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Post-Durban Climate Policy Architecture Based on Linkage of Cap-and-Trade Systems

  • Matthew Ranson
  • Robert N. Stavins

The outcome of the December 2011 United Nations climate negotiations in Durban, South Africa, provides an important new opportunity to move toward an international climate policy architecture that is capable of delivering broad international participation and significant global CO2 emissions reductions at reasonable cost. We evaluate one important component of potential climate policy architecture for the post-Durban era: links among independent tradable permit systems for greenhouse gases. Because linkage reduces the cost of achieving given targets, there is tremendous pressure to link existing and planned cap-and-trade systems, and in fact, a number of links already or will soon exist. We draw on recent political and economic experience with linkage to evaluate potential roles that linkage may play in post-Durban international climate policy, both in a near-term, de facto architecture of indirect links between regional, national, and sub-national cap-and-trade systems, and in longer-term, more comprehensive bottom-up architecture of direct links. Although linkage will certainly help to reduce long-term abatement costs, it may also serve as an effective mechanism for building institutional and political structure to support a future climate agreement.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18140.

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Date of creation: Jun 2012
Date of revision:
Publication status: published as APost-Durban Climate Policy Architecture Based on Linkage of Cap-and-Trade Systems.@ The Chicago Journal of International Law, Volume 13, Number 2, Winter 2013, pp. 403-438. With M. Ranson. [A-76]
Handle: RePEc:nbr:nberwo:18140
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. Robert W. Hahn & Robert Stavins, 1999. "What Has the Kyoto Protocol Wrought?," Books, American Enterprise Institute, number 52837, September.
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  6. Kruger, Joseph & Oates, Wallace E. & Pizer, William A., 2007. "Decentralization in the EU Emissions Trading Scheme and Lessons for Global Policy," Discussion Papers dp-07-02, Resources For the Future.
  7. Zhang, Junjie & Wang, Can, 2011. "Co-benefits and additionality of the clean development mechanism: An empirical analysis," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 140-154, September.
  8. Helm, Carsten, 2003. "International emissions trading with endogenous allowance choices," Journal of Public Economics, Elsevier, vol. 87(12), pages 2737-2747, December.
  9. Valentina Bosetti & Sergey Paltsev & John Reilly & Carlo Carraro, 2011. "Emissions Pricing to Stabilize Global Climate," Working Papers 2011.80, Fondazione Eni Enrico Mattei.
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