Scandinavian Working Papers in Economics
Working Paper Series,
Norwegian University of Life Sciences, School of Economics and Business
No 2-2019: EU ETS and the new green paradox
Knut Einar Rosendahl ()
Additional contact information
Knut Einar Rosendahl: School of Economics and Business, Norwegian University of Life Sciences, Postal: Norwegian University of Life Sciences, School of Economics and Business, P.O. Box 5003 NMBU, N-1432 Ås, Norway
Abstract: With the new rules of the EU ETS, involving cancellation of allowances, cumulative emissions are no longer fixed but depending on the market outcome. Perino (2018) showed that additional abatement effort can reduce cumulative emissions if it occurs within a few years. This article shows that Perino’s result will be reversed, i.e., cumulative emissions increase, if the abatement effort is at a later year, or permanent. Thus, a new green paradox has emerged.
Keywords: Emissions trading; Green Paradox; EU ETS; MSR
18 pages, May 2, 2019
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