Best (and Worst) of GHG Emission Trading Systems: Comparing the EU ETS with Its Followers

Cited by 30 publications

References 59 publications

Price and network dynamics in the European carbon market

Price and network dynamics in the European carbon market

Sustainable Feasibility of Carbon Trading Policy on Heterogenetic Economic and Industrial Development

Revising Emission Responsibilities through Consumption-Based Accounting: A European and Post-Brexit Perspective

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