Tightening the System: Central Allocation of Emission Rights

Michael Dutschke, Axel Michaelowa and Marcus Stronzik

No 26375, Discussion Paper Series from Hamburg Institute of International Economics

Abstract: A whole bundle of so-called "flexible mechanisms" has been foreseen by the Kyoto Protocol in order to help industrial countries to fulfill their agreed reduction targets in the most cost-effective way. Emission permits will act as the backbone of all market-orientated mechanisms. Therefore, their initial allocation to the market participants is crucial. The deposit-refund model of Central Allocation is an alternative to the distribution of emission permits actually discussed in the context of flexible mechanisms. A Climate Bank is proposed that issues permits equal to the aggregate budget of all Annex-B countries. The system of Central Allocation is aimed to achieve an equitable distribution according to real emission needs, a positive sanction for compliance and overall system integrity.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 15
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hwwadp:26375

DOI: 10.22004/ag.econ.26375

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