Warnings that the EU’s emissions trading system (ETS) would harm Europe’s economic competitiveness have been proven to be exaggerated, according to a new paper published on Thursday (6 December) by the Organisation for Economic Co-operation and Development (OECD). The authors wrote that between 2005 and 2012 the ETS led to a 10 percent reduction of greenhouse gas emissions, “but had no negative impact on the economic performance of regulated firms”. “These results demonstrate that concerns that the EU ETS would come at a cost in terms of competitiveness have been vastly overplayed,” said the researchers, Antoine Dechezlepretre, Daniel Nachtigall and Frank Venmans, whose study did not represent an official view of the OECD. The ETS is the EU’s main climate action tool, aimed at enticing 8,000 of Europe’s most polluting companies to reduce emissions by becoming more efficient or switching to a cleaner power source. Companies owning installations covered by the ETS, like steel-production plants or coal-fired power plants, are required to annually hand in ETS certificates – or carbon credits – for every tonne of CO2 emitted. The credits can be sold and bought, but each year less of them become available on the market, making them (at least in theory), more expensive as time goes on. The system has several exemptions, and offers free credits to some companies to accommodate fears – notably from eastern EU member states – that the ETS will make their firms uncompetitive, by being undercut by competitors from outside the EU not covered… [Read full story]
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