Encyclopedia of Law and Economics

2019 Edition
| Editors: Alain Marciano, Giovanni Battista Ramello

Emissions Trading

  • Edwin WoerdmanEmail author
Reference work entry
DOI: https://doi.org/10.1007/978-1-4614-7753-2_61

Abstract

Emissions trading is a market-based instrument to achieve environmental targets in a cost-effective way by allowing legal entities to buy and sell emission rights. The current international dissemination and intended linking of emissions trading schemes underlines the growing relevance of this instrument. There are three basic design variants of emissions trading: cap-and-trade (allowance trading), performance standard rate trading (credit trading), and project-based credit trading (such as domestic offsets, JI, and the CDM). These design variants are analyzed in terms of effectiveness, efficiency, and acceptance. It is also explained why emissions trading schemes may become inefficient hybrids of such design variants.

This is a preview of subscription content, log in to check access.

References

  1. Coase RH (1960) The problem of social cost. J Law Econ 3:1–44CrossRefGoogle Scholar
  2. Dales JH (1968) Pollution, property and prices: an essay in policy-making and economics. Toronto University Press, TorontoGoogle Scholar
  3. de Perthuis C, Trotignon R (2013) Governance of CO2 markets: lessons from the EU ETS. Working paper series no 2013–07, CDC Climat, Climate Economics Chair, ParisGoogle Scholar
  4. de Vries FP, Dijkstra BR, McGinty M (2013) On emissions trading and market structure: cap-and-trade versus intensity standards. Environ Resour Econ.  https://doi.org/10.1007/s10640-013-9715-2CrossRefGoogle Scholar
  5. Dewees DN (2001) Emissions trading: ERCs or allowances? Land Econ 77(4):513–526CrossRefGoogle Scholar
  6. Dijkstra BR (1999) The political economy of environmental policy: a public choice approach to market instruments. Edward Elgar, CheltenhamGoogle Scholar
  7. Dutschke M, Michaelowa A (1999) Creation and sharing of credits through the Clean Development Mechanism under the Kyoto Protocol. In: Jepma CJ, van der Gaast WP (eds) On the compatibility of flexible instruments. Kluwer, Dordrecht, pp 47–64CrossRefGoogle Scholar
  8. Ellerman D (2007) New entrant and closure provisions: how do they distort? Energy J 28:63–78Google Scholar
  9. Faure M, Peeters M (eds) (2008) Climate change and European emissions trading: lessons for theory and practice. Edward Elgar, CheltenhamGoogle Scholar
  10. Grubb M, Neuhoff K (2006) Allocation and competitiveness in the EU emissions trading scheme: policy overview. Clim Policy 6(1):7–30CrossRefGoogle Scholar
  11. Hahn RW, Stavins RN (2011) The effect of allowance allocations on cap-and-trade system performance. J Law Econ 54:267–294CrossRefGoogle Scholar
  12. ICAP (2014) International overview of emissions trading schemes. Available online at https://icapcarbonaction.com/ets-map
  13. Jaraitė J, Jong T, Kažukauskas A, Zaklan A, Zeitlberger A (2013) Matching EU ETS accounts to historical parent companies: a technical note. European University Institute, Florence. Available online at http://fsr.eui.eu/CPRU/EUTLTransactionData.aspx
  14. Jepma CJ, Munasinghe M (1998) Climate change policy: facts, issues and analyses. Cambridge University Press, CambridgeGoogle Scholar
  15. Nentjes A, Woerdman E (2012) Tradable permits versus tradable credits: a survey and analysis. Int Rev Environ Resour Econ 6(1):1–78CrossRefGoogle Scholar
  16. Nentjes A, Boom JT, Dijkstra BR, Koster M, Woerdman E, Zhang ZX (2002) National and international emissions trading for greenhouse gases. Dutch National Research Programme on Global Air Pollution and Climate Change (NRP) Report No. 410 200 093, BilthovenGoogle Scholar
  17. Tietenberg T (1980) Transferable discharge permits and the control of stationary source air pollution: a survey and synthesis. Land Econ 56(4):391–416CrossRefGoogle Scholar
  18. Tietenberg T, Grubb M, Michaelowa A, Swift B, Zhang ZX (1999) International rules for greenhouse gas emissions trading: defining the principles, modalities, rules and guidelines for verification, reporting and accountability. UNCTAD/GDS/GFSB/Misc.6, United Nations Conference on Trade and Development (UNCTAD), GenevaGoogle Scholar
  19. van Zeben J (2014) The allocation of regulatory competence in the EU emissions trading scheme. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  20. Weishaar SE (2007) CO2 emission allowance allocation mechanisms, allocative efficiency and the environment: a static and dynamic perspective. Eur J Law Econ 24:29–70CrossRefGoogle Scholar
  21. Weishaar SE (2014) Emissions trading design: a critical overview. Edward Elgar, CheltenhamCrossRefGoogle Scholar
  22. Woerdman E (2004) The institutional economics of market-based climate policy. Elsevier, AmsterdamGoogle Scholar
  23. Woerdman E (2015) The EU greenhouse gas emissions trading scheme. In: Holwerda M, Roggenkamp MM, Woerdman E (eds) Essential EU climate law. Edward Elgar, Cheltenham (forthcoming)Google Scholar
  24. Woerdman E, Arcuri A, Clò S (2008) Emissions trading and the polluter-pays principle: do polluters pay under grandfathering? Rev Law Econ 4(2):565–590CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Faculty of Law, Department of Law and EconomicsUniversity of GroningenGroningenThe Netherlands