Fit-for-55 : new emission trading system in the EU for buildings and road transport : an environmental economic analysis of implementing the new ETS in both the EU and Norwegian sectors

This thesis aims to discuss the potential effects of the implementation of a newly proposed emissions trading system (ETS) for the road transport and building sectors in the European Union, laid forward in the recently proposed legislative document "fit for 55". The EU commission proposes the implementation of this new ETS by 2025, which would operate with the same framework as the existing EU ETS but be separate from it. Implementing a new multinational ETS comes with many questions, where we decided to focus on how this new ETS impacts emissions and carbon pricing in the respective sectors, how EU sectors and non- EU sectors would interact in the new ETS, and finally, based on experience from the existing EU ETS, how overlapping climate policies would impact this new ETS. As such, we created an environmental economical model allowing us to analyse the emissions and carbon pricing of the road transport and building sectors in the EU and in Norway. In order to gain potential answers to our questions we expanded this model across three different scenarios which allowed us to evaluate the outlook for these sectors in the future. The results of our analysis and discussion explains how the new ETS reduces emissions for all sectors as compared to a business-us-usual situation. Furthermore, we deliberate that the EU sectors have a larger influence over the new ETS then the Norwegian sectors, and thus have significant influence on the Norwegian sectors. Finally, we discuss that the overlapping climate policy shifts the balance of emissions between sectors and changes the carbon price in the ETS, and we discuss advantageous and disadvantageous of this