Developing a European Carbon Trading Market: Will Permit Allocation Distort Competition and Lead to State Aid?

Competition and State Aid Policy in the European Community

This article discusses the effect of European Community state aid policy on competition. First, the article defines and discusses the types of state aid under the Treaty Establishing the European Community. Second, the article analyzes the distortion of competition and effect on trade that state aids have. Third, the article discusses whether state aid qualifies for an exemption because it fulf...

The Economic Geography of European Carbon Market Trading

Innovation market failures and state aid: developing criteria

The views expressed are those of the authors and do not necessary reflect those of the European Commission. Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use which might be made of the following information. Nothing in this publication implies or expresses a warranty of any kind. Although every effort has been made to ensure the accurac...

Carbon Sequestration and Permit Trading on the Competetive Fringe

This paper makes two contributions to the carbon-sequestration literature. The first is the development of a theoretical framework within which sequestration and permit trading may be analyzed jointly in the context of a competitive fringe model. The second is a numerical analysis of the model. We find that when the cost-structure changes lead to progressively less separation in costs between t...

Trading Hot Air The Influence of Permit Allocation Rules

After the conferences in Bonn and Marrakech it is likely that international emission trading will be realized in the near future. Major influences on the permit market are the institutional detail, the participation structure and the treatment of hot air. Different scenarios do not only differ in their implications for the demand and supply of permits and thus the permit price, but also in thei...