Dataset Information

The European Union Emissions Trading System reduced CO2 emissions despite low prices.

ABSTRACT: International carbon markets are an appealing and increasingly popular tool to regulate carbon emissions. By putting a price on carbon, carbon markets reshape incentives faced by firms and reduce the value of emissions. How effective are carbon markets? Observers have tended to infer their effectiveness from market prices. The general belief is that a carbon market needs a high price in order to reduce emissions. As a result, many observers remain skeptical of initiatives such as the European Union Emissions Trading System (EU ETS), whose price remained low (compared to the social cost of carbon). In this paper, we assess whether the EU ETS reduced [Formula: see text] emissions despite low prices. We motivate our study by documenting that a carbon market can be effective if it is a credible institution that can plausibly become more stringent in the future. In such a case, firms might cut emissions even though market prices are low. In fact, low prices can be a signal that the demand for carbon permits weakens. Thus, low prices are compatible with successful carbon markets. To assess whether the EU ETS reduced carbon emissions even as permits were cheap, we estimate counterfactual carbon emissions using an original sectoral emissions dataset. We find that the EU ETS saved about 1.2 billion tons of [Formula: see text] between 2008 and 2016 (3.8%) relative to a world without carbon markets, or almost half of what EU governments promised to reduce under their Kyoto Protocol commitments. Emission reductions in sectors covered under the EU ETS were higher.

SUBMITTER: Bayer P

PROVIDER: S-EPMC7183178 | biostudies-literature | 2020 Apr

REPOSITORIES: biostudies-literature

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The European Union Emissions Trading System reduced CO<sub>2</sub> emissions despite low prices.

Bayer Patrick P Aklin Michaël M

Proceedings of the National Academy of Sciences of the United States of America 20200406 16

International carbon markets are an appealing and increasingly popular tool to regulate carbon emissions. By putting a price on carbon, carbon markets reshape incentives faced by firms and reduce the value of emissions. How effective are carbon markets? Observers have tended to infer their effectiveness from market prices. The general belief is that a carbon market needs a high price in order to reduce emissions. As a result, many observers remain skeptical of initiatives such as the European Un ...[more]

PMID: 32253304

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Project description:In the current era of globalization, a clean environment remains a crucial factor for the health of the population. Thus, improving air quality is a major focus of environmental policies, as it affects all aspects of nature, including humans. For these reasons, it is appropriate to take into account the health risks posed by greenhouse gas (GHG) emissions released into the atmosphere. With regard to global GHG emissions, there are concerns about the loss of protection of the ozone layer and it is very likely that climate change can be expected, which multiplies the environmental threat and has potentially serious global consequences. In this regard, it is important to pay increased attention to emissions that enter the atmosphere, which include countless toxic substances. The aim of this study was to examine the associations between selected GHG emissions and the health of the European Union (EU) population represented by disability-adjusted life years (DALYs). This aim was achieved using several analytical procedures (descriptive analysis, correlation analysis, cluster analysis, and panel regression analysis), which included five environmental variables (carbon dioxide (CO2), methane (CH4) in CO2 equivalent, nitrous oxide (N2O) in CO2 equivalent, hydrofluorocarbons (HFC) in CO2 equivalent, sulfur hexafluoride (SF6) in CO2 equivalent) and one health variable (DALYs). An emphasis was placed on the use of quantitative methods. The results showed that CO2 emissions have a dominant position among selected GHG emissions. The revealed positive link between CO2 and DALYs indicated that a decrease in CO2 may be associated with a decrease in DALYs, but it is also true that this cannot be done without reducing emissions of other combustion products. In terms of CO2, the least positive scores were observed in Luxembourg and Estonia. Germany had the lowest score of DALYs, representing the most positive health outcome in the EU. In terms of total GHG emissions, Ireland and Luxembourg were considered to be less positive countries compared to the other analyzed countries. Countries should focus on reducing GHG emissions in general, but from a health point of view, reducing CO2 emissions seems to be the most beneficial.

Dataset Information

The European Union Emissions Trading System reduced CO2 emissions despite low prices.

Publications

The European Union Emissions Trading System reduced CO<sub>2</sub> emissions despite low prices.

Similar Datasets

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