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Mission Impossible!? On the Harmonization of National Allocation Plans under the EU Emissions Trading Directive

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  • Böhringer, Christoph
  • Lange, Andreas

Abstract

Starting in 2005, the EU will implement a CO2 emissions trading scheme. In this paper we show that the outspoken goals of economic efficiency and free allocation of allowances are incompatible with harmonized allocation rules. In general, the assignment of allowances is endogenous and differs widely across countries, thereby substantiating concerns for implicit state aid and competitive distortions. We discuss potential adjustments to the Directive in order to allow for harmonization, i.e. for identical assignment factors to similar firms located in different EU countries. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-15.

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Date of creation: 2004
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Handle: RePEc:zbw:zewdip:1848

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Keywords: emissions trading; allowance allocation; national allocation plan; competitive distortions;

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  1. Joskow, Paul L & Schmalensee, Richard, 1998. "The Political Economy of Market-Based Environmental Policy: The U.S. Acid Rain Program," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 37-83, April.
  2. Rob Van der Laan & Andries Nentjes, 2001. "Competitive Distortions in EU Environmental Legislation: Inefficiency versus Inequity," European Journal of Law and Economics, Springer, vol. 11(2), pages 131-152, March.
  3. Christoph Böhringer & Andreas Lange, 2005. "Economic Implications of Alternative Allocation Schemes for Emission Allowances," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(3), pages 563-581, 09.
  4. Böhringer, Christoph & Lange, Andreas, 2003. "On the Design of Optimal Grandfathering Schemes for Emission Allowances," ZEW Discussion Papers 03-08, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Fischer, Carolyn, 2001. "Rebating Environmental Policy Revenues: Output-Based Allocations and Tradable Performance Standards," Discussion Papers dp-01-22, Resources For the Future.
  6. Burtraw, Dallas & Palmer, Karen & Bharvirkar, Ranjit & Paul, Anthony, 2001. "The Effect of Allowance Allocation on the Cost of Carbon Emission Trading," Discussion Papers dp-01-30-, Resources For the Future.
  7. Christoph Bohringer, 2002. "Climate Politics from Kyoto to Bonn: From Little to Nothing?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 51-71.
  8. Robert N. Stavins, 1998. "What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 69-88, Summer.
  9. Christoph Bohringer, 2002. "Industry-level emission trading between power producers in the EU," Applied Economics, Taylor & Francis Journals, vol. 34(4), pages 523-533.
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Citations

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Cited by:
  1. Burtraw, Dallas & Kruger, Joseph & Zetterberg, Lars & Åhman, Markus, 2005. "The Ten-Year Rule: Allocation of Emission Allowances in the EU Emission Trading System," Discussion Papers dp-05-30, Resources For the Future.
  2. Dannenberg, Astrid & Mennel, Tim & Moslener, Ulf, 2007. "What Does Europe Pay for Clean Energy? Review of Macroeconomic Simulation Studies," ZEW Discussion Papers 07-019, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. van Asselt, Harro & Brewer, Thomas, 2010. "Addressing competitiveness and leakage concerns in climate policy: An analysis of border adjustment measures in the US and the EU," Energy Policy, Elsevier, vol. 38(1), pages 42-51, January.
  4. Christoph Böhringer & Henrike Koschel & Ulf Moslener, 2008. "Efficiency losses from overlapping regulation of EU carbon emissions," Journal of Regulatory Economics, Springer, vol. 33(3), pages 299-317, June.
  5. Christoph Böhringer & Andreas Lange & Ulf Moslener, 2005. "Der EU-Emissionshandel im Zielkonflikt zwischen Effizienz, Kompensation und Wettbewerbsneutralität," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 6(3), pages 309-323, 08.
  6. Böhringer, Christoph & Hoffmann, Tim & de Lara Peñate, Casiano Manrique, 2005. "The Efficiency Costs of Separating Carbon Markets Under the EU Emissions Trading Scheme: A Quantitative Assessment for Germany," ZEW Discussion Papers 05-06, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Böhringer, Christoph & Koschel, Henrike & Moslener, Ulf, 2006. "Efficiency Losses from Overlapping Economic Instruments in European Carbon Emissions Regulation," ZEW Discussion Papers 06-18, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Christos Constantatos & Eleftherios Filippiadis & Eftichios Sartzetakis, 2014. "Using the allocation of emission permits for strategic trade purposes," Journal of Regulatory Economics, Springer, vol. 45(3), pages 259-280, June.
  9. Welsch, Heinz, 2008. "Armington elasticities for energy policy modeling: Evidence from four European countries," Energy Economics, Elsevier, vol. 30(5), pages 2252-2264, September.
  10. Christoph Böhringer & Knut Einar Rosendahl, 2009. "Green Serves the Dirtiest: On the Interaction between Black and Green Quotas," CESifo Working Paper Series 2837, CESifo Group Munich.
  11. Bohringer, Christoph & Hoffmann, Tim & Manrique-de-Lara-Penate, Casiano, 2006. "The efficiency costs of separating carbon markets under the EU emissions trading scheme: A quantitative assessment for Germany," Energy Economics, Elsevier, vol. 28(1), pages 44-61, January.
  12. Christoph Böhringer & Knut Rosendahl, 2010. "Green promotes the dirtiest: on the interaction between black and green quotas in energy markets," Journal of Regulatory Economics, Springer, vol. 37(3), pages 316-325, June.
  13. Kruger, Joseph & Oates, Wallace E. & Pizer, William A., 2007. "Decentralization in the EU Emissions Trading Scheme and Lessons for Global Policy," Discussion Papers dp-07-02, Resources For the Future.
  14. Löschel, Andreas & Lange, Andreas & Hoffmann, Tim & Böhringer, Christoph & Moslener, Ulf, 2004. "Assessing Emission Allocation in Europe: An Interactive Simulation Approach," ZEW Discussion Papers 04-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  15. Ahman, Markus & Burtraw, Dallas & Kruger, Joseph & Zetterberg, Lars, 2007. "A Ten-Year Rule to guide the allocation of EU emission allowances," Energy Policy, Elsevier, vol. 35(3), pages 1718-1730, March.
  16. Moslener, Ulf & Sturm, Bodo, 2008. "A European Perspective on Recent Trends in U.S. Climate Policy," ZEW Discussion Papers 08-026, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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