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Emissions Trading: What Makes It Work?

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  • Julien Chevallier

    () (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

At the stage of international post-Kyoto negotiations, the adoption of ambitious public policies raises an increasing interest, as society has a whole is more concerned by the scale of damages and the potential irreversibilities linked to climate change. The introduction of a tradable permits market in Europe on January 1, 2005, in order to provide incentives to Member-States to take early abatement measures, may be seen as a decisive first step towards that direction. The creation of the EU ETS has indeed revealed the key role played by the European Union in the preservation of the global public good that constitutes the climate. Following a review of current climate policies, and of the negotiations under way at the international level, this article critically discusses the main advantages of introducing environmental regulation tools such as tradable permits markets.

Suggested Citation

  • Julien Chevallier, 2009. "Emissions Trading: What Makes It Work?," Working Papers halshs-00401725, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00401725
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00401725
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    File URL: https://halshs.archives-ouvertes.fr/halshs-00401725/document
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    References listed on IDEAS

    as
    1. Mustafa Babiker, John Reilly and Laurent Viguier, 2004. "Is International Emissions Trading Always Beneficial?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 33-56.
    2. Kling, Catherine & Rubin, Jonathan, 1997. "Bankable permits for the control of environmental pollution," Journal of Public Economics, Elsevier, vol. 64(1), pages 101-115, April.
    3. Ekins, Paul & Barker, Terry, 2001. " Carbon Taxes and Carbon Emissions Trading," Journal of Economic Surveys, Wiley Blackwell, vol. 15(3), pages 325-376, July.
    4. Jacoby, Henry D. & Ellerman, A. Denny, 2004. "The safety valve and climate policy," Energy Policy, Elsevier, vol. 32(4), pages 481-491, March.
    5. Jouvet, Pierre-Andre & Michel, Philippe & Rotillon, Gilles, 2005. "Optimal growth with pollution: how to use pollution permits?," Journal of Economic Dynamics and Control, Elsevier, vol. 29(9), pages 1597-1609, September.
    6. Ellerman,A. Denny & Joskow,Paul L. & Schmalensee,Richard & Montero,Juan-Pablo & Bailey,Elizabeth M., 2005. "Markets for Clean Air," Cambridge Books, Cambridge University Press, number 9780521023894.
      • Ellerman,A. Denny & Joskow,Paul L. & Schmalensee,Richard & Montero,Juan-Pablo & Bailey,Elizabeth M., 2000. "Markets for Clean Air," Cambridge Books, Cambridge University Press, number 9780521660839.
    7. A. Denny Ellerman & Ian Sue Wing, 2003. "Absolute versus intensity-based emission caps," Climate Policy, Taylor & Francis Journals, vol. 3(sup2), pages 7-20, December.
    8. Dinan, Terry & Rogers, Diane Lim, 2002. "Distributional Effects of Carbon AllowanceTrading: How Government Decisions Determine Winners and Losers," National Tax Journal, National Tax Association, vol. 55(N. 2), pages 199-221, June.
    9. Rubin, Jonathan D., 1996. "A Model of Intertemporal Emission Trading, Banking, and Borrowing," Journal of Environmental Economics and Management, Elsevier, vol. 31(3), pages 269-286, November.
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    Cited by:

    1. Julien Chevallier, 2013. "At the crossroads: can China grow in a low-carbon way?," Chapters,in: Handbook on Energy and Climate Change, chapter 31, pages 666-681 Edward Elgar Publishing.
    2. Julien Chevallier, 2013. "Carbon trading: past, present and future," Chapters,in: Handbook on Energy and Climate Change, chapter 21, pages 471-489 Edward Elgar Publishing.
    3. Julien Chevallier, 2010. "Carbon Prices during the EU ETS Phase II: Dynamics and Volume Analysis," Working Papers halshs-00459140, HAL.

    More about this item

    Keywords

    climate change policy; emissions trading; initial allocation; safety valve; banking borrowing;

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