Climate system protection from the legal point of view Climate change seems to be a defining ecological issue of the 21st century. However, unlike other global threats there are still some scientific uncertainties about the gravity of this problem and its actual consequences. On the other hand the proven fact is that the Earth climate is affected by altered atmospheric concentrations of greenhouse gases. Dozens of recent studies clearly indicate that the changes in the atmosphere are a result of human activities and that an immediate action is needed to reduce greenhouse gas emissions and avoid reaching more harmful levels. If nothing is happened, climate change would lead to a rise in global average temperature together with other associated impacts such as melting glaciers, rising sea-levels or more frequent appearence of extreme weather events. The climate change issue is being addressed both at international and national level. There is a need to take a coordinated action of all states worldwide with respect to their development capabilities and historic responsibilities. International negotiations in last couple of years have shown that it will be very difficult to achieve an agreement between countries with different intrests. The aim of this diploma thesis is to summarize a development of the...

The aim of this thesis is to describe and subsequently analyze the establishment and the development of the European legal regime for greenhouse gas emission allowance trading. Methodology of the thesis is focused on capturing the processes of establishment and development of the emission trading regime as processes of rather dynamic nature, having their causes and consequences, and so is not only an isolated description of each of their respective stages. The dynamics of development is analyzed within each of the basic elements of the emission trading regime, taking due account of the relevant case law of the Court of Justice of the EU. Given the considerable complexity of the subject concerned, and therefore also the need for integration of the analysis into a certain perspective, a brief explanation of the phenomenon of climate change, including its economic implications, as well as of the international legal framework set up to tackle this issue forms a part of this thesis.

Market evidences of the last three years show that the application of the Emission Trading Scheme (ETS) may endanger the European electricity intensive industries both directly and indirectly. The direct ETS burdens come from the costs of both abating emissions from old technologies and buying emission allowances on the market. The pass through of carbon cost in electricity price implies an indirect ETS charge. The combined action of these two carbon burdens may negatively affect European industries' competitiveness at international level. Some of these industries are threatening to relocate their production activities outside of Europe. This would lead to the so-called "carbon leakage" phenomenon. Taking stock of a French industrial proposal, I consider some special contractual policies whereby electricity intensive industries can buy electricity at average cost. The rest of the market is instead priced at marginal cost. Thanks to these contracts, generators reserve part of their power plants for these industries and apply to them a price depending on the average capacity, fuel and emission costs of these dedicated units. In addition, these contracts account for the average transmission charges. Industries can choose to be supplied either at a single regional average cost price or at zonal (assimilated to nodal) average cost prices (in which case transmission costs are equal to zero). The final objective consists in analyzing the effects provoked by the application of the single and the nodal average cost prices in the cases where generators dispose of fixed capacity or can invest in new technologies. The market for transmission services is of the "flow based market coupling" type and the allowance price is endogenous. The results show that power contracts indeed partially relieve the direct and the indirect carbon costs and mitigate the incentive of European electricity intensive industries to relocate their activities, but with quite diverse regional impacts in correspondence with different national power policies. Finally, the EU-ETS drives generators' investment choices towards clean and nuclear based technologies. Models are formulated as non-monotone complementarity problems with endogenous electricity, transmission and allowance prices. These are implemented in GAMS and solved by PATH. They are applied to a prototype power system calibrated on four countries of the Central Western Europe represented by France, Germany, Belgium and The Netherlands.

La nécessité d’une action mondiale pour limiter les émissions de gaz à effet de serre est reconnue par la majorité des pays, mais l’incapacité du régime climatique international à fournir une régulation globale des rejets de GES dans l’atmosphère a conduit à l’échec de l’approche top-down. Cet impossible consensus a conduit à un point de rupture dans la structure du régime climatique mondial dont témoignent notamment le développement, avant l’Accord de Paris d’une approche bottom-up, fondée sur une gouvernance climatique polycentrique et multiniveaux. C’est dans ce contexte qu’émergent et se développent, à différentes échelles administratives, les dix-neuf systèmes de permis d’émissions négociables aujourd’hui en fonctionnement dans le monde. De fait, aucune homogénéité n’est recherchée dans la conception de ces mécanismes de réglementation. Les choix structurels sont dépendants des caractéristiques et contraintes politiques et économiques de la zone géographique à laquelle ils appartiennent. Les configurations et les effets de l’élargissement des systèmes de permis négociables sont encore débattus et cette thèse apporte des recommandations sur la manière dont ces extensions et connexions pourraient avoir lieu.A partir d’analyses de la littérature empirique et de simulations à l’aide d’un modèle d’équilibre partiel pour le secteur énergétique (modèle POLES), nous préconisons la mise en place de mécanismes de cloisonnement sectoriel et de restrictions aux échanges de permis. En effet, dans un contexte caractérisé par des constructions hétérogènes de systèmes de permis d’émissions négociables, une diffusion non-universelle de ces marchés et une inclusion non-intégrale de tous les secteurs de l’économie, nous concluons que deux types d’ajustements sont essentiels. Premièrement, nous démontrons la nécessité d’une configuration et d’un cloisonnement sectoriel des marchés, cela afin d’impulser une dynamique d’innovations, de limiter les impacts sur la compétitivité internationale et de rendre conforme le système aux exigences des politiques connexes. Deuxièmement, nous justifions l’intérêt des mécanismes de restriction aux échanges internationaux de permis d’émissions négociables ; ils permettent en particulier une meilleure redistribution des gains liés à l’échange, tout en réduisant le coût total de la politique climatique et les quantités de GES émis par rapport à une pure segmentation des marchés.Finalement, l’existence de plusieurs prix du carbone apparaît incontournable dans le contexte actuel d’une gouvernance climatique mondiale hétérogène et d’une multiplicité d’objectifs politiques nationaux. Encourager le développement de prix différents par secteur et par pays permettrait, sous certaines conditions, de favoriser l’acceptabilité politique, de renforcer l’efficacité environnementale et d’améliorer l’efficience économique des systèmes de permis d’émission. / Most countries recognize that a coordinated worldwide action to limit greenhouse gas (GHG) emissions has to be implemented. However, the countries inability to coordinate their efforts led to the failure of the top-down climate architecture. Today, the international climate governance adopts a different direction, which based on bottom-up approach. This approach promotes polycentric and multi-level governances, that induce several independent policy-makers in different administrative scales (province, state and region). Therefore, the actual implemented Emission Trading Systems (ETS), as well as the emerging ones, grow in a domestic context. This context, in terms of economic development, political commitment and geographical coverage, determine the ETS design. Then, there is no harmonized design among ETS, no universal diffusion of these mechanisms in the world and a lack of integral inclusion of all sectors in these carbon markets. While researchers and policy-makers discuss the optimal features of such systems, this thesis examines different configuration options and coverage areas for the tradable permit schemes.Using a world energy-economy partial equilibrium simulation model (POLES) and drawing on experiences with real-world ETSs (based on empirical literature), we recommend two types of adjustments: the restrictions on trade permits between sectors, in one hand, and the control of international permit exchange between ETS, in the second hand. Indeed, we demonstrate firstly the necessity to separate ETS by sector and adapt them considering the specificities of each sector. This kind of policy will stimulate innovation in each sector. Also, it will limit the impacts on the international competitiveness and it will lead climate policy to other economic policies. Secondly, we develop a model to describe the effects of exchange permits emissions considering international linking among emissions trading systems. We prove that restriction exchange mechanisms are necessary to insure the redistribution of exchange gain compared to full linking. At the same time, these trade restriction mechanisms minimize the total cost and increase GHG emissions reductions compared to a segmented market.Considering the diversity of national political objectives and the bottom-up context of world climate framework, we concluded that the coexistence of several carbon prices is unavoidable and necessary. Encouraging the development of several carbon prices can promote political acceptability, strengthen environmental efficiency and improve economic efficiency.

The growing consensus among scientists and governments on the need for immediate action to avoid the dangerous impacts of climate change has resulted in many industries starting to prepare for a carbon-constrained world, in order to analyse the effectiveness of industry response, this research has developed a theoretical framework to categorise corporate strategies on climate change in developing and industrialized countries. The framework classifies the corporate response into four sets of strategies based on their operational and management activities. The empirical data was collected from 180 companies trough a questionnaire survey in Pakistan and the UK. Twenty-four interviews with representatives from industries and other stakeholder groups were also conducted to triangulate and complement the survey results. An analysis of the empirical data indicates that corporate responses towards climate change can be characterized in four categories: indifferent, beginner, emerging and active which validates the theoretical framework. The research found that business responses to this international challenge depend on national policies, economic, social, and technological related factors. However, the strength and content of these factors varies between industrialized and developing countries, where corporate environmentalism is a relatively new phenomenon. For Pakistan, the findings suggest that, in the absence of regulatory and societal pressure, the only effective incentive for organizations is cost-savings tlirough energy efficiency projects. However, their response is shaped by the prevalence of obstacles and a lack of external pressure that prevent a different picture to emerge. The situation is different for the UK. Due to regulatory pressure, UK firms are actively involved in GHG management activities. However, climate policies concerning industries for instance, EU ETS, do not provide sufficient incentives to companies to change from 'business as usual' because of its short-term outlook, uncertainty, complexity and the generous allocation of allowances, hence very low carbon price.

Cette thèse est une évaluation des deux premières phases du Système Communautaire d’Echange de Quotas d’Emission (SCEQE). Il s'articule autour de la construction progressive d'un modèle de simulation, ZEPHYR-Flex, qui vise à reproduire les évolutions du prix et des émissions observés entre 2005 et 2012, et à les projeter jusqu'en 2020 sous différentes séries d'hypothèses. L'analyse ex post des huit premières années du système révèle que, pour comprendre son évolution, il est nécessaire d'étudier en détail le rôle joué par trois mécanismes de flexibilité: les échanges de quotas, la flexibilité spatiale (crédits carbone), et la flexibilité temporelle (banking/borrowing). Dans un premier temps, nous construisons un cadre technico-économique servant de base au mécanisme simulant les échanges de quotas dans le modèle. Le rôle des crédits carbone est ensuite examiné et un scénario pour leur utilisation jusqu'en 2020 est calculé sur cette base. Ensuite, la flexibilité temporelle est introduite dans le modèle qui, une fois les trois mécanismes de flexibilité réunis, peut reproduire la trajectoire passée du prix et des émissions. Le modèle et les leçons tirées des deux premières phases sont ensuite utilisés dans différents scénarios prospectifs à l'horizon 2020. Parmi les scénarios testés, seul un renforcement du plafond d’émission en ligne avec l'objectif européen de 2050 est en mesure de restaurer la confiance et les anticipations associées au système, deux facteurs qui conditionnent l'efficacité du SCEQE à long terme. La nécessité d’articuler correctement le SCEQE avec les autres politiques climat-énergie est également soulignée / This thesis is an evaluation of the first two phases of the EU ETS. It is articulated around the progressive construction of a simulation model, ZEPHYR-Flex, which aims at being able to replicate the observed price and emissions trajectories between 2005 and 2012, and to project them until 2020 under different sets of assumptions. The ex post analysis of the first eight years of the system reveals that to understand its development, it is necessary to study in details the role played by three flexibility mechanisms: trading, spatial flexibility (offsets), and time flexibility (banking/borrowing). In a first stage, we build a technical-economic framework for the core trading mechanism of the model. The role of offsets is then scrutinized and a scenario for their use up to 2020 is calculated on this basis. Next, the time flexibility and the related banking and borrowing behavior are introduced into the model which can then replicate the past price and emission trajectory. The model and the lessons from the first two phases are then used in different prospective scenarios to 2020. Among the scenarios tested, only a strengthening of the cap in line with the 2050 European reduction target is able to restore confidence and anticipations, two factors needed for the efficiency of the EU ETS in the long term. The issue of correctly articulating the EU ETS with other climate-energy policies is also underlined

Aviation industry has been developing throughout the last decades and is today an important part of the global economy. This constant growth makes it important to constrain the climate impacts derived from it. The IPCC report (1999), Aviation and the global atmosphere, lists four measures to reduce emissions and environmental impacts of aviation; Aircraft and engine technology options, fuel options, operational options and regulatory and economic options. The study aims to discuss the efficiency and implementation level of the measures. The theoretical frame for the research is based on literature studies whereas the empirical material is based on qualitative interviews of representatives of three key sectors; the authority, the service provider and the aircraft operator. While analysing the theoretical and the empirical results, a certain emphasis on the regulatory and economical measures has been noticed. Moreover, following conclusions have been drawn; (1) An emission trading with carbon dioxide would be an incentive to improve aircraft technology and flying procedures; (2) The best way of having international aviation included in the European emissions trading scheme (EU ETS) would be through an initial grandfathering distribution (costless distribution of permits according to historical emission and volume of fuel use) done according to a best-practise philosophy; (3) A robust instrument to measure emissions behaviour at different levels of the atmosphere is still missing. (4) The exclusion of the international aviation from the Kyoto Protocol negotiations makes it harder to include it in the existing EU ETS. Finally, all measures are needed and should be put into practise, but a trading with emissions would be the one to start the improving cycle leading to more sustainable results regarding time, environment and economy.

Climate system protection from the legal point of view The global warming is one of the most serious and acute problem, that is touching all the global society. Growing of the greenhouse gasses is evoking the change of climate system, especially the warming of the Atmosphere and the Earth. In the last 100 years the temperature rises, what cause a lot of problems not just on the environment, but impacts on human health and society. Many of recent scientist studies clearly indicate, that climate changes are a result of human activities. Consequences of the global warming have been observed for several years, included rising global average temperature, rising of the sea level, melting glaciers and severity of extremes such as heat waves, cold waves, storms, floods and droughts. To preclude this consequences, there is necessary a global action with participation of every country. The aim of the diploma thesis is an introduction to the reader create a picture of the functioning of the climate system and its changes, causes and consequences of these changes and clarify the activities to protect, whether it is the activities of international, multinational or the Czech Republic. Finally, I will try to assess the individual activities and measures, including measures of adaptation, or to compare them and...

Emission trading allowances are one of the new instrument of the environmental protection, which is, as an EU ETS component, influencing almost 400 czech companies with just about 500 air polluting sources in the Czech republic. This diploma thesis deals with the main impact of the EU ETS on the czech companies. The analysis is focused on the first trading period 2005 -- 2007 and on the first year of the second trading period 2008 -- 2012. Methodology of the analysis is based on the qualitative research with individual in-depth interviews with czech companies and is focused on the research of induced costs and diverse approach and motivations of the large and small companies within the EU ETS

This dissertation is a collection of three economics essays on different aspects of carbon emission trading markets. The first essay analyzes the dynamic optimal emission control strategies of two nations. With a potential to become the largest buyer under the Kyoto Protocol, the US is assumed to be a monopsony, whereas with a large number of tradable permits on hand Russia is assumed to be a monopoly. Optimal costs of emission control programs are estimated for both the countries under four different market scenarios: non-cooperative no trade, US monopsony, Russia monopoly, and cooperative trading. The US monopsony scenario is found to be the most Pareto cost efficient. The Pareto efficient outcome, however, would require the US to make side payments to Russia, which will even out the differences in the cost savings from cooperative behavior. The second essay analyzes the price dynamics of the Chicago Climate Exchange (CCX), a voluntary emissions trading market. By examining the volatility in market returns using AR-GARCH and Markov switching models, the study associates the market price fluctuations with two different political regimes of the US government. Further, the study also identifies a high volatility in the returns few months before the market collapse. Three possible regulatory and market-based forces are identified as probable causes of market volatility and its ultimate collapse. Organizers of other voluntary markets in the US and worldwide may closely watch for these regime switching forces in order to overcome emission market crashes. The third essay compares excess skewness and kurtosis in carbon prices between CCX and EU ETS (European Union Emission Trading Scheme) Phase I and II markets, by examining the tail behavior when market expectations exceed the threshold level. Dynamic extreme value theory is used to find out the mean price exceedence of the threshold levels and estimate the risk loss. The calculated risk measures suggest that CCX and EU ETS Phase I are extremely immature markets for a risk investor, whereas EU ETS Phase II is a more stable market that could develop as a mature carbon market in future years.