By Ricardo Coelho
September 16, 2012 -- Corner House/Carbon Trade Watch -- The first two phases of the EU Emissions Trading Scheme (2005-2007, 2008-2012) allocated free permits according to historical emissions; a practice known as "grandfathering" that has acted as a de facto subsidy for the biggest polluters. Electricity producers, for example, by increasing electricity prices in line with the price of the permits they received for free, have made windfall profits of between €23 to €71 billion during the second phase. The third phase (2013-2020) will still see significant subsidies paid to industry.