Auctioning of CO2 Emission Allowances in Phase 3 of the EU Emissions Trading Scheme

Eva Benz, Andreas Löschel and Bodo Sturm

No 08-081, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: The 'Climate action and renewable energy package' proposed by the European Commission in the beginning of 2008 suggests auctioning as basic principle for allocation for the upcoming third trading phase of the EU Emissions Trading Scheme that runs from 2013 to 2020. Overall, it is estimated that at least two third of the total quantity of allowances will be auctioned in 2013, to be increased to 100 % by 2020. In this paper, we emphasize the importance of a properly chosen auction design as the significantly higher auction share, compared to the past and current trading phase, is expected to yield a thin secondary market for CO2 allowances. We elaborate main criteria that a viable auction design is supposed to fulfil and propose a specific auction design for the third trading phase. The auction we recommend is a simultaneous dynamic uniform double auction.

Keywords: climate policy; emissions trading; auction design (search for similar items in EconPapers)
JEL-codes: D44 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-eec, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Auctioning of CO 2 emission allowances in Phase 3 of the EU Emissions Trading Scheme (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:7423

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