The US has been criticized for wanting to earn a fortune on a global CO2 market. However, compared to the situation without trade and provided that such a market is designed so that it does not pay to cheat, a global CO2 market may provide the world with an epoch-making means of cost-effective control which can solve future global environmental problems. The economic gains from 'hot air' distributions of permits and CO2 trade make the system politically attractive to potential participants. For example, vital financial subsidies from the EU to Eastern Europe are to be expected. It will probably not pay to cheat if quotas are renewed periodically by the UN. Cheating countries are then to be excluded from further profitable trade. Also, a periodical renewal of permits makes it possible to tighten target levels in the future.
Environmental Policy and Governance, 1999, Vol 9, Issue 6, p. 232-37
Global CO2 Trade; Permit Market; USA; Enforcement; Hot Air; Russia; United Nations; Cheating; Collective Action; Cost-Effectiveness