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ETCLIP – The Challenge of the European Carbon Market: Emission Trading, Carbon Leakage and Instruments to Stabilise the CO2 Price. Implications of Linking on Leakage

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  • Andreas Türk

    (WIFO)

Abstract

After the climate conferences in Copenhagen and Cancun, it is likely that the EU remains more ambitious regarding greenhouse gas reduction targets than other countries. The possible problem of carbon leakage and instruments to tackle it therefore remains an important issue in the European climate policy debate. The reduction of competitive distortions and carbon leakage induced by different CO2 prices in the EU and important trading partners is one of several reasons for the EU to aim for the establishment of a trading link between the European Emission Trading Scheme (EU ETS) and other domestic or regional emissions trading systems in developed and developing countries. Main reasons for linking include higher cost efficiency to meet a given reduction target as well as improved market liquidity resulting in more robust and stable price signals.

Suggested Citation

  • Andreas Türk, 2011. "ETCLIP – The Challenge of the European Carbon Market: Emission Trading, Carbon Leakage and Instruments to Stabilise the CO2 Price. Implications of Linking on Leakage," WIFO Working Papers 410, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2011:i:410
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    References listed on IDEAS

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    1. Andreas Tuerk & Michael Mehling & Christian Flachsland & Wolfgang Sterk, 2009. "Linking carbon markets: concepts, case studies and pathways," Climate Policy, Taylor & Francis Journals, vol. 9(4), pages 341-357, July.
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    Keywords

    Carbon market; Emissions Trading; Leakage; Linking;
    All these keywords.

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