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Trading Sulphur Emissions in Europe: `Guided Bilateral Trade'

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  • S. Kruitwagen
  • H. Folmer
  • E. Hendrix
  • L. Hordijk
  • E. van Ierland

Abstract

In this paper a system of `guided permit trading' is developed for SO 2 emissions reduction which considers permit trading as a bilateral andsequential process. This implies that in order to meet the deposition targetsat the end of the trading process, not every single trade transaction hasto meet the deposition targets. To ensure that the target is ultimately met,the number of permits traded should be controlled by a trade coordinatinginstitution. A simulation of the system of guided bilateral trading ofSO 2 permits among European countries on the basis of the SecondSO 2 Protocol indicates that some non-profitable trade transactionstake place. This prevents the cost effective emission allocation from beingfully achieved. However, the calculations show that guided bilateral permittrading may generate substantial cost savings while contributing toenvironmental protection. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • S. Kruitwagen & H. Folmer & E. Hendrix & L. Hordijk & E. van Ierland, 2000. "Trading Sulphur Emissions in Europe: `Guided Bilateral Trade'," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(4), pages 423-441, August.
    • Handle: RePEc:kap:enreec:v:16:y:2000:i:4:p:423-441
    DOI: 10.1023/A:1008371731089
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    References listed on IDEAS

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    1. Dallas Burtraw & Keneth Harrison & Paul Turner, 1998. "Improving Efficiency in Bilateral Emission Trading," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(1), pages 19-33, January.
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    Cited by:

    1. Petra Hellegers & Ekko van Ierland, 2003. "Policy Instruments for Groundwater Management in the Netherlands," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 163-172, September.

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    Keywords

    tradeable permits; acid rain;

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