Revenues of the EU ETS Auctioning and Their Impact on Budgetary Allocation: The Case of Poland

Literature Review

The debate over the use of auction revenues started at the very beginning of the EU ETS operations. Müller (2008) summarised the first rounds of negotiations between EU member states and EU bodies over the extent to which auction revenues should be earmarked for climate change purposes and discussed points highlighted by both followers and opponents of earmarking as well as presented some countries’ experience with earmarking in public finance.

Marchewka-Bartkowiak (2012) focused on possible allocation models of auction revenues and differentiates between directing auction revenues to the state budget and channelling them into a specially dedicated environmental fund.

Löfgren et al. (2018) compared auction revenues across EU member states and investigated the directions of auction revenues spending using EIONET data. They found that when spending their auction revenues, EU countries generally favoured energy efficiency projects and promotion of renewable energy sources (the same conclusion was drawn from a similar study that utilised EIONET data of Quatrosi (2018)), though there was a great diversity between countries. The researchers concluded it was impossible to completely review spending of auction revenues within the EU because of some obstacles. First, they stressed big differences between countries when it comes to amount of data reported. They also highlighted the lack of direct earmarking in many countries. Finally, they underlined that one was not able to assess the extent to which auction revenues crowd out funding of projects that would have been implemented without the revenues. Their findings regarding comparison difficulties are similar to those obtained by researchers that have prepared a report on auction revenues spending for the European Commission (Le Den et. al 2017).

The empirical studies discussed above focus on a problem of auction revenues earmarking from the perspective of public expenditures only. However, to gain a better understanding of auction revenues significance, it is important to evaluate carbon revenues in a broader context of a national public sector.