Cap, auction, trade

Earlier experiments in Europe with carbon cap-and-trade systems have drawn wide critique for their limited environmental effectiveness.  The EU plans to start auctioning permits in the next phase, sending a real price signal to the market. 

Prof Lans Bovenberg wrote on VoxEU:

The EU plans to auction permits for the next phase of emissions trading, rather than giving them away for free as in the past. This column explains why the new scheme is a significantly better policy and proposes compensation measures to redress the complaints of industries opposed to the new climate change policy. Harmonised EU action may be required.

Read here for full article.