1 Business and Environment, Aarhus School of Business, Aarhus BSS, Aarhus University2 GlobID -Globalization and Industry Dynamics, Aarhus School of Business, Aarhus BSS, Aarhus University3 Industrial Economics, Aarhus School of Business, Aarhus BSS, Aarhus University4 Department of Economics, Aarhus School of Business, Aarhus BSS, Aarhus University5 Department of Political Science, Aarhus BSS, Aarhus University6 Department of Political Science, Aarhus BSS, Aarhus University
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