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Last update: 9/11/2012 3:13 PM
| Authors |
Dallas Burtraw Åsa Löfgren Lars Zetterberg |
|---|---|
| Publication year | 2013 |
| Published at |
Department of Economics |
| Language | en |
| Links |
www.economics.handels.gu.se/digital... |
| Keywords | price floor, EU ETS, suprlus, climate change |
| Subject categories | Economics |
Since 2008 there has been a rapid buildup of surplus emissions allowances in the EU ETS. The European Commission has presented six structural options to address the oversupply of allowances on a long-term basis. One option would introduce price management mechanisms, which could allow for the use of a price floor. A price floor has been mischaracterized as a tax, an instrument that has historically faced political opposition, and the commission states that an explicit carbon price objective would alter the nature of the EU ETS being a quantity-based market instrument. However, a price floor is structurally different from a tax in multiple ways, and its merits are well documented in the academic literature. This rule-based approach could reinforce the market-based philosophy and investment climate of the ETS.
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