Emissions Trading Design

Emissions Trading Design

A Critical Overview

New Horizons in Environmental and Energy Law series

Stefan E. Weishaar

Emissions trading is becoming an increasingly popular policy instrument with growing diversity in design. This book examines emissions trading design, emissions trading implementation problems and how to address them.

Chapter 4: Real-life applications of emissions trading systems

Stefan E. Weishaar

Subjects: economics and finance, law and economics, environment, climate change, environmental law, law - academic, environmental law, law and economics


This chapter presents an overview of emissions trading systems that are currently operating. In spite of some imperfections in and criticisms of emissions trading, there is a quick proliferation of such systems around the globe. An effort has been made to give a concise presentation in this chapter of prominent schemes. The reader should be aware that the systems presented below differ considerably with regard to their size, scope and coverage, and their design. While some systems, such as the European Union Emissions Trading Scheme (EU ETS), are supranational in nature, others are sub-national initiatives, such as the American RGGI and the WCI.Yet other schemes are national or provincial (such as those in Australia and Guangdong), or restricted to city boundaries or metropolitan areas (for example, the Tokyo and Shanghai systems). While their respective size and ambitions naturally diverge, so does their potential for greenhouse gas (GHG) reduction. It appears that the city-based emissions trading schemes focus primarily on carbon dioxide (CO2) emissions arising from fuel inputs and energy consumption, while larger schemes are able also to incorporate process emissions. The emissions trading systems in Europe, North America, and the Asia-Pacific region are discussed first, followed by the Asian systems. Issues such as policy targets, start dates and compliance dates, allocation mechanisms, coverage, permissible types of allowance and offset, support schemes/leakage safeguards, fines for non-compliance, banking and borrowing, and linking will be considered.

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