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; Spatio-temporal Models
- 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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- Stephen Lecourt & Clément Pallière & Oliver J. Sartor, 2013.
"The impact of emissions-performance benchmarking on free allocations in EU ETS Phase 3,"
- Stephen Lecourt & Clément Pallière & 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.
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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.
- Ralf Martin & Mirabelle Muûls & Laure B. de Preux & Ulrich J. Wagner, 2012.
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Grantham Research Institute on Climate Change and the Environment Working Papers
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- Chan, Hei Sing & Li, Shanjun & Zhang, Fan, 2013. "Firm competitiveness and the European union emissions trading scheme," Policy Research Working Paper Series 6662, The World Bank.
- 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.
- 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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