 Benchmark-based allocations in EU ETS Phase 3: an early assessmentOliver Sartor, Clement Palli�re and Stephen Lecourt Climate Policy, 2014, vol. 14, issue 4, 507-524 Abstract: Phase 3 of the European Union Emissions Trading Scheme (EU ETS; 2013-2020) sees the introduction of new rules governing the free allocations of emissions allowances given to energy-intensive industries. In contrast to Phases 1 and 2, allocations will be based on historical production multiplied by best available emissions technology benchmarks. This article exploits an original database to provide a first analysis of the distributional and economic efficiency implications of the new rules. It is shown empirically that the new allocation rules reduce the scope for windfall gains by EU ETS firms while also effectively mitigating carbon leakage risks, even assuming optimistic forecasts of Phase 3 carbon prices. The example of the cement sector is used to show that benchmarking significantly improves the harmonization of the levels of free allocations to competing firms throughout the EU compared to Phase 2. However, it is also found that the use of ex ante output levels to determine allocations still leaves considerable scope for windfall gains and possible distortions of the internal market. Date: 2014 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:tcpoxx:v:14:y:2014:i:4:p:507-524 Ordering information: This journal article can be ordered from DOI: 10.1080/14693062.2014.872888 Access Statistics for this article Climate Policy is currently edited by Professor Michael Grubb More articles in Climate Policy from Taylor & Francis Journals |
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