<p>In Rio De Janeiro, 1992, was the first document signed that meant a responsibility for industrial countries to decrease their emissions, United Nations Framework Convention on Climate Change (UNFCCC). Thirteen years later was the first legal binding document signed, the Kyoto protocol, and for the first time industrial countries all over the world was bound to decrease their emissions on greenhouse gases. Within the framework of this commitment, three flexible mechanisms (Clean Development mechanism, Joint Implementation and Emission trading) were introduced with the function to reduce the economical costs of the commitment. The flexible mechanisms Emission Trading (ET) is what this report is about.</p><p>The report starts with a description of carbon dioxide and it’s effect on the environment, thereafter comes a background review of the national agreements who lies as a ground to the implementation of emission trading as a management control measure in Sweden and the rest of the world.</p><p><em><p>Keywords</p>: United Framework Convention on Climate Change, Kyoto protocol, Flexible mechanisms, Emission trading, carbon dioxide </em></p>

In Rio De Janeiro, 1992, was the first document signed that meant a responsibility for industrial countries to decrease their emissions, United Nations Framework Convention on Climate Change (UNFCCC). Thirteen years later was the first legal binding document signed, the Kyoto protocol, and for the first time industrial countries all over the world was bound to decrease their emissions on greenhouse gases. Within the framework of this commitment, three flexible mechanisms (Clean Development mechanism, Joint Implementation and Emission trading) were introduced with the function to reduce the economical costs of the commitment. The flexible mechanisms Emission Trading (ET) is what this report is about. The report starts with a description of carbon dioxide and it’s effect on the environment, thereafter comes a background review of the national agreements who lies as a ground to the implementation of emission trading as a management control measure in Sweden and the rest of the world. Keywords : United Framework Convention on Climate Change, Kyoto protocol, Flexible mechanisms, Emission trading, carbon dioxide

This thesis examines the debate between the auctioning of green house gas permits vs. the free distribution of green house gas permits, also known as grandfathering. The authors’ purpose is to discover which allocation system is more suited under the European Union Emissions Trading Scheme (EU ETS). To help draw the conclusion, data and views have been collected from different known researchers within the emission trading field and – compared to different theories and the view of the authors. Evidence suggested that auctioning as an allocation system is more efficient than a system based solely on free allocation (e.g. grandfathering). Evidence of this can be found in the electricity sector by comparing the electricity prices the consumer stand to pay before and after the producing firm receives there emission rights for free. When the producing firms receive their emission rights free of charge they stand with the option to sell their rights or to use them in their production. By selling its electricity the producers wants to recover their forgone opportunity and can do so via the price paid for by the consumer. By also looking at the two systems under distribution one can also see that auctioning is more efficient since under this system, the polluters end up buying the right to pollute from the public. With a system based on grandfathering, the affected firms under EU ETS will receive windfall profits when given the emission rights for free as they can choose to store and sell the rights at a later date. / Denna kandidatuppsats undersöker debatten kring auktionering vs. gratis tilldelning av utsläppsrätter även kallat grandfathering. Målet med uppsatsen är att fastslå vilket tilldelningssystem som är bättre anpassat för användning i Europeiska Unionens handelssystem med utsläppsrätter, (EU ETS). För att komma fram till en slutsats, har författarna samlat data och teori från diverse kända forskare inom området och jämfört dessa med sina egna ekonomiska teorier och tankar. I rapporten framgår det att auktionering som tilldelningssystem är sannolikt mer effektivt än ett tilldelningssystem baserat enbart på gratis tilldelning. Detta går att påvisa bland annat genom att jämföra priset av elektricitet som konsumenten får betala både innan och efter att företagen erhållit gratis utsläppsrätter. När företagen som verkar inom energisektorn får sina utsläppsrätter gratis står de med möjligheten att sälja dem vidare eller att använda sig av dem. På så vis om företagen väljer att producera elektricitet kan de inte längre sälja sina utsläppsrätter och måste på så sätt kompensera detta beslut, vilket de ofta gör via en höjning av priset för konsumenten. Ser man även till själva tilldelningssystemet är auktionen av utsläppsrätter ett bättre val då det gör så att de företag som släpper ut växthusgaser även får stå för notan. Vid gratis tilldelning får företagen som är berörda av EU ETS en oväntad inkomst som de kan spara eller använda när de behagar.

Although many nations have recognized the need to protect the Earth’s climate, human activities are continuing to result in a change in greenhouse gas levels that threaten to result in a detrimental change in the Earth’s climate in terms of ongoing human life. The EU ETS has been developed and implemented in Europe as a key tool to meet the goals set by the Kyoto Protocol. Much political debate has arisen in recent years regarding the implementation of a carbon-trading regime in the United States. Many commentators have recognized that the success of any proposed carbon regime will be determined by how well it is tailored to fit certain economic realities in the United States. However, the adequacy of proposed carbon trading frameworks with regard to potential linkage to existing systems, namely the EU ETS, raises additional considerations. My study seeks to expose these considerations for debate and determine whether existing political considerations in the United States are adequate for the establishment of future linkages or whether further measures are required.

Although many nations have recognized the need to protect the Earth’s climate, human activities are continuing to result in a change in greenhouse gas levels that threaten to result in a detrimental change in the Earth’s climate in terms of ongoing human life. The EU ETS has been developed and implemented in Europe as a key tool to meet the goals set by the Kyoto Protocol. Much political debate has arisen in recent years regarding the implementation of a carbon-trading regime in the United States. Many commentators have recognized that the success of any proposed carbon regime will be determined by how well it is tailored to fit certain economic realities in the United States. However, the adequacy of proposed carbon trading frameworks with regard to potential linkage to existing systems, namely the EU ETS, raises additional considerations. My study seeks to expose these considerations for debate and determine whether existing political considerations in the United States are adequate for the establishment of future linkages or whether further measures are required.

<p>This thesis examines the debate between the auctioning of green house gas permits vs. the free distribution of green house gas permits, also known as grandfathering. The authors’ purpose is to discover which allocation system is more suited under the European Union Emissions Trading Scheme (EU ETS).</p><p>To help draw the conclusion, data and views have been collected from different known researchers within the emission trading field and – compared to different theories and the view of the authors.</p><p>Evidence suggested that auctioning as an allocation system is more efficient than a system based solely on free allocation (e.g. grandfathering). Evidence of this can be found in the electricity sector by comparing the electricity prices the consumer stand to pay before and after the producing firm receives there emission rights for free. When the producing firms receive their emission rights free of charge they stand with the option to sell their rights or to use them in their production. By selling its electricity the producers wants to recover their forgone opportunity and can do so via the price paid for by the consumer.</p><p>By also looking at the two systems under distribution one can also see that auctioning is more efficient since under this system, the polluters end up buying the right to pollute from the public. With a system based on grandfathering, the affected firms under EU ETS will receive windfall profits when given the emission rights for free as they can choose to store and sell the rights at a later date.</p> / <p>Denna kandidatuppsats undersöker debatten kring auktionering vs. gratis tilldelning av utsläppsrätter även kallat grandfathering. Målet med uppsatsen är att fastslå vilket tilldelningssystem som är bättre anpassat för användning i Europeiska Unionens handelssystem med utsläppsrätter, (EU ETS).</p><p>För att komma fram till en slutsats, har författarna samlat data och teori från diverse kända forskare inom området och jämfört dessa med sina egna ekonomiska teorier och tankar.</p><p>I rapporten framgår det att auktionering som tilldelningssystem är sannolikt mer effektivt än ett tilldelningssystem baserat enbart på gratis tilldelning. Detta går att påvisa bland annat genom att jämföra priset av elektricitet som konsumenten får betala både innan och efter att företagen erhållit gratis utsläppsrätter. När företagen som verkar inom energisektorn får sina utsläppsrätter gratis står de med möjligheten att sälja dem vidare eller att använda sig av dem. På så vis om företagen väljer att producera elektricitet kan de inte längre sälja sina utsläppsrätter och måste på så sätt kompensera detta beslut, vilket de ofta gör via en höjning av priset för konsumenten.</p><p>Ser man även till själva tilldelningssystemet är auktionen av utsläppsrätter ett bättre val då det gör så att de företag som släpper ut växthusgaser även får stå för notan. Vid gratis tilldelning får företagen som är berörda av EU ETS en oväntad inkomst som de kan spara eller använda när de behagar.</p>

The aim of this thesis is to study China's position regarding the global climate and the numerous topics discussed in the global meetings held during 1997, ending in the Kyoto summit in the same year. Chinas position during this year was evidently on the side of developing countries. China regarded topics such as technology transfer, emission trading and Commitments for the participating parties as very important topics which had to be considered. Chinas final position regarding these subjects was during 1997: - Increased funding and technology transfer resources to developing countries. - Objection to the inclusion of emission trading in the protocol. - No new commitments of any nature for developing countries. - National development is Chinas key issue.

For more than 20 years, cap-and-trade system has served as an efficient market-based mechanism to reduce emission of air pollutants such as sulfur dioxide and greenhouse gas. In this system, a limited amount of emission allowances are traded between affected firms with no price restriction. A potential problem arises when market demand of the allowances significantly surpasses market supply: allowance prices could boom to unexpected high level that jeopardizes the overall economy. Safety valve, an innovative mechanism, sets an upper limit of the allowance price and eliminates the risk of allowance price spike. Yet individual firms would bear less incentive to undertake substantial investment in costly emission reduction equipment. This paper analyzes how firms would change their investment strategy when we add a safety valve to a cap-and trade system. Since the allowance price evolution process is time dependent and does not follow the standard Geometric Brownian Motion, there is no analytical solution to this problem, hence we base our analysis on numerical analysis. Using a lattice model, we conclude that a safety valve would undoubtedly delay firms’ actual investment in emission reduction equipment. We also conduct sensitivity tests to analyze how would a firm’s investment strategy respond to change in some model parameters.

Increasingly the body of research shows that tourism is vulnerable to climate change. Tourism is also a non-negligible contributor to climate change, primarily through rapidly increasing air travel. Recently, a number of tourism destinations that are dependent on long-haul tourism have expressed concerns about the impact of climate policy (both implemented and proposed) on tourist mobility and arrivals to their countries. This thesis examines outcomes from a model which projects how climate mitigation policy could influence arrival numbers to the Caribbean region; an area projected to be disproportionately impacted by climate change. While impacts on this region are likely to be both physical as well as economical, mitigation policy restricting emissions from international aviation is likely to be the first wave of climate change effects felt. This policy, coupled with the fluctuation of global oil prices, may be a significant deterrent for travelers to the Caribbean. Different scenarios using likely mitigation policy costs on international flights and oil price fluctuations were modeled to understand how these tourism-dependent nations might fair with increases in travel cost due to conditions beyond their control. Both region-wide and destination specific results were examined showing that visitor numbers could decrease versus a business as usual scenario with climate policy and heightened oil prices, but not significantly until climate policy with deeper emission cuts and carbon prices higher than currently suggested are put in place. Result are not uniform across the region, and show that certain destinations are projected to be more vulnerable to climate mitigation policy than others. Recommendations focusing on both the aviation industry’s inclusion in climate policy and those to aid the region’s tourism sector are provided.

Increasingly the body of research shows that tourism is vulnerable to climate change. Tourism is also a non-negligible contributor to climate change, primarily through rapidly increasing air travel. Recently, a number of tourism destinations that are dependent on long-haul tourism have expressed concerns about the impact of climate policy (both implemented and proposed) on tourist mobility and arrivals to their countries. This thesis examines outcomes from a model which projects how climate mitigation policy could influence arrival numbers to the Caribbean region; an area projected to be disproportionately impacted by climate change. While impacts on this region are likely to be both physical as well as economical, mitigation policy restricting emissions from international aviation is likely to be the first wave of climate change effects felt. This policy, coupled with the fluctuation of global oil prices, may be a significant deterrent for travelers to the Caribbean. Different scenarios using likely mitigation policy costs on international flights and oil price fluctuations were modeled to understand how these tourism-dependent nations might fair with increases in travel cost due to conditions beyond their control. Both region-wide and destination specific results were examined showing that visitor numbers could decrease versus a business as usual scenario with climate policy and heightened oil prices, but not significantly until climate policy with deeper emission cuts and carbon prices higher than currently suggested are put in place. Result are not uniform across the region, and show that certain destinations are projected to be more vulnerable to climate mitigation policy than others. Recommendations focusing on both the aviation industry’s inclusion in climate policy and those to aid the region’s tourism sector are provided.