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Summary:
In its third phase (2013-20) the European Union's emissions
trading system (ETS) will issue allowances for around two billion tonnes of CO2 equivalent each year. The emission rights are valued at around €30-35 billion at current prices, between one-half and two-thirds of the amount the
EU spends on the Common Agricultural Policy. The redistributive effects of the allocation of emission allowances are therefore potentially significant.
Quantitative indicators for the relative degree to which individual countries will be affected by the ETS suggest that economic consequences for the member states will be quite different. By comparing the indicators for each
country with that country's initial allocation, we find, however, that countries with less favourable initial conditions are largely compensated.
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