Working Paper: CEPR ID: DP5843
Authors: Barbara Buchner; Carlo Carraro; A. Denny Ellerman
Abstract: This paper is the concluding chapter of Rights, Rents and Fairness: Allocation in the European Emissions Trading Scheme, edited by the co-authors and forthcoming from Cambridge University Press. The main objective of this paper is to distill the lessons and general principles to be learnt from the allocation of allowances in the European Union Emission Trading Scheme (EU ETS), i.e. in the world?s first experience with allocating carbon allowances to sub-national entities. We discuss the lessons that emerge from this experience and make some comments on what seem to be more general principles informing the allocation process and on what are the global implications of the EU ETS. As has become obvious during the first allocation phase, the diversity of experience among the Member States is considerable, so that it must be understood that these lessons and unifying themes are drawn from the experience of most of the Member States, not necessarily from all. Lessons and unifying observations are grouped in three categories: those concerning the conditions encountered, the processes employed, and the actual choices.
Keywords: allocation; climate change; emission trading; EU policy; fairness
JEL Codes: C72; H23; Q25; Q28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| availability of accurate data (C82) | efficiency and fairness of allowance distribution (D61) |
| lack of installation-level data (C80) | allocation choices made by member states (F55) |
| involvement of industry in the allocation process (L59) | quality of data collected (C80) |
| involvement of industry in the allocation process (L59) | fairness of the allocation process (D63) |
| perception of limited abatement potential for CO2 emissions (Q52) | allocation strategies adopted by member states (F55) |
| perception of limited abatement potential for CO2 emissions (Q52) | willingness of policymakers to adopt aggressive emissions targets (Q58) |