• The empirical literature indicates that, in Phases I and II, the impact of the EU ETS on low-carbon innovation was moderate. The findings of one prominent study, which measures innovation output by patent counts, present a more clearly positive picture. • The empirical literature indicates that, in Phases I and II, low-carbon investments brought about by the EU ETS were typically small-scale, with short amortisation times (e.g., three to five years), producing incremental emission reductions. • In view of the EU’s long-term emission reduction targets, there is scope to improve the dynamic efficiency of the EU ETS by strengthening incentives for low-carbon innovation and investment. Tightening the cap and extending allowance auctioning in a predictable way are the most frequent recommendations in the literature. • There is a compelling economic case, related to innovation spill overs, scale and network economies, competitiveness preservation and energy security, for complementing the EU ETS with stronger R&D policies. • The Innovation Fund – the future EU ETS funding programme for low-carbon innovation – will build on the experiences gained through the existing NER 300 programme in several important respects.
Economic regulators of water and sanitation services (WSS) across Europe were originally established to address harmful consequences arising from the natural monopoly of the sector. This is reflected in their [...]