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The role of the emissions trading scheme 2 in the policy mix to decarbonize road transport in the European Union
Abstract This article analyzes the recently decided EU-wide emission trading scheme for road transport and heating fuels. The so-called ETS2 is part of the ‘Fit for 55’ policy package, which also includes tighter vehicle emission standards, a reform of energy taxation, provisions to enhance advanced fuel infrastructure and a Social Climate Fund to alleviate financial pressure for low-income households. We argue that the ETS2 should be understood as an element of a broader policy mix, which considers multiple market failures, fairness both within and across EU member states within the institutional constraints of EU policy making. We conclude by discussing specific potential modifications to the design of the ETS2 that could help achieve the EU's climate target in an efficient and equitable way. These include linking ETS and ETS2, reducing price volatility, increasing the size of the Social Climate fund, and clarifying penalties for countries missing targets under the Effort Sharing Regulation.
Highlights Various measures complement EU carbon pricing in heating and transport. Distributional concerns, within and across countries, are key to policy design. Various measures aim to ensure prices in ETS2 remain limited. Continued inclusion of ETS2-sectors in ESR ensures rich EU countries must mitigate. We propose further evolution of ETS, including linking, price corridors, larger SCF.
Highlights: Political and economic analysis of the policy mix to decarbonize road transport with a special focus on the role of the recently decided new emissions trading scheme for this sector.
The role of the emissions trading scheme 2 in the policy mix to decarbonize road transport in the European Union
Abstract This article analyzes the recently decided EU-wide emission trading scheme for road transport and heating fuels. The so-called ETS2 is part of the ‘Fit for 55’ policy package, which also includes tighter vehicle emission standards, a reform of energy taxation, provisions to enhance advanced fuel infrastructure and a Social Climate Fund to alleviate financial pressure for low-income households. We argue that the ETS2 should be understood as an element of a broader policy mix, which considers multiple market failures, fairness both within and across EU member states within the institutional constraints of EU policy making. We conclude by discussing specific potential modifications to the design of the ETS2 that could help achieve the EU's climate target in an efficient and equitable way. These include linking ETS and ETS2, reducing price volatility, increasing the size of the Social Climate fund, and clarifying penalties for countries missing targets under the Effort Sharing Regulation.
Highlights Various measures complement EU carbon pricing in heating and transport. Distributional concerns, within and across countries, are key to policy design. Various measures aim to ensure prices in ETS2 remain limited. Continued inclusion of ETS2-sectors in ESR ensures rich EU countries must mitigate. We propose further evolution of ETS, including linking, price corridors, larger SCF.
Highlights: Political and economic analysis of the policy mix to decarbonize road transport with a special focus on the role of the recently decided new emissions trading scheme for this sector.
The role of the emissions trading scheme 2 in the policy mix to decarbonize road transport in the European Union
Haywood, Luke (author) / Jakob, Michael (author)
Transport Policy ; 139 ; 99-108
2023-06-05
10 pages
Article (Journal)
Electronic Resource
English
| Springer Verlag | 2024
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