Show Less
You do not have access to this content

Paying the Carbon Price

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Paying the Carbon Price analyses the practice of freely allocating permits in Emissions Trading Schemes (ETSs) and demonstrates how many heavy polluters participating in ETSs are not yet paying the full price of carbon. This innovative book provides a framework to assist policymakers in the design of transitional assistance measures that are both legally robust and will support the effectiveness of the ETSs whilst limiting negative impacts on international trade.
Show Summary Details
You do not have access to this content

Chapter 6: The free allocation of permits and the WTO discipline of subsidies

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Extract

The literature has extensively analysed the legal implications of the free allocation system from the perspective of the World Trade Organization (WTO) laws on subsidies. However, the absence of an interdisciplinary approach resulted in a lack of detailed understanding of the functioning of the ETSs, the free allocation methodology and the economic aspects of distributing permits free of cost. Chapter 6 closes the gap between the doctrinal analysis of the Agreement on Subsidies and Countervailing Measures (SCM Agreement), the legal frameworks of these schemes in practice and the economic research data. Chapter 6 concludes that the free allocation of permits is a subsidy in accordance with the definition in the SCM Agreement and analyses whether it could be a prohibited or actionable subsidy, according to the different thresholds for allocation and the levels of assistance set by each scheme. In relation to the EU ETS sole emissions-intensity threshold, it is arguably perpetuating a targeted subsidisation of a small number of enterprises from the cement sector, which had already been favoured by the decentralised NAPs during the first and second trading periods. As such, it is an actionable subsidy and may be challenged if it causes adverse effects on other WTO Members. The chapter recommends the removal of the sole emissions-intensity factor from the EU ETS quantitative assessment. The recent proposal for a Directive to amend the EU ETS is partially in line with this recommendation. Keywords: World Trade Organization (WTO) – subsidies – free allocation – emissions trading – Agreement on Subsidies and Countervailing Measures (SCM Agreement) – actionable subsidy – prohibited subsidy – cement – EU ETS

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

or login to access all content.