On the empirical content of carbon leakage criteria in the EU Emissions Trading Scheme

The EU Emissions Trading Scheme continues to exempt industries deemed at risk of carbon leakage from permit auctions. Carbon leakage risk is established based on the carbon intensity and trade exposure of each 4-digit industry. Using a novel measure of carbon leakage risk obtained in interviews with...

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Vydané v:	Ecological economics Ročník 105; s. 78 - 88
Hlavní autori:	Martin, Ralf, Muûls, Mirabelle, de Preux, Laure B., Wagner, Ulrich J.
Médium:	Journal Article
Jazyk:	English
Vydavateľské údaje:	Amsterdam Elsevier B.V 01.09.2014 Elsevier
Predmet:	Animal, plant and microbial ecology Applied ecology auctions Biological and medical sciences carbon Carbon leakage developing countries Emissions trading environmental markets EU ETS European Union Firm data Fundamental and applied biological sciences. Psychology income Industrial relocation industry interviews managers Permit allocation prices risk trade Q54 Firm data Industrial relocation Emissions trading H23 H25 Carbon leakage F18 Permit allocation EU ETS Q52 Environment economy Gas emission Emission permit Kyoto Protocol Carbon dioxide Empirical method Ecology Industry Relocation Firm
ISSN:	0921-8009
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Shrnutí:	The EU Emissions Trading Scheme continues to exempt industries deemed at risk of carbon leakage from permit auctions. Carbon leakage risk is established based on the carbon intensity and trade exposure of each 4-digit industry. Using a novel measure of carbon leakage risk obtained in interviews with almost 400 managers at regulated firms in six countries, we show that carbon intensity is strongly correlated with leakage risk whereas overall trade exposure is not. In spite of this, most exemptions from auctioning are granted to industries with high trade exposure to developed and less developed countries. Our analysis suggests two ways of tightening the exemption criteria without increasing relocation risk among non-exempt industries. The first one is to exempt trade exposed industries only if they are also carbon intensive. The second one is to consider exposure to trade only with less developed countries. By modifying the carbon leakage criteria along these lines, European governments could raise additional revenue from permit auctions of up to €3billion per year, based on a permit price of €30.
Bibliografia:	ObjectType-Article-1 SourceType-Scholarly Journals-1 ObjectType-Feature-2 content type line 23
ISSN:	0921-8009
DOI:	10.1016/j.ecolecon.2014.05.010