Tradable SO-2-permits in the European Union: a practicable scheme for public utilities
In this paper, a practicable scheme of SO2-emission permits for European power producers is developed. Background is the second UN-ECE Sulphur Protocol from 1994 (Protocol of Oslo). After discussing some theoretical models of spatially differentiated permit schemes, evaluating the U.S. Acid Rain and RECLAIM Program, and considering the setting in the EU-15 countries, a scheme of locally undifferentiated emission permits is proposed which is distinguished by a high degree of both economic efficiency and market functioning. However, as our model simulations indicate, national deposition targets will be violated in all probability due to the scheme?s missing differentiation regarding the receptors. The risk of hot spots is addressed adequately by a differentiated bundle of countermeasures. The general economic impact of an EU-wide permit scheme is low, and, in terms of change in GDP, lower compared to a non-coordinated SO2 policy. The proposed mode of the initial permit allocation allows for early price signals and guarantees maximum static and dynamic efficiency. Balancing the interests of existing and new emitters, a long-term transition from the grandfathering to the free auction procedure is chosen.
|Date of creation:||1998|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.zew.de/Email:
More information through EDIRC
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.:
- Misiolek, Walter S. & Elder, Harold W., 1989. "Exclusionary manipulation of markets for pollution rights," Journal of Environmental Economics and Management, Elsevier, vol. 16(2), pages 156-166, March.
- O Fromm & B Hansj�rgens, 1996. "Emission trading in theory and practice: an analysis of RECLAIM in Southern California," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 14(3), pages 367-384, June.
- Stavins Robert N., 1995. "Transaction Costs and Tradeable Permits," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 133-148, September.
- Morch von der Fehr, N-H., 1991.
"Tradable Emission Rights and Strategic Interaction,"
11/1991, Oslo University, Department of Economics.
- Nils-Henrik Mørch von der Fehr, 1993. "Tradable emission rights and strategic interaction," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(2), pages 129-151, April.
- Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
- Tietenberg, T H, 1990. "Economic Instruments for Environmental Regulation," Oxford Review of Economic Policy, Oxford University Press, vol. 6(1), pages 17-33, Spring.
- Paul Koutstaal & Andries Nentjes, 1995. "Tradable Carbon Permits in Europe: Feasibility and Comparison with Taxes," Journal of Common Market Studies, Wiley Blackwell, vol. 33(2), pages 219-233, 06.
- Ger Klaassen & Finn Førsund & Markus Amann, 1994. "Emission trading in Europe with an exchange rate," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 4(4), pages 305-330, August.
- Hahn, Robert W., 1982.
"Market Power and Transferable Property Rights,"
402, California Institute of Technology, Division of the Humanities and Social Sciences.
- 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.
- Tom Tietenberg, 1995. "Tradeable permits for pollution control when emission location matters: What have we learned?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 5(2), pages 95-113, March.
When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:5188. See general information about how to correct material in RePEc.
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.