IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-01504611.html
   My bibliography  Save this paper

Governance of CO2 markets: Lessons from the EU ETS

Author

Listed:
  • Christian de Perthuis

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Raphaël Trotignon

    (Chaire économie du climat - Chaire économie du climat)

Abstract

The European emissions trading scheme (EU ETS) is the centerpiece of Europe׳s climate policy. The system has been undermined variously by the weakness of its regulation, an undesirable overlap with other public policies and the far-reaching economic and financial crisis that caused the market price of allowances to plunge. This article attempts to identify the conditions for making the coming years of the EU ETS a success. It draws historical lessons from the eight years the scheme has been in operation, and then presents the various interventions by the public authorities currently under discussion in order to revive the market. Finally, the article proposes to draw lessons from monetary policy by outlining what might be the mandate of an Independent Carbon Market Authority, with responsibility for the dynamic management of the supply of allowances, and whose main mission would be to ensure the optimal linkage between the different temporal horizons of the climate strategy. This article could provide important lessons for schemes developing in the rest of the world, especially in South Korea or in China.

Suggested Citation

  • Christian de Perthuis & Raphaël Trotignon, 2014. "Governance of CO2 markets: Lessons from the EU ETS," Post-Print hal-01504611, HAL.
    • Handle: RePEc:hal:journl:hal-01504611
    DOI: 10.1016/j.enpol.2014.05.033
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:dau:papers:123456789/11687 is not listed on IDEAS
    2. Brian C. Murray & Richard G. Newell & William A. Pizer, 2009. "Balancing Cost and Emissions Certainty: An Allowance Reserve for Cap-and-Trade," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 3(1), pages 84-103, Winter.
    3. Samuel Fankhauser & Cameron Hepburn & Jisung Park, 2010. "Combining Multiple Climate Policy Instruments: How Not To Do It," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 1(03), pages 209-225.
    4. Richard Schmalensee & Robert N. Stavins, 2013. "The SO 2 Allowance Trading System: The Ironic History of a Grand Policy Experiment," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 103-122, Winter.
    5. Trotignon, Raphaël, 2012. "In search of the carbon price: The european CO2 emission trading scheme : from ex ante and ex post analysis to the protection in 2020," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/11212 edited by De Perthuis, Christian.
    6. Tatsutani, Marika & Pizer, William A., 2008. "Managing Costs in a U.S. Greenhouse Gas Trading Program: A Workshop Summary," RFF Working Paper Series dp-08-23, Resources for the Future.
    7. Park, Hojeong & Hong, Won Kyung, 2014. "Korea׳s emission trading scheme and policy design issues to achieve market-efficiency and abatement targets," Energy Policy, Elsevier, vol. 75(C), pages 73-83.
    8. Lawrence H. Goulder, 2013. "Markets for Pollution Allowances: What Are the (New) Lessons?," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 87-102, Winter.
    9. Whitesell,William C., 2012. "Climate Policy Foundations," Cambridge Books, Cambridge University Press, number 9781107614727, September.
    10. Raphael Trotignon, 2012. "Combining cap-and-trade with offsets: lessons from the EU-ETS," Climate Policy, Taylor & Francis Journals, vol. 12(3), pages 273-287, May.
    11. repec:dau:papers:123456789/10174 is not listed on IDEAS
    12. Christian de Perthuis & Raphaël Trotignon, 2013. "The European CO2 allowances market: issues in the transition to Phase III," Chapters, in: Roger Fouquet (ed.), Handbook on Energy and Climate Change, chapter 23, pages 500-520, Edward Elgar Publishing.
    Full references (including those not matched with items on IDEAS)

    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. Raphaël Trotignon & Pierre-André Jouvet & Boris Solier & Simon Quemin & Jérémy Elbeze, 2015. "European carbon market: lessons on the impact of a market stability reserve using the Zephyr model," Working Papers 1511, Chaire Economie du climat.
    2. Knopf, Brigitte & Koch, Nicolas & Grosjean, Godefroy & Fuss, Sabine & Flachsland, Christian & Pahle, Michael & Jakob, Michael & Edenhofer, Ottmar, 2014. "The European Emissions Trading System (EU ETS): Ex-Post Analysis, the Market Stability Reserve and Options for a Comprehensive Reform," Climate Change and Sustainable Development 184856, Fondazione Eni Enrico Mattei (FEEM).
    3. Leard, Benjamin & McConnell, Virginia, 2015. "New Markets for Pollution and Energy Efficiency: Credit Trading under Automobile Greenhouse Gas and Fuel Economy StandardsAbstract: Recent changes to the Corporate Average Fuel Economy (CAFE) standard," RFF Working Paper Series dp-15-16, Resources for the Future.
    4. Richard G. Newell & William A. Pizer & Daniel Raimi, 2014. "Carbon Markets: Past, Present, and Future," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 191-215, October.
    5. Peifang Yang & Daniel T. Kaffine, 2016. "Community-Based Tradable Permits for Localized Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 773-788, December.
    6. 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.
    7. Lecuyer, Oskar & Quirion, Philippe, 2013. "Can uncertainty justify overlapping policy instruments to mitigate emissions?," Ecological Economics, Elsevier, vol. 93(C), pages 177-191.
    8. Simon Quemin, 2016. "Intertemporal abatement decisions under ambiguity aversion in a cap and trade," Working Papers 1604, Chaire Economie du climat.
    9. Endre Tvinnereim, 2014. "The bears are right: Why cap-and-trade yields greater emission reductions than expected, and what that means for climate policy," Climatic Change, Springer, vol. 127(3), pages 447-461, December.
    10. Stavins, Robert N., 2019. "The Future of U.S. Carbon-Pricing Policy: Normative Assessment and Positive Prognosis," Working Paper Series rwp19-017, Harvard University, John F. Kennedy School of Government.
    11. Grischa Perino, 2015. "Climate Campaigns, Cap and Trade, and Carbon Leakage: Why Trying to Reduce Your Carbon Footprint Can Harm the Climate," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(3), pages 469-495.
    12. Simon Quemin & Christian Perthuis, 2019. "Transitional Restricted Linkage Between Emissions Trading Schemes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 1-32, September.
    13. Schmidt, Klaus & Herweg, Fabian, 2021. "Prices versus Quantities with Morally Concerned Consumers," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242371, Verein für Socialpolitik / German Economic Association.
    14. Koch, Nicolas & Basse Mama, Houdou, 2019. "Does the EU Emissions Trading System induce investment leakage? Evidence from German multinational firms," Energy Economics, Elsevier, vol. 81(C), pages 479-492.
    15. Meyer, Andrew G. & Raff, Zach, 2022. "Pass-through of water pollution regulation: Evidence from sewer utility bills and Wisconsin's phosphorus rule," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322444, Agricultural and Applied Economics Association.
    16. Böhringer, Christoph & Keller, Andreas & Bortolamedi, Markus & Rahmeier Seyffarth, Anelise, 2016. "Good things do not always come in threes: On the excess cost of overlapping regulation in EU climate policy," Energy Policy, Elsevier, vol. 94(C), pages 502-508.
    17. Edenhofer, Ottmar & Flachsland, Christian & Kalkuhl, Matthias & Knopf, Brigitte & Pahle, Michael, 2019. "Optionen für eine CO2-Preisreform," Working Papers 04/2019, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    18. Robert N. Stavins, 2020. "The Future of US Carbon-Pricing Policy," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 1(1), pages 8-64.
    19. Thomas D. Jeitschko & Pallavi Pal, 2021. "Curbing Price Fluctuations in Cap-and-Trade Auctions," CESifo Working Paper Series 9266, CESifo.
    20. Stavins, Robert, 2019. "The Future of United States Carbon-Pricing Policy," RFF Working Paper Series 19-11, Resources for the Future.

    More about this item

    Keywords

    Emission trading; Governance; EU ETS;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    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:hal:journl:hal-01504611. 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.