Tradeable permits and the comprehensive approach to climate change

The need to constrain the rising concentration of greenhouse gases in the atmosphere has led to a growing interest in efficient ways of achieving it. Many analysts have argued for the advantages of tradeable emission permits. Others have pointed to the importance of addressing all sources and sinks of greenhouse gases. However, this ‘comprehensive approach’ at present appears incompatible with the use of tradeable permits, because few sources and sinks can be monitored with the accuracy required for such a system. It is not enough to make rough approximations, because inadequate monitoring and revision of approximations could disrupt the whole system. The best approach is to start by developing an efficient control system for the major sources which can be adequately monitored ‐ primarily fossil‐fuel CO2 ‐ and by ensuring that other sources and sinks may be introduced over time. This can be achieved by starting with a system of overlapping permits which focuses upon the major quantifiable sources (notably fossil CO2), and introduces revisions as permits are retired and reissued.