| dc.description.abstract | The EU Emissions Trading System (EU ETS) is the EU’s climate flagship for cutting industry emissions. In the early phases of EU ETS (2005-2012), industries were mostly allocated free emissions allowances. For phase 3 (2013-2020) and the recently negotiated phase 4 (2021-2030), industries are allocated allowances through auctioning as the principal rule. However, some sectors are still granted free allocations since they are deemed to be exposed to so-called ‘carbon leakage’; risk of industrial relocation to non-mitigating countries due to ETS costs. This thesis investigates why the offshore oil and gas sector receives free allowances in the EU ETS, during phases 3 and 4. From the outset, free allocation has not only been undermining the environmental effectiveness of the ETS, few arguments supported that the offshore oil and gas production was exposed to carbon leakage. Although, the rational for free allocation is questionable, the offshore sectors continue to emit for free in phase 3 and partly until 2030. The continuation of free allocation is explained by theoretical frameworks from historical institutionalism and policy entrepreneurship. Historical institutionalism emphasises how the carbon leakage risk generated self-reinforcing negative feedback effects, prolonging the free allocation trajectory. Policy entrepreneurship explains how the continuation was a result of oil industry’s savvy strategies aimed at EU policymakers. In-depth interviews with 20 informants and process-tracing from 2006-2017 supports mostly the institutional explanation. In the phase 3 revision process in 2006-2008, the offshore industry’s strategies made small impact on the policy-process. Instead, the establishment of severe carbon leakage risk and the alliance of energy-intensive industries pressured EU policymakers to continue free allocation. During the phase 4 revision between 2014-2017, the negative feedbacks on carbon leakage risk convincingly explains why oil extraction gets prolonged free allocation. Yet the oil industry’s ‘failed entrepreneurship’ flopped in reversing the rules that blocked free allocation to gas extraction and electricity production on offshore platforms. Low institutional support and environmental consciousness amplified by the Paris Climate Summit constrained the offshore industry’s political impact. These findings suggest that business power in climate policy is facilitated by institutional perceptions, and less so by the industry’s own strategies. This indicates that global corporations cannot just ‘set the rules’ in international climate policy. Instead, policymakers mediate and restrain the political influence of big businesses. | eng |