New rules, new politics, same actors – explaining policy change in the EU ETS
AbstractThe allocation rules for phase one EU ETS emissions permits demonstrates that energy generators were lobbying winners because they successfully blocked differential treatment (rules) from energy intensive industries, who cannot pass-on real or nominal costs of permits to consumers. As a result, these generators benefited from windfall profits. In phase three, the reverse is true; energy intensive industries successfully established differential rules. These rules will provide energy intensive industries with free allocations while most generators will be subject to 100 per cent auctioning, thus removing the windfall profit mechanism for generators. Literature applying public choice theory to this case study predicted free permit allocations but not windfall profits for generators nor the change in allocation rules in phase three. This paper presents the argument that a shift in Wilson’s Typology from client to interest group politics best explains these changes and provides a good framework for other jurisdictions considering emissions trading reforms. This dynamism in Wilson’s Typology is demonstrated by comparing the positions of industry associations representing energy generators and energy intensive industries with the two directives before and after consultations, which facilitates the identification of lobbying winners and losers. The EU ETS case study is fertile ground for testing regulatory theories that explain shifts away from clientelist policies with high levels of rent-seeking and towards more optimal policy equilibriums. This paper provides both a theoretical framework and empirical evidence for how emissions trading policy can be improved, despite rent-seeking, once it clears the legislative hurdle.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
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 29.
Date of creation: Oct 2010
Date of revision:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pezzey, John C.V. & Mazouz, Salim & Jotzo, Frank, 2009.
"The logic of collective action and Australia’s Climate Policy,"
94824, Australian National University, Environmental Economics Research Hub.
- John C.V. Pezzey & Salim Mazouz & Frank Jotzo, 2009. "The logic of collective action and Australia’s Climate Policy," Environmental Economics Research Hub Research Reports 0924, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
- Jotzo, Frank & Mazouz, Salim & Pezzey, John C.V., 2010. "The Logic of Collective Action and Australia's Climate Policy," Working paper 601, Regulation2point0.
- Pezzey, John C.V. & Mazouz, Salim & Jotzo, Frank, 2010. "The Logic Of Collective Action And Australia'S Climate Policy," 2010 Conference (54th), February 10-12, 2010, Adelaide, Australia 59577, Australian Agricultural and Resource Economics Society.
- Pezzey, John C.V. & Mazouz, Salim & Jotzo, Frank, 2010. "The logic of collective action and Australia’s climate policy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), June.
- Dieter Helm, 2006. "Regulatory Reform, Capture, and the Regulatory Burden," Oxford Review of Economic Policy, Oxford University Press, vol. 22(2), pages 169-185, Summer.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (The GRI Administration).
If references are entirely missing, you can add them using this form.