Euro Carbon Trading Scheme

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Decreasing Carbon Emissions: the European Trading Scheme

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Euro Carbon Trading Scheme

  1. 1. EUROPEAN CARBON EMISSIONS TRADING SCHEME <ul><li>By: RAJ (Roy, Andrew, John) </li></ul>
  2. 2. Background Information <ul><li>Largest Emission Trading Scheme in the world </li></ul><ul><ul><li>Two phases </li></ul></ul><ul><li>Commenced operation in January 2005 </li></ul><ul><li>Covers more than 10000 installations </li></ul>
  3. 3. Market Failure <ul><li>A situation where the allocation of production or consumption of goods and services by the free market is not efficient </li></ul><ul><ul><li>Carbon Emissions </li></ul></ul>
  4. 4. Externalities <ul><li>Negative externalities </li></ul><ul><ul><li>Greenhouse gas; major contributor to the global warming </li></ul></ul><ul><ul><li>Decreases air quality, leads to increase in population with asthma </li></ul></ul><ul><ul><li>Increases worldwide death rate </li></ul></ul>
  5. 5. Remedy – Phase One <ul><li>January 2005 </li></ul><ul><li>Cap-and-trade system </li></ul><ul><ul><li>Firms are given “allowances” </li></ul></ul><ul><ul><li>Allowances can be bought and sold </li></ul></ul>
  6. 6. Efficiency – Phase One <ul><li>No </li></ul><ul><ul><li>Cap/limit on carbon emissions too high </li></ul></ul><ul><ul><li>“ Allowances” too cheap </li></ul></ul><ul><ul><ul><li>From 1.2 Euros to 0.1 Euros per ton of CO 2 </li></ul></ul></ul><ul><ul><ul><li>Less incentive </li></ul></ul></ul><ul><li>Emissions actually increased by 1.9% between 2005-2007 </li></ul><ul><ul><li>Over 6 billion tons CO 2 emitted </li></ul></ul>
  7. 8. Remedy – Phase Two <ul><li>January 2008 </li></ul><ul><li>Decreased total amount of emissions allowed </li></ul><ul><li>Price of allowances increased </li></ul>
  8. 9. Efficiency – Phase Two <ul><li>YES! </li></ul><ul><ul><li>More incentive to emit less </li></ul></ul><ul><ul><li>High goals/expectations </li></ul></ul><ul><ul><ul><li>By 2012, include all greenhouse gases from all sectors </li></ul></ul></ul>
  9. 12. Sources: <ul><li>&quot;Carbon emissions trading in Europe: Lessons to be learned.&quot; MITEI | Carbon emissions trading in Europe . MITEI. 8 Mar 2009 <http://web.mit.edu/mitei/research/spotlights/europe-carbon.html>. </li></ul><ul><li>&quot;Environment -Climate Change - Emission Trading Scheme.&quot; Emission Trading Scheme . 28 Nov 2008. EUROPA. 8 Mar 2009 <http://ec.europa.eu/environment/climat/emission/index_en.htm>. </li></ul><ul><li>&quot;European Union Emission Trading Scheme.&quot; European Union Emission Trading Scheme - Wikipedia, the free encyclopedia . 08 Mar 2009. Wikipedia. 9 Mar 2009 <http://en.wikipedia.org/wiki/European_Union_Emission_Trading_Scheme>. </li></ul><ul><li>&quot;Q&A: Europe's carbon trading scheme.&quot; BBC NEWS | Science & Environment . 20 Dec 2006. BBC. 8 Mar 2009 <http://news.bbc.co.uk/go/pr/fr/-/2/hi/science/nature/4114921.stm>. </li></ul>

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