Assessing the impact of the EU ETS using firm level data
AbstractThis paper investigates the impact of the European Unionâ??s Emission Trading System (EU ETS) at a firm level. Using panel data on the emissions and performance of more than 2000 European firms from 2005 to 2008, we are able to analyse the effectiveness of the scheme. The results suggest that the shift from the first phase (2005-2007) to the second phase (2008-2012) had an impact on the emission reductions carried out by firms. The initial allocation also had a significant impact on emission reduction. This challenges the relevance for the ETS of Coaseâ??s theorem (Coase, 1969), according to which the initial allocation of permits is irrelevant for the post-trading allocation of marketable pollution permits. Finally, we found that the EU ETS had a modest impact on the participating companiesâ?? performance. We conclude that a full auctioning system could help to reduce emissions but could also have a negative impact on the profits of participating companies.
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Bibliographic InfoPaper provided by Bruegel in its series Working Papers with number 579.
Date of creation: Jul 2011
Date of revision:
Other versions of this item:
- Jan Abrell & Anta Ndoye Faye & Georg Zachmann, 2011. "Assessing the impact of the EU ETS using firm level data," Working Papers of BETA 2011-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-27 (All new papers)
- NEP-ENV-2011-07-27 (Environmental Economics)
- NEP-EUR-2011-07-27 (Microeconomic European Issues)
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- Aleksandar Zaklan, 2013. "Why Do Emitters Trade Carbon Permits?: Firm-Level Evidence from the European Emission Trading Scheme," Discussion Papers of DIW Berlin 1275, DIW Berlin, German Institute for Economic Research.
- Stephen Lecourt & Clément Pallière & Oliver J. Sartor, 2013.
"The impact of emissions-performance benchmarking on free allocations in EU ETS Phase 3,"
- Stephen Lecourt & ClÃ©ment PalliÃ¨re & Oliver Sartor, 2013. "The impact of emissions-performance benchmarking on free allocations in EU ETS Phase 3," RSCAS Working Papers 2013/17, European University Institute.
- Claudia Kettner & Daniela Kletzan-Slamanig & Angela Köppl, 2013. "The EU Emission Trading Scheme. Sectoral Allocation Patterns and Factors Determining Emission Changes," WIFO Working Papers 444, WIFO.
- Stephen Lecourt & Clement Palliere & Oliver Sartor, 2013. "Free allocations in EU ETS Phase 3: The impact of emissions-performance benchmarking for carbonintensive industry," Working Papers 1302, Chaire Economie du Climat.
- Ralf Martin & Mirabelle Muûls & Laure B. de Preux & Ulrich J. Wagner, 2012.
"Industry compensation under relocation risk: a firm-level analysis of the EU Emissions Trading Scheme,"
Grantham Research Institute on Climate Change and the Environment Working Papers
85, Grantham Research Institute on Climate Change and the Environment.
- Ralf Martin & Mirabelle Muûls & Laure B. de Preux & Ulrich J. Wagner, 2013. "Industry Compensation Under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme," NBER Working Papers 19097, National Bureau of Economic Research, Inc.
- Ralf Martin & Mirabelle Muûls & Ulrich J. Wagner & Laure B. de Preux, 2012. "Industry Compensation Under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme," CEP Discussion Papers dp1150, Centre for Economic Performance, LSE.
- Thijs Jong & Oscar Couwenberg & Edwin Woerdman, 2013. "Does the EU ETS Bite? The Impact of Allowance Over-Allocation on Share Prices," RSCAS Working Papers 2013/54, European University Institute.
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