Stringency and distribution in the EU emissions trading scheme: first evidence

Based on the verified emissions for the 2005 and 2006 trading years, the actual emissions and allowances for each installation covered by the EU Emissions Trading Scheme (EU ETS) were compared. Based on data available for 24 Member States as of May 2007, this article uses a thorough data analysis for about 9,900 installations to investigate evidence on three issues: first, the stringency of the total allocation cap and allocation differences both among the Member States and a selection of emission-intensive sectors; second, the distribution of the size of installations; and third, the spread of allocation discrepancies and possible allocation biases regarding the size of installations. There is a surprisingly high spread of allocation discrepancies, which provide evidence for treating small installations differently from large ones: the inequality of distribution of the size of installations, between allocated and verified allowances, variations in the spread of the allocation discrepancies both by country and by sector reflecting the implementation of National Allocation Plans, the size of an installation and its allocation discrepancy.