Rearranging the allocation of credits in the EU’s Emission Trading Scheme (ETS) could lead to earn indebted euro zone countries €6.7 billion a year and help to safeguard thousands of jobs, according to a study by the London School of Economics.
In order to protect industry and employment, carbon intensive sectors will receive free allowances in the 2013-2020 trading phase to cut emissions. Targeting specifically vulnerable firms rather than blanket awards to sectors could earn billions of euros a year by enabling Member States to sell allowances they would otherwise be obliged to hand out for free under EU law. The move would also reduce the likelihood of carbon leakage.
“We find that the aggregate risk of job loss or carbon leakage resulting from an application of the current EU criteria could be achieved with just a fraction of the amount of permits that will be handed out for free”, concludes the report.
The report is available here.

The full story is reported in Climate Policy News, the weekly column edited by Marinella Davide and Valeria Barbi.

Photo by Vattenfall.