Nordic Economic Policy Review 2019

Climate Policies in the Nordics

image of Nordic Economic Policy Review 2019

The articles in the 2019 Nordic Economic Policy Review analyse how the Nordic countries best can contribute to international climate policy. The articles cover topics such as: How can the Nordics help raise the ambitions in the Paris Agreement? What is the effect of national policy on emissions regulated by the EU Emissions Trading System? Would it be cost-effective for the Nordic countries to pay for emission reductions elsewhere to a larger extent? What role should be played by subsidies to green technology? Should Norway put more emphasis on supply-side policies, that is, on limiting future extraction of oil and gas? The volume contains five papers with associated comments which were originally presented at a conference in Stockholm on 24 October 2018.



National Climate Policies and the European EmissionsTrading System

We set up a model of the European Emissions Trading System (ETS) to evaluate the prospects for the system after the recent reform. Our simulations indicate that the current allowance surplus may not disappear before the 2050s. They also show that the mechanics of the new Market Stability Reserve imply that annulment of allowances by an EU member state may be largely ineffective, whereas national emission reductions can permanently reduce EUwide CO2 emissions. We suggest that the next ETS reform should include a floor and a ceiling for the price of emission allowances.


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