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Allowance allocation in the European emissions trading system: a commentary

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  • Michael Grubb
  • Christian Azar
  • U. Martin Persson

Abstract

We review the total allocations under the EU ETS first phase and compare these against historical emissions, projections, and national Kyoto targets. We conclude that most Phase 1 allocations are excessive on all these measures, particularly the last, and argue that this is potentially damaging in several respects. We argue that: fundamentally different allocation methodologies (that avoid updating and referencing against projected emissions) must be considered for Phase 2; that industrial concerns about competitiveness should be carefully scrutinized on a specific sub-sector basis rather than taken as a generic reason for generous allocations; and that EU-level institutions should agree stronger guidelines to ensure a greater degree of coordination, comparability and transparency in Phase 2 national allocation plans.

Suggested Citation

  • Michael Grubb & Christian Azar & U. Martin Persson, 2005. "Allowance allocation in the European emissions trading system: a commentary," Climate Policy, Taylor & Francis Journals, vol. 5(1), pages 127-136, January.
    • Handle: RePEc:taf:tcpoxx:v:5:y:2005:i:1:p:127-136
    DOI: 10.1080/14693062.2005.9685545
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    References listed on IDEAS

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    1. Neuhoff, K. & Grubb, M. & Keats, K., 2005. "Impact of the allowance allocation on prices and efficiency," Cambridge Working Papers in Economics 0552, Faculty of Economics, University of Cambridge.
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