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Abatement and Allocation in the Pilot Phase of the EU ETS

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Abstract

We use historical industrial emissions data to assess the level of abatement and over-allocation that took place across European countries during the pilot phase (2005–2007) of the European Union Emission Trading Scheme. Using a dynamic panel data model, we estimate the counter factual (business-as-usual) emissions scenario for EU member states. Comparing this baseline to allocated and verified emissions, we find that both over-allocation and abatement occurred, along with under-allocation and emissions inflation. Over the three trading years of the pilot phase we find over-allocation of approximately 280 million EUAs and total abatement of 247 Mt CO2. However, we calculate that emissions inflation of approximately 73 Mt CO2 also occurred, possibly due to uncertainty about future policy design features.

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Authors and Affiliations

  1. School of Geography, Planning & Environmental Policy, University College Dublin, Planning Building, Richview, Clonskeagh, Dublin 14, Ireland

    Barry Anderson

  2. Queen’s University Management School, Queen’s University Belfast, 25 University Square, Belfast, BT7 1NN, UK

    Corrado Di Maria

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  1. Barry Anderson
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  2. Corrado Di Maria
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Correspondence to Corrado Di Maria.

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Anderson, B., Di Maria, C. Abatement and Allocation in the Pilot Phase of the EU ETS. Environ Resource Econ 48, 83–103 (2011). https://doi.org/10.1007/s10640-010-9399-9

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