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The policy challenges of tradable credits: A critical review of eight markets

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  • Sovacool, Benjamin K.
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    Abstract

    This article offers a critical review of eight tradable permit markets: water permits at Fox River, Wisconsin; the U.S. leaded gasoline phase-out; sulfur dioxide credits under the U.S. Clean Air Act Amendments of 1990; the Regional Clean Air Incentives Market (RECLAIM) for controlling ozone and acid rain in Southern California; renewable energy credit trading at the regional level in the United States; individual transferrable quotas for fisheries at the national level in New Zealand; carbon credits traded under the European Union-Emissions Trading Scheme; and carbon offsets permitted under the Clean Development Mechanism of the Kyoto Protocol. By "critical" the article does not fully weigh the costs and benefits of each tradable credit scheme and instead identifies key challenges and problems. By "review" the author relied exclusively on secondary data from an interdisciplinary review of the academic literature. Rather than performing as economic theory suggests, the article shows that in many cases credit markets are prone to compromises in program design, transaction costs, price volatility, leakage, and environmental degradation. The article concludes by discussing the implications of these problems for those seeking to design more equitable and effective public policies addressing environmental degradation and climate change.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 39 (2011)
    Issue (Month): 2 (February)
    Pages: 575-585

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    Handle: RePEc:eee:enepol:v:39:y:2011:i:2:p:575-585

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    Web page: http://www.elsevier.com/locate/enpol

    Related research

    Keywords: Carbon credits Climate change Cap-and-trade;

    References

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    Cited by:
    1. Paul Lehmann & Felix Creutzig & Melf-Hinrich Ehlers & Nele Friedrichsen & Clemens Heuson & Lion Hirth & Robert Pietzcker, 2012. "Carbon Lock-Out: Advancing Renewable Energy Policy in Europe," Energies, MDPI, Open Access Journal, vol. 5(2), pages 323-354, February.
    2. Wang, Qiang & Chen, Xi, 2013. "Rethinking and reshaping the climate policy: Literature review and proposed guidelines," Renewable and Sustainable Energy Reviews, Elsevier, vol. 21(C), pages 469-477.

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