Download Overview of the role of Market Mechanisms

Overview of the role of Market
Mechanisms
Climate Change and Sustainable Development
Delhi 07 - 08 April 2006
Edwin Aalders
Manager IETA
The Objectives of Market Mechanism
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To provide an effective mechanism that results in
emission reductions at a least cost option.
The alternatives to Market Mechanism
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Taxation –
• Receivables spend on procurement programmes
to obtain Kyoto Units
• Able to direct resource to Sustainable
Development
Subsidies –
• Stimulating technologies with lower emission
(green energy – NL)
• Subsidies can direct itself to technologies that
focus on Sustainable Development
Both option normally result in relative higher costs to the
overall programme / society
The advantages to Market Mechanism
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Bring together potential users and sellers in an
environment that both can gain from the
interaction
Allows & Drives innovation and cost reductions
Creates competition
The disadvantages of the Market Mechanism
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Allocation always results in winners & losers
Can be complex
• Auction
• Burden sharing
Sustainable development not always clearly
addressed in the line with expectations (HFC 23
versus renewable energy)
Economic of Scale disadvantaged against small
scale projects
Example of Market Mechanism
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US NOx & SOx programme
European Union Emission Trading System
UK Emission Trading System
New South Wales
California Climate Action Registry
Chicago Climate Exchange
Japanese Emission Trading System
For more Information
International Emissions Trading Association
www.ieta.org
Edwin Aalders
[email protected]
www.carbonexpo.com