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Since Weitzman (1974) raised a question on which is the better environmental policy tax or standard under asymmetric information, many authors have proposed alternatives to both tax and standard or emission trading scheme. The policy recommended in this paper is also one of them. The policy tells us that the government can set tax rates at arbitrary levels during the trial runs. The government can extract private information from observable abatement activities of firms in the trial periods. However, the government needs not only tax but also the standard for abatement and the penalty against violating the standard, because the firms may respond strategically to the tax rates set in the trial periods. Those supplemental policy devices can eliminate any strategic incentive by equating the marginal benefit and the marginal cost. As a result, we can attain the first best after the trial periods. [ABSTRACT FROM AUTHOR]

The literature on policy dynamics has long argued for a better conceptualization and measurement of the dependent variable ("policy"), but this fundamental point has often been neglected in the policy feedback literature. In this paper, we explore how far disaggregating policy into different elements (policy instruments, objectives, and settings) addresses this gap. We do so by examining the world's largest market-based climate policy instrument—emissions trading in the European Union—and reveal a number of valuable new insights. First, even if positive policy feedback locks in a policy instrument, actor contestation does not disappear, but narrows down to the more detailed level of policy settings. Second, feedback may operate differently at each policy level: the policy instrument and its settings may strengthen at the same time as support for broader objectives weakens. Finally, positive feedback may simultaneously strengthen opposing actors' support for multiple policy elements, leading to a form of "policy stability by stalemate." These findings highlight the need for a new, interdisciplinary phase of policy feedback research that more fully disaggregates the dependent variable across a wider range of policy areas and policy instrument types. Policy scientists are well equipped to contribute to and benefit from such a debate. [ABSTRACT FROM AUTHOR]

This paper examines the interaction of different policies used to control two types of agricultural pollution. Pollution control policy is efficient when both pollution types are controlled by taxes, although a tax increase on one type of pollution can increase the quantity of another type of pollution if farm inputs are substitutes. However, if one of the pollutions is controlled by a local emissions trading scheme, and another pollution type is taxed, then the pollution type which is taxed becomes less responsive to a change in its own tax levels. This policy scenario results in inefficient levels of environmental pollution outcomes unless the cap for the local emissions trading scheme is constantly being shifted in response to the tax. [ABSTRACT FROM AUTHOR]

Conventional emission permit markets are inefficient for non-uniformly mixed pollutants that create geographic 'hot spots' of different ambient emission concentrations and environmental damage. Economically efficient ambient concentration contribution markets involve difficult interactions among multiple markets that makes them practically infeasible. Extending economic theory by Muller and Mendelsohn (Am Econ Rev 99(5):1714-1739, 2009. doi:) and others about 'getting the prices right' through bilateral trading ratios, this paper introduces theoretical simplifications and a novel type of single permit market with a hybrid price-quantity instrument that addresses the dual heterogeneity of firm-specific abatement costs and regional variation in damage. This paper shows how to 'get the market right' robustly through simplicity, liquidity, and gradualism. Analytic solutions and simulation results demonstrate the feasibility of the novel market concept. Also discussed is the potential applicability of the market design to interstate trading in the United States in the wake of the recently implemented Cross-State Air Pollution Rule. [ABSTRACT FROM AUTHOR]

The paper focuses on the impact of emission 'cap-and-trade' mechanism in a so-called emission-dependent supply chain with the emission permit supplier and the emission-dependent firm. In the cap-and-trade system, emission permit becomes one of key factors of production for emission-dependent firms. Two major sources of emission permits are considered-emission cap/quota imposed by the government, and permits purchased via emission trading. If the quota is insufficient to satisfy the target production, extra permits should be purchased via trading. In this case, the traditional non-profit green organizations may be endowed with the role of emission permit suppliers. Thus, the introduction of market mechanism injects new life into environment protection. In the context of newsvendor, the paper investigates the behavior and decision-making of each member in the emission-dependent supply chain. A game-theoretical analytical model is proposed and the unique Nash equilibrium is derived. In their own self-interest, the emission permit supplier and the emission-dependent firm make their optimal decisions on permits pricing and production quantity respectively. Players' bargaining power in the game is affected by several exogenous factors, such as the governmental environment policy, the market risk, etc. Several valuable managerial insights on bargaining power affected by external factors (such as environmental policies, market risks, etc.) are further concluded. [ABSTRACT FROM AUTHOR]

Profit-seeking firms can be induced to internalise the environmental damages caused by production via several policy instruments, a widely used one being emission permits. In a very influential paper, Laffont and Tirole (J Public Econ 62:127-140, ) point out that the allocation of pollution rights to firms may hinder their willingness to undertake uncertain R&D projects for environmental friendly technologies. We revisit this issue in a duopoly model, showing that a lottery allocating a given volume of emission rights exclusively to the winner might indeed be used by the regulator to spur the introduction of green technologies at least by the loser and, if properly designed, by the entire industry, in an admissible range of the model parameters. We also show that there exist parameter constellations wherein firms' incentives are aligned with social ones. [ABSTRACT FROM AUTHOR]

The aim of this paper is to propose the main elements of a theoretical and methodological framework for the assessment of the success of complex policy mixes, to highlight the conflicts between individual instruments and other elements within those mixes and to propose policy recommendations in order to mitigate them. Some criteria are defined, and different levels of analysis are considered. The challenges in evaluating policy packages are illustrated with the case of the coexistence between renewable energy support and emissions trading schemes. It is shown that policy mixes inherently lead to interactions between the different instruments, either in the form of conflicts or synergies. Conflicts are horizontal (i.e., between different types of instruments) and/or vertical (i.e., between different administrative levels). It is suggested that mitigating those conflicts could require administrative coordination. Relevant coordination could take place between different administrative levels and relate to different instruments or different design elements within similar instruments. However, given the trade-offs between different criteria, the role of coordination is necessarily limited. [ABSTRACT FROM AUTHOR]

The Great Tōhoku-Earthquake and the following nuclear meltdown in Fukushima called the world's attention to Japans' energy and climate policy. Japan is one of the biggest emitters of greenhouses gases in the world and is still facing problems of reaching its Kyoto target by domestic reductions. Emissions trading has been used in Japanese climate policy since 2005. However, major emission reductions have not been achieved and a functioning market does not exist. Hence, using an advanced Public Choice approach, we ask for the political reasons for the failure of ambitious carbon markets in Japan and how the earthquake has influenced the political chances of emissions trading. Also, we evaluate Public Choice's arguments and environmental policy making. We show that in Japan, even after some positive promising developments, chances for an ambitious carbon market are still very low. We also show that a Public Choice that takes exogenous conditions into account delivers important insights into climate policy decision making. [ABSTRACT FROM AUTHOR]

We outline the theoretical and political background to the global carbon mechanisms and how they emerged in the form of the Kyoto Protocol's Clean Development Mechanism, Joint Implementation, and Intergovernmental Emissions Trading. We present empirical data on the response to date and the variants that have arisen. Based on this, we analyse the issues and evidence on the main controversies around additionality, efficiency and effectiveness of the instruments. The final part of the paper considers some of the implications for future development. [ABSTRACT FROM AUTHOR]

Many countries have begun to look increasingly toward the Clean Development Mechanism (CDM) as one of the key tools to increase the cost effectiveness of fulfilling their compliance requirements with the Kyoto Protocol. It is believed, from a theoretical point of view, that linking emissions trading schemes to the Kyoto Protocol's flexible mechanisms can lead to a decrease in carbon prices and so a reduction of the overall compliance costs. This study provides an analysis of the relationship between the European Union Emissions Trading Scheme (EU ETS) and the CDM. The study considers the dynamic interactions between European allowance (EUA) prices and certified emission reduction (CER) prices, and uses time-series econometric techniques to test for the existence of long-term links and causal relations between the prices. Furthermore, the generalized impulse response analysis has been used to investigate temporal interactions among the variables. The results show that CER prices do not have a statistically significant effect on EUA prices; rather, it is the EUA prices that have driven CER prices during the period investigated. The constraint on the availability of CERs emanating from supplementarity and additionality criteria, as stipulated by the Kyoto Protocol, is one of the major factors that can be hypothesized to account for this finding. [ABSTRACT FROM AUTHOR]

The allocation of CO2 emissions to specific sources is a major policy issue for international aviation, especially for determining allocations for emissions trading schemes. This paper addresses the problem by recommending a possible methodology to allocate emissions to specific sources using detailed air traffic data. The basis for the calculations is an air traffic sample for one full-day of traffic from the UK. In order to analyse aircraft fuel burn use and hence CO2 emissions, the Reorganized Air Traffic Control Mathematical Simulator (RAMS Plus) and the Advanced Emission Model (AEM III) are used. The results from these detailed simulations are compared with two of the most widely-used aviation CO2 emission estimates to have been made for the UK: the SERAS study and NETCEN estimate. Their estimates for the year 2000 are 26.1 and 31.4 Mt, respectively. In addition, the most recent NETCEN estimate for the year 2003 is 34.1 Mt of CO2. Our estimate of total aviation CO2 emissions, using detailed simulations and real air traffic data, is 34.7 Mt for the year 2004. In addition, emission estimates are compared with two global aviation emission inventories: AERO2K and SAGE. Contributions of the highest-emitting flights and aircraft types are identified. International departures dominate; 6% of flights account for 50% of total emissions. The largest aircraft emit the most per flight-km, although not per passenger-km. Different methodologies and their implications are also discussed. [ABSTRACT FROM AUTHOR]

This article explores the issue of nonpoint pollution credit production in the context of water quality in rivers and streams. Such trading depends on emission reduction cost differential between point source polluters, such as publicly owned treatment plants and industrial sources, and nonpoint polluters, such as farms. In previous studies of emission trading markets, polluter production decisions are either treated outside the market analysis or made on the basis of emission credits as an input to production. In water quality emission markets there is a clear link between nonpoint (farm) production activities and nonpoint emission credits, although this is often difficult to quantify accurately in advance. The problems associated with linking cause and effect gives the nonpoint emission credit its unique nonpoint characteristic. Because water quality is a significant issue in many catchments throughout the world, further experimentation seems warranted. This article presents the results of a series of experiments in which players faced imperfect knowledge of abatement outcomes associated with nonpoint (defuse) sources of emission credits. [ABSTRACT FROM AUTHOR]

Uncertainty analysis facilitates identification of the most important categories affecting greenhouse gas (GHG) inventory uncertainty and helps in prioritisation of the efforts needed for development of the inventory. This paper presents an uncertainty analysis of GHG emissions of all Kyoto sectors and gases for Finland consolidated with estimates of emissions/removals from LULUCF categories. In Finland, net GHG emissions in 2003 were around 69 Tg (±15 Tg) CO2 equivalents. The uncertainties in forest carbon sink estimates in 2003 were larger than in most other emission categories, but of the same order of magnitude as in carbon stock change estimates in other land use, land-use change and forestry (LULUCF) categories, and in N2O emissions from agricultural soils. Uncertainties in sink estimates of 1990 were lower, due to better availability of data. Results of this study indicate that inclusion of the forest carbon sink to GHG inventories reported to the UNFCCC increases uncertainties in net emissions notably. However, the decrease in precision is accompanied by an increase in the accuracy of the overall net GHG emissions due to improved completeness of the inventory. The results of this study can be utilised when planning future GHG mitigation protocols and emission trading schemes and when analysing environmental benefits of climate conventions. [ABSTRACT FROM AUTHOR]

On the basis of the IPCC B2, A1b and B1 baseline scenarios, mitigation scenarios were developed that stabilize greenhouse gas concentrations at 650, 550 and 450 and--subject to specific assumptions--400 ppm CO2-eq. The analysis takes into account a large number of reduction options, such as reductions of non-CO2 gases, carbon plantations and measures in the energy system. The study shows stabilization as low as 450 ppm CO2-eq. to be technically feasible, even given relatively high baseline scenarios. To achieve these lower concentration levels, global emissions need to peak within the first two decades. The net present value of abatement costs for the B2 baseline scenario (a medium scenario) increases from 0.2% of cumulative GDP to 1.1% as the shift is made from 650 to 450 ppm. On the other hand, the probability of meeting a two-degree target increases from 0%--10% to 20%--70%. The mitigation scenarios lead to lower emissions of regional air pollutants but also to increased land use. The uncertainty in the cost estimates is at least in the order of 50%, with the most important uncertainties including land-use emissions, the potential for bio-energy and the contribution of energy efficiency. Furthermore, creating the right socio-economic and political conditions for mitigation is more important than any of the technical constraints. [ABSTRACT FROM AUTHOR]

The article reports on Chinese president Xi Jinping's September 2015 announcement of plans for a Chinese national emissions-trading system to limit greenhouse-gas production. The plan is related to a 2014 climate change agreement between the U.S. and China. Details on other joint environmental plans by China and the U.S. are presented. It is suggested that the cap-and-trade program could contribute to the development of a global climate pact ahead of United Nations (UN) climate talks in December 2015.

The article reports on the deforestation issues which will be discussed at the global carbon emission control forum. According to the report, European companies seek to offset their greenhouse-gas emissions under the Kyoto Protocol for it is generating billions of dollars into clean-energy projects in the developing world. However, the policy does not include funds to prevent deforestation, which is responsible for some 20% of global carbon emissions. Environmental experts ensures that deforestation will be part of the meeting's agenda as the international negotiators of United Nations will be gathered for climate change in Bali, Indonesia.

The article focuses on the effectiveness of carbon offsetting in protecting the environment against green house gas emissions. Offsetting is being increasingly accepted by the businesses and the money collected is used to buy credits in the emission market and this money will be invested on renewable energy technology sources in developing countries. The article also presents that reduction of energy consumption along with voluntary measures can result in effective carbon offsetting.

In this article, the author mentions that China should upgrade its climate policy from reducing carbon intensity to setting a long-term cap on total emissions. Topics discussed include carbon dioxide mitigation, plans of the U.S. to cut carbon pollution from power plants and carbon emissions in China. It mentions that China should delink the relation between economic growth and emissions.

A letter to the editor in response to an article in the previous issue of the journal on carbon emission policy of the Chinese government is presented.

The author reflects on the progress of the emissions trading scheme in China. He cites the implementation of seven trading trials of the scheme in the country that covers around one-third of energy use, however, he also mentions the challenges and issues associated with the program due to several questions pertaining to its energy use and carbon emission calculation. However, the author asserts that the country will be able develop a reliable system for the program to ensure its success.

The author reflects on the testimony of Al Gore on climate change in the United States Congress. Gore's recommendations include reducing the emission levels, carbon tax, ban on incandescent light bulbs and new coal plants, corporate disclosure of carbon emissions and mileage standards for cars. The author also discusses the duties of politicians on climate change policy.

The article presents a chart for the European Carbon Index for the months of December 2006 and January 2007. The recent steep fall of carbon emission allowances and the second phase of carbon trading for the period 2008 to 2012 are discussed in the article. The reasons for the downward market trend including lower gas prices, fewer restrictions on carbon emissions reduction credits and other environmental issues are presented.

The article discusses the practice of carbon offsetting, which allows people to support climate-friendly projects anywhere the world. Details of carbon offsetting schemes and emissions trading are presented. Organizations like Carbon Neutral Company and Atmosfair sell credits to the people for their carbon offsetting efforts. The article, however, stresses on the need for proper regulation and accreditation for the success of offsetting.

The article reports on the nations meeting to negotiate a successor to the Kyoto Protocol in Montreal, Quebec. Europe's market in carbon dioxide moved back from the last minute deal. The agreement would provide extra security for banks, companies and investors who own the options. There has been speculation that the European Union might take aviation subject to emissions trading.

Comments on the desired framework for the successor to the Kyoto Protocol on climate change. Reaction of the Protocol's supporters to the pronouncement of British Prime Minister Tony Blair stressing the role of technology development in cutting emissions; Recommendation for developing countries like China and India to take action under the Protocol; Challenges with the existing carbon-trading system.