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Published Studies

Economic analysis of EU-wide emissions trading in CO₂

In preparation of the Green Paper on greenhouse gas emissions trading within the European Union, the cost implications of EU-wide emissions trading carbon dioxide were estimated by E3-Lab with their PRIMES energy systems model. The results are available in

• The Economic Effects of EU-wide Industry-Level Emission Trading to Reduce Greenhouse Gases - Results from PRIMES model (pdf ~230K)

In addition, the Institute for Prospective Technological Studies (IPTS) made a preliminary aggregate analysis using the POLES energy systems model. These results are available in

• Preliminary Analysis of the Implementation of an EU-Wide Permit System on CO2 Emissions Abatement Costs - Results from POLES model (pdf ~50K)

Although the models are different in some major characteristics they come to fairly similar conclusions about the achievable cost savings. They estimate them to be 25 and 30 percent compared with a situation without EU-wide emissions trading. The models are restricted to energy-related CO₂ emissions and thus fail to capture the impacts of the six gas basket and the inclusion of carbon sinks as means to implement the Kyoto commitments. However, this omission is not likely to alter the main conclusions.