Phase III of the European Union Emissions Trading System (EU ETS) marked a shift in the power sector from free allocation to auctioning as the default method of distributing allowances. To ease the transition, some lower-income countries were granted derogations that allowed them to retain free permits, provided the equivalent monetary value was invested in renewable energy and modernization of energy infrastructure. This created a policy divergence between auctioning and derogated countries. Did these contrasting allocation regimes lead to different renewable deployment outcomes between the two groups?
