Open AccessAllocating emission allowances: towards a sustainable approach
Author(s) -
Fries Steven
Publication year - 2008
Publication title -
oxonomics
Language(s) - English
Resource type - Journals
eISSN - 1752-5209
pISSN - 1752-5195
DOI - 10.1111/j.1752-5209.2008.00024.x
Subject(s) - allowance (engineering) , emissions trading , greenhouse gas , point (geometry) , cover (algebra) , natural resource economics , economics , business as usual , politics , business , environmental economics , market economy , economic system , engineering , political science , operations management , ecology , law , mechanical engineering , geometry , mathematics , biology
The paper examines a politically sensitive issue in design of emission allowance trading systems – how to allocate initially the allowances. In most systems, whether they cover greenhouse gases (GHG) or other pollutants, initial allowance allocations have been largely free and based on past emissions. An alternative is to allocate allowances by auctioning. Political economy considerations point to greater future use of auctioning. This paper sets out reasons for this conclusion, while arguing for a phased transition towards greater auctioning.