Allocation of Carbon Emission Certificates in the Power Sector: How generators profit from grandfathered rights
AbstractTo meet its Kyoto requirements, the EU will establish an internal market for carbon dioxide allowances from 2005, the EU Emissions Trading Scheme (ETS). National governments are to allocate most of these allowances for free. The analysis shows that as a result the net value of both a typical pulverised coal-fired (PC) power station and a more modern gas-fired combined cycle gas turbine (CCGT) will increase. We show that in future allocation rounds a greater proportion of allowances can and should be auctioned. The paper also analyses the interactions with the Large Combustion Plant Directive, which limits SO2 and NOx emissions
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0444.
Date of creation: Sep 2004
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electricity generation; eu emission trading; allocation; updating; grandfathering;
Find related papers by JEL classification:
- D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Financing, Investment, and Capacity
- F18 - International Economics - - Trade - - - Trade and Environment
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-09-30 (All new papers)
- NEP-ENE-2004-09-30 (Energy Economics)
- NEP-RES-2004-09-30 (Resource Economics)
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