Journal Press India^®

Author Details ( * ) denotes Corresponding author

The global energy landscape is rapidly changing as a result of economic shifts and technological breakthroughs. There has been an increased focus on climate change through the phenomenon of global warming, which is caused by accumulation of green house gases (GHG) in the atmosphere. Efforts have been underway at the international as well as national level for abatement of GHG emissions through cost-effective and sustainable solutions. The UNFCCC with its mandate of a safer future launched the Kyoto Protocol in 1997, to firm-up ongoing efforts for stabilizing the ecosystems. The Protocol commits its Parties through internationally binding emission reduction commitments. The idea was to create an international unified carbon market, which would render a check on the worldwide emission levels. However, actual experience with the markets has revealed that the dream of a global top-down market is far from being realised. Against this backdrop, this paper attempts to review the evolution of carbon markets, through the mechanism of International Emissions Trading. It also highlights some trends and developments that have characterised these markets over the past few years. Overall, the literature seems to signify the emergence of a decentralised bottom-up design of the market. There is a multitude of regional, national and sub-national markets in operation, with EU ETS as the frontrunner. Moreover, these systems are starting to link with one another to facilitate the evolution of an international carbon market, in the wake of an unpromising future outlook for Kyoto credits.

Keywords

Carbon trading, Greenhouse gases, Kyoto Protocol

1. Brandi, Clara (2013). Trade and climate change: Environmental, economic and ethical perspectives on border carbon adjustments. Ethics, Policy & Environment, 16(1): 79-93.
2. Branger, Frédéric et al. (2013). The European Union Emissions Trading System: Should we throw the flagship out with the bathwater?’. Working Paper No. 48, Centre International de Recherches sur I’Environnement et le Développement (CIRED).
3. Dinica, Valentina (2002). Energy policies for CO2 emissions reduction.  In Yotova, A. (ed) Natural Resource System Challenge II - Climate Change, Human Systems and Policy, Encyclopedia of Life Support Systems, EOLSS Publishers Co., Oxford: UK.
4. Goldar, Bishwanath & Pratap, Devender (2013). Emission reduction commitments and international carbon trading: Assessment of impact on India and China based on GTAP-E Model’. Web reference: http://ssrn.com/abstract=2207651.
5. Gupta, Yuvika (2011). Carbon credit: A step towards green environment. Global Journal of Management and Business Research, 11(5): 16-20.
6. Laing, Tim, Stao, M., Grubb, M., & Comberti, C. (2013). Assessing the effectiveness of the EU emissions trading system. Working Paper No. 126, Centre for Climate Change Economics and Policy, London School of Economics
7. Leiter, Andrea M., Paolini, Arno & Winner, Hannes (2011). Environmental regulation and investment: Evidence from European industry data. Ecological Economics,70(4): 759–770.
8. Lo, Alex Y. (2013). Carbon trading in a socialist market economy: Can China make a difference? Ecological Economics, 87: 72-74.
9. Newell, Richard G., Pizer, William A., & Raimi, Daniel (2013). Carbon markets 15 years after Kyoto: Lessons learned, new challenges. Journal of Economic Perspectives, 27(1): 123-146.
10. World Bank (2014). State and Trends of Carbon Pricing, World Bank, May. Washington DC,
11. Zhang, Junjie & Wang, Can (2011). Co-benefits and additionality of the clean development mechanism: An empirical analysis. Journal of Environmental Economics and Management, 62(2): 140–154.