Arbeitspapier
Carbon Pricing in the EU: Evaluation of Different EU ETS Reform Options
This paper studies various options to support allowance prices in the EU Emissions Trading System (ETS), such as adjusting the cap, an auction reserve price, and fixed and variable carbon taxes in addition to EU ETS. We use a dynamic computable general equilibrium model that explicitly allows for allowance banking and for a detailed cost-effectiveness analysis at the EU Member State level. We find that both a variable carbon tax and an auction reserve price support effective carbon prices at least cost in times of negative demand shocks for emission allowances. Moreover, these price-based policies still benefit from the intertemporal flexibility through the banking provision in the EU ETS by re-allocating emissions over time with stronger emission reductions in early years and emission increases in later years. Compliance costs of the various options differ over time and between Member States. New Member States face larger welfare gains than the EU as a whole with a variable tax, while they are worse off than other Member States under an auction reserve price.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 5633
- Classification
-
Wirtschaft
Energy and the Macroeconomy
Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
Environmental Economics: Government Policy
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Computable and Other Applied General Equilibrium Models
Allocative Efficiency; Cost-Benefit Analysis
- Subject
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climate policy
European Union Emission Trading System
auction reserve price
carbon tax
price floor
banking
computable general equilibrium
- Event
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Geistige Schöpfung
- (who)
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Brink, Corjan
Vollebergh, Herman R. J.
van der Werf, Edwin
- Event
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Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
-
2015
- Handle
- Last update
-
10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Brink, Corjan
- Vollebergh, Herman R. J.
- van der Werf, Edwin
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2015
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