Allocation of Carbon Emission Certificates in the Power Sector: How generators profit from grandfathered rights

Kim Keats Martinez and Karsten Neuhoff ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: To meet its Kyoto requirements, the EU will establish an internal market for carbon dioxide allowances from 2005, the EU Emissions Trading Scheme (ETS). National governments are to allocate most of these allowances for free. The analysis shows that as a result the net value of both a typical pulverised coal-fired (PC) power station and a more modern gas-fired combined cycle gas turbine (CCGT) will increase. We show that in future allocation rounds a greater proportion of allowances can and should be auctioned. The paper also analyses the interactions with the Large Combustion Plant Directive, which limits SO2 and NOx emissions

Keywords: electricity generation; eu emission trading; allocation; updating; grandfathering (search for similar items in EconPapers)
JEL-codes: D92 F18 H23 (search for similar items in EconPapers)
Pages: 24
Date: 2004-09
New Economics Papers: this item is included in nep-ene and nep-res
Note: CMI, IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Journal Article: Allocation of carbon emission certificates in the power sector: how generators profit from grandfathered rights (2005)
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