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Allocation of Carbon Emission Certificates in the Power Sector: How generators profit from grandfathered rights

Listed author(s):
  • Keats, K. Martinez
  • Neuhoff, K.

To 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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Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0444.

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Length: 24
Date of creation: Sep 2004
Handle: RePEc:cam:camdae:0444
Note: CMI, IO
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