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Leaving an emissions trading scheme – insights from the United Kingdom

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  • Richard S.J. Tol

    () (Department of Economics, University of Sussex
    Department of Spatial Economics, Vrije Universiteit Amsterdam
    Institute for Environmental Studies, Vrije Universiteit Amsterdam
    Tinbergen Institute, Amsterdam)

Abstract

The United Kingdom may opt to leave the EU Emissions Trading System (ETS) for greenhouse gases. If so, a central plank of UK climate policy will need to be replaced at short notice. The UK is a large importer of emission permits, and meeting its climate policy targets would be much harder and dearer without the EU ETS. The impact on the EU would be limited, although UK permits circulating in the rest of the EU would lose their legal standing between Brexit and 2021. Non-EU countries take part in the EU ETS, and this appears to be the best option for the UK post-Brexit.

Suggested Citation

  • Richard S.J. Tol, 2017. "Leaving an emissions trading scheme – insights from the United Kingdom," Working Paper Series 1017, Department of Economics, University of Sussex Business School.
  • Handle: RePEc:sus:susewp:1017
    as

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    File URL: http://www.sussex.ac.uk/economics/documents/wps-10-2017.pdf
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    References listed on IDEAS

    as
    1. Martin L. Weitzman, 1974. "Prices vs. Quantities," Review of Economic Studies, Oxford University Press, vol. 41(4), pages 477-491.
    2. Chaton, Corinne & Creti, Anna & Peluchon, Benoît, 2015. "Banking and back-loading emission permits," Energy Policy, Elsevier, vol. 82(C), pages 332-341.
    3. Helm, Carsten, 2003. "International emissions trading with endogenous allowance choices," Journal of Public Economics, Elsevier, vol. 87(12), pages 2737-2747, December.
    4. Gilbert E. Metcalf & David Weisbach, 2012. "Linking Policies When Tastes Differ: Global Climate Policy in a Heterogeneous World," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 6(1), pages 110-129.
    5. repec:dau:papers:123456789/14770 is not listed on IDEAS
    6. Pizer, William A. & Yates, Andrew J., 2015. "Terminating links between emission trading programs," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 142-159.
    7. Rehdanz, Katrin & Tol, Richard S.J., 2005. "Unilateral regulation of bilateral trade in greenhouse gas emission permits," Ecological Economics, Elsevier, vol. 54(4), pages 397-416, September.
    8. Grüll, Georg & Taschini, Luca, 2011. "Cap-and-trade properties under different hybrid scheme designs," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 107-118, January.
    9. Hu, Jing & Crijns-Graus, Wina & Lam, Long & Gilbert, Alyssa, 2015. "Ex-ante evaluation of EU ETS during 2013–2030: EU-internal abatement," Energy Policy, Elsevier, vol. 77(C), pages 152-163.
    10. Erik Haites & Michael Mehling, 2009. "Linking existing and proposed GHG emissions trading schemes in North America," Climate Policy, Taylor & Francis Journals, vol. 9(4), pages 373-388, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    climate policy; tradable permits; Brexit; EU ETS;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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