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Carbon Exchanges: European Experience in Developing the Mechanism of Emission Permit Trading

Author

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  • Svetlana V. Doroshenko

    (Ural Federal University named after the first President of Russia B.N. Yeltsin, Yekaterinburg 620002, Russian Federation; Institute of Economics of the Ural Branch of the RAS, Yekaterinburg 620014, Russian Federation)

  • Anna D. Mingaleva

    (Ural Federal University named after the first President of Russia B.N. Yeltsin, Yekaterinburg 620002, Russian Federation; Ca' Foscari University of Venice, Venice VE 30123, Italy)

Abstract

The system for trading permits for greenhouse gas emissions is currently being presented as one of the most promising mechanisms for influencing climate problems. However, the regulatory function of this mechanism is not as positively unambiguous as it is represented by international organizations, and its creation, operation and distribution on a global scale are facing many obstacles. The article presents the main results of a study on the process of creating and developing a system for trading in permits for CO2 emissions, implemented in the EU for more than 15 years. In order to identify problems in the functioning of the mechanism for trade in permits for CO2 emissions, a phased analysis of development within the EU has been carried out, and the main institutional obstacles in the existing mechanism have been detected. The analysis of the features of its application is then performed, the strengths and weaknesses of the functioning are determined, and the development prospects are assessed. As a result of the study, it is concluded that, due to the presence of objective contradictions and shortcomings in the existing mechanism for trading permits for CO2 emissions, its validity in its current form does not allow one to achieve the results on reducing emissions and pollution recorded in the UN and EU planning documents on environmental regulation. The main obstacle is the inability to reach, in modern conditions, coordination of the interests of many stakeholders in reducing emissions, which provokes the effect of “carbon leakage”.

Suggested Citation

  • Svetlana V. Doroshenko & Anna D. Mingaleva, 2020. "Carbon Exchanges: European Experience in Developing the Mechanism of Emission Permit Trading," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 4, pages 52-68, August.
    • Handle: RePEc:fru:finjrn:200404:p:52-68
    DOI: 10.31107/2075-1990-2020-4-52-68
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    More about this item

    Keywords

    trading permits for CO2 emissions; EU ETS; carbon exchanges; regulating one-sidedness; carbon leakage; quotas; greenhouse effect;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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