April 17, 2011

Efficiency, Productivity and Environmental Policy: A Case Study of Power Generation in the EU

by Jurate Jaraite and Corrado Di Maria

- This study uses the EU public power generating sector as a case study to investigate the environmental efficiency and productivity enhancing performance of the European Union’s CO2 Emissions Trading Scheme (EU ETS) in its pilot phase. Our analysis suggests two conclusions: on the one hand carbon pricing led to an increase in environmental efficiency and to a shift outwards of the technological frontier; on the other hand, the overly generous allocation of emission permits had a negative impact on both measures. These results are shown to be robust to changes in controls and specifications.

Jaraite, J. and C. Di Maria (2011). "Efficiency, Productivity and Environmental Policy: A Case Study of Power Generation in the EU." FEEM Note di lavoro No. 2011.019, Mar 2011.