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Extending the EU Commission’s Proposal for a Reform of the EU Emissions Trading System

Stefan P. Schleicher, Angela Köppl and Alexander Zeitlberger

No 234308, EIA: Climate Change: Economic Impacts and Adaptation from Fondazione Eni Enrico Mattei (FEEM)

Abstract: Pursuing an evidence based approach we summarize the key elements of the European Commission’s proposal of July 2015 for a reform of the EU Emissions Trading System and offer facts about the current state of EU ETS that underline the needs for such a reform. We supply key data for understanding the current state of EU ETS and report in particular the share of freely allocated allowances in emissions for the various sectors since the start of EU ETS in 2005. This is the most relevant parameter for evaluating the stringency and cost impacts of the EU ETS on sectors and installations. We provide propositions for enhancing the allocation procedure of both free and auctioned allowances, the fundamental element in the cap and trade design of this system. We link this procedure closely to the relevant suggestions of the Commission proposal and offer extensions that can make in particular the allocation of free allowances more targeted and effective. We indicate how the impacts of free allowances can be calculated both for sectors and installations and conclude that these reform steps could reduce the administrative burden of the system.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 34
Date: 2016-04-15
New Economics Papers: this item is included in nep-ene, nep-eur, nep-reg and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:ags:feemei:234308

DOI: 10.22004/ag.econ.234308

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