The European Union (EU) aims to put Europe on track toward a low-carbon economy. In this striking challenge, the EU Emissions Trading System (EU ETS) has been singled out as the Union’s key climate policy instrument, ultimately aimed as a model for a global carbon market. The learning effect of the EU ETS could thus be tremendous. This study explores how the EU ETS actually works on the ground, affecting corporate climate strategies. It covers general sector responses as well as systematic comparative studies of companies across the sectors. The latter enables improved understanding of causal effects and the role of interaction between different policy instruments and other factors that impact corporate climate strategies. The study explores a broad set of mechanisms at play potentially linking the EU ETS to company climate strategies. These include how corporate norms of responsibility are affected by the EU ETS and how economic incentives provide opportunities for innovation. The book’s main contribution lies in its systematic examination of corporate responses to the EU ETS from a broad empirical and analytical social science perspective covering companies in all main EU ETS sectors: electric power, oil, cement, steel and pulp and paper.

A leading economist develops a supply-side approach to fighting climate change that encourages resource owners to leave more of their fossil carbon underground. The Earth is getting warmer. Yet, as Hans-Werner Sinn points out in this provocative book, the dominant policy approach—which aims to curb consumption of fossil energy—has been ineffective. Despite policy makers' efforts to promote alternative energy, impose emission controls on cars, and enforce tough energy-efficiency standards for buildings, the relentlessly rising curve of CO2 output does not show the slightest downward turn. Some proposed solutions are downright harmful: cultivating crops to make biofuels not only contributes to global warming but also uses resources that should be devoted to feeding the world's hungry. In The Green Paradox, Sinn proposes a new, more pragmatic approach based not on regulating the demand for fossil fuels but on controlling the supply. The owners of carbon resources, Sinn explains, are pre-empting future regulation by accelerating the production of fossil energy while they can. This is the “Green Paradox”: expected future reduction in carbon consumption has the effect of accelerating climate change. Sinn suggests a supply-side solution: inducing the owners of carbon resources to leave more of their wealth underground. He proposes the swift introduction of a “Super-Kyoto” system—gathering all consumer countries into a cartel by means of a worldwide, coordinated cap-and-trade system supported by the levying of source taxes on capital income—to spoil the resource owners' appetite for financial assets. Only if we can shift our focus from local demand to worldwide supply policies for reducing carbon emissions, Sinn argues, will we have a chance of staving off climate disaster.

The European Union (EU) aims to put Europe on track toward a low-carbon economy. In this striking challenge, the EU Emissions Trading System (EU ETS) has been singled out as the Union’s key climate policy instrument, ultimately aimed as a model for a global carbon market. The learning effect of the EU ETS could thus be tremendous. This study explores how the EU ETS actually works on the ground, affecting corporate climate strategies. It covers general sector responses as well as systematic comparative studies of companies across the sectors. The latter enables improved understanding of causal effects and the role of interaction between different policy instruments and other factors that impact corporate climate strategies. The study explores a broad set of mechanisms at play potentially linking the EU ETS to company climate strategies. These include how corporate norms of responsibility are affected by the EU ETS and how economic incentives provide opportunities for innovation. The book’s main contribution lies in its systematic examination of corporate responses to the EU ETS from a broad empirical and analytical social science perspective covering companies in all main EU ETS sectors: electric power, oil, cement, steel and pulp and paper.

The first detailed description and analysis of the European Union Emissions Trading Scheme.

The Scheme is one of the Government's policy measures designed to help meet its commitments under the 1997 Kyoto Protocol to secure significant reductions in UK greenhouse gas emissions, in order to address the causes of global warming. Under the Scheme, companies are issued with allowances equal to their target emissions for the year, and at the end of the year must hold enough allowances to cover its actual emissions. A company can choose to reduce its actual emissions below its target (enabling it to sell excess allowances to other companies, or to save them for use in future years), to meet its target, or to buy extra allowances to cover any emissions in excess of its target amount. Following on from a National Audit Office report on this topic (HCP 517, session 2003-04; ISBN 0102927804) published in April 2004, the Committee's report examines the risk management procedures associated with the Scheme, the way baselines for greenhouse emissions were set, the effectiveness of the auction and the market, and the wider benefits to the UK economy.

An authoritative overview of the requirements and costs of monitoring, reporting and verifying emissions from industry to regional and national levels.

Given the scale of the greenhouse gas emissions reductions that are seen as necessary to avert the worst effects of climate change, policy action is likely to result in a complete reshaping of the world economy. The consequences are not confined to 'obvious' sectors such as power generation, transport and heavy industry; virtually every company's activities, business models and strategies will need to be completely rethought. In addition, beyond their core business activities, companies have the potential to make important contributions to reducing greenhouse gas emissions through the allocation of capital, through innovation and the development of new technologies, and through their influence on the actions taken by governments on climate change. Corporate Responses to Climate Change has been written at a crucial point in the climate change debate, with the issue now central to economic and energy policy in many countries. The book analyses current business practice and performance on climate change, in the light of the dramatic changes in the regulatory and policy environment over the last five years. More specifically, it examines how climate change-related policy development and implementation have influenced corporate performance, with the objective of using this information to consider how the next stage of climate change policy – regulation, incentives, voluntary initiatives – may be designed and implemented in a manner that delivers the real and substantial reductions in greenhouse gas emissions that will be required in a timely manner, while also addressing the inevitable dilemmas at the heart of climate change policy (e.g. how are concerns such as energy security to be squared with the need for drastic reductions in greenhouse gas emissions? Can economic growth be reconciled with greenhouse gas emissions? Can emissions reductions be delivered in an economically efficient manner?). The book focuses primarily on two areas. First, how have companies actually responded to the emerging regulatory framework and the growing political and broader public interest in climate change? Have companies reduced their greenhouse gas emissions and by how much? Have companies already started to position themselves for the transition to a low-carbon economy? Does corporate self-regulation – unilateral commitments and collective voluntary approaches – represent an appropriate response to the threat presented by climate change? What are the barriers to further action? Second, the book examines what the key drivers for corporate action on climate change have been: regulation, stakeholder pressure, investor pressure. Which policy instruments have been effective, which have not, and why? How have company actions influenced the strength of these pressures? Corporate Responses to Climate Change is a state-of-the-art analysis of corporate action on climate change and will be essential reading for businesses, policy-makers, academics, NGOs, investors and all those interested in how the business sector is and should be dealing with the most serious environmental threat faced by our planet.