Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216524 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8128
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
According to the Phase IV (2021-2030) rules of the EU ETS, the total amount of emissions permits allocated to firms is not fixed but endogenous. This implies that a national climate policy that overlaps with the emission trading system can have an impact on total aggregate emissions. Roughly speaking, if firms increase their holdings of emission permits, the total amount of emissions allocated is reduced. This paper investigates analytically how an overlapping national policy affects the decision of an individual firm and the whole industry to bank emission permits. If marginal abatement costs are not too convex, national climate policies increase banking and thus tend to reduce overall emissions. This effect, however, is reduced in times of low interest rates.
Subjects: 
banking of permits
cap-and-trade
EU ETS
national measures
JEL: 
D45
Q48
Q58
Document Type: 
Working Paper
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