Business perspectives on the EU emissions trading scheme

A new and diverse range of regulatory issues for business has emerged as a result of the entry into force of the EU emissions trading scheme (ETS). The scheme is, of course, most directly relevant to firms with installations in the EU in the industry sectors that are covered in Phase I; however, the scheme also has implications for firms in other sectors, and indeed for firms outside the EU as well. This article focuses on how business people have perceived the scheme, particularly during the several years before its formal start-up on 1 January 2005. The article draws upon four surveys, as well as anecdotal evidence, to identify the key components of those perceptions. In sum, there is evidence of much uncertainty, but also skepticism and lack of interest. Among executives responding to the surveys, there was a widespread lack of information about the scheme and its consequences for their firms. As many as half of the firms in directly affected industries assumed that the ETS would not become operational according to schedule-and that when it did become operational, it would not be very consequential. At the same time, many firms nevertheless undertook a series of precautionary actions to prepare for the eventuality of an operational ETS by training personnel, establishing management teams and project directors, developing strategic responses, and trying to assess the impact of the ETS on themselves.