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Addressing leakage in the EU ETS : Border adjustment or output-based allocation ?

dc.contributor.authorMonjon, Stéphanie
dc.contributor.authorQuirion, Philippe
HAL ID: 1130
ORCID: 0000-0003-4066-2984
dc.date.accessioned2011-10-28T09:31:09Z
dc.date.available2011-10-28T09:31:09Z
dc.date.issued2011-09
dc.identifier.urihttps://basepub.dauphine.fr/handle/123456789/7346
dc.language.isoenen
dc.subjectEmission tradingen
dc.subjectborder adjustmenten
dc.subjectoutput‐based allocationen
dc.subjectcompetitivenessen
dc.subjectcarbon leakageen
dc.subject.ddc333en
dc.subject.classificationjelQ38en
dc.subject.classificationjelQ58en
dc.subject.classificationjelQ54en
dc.subject.classificationjelL94en
dc.subject.classificationjelL61en
dc.subject.classificationjelL51en
dc.titleAddressing leakage in the EU ETS : Border adjustment or output-based allocation ?en
dc.typeArticle accepté pour publication ou publié
dc.description.abstractenThe EU ETS has been criticised for threatening the competitiveness of European industry and generating carbon leakage, i.e., increasing foreign greenhouse gas emissions. Two main options have been put forward to tackle these concerns : border adjustments and output-based allocation, i.e., allocation of free allowances in proportion to current production. We compare various configurations of these two options, as well as a scenario with full auctioning and no border adjustment. Against this background, we develop a model of the main sectors covered by the EU ETS: electricity, steel, cement, and aluminium. We conclude that the most efficient way to tackle leakage is auctioning with border adjustment, which generally induces a negative leakage (a spillover). This holds even if the border adjustment does not include indirect emissions, if it is based on EU (rather than foreign) specific emissions, or (for some values of the parameters) if it covers only imports. Another relatively efficient policy is to combine auctioning in the electricity sector and output-based allocation in exposed industries, especially if free allowances are given both for direct and indirect emissions, i.e., those generated by the generation of the electricity consumed. Although output-based allocation is generally less effective than border adjustment to tackle leakage, it is more effective to mitigate production losses in the sectors affected by the ETS, which may ease climate policy adoption.en
dc.relation.isversionofjnlnameEcological Economics
dc.relation.isversionofjnlvol70en
dc.relation.isversionofjnlissue11en
dc.relation.isversionofjnldate2011-09
dc.relation.isversionofjnlpages1957-1971en
dc.relation.isversionofdoihttp://dx.doi.org/10.1016/j.ecolecon.2011.04.020en
dc.description.sponsorshipprivateouien
dc.relation.isversionofjnlpublisherElsevieren
dc.subject.ddclabelEconomie de la terre et des ressources naturellesen


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