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The objective of the work on emissions trading is to develop a practical implementation framework, or options, for an international greenhouse gas emission trading system. Bookmark this page: www.oecd.org/env/cc/emissiontrading. Link to IEA work on Emissions Trading.

Keeping Track: Options to Develop International Greenhouse Gas Unit Accounting After 2012 (June 2011)
Andrew Prag (OECD), André Aasrud and Christina Hood (IEA)
There is still uncertainty surrounding the use of tradable greenhouse gas (GHG) units in a post-2012 international climate change policy framework, despite progress made at the 16th Conference of the Parties (COP 16) in Cancún. In particular, it is not clear whether the current approach under the Kyoto Protocol of allocating centrally-administered emissions allowances for Annex I countries will continue and be built upon, or whether a future system will be based on emission reduction pledges by countries and therefore be less centralised. This paper examines environmental and institutional implications of the use of tradable GHG units under different international accounting scenarios, and explores elements of common ground between scenarios, including lessons from outside the Kyoto Protocol system.

Towards Global Carbon Pricing: Direct and Indirect Linking to Carbon Markets (July 2010)
By R.B. Dellink, S. Jamet, J. Chateau and R. Duval
Emissions trading systems (ETS) can play a major role in a cost-effective climate policy framework. Both direct linking of ETSs and indirect linking through a common crediting mechanism can reduce costs of action. We use a global recursive-dynamic computable general equilibrium model to assess the effects of direct and indirect linking of ETS systems across world regions. The analysis in this paper shows, however, that the potential gains to be reaped are so large, that substantial efforts in this domain are warranted.

Emissions Trading: Trends and Prospects (Dec 2007)
By Julia Reinaud and Cédric Philibert (IEA)
Emissions trading schemes are developing or being proposed in several regions and countries. This paper provides the latest developments of announced, proposed and existing greenhouse gas emissions trading schemes (ETS) around the world since 2006. It also examines different potential design options for ETS (e.g. coverage, allocation mode, provision for offsets), and how these options are treated in the existing, announced or proposed schemes.

Linking Greenhouse Gas Emission Trading Systems and Markets (Oct 2006)
By Jane Ellis and Dennis Tirpak (OECD)
Several different emission trading schemes (ETS) are currently operating, and a number of other national and sub-national schemes are likely to emerge in the near future. These ETS have different sizes, design characteristics and geographical/sectoral scopes. There are currently only a few links between different emissions trading schemes and markets. However, there are no conceptual reasons why links between emission trading systems and markets cannot be expanded. This paper outlines key characteristics of current and proposed ET schemes and assesses current, or possible pre-2012, links between them.

New Commitment Options: Compatibility with Emissions Trading (Nov 2005)
By Cédric Philibert (IEA)
This paper considers different options for quantitative greenhouse gas emission commitments from the standpoint of their technical compatibility with emissions trading. These are dynamic targets, binding targets with price caps, non-binding targets, sector-wide targets/mechanisms, action targets, allowances and endowments, and long-term permits. This paper considers these options from the standpoint of their compatibility with emissions trading. It does not discuss their other merits and demerits, for example, the effect on greenhouse gas emissions levels.

Linking Project-based Mechanisms with Domestic Greenhouse Gas Emissions Trading Schemes
(June 2004)
By Stephen Bygrave (OECD) and Martina Bosi (IEA)
Project-based mechanisms can represent cost-effective GHG mitigation possibilities, but they are voluntary and only contribute to increasing the supply of credits. They thus need to be linked to another instrument that recognises the project credits towards compliance with a GHG objective - such as an emissions trading scheme. Linking project-based mechanisms and domestic emissions trading schemes is economically desirable as it typically expands coverage of gases and sources, increases compliance options, increases market liquidity and lowers compliance costs of meeting environmental goals. The paper examines how some issues associated with linking GHG emissions trading and project-based mechanisms are being dealt with in the EU's "Linking Directive".

Linking non-EU Domestic Emissions Trading Schemes with the EU Emissions Trading Schemes  (June 2004)
By William Blyth and Martina Bosi (IEA)
Linking the domestic emissions trading schemes of different countries or regions can have efficiency benefits as a result of increasing the size and fluidity of the market, so that the same environmental benefits can be gained at a lower overall cost, giving economic benefits to both parties.  The paper takes each of the design features of the EU emissions trading scheme, and assesses the implications for countries with schemes of different designs who wish to link to the EU scheme.  The paper concludes that it is possible to link schemes with a wide range of design differences, with perhaps only two aspects causing particular difficulties, namely mutual recognition of trading units and the penalty regime.

Emissions Trading: Taking Stock and Looking Forward  (June 2004)
By Cédric Philibert and Julia Reinaud (IEA)
Both practical experiences and analyses of tradable permit schemes point to emissions trading as a tool to achieve environmental goals most cost-effectively. It might also be key to long-term environmental efficacy, and equitable repartition of efforts. In future, emissions trading might be the centrepiece of international efforts to mitigate climate change. However, abatement costs are and will remain largely uncertain, and fixed and binding targets thus entail unpredictable costs. This paper discusses options to deal with cost uncertainties.

Greenhouse Gas Emissions Trading and Project-based Mechanisms (2004)
This book presents a selection of papers from an international workshop co-sponsored by the OECD and Concerted Action on Tradeable Emissions Permits (CATEP), to discuss key research and policy issues relating to the design and implementation of these instruments. The papers cover the experience of developing and transition countries with greenhouse gas emissions trading and project-based mechanisms. In addition, the papers examine the use of tradeable permits in policy mixes and harmonisation of emissions trading schemes, as well as transition issues relating to greenhouse gas emissions trading markets.

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