Options and issues for restricted linking of emissions trading systems

The document examines the benefits and challenges of linking emissions trading systems (ETSs). While full linking offers economic, political, and administrative advantages, it requires significant harmonization and risks a loss of regulatory autonomy. To address these challenges, the paper explores "restricted linking"—mechanisms that allow the flow of units between jurisdictions under specific constraints like quantity limits or exchange rates—evaluating them against criteria of environmental benefit, economic benefit, political feasibility, and practical considerations.

• Linking emissions trading systems (ETSs) can provide economic advantages including better access to abatement options, reduced carbon leakage risks, improved market liquidity, and higher resilience to shocks, alongside political benefits like increased cooperation and the ability to set more ambitious targets.
• Full linking of ETSs is difficult because it necessitates compromises on design elements and may lead to reduced ambition if one jurisdiction over-allocates allowances, or result in a perceived loss of regulatory autonomy.
• The paper proposes "restricted linking" as an alternative to full linking, utilizing specific constraints such as quotas, one-way linking, exchange rates, and discount rates to mitigate the issues associated with full harmonization.

APA

Stockholm Environment Institute (2015). Options and issues for restricted linking of emissions trading systems. https://www.sei.org/publications/options-and-issues-for-restricted-linking-of-emissions-trading-systems/

Chicago

Stockholm Environment Institute. Options and issues for restricted linking of emissions trading systems. 2015. https://www.sei.org/publications/options-and-issues-for-restricted-linking-of-emissions-trading-systems/.

Wikipedia

{{cite report |author=Stockholm Environment Institute |title=Options and issues for restricted linking of emissions trading systems |date=22 October 2015 |url=https://www.sei.org/publications/options-and-issues-for-restricted-linking-of-emissions-trading-systems/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stockholmenvironmentinstitute2015options, author = {{Stockholm Environment Institute}}, title = {{Options and issues for restricted linking of emissions trading systems}}, institution = {Stockholm Environment Institute}, year = {2015}, month = oct, url = {https://www.sei.org/publications/options-and-issues-for-restricted-linking-of-emissions-trading-systems/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }