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Ways to improve the design of the EU emissions trading scheme: key issues and answers

Author

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  • Zhang, ZhongXiang

Abstract

The Europe Union is about to lunch the world’s first greenhouse gas emissions trading scheme in history. This represents an enormous challenge because there is no previous experience with such an unprecedented scheme, and because its final outcome might shape the design of future environmental market-based policies as well as the political viability of future efforts towards emissions reductions. There are five basic issues that not only will shape the final design of the scheme but also might hinder the performance of such a scheme, if not effectively addressed. They include universal vs. reduced scope, member country vs. European-wide sector objectives and allocations, allocation methodology and base year choice, energy mix and national security, and incentives for technological innovation. This paper aims to address these key issues to help to shape the final design of the scheme in a positive manner.

Suggested Citation

  • Zhang, ZhongXiang, 2004. "Ways to improve the design of the EU emissions trading scheme: key issues and answers," MPRA Paper 14668, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:14668
    as

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    File URL: https://mpra.ub.uni-muenchen.de/14668/1/MPRA_paper_14668.pdf
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    References listed on IDEAS

    as
    1. ZhongXiang Zhang, 2003. "Open Trade with the U.S. without Compromising Canada’s Ability to Comply with its Kyoto Target," Working Papers 2003.68, Fondazione Eni Enrico Mattei.
    2. Manne, Alan & Richels, Richard, 2004. "US rejection of the Kyoto Protocol: the impact on compliance costs and CO2 emissions," Energy Policy, Elsevier, vol. 32(4), pages 447-454, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    EU emissions trading scheme; Allowance allocations; Carbon price; Energy mix; Technological innovation; Competitiveness concerns;

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • 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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