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Interactions between the EU Emissions Trading Scheme and the UK Renewables Obligation and Energy Efficiency Commitment

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  • Steve Sorrell

    (SPRU (Science and Technology Policy Research), University of Sussex, Falmer, Brighton, Sussex, BN1 9RF, UK)

Abstract

The recent agreement by European environment ministers on the ground rules for an EU Emissions Trading Scheme (EU ETS) represents a landmark in the evolution of EU climate policy. But this scheme will be introduced into a crowded ‘policy space’ within each Member State in which complex interactions between the EU ETS and existing instruments appear unavoidable. This paper explores one aspect of the problems created by the EU ETS for the UK – namely the potential interactions with the UK Renewables Obligation and the UK Energy Efficiency Commitment. Both these instruments have objectives which go beyond the least-cost abatement of carbon emissions and both utilise trading arrangements in which the trading commodity is denominated in MWh rather than tonnes of carbon. The paper explores the potential interactions between the EU ETS and the UK instruments by comparing in turn their scope, timing, objectives and operation. The coexistence of the EU ETS with the RO and EEC is shown to raise three important issues, namely target setting and double counting, double regulation of electricity and the fungibility of trading commodities. The paper concludes that the coexistence of the RO and EEC with the EU ETS is both possible and justifiable, but more attention should be paid to the non-CO 2 objectives of each instrument.

Suggested Citation

  • Steve Sorrell, 2003. "Interactions between the EU Emissions Trading Scheme and the UK Renewables Obligation and Energy Efficiency Commitment," Energy & Environment, , vol. 14(5), pages 677-703, September.
    • Handle: RePEc:sae:engenv:v:14:y:2003:i:5:p:677-703
    DOI: 10.1260/095830503322663401
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    References listed on IDEAS

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    1. Stirling, Andrew, 1994. "Diversity and ignorance in electricity supply investment : Addressing the solution rather than the problem," Energy Policy, Elsevier, vol. 22(3), pages 195-216, March.
    2. Morthorst, P. E., 2001. "Interactions of a tradable green certificate market with a tradable permits market," Energy Policy, Elsevier, vol. 29(5), pages 345-353, April.
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    Cited by:

    1. Grösche, Peter, 2006. "Marktkonforme Möglichkeiten zur Forcierung privatwirtschaftlicher Investitionen in den Wohngebäudebestand zum Zwecke einer effizienteren Energieverwendung: Endbericht, April 2006," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 70901.
    2. Hal Nelson, 2008. "Planning implications from the interactions between renewable energy programs and carbon regulation," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 51(4), pages 581-596.
    3. Lehmann, Paul & Gawel, Erik, 2013. "Why should support schemes for renewable electricity complement the EU emissions trading scheme?," Energy Policy, Elsevier, vol. 52(C), pages 597-607.
    4. Charnovitz, Steve & Fischer, Carolyn, 2015. "Canada–Renewable Energy: Implications for WTO Law on Green and Not-So-Green Subsidies," World Trade Review, Cambridge University Press, vol. 14(2), pages 177-210, April.
    5. Sorrell, Steve & Harrison, David & Radov, Daniel & Klevnas, Per & Foss, Andrew, 2009. "White certificate schemes: Economic analysis and interactions with the EU ETS," Energy Policy, Elsevier, vol. 37(1), pages 29-42, January.
    6. Fischer, Carolyn & Preonas, Louis, 2010. "Combining Policies for Renewable Energy: Is the Whole Less Than the Sum of Its Parts?," International Review of Environmental and Resource Economics, now publishers, vol. 4(1), pages 51-92, June.
    7. Thema, Johannes & Suerkemper, Felix & Grave, Katharina & Amelung, Adrian, 2013. "The impact of electricity demand reduction policies on the EU-ETS: Modelling electricity and carbon prices and the effect on industrial competitiveness," Energy Policy, Elsevier, vol. 60(C), pages 656-666.
    8. Mengfei Jiang & Xi Liang & David Reiner & Boqiang Lin & Maosheng Duan, 2018. "Stakeholder Views on Interactions between Low-carbon Policies and Carbon Markets in China: Lessons from the Guangdong ETS," Working Papers EPRG 1805, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    9. Zeng, Yingying, 2017. "Indirect double regulation and the carbon ETSs linking: The case of coal-fired generation in the EU and China," Energy Policy, Elsevier, vol. 111(C), pages 268-280.
    10. Foxon, T.J. & Pearson, P.J.G., 2007. "Towards improved policy processes for promoting innovation in renewable electricity technologies in the UK," Energy Policy, Elsevier, vol. 35(3), pages 1539-1550, March.
    11. Paolo Bertoldi & Silvia Rezessy & Diana Ãœrge-Vorsatz, 2005. "Tradable Certificates for Energy Savings: Opportunities, Challenges, and Prospects for Integration with other Market Instruments in the Energy Sector," Energy & Environment, , vol. 16(6), pages 959-992, November.

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