Assessing the impact of the EU ETS using firm level data
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 InfoPaper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2011-15.
Date of creation: 2011
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panel data; energy; climate change; evaluation econometrics; firm behaviour.;
Other versions of this item:
- Georg Zachmann & Anta Ndoye & Jan Abrell, 2011. "Assessing the impact of the EU ETS using firm level data," Working Papers 579, Bruegel.
- 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-ENE-2011-07-27 (Energy Economics)
- NEP-ENV-2011-07-27 (Environmental Economics)
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- 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
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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.
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