The Efficiency Costs of Separating Carbon Markets Under the EU Emissions Trading Scheme: A Quantitative Assessment for Germany

24 Pages Posted: 10 Apr 2005 Last revised: 24 May 2014

See all articles by Christoph Böhringer

Christoph Böhringer

University of Oldenburg - Economic Policy; Centre for European Economic Research (ZEW)

Tim Hoffmann

ZEW – Leibniz Centre for European Economic Research

Casiano Manrique

University of Las Palmas de Gran Canaria - Analisis Economico Aplicado

Date Written: 2005

Abstract

From 1 January 2005 onwards the European Union has launched the first large-scale international carbon emissions trading program. As the EU Emissions Trading Scheme (EU-ETS) covers only part of domestic carbon emissions, it implies a hybrid environmental regulation scheme: Each EU Member State must specify additional domestic abatement policies for the sectors that are not covered by the emissions trading scheme in order to meet its emissions budget under the EU Burden Sharing Agreement. Based on numerical simulations for Germany, we illustrate the efficiency drawback of hybrid carbon regulation which becomes particularly relevant when distributional constraints of the current EU-ETS design are taken into account.

Keywords: Emissions trading, hybrid regulation, National Allocation Plans

JEL Classification: D61, H21, Q48

Suggested Citation

Bohringer, Christoph and Hoffmann, Tim and Manrique, Casiano, The Efficiency Costs of Separating Carbon Markets Under the EU Emissions Trading Scheme: A Quantitative Assessment for Germany (2005). ZEW - Centre for European Economic Research Discussion Paper No. 05-006, Available at SSRN: https://ssrn.com/abstract=686741 or http://dx.doi.org/10.2139/ssrn.686741

Christoph Bohringer (Contact Author)

University of Oldenburg - Economic Policy ( email )

Centre for European Economic Research (ZEW) ( email )

D-68161 Mannheim
Germany
+49 6211235200 (Phone)
+49 6211235226 (Fax)

Tim Hoffmann

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Casiano Manrique

University of Las Palmas de Gran Canaria - Analisis Economico Aplicado ( email )

Dep. de Analisis Economico Aplicado
Las Palmas de Gran Canaria, Las Palmas 35017
Spain

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