After monetary policy, climate policy: is delegation the key to EU ETS reform?

Climate Policy

Volumn 16, Issue 1, 2016, Pages 1-25

  Grosjean, G ^a,b   Acworth, W ^a   Flachsland, C ^c   Marschinski, R ^a,b,c  

^a POTSDAM INSTITUTE FOR CLIMATE IMPACT RESEARCH   (Germany)

^b TECHNISCHE UNIVERSITÄT BERLIN   (Germany)

^c MERCATOR RESEARCH INSTITUTE ON GLOBAL COMMONS AND CLIMATE CHANGE   (Germany)

Author keywords

carbon authority; carbon central bank; carbon price; delegation; EU Emissions Trading System; market stability reserve

Indexed keywords

EMISSIONS TRADING; ENVIRONMENTAL POLICY; EUROPEAN UNION; POLICY REFORM;

EID: 84952298452     PISSN: 14693062     EISSN: 17527457     Source Type: Journal    
DOI: 10.1080/14693062.2014.965657     Document Type: Article

References (101)

1. J.Aldy,, & N.Stavins, (2012). The promise and problems of pricing carbon: Theory and experience. Journal of Environment and Development, 21, 152–180. doi:10.1177/1070496512442508
2. N.Aziz, (2005). Power delegation and the European Central Bank's democratic deficit. Asia Europe Journal, 3, 537–550. doi:10.1007/s10308-005-0018-2
3. R.J.Barro, (1986). Recent developments in the theory of rules versus discretion. The Economic Journal, 96, 23–37. Retrieved from https://notendur.hi.is/~ajonsson/kennsla2005/rules-discretion.pdf
4. R.J.Barro,, & D.Gordon, (1983). A positive theory of monetary policy in a natural rate model. Journal of Political Economy, 91, 589–610. Retrieved from http://www.jstor.org/stable/1831069
5. W.J.Baumol,, & W.E.Oates, (1988). The theory of environmental policy. Cambridge: Cambridge University Press.
6. J.Bendor,, A.Glazer,, & T.Hammond, (2001). Theories of delegation. Annual Review of Political Science, 4, 235–269. doi:10.1146/annurev.polisci.4.1.235
7. B.S.Bernanke, (2003). “Constrained discretion” and monetary policy. Retrieved from http://www.federalreserve.gov/boarddocs/speeches/2003/20030203/
8. L.Beurskens,, & M.Hekkenberg, (2011). Renewable energy projections as published in the National RenewableEnergy Action Plans of the European Member States covering all 27 EU Member States (ECN-E--10-069). Retrieved from https://www.ecn.nl/docs/library/report/2010/e10069.pdf
9. W.Blyth,, & D.Bunn, (2011). Coevolution of policy, market and technical price risks in the EU ETS. Energy Policy, 39, 4578–4593. doi:10.1016/j.enpol.2011.04.061
10. S.Brunner,, C.Flachsland,, & R.Marschinski, (2012). Credible commitment in carbon policy. Climate Policy, 12, 255–271. doi:10.1080/14693062.2011.582327
11. D.Burtraw,, K.Palmer,, & D.Kahn, (2009). A symmetric safety valve (RFF DP 09-06). Washington, DC: Resources for the Future.
12. Y.K.Che, (1995). Revolving doors and the optimal tolerance for agency collusion. Rand Journal of Economics, 26, 378–397. Retrieved from http://www.columbia.edu/~yc2271/files/papers/Revolve.pdf
13. S.Clò,, S.Battles,, & P.Zoppoli, (2013). Policy options to improve the effectiveness of the EU emissions trading system: A multi-criteria analysis. Energy Policy, 57, 477–490. doi:10.1016/j.enpol.2013.02.015
14. F.Convery, (2009). Origins and development of the EU ETS. Environmental and Resource Economics, 43, 391–412. doi:10.1007/s10640-009-9275-7
15. I.Curien,, & M.Lewis, (2012). EU Energy: ETS reform should not be set aside. Deutsche Bank Global MarketResearch. Retrieved from http://www.longfinance.net/images/reports/pdf/db_etsreform_2012.pdf
16. O.Edenhofer, (2014). Reforming emissions trading. Nature Climate Change, 4, 663–664. doi:10.1038/nclimate2327
17. 2 market: An economic analysis. Retrieved from http://www.pik-potsdam.de/members/flachs/publikationen/towards-a-global-co2-market
18. O.Edenhofer,, B.Knopf,, & G.Luderer, (2010). From utopia to common sense: The climate mitigation challenge. In E.Cerdá & X.Labandeira (Eds.), Climate change policies (pp. 61–73). Cheltenham: Elgar.
19. EEA. (2013). EU Emission Trading System (ETS) data viewer. European Environment Agency. Retrieved from http://www.eea.europa.eu/data-and-maps/data/data-viewers/emissions-trading-viewer
20. C.Egenhofer,, A.Marcu,, & A.Georgiev, (2012). Reviewing the EU ETS review. Brussels: Centre for European Policy Studies.
21. G.Eggertsson,, & E.Le Borgne, (2003). A Political Agency Theory of Central Bank Independence (WP/03/144). Retrieved from http://www.imf.org/external/pubs/ft/wp/2003/wp03144.pdf
22. H.Ergas, (2010). New policies create new politics: Issues of institutional design in climate change policy. The Australian Journal of Agriculture and Resource Economics, 54, 143–164. doi:10.1111/j.1467-8489.2010.00484.x
23. European Commission. (2007). European energy and transport trends to 2030 – Update 2007. Retrieved from http://www.e3mlab.ntua.gr/reports/energy_transport_trends_2030_update_2007_en.pdf
24. European Commission. (2009). EU energy trends to 2030: Update 2009. Retrieved from http://ec.europa.eu/energy/observatory/trends_2030/doc/trends_to_2030_update_2009.pdf
25. European Commission. (2011). A roadmap for moving to a competitive low carbon economy 2050 (COM(2011) 112 final). Retrieved from http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0112:FIN:en:PDF.
26. European Commission. (2012a). The state of the European carbon market in 2012 (COM(2012) 652 final). Retrieved from http://ec.europa.eu/clima/policies/ets/reform/docs/com_2012_652_en.pdf
27. European Commission. (2012b). Renewable energy policy database and support: Legal sources on renewable energy. Retrieved from http://www.res-legal.eu
28. European Commission. (2013). EU energy, transport and GHG emissions, trends to 2050, reference scenario 2013. Brussels: European Commission.
29. European Commission. (2014a). Impact assessment accompanying the document concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (SWD(2014) 17 final). Retrieved from http://ec.europa.eu/clima/policies/ets/reform/docs/swd_2014_17_en.pdf
30. European Commission. (2014b). Proposal for a decision of the European Parliament and of the Council concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (COM(2014) 20/2). Retrieved from http://ec.europa.eu/clima/policies/ets/reform/docs/com_2014_20_en.pdf
31. European Commission. (2014c). Reducing emissions from aviation. Retrieved from http://ec.europa.eu/clima/policies/transport/aviation/index_en.htm
32. European Commission. (2014d). A policy framework for climate and energy in the period from 2020 to 2030 (COM(2014) 15 final). Retrieved from http://ec.europa.eu/clima/policies/2030/docs/com_2014_15_en.pdf
33. European Union. (2003). Directive 2003/87/EC of the European Parliament and of the Council. Official Journal ofthe European Union. Retrieved from: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32003L0087
34. European Union. (2009). Directive 2009/29/EC of the European Parliament and of the Council. Official Journal of the European Union. Retrieved from: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32009L0029
35. European Union. (2014). Commission regulation (EU) no 176/2014 of 25 February 2014 amending regulation (EU) no 1031/2010 in particular to determine the volumes of greenhouse gas emission allowances to be auctioned in 2013–20. Official Journal of the European Union. Retrieved from: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2014.056.01.0011.01.ENG
36. Eurostat. (2013a). Short term business statistics. Retrieved from http://epp.eurostat.ec.europa.eu/portal/page/portal/short_term_business_statistics
37. Eurostat. (2013b). Share of renewable energy in gross final energy consumption. Retrieved from http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&language=en&pcode=t2020_31&plugin=1
38. S.Fankhauser,, C.Hepburn,, & J.Park, (2010). Combining multiple climate policy instruments: How not to do it. Climate Change Economics, 1, 209–225. doi:10.1142/S2010007810000169
39. Federal Reserve. (2013). What are the Federal Reserve's objectives in conducting monetary policy? Retrieved from http://www.federalreserve.gov/faqs/money_12848.htm
40. H.Fell,, D.Burtraw,, R.Morgenstern,, K.Palmer,, & L.Preonas, (2010). Soft and hard price collars in a cap-and-trade system: A comparative analysis (RFF DP 10–27). Retrieved from http://www.rff.org/documents/RFF-DP-10-27.pdf
41. R.Garnaut, (2012). Garnaut climate change review 2011: Australia in the global response to climate change. Melbourne: Cambridge University Press.
42. German Council of Economic Experts. (2013). Against a backward looking policy (Annual Economic Report 2013/14). Retrieved from http://www.sachverstaendigenrat-wirtschaft.de/fileadmin/dateiablage/download/gutachten/executive_summary_2013.pdf
43. F.Gilardi, (2002). Policy credibility and delegation to independent regulatory agencies: A comparative empirical analysis. Journal of European Public Policy, 9, 873–893. doi:10.1080/1350176022000046409
44. R.Golombek,, & M.Hoel, (2004). Unilateral emission reductions and cross-country technology spillovers. Advances in Economic Analysis and Policy, 3, 1–25. doi:10.2202/1538-0637.1318
45. M.Grubb, (2012). Strengthening the EU ETS: Creating a stable platform for EU energy sector investment. Retrieved from http://www.climatestrategies.org/research/our-reports/category/60/343.html
46. M.Grubb,, C.Azar,, & U.M.Persson, (2005). Allowance allocation in the European emissions trading system: A commentary. Climate Policy, 5, 127–136. doi:10.1080/14693062.2005.9685545
47. B.Harstad,, & G.Eskeland, (2010). Trading for the future: Signalling in permit markets. Journal of Public Economics, 94, 749–760. Retrieved from http://www.sciencedirect.com/science/article/pii/S0047272710000277
48. D.Helm, (2008). Caps and floors for the EU ETS: A practical carbon price. Retrieved from http://www.dieterhelm.co.uk/node/670
49. D.Helm,, C.Hepburn,, & R.Mash, (2003). Credible carbon policy. Oxford Review of Economic Policy, 19, 438–450. doi:10.1093/oxrep/19.3.438
50. C.Hepburn, (2006). Regulation by prices, quantities or both: A review of instrument choice. Oxford Review of Economic Policy, 22, 226–247. doi:10.1093/oxrep/grj014
51. Intercontinental Exchange (ICE) (2014). Retrieved from www.theice.com
52. International Emissions Trading Association (IETA). (2013). Initial IETA reflections on the concept of an Automatic adjustment of auction volumes’ in the EU ETS. Retrieved from http://www.ieta.org/assets/EUWG/ieta_reflection_flexible_supply_paper_02.10.2013_final.pdf
53. H.D.Jacoby,, & D.A.Ellerman, (2004). The safety valve and climate policy. Energy Policy, 32, 481–491. doi:10.1016/j.bbr.2011.03.031
54. M.Jakob,, & S.Brunner, (2014). Optimal commitment under uncertainty: Adjustment rules for climate policy. Strategic Behaviour and Environment, 4, 291–310. doi:10.1561/102.00000047
55. M.Jakob,, & K.Lessmann, (2012). Signalling in international environmental agreements: The case of early and delayed action. International Environmental Agreements: Policy, Law, and Economics, 12, 309–325. doi:10.1007/s10784-012-9170-5
56. D.Klingenfeld, (2012). On strategies for avoiding dangerous climate change: Elements of a global carbon market. Münster: LIT.
57. B.Knopf,, N.Koch,, G.Grosjean,, S.Fuss,, C.Flachsland,, M.Pahle,, … O.Edenhofer, (2014). The European Emissions Trading System (EU ETS): Ex-post analysis, the market stability reserve and options for a comprehensive reform (FEEM Nota di Lavoro 79.2014). Retrieved from: http://www.feem.it/getpage.aspx?id=6715&sez=Publications&padre=73
58. N.Koch,, S.Fuss,, G.Grosjean,, & O.Edenhofer, (2014). What drives the price in the EU ETS? New evidence on the impact of renewables. Energy Policy, 73, 676–685. doi:10.1016/j.enpol.2014.06.024
59. F.Kydland,, & E.C.Prescott, (1977). Rules rather than discretion: The inconsistency of optimal plans. Journal ofPolitical Economy, 85, 473–492. Retrieved from http://www.sfu.ca/~kkasa/prescott_77.pdf
60. J.J.Laffont,, & J.Tirole, (1996). Pollution permits and environmental innovation. Journal of Public Economics, 62, 127–140. Retrieved from http://workshopthesis.wikispaces.com/file/view/Laffont_Tirole_JPubE96_b.pdf
61. Lieberman, J., & Warner, J. (2007). Bill S. 2191, 110th Congress, 2nd Session. Senate of the United States. Retrieved from http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=8d265271-5fb9-4a34-a186-0d1f1c8c104e
62. P.Levine,, J.Stern,, & F.Trillas, (2005). Utility price regulation and time inconsistency: Comparisons with monetary policy. Oxford Economic Papers, 57, 447–478. doi:10.1093/oep/gpi021
63. G.Majone, (1996). Temporal consistency and policy credibility: Why democracies need non-majoritarianinstitutions (Working Paper RSC No. 96/57). Retrieved from http://cadmus.eui.eu/bitstream/handle/1814/1472/RSCAS_1996_57.pdf?sequence=3
64. G.Majone, (1997). From the positive to the regulatory state: Causes and consequences of changes in the mode of governance. Journal of Public Policy, 17, 139–167. doi:10.1017/S0143814X00003524
65. J.R.Manson, (2009). The economic policy risks of cap and trade markets for carbon emissions: A monetaryeconomist's view of cap and trade market and Carbon Market Efficiency Board Designs. Baton Rouge, LA: Louisiana State University and the US Climate Task Force.
66. B.T.McCallum, (1995). Two fallacies concerning central-bank independence (NBER Working Paper No. 5075). Retrieved from: http://www.nber.org/papers/w5075
67. W.J.McKibbin,, A.Morris,, & P.J.Wilcoxen, (2009). A Copenhagen collar: Achieving comparable effort through carbon price agreements. Climate change policy: Recommendations to reach consensus (pp. 26–34). Washington, DC: Brookings. Retrieved from http://www.brookings.edu/research/reports/2009/08/carbon-morris
68. G.P.Miller, (1998). An interest-group theory of central bank independence. Journal of Legal Studies, 27, 433–453. Retrieved from http://www.jstor.org/stable/10.1086/468026
69. D.Morris, (2012). Losing the lead? Europe‘s flagging carbon market. Retrieved from http://www.sandbag.org.uk/site_media/pdfs/reports/Losing_the_lead_modified_3.8.2012.pdf
70. B.G.Murray,, R.G.Newell,, & W.Pizer, (2008). Balancing cost and emissions certainty: An allowance reservefor cap and trade (NBER Working Paper Series 14258). Retrieved from http://www.nber.org/papers/w14258
71. K.Neuhoff,, A.Schopp,, R.Boyd,, K.Stelmakh,, & A.Vasa, (2012). Banking of surplus emissions allowances doesthe volume matter? (DIW Discussion Papers No. 1193). Retrieved from http://www.diw.de/documents/publikationen/73/diw_01.c.394484.de/dp1196.pdf
72. R.G.Newell,, W.A.Pizer,, & D.Raimi, (2013). Carbon markets 15 years after Kyoto: Lessons learned, new challenges. Journal of Economic Perspectives, 27, 123–46. doi:10.1257/jep.27.1.123
73. R.G.Newell,, W.A.Pizer,, & J.Zhang, (2005). Managing permit markets to stabilize prices. Environmental and Resources Economics, 31, 133–157. doi:10.1007/s10640-005-1761-y
74. W.Nordhaus, (2011). Designing a friendly space for technological change to slow global warming. Energy Economics, 33, 665–673. doi:10.1016/j.bbr.2011.03.031
75. C.de Perthuis, (2011). Carbon market regulation: The case for a carbon central bank (Paper No. 10). Retrieved from http://EconPapers.repec.org/RePEc:dau:papers:123456789/7782
76. 2 markets: Lessons from the EU ETS. Energy Policy. doi:10.1016/j.enpol.2014.05.033
77. W.A.Pizer, (2002). Combining price and quantity controls to mitigate global climate change. Journal of Public Economics, 85, 409–434. doi:10.1016/S0047-2727(01)00118-9
78. Point Carbon. (2011a). Point Carbon sixth's annual survey. Point Carbon.
79. Point Carbon. (2011b). Record number of UN credits used for compliance in 2010. Retrieved from http://www.pointcarbon.com/aboutus/pressroom/pressreleases/1.1533512
80. Point Carbon. (2012). Use of offsets for compliance within EU ETS up 86% on 2011. Retrieved from http://www.pointcarbon.com/aboutus/pressroom/pressreleases/1.1902674
81. Point Carbon. (2013a). German firms lower EU carbon price expectations. Retrieved from http://www.pointcarbon.com/news/1.2571870
82. Point Carbon. (2013b). Use of credits for compliance within EU ETS nearly doubles 2012 levels. Retrieved from http://www.pointcarbon.com/aboutus/pressroom/pressreleases/1.2383916
83. Point Carbon. (2013c). Carbon 2013, at a tipping point. Retrieved from http://www.pointcarbon.com/news.
84. A.Rodrik, (2014). Rethinking democracy. Retrieved from https://www.project-syndicate.org/commentary/dani-rodrik-examines-the-root-causes-of-political-malaise-in-advanced-and-developing-countries
85. K.Rogoff, (1985). The optimal degree of commitment to an intermediate monetary target. The Quarterly Journal of Economics, 100, 1169–1190. doi:10.2307/1885679
86. O.Sartor, (2012). The EU ETS carbon price: To intervene or not to intervene? (Climate Brief No. 12). Retrieved from http://www.cdcclimat.com/IMG/pdf/12-02_climate_brief_12_-_the_eu_ets_carbon_price_-_to_intervene_or_not_to_intervene.pdf
87. 2 Trading Scheme: Is it time for a major overhaul? Retrieved from http://e360.yale.edu/feature/europes_co2_trading_scheme_is_it_time_for_a_major_overhaul/2396/.
88. A.Schopp,, & K.Neuhoff, (2013). The role of hedging in carbon markets (DIW Berlin Discussion Papers 1271). Berlin: DIW Berlin.
89. I.Staub-Kaminski,, A.Zimmer,, M.Jakob,, & R.Marschinski, (2014). Putting climate policy into practice: a typology of obstacles and implications for integrated assessment modelling. Climate Change Economics. Vol. 5, No. 1.
90. J.Stern,, & F.Trillas, (2003). Independence and discretion in telecommunications regulation: Lessons from independent central banks. Utilities Policy, 11, 191–201. doi:10.1016/S0957-1787(03)00048-1
91. N.Stern, (2007). The economics of climate change: The Stern review. Cambridge: Cambridge University Press.
92. L.Taschini,, S.Kollenberg,, & C.Duffy, (2014). System responsiveness and the European Union EmissionsTrading System. Retrieved from http://www.lwec.org.uk/sites/default/files/attachments_biblio/PP-System-responsiveness-and-EU-Emission-Trading-System.pdf
93. F.Trillas, (2010). Independent regulators: Theory, evidence and reform proposals (WP-860). Retrieved from http://www.iese.edu/research/pdfs/di-0860-e.pdf
94. R.Trotignon,, F.Gonand,, & C.de Perthuis, (2014). EU ETS reform in the 2030 Climate and Energy Package: First lessons from the ZEPHYR model (no. 2014-01). Retrieved from http://www.chaireeconomieduclimat.org/wp-content/uploads/2014/03/14-03-07-Policy-Brief-2014-01-EN-v2.pdf
95. UK Government. (2013). Supporting international action on climate change. Retrieved from https://www.gov.uk/government/policies/taking-international-action-to-mitigate-climate-change/supporting-pages/encouraging-the-eu-to-demonstrate-leadership-on-climate-change.
96. 2 emissions in the European electricity sector. Energy Policy, 63, 1021–1031. doi:10.1016/j.enpol.2013.09.003
97. W.Van Lear, (2000). A review of the rules versus discretion debate in monetary policy. Eastern Economic Journal, 26, 29–39. Retrieved from http://college.holycross.edu/RePEc/eej/Archive/Volume26/V26N1P29_39.pdf
98. W.Whitesell, (2007). Carbon taxes, cap-and-trade administration and US legislation. Climate Policy, 7, 457–462. doi:10.1080/14693062.2007.9685668
99. W.Whitesell, (2011). Climate policy foundations, science and economics with lessons from monetary regulation. Cambridge: Cambridge University Press.
100. P.J.Wood,, & F.Jotzo, (2011). Price floor for emissions trading. Energy Policy, 39, 1746–1753. doi:10.1016/j.bbr.2011.03.031
101. World Bank. (2012). States and trends of the carbon market 2012. Retrieved from http://siteresources.worldbank.org/INTCARBONFINANCE/Resources/State_and_Trends_2012_Web_Optimized_19035_Cvr&Txt_LR.pdf