EU Emission Trading: Starting with Carbon Dioxide

Abstract

The Commission of the European Union wants to start a limited emission trading scheme by 2005 within the Community to enable “learning-by-doing” prior to the Kyoto Protocol. This is to accomplish the desired 8% target level for six different greenhouse gases. However, in the EU it is not clear whether all the six relevant greenhouse gases or only CO2 should be traded. What is the simplest and most practicable solution? We argue in favour of the latter option for three main reasons: the possible dominating global warming potential of CO2, expected future developments in CO2 emissions and the fact, that CO2 is the pollutant most easily monitored.