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CO2 Emission Trading – A Tool for the Austrian Climate Strategy

Author

Listed:
  • Daniela Kletzan

    (WIFO)

  • Angela Köppl

    (WIFO)

Abstract

International commitments constitute a considerable challenge for the climate policy pursued in Austria. In 1997, the first obligatory targets for greenhouse gas emission rates were defined by the Kyoto Protocol, and Austria, within the scope of an internal EU burden sharing agreement, agreed to cut its emissions by 13 percent against the 1990 level. The Kyoto Protocol raised great expectations with regard to reducing anthropogenic effects on the climate change. In November 2000, the Sixth Session of the UN FCCC Conference of the Parties (COP 6) will be held in The Hague. Its outcome is likely to affect the probability that the Kyoto Protocol will be ratified. Achieving the emission targets is to be facilitated by the introduction of so-called flexible mechanisms laid down in the Kyoto Protocol, which include emission trading. A key aspect of emission trading is its economic efficiency, i.e., it provides a market mechanism to ensure that necessary reductions will be made where their costs are lowest. Emission trading is also effective from an environmental policy point of view because it makes sure that the specified environmental goal will be attained. The trade in emission licences offers an incentive to exceed individual goals and thus be able to sell surplus licences. This provides an incentive to search for cost-effective ways to reduce emissions, which in turn promotes technical change and the development of environmentally friendly technologies. Key aspects of the framework for national CO2 emission trading system are the sectoral emission structure and existing taxes on energy. From the sectoral emission structure in Austria it can be seen that CO2 emissions in manufacturing are concentrated on a few sectors and a small number of companies. With regard to energy-related taxes, consideration should be given to how taxation can be used for companies and sectors which do not participate in the emission trading system.

Suggested Citation

  • Daniela Kletzan & Angela Köppl, 2000. "CO2 Emission Trading – A Tool for the Austrian Climate Strategy," WIFO Monatsberichte (monthly reports), WIFO, vol. 73(11), pages 663-673, November.
  • Handle: RePEc:wfo:monber:y:2000:i:11:p:663-673
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    References listed on IDEAS

    as
    1. Zhang, Zhong Xiang, 1999. "International greenhouse gas emissions trading: who should be held liable for the non-compliance by sellers?," Ecological Economics, Elsevier, vol. 31(3), pages 323-329, December.
    2. Cramton, Peter & Kerr, Suzi, 2002. "Tradeable carbon permit auctions: How and why to auction not grandfather," Energy Policy, Elsevier, vol. 30(4), pages 333-345, March.
    3. Zhang, Zhong Xiang, 1999. "Should the rules of allocating emissions permits be harmonised?," Ecological Economics, Elsevier, vol. 31(1), pages 11-18, October.
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