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This paper aims to help policy makers identify how standards can contribute to the effective and cost-efficient development and deployment of eco-innovations (innovations that result in a reduction of environmental impact). To that end we discuss what standards are, how the process of standardization works, and how standards are related to induced innovation and diffusion in different type of markets, e.g. markets for add-on technologies versus markets for integrated resource- or emission-saving technologies. This broad perspective enables us to identify interesting economic dimensions of standards, such as their contribution to positive network externalities, and the extent to which they are substitutes or complements to environmental policy instruments. Finally we discuss how governments might contribute to eco-innovation by selecting, stimulating or creating (inter)national standards.

This paper discusses lessons that other regions could learn from European Union's effort to implement carbon pricing through EU Emission Trading System (EU ETS). Our lessons are, first of all, that a cap-and-trade system like EU ETS is very helpful in guaranteeing a credible and binding reduction of emissions through its cap within the sectors subject to this regulation. Second, providing enough flexibility for trade, in particular intertemporal trade, is essential but should also be guided with care. The current quantity rules for the Market Stability Reserve to steer the abundancy of allowances seems a promising new feature for cap-and-trade policies, although price collars for newly designed systems create more transparency. Third, it is far from obvious why EU ETS should cover the entire carbon emissions base if other instruments, like (implicit) carbon taxes are already available. Finally, EU ETS seems at least partially responsible for the observed steady reduction of carbon emission within the EU ETS sectors. However, the gradual tendency to outsource emissions to other regions justifies carbon border adjustment mechanisms for selected sectors if other regions do not impose carbon pricing rules.

The efficiency case for raising fuel tax minima under the EU Energy Tax Directive (ETD) appears nuanced. Some fuels may be undertaxed (e.g., road diesel, natural gas), while others may be adequately taxed already (e.g., gasoline). Reform proposals would increase some minima, including for road diesel and natural gas, while leaving that for gasoline unchanged. This is a step in the right direction, though the climate, fiscal, health, and net economic benefits are limited. There are potentially much larger gains from extending tax minima to fuels (especially coal) covered by the EU Emissions Trading System (if the cap is tightened). Two-speed systems (with lower minima for low-income countries) may improve political acceptability, while sacrificing little in terms of climate benefits. Under higher, but still plausible, environmental damage assumptions than used here, there is a case for reviving ETD reform, whatever its exact structure.

We estimate the long-run effect of a uniform carbon tax on energy consumption by using a new and unique dataset in which effective tax rates of OECD countries are calculated in terms of carbon dioxide emissions. The effective tax rates account for the widely discussed tax deductions for specific energy tax bases leading to a careful calculation of net tax rates faced by agents. We argue that taxation might be endogenous to energy consumption in the long run. In order to identify a causal effect, we document a positive correlation between the tax rates of neighboring countries which we then exploit in our instrumental variables estimations. Validity of our identification strategy is consistent with the strategic inter-governmental interaction theo-ries that lead to a spatial pattern in local government policies in the presence of immobile tax bases. Our instrumental variables estimations indicate that taxing carbon content of energy use can be an effective instrument for climate policy.

This article studies the likely impact of unconventional gas developments in the U.S. on EU competitiveness. We find, first of all, little evidence for a prosperous unconventional gas development in Europe. Second, the U.S. boom has already a strong impact on both world and European energy markets. In particular, lower U.S. gas and coal prices have changed relative energy prices both at home and abroad. Finally, competitiveness impacts in some (sub)sectors will be considerable. These impacts are not only related to production based on gas use as a feedstock but also on the byproducts' from unconventional gas production, such as ethylene, propane and butane. However, several indirect impacts, such as lower coal import prices, may soften the adverse competitiveness impact in the EU.

In the context of transboundary air pollution policy the broad ambition is to achieve reductions in the level of environmental and societal damage associated with certain pollutant concentrations and exposure rates in a cost effective manner. Policy formulation and legislative frameworks in this field, such as the current National Emissions Ceiling Directive in the European Union, are challenged by the degree of scientific complexity involved, the dispersed sources of emissions, and the inherent uncertainties associated with long range forecasting under these conditions. This paper identifies the reasons why varied forms of adaptive policy mechanisms (also termed flexibilities) are necessary and valuable in this arena, presents the critical considerations for their design and operation, reviews a selection of the more prominent options currently considered in the associated transboundary research community, and concludes with recommendations for the next set of transboundary air pollution policy frameworks.

This paper aims to help policy makers identify how standards can contribute to the effective and cost-efficient development and deployment of eco-innovations (innovations that result in a reduction of environmental impact). To that end we discuss what standards are, how the process of standardization works, and how standards are related to induced innovation and diffusion in different type of markets, e.g. markets for add-on technologies versus markets for integrated resource- or emission-saving technologies. This broad perspective enables us to identify interesting economic dimensions of standards, such as their contribution to positive network externalities, and the extent to which they are substitutes or complements to environmental policy instruments. Finally we discuss how governments might contribute to eco-innovation by selecting, stimulating or creating (inter)national standards.

This paper aims to help policy makers identify how standards can contribute to the effective and cost-efficient development and deployment of eco-innovations (innovations that result in a reduction of environmental impact). To that end we discuss what standards are, how the process of standardization works, and how standards are related to induced innovation and diffusion in different type of markets, e.g. markets for add-on technologies versus markets for integrated resource- or emission-saving technologies. This broad perspective enables us to identify interesting economic dimensions of standards, such as their contribution to positive network externalities, and the extent to which they are substitutes or complements to environmental policy instruments. Finally we discuss how governments might contribute to eco-innovation by selecting, stimulating or creating (inter)national standards.

This paper estimates Nash-type fiscal reaction functions for European governments competing for revenue from diesel excises. It appears that European governments strategically set their excise levels by responding to their neighbors? tax rates. This provides evidence for the presence of tax competition in diesel excises. In fact, a 10 percent higher rate in neighboring countries (in terms of the user price) induces a country to raise its own rate by between 2 and 3 percent. This impact is robust for alternative specifications. By imposing restrictions on excise levels, EU harmonization of excises in 1987 and the introduction of a minimum in 1992 exerted a positive impact on the excise level in a number of EU countries. It has not, however, significantly reduced the intensity of tax competition. Indeed, strategic tax responses have not significantly been reduced by these harmonization policies. We also find that high-tax countries appear to compete more aggressively than low-tax countries in the sense that they feature larger strategic tax responses. There is no significant difference between large and small countries.