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EU energy‐intensive industries and emission trading: losers becoming winners?
Author(s) -
Wettestad Jorgen
Publication year - 2009
Publication title -
environmental policy and governance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.987
H-Index - 48
eISSN - 1756-9338
pISSN - 1756-932X
DOI - 10.1002/eet.516
Subject(s) - carbon leakage , emissions trading , position (finance) , business , energy (signal processing) , windfall gain , production (economics) , industrial organization , economics , natural resource economics , greenhouse gas , microeconomics , finance , ecology , statistics , mathematics , biology
The EU Emissions Trading System (ETS) initially treated power producers and energy‐intensive industries similarly, despite clear structural differences between these industries regarding e.g. pass‐through of costs. Hence, the energy‐intensive industries could be seen as losing out in the internal distribution. In the January 2008 proposal for a reformed ETS post‐2012, a differentiated system was proposed where the energy‐intensive industries would come out relatively much better. Why is this? Although power producers still have a dominant position in the system, the increasing consensus about windfall profits has weakened their standing. Conversely, increasing attention to such profits and not least the possibility of global carbon leakage has strengthened the case of energy‐intensive industries at both national and EU levels. These industries have become more active in EU processes and somewhat better organized. Finally, growing fear of lax global climate policies has strengthened the case of these industries further. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.