IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkie/3270.html
   My bibliography  Save this paper

The EU emissions trading scheme allowance prices, trade flows and competitiveness effects

Author

Listed:
  • Klepper, Gernot
  • Peterson, Sonja

Abstract

The upcoming European Emissions Trading Scheme (ETS) is one of the more controversial climate policy instruments. Predictions about its likely impact and its performance can at present only be made to a certain degree. As long as the National Allocations Plans are not finally settled the overall supply of allowances is not determined. In this paper, we will identify key features and key impacts of the EU ETS by scanning the range of likely allocation plans using the simulation model DART. The analysis of the simulation results highlights a number of interesting details in terms of allowance trade flows between Member States, of allowance prices, and in terms of the role of the accession countries in the ETS. An important finding about the impact of the new ETS with respect to achieving emission reductions more efficiently, i.e. at lower cost, is that savings can only be realized if the cap on emissions is distributed between the ETS sector and the rest of the economy in such a way that the different abatement costs are taken into account. This would imply a relatively small allocation of emissions to the ETS sector. The second important result concerns the role of the accession countries. Even if they do not supply their hot-air in the ETS market, they contribute substantially to the cost savings of the ETS by offering low cost abatement options.

Suggested Citation

  • Klepper, Gernot & Peterson, Sonja, 2004. "The EU emissions trading scheme allowance prices, trade flows and competitiveness effects," Open Access Publications from Kiel Institute for the World Economy 3270, Kiel Institute for the World Economy (IfW Kiel).
  • Handle: RePEc:zbw:ifwkie:3270
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/3270/1/Pe_EU_Emissions_Trading.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gagelmann, Frank & Hansjürgens, Bernd, 2002. "Climate protection through tradable permits: The EU proposal for a CO2 emissions trading system in Europe," UFZ Discussion Papers 1/2002, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    2. Christoph Bohringer, 2002. "Industry-level emission trading between power producers in the EU," Applied Economics, Taylor & Francis Journals, vol. 34(4), pages 523-533.
    3. Klepper, Gernot & Peterson, Sonja & Springer, Katrin, 2003. "DART97: a description of the multi-regional, multi-sectoral trade model for the analysis of climate policies," Kiel Working Papers 1149, Kiel Institute for the World Economy (IfW Kiel).
    4. Johan Albrecht (ed.), 2002. "Instruments for Climate Policy," Books, Edward Elgar Publishing, number 2492, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Klepper, Gernot & Peterson, Sonja, 2004. "The EU emissions trading scheme: allowance prices, trade flows, competitiveness effects," Kiel Working Papers 1195, Kiel Institute for the World Economy (IfW Kiel).
    2. Klepper, Gernot & Peterson, Sonja, 2004. "Das Europäische Emissionshandelssystem - effiziente Klimapolitik oder Gefahr für die europäische Wettbewerbsfähigkeit?," Open Access Publications from Kiel Institute for the World Economy 3260, Kiel Institute for the World Economy (IfW Kiel).
    3. Hübler, Michael, 2011. "Technology diffusion under contraction and convergence: A CGE analysis of China," Energy Economics, Elsevier, vol. 33(1), pages 131-142, January.
    4. Hallwood, Paul, 2007. "Contractual difficulties in environmental management: The case of wetland mitigation banking," Ecological Economics, Elsevier, vol. 63(2-3), pages 446-451, August.
    5. Kretschmer, B. & Peterson, S. & Ignaciuk, A., 2010. "Integrating Biofuels into the DART Model: Analysing the Effects of the EU 10% Biofuel Target," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 45, March.
    6. Klepper, Gernot & Peterson, Sonja, 2003. "On the robustness of marginal abatement cost curves: the influence of world energy prices," Kiel Working Papers 1138, Kiel Institute for the World Economy (IfW Kiel).
    7. Böhringer, Christoph & Koschel, Henrike & Moslener, Ulf, 2006. "Efficiency Losses from Overlapping Economic Instruments in European Carbon Emissions Regulation," ZEW Discussion Papers 06-018, ZEW - Leibniz Centre for European Economic Research.
    8. Brandt, Urs Steiner & Svendsen, Gert Tinggaard, 2006. "Climate change negotiations and first-mover advantages: the case of the wind turbine industry," Energy Policy, Elsevier, vol. 34(10), pages 1175-1184, July.
    9. Rickels, Wilfried & Rehdanz, Katrin & Oschlies, Andreas, 2012. "Economic prospects of ocean iron fertilization in an international carbon market," Resource and Energy Economics, Elsevier, vol. 34(1), pages 129-150.
    10. Gernot Klepper & Sonja Peterson, 2006. "Emissions Trading, CDM, JI, and More: The Climate Strategy of the EU," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-26.
    11. Matthias Weitzel, 2017. "The role of uncertainty in future costs of key CO2 abatement technologies: a sensitivity analysis with a global computable general equilibrium model," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 22(1), pages 153-173, January.
    12. Johansson, Daniel J. A. & Lucas, Paul L. & Weitzel, Matthias & Ahlgren, Erik O. & Bazaz, A. B. & Chen, Wenying & den Elzen, Michel G. J. & Ghosh, Joydeep & Grahn, Maria & Liang, Qiao-Mei & Peterson, S, 2012. "Multi-model analyses of the economic and energy implications for China and India in a post-Kyoto climate regime," Kiel Working Papers 1808, Kiel Institute for the World Economy (IfW Kiel).
    13. Christoph Bohringer & Heinz Welsch, 2006. "Burden sharing in a greenhouse: egalitarianism and sovereignty reconciled," Applied Economics, Taylor & Francis Journals, vol. 38(9), pages 981-996.
    14. Vincent Steenberghe, 2005. "Carbon dioxide abatement costs and permit price: exploring the impact of banking and the role of future commitments," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(2), pages 75-107, June.
    15. Natalia Vechiu & Oscar Kuikeu, 2009. "The impact of globalization on FDIs: an empirical assessment for Central and Eastern European Countries," Post-Print hal-01881848, HAL.
    16. Christoph Böhringer & Andreas Lange, 2005. "Mission Impossible !? On the Harmonization of National Allocation Plans under the EU Emissions Trading Directive," Journal of Regulatory Economics, Springer, vol. 27(1), pages 81-94, September.
    17. Diana Piloyan, 2009. "The Clean Development Mechanism: Mexico’s Contribution to the Mitigation of Global Climate Change," Working Papers 0309, Universidad Iberoamericana, Department of Economics.
    18. Gagelmann, Frank, 2003. "E.T. and innovation - science fiction or reality? An assessment of the impact of emissions trading on innovation," UFZ Discussion Papers 13/2003, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    19. Nijkamp, Peter & Wang, Shunli & Kremers, Hans, 2005. "Modeling the impacts of international climate change policies in a CGE context: The use of the GTAP-E model," Economic Modelling, Elsevier, vol. 22(6), pages 955-974, December.
    20. Van den Bergh, Kenneth & Delarue, Erik, 2015. "Quantifying CO2 abatement costs in the power sector," Energy Policy, Elsevier, vol. 80(C), pages 88-97.

    More about this item

    Keywords

    EU emissions trading scheme; permit allocation; Kyoto targets; computable general equilibrium model; DART;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • F18 - International Economics - - Trade - - - Trade and Environment
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifwkie:3270. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.