Implications of announced phase II national allocation plans for the EU ETS

Neuhoff, Karsten; Åhman, Markus; Betz, Regina; Cludius, Johanna; Ferrario, Federico; Holmgren, Kristina; Pál, Gabriella; Grubb, Michael; Matthes, Felix Christian; Rogge, Karoline S.; Sato, Misato; Schleich, Joachim; Sijm, J.P.M.; Tuerk, Andreas; Kettner, Claudia; Walker, Neil

doi:10.1080/14693062.2006.9685610

Cited by 31 publications

(12 citation statements)

References 12 publications

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“…In consequence, the system could lack liquidity, and thus a proper price signal (Hepburn et al, 2006). Moreover, free allocation is often referred to as a subsidy in the literature (Böhringer & Lange, 2005;Jegou & Rubini, 2011;Neuhoff et al, 2006). Auctioning may be more effective than free allocation in minimizing abatement costs over the long run, because its positive price may induce greater investment in low-carbon technologies (Cramton & Kerr, 2002, p. 2;Milliman & Prince, 1989, 1992.…”

Section: Hypothesis No 1: Free Allocationmentioning

confidence: 99%

Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms’ competitiveness? Empirical findings from the literature

2018

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Environmental policies may have important consequences for firms' competitiveness or profitability. For the European Union Emissions Trading System (EU ETS) the empirical literature documents that significant emissions reductions have resulted from it. Surprisingly, however, the literature shows that there have been hardly any concurrent negative effects on firms' competitiveness during the first two phases of the scheme (2005-2012). We show that the main explanations for the absence of negative impacts on competitiveness are a large over-allocation of emissions allowances leading to a price drop and the ability of firms to pass costs onto consumers in some sectors. Cost pass-through combined with free allocation, in turn, partly generated windfall profits. In addition, the relatively low importance of energy costs indicated by their average share in the budgets of most manufacturing industries may have limited the impact of the EU ETS. Finally, small but significant stimulating effects on innovation have been found so far. Several factors suggest that over-allocation is likely to remain substantial in the upcoming periods of the scheme. Therefore, we expect to see no negative competitiveness effects from the EU ETS in Phases III and IV (2013-2030). Key policy insights. Empirical literature on the EU ETS shows that there have been hardly any effects on firms' competitiveness or profitability.. One main explanation is a large over-allocation of emissions allowances leading to a price drop. This reduced incentives for innovation.. Moreover, firms were able to pass costs on to consumers in some sectors which partly generated windfall profits.. Innovation effects have so far been small but positive.. We expect to see no negative competitiveness effects on regulated firms in the near future suggesting that no further reliefs for regulated firms are required.

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Section: Hypothesis No 1: Free Allocationmentioning

confidence: 99%

Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms’ competitiveness? Empirical findings from the literature

2018

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“…Second, one outcome of political deals struck over Phase‐I and ‐II NAPs was that differences in sectors’ ability to pass on abatement costs (caused by differences in exposure to domestic and international competition, market share, level of vertical integration and so on) were not properly reflected in the allocation process (Kallbekken 2005). The consequences for investment remain uncertain, although research suggests that variations in the distribution of free allowances can distort investment because allocations based on historical emissions disproportionately favour emissions‐intensive fuels and provide fuel‐differentiated subsidies for new installations (Neuhoff et al 2006). Despite this, most industry groups still favour free allocations to offset increased competition as emissions caps tighten in Phase III.…”

Section: The Eu Ets Marketmentioning

confidence: 99%

Scales and networks of neoliberal climate governance: the regulatory and territorial logics of European Union emissions trading

Bailey

Maresh

2009

Trans Inst British Geog

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The growing influence of neoliberal approaches to environmental governance has significantly increased the involvement of industry non‐state actors in international and national climate governance. However, the implications of this neoliberalisation and hybridisation of climate governance, and particularly state–industry relations during these processes, remain under‐integrated with wider geographical debates on the scalar and network politics of environmental governance. In this paper, we probe these issues by examining the regulatory and territorial logics underpinning the negotiation and implementation of the European Union emissions trading scheme (EU ETS). We argue that overlapping interpretations of the regulatory logic of emissions trading (as a cost‐effective means of meeting climate objectives) by EU, state and industry actors provided the driving force for the creation of a Europeanised climate governance space and the consolidation of the EU’s governing authority in respect of the formal rule‐making elements of the EU ETS. However, alliances between state and industry actors, based around intersecting interpretations of their territorial interests in relation to emissions trading, strongly influenced the scheme’s design. Moreover, speculative behaviour within the EU ETS market indicates the continued ability of market networks to disrupt territorially‐based climate governance regimes. We argue that critical exploration of the territorial logics and practices of EU emissions trading from regime creation to operation provides new insights into the emerging spatial politics of neoliberal environmental governance and its implications for climate protection.

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“…However, the EU Commission did not accept national allocation plans for the EU ETS for 2008-2012, if there were no restrictions on the amount of emissions credits they could buy from non-EU countries, through either the CDM or the JI. See Neuhoff et al (2006). takers and clear the market, see Westskog (1996) and Godal and Meland (2010).…”

Section: Introductionmentioning

confidence: 99%

Incentives for Strategic Behavior in the Permit Market

Hagem

2013

SBE

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In an international permit trading regime, the initial allocation of permits across countries determines the participating countries' trading position. Large permit trading countries on both sides of the market can exploit their market power in the permit market. We analyze how the competitive environment on the permit market affects countries' gain from strategic manipulation of the permit price. We conclude that gains from strategic behavior depend on whether there are other strategic players on the same or opposite side of the market. * The author would like to thank Mads Greaker, Matti Liski, Knut Einar Rosendahl and two anonymous referees for their helpful comments and valuable suggestions.

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Implications of announced phase II national allocation plans for the EU ETS

Cited by 31 publications

References 12 publications

Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms’ competitiveness? Empirical findings from the literature

Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms’ competitiveness? Empirical findings from the literature

Scales and networks of neoliberal climate governance: the regulatory and territorial logics of European Union emissions trading

Incentives for Strategic Behavior in the Permit Market

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