Market Based Instruments

Market Based Instruments

National Experiences in Environmental Sustainability

Critical Issues in Environmental Taxation series

Edited by Larry Kreiser, David Duff, Janet E. Milne and Hope Ashiabor

This detailed book explores how market based environmental strategies are used in various countries around the world. It investigates how successful sustainability strategies used by one country can be transferred and used successfully in other countries, with a minimum of new research and experimentation. Leading environmental taxation scholars discuss this question and analyse a set of key case studies.

Chapter 5: Tokyo’s greenhouse gas emissions trading scheme: a model for sustainable megacity carbon markets

Sven Rudolph and Takeshi Kawakatsu

Subjects: economics and finance, environmental economics, public finance, environment, environmental economics, environmental law, law - academic, environmental law, tax law and fiscal policy


Despite small steps forward, international climate negotiations are dead locked in as much as a consensus on a binding global climate policy regime with absolute emission targets for all major emitters is very difficult to achieve. Hence, bottom-up initiatives become more important. One option is to interlink national, regional, or even local activities. This strategy has been intensively discussed in the area of linking supranational (EU), national (New Zealand, Australia), and regional (Regional Greenhouse Gas Initiative, RGGI) greenhouse gas (GHG) emissions trading schemes (ETS) (Flachsland et al. 2008, Roßnagel 2008, Sterk and Schüle 2009). Linking local schemes could be a promising additional strategy. Initiatives for cooperation amongst cities already exist, for example, the C40 Cities Climate Leadership Group. Already, megacities’ key role in future climate protection has been emphasized by renowned institutions such as the World Bank (2010). Cities already account for around two-thirds of global energy consumption and more than 70 percent of global energy-related carbon dioxide (CO2) emissions, while on the other hand their potential for cost-efficient emission reductions is amongst the highest. In 2010, half of the world’s population lived in cities and the number is expected to increase to reach 70 percent by 2050, thus also increasing cities’ climate impact.

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