International Emissions Trading: A Survey of Phases of the European Union Emissions Trading Scheme

This paper provides a review of pertinent trading, regulatory and policy issues in the EU-ETS since 2005. We review the first two phases of the scheme and speculate on auctioning related issues in the third phase. Our report documents a number of variables contributing to inefficiencies in Phase I and significant general market improvements in Phase II. This review suggests that the prospects for continued global action on climate change after Durban COP 2011 rests on the continued success of the EU-ETS.