The European Union Emissions Trading System: should we throw the flagship out with the bathwater ?

Frederic Branger, Oskar Lecuyer () and Philippe Quirion

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Abstract: The European Union Emissions Trading System (EU-ETS), presented as the ''flagship'' of European climate policy, is subject to many criticisms from different stakeholders. Criticisms include the insufficient carbon emissions reduction, the competitiveness losses and the induced carbon leakages, the unfair distributional effects, the frauds and the existence of several other overlapping climate policy instruments. We review these criticisms and find the EU-ETS brought small but real abatements. The competitiveness losses and carbon leakages do not seem to have occurred. The distributional effects have indeed been unfair and fraud has been important. Finally, the scheme does not justify abandoning other climate policies. Some of these problems could have been avoided and can still be corrected by rethinking flexibility mechanisms and by adding some control over the carbon price.

Keywords: EU-ETS; climate policy; carbon price; flexibility mechanisms; carbon leakage; competitiveness; frauds; distributional effects; politique climatique; prix du carbone; mécanismes de flexibilité; fuites de carbone; compétitivité; fraudes; effets distributifs (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
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Citations: View citations in EconPapers (9)

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