Allowance allocation alternatives
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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

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 approaches1

Three Generic Approaches


Three generic approaches2

Three Generic Approaches


Important subtleties

Important Subtleties


Important subtleties1

Important Subtleties


Important subtleties2

Important Subtleties

  • Common formula across fuels, sources?


Decision research criteria

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.


Decision research criteria1

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’).


Preferred method of allocation

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.


Decision research criteria2

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.


For more information

For More Information

www.rff.org/multipollutant


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