Emissions Trading and Competitiveness: Allocations, Incentives and Industrial Competitiveness under the EU Emissions Trading Scheme (Climate Policy)

Contents......Page 4
Preface......Page 6
Abstract......Page 8
Introduction......Page 9
Part A: Why the EU ETS is different - and what that implies......Page 10
Part B: The policy implications......Page 19
Notes......Page 28
References......Page 30
1. Introduction......Page 32
2. Background......Page 33
3. Operation of the model......Page 36
4. The assumption that firms pursue profit-maximization......Page 38
5. Initial market conditions......Page 40
6. Data......Page 41
7. Scenarios......Page 42
8. Results......Page 43
9. Conclusions......Page 48
References......Page 49
1. Introduction......Page 50
2. Theory......Page 51
3. Empirical estimates of passing through CO2 costs......Page 54
4. Model estimates of CO2 cost pass-through......Page 61
5. Estimates of windfall profits......Page 62
Notes......Page 68
References......Page 69
Appendix 1......Page 70
1. Introduction......Page 74
2. Allocation to incumbents......Page 76
3. Allocation to new entrants......Page 84
4. Conclusions......Page 90
References......Page 91
1. Introduction......Page 94
2. Allowance allocation in the EU ETS......Page 96
3. Grandfathering vs. output-based allocation: the basic theory......Page 97
4. Presentation of CEMSIM-GEO......Page 99
5. Simulations and results......Page 101
6. Conclusions......Page 111
Acknowledgements......Page 112
References......Page 113
1. Introduction......Page 116
2. Free allocation and State aid......Page 117
3. Justifying State aid granted by the free allocation of allowances......Page 121
4. Various procedural questions......Page 127
5. Conclusions......Page 133
Notes......Page 134
References......Page 136
1. Introduction......Page 138
2. The pros and cons of auctioning allowances......Page 140
3. How to auction EU ETS allowances......Page 145
4. Active auctioning: hedging, pricing and border adjustments......Page 150
Notes......Page 156
References......Page 159