Is a Cap-and-Trade System Always Efficient? The Case of New Entrants in the Emissions Trading System of the EU
Publication: Journal of Energy Engineering
Volume 134, Issue 2
Abstract
This paper analyzes the effects of allocating permits to new power plants free of charge within a tradable permit system. We demonstrate that these free allocations distort investments. Furthermore, we distinguish the effects of a uniform benchmark from a fuel specific benchmark, as both are common elements in EU member states’ national allocation plans. An empirical model for the European market is used to quantify the effects in a realistic framework.
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Published In
Journal of Energy Engineering
Volume 134 • Issue 2 • June 2008
Pages: 33 - 39
Copyright
© 2008 ASCE.
History
Received: May 18, 2007
Accepted: Dec 3, 2007
Published online: Jun 1, 2008
Published in print: Jun 2008
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