Relation of economic and environmental indicators to the European Union Emission Trading System: a spatial analysis

Abstract

Abstract The main goal of this contribution is to evaluate the development of CO2 emissions and selected economic indicators of EU28 countries in the period from 2005 to 2015, and to capture geographical pattern and spatial distribution of countries emitting pollution. This will be performed within the context of the EU Emissions Trading System (ETS), which has represented a major scheme in Europe to cope with CO2 emissions since 2005. The actual situation in the field of the EU ETS is described and key scientific studies focusing on the EU ETS are presented. Based on a broad set of indicators we examine and evaluate possible geographical pattern in the development of selected indicators within the EU and provide detailed spatial analysis of economic and environmental data of EU28 countries, with the use of (geo)visual analysis of spatial data and spatial statistics (grouping analysis). The preliminary results of the (geo)visual analysis show that CO2 emissions within EU countries were decreasing in the selected period 2005–2015, with some exceptions (e.g. Iceland and Latvia). As the development of CO2 emissions in all EU countries is not similar, the other economic and environmental indicators were included (e.g. GDP, Investments) into the analysis in order to reveal a common (geographical) pattern and explain the current situation. Based on grouping/cluster analysis, it is possible to form territorial groups of EU states with similar development, which are almost perfectly in the line with current EU member states strategies of CO2 emissions trade. The current auction markets are well in tune with geographical and economic characteristics of particular EU countries. Results of grouping analysis of all indicators in 2015 using six K-nearest neighbours underline current separate auction markets for Germany, the United Kingdom and Poland.It indicates that the system of emission auctions has logical background and the markets represent natural platforms for emission trading, corresponding to both economic and spatial characteristics of particular countries/polluters. Presented approach thus brings valuable information for policymakers both on the national and international level for the next phases of EU ETS scheme planning.