Over-allocation or abatement? A preliminary analysis of the EU ETS based on the 2005-2006 emissions data

Joint Program Reprint • Journal Article
Over-allocation or abatement? A preliminary analysis of the EU ETS based on the 2005-2006 emissions data
Ellerman, A.D., and B. Buchner (2008)
Environmental and Resource Economics, 41(2): 267-287

Reprint 2008-19 [Read Full Article]

Abstract/Summary:

This paper provides an initial analysis of the EU Emissions Trading Scheme (ETS) based on the installation-level data for verified emissions and allowance allocations in the first 2 years of the first trading period. These data reveal that CO2 emissions were about 3% lower than the allocated allowances. The main objective of the paper is to shed light on the extent to which over-allocation and abatement have taken place in 2005 and 2006, when a significant CO2 price was observed. We propose a measure by which over-allocation can be judged and provide estimates of abatement based on emissions data and indicators of economic activity as well as trends in energy and carbon intensity. Finally, we discuss the insights and implications that emerge from this tentative assessment.

© 2008 Springer

Citation:

Ellerman, A.D., and B. Buchner (2008): Over-allocation or abatement? A preliminary analysis of the EU ETS based on the 2005-2006 emissions data. Environmental and Resource Economics, 41(2): 267-287 (http://dx.doi.org/10.1007/s10640-008-9191-2)

Supersedes:

Report 141. Over-Allocation or Abatement: A Preliminary Analysis of the EU Emissions Trading Scheme Based on the 2005 Emissions Data (Joint Program Report Series, 2006)
  • Joint Program Reprint
  • Journal Article
Over-allocation or abatement? A preliminary analysis of the EU ETS based on the 2005-2006 emissions data

Ellerman, A.D., and B. Buchner

Environmental and Resource Economics
2008-19
41(2): 267-287

Abstract/Summary: 

This paper provides an initial analysis of the EU Emissions Trading Scheme (ETS) based on the installation-level data for verified emissions and allowance allocations in the first 2 years of the first trading period. These data reveal that CO2 emissions were about 3% lower than the allocated allowances. The main objective of the paper is to shed light on the extent to which over-allocation and abatement have taken place in 2005 and 2006, when a significant CO2 price was observed. We propose a measure by which over-allocation can be judged and provide estimates of abatement based on emissions data and indicators of economic activity as well as trends in energy and carbon intensity. Finally, we discuss the insights and implications that emerge from this tentative assessment.

© 2008 Springer

Full article on publisher's website

Supersedes: 

Over-Allocation or Abatement: A Preliminary Analysis of the EU Emissions Trading Scheme Based on the 2005 Emissions Data