Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/128338
Authors: 
Brink, Corjan
Vollebergh, Herman R. J.
van der Werf, Edwin
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5633
Abstract: 
This paper studies various options to support allowance prices in the EU Emissions Trading System (ETS), such as adjusting the cap, an auction reserve price, and fixed and variable carbon taxes in addition to EU ETS. We use a dynamic computable general equilibrium model that explicitly allows for allowance banking and for a detailed cost-effectiveness analysis at the EU Member State level. We find that both a variable carbon tax and an auction reserve price support effective carbon prices at least cost in times of negative demand shocks for emission allowances. Moreover, these price-based policies still benefit from the intertemporal flexibility through the banking provision in the EU ETS by re-allocating emissions over time with stronger emission reductions in early years and emission increases in later years. Compliance costs of the various options differ over time and between Member States. New Member States face larger welfare gains than the EU as a whole with a variable tax, while they are worse off than other Member States under an auction reserve price.
Subjects: 
climate policy
European Union Emission Trading System
auction reserve price
carbon tax
price floor
banking
computable general equilibrium
JEL: 
Q43
Q52
Q58
H23
D58
D61
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.