EUROPEAN EMISSIONS TRADING SCHEME

Submited by Group Q Section 3

Geet Panwar
Marina Panggeng
Nishant Ray
Prabhat Saxena
Raghav Bhatnagar
Raunak Manrtri
Shivam Paliwal
Yashwardhan Kabra

1. Emissions trading (also known as cap and trade) has been

widely touted as a market-based solution to emissions
reduction .
a. What are the main advantages of cap and trade over
international negotiations , carbon taxes ,and other
approaches ?
b. Why is the cement industry generally opposed to it,and the
energy industry generally in favour ?
c. Why is the European Union eager to champion its ETS ?
Ans : a. i. market based mechanism
ii. free market approach expected to foster
competition and lead
to decarbonized growth
ii. expected to create an ecosystem for the
development of clean
energy entrepreneurial and societal initiatives
iii. increase in carbon trading
b.
i. energy industry has made huge investments in
clean energy
ii. scope for renewables in the energy industry
iii. less technological scope in decarbonization for
the cement
industry
iv. costs of investments in permits to be higher
for the cement
industry
c. i. recognized advantages of emissions trading
ii. market-approach to emissions preferred to
carbon taxes and
other policy initiatives
iii. strengthen EUs claim to a leadership role in
combating climate
change
iv. champion of market based solutions to
managing the global
commons
2. The EU ETS has been the flagship of Europes fight against
global warming.
a. What have been the main achievement of the ETS ?
b. Why has it not been the successs some hoped for /
c. Is Teyssen right to say it is bust ?
Ans: a. i. creating a competitive platform for carbon
trading
ii. a market based approach to encourage
decarbonized

growth
iii. contribution to combating global climate
change
b. i. a lag time is required before such initiatives can
pay
dividends in all sectors
ii. discongruence in emissions trading policies in
different
parts of the globe
iii. unequal distribution of benefits of carbon
permits across
industries
d. In the temporary context,Teyssen may have a point but
such initiatives cannot be expected to have immediate
beneficial consequences .More so in this case as the
benefits need to percolate and diffuse in the entire
business ecosystem of the world ,at least in the main
trading and commercial centres.
3. Cap and trade has engendered a lot of political controversy
worldwide.
a. Why are Russian and Chinese angry about the European
system being extended to their industry ?
b. Compare the ETSs development with trading schemes in
the USA and Austalia.Why have national governments in
those countries opposed such schemes ?
c. Is it likely that a cap-and-trade type approach will be
extended to other sustainability challenges such as
biodiversity and ecosystems management ?
Ans :
a. i. Nationalistic and economic concerns
ii. Yet to be standardized policies on emissions trading
iii. Absence of consensus pertaining to climate change
initiatives
iv. Incongruent trade and commerce regimes in
different countries
b. i. Strong government led organizational and policy
initiatives like the
EPA in the USA
ii. Initiatives like the RGGI (Regional Greenhouse Gases
Initiative )
iii. Divided approach towards cabon emissions unlike ETS
in EU
iv. Australia scrapped carbon tax in 2014
v. Unlike EU, no clarity in carbon emission reduction
goals of Australia
c. There is a huge possibility of such an approach being
followed in

ecosystem and biodiversity management as economic

concerns have always clashed with environmental goals and
creating economic benefits in achieving environmental goals is a
major consideration in such efforts.