The effects of the European Union Emission Trading Scheme on the energy enterprises with small carbon dioxide emissions in Sweden

Sammanfattning: To reduce the rate of global warming the EU has implemented the European Union EmissionTrading Scheme (EU ETS) as the world’s largest Cap and Trade system in an ambitiousattempt to reduce greenhouse gases with high cost-effectiveness. However, Cap and Tradetheory stipulates that transaction costs should be low for a Cap and Trade system to workeffectively. There is a possibility that small actors producing district heating and electricitypay too large a part of their costs in transaction cost, thereby making the EU ETS fail in itseffort to reduce emissions in the most cost effective way. To research this, interviews withrepresentatives from ten small producers of district heating and electricity in Sweden whereconducted. This study details their time and cost necessary to administrate the EU ETS. Theresults showed that transaction costs where high at around 50%. The cause for the hightransaction costs are the administrative requirements necessary to fulfill the legal obligationsin the EU ETS, a system that requires a little less than a week to administrate. Despite thehigh transaction costs the EU ETS does not lower the energy producers CO2 emissions, sincebio-fuel is already the preferred fuel. It is recommended is that the Swedish government usesthe possibility stipulated in the EU legislation to opt-out small emitters from the EU ETS.