Study: Emissions trading helps

Global CO2 market as a new perspective for climate policy?

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The international linkage of emissions trading systems is an important option for climate protection. European emissions trading, currently the EU's most important climate policy instrument, could become the starting point for a global emissions trading scheme. This emerges from a new report by the Potsdam Institute for Climate Impact Research (PIK).

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The dynamic trading model developed at PIK shows that the total costs of climate protection are reduced through the integration of emissions trading systems. This also applies if the partner regions introduce different emission limits. The report, which was carried out on behalf of the Federal Foreign Office and presented in Berlin on 6 July 2007, also makes it clear that a single issue price could eliminate competitive distortions between the associated regions.

The combination of emissions trading systems enables pioneers of climate protection to achieve their reduction goals with maximum efficiency, according to the report. However, for this to work, the systems would need to be compatible. This requires early discussions between the players on a technical and legal level.

According to the report, European emissions trading could be linked in the medium term to regional emissions trading systems, such as those currently underway in the USA. "When Foreign Minister Steinmeier talks to Californian Governor Arnold Schwarzenegger about transatlantic cooperation on emissions trading, this is an enormous step forward in terms of global climate policy, " says Ottmar Edenhofer, chief economist at PIK and lead author of the report. "These talks could have a strong signal on national US legislation, " he says. display

(Potsdam Institute for Climate Impact Research (PIK), 09.07.2007 - NPO)