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Cited by 142Climate Change Policy and EconomicsEU Law and Policy AnalysisEnergy, Environment, Economic Growth

THE IMPACT OF THE EU EMISSIONS TRADING SYSTEM ON COMPETITIVENESS AND CARBON LEAKAGE: THE ECONOMETRIC EVIDENCE

Verde, Stefano F.·2020·Journal of Economic Surveys
DOI 10.1111/joes.12356
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Abstract

This paper carefully surveys the econometric literature that tests for competitiveness effects and related carbon leakage caused by the EU Emissions Trading System (EU ETS). The results of this literature tell us that to date there is no evidence of the EU ETS having had widespread negative or positive effects on the competitiveness of regulated firms, nor is there evidence of significant carbon leakage. However, the paper also identifies three important caveats to this general conclusion. Firstly, the evidence we have still largely refers to the first two trading periods, namely Phases I (2005–2007) and II (2008–2012). Secondly, some heterogeneity of estimated effects is observed, but patterns, notably sectoral patterns, hardly emerge. Thirdly, very little explored is whether the EU ETS has had long‐term effects on the economy via investment leakage or firm dynamics. Further empirical studies investigating these long‐term effects are particularly desirable.

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  • The lack of empirical evidence for leakage is hardly surprising given the generous free allocations granted with the express aim of preventing leakage.

    “however, this is hardly surprising given the generous free allocations granted with the express aim of preventing leakage (35, 36) (Section 4).”

    From Carbon Leakage, Consumption, and Trade (2022) · cites this paper as [36]

  • Empirical studies testing for evidence of leakage from existing policies such as the EU ETS do not find strong support.

    “empirical studies testing for evidence of leakage from existing policies such as the EU Emissions Trading System (ETS) do not find strong support”

    From Carbon Leakage, Consumption, and Trade (2022) · cites this paper as [36]

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Authors
Verde, S. F.
Affiliations
European University Institute (IT)
Corresponding author
Verde, Stefano F.
ORCID
Verde, Stefano F.
Venue
Journal of Economic Surveys
Publisher
Wiley
Published
2020-02-11
Volume
34
Issue
2
Pages
320-343
ISSN
  • 0950-0804 (ISSN-L)
  • 1467-6419
DOI
10.1111/joes.12356
OpenAlex
W3005904981
Cited by
142
References
11
Citations by year
2026: 29 · 2025: 33 · 2024: 30 · 2023: 24 · 2022: 14 · 2021: 7 · 2020: 5
FWCI
10.62
Type
journal article
Language
en
Open access
closed
Licence
onlinelibrary.wiley.com/termsAndConditions#vor (vor)
Locations
  • Journal of Economic Surveys (publishedVersion)
  • Cadmus - EUI Research Repository (European University Institute) (submittedVersion, public-domain)
  • Use Siena air (University of Siena) (submittedVersion)
Funders
EU LIFE Programme of the European Commission (GIC/IT/000051)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
  • Social Sciences › Law › EU Law and Policy Analysis
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Energy, Environment, Economic Growth
Keywords
EU Emissions Trading System, carbon leakage, competitiveness, carbon pricing, firm dynamics, sectoral heterogeneity, long-term economic effects, climate policy

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