Trading Costs and the Efficiency of Emissions Trading – Evidence from the EU ETS

I’ve lost a track a little of how the research projects I worked on at the Centre for Energy and Environmental Markets progressed since I left, but it looks as though at least one of them is proving useful: my former boss, Regina Betz, presented some of our work at the 4th IAEE Asia Conference in Beijing this September just gone.

Trading Costs and the Efficiency of Emissions Trading – Evidence from the EU ETS [pdf]

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Why Drop the Price Floor? Taking a Gamble on the EU

Updated on Wednesday, August 29, 2012 at 14:28 by MCJ

Updated on Thursday, August 30, 2012 at 16:27 by MCJ

I couldn’t make much at first of today’s announcement by Greg Combet, Minister for Climate Change and Energy Efficiency, that Australia was going to link its ETS with the EU ETS, and oh, by the way, we’re dropping the price floor.

That Australia and the EU will link their schemes good news, but it’s an expected development. Dropping the price floor, on the hand, had been speculated about (notably by the AFR; well done, Marcus Priest), wasn’t really part of the original plan.

As I wrote back in May, a price floor has some good things going for it, despite being technically challenging, and as it’s only regulation the government has the numbers to pass it even with Rob Oakeshott’s opposition. So my initial reaction was that the floor price had been put in the “too hard” basket and the ETS linkage was just used to hide the announcement somewhat.

I’ve since heard, however, that dropping the price floor was a condition of the EU agreeing to link the schemes. This makes more sense.

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