Determination of the Distribution of Allowances under NAP 2008-2012

A Report For The EPA Prepared By Indecon

Summary: The EPA appointed Indecon International Economic Consultants to assist it in determining the distribution of greenhouse gas emissions to the various industrial sectors and participants involved in the National Allocation Plan 2008-2012

Published: 2006


Pages: 152

Filesize: 776KB

Format: pdf

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Executive Summary

This report represents an independent determination of the distribution of national greenhouse gas emissions allowances for emissions trading in Ireland.

The report has been prepared for the Environmental Protection Agency by Indecon International Economic Consultants in association with Enviros Consulting and involves a detailed evaluation of second National Allocation Plan (NAP2) options. Ireland’s first NAP was developed and introduced by the EPA, based on the study and recommendations from the report by Indecon (Indecon 2004)1.

The main purpose of the previous study was to make recommendations to the EPA, within an Irish policy context, on the most economically efficient allocation of Ireland’s assigned amount units (AAUs) under the Kyoto Protocol among those participating in the EU emissions trading scheme (EU ETS) in Ireland.

An important feature was, as much as possible, to ensure that no sector or installation was faced with a disproportionate cost or burden for their share of meeting the country’s Kyoto target. The terms of reference are broadly similar to NAP 1, namely to advise the EPA on the most appropriate methodology.

In addition, we were asked to examine a number of specific issues including:

· Sector Growth· Impacts on sectoral competitiveness · Early action and clean technology· Production efficiency/use of benchmarks/Process Emissions· Use of unutilised/underutilised capacity· Ramp up periods, treatment of new and recent entrants

We also paid attention to options developed/utilised by other Member States in their first NAPs. An issue for the allocation plan is the overall size of the ‘bubble’. The ‘bubble’ is the overall size of the emissions to be allocated to the trading entities under NAP 2 which determines the level of constraint to be put on industry as measured by the gap between emissions and this amount. This size of the bubble is a matter for Government and is not addressed in this report.