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A Firm-level evaluation of the European Union Emissions Trading System
The flagship policy of the European Union to reduce its Greenhouse Gas emissions and hence the risk of dangerous climate change is the EU Emissions Trading System (ETS, in place since 2005. Through this system, participating power and industrial firms are given or sold a certain number of emissions allowances which they can then trade amongst each other.
The project will provide the first assessment of the effects of the EUETS on the energy efficiency and performance of individual businesses. Using firm-level data on energy use, output and employment in a large sample of business establishments in the United Kingdom and France, it will study how the introduction of the EUETS in January 2005 has affected business energy use, in particular whether it has resulted in additional energy savings. It will also estimate the impact that the policy has had on participating firms' performance and their competitiveness.
With its focus on the short-run effects of the trading scheme and on two countries, this project is the first of a larger research agenda that will lead to the study other European countries as well as the longer-term implications of a carbon market on firms' behaviour and performance.