| ID | 168677 |
| Title Proper | Decoupling the EU ETS from subsidized renewables and other demand side effects |
| Other Title Information | lessons from the impact of the EU ETS on CO2 emissions in the German electricity sector |
| Language | ENG |
| Author | Schäfer, Sebastian |
| Summary / Abstract (Note) | This paper analyzes the impact of the EU ETS on CO2 reduction in the German electricity sector. We find an ETS-induced emission abatement which is not exceeding 6% of total emissions with a maximum already in 2010. Thereafter the ETS has not induced additional reductions. This outcome corresponds to the recent debate about sub-optimal performance of the EU ETS caused by excessive allowances. Following up on this we develop a unilateral flexible cap to eliminate demand side effects which lead to excessive allowances. The unilateral flexible cap is based on emission intensities. Using the works of Newell and Pizer (2008); Sue Wing et al. (2009) we prove that an intensity-based emission cap is advantageous in the German electricity sector when compared to an absolute cap. An ex-post analysis shows that the amount of excessive allowances resulting from the economic crisis during the second trading period could have been significantly lowered with a unilateral flexible cap. This approach also decouples the EU ETS from a simultaneous promotion of renewable energy. |
| `In' analytical Note | Energy Policy, No.133; Oct 2019: p.110858 |
| Journal Source | Energy Policy 2019-10 |
| Key Words | Decoupling Overlapping Regulations ; Promotion of Renewable Energy ; Impact of EU Emissions Trading ; Intensity Standard |