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Efficiency, Productivity and Environmental Policy: A Case Study of Power  Generation in the EU / Jurate Jaraite, Corrado Di Maria. FEEM, 2011, 27 p. (Nota di lavoro ; 19.2011)http://www.feem.it/userfiles/attach/2011225104524NDL2011-019.pdfThis study uses the EU public power generating sector as a case study to  investigate the environmental efficiency and productivity enhancing  performance of the European Union’s CO2 Emissions Trading Scheme (EU  ETS) in its pilot phase. Using Data Envelopment Analysis methods, we  measure the environmental efficiency and the productivity growth  registered in public power generation across the EU over the 1996-2007  period. In the second stage of our analysis we attempt to explain  changes in productivity and efficiency over time using state-of-the-art  econometric techniques. Our analysis suggests two conclusions: on the  one hand carbon pricing led to an increase in environmental efficiency  and to a shift outwards of the technological frontier; on the other  hand, the overly generous allocation of emission permits had a negative  impact on both measures. These results are shown to be robust to changes  in controls and specifications. (© FEEM)