Chasing Down the Climate Change Footprint of the Public and Private Sectors: Forces Converge - Part II

Abstract:     
In Part II of this article, the author discusses and analyses the various emissions trading schemes that have emerged around the world, with the imprimatur of the Kyoto Protocol, to reduce greenhouse gas emissions. The emissions trading schemes are analysed against a theoretical model for designing an ideal emissions trading scheme. The schemes include the European Union Emissions Trading Scheme, the Regional Greenhouse Gas Initiative in the United States as well as schemes proposed under the United Kingdom Climate Change Bill 2007, the US Climate Stewardship and Innovation Act 2007, the New Zealand Emissions Trading Scheme and the two different schemes proposed for Australia. The state of the world carbon market, particularly the derivatives market, and the emergence of carbon funds are discussed to demonstrate the exponential growth in carbon trading. The liquidity and efficiency of the world carbon market will depend to a large extent on the ability to link the existing and proposed emissions trading schemes, either on a regional or global basis.

Keywords: Designing Emissions Trading Schemes, EU ETS, Regional Greenhouse Gas Initiative, New Zealand Emissions Trading Scheme, Australian Emissions Trading Schemes, the carbon market, carbon derivatives

JEL Classifications: K32, K30, K10, N50, N57, Q20, Q28, M14

Accepted Paper Series