Rent-seeking and grandfathering: The case of GHG trade in the EU

Urs Steiner Brandt () and Gert Svendsen
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Urs Steiner Brandt: Department of Environmental and Business Economics, University of Southern Denmark

No 35/02, Working Papers from University of Southern Denmark, Department of Sociology, Environmental and Business Economics

Abstract: The EU Commission has recently proposed a new directive establishing a framework for greenhouse gas (GHG) emissions trading within the European Union. The idea is to devalue the emission quotas in circulation by the year 2012 at latest, so that the EU will meet its Kyoto target level of an 8% GHG reduction. Our main question is whether the final choice of allocation rule can be explained by potential industrial net winners involved in the policy making process. We answer this question by using rent-seeking theory and by analysing the Green Paper hearing replies from the main industrial groups. In other words, we want to explain and observe how rent-seeking (or lobbyism) affects the de-sign of environmental regulation and energy policy in favour of well-organized industrial interest groups. We argue that some firms are likely to reap a net gain from being regulated by a grandfathered emission trading system. This is so be-cause total costs of emission reduction and lobbyism are likely to be smaller than the total rents from having this type of regulation.

Keywords: Rent-seeking; lobbyism; grandfathering; greenhouse gases; Kyoto Protocol; emission trading; EU (search for similar items in EconPapers)
JEL-codes: H2 H4 Q28 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2002-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Rent-Seeking and Grandfathering: The Case of GHG Trade in the Eu (2004)
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