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Cross-country comparison of the replacement incentives of the EU ETS in 2008-12: The case of the power sector

 
: Rogge, K.; Linden, C.

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Fulltext urn:nbn:de:0011-n-1193399 (604 KByte PDF)
MD5 Fingerprint: d4e0b3ac5b97017920ee4f507f965cf9
Created on: 4.3.2010


Karlsruhe: Fraunhofer ISI, 2010, 32 pp.
Working Paper Sustainability and Innovation, S1/2010
English
Report, Electronic Publication
Fraunhofer ISI ()
EU emission trading scheme (EU ETS); replacement; adoption; diffusion; power sector; allocation rule

Abstract
In this paper, we conduct a cross-country quantitative analysis of the replace-ment incentives generated by the EU ETS for the power sector in 2008-12. In order to do so, the allocation rules of the Member States are applied to concrete reference power plants for three different fuel types (lignite, hard coal and gas). Based on these calculations, we compare installation-specific replacement in-centives across the Member States. Our analysis shows that replacement in-centives vary significantly across Member States and typically deviate from the incentives provided in the reference case of full auctioning. Furthermore, the EU ETS allocation rules lead to perverse incentives in approximately 30% of the possible replacement options. Only 5 MS do not provide any perverse incen-tives. Finally, we explore the link between replacement incentives and allocation types. Based on our findings, we derive policy recommendations for the design of emission trading schemes emerging around the world.

: http://publica.fraunhofer.de/documents/N-119339.html