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An Overview of Carbon Markets and Emissions Trading: Lessons for Canada


  • Michael R. King


The author provides an overview of carbon markets and explains how emissions trading can be important in encouraging the reduction of CO2 emissions in an efficient manner. He describes the key steps in establishing a cap-and-trade system, and reviews the European experiences with emissions trading. He highlights the lessons learned from the EU Emissions Trading System on how to design a market that operates efficiently and effectively. By learning from the experience of other countries, Canada can avoid the uncertainty and volatility witnessed in carbon markets abroad while benefiting from an efficient trading mechanism that contributes to the welfare of all Canadians.

Suggested Citation

  • Michael R. King, 2008. "An Overview of Carbon Markets and Emissions Trading: Lessons for Canada," Discussion Papers 08-1, Bank of Canada.
  • Handle: RePEc:bca:bocadp:08-1

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    Cited by:

    1. Shastitko, Anastasia (Шаститко, Анастасия), 2018. "Application of the Conclusions of the Behavioral Economy to the Behavior of Civil Servants: Methodological Aspects
      [Применение Выводов Поведенческой Экономики К Поведению Государственных Служащих:
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    2. Bull, Lyndall & Thompson, Derek, 2011. "Developing forest sinks in Australia and the United States -- A forest owner's prerogative," Forest Policy and Economics, Elsevier, vol. 13(5), pages 311-317, June.

    More about this item


    International topics; Market structure and pricing;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices

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