The impact of emissions-performance benchmarking on free allocations in EU ETS Phase 3

Stephen Lecourt, Clément Pallière and Oliver Sartor

No 2013/17, RSCAS Working Papers from European University Institute

Abstract: From Phase 3 (2013-20) of the European Union Emissions Trading Scheme carbon-intensive industrial emitters will receive free allocations based on harmonised, EU-wide benchmarks. This paper analyses and evaluates the impacts of these new rules on allocations to key energy-intensive sectors. It exploits an original dataset that combines recent data from the National Implementing Measures of 20 Member States with the Community Independent Transaction Log and ETS-installation NACE code data. The analysis reveals that free allocations to benchmarked sectors will be reduced significantly, though not excessively, in Phase 3. This reduction should both increase public revenues from carbon auctions and has the potential to enhance the economic efficiency of the carbon market. The analysis also shows that changes in allocation vary mostly across installations within, rather than across, countries. Lastly, the analysis finds evidence that the new rules will, as intended, reward installations with better emissions performance, and will improve harmonisation of free allocations in the EU ETS by reducing differences in allocation levels across countries with similar carbon intensities of production.

Keywords: European Union Emissions Trading Scheme (EU ETS); CO2 allowance allocation; Emissions-performance benchmarking (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: The impact of emissions-performance benchmarking on free allocations in EU ETS Phase 3 (2013)
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