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The Market Stability Reserve in the EU Emissions Trading System: A Critical Review

Author

Listed:
  • Simone Borghesi

    (Department of Political and International Sciences, University of Siena, Siena, Italy)

  • Michael Pahle

    (Potsdam Institute for Climate Impact Research (PIK), Potsdam, Germany)

  • Grischa Perino

    (Department of Socioeconomics, Universität Hamburg, Hamburg, Germany)

  • Simon Quemin

    (Potsdam Institute for Climate Impact Research (PIK), Potsdam, Germany)

  • Maximilian Willner

    (Department of Socioeconomics, Universität Hamburg, Hamburg, Germany)

Abstract

Having experienced low prices for about a decade, the European Union Emissions Trading System has been supplemented with the market stability reserve (MSR) that adjusts the supply of allowances to market outcomes. We critically review the literature assessing the performance of the MSR against several policy objectives. In doing so, we cover both conceptual aspects and quantitative assessments. We conclude by pointing out important policy implications and open issues for further research.

Suggested Citation

  • Simone Borghesi & Michael Pahle & Grischa Perino & Simon Quemin & Maximilian Willner, 2023. "The Market Stability Reserve in the EU Emissions Trading System: A Critical Review," Annual Review of Resource Economics, Annual Reviews, vol. 15(1), pages 131-152, October.
    • Handle: RePEc:anr:reseco:v:15:y:2023:p:131-152
    DOI: 10.1146/annurev-resource-111820-030145
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    More about this item

    Keywords

    climate policy; emissions trading; EU ETS; stability mechanism; overlapping policies;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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