Emissions Trading For Climate Policy: Us And European Perspectives

This page intentionally left blank Emissions Trading for Climate Policy The 1997 Kyoto Conference introduced emissions trading as a new policy instrument for climate protection. Bringing together scholars in the fields of economics, political science, and law, this book provides a description, analysis, and evaluation of different aspects of emissions trading as an instrument to control greenhouse gases. The authors analyze theoretical aspects of regulatory instruments for climate policy, provide an overview of US experience with market-based instruments, draw lessons from existing trading schemes for the control of greenhouse gases, and discuss options for emissions trading in climate policy. They also highlight the background of climate policy and instrument choice in the US and Europe and of the emerging new systems in Europe, particularly the new EU directive for a CO2 emissions trading system. ¨ R G E N S is Professor of Economics at Martin Luther BERND HANSJU University Halle-Wittenberg. He is also the Head of the Department of Economics, UFZ Center for Environmental Research Leipzig-Halle. Emissions Trading for Climate Policy US and European Perspectives Edited by Bernd Hansju¨rgens cambridge university press Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge cb2 2ru, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521848725 © Cambridge University Press 2005 This publication is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format 2005 isbn-13 isbn-10 978-0-511-12907-0 eBook (EBL) 0-511-12907-6 eBook (EBL) isbn-13 isbn-10 978-0-521-84872-5 hardback 0-521-84872-5 hardback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. Contents List of figures List of tables List of contributors Preface List of abbreviations 1 page vii viii ix x xii Introduction 1 ¨ RGENS BERND HANSJU Part 1 Regulatory instruments for climate policy : theoretical aspects 2 Designing instruments for climate policy 17 THOMAS STERNER AND HENRIK HAMMAR 3 Technical innovation and design choices for emissions trading and other climate policies 37 C A R O LY N F I S C H E R 4 Incentives to adopt new abatement technology and US–European regulatory cultures 53 R E I M U N D S C H WA R Z E Part 2 The US approach to pollution control : lessons for climate policy 5 Implications of the US experience with market-based environment strategies for future climate policy 63 R O B E R T N . S TAV I N S 6 US experience wi