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- Fischer, Carolyn, et al.
(author)
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The Legal and Economic Case for an Auction Reserve Price in the EU Emissions Trading System
- 2020
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In: The Columbia journal of European law. - 1076-6715. ; 26:2, s. 1-28
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Journal article (peer-reviewed)abstract
- When it first launched in 2005, the European Union emissions trading system (EU ETS) expected to see carbon dioxide prices of around €30/ton and be a cornerstone of the EU's climate policy. The reality was a cascade of falling prices, a ballooning privately held emissions bank, and a decade of muted incentives for investment in the technology and innovation necessary to achieve long-term climate goals. The European Commission responded with various administrative measures, including postponing the introduction of allowances (“backloading”) and using a quantity-based criterion for regulating future allowance sales (“the market stability reserve”). While prices have now begun to recover, it is far from clear whether these measures are sufficient to adequately support the price of carbon dioxide into the future. In the meantime, governments outside the EU ETS have begun turning away from carbon pricing and adopting overlapping regulatory measures that reinforce low prices. Unfortunately, however, this further undermines confidence in market-based mechanisms for reducing greenhouse gas emissions. Other carbon markets have responded to such by introducing an auction reserve price that sets a minimum price in allowance auctions, thus avoiding the unexpectedly low price outcomes experienced in the EU ETS. Opponents of instituting such an auction reserve price in the EU ETS express two main concerns. First, they fear that a minimum auction price would interfere with the quantity-based nature of the market. Second, they argue that a reserve price would be tantamount to a tax, thus triggering a burdensome decision rule requiring unanimity among EU Member States that would be difficult to overcome. This Article reviews the economic and legal arguments for and against an auction reserve price. Our economic analysis concludes that an auction reserve price is necessary to accommodate overlapping policies and for the allowance market to operate efficiently. Our legal analysis concludes that, inasmuch as an auction reserve price is not a “provision primarily of a fiscal nature,” nor would it “significantly affect a Member State's choice between different energy sources,” no legal barriers stand in the way of the introduction of an auction reserve price into the EU ETS. We then describe two ways by which a reserve price could be introduced into this system.
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- Lindholm, Johan, 1977-, et al.
(author)
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Article 28 E.C. and rules on use : A step towards a workable doctrine on measures having equivalent effect to quantitative restrictions
- 2010
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In: The Columbia journal of European law. - New York : Parker School of Foreign and Comparative Law. - 1076-6715. ; 16:1, s. 191-231
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Journal article (peer-reviewed)abstract
- In June 2009 the European Court of Justice (E.C.J.) decided the Mickelsson case (C-142/05). Mickelsson concerns the application of the (in)famous Article 28 E.C. prohibiting practical obstacles to the free movement of goods within the European Union. The meaning of Article 28 is notoriously vague and has given rise to extensive case law. Mickelsson brings attention to a little discussed dimension of Article 28 E.C.: the fact that rules on use (i.e. national measures regulating how, when, and by whom goods can be used) can constitute practical obstacles to trade (so called MEQRs—measures having equivalent effect to quantitative restrictions). Rules on use do not fit the conventional concepts and principles established in the case law of the E.C.J. In this Article we examine the application of Article 28 on rules on use, but we also discuss the implications of this development for the free movement of goods in general. We argue that the recent decisions handed down by the E.C.J. have three distinct advantages over previous case law on MEQRs. Firstly, the Court of Justice has approached the concept of MEQRs broadly, thus managing to accommodate national measures that do not easily fit the traditional categories employed in relation to Article 28. Secondly, the Court’s approach is pragmatic and allows for the relatively simple identification of obvious breaches while providing a more nuanced approach based on market access for “hard cases.” Finally, the new approach improves upon existing case law without discarding workable elements established previously. While many questions remain unanswered, we argue that the Court’s recent case law on rules on use is a clear and much needed step in the right direction towards a workable doctrine of MEQRs, not only for rules on use but for the entire field of free movement of goods.
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