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Should the EU ETS be extended to road transport and heating fuels?

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  • Pollitt, M. G.
  • Dolphin, G. G.

Abstract

This paper considers the current proposal to extend the EU ETS to cover CO2 emissions from the combustion of heating and road transport fuels. We argue that increased coverage of the EU ETS, together with a binding cap consistent with a net zero trajectory, would be a powerful dynamic incentive to efficient emissions reduction. In addition, it would complement standards-based policies currently enacted in these sectors in several ways. Distributional implications remain a serious challenge to such an extension but several mechanisms are available to alleviate them.

Suggested Citation

  • Pollitt, M. G. & Dolphin, G. G., 2024. "Should the EU ETS be extended to road transport and heating fuels?," Cambridge Working Papers in Economics 2152, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:2152
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    Cited by:

    1. Chunyan Dai & Michael G Pollitt, 2024. "From local carbon emissions pilots to the national carbon emissions trading scheme in China," Working Papers EPRG2417, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.

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    Keywords

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    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • 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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