Measuring and Evaluating Implicit Air Pollution Trades on the European Carbon Market

Market-based climate policies decentralize abatement decisions by establishing a CO2 price, either via taxes or via a pollution permit market. Since CO2 emissions are often released jointly with conventional air pollutants, CO2 permit trades give rise to implicit trades of such co-pollutants. In contrast to CO2 emissions, co-pollution emissions are not traded on a ton-for-ton basis, but they do have local environmental impacts. Depending on the spatial distribution of polluters and the polluted, these properties can lead to undesirable outcomes. Drawing on economic theory, econometrics, and atmospheric chemistry, we develop an empirical framework for measuring air pollution trades and evaluating their economic consequences. We apply this framework to provide the first estimates of the welfare and distributional consequences of co-pollution trades on the European carbon market.

Date et heure: 
Mercredi 09 novembre 2022, 16:30 - 18:00
NBB, KU Leuven, UAntwerpen, UCLouvain, UGent, UHasselt, ULB, ULiège and UMons
Ulrich Wagner (University of Mannheim)
Lamfalussy room (NBB1 +4) of the National Bank of Belgium - Boulevard de Berlaimont 14, 1000 Brussels
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