What did companies learn in the EU emissions trading system phase I?

The European Union tried to meet the agreed emissions reduction target in the Kyoto Protocol with the creation of an Emission Trading System.

Due to lobbying and uncertainty, the Phase I (2005-2007) finished with an overallocation of emission certificates and the authorities decided to change the main objective from „reduction of emissions“ to “learning” (Knoll 2009). The objective was European companies shall learn how to reduce greenhouse emissions by participating in a market of emissions. This paper asks: What did companies learn in the EU Emissions Trading System Phase I?

To make learning visible, we research about the relationship between the trading activity of participating companies and the delegation within the company departments of the decision on the purchase and sale of emission certificates.

Based on a qualitative study, we assume that there are two possible strategies of responsibility delegation about emissions within company departments: coupling and decoupling. Coupling implies the delegation about responsibility of the CO2 certificates closer in the process of production departments and decoupling means delegation in the more administrative and financial departments.

The empirical part of the work is a panel study based on a survey in four countries (Germany, United Kingdom, Netherlands and Denmark) with 360 observations.

The conclusion shows that companies carry out a decoupling when they need to buy the certificates.