Emissions curbs do not harm business, says OECD

14 December 2018

Sian Crampsie

A new report from the OECD indicates that the EU’s Emissions Trading Scheme (ETS) has not harmed the competitiveness of business and industry in the region.

The OECD report, ‘The Joint Impact of the EU ETS on Carbon Emissions and Economic Performance’, compares financial data from around 2000 firms operating ETS-regulated facilities across the EU with data from similar-sized unregulated firms from the same countries and sectors.

The report finds that ETS regulations had no negative effect on revenue, profits, fixed assets or jobs, and, in fact, firms subject to the ETS tended to perform better.

The EU ETS is the world’s first international emissions trading system and the biggest of 25 carbon cap-and-trade systems in place worldwide today. It allocates tradeable emissions permits to over 14 000 power stations and industrial plants in 31 countries accounting for over 40 per cent of the EU’s total greenhouse gas emissions.

According to the OECD, the revenues of companies subject to ETS regulations over 2005-2014 were 7-18 per cent higher at the end of the period studied than what they would have been without the EU ETS, and their fixed assets grew by 6-10 per cent compared to control firms. In addition, employment levels and operating profit at ETS firms were also higher than at non-ETS firms, although by a non-statistically significant amount.

The report also found the ETS has been effective in reducing carbon emissions. Comparing emissions data from power plants and industrial facilities covered by the ETS with data from similar but unregulated facilities in the four countries where data enable such a comparison – France, the Netherlands, Norway and the United Kingdom – shows a significant difference.

ETS-regulated plants in these countries cut their emissions by 10-14 per cent between the system’s 2005 introduction and 2012 compared with similar-sized unregulated installations from the same countries and sectors. Most of the drop took place from 2008 to 2012, during the second trading phase of the ETS, and the decrease was most marked at the biggest facilities.



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