Discussion Paper

The Effect on Asset Values of the Allocation of Carbon Dioxide Emission Allowances

Mar 1, 2002 | Dallas Burtraw, Karen L. Palmer, Ranjit Bharvirkar, Anthony Paul

Abstract

Paradoxically, owners of existing generation assets may be better off paying for carbon dioxide emission allowances than having them distributed for free. This analysis shows that it takes just 7.5% of the revenue raised under an auction to preserve the asset values of existing generators.