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Installation entries and exits in the EU ETS industrial sector

Author

Listed:
  • Stefano F. Verde
  • Christoph Graf
  • Thijs Jong and Claudio Marcantonini

Abstract

Focusing on the industrial sector of the EU ETS, this study identifies and analyses the entries and the exits of installations into and from the system over the period 2005-2013. The overall number of exits was notable relative to the number of installations, and significantly greater than that of the entries. Further, we estimate a hazard model for the risk of an installation exiting the EU ETS, which identifies a number of different factors referring to the installation, the firm, and the economy, explaining the occurrence of this event. In addition to these, an “end-of-phase effect” is found, whereby the chances of exit were significantly higher in the final years of the EU ETS Phases I and II. This effect, related to the rules concerning the closure of an installation and the withdrawal of the relative allowances, is detrimental to the allocative efficiency of the system and, therefore, to its cost-effectiveness in emissions abatement. The evidence provided by the study and some of its methodological aspects may be useful for future attempts to identify investment leakage in the EU ETS.

Suggested Citation

  • Stefano F. Verde & Christoph Graf & Thijs Jong and Claudio Marcantonini, 2016. "Installation entries and exits in the EU ETS industrial sector," RSCAS Working Papers 2016/19, European University Institute.
    • Handle: RePEc:rsc:rsceui:2016/19
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    References listed on IDEAS

    as
    1. Ellerman,A. Denny & Buchner,Barbara K. & Carraro,Carlo (ed.), 2007. "Allocation in the European Emissions Trading Scheme," Cambridge Books, Cambridge University Press, number 9780521875684.
    2. Frédéric Branger & Jean-Pierre Ponssard & Oliver Sartor & Misato Sato, 2015. "EU ETS, Free Allocations, and Activity Level Thresholds: The Devil Lies in the Details," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(3), pages 401-437.
    3. Ralf Martin & Mirabelle Mu?ls & Laure B. de Preux & Ulrich J. Wagner, 2014. "Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme," American Economic Review, American Economic Association, vol. 104(8), pages 2482-2508, August.
    4. Chan, Hei Sing (Ron) & Li, Shanjun & Zhang, Fan, 2013. "Firm competitiveness and the European Union emissions trading scheme," Energy Policy, Elsevier, vol. 63(C), pages 1056-1064.
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    6. Dechezleprêtre, Antoine & Gennaioli, Caterina & Martin, Ralf & Muûls, Mirabelle & Stoerk, Thomas, 2022. "Searching for carbon leaks in multinational companies," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    7. Oliver Sartor, 2012. "Carbon Leakage in the Primary Aluminium Sector," Working Papers hal-00776451, HAL.
    8. Frédéric Branger, Philippe Quirion, Julien Chevallier, 2017. "Carbon Leakage and Competitiveness of Cement and Steel Industries Under the EU ETS: Much Ado About Nothing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
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    Cited by:

    1. Piotr Gretszel & Henryk Gurgul & £ukasz Lach & Stefan Schleicher, 2020. "Testing for the economic and environmental impacts of EU Emissions Trading System: A panel GMM approach," Managerial Economics, AGH University of Science and Technology, Faculty of Management, vol. 21(2), pages 99-125.

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    Keywords

    EU ETS; entries and exits; manufacturing sector; hazard model; end-of-phase effect;
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