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Assessing the impact of the EU ETS using firm level data

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  • Jan Abrell
  • Anta Ndoye Faye
  • Georg Zachmann

Abstract

· This paper investigates the impact of the European Union’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 Coase’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 companies’ 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 Info

Paper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2011-15.

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Date of creation: 2011
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Handle: RePEc:ulp:sbbeta:2011-15

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Keywords: panel data; energy; climate change; evaluation econometrics; firm behaviour.;

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Cited by:
  1. Jarait, Jurate & Di Maria, Corrado, 2014. "Did the EU ETS make a difference? An empirical assessment using Lithuanian firm-level data," CERE Working Papers, CERE - the Center for Environmental and Resource Economics 2014:2, CERE - the Center for Environmental and Resource Economics.
  2. 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, Grantham Research Institute on Climate Change and the Environment 85, Grantham Research Institute on Climate Change and the Environment.
  3. Stephen Lecourt & Clément Pallière & Oliver J. Sartor, 2013. "The impact of emissions-performance benchmarking on free allocations in EU ETS Phase 3," Working Papers, HAL hal-00809096, HAL.
  4. Sebastian Petrick & Ulrich J. Wagner, 2014. "The Impact of Carbon Trading on Industry: Evidence from German Manufacturing Firms," Kiel Working Papers, Kiel Institute for the World Economy 1912, Kiel Institute for the World Economy.
  5. Claudia Kettner & Daniela Kletzan-Slamanig & Angela Köppl, 2013. "The EU Emission Trading Scheme. Sectoral Allocation Patterns and Factors Determining Emission Changes," WIFO Working Papers, WIFO 444, WIFO.
  6. Chan, Hei Sing & Li, Shanjun & Zhang, Fan, 2013. "Firm competitiveness and the European union emissions trading scheme," Policy Research Working Paper Series, The World Bank 6662, The World Bank.
  7. 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, Chaire Economie du Climat 1302, Chaire Economie du Climat.
  8. 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.
  9. Thijs Jong & Oscar Couwenberg & Edwin Woerdman, 2013. "Does the EU ETS Bite? The Impact of Allowance Over-Allocation on Share Prices," RSCAS Working Papers, European University Institute 2013/54, European University Institute.
  10. Chan, Hei Sing (Ron) & Li, Shanjun & Zhang, Fan, 2013. "Firm competitiveness and the European Union emissions trading scheme," Energy Policy, Elsevier, Elsevier, vol. 63(C), pages 1056-1064.

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