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International emissions trading needs harmonization

05/07/2008 - A PIK study of the future of international emissions trading shows how emissions trading can be globalized in order to reach climate protection goals like the European Union’s two degree target. Christian Flachsland, Ottmar Edenhofer and other scientists of PIK’s research domain “Sustainable Solutions” investigated ways to link the EU’s emissions trading system with emerging trade systems in the USA, Australia and New Zealand and looked at where these systems need to be further harmonized. The study was sponsored by the German Federal Foreign Office.
International emissions trading needs harmonization

Global carbon market: Governments devolve emissions trading activity to companies by implementing and linking domestic emissions trading systems. Credit: PIK

A global carbon market could be created “top-down” within an internationally binding climate regime or alternatively “bottom-up” by linking regional emissions trading systems. The study shows that ambitious targets for climate protection and stringent regulation are crucial preconditions for successful formal linking of regional emissions trading systems. To coordinate carbon market regulation an international clearinghouse should be installed. The International Carbon Action Partnership ICAP, founded in October 2007, has already started preparing the linking of trading systems and could serve as a future regulatory body.

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