Emissions Trading and the Polluter-Pays Principle : do Polluters Pay under Grandfathering?

Emissions trading is becoming increasingly popular in environmental law. Allowances to trade emissions can either be auctioned off or handed out free of charge by means of grandfathering. Although grandfathering is frequently used in emissions trading schemes, it is a popular view in the economic and legal literature that grandfathering is inconsistent with the polluter-pays principle. We come to a different, more nuanced view. The question of whether polluters pay under grandfathering depends on how the polluter-pays principle is interpreted. We present a taxonomy of interpretations. Based on an efficiency interpretation of the principle, consistency is demonstrated by emphasizing the economic impact of the opportunity costs of gratis allowances and the lump sum nature of the subsidy that is inherent to grandfathering. Inconsistency can only be claimed based on an equity interpretation of the polluter-pays principle. Allocating allowances free of charge means that polluting firms receive a capital gift making their shareholders richer, which may be perceived as unfair. We draw two conclusions. First, contrary to what some have claimed, grandfathering is compatible with an efficiency interpretation of the polluter-pays principle. Second, only auctioning is consistent with an extended form of this principle. Auctioning ensures not only that pollution costs are internalized (efficiency), but also that producers buy their allowances before they pass on those costs to consumers (equity)

The Role of Environmental Economics in Recent Policy Making at the European Commission

This article examines the use of environmental economics at the European Commission in recent policy making concerning climate change, energy, and air pollution. In particular, we describe economic analysis of policy options designed to help the European Union (EU) to achieve its objective of reducing greenhouse gas emissions by 20 percent and increasing the share of renewable energy to 20 percent by 2020. This analysis looked at cost-effectiveness and emission trading options as well as equity issues. We also discuss an economic analysis of policy options for including carbon capture and storage (CCS) in the EU Emissions Trading Scheme. The analysis finds that CCS could result in significant cost savings. The additional costs of making CCS mandatory or using subsidies were also estimated. Economic assessments prepared for the revision of the national emission ceiling directive suggest that air pollution objectives can be met at modest costs and that monetary benefits exceed costs. The assessments also find that limiting the additional costs for poorer Member States does not increase overall costs significantly and that when limited to regional zones, emissions trading of air pollutants could save costs but might lead to hot spots. Copyright 2010, Oxford University Press.

Aktivierung als globales Modell der Weltpolitik? Konzeptionelle Überlegungen zum Wandel der Arbeitsmarktpolitik in europäischen Wohlfahrtsstaaten

Seit den letzten Dekaden des ausgehenden zwanzigsten Jahrhunderts sind die europäischen Wohlfahrtsstaaten mit einer spürbaren Zunahme der Arbeitslosigkeit konfrontiert. Die sich auf den neoliberalen Diskurs beziehende Kritik am Wohlfahrtsstaat führte daraufhin zu einer schrittweisen Neuausrichtung der damit in Verbindung stehenden Sozialpolitik und des dazugehörigen Verwaltungsapparats. Aktivierung prägt seitdem die sozialpolitischen Reformwellen in Ländern historisch unterschiedlichen Wohlfahrtszuschnitts. Dadurch kommt es zu einer tendenziellen Angleichung der europäischen Wohlfahrtsregime, zur Herausbil-dung zunehmend isomorpher Strukturen im sozialpolitischen Be-reich. Der neoliberale Diskurs trifft jedoch auf unterschiedliche, nationalstaatlich geprägte Institutionen und Organisationen mit ihrer je eigenen Historie, Tradition und Kultur. Daher bleiben Unterschiede in den Praktiken der Arbeitsmarktpolitik bestehen.   Activation as a Global Model of World Politics? Conceptual Considerations on Labour Market Policy Shifts in European Welfare States Since the last decades of the twentieth century, European welfare states have faced a significant increase in unemployment. Referring to the neoliberal discourse, the emerging criticism of the welfare state has led to a gradual realignment of social policy and its administrative apparatus. Activation has since become a crucial attribute of labour market reform activities all over Europe, causing a step-by-step convergence of European welfare regimes as well as increasingly isomorphic structures of different welfare states. However, the neoliberal discourse encounters different state-dominated institutions and organizations, each with its own history, tradition, and culture. Hence, differences related to labour market policy practices still persist

Enforcement and environmental quality in a decentralized emission trading system

Emissions trading, Environmental federalism, Enforcement, Monitoring cost, H70, Q58,

Interaction between EU carbon trading and the international climate regime: synergies and learning

EU climate policy, Emissions trading, ETS, National allocation plans, Kyoto Protocol, Clean Development Mechanism, Interaction,