Different measures for carbon leakage prevention across Emissions Trading Systems (ETSs) may distort economic competition between firms. The same is true of competition between jurisdictions if decisions on the location of production plants are concerned. Free allocation of emission allowances responds to a logic of carbon costs compensation. Border carbon adjustments aim at levelling the playing field between domestic firms and their foreign competitors. Direct support to low-carbon innovation aims at enhancing the competitiveness of domestic firms. Any instrument for carbon leakage prevention could produce, depending on its own specific design, competitive distortions that are illegitimate under WTO law or other applicable trade regime. By inducing convergence of allowance prices, ETS linking reduces any internal competitive distortion due to differences in carbon prices. However, given pre-link differences in anti-leakage measures, price convergence can highlight or even exacerbate potential competitive distortions. In a linking context, output-based allocation may amplify or attenuate competitive distortions by interacting with post-link changes in allowance prices. Differences in anti-leakage measures do not preclude linking in a technical sense. However, with time, some harmonization may prove necessary for the political sustainability of the linkage. The actual significance of any competitive distortion always depends on the extent to which firms compete in a market.
The EU ETS with companion policies is more robust than relying solely on either regulatory or carbon-pricing interventions. Policies should be developed to account for the disparate impacts of the [...]
Customers are expected to play a fundamental role in the transition to a decarbonised and digitalised energy system. However, experience so far suggests that customer engagement in energy markets cannot [...]
This deliverable, which is part of the Horizon 2020 OneNet project, outlines the alignment activities carried out in OneNet Task 3.4, focusing on integrating the proposed electricity market concepts with [...]
Flexibility involves the adjustment of energy consumption or generation schedules to benefit the grid, for instance, providing services such as balancing, congestion management, and voltage control. Flexibility can be offered [...]