Emissions Trading Under the Kyoto: Protocol - A Detailed Study of the UK Emissions Trading Scheme (ETS) and the Lessons Learnt

Abstract

Greenhouse gases (GHGs) can contribute to global warming regardless of their country of origin. To reduce the impacts, it doesn't matter which region of the world cuts back on emissions, as long as the overall amount across the globe falls. That is the idea behind greenhouse gas emissions trading, which places a cap on total emissions, allocates credits to individual emitters and then allows them to buy or sell credits in a market to meet their targets. These systems are set up within a cap-and-trade program enacted by legislation of the state, country or region. The Kyoto Protocol allows certain participating countries to buy and sell some of their allowances to meet their emissions targets. It also permits different domestic or regional trading schemes to link to one another. One such example is the UK Emissions Trading Scheme (UK ETS) which attempts to address the problem of GHGs. The UK ETS is one of the first examples of a market for carbon dioxide emissions trading. As a pilot scheme, it was largely inspired by the European Union Emissions Trading Scheme (EU ETS) to achieve their targets set in the Kyoto Protocol but differs on some key design aspects. The Author wishes to study this particular ETS since it has been relatively successful and it aims to understand its results and lessons learnt to date so that it can be a model or paradigm for other economies of the world to follow suit in the path towards addressing climate change issues such as Global Warming.