The ongoing process of changes in the global climate system is rather undisputed these days, as it is evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice as well as rising global sea levels. Moreover, while the exact causes for the currently observed increases in global temperatures are yet to be established, a growing consensus is emerging that at least part of it is human-caused. As a result, various panels and organisations have emerged throughout the world, which are working on strategies how to reverse or at least halt this process. As Kolk & Pinske point out the resulting climate policies across different sectors and locations are diverse. Various companies are trying to restructure their operations in order to reduce waste and to make their processes more energy efficient. A number of governments are enacting policies to replace CO2-intensive energy, released through the burning of coal, oil and gas by more environmentally friendly, so-called ‘clean’ energy, such as wind, solar, or hydroelectric power. Others are resorting back to nuclear power asserting that the actual risks of this technology are by far not as high as they are perceived to be or as they were some years ago. A further alternative that has recently been implemented by the EU is a ‘cap-and-trade system’ for energy-intensive industries, which defines strict limits for the absolute amount of emissions. While the responsibility for complying with this regulation rests with the companies in the respective industries, they are free to find ways how to stay within the limits. Compensating for emissions by purchasing carbon credits is one prominent option available to companies in this respect.
Purpose of this paper will hence be to analyse the current state of emissions trading development and assess the prospects of a universal worldwide emissions trading scheme.
Table of Contents
1. Introduction
2. Global Climate Change
2.1. Intergovernmental Panel on Climate Change (IPCC)
3. Emissions Trading
3.1. The Concept
3.2. Emissions Trading under the Kyoto Protocol
3.3. The European Union Greenhouse Gas Emissions Trading Scheme
3.4. International Carbon Action Partnership
4. SWOT Analysis
5. Conclusion
6. Bibliography
Research Objectives and Focus Areas
The primary objective of this paper is to analyze the current development status of emissions trading systems and to evaluate the feasibility and potential prospects of implementing a universal, worldwide emissions trading scheme to mitigate the impacts of global climate change.
- The scientific consensus on global warming and the role of anthropogenic greenhouse gas emissions.
- The mechanics of cap-and-trade systems and their function as market-based instruments.
- An evaluation of current international frameworks, specifically the Kyoto Protocol and the EU ETS.
- A strategic SWOT analysis of global emissions trading to identify strengths, weaknesses, opportunities, and threats.
Excerpt from the Publication
3.1. The Concept
The introduction of emissions trading schemes (ETS) gives companies the option to compensate for their emissions, instead of reducing them by changing their products or processes. It enables companies to buy or sell certified emission allowances in a specifically created market. For some companies trading such certified emission allowances can be more cost-effective than changes in their production processes or products. Particularly for companies with a large experience in trading in general, this option may be less complicated than the introduction of large-scale innovations.
To a certain extent, the choice between emissions trading and product- or process-oriented improvements can be viewed as a make-or-buy decision. Of course companies can also do both: they can achieve some reductions internally and buy the balance. Moreover, it is also possible that companies make-and-sell. Such a strategy particularly fits those companies that can reduce emissions at a relatively low cost and sell the resulting surplus of emission credits to other companies. In fact, the existence of such make-and-sell companies is crucial for the functioning of an emissions trading market, as it works like any other market on the principle of supply and demand. A company cannot buy emission credits in the market if there is no seller that offers credits acquired by reduction of emissions through innovation. In order for the market of emissions trading to work properly it is necessary that a balance between buyers and sellers of emission credits exist which illustrates the relationship between compensation and innovation and suggests that an emissions trading scheme to some extent furthers the development of environmentally-friendly technologies and processes.21
Summary of Chapters
1. Introduction: Outlines the global climate change context and the rising importance of market-based strategies like cap-and-trade for industrial emissions.
2. Global Climate Change: Explores the scientific consensus on global warming, the greenhouse effect, and the role of the IPCC in defining future reduction targets.
3. Emissions Trading: Details the economic mechanics of emission markets and reviews specific implementations such as the Kyoto Protocol and the EU ETS.
4. SWOT Analysis: Evaluates the strategic internal and external factors influencing the feasibility of a globalized emissions trading framework.
5. Conclusion: Summarizes the findings, noting that while emissions trading offers theoretical benefits, achieving a global consensus remains a significant political challenge.
6. Bibliography: Lists the academic sources, reports, and policy documents used to support the research.
Keywords
Global warming, Climate change, Emissions trading, Cap-and-trade, Greenhouse effect, IPCC, Kyoto Protocol, EU ETS, Carbon credits, Sustainability, SWOT analysis, Environmental policy, Greenhouse gases, International cooperation, Industrial emissions.
Frequently Asked Questions
What is the central focus of this research paper?
The paper examines the viability of global emissions trading as a tool to mitigate climate change, analyzing its conceptual framework and political feasibility.
Which key thematic areas are addressed in the study?
The study covers the science of global warming, current market-based emission regulations, and a SWOT analysis of global trading schemes.
What is the primary objective or research question?
The research aims to evaluate whether a universal worldwide emissions trading scheme is a realistic and effective mechanism for future global climate policy.
Which scientific methodology is applied in the paper?
The author employs a literature-based analysis, utilizing findings from the IPCC and institutional reports to conduct a strategic SWOT analysis of current climate policies.
What topics are covered in the main section of the paper?
The main section discusses the greenhouse effect, the operational concepts of trading schemes, existing initiatives like the EU ETS, and the strategic outlook for international carbon markets.
How are the keywords for this study defined?
The keywords are centered around environmental economics, global warming, and the regulatory frameworks governing emission reductions.
How does the Kyoto Protocol relate to emissions trading?
The Kyoto Protocol established a framework for reducing emissions, introducing the Clean Development Mechanism (CDM) to allow carbon credit trading between developed and developing nations.
What does the SWOT analysis reveal about emissions trading?
It highlights that while emissions trading has a strong theoretical foundation, it faces significant risks from the free-rider problem and political reluctance in major industrial nations.
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- Jens Hillebrand (Autor:in), 2008, Carbon Credits and Global Emissions Trading, München, GRIN Verlag, https://www.grin.com/document/115372
