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Emissions Trading: Lessons From SOx and NOx Emissions Allowance and Credit Systems Legal Nature, Title, Transfer, and Taxation of Emission Allowances and Credits
| Content Provider | Semantic Scholar |
|---|---|
| Author | Gehring, Markus W. Streck, Charlotte |
| Copyright Year | 2005 |
| Abstract | Emissions trading is increasingly recognized as a cost-effective policy instrument to reduce the concentration of greenhouse gases (GHGs) in our atmosphere. The concept, which until recently was treated with suspicion by many countries, has seen in the last 12 months unprecedented proliferation and success. In October 2003, Directive 2003/87/EC “establishing a scheme for greenhouse gas emission allowance trading within the Community” became law in the European Union (EU). The objective of the newly established EU Emissions Trading Scheme (ETS) is to reduce the emissions of GHGs in an efficient and cost-effective manner. The initially adopted scheme was limited to emissions allowance trading within the EU and did not link the EU ETS to emission reduction credits (ERCs) generated under the Kyoto Protocol. Therefore, such credits, namely emission reduction units (ERUs) and certified emission reductions (CERs), could not be used by operators of covered installations to meet compliance obligations under the EU ETS. To remedy this, the EU has recently adopted a directive to amend the EU ETS to link the scheme to emission credits that comply with the Kyoto Protocol. The EU trading scheme will encompass not only the 15 previous EU Member States but will also apply to all its newly acceded Members. Denmark and the United Kingdom (U.K.) have traded with emission allowances since July 2000, and March 2002, respectively. Canada, Japan, Norway, and several U.S. states have expressed their intent to establish similar GHG trading systems, to name only a few incentives that have been announced over the last months. Finally, Chile, the only developing country engaging in emissions trading so far, has recently adopted a bill which establishes a trade in pollution permits. The European, the U.K., and the Danish ETS are directly targeted to reduce GHGs in order to help EU countries meet their quantified emission limitation and reduction commitments (QELRCs) as defined under the Kyoto Protocol. In its transition into the legal systems of the EU Member States, the EU ETS will lead to the implementation of 25 national trading systems which are technically and legally harmonized on the EU level. Each country listed in Annex B of the Kyoto Protocol has an obligation to adjust its emissions of GHG by a specific average percentage from a 1990 baseline within the five-year commitment period (2008-2012). These percentages range from 8% for EU (EU15) countries to 6% for Japan, and even allow Iceland to increase its GHG emissions by 10%. The Kyoto Protocol is a unique international law instrument in at least two respects: first, in scale, because it sets out stringent and legally binding targets for the reduction of emissions of GHGs—primarily carbon dioxide (CO2)—which are unprecedented in an environmental agreement and which will involve the commitment of substantial financial resources in virtually all industrialized countries; and second, it is the first international agreement to include economic instruments to assist Parties to meet these targets—also known as the Kyoto Mechanisms. These mechanisms are an innovative, market-driven approach to reducing global GHG emissions. The theory behind this approach is that the marginal abatement cost, i.e., the cost of financing a GHG emission reduction, in a relatively fuel-efficient industrialized country will usually be far higher than in a country with its economy in transition or a Markus W. Gehring is Lead Counsel for Sustainable International Trade, Investment, and Competition Law at the Centre for International Sustainable Development and Law (CISDL), based at the Faculty of Law, McGill University, Montreal, Canada. Charlotte Streck is Senior Counsel at the World Bank, Legal Department. This Article is provided in the personal capacity of the authors. They would like to thank Michelle Toering, CISDL publication officer, and Kengkran Louvirojanakul, researcher, Bristol University, United Kingdom for their invaluable help. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://docsjweinsteinlaw.com/pdfs/CGSH_35.10219.pdf |
| Alternate Webpage(s) | https://www.gppi.net/media/Streck_2005_Emissions_Trading.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
