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Home / Analysis of Options for Gratis Distribution of Allowances

Analysis of Options for Gratis Distribution of Allowances

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RELEASED
1999

 

   Domestic Greenhouse Gas Emissions Trading: Technical Paper SeriesThis is one of a series of NRTEE papers dealing with issues common to several possible designs for a domestic greenhouse gas (GHG) emissions trading system. In a "cap and trade" system, designated sources are required to hold allowances equal to their actual emissions. The number of allowances available is limited. In this paper it is assumed that the regulatory authority distributes the allowances gratis (free of charge), usually to the participants. Free distribution of allowances is often referred to as "grandfathering". Grandfathering implies distribution to participants based on historical emissions. Since this is only one possible allocation rule, gratis distribution is used here to cover any rule for free distribution of allowances.