The aim of this paper is to examine whether shareholders consider the EU Emissions Trading Scheme (EU ETS) as value-relevant for the participating firms. An analysis is conducted of the share prices changes as caused by the first publication of compliance data in April, 2006, which disclosed an over-allocation of emission allowances. Through an event study, it is shown that share prices actually increased as a result of the allowance price drop when firms have a lower carbon-intensity of production and larger allowance holdings. There was no significant value impact from firms' allowance trade activity or from the pass-through of carbon-related production costs (carbon leakage). The conclusion is that the EU ETS does 'bite'. The main impact on the share prices of firms arises from their carbon-intensity of production. The EU ETS is thus valued as a restriction on pollution.

At the end of the 1990s, the EU was still sceptical towards emissions trading, but in 2003 it adopted a directive that enables such trading in the EU from 2005 onwards. Instead of presenting ad hoc explanations, we develop and apply the path dependence approach to clarify this remarkable attitude change. Sunk costs, switching costs and learning explain why politicians were initially tempted to add credit trading to existing, sub-optimal policy. Permit trading, however, is more efficient and effective. An institutional lock-in was bound to occur, but attitudes changed as a result of internal pressures, such as the pioneering role of the European Commission, and external 'shocks', such as the withdrawal of the US from the Kyoto Protocol. A full-scale institutional break-out towards efficiency is not guaranteed, though, because elements of credit trading can still enter the permit trading directive. The risk is that these elements become locked in, from which it may be difficult to escape.

The Social Sciences and Humanities (SSH) have a key role to play in understanding which factors and policies would motivate, encourage and enable different actors to adopt a wide range of sustainable energy behaviours and support the required system changes and policies. The SSH can provide critical insights into how consumers could be empowered to consistently engage in sustainable energy behaviour, support and adopt new technologies, and support policies and changes in energy systems. Furthermore, they can increase our understanding of how organisations such as private and public institutions, and groups and associations of people can play a key role in the sustainable energy transition. We identify key questions to be addressed that have been identified by the Platform for Energy Research in the Socio-economic Nexus (PERSON, see person.eu), including SSH scholars who have been studying energy issues for many years. We identify three main research themes. The first research theme involves understanding which factors encourage different actors to engage in sustainable energy behaviour. The second research theme focuses on understanding which interventions can be effective in encouraging sustainable energy behaviour of different actors, and which factors enhance their effects. The third research theme concerns understanding which factors affect public and policy support for energy policy and changes in energy systems, and how important public concerns can best be addressed as to reduce or prevent resistance.

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Policy makers have proposed various incentive programs to curb consumption-related problems, such as traffic congestion and carbon emissions. While experts consider such programs effective in reducing those problems, consumers are more skeptical. Although this “effectiveness skepticism” is currently viewed as an important cause of public opposition, the authors argue that it may also arise as a consequence of opposition. Specifically, consumers oppose policies they consider personally unattractive or unfair. This opposition motivates them to also be skeptical about the potential effectiveness of such policies. Three studies that include a variety of methods, policies, and samples provide empirical support for this reasoning: perceptions of expected effects can be biased by consumers’ perceptions of personal attractiveness and fairness. In line with this causal ordering, the authors find that offering optimistic effectiveness estimates, although successful in reducing effectiveness skepticism, did not boost policy support. Policy makers aiming to boost support prior to implementation should thus not only communicate a policy's effectiveness, but also address other causes of opposition.