Alberta's CO2 Reduction Strategy - Assessing the Environmental Integrity of Emissions Trading Schemes

Abstract

National and regional emission trading schemes (ETSs) for greenhouse gas (GHG) emissions represent an essential policy response to climate change around the world. Witnessing a proliferation of carbon pricing schemes in different jurisdictions, the possibility of further reducing compliance costs by allowing allowances to be traded, not just within, the systems become reality. This is commonly referred as linking the systems. This process is not risk-free; as a matter of fact ill-considered links may be counter-productive, to the point that they might undercut the efforts to reduce GHG emissions. This paper signals the need to identify such ill links and points out the danger zones when linking ETSs. The paper proposes a criteria-based analysis in order to determine the degree of environmental integrity.