Transferable Discharge Permits
There are different approaches for dealing with water, air, and soil pollution, for example, the prescription of an emission or immission standard by environmental law or pollution reduction by economic instruments like transferable discharge permits (TDP). The idea of TDP is to control the pollution level in the environmental media by economic incentive setting (see, e.g., Tietenberg T, Lewis L (2014) Environmental & natural resource economics, global edition, 10th edn. Pearson Higher Education; for an introduction in economic theory). This requires the setting of a critical threshold level for pollution control – e.g., a safe minimum standard – and the breakup of this standard (“cap”) in permits that can be traded on a market.
The most prominent application of TDP in Europe is the trading of CO2 emissions in selected sectors of the economy (EU-ETS; see, e.g., Ellerman D, Convery F, de Perthuis C (2010) Pricing carbon: the European Union emissions trading scheme. Cambridge University Press, Cambridge, UK/New York (also published in French: Le Prix du Carbone: Les enseignements du marché du carbone, London: Pearson, 2010); Endres and Ohl (Eur J Law Econ 19:17–39, 2005)). It can be seen as a flagship approach for a European-Union-wide harmonization of environmental laws and regulations for emission control by economic incentive setting.
- Tietenberg T, Lewis L (2014) Environmental & natural resource economics, global edition, 10th edn. Pearson Higher Education, Universal Free E-Book storeGoogle Scholar
Further Reading (documents on EU-ETS)
- Commission Decision 2006/780/EC of 16 November 2006 on avoiding double counting of greenhouse gas emission reductions under the Community emissions trading scheme for project activities under the Kyoto Protocol pursuant to Directive 2003/87/EC of the European Parliament and of the Council [Official Journal L 316 of 16 November 2006]Google Scholar
- Commission Decision 2007/589/EC of 18 July 2007 establishing guidelines for the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council [Official Journal L 229 of 31.8.2007]Google Scholar
- Commission Regulation (EU) No 1031/2010 of 12 November 2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowances trading within the Community [Official Journal L 302 of 18.11.2010]Google Scholar
- Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/ECGoogle Scholar