Linkage of Tradable Permit Systems in International Climate Policy Architecture
AbstractCap-and-trade systems have emerged as the preferred national and regional instrument for reducing emissions of greenhouse gases throughout the industrialized world, and the Clean Development Mechanism — an international emission-reduction-credit system — has developed a substantial constituency, despite some concerns about its performance. Because linkage between tradable permit systems can reduce compliance costs and improve market liquidity, there is great interest in linking cap-and-trade systems to each other, as well as to the CDM and other credit systems. We examine the benefits and concerns associated with various types of linkages, and analyze the near-term and long-term role that linkage may play in a future international climate policy architecture. In particular, we evaluate linkage in three potential roles: as an independent bottom-up architecture, as a step in the evolution of a top-down architecture, and as an ongoing element of a larger climate policy agreement. We also assess how the policy elements of climate negotiations can facilitate or impede linkages. Our analysis throughout is both positive and normative.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2008.90.
Date of creation: Oct 2008
Date of revision:
Linkage; Cap-and-Trade; Tradable Permits; Global Climate Change;
Other versions of this item:
- Jaffe, Judson & Stavins, Robert, 2008. "Linkage of Tradable Permit Systems in International Climate Policy Architecture," Working Paper Series rwp08-053, Harvard University, John F. Kennedy School of Government.
- Judson Jaffe & Robert N. Stavins, 2008. "Linkage of Tradable Permit Systems in International Climate Policy Architecture," NBER Working Papers 14432, National Bureau of Economic Research, Inc.
- F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
- Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-AGR-2009-01-17 (Agricultural Economics)
- NEP-ALL-2009-01-17 (All new papers)
- NEP-ENE-2009-01-17 (Energy Economics)
- NEP-ENV-2009-01-17 (Environmental Economics)
- NEP-RES-2009-01-17 (Resource Economics)
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