Free allocation in hte 3rd EU ETS period: assessing two manufacturing sectors
Författare
Summary, in English
This paper provides an analysis of the EU ETS harmonised benchmark-based allocation procedures by comparing two energy-intensive sectors with activities in three Member States (MS); the cement industry (CEI) and the pulp and paper industry (PPI) in UK, Sweden and France. Results show that the new procedures are better suited for the homogenous CEI, for which allocation is to decrease in a consistent manner. For the heterogeneous PPI – with diverse product portfolios, technical infrastructure and fuel-mixes – the allocation procedures cause dispersed outcomes. The lack of product benchmark curves, biased reference values on fuel-mix and specific energy use as well as other issues, leads to allocations that do not represent the average performance of the 10% most GHG efficient installations. Another issue with the 3rd phase allocation procedure is that grandfathering is still present via the historically based production volumes. How to deal with structural change and provisions regarding capacity reductions and partial cessation is an issue, which is highly relevant for the PPI but less so for the CEI. In manufacturing sectors such as cement industry (CEI) and pulp and paper industry (PPI), the new banchmark-based allocation procedures have managed to reduce the EU-wide free allocation in the 3rd period compared with the 2nd period. For the homogenous CEI the outcome of stricter allocation is consistent between Member States. However, free allocation based on grandfathering of prerecession activity levels and CO2 performances is likely to create long positions in coming years. Our results disclose differing outcomes between sectors and Member States, with cases of conspicuous supply of allowances in the heterogeneous PPI. Lack of product benchmark curves, biased reference values on fuel-mix and specific energy use etc., leads to allocations that do not represent the average performance of the 10% most GHG efficient installations.
Avdelning/ar
Publiceringsår
2016
Språk
Engelska
Sidor
125-144
Publikation/Tidskrift/Serie
Climate Policy
Volym
16
Issue
2
Fulltext
- Available as PDF - 179 kB
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Dokumenttyp
Artikel i tidskrift
Förlag
Taylor & Francis
Ämne
- Environmental Engineering
Nyckelord
- EU ETS
- Climate policy
- industry
Status
Published
ISBN/ISSN/Övrigt
- ISSN: 1469-3062