Lobbying for carbon permits in Europe .

• Published in: Recherches économiques de Louvain
• Main Author: Hanoteau, Julien
• Format: Journal Article
• Language: French
• Published: De Boeck Université 2014
• Subjects: Humanities and Social Sciences; emissions trading; Lobbying; permits allocation
• ISSN: 0770-4518; 1782-1495
• DOI: 10.3917/rel.801.0061

Using cross-sector and cross-country data, this paper evidences that rent seeking influenced the allocation of CO2 emission permits in the two first phases of the European emissions trading scheme. Industry lobbies effectively used the ‘job loss’ argument, as unemployment variables significantly impacted the allocations in both phases. The countries that adopted a partial auction scheme also gave relatively more permits and in particular to the politically more powerful sectors. This suggests a compensation mechanism and supports the assumption of a political tradeoff between the quantity of permits issued and the decision between free grant and auction. It also confirms that the initial allocation is not neutral in the presence of special interest lobbying.
Using cross-sector and cross-country data, this paper evidences that rent seeking influenced the allocation of CO2 emission permits in the two first phases of the European emissions trading scheme. Industry lobbies effectively used the ‘job loss’ argument, as unemployment variables significantly impacted the allocations in both phases. The countries that adopted a partial auction scheme also gave relatively more permits and in particular to the politically more powerful sectors. This suggests a compensation mechanism and supports the assumption of a political tradeoff between the quantity of permits issued and the decision between free grant and auction. It also confirms that the initial allocation is not neutral in the presence of special interest lobbying.