Lessons learnt from the national allocation of allowances in the European Union Emissions Trading Scheme – LESSONS
This project aims to organise two workshop of experts in order to assemble knowledge in the EU ETS allocation process of Co2 allowances, to draw appropriate observations and lessons from it, and finally to suggest potential improvements for future rounds of the allocation process.
In January 2005, the world’s largest scheme for greenhouse gases has been launched in Europe. Allocation is the only aspect of the EU Emission Trading Scheme (ETS) that can be usefully studied now without waiting for the accumulation of more experience and data. Given the importance of the allocation process for the overall efficiency of any potential emission trading scheme, the process of allocating the emission allowances in Europe has attracted world-wide attention. The recent experience of the European Union in creating and allocating CO2 allowances to sub-national entities offers rich lessons, and the goal of the project is to make this experience more accessible and to draw appropriate observations and lessons from it.
A small group of experts was assembled by FEEM to participate in a thorough discussion and analysis of the issues related to allocating allowances in the EU ETS. Two workshops organised over the course of 2005 provided the occasion for those experts to report on the key issues they confronted during the allocation process, how they dealt with them and for which reasons they were resolved in a particular manner. The experiences of ten representative member states were written up and these contributions constitute the core of the book. In addition, a few selected external experts from academia, the media, and carbon market intermediaries contributed an informed and insightful comment from their vantage points.
Finally, an official from the European Commission (EC) provided his perspective on the process of guidance, co-ordination, review, and approval. To complete the detailed case studies of the participants, the editors conducted an analysis of the insights provided at the workshops and in the participants’ contributions in order to highlight the lessons learnt during the allocation process at the EU level and to suggest potential improvements for future rounds of the allocation process.
The final product of the project is a coherent and insightful analysis of the process by which these nations came to decide limits on CO2 emissions and to distribute the resulting rights to emit to the stationary sources that make up an important segment of their economies.
The project, coordinated by FEEM, in co-operation with Peter Zapfel from the European Commission and with scientific advice by Denny Ellerman from the Massachusetts Institute of Technology, USA, is funded by the European Commission. Its outcome is a book by Cambridge University Press.