Cross Border Trading and Borrowing in the EU ETS

Ellerman, A. Denny; Trotignon, Raphaël

doi:10.5547/issn0195-6574-ej-vol30-nosi2-4

Cited by 9 publications

(7 citation statements)

References 6 publications

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“…Among others, allocation amounts but also differences in allocations-to-emissions positively affect this likelihood to sell. The latter seems to run counter to the finding in Ellerman and Trotignon (2009) that firms in the EU ETS traded less if they were long on allowances, and traded more if they were short on allowances. Given these results one would expect that the determinants of selling differ from the determinants of purchasing allowances.…”

Section: Eu Etscontrasting

confidence: 45%

Does the EU ETS Bite? The Impact of Allowance Over-Allocation on Share Prices

Jong¹,

Couwenberg

Woerdman

2013

SSRN Journal

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The Robert Schuman Centre for Advanced Studies (RSCAS), created in 1992 and directed by Stefano Bartolini since September 2006, aims to develop inter-disciplinary and comparative research and to promote work on the major issues facing the process of integration and European society.The Centre is home to a large post-doctoral programme and hosts major research programmes and projects, and a range of working groups and ad hoc initiatives. The research agenda is organised around a set of core themes and is continuously evolving, reflecting the changing agenda of European integration and the expanding membership of the European Union. Climate Policy Research UnitThe Climate Policy Research Unit (CPRU) is a research group within the Robert Schuman Centre for Advanced Studies under the Loyola de Palacio Chair. The goal of the CPRU is to provide a reliable source for information and analysis of EU climate policy and a forum for discussion of research carried out in this area among government officials, academics and industry.The CPRU was established in 2010 at the initiative of Josep Borrell, President of the EUI and former President of the European Parliament, as a means of providing more focus to European climate policy developments. The director of the CPRU is Denny Ellerman, part-time professor at the RSCAS, and recently retired as a Senior Lecturer from MIT's Sloan School of Management. The CPRU works in collaboration with the energy and regulatory policy research groups of the Florence School of Regulation and Loyola de Palacio Chair and with the Global Governance Programme at the EUI. Starting in 2012, the CPRU has been funded primarily by the European Commission (DG Clima).The opinions expressed in this paper are those of the author(s) and do not represent the views of the European University Institute or any of its subsidiary components or those of the European Commission. For more information:http://fsr.eui.eu/CPRU/Index.aspx AbstractThe 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 overallocation 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.

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Section: Eu Etscontrasting

confidence: 45%

Does the EU ETS Bite? The Impact of Allowance Over-Allocation on Share Prices

Jong¹,

Couwenberg

Woerdman

2013

SSRN Journal

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“…As a consequence of the generous allocation of permits, Lithuanian firms were able to sell large amounts of allowances and benefit from wind-fall profits. Table 3 reproduces information from Ellerman and Trotingnon (2009) and summarizes information on the flows of EUAs from Lithuania. Not surprisingly, Lithuania was a net exporter of allowances in the first trading period, exporting almost 11 million EUAs.…”

Section: Lithuania In the Eu Etsmentioning

confidence: 99%

Did the EU ETS Make a Difference? An Empirical Assessment Using Lithuanian Firm-Level Data

Jaraitė

Maria²

2016

The Energy Journal

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Abstract. We use a panel dataset of about 5,000 Lithuanian firms between 2003 and 2010, to assess the impact of the EU ETS on the environmental and economic performance of participating firms. Using a matching methodology, we are able to estimate the causal impact of EU ETS participation on CO 2 emissions, CO 2 intensity, investment behaviour and profitability of participating firms. Our results show that ETS participation did not lead to a reduction in CO 2 emissions, while we identify a slight improvement in CO 2 intensity. ETS participants are shown to have retired part of their less efficient capital stock, and to have made modest additional investments from 2010. We also show that the EU ETS did not represent a drag on the profitability of participating firms.

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“…Another NO x market (RECLAIM) ruled out banking "because of concerns that the ability to use banked emissions might lead to substantial increases in actual emissions in some future year, and thus delay compliance with ambient air quality standards" 25 Ellerman and Trotignon (2009) develop evidence of both borrowing and banking in the EU ETS during 2005-2007. 26 The flow control ratio is defined as 10% * permit allocation for year t _ aggregate banked permits at compliance time t-1…”

Section: Temporal Restrictions In Permit Validitymentioning

confidence: 99%

Market Design in Cap and Trade Programs: Permit Validity and Compliance Timing

Holland

2012

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Cross Border Trading and Borrowing in the EU ETS

Cited by 9 publications

References 6 publications

Does the EU ETS Bite? The Impact of Allowance Over-Allocation on Share Prices

Does the EU ETS Bite? The Impact of Allowance Over-Allocation on Share Prices

Did the EU ETS Make a Difference? An Empirical Assessment Using Lithuanian Firm-Level Data

Market Design in Cap and Trade Programs: Permit Validity and Compliance Timing

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