The effect of the EU Emission Trading Scheme on emissions

Anton Bogachev and Frank Venmans

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We assess the effect of the EU Emission Trading Scheme (ETS) on emission reductions between 2008 and 2023. To do so, we compare emissions of ETS installations with non-ETS installations of similar size in the same sector and country. We use data in the UK, the Netherlands, France and Norway, because these countries require companies to report CO2 emissions at low levels, which are below the inclusion criteria of the ETS. We find that the ETS has reduced industrial emissions by approximately 12% in the second phase (2008-2012), by 18% in the third phase (2013-2020) and by 41% in the fourth phase (2021-2023). To obtain strong internal validity, our sample focusses on small companies. However, we find that the larger installations in our sample have made slightly larger emission reductions than the smaller companies.

Keywords: EU Emissions Trading Scheme; carbon pricing; cap and trade; difference-in-differences; climate policy uncertainty (search for similar items in EconPapers)
JEL-codes: H23 Q54 Q58 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2026-07
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