Allocation and Related Issues for Post-2012 Phases of the EU ETS Page: 1

                                
Introduction

1. Introduction
This report provides information on major design options related to the allocation of
emissions allowances under the European Union Emissions Trading Scheme (hereafter the
EU ETS, or "the Scheme"). The report was developed to assist the European Commission in
the context of the review of options for the EU ETS after 2012, during the third and
subsequent phases of the Scheme.
The report covers topics related to allocation alternatives as well as several other issues. All
of the material contained here was developed initially as a set of briefing notes for the
Commission in 2007. The topics covered in the report are divided into two major categories:
(1) assessment criteria and other general features, including cap-setting; and (2) allocation
alternatives and issues specifically related to allocation.
The topics in the first category include the following:
* Criteria and principles for assessing design options;
* Competitiveness; and
* Cap-setting.
The topics in the second category are the following:
* Auctioning;
* Emissions-based grandfathering of allowances;
* Benchmarked allowance allocation;
* New entrants and closure rules;
*   "Updating" of allocations; and
* Other allocation issues.
The general structure for the chapters related to allocation alternatives is to provide
background on the allocation issue, describe and evaluate the options, and provide tentative
conclusions.

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