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Allowance Allocation Alternatives

Allowance Allocation Alternatives. Dallas Burtraw Resources for the Future February 28, 2005 Sustainable Energy Roundtable: “Multi-Pollutant Legislation”. Three Generic Approaches. Three Generic Approaches. Three Generic Approaches. Important Subtleties. Important Subtleties.

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Allowance Allocation Alternatives

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  1. Allowance Allocation Alternatives Dallas Burtraw Resources for the Future February 28, 2005 Sustainable Energy Roundtable:“Multi-Pollutant Legislation”

  2. Three Generic Approaches

  3. Three Generic Approaches

  4. Three Generic Approaches

  5. Important Subtleties

  6. Important Subtleties

  7. Important Subtleties • Common formula across fuels, sources?

  8. Decision / Research Criteria • Efficiency • Auction always best. • Second-best (historic) depends on regulation in electricity sector. • However, with ‘3P’s the distinction is not great. • Importance is as precedent for CO2where social cost can be cut in half or more with auction.

  9. Decision / Research Criteria • Compensation • Producers vs. Consumers. • Different producer interests • Existing coal • Gas, new sources. • Principles: • Political compromise. • Time is compensation. • Possibility for over-compensation (not likely for ‘3P’).

  10. Preferred Method of Allocation • In competitive regions the auction does relatively better. This is due to the resource mix. • A move to competition makes historic more profitable for emitters.

  11. Decision / Research Criteria • Incentives for Technical Change • Motivation supports updating & auction. • We’ve looked at insufficiently. • Auction could be most potent – Depends what is done with auction revenues.

  12. For More Information www.rff.org/multipollutant

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