Browsing by Author "Biksons, Roberts"

The aim of this study was to describe the main European Union Emission Trading System`s (EU ETS) aspects that affect carbon abatement investments and the way in which they influence investment decision making of the participating companies. Furthermore, trading phase III was analysed and compared to the previous phases in order to forecast possible carbon abatement investment trends for phase IV. The study consists of the collection of data from 9 EU ETS companies using semi-structured interviews. The questions were structured in four (compliance, protection against carbon leakage, carbon price and allowance allocation methods) sections based on extensive literature review of previous studies. According to the results, most companies considered the EU ETS as an important policy tool that encourages carbon abatement investments; however the system has also created certain difficulties: entering trading phase IV, companies are facing significant administrative burden, regulatory uncertainty and unfair competition caused by direct and indirect carbon costs and therefore increasing the risk of carbon leakage. All the above lower the companies’ ability of investing in carbon abatement. To tackle this problem more protective mechanisms should be introduced, including more flexible free allowance allocation. Taking into account the research limitations, respectively the low response rate (3,5%) and the lack of representation of certain industries, further investigation would be necessary for more definitive results, which would in turn help develop concrete policy proposals.