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The effectiveness of the EU Emissions Trading Scheme

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  • STEFANO CLÒ

Abstract

How effective is the EU Emissions Trading Scheme (EU ETS) in promoting emissions reduction for compliance with the Kyoto Protocol commitment? A theoretical benchmark is determined in order to assess the stringency of the ETS cap and to evaluate whether emissions allowances have been over-allocated. This analysis clarifies how the emissions reduction effort has been divided between ETS and non-ETS sectors, highlighting the extent to which Member States effectively rely on the ETS to comply with their Kyoto commitments. Finally, inefficiencies relating to the over-allocation of allowances are analysed; namely cross-subsidization from non-ETS to ETS sectors, national subsidies to the ETS sectors, and distortion of competition.

Suggested Citation

  • Stefano Clò, 2009. "The effectiveness of the EU Emissions Trading Scheme," Climate Policy, Taylor & Francis Journals, vol. 9(3), pages 227-241, May.
    • Handle: RePEc:taf:tcpoxx:v:9:y:2009:i:3:p:227-241
    DOI: 10.3763/cpol.2008.0518
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    References listed on IDEAS

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    1. Peterson, Sonja, 2006. "Efficient abatement in separated carbon markets: A theoretical and quantitative analysis of the EU emissions trading scheme," Kiel Working Papers 1271, Kiel Institute for the World Economy (IfW Kiel).
    2. Ellerman, A. Denny & Buchner, Barbara K., 2006. "Over-Allocation or Abatement? A Preliminary Analysis of the Eu Ets Based on the 2005 Emissions Data," Climate Change Modelling and Policy Working Papers 12062, Fondazione Eni Enrico Mattei (FEEM).
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    Cited by:

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    2. Huiqin Jiang & Xinxiao Shao & Xiao Zhang & Jianqiang Bao, 2017. "A Study of the Allocation of Carbon Emission Permits among the Provinces of China Based on Fairness and Efficiency," Sustainability, MDPI, vol. 9(11), pages 1-17, November.
    3. Tan, Xiujie & Liu, Yishuang & Dong, Hanmin & Zhang, Zhan, 2022. "The effect of carbon emission trading scheme on energy efficiency: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 506-517.
    4. Jos Sijm, 2012. "Tradable Carbon Allowances: The Experience of the European Union and Lessons Learned," Chapters, in: Chin Hee Hahn & Sang-Hyop Lee & Kyoung-Soo Yoon (ed.), Responding to Climate Change, chapter 3, Edward Elgar Publishing.
    5. Qian Wang & Cuiyun Gao & Shuanping Dai, 2019. "Effect of the Emissions Trading Scheme on CO 2 Abatement in China," Sustainability, MDPI, vol. 11(4), pages 1-13, February.
    6. Xu, Jiuping & Yang, Xin & Tao, Zhimiao, 2015. "A tripartite equilibrium for carbon emission allowance allocation in the power-supply industry," Energy Policy, Elsevier, vol. 82(C), pages 62-80.
    7. Marcin Rabe & Dalia Streimikiene & Yuriy Bilan, 2019. "EU Carbon Emissions Market Development and Its Impact on Penetration of Renewables in the Power Sector," Energies, MDPI, vol. 12(15), pages 1-20, August.

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