The future of emissions trading

Meckling, Jonas

doi:10.1002/wcc.293

Cited by 7 publications

(4 citation statements)

References 30 publications

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“…They recommended that climate finance mechanisms should be more responsive to the needs and preferences of vulnerable communities, and more flexible and adaptive to changing contexts and uncertainties. Meckling (2015) examined the conditions and consequences of international climate finance, which is a key component of the global response to climate change. The author analyzed the political and economic factors that shape the allocation and effectiveness of climate finance, as well as the implications of different financing modalities for equity and efficiency.…”

Section: Empirical Reviewmentioning

confidence: 99%

Climate Finance and its Role in Climate Policy

Scott

2023

JCP

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Purpose: The main objective of this study was to explore climate finance and its role in climate policy. Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library. Findings: The findings revealed that there exists a contextual and methodological gap relating to climate finance and its role in climate policy. Preliminary empirical review revealed that the importance of continuously assessing and adapting climate finance mechanisms to meet evolving climate policy needs. Climate finance is not merely a financial resource but a crucial tool in the global fight against climate change, and its effective deployment can significantly contribute to achieving the goals set forth in international climate agreements like the Paris Agreement. Unique Contribution to Theory, Practice and Policy: The Neoliberal Institutionalism theory, Political Economy theory and the Environmental Governance theory may be used to anchor future studies on climate finance. The study suggested for enhanced transparency and accountability, strengthening capacity building, alignment of climate finance with national priorities, promoting innovative financing mechanisms and facilitating south-south cooperation.

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Section: Empirical Reviewmentioning

confidence: 99%

Climate Finance and its Role in Climate Policy

Scott

2023

JCP

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“…California's experience shows that a combination of allocation methods, starting with free allocation and gradually increasing the use of auctioning, could be both a politically feasible and environmentally sound approach (Schmalensee & Stavins, ). And ETS programs around the world show the importance of having consistent and continuous policies in order to provide stable market expectations and confidence (Meckling, ). Besides these universal challenges, we argue that China also faces challenges different from other countries and needs to find new solutions.…”

Section: The Major Challengesmentioning

confidence: 99%

Key challenges for China's carbon emissions trading program

Wang

Liu

Tan

et al. 2019

WIREs Climate Change

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China's national carbon emissions trading program is expected to become the world's largest carbon market and is critical for achieving China's domestic mitigation goals. But China's trading program is likely to face significant challenges, due to its large scale and high complexity. First, the accuracy and credibility of China's emissions data have been widely criticized. There are significant inconsistencies between the national and provincial emissions inventories, and the facility‐level data are even less satisfying. Institutional capacities related to the carbon market need to be significantly enhanced to strengthen monitoring, reporting, and verifying capabilities. Second, compared to emissions trading programs in other parts of the world, China's program is likely to face greater market volatility, due to the country's economic structural transition from a manufacturing‐based to a service‐based economy. Wise cap‐setting and allowance allocation methods and proper price containment mechanisms are needed to maintain market stability. And third, China is a market economy with many features of a central planning system, particularly in the energy sector. Large state‐owned enterprises (SOEs) do not act as profit‐maximizing entities, and their behaviors could undermine the efficiency of the cap‐and‐trade program. To address these challenges, we provide a series of policy recommendations, including capacity building from central to local levels, wise selection of allowance allocation methods to cope with changing economic realities, and deepening market‐oriented reforms in energy sectors and SOEs. This article is categorized under: The Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior

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“…The theory assumes there is effectively one policymaker, one citizen and one firm, but the fragmented and heterogeneous real world gives rise to political economy complications. For example, decision makers in the idealized world are oblivious to the differences between a carbon tax and an ETS; they face no reelection constraint; and are insensitive to lobbying on how revenues are recycled, or on how (many) free permits are allocated to energy‐intensive or trade‐exposed sectors . Finally, the theory may be omitting relevant features of the problem: there are no market failures other than the climate change externality and no preexisting distortions in the economy.…”

Section: Theory Of Carbon Pricing In Good Times…and Badmentioning

confidence: 99%

How to price carbon in good times … and bad!

Doda

2015

WIREs Climate Change

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Emissions trading systems and carbon taxes are two market-based policy instruments for responding to the climate change externality. This article focuses on the relationship between the design of these carbon pricing instruments and business cycle fluctuations. In particular, whether and how these instruments should respond to business cycles is a topical policy question. To answer it, the article brings together the relevant empirical and theoretical results from the academic literature. It finds that building responsiveness into the design of carbon pricing instruments can reduce the burden of regulation by distributing it more evenly over time. Specifically, relative to a fixed cap emissions trading system, this can be achieved by relaxing the cap during economic expansions and tightening it during recessions. Similarly, a carbon tax regime in which the tax is higher during expansions, and lower during recessions, is likely to improve welfare compared to a cyclically unresponsive tax. In practice, a mechanism which renders real-world carbon pricing instruments responsive is a challenging task. The article provides an overview of the trade-offs involved by focusing on the broad classes of mechanisms explored in the literature. The choice of responsiveness-inducing mechanism must crucially consider country characteristics such as the properties of fluctuations in the country's GDP and emissions, any relevant political economy concerns and its institutional background.

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The future of emissions trading

Cited by 7 publications

References 30 publications

Climate Finance and its Role in Climate Policy

Climate Finance and its Role in Climate Policy

Key challenges for China's carbon emissions trading program

How to price carbon in good times … and bad!

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