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Auctioning Greenhouse Gas Emissions Permits in Australia

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Author Info
Regina Betz
Stefan Seifert
Peter Cramton () (Economics Department, University of Maryland)
Suzi Kerr

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Abstract

The allocation of permits is an important design aspect of an emissions trading scheme. Traditionally, governments have favoured a free allocation of greenhouse gas permits based on individual historical emissions (“grandfathering”) or industry benchmark data. As, particularly in the EU, the free allocation of permits has proven complex and inefficient and the distributional implications are politically difficult to justify, auctioning emissions permits has become more popular. The EU is now moving to auctioning more than 50% of all permits in 2013 and in the U.S. the Regional Greenhouse Gas Initiative (RGGI) has started with auctioning 100%. Another case in point is the Austra-lian proposal for a Carbon Pollution Reduction Schemes (CPRS) which provides for auctioning a significant share of total permits. This paper discusses some important theoretical and practical aspects of designing an auction for allocating emissions per-mits in Australia. The specific design details proposed here have been adopted by the Australian Government in their CRPS White Paper. Particularly interesting is the pro-posed structure of auctioning multiple emissions units of different vintages simultane-ously.

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File URL: http://www.cramton.umd.edu/papers2005-2009/betz-seifert-cramton-kerr-australia-carbon-auction.pdf
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Publisher Info
Paper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number 09aghg.

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Length: 28 pages
Date of creation: 2009
Date of revision: 2009
Publication status: Published in Working Paper, University of Maryland, May 2009
Handle: RePEc:pcc:pccumd:09aghg

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Postal: Economics Department, University of Maryland, College Park, MD 20742-7211
Phone: (202) 318-0520
Fax: (202) 318-0520
Web page: http://www.cramton.umd.edu

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Related research
Keywords: Auctions; carbon auctions; greenhouse gas auctions;

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Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 6(3), pages 431-495, 09. [Downloadable!] (restricted)
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  2. Lawrence M. Ausubel & Peter Cramton, 2004. "Auctioning Many Divisible Goods," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 480-493, 04/05. [Downloadable!] (restricted)
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  3. Martin Feldstein, 1999. "Tax Avoidance And The Deadweight Loss Of The Income Tax," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 674-680, November. [Downloadable!] (restricted)
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  4. Peter Cramton & Suzi Kerr, 2002. "Tradeable Carbon Permit Auctions: How and Why to Auction Not Grandfather," Papers of Peter Cramton 02eptc, University of Maryland, Department of Economics - Peter Cramton, revised 06 May 2002. [Downloadable!]
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This page was last updated on 2009-11-14.

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