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Under neoclassical assumptions, this paper develops a model to illustrate the effects of government use of carbon allowances for carbon emission control. We find that control using the instrument of issuing long-term carbon allowances does not produce the same good results in the Decentralised Equilibrium as in the Planning Problem. Thus, while Coase's Theorem ensures that the Pareto optimum is maintained in an economy with multiple agents, it does not align the social development with the economic optimum of the planner. We believe this is due to the that the price of carbon allowances is determined by asset profiles of investors rather than externalities. The steady-state under the special pathway shows that consumption is determined by the rate of technological progress, the total amount of carbon dioxide at steady-state, the level of technology at which steady-state is reached and the total amount of carbon allowances remaining. The comparison with the optimal tax path reveals that the price of carbon allowances has increased too quickly, leading to excessive consumption of fossil fuels in the early stages. [ABSTRACT FROM AUTHOR]

This paper constructs a unique dataset of clean energy and adopts static panel models and dynamic panel specifications to explore the correlation between clean energy and CO2 emissions. Furthermore, this paper employs the interaction term of pilot areas and pilot time as the proxy of emission trading policy to examine the effect of China's emission trading pilot on clean energy. Then, this paper conducts quasi-natural experiments on CO2 emissions. Our findings show a negative correlation between CO2 emissions and clean energy. We also find that China's emission trading pilot has a significant impact on promoting clean energy. In addition, empirical results affirm that emission trading market pilots can help decrease CO2 emissions. Finally, we put forwards relevant policy recommendations. [ABSTRACT FROM AUTHOR]

This study investigates the relationship among technology innovation, emission trading schemes, and carbon productivity based on data from firms participating in the Korean Emission Trading Scheme. First, the total factor carbon productivity based on stochastic frontier analysis is estimated by industry and it is confirmed that changes in carbon productivity vary by industry. Based on the estimated carbon productivity, panel data analysis is conducted to determine the effects of innovation and environmental policy on carbon productivity. The results show that R&D investment and environmental policy play an important role in promoting carbon productivity. In this study, the factors affecting carbon productivity are also analyzed by industry. Comparative analysis across industries confirms that factors affecting environmental performance vary by industry. Innovation does not significantly affect carbon productivity in assembling industries, but in the process industry, R&D investment plays an important role in increasing environmental performance. [ABSTRACT FROM AUTHOR]

Coal-fired power industry is under enormous pressure to accomplish carbon emission reduction targets. This paper proposes a bi-level multi-objective model for co-firing biomass with coal under carbon cap-and-trade regulation which considers a leader-follower Stackelberg game between the authority and the coal-fired power plants. The upper level regards social welfare maximization and allocation satisfaction maximization as its multiple objectives, while the lower level attempts to maximize the profits of each coal-fired power plant. The inherent uncertainty prompts the motivation for employing fuzzy set theory to characterize the uncertain parameters and determine their exact values. A case study from Shandong Province, China is provided to demonstrate the practicality and efficiency of the optimization model. ε -constraint method and interactive algorithm are used to solve the model, and furthermore the solutions associated with different free carbon emission quota levels and minimal allocation satisfactions have been generated to examine the influences. Based on the analysis and discussion, the methodology can meet the carbon emission reduction goals and transit to a lower-carbon power generation. It also assists the decision makers to develop desired quota allocation strategy in accordance with their attitudes and actual conditions. [ABSTRACT FROM AUTHOR]

With increasing global pressure on transition to carbon neutrality, various technical and policy efforts such as emission trading scheme and carbon tax are being made to improve energy productivity. Yet, there are not many literatures that analyze determinants of firm-level energy productivity, which is an important issue as energy use in industry accounts for one fourth of global carbon emission. This study investigates factors affecting energy productivity such as technology innovation, environmental policy and energy price based on firm-level data from the Korean Emission Trading Scheme (KETS). The total factor energy productivity is estimated by industry based on stochastic frontier analysis (SFA) and panel data analysis is performed to identify determinants of firm-level energy productivity. The results show that energy productivity in Korea has been improved since 2016, and technical progress and environmental policy play an important role in promoting energy productivity. In addition, analysis identifying industry-specific characteristics is performed as their production process and energy consumptions structures vary. The result shows that innovation activity does not significantly affect energy productivity in process industries, but it does in the assembling and high technology industries. This paper implies that policy design reflecting industry-specific characteristics is important to improve energy efficiency more effectively. [ABSTRACT FROM AUTHOR]

Based on the panel data of 277 cities between 2003 and 2017 and a unique city-level dataset of green patent applications, this study employs the difference-in-differences (DID) method to evaluate the effect of China's carbon emission trading scheme (ETS) pilots on urban green innovation. The findings indicate that China's ETS pilots have a positive impact on urban green innovation, and that impact is more significant for municipalities than for prefecture-level cities. Furthermore, the impact on different categories of urban green innovation is heterogeneous. More specifically, China's ETS pilots have significantly spurred urban green innovation that is closely related to energy conservation and emission reduction, including alternative energy production, transportation, energy conservation and so forth. Moreover, the facilitating effect of China's ETS pilots on urban green innovation suffers from a lagging effect, which began to show a significant positive effect in 2016. Overall, this paper identifies the effect of China's ETS pilots on urban green innovation, and suggests that the government should consider the heterogeneity of urban green innovation when designing national ETS policies. [ABSTRACT FROM AUTHOR]

This study aims to analyze the behavior of Chilean industrial sources when a CO2 tax, an emissions trading system with a total reduction target of 30%, or both instruments simultaneously are applied. For the above, an optimization model is built that is then calibrated with firm -level data obtained from the Annual National Industrial Survey (ENIA). Specifically, the model assumes that industrial sources have the option of maintaining their original emissions, replacing their current fuels with less polluting ones to pay fewer taxes and/or trade of emissions in a carbon market. The results show that to reduce emissions by at least 30% a tax close to US $17.5/tCO2 could be applied with a total cost of US $106 million, but it would be better to apply an emissions trading system with a similar price because the total cost would be US $21.3 million. If both economic instruments are applied together, the total cost of reduction is higher than when the instruments are implemented independently. Thus, it is concluded that Chile could move from a CO2 tax to an emissions trading system in order to reduce the costs of its environmental regulation. [ABSTRACT FROM AUTHOR]

Emission trading scheme is known as a cost-effective measure for mitigating CO2 emissions, and recently, China has started the world's largest carbon trading system. As the most influential industry in determining China's overall CO2 emission level, the thermal power industry will be greatly affected by nationwide carbon market in the near future. This paper explores the impact of the upcoming national emission trading scheme on China's thermal power industry at firm level. First, based on empirical data of 478 thermal power plants, an empirical analytical framework of micro-firm level is constructed. Then, two kinds of policy scenarios, including no carbon emission trading and national emission trading scheme, in two different market structures have been analyzed. The results show that emission trading scheme have positive impacts on reduction of CO2 emissions among China's power plants and can reduce the total abatement costs by 0.37%–41.5%. Furthermore, most of the thermal power plants are emissions permits buyers including all the low-emission gas-fired power plants. Additionally, compared with the perfect competition market, more than 70% of thermal power plants increase their total abatement costs in imperfect competition market. These findings provide reference for promoting the development of nationwide carbon emission trading system in China. [ABSTRACT FROM AUTHOR]

The paper selected the carbon emission trading yields data from 2014 to 2017 in Shenzhen. A generalized autoregressive conditional heteroscedasticity model was used to find the best way to hedge the risk of spot carbon emissions in Shenzhen carbon emission trading exchange market. The variances of carbon spot and coal futures were first examined. The dynamic hedging rate was calculated too. The results showed that according to the actual data and market change strategies, the dynamic hedging rate is better than the optimal hedging rate that can hedge risk better. The carbon emission trading yield was found to exhibit aggregate fluctuation; in addition, the dynamic hedging can better hedge risk timely than static hedging. This provides investors with the basis for decision-making to hedge risk in carbon emission trading and helps investors to maximize their returns under certain risk conditions. [ABSTRACT FROM AUTHOR]

To launch the nationwide emission trading scheme, some provinces in China were approved to design their pilot work for emission trading scheme according to local circumstances. Shanxi Province is the only pilot area with provincial trading market for industrial soot and dust emissions. This paper investigates the effect of Shanxi Pilot emission trading scheme on industrial soot and dust emissions by using the synthetic control method. The idea behind the synthetic control approach is to construct a combination of comparison cities to approximate the emission paths that the cities in Shanxi would have experienced in the absence of the pilot emission trading scheme. We demonstrate that, following Shanxi Pilot emission trading scheme, industrial soot and dust emissions fell markedly in Taiyuan, Datong, and Linfen relative to the synthetic counterparts. The finding that emission trading scheme can help achieve emission reduction targets is shown to be robust to the reduction in the number of control units, placebo tests, and difference-in-differences estimation. [ABSTRACT FROM AUTHOR]

In this study, we consider the sulfur dioxide emissions trading pilot scheme (SETPS) of China, with pilot provinces as the treatment group and other provinces as the control group. We employ the difference-in-differences method to estimate the effects of the SETPS on pollution mitigation and economic growth. Results show that the SETPS plays a robust role both in China's industrial sulfur dioxide abatement and in economic growth. Furthermore, by applying regression analysis to explore regional heterogeneity, we find that it has a stronger effect on industrial sulfur dioxide reduction in the Central China than it does in the Eastern and Western China, and it also exerts a positive influence on economic growth in the Western China. Moreover, a time-trend analysis indicates that the pollution reduction effect of the SETPS has decreased, while the economic growth effect has slightly increased since 2007. [ABSTRACT FROM AUTHOR]

Spain and Portugal are highly dependent on energy from abroad, importing more than 70% of all the energy they consume. This high energy dependence could involve important effects on the level and stability of their electricity prices as a half the gross electricity generated in both countries came from power stations using imported combustible fuels (such as natural gas, coal and oil). In general, changes in the prices of these fossil fuels can directly affect household electricity prices, since generation costs are likely to be transmitted through to the wholesale electricity market. Moreover, in the framework of the European Union Emission Trading System, electricity production technologies tend to incorporate their costs of carbon dioxide emission allowances in sale offers with the consequent increase of the electricity prices. The objective of this paper is to analyze the influence of fossil fuel costs and prices of carbon dioxide emission allowances in the EU on the Spanish and Portuguese electricity prices. With this aim, a maximum entropy econometric approach is used. The obtained results indicate that not only the price of imported gas are very important in explaining Spanish and Portuguese electricity prices but also the price of carbon dioxide emission allowances in the EU. [ABSTRACT FROM AUTHOR]

Seven regions in China are currently conducting trial greenhouse gas emission trading pilot programmes in preparation for the development by 2015 of a nationwide cap and trade programme mandated by the 12th Five-Year Plan. Whilst China's carbon emission trading pilots are relatively recent, China possesses over fifteen years of experience in sulphur dioxide (SO2) emissions trading. Like the current carbon emission pilots, various SO2 pilots were conducted covering nine cities and four provinces before adoption of a national SO2 emissions trading programme. This paper considers how China's nascent greenhouse gas cap and trade programme may evolve and what policymakers can learn from China's own extensive domestic experience with SO2 emissions trading, which remains largely unexplored in the literature on China's carbon markets. [ABSTRACT FROM AUTHOR]

China's carbon emissions trading pilot schemes have already made significant progress, with five out of the seven pilot systems having started operation by the end of 2013. The experience in establishing and operating the pilot schemes will be valuable to the establishment of China's unified national emissions trading system in the near future. Design features of the five pilots are analyzed and compared, based on officially published documents. Aspects discussed include the establishment of the emissions cap, sector coverage, allowance allocation, data basis, compliance rules, monitoring/reporting/verification (MRV) mechanism, market intervention, offset mechanism, stakeholder consultations and legal basis. These systems are somewhat similar in cap setting, MRV mechanism and offset mechanism, but quite different in allocation approaches and market intervention. The schemes differ as well from existing international schemes as for example the European Emission Trading Scheme (EU ETS). Reasons for the different designs are briefly analyzed in a comparative manner. [ABSTRACT FROM AUTHOR]

The European Union has set a system of climate and energy targets comprising target values for greenhouse gas emissions (GHG), Emission Trading Sectors ETS and non-ETS sectors, energy efficiency and renewable energies until 2020. A new framework up to 2030 is just being developed. We analyse what lessons can be learned from the EU 2020 target system and how a new 2030 framework could be designed coherently. We derive a coherent target system for 2030 from a bottom-up assessment of energy efficiency potentials. Thus we show that ambitious energy efficiency and renewable energy targets also guarantee significant reductions in greenhouse gas emissions of 47-60% compared to 1990. ETS sectors can contribute significantly to the GHG reduction, provided that a stabilisation of the carbon price can be reached. An alternative design with a 40% GHG emission reduction as the only headline target, as currently debated, will not exploit all cost-effective energy saving potentials and so not take advantage of the macroeconomic co-benefits of energy efficiency either. [ABSTRACT FROM AUTHOR]

Emissions trading promises the achievement of a pre-defined environmental outcome at least cost. If the system works and key assumptions hold, it would seem to be an "optimal" climate policy instrument. On closer inspection, however, it is less clear what constitutes an "optimal" climate policy. This paper argues that optimality involves a range of criteria beyond short-term economic efficiency, but also has to consider the longer-term dynamic efficiency, as well as the political, administrative and legal feasibility of policy instruments. The assessment of optimality is confounded by the fact that climate policy relies on a number of policy instruments. This paper argues that a policy analysis should look at the performance of the entire instrument mix, and not analyse individual instruments in isolation. Such a mix will differ from country to country - depending on political preferences, administrative capacities, or regulatory traditions. The mix is also evolving: as climate policy aims to transform entire economies, the impact of individual policy instruments in the climate policy mix grows - measured by the share of the relevant markets that they affect, the incentives they provide, or the costs they impose. As this impact grows, there is increasing interaction between policy instruments. Understanding and managing these interactions therefore becomes key for successful climate policy. Emissions trading has a particular position in this instrument mix: it directly targets the end result, i.e. emissions from the regulated sectors, inputs to the process, technologies used, or the infrastructure, where other instruments target the interim stages in the process. At the same time, emissions trading also builds on other policies, for instance through administrative and regulatory infrastructures. This paper discusses how the other policy instruments affect the functioning of an emissions trading scheme (ETS), and how this will reflect on the performance of an ETS in terms of optimality. [ABSTRACT FROM AUTHOR]

Emission trading schemes (ETS) are being employed by an increasing number of countries as a market-based policy instrument to reduce greenhouse gas (GHG) emissions and so address climate change. Although traditional environmental economics has laid a strong foundation for ETS design, the existing schemes of GHG trading in different countries are facing many new challenges and critical issues still need to be explored. China, the largest greenhouse gas emitter, is currently in the process of setting up ETS pilot schemes. Learning from the ETS experiences of other countries may prove valuable. Against this background, an international conference was held in Beijing on the theoretical advances in and empirical lessons of emission trading schemes. Leading scholars from China, Germany, France, Singapore, Australia, New Zealand and the United States presented new research findings. Ten selected papers from this conference are brought together in this Special Issue of Energy and Environment. Topics include analysing greenhouse gas emissions, the abatement potentials in key sectors, the regulation of ETS, sector coverage of ETS, interaction between ETS and other policy instruments, and between ETS and investment in carbon abatement technology. Experiences with several ETS were explored, including SO2 trading in China, carbon emissions trading in California, and several ETS pilot schemes in China. [ABSTRACT FROM AUTHOR]

It is crucial to determine an adequate sectoral coverage in the design of a Chinese emissions trading mechanism, as there is a huge diversity in regional economic development in China and an Emission Trading Scheme (ETS) would not initially be able to cover all sectors. This paper uses an inter-regional model to estimate the regional and sectoral abatement cost curves and simulate the operation of an emissions trading system where, like the European Union Emissions Trading Scheme (EU ETS), emissions are regulated at the point of emissions downstream where there is a large number of firms, rather than 'upstream'. Then we build a Nash-Cournot model to analyse the influence of strategic partitioning of allowances based on the analysis of compliance cost in different sectoral coverage schemes in the unified carbon market. We take into account the allowance price, trading volumes, transaction cost, and regional differences in reduction potentials. We come to the following main conclusions: (a) the strategic partitioning of reduction requirements between trading and non-trading sectors has little impact on allowance prices and compliance cost. Despite this western regions in China are likely to receive more benefit than those in the east though the gains are limited; (b) when industrial sectors are successively included in the ETS, allowance prices range from 40-50 RMB/tonne. This approaches that in the ideal scenario in which all sectors are included; (c) the following sectors could be included in a reasonable sectoral coverage of a downstream ETS in China: mining, paper and printing, processing of petroleum, coking, processing of nuclear fuel, chemical products, metals and non-metal products, and production and supply of electric power and gas. [ABSTRACT FROM AUTHOR]

The technological status of seven key sub-sectors in three sectors (energy, industry and consumption) was analysed using bottom-up modelling. Using 2010 as a baseline, the paper predicts direct CO2 emission trends, turning points, reduction potentials and costs for the three sectors in two policy scenarios and three technology scenarios for the years 2015, 2020 and 2030. The scenario analysis shows that the industry sector might reach its emissions peak between 2015 and 2020, which leaves more emission reduction potential for the consumption sector. CO2 emissions in the consumption sector will increase through to 2030 without reaching a turning point. In the Social Low Control Middle (SL-CM) scenario, CO2 reduction technology potentials of the industry and consumption sectors will reach 0.84 billion tonnes CO2-eq by 2020. Within this, production contributes 13% of reductions, transportation 48%, and construction 39%. In the 2030SL-CM-scenario, the CO2 reduction potentials rise to 1.6 billion tonnes CO2-eq, within which production contributes 8%, transportation 44% and construction 48%. In building China's Emission Trading Scheme (ETS), the government should pay more attention to a low carbon consumption policy rather than a traditional CO2 control policy for the industrial sector. [ABSTRACT FROM AUTHOR]

The effect of an EU emission trading scheme (EU ETS) on CO2 abatement technology development is limited, according to many empirical studies. This is the result of an existing low carbon price and the future uncertainty of the development of the carbon market. Carbon price stabilisation mechanisms, especially the carbon price floor, may serve to supplement the ETS and cope with this problem. We are concerned with how the carbon price floor affects the investment in carbon abatement technology, the resulting CO2 abatement, and how to best design such a carbon floor price. In this paper, we focus on carbon capture and storage (CCS) technology by building a CCS investment and operation decision model based on real options theory. We consider investment timing and CCS operation flexibility and we also design a model for carbon price evolution with a carbon price floor using the Monte Carlo simulation method. We determine the floor prices above which immediate CCS investment is occuring, and those at which CO2 emissions can be eliminated. According to the simulation results, the carbon price floor has a significant effect on promoting CCS investment. The marginal effect of an increasing carbon price floor first rises and then falls; when the floor price reaches a threshold value, its marginal effect becomes minimal. Based on the simulation results, the carbon floor price for EU ETS could be set at about 20 EUR/t CO2 to stimulate the CCS investment, while it should be increased to 30 EUR/t CO2 to sufficiently promote CO2 abatement. [ABSTRACT FROM AUTHOR]

We investigate the risk of favouring domestic industries in the current European Union Emission Trading System (EU ETS). As the EU forms a weak federal structure compared to the US, there is a risk that single countries may free ride on the others by choosing to take a blind eye to industry-level corruption when tempted to favour their own industries. In other words, the optimal level of national cheating may not take into account the external cost it imposes upon other countries and the risk of wide-scale cheating and the possibility of an EU ETS collapse. Such national incentives to cheat correspond to a well-known transnational externality problem from international environmental problems and multiplayer prisoners' dilemma games. Thus, there is a strong need for systematic empirical analysis of whether cheating actually occurs in the EU ETS as predicted by theory. [ABSTRACT FROM AUTHOR]

The article examines the impacts of wind energy integration into the electricity market with considerations for supporting policies and thermal generators emission penalties. The thermal and wind generators are modeled with the use of agent-based approach and are provided with learning capabilities. It discusses wind power agent benefits from supporting policies such as feed-in-tariff and quota models and the proficiency of each model.

An introduction is presented in which the editor discusses various reports within the issue on topics including the European emission trading system, evolution of renewable energies, and role of the Clean Development Mechanism (CDM).

The article offers the author's insights regarding the emission trading scheme (ETS) imposed by European Union (EU) to airlines using the air traffic of Europe as part of its climate policy. The author argues that the ETS on airline only seeks to control more the airline industry and collect more tax revenues. He states that the policy raises questions of the implementation such as if the global carbon dioxide (CO2) increase influence global climate and CO2 from airlines.

This paper suggests a climate policy that integrates adaptation funds into a harmonized carbon tax approach. In the proposed approach, the world will set a carbon tax assuming that vulnerable sectors will adapt to future changes at its full capacity. At the same time, the world will support climate adaptation programs at a regional level. A mitigation policy will be set at the global level while adaptation measures will be taken at a local or regional level. The carbon revenue generated from a mitigation program will be used to support adaptation aid programs in developing countries. This augmented carbon tax approach has the capacity to deal with climate inequities while it creates additional incentives for developing countries to participate in a global mitigation effort. [ABSTRACT FROM AUTHOR]

With the rising popularity of emissions trading schemes and the private sector call for a global carbon market, it seems as though there is the chance to solve climate change by simply providing a clear price signal. But how easy will this be, both technically and practically? This paper provides an overview of the challenges in policy design terms involved in directly linking existing emissions trading schemes, and the status of planned emissions trading schemes, in order to set the potential of establishing a policy framework for a global carbon market in a realistic frame. The paper begins by outlining what linking is and setting out the advantages and risks of linking schemes. The key criteria to consider in order to establish compatibility for linking are explored, and then a summary of existing or planned schemes is given to highlight some of the technical challenges involved in linking emissions trading schemes together. The paper goes on to describe how a linked scheme could be set up and then moves on to the political arena, looking more closely at the political benefits and risks of linking and then discussing whether or not linking emissions trading schemes is an element of, or an alternative to, a global climate policy. [ABSTRACT FROM AUTHOR]

The advent of the EU Emissions Trading Scheme (EU ETS) introduced CO2 emission allowances as a new tradable asset. Market participants now face the question how to manage the risks associated with these emission certificates. In this paper we discuss the market environment in the EU ETS and present the results and implications of an expert survey, which gives a perspective on the development of derivative markets in the EU ETS. Although the EU ETS exhibits some differences, in that it is not only driven by fundamentals but also strongly by regulatory and political factors, we find that the EU ETS develops in a similar fashion to other financial and commodity markets. Moreover, the expert survey gives a clear indication that there are realistic chances for the long-term success of derivatives, not only for futures and forwards but also — to a lesser extent — for more asymmetric, option-like instruments. [ABSTRACT FROM AUTHOR]

The present paper introduces the notion of cool storage system and summarizes its benefits, especially the environmental ones: air emissions savings and CFC reductions. Four existing cool storage types are outlined: chilled water storage, ice storage, PCM (phase change material) cool storage and high temperature water cool storage and a commonly employed value analysis method is introduced and applied to select the best cool storage option. An evaluating method is established and the best type of cool storage is obtained. The results indicate that high temperature water cool storage is the optimal option, and the method of value analysis has applicability in selecting an optimal system. [ABSTRACT FROM AUTHOR]

This paper is a non-technical examination of some aspects of global warming that are generally neglected in the academic economics literature. The discussion features several basic issues considered by Goodstein (2004) in his short and easily read book, and particularly the serious consequences that might result from a peaking of the global oil output. The same topic is considered to a lesser extent in my energy economics textbook (2000). In addition I have emphasized that, as David Victor (2001) makes clear, the provisions of the Kyoto Protocol are meaningless unless emissions trading is effective. A key argument here is that since exchange-based financial instruments have been unsatisfactory in the electricity markets, to include those associated with the Nordic Electricity Exchange (Nordpool), it could happen that the trading of exchange-based emission permits will also be ineffectual: for example, the emissions trading program broached by the European Union is likely to result in serious problems for the electricity-intensive industries of countries like Sweden, since one result of that program is that a large increase in electricity prices may be unavoidable. Furthermore, it may also be the true that even if there is no man-made component of global warming, the curtailing of greenhouse gas emissions (by e.g. reducing the use of fossil fuels, and increasing energy efficiencies) could result in sizable economic and social gains. [ABSTRACT FROM AUTHOR]

In this paper the main design issues of 16 National Allocation Plans (NAPs) are presented in a systematic way for the first period (2005-2007) of the EU Emissions Trading System (EU ETS). These NAPs have either been submitted to the European Commission (EC) by the EU Member States (MS), or were available as draft versions in early May 2004. Further quantitative and qualitative analyses of these NAPs lead to the conclusions that - unless the review process by the EC leads to significant modifications - (i) the EU ETS is unlikely to result in any major emission reductions in this first period; (ii) many MS allow for a generous allocation to the emissions trading sector at the cost of other sectors and the general taxpayer; (iii) competitive distortions are likely to arise from the different national interpretations of the installations to be covered by the EU ETS and from the partial-system character of the EU ETS; (iv) barriers to economic efficiency will arise from a probable EU-wide ban on banking and ex-post adjustments of allocated quantities for newcomer installations. Finally, for the vast majority of participants transaction costs are expected to be high compared to costs for compliance. [ABSTRACT FROM AUTHOR]

The EU Commission has recently proposed a new directive establishing a framework for greenhouse gas (GHG) emissions trading within the European Union. The idea is to devalue part of the emission quotas in circulation by the year 2012 at latest, so that the EU will meet its Kyoto target level of an 8% GHG reduction. Our main question is whether the final choice of allocation rule can be explained by the role of industrial groups in the policy making process. We answer this question by using rent-seeking theory and by analysing the Green Paper hearing replies from the main industrial groups. In other words, we want to explain and observe how rent-seeking (or lobbyism) affects the design of environmental regulation and energy policy in favour of well-organized industrial interest groups. We argue that some firms are likely to reap a net gain from being regulated by a grandfathered emission trading system. This is so because total costs of emission reduction and lobbyism are likely to be smaller than the total rents from having this type of regulation. [ABSTRACT FROM AUTHOR]

In simple terms a Green Investment Scheme entails connecting revenues from emissions trading to investments in environmental activities in Russia. This article presents insights derived from an international project on the GIS, focusing on issues that must be addressed if the concept is to become operational, on the background of the domestic, as well as international interests connected to a GIS. GIS is a worthwhile concept with the potential to bring real environmental benefits and meet profound concerns from several of the key actors in the Kyoto regime. However, establishing a well-functioning GIS means removing many of the current barriers that hold back investments in Russia. At the time of writing, Russia has still not decided whether it will ratify Kyoto Protocol. GIS illustrates that there will be substantial benefits for Russia from ratifying the Kyoto Protocol, which is a prerequisite for its entering into force. [ABSTRACT FROM AUTHOR]

The Lithuanian climate change policy has to be considered in the framework of the Convention on Climate Change. The National Strategy for Implementation of Convention was the first step in evaluating the country's impact on climate change, adapting to the Convention and foreseeing the means and measures for climate change mitigation. The paper introduces main issues related to climate change mitigation policy in Lithuania. It presents an analysis of greenhouse gas emission trends in Lithuania and surveys institutional organizations as well as stakeholder associations related to climate change issues and their role in climate policy making. The main Lithuanian international environmental obligation and Lithuanian governmental climate change mitigation policy in the energy sector are presented as well. [ABSTRACT FROM AUTHOR]

The recent agreement by European environment ministers on the ground rules for an EU Emissions Trading Scheme (EU ETS) represents a landmark in the evolution of EU climate policy. But this scheme will be introduced into a crowded 'policy space' within each Member State in which complex interactions between the EU ETS and existing instruments appear unavoidable. This paper explores one aspect of the problems created by the EU ETS for the UK - namely the potential interactions with the UK Renewables Obligation and the UK Energy Efficiency Commitment. Both these instruments have objectives which go beyond the leastcost abatement of carbon emissions and both utilise trading arrangements in which the trading commodity is denominated in MWh rather than tonnes of carbon. The paper explores the potential interactions between the EU ETS and the UK instruments by comparing in turn their scope, timing, objectives and operation. The coexistence of the EU ETS with the RO and EEC is shown to raise three important issues, namely target setting and double counting, double regulation of electricity and the fungibility of trading commodities. The paper concludes that the coexistence of the RO and EEC with the EU ETS is both possible and justifiable, but more attention should be paid to the non-CO2 objectives of each instrument. [ABSTRACT FROM AUTHOR]

This paper investigates the strategic challenges for companies arising from the EU-wide greenhouse gas emission trading system (EU-ETS). Tools are suggested to help companies develop synchronised abatement and trading strategies in their dynamic decision making and facilitate overall cost-minimising behaviour. Furthermore, an EU-ETS simulation game is presented, which has recently been carried out in Germany,and which combines the advantages of a field experiment and a controlled laboratory experiment. The results of the game suggest that the proposed trading system will not automatically result in the expected cost savings. Different factors can be identified as the causes, such as specific design parameters of the EU-ETS, participants' lack of experience with a new instrument, their lack of trust in the market mechanism and risk aversion. The simulation results stress the need for companies to acquaint themselves with the rules and the range of possible strategies. [ABSTRACT FROM AUTHOR]

Throughout the past years, the first carbon credits - though not yet certified by the UNFCCC - have been traded. The technologies used, project size and regional preferences of carbon transactions via Joint Implementation and the Clean Development Mechanism approved under major programmes are reviewed in this paper. The current full JI and CDM project portfolio aims to reduce some 100 MtCO2-eq. This market is highly monopsonic; the buyers determine which credits are sold. The 12 JI projects are mainly implemented in Romania and Poland and constitute a diverse technology portfolio. Most of the 37 CDM projects are implemented in Latin America. Hydro and wind energy projects dominate in terms of numbers of projects. One large-scale fuel switch and one afforestation project bias the portfolio in terms of absolute CO2 reduction. Comments are made on the baseline consistency and additionality of the currently selected projects. The assessment of emissions trading programmes is more difficult than that of separate projects, because of the characteristics of an emissions trading market. Yet, depending on the starting conditions, the ET programmes vary in their success. [ABSTRACT FROM AUTHOR]