IDEAS home Printed from https://ideas.repec.org/a/taf/tcpoxx/v5y2005i1p1-9.html
   My bibliography  Save this article

EU emissions trading: navigating between Scylla and Charybdis

Author

Listed:
  • Axel Michaelowa
  • Sonja Butzengeiger

Abstract

With the introduction of the EU emissions trading system on 1 January 2005, the EU became the world leader in the implementation of a market mechanism in environmental policy. Through the project-based Kyoto mechanisms, the EU trading scheme is linked to the world greenhouse gas market; however, the robustness of that link remains to be tested. Due to effective lobbying of large emitters, allocation is cost-free-either based on historical emissions (traditional 'grandfathering') or against projected emissions (which one might call 'baseline-and-cap trading')-and in most Member States the trading sectors have received a generous allocation. This may lead to a market with low liquidity and low prices. Nevertheless, the EU Commission has managed to reduce some of the more blatant cases of over-allocation. While the ongoing legal cases may lead to a temporary weakening of demand for allowances, a decision to expand the trading scheme to other sectors and gases, a larger role of auctioning as well as a more stringent post-2008 allocation plans process scheduled for 2006 may correct many of the first period's misconstructions.

Suggested Citation

  • Axel Michaelowa & Sonja Butzengeiger, 2005. "EU emissions trading: navigating between Scylla and Charybdis," Climate Policy, Taylor & Francis Journals, vol. 5(1), pages 1-9, January.
    • Handle: RePEc:taf:tcpoxx:v:5:y:2005:i:1:p:1-9
    DOI: 10.1080/14693062.2005.9685536
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/14693062.2005.9685536
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/14693062.2005.9685536?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kruger, Joseph & Pizer, William A., 2004. "The EU Emissions Trading Directive: Opportunities and Potential Pitfalls," Discussion Papers 10679, Resources for the Future.
    2. Gernot Klepper & Sonja Peterson, 2004. "The EU Emissions Trading Scheme. Allowance Prices, Trade Flows, Competitiveness Effects," Working Papers 2004.49, Fondazione Eni Enrico Mattei.
    3. Markussen, Peter & Svendsen, Gert Tinggaard & Vesterdal, Morten, 2002. "The political economy of a tradable GHG permit market in the European Union," Working Papers 02-3, University of Aarhus, Aarhus School of Business, Department of Economics.
    4. Bode, Sven, 2004. "Multi-Period Emissions Trading in the Electricity Sector - Winners and Losers," Discussion Paper Series 26314, Hamburg Institute of International Economics.
    5. Bode, Sven, 2004. "Multi-Period Emissions Trading in the Electricity Sector: Winners and Losers," HWWA Discussion Papers 268, Hamburg Institute of International Economics (HWWA).
    6. Klepper, Gernot & Peterson, Sonja, 2004. "The EU emissions trading scheme allowance prices, trade flows and competitiveness effects," Open Access Publications from Kiel Institute for the World Economy 3270, Kiel Institute for the World Economy (IfW Kiel).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Raimund Bleischwitz & Katrin Fuhrmann & Elias Huchler, 2007. "The Sustainability Impact of the EU Emissions Trading System on the European Industry," Bruges European Economic Policy Briefings 17, European Economic Studies Department, College of Europe.
    2. Rodriguez Lopez, Juan Miguel & Sakhel, Alice & Busch, Timo, 2017. "Corporate investments and environmental regulation: The role of regulatory uncertainty, regulation-induced uncertainty, and investment history," European Management Journal, Elsevier, vol. 35(1), pages 91-101.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Streimikiene, Dalia & Roos, Inge, 2009. "GHG emission trading implications on energy sector in Baltic States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(4), pages 854-862, May.
    2. Liu, Yu & Tan, Xiu-Jie & Yu, Yang & Qi, Shao-Zhou, 2017. "Assessment of impacts of Hubei Pilot emission trading schemes in China – A CGE-analysis using TermCO2 model," Applied Energy, Elsevier, vol. 189(C), pages 762-769.
    3. Anger, Niels & Oberndorfer, Ulrich, 2008. "Firm performance and employment in the EU emissions trading scheme: An empirical assessment for Germany," Energy Policy, Elsevier, vol. 36(1), pages 12-22, January.
    4. Anke, Carl-Philipp & Hobbie, Hannes & Schreiber, Steffi & Möst, Dominik, 2020. "Coal phase-outs and carbon prices: Interactions between EU emission trading and national carbon mitigation policies," Energy Policy, Elsevier, vol. 144(C).
    5. Vincenzo Formisano & Bernardino Quattrociocchi & Maria Fedele & Mario Calabrese, 2018. "From Viability to Sustainability: The Contribution of the Viable Systems Approach (VSA)," Sustainability, MDPI, vol. 10(3), pages 1-17, March.
    6. Lutz, Benjamin Johannes & Pigorsch, Uta & Rotfuß, Waldemar, 2013. "Nonlinearity in cap-and-trade systems: The EUA price and its fundamentals," Energy Economics, Elsevier, vol. 40(C), pages 222-232.
    7. Brandt, Urs Steiner & Svendsen, Gert Tinggaard, 2006. "Climate change negotiations and first-mover advantages: the case of the wind turbine industry," Energy Policy, Elsevier, vol. 34(10), pages 1175-1184, July.
    8. Gernot Klepper & Sonja Peterson, 2006. "Emissions Trading, CDM, JI, and More: The Climate Strategy of the EU," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-26.
    9. Song, Yazhi & Liu, Tiansen & Liang, Dapeng & Li, Yin & Song, Xiaoqiu, 2019. "A Fuzzy Stochastic Model for Carbon Price Prediction Under the Effect of Demand-related Policy in China's Carbon Market," Ecological Economics, Elsevier, vol. 157(C), pages 253-265.
    10. Thomas Eichner & Rüdiger Pethig, 2007. "Efficient CO2 Emissions Control with National Emissions Taxes and International Emissions Trading," CESifo Working Paper Series 1967, CESifo.
    11. Manuel Frondel & Jörg Peters, 2005. "Biodiesel: A New Oildorado?," RWI Discussion Papers 0036, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
    12. Christoph Böhringer & Ulf Moslener & Bodo Sturm, 2007. "Hot air for sale: a quantitative assessment of Russia’s near-term climate policy options," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(4), pages 545-572, December.
    13. Damien Demailly & Philippe Quirion, 2006. "CO 2 abatement, competitiveness and leakage in the European cement industry under the EU ETS: grandfathering versus output-based allocation," Climate Policy, Taylor & Francis Journals, vol. 6(1), pages 93-113, January.
    14. Rammerstorfer, Margarethe & Eisl, Roland, 2011. "Carbon capture and storage—Investment strategies for the future?," Energy Policy, Elsevier, vol. 39(11), pages 7103-7111.
    15. Meleo, Linda, 2014. "On the determinants of industrial competitiveness: The European Union emission trading scheme and the Italian paper industry," Energy Policy, Elsevier, vol. 74(C), pages 535-546.
    16. Stoschek, Barbara, 2007. "The political economy of environmental regulations and industry compensation," University of Göttingen Working Papers in Economics 65, University of Goettingen, Department of Economics.
    17. Frondel, Manuel & Peters, Jörg, 2006. "Biodiesel: Eine nachhaltige Alternative? Endbericht - Januar 2006," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 70899.
    18. Omri, Anis & Kahouli, Bassem, 2014. "Causal relationships between energy consumption, foreign direct investment and economic growth: Fresh evidence from dynamic simultaneous-equations models," Energy Policy, Elsevier, vol. 67(C), pages 913-922.
    19. Kim, Hyun Seok & Koo, Won W., 2010. "Factors affecting the carbon allowance market in the US," Energy Policy, Elsevier, vol. 38(4), pages 1879-1884, April.
    20. Kim Keats Martinez & Karsten Neuhoff, 2005. "Allocation of carbon emission certificates in the power sector: how generators profit from grandfathered rights," Climate Policy, Taylor & Francis Journals, vol. 5(1), pages 61-78, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:tcpoxx:v:5:y:2005:i:1:p:1-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/tcpo20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.