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Carbon Markets: Past, Present, and Future

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  • Newell, Richard G.
  • Pizer, William A.
  • Raimi, Daniel

Abstract

Carbon markets are substantial and they are expanding. There are many lessons from experiences over the past eight years -- fewer free allowances, better management of market-sensitive information, and a recognition that trading systems require adjustments that have consequences for market participants and market confidence. Moreover, the emerging international architecture features separate emissions trading systems serving distinct jurisdictions. These programs are complemented by a variety of other types of policies alongside the carbon markets. This sits in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol and raises a suite of new questions. In this new architecture, jurisdictions with emissions trading have to decide how, whether, and when to link with one another, and policymakers overseeing carbon markets must confront how to measure the comparability of efforts among markets and relative to a variety of other policy approaches.

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  • Newell, Richard G. & Pizer, William A. & Raimi, Daniel, 2012. "Carbon Markets: Past, Present, and Future," RFF Working Paper Series dp-12-51, Resources for the Future.
  • Handle: RePEc:rff:dpaper:dp-12-51
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    2. Qi, Shaozhou & Wang, Banban & Zhang, Jihong, 2014. "Policy design of the Hubei ETS pilot in China," Energy Policy, Elsevier, vol. 75(C), pages 31-38.
    3. Sheng, Jichuan, 2020. "Private sector participation and incentive coordination of actors in REDD+," Forest Policy and Economics, Elsevier, vol. 118(C).
    4. James B. Bushnell & Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel, 2017. "Strategic Policy Choice in State-Level Regulation: The EPA's Clean Power Plan," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 57-90, May.
    5. Koch, Nicolas & Fuss, Sabine & Grosjean, Godefroy & Edenhofer, Ottmar, 2014. "Causes of the EU ETS price drop: Recession, CDM, renewable policies or a bit of everything?—New evidence," Energy Policy, Elsevier, vol. 73(C), pages 676-685.
    6. Hall, Peggy Kirk, 2022. "Carbon For Sale: Legal Issues With Carbon Farming In The United States," Agricultural Economics Society (AES) 98th Annual Conference, The University of Edinburgh, Edinburgh, UK, March 18-20, 2024 345994, Agricultural Economics Society (AES).
    7. Yu, Song-min & Fan, Ying & Zhu, Lei & Eichhammer, Wolfgang, 2020. "Modeling the emission trading scheme from an agent-based perspective: System dynamics emerging from firms’ coordination among abatement options," European Journal of Operational Research, Elsevier, vol. 286(3), pages 1113-1128.
    8. Koch, Nicolas & Grosjean, Godefroy & Fuss, Sabine & Edenhofer, Ottmar, 2016. "Politics matters: Regulatory events as catalysts for price formation under cap-and-trade," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 121-139.
    9. Yeo, Boon-Ling & Anastasiadis, Simon & Kerr, Suzi & Browne, Oliver, 2012. "Synergies between Nutrient Trading Scheme and the New Zealand Greenhouse Gas (GHG) Emissions Trading Scheme (ETS) in the Lake Rotorua Catchment," 2012 Conference, August 31, 2012, Nelson, New Zealand 144270, New Zealand Agricultural and Resource Economics Society.
    10. Arif, Faisal & Dissou, Yazid, 2016. "Regional burden sharing of GHG mitigation policies in a decentralized federation," Economic Modelling, Elsevier, vol. 52(PB), pages 390-399.
    11. Burtraw, Dallas & Palmer, Karen & Munnings, Clayton & Weber, Paige & Woerman, Matt, 2013. "Linking by Degrees: Incremental Alignment of Cap-and-Trade Markets," RFF Working Paper Series dp-13-04, Resources for the Future.
    12. Hall, Peggy Kirk, 2022. "Carbon For Sale: Legal Issues With Carbon Farming In The United States," 23rd Congress, Copenhagen, Denmark, 2022 345994, International Farm Management Association.
    13. van der Hoff, Richard & Rajão, Raoni & Leroy, Pieter, 2019. "Can REDD+ still become a market? Ruptured dependencies and market logics for emission reductions in Brazil," Ecological Economics, Elsevier, vol. 161(C), pages 121-129.
    14. Grebel, Thomas & Islam, Rohidul, 2022. "Endogenous cap reduction in Emission Trading Systems," Ilmenau Economics Discussion Papers 169, Ilmenau University of Technology, Institute of Economics.
    15. Kate O’Neill & Erika Weinthal & Patrick Hunnicutt, 2017. "Seeing complexity: visualization tools in global environmental politics and governance," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 7(4), pages 490-506, December.
    16. Bello, Carolina & Culot, Laurence & Ruiz Agudelo, Cesar Augusto & Galetti, Mauro, 2021. "Valuing the economic impacts of seed dispersal loss on voluntary carbon markets," Ecosystem Services, Elsevier, vol. 52(C).
    17. Yang Liu & Xueqing Yang & Mei Wang, 2021. "Global Transmission of Returns among Financial, Traditional Energy, Renewable Energy and Carbon Markets: New Evidence," Energies, MDPI, vol. 14(21), pages 1-32, November.

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    More about this item

    Keywords

    carbon market; tradable permit; allowance; climate change; greenhouse gas;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation

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