A guide to emissions trading

Feb 2003

Since its inclusion in the Kyoto Protocol—as one of three market-based mechanisms to reduce greenhouse gas (GHG) emissions—the prospect of an international emissions trading system has attracted wide interest among policy makers, industrialists and others.
In principle, emissions trading is simple. However, in practice, applying the concept effectively to different pollutants can become quite complex and the term emissions trading applies to a fairly broad spectrum of systems of different design. This Guide adopts a step-by-step approach to emissions trading, in three parts, to allow readers to build up their understanding of both the environmental and economic aspects of the subject:

  • Part I provides a simple theoretical model of an emissions trading system, used as a basis for understanding the real-world designs explained in the following parts. The emphasis here is on the economic advantages of emissions trading in relation to more conventional forms of regulation.
  • Part II covers the various types of emissions trading system designs, with an emphasis on the ways in which they achieve their environmental aims.
  • Part III presents examples of existing systems, gives some comment on their performance to date, and considers what future systems might be like.

By: UNEP, UNCCEE, UNCTAD

 
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