Carbon Markets: Past, Present, and Future
Resources for the Future Discussion Paper No. 12-51
54 Pages Posted: 8 Jan 2013 Last revised: 28 Jan 2013
Date Written: December 7, 2012
Carbon markets are substantial and they are expanding. There are many lessons from experiences over the past eight years: fewer free allowances, better management of market-sensitive information, and a recognition that trading systems require adjustments that have consequences for market participants and market confidence. Moreover, the emerging international architecture features separate emissions trading systems serving distinct jurisdictions. These programs are complemented by a variety of other types of policies alongside the carbon markets. This sits in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol and raises a suite of new questions. In this new architecture, jurisdictions with emissions trading have to decide how, whether, and when to link with one another, and policymakers overseeing carbon markets must confront how to measure the comparability of efforts among markets and relative to a variety of other policy approaches.
Keywords: carbon market, tradable permit, allowance, climate change, greenhouse gas
JEL Classification: Q54, Q52, Q58, F53, D04
Suggested Citation: Suggested Citation