Using benchmarking for the primary allocation of EU allowances - an application to the German power sector
AbstractBasing allocation of allowances for existing installations under the EU Emissions Trading Scheme on specific emission values (benchmarks) rather than on historic emissions may have several advantages. Benchmarking may recognize early action, provide higher incentives for replacing old installations and result in fewer distortions in case of updating, facilitate EU-wide harmonization of allocation rules or allow for simplified and more efficient closure rules. Applying an optimization model for the German power sector, we analyze the distributional effects of various allocation regimes across and within different generation technologies. Results illustrate that regimes with a single uniform benchmark for all fuels or with a single benchmark for coal- and lignite-fired plants imply substantial distributional effects. In particular, lignite- and old coal-fired plants would be made worse off. Under a regime with fuel-specific benchmarks for gas, coal, and lignite 50 % of the gas-fired plants and 4 % of the lignite and coal-fired plants would face an allowance deficit of at least 10 %, while primarily modern lignite-fired plants would benefit. Capping the surplus and shortage of allowances would further moderate the distributional effects, but may tarnish incentives for efficiency improvements and recognition of early action. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Fraunhofer Institute for Systems and Innovation Research (ISI) in its series Working Papers "Sustainability and Innovation" with number S6/2007.
Date of creation: 2007
Date of revision:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Rogge, Karoline S. & Linden, Christian, 2010. "Cross-country comparison of the replacement incentives of the EU ETS in 2008-12: the case of the power sector," Working Papers "Sustainability and Innovation" S1/2010, Fraunhofer Institute for Systems and Innovation Research (ISI).
- Schleich, Joachim & Betz, Regina & Rogge, Karoline S., 2007. "EU emission trading: better job second time around?," Working Papers "Sustainability and Innovation" S2/2007, Fraunhofer Institute for Systems and Innovation Research (ISI).
- Rogge, Karoline S. & Schleich, Joachim & Betz, Regina, 2006. "An early assessment of national allocation plans for phase 2 of EU emission trading," Working Papers "Sustainability and Innovation" S1/2006, Fraunhofer Institute for Systems and Innovation Research (ISI).
- Schleich, Joachim & Rogge, Karoline S. & Betz, Regina, 2008. "Incentives for energy efficiency in the EU Emissions Trading Scheme," Working Papers "Sustainability and Innovation" S2/2008, Fraunhofer Institute for Systems and Innovation Research (ISI).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.