Towards a successful international greenhouse gas emissions trading

The inclusion of emissions trading in the Kyoto Protocol reflects an important decision to address climate change issues through flexible market mechanisms. In this paper, we have addressed a number of policy issues that must be considered in designing and implementing an international greenhouse gas (GHG) emissions trading scheme. These include how much of a Party’s assigned amounts of GHG emissions can be traded internationally; emissions trading models; competitiveness concern in the allocation of emissions permits; banking and borrowing; accountability; emissions trading system enlargement; and bubbles. Although our focus has been exclusively on emissions trading, we have discussed its relationship with the clean development mechanism, joint implementation and bubbles wherever necessary. By providing some new insights, the paper aims to contribute to the design and operationlization of an international emissions trading scheme.