Emission trading in Europe: The importance of allocation rules

The objective of the project is to study emissions trading for CO2 emissions in Norway and the EU, with main focus on allocation of quotas.

Project details

Project manager
for the Future, Frisch, University of Oldenburg
Project term
01.01.2008 - 31.12.2013
Project status
Research field

About the Project

The project has three subprojects that all focus on the use of quota markets as a climate policy instrument. The subprojects study different aspects of quota allocation. All subprojects apply both theoretical analysis and numerical simulation models.

• The first subproject studies how different types of allocation rules affect the quota market. That is, for instance the effects on quota prices, technological change and entry/exit. In addition, quota markets are compared with carbon taxes. This subproject includes inter alia a Ph.D thesis.

• The second subproject studies how allocation rules affect the relationship between the quota market and the power market. Special focus is on how different allocation rules affect different types of producers. The effects on power prices are also examined.

• The third subproject studies how allocation of quotas and trade policies such as import tariffs and export rebates may affect carbon leakage and the output in energy-intensive industries. Both Norwegian and international policies are analyzed.