Overlapping efforts in the EU Emissions Trading System

Fabian Herweg ()

Economics Letters, 2020, vol. 193, issue C

Abstract: According to the Phase IV (2021–2030) rules of the EU ETS, the total amount of emission permits allocated to firms is not fixed but endogenous. This implies that a national climate policy that overlaps with the ETS can have an impact on total aggregate emissions. Roughly speaking, if firms increase their holdings of emission permits, the total amount of permits allocated is reduced. This paper analytically investigates how an overlapping national policy affects the aggregate bank of emission permits. If marginal abatement costs are not too convex, national climate policies increase banking and thus tend to reduce overall emissions.

Keywords: Banking of permits; Cap-and-trade; EU ETS; National measures (search for similar items in EconPapers)
JEL-codes: D45 Q48 Q58 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: Overlapping Efforts in the EU Emission Trading System (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:193:y:2020:i:c:s0165176520302135

DOI: 10.1016/j.econlet.2020.109323

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