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- Publisher
- Addleton Academic Publishers
- Copyright
- © 2009 Addleton Academic Publishers
- ISSN
- 2329-4175
- eISSN
- 2377-0996
- Publisher site
- See Article on Publisher Site
Abstract
The European emissions trading scheme (EU ETS) is the centerpiece of Europe’s climate policy. The system has been undermined variously by the weakness of its regulation, an undesirable overlap with other public policies and the farreaching economic and financial crisis that caused the market price of allowances to plunge. This article attempts to identify the conditions for making the coming years of the EU ETS a success. It draws historical lessons from the eight years the scheme has been in operation, and then analyzes, using the ZEPHYR-Flex model, the various interventions by the public authorities currently under discussion in order to revive the market. These simulations reveal the risk of carrying forward problems to the future, with further clouding of the visibility needed by ETS actors in the long term. Finally, the article proposes to draw lessons from monetary policy by outlining what might be the mandate of an Independent Carbon Market Authority, with responsibility for the dynamic management of the supply of allowances, and whose main mission would be to ensure the optimal linkage between the different temporal horizons of the climate strategy. JEL codes: Q54; E52 Keywords: emission trading; EU ETS; governance.
Journal
Journal of Self-Governance and Management Economics – Addleton Academic Publishers
Published: Jan 1, 2014