Efficiency, Compensation, and Discrimination: What is at Stake When Implementing the EU Emissions Trading Scheme?

Abstract

In 2005, an EU-wide emissions trading scheme covering major CO2 producing sites shall come into power. The key objective of the trading scheme is to promote cost-efficiency of carbon reduction within the EU. We identify policy-relevant tradeoffs between overall efficiency, compensation and competitive neutrality which arise in the concrete implementation of the EU emissions trading scheme through National Allocation Plans. --emissions trading,allowance allocation,competition,National Allocation Plans,computable general equilibrium