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- W1574665050 abstract "Competitiveness and carbon leakage are major concerns for the design of CO2 emissions permits markets. In the absence of a global carbon tax and of border carbon adjustments, output-based allocation is a third-best solution and is actually implemented (Australia, California, New Zealand). The EU has followed a different route; free allowances are allocated to existing or new capacities in proportion to a benchmark, independent of actual production. This paper compares these two schemes in a formal setting and shows that the optimal one is in fact a combination of both schemes, or output-based allocation alone if uncertainty is limited. A key assumption of our analysis is that the short-term import pressure depends both on the existing capacities and the level of demand, which is typical in capital intensive and internationally traded sectors. A calibration of the model is used to discuss the EU scheme for the cement sector in the third phase of the EU-ETS (2013–2020). This allows for a quantification of various policies in terms of welfare, investment, production, company profits, public revenues and leakage." @default.
- W1574665050 created "2016-06-24" @default.
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- W1574665050 date "2014-09-01" @default.
- W1574665050 modified "2023-10-12" @default.
- W1574665050 title "Carbon leakage and capacity-based allocations: Is the EU right?" @default.
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- W1574665050 doi "https://doi.org/10.1016/j.jeem.2014.07.002" @default.
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