Complying with the forthcoming tightening of CO2 emission allocations in the EU may mean big bills for the industries affected. In this special issue of Climate Policy journal, leading experts examine the impacts on competitiveness and the commercial incentives available from the CO2 allowance allocations under the methodologies, and whether – and if so at what stage – the ETS itself may need to be amended.

The study is multidisciplinary, combining economic, legal and policy analysis with specific studies of impacts on electricity, cement and other industrial sectors and the allocation issues. It brings together the results of research conducted over the past two year from various research centres and consultancies in Europe, and in particular, work commissioned by the Carbon Trust and Climate Strategies Network. Through these, it presents the most comprehensive and detailed set of analyses yet conducted of the impacts of allocation on competitiveness – one of the most critical issues for the sectors affected and for the operation of the ETS.

About the author(s)

Michael Grubb is Editor-in-Chief of Climate Policy and Karsten Neuhoff is Senior Research Associate at the Faculty of Economics, Cambridge University.

Contributors
Lead authors include: Damien Demailly, Michael Grubb, Angus Johnston, Karsten Neuhoff, Jos Sijm and Robin Smale.

Contents

Emissions allocation, incentives and the competitiveness of European industry * Emissions, firm profits and market prices * CO2 cost pass through and windfall profits in the power sector * Allocation, incentives and distortions * CO2 abatement, competitiveness and the leakage in the European cement industry under the EU ETS * Free allocation of allowances under the EU ETS * legal issues * Auctioning of EU ETS Phase II allocations *