Climate | Article
The international dimension of the EU emissions trading system : bringing the pieces together
20 October 2023
BY: VERDE Stefano F., Simone Borghesi
Environmental and resource economics, 2022, Vol. 83, pp. 23–46
We analyse the international dimension of the EU Emissions Trading System (EU ETS) over the past two decades and in the foreseeable future by reviewing facts and economic theory. The facts mainly concern the international climate change regime and the EU’s relevant experience in international cooperation. Club theory shows how incentives can be created for cooperation on climate mitigation. The linkage of the EU ETS to the Kyoto flexible mechanisms had mixed results: it promoted emissions trading abroad, but the inflow of credits into the EU ETS added to a large market surplus and the environmental integrity of certain credits was problematic. Looking ahead, the ability of the EU ETS to reduce foreign emissions may grow. Key will be whether competitiveness and distributional effects are successfully addressed. The Carbon Border Adjustment Mechanism might help the EU reduce the risk of carbon leakage while incentivising emission reductions in countries exporting to the EU. The EU’s focus on reducing domestic emissions only, suggests we will probably not see new international linkages this decade. However, it cannot be excluded that the EU will revisit its decision and relax the domestic constraint.
logo cadmus Read it on Cadmus Download in open access


Technical Report
Lack of interoperability is increasingly becoming a significant issue in the electricity sector. The need to integrate a growing amount of distributed resources, such as renewable energy sources and electric [...]
Technical report
The energy transition calls for a rapid expansion of electricity grids at both transmission and distribution levels. Technological progress and digitalisation offer new solutions to system needs that can increase [...]
Technical report
The interaction of “Contracts”, “Markets” and “Law and Regulation” have informed the economic analysis of market economies for over 40 years. One of the main lessons learnt is that (contracts), [...]
Rail transport and inland waterways are crucial to achieve the objectives outlined in the Green Deal agenda. These aims include a 55% reduction in greenhouse gases by 2030 and attaining [...]
Urban mobility plays a key role for the promotion of the socio-economic development of a country. Particularly, MaaS platforms are important for those daily journeys made by travellers that must [...]
The scaling up of renewable gases is now being presented as a critical and effective component of the EU's long-term decarbonization strategy. Yet, the support schemes implemented for biogas and [...]

Join our community

To meet, discuss and learn in the channel that suits you best.