Under European Union proposals for CO2 emission reduction between 2013 and 2020, a Member State can transfer to another Member State the right to use its unused Clean Development Mechanism ("CDMs") credits. The paper addresses three issues in relation to these CDM Warrants ("CDMW"). First, how should the Member State treat the CDMW in making decisions concerning emission reduction? The price of the property right is an important signal for a Member State in deciding the level of domestic abatement compared to trading in CDMWs. In other words, a shadow price for CDMWs should be used in formulating the emission strategy in order to determine whether or not a member State is a buyer or seller of CDMWs. Second, what mechanism should be used to facilitate the exchange of CDMWs? The preferred mechanism depends on the market size, over which there appears to be some ambiguity: market intermediaries such as Over-the-Counter trades and exchanges are preferred if market size is small; auctions if the market size is large. Third, who should realise the value of CDMWs ? the State, existing polluters etc? The value of CDMWs should accrue to the State.
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Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number
WP299.
Length: Date of creation: May 2009 Date of revision: Handle: RePEc:esr:wpaper:wp299
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Richard S. J. Tol & Tim Callan & Thomas Conefrey & John Fitz Gerald & Seán Lyons & Laura Malaguzzi Valeri & Susan Scott, 2008.
"A Carbon Tax for Ireland,"
Papers
WP246, Economic and Social Research Institute (ESRI).
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