Free allowance allocation in the EU ETS

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dc.contributor.editorMARCANTONINI, Claudio
dc.contributor.editorTEIXIDO-FIGUERAS, Jordi
dc.contributor.editorVERDE, Stefano F.
dc.contributor.editorLABANDEIRA, Xavier
dc.date.accessioned2017-04-07T15:34:59Z
dc.date.available2017-04-07T15:34:59Z
dc.date.issued2017
dc.description.abstract• In the EU ETS, free allowance allocation is used to safeguard the competitiveness of the regulated industries and to avoid carbon leakage. In Phase I and II, most allowances were given for free. With Phase III, auctioning became the default method for allocation of allowances. However, industrial sectors receive free allowances according to emission efficiency benchmarks and depending on the sectoral risk of carbon leakage. Sectors at risk of carbon leakage are identified based on carbon and trade intensity. • We analysed the empirical research on the EU ETS relevant to free allocation. First, no strong evidence has been found that the EU ETS affected the competitiveness of the regulated industries. Second, an overly conservative criterion for identifying the sectors at risk of carbon leakage meant that free allowances were given to installations which most likely were in fact not at risk. Third, evidence of pass-through of carbon costs was found not only for the electricity sector, but also for industrial sectors. • The reform for Phase IV proposed by the European Commission introduces some changes relevant to free allocation. Notably, it devises a more efficient criterion for identifying the sectors at risk of carbon leakage and it sets a rule for updating the benchmark values.en
dc.format.mimetypeapplication/pdf
dc.identifier.doi10.2870/55486
dc.identifier.isbn9789290844631
dc.identifier.issn2467-4540
dc.identifier.urihttps://hdl.handle.net/1814/46048
dc.language.isoen
dc.relation.ispartofseriesPolicy Briefsen
dc.relation.ispartofseries2017/02en
dc.relation.ispartofseriesFlorence School of Regulationen
dc.relation.ispartofseriesEnergyen
dc.relation.ispartofseriesClimateen
dc.relation.urihttp://fsr.eui.eu/
dc.rightsinfo:eu-repo/semantics/openAccess
dc.titleFree allowance allocation in the EU ETSen
dc.typeOtheren
dspace.entity.typePublication
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person.identifier.other38998
person.identifier.other35245
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