Climate Change and European Emissions Trading
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Climate Change and European Emissions Trading

Lessons for Theory and Practice

Edited by Michael Faure and Marjan Peeters

This timely book focuses on the EU-wide greenhouse gas emissions trading scheme for major sources. It combines legal and economic approaches and reviews the major revision of this scheme. A distinguished range of authors assess the experiences thus far and also consider future development from both theoretical and practical perspectives. They also discuss many design options, including auctioning, credit and trade, the inclusion of aviation emissions, and linking possibilities. Moreover, attention is paid to the role of legal principles, the role of case law, and to aspects of democratic accountability within an emissions trading scheme. Ways to avoid carbon leakage and the role of national climate policies are also discussed. This book makes clear that the economic efficiency and effectiveness of an emissions trading scheme depend to a large extent on the specific legislative choices, and hence the legislative design of such a scheme deserves meticulous attention.
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Chapter 6: EU Greenhouse Gas Emissions Trading and Competition Law

Stefan Weishaar


Stefan Weishaar INTRODUCTION This chapter addresses Competition law issues that arise under the European Emissions Trading System (EU ETS). Where appropriate, comments on the proposed amendment of Directive 2003/87/EC1 that emphasizes auctioning and benchmarking are made. Pursuant to the proposal of the European Commission, sectors exposed to strong international competition and that give rise to carbon leakage will benefit from free allocation. Sectors other then electricity – electricity will in principle not benefit from any free allocation2 – will be subject to ever more auctioning.3 A transitory rule envisages a partial free allocation of 80% of the average measured emissions during the period 2005–2007. The free allocation is reduced annually by equal amounts so that by 2020 free allocation will have completely faded out in these sectors.4 Undue interventions by Member States are largely foreclosed through the application of the four freedoms, while EC Competition law (Articles 81 and 82 EC Treaty) is geared to the prevention of competitive distortions arising in particular from undue behaviour of firms. Not prejudicing the application of the four freedoms, Member States’ involvement in practices that distort competition between undertakings is addressed through the application of EU Competition law rules. There are two main alleys in which unduly distorting State measures taken within the EU ETS framework can be contained. Firstly, through the joint application of Articles 3(g), 10(2), 81 and 82 EC Treaty which was developed by the ECJ upon recognition that State measures can COM(2008)16 final of 23.01.2008. See...

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