Tradeable Permits in Transport

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Article 16 bis was a last-minute addition to the Protocol negotiated in Kyoto in December 1997 at the third Conference of the Parties to the United Nations Framework Convention on Climate Change. It calls on the Parties to develop rules and guidelines for emissions trading 'for the purpose of meeting quantified emission limitation and reduction commitments'. No concrete consideration has been given yet to the modalities of introducing a scheme for trading emissions in countries like Australia. It is therefore timely to identify at least some of the practical implications that any such scheme might have, if it were to be introduced at some time in the future. Most of the literature on trading in greenhouse emissions has focused either on international aspects, or on general principles. Much of the literature is also incestuous, because the same examples of the limited number of existing (non-greenhouse) schemes tend to be drawn on in each article or book. Little has been written on the likely effects on various sectors of domestic economies. Even less has been written on the difficult issue of how to take account of carbon sinks. By contrast, this Working Paper breaks new ground by identifying a number of practical issues that merit serious consideration if a workable scheme is to be implemented in the transport sector. Nevertheless, the authors are conscious of the strong likelihood that not all relevant issues have been addressed. Any comment would therefore be gratefully received.