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 comeinto 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.

Böhringer, Christoph and Andreas Lange (2003), Efficiency, Compensation, and Discrimination: What is at Stake When Implementing the EU Emissions Trading Scheme?, ZEW Discussion Paper No. 03-73, Mannheim.