Browse by title

You are looking at 1 - 10 of 106 items :

  • Chapters/Articles x
Clear All Modify Search
You do not have access to this content

Carbon leakage and industry assistance

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Chapter 2 discusses the theory of carbon leakage and competitiveness concerns in relation to emissions-intensive and trade-exposed sectors participating in ETSs. Two measures are often considered as alternatives to avoid competitiveness issues and carbon leakage from the implementation of ETSs, that is, border carbon adjustments (BCA) and the free of cost allocation of permits. While BCAs are not very popular, it is possible that, due to the adoption of free allocation of permits, carbon-pricing schemes have been failing to implement the polluter pays principle. Keywords: emissions trading – carbon leakage – free allocation – polluter pays principle

This content is available to you

Contextualising the issue

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Chapter 1 introduces the book and the book chapters. It discusses the exponential increase in anthropogenic greenhouse gas (GHG) emissions in the past decades and outlines the most recent global emissions trends. The chapter then introduces the Paris Agreement and the key domestic climate change policies that are being adopted by countries in order to meet their intended nationally determined contribution (INDCs). Carbon pricing has been increasingly adopted by countries aiming to mitigate GHG emissions. However, even now, many heavy polluters participating in emissions trading schemes (ETSs) are not paying the full price of carbon. Keywords: climate change – greenhouse gas (GHG) emissions – Paris Agreement – intended nationally determined contribution (INDCs) – carbon taxes – emissions trading schemes (ETSs)

You do not have access to this content

Free allocation and linking emissions trading schemes: the case for harmonisation

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Chapter 5 examines aspects of the design of the free-allocation methods that might lead to competitiveness distortions. It reviews the data from the first and second trading periods of the EU ETS, when the different Member States had their own separate National Allocation Plans (NAPs). In the EU ETS context, the different allocation rules generated concerns over the competitiveness of industries subject to the different NAPs. By analogy, key design elements in the legal framework of the EU ETS and the AUS CPM would be problematic from a trade perspective. For example, the uneven benchmarks and output-based allocation versus the historical emissions data, which could result in a significant variation of the allocation levels, with the potential to impact trade and distort competition between liable installations under the independent ETSs. Keywords: emissions trading – National Allocation Plans (NAPs) – allocation – trade – competition – EU ETS – industry sectors

You do not have access to this content

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

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 do not have access to this content

Real world emissions trading schemes: challenges and lessons learnt

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Chapter 3 introduces the three case studies, that is, the European Union Emissions Trading System (EU ETS), the New Zealand Emissions Trading Scheme (NZ ETS) and the Australian Carbon Pricing Mechanism (AUS CPM). The chapter provides the reader with a basic understanding of the key elements of each ETS, such as the coverages, emissions caps, governance regimes and links with other schemes. It also reflects on the main achievements and challenges particular to each scheme. For example, the significant problems with surplus emissions permits experienced by the EU ETS, the process that led to the repeal of the CPM in Australia and the distinctiveness of the NZ ETS, which has been resilient and stable, despite significant changes in the country’s approach towards international climate change negotiations. Keywords: European Union Emissions Trading System (EU ETS) – New Zealand Emissions Trading Scheme (NZ ETS) – Australian Carbon Pricing Mechanism (AUS CPM)

You do not have access to this content

Reconsidering the eligibility thresholds for the free allocation of permits

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Chapter 4 focuses on carbon leakage in practice and real life examples of the use of free allocation as an industry assistance measure. It demonstrates that jurisdictions linking independent ETSs would benefit from harmonising the free allocation methodologies in order to minimise the competitiveness concerns and to reduce the trade distortions and other impacts inherent to the free allocation system. It proposes a review of the general thresholds in order to assess the exposures to carbon leakage so as to improve the effectiveness and fairness of the ETSs. The two final key recommendations are the removal of the sole trade-exposure factor from the quantitative assessment in the EU ETS and increasing the stringency of all the thresholds to determine emissions-intensity. Keywords: carbon leakage – free allocation – emissions intensity – trade exposure – linking – competitiveness

You do not have access to this content

Summary of the main findings

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Chapter 7 presents a summarised version of the key findings of this book. While the EU ETS, the AUS CPM and the NZ ETS have all subsidised emissions-intensive industries, the consequences of this regulatory model have, in general, escaped the scrutiny of legal scholars. The book closes with an important message, that despite formally participating in ETSs, many heavy polluters are not yet paying their fair share of the carbon price. Keywords: Emissions Trading – EU ETS – Free Allocation – World Trade Organization –Agreement on Subsidies and Countervailing Measures

You do not have access to this content

Youseph Farah and Malakee Makhoul

European Union oil and gas companies occupy a significant share of the extractive industry, and have a significant global reach. While this can bring benefits for communities by creating wealth and jobs, adding value and providing services, sometimes corporate activity can have an adverse effect on people and the environment. When this happens, the people whose human rights have been affected often seek reparation, and expect the company to be held to account. Victims have increasingly sought a remedy in the home state of the parent company either in relation to its direct acts or the unlawful conduct of its subsidiary in the host state. Whilst there are some isolated success stories, evidence suggests that victims choosing court litigation within the EU or in other home states such as the US, continue to face factual and legal challenges associated with court litigation. We place the debate within the EU’s commitment to business and human rights. The European Commission has endorsed the ‘United Nations Guiding Principles on Business and Human Rights’ (UNGPs), and has committed to supporting their implementation, encouraging companies to adhere to internationally recognised human rights, guidelines and principles. In relation to the oil and gas sector, the European Commission issued a non-binding ‘Oil and Gas Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights’, advising on how to implement the corporate responsibility to respect human rights in daily business operations. The chapter argues that, for several reasons, the ‘Oil and Gas Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights’ does not go far enough in improving the access to remedy. Specifically, this chapter advocates that due to the unique legal and business structure of oil and gas companies’ engagement, for those victims of business-related human rights violations in the oil and gas sector, unilaterally binding alternative dispute resolution processes may complement a state’s duty to offer an effective access to a remedy for victims of business-related human rights violations, and improve the effectiveness of the UNGPs. Keywords: United Nation Guiding Principles on Business and Human Rights, UNPGs, European Union law, Oil and Gas Sector Guide, access to justice, access to effective remedy, Alien Tort Statute, unilateral binding arbitration, non-judicial grievance mechanisms, alternative dispute resolution.

You do not have access to this content

Filippos Proedrou

The transition to low-carbon energy systems is the pivotal political economy issue for the EU, as it stands in the nexus of energy, politics and markets. With power markets developing into dynamic energy system integrators, smart grids emerge as the all-powerful structures that can help achieve the EU’s three principal energy security goals, namely sustainability, security of supply and affordability. Smart grids integrate renewable sources at the upstream level, advance overall renewable generation, including self-generation, enable energy efficiency and conservation, and promise to achieve low carbon security and hedge against the volatility of international energy markets. On the other hand, smart grids call for high upfront investments and the establishment of functional markets that necessitate large-scale citizens’ engagement, incentivization and education, as well as bridging the voluminous gap between textbook economics and the economy’s actual workings. Moreover, while realizing the transition to constantly balanced power loads by means of demand response management is highly promising, it may also generate a handful of adverse results. This chapter aims to critically discuss the trade-offs involved in the roll-out of smart grids and the existent barriers. In doing so, it provides a clear overview of the current state of the art, and suggests future research pathways.

You do not have access to this content

Kim Talus and Pami Aalto

Energy has been at the core of the EU project since the beginning. However, a legal basis for EU action in this area was only created with the Lisbon Treaty. Article 194 TFEU now provides for objectives of EU energy policy and a framework to enact EU-level regulation in this area. This chapter examines the vertical division of competences between EU and its Member States. While the primary focus of the chapter is on the interpretation of the Treaty on the Functioning of the European Union and Article 194 in particular, the chapter also discusses questions relating to multilevel governance in the context of EU energy policy.