IDEAS home Printed from https://ideas.repec.org/a/tpr/glenvp/v17y2017i2p105-124.html
   My bibliography  Save this article

Ratcheting Up Carbon Trade: The Politics of Reforming EU Emissions Trading

Author

Listed:
  • Torbjørg Jevnaker
  • Jørgen Wettestad

Abstract

The EU’s emissions trading system (ETS) covers almost half of its greenhouse gas emissions and has been hailed as the cornerstone and flagship of EU climate policy. In spring 2013, however, the ETS was in severe crisis, with a huge surplus of allowances and a sagging carbon price. Even a formally simple measure to change the timing of auctioning was initially rejected by the European Parliament. Two years later, a much more important, quantity-focused “market thermostat” (the market stability reserve) was adopted, and proposals for a complete ETS overhaul were put on the table. This article examines how it was possible to turn the flagship around so quickly, providing insights into the mechanisms for gradually rendering emissions trading systems more effective. Crucial changes at the EU and national levels are identified, chief among them changes in Germany and in the European Parliament. Furthermore, the quantity-based tightening mechanism discussed could be of relevance for carbon markets outside Europe.

Suggested Citation

  • Torbjørg Jevnaker & Jørgen Wettestad, 2017. "Ratcheting Up Carbon Trade: The Politics of Reforming EU Emissions Trading," Global Environmental Politics, MIT Press, vol. 17(2), pages 105-124, May.
  • Handle: RePEc:tpr:glenvp:v:17:y:2017:i:2:p:105-124
    as

    Download full text from publisher

    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/GLEP_a_00403
    File Function: link to full text
    Download Restriction: Access to PDF is restricted to subscribers.
    ---><---

    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. Richard Schmalensee & Robert N. Stavins, 2017. "Lessons Learned from Three Decades of Experience with Cap and Trade," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 59-79.
    2. Andrew Moravcsik, 1993. "Preferences and Power in the European Community: A Liberal Intergovernmentalist Approach," Journal of Common Market Studies, Wiley Blackwell, vol. 31(4), pages 473-524, December.
    3. A. Denny Ellerman & Claudio Marcantonini & Aleksandar Zaklan, 2016. "The European Union Emissions Trading System: Ten Years and Counting," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(1), pages 89-107.
    4. Christopher J. Bickerton & Dermot Hodson & Uwe Puetter, 2015. "The New Intergovernmentalism: European Integration in the Post-Maastricht Era," Journal of Common Market Studies, Wiley Blackwell, vol. 53(4), pages 703-722, July.
    5. Richard G. Newell & William A. Pizer & Daniel Raimi, 2013. "Carbon Markets 15 Years after Kyoto: Lessons Learned, New Challenges," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 123-146, Winter.
    6. Sebenius, James K., 1983. "Negotiation arithmetic: adding and subtracting issues and parties," International Organization, Cambridge University Press, vol. 37(2), pages 281-316, April.
    7. Jon Birger Skjærseth & Jørgen Wettestad, 2010. "Fixing the EU Emissions Trading System? Understanding the Post-2012 Changes," Global Environmental Politics, MIT Press, vol. 10(4), pages 101-123, November.
    8. Loren Cass, 2005. "Norm Entrapment and Preference Change: The Evolution of the European Union Position on International Emissions Trading," Global Environmental Politics, MIT Press, vol. 5(2), pages 38-60, May.
    9. Jonas Meckling, 2015. "Oppose, Support, or Hedge? Distributional Effects, Regulatory Pressure, and Business Strategy in Environmental Politics," Global Environmental Politics, MIT Press, vol. 15(2), pages 19-37, May.
    10. Jørgen Wettestad, 2014. "Rescuing EU Emissions Trading: Mission Impossible?," Global Environmental Politics, MIT Press, vol. 14(2), pages 64-81, May.
    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. Raymond, Leigh, 2019. "Policy perspective:Building political support for carbon pricing—Lessons from cap-and-trade policies," Energy Policy, Elsevier, vol. 134(C).
    2. Yunting Feng & Yong Geng & Ge Zhao & Mengya Li, 2022. "Carbon Emission Constraint Policy in an OEM and Outsourcing Remanufacturer Supply Chain with Consumer Preferences," IJERPH, MDPI, vol. 19(8), pages 1-16, April.
    3. Stefan Ćetković & Aron Buzogány, 2019. "The Political Economy of EU Climate and Energy Policies in Central and Eastern Europe Revisited: Shifting Coalitions and Prospects for Clean Energy Transitions," Politics and Governance, Cogitatio Press, vol. 7(1), pages 124-138.
    4. Easwaran Narassimhan & Stefan Koester & Kelly Sims Gallagher, 2022. "Carbon Pricing in the US: Examining State-Level Policy Support and Federal Resistance," Politics and Governance, Cogitatio Press, vol. 10(1), pages 275-289.
    5. Ergen, Timur & Schmitz, Luuk, 2023. "The sunshine problem: Climate change and managed decline in the European Union," MPIfG Discussion Paper 23/6, Max Planck Institute for the Study of Societies.
    6. Sato, Misato & Rafaty, Ryan & Calel, Raphael & Grubb, Michael, 2022. "Allocation, allocation, allocation! The political economy of the development of the European Union Emissions Trading System," LSE Research Online Documents on Economics 115431, London School of Economics and Political Science, LSE Library.
    7. Zhong Wang & Mingyu Wu & Shixiang Li & Changji Wang, 2021. "The Effect Evaluation of China’s Energy-Consuming Right Trading Policy: Empirical Analysis Based on PSM-DID," Sustainability, MDPI, vol. 13(21), pages 1-16, October.
    8. Dominique Desbois, 2020. "Economics of Agricultural Carbon Sequestration in Soils," Agricultural Research & Technology: Open Access Journal, Juniper Publishers Inc., vol. 24(3), pages 127-128, June.
    9. Claire Dupont & Brendan Moore, 2019. "Brexit and the EU in Global Climate Governance," Politics and Governance, Cogitatio Press, vol. 7(3), pages 51-61.
    10. Jim Ormond, 2020. "Geoengineering super low carbon cows: food and the corporate carbon economy in a low carbon world," Climatic Change, Springer, vol. 163(1), pages 135-153, November.
    11. Brendan Moore & Andrew Jordan, 2020. "Disaggregating the dependent variable in policy feedback research: an analysis of the EU Emissions Trading System," Policy Sciences, Springer;Society of Policy Sciences, vol. 53(2), pages 291-307, June.
    12. Heather W. Cann, 2021. "Policy or scientific messaging? Strategic framing in a case of subnational climate change conflict," Review of Policy Research, Policy Studies Organization, vol. 38(5), pages 570-595, September.
    13. Xiqiang Xia & Mengya Li & Biao Li & Hao Wang, 2021. "The Impact of Carbon Trade on Outsourcing Remanufacturing," IJERPH, MDPI, vol. 18(20), pages 1-18, October.
    14. Jochen Markard & Daniel Rosenbloom, 2020. "Politics of low-carbon transitions: The European Emissions Trading System as a Trojan Horse for climate policy?," Working Papers on Innovation Studies 20200116, Centre for Technology, Innovation and Culture, University of Oslo.
    15. Alexander Krenek & Mark Sommer & Margit Schratzenstaller-Altzinger, 2019. "Sustainability-oriented Future EU Funding. A European Border Carbon Adjustment," WIFO Working Papers 587, WIFO.

    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. Sato, Misato & Rafaty, Ryan & Calel, Raphael & Grubb, Michael, 2022. "Allocation, allocation, allocation! The political economy of the development of the European Union Emissions Trading System," LSE Research Online Documents on Economics 115431, London School of Economics and Political Science, LSE Library.
    2. Jon Birger Skjærseth, 2017. "The European Commission’s Shifting Climate Leadership," Global Environmental Politics, MIT Press, vol. 17(2), pages 84-104, May.
    3. Raymond, Leigh, 2019. "Policy perspective:Building political support for carbon pricing—Lessons from cap-and-trade policies," Energy Policy, Elsevier, vol. 134(C).
    4. Ritter, Hendrik & Zimmermann, Karl, 2019. "Cap-and-Trade Policy vs. Carbon Taxation: Of Leakage and Linkage," EconStor Preprints 197796, ZBW - Leibniz Information Centre for Economics.
    5. Eric Tremolada & Carlos Tassara & Olivier Costa, 2019. "Colombia y la Unión Europea. Una asociación cada vez más estrecha," Books, Universidad Externado de Colombia, Facultad de Derecho, number 1101, October.
    6. Baudry, Marc & Faure, Anouk & Quemin, Simon, 2021. "Emissions trading with transaction costs," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    7. Ruf, Julia Anna, 2017. "A policy analysis of the EU Emissions Trading System and its crisis," IPE Working Papers 82/2017, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    8. Mehling, Michael A. & Metcalf, Gilbert E. & Stavins, Robert N., 2017. "Linking Heterogeneous Climate Policies (Consistent with the Paris Agreement)," MITP: Mitigation, Innovation and Transformation Pathways 266282, Fondazione Eni Enrico Mattei (FEEM).
    9. Nikula Harri, 2020. "Instrument choice in the case of multiple externalities," Working Papers 2028, Tampere University, Faculty of Management and Business, Economics.
    10. Joltreau, Eugénie & Sommerfeld, Katrin, 2016. "Why does emissions trading under the EU ETS not affect firms' competitiveness? Empirical findings from the literature," ZEW Discussion Papers 16-062, ZEW - Leibniz Centre for European Economic Research.
    11. Mattia Guidi & Igor Guardiancich, 2018. "Intergovernmental or supranational integration? A quantitative analysis of pension recommendations in the European Semester," European Union Politics, , vol. 19(4), pages 684-706, December.
    12. Ohlendorf, Nils & Flachsland, Christian & Nemet, Gregory F. & Steckel, Jan Christoph, 2022. "Carbon price floors and low-carbon investment: A survey of German firms," Energy Policy, Elsevier, vol. 169(C).
    13. Nikula Harri, 2020. "Voluntary opt-in provision and instrument choice in environmental regulation," Working Papers 2027, Tampere University, Faculty of Management and Business, Economics.
    14. Olli-Pekka Kuusela & Jussi Lintunen, 2020. "A Cap-and-Trade Commitment Policy with Allowance Banking," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(3), pages 421-455, March.
    15. Benczes, István, 2018. "Az euróövezet válságrendezése a liberális kormányköziség elméletének értelmezésében [Crisis management in the Euro Zone from the perspective of liberal inter-governmentalism]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 923-948.
    16. Dermot Hodson, 2019. "The New Intergovernmentalism and the Euro Crisis: A Painful Case?," LEQS – LSE 'Europe in Question' Discussion Paper Series 145, European Institute, LSE.
    17. Yemane Wolde-Rufael & Eyob Mulat-weldemeskel, 2023. "Effectiveness of environmental taxes and environmental stringent policies on CO2 emissions: the European experience," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(6), pages 5211-5239, June.
    18. Shobande, Olatunji A. & Ogbeifun, Lawrence & Tiwari, Aviral Kumar, 2024. "Extricating the impacts of emissions trading system and energy transition on carbon intensity," Applied Energy, Elsevier, vol. 357(C).
    19. Daniel Fiott, 2017. "Patriotism, Preferences and Serendipity: Understanding the Adoption of the Defence Transfers Directive," Journal of Common Market Studies, Wiley Blackwell, vol. 55(5), pages 1045-1061, September.
    20. Jon Birger Skjærseth, 2021. "Towards a European Green Deal: The evolution of EU climate and energy policy mixes," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 21(1), pages 25-41, March.

    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:tpr:glenvp:v:17:y:2017:i:2:p:105-124. 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: Kelly McDougall (email available below). General contact details of provider: https://direct.mit.edu/journals .

    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.