Allocation, allocation, allocation! The political economy of the development of the European Union Emissions Trading System

Sato, Misato ORCID: 0000-0002-9978-9595, Rafaty, Ryan, Calel, Raphael and Grubb, Michael (2022) Allocation, allocation, allocation! The political economy of the development of the European Union Emissions Trading System. Wiley Interdisciplinary Reviews: Climate Change, 13 (5). ISSN 1757-7780

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Abstract

The European Union's pioneering carbon Emissions Trading System, the EU ETS, has inspired countries around the world to launch their own CO 2 markets. This paper analyses the evolution of the EU ETS from a political economy perspective, emphasizing the interaction of economic principles and political interests at pivotal moments, and showing how each compromise changed the scope for future design choices. We focus on the allowance allocation issue, which provides a window into the complex tug-of-war between economic efficiency and the politics of distribution. Our account highlights the dynamic nature of CO 2 market reform, and provides lessons that can help inform the design of more stable and effective CO 2 markets in the future. This article is categorized under: Climate Economics > Economics of Mitigation The Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior.

Item Type:	Article
Official URL:	https://wires.onlinelibrary.wiley.com/journal/1757...
Additional Information:	© 2022 The Authors
Divisions:	Grantham Research Institute
Subjects:	G Geography. Anthropology. Recreation > GE Environmental Sciences H Social Sciences > HB Economic Theory J Political Science > JN Political institutions (Europe)
Date Deposited:	24 Jun 2022 10:00
Last Modified:	12 Dec 2024 03:05
URI:	http://eprints.lse.ac.uk/id/eprint/115431

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