Simple rules for targeting CO 2 allowance allocations to compensate firms

Karen Palmer, Dallas Burtraw and Danny Kahn

Climate Policy, 2006, vol. 6, issue 4, 477-493

Abstract: Policies to cap emissions of carbon dioxide (CO 2 ), such as the recently announced agreement among the northeastern states of the USA, are expected to have important effects on the electricity industry and on the market value of firms that own electricity generation assets. A study of the economics literature reveals potentially large efficiency advantages for initial distribution of tradable emissions allowances through an auction and direction of allowance value to public purposes. However, an auction raises the costs for the regulated firms. This article identifies rules for free distribution of a portion of the allowances that satisfy a compensation goal for firms while maximizing the value of allowances that can be directed to public purposes. The article employs a detailed simulation model to calculate numerical results for the market value of generation assets under the CO 2 cap-and-trade programme in the northeastern USA.

Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://hdl.handle.net/10.1080/14693062.2006.9685614 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Simple Rules for Targeting CO2 Allowance Allocations to Compensate Firms (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:tcpoxx:v:6:y:2006:i:4:p:477-493

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/tcpo20

DOI: 10.1080/14693062.2006.9685614

Access Statistics for this article

Climate Policy is currently edited by Professor Michael Grubb

More articles in Climate Policy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().