Efficiency of the emissions trading scheme – a theoretical approach

• Authors: Kudełko Kudełko

Title variants

PL

Efektywność handlu uprawnieniami zbywalnymi – podejście teoretyczne

• Languages of publication: EN

Abstracts

EN

The purpose of the article is to indicate the most important feature of the emissions trading system – efficiency – which was the basis for the proposed and currently implemented legal solutions for environmental protection actions. The main reasons for the discrepancies in environmental and economic policies are described. The most important of which are the unequal treatment of the own costs of energy companies and the external costs caused by the emissions of the main pollutants. This causes incorrect investment decisions (allocation) made by the energy producers. The conditions under which the emissions trading system fulfil the criterion of allocation and cost efficiency are given. The analysis of some features that are the essence of this instrument creates the premise for a better understanding of its operation. The negative opinions formulated, also in Poland, emerge mainly from the opinions about this instrument, focusing only on its negative impact on energy prices increases, but also the practice of the EU ETS, which is largely inconsistent with its original assumptions.

PL

Celem artykułu jest wskazanie najważniejszej cechy handlu uprawnianiami zbywalnymi – efektywności, która stanowiła fundament dla proponowanych i realizowanych obecnie rozwiązań prawnych w ochronie środowiska. Wskazano główne powody rozbieżności polityki środowiskowej i ekonomicznej. Do najważniejszych należy zaliczyć niejednakowe traktowanie prywatnych kosztów przedsiębiorstw energetycznych i kosztów zewnętrznych powodowanych emisją zanieczyszczeń gazowych. Powoduje to podejmowanie błędnych decyzji inwestycyjnych (alokacyjnych) w sektorze energetycznym. Podano, w jakich warunkach handel uprawnieniami zbywalnymi spełnia warunek efektywności alokacyjnej, a w jakich efektywności kosztowej. Przeprowadzona analiza pewnych cech, które stanowią istotę funkcjonowania tego instrumentu, stwarza przesłanki do lepszego zrozumienia jego działania.

Keywords

EN

emissions trading system; energy sector; allocation and cost efficiency

• Publisher: Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu
• Journal: Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu
• Year: 2019
• Issue: vol. 63, nr 9
• Pages: 79-89

Contributors

author

Kudełko Kudełko

References

• Abrell J., Ndoye Faye A., Zachmann G., 2011, Assessing the Impact of the EU ETS Using Firm Level Data, Brueger Working Paper 08.
• Alberola E., Chevallier J., Chèze B., 2009, Emissions compliances and carbon prices under the EU ETS: a country specific analysis of industrial sectors, Journal of Policy Modeling, vol. 31, issue 3, pp. 446-462.
• Baumol W.J., Oates W.E., 1988, The Theory of Environmental Policy, 2nd ed., Cambridge University Press, Cambridge.
• Bonentia F., Oggionia G., Allevia E., Marangoni G., 2013, Evaluating the EU ETS impacts on profits, investments and prices of the Italian electricity market, Energy Policy, vol. 59, pp. 242-256.
• Clo S., 2009, The effectiveness of the EU Emissions Trading Scheme, Climate Policy, vol. 9, issue 3.
• Conga R., Weib M., 2010, Potential impact of (CET) carbon emissions trading on China’s power
• sector: A perspective from different allowance allocation options, Energy, volume 35, issue 9,
• pp. 3921-3931.
• De Bruyn S., Nelissen D., Korteland M., Davidson M., Faber J., van de Vreede G., 2008, Impacts on competitiveness from EU ETS: An analysis of the Dutch industry, CE Delft Report, The Netherlands.
• Egenhofer C., Alessi M., Georgiev A., Fujiwara N., 2011, The EU Emissions Trading System and
• Climate Policy Towards 2050. Real Incentives to Reduce Emissions and Drive Innovation?, Centre for European Policy Studies, Brussels.
• Ellerman A.D., Convery F.J., Perthuis C., 2010, Pricing Carbon: The European Union Emissions Trading Scheme, Cambridge University Press, Cambridge.
• Faure M., Peeters M., 2008, Climate Change and European Emissions Trading: Lessons for Theory and Practice, Edward Elgar.
• Grubb M., Laing T., Sato M., Comberti C., 2012, Analyses of the effectiveness of trading in EU ETS, Climate Strategies Working Paper.
• Helm D., 2005, Economic instruments and environmental policy, The Economic and Social Review, vol. 36, no. 3.
• Hoffmann V., 2007, EU ETS and investment decisions: the case of the german electricity industry, European Management Journal, vol. 25, issue 6, pp. 464-474.
• Kirat D., Ahamada I., 2011, The impact of the European Union emission trading scheme on the electricity-generation sector, Energy Economics, vol. 33, issue 5, pp. 995-1003.
• Laing T., Sato M., Grubb M., Comberti C., 2013, Assessing the effectiveness of the EU Emissions
• Trading System, Centre for Climate Change Economics and Policy Working Paper No. 126.
• Linares P., Santos F., Ventosa M., Lapiedra L., 2006, Impacts of the European emissions trading scheme directive and permit assignment methods on the Spanish electricity sector, The Energy Journal, vol. 27, no. 1, pp. 79-98.
• Lund P., 2007, Impacts of EU carbon emission trade directive on energy-intensive industries – Indicative micro-economic analyses, Ecological Economics, vol. 63, issue 4, pp. 799-806.
• Martin R., Muûls M., Wagner U., 2012, An evidence review of the EU Emissions Trading System, focusing on effectiveness of the system in driving industrial abatement, Energy and Climate Change.
• Opschoor J.B., Vos H.B., 1989, Economic Instruments for Environmental Protection, OECD Publications Service, Paris.
• Pearce D., Turner K., 1990, Economics of Natural Resources and the Environment, Harvester Whateshaw, London.
• Rogge K., Hoffmann V., 2010, The impact of the EU ETS on the sectoral innovation system for power generation technologies – Findings for Germany, Energy Policy, vol. 38, issue 12, pp. 7639-7652.
• The impact of a CO2 levy on the electricity sector, 2016, ECOFYS.
• Thema J., Suerkemper F., Grave K., Amelung A., 2013, The impact of electricity demand reduction policies on the EU-ETS: Modelling electricity and carbon prices and the effect on industrial competitiveness, Energy Policy, volume 60, pp. 656-666.
• Tietenberg T., 1991, Economic Instruments for Environmental Regulation, [in:] D.R. Helm (ed.), Economic Policy towards the Environment, Blackwell, Oxford.
• Villoria-Sáeza P., Tamb W.Y., del Río Merinoa M., Arrebolaa C.V., Wang X., 2016, Effectiveness of greenhouse gas emission trading schemes implementation: a review on legislations, Journal of Cleaner Production, vol. 127.
• Weitzman M., 1974, Prices vs quantities, Review of Economic Studies, vol. 41.