Mission Impossible!? On the Harmonization of National Allocation Plans Under the EU Emissions Trading Directive
University of Oldenburg - Economic Policy; Centre for European Economic Research (ZEW)
University of Hamburg; Center for European Economic Research (ZEW) - Environmental & Resource Economics
ZEW - Centre for European Economic Research Discussion Paper No. 04-015
Starting in 2005, the EU will implement a CO2 emissions trading scheme. In this paper we show that the outspoken goals of economic efficiency and free allocation of allowances are incompatible with harmonized allocation rules. In general, the assignment of allowances is endogenous and differs widely across countries, thereby substantiating concerns for implicit state aid and competitive distortions. We discuss potential adjustments to the Directive in order to allow for harmonization, i.e. for identical assignment factors to similar firms located in different EU countries.
Number of Pages in PDF File: 30
Keywords: Emissions trading, allowance allocation, national allocation plan, competitive distortions
JEL Classification: D58, H21, H23, Q50, Q58working papers series
Date posted: May 20, 2004 ; Last revised: August 14, 2008
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