possible efficiency mechanisms allowed by the Kyoto Protocol – joint implementation (JI) and clean development mechanism (CDM). The main objective of these early modelling analyses is to quantify the likely impact of the EU-wide $ CO_{2} $ permit market on the energy sector, and the overall European economy. Usually two policy options to reach the same $ CO_{2} $ reduction target are compared. Firstly, it is assumed that each EU member state performs the full $ CO_{2} $ emissions reduction within its own borders, i.e. member states do not participate in any international trading scheme and, secondly, it is supposed that the same $ CO_{2} $ abatement is reached implementing the EU-wide $ CO_{2} $ emissions trading scheme, allowing trading across the European member states. Not surprisingly, these modelling studies lead to the same conclusions, i.e. that the EU-wide trading scheme is superior (in the form of reduced compliance costs) to alternative regulation options such as a domestic-trading scheme or carbon tax.

Another strand of the research (Klepper and Peterson, 2005, Russ et al., 2005, Kemfert et al., 2006, Peterson, 2006, Alexeeva-Talebi and Anger, 2007) assesses the costs of the EU ETS with the additional flexibility allowed by JI and CDM. The limited use of these flexibility mechanisms in the pilot phase of the EU ETS was criticised and, hence, encouraged researches to assess to what extent the incorporation of the credits from JI and CDM mechanisms makes $ CO_{2} $ emissions abatement less costly. The main message from these studies is that the fewer restrictions are imposed on the use of the credits generated by JI and CDM, the less costly the EU ETS would be and, hence, the higher the benefits to the economy.

The later studies (Bohringer et al., 2005, Bohringer and Lange, 2005, den Elzen, 2007), in parallel to efficiency issues, put more emphasis on equity issues, such as the initial allocation of tradable allowances, the design and harmonisation of national allocation plans (NAP), the distribution of Kyoto $ CO_{2} $ abatement targets among the sectors participating and those non-participating in the EU ETS. Here, the efficiency issues are not forgotten and are analysed in parallel.

There are few studies that do not fit the taxonomy provided above. These studies (Babiker et al., 2004, COWI, 2004, Stankeviciute and Criqui, 2008) address issues of efficiency in the EU-wide trading scheme within the framework of a more realistic, constrained economic environment. Babiker et al. (2004) show that the EU-wide trading could be welfare decreasing due to pre-existing energy taxes when measuring price and equilibrium effects. COWI (2004) analyses how the pace of technological change affects $ CO_{2} $ abatement and the costs associated with it. This study concludes that when technological change in production processes is sluggish, the cost of $ CO_{2} $ abatement is higher, compared to the case where technology adaptation is less-constrained. Stankeviciute and Criqui (2008) assesses the costs of the EU ETS in the context of other European environmental policies such as the objective to reach 20 percent reduction in energy consumption by 2020, and the target to increase the share of renewable energy up to 20 percent in the overall energy consumption by 2020. This study shows that the presence of other environmental policies contributes for reaching the EU ETS targets and reduces the marginal $ CO_{2} $ abatement costs and, consequently, the total $ CO_{2} $ abatement costs for participants in the EU ETS.

### 4.2 Comparison of the ex-ante costs

The fact that all selected studies differ in their modelling approaches, assumptions, objectives as well as in other aspects, makes a meaningful comparison of the models' results a daunting task. For us to be able to make such a comparison, many adjustments must be made first. Not only