Inclusion of Consumption into the <scp>EU ETS</scp>: The Legal Basis under <scp>E</scp>uropean <scp>U</scp>nion Law

Ismer, Roland; Haußner, Manuel

doi:10.1111/reel.12131

Cited by 8 publications

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“…Adjustments for the EU ETS also have the advantage that they can be adopted under the qualified majority voting rules (Article 192(1) of the TFEU). 8 By contrast, the adoption of tax provisions would require unanimity, which would arguably make such option politically less realistic. 9 Our analysis concentrates on carbon-intensive basic materials, including steel, cement clinker, aluminium, pulp paper and plastic.…”

Section: Introductionmentioning

confidence: 99%

Border Carbon Adjustments and Alternative Measures for the EU ETS: An Evaluation

2020

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As part of its Green Deal, the European Commission is considering the introduction of border carbon adjustments and alternative measures. The measures, which would primarily apply to basic materials like steel and cement, pursue a double objective: they are aimed at enhancing the effectiveness of carbon pricing for the transition to climate neutrality but also at avoiding carbon leakage risks. When implementing carbon adjustment mechanisms and alternative measures, various design options might be considered to reform the EU Emissions Trading Scheme (EU ETS). In this paper, we have decided to focus on three main models, which help to highlight the main differences between the available options. Under the first model, importers of basic materials would be required to surrender carbon allowances at the level of a product benchmark or, where lower, at the verified level of foreign carbon intensity. In parallel, allocation of free allowances would be phased out. Under the second model, a symmetric adjustment mechanism for exports and imports would be adopted, including refund to exporters for the carbon costs incurred on basic materials embodied in products. Finally, under the third model, the EU ETS would be complemented with a climate contribution charged for materials sold in the European Union (EU) at the product benchmark level related to the carbon intensity of each material. The free allowance allocation regime would then be modified to be directly linked to the volume of material production at the product benchmark level. In order to contribute to the current policy debate, we evaluate for each of these three models, their legality, coherence with EU climate objectives, effectiveness in carbon leakage prevention, potential international implications, as well as their administrative complexity and compliance costs.

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Section: Introductionmentioning

confidence: 99%

Border Carbon Adjustments and Alternative Measures for the EU ETS: An Evaluation

2020

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Taxing Consumption to Mitigate Carbon Leakage

Kaushal

Rosendahl

2019

Environ Resource Econ

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Unilateral actions to reduce CO2 emissions could lead to carbon leakage such as relocation of emissionintensive and trade-exposed industries (EITE). To mitigate such leakage, countries often supplement an emissions trading system (ETS) with free allocation of allowances to exposed industries, e.g. in the form of output-based allocation (OBA). This paper examines the welfare effects of supplementing OBA with a consumption tax on EITE goods. In particular, we investigate the case when only a subset of countries involved in a joint ETS introduces such a tax. The analytical results suggest that the consumption tax would have unambiguously global welfare improving effects, and under certain conditions have welfare improving effects for the tax introducing country as well. Numerical simulations in the context of the EU ETS support the analytical findings, including that the consumption tax is welfare improving for the single country that implements the tax.

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Austria’s consumption-based greenhouse gas emissions: Identifying sectoral sources and destinations

Steininger

Muñoz

Karstensen

et al. 2018

Global Environmental Change

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Inclusion of Consumption into the EU ETS: The Legal Basis under European Union Law

Cited by 8 publications

References 0 publications

Border Carbon Adjustments and Alternative Measures for the EU ETS: An Evaluation

Border Carbon Adjustments and Alternative Measures for the EU ETS: An Evaluation

Taxing Consumption to Mitigate Carbon Leakage

Austria’s consumption-based greenhouse gas emissions: Identifying sectoral sources and destinations

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