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The European Union Emissions Trading Scheme: should we throw the flagship out with the bathwater?

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  • Frédéric Branger
  • Oskar Lecuyer
  • Philippe Quirion
Abstract
The European Union Emissions Trading System (EU ETS), presented as the ‘flagship’ of European climate policy, is subject to many criticisms from different stakeholders: it neither reduce carbon emissions nor generates enough low‐carbon innovation; it induces competitiveness losses and carbon leakage; its distributional effects are unfair; and, finally; it is susceptible to fraud. We review these criticisms and recognize that abatement is real (though small), innovation is insufficient, competitiveness losses and carbon leakage did not seem to take place, distributional effects have indeed been unfair, and fraud has been important. Some of these problems could have been avoided. They can still be corrected by reforming the ETS through the introduction of price limits and by developing complementary policies, both because the ETS reform may fail and because the ETS cannot address all the relevant market failures. WIREs Clim Change 2015, 6:9–16. doi: 10.1002/wcc.326 This article is categorized under: Climate Economics > Economics of Mitigation Policy and Governance > Multilevel and Transnational Climate Change Governance

Suggested Citation

  • Frédéric Branger & Oskar Lecuyer & Philippe Quirion, 2015. "The European Union Emissions Trading Scheme: should we throw the flagship out with the bathwater?," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 6(1), pages 9-16, January.
    • Handle: RePEc:wly:wirecc:v:6:y:2015:i:1:p:9-16
    DOI: 10.1002/wcc.326
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    Cited by:

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    2. Schleich, Joachim & Lehmann, Sascha & Cludius, Johanna & Abrell, Jan & Betz, Regina Annette & Pinkse, Jonatan, 2020. "Active or passive? Companies' use of the EU ETS," Working Papers "Sustainability and Innovation" S07/2020, Fraunhofer Institute for Systems and Innovation Research (ISI).
    3. Brouwers, Roel & Schoubben, Frederiek & Van Hulle, Cynthia & Van Uytbergen, Steve, 2016. "The initial impact of EU ETS verification events on stock prices," Energy Policy, Elsevier, vol. 94(C), pages 138-149.
    4. Cristian Mardones, 2021. "Analysis on complementarity between a CO2 tax and an emissions trading system to reduce industrial emissions in Chile," Energy & Environment, , vol. 32(5), pages 820-833, August.
    5. Philippe Quirion, 2021. "Tradable instruments to fight climate change: A disappointing outcome," Post-Print hal-03495904, HAL.

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