Auctioning Greenhouse Gas Emissions Permits in Australia

Title data

Betz, Regina ; Seifert, Stefan ; Cramton, Peter ; Kerr, Suzi:
Auctioning Greenhouse Gas Emissions Permits in Australia.
In: The Australian Journal of Agricultural and Resource Economics. Vol. 54 (2010) Issue 2 . - pp. 219-238.
ISSN 1467-8489
DOI: https://doi.org/10.1111/j.1467-8489.2010.00490.x

Project information

Abstract in another language

The allocation of permits is an important design aspect of an emissions trading
scheme. Traditionally, governments have favoured the free allocation of greenhouse
gas permits based on individual historical emissions (‘grandfathering’) or industry
benchmark data. Particularly in the European Union (EU), the free allocation of
permits has proven complex and inefficient and the distributional implications are
politically difficult to justify; auctioning emissions permits has therefore become more
popular. The EU is now moving to auction more than 50 per cent of all permits in
2013, and in the US the Regional Greenhouse Gas Initiative (RGGI) has begun
auctioning more than 90 per cent of total allowances. Another case in point is the
Australian proposal for a Carbon Pollution Reduction Scheme (CPRS), which
provides for auctioning a significant share of total permits. This paper discusses the
proposed Australian CPRS’s auction design. A major difference to other emissions
trading schemes is that the CPRS plans to auction multiple vintages of emissions
permits simultaneously.