The use of emissions trading in relation to other means of reducing emissions

A Nordic comparative study

image of The use of emissions trading in relation to other means of reducing emissions

For quite a long time the Nordic countries have had explicitly formulated climate change strategies and have used various measures intended to curb emissions. Since 1 January 2005 an emissions trading scheme is in operation within the European Union, after several years of preparation. When setting climate policies the Nordic countries must take this new instrument in to account, and try and find the right balance between emissions trading and other means of reducing emissions. This study analyzes how the Nordic countries have dealt with or plan to deal with the conditions of the EU emissions trading system and the relation to other measures to curb emissions.



ETS combined with other instruments – theoretical issues

Within environmental and energy policy in general and climate policy in particular it appears as if there is a tendency to introduce new policy instruments without removing or adjusting the instruments already in use. Even if each of the measures used might be rational in themselves, there is clearly a risk that they, when analyzed together, could interact in a way that reduces the effectiveness of the overall climate policy. Given this potential risk, the effect of using multiple instruments has been given surprisingly little attention in both the academic and the policy debate. So far, analysis has mostly been focused on the effectiveness of one instrument at the time. The issue has however been given somewhat more attention lately as the need for understanding of these issues has increased with the introduction of the EU ETS. For example, research funded by the OECD and the European Commission recently analyzed the effects of emissions trading in combination with other instruments. Within the Nordic countries, which has a relatively long tradition in using different emissions related instruments, there is lacking assessments of how the different climate and energy policy related instruments interact.


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