Argument: The EU Emissions Trading System is a success

Supporting articles and reports

“Review of Environmental Economics and Policy, Oxford University Press, Winter 2007

• “Review of pilot phase of European Union Emissions Trading Scheme finds it to be successful”, Denny Ellerman, May 28th, 2007
• A summary of the report’s conclusions: “An analysis of the historical emissions data by the economists suggests that abatement or environmental measure taken by companies had achieved a reduction of about 7 per cent, even allowing for the growth in emissions that accompanies growth in gross domestic product. The economists conclude ETS has been successful in helping to correct what they call the market failure that surrounds climate change, and in delivering the EU’s commitments to reduce carbon dioxide (CO2) emissions under the Kyoto Protocol. The seven conclude that it will be central to future global climate negotiations. They also call for a global framework for managing climate policy in the long term.”[1]
• Select quotes:
  • “It shows that emissions trading can be done, and will be hard to ignore in future climate negotiations.”
  • “The challenges of establishing a global system are likely to be formidable,” they warn.

Supporting arguments and evidence

The EU ETS has succesfully reduced carbon emissions:

• According to the 2007 Review of Environmental Economics and Policy, an analysis of the historical emissions data suggests that abatement or environmental measure taken by companies had achieved a reduction of about 7 per cent.

The EU ETS has succesfully placed a price on C02:

• Review of Environmental Economics and Policy, Oxford University Press, Winter 2007 – “The EU has succeeded in placing a price on CO2 that starts to reflect the scarce capacity of the earth’s atmosphere to absorb more greenhouse gas emissions”.

The EU ETS Commission has effectively responded to its mistakes in initially over-allocating carbon credits: After the overallocation in the first round, the Commission reduced the proposed number of allowances of 14 of the 25 member states by a combined annual amount of almost 100 million tonnes of CO2, according to the Winter 2007, Review of Environmental Economics and Policy.[2]