Auctioning of CO 2 emission allowances in Phase 3 of the EU Emissions Trading Scheme

Eva Benz, Andreas Löschel and Bodo Sturm

Climate Policy, 2010, vol. 10, issue 6, 705-718

Abstract: The revised Directive published in June 2009 suggests auctioning as a basic principle for allocation for the upcoming third trading phase of the EU Emissions Trading Scheme (EU ETS) that runs from 2013 to 2020. The article emphasizes the importance of a properly chosen auction design. Compared with the past and current trading phases, the significantly higher auction share is expected to yield a thin secondary market for CO 2 allowances. The main criteria for a viable auction design (price signalling, efficient allocation, and simplicity combined with transparency and credibility) are used to assess different options for an auction design. A specific auction design for the third trading phase-the simultaneous dynamic uniform double auction-is recommended.

Date: 2010
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Working Paper: Auctioning of CO2 Emission Allowances in Phase 3 of the EU Emissions Trading Scheme (2008)
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DOI: 10.3763/cpol.2009.0055

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