The European emissions trading scheme (EU-ETS) is a cap and trade system that requires the industries participating in the program to obtain allowances to cover their carbon emissions. Energy Intensive Industries claim that this system puts their European plants at an economics disadvantage compared to facilities located outside the EU. As a direct consequence, industries may relocate their pro...

Cap-and-trade programs such as the European Union's Emissions Trading System (EU ETS) expose firms to considerable risks, which can respond with hedging. We develop an intertemporal stochastic equilibrium model analyze implications of hedging by risk-averse firms. show that resulting time-varying risk premium depends on size permit bank. Applying EU ETS, we find lead a U-shaped price path, beca...

Several European countries have decided to phase out coal power generation. Emissions from electricity generation are already regulated by the EU Trading System (ETS), and in some like Germany phaseout of will be accompanied with cancellation emissions allowances. In this paper we examine consequences phasing coal, for CO 2 emissions, sector, broader economy. We show analytically how welfare im...

Over the past 30 years, aviation industry has seen record-breaking growth whilst enjoying exemptions from most taxes and VAT charges. Currently, sector is considered one of fastest-growing greenhouse gas emissions sources. Attempting to reduce these in a cost-effective manner, EU decided 2012 include all flights entering leaving their Emission Trading System (EU ETS). It was quickly changed onl...

foreign policy cooperation and coordination among the european community member states and presenting europe with a single voice, has long been an important challenge within the european community/european union, especially since early 1970s. in the early 1990s, following the collapse of the ussr and the end of the cold war, there was a general speculation in europe that the ec may be able to p...

The European Union's pioneering carbon Emissions Trading System, the EU ETS, has inspired countries around world to launch their own CO2 markets. This paper analyses evolution of ETS from a political economy perspective, emphasizing interaction economic principles and interests at pivotal moments, showing how each compromise changed scope for future design choices. We focus on allowance allocat...

The EU Emissions Trading System (EU ETS), which is a cornerstone of the EU’s policy to combat climate change, has been criticised by its effects on the competitiveness of intensive energy demanding industries, and in particular, of the chlor-alkali sector. The main chlorine application in Europe is the production of polyvinyl chloride (PVC) from ethylene dichloride (EDC) as intermediate. Since ...

This Commentary sets out four lines of evidence to argue both that emission forecasts are intrinsically uncertain, and that there is clear evidence of projection inflation in the forecasts of sector emissions used to underpin the setting of sector caps in emission trading systems. From a limited evidence base, we conclude that uncertainty is at least ±2%/year, overlaying an upward bias (project...