Assessing the effectiveness of the EU Emissions Trading System
AbstractAs an increasing number of countries, regions, cities and states implement emission trading policies to limit cap CO2 emission, many turn to the experience of the European Union’s Emissions Trading System, as the largest greenhouse gas emissions trading system currently operating. The aim of this paper is to survey the literature conducted over the past eight years of the scheme’s existence, particularly those focusing on three key challenging areas of evaluation: emissions impacts in relation to the balance with economic objectives; investment and innovation impacts; and finally profits and price impacts. Among the key conclusions is that the lack of flexibility in the structure of the EU ETS cap, and its inability to adjust to radically shifted wider economic conditions, in the shape of the financial crisis, threatens to undermine its efficacy in providing incentives for abatement.
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Bibliographic InfoPaper provided by Grantham Research Institute on Climate Change and the Environment in its series Grantham Research Institute on Climate Change and the Environment Working Papers with number 106.
Date of creation: Jan 2013
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-06 (All new papers)
- NEP-ENE-2013-04-06 (Energy Economics)
- NEP-ENV-2013-04-06 (Environmental Economics)
- NEP-EUR-2013-04-06 (Microeconomic European Issues)
- NEP-REG-2013-04-06 (Regulation)
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