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Global trading versus linking: Architectures for international emissions trading

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  • Flachsland, Christian
  • Marschinski, Robert
  • Edenhofer, Ottmar

Abstract

International emissions trading is widely seen as an indispensable policy pillar of climate change mitigation [Stern, N., 2007. The Economics of Climate Change. The Stern Review. Cambridge University Press, New York]. This article analyzes five different types of trading architectures, classified into two top-down (UNFCCC driven) and three bottom-up (driven by individual countries or regions) approaches. The two types of approaches are characterized by a trade-off between environmental effectiveness and political feasibility, respectively, whereas their relative cost-effectiveness depends on implementation details. Bottom-up architectures constitute imperfect substitutes for top-down architectures in terms of environmental effectiveness, and thus remain mere fallback options. However, especially the 'formal linking' architecture can act as complement in terms of cost-effectiveness.

Suggested Citation

  • Flachsland, Christian & Marschinski, Robert & Edenhofer, Ottmar, 2009. "Global trading versus linking: Architectures for international emissions trading," Energy Policy, Elsevier, vol. 37(5), pages 1637-1647, May.
  • Handle: RePEc:eee:enepol:v:37:y:2009:i:5:p:1637-1647
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Marschinski, Robert & Edenhofer, Ottmar, 2010. "Revisiting the case for intensity targets: Better incentives and less uncertainty for developing countries," Energy Policy, Elsevier, vol. 38(9), pages 5048-5058, September.
    2. Marschinski, Robert & Flachsland, Christian & Jakob, Michael, 2012. "Sectoral linking of carbon markets: A trade-theory analysis," Resource and Energy Economics, Elsevier, vol. 34(4), pages 585-606.
    3. Itkonen, Juha, 2017. "Efficiency and dependency in a network of linked permit markets," Research Discussion Papers 20/2017, Bank of Finland.
    4. Springmann, Marco, 2012. "A look inwards: Carbon tariffs versus internal improvements in emissions-trading systems," Energy Economics, Elsevier, vol. 34(S2), pages 228-239.
    5. Burtraw, Dallas & Palmer, Karen & Munnings, Clayton & Weber, Paige & Woerman, Matt, 2013. "Linking by Degrees: Incremental Alignment of Cap-and-Trade Markets," Discussion Papers dp-13-04, Resources For the Future.
    6. repec:spr:ieaple:v:17:y:2017:i:6:d:10.1007_s10784-017-9370-0 is not listed on IDEAS
    7. Mizrach, Bruce, 2012. "Integration of the global carbon markets," Energy Economics, Elsevier, vol. 34(1), pages 335-349.
    8. Qi, Tianyu & Weng, Yuyan, 2016. "Economic impacts of an international carbon market in achieving the INDC targets," Energy, Elsevier, vol. 109(C), pages 886-893.
    9. Fabio Sferra & Massimo Tavoni, 2013. "Endogenous Participation in a Partial Climate Agreement with Open Entry: A Numerical Assessment," Working Papers 2013.60, Fondazione Eni Enrico Mattei.
    10. Gilbert E. Metcalf & David Weisbach, 2012. "Linking Policies When Tastes Differ: Global Climate Policy in a Heterogeneous World," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 6(1), pages 110-129.
    11. Jobst Heitzig, 2013. "Bottom-Up Strategic Linking of Carbon Markets: Which Climate Coalitions Would Farsighted Players Form?," Working Papers 2013.48, Fondazione Eni Enrico Mattei.
    12. Tatsuyoshi Miyakoshi & Laixun Zhao, 2012. "Multi-National Public Goods Provision under Multilateral Income Transfers & Productivity Differences," Discussion Paper Series DP2012-19, Research Institute for Economics & Business Administration, Kobe University.
    13. repec:spr:ieaple:v:17:y:2017:i:6:d:10.1007_s10784-017-9352-2 is not listed on IDEAS
    14. Lindner, Soeren & Liu, Zhu & Guan, Dabo & Geng, Yong & Li, Xin, 2013. "CO2 emissions from China’s power sector at the provincial level: Consumption versus production perspectives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 19(C), pages 164-172.
    15. Adrian Amelung, 2016. "Das "Paris-Agreement": Durchbruch der Top-Down-Klimaschutzverhandlungen im Kreise der Vereinten Nationen," Otto-Wolff-Institut Discussion Paper Series 03/2016, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    16. Schmidt, Robert C. & Marschinski, Robert, 2010. "Can China benefit from adopting a binding emissions target?," Energy Policy, Elsevier, vol. 38(7), pages 3763-3770, July.
    17. Ottmar Edenhofer & Steffen Brunner, 2009. "Adapt, Mitigate, or Die? The Fallacy of a False Trade-off by Ottmar Edenhofer and Steffen Brunner," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 10(3), pages 14-18, October.
    18. Brigitte Knopf, Ottmar Edenhofer, Christian Flachsland, Marcel T. J. Kok, Hermann Lotze-Campen, Gunnar Luderer, Alexander Popp, Detlef P. van Vuuren, 2010. "Managing the Low-Carbon Transition - From Model Results to Policies," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    19. Ottmar Edenhofer & Christian Flachsland, 2012. "Die Nutzung globaler Gemeinschaftsgüter: Politökonomische Herausforderungen an die Klimapolitik," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(12), pages 29-35, June.
    20. repec:spr:jknowl:v:8:y:2017:i:2:d:10.1007_s13132-015-0264-5 is not listed on IDEAS

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