Evaluation of Alternative Initial Allocation Mechanisms in a European Union Greenhouse Gas Emissions Allowance Trading Scheme
Description: This report is intended to provide background to assist Member States and the European Commission ("Commission") in determining the allocation mechanism to use in conjunction with the Commission's proposed emissions trading programme for carbon dioxide ("CO2") and other greenhouse gases ("GHGs"). The Commission in October 2001 adopted a major package of initiatives to combat climate change. This package includes a proposed Directive on GHG emission trading ("proposed Directive") as well as a proposal for the EC to ratify the Kyoto Protocol and a Communication setting out further methods for reducing greenhouse gas emissions beyond the Directive on emissions trading. This report provides descriptions and evaluations of alternative mechanisms for initial allocation of allowances. The report has the following specific objectives: - Provide a typology of alternative initial allocation mechanisms. - Describe the allocation mechanisms that have been used in previous emissions trading programmes. - Develop criteria for evaluating alternative mechanisms. - Evaluate the alternative mechanisms in light of these criteria. - Develop plant-level data that allow one to simulate various initial allocation alternatives and thus shed light on key empirical issues, including feasibility and sector- and plantlevel effects. - Provide an overview of major conclusions and implications.
Creator: NERA Economic Consulting