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EU ETS Phase 3 Benchmarks - Implications and Potential Flaws

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  • Stephen Lecourt

Abstract

In Phase 3 (2013-20) of the European Union Emissions Trading Scheme, the allocation methodology has shifted from grandfathering to a combination of auctioning and benchmark-based free allocation in the framework of Community-wide rules. Free allocation will apply mainly to non-electricity generators, and will decrease linearly throughout the phase with a view of ending free allocation by 2027. Benchmark-based free allocation is intended to reward the least CO2-intensive installations and thus provide an incentive to reduce greenhouse gas emissions. This policy note describes the concrete changes implied by this shift in allocation methodology, and identifies potential flaws in the new transitional Community-wide rules for free allocation, thereby contributing to the discussion on the need for structural reforms in the ETS.

Suggested Citation

  • Stephen Lecourt, 2013. "EU ETS Phase 3 Benchmarks - Implications and Potential Flaws," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    • Handle: RePEc:aen:eeepjl:2_2_a07
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    1. Stefan Pauer, 2012. "Development and Application of Greenhouse Gas Performance Benchmarks in the European Union Emissions Trading Scheme," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 3).
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    Cited by:

    1. Frédéric Branger & Oskar Lecuyer & Philippe Quirion, 2015. "The European Union Emissions Trading Scheme: should we throw the flagship out with the bathwater?," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 6(1), pages 9-16, January.
    2. Wang, M. & Zhou, P., 2022. "A two-step auction-refund allocation rule of CO2 emission permits," Energy Economics, Elsevier, vol. 113(C).
    3. Fontini, Fulvio & Pavan, Giulia, 2014. "The European Union Emission Trading System and technological change: The case of the Italian pulp and paper industry," Energy Policy, Elsevier, vol. 68(C), pages 603-607.

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      JEL classification:

      • F0 - International Economics - - General

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