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What Have We Learnt from the European Union’s Emissions Trading System?

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Abstract

The EU Emissions Trading System (ETS) demonstrated the ability to design and launch a large-scale trading system in a short period of time. The path from initial reticence about emissions trading to implementation of the world’s largest program is an important history. Three issues play a large role in the evaluation of the program to date and its on-going development: allocation plans, cost uncertainty, and leakage of emissions to abroad. Decisions in Phase I and II (2005–2012) were responsive to questions of political feasibility and implementation, but some of these decisions including allocation in particular will be substantially revised in Phase III (2013–2020).

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Notes

  1. For an overview, see for instance the OECD Environmentally Related Taxes database, www.oecd.org/env/policies/database.

  2. This option is available to member states which fulfil certain conditions related to the interconnectivity of their electricity grid, the share of a single fossil fuel used in electricity production, and GDP per capita in relation to the EU-27 average. In addition, the amount of free allowances that a member state can allocate to power plants is limited to 70% of CO2 emissions of relevant plants in phase I and declines annually thereafter. Furthermore, free allocation in phase III can only be given to power plants that were operational or under construction no later than the end of 2008.

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Acknowledgments

This research has been supported by the Foundation for Strategic Environmental Research (Mistra) through the Climate Policy Research Program, Clipore.

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Authors and Affiliations

  1. International Energy Agency, 9 rue de la Féderation, 75239, Paris, France

    Markus Wråke

  2. Resources for the Future, 1616 P Street NW, Washington, DC, 20036, USA

    Dallas Burtraw

  3. University of Gothenburg, P.O. Box 640, 405 30, Göteborg, Sweden

    Åsa Löfgren

  4. IVL Swedish Environmental Research Institute, P.O. Box 210 60, 10031, Stockholm, Sweden

    Lars Zetterberg

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  1. Markus Wråke
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  3. Åsa Löfgren
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Correspondence to Markus Wråke.

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Wråke, M., Burtraw, D., Löfgren, Å. et al. What Have We Learnt from the European Union’s Emissions Trading System?. Ambio 41 (Suppl 1), 12–22 (2012). https://doi.org/10.1007/s13280-011-0237-2

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