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Implementing EU emissions trading: success or failure?

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Abstract

This article assesses and explains the implementation of the EU emissions trading scheme (EU ETS). It argues that implementation in terms of ambitiousness has been only moderately successful so far, but significant differences between the Member States are also observed. Similarities and differences are then explained within a multi-level governance approach emphasizing the need to search for explanations at national, EU, and global levels. The EU ETS case shows that the multi-level governance approach can be as relevant for understanding implementation as for explaining policy-making. In addition to factors located at the national level, the decentralized nature of the EU scheme itself is important for understanding how the system works in practice. At the global level, the link to the Clean Development Mechanism under the Kyoto Protocol is particularly important for determining how well the EU ETS will perform in the future.

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Notes

  1. The Kyoto Protocol was adopted in December 1997 and, in addition to emissions trading, two other flexible mechanisms were established: the Clean Development Mechanism (CDM) and Joint Implementation (JI) (see e.g. Grubb et al. 1999).

  2. As noted by Vis (2006, p. 188): “Only if there are fewer allowances than there would be emissions in the absence of a trading scheme will there be any environmental added value.”

  3. One could argue, however, that high data certainty could reveal little need for the EU ETS to meet relevant commitments and previous experience with trading could be negative. This situation would probably affect ambitiousness negatively. See Knill (2001) for a differentiated and nuanced approach to the ‘goodness of fit’ proposition.

  4. The EU ETS so far only covers certain industries, accounting for around half of EU CO2 emissions.

  5. In the 2005 NAP II Communication, it is for instance noted that “the EU ETS needs to be used more to fully realize the potential of emissions trading” (EU Commission 2005, p. 4).

  6. Still, it should also be mentioned that the case of the UK in NAP I was prolonged and complicated when the British government tried to submit a revised and somewhat less ambitious NAP in November 2004. See Vis (2006, pp. 204–206) for an overview and discussion of this case.

  7. But as discussed by Harrison and Radov (2007), much additional data collection and institutional groundwork had to be carried out to meet EU ETS requirements.

  8. In the British ETS, 31 organizations (‘direct participants’) took on targets to reduce their emissions against 1998–2000 levels, aiming to deliver close to 12 million tonnes of additional CO2 equivalent emission reductions over the period 2002–2006 (www.defra.gov.uk/environment/climatechange/trading/).

  9. As noted by Matthes and Schafhausen (2007, pp. 72–73), ‘Significant powers from politics and the Federal Administration have a very negative stance toward the implementation of the EU Emissions Trading System (EU ETS), or still oppose it even today.’

  10. The positive impact of the new government is also emphasised by Del Rio (2007, p. 208).

  11. This pattern is not unique for Spain. The same dynamic can be seen in the case of Italy where a change of government in the spring of 2005 led to a more positive and vigorous NAP process. This may indicate that environmental issues generally figure higher on the agendas of European socialists/social-democrats than Conservatives.

  12. EU ETS implementation in Poland has generally been characterized as ‘wearing an ill-fitted suit.’ See Jankowski (2007, p. 333).

  13. (1) Consistency between total quantity of allowances and the Member States’ commitments under the Kyoto Protocol; (2) Consistency between quantity of allowances and assessments of emissions development; (3) Consistency between quantity of allowances and potential to reduce emissions; (4) Consistency with other Community legislative and policy instruments; (5) Non-discrimination between companies or sectors; (6) Information on the treatment of new entrants; (7) Information on how early action would be taken into account; (8) Information on how clean technology would be taken into account; (9) How the public would be involved; (10) List of installations and their respective allowances; (11) How competition from outside the EU would be taken into account.

  14. The CDM Executive Board is composed of ten members drawn from all constituencies of the Kyoto Protocol’s parties.

Abbreviations

CCA:

Climate change agreements

CDM:

Clean Development Mechanism

CEECs:

Central and Eastern European Countries

CER:

Certified Emissions Reduction

EB:

Executive Board

EEA:

European Environmental Agency

EITs:

Economies in Transition

ETS:

Emissions trading scheme

EU ETS :

EU emissions trading scheme

GHG:

Greenhouse gas

JI:

Joint Implementation

NAO:

National Audit Office

NAP:

National Allocation Plan

UNFCCC:

United Nations Framework Convention on Climate Change

VAs:

Voluntary agreements

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Acknowledgments

We would like to express thanks to Steinar Andresen, FNI, and Sebastian Oberthür, IES, for helpful comments, and to Lynn P. Nygaard for language polishing and Maryanne Rygg for editorial assistance. The article is based on Chapter 6 in Skjærseth and Wettestad (2008).

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  1. The Fridtjof Nansen Institute, Fridtjof Nansens vei 17, 1326, Lysaker, Norway

    Jon Birger Skjærseth & Jørgen Wettestad

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  1. Jon Birger Skjærseth
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Correspondence to Jørgen Wettestad.

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Skjærseth, J.B., Wettestad, J. Implementing EU emissions trading: success or failure?. Int Environ Agreements 8, 275–290 (2008). https://doi.org/10.1007/s10784-008-9068-4

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