Hlavac, Marek (2010): The Distribution of European Union Allowances (EUAs): Windfall Profits, Free Allocation and Auctions.
Download (50kB) | Preview
The first half of the paper provides a brief overview of the European Union’s Emission Trading System (EU ETS), and discusses how emission allowances have been allocated during the first two phases of the trading scheme. I then discuss the effects of auctioning off more emission allowances during Phase III of the EU ETS. I conclude that such a change would reduce the windfall profits of the initial allowance holders, and provide additional revenues that participating governments could use to support a variety of policies, some of which I discuss.
|Item Type:||MPRA Paper|
|Original Title:||The Distribution of European Union Allowances (EUAs): Windfall Profits, Free Allocation and Auctions|
|Keywords:||environmental economics; emissions trading; European Union; windfall profits|
|Subjects:||Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics
P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P26 - Political Economy ; Property Rights
|Depositing User:||Marek Hlavac|
|Date Deposited:||04. Aug 2010 00:04|
|Last Modified:||16. Feb 2013 01:01|
Coase, Ronald H. 1960. "The Problem of Social Cost." Journal of Law and Economics, Vol. 3, No.1, 1-44.
Deutsche Bank. 2007. “EU Emission Trading: Allocation Battles Intensifying.”
European Carbon Exchange (ECX). “What is the EU ETS?” Available at: http://www.ecx.eu/What-is-the-EU-ETS European Commission (EC). 2009. “Three weeks to Copenhagen: EU on track on Kyoto targets as pressure for agreement intensifies.” Available at: http://ec.europa.eu/unitedkingdom/press/frontpage/091112_en.htm
European Union (EU). 2008. “Questions and Answers on the Commission's proposal to revise the EU Emissions Trading System.” Available at: http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/35&format=HTML&ag ed=0&language=EN&guiLanguage=en
European Union (EU). 2010. “Emission Trading System: Community Independent Transaction Log.” Available at: http://ec.europa.eu/environment/climat/emission/citl_en.htm
Ellerman, A. Denny and Paul L. Joskow. 2008. The European Union's Emissions Trading System in Perspective. Pew Center on Global Climate Change. Available at: http://www.pewclimate.org/eu-ets
Gruber, Jonathan. 2005. Public Finance and Public Policy. New York, NY: Worth Publishers.
Hepburn, Cameron, Michael Grubb, Karsten Neuhoff, Felix Matthes and Maximilien Tse. “Auctioning of EU ETS Phase II Allowances: how and why?” Electricity Policy Research Group (EPRG), University of Cambridge: Cambridge, UK. Intergovernmental Panel on Climate Change (IPCC). IPCC Fourth Assessment Report. Available at: http://www.ipcc.ch/ipccreports/ar4-wg1.htm
Kruger, Joseph, Wallace E. Oates and William A. Pizer. 2007. “Decentralization in the EU Emissions Trading Scheme and Lessons for Global Policy.” Environmental Economics and Policy.
McCormick, Scott. 2007. “An Inconvenient Comparison: Should Oregon Trust Europe’s Model of CO2 Trading?” Cascade Policy Institute: Portland, Oregon. Available at: http://www.cascadepolicy.org/pdf/env/200701_an_inconvenient_comparison.pdf
Markussen, Peter and Gert Tinggaard Svendsen. 2005. "Industry lobbying and the political economy of GHG trade in the European Union.” Energy Policy, Volume 33, Issue 2, 245-255.
Parker, Larry. 2010. “Climate Change and the EU Emissions Trading Scheme (ETS): Looking to 2020.” Congressional Research Service: Washington, DC.
Point Carbon. 2008. “EU ETS Phase II – The potential and scale of windfall profits in the power sector.” Available at: http://assets.panda.org/downloads/point_carbon_wwf_windfall_profits_mar08_final_report_ 1.pdf
Rosen, Harvey S. and Ted Gayer. Public Finance. 8th Edition. McGraw-Hill.
Skaperdas, Stergios. 1992. “Cooperation, Conflict, and Power in the Absence of Property Rights.” American Economic Review, Vol. 82, No. 4, 720-739.
World Bank. 2009. State and Trends of the Carbon Market. Available at: http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,print:Y~isCURL:Y~contentMDK:21 520231~pagePK:64257043~piPK:437376~theSitePK:4607,00.html