*Auctioning Greenhouse Gas Emissions Permits in Australia

20 Pages Posted: 3 May 2010

See all articles by Regina Betz

Regina Betz

University of New South Wales (UNSW)

Stefan Seifert

University of Karlsruhe - Institute of Information Systems and Management

Peter Cramton

University of Maryland - Department of Economics

Suzi Kerr

Motu Economic and Public Policy Research Trust

Abstract

The allocation of permits is an important design aspect of an emissions trading scheme. Traditionally, governments have favoured the free allocation of greenhouse gas permits based on individual historical emissions (‘grandfathering’) or industry benchmark data. Particularly in the European Union (EU), the free allocation of permits has proven complex and inefficient and the distributional implications are politically difficult to justify; auctioning emissions permits has therefore become more popular. The EU is now moving to auction more than 50 per cent of all permits in 2013, and in the US the Regional Greenhouse Gas Initiative (RGGI) has begun auctioning more than 90 per cent of total allowances. Another case in point is the Australian proposal for a Carbon Pollution Reduction Scheme (CPRS), which provides for auctioning a significant share of total permits. This paper discusses the proposed Australian CPRS’s auction design. A major difference to other emissions trading schemes is that the CPRS plans to auction multiple vintages of emissions permits simultaneously.

Suggested Citation

Betz, Regina and Seifert, Stefan and Cramton, Peter C. and Kerr, Suzi, *Auctioning Greenhouse Gas Emissions Permits in Australia. Australian Journal of Agricultural and Resource Economics, Vol. 54, Issue 2, pp. 219-238, April 2010. Available at SSRN: https://ssrn.com/abstract=1597436 or http://dx.doi.org/10.1111/j.1467-8489.2010.00490.x

Regina Betz

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Stefan Seifert

University of Karlsruhe - Institute of Information Systems and Management ( email )

Englerstr 14
Karlsruhe, 76131
Germany

Peter C. Cramton

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-6987 (Phone)
301-405-3542 (Fax)

Suzi Kerr

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand
+64 4 383 4250 (Phone)
+64 4 383 4270 (Fax)

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