What is driving the EU burden-sharing agreement: Efficiency or equity?

Under the Kyoto Protocol the European Union agreed to reduce emissions of greenhouse gases by 8 percent. The Burden-Sharing Agreement (BSA) redistributes the reduction target among the member states. The purpose of this paper is to evaluate the BSA. To determine if cost efficiency was considered, marginal abatement costs (MACs) are first calculated based on an estimation of the directional output distance function using country production data for 1990–2000. MACs, together with equity indicators, are then regressed on the emission change targets. The main conclusion is that both efficiency and equity were important aspects considered in the settlement.