Emissions Abatement: the Role of EU ETS and Free Allowances. The Italian Case

Carla Guerriero () and Antonia Pacelli ()
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Carla Guerriero: Università di Napoli Federico II and CSEF, https://csef.it/people/carla-guerriero/
Antonia Pacelli: University of Naples Federico II, Naples School of Economics.

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: This paper uses Italian data on industrial plant emissions over a 12 years period to assess the differential impact of negative shocks in the allocation of free allowances across various industrial sectors in the context of the EU Emission Trading Scheme (ETS). Specifically, it examines the consequences of reduced free allowances for certain sectors in contrast to those that maintain their existing allocation. By using a novel indicator of emission intensity based on quantity this study shows that the absence of free allowances does not directly impact the incentive to abate emissions but foster the entry of cleaner producers. The results offer evidence of regional heterogeneity by analysing the variations in policy effects between the South and the North of Italy.

Keywords: Carbon pricing; free allowances; carbon leakage; emission intensity. (search for similar items in EconPapers)
JEL-codes: D22 H23 Q54 Q58 (search for similar items in EconPapers)
Date: 2023-12-12
New Economics Papers: this item is included in nep-law and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:698

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