Over-Allocation or Abatement: A Preliminary Analysis of the EU Emissions Trading Scheme Based on the 2005 Emissions Data

Joint Program Report
Over-Allocation or Abatement: A Preliminary Analysis of the EU Emissions Trading Scheme Based on the 2005 Emissions Data
Ellerman, A.D., and B. Buchner (2006)
Joint Program Report Series, 34 pages

Report 141 [Download]

Abstract/Summary:

This paper provides an initial analysis of the European Union Emissions Trading Scheme (EU ETS) based on the installation-level data for verified emissions and allowance allocations in the first trading year. Those data, released on May 15, 2006, and subsequent updates revealed that CO2 emissions were about 4% lower than the allocated allowances. The main objective of the paper is to shed light on the extent to which over-allocation and abatement have taken place in 2005. We propose a measure by which over-allocation can be judged and provide estimates of abatement based on emissions data and indicators of economic activity as well as trends in energy and carbon intensity. Finally, we discuss the insights and implications that emerge from this tentative assessment.

Citation:

Ellerman, A.D., and B. Buchner (2006): Over-Allocation or Abatement: A Preliminary Analysis of the EU Emissions Trading Scheme Based on the 2005 Emissions Data. Joint Program Report Series Report 141, 34 pages (http://globalchange.mit.edu/publication/14290)

Superseded by:

Reprint 2008-19. Over-allocation or abatement? A preliminary analysis of the EU ETS based on the 2005-2006 emissions data (Environmental and Resource Economics, 2008)
  • Joint Program Report
Over-Allocation or Abatement: A Preliminary Analysis of the EU Emissions Trading Scheme Based on the 2005 Emissions Data

Ellerman, A.D., and B. Buchner

Joint Program Report Series

Report 

141
34 pages
2006

Abstract/Summary: 

This paper provides an initial analysis of the European Union Emissions Trading Scheme (EU ETS) based on the installation-level data for verified emissions and allowance allocations in the first trading year. Those data, released on May 15, 2006, and subsequent updates revealed that CO2 emissions were about 4% lower than the allocated allowances. The main objective of the paper is to shed light on the extent to which over-allocation and abatement have taken place in 2005. We propose a measure by which over-allocation can be judged and provide estimates of abatement based on emissions data and indicators of economic activity as well as trends in energy and carbon intensity. Finally, we discuss the insights and implications that emerge from this tentative assessment.

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