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Wide and Narrow Approaches in Climate Change Policies: The Case of Spain

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  • Miguel Rodríguez
  • Xavier Labandeira

Abstract

This paper deals with the effects of emissions trading, a standard economic instrument to control greenhouse gas emissions, in a particular country. After distributing the Kyoto-mandated allocation among member states, the European Commission introduced a rather conventional emissions trading scheme in 2005. The extent of application of the market is limited, with only certain sectors being subject to it (mostly industries), and tradable permits are freely allocated. Both facts have important consequences in efficiency and distributional terms, also raising (normative) concerns on the actual and desirable regulatory approximation. The paper mainly focuses on the (positive) efficiency and distributional effects of the EU emissions trading system, with the use of a static general equilibrium model for the Spanish economy, also incorporating some hypothetical simulations (broader scope of the market, carbon taxation). The results indicate that the narrow scope of the EU emission trading market generates efficiency costs and relevant distributional effects.

Suggested Citation

  • Miguel Rodríguez & Xavier Labandeira, 2007. "Wide and Narrow Approaches in Climate Change Policies: The Case of Spain," Working Papers 2007-39, FEDEA.
    • Handle: RePEc:fda:fdaddt:2007-39
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    Cited by:

    1. Xavier Labandeira & José María Labeaga & Miguel Rodríguez, 2008. "The Costs of Kyoto Adjustments for Spanish Households," Working Papers 2008-02, FEDEA.

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