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Lobbying for carbon permits in Europe

Julien Hanoteau ()

No 2014013, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Using cross-sector and cross-country data, this paper evidences that rent seeking influenced the allocation of CO2 emission permits in the two first phases of the European emissions trading scheme. Industry lobbies effectively used the ‘job loss’ and ‘competitiveness’ arguments, as unemployment proxy variables significantly impacted the allocation in both phases, and carbon intensity influenced it in the second phase. The countries that adopted a partial auction scheme also gave relatively more permits and in particular to the politically more powerful sectors. This suggests a compensation mechanism and supports the assumption of a political tradeoff between the quantity of permits issued and the decision between free grant and auction. It also confirms that the initial allocation is not neutral in the presence of special interest lobbying.

Keywords: Lobbying; Emission trading; Permits allocation (search for similar items in EconPapers)
JEL-codes: D72 Q58 C10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env, nep-pol and nep-reg
Date: 2014-03-01
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