EU ETS and the New Green Paradox

19 Pages Posted: 23 Jul 2019

See all articles by Knut Einar Rosendahl

Knut Einar Rosendahl

Norwegian University of Life Sciences; Statistics Norway - Research Department

Date Written: 2019


With the new rules of the EU ETS, involving cancellation of allowances, cumulative emissions are no longer fixed but depending on the market outcome. Perino (2018) showed that additional abatement effort can reduce cumulative emissions if it occurs within a few years. This article shows that Perino's result will be reversed, i.e., cumulative emissions increase, if the abatement effort is at a later year, or permanent. Thus, a new green paradox has emerged.

Keywords: emissions trading, green paradox, EU ETS, MSR

JEL Classification: H230, Q540, Q580

Suggested Citation

Rosendahl, Knut Einar, EU ETS and the New Green Paradox (2019). CESifo Working Paper No. 7645. Available at SSRN:

Knut Einar Rosendahl (Contact Author)

Norwegian University of Life Sciences ( email )

PO Box 5033
NO-1432 Aas
+47 64966117 (Phone)

Statistics Norway - Research Department ( email )

Kongens Gt. 6
PO Box 8131 Dep
N-0033 Oslo
+47 21094954 (Phone)
+47 21094963 (Fax)

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