Carbon Pricing
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Carbon Pricing

Design, Experiences and Issues

Edited by Larry Kreiser, Mikael S. Andersen, Birgitte E. Olsen, Stefan Speck, Janet E. Milne and Hope Ashiabor

Carbon Pricing reflects upon and further develops the ongoing and worthwhile global debate into how to design carbon pricing, and how to utilize the financial proceeds in the best possible way for society. The world has recently witnessed a significant downward adjustment in fossil fuel prices, which has negative implications for the future of our environment. In light of these negative developments, it is important to understand the benefits of environmental sustainability through well-documented research. This discerning book considers the design of carbon taxes and examines the consequential outcomes of different taxation compositions as regulatory instruments. Expert contributors assess a variety of national experiences to provide an empirical insight into the use of carbon taxes, emissions trading, energy taxes and excise taxes. The overarching discussion concludes that successful policies used by some countries can be implemented in other jurisdictions with minimum new research and experimentation.
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Chapter 3: Fault lines between fees and taxes: legal obstacles for linking

Stefan E. Weishaar


Over the last decades concerns about climate change have been intensifying yet international agreements on a global solution in the form of a second Kyoto Protocol are not forthcoming. In the absence of such a global solution, an increasing number of national and regional greenhouse gas emissions trading schemes address climate change. Currently such schemes are operating in the European Union, in Switzerland, in North America (the Regional Greenhouse Gas Initiative (RGGI) and the Western Climate Initiative (WCI)), New Zealand, Australia, Japan, Kazakhstan and China. Because least cost abatement options are spread all over the world, linking of emissions trading schemes reduces overall abatement costs and leads to a convergence of international emission allowances prices: consequently the same amount of global warming protection can be attained at lower costs. Moreover, linking by enlarging emissions trading markets and creating more opportunities for trading would lead to more market liquidity with a more stable price signal. Allowance prices that are the same across different emissions trading systems would also eliminate competitive distortions that might arise from differences in pre-link allowance prices. Without having to wait for a global solution to climate change, creating a link between existing and emerging emissions trading systems (ETSs) can help to reduce carbon emissions at low costs and thereby help to foster political acceptance for greenhouse gas reductions and perhaps even lead to further proliferation of ETSs that could help to overcome the current political stalemate.

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