Cap-and-trade and emissions clustering: A spatial-temporal analysis of the European Union Emissions Trading Scheme.

One of the most popular policy mechanisms for greenhouse gas emissions regulation is cap-and-trade which is a market-based approach that has come to dominate partially because of its flexibility. With flexibility, however, comes the potential for the clustering of greenhouse gas emissions. To understand whether emissions trading leads to localized clustering of emissions changes, we perform a systematic, spatio-economic assessment of the European Union Emissions Trading Scheme (EU ETS).