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Still time to reclaim the European union emissions trading system for the European tax payer

Author

Listed:
  • Martin, Ralf
  • Wagner, Ulrich J.
  • Muuls, Mirabelle

Abstract

The criteria proposed by the EU Commission to identify industries that will receive free emission permits in the third phase of the European Union Emissions Trading System (EU ETS) are not restrictive enough. Evidence from interviews with almost 800 managers in Europe shows that most of the sectors entitled to free emission permits are not facing an increased risk of closure or relocation outside of the EU as a consequence of permit auctioning. Free permit allocation is therefore just a transfer of tax payers' money to industry without any additional social benefit. We propose a simple modification of the Commission's criteria for free permit allocation which could save European tax payers at least 7 billion euros annually.

Suggested Citation

  • Martin, Ralf & Wagner, Ulrich J. & Muuls, Mirabelle, 2010. "Still time to reclaim the European union emissions trading system for the European tax payer," LSE Research Online Documents on Economics 58005, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:58005
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    File URL: http://eprints.lse.ac.uk/58005/
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    More about this item

    Keywords

    climate change; EU ETS; emissions; European union emissions trading system; carbon leakage;

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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