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

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  • Christoph Böhringer
  • Andreas Lange

Abstract

Starting in 2005, the EU will implement a CO 2 emissions trading scheme. We show that the outspoken objectives of economic efficiency and free allocation of allowances are incompatible with harmonized allocation rules. The latter would be necessary to avoid unequal changes of the financial positions between identical firms across the EU, thereby distorting competition, i.e. the “level playing field”. We discuss and evaluate potential adjustments to the current prescriptions of the EU emissions trading system in order to achieve harmonization of allowance allocation across EU Member States. The proposed adjustments involve relaxation of either the efficiency objective or the objective of free allowance allocation. Copyright Springer Science+Business Media, Inc. 2005

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  • Christoph Böhringer & Andreas Lange, 2005. "Mission Impossible !? On the Harmonization of National Allocation Plans under the EU Emissions Trading Directive," Journal of Regulatory Economics, Springer, vol. 27(1), pages 81-94, September.
    • Handle: RePEc:kap:regeco:v:27:y:2005:i:1:p:81-94
    DOI: 10.1007/s11149-004-4420-2
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    Cited by:

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    2. Ahman, Markus & Burtraw, Dallas & Kruger, Joseph & Zetterberg, Lars, 2005. "The Ten-Year Rule: Allocation of Emission Allowances in the EU Emission Trading System," Discussion Papers 10637, Resources for the Future.
    3. Dannenberg, Astrid & Mennel, Tim & Moslener, Ulf, 2008. "What does Europe pay for clean energy?--Review of macroeconomic simulation studies," Energy Policy, Elsevier, vol. 36(4), pages 1318-1330, April.
    4. Moslener, Ulf & Sturm, Bodo, 2008. "A European Perspective on Recent Trends in U.S. Climate Policy," ZEW Discussion Papers 08-026, ZEW - Leibniz Centre for European Economic Research.
    5. Christoph Böhringer & Knut Einar Rosendahl, 2009. "Green Serves the Dirtiest: On the Interaction between Black and Green Quotas," CESifo Working Paper Series 2837, CESifo.
    6. 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.
    7. Liu, Yu & Tan, Xiu-Jie & Yu, Yang & Qi, Shao-Zhou, 2017. "Assessment of impacts of Hubei Pilot emission trading schemes in China – A CGE-analysis using TermCO2 model," Applied Energy, Elsevier, vol. 189(C), pages 762-769.
    8. 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 - Leibniz Centre for European Economic Research.
    9. 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.
    10. Christoph Böhringer, 2014. "Two Decades of European Climate Policy: A Critical Appraisal," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 1-17, January.
    11. Welsch, Heinz, 2008. "Armington elasticities for energy policy modeling: Evidence from four European countries," Energy Economics, Elsevier, vol. 30(5), pages 2252-2264, September.
    12. Kruger, Joseph & Oates, Wallace E. & Pizer, William A., 2007. "Decentralization in the EU Emissions Trading Scheme and Lessons for Global Policy," RFF Working Paper Series dp-07-02, Resources for the Future.
    13. 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.
    14. 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.
    15. 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, August.
    16. 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 - Leibniz Centre for European Economic Research.
    17. 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.
    18. 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.
    19. Böhringer, Christoph & Koschel, Henrike & Moslener, Ulf, 2006. "Efficiency Losses from Overlapping Economic Instruments in European Carbon Emissions Regulation," ZEW Discussion Papers 06-018, ZEW - Leibniz Centre for European Economic Research.
    20. Siriwardana, Mahinda & Nong, Duy, 2015. "Australia in an International Emissions Trading (ETS) Scheme: An Economic Evaluation Using the GTAP-E Model," Conference papers 332632, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    21. Nong, Duy & Meng, Sam & Siriwardana, Mahinda, 2017. "An assessment of a proposed ETS in Australia by using the MONASH-Green model," Energy Policy, Elsevier, vol. 108(C), pages 281-291.

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    More about this item

    Keywords

    emissions trading; allowance allocation; national allocation plan; competitive distortions;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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