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A literature-based multi-criteria evaluation of the EU ETS

Listed author(s):
  • Venmans, Frank

This article reviews the existing literature on the European Union Emission Trading Scheme (EU ETS), focusing on empirical ex-post research since the end of the first period (2007). The literature is presented through a multi-criteria evaluation. Concerning environmental effectiveness, despite over-allocation during the first period, abatement is estimated between −2.5% and −5%. Trade-driven carbon leakage was not observed, even if long-term economic models predict divergent leakage estimates for certain at-risk sectors. The abatement target was likely to be below an economically efficient level, but was reached in a fairly cost-effective way, even if free allocation gave rise to several distortional effects. Equity concerns were manifold and constitute a major drawback to the policy. Finally, institutional feasibility can be considered positive in that the EU ETS passed the European legislative process, unlike the previously proposed EU-wide carbon tax.

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Article provided by Elsevier in its journal Renewable and Sustainable Energy Reviews.

Volume (Year): 16 (2012)
Issue (Month): 8 ()
Pages: 5493-5510

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Handle: RePEc:eee:rensus:v:16:y:2012:i:8:p:5493-5510
DOI: 10.1016/j.rser.2012.05.036
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