Firms’ Banking and Pooling in the EU ETS (2005-2007)

Firms’ Banking and Pooling in the EU ETS (2005-2007)

Julien Chevallier (Université Paris Dauphine, France), Johanna Etner (Université Paris Descartes & ESG Management School, France) and Pierre-André Jouvet (Université Paris Ouest Nanterre La Défense, France)
DOI: 10.4018/978-1-61350-156-6.ch003
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This chapter investigates firms’ banking and pooling behaviors in the context of the EU Emissions Trading Scheme (EU ETS) during Phase I (2005-2007). It provides an overview of the questions raised at the firm-level by the introduction and implementation of the EU trading system in terms of allowances management. More specifically, the article details the banking behavior at the installation level, and the pooling of risks at the group level attached to allowance trading between the parent company and its subsidiaries. Based on case-studies of the most significant patterns in terms of allowances management among firms, the empirical analyses underline the efficiency of the banking instrument as a risk-management tool.
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Background Information On The Eu Ets

The EU ETS has been created on January 1, 2005 to reduce by 8% CO2 emissions in the European Union by 2012, relative to 1990 emissions levels. This aggregated emissions reduction target in the EU has been achieved following differentiated agreements, sharing efforts between Member States based on their potential of “decarbonisation” of their economy.

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