Designing National Allocation Plans for Eu-Emissions Trading — A First Analysis of the Outcomes

Abstract

In this paper the main design issues of 16 National Allocation Plans (NAPs) are presented in a systematic way for the first period (2005)(2006)(2007) of the EU Emissions Trading System (EU ETS). These NAPs have either been submitted to the European Commission (EC) by the EU Member States (MS), or were available as draft versions in early May 2004. Further quantitative and qualitative analyses of these NAPs lead to the conclusions that -unless the review process by the EC leads to significant modifications -(i) the EU ETS is unlikely to result in any major emission reductions in this first period; (ii) many MS allow for a generous allocation to the emissions trading sector at the cost of other sectors and the general taxpayer; (iii) competitive distortions are likely to arise from the different national interpretations of the installations to be covered by the EU ETS and from the partial-system character of the EU ETS; (iv) barriers to economic efficiency will arise from a probable EU-wide ban on banking and ex-post adjustments of allocated quantities for newcomer installations. Finally, for the vast majority of participants transaction costs are expected to be high compared to costs for compliance.

Do Environmental Policies Matter for Productivity Growth?

“…Since the scrapping rate used by national accountants for the calculation of the capital stock -and hence MFP growth -is usually assumed to be immune to such changes (Schreyer et al, 2011), the productive capital stock will tend to be overestimated. At the same time, environmental policies may also have the opposite effect to extend the life of some existing capital goods -for instance vintagedifferentiated regulations (VDRs) and higher entry barriers can prolong the life of old and otherwise unviable plants, with the opposite effect on productivity measurement (see Nelson et al 1993, Stavins, 2005 for the case of New Source Review in the US Clean Air Act; and Ahman et al, 2006 andBetz, Eichhammer andSchleich, 2004, for EU's Emission Trading Scheme).…”

Allocation of Greenhouse Gas Emission for Japan Large Emitting Industries under Kyoto Protocol by Grandfathering Rule Approach

“…This type of free allocation method was popular and has been welcomed by most of general public. Many of the European countries chose this approach to allocate its emission allowance [5], [6]. We have also applied this allocation method in our study to determine the allowance allocation among the high emitting industries in Japan under the first commitment of the Kyoto Protocol.…”

“…In another word, the emission allowance allocated to a particular entity is equal to the emission of that particular regulated entity in the baseline year multiplied by the ratio of the emissions cap to total emissions in the baseline year. The formula is as followed [6]:…”

“…However, due to the economic cycle, a particular baseline year data may not be the true representation of the overall performance for a particular entity in the past. We have adjusted the baseline year value by taking the average value of a selected time period [6]. Compared to the data selected from a particular year, this better captured the overall condition.…”

Efficiency Losses from Overlapping Economic Instruments in European Carbon Emissions Regulation

“…According to this, many analyses conclude that the actual NAP Macro plans contain a "too generous" allocation to the DIR sectors, leading to comparatively high reduction requirements on the part of the NDIR sectors while leaving the DIR sectors with a comparatively lax reduction requirement (e.g. Betz et al, 2004).…”