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Emissions and Allowances in the EU Emissions Trading System after the Paris Agreement

Author

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  • Akin A. Cilekoglu

    (AQR-IREA Research Group, University of Barcelona)

Abstract

In this paper, I examine how allowances allocation affected emissions of power sector installations in the EU ETS following the Paris Agreements. The dataset I use covers the 2010-2022 period, includes the emissions and allowances of 4,498 installations operating in power sector across the 27 Member States of the European Union. I discover that installations receiving lower allowances in the first quartile (Q1) reduced their emissions by 3.5% from 2016 to 2022 compared to the 2010-2015 period. I find no evidence on the installations in second, third and fourth quartiles due to the country specific developments. I also show that country characteristics have a crucial role in policy effectiveness because the emissions of installations located in lower-income Member States entered into the EU at later stages did not fall.

Suggested Citation

  • Akin A. Cilekoglu, 2024. "Emissions and Allowances in the EU Emissions Trading System after the Paris Agreement," IREA Working Papers 202404, University of Barcelona, Research Institute of Applied Economics, revised Feb 2024.
    • Handle: RePEc:ira:wpaper:202404
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    References listed on IDEAS

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    1. Nathalie Müller & Jordi J. Teixidó, 2021. "The effect of the EU ETS free allowance allocation on energy mix diversification: the case of Poland’s power sector," Climate Policy, Taylor & Francis Journals, vol. 21(6), pages 804-822, July.
    2. Raphael Calel, 2020. "Adopt or Innovate: Understanding Technological Responses to Cap-and-Trade," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 170-201, August.
    3. Cameron Hepburn & Michael Grubb & Karsten Neuhoff & Felix Matthes & Maximilien Tse, 2006. "Auctioning of EU ETS phase II allowances: how and why?," Climate Policy, Taylor & Francis Journals, vol. 6(1), pages 137-160, January.
    4. Mathy, Sandrine & Menanteau, Philippe & Criqui, Patrick, 2018. "After the Paris Agreement: Measuring the Global Decarbonization Wedges From National Energy Scenarios," Ecological Economics, Elsevier, vol. 150(C), pages 273-289.
    5. Robert M. DeConto & David Pollard & Richard B. Alley & Isabella Velicogna & Edward Gasson & Natalya Gomez & Shaina Sadai & Alan Condron & Daniel M. Gilford & Erica L. Ashe & Robert E. Kopp & Dawei Li , 2021. "The Paris Climate Agreement and future sea-level rise from Antarctica," Nature, Nature, vol. 593(7857), pages 83-89, May.
    6. repec:dau:papers:123456789/10174 is not listed on IDEAS
    7. Dechezleprêtre, Antoine & Nachtigall, Daniel & Venmans, Frank, 2023. "The joint impact of the European Union emissions trading system on carbon emissions and economic performance," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Emissions; Paris Agreement; Power sector; Climate change. JEL classification: Q40; Q48; O13; H32; L25.;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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