Absolute abundance and relative scarcity: Environmental policy with implementation lags

Di Maria, Corrado ORCID: https://orcid.org/0000-0002-3048-0506, Smulders, Sjak and Van der Werf, Edwin (2012) Absolute abundance and relative scarcity: Environmental policy with implementation lags. Ecological Economics, 74. pp. 104-119. ISSN 0921-8009

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Abstract

Until now, there has been little empirical evidence that EU Emissions Trading Scheme (ETS) transaction costs are incurred at firm level. The transaction costs (internal costs, capital costs, consultancy and trading costs) incurred by Irish firms under the EU ETS during its pilot phase (2005–2007) were measured and analysed. Evidence for the sources of transaction costs, their magnitude and the distribution of costs shows that these were mainly administrative in nature. Considerable variation in costs was found due to economies of scale, as the costs per tonne of CO2 were lower for participants with larger allocations. For the largest firms—accounting for over half the emissions—average transaction costs were €0.05 per tonne. However, for small firms, average transaction costs were €2.02—over 18% of the current allowance price. This supports the concerns that transaction costs are excessive for smaller participants. The immediate policy implication is that additional attention will be needed to address different sizes of firms, number of installations per firm, and the size of the initial allocations.

Item Type:	Article
Faculty \ School:	Faculty of Social Sciences > School of Economics University of East Anglia Research Groups/Centres > Theme - ClimateUEA
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Environment, Resources and Conflict Faculty of Social Sciences > Research Groups > Economic Theory Faculty of Social Sciences > Research Groups > Applied Econometrics And Finance Faculty of Science > Research Centres > Centre for Social and Economic Research on the Global Environment (CSERGE) University of East Anglia Schools > Faculty of Science > Tyndall Centre for Climate Change Research Faculty of Science > Research Centres > Tyndall Centre for Climate Change Research
Depositing User:	Pure Connector
Date Deposited:	21 Jan 2014 13:54
Last Modified:	04 Jul 2023 15:30
URI:	https://ueaeprints.uea.ac.uk/id/eprint/47121
DOI:	10.1016/j.ecolecon.2011.12.003

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