The Distribution of European Union Allowances (EUAs): Windfall Profits, Free Allocation and Auctions

Marek Hlavac

MPRA Paper from University Library of Munich, Germany

Abstract: The first half of the paper provides a brief overview of the European Union’s Emission Trading System (EU ETS), and discusses how emission allowances have been allocated during the first two phases of the trading scheme. I then discuss the effects of auctioning off more emission allowances during Phase III of the EU ETS. I conclude that such a change would reduce the windfall profits of the initial allowance holders, and provide additional revenues that participating governments could use to support a variety of policies, some of which I discuss.

Keywords: environmental economics; emissions trading; European Union; windfall profits (search for similar items in EconPapers)
JEL-codes: P26 Q5 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:24242

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