Abstract
The purpose of this paper is to identify potential benefits of international greenhouse gas (GHG) emissions trading among participating countries committed to emissions limits (Annex B countries in the terminology of the Kyoto Protocol) and comment on various design options for this trading. The principal criterion used for evaluating, in principle, the net benefits of different versions of free as well as constrained emissions trading is the net costs avoided by the individual country when trade is allowed. The discussion is mainly focused on carbon emissions from the combustion of fossil fuel, the dominating source and that likely to be most, or sufficiently, simple to monitor. Other sources or sinks could be added once their monitoring is given a satisfactory solution; this does not require that such monitoring would have to be the same for all the sources and sinks. Although joint implementation (project-related emissions trading among Annex B countries) and the use of the Clean Development Mechanism (project-related emissions trading with non-Annex B countries) also represent a form of trading, they are left out of the discussion below, the main reason being that they do not seem to offer any significant benefits in terms of real cost reductions that are anywhere near those of GHG emissions quota trading among Annex B countries.2
This study was commissioned by the Nordic Council of Ministers (Copenhagen) and was published, in a somewhat larger version, as TemaNord 1999:506 (www.norden.org). The Council has kindly accepted to have the study reprinted here. Helpful comments by Björn Carlén, Carsten Helm, and Patrick Säfvenblad are gratefully acknowledged.
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Bohm, P. (2000). International Greenhouse Gas Emissions Trading — With Special Reference to the Kyoto Protocol. In: Carraro, C. (eds) Efficiency and Equity of Climate Change Policy. Fondazione Eni Enrico Mattei (FEEM) Series on Economics, Energy and Environment, vol 15. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-9484-4_5
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DOI: https://doi.org/10.1007/978-94-015-9484-4_5
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