RT Journal Article
T1 On the empirical content of carbon leakage criteria in the EU emissions trading scheme
A1 Martin, Ralf
A1 Muûls, Mirabelle
A1 Preux, Laure B. de
A1 Wagner, Ulrich J
AB The EU Emissions Trading Scheme continues to exempt industries deemed at risk of carbon leakagefrom permit auctions. Carbon leakage risk is established based on the carbon intensity and tradeexposure of each 4-digit industry. Using a novel measure of carbon leakage risk obtained in interviewswith almost 400 managers at regulated firms in six countries, we show that carbon intensity is stronglycorrelated with leakage risk whereas overall trade exposure is not. In spite of this, most exemptionsfrom auctioning are granted to industries with high trade exposure to developed and less developedcountries. Our analysis suggests two ways of tightening the exemption criteria without increasingrelocation risk among non-exempt industries. The first one is to exempt trade exposed industries onlyif they are also carbon intensive. The second one is to consider exposure to trade only with lessdeveloped countries. By modifying the carbon leakage criteria along these lines, Europeangovernments could raise additional revenue from permit auctions of up to €3 billion per year, based ona permit price of €30
PB Elsevier
SN 0921-8009
YR 2014
FD 2014-04
LK https://hdl.handle.net/10016/20734
UL https://hdl.handle.net/10016/20734
LA eng
NO The authors gratefully acknowledgefinancial support from the British Academy (Martin), from the Leverhulme Trust (Muûls) and from the Spanish Government,reference numbers SEJ2007-62908 and ECO2012-31358 (Wagner)
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RD 17 jul. 2024