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The EU Emission Trading Scheme. National Allocation Patterns and Trading Flows

Author

Listed:
  • Claudia Kettner-Marx
  • Daniela Kletzan-Slamanig

    (WIFO)

  • Angela Köppl

Abstract

The EU Emission Trading Scheme (EU ETS) covers emitters from industry and the energy sector and 40 percent of the EU's total greenhouse gas emissions. It is the biggest implementation of a cap-and-trade scheme worldwide and the core instrument of European climate policy since its start in 2005. Based on a database comprising more than 10,000 installations in 26 EU countries, this paper provides a thorough analysis of the performance of the EU ETS in the period 2005-2010. In the first part, we analyse allocation patterns – i.e., the stringency of allocation caps and distribution issues – on EU and country level comparing the results of the EU ETS pilot phase and the first three years of the Kyoto phase. In the second part of the paper, we assess trading flows of European Allowance Units (EUAs) between EU countries comparing the results for the first and second trading period and analyse the use of project-based credits in the second trading period. Our analysis shows a higher overall stringency of the 2008 allocation caps compared to the first trading period reflecting the stronger role of the European Commission. For the following years we find, however, a surplus of allowances reflecting the decline in emissions due to the economic crisis. Traded certificates account for only a small share in EU-wide surrendered allowances, but increased in the second trading phase. Our analysis reveals that some countries have been net importers of EUAs despite national surpluses of allowances. This may either be due to differences in allocation patterns within EU countries, EUA transfers between associate companies or due to excess imports because of wrong (emission) growth expectations.

Suggested Citation

  • Claudia Kettner-Marx & Daniela Kletzan-Slamanig & Angela Köppl, 2012. "The EU Emission Trading Scheme. National Allocation Patterns and Trading Flows," WIFO Studies, WIFO, number 44139, January.
    • Handle: RePEc:wfo:wstudy:44139
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    References listed on IDEAS

    as
    1. Alexandre Kossoy & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2010," World Bank Publications - Reports 13401, The World Bank Group.
    2. Ellerman,A. Denny & Buchner,Barbara K. & Carraro,Carlo (ed.), 2007. "Allocation in the European Emissions Trading Scheme," Cambridge Books, Cambridge University Press, number 9780521875684, January.
    3. Raphael Trotignon, 2011. "Combining cap-and-trade with offsets: Lessons from CER use in the EU ETS in 2008 and 2009," Working Papers 1103, Chaire Economie du climat.
    4. Karan Capoor & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2009," World Bank Publications - Reports 13402, The World Bank Group.
    5. Barry Anderson & Corrado Di Maria, 2011. "Abatement and Allocation in the Pilot Phase of the EU ETS," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(1), pages 83-103, January.
    6. Claudia Kettner-Marx & Daniela Kletzan-Slamanig & Angela Köppl, 2011. "The EU Emission Trading Scheme. Allocation Patterns and Trading Flows," WIFO Working Papers 402, WIFO.
    7. Karan Capoor & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2009," World Bank Publications - Reports 13403, The World Bank Group.
    8. Karan Capoor & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2008," World Bank Publications - Reports 13404, The World Bank Group.
    9. Claudia Kettner-Marx & Angela Köppl & Stefan Schleicher, 2010. "The EU Emission Trading Scheme. Insights from the First Trading Years with a Focus on Price Volatility," WIFO Working Papers 368, WIFO.
    10. Karan Capoor & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2008," World Bank Publications - Reports 13405, The World Bank Group.
    11. repec:dau:papers:123456789/10174 is not listed on IDEAS
    12. Claudia Kettner & Angela Köppl & Stefan P. Schleicher & Gregor Thenius, 2008. "Stringency and distribution in the EU Emissions Trading Scheme: first evidence," Climate Policy, Taylor & Francis Journals, vol. 8(1), pages 41-61, January.
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    Cited by:

    1. Zhang, Zhong Xiang, 2012. "Competitiveness and Leakage Concerns and Border Carbon Adjustments," International Review of Environmental and Resource Economics, now publishers, vol. 6(3), pages 225-287, December.

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