European Emissions Trading in Practice

European Emissions Trading in Practice

An Economic Analysis

New Horizons in Environmental and Energy Law series

Stefano Clò

This unique and up-to-date book analyses the functioning of the European Emissions Trading Scheme (ETS) and assesses the extent to which relevant legislation has affected its capacity to promote cost-effective reduction of European carbon emissions.

Chapter 4: Legal and Economic Aspects of the European Emissions Trading Scheme

Stefano Clò

Subjects: environment, climate change, environmental law, law - academic, environmental law, european law, law and economics


1. INTRODUCTION Taking the European emissions reduction target as given, and without questioning the European decision of opting for a cap and trade scheme among different possible regulatory options, we start by observing how the ETS has been performing during these years and, in the case that fallacies are identified, we will try to offer some normative prescriptions to improve the ETS effectiveness by reforming its institutional framework according to economic principles. Chapter 4 introduces the economic and legal background of the ETS. Starting with a brief reminder of the important experience of the American SO2 emissions trading programme, section 2 of this chapter describes the origin of the EU ETS within the legal framework of the Kyoto Protocol and the role it covers within the European climate policy. The ETS is based upon the institution of emissions allowances, artificially created by the public authority and assigned to the regulated agents that are free to trade them within the ETS. Therefore, the legal nature of the allowances within the field of property law is briefly discussed. Section 3 contextualizes the ETS in a temporal and special framework. The length of the ETS regulation and its subdivision in different trading periods are specified together with its scope: the amount of emissions and sources that fall within the ETS. This specification is important to underline that the ETS regulates only a subset of the GHG and emissions sources covered by the Kyoto Protocol. This difference suggests that compliance with the ETS European...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information