This report investigates four alternative allocation schemes for emission allowances. The investigated schemes are ' Emission-based allocation ' Production-based allocation with actor-specific emission factors ' Production-based allocation with benchmarking ' Production-based allocation based on data on Best Available Technology (BAT) All the examined schemes apply free allocation based on historical activities. The allocation schemes are evaluated in relation to the criteria for a National Allocation Plan, listed in the Annex III of the EU ETS Directive, and regarding their conformity with the criteria put forward by the Swedish Parliamentary Delegation on Flexible Mechanisms, The FlexMex 2 Commission. No allocation scheme unambiguously meets all criteria. Each has its advantages and disadvantages. Emission-based allocation schemes are most straightforward, transparent and are easiest to implement. Producion-based allocation schemes meet more of the criteria, but are more costly to implement and require more data. Data on BAT will not be available to the extent necessary in order to base an allocation scheme implemented for the trading starting 2005 on BAT. No scheme will be perceived as fair by all concerned parties, no matter how sophisticated it is. The overall conclusions are summarised in table 9 in chapter 10.