The magnitude of carbon leakage and addressing it in the EU ETS

dc.contributorAalto Universityen
dc.contributor.advisorMustonen, Mikko
dc.contributor.authorKiviranta, Juuso
dc.contributor.departmentTaloustieteen laitosfi
dc.contributor.schoolSchool of Businessen
dc.description.abstractThis literary review discusses the phenomenon of carbon leakage in the European Union emissions trading system (EU ETS). I present the main principles of emissions trading applied in the EU ETS and how the current ETS policy is build. These lay the groundwork for assessing the magnitude of carbon leakage in the EU ETS and how it should be tackled. Assessing the magnitude of carbon leakage and ways to tackle it are the two key questions of this paper. As presented in this paper, carbon leakage might not be that big of a problem for the ETS as the European policy could insist. This suggests that the policy is partly created on political basis ignoring the environmental and economic principles beneath it. I also present two solutions to carbon leakage presented in the literature. Out of the two alternatives, the use of border adjustment is supported by the economic literature. The downside of this environmentally and economically effective solution is its legal restrictions that lower its effectiveness. Despite these restrictions the proposed solution and the other alternative, output-based allocation, deliver better results than the current European policy to fight carbon leakage.en
dc.description.notificationTutkielman tiivistelmätiedoissa näkyvä hyväksymisvuosi on
dc.description.notificationThe year of approval showing in the abstract of the thesis is 2020.en
dc.subject.keywordcarbon leakageen
dc.subject.keywordEU ETSen
dc.subject.keywordborder adjustmenten
dc.subject.keywordoutput-based allocationen
dc.subject.keywordleakage ratioen
dc.subject.keywordcompetitiveness channelen
dc.subject.keywordenergy channelen
dc.subject.keywordmacro leakageen
dc.titleThe magnitude of carbon leakage and addressing it in the EU ETSen
dc.typeG1 Kandidaatintyöfi
dc.type.ontasotBachelor's thesisen
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