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

Author

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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
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    References listed on IDEAS

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    1. Boom, J.-T. & Svendsen, G.T., 1999. "International Emission Trading Systems: Trade Level and Political Acceptability," Papers 99-11, Aarhus School of Business - Department of Economics.
    2. von Hagen, Jurgen & Harden, Ian J., 1995. "Budget processes and commitment to fiscal discipline," European Economic Review, Elsevier, vol. 39(3-4), pages 771-779, April.
    3. Krueger, Anne O, 1997. "Trade Policy and Economic Development: How We Learn," American Economic Review, American Economic Association, vol. 87(1), pages 1-22, March.
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    Cited by:

    1. 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.
    2. repec:eee:enepol:v:111:y:2017:i:c:p:268-280 is not listed on IDEAS

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