This document is a thesis that assesses the impact of the EU Emissions Trading System (EU ETS) on emissions allowance trade using a tailored gravity model approach. It contains an introduction and three chapters. Chapter 1 provides the rationale for tradable emissions mechanisms by discussing UN environmental summits, concepts of weak and strong sustainability, and the role of emissions trading. Chapter 2 describes key features of the EU ETS, including its history, price dynamics, effectiveness in reducing emissions, and international comparisons. Chapter 3 outlines a gravity model used to assess the impact of the EU ETS on emissions allowance trade, discusses the model and provides results of the impact assessment.

1. Facoltà di Scienze Politiche, Sociologia e Comunicazione
Corso di laurea in Scienze dello Sviluppo e della
Cooperazione Internazionale
Assessing the impact of EU ETS
on emission allowances’ trade:
a tailored gravity approach
Relatore Candidato
Pierluigi Montalbano Margherita Volpe
Matricola 1508224
Correlatore
Roberto Pasca Di Magliano
A/A 2013/2014
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2. The future we seek, as always, must be earned.
[Obama B. - Hollande F.,
The Washington Post, 2014]
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3. Table of contents
Introduction
5
Chapter 1 _ The rationale behind tradable commons
12
1.1 The UN Environmental Summits
13
1.2 Weak versus strong sustainability
18
1.3 The options at stake
24
1.4 The role of emission trading mechanisms
26
Chapter 2 _ EU ETS, Key feature and Peculiar dynamics
29
2.1 The EU ETS
33
2.2 The EU ETS Periodization
37
2.3 EUA’s Price dynamics
39
2.4 EU ETS’s emission reduction effectiveness
44
2.5 EU ETS’s Key Features
46
2.6 International terms of comparison
55
Chapter 3 _ EU ETS, impact assessment
61
3.1 Gravity model theoretical description
62
3.2 Rose’s specification of the gravity model
68
3.3 EU ETS’s impact assessment model description
71
3.4 EU ETS impact assessment results
80
Conclusions
89
Glossary
94
Bibliography
103
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