Efecto de la sobreexpresión del factor transcripcional SPL

Next, I assess the institutional choices and their impacts on the efficiency of the system. The focus is on national legislation, monitoring and enforcement and on the flexibility of trading. Below, I examine, on the basis of the earlier findings, the possibilities of increasing the centralisation degree, i.e. harmonising the work of the institutions and improving the efficiency. The key points for efficiency and the proper functioning of the EU ETS are a high compliance level of the participants and low transaction costs. These issues are closely related to many factors of the whole system and they include much causality. Transaction costs affect the system in several ways and their impact can be lessened by certain design issues. Increasing the flexibility of the institutions work and harmonising and centralising some of their tasks are some of options for reducing transaction costs. This requires, at the very least, that national legislations within the Member States should be comparable.

In addition to the parallelism of the legislation, careful design of the institutions and their tasks can significantly affect the flexibility of the ETS. Through close cooperation with the Member States during planning and creating the central institutions the unnecessary constraints can be removed. As earlier experiences from the USA show a high level of centralisation of certain institutions is important for the success of the system. (Kruger & Pizer 2004.) As for EU, centralisation is a much more difficult task since the political structure is very different from the US. Thus voluntary cooperation within the MS is particularly important. The contents of the national legislations seem to be rather similar and this leads to the possibility of centralised legislation. This type of common legislation would decrease the complexity of the regulations and acts.

Enforcement and compliance include many institutions in the system. Their establishment seems to have been carried out in a similar fashion in the Member States. Centralisation of some of them, like registry operations and monitoring guidelines would be also economically convenient. But in order to ensure compliance and to meet the reduction target the verification and the accreditation of the verifiers play an even more important role. When also considering the fact that accurate monitoring is the most complex and costly element component of the trading scheme, it gives an incentive to organise and design the monitoring in a just and accurate manner. (Egenhofer & Fujiwara 2003.)

Monitoring and enforcement rules should be centralised in order to ensure high compliance. This point has also entered the discussion, as the improvement options of the ETS have been conferred. If the regulations and definitions were similar across the EU, the rules would be set in an even more centralised fashion to all which would increase compliance. Reporting is a key compliance mechanism. It involves the monitoring of emissions and reporting of the emissions trading activity. Emissions’ reporting is a task of the operators and the Member State is responsible for reporting of the trading activity and of the functioning of the whole system. Reporting relies on emissions data and monitoring. In both Member States, monitoring and reporting are organised in cooperation with the state authorities. Competent authorities receive the reports and they can also compare them to the registry data.

Ensuring compliance and identical approval of the monitored emission reports has aroused many concerns among the MS and the participants. The lack of uniform and mandatory standards for certification is one reason behind these concerns. Directive and national legislation in both of the considered MS allows the use of independent third party verification. Both MS are also planning to do so. This raises several questions of its efficiency. Is this third party verification more cost-efficient than having a more centralised verification and having e.g. MS authorities perform it? Third party verification may reduce government costs but increases costs to industry. Independent verifiers may also be inconsistence in their interpretations of the guidelines. Who will resolve inconsistencies? It must be secured that verifiers are credible and independent of the firms they are verifying. (Kruger & Pizer 2004.)

Authority monitoring regulations should be centralised in order to ensure equity and efficiency for the system. This supervising monitoring should be made stochastic as the Malik’s model in chapter two presents. As planning this monitoring, attention should be paid into the probability determinants of the monitoring, as it is the key for the non- compliance incentive. This means that setting the fine should be related to the price of the allowances. According to the current design of this supervision the authority monitoring are not made taking the price of the allowance into account. In both MS the competent authorities are responsible for this supervision of the system, which includes this monitoring of compliance with approving the emission reports and penalising if the operator is found non-compliant. These regulations should also be comparable within the MS to avoid e.g. transferring production into less stringent regulated areas.

The International Emissions trading Association, IETA, has expressed its concern over this issue and made some suggestions for the EU on how to modify the system to make it function better. (IETA 2004). With third party verification there is a danger of less stringent verification and, as a result, the firm might face lower costs and a competitive advantage over other firms (Kruger& Pizer 2004). The Member States have guidelines which aim to guarantee that the verification is made correctly. In addition, the International Standardisation Organisation (ISO) is planning to create standards for validation and verification of the Kyoto flexible mechanisms (Oikarinen 2004). Based on the experience of the German and Finnish cases, reporting and verifying could be centralised as the legislation already now allows the verification in other EU states.

The Member States have chosen to co-operate during the planning phase, as the creation of the registries illustrates. The idea of one, centralised register in the whole EU is also mentioned in the directive review article. (Art 30f.) One register would naturally increase flexibility and ease trading as information concerning trading would then be only in one registry instead of two or three. Creating such a register would require time and adjustments to the national systems. After the initial stage, however, the system is likely to function efficiently. Both Germany and Finland are already part of wider registry system. The GRETA project includes several MS of the ETS and thus this centralised register is a likely step towards a more centralised and reliable and less

complicated system. The Commission transaction log, which charts the EU-wide trading, shows that this type of centralised registry would be technically possible.

Penalising is one tool to help keep the compliance level high. The directive sets monetary values for the penalties applied in the case of excess emissions. The directive leaves, however, the decisions and regulations for the MS to create other penalty schemes, e.g. for criminal and civil penalising, including different malpractices of the system. This variation in the Member States’ punishment strategies may place the operators in unequal positions in the different Member States and perhaps result in firms moving their operations from one Member State to another. Again, centralisation offers a solution to this problem and would lead to increased compliance.

Transaction costs are inevitable in all trading. As discussed in Chapter 2, in the case of ET, transaction costs can, however, play a central role in determining the efficiency of the system. Implementation in the MS seem to partly support increased flexibility of the institutions, e.g. the verification can be made in any MS and registries can be maintained jointly by a number of MS. There are several broker firms in Germany as well as in Finland and they are partly easing trading and reducing transaction costs. Despite these similar regulations and trading services, the basic character of decentralisation remains and complex legislation increases the transaction costs in the system.

Flexibility of trading depends not only on national transaction costs but also on the ability to make cross-border trades. The implementation procedures in both examined MS seem to be made rather in order to ensure the national trading. For the ETS the trades made over the national borders are vital. National trades are likely to dominate, at least in the beginning. In Germany few large operators dominate the market by owning the majority of the allowances. (Fichtner 2004.) This characterises trading and creates the need to buy allowances EU-wide. For these trades to take place institutions need to be flexible and transaction costs must not rise too high.

If all operators work under same procedures the system is efficient and the mutual recognition of different elements, like allowances and monitoring data, is easy. But the capacity to minimize transaction costs requires reliance on market institutions and on

national authorities which are responsible for the monitoring, certification and enforcement of the ETS. (Joshua 1997.) Moreover, not only for flexibility's sake but also for the sake of compliance it would be important to centralise e.g. verification, monitoring and penalizing. Even if full standardisation and centralisation of the institutions is not feasible, a challenge for the EU ETS is too find the right balance between consistency and simplicity and national sovereignty.

As the EU Commission has pointed out, the first period is based on the learning by doing- principle. As the markets become more matured, as the institutions develop and as the operation models become more standardised, the level of transaction and enforcement costs as well as non-compliance is expected to fall. It is rather difficult to increase centralisation of the different institutions within the EU as the sovereignty of the Member States is of great importance and Member States wish to keep decision- making national where possible.

This tendency towards the harmonisation of environmental policy or some institutions is in line with the general policymaking and the integrity ideas of the EU. One of the main concerns behind these ET measures is, however, the functioning of the internal markets and the competitiveness of the European economy. Even if there is lack of harmonisation and thus inefficiency in the ETS there is a possibility that the Commission tightens the guidelines over time once it is convinced that the ETS is working properly and experience of the ETS has been gained.

6 Conclusions

Emissions trading has been known for decades and it has gained attention in practice, especially in the USA but also in Europe through national ETS in some Member States. It has been recognised as a cost-efficient and environmental efficient environmental policy instrument. ET is a market-based instrument but needs, however, an administrative framework in order to function efficiently. This framework is rather complex in the case of the EU ETS given that it is the biggest ET program in the world. It will be launched on 1st January 2005.

The aim of this study was to find out whether the EU ETS is efficient and if it is going to work as economic literature and earlier experiences suggest. While doing this, this study concentrates on the administrative framework, i.e. on the key institutions of the ETS, such as monitoring and enforcement and on compliance issues. Two Member States of the EU, Finland and Germany, were considered. Data considering the chosen institutions were collected from these Member States by studying their implementation work. This was challenging as the topic is so current and the implementation work was still ongoing in the MS at the time of the study.

Both of these chosen Member States are very renowned for their environmental policy and have developed administration to create and maintain the required institutions for the ETS. Germany is the biggest single Member State in the EU ETS with over 2 400 installations and with the significant reduction target in the Kyoto burden sharing. Finland, in contrast, is a small country which, however, has relative many installations and a zero target under the Kyoto burden sharing agreement. Both of the chosen Member States have been “model students” in the EU regarding the implementation work of the ETS. They have been able to reach the tight timetables of the implementation work and created the necessary institutions. There is also already experience on allowance trading in both of these MS. Tight timetables have overshadowed the EU ETS from the very first proposals. Although the passing of the directive was made rather quickly in the EU decision-making process, the time left for the Member States for implementation and designing of the system was only one and a half years. This is a short time for preparing such a wide and system and there is a danger that it hinders the creation of the best possible practices and thus increases the costs, especially the transaction costs of the system.

In this study I have concentrated together with trading especially on enforcement and compliance issues, i.e. the monitoring, reporting, verification and penalising institutions and their implementation in the MS. These issues are regulated by the directive and by national legislation thereafter. MS have mainly followed these guidelines. These guidelines are also a very costly part of the ETS administrative work and a basic theoretical requirement in the ETS is to try to equalise the marginal costs in each country. For this to happen the theory calls for a high degree of harmonisation: the benefits from cutting emissions is the same regardless of the country in which it takes

place, and tradable permits allow equalising marginal abatement costs irrespective of national circumstances. This requires comparable and cooperative national institutions. One example of this is the cooperation within the Member States to maintain a registry. Both Germany and Finland are working in close cooperation with other Member States to establish and maintain their national registries.

Decreasing transaction costs would promote the efficiency of the system. One possibility to decrease the transaction costs and improve compliance is to create even more detailed and centralised regulation on monitoring and verification. Verification of the emission reports prepared by the operator is one of the key elements of compliance. Currently it is possible to contract independent third parties to perform the verification. There is a slight need for more detailed and common regulation of the verification. There are potential efficiency gains from reorganising the verification and certification process. It is advisable to harmonise rules for certification and for accreditation of certifiers at EU level or at least follow same rules for accreditation. (Egenhofer & Fujiwara 2003.)

Adequate regulation is the foundation of an efficient ETS. If the harmonisation or centralisation of the institutions is realised by increasing regulation and legislative norms, there is a danger that over-regulation increases the complexity of the system as well as the transaction costs. Already in the Green Paper (COM(2000)87) of the EU ET directive, most of the open questions were related to the harmonisation and subsidiary issues. Theory calls for a high degree of harmonisation, but the multifaceted and heterogeneous nature of the EU sets a challenge on this requirement. The experiences of the successful programs in the US have been based on the great degree of centralisation. Harmonisation and centralisation are, however, much more difficult to put in practice in the EU because of the political nature of the Union. The MS are very keen on keeping their sovereignty and any decisions which would increase the centralisation of power are often opposed or regarded with suspicion even if these types of decisions would increase efficiency in some area. In practice, increased flexibility would imply cooperation and communication between the different national institutions and increased mutual recognition of the institutions’ decisions. This in turn requires that the national legislations are as comparable as possible to each other.

One possibility would be to form some sort of a European Emissions trading Association, which would take some of the monitoring and enforcement tasks from the national authorities. The existing regulation set only the national registers under the supervision of the Commission based transaction log. Also, the verification of emission reports should be supervised at the Union level in order to ensure the accuracy of the data and a high level of compliance. This type of centralisation is often met with much reluctance and opposition, as the Member States regard their political sovereignty as such an important thing.

If the ETS manages to enable cheaper and more flexible compliance, ET encourages more environmental benefits at an earlier stage. In addition, a successful ETS can help to win political support for larger reductions (Joshua 1997). Compared to other policy instruments the ETS has quite low administrative costs. If the ETS is able to reduce its transaction costs it would demonstrate its superiority over other instruments in environmental policy. The biggest challenge for the EU ETS is to find a balance between the economic, environmental and political targets and to make the system work and function as well as possible in the given framework. The more the regulation is centralised the more the complexity of the system increases but at the same time flexibility might increase as may the efficiency and cost-efficiency of the system.

This study has examined only two advanced Member States’ way of implementing the EU ETS. The fact is that within the EU there are several Member States which have not been able or willing to implement the EU ETS. So in future studies it would be interesting to expand the consideration to the other less developed MS. The first years of the EU ETS will show the adequacy of the flexibility of the institutions and reveal areas where modifying is needed and possible. The directive obligates the Member States to do a clarification of the functioning of the ETS in the first year. It would be interesting to study the success and efficiency of the system according to these reports and the experience of the trading within the ETS.

A study of a very current topic has created a challenge for data collection and thus further considerations and a deeper analysis would be interesting. In this study, the aim has been to consider the EU ETS from a rather general perspective and this leaves space