A literature-based multi-criteria evaluation of the EU ETS

Frank Venmans

Renewable and Sustainable Energy Reviews, 2012, vol. 16, issue 8, 5493-5510

Abstract: This article reviews the existing literature on the European Union Emission Trading Scheme (EU ETS), focusing on empirical ex-post research since the end of the first period (2007). The literature is presented through a multi-criteria evaluation. Concerning environmental effectiveness, despite over-allocation during the first period, abatement is estimated between −2.5% and −5%. Trade-driven carbon leakage was not observed, even if long-term economic models predict divergent leakage estimates for certain at-risk sectors. The abatement target was likely to be below an economically efficient level, but was reached in a fairly cost-effective way, even if free allocation gave rise to several distortional effects. Equity concerns were manifold and constitute a major drawback to the policy. Finally, institutional feasibility can be considered positive in that the EU ETS passed the European legislative process, unlike the previously proposed EU-wide carbon tax.

Keywords: Carbon leakage; Emission trading; EU ETS; Multi-criteria analysis; Over-allocation; Technology development; Windfall profits (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (39)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:rensus:v:16:y:2012:i:8:p:5493-5510

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DOI: 10.1016/j.rser.2012.05.036

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