The European Union's Emissions Trading Scheme (EU ETS) is the world's largest market for carbon and the most significant multinational initiative ever taken to mobilize markets to protect the environment. It will be an important influence on the development and implementation of trading schemes in the US, Japan, and elsewhere. However, as is true of any pioneering public policy experiment, this scheme has generated much controversy. Pricing Carbon provides the first detailed description and analysis of the EU ETS, focusing on the first 'trial' period of the scheme (2005–7). Written by an international team of experts, it allows readers to get behind the headlines and come to a better understanding of what was done and what happened based on a dispassionate, empirically based review of the evidence. This book should be read by anyone who wants to know what happens when emissions are capped, traded, and priced.

Pricing Carbon: The European Union Emissions Trading Scheme

Digitalization and energy consumption. Does ICT reduce energy demand

This article reviews the empirical literature on the impacts of environmental regulations on firms’ competitiveness as measured by trade, industry location, employment, productivity, and in...

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The impacts of environmental regulations on competitiveness

https://isiarticles.com/bundles/Article/pre/pdf/19530.pdf

European Emission Trading Scheme and competitiveness: A case study on the iron and steel industry

During the 22nd Conference of the Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC) held in Marrakech, Morocco, in 2016, at the invitation of the Co-Chairs of the Carbon Pricing Leadership Coalition (CPLC) High-Level Assembly, Segolene Royal and Feike Sijbesma, Joseph Stiglitz, Nobel Laureate in Economics, and Lord Nicholas Stern, accepted to chair a new High-Level Commission on Carbon Prices comprising economists, and climate change and energy specialists from all over the world, to help spur successful implementation of the Paris Agreement. The Commission’s objective is to identify indicative corridors of carbon prices that can be used to guide the design of carbon-pricing instruments and other climate policies, regulations, and measures to incentivize bold climate action and stimulate learning and innovation to deliver on the ambition of the Paris Agreement and support the achievement of the Sustainable Development Goals.

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Report of the high-level commission on carbon prices

https://halshs.archives-ouvertes.fr/halshs-00639327/document

CO2 abatement, competitiveness and leakage in the European cement industry under the EU ETS: grandfathering versus output-based allocation

We present a spatial international trade model, GEO, which computes transportation costs by not treating markets as dimensionless points and explicitly represents capacity shortages and investment decisions in new production capacities. We link it to CEMSIM, a partial equilibrium model of the world cement industry developed by the IPTS. We assume that the Kyoto Protocol Annex B countries (except the USA and Australia), create a CO2 tax at 15 euros per tonne. This policy entails significant emissions reductions (around 20%) in these countries. A significant leakage occurs, with an emissions increase in the rest of the world of around 20% of the emissions reduction in Annex B-USA&Australia. We thus run two scenarios combining a CO2 tax with border-tax adjustments (BTA). With the more ambitious BTA tested, not only is there no leakage, but emissions in the rest of the world decrease slightly. However, compared to business-as-usual, non-Annex B price-competitiveness and production decrease a little and these countries loose some market shares, so they could attack this system as distorting competition in favour of Annex B countries. A less ambitious BTA is thus tested, which cannot be criticised on this ground and prevents almost all leakage. The only drawback of both BTA policies is that the cement price in Annex BUSA& Australia increases a little more than without BTA, further impacting the cement consumers in these countries.

https://halshs.archives-ouvertes.fr/halshs-00009337/document

Leakage from climate policies and border tax adjustment:lessons from a geographic model of the cement industry

We assess five proposals for the future of the EU greenhouse gas Emission Trading Scheme (ETS): pure grandfathering allocation of emission allowances (GF), output-based allocation (OB), auctioning (AU), auctioning with border adjustments (AU-BA), and finally output-based allocation in sectors exposed to international competition combined with auctioning in electricity generation (OB-AU). We look at the impact on production, trade, CO2 leakage and welfare. We use a partial equilibrium model of the EU 27 featuring three sectors covered by the EU ETS - cement, steel and electricity - plus the aluminium sector, which is indirectly impacted through a rise in electricity price. The leakage ratio, i.e. the increase in emissions abroad over the decrease in EU emissions, ranges from around 8% under GF and AU to -2% under AU-BA and varies greatly among sectors. Concerning the overall economic cost, OB appears to be the least efficient policy, even when taking into account its ability to prevent CO2 leakage. On the other hand, this policy minimises production losses and wealth transfers among stakeholders, which is likely to soften oppositions. GF and AU are the most efficient policies from an EU perspective, even when leakage is accounted for. From a world welfare perspective and whatever the emission reduction, AU-BA is the least costly policy, while OB-AU, AU and GF entail similar costs.

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Changing the Allocation Rules in the EU ETS: Impact on Competitiveness and Economic Efficiency

L'elaboration de nouveaux indicateurs de prosperite (NIP) fait l'objet d'un interet grandissant aupres de nombreux acteurs et instances (ONGs, academiques, societe civile, institutions regionales, nationales et internationales). Cet article traite des conditions d'institutionnalisation, dans les spheres officielles, de tels indicateurs. Pour ce faire, six initiatives nationales et regionales sont etudiees en Australie, au Royaume-Uni, au Pays de Galles, en Belgique, en Wallonie et en Allemagne. Pour chacune d'entre elles, nous questionnons les usages effectifs de nouveaux indicateurs de prosperite ainsi que les roles - instrumental, politique et symbolique - que ceux-ci sont amenes a jouer. L'analyse de ces experiences nationales et regionales nous conduit a formuler dix lecons pouvant instruire et alimenter les debats sur l'institutionnalisation des NIP, notamment en France. Parmi ces lecons apparaissent, entre autres, la pertinence de proposer des indicateurs complementaires plutot que substituables au Produit Interieur Brut, le role de soutien que peuvent jouer les instances executives et legislatives au plus haut niveau, le role strategique des instituts nationaux de statistiques et l'importance de soumettre l'elaboration et le choix d'indicateurs a une debat democratique.

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Damien Demailly

Papers

European Emission Trading Scheme and competitiveness: A case study on the iron and steel industry

CO2 abatement, competitiveness and leakage in the European cement industry under the EU ETS: grandfathering versus output-based allocation

Leakage from climate policies and border tax adjustment:lessons from a geographic model of the cement industry

Changing the Allocation Rules in the EU ETS: Impact on Competitiveness and Economic Efficiency

Les nouveaux indicateurs de prospérité : pour quoi faire ? Enseignements de six expériences nationales