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Auctioning of CO 2 emission allowances in Phase 3 of the EU Emissions Trading Scheme

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  • EVA BENZ
  • ANDREAS LÖSCHEL
  • BODO STURM

Abstract

The revised Directive published in June 2009 suggests auctioning as a basic principle for allocation for the upcoming third trading phase of the EU Emissions Trading Scheme (EU ETS) that runs from 2013 to 2020. The article emphasizes the importance of a properly chosen auction design. Compared with the past and current trading phases, the significantly higher auction share is expected to yield a thin secondary market for CO 2 allowances. The main criteria for a viable auction design (price signalling, efficient allocation, and simplicity combined with transparency and credibility) are used to assess different options for an auction design. A specific auction design for the third trading phase-the simultaneous dynamic uniform double auction-is recommended.

Suggested Citation

  • Eva Benz & Andreas Löschel & Bodo Sturm, 2010. "Auctioning of CO 2 emission allowances in Phase 3 of the EU Emissions Trading Scheme," Climate Policy, Taylor & Francis Journals, vol. 10(6), pages 705-718, November.
    • Handle: RePEc:taf:tcpoxx:v:10:y:2010:i:6:p:705-718
    DOI: 10.3763/cpol.2009.0055
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    Cited by:

    1. Koesler, Simon & Achtnicht, Martin & Köhler, Jonathan, 2012. "Capped steam ahead: A case study among ship operators on a maritime ETS," ZEW Discussion Papers 12-044, ZEW - Leibniz Centre for European Economic Research.
    2. Haoran He & Yefeng Chen, 2021. "Auction mechanisms for allocating subsidies for carbon emissions reduction: an experimental investigation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(2), pages 387-430, August.
    3. Corina Haita-Falah, 2016. "Uncertainty and speculators in an auction for emissions permits," Journal of Regulatory Economics, Springer, vol. 49(3), pages 315-343, June.
    4. Tang, Ling & Wang, Haohan & Li, Ling & Yang, Kaitong & Mi, Zhifu, 2020. "Quantitative models in emission trading system research: A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 132(C).
    5. Eva Benz & Andreas Löschel & Bodo Sturm, 2010. "Auctioning of CO 2 emission allowances in Phase 3 of the EU Emissions Trading Scheme," Climate Policy, Taylor & Francis Journals, vol. 10(6), pages 705-718, November.
    6. Jianfeng Guo & Bin Su & Guang Yang & Lianyong Feng & Yinpeng Liu & Fu Gu, 2018. "How Do Verified Emissions Announcements Affect the Comoves between Trading Behaviors and Carbon Prices? Evidence from EU ETS," Sustainability, MDPI, vol. 10(9), pages 1-17, September.
    7. Remes, Piia, 2013. "Putting a Price on Carbon – Econometric Essays on the European Union Emissions Trading Scheme and its Impacts," Research Reports 62, VATT Institute for Economic Research.
    8. Andrea Kollmann & Friedrich Schneider, 2010. "Why Does Environmental Policy in Representative Democracies Tend to Be Inadequate? A Preliminary Public Choice Analysis," Sustainability, MDPI, vol. 2(12), pages 1-25, November.
    9. Aatola, Piia, 2013. "Putting a Price on Carbon – Econometric Essays on the European Union Emissions Trading Scheme and its Impacts," Research Reports P62, VATT Institute for Economic Research.

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    More about this item

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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