Implementing greenhouse gas trading in Europe: lessons from economic literature and international experiences

Catherine Boemare () and Philippe Quirion

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Abstract: The European Commission (2001a) has recently presented a directive proposal to the European Parliament and Council in order to implement a greenhouse gas emission trading scheme. If this proposal survives the policy process, it will create the most ambitious trading system ever implemented. However the legislative process is an opportunity for various interest groups to amend envi-ronmental policies which, as a result, generally deviate further from what eco-nomic literature proposes. A close look at implemented emission trading schemes, stressing their discrepancies with economic literature requests, is thus useful to increase the chances of forthcoming emission trading schemes to go through the political process. We thus review ten emission trading systems, that are either implemented or at an advanced stage of the policy process. We draw attention to major points to be aware of when designing an emission trading system: sectoral and spatial coverage, permits allocation, temporal flexibility, trading organisation, moni-toring, enforcement, compliance, and the harmonisation vs. subsidiarity issue. The aim is to evaluate how far experiences in emission trading move away from theory and why. We then provide some lessons and recommendations on how to implement a greenhouse gas emission trading program in Europe. We identify some pros of the Commission proposal (spatial and sectoral coverage, temporal flexibility, trading organisation, compliance rules), some potential drawbacks (allocation rules, monitoring and enforcement) and items on which further guidance is needed (monitoring and allocation rules). Lastly, the European Commission should devote prominent attention to the U.S. NOX Ozone Transport Commis-sion budget program, as the only example of integration between the federal and state levels.

Keywords: Emission trading; climate change policy; policy-making and implementation (search for similar items in EconPapers)
Date: 2002
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00007264v1
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Citations: View citations in EconPapers (63)

Published in Ecological Economics, 2002, 43 (2-3), pp.213-230. ⟨10.1016/S0921-8009(02)00213-6⟩

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Journal Article: Implementing greenhouse gas trading in Europe: lessons from economic literature and international experiences (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00007264

DOI: 10.1016/S0921-8009(02)00213-6

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